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Registration number: 02496662

European Aviation Limited

Annual Report and Consolidated Financial Statements

for the Year Ended 31 December 2023

 

European Aviation Limited

Contents

Company Information

1

Strategic Report

2 to 4

Directors' Report

5 to 7

Statement of Directors' Responsibilities

8

Independent Auditor's Report

9 to 12

Consolidated Profit and Loss Account

13

Consolidated Statement of Comprehensive Income

14

Consolidated Balance Sheet

15

Balance Sheet

16

Consolidated Statement of Changes in Equity

17

Statement of Changes in Equity

18

Consolidated Statement of Cash Flows

19

Notes to the Financial Statements

20 to 49

 

European Aviation Limited

Company Information

Directors

P G Stoddart

S E Aston

T S Whetter

S B Penton

Company secretary

S E Aston

Registered office

Ground Floor
Custom House
Waterfront East
Brierley Hill
West Midlands
DY5 1XH

Auditors

Wenn Townsend
Chartered Accountants and Registered Auditors
30 St Giles'
Oxford
OX1 3LE

 

European Aviation Limited

Strategic Report for the Year Ended 31 December 2023

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

Principal activity

The company has three separate revenue streams and these represent its principal activities:

1. Sale of A340 and B737 aircraft together with their lease, charter, operation and renovation
2. CFM 56 series engine overhaul and sales
3. The sale of aircraft spare parts and interiors

Fair review of the business

The group has made a loss before tax of £25,136,826 for the 12-month period to 31 December 2023, of which £12,762,627 was attributable to minority interest ownership. European Aviation Ltd made a profit before tax of £4,963,922 for the 12-month period to 31st December 2023. During the year the group has increased the number of charter aircraft and flights to China and became the designated UK carrier under the China/UK Air Service Agreement enabling more flexible and frequent flying.

The group's key financial and other performance indicators during the year were as follows:

Financial KPIs

Unit

2023

2022

Turnover

£

57,215,275

42,678,266

Operating profit/(loss) before impairment

£

(17,867,728)

(27,423,588)

Operating profit margin before impairment

%

(31)

(64)

Stock held

£

14,435,666

16,555,311

Loans

£

1,541,869

3,695,855

Net Assets

£

28,286,140

53,513,061

Principal risks and uncertainties

The business is subject to several key risks and uncertainties based on its principal activities and current operations:

Liquidity and financing risk
The business currently relies on the continuing support from its shareholders whilst it operates in the growth phase of its long-term strategy. This is required until the business becomes cash-flow positive, which management expects when four aircraft operate under contract. The shareholders intend to continue to support the company and as a result we continue to consider the business to be a going concern.

Fuel price risk
A significant element of our cost of sales results from the purchase of Jet A1 aviation fuel. Fuel prices fluctuate as part of a global commodity market. While the company manages exposure to changes in price through commercially agreed contract limits, an increase in fuel price may reduce demand for air cargo in favour of alternative cargo options. Additionally, we plan to deploy several mitigating actions to reduce the risk operationally through improved flight planning software resulting in less fuel burn. Management will actively manage other costs such as airport charges as purchasing grows in tandem with fleet size.

Customer risk
The business has operated various routes for a range of customers concentrated on China-UK routes with a small number of customers. As we continue to grow the business further and additional aircraft become active, we anticipate diversification of customers and routes lowering risk.

 

European Aviation Limited

Strategic Report for the Year Ended 31 December 2023

People risk
The business relies upon highly skilled people, particularly pilots and engineers, who require lengthy training. With a finite qualified talent pool in the UK, the business needs to find, attract and hire critical roles to support growth. Management has addressed this through apprentice engineer programmes, optimizing routing to maximize pilot utilization and actively assessing recruiting strategies so that we remain competitive.

Aircraft availability risk
Aircraft require regular scheduled maintenance and can experience unscheduled maintenance events preventing planned operations. The business outsources line maintenance of its aircraft to another group company and relies on third parties to provide heavy maintenance. The aircraft require spare parts and while we hold a large reserve of spare parts, the business will likely purchase spare parts and services from third parties, which can delay operational readiness. We mitigate this risk through careful management and planning in our Continuing Airworthiness Management Organisation (CAMO) and paying close attention to the lead times in the supply chain.

Geopolitical and global economic conditions
The business operates in a global market and operates in and over many countries where changes in geopolitics can significantly impact the profitability and operability of the business. Events such as the closure of Russian airspace and ongoing issues in the Middle East, for example, require longer routing and may reduce profitability. Diversifying and increasing the number of customers and routes mitigates this risk.

Related party balances
The company has a number of material balances outstanding with related undertakings. Details of these balances and the associated uncertainties are outlined below:

(i) Skybus LLC. Skybus LLC is an associated company based in the USA that specialises in the sale of aircraft and engine spares worldwide. As of the balance sheet date, Skybus LLC owes the Company £1,866,512.

(ii) European Skybus Limited is a fellow subsidiary that holds essential regulatory approvals critical to the operations of European Aviation. These approvals are vital for the continued trading of European Aviation and European Cargo. As of the balance sheet date, the balance owed to the Company by European Skybus Limited is £7,838,802.

(iii) European Minardi Team Limited is a fellow subsidiary, and as of the balance sheet date, it owes European Aviation £6,450,075.

Section 172(1) statement

The directors manage the operational performance of the company in a way most likely to promote its long-term success for the benefit of its members as a whole. The smooth running of the business relies on the support and joint effort of the stakeholders.

The directors have had regard to the matters set out in section 172 (1) (a) to (f) of the Companies Act 2006 when performing their duties under S172.

 

European Aviation Limited

Strategic Report for the Year Ended 31 December 2023

Set out below are the stakeholders identified and engaged with by the directors during the year.

Employees: The company’s greatest assets are its employees, and the long-term success of the business is predicated on the commitment and delivery of the company’s employees to the company’s strategy and their consistent demonstration of company values. To maintain the company’s competitive advantage and to meet the growing demands of the environment in which it operates, it needs employees to be adaptive and constantly evolve their skills through inhouse and external training. The company believes that investment in training helps to retain employees and reduce turnover rates. The company values employees with long term practical experience as well as formal qualifications. It has strict selection standards and procedures in place to ensure a non-discriminatory employment policy. The directors continually strive to improve employee health and safety and actively encourages employees to be involved in enhancing and monitoring health and safety practices throughout the business.

Shareholders: The company obtains shareholder buy-in into its strategic objectives and how it achieves them. The directors create value for the shareholders by the generation of sustainable results that can be re-invested in the business. We seek to promote an investor base that is interested in a long-term holding in the company.

Lenders: A good working relationship with the business’s lenders is of vital importance to the long-term success of the business. There is an ongoing engagement with the company’s lenders to ensure that there is adequate working capital available for the company’s needs.

Customers: In a highly competitive environment success depends on meeting customer needs and requirements more effectively and efficiently than the company’s competitors. Engaging with the company’s customers is vital to ensure that both our current products and those in development meet their needs in the longer-term.

