Company registration number 12109077 (England and Wales)
HAMBLE AEROSTRUCTURES LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
HAMBLE AEROSTRUCTURES LIMITED
COMPANY INFORMATION
Director
R Chocarro Melgosa
(Appointed 25 January 2022)
Company number
12109077
Registered office
Kings Avenue
Hamble-Le-Rice
Southampton
Hampshire
United Kingdom
SO31 4NF
Auditor
Azets Audit Services
Carnac Place
Cams Hall Estate
Fareham
Hampshire
United Kingdom
PO16 8UY
HAMBLE AEROSTRUCTURES LIMITED
CONTENTS
Page
Strategic report
1 - 4
Director's report
5 - 6
Independent auditor's report
7 - 10
Income statement
11
Statement of comprehensive income
12
Statement of financial position
13
Statement of changes in equity
14
Notes to the financial statements
15 - 32
HAMBLE AEROSTRUCTURES LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 1 -
The director presents the strategic report for the year ended 31 December 2021.
Fair review of the business
The company recorded a profit before taxation of £2.0 million
(2020 - loss before taxation of £34.7 million)
, improved by the release of £7.7 million
(2020 - £7.1 million) negative goodwill
on the acquisition of the assets and liabilities from GE Aviation Systems Limited. The
negative goodwill
release has been credited to “administrative expenses” in the Profit and Loss Account.
Operating revenues were below expectation at £74.5 million
(2020 - £76.3 million)
, primarily due to the impact of the COVID
-
19 pandemic.
The aeronautical sector has been one of the sectors most strongly affected by the crisis unleashed by COVID-19. The first direct consequence of the crisis was the collapse of air traffic due to mobility restrictions and, as a direct consequence, the paralysis of a large part of the air fleets and the reduction in deliveries of new aircraft to airlines.
The 2021 financial year has been a year of transition in which Aernnova Group
("the Group")
has been restructured to adapt to the new reality of the sector. The measures implemented to reduce costs and working capital have made it possible to decrease losses significantly compared to 2020 and once again generate positive cash flow throughout the year.
The vaccination campaigns implemented worldwide have allowed mobility restrictions to be gradually lifted, and air traffic is recovering compared to 2020, although it is still far from reaching 2019 levels. It is difficult to establish when air traffic, as well as the delivery of new aircraft, will recover to pre-pandemic levels, although most analysts estimate that it will be between 2024 and 2025 depending on the evolution of the health and economic crisis.
In recent years, the Group has positioned itself as one of the world leaders in the design and manufacture of composite materials and one of the main Tier-1 companies in the aerostructures sector with a strong international presence. The measures taken during 2020 and 2021 have made it possible to reduce the initial impact of the COVID-19 crisis and lay the foundations for the Group's recovery. However, it is necessary to continue adapting the Group's companies to the new challenges demanded by our customers.
Although 2022 is expected to be the first year of recovery in the industry, with significant growth in air traffic and, consequently, in new aircraft deliveries, it will still be far from the levels reached before the crisis. Moreover, the recovery of the sector will not affect all models equally, with single-aisle models benefiting the most, while models serving long-haul routes will evolve more slowly.
Despite the aforementioned impact of COVID-19 on demand and the lagging supply chain ramp-up, particularly in the civil market, Hamble have maintained a relatively healthy defence and military order book, and generally customer relationships remain strong. Additionally Hamble, working with other strategic partners and supported by the Group, maintain a level investment in key
research and development
areas to protect the position in the market and position the business for future opportunities.
HAMBLE AEROSTRUCTURES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 2 -
Principal risks and uncertainties
During the period, the Group has maintained active risk management policies aimed at mitigating exposure to the main risks associated with its activity. The main measures used to control exposure to these risks are detailed below:
Currency risk
The Group is exposed to currency fluctuations. There is a risk of variation in the margin generated on sales from the time of sale until collection and risk on the amounts of purchases made in US dollars, mainly raw materials. The Group's policy is not to maintain open positions, contracting foreign exchange insurance both for balance positions and for future income.
Interest rate risk
Part of the Group's financing operations are indexed to Euribor or Libor, so the financial cost is subject to the variation of these indices. The Group recurrently analyses the advisability of making interest rate hedges to mitigate this risk.
Liquidity risk
The Group carries out prudent liquidity risk management, based on obtaining Institutional financing for investments in long-term programmes, complementing it with bank financing or long-term debt issues. Additionally, the provision of other working capital financing instruments, such as lines of credit with large undrawn limits and factoring allowing advance collections from customers and helping manage payments to suppliers, supports maintaining a good cash position. After the refinancing carried out in February 2020, the Group has significantly lengthened the debt amortisation profile, reducing liquidity risk.
Key performance indicators
Performance during the year is set out in the table below:
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Below expectation due primarily to COVID 19 pandemic and lagging supply chain ramp-up.
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Significant focus is put on working capital, in particular debtors, creditors and inventories to drive better cash conversion.
The order book position is also considered a key indicator of the health of the business.
