Company registration number 01786291 (England and Wales)
AIRPART SUPPLY LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
AIRPART SUPPLY LIMITED
COMPANY INFORMATION
Directors
Mr R Allen
Mr D McHugh
Mrs L Scott
(Appointed 12 August 2022)
Mr S Page
Mrs T Raynes
Secretary
Mr A Paterson
Company number
01786291
Registered office
Unit 3, The Gateway Centre
Coronation Road
Cressex Business Centre
High Wycombe
Buckinghamshire
HP12 3SU
Auditor
DSA Prospect Audit Limited
The Old Chapel
Union Way
Witney
Oxfordshire
OX28 6HD
AIRPART SUPPLY LIMITED
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4 - 5
Directors' responsibilities statement
6
Independent auditor's report
7 - 9
Statement of comprehensive income
10
Balance sheet
11
Statement of changes in equity
12
Statement of cash flows
13
Notes to the financial statements
14 - 28
AIRPART SUPPLY LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MAY 2023
- 1 -

The directors present the strategic report for the year ended 31 May 2023.

Fair review of the business

The aircraft parts aftermarket appears to have now virtually recovered completely with demand as strong as pre-2019 levels. Supply chain issues, demand in the USA and Worldwide together with inflation are the biggest challenges we now face day to day although we are starting to see positive signs of these beginning to ease this past year.

 

Back-order levels are now stabilising as manufacturers continue to catch up in meeting demand, but we still see a threat to OEMs’ marketplaces by PMA suppliers taking advantage of OEM longer lead times. Thus, the threat is still out there where loyal OEM customers and distributors are forced to change allegiances in order to sustain sales. This policy does not fit into the Airpart business model, and we continue to resist. We see far more benefit longer term by remaining loyal to existing relationships and investing to support these.

 

Distributor relationships with OEMs continue to be enhanced with improved distribution agreements containing expanded territories, products and new OEMs being added to the company portfolio. This bodes well for the significant and continued growth in the business both domestically and internationally. Several significant distribution agreements have been ratified during the year and others are in the negotiation stage.

 

Trade shows are now back to normal and Airpart has resumed their activity and participation in the appropriate ones during the trading year. We also plan to reinstate our programme of targeted customer sales visits during the new trading year.

 

Tight fiscal control continues to be the bedrock of the company’s success, and this will continue along with the strong emphasis on liquidity and low levels of bank borrowing. This is demonstrated by the growing strength in the balance sheet. EBITDA has improved due to careful and sensible management during the year.

 

There have been no airworthiness issues that could lead to any liability issues and warranty claims are at standard levels. The biggest risk identified by the directors continues to be exposure to potential bad debt, but this is mitigated by the tight fiscal control referred to earlier together with our extensive due diligence practiced when reviewing customers creditworthiness. The company IT department and sub-contractors continue to review and update computer and cyber security protocols as is required.

 

Integrity and safety are at the heart of the day-to-day operations of the business and the Airpart brand is set to continue growing worldwide, recognised for quality and high levels of customer satisfaction.

AIRPART SUPPLY LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 2 -
Principal risks and uncertainties

Risk is an inherent part of doing business in a global market. The Directors have identified the following factors as potential risks to the successful operation of the business.

 

Economic and Market Risks

The continued threat of inflation within the global economy running out of control is one of the biggest risks to Airpart’s growth trajectory continuing an upward trend. In addition, the geo-political instability also continues to pose some risk to Airpart’s growth plans and needs careful monitoring as the trading year progresses.

 

Regulatory Risk

The company's operations are subject to an ever-increasing range of regulatory requirements which need constant review and implementation. The company monitors these with regular reviews and audits to ensure compliance and training needs are reviewed and addressed as required.

 

Business Continuity

The company has plans in place in case of any form of incident that would impact on the ability to trade.

 

IT Systems and Infrastructure

The company is reliant on its IT infrastructure to facilitate trade and continues to update and improve its systems with the latest technology. A failure in these systems could have a significant impact on our business. Therefore, the company has controls and backup systems in place to maintain the integrity and continuity of trading should this prove necessary.