Suppliers: Suppliers are fundamental to the quality of the company’s products and to ensuring that the business meets the high standards of service that it sets itself and complies with regulatory requirements. The company relies on its suppliers to deliver products on time and to the standard it specifies. It is important to mitigate against supply chain risk to prevent interruptions to product delivery schedules which could impact on the company’s relationships with customers.

Doing business responsibly brings benefits for wider society and assists commercial success.

Approved and authorised by the Board on 23 December 2024 and signed on its behalf by:
 

.........................................
P G Stoddart
Director

 

European Aviation Limited

Directors' Report for the Year Ended 31 December 2023

The directors present their report and the for the year ended 31 December 2023.

Directors of the group

The directors who held office during the year were as follows:

P G Stoddart

S E Aston - Company secretary and director

T S Whetter

S B Penton

Dividends

No dividends will be distributed for the period to 31 December 2023.

Future developments

European Aviation Limited has completed the sale of its 50.01% shareholding in European Cargo Limited (ECL) as of 19th November 2024. This transaction represents a significant milestone for the company, allowing it to focus on streamlining operations and leveraging its remaining business units for sustained growth.

Following the sale of ECL, the company remains committed to optimizing its aviation fleet and operational capabilities. Plans include continuing the conversion of aircraft under the Supplemental Type Certificate (STC) program, enabling fleet modernisation and alignment with market demands. In 2025, three additional aircraft are scheduled for conversion, which will bring the total number of operational aircraft to eight by January 2026.

The company also intends to pursue diversification strategies across its customer base and route network. These measures aim to reduce reliance on specific markets, mitigate concentration risk, and enhance market exposure in an increasingly competitive aviation sector.

Engagement with suppliers, customers and others

The board seeks to promote good general business principles in all business relationships. It seeks to work in partnership with both suppliers and customers, driving innovation and promoting new ideas and ways of working.

 

European Aviation Limited

Directors' Report for the Year Ended 31 December 2023

Greenhouse gas emissions, energy consumption and energy efficiency action

In compliance with the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013, the group reports its greenhouse gas emissions and energy usage for the financial year ending 31 December 2023.

The group measures its carbon footprint in accordance with the GHG Protocol Corporate Accounting and Reporting Standard, utilising the operational control approach. Emissions from operations under our direct control have been included, encompassing offices, warehouses, and company-owned vehicles and aircrafts.

Breakdown of emissions by scope:
Scope 1 (Direct Emissions): Emissions from company-owned vehicles and aircrafts.
Scope 2 (Indirect Emissions): Emissions from purchased electricity and heat.
Scope 3 (Other Indirect Emissions): Reporting of emissions from business travel.

Annual GHG Emissions
(tonnes CO2e)
2023

Annual Energy Usage
(KWh)
2023

Scope 1 (Direct Emissions)

104,712

250,718

Scope 2 (Indirect Emissions)

102

491,763

Scope 3 (Other Indirect Emissions)

291

1,223,361

105,105

1,965,842

Emissions intensity has been calculated that during 2023 the group created 1,837 tonnes of CO2 per £1m of revenue.

The company is committed to mitigating its environmental impact by researching and implementing carbon reduction and offsetting strategies. Key initiatives include:
1. Sustainable Aviation Fuel (SAF): Exploring the adoption of SAF to lower emissions from flight operations.
2. Carbon Offset and Reduction Schemes: Active participation in CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation), an international program requiring airlines to offset emissions exceeding 2019 levels for international flights.
3. Fleet Modernisation: Upgrading to modern, fuel-efficient aircraft, reducing emissions indirectly by improving overall fuel economy.

The directors acknowledge their responsibility for ensuring the accuracy and completeness of this GHG report.

Important non adjusting events after the financial period

Please see note 27 in relation to events occurring after the reporting period.

Disclosure of information to the auditor

Each director has taken steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditor is aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditor is unaware.

Reappointment of auditors

 

European Aviation Limited

Directors' Report for the Year Ended 31 December 2023

In accordance with section 485 of the Companies Act 2006, a resolution for the re-appointment of Wenn Townsend as auditors of the company is to be proposed at the forthcoming Annual General Meeting.

Approved and authorised by the Board on 23 December 2024 and signed on its behalf by:
 

.........................................
P G Stoddart
Director

 

European Aviation Limited

Statement of Directors' Responsibilities

The directors acknowledge their responsibilities 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 group and the company and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

select suitable accounting policies and 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 directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group's and the company's transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

European Aviation Limited

Independent Auditor's Report to the Members of European Aviation Limited

Qualified opinion

We have audited the financial statements of European Aviation Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2023, which comprise the Consolidated Profit and Loss Account, Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Balance Sheet, Consolidated Statement of Changes in Equity, Statement of Changes in Equity, Consolidated Statement of Cash Flows, and Notes to the Financial Statements, including a summary of 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, except for the possible effects of the matter described in the basis for qualified opinion section of our report, the financial statements:

give a true and fair view of the state of the group's and the parent company's affairs as at 31 December 2023 and of the group's loss 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.

Basis for qualified opinion on financial statements

The financial statements of the subsidiary European Cargo Limited for the year ended 31 December 2022 included the following qualification by the previous auditors:

"As confirmation of our continued appointment as auditor of the company was not until August 2023, we did not observe the counting of physical inventories at the end of the year. We were unable to satisfy ourselves by alternative means concerning the inventory quantities held at 31 December 2022, which are included in the balance sheet at $6,484,192. Owing to the nature of the company's records, we were unable to obtain sufficient appropriate audit evidence regarding the stock quantities at 31 December 2022 by using other audit procedures."

Although appointed after the 2023 year end date, we are content that we have been able to perform sufficient procedures to verify the European Cargo Limited stock held as at 31 December 2023 for the purposes of our audit report this year. However, due to the above 2022 finding we are therefore unable to issue an unqualified opinion on the financial statements for the year ended 31 December 2023 as we were unable to determine whether there was any consequential effect on the cost of sales for the year ended 31 December 2023 (due to the opening stock position of European Cargo Limited not being fully verified).

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 responsibilities for the audit of the financial statements section of our report. We are independent of the group 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 qualified opinion.

 

European Aviation Limited

Independent Auditor's Report to the Members of European Aviation Limited

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 group's ability to continue as a going concern for a period of at least twelve months from when the original financial statements were 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 directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. 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.

In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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.

As described in the basis for qualified opinion section of our report, the previous auditors for the subsidiary European Cargo Limited were unable to satisfy themselves concerning the inventory quantities of $6,484,192 held at 31 December 2022 and the current year report is qualified due to the potential impact of this on cost of sales in the year ended 31 December 2023. We have concluded that where the other information refers to the opening inventory balance or related balances such as cost of sales, it may be materially misstated for the same reason.