HAMBLE AEROSTRUCTURES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 3 -
Other performance indicators
Other key performance indicators monitored are on
-
time deliver
ies
, quality escapes and health and safety at work.
Performance during the year is set out in the table below:
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*March to Dececember 2020. Global supplier recognition in 2021 due to outstanding delivery performance particularly from the civil product portfolio.
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Focus on improvement of processes and quality control.
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Recordable EHS (Environmental, Health and Safety) instances
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Focus on continuous improvement of health and safety initiatives.
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Section 172(1) statement
Promoting the success of the company
The directors of Hamble Aerostructures Limited act in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (among other matters) to:
-
the likely consequences of any decision in the long term;
-
the interests of the company's employees;
-
the need to foster the company's business relationships with suppliers, customers and others;
-
the impact of the company's operations on the community and the environment;
-
the desirability of the company maintaining a reputation for high standards of business conduct; and
-
the need to act fairly as between members of the company.
Employees
The success of the company is reliant on all of our employees, whether they work on the shop floor or in the offices - everyone plays their part. Therefore, it is important for all employees to feel valued and understand what we are trying to achieve.
Employee feedback is welcomed and listened to and regular meetings are held with employees about the direction of the company, which is especially important since becoming part of the Aernnova Group, and the efficiencies we are striving for to bring the company in line with the rest of the group.
Performance reviews are also held with employees to help them develop and the company has a track record of doing this with a number senior staff having joined as apprentices many years ago. There is also the option of transferring to different departments within the company to help employees develop their skills in other areas of the business.
Suppliers
We have many global suppliers which we rely heavily on to provide the raw materials that enable us to produce parts for the numerous programmes we have running and meet customer demands, which can be subject to fluctuations.
Therefore, we place great value on our relationships with our suppliers and enter into long-term agreements with them where appropriate and pay their invoices promptly to promote a positive business relationship. We actively communicate with our suppliers to ensure the supply chain is running effectively and raw materials are delivered in accordance with our production plans.
HAMBLE AEROSTRUCTURES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 4 -
Customers
The majority of our trade is derived from long-term build programmes with customers, therefore, maintaining our strong relationships with them is essential to the long-term success of the company.
A fundamental part of this relates to on-time deliveries and quality escapes, so these statistics are regularly monitored internally and there is a constant strive for improvement. As shown under other performance indicators above, on-time deliveries were up to 98% at the year end, which is reflective of the efforts made to improve on-time deliveries, and we are focusing on improving our processes and quality control to reduce the number of quality escapes.
R Chocarro Melgosa
Director
29 September 2022
HAMBLE AEROSTRUCTURES LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 5 -
The director presents his annual report and financial statements for the year ended 31 December 2021.
Principal activities
The principal activity of the company continued to be that of the development and manufacture of aircraft structures.
Results and dividends
The results for the year are set out on page 11.
No ordinary dividends were paid. The director does not recommend payment of a final dividend.
Director
The director who held office during the year and up to the date of signature of the financial statements was as follows:
J I Lopez Gandasegui
(Resigned 25 January 2022)
R Chocarro Melgosa
(Appointed 25 January 2022)
Disabled persons
Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the company's continues and that the appropriate training is arranged. It is the policy of the company that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.
Employee involvement
The company's policy is to consult and discuss with employees at meetings matters likely to affect employees' interests.
Information of matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the company's performance.
There is no employee share scheme at present, however, there is a bonus scheme in place to further encourage the involvement of employees in the company's performance.
Auditor
Azets Audit Services were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
Energy and carbon report
The company's energy and carbon information has not been included, as it has already been included in the ultimate parent company's non-financial information statement for the group.
HAMBLE AEROSTRUCTURES LIMITED
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 6 -
Statement of director's responsibilities
The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the director is required to:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and accounting estimates that are reasonable and prudent;
-
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
-
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The director is responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of
financial risk management, future developments, research and development activities and engagement with suppliers, customers and others.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
R Chocarro Melgosa
Director
29 September 2022
HAMBLE AEROSTRUCTURES LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF HAMBLE AEROSTRUCTURES LIMITED
- 7 -
Opinion
We have audited the financial statements of Hamble Aerostructures Limited
(the 'company')
for the year ended 31 December 2021 which comprise the income statement, the statement of comprehensive income, the statement of financial position, the statement of changes in equity and
notes to the financial statements, including significant accounting policies
. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
-
give a true and fair view of the state of the company's affairs as at 31 December 2021 and of its profit for the year then ended;
-
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
-
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the
Auditor's
responsibilities for the audit of the
financial statements
section of our report. We are independent of the
company
in accordance with the ethical requirements that are relevant to our audit of the
financial statements
in the UK, including the FRC’s Ethical Standard
, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the director with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The director is responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit
:
-
the information given in the strategic report and the director's
r
eport for the financial year for which the financial statements are prepared is consistent with the financial statements
; and
-
the strategic report and the director's report have been prepared in accordance with applicable legal requirements.