 

Employee Engagement and Retention

Good relations with colleagues and investing in their training and development are essential to the efficient operation of the company. The employment policies, remuneration and benefits packages and general working environment are benchmarked across industry to ensure our offering remains comprehensive and attractive.

 

Products

The safety, quality and legality of our products is of paramount importance, and if not managed appropriately can result in risks. There is sufficient, suitably trained resource in place to manage these parameters and ensure that stringent product safety and quality controls are in place to minimise such risks.

Development and performance

Development and performance of the company are described below:

 

Year End Position

The year-end position is reflected in the company's balance sheet and represents a successful year of trading. Stocking levels are similar to last year although our overall stock position is slightly lower by way of value due to the supply issues and longer manufacturer delivery times discussed above.

 

The directors do not anticipate any material changes to the structure and supply chain of the business for the foreseeable future.

 

Future Developments

The company will endeavour to increase sales by extending its range of products from current and new supplier partners during the forthcoming financial year.

 

 

AIRPART SUPPLY LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 3 -
Key performance indicators

Turnover for 2023 was £19,308,936 (2022 - £15,180,326) representing significant growth on the previous year.

2023
2022
Change
£'000
£'000
+/-
Turnover
19,309
15,180
27.20%
Operating profit
1,735
1,512
10.00%
Profit for the financial year
1,393
1,254
11.14%
Total equity
3,209
2,541
26.30%
Current assets as % of current liabilities
175%
180%
(5.49)%
Return on assets %
18%
20%
(2.48)%
Average number of employees in the year
21
22
(4.55)%

On behalf of the board

Mr R Allen
Director
5 September 2023
AIRPART SUPPLY LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MAY 2023
- 4 -

The directors present their annual report and financial statements for the year ended 31 May 2023.

Principal activities

The principal activity of the company continued to be that of wholesale distribution of aircraft & aerospace components.

Results and dividends

The results for the year are set out on page 10.

Ordinary dividends were paid amounting to £725,000. The directors do not recommend payment of a further dividend.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

Mr R Allen
Mr D McHugh
Mrs L Scott
(Appointed 12 August 2022)
Mr S Page
Mr H Povey
(Resigned 12 August 2022)
Mrs T Raynes
Financial instruments

The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.

All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary.

Post reporting date events

There are no events after the year end that the directors believe need to be reported.

Future developments

There are no future developments that the directors believe need to be reported.

Auditor

In accordance with the company's articles, a resolution proposing that DSA Prospect Audit Limited be reappointed as auditor of the company will be put at a General Meeting.

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.

Medium-sized companies exemption

This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.

AIRPART SUPPLY LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 5 -
On behalf of the board
Mr R Allen
Director
5 September 2023
AIRPART SUPPLY LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MAY 2023
- 6 -

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have 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 directors must not approve the financial statements unless they are 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 directors are required to:

 

 

The directors are 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. They are 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.

AIRPART SUPPLY LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF AIRPART SUPPLY LIMITED
- 7 -
Opinion

We have audited the financial statements of Airpart Supply Limited (the 'company') for the year ended 31 May 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows 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 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

Basis for opinion

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 directors' 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 directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are 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:

AIRPART SUPPLY LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF AIRPART SUPPLY 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 identified material misstatements in the strategic report or the directors' report.

 

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:

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, the directors are 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 directors determine 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 directors are 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 directors either intend to liquidate the company or to cease operations, or have 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.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

 

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:

AIRPART SUPPLY LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF AIRPART SUPPLY LIMITED
- 9 -

We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

 

To address the risk of fraud through management bias and override of controls, we:

 

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

 

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.

 

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.

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.