Opinion on other matter prescribed by the Companies Act 2006

Except for the possible effects of the matter described in the basis for qualified opinion section of our report, in our opinion, based on the work undertaken in the course of the audit:

the information given in the Strategic Report and Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

the Strategic Report and Directors' Report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

Except for the matter described in the basis for qualified opinion section of our report, in the light of our 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 and the Directors' Report.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

 

European Aviation Limited

Independent Auditor's Report to the Members of European Aviation Limited

adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

the parent company financial statements are not in agreement with the accounting records and returns; or

certain disclosures of directors' remuneration specified by law are not made; or

we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities [set out on page 8], 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 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.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The specific procedures for this engagement and the extent to which our procedures are capable of detecting irregularities, including fraud are detailed below:

• Enquiry of management, those charged with governance and the entity’s solicitors around actual and potential litigation and claims;
• Enquiry of entity staff in tax and compliance functions to identify any instances of non-compliance with laws and regulations;
• Reviewing minutes of meetings of those charged with governance;
• 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 override of controls, including testing of 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 bias.

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 is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

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.

 

European Aviation Limited

Independent Auditor's Report to the Members of European Aviation Limited

Use of our report

This report is made solely to the company’s members, as a body, 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 members those matters we are required to state to them 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 members as a body, for our audit work, for this report, or for the opinions we have formed.

......................................
Benjamin Hayes BSc FCA (Senior Statutory Auditor)
For and on behalf of Wenn Townsend, Statutory Auditor

30 St Giles'
Oxford
OX1 3LE

23 December 2024

 

European Aviation Limited

Consolidated Profit and Loss Account for the Year Ended 31 December 2023

Note

2023
 £

2022
 £

Turnover

3

57,215,275

42,678,266

Cost of sales

 

(60,269,985)

(54,059,011)

Gross loss

 

(3,054,710)

(11,380,745)

Administrative expenses

 

(14,813,018)

(16,042,843)

Operating loss

5

(17,867,728)

(27,423,588)

Other interest receivable and similar income

6

76,266

-

Interest payable and similar charges

7

(7,345,364)

(2,658,288)

 

(7,269,098)

(2,658,288)

Loss before tax

 

(25,136,826)

(30,081,876)

Taxation

11

-

(1,100,000)

Loss for the financial year

 

(25,136,826)

(31,181,876)

Profit/(loss) attributable to:

 

Owners of the company

 

(12,374,199)

(18,404,977)

Minority interests

 

(12,762,627)

(12,776,899)

 

(25,136,826)

(31,181,876)

 

European Aviation Limited

Consolidated Statement of Comprehensive Income for the Year Ended 31 December 2023

2023
£

2022
£

Loss for the year

(25,136,826)

(31,181,876)

Foreign currency translation (losses)/gains on consolidation

(90,095)

3,311,681

Total comprehensive income for the year

(25,226,921)

(27,870,195)

Total comprehensive income attributable to:

Owners of the company

(12,755,898)

(15,093,296)

Minority interests

(12,471,023)

(12,776,899)

(25,226,921)

(27,870,195)

 

European Aviation Limited

(Registration number: 02496662)
Consolidated Balance Sheet as at 31 December 2023

Note

2023
£

2022
£

Fixed assets

 

Intangible assets

12

1,116,053

1,015,087

Tangible assets

13

60,833,110

60,705,333

 

61,949,163

61,720,420

Current assets

 

Stocks

15

14,435,666

16,555,311

Debtors

16

19,566,552

25,432,701

Cash at bank and in hand

 

6,819,997

7,533,311

 

40,822,215

49,521,323

Creditors: Amounts falling due within one year

18

(17,123,587)

(21,611,040)

Net current assets

 

23,698,628

27,910,283

Total assets less current liabilities

 

85,647,791

89,630,703

Creditors: Amounts falling due after more than one year

18

(55,391,651)

(33,847,642)

Provisions for liabilities

19

(1,970,000)

(2,270,000)

Net assets

 

28,286,140

53,513,061

Capital and reserves

 

Called up share capital

21

750,020

750,020

Revaluation reserve

2,959,965

2,959,965

Other reserves

17,538,374

17,538,374

Foreign currency translation reserve

 

2,926,644

3,308,343

Profit and loss account

10,277,457

22,651,656

Equity attributable to owners of the company

 

34,452,460

47,208,358

Minority interests

 

(6,166,320)

6,304,703

Shareholders' funds

 

28,286,140

53,513,061

Approved and authorised by the Board on 23 December 2024 and signed on its behalf by:
 

.........................................
P G Stoddart
Director

 

European Aviation Limited

(Registration number: 02496662)
Balance Sheet as at 31 December 2023

Note

2023
£

2022
£

Fixed assets

 

Tangible assets

13

14,415,751

15,552,245

Investments

14

13,554,982

7,000,000

 

27,970,733

22,552,245

Current assets

 

Stocks

15

12,452,985

16,310,457

Debtors

16

23,212,762

30,687,117

Cash at bank and in hand

 

5,748,538

2,774,476

 

41,414,285

49,772,050

Creditors: Amounts falling due within one year

18

(2,471,531)

(8,566,939)

Net current assets

 

38,942,754

41,205,111

Total assets less current liabilities

 

66,913,487

63,757,356

Creditors: Amounts falling due after more than one year

18

(1,094,089)

(2,601,880)

Provisions for liabilities

19

(1,970,000)

(2,270,000)

Net assets

 

63,849,398

58,885,476

Capital and reserves

 

Called up share capital

21

750,020

750,020

Revaluation reserve

2,959,965

2,959,965

Profit and loss account

60,139,413

55,175,491

Shareholders' funds

 

63,849,398

58,885,476

The company made a profit after tax for the financial year of £4,963,922 (2022 - profit of £13,929,072).

Approved and authorised by the Board on 23 December 2024 and signed on its behalf by:
 

.........................................
P G Stoddart
Director

 

European Aviation Limited

Consolidated Statement of Changes in Equity for the Year Ended 31 December 2023
Equity attributable to the parent company

Share capital
£

Revaluation reserve
£

Foreign currency translation reserve
£

Other reserves
£

Profit and loss account
£

Non-controlling interests - Equity
£

Total equity
£

At 1 January 2023

750,020

2,959,965

3,308,343

17,538,374

22,651,656

6,304,703

53,513,061

Loss for the year

-

-

-

-

(12,374,199)

(12,762,627)

(25,136,826)

Other comprehensive income

-

-

(381,699)

-

-

291,604

(90,095)

Total comprehensive income

-

-

(381,699)

-

(12,374,199)

(12,471,023)

(25,226,921)

At 31 December 2023

750,020

2,959,965

2,926,644

17,538,374

10,277,457

(6,166,320)

28,286,140

Share capital
£

Revaluation reserve
£

Foreign currency translation reserve
£

Other reserves
£

Profit and loss account
£

Non-controlling interests - Equity
£

Total equity
£

At 1 January 2022

750,020

2,959,965

(3,338)

-

41,056,633

-

44,763,280

Loss for the year

-

-

-

-

(18,404,977)

(12,776,899)

(31,181,876)

Other comprehensive income

-

-

3,311,681

-

-

-

3,311,681

Total comprehensive income

-

-

3,311,681

-

(18,404,977)

(12,776,899)

(27,870,195)