HAMBLE AEROSTRUCTURES LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF HAMBLE AEROSTRUCTURES LIMITED
- 8 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identifie
d
material misstatements in the strategic report or the director's
r
eport
. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
-
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
-
the financial statements are not in agreement with the accounting records and returns; or
-
certain disclosures of
remuneration specified by law are not made; or
-
we have not received all the information and explanations we require for our audit.
Responsibilities of director
As explained more fully in the director's
r
esponsibilities
s
tatement, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the director determines is necessary to enable the preparation of
financial statements
that are free from material misstatement, whether due to fraud or error. In preparing the
financial statements
, the
director is
responsible for assessing the company
'
s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the company or to cease operations, or has
no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the
financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor's
report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with
ISAs (UK)
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements
.
A further description of our responsibilities is available on the
Financial Reporting Council's website at: https://www.frc.org.uk/auditorsresponsibilities.
This description forms part of our
auditor's
report.
HAMBLE AEROSTRUCTURES LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF HAMBLE AEROSTRUCTURES LIMITED
- 9 -
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. We determined that the most significant legal and regulatory frameworks that are applicable to the entity include Environment, Health and Safety and quality compliance. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
-
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
-
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection;
-
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
-
Performing audit work over the risk of management bias and override of controls, including testing of
provisions,
journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias
;
-
Performing analytical procedures to support
the
testing
of detail
to identify unusual or unexpected
relationships and transactions.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Other matters which we are required to address
The financial statements for the year ended 31 December 2020 were unaudited.
HAMBLE AEROSTRUCTURES LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF HAMBLE AEROSTRUCTURES LIMITED
- 10 -
This report is made solely to the company’s member in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s member, those matters we are required to state to the member in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s member, for our audit work, for this report, or for the opinions we have formed.
James Reilly ACCA (Senior Statutory Auditor)
For and on behalf of Azets Audit Services
30 September 2022
Chartered Accountants
Statutory Auditor
Carnac Place
Cams Hall Estate
Fareham
Hampshire
United Kingdom
PO16 8UY
HAMBLE AEROSTRUCTURES LIMITED
INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 11 -
2021
2020
as restated
Notes
£
£
Revenue
3
74,508,028
76,349,984
Cost of sales
(52,161,842)
(89,824,100)
Gross profit/(loss)
22,346,186
(13,474,116)
Administrative expenses
(16,326,154)
(23,082,770)
Other operating income
259,178
2,634,300
Operating profit/(loss)
4
6,279,210
(33,922,586)
Finance costs
7
(4,250,107)
(798,668)
Profit/(loss) before taxation
2,029,103
(34,721,254)
Tax on profit/(loss)
8
(990,816)
(7,417,160)
Profit/(loss) for the financial year
1,038,287
(42,138,414)
HAMBLE AEROSTRUCTURES LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
- 12 -
2021
2020
as restated
£
£
Profit/(loss) for the year
1,038,287
(42,138,414)
Other comprehensive income:
Items that will not be reclassified to profit or loss
Tax relating to items not reclassified
672,097
(648,985)
Items that may be reclassified to profit or loss
Cash flow hedges:
- Hedging gain arising in the year
21,346
3,950,533
- Hedging gain reclassified to profit or loss
(3,529,505)
(534,825)
Total items that may be reclassified to profit or loss
(3,508,159)
3,415,708
Total other comprehensive (loss)/income for the year
(2,836,062)
2,766,723
Total comprehensive income for the year
(1,797,775)
(39,371,691)
HAMBLE AEROSTRUCTURES LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2021
31 December 2021
- 13 -
2021
2020
as restated
Notes
£
£
£
£
Non-current assets
Negative goodwill
9
(62,479,839)
(70,209,304)
Property, plant and equipment
10
64,865,224
69,544,799
Investments
11
1
1
2,385,386
(664,504)
Current assets
Inventories
13
30,739,216
30,715,953
Trade and other receivables
14
6,491,255
18,616,274
Cash and cash equivalents
2,435,637
2,199,616
39,666,108
51,531,843
Current liabilities
15
(39,666,464)
(41,422,297)
Net current (liabilities)/assets
(356)
10,109,546
Total assets less current liabilities
2,385,030
9,445,042
Provisions for liabilities
Deferred tax liabilities
20
(8,384,863)
(8,066,145)
Other provisions
17
(35,109,633)
(40,690,588)
Net liabilities
(41,109,466)
(39,311,691)
Equity
Called up share capital
21
60,000
60,000
Hedging reserve
22
(69,339)
2,766,723
Retained earnings
(41,100,127)
(42,138,414)
Total equity
(41,109,466)
(39,311,691)
The financial statements were approved by the board of directors and authorised for issue on 29 September 2022 and are signed on its behalf by:
R Chocarro Melgosa
Director
Company registration number 12109077
HAMBLE AEROSTRUCTURES LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
- 14 -
Share capital
Hedging reserve
Retained earnings
Total
£
£
£
£
As restated for the period ended 31 December 2020:
Balance at 1 January 2020
60,000
-
-
60,000
Balance at 1 January 2020
60,000
60,000
Year ended 31 December 2020:
Loss for the year
-
-
(42,138,414)
(42,138,414)
Other comprehensive income:
Cash flow hedges gains
-
3,950,533
-
3,950,533
Cash flow hedges gains reclassified to profit or loss
-
(534,825)
-
(534,825)
Tax relating to other comprehensive income
-
(648,985)
(648,985)
Total comprehensive income for the year
-
2,766,723
(42,138,414)
(39,371,691)
Balance at 31 December 2020
60,000
2,766,723
(42,138,414)
(39,311,691)
Year ended 31 December 2021:
Profit for the year
-
-
1,038,287
1,038,287
Other comprehensive income:
Cash flow hedges gains
-
21,346
-
21,346
Cash flow hedges gains reclassified to profit or loss
-
(3,529,505)
-
(3,529,505)
Tax relating to other comprehensive income
-
672,097
672,097
Total comprehensive income for the year
-
(2,836,062)
1,038,287
(1,797,775)
Balance at 31 December 2021
60,000
(69,339)
(41,100,127)
(41,109,466)
HAMBLE AEROSTRUCTURES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
- 15 -
1
Accounting policies
Company information
Hamble Aerostructures Limited is a private company limited by shares incorporated in England and Wales. The registered office is Kings Avenue, Hamble-Le-Rice, Southampton, Hampshire, United Kingdom, SO31 4NF.