Mr Gary John McHale FCCA
Senior Statutory Auditor
For and on behalf of DSA Prospect Audit Limited
5 September 2023
Chartered Certified Accountants
Statutory Auditor
The Old Chapel
Union Way
Witney
Oxfordshire
OX28 6HD
AIRPART SUPPLY LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MAY 2023
- 10 -
2023
2022
as restated
Notes
£
£
Turnover
3
19,308,936
15,180,326
Cost of sales
(16,055,849)
(12,295,323)
Gross profit
3,253,087
2,885,003
Administrative expenses
(1,517,775)
(1,382,417)
Other operating income
-
0
4,873
Operating profit
4
1,735,312
1,507,459
Interest receivable and similar income
7
19,524
20,619
Interest payable and similar expenses
8
(8,356)
(12,672)
Profit before taxation
1,746,480
1,515,406
Tax on profit
9
(353,207)
(261,741)
Profit for the financial year
1,393,273
1,253,665

The profit and loss account has been prepared on the basis that all operations are continuing operations.

AIRPART SUPPLY LIMITED
BALANCE SHEET
AS AT 31 MAY 2023
31 May 2023
- 11 -
2023
2022
as restated
Notes
£
£
£
£
Fixed assets
Tangible assets
11
71,522
81,241
Current assets
Stocks
12
4,087,718
1,943,644
Debtors
13
2,003,191
1,687,586
Cash at bank and in hand
1,688,579
2,486,026
7,779,488
6,117,256
Creditors: amounts falling due within one year
14
(4,453,888)
(3,395,592)
Net current assets
3,325,600
2,721,664
Total assets less current liabilities
3,397,122
2,802,905
Creditors: amounts falling due after more than one year
15
(170,166)
(246,667)
Provisions for liabilities
Deferred tax liability
17
17,881
15,436
(17,881)
(15,436)
Net assets
3,209,075
2,540,802
Capital and reserves
Called up share capital
20
9,280
9,280
Share premium account
21
14,000
14,000
Capital redemption reserve
22
2,000
2,000
Profit and loss reserves
23
3,183,795
2,515,522
Total equity
3,209,075
2,540,802

These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.true

The financial statements were approved by the board of directors and authorised for issue on 5 September 2023 and are signed on its behalf by:
Mr R Allen
Director
Company registration number 01786291 (England and Wales)
AIRPART SUPPLY LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MAY 2023
- 12 -
Share capital
Share premium account
Capital redemption reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
As restated for the period ended 31 May 2022:
Balance at 1 June 2021
9,000
14,000
2,000
4,816,320
4,841,320
Year ended 31 May 2022:
Profit and total comprehensive income
-
-
-
1,253,665
1,253,665
Issue of share capital
20
280
-
0
-
-
280
Dividends
10
-
-
-
(3,554,463)
(3,554,463)
Balance at 31 May 2022
9,280
14,000
2,000
2,515,522
2,540,802
Year ended 31 May 2023:
Profit and total comprehensive income
-
-
-
1,393,273
1,393,273
Dividends
10
-
-
-
(725,000)
(725,000)
Balance at 31 May 2023
9,280
14,000
2,000
3,183,795
3,209,075
AIRPART SUPPLY LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MAY 2023
- 13 -
2023
2022
as restated
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
28
273,642
2,441,503
Interest paid
(8,356)
(12,672)
Income taxes paid
(350,762)
(256,787)
Net cash (outflow)/inflow from operating activities
(85,476)
2,172,044
Investing activities
Purchase of tangible fixed assets
(12,231)
(11,829)
Repayment of loans
-
0
1,218,795
Interest received
19,524
20,619
Net cash generated from investing activities
7,293
1,227,585
Financing activities
Proceeds from issue of shares
-
0
280
Payment of finance leases obligations
5,736
(4,112)
Dividends paid
(725,000)
(3,554,463)
Net cash used in financing activities
(719,264)
(3,558,295)
Net decrease in cash and cash equivalents
(797,447)
(158,666)
Cash and cash equivalents at beginning of year
2,486,026
2,644,692
Cash and cash equivalents at end of year
1,688,579
2,486,026
AIRPART SUPPLY LIMITED
STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 14 -
1
Judgements and key sources of estimation uncertainty

In the application of the company’s accounting policies, the directors are 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 where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

2
Accounting policies
Company information

Airpart Supply Limited is a private company limited by shares incorporated in England and Wales. The registered office is Unit 3, The Gateway Centre, Coronation Road, Cressex Business Centre, High Wycombe, Buckinghamshire, HP12 3SU.