Decrease in ownership interests in subsidiaries that do not result in a loss of control

-

-

-

17,538,374

-

19,081,602

36,619,976

At 31 December 2022

750,020

2,959,965

3,308,343

17,538,374

22,651,656

6,304,703

53,513,061

 

European Aviation Limited

Statement of Changes in Equity for the Year Ended 31 December 2023

Share capital
£

Revaluation reserve
£

Profit and loss account
£

Total
£

At 1 January 2023

750,020

2,959,965

55,175,491

58,885,476

Profit for the year

-

-

4,963,922

4,963,922

At 31 December 2023

750,020

2,959,965

60,139,413

63,849,398

Share capital
£

Revaluation reserve
£

Profit and loss account
£

Total
£

At 1 January 2022

750,020

2,959,965

41,246,419

44,956,404

Profit for the year

-

-

13,929,072

13,929,072

At 31 December 2022

750,020

2,959,965

55,175,491

58,885,476

 

European Aviation Limited

Consolidated Statement of Cash Flows for the Year Ended 31 December 2023

Note

2023
 £

2022
 £

Cash flows from operating activities

Loss for the year

 

(25,136,826)

(31,181,876)

Adjustments to cash flows from non-cash items

 

Depreciation and amortisation

5

5,418,571

3,872,413

Loss on disposal of tangible assets

4

-

370,486

Finance income

6

(76,266)

-

Finance costs

7

6,883,327

2,658,288

Income tax expense

11

-

1,100,000

Foreign exchange gains/losses

 

2,257,958

3,311,681

Transfer of fixed assets to stock

 

2,533,921

-

 

(8,119,315)

(19,869,008)

Working capital adjustments

 

Decrease in stocks

15

2,119,645

32,346,689

Decrease/(increase) in trade debtors

16

5,866,149

(7,154,234)

Increase in trade creditors

18

17,925,842

32,221,051

(Decrease)/increase in provisions

19

(300,000)

1,170,000

Cash generated from operations

 

17,492,321

38,714,498

Income taxes paid

11

(86,838)

(164,505)

Net cash flow from operating activities

 

17,405,483

38,549,993

Cash flows from investing activities

 

Interest received

76,266

-

Proceeds from sale of subsidiaries

 

-

36,619,976

Acquisitions of tangible assets

(10,205,317)

(56,184,008)

Proceeds from sale of tangible assets

 

87,487

4,809,283

Acquisition of intangible assets

12

(411,458)

(1,015,087)

HP interest paid

 

(36,509)

(47,334)

Net cash flows from investing activities

 

(10,489,531)

(15,817,170)

Cash flows from financing activities

 

Interest paid

7

(6,846,818)

(2,610,954)

Repayment of bank borrowing

 

(2,153,986)

(356,635)

Repayment of other borrowing

 

-

(13,159,274)

Repayment of/new finance leases

 

1,371,538

(99,922)

Net cash flows from financing activities

 

(7,629,266)

(16,226,785)

Net (decrease)/increase in cash and cash equivalents

 

(713,314)

6,506,038

Cash and cash equivalents at 1 January

 

7,533,311

1,027,273

Cash and cash equivalents at 31 December

 

6,819,997

7,533,311

 

European Aviation Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

1

General information

The company is a private company limited by share capital, incorporated in England and Wales.

The address of its registered office is:
Ground Floor
Custom House
Waterfront East
Brierley Hill
West Midlands
DY5 1XH
United Kingdom

The principal place of business is:
European Hall
Bromyard Road
Ledbury
Herefordshire
HR8 1LG
United Kingdom

These financial statements were authorised for issue by the Board on 23 December 2024.

2

Accounting policies

Summary of significant accounting policies and key accounting estimates

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Statement of compliance

These financial statements were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland and the Companies Act 2006'.

Basis of preparation

These financial statements have been prepared using the historical cost convention except that as disclosed in the accounting policies certain items are shown at fair value.

The company's functional currency is GBP. Monetary amounts in these financial statements are rounded to the nearest £. The company operates using three primary currencies - $USD, GBP and Euros. The majority of trade is conducted using $USD, however a significant proportion of borrowings and most overhead expenses and fixed assets are denominated in sterling. The company has judged that sterling is the most appropriate functional currency for the purpose of these financial statements.

Summary of disclosure exemptions

The company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own statement of comprehensive income in these financial statements..

 

European Aviation Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Basis of consolidation

The consolidated financial statements consolidate the financial statements of the company and its subsidiary undertakings drawn up to 31 December 2023.

A subsidiary is an entity controlled by the company. Control is achieved where the company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the Profit and Loss Account from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the group.

The purchase method of accounting is used to account for business combinations that result in the acquisition of subsidiaries by the group. The cost of a business combination is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the business combination. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Any excess of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised is recorded as goodwill.

Inter-company transactions, balances and unrealised gains on transactions between the company and its subsidiaries, which are related parties, are eliminated in full.

Intra-group losses are also eliminated but may indicate an impairment that requires recognition in the consolidated financial statements.

Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group. Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the group’s equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling shareholder’s share of changes in equity since the date of the combination.

 

European Aviation Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Going concern

The directors have assessed the financial position and operational capabilities of the business and are confident in its ability to continue as a going concern. This assessment reflects the following considerations:

The company has secured adequate financial resources, including ongoing support from lenders and stakeholders, ensuring liquidity for the foreseeable future. As of 31st December 2023, the company maintained sufficient cash reserves and access to credit facilities to meet its obligations.

Despite the challenges in the aviation sector, including fluctuating fuel prices, global inflationary pressures, and geopolitical uncertainties, the business has demonstrated resilience. Revenue has been supported by a recovery in cargo demand, coupled with operational efficiencies.

The company continues to receive financial backing from its parent company/shareholders. In 2023, additional capital injections and extended credit facilities were provided, demonstrating stakeholder confidence in the business model and strategy.

The directors have evaluated potential risks, including operational disruptions and economic downturns. These risks have been mitigated through robust financial planning and flexible business strategies.

Based on the financial forecasts, cash flow projections, and operational strategies in place, the directors believe that the company has adequate resources to continue operating for at least 12 months from the date of approval of the financial statements. Therefore, the financial statements have been prepared on a going concern basis.

 

European Aviation Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Judgements in applying accounting policies and key sources of estimation uncertainty

A. Airframe, engine and spares stock

The Directors are continually reviewing stock values and estimates of the company's stock. Valuing A340 airframes and associated engine stock is particularly challenging as there is a limited market for them. The directors acknowledge the inherent uncertainty in valuing this stock. The value of airframes and related engines stock reflected in these financial statements at 31 December 2023 is £2,298,166 (after impairment). Total stock is broken down as airframe stock and related engines £9,209,680 and spares and components of £5,225,986 (after impairment).

B. Cost of sales adjustment

Specific elements of stock with a balance sheet value of £2,031,859 have been valued using a "Cost of Sales Adjustment". In these cases the deduction of cost of sales is calculated by reference to a percentage of the sales value achieved in the period/year. The percentages used are based on estimates that have been carefully considered by the directors using their knowledge of the stock and the state of the market.