The company's principal activities and nature of its operations are disclosed in the director's report.
1.1
Accounting convention
The financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) and in accordance with applicable accounting standards.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, except for the revaluation of derivatives. The principal accounting policies adopted are set out below.
As permitted by FRS 101, the company has taken advantage of the following disclosure exemptions from the requirements of IFRS:
-
inclusion of an explicit and unreserved statement of compliance with IFRS;
-
presentation of a statement of cash flows and related notes;
-
disclosure of the objectives, policies and processes for managing capital;
-
disclosure of key management personnel compensation;
-
disclosure of the categories of financial instrument and the nature and extent of risks arising on these financial instruments;
-
the effect of financial instruments on the statement of comprehensive income;
-
comparative period reconciliations for the number of shares outstanding and the carrying amounts of property, plant and equipment and intangible assets;
-
disclosure of the future impact of new International Financial Reporting Standards in issue but not yet effective at the reporting date;
-
comparative narrative information;
-
for financial instruments measured at fair value and within the scope of IFRS 13, the valuation techniques and inputs used to measure fair value, the effect of fair value measurements with significant unobservable inputs on the result for the period and the impact of credit risk on the fair value; and
-
related party disclosures for transactions with the parent or wholly owned members of the group.
Where required, equivalent disclosures are given in the group accounts of Aernnova Aerospace Corporation, S.A. The group accounts of Aernnova Aerospace Corporation, S.A. are available to the public and can be obtained as set out in note 24.
The company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts. The
financial statements
present information about the company as an individual entity and not about its group
.
Hamble Aerostructures Limited is a wholly owned subsidiary of Aernnova Aerospace, S.A.U. and the results of Hamble Aerostructures Limited are included in the consolidated financial statements of Aernnova Aerospace Corporation, S.A. which are available from the Commercial Register of Álava (Spain), Book 1242, Volume 210, Sheet VI-11396.
1.2
Change in accounting estimate
The provision for onerous contracts calculation is adjusted on an annual basis for changes in volumes required by the customer, changes estimated attributable costs and changes in foreign exchange rates. This has a direct impact on the cost of sales in the income statement.
HAMBLE AEROSTRUCTURES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 16 -
1.3
Prior period error
Prior period adjustments have been put through in relation to amortisation on negative goodwill, depreciation on property, plant and equipment and the deferred tax provision.
It was discovered that 12 months of amortisation on negative goodwill was included in the 2020 financial statements, rather than 11 months.
It was also discovered that depreciation on property, plant and equipment had been materially understated in the 2020 financial statements.
Finally, it was discovered that the deferred tax provision had been materially overstated in the 2020 financial statements.
All adjustments relate solely to the 2020 financial statements as shown in note 25.
1.4
Going concern
The director has at the time of approving the financial statements, a reasonable expectation that the
true
company
has adequate resources to continue in operational existence for the foreseeable future, taking into account anticipated demand, forecast performance of activities and estimated cashflows expected for the coming years, fulfilment of which depends on the course of the COVID-19 pandemic, and the ongoing support of the parent company. Thus
t
he director continues to adopt the going concern basis of accounting in preparing the financial statements.
1.5
Revenue
Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The company recognises revenue when it transfers control of a product or service to a customer
in exchange for fulfilling its performance obligations
.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
The company recognises revenue from the following major sources:
Development and manufacture of aircraft structures
Revenue from the development and manufacture of aircraft structures is derived from contracts for long-term build programmes. The contracts are for the manufacture of a certain number of shipsets and in each shipset are a number of deliverables. The contracted revenue for each shipset is allocated across each deliverable and revenue is recognised when a deliverable is dispatched to the customer as this is when the performance obligations are considered to have been met.