2.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

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. The principal accounting policies adopted are set out below.

2.2
Prior period error

During the preparation of the financial statements it was identified that goods in transit are insured from the date of dispatch and not receipt. The director’s believe, although there is no effect on the profit and loss statement, the balance sheet should be adjusted so that stock and creditors under one year provide a true and fair view of the company’s financial position at the year end and comparative period.

2.3
Going concern

Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

2.4
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

 

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.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

AIRPART SUPPLY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
2
Accounting policies
(Continued)
- 15 -
2.5
Tangible fixed assets

Tangible fixed assets 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:

Plant and equipment
20% and 25% reducing balance

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 credited or charged to profit or loss.

2.6
Impairment of fixed assets

At each reporting period end date, the company reviews the carrying amounts of its tangible 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.

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.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. 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.

2.7
Stocks

Stocks 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 stocks to their present location and condition.

 

Stocks 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.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

2.8
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and 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.

AIRPART SUPPLY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
2
Accounting policies
(Continued)
- 16 -
2.9
Financial instruments

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

 

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

AIRPART SUPPLY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
2
Accounting policies
(Continued)
- 17 -
Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Other financial liabilities

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

 

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

2.10
Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

2.11
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 profit and loss account 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.

AIRPART SUPPLY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
2
Accounting policies
(Continued)
- 18 -
Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing 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 profit and loss account, 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.

2.12
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 stock or fixed 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.

2.13
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

2.14
Share-based payments

For cash-settled share-based payments, a liability is recognised for the goods and services acquired, measured initially at the fair value of the liability. At the balance sheet date until the liability is settled, and at the date of settlement, the fair value of the liability is remeasured, with any changes in fair value recognised in profit or loss for the year.

Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the weighted average exercise price model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.

When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.

 

Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.

AIRPART SUPPLY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
2
Accounting policies
(Continued)
- 19 -
2.15
Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

 

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

2.16
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.

3
Turnover and other revenue
2023
2022
£
£
Other revenue
Interest income
19,524
20,619

The directors consider that a geographical analysis of turnover would be seriously prejudicial to the company's interest in terms of commercial sensitivity, and as such have not included a split of geographical turnover.

4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange (gains)/losses
(582)
79,015
Fees payable to the company's auditor for the audit of the company's financial statements
9,250
9,250
Depreciation of owned tangible fixed assets
21,950
21,000
Depreciation of tangible fixed assets held under finance leases
-
5,255
Operating lease charges
113,545
114,813
5
Employees

The average monthly number of persons (including directors) employed by the company during the year was:

2023
2022
Number
Number
21
22
AIRPART SUPPLY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
5
Employees
(Continued)
- 20 -

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
781,021
611,558
Social security costs
95,032
64,496
Pension costs
35,940
29,235
911,993
705,289
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
200,000
91,667
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
100,000
45,834
7
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
947
311
Other interest income
18,577
20,308
Total income
19,524
20,619
2023
2022
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
947
311
AIRPART SUPPLY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 21 -
8
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
8,095
11,398
Other finance costs:
Interest on finance leases and hire purchase contracts
261
1,274
8,356
12,672
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
-
0
171,175
Adjustments in respect of prior periods
(769)
-
0
Group tax relief
351,531
85,612
Total current tax
350,762
256,787
Deferred tax
Origination and reversal of timing differences
2,445
4,954
Total tax charge
353,207
261,741