C. Balance due from Skybus LLC

Note 25 to the financial statements discloses a balance due from Skybus LLC ("LLC") a related undertaking, of £1,866,512. The amount stated is after an impairment provision of £1,600,000, which comprises £600,000 brought forward and £1,000,000 recognised in profit and loss in the year. The recovery of the amount shown on the balance sheet is dependent upon the future transfer of aviation stock items and equipment from LLC to the company, as well as the successful outcome of a proposed restructuring of LLC. The directors acknowledge that the treatment they have adopted in respect the balance is based on their judgement of the outcome of future events. They recognise that the amount that may be recoverable is uncertain, and that further impairments may be necessary in future accounting periods.

D. Balance due from European Minardi Team Limited

Note 25 to the financial statements discloses a balance due from European Minardi Team Limited ("EMT") a fellow subsidiary, of £6,450,075. The amount stated is after an impairment provision of £1,100,000, which comprises £800,000 brought forward and £300,000 recognised in profit and loss in the year. EMT's principal activities are unrelated to the core activities of European Aviation Limited, and recoverability has been determined from estimated net realisable values of the assets of EMT. One of EMT's main assets is a loan to European Skybus Inc. European Skybus Inc. has a substantial equity stake in Skybus LLC above. The directors acknowledge that the treatment they have adopted in respect the balance is based on their judgement of the outcome of future events and that further impairments may be necessary in future accounting periods.

 

European Aviation Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

E. Balance due from, and transactions with, European Skybus Limited

Note 25 to the financial statements discloses a balance due from European Skybus Limited ("ESL") a fellow subsidiary, of £7,838,802. The amount stated is after an impairment provision of £388,140 brought forward. One of ESL's principal balance sheet assets is a loan to European Skybus Inc. European Skybus Inc. has a substantial equity stake in Skybus LLC above. ESL's activities are closely related to those of European Aviation Limited and the two companies are mutually dependent from a regulatory and financial standpoint. There is a considerable volume of trading between the two companies (see note 25) . For these reasons the directors have assessed that an impairment provision is necessary and that further impairments may be necessary in future accounting periods. ESL has charged European Aviation Limited £1,500,000 for aircraft fleet management services during the period (2022: £1,000,000). The Directors have used an element of judgment in arriving at this figure which in their opinion reflects market rates for the services supplied.

Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:

Sale of goods

Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
• the Group has transferred the significant risks and rewards of ownership to the buyer;
• the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
• the amount of revenue can be measured reliably;
• it is probable that the Group will receive the consideration’due under the transaction; and
• the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Rendering of services

Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
• the amount of revenue can be measured reliably;
• it is probable that the Group will receive the consideration due under the contract;
• the stage of completion of the contract at the end of the reporting period can be measured reliably; and
• the costs incurred and the costs to complete the contract can be measured reliably.

 

European Aviation Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Foreign currency transactions and balances

Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated into the respective functional currency of the entity at the rates prevailing on the reporting period date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rate on the date when the fair value is re-measured.

Non-monetary items measured in terms of historical cost in a foreign currency are not retranslated.

On consolidation, the results of overseas operations are translated into Sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income.

Tax

The tax expense for the period comprises tax. Tax is recognised in profit or loss, except that a change attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:
• The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits;
• Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and
• Where they relate to timing differences in respect of interests in subsidiaries, associates, branches and joint ventures and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future.

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Tangible assets

Tangible assets are stated in the balance sheet at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.

 

European Aviation Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Depreciation

Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:

Asset class

Depreciation method and rate

Freehold property

2% straight line

Long-term leasehold property

2% straight line, based on building of 50 years

Short-term leasehold property

5% straight line

Plant and machinery

8.33-15% straight line

Motor vehicles

10-25% straight line

Office equipment

10-25% straight line

Other fixed assets

8.33-10% straight line

Revaluation of tangible fixed assets

Individual freehold and leasehold properties are carried at current year value at fair value at the date of the revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations are undertaken with sufficient regularity to ensure the carrying amount does not differ materially from that which would be determined using fair value at the balance sheet date.

Fair values are determined from market based evidence normally undertaken by professionally qualified valuers.

Revaluation gains and losses are recognised in other comprehensive income unless losses exceed the previously recognised gains or reflect a clear consumption of economic benefits, in which case the excess losses are recognised in profit or loss.

Business combinations

Business combinations are accounted for using the purchase method. The consideration for each acquisition is measured at the aggregate of the fair values at acquisition date of assets given, liabilities incurred or assumed, and equity instruments issued by the group in exchange for control of the acquired, plus any costs directly attributable to the business combination. When a business combination agreement provides for an adjustment to the cost of the combination contingent on future events, the group includes the estimated amount of that adjustment in the cost of the combination at the acquisition date if the adjustment is probable and can be measured reliably.

Intangible assets

Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.

Amortisation

Amortisation is provided on intangible assets so as to write off the cost, less any estimated residual value, over their useful life as follows:

Asset class

Amortisation method and rate

Development expenditure

10% straight line

 

European Aviation Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Investments

Investments in subsidiaries are measured at cost less accumulated impairment.

Investments in equity shares which are publicly traded or where the fair value can be measured reliably are initially measured at fair value, with changes in fair value recognised in profit or loss. Investments in equity shares which are not publicly traded and where fair value cannot be measured reliably are measured at cost less impairment.

Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

In the consolidated statement of cash flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the group's cash management.

Trade debtors

Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

Stocks

Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a weighted average basis. Work in progress and finished goods include labour and attributable overheads.

At each balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.

The company's stock is valued at the lower of cost and net realisable value.

For further details see "Judgments in applying accounting policies and key sources of estimation uncertainty".

Trade creditors

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if the group does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.

Trade creditors are measured at the transaction price.

 

European Aviation Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Borrowings

Interest-bearing borrowings are initially recorded at fair value, net of transaction costs. Interest-bearing borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the profit and loss account over the period of the relevant borrowing.

Interest expense is recognised on the basis of the effective interest method and is included in interest payable and similar charges.

Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

Provisions

Provisions are recognised when the group has an obligation at the reporting date as a result of a past event, it is probable that the group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

Leases

Fixed assets under hire purchase contracts or finance leases are capitalised in the balance sheet and depreciated over their estimated useful lives. The interest element is charged to income and expenditure over the relevant period. The capital element of the future payments is treated as a liability.

Loans for assets that are treated as stock are subject to a separate accounting policy (see "Finance of stock").

Rentals payable under operating leases are charged to income on a straight line basis over the term of relevant lease.

Share capital

Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.

Defined contribution pension obligation

A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the group has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.

 

European Aviation Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Financial instruments

Classification
The Group only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.


 Recognition and measurement
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan.


 Impairment
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Consolidated statement of comprehensive income.

For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.

For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Group would receive for the asset if it were to be sold at the balance sheet date.

Operating leases: the Group as lessor

Rental income from operating leases is credited to profit or loss on a straight-line basis over the lease term.