Repair and overhaul work
Revenue from repair and overhaul work is recognised when the parts are dispatched to the customer as this is when the performance obligations are considered to have been met. An estimate is provided to the customer when the parts are received into the workshop and work will commence once the estimate has been accepted by the customer. The consideration is based on this estimate.
HAMBLE AEROSTRUCTURES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 17 -
1.6
Goodwill
Negative g
oodwill represents the excess of the fair value of net assets acquired
over
the cost of acquisition of
the business
.
The
gain on a bargain purchase is recognised
on the statement of financial position at the date of the acquisition. The excess up to the fair value of the non-monetary assets acquired is then released to the income statement in the periods in which the non-monetary assets are recovered
.
Any excess exceeding the fair value of non-monetary assets acquired is the released to the income statement in the periods expected to be benefited.
Therefore, as a result of the above, negative goodwill is currently being released to the income statement over 10 years on a straight line basis.
1.7
Property, plant and equipment
Property, plant and equipment are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Freehold land and buildings
Straight line over 16 years
Plant and equipment
5-25% years on a straight line basis
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the
income statement
.
1.8
Non-current investments
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
1.9
Impairment of tangible and intangible assets
At each reporting end date, the
company
reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the
company
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
HAMBLE AEROSTRUCTURES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 18 -
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit)
in
prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.10
Inventories
Inventories
are stated at the lower of cost and
estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the
inventories
to their present location and condition.
Inventories
held for distribution at no or nominal consideration are measured
at
the lower of cost and replacement cost,
adjusted where applicable for any loss of service potential.
Cost is calculated using the
standard cost
method.
Net realisable value is the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.
1.11
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.12
Financial assets
Financial assets are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of the financial assets.
At initial recognition, financial assets classified as fair value through profit and loss are measured at fair value and any transaction costs are recognised in profit or loss. Financial assets not classified as fair value through profit and loss are initially measured at fair value plus transaction costs.
Financial assets at fair value through profit or loss
When any of the above-mentioned conditions for classification of financial assets is not met, a financial asset is classified as measured at fair value through profit or loss. Financial assets measured at fair value through profit or loss are recogni
s
ed initially at fair value and any transaction costs are recognised in profit or loss when incurred. A gain or loss on a financial asset measured at fair value through profit or loss is recognised in profit or loss, and is included within finance income or finance costs in the statement of income for the reporting period in which it arises.
HAMBLE AEROSTRUCTURES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 19 -
Financial assets held at amortised cost
Financial instruments are classified as financial assets measured at amortised cost where the objective is to hold these assets in order to collect contractual cash flows, and the contractual cash flows are solely payments of principal and interest. They arise principally from the provision of goods and services to customers (eg trade receivables). They are initially recognised at fair value plus transaction costs directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment where necessary.
Financial assets at fair value through other comprehensive income
Debt instruments are classified as financial assets measured at fair value through other comprehensive income where the financial assets are held within the company’s business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A debt instrument measured at fair value through other comprehensive income is recognised initially at fair value plus transaction costs directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognised through other comprehensive income are directly transferred to profit or loss when the debt instrument is derecognised.
Impairment of financial assets
Financial assets carried at amortised cost and FVOCI are assessed for indicators of impairment at each reporting end date.
The expected credit losses associated with these assets are estimated on a forward-looking basis. A broad range of information is considered when assessing credit risk and measuring expected credit losses, including past events, current conditions, and reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.
1.13
Financial liabilities
The company recogni
s
es financial debt when the company becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either
'
financial liabilities at fair value through profit or loss
'
or
'
other financial liabilities
'
.
Other financial liabilities
Other financial liabilities, including borrowings
, t
rade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs
directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method
.
For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.
Derecognition of financial liabilities
Financial liabilities are derecognised when, and only when, the
company’s
obligations are discharged, cancelled, or they expire.
HAMBLE AEROSTRUCTURES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 20 -
1.14
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.15
Derivatives
The company enters into foreign exchange forward contracts in order to manage its exposure to foreign exchange risk.
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.
A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability. A derivative is presented as a non-current asset or liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are classified as current.
1.16
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the
income statement
because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The
company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the
income statement
, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the
company
has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
HAMBLE AEROSTRUCTURES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 21 -
1.17
Provisions
Provisions are recognised when the
company
has a legal or constructive present obligation as a result of a past event
and
it is probable that the
company
will be required to settle that obligation
,
and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation.
Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Provision for onerous contracts
The provision for onerous contracts is recognised when it is probable that the total estimated costs of the contract exceed total revenue. The provision is based on the estimated present value of the free cash flows in relation to the remainder of the contract term.
Provision for liquidated damages
The provision for liquidated damages relates to claims in relation to late deliveries and concessions, which is estimated based on management information and discussions with customers.