The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

2023
2022
£
£
Profit before taxation
1,746,480
1,515,406
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2022: 19.00%)
331,831
287,927
Tax effect of expenses that are not deductible in determining taxable profit
757
416
Adjustments in respect of prior years
(769)
-
0
Effect of change in corporation tax rate
17,677
-
0
Other non-reversing timing differences
2,445
4,954
Capital allowance's
(2,905)
(2,922)
Depreciation
4,171
4,988
Share options
-
0
(33,622)
Taxation charge for the year
353,207
261,741
AIRPART SUPPLY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 22 -
10
Dividends
2023
2022
£
£
Final paid
725,000
3,554,463
11
Tangible fixed assets
Plant and equipment
£
Cost
At 1 June 2022
292,739
Additions
12,231
At 31 May 2023
304,970
Depreciation and impairment
At 1 June 2022
211,498
Depreciation charged in the year
21,950
At 31 May 2023
233,448
Carrying amount
At 31 May 2023
71,522
At 31 May 2022
81,241

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

2023
2022
£
£
Fixtures and fittings
-
0
15,765

Plant and equipment with a carrying amount of £68,232 (2022 - £65,476) have been pledged to secure borrowings of the company. The company is not allowed to pledge these assets as security for other borrowings or to sell them to another entity.

12
Stocks
2023
2022
£
£
Finished goods and goods for resale
4,087,718
1,943,644

The carrying amount of stocks includes £4,087,718 (2022 - £1,943,644) pledged to secure borrowings of the company. The company is not allowed to pledge these assets as security for other borrowings.

AIRPART SUPPLY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 23 -
13
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
1,701,183
1,223,987
Other debtors
-
0
341,269
Prepayments and accrued income
302,008
122,330
2,003,191
1,687,586

Amounts included in debtors includes £1,701,183 (2022 - £1,565,256) pledged to secure borrowings of the company. The company is not allowed to pledge these assets as security for other borrowings.

14
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Obligations under finance leases
16
2,237
-
0
Trade creditors
2,499,728
1,931,437
Amounts owed to group undertakings
351,531
85,612
Taxation and social security
202,583
74,715
Other creditors
1,397,809
1,303,828
4,453,888
3,395,592

Held in creditors due within one year is a loan to the value of £80,000 (2022 - £ 80,000). The security is a fixed and floating charge with a negative pledge in favour of National Westminster Bank Plc.

15
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Obligations under finance leases
16
3,499
-
0
Other creditors
166,667
246,667
170,166
246,667

Held in creditors due after one year is a loan to the value of £166,667 (2022 - £ 246,667). The security is a fixed and floating charge with a negative pledge in favour of National Westminster Bank Plc.

16
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
2,237
-
0
In two to five years
3,499
-
0
5,736
-
0
AIRPART SUPPLY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
16
Finance lease obligations
(Continued)
- 24 -

Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

17
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:

Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
17,881
15,436
2023
Movements in the year:
£
Liability at 1 June 2022
15,436
Charge to profit or loss
2,445
Liability at 31 May 2023
17,881
18
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
35,940
29,235

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.

19
Share-based payment transactions

During the period the company granted options to certain key management.

 

The options were exercisable at asset sale, share sale and or a listing event. The options lapse after ten years. The options lapse if employment is terminated. The method of settlement was a mix of equity and cash. The options did not contain any exercise conditions.

AIRPART SUPPLY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
19
Share-based payment transactions
(Continued)
- 25 -
Number of share options
Weighted average exercise price
2023
2022
2023
2022
Number
Number
£
£
Outstanding at 1 June 2022
-
0
-
0
-
0
-
0
Granted
-
0
2
-
0
633.07
Exercised
-
(2)
-
0
-
0
Outstanding at 31 May 2023
-
0
-
0
-
0
-
0
Exercisable at 31 May 2023
-
0
-
0
-
0
-
0

The weighted average share price at the date of exercise for share options exercised during the year was £0 (2022 - £633).

As at the year end there were no options outstanding.