Amounts paid and payable as an incentive to sign an operating lease are recognised as a reduction to income over the lease term on a straight-line basis, unless another systematic basis is representative of the time pattern over which the lessor's benefit from the leased asset is diminished.

 

European Aviation Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Leased assets: the Group as lessor

Where assets leased to a third party give rights approximating to ownership (finance lease), the lessor recognises as a receivable an amount equal to the net investment in the lease i.e. the minimum lease payments receivable under the lease discounted at the interest rate implicit in the lease. This receivable is reduced as the lessee makes capital payments over the term of the lease.

A finance lease gives rise to two types of income: profit or loss equivalent to the profit or loss resulting from outright sale of the asset being leased, at normal selling prices, reflecting any applicable discounts, and finance income over the lease term.

Heavy check accrual

The flying fleet requires significant maintenance after certain periods of operation. These costs are accrued on a straight line basis in relation to the number of hours of operation.

Finance of stock

Loans which are related to stock items are shown as amounts falling due within one year regardless of term of the loan. This is to reflect the nature of the security provided against the loan which, as it is classified as stock is disclosed as a current asset in the financial statements. The interest payable on these loans is charged to the income statement.

3

Turnover

The analysis of the group's Turnover for the year by class of business is as follows:

2023
£

2022
£

Sale of stock

3,428,333

1,018,823

Engines and aircraft

10,464,215

621,343

Repairs

879,287

1,196,484

Aircraft leasing and charter

42,443,440

39,841,616

57,215,275

42,678,266

The analysis of the group's Turnover for the year by market is as follows:

2023
£

2022
£

United Kingdom and EU States

7,004,971

23,308,540

North America, Middle East, Africa and other

50,210,304

19,369,726

57,215,275

42,678,266

 

European Aviation Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

4

Other gains and losses

The analysis of the group's other gains and losses for the year is as follows:

2023
£

2022
£

Loss on disposal of tangible assets

-

(370,486)

Gain from changes in provisions

1,716,296

-

1,716,296

(370,486)

5

Operating loss

Arrived at after charging/(crediting)

2023
£

2022
£

Foreign exchange losses/(gains)

179,023

(2,498,431)

Depreciation expense

5,159,231

3,872,413

Amortisation expense

259,340

-

Operating lease expense - plant and machinery

648,971

1,730,753

Loss on disposal of property, plant and equipment

-

370,486

The foreign exchange differences above are in respect of the losses/(profits) on foreign currency translation. See note 2 for the relevant accounting policy.

6

Other interest receivable and similar income

2023
£

2022
£

Interest income on bank deposits

46,412

-

Other finance income

29,854

-

76,266

-

 

European Aviation Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

7

Interest payable and similar expenses

2023
£

2022
£

Interest on bank overdrafts and borrowings

185,079

425,917

Interest on obligations under finance leases and hire purchase contracts

36,509

47,334

Interest expense on other finance liabilities

6,661,739

2,185,037

Foreign exchange gains

462,037

-

7,345,364

2,658,288

8

Staff costs

The aggregate payroll costs (including directors' remuneration) were as follows:

2023
£

2022
£

Wages and salaries

6,352,224

5,510,886

Social security costs

762,368

682,346

Pension costs, defined contribution scheme

279,889

252,532

7,394,481

6,445,764

The average number of persons employed by the group (including directors) during the year, analysed by category was as follows:

2023
No.

2022
No.

Administration

18

18

Stores

16

18

Sales

9

9

Operations

89

83

132

128

9

Directors' remuneration

The directors' remuneration for the year was as follows:

2023
£

2022
£

Remuneration

481,768

439,663

Contributions paid to money purchase schemes

11,428

27,170

493,196

466,833

During the year the number of directors who were receiving benefits and share incentives was as follows:

 

European Aviation Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

2023
No.

2022
No.

Accruing benefits under money purchase pension scheme

2

2

In respect of the highest paid director:

2023
£

2022
£

Remuneration

237,070

234,108

Company contributions to money purchase pension schemes

9,240

9,265

10

Auditors' remuneration

2023
£

2022
£

Audit of these financial statements

24,500

22,500

Audit of the financial statements of subsidiaries of the company

19,698

30,000

44,198

52,500


 

11

Taxation

Tax charged/(credited) in the consolidated profit and loss account

2023
£

2022
£

Deferred taxation

Arising from origination and reversal of timing differences

-

1,100,000

 

European Aviation Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

The tax on profit before tax for the year is higher than the standard rate of corporation tax in the UK (2022 - higher than the standard rate of corporation tax in the UK) of 25% (2022 - 19%).

The differences are reconciled below:

2023
£

2022
£

Loss before tax

(25,136,826)

(30,081,876)

Corporation tax at standard rate

(6,284,207)

(5,715,556)

Effect of expense not deductible in determining taxable profit (tax loss)

-

494,000

Tax increase/(decrease) from effect of capital allowances and depreciation

1,289,808

(45,766)

Other tax effects for reconciliation between accounting profit and tax expense (income)

37,425

86,552

Increase from tax losses for which no deferred tax asset was recognised

4,485,776

5,180,770

Tax increase from effect of rollover relief on profit on disposal of fixed assets

-

1,100,000

Total tax (credit)/charge

(471,198)

1,100,000

Deferred tax

Group

Deferred tax assets and liabilities

2023

Asset
£

Liability
£

Tax due on rollover relief claimed

-

1,100,000

-

1,100,000

2022

Asset
£

Liability
£

Tax due on rollover relief claimed

-

1,100,000

-

1,100,000

Company

Deferred tax assets and liabilities

2023

Asset
£

Liability
£

Tax due on rollover relief claimed

-

1,100,000

-

1,100,000

 

European Aviation Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

2022

Asset
£

Liability
£

Tax due on rollover relief claimed

-

1,100,000

-

1,100,000

12

Intangible assets

Group

Development expenditure
£

Total
£

Cost or valuation

At 1 January 2023

1,015,087

1,015,087

Additions acquired separately

411,458

411,458

Foreign exchange movements

(51,152)

(51,152)

At 31 December 2023

1,375,393

1,375,393

Amortisation

Amortisation charge

259,340

259,340

At 31 December 2023

259,340

259,340

Carrying amount

At 31 December 2023

1,116,053

1,116,053

At 31 December 2022

1,015,087

1,015,087

Amortisation of intangible assets is included within administrative expenses.

Individually material intangible assets

Supplemental Type Certificate (STC)
The carrying amount of this asset is £1,116,053 (2022 -£1,015,087) and the remaining amortisation period is 4 years (2022 - 5 years). The STC grants approval for modifications to aircraft, allowing for specific technical changes that meet aviation authority standards.