1.18
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of
inventories
or non-current assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.19
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.20
Leases
At inception, the company assesses whether a contract is
,
or contains
,
a lease
within the scope of IFRS 16. A contract is
,
or contains
,
a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Where a tangible asset is acquired through a lease, the company recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within
property, plant and equipment,
apart from those that meet the definition of investment property
.
The company has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less, or for leases of low-value assets including IT equipment. The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.
1.21
Grants
Government grants are recognised when there is reasonable assurance that the grant conditions will be met and the grants will be received.
HAMBLE AEROSTRUCTURES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 22 -
1.22
Foreign exchange
Transactions in currencies other than
pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
2
Critical accounting estimates and judgements
In the application of the company’s accounting policies, the director is required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.
Critical judgements
Inventory provision
An inventory provision is included in the financial statements to reduce the inventories held in relation to the onerous contracts down to their net realisable value. The calculation of this requires management's judgement to estimate the costs attributable to each shipset. These costs are then compared with the sales value of each shipset, as contracted with the customer. This is used to calculate the percentage to reduce all inventories in relation to the onerous contracts down to their net realisable value.
Provision for onerous contracts
A provision for onerous contracts is included in the financial statements for the loss-making contracts with customers. This is based on the present value of the free cash flows in relation to the contracts and requires management's judgement in calculating expected future costs attributable to the contracts and the discount factor applied. The provision is updated annually for changes in assumptions, for example, changes in the number of shipsets required by the customer each year.
Provision for liquidated damages
A provision for liquidated damages is included in the financial statements for customer claims for late deliveries and concessions. These claims are made following the completion of a calendar year, so the calculation of the provision requires management's judgement to estimate the future claims payable in relation to the current financial year. The calculation is based on management information in respect of late deliveries and concessions and following discussions with customers.
Key sources of estimation uncertainty
Useful economic life of negative goodwill
The useful economic life of the negative goodwill recorded in the financial statements has been estimated based on the expected useful economic lives of the property, plant and equipment acquired as part of the business purchase agreement. This is subject to estimation uncertainty due to the variation of the useful economic lives of the property, plant and equipment acquired. This has a direct impact on the amortisation credited to the income statement.
HAMBLE AEROSTRUCTURES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
2
Critical accounting estimates and judgements
(Continued)
- 23 -
Useful economic lives of property, plant and equipment
The useful economic lives of the property, plant and equipment recorded in the financial statements have been estimated based on the expected number of years the economic benefits will be received for each asset, whilst also taking into account any estimated residual value. Therefore, the useful lives are subject to estimation uncertainty. This has a direct impact on the depreciation charged to the income statement.
3
Revenue
2021
2020
£
£
Revenue analysed by class of business
Development and manufacture of aircraft structures
65,736,316
71,260,245
Repair and overhaul work
8,771,712
5,089,739
74,508,028
76,349,984
2021
2020
£
£
Revenue analysed by geographical market
Great Britain
13,856,232
8,934,046
Rest of Europe
52,636,597
54,957,143
North America
7,098,579
11,199,282
Asia
359,337
827,259
Middle East
348,402
278,228
Oceania
172,199
149,617
Africa
36,682
4,409
74,508,028
76,349,984
2021
2020
£
£
Other income
Grants received
250,457
2,159,765
Grants received relate to Government grants in relation to the Coronavirus Job Retention Scheme.
HAMBLE AEROSTRUCTURES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 24 -
4
Operating profit/(loss)
2021
2020
Operating profit/(loss) for the year is stated after charging/(crediting):
£
£
Exchange (gains)/losses
(4,865,142)
1,527,610
Research and development costs
176,266
Government grants
(250,457)
(2,159,765)
Depreciation of property, plant and equipment
5,342,880
5,113,104
Profit on disposal of property, plant and equipment
(6,000)
(1,350)
Release of negative goodwill to income
(7,729,465)
(7,085,343)
Cost of inventories recognised as an expense
42,903,129
43,542,508
The release of negative goodwill to income is included within administration expenses.
5
Auditor's remuneration
2021
2020
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
75,000
For other services
Tax services
10,000
Other services
7,000
Total non-audit fees
17,000
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2021
2020
Number
Number
Senior management
3
5
Management
58
68
Office
79
90
Shop floor
391
465
Total
531
628
HAMBLE AEROSTRUCTURES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
6
Employees
(Continued)
- 25 -
Their aggregate remuneration comprised:
2021
2020
£
£
Wages and salaries
19,513,566
21,219,312
Social security costs
1,744,630
2,284,231
Pension costs
1,747,832
2,477,016
23,006,028
25,980,559
7
Finance costs
2021
2020
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
205,147
171,031
Interest payable to group undertakings
733,673
627,637
938,820
798,668
Other finance costs:
Unwinding of discount on provisions
3,311,287
Total finance costs
4,250,107
798,668
8
Taxation
2021
2020
£
£
Deferred tax
Origination and reversal of temporary differences
(1,308,450)
11,494,596
Changes in tax rates
2,342,261
Tax losses carried forward
(42,995)
(4,077,436)
990,816
7,417,160
Deferred tax has been calculated at 25% (2020 - 19%), being the corporation tax main rate enacted in the Finance Act 2021 on 10 June 2021. Therefore, this is the rate expected to apply to the reversal of the timing differences.