The weighted average fair value of options granted in the year was determined using the Black-Scholes option pricing model. The Black-Scholes model is considered to apply the most appropriate valuation method due to the relatively short contractual lives of the options and the requirement to exercise within a short period after the employee becomes entitled to the shares (the “vesting date”).

 

The expected life used in the model has been adjusted, based on management’s best estimate, for the effect of non-transferability, exercise restrictions, and behavioural considerations.

 

Non-vesting conditions and market conditions are taken into account when estimating the fair value of the option at grant date. Service conditions and non-market performance conditions are taken into account by adjusting the number of options expected to vest at each reporting date.

20
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary A shares of £1 each
7,000
7,000
7,000
7,000
Ordinary B shares of £1 each
2,000
2,000
2,000
2,000
Ordinary C shares of £1 each
280
280
280
280
9,280
9,280
9,280
9,280
AIRPART SUPPLY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
20
Share capital
(Continued)
- 26 -

Ordinary A shares

Each share is entitled to one vote in any circumstances. Each share has equal rights to dividends each share is entitled to participate equally in a distribution arising from a winding up of the company.

 

Ordinary Redeemable B shares

Each share is entitled to one vote in any circumstances. Each share has equal rights to dividends. Each share is entitled to participate equally in a distribution arising from a winding up of the company.

 

Ordinary C

Each share carries no rights to vote whether on a show of hands or on a poll vote. Each share has no right to receive a dividend. Each share is entitled to participate in a distribution arising from a winding up of the company in accordance with article 18 of the articles of association of the company. Each share is non-redeemable.

21
Share premium account
2023
2022
£
£
At the beginning and end of the year
14,000
14,000

The share premium account records the amount received above the nominal value of the shares sold less any transaction costs.

22
Capital redemption reserve
2023
2022
£
£
At the beginning and end of the year
2,000
2,000

Capital redemption reserves are a statutory, non-distributable reserve into which amounts are transferred following the redemption or purchase of a company's own shares out of distributable profits.

23
Profit and loss reserves
2023
2022
as restated
£
£
At the beginning of the year
2,515,522
4,816,320
Profit for the year
1,393,273
1,253,665
Dividends declared and paid in the year
(725,000)
(3,554,463)
At the end of the year
3,183,795
2,515,522
24
Financial commitments, guarantees and contingent liabilities

Other than described above there are no further guarantees to be disclosed.

AIRPART SUPPLY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 27 -
25
Operating lease commitments
Lessee

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

2023
2022
£
£
Within one year
128,318
3,192
Between two and five years
371,041
15,818
In over five years
-
0
600,826
499,359
619,836
26
Events after the reporting date

There are no events after the year end that the directors believe need to be reported.

27
Ultimate controlling party

The ultimate controlling party of Airpart Supply Limited is Pula Aviation Services Limited. Pula Aviation Services Limited's is incorporated in the Bailiwick of Guernsey.

28
Cash generated from operations
2023
2022
£
£
Profit for the year after tax
1,393,273
1,253,665
Adjustments for:
Taxation charged
353,207
261,741
Finance costs
8,356
12,672
Investment income
(19,524)
(20,619)
Depreciation and impairment of tangible fixed assets
21,950
26,255
Movements in working capital:
(Increase)/decrease in stocks
(2,144,074)
11,904
Increase in debtors
(315,605)
(568,174)
Increase in creditors
976,059
1,464,059
Cash generated from operations
273,642
2,441,503
AIRPART SUPPLY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 28 -
29
Analysis of changes in net funds
1 June 2022
Cash flows
31 May 2023
£
£
£
Cash at bank and in hand
2,486,026
(797,447)
1,688,579
Obligations under finance leases
-
(5,736)
(5,736)
2,486,026
(803,183)
1,682,843
30
Prior period adjustment
Reconciliation of changes in equity
The prior period adjustments do not give rise to any effect upon equity.
Reconciliation of changes in profit for the previous financial period
2022
£
Total adjustments
-
Profit as previously reported
1,253,665
Profit as adjusted
1,253,665
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