 

European Aviation Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

13

Tangible assets

Group

 

European Aviation Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Land and buildings
£

Plant and machinery
 £

Motor vehicles
 £

Fleet aircraft
£

Total
£

Cost or valuation

At 1 January 2023

8,641,056

14,032,330

580,482

44,269,087

67,522,955

Additions

-

362,524

80,142

9,762,651

10,205,317

Disposals

-

-

(116,650)

(2,533,921)

(2,650,571)

Foreign exchange movements

-

(609,443)

(1,195)

(1,844,080)

(2,454,718)

At 31 December 2023

8,641,056

13,785,411

542,779

49,653,737

72,622,983

Depreciation

At 1 January 2023

1,161,518

2,191,511

222,993

3,241,600

6,817,622

Charge for the year

173,125

1,198,234

45,637

3,742,235

5,159,231

Eliminated on disposal

-

-

(29,163)

-

(29,163)

Foreign exchange movements

-

(44,728)

(287)

(112,802)

(157,817)

At 31 December 2023

1,334,643

3,345,017

239,180

6,871,033

11,789,873

Carrying amount

At 31 December 2023

7,306,413

10,440,394

303,599

42,782,704

60,833,110

At 31 December 2022

7,479,538

11,840,819

357,489

41,027,487

60,705,333

Included within the net book value of land and buildings above is £6,757,413 (2022 - £6,907,038) in respect of freehold land and buildings, £145,250 (2022 - £148,750) in respect of long leasehold land and buildings and £403,750 (2022 - £423,750) in respect of short leasehold land and buildings.
 

 

European Aviation Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Assets held under finance leases and hire purchase contracts

The net carrying amount of tangible assets includes the following amounts in respect of assets held under finance leases and hire purchase contracts:

2023
£

2022
£

Fleet aircraft

2,080,063

-

   

Revalued assets

Freehold properties with a net book value of £4,095,693 (2022: £4,183,996) were valued to £4,900,000 on 22 April 2016 on an open market basis by an independent valuer.

A freehold property with a net book value of £825,000 (2022: £845,000) was valued to £1,000,000 on 25 April 2016 on an open market basis by an independent valuer.

The long leasehold properties were valued to £175,000 on 22 July 2016 on an existing use basis by an independent valuer.

If the freeholds/long leaseholds had not been included at valuation they would have been included under the historical cost convention as follows:

2023
£

2022
£

Cost

5,573,501

5,573,501

Accumulated depreciation

(3,461,283)

(3,349,813)

Net book value

2,112,218

2,223,688

 

European Aviation Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Company

Land and buildings
£

Plant and machinery
 £

Motor vehicles
 £

Fleet aircraft
£

Total
£

Cost or valuation

At 1 January 2023

8,641,056

1,938,382

556,760

7,346,731

18,482,929

Additions

-

25,451

80,142

-

105,593

Disposals

-

-

(116,650)

-

(116,650)

At 31 December 2023

8,641,056

1,963,833

520,252

7,346,731

18,471,872

Depreciation

At 1 January 2023

1,161,518

1,303,926

217,306

247,934

2,930,684

Charge for the year

173,125

205,729

41,073

734,673

1,154,600

Eliminated on disposal

-

-

(29,163)

-

(29,163)

At 31 December 2023

1,334,643

1,509,655

229,216

982,607

4,056,121

Carrying amount

At 31 December 2023

7,306,413

454,178

291,036

6,364,124

14,415,751

At 31 December 2022

7,479,538

634,456

339,454

7,098,797

15,552,245

Included within the net book value of land and buildings above is £6,757,413 (2022 - £6,907,038) in respect of freehold land and buildings, £145,250 (2022 - £148,750) in respect of long leasehold land and buildings and £403,750 (2022 - £423,750) in respect of short leasehold land and buildings.
 

Revalued assets

The revalued assets for the company are the same as the group revalued assets.

 

European Aviation Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

14

Investments

Company

2023
£

2022
£

Investments in subsidiaries

13,554,982

7,000,000

Subsidiaries

£

Cost or valuation

At 1 January 2023

13,554,982

Provision

At 1 January 2023

6,554,982

Provision

(6,554,982)

At 31 December 2023

-

Carrying amount

At 31 December 2023

13,554,982

At 31 December 2022

7,000,000

Details of undertakings

Details of the investments (including principal place of business of unincorporated entities) in which the company holds 20% or more of the nominal value of any class of share capital are as follows:

Undertaking

Registered office

Holding

Proportion of voting rights and shares held

2023

2022

Subsidiary undertakings

European Cargo Limited

European Hall, Bromyard Road, Ledbury, Herefordshire, HR8 1LG.

Ordinary

50.01%

50.01%

 

European Aviation Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

15

Stocks

 

Group

Company

2023
£

2022
£

2023
£

2022
£

Air frames

2,298,166

4,490,012

2,298,166

4,490,012

Engines

6,911,514

8,971,587

6,911,514

8,971,587

Spares and components

5,225,986

3,093,712

3,243,305

2,848,858

14,435,666

16,555,311

12,452,985

16,310,457

The difference between purchase price or production costs of stocks and their replacement cost is not material.

Valuation of the company's stock is subject to "Judgements in applying accounting policies and key sources of estimation uncertainty" (note 2).

The carrying value of stocks are stated net of impairment losses.

Group

Impairment of inventories

The amount of impairment loss included in profit or loss is £Nil (2022 - £Nil).

 

European Aviation Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

16

Debtors

   

Group

Company

Note

2023
£

2022
£

2023
£

2022
£

Trade debtors

 

400,854

919,964

211,553

48,678

Amounts owed by group undertakings

25

16,491,284

19,129,294

21,999,963

29,566,782

Other debtors

 

1,794,600

4,318,646

929,537

1,007,485

Prepayments and accrued income

 

879,814

1,064,797

71,709

64,172

   

19,566,552

25,432,701

23,212,762

30,687,117

Less non-current portion

 

(845,688)

(845,688)

(845,688)

(845,688)

 

18,720,864

24,587,013

22,367,074

29,841,429

17

Cash and cash equivalents

 

Group

Company

2023
£

2022
£

2023
£

2022
£

Cash at bank

6,819,997

7,533,311

5,748,538

2,774,476

 

European Aviation Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

18

Creditors

   

Group

Company

Note

2023
£

2022
£

2023
£

2022
£

Due within one year

 

Loans and borrowings

22

2,392,634

1,667,291

862,022

1,667,291

Trade creditors

 

3,989,470

3,914,006

784,544

1,121,113

Amounts owed to group undertakings

25

1,001,905

1,036,355

-

-

Social security and other taxes

 

261,372

124,311

41,669

120,126

Other payables

 

1,238,192

5,010,947

396,948

4,647,963

Accruals and deferred income

 

7,976,410

9,507,688

122,744

660,004

Income tax liability

11

263,604

350,442

263,604

350,442

 

17,123,587

21,611,040

2,471,531

8,566,939

Due after one year

 

Loans and borrowings

22

1,094,089

2,601,880

1,094,089

2,601,880

Other non-current financial liabilities

 

54,297,562

31,245,762

-

-

 

55,391,651

33,847,642

1,094,089

2,601,880

19

Provisions for liabilities

Group and Company

Legal proceedings
£

Deferred tax
£

Total
£

At 1 January 2023

1,170,000

1,100,000

2,270,000

Decrease in existing provisions

(300,000)

-

(300,000)

At 31 December 2023

870,000

1,100,000

1,970,000

The legal proceedings provision relates to an ongoing claim, the final resolution date of which is not known as at the date of approval.