HAMBLE AEROSTRUCTURES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
8
Taxation
(Continued)
- 26 -
The charge for the year can be reconciled to the profit/(loss) per the income statement as follows:
2021
2020
£
£
Profit/(loss) before taxation
2,029,103
(34,721,254)
Expected tax charge/(credit) based on a corporation tax rate of 19.00% (2020: 19.00%)
385,530
(6,597,038)
Effect of expenses not deductible in determining taxable profit
12,519
2,857,015
Effect of change in UK corporation tax rate
2,017,914
Fixed asset differences
(1,425,147)
8,633,087
Capital gains differences
2,524,096
Taxation charge for the year
990,816
7,417,160
In addition to the amount charged to the income statement, the following amounts relating to tax have been recognised directly in other comprehensive income:
2021
2020
£
£
Deferred tax arising on:
Revaluation of financial instruments treated as cash flow hedges
(672,097)
648,985
9
Intangible fixed assets
Negative goodwill
£
Cost
At 31 December 2020
(77,294,647)
At 31 December 2021
(77,294,647)
Amortisation and impairment
At 31 December 2020
(7,085,343)
Charge for the year
(7,729,465)
At 31 December 2021
(14,814,808)
Carrying amount
At 31 December 2021
(62,479,839)
At 31 December 2020
(70,209,304)
HAMBLE AEROSTRUCTURES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
9
Intangible fixed assets
(Continued)
- 27 -
Negative goodwill is being released to administrative expenses in the income statement over a 10-year period, with the remaining period being 8 years and 1 month.
10
Property, plant and equipment
Freehold land and buildings
Assets under construction
Plant and equipment
Total
£
£
£
£
Cost
At 1 January 2021
42,523,274
5,294,158
26,840,471
74,657,903
Additions
228,693
434,612
663,305
Other
(5,294,158)
5,294,158
At 31 December 2021
42,751,967
32,569,241
75,321,208
Accumulated depreciation and impairment
At 1 January 2021
1,610,766
3,502,338
5,113,104
Charge for the year
1,748,459
3,594,421
5,342,880
At 31 December 2021
3,359,225
7,096,759
10,455,984
Carrying amount
At 31 December 2021
39,392,742
25,472,482
64,865,224
At 31 December 2020
40,912,508
5,294,158
23,338,133
69,544,799
11
Investments
Current
Non-current
2021
2020
2021
2020
£
£
£
£
Investments in subsidiaries
-
-
1
1
Fair value of financial assets carried at amortised cost
The directors consider that the carrying amounts of financial assets carried at amortised cost in the financial statements approximate to their fair values.
12
Subsidiaries
Details of the company's subsidiaries at 31 December 2021 are as follows:
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Hamble Aerostructures Sub Limited
Kings Avenue, Hamble-Le-Rice, Southampton, Hampshire, England, SO31 4NF
Ordinary
100.00
HAMBLE AEROSTRUCTURES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 28 -
13
Inventories
2021
2020
£
£
Raw materials
16,334,313
12,943,327
Work in progress
10,536,264
10,719,038
Finished goods
3,868,639
7,053,588
30,739,216
30,715,953
14
Trade and other receivables
2021
2020
£
£
Trade receivables
6,034,909
13,901,397
Derivative financial instruments
3,415,708
Other receivables
438,501
1,299,169
Prepayments and accrued income
17,845
6,491,255
18,616,274
15
Liabilities
2021
2020
Notes
£
£
Trade and other payables
16
38,119,682
39,541,066
Taxation and social security
727,591
1,881,231
Derivative financial instruments
92,451
Deferred income
18
726,740
39,666,464
41,422,297
16
Trade and other payables
2021
2020
£
£
Trade payables
5,315,696
5,870,755
Amount owed to parent undertaking
9,541
62,672
Amounts owed to fellow group undertakings
20,757,722
17,747,904
Accruals and deferred income
9,766,126
13,247,723
Other payables
2,270,597
2,612,012
38,119,682
39,541,066
The amounts owed to group undertakings are unsecured, interest-bearing at a rate of 3.8% per annum and there are no fixed repayment terms.
HAMBLE AEROSTRUCTURES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 29 -
17
Provisions for liabilities
2021
2020
£
£
Provision for onerous contracts
34,205,440
39,056,912
Provision for liquidated damages
904,193
1,633,676
35,109,633
40,690,588
Movements on provisions:
Provision for onerous contracts
Provision for liquidated damages
Total
£
£
£
At 1 January 2021
39,056,912
1,633,676
40,690,588
Additional provisions in the year
-
755,792
755,792
Utilisation of provision
(8,703,483)
(1,485,275)
(10,188,758)
Unwinding of discount
3,311,287
-
3,311,287
Exchange difference
540,724
-
540,724
At 31 December 2021
34,205,440
904,193
35,109,633
The provision for onerous contracts is
management's best estimate of the present value of the free cash flows in relation to the loss-making contracts. The provision is currently expected to reverse over the next 11 financial years, however, this is subject to change if the required annual volumes are amended.
The provision for liquidated damages
represents management's best estimate of claims in relation to
late deliveries and concessions
up to the year-end, based on management information and discussions with customers, and it is expected to reverse in the next financial year. Claims are made in arrears, so this causes uncertainty over amounts of outflows.
18
Deferred revenue
2021
2020
£
£
Arising from grants receivable
726,740
19
Retirement benefit schemes
2021
2020
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
1,747,832
2,477,016
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
Unpaid contributions at 31 December 2021 were £nil (2020 - £nil).
HAMBLE AEROSTRUCTURES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 30 -
20
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon during the current and prior reporting period.
Accelerated capital allowances
Tax losses
Revaluation of derivatives
Total
£
£
£
£
Balance at 1 January 2020
Deferred tax movements in prior year
Charge/(credit) to profit or loss
11,494,596
(4,077,436)
-
7,417,160
Charge/(credit) to other comprehensive income
-
-
648,985
648,985
Liability at 1 January 2021
11,494,596
(4,077,436)
648,985
8,066,145
Deferred tax movements in current year
Charge/(credit) to profit or loss
2,321,423
(1,330,607)
-
990,816
Charge/(credit) to other comprehensive income
-
-
(672,098)
(672,098)
Liability at 31 December 2021
13,816,019
(5,408,043)
(23,113)
8,384,863
2021
2020
2021
2020
Offsets applied
£
£
£
£
Deferred tax assets
Deferred tax liabilities
Balances before offset
5,431,156
4,077,436
13,816,019
12,143,581
Amounts offset
(5,431,156)
(4,077,436)
(5,431,156)
(4,077,436)
Balances after offset
8,384,863
8,066,145
21
Share capital
2021
2020
2021
2020
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
60,000
60,000
60,000
60,000
Shares rank equally for voting purposes, for any dividend declared and for any distribution made on winding up. On a show of hands, each member shall have one vote and, on a pole, each member shall have one vote per share held. The shares are not redeemable.
HAMBLE AEROSTRUCTURES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 31 -
22
Hedging reserve
2021
2020
£
£
At the beginning of the year
2,766,723
Gains and losses on cash flow hedges
21,346
3,950,533
Tax on gains and losses on cash flow hedges
672,097
(648,985)
Transfer to income
(3,529,505)
(534,825)
At the end of the year
(69,339)
2,766,723
23
Other leasing information
Lessee
Amounts recognised in profit or loss as an expense during the period in respect of lease arrangements are as follows:
2021
2020
£
£
Expense relating to leases of low-value assets
198,524
109,357
Set out below are the future cash outflows to which the lessee is potentially exposed that are not reflected in the measurement of lease liabilities:
2021
2020
Operating leases apart from land and buildings
£
£
Within one year
146,766
150,914
Between two and five years
301,070
447,835
447,836
598,749
The above operating leases relate to the leasing of motor vehicles and production equipment.
24
Controlling party
The parent company of Hamble Aerostructures Limited is Aernnova Aerospace, S.A.U. and its registered office is located in the Technological Park of Alava at calle Leonardo Da Vinci 13, Miñano Mayor (Alava, Spain).
The ultimate parent company of Hamble Aerostructures Limited is Aernnova Aerospace Corporation, S.A. and its registered office is located in the Technological Park of Alava at calle Leonardo Da Vinci 13, Miñano Mayor (Alava, Spain).
HAMBLE AEROSTRUCTURES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
24
Controlling party
(Continued)
- 32 -
T
he
largest and smallest group in which the
results of Hamble Aerostructures Limited are
consolidated in are
the financial statements of Aernnova Aerospace Corporation, S.A. which are available from the Commercial Register of Álava (Spain), Book 1242, Volume 210, Sheet VI-11396.
25
Prior period adjustment
Reconciliation of changes in equity
1 January
31 December
2020
2020
Notes
£
£
Equity as previously reported
60,000
(42,288,661)
Adjustments to prior year
Correction to amortisation on negative goodwill
-
(644,122)
Correction to depreciation on property, plant and equipment
-
(1,615,660)
Correction to deferred tax provision
-
5,236,752
Equity as adjusted
60,000
(39,311,691)
Analysis of the effect upon equity
Retained earnings
-
2,976,970
Reconciliation of changes in loss for the previous financial period
2020
Notes
£
Loss as previously reported
(45,115,384)
Adjustments to prior year
Correction to amortisation on negative goodwill
(644,122)
Correction to depreciation on property, plant and equipment
(1,615,660)
Correction to deferred tax provision
5,236,752
Loss as adjusted
(42,138,414)
2021-12-31
2021-01-01
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R Chocarro Melgosa
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