 

European Aviation Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

20

Pension and other schemes

Defined contribution pension scheme

The group operates two defined contribution pension schemes. The pension cost charge for the year represents contributions payable by the group to the schemes and amounted to £279,889 (2022 - £252,532).

Contributions totalling £68,722 (2022 - £8,306) were payable to the schemes at the end of the year and are included in creditors.

21

Share capital

Allotted, called up and fully paid shares

2023

2022

No.

£

No.

£

Ordinary shares of £1 each

750,020

750,020

750,020

750,020

       

22

Loans and borrowings

 

Group

Company

2023
£

2022
£

2023
£

2022
£

Non-current loans and borrowings

Bank borrowings

872,468

2,212,926

872,468

2,212,926

HP and finance lease liabilities

221,621

388,954

221,621

388,954

1,094,089

2,601,880

1,094,089

2,601,880

 

Group

Company

2023
£

2022
£

2023
£

2022
£

Current loans and borrowings

Bank borrowings

669,401

1,482,929

669,401

1,482,929

HP and finance lease liabilities

1,723,233

184,362

192,621

184,362

2,392,634

1,667,291

862,022

1,667,291

Bank borrowing

At the 31 December 2023 the bank borrowing facilities of the company were secured by specific legal charges over all the company's freehold properties, with the exception of freehold property with a total net book value of £825,000.

Holding company

 

European Aviation Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Gannet Investments Limited (the holding company) also has a specific charge over a company freehold property with a net book value of £760,219 securing £495,000 and all other monies due or to become due from the company.

Group and Company

Included in the loans and borrowings are the following amounts due after more than five years:

2023
£

2022
£

After more than five years by instalments

16,320

22,551

Borrowings due after five years

Bank loan with interest charged at a variable rate of no more than 2% above the base rate. Repayments are £829 per month expiring October 2030.

23

Obligations under leases and hire purchase contracts

Group

Hire purchase and finance leases

The total of future minimum lease payments is as follows:

2023
£

2022
£

Not later than one year

1,723,233

184,362

Later than one year and not later than five years

221,621

388,954

1,944,854

573,316

 

European Aviation Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Operating leases

The total of future minimum lease payments is as follows:

2023
£

2022
£

Not later than one year

670,306

748,686

Later than one year and not later than five years

2,138,069

2,514,210

Later than five years

1,088,550

1,492,165

3,896,925

4,755,061

The amount of non-cancellable operating lease payments recognised as an expense during the year was £728,232 (2022 - £1,730,753).

Company

Finance leases

The total of future minimum lease payments is as follows:

2023
£

2022
£

Not later than one year

192,621

184,362

Later than one year and not later than five years

221,621

388,954

414,242

573,316

24

Analysis of changes in net debt

Group

At 1 January 2023
£

Financing cash flows
£

New finance leases
£

At 31 December 2023
£

Cash and cash equivalents

Cash

7,533,311

(713,314)

-

6,819,997

Borrowings

Long term borrowings

(2,212,926)

1,340,458

-

(872,468)

Short term borrowings

(1,482,929)

813,528

-

(669,401)

Lease liabilities

(573,316)

159,074

(1,530,612)

(1,944,854)

(4,269,171)

2,313,060

(1,530,612)

(3,486,723)

 

3,264,140

1,599,746

(1,530,612)

3,333,274

 

European Aviation Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Company

At 1 January 2023
£

Financing cash flows
£

At 31 December 2023
£

Cash and cash equivalents

Cash

2,774,476

2,974,062

5,748,538

Borrowings

Long term borrowings

(2,212,926)

1,340,458

(872,468)

Short term borrowings

(1,482,929)

813,528

(669,401)

Lease liabilities

(573,316)

159,074

(414,242)

(4,269,171)

2,313,060

(1,956,111)

 

(1,494,695)

5,287,122

3,792,427

25

Related party transactions

Company

Transactions with directors

2023

At 1 January 2023
£

Advances to director
£

At 31 December 2023
£

P G Stoddart

3,717,359

149,704

3,867,063

2022

At 1 January 2022
£

Advances to director
£

At 31 December 2022
£

P G Stoddart

3,001,402

715,957

3,717,359

The balance is unsecured and interest free.

The balances outstanding in respect of the above balances have been provided for in full. The company has not released the director from his obligation to repay the debt.

In the event that Mr P G Stoddart is released from his obligation to repay the balance above, it is estimated that a company National Insurance charge of £533,655 (2022: £512,996) would arise. No provision for this amount has been made in the financial statements.

 

European Aviation Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Amounts owed to group and related companies

The company had balances owing to the following group, and other companies which are related by common directorships and/or shareholding, as follows:

2023
£

2022
£

Group companies

Gannet Investments Limited

84,131

84,741

2023
£

2022
£

Related companies

Autoquad Limited

67,486

67,486

Amounts owed by group and related companies

The company had balances owing from the following group and related companies:

2023
£

2022
£

Group companies

European Minardi Team Limited (EMT)

6,450,075

8,827,375

Trans Europa Trading Limited (TET)

325,311

206,352

European Skybus Limited (ESL)

7,838,802

7,843,674

2023
£

2022
£

Related companies

Skybus LLC

1,866,512

2,240,746

 

European Aviation Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

The above balances are unsecured and interest free.

Skybus LLC is 50% owned by European Skybus Inc. At the year end (and at 31 December 2022) European Skybus Inc. and European Aviation Limited were subject to common beneficial ownership (see note 27).

The company's balances with Skybus LLC, EMT and ESL are subject to "Judgements in applying accounting policies and key sources of estimation uncertainty" (note 2).

The company purchased stock and utilised engineering services including fleet management services from ESL for £1,938,754 (2022: £3,951,731). An element of these charges are regarded as being subject to "Judgements in applying accounting policies and key sources of estimation uncertainty" (note 2).

The rental income receivable in respect of the company's long leasehold properties of £251,658 (2022: £236,186) is reflected in the income statement of ESL.

Sales of £31,120 (2022: £173,744) have been made to Skybus LLC.

Wages costs of £152,959 (2022: £192,524) were recharged from TET to EAL.

26

Controlling party

The holding company is Gannet Investments Limited, a company registered in Liberia. The entire issued share capital of Gannet Investments Limited is owned by The Cosmar Settlement, a discretionary trust registered in the Isle of Man and administered from the UK. In August 2018 Companies House was notified that Mr P G Stoddart is a person with significant control.

27

Non adjusting events after the financial period

On 19th November 2024, European Aviation Limited sold their remaining shares in European Cargo Limited to Priority 1 Logistics Holdings LLC for total consideration of $54.52m.

The assets and liabilities of European Aviation Limited that were disposed of as part of the sale were as follows (values as at 19 November 2024):

£

Investments

13,554,982

Tangible assets

6,364,124

Stocks

1,378,550

Loans receivable

1,578,660

22,876,316

There may be additional costs relating to the sale that can not be estimated at this point, however the directors are content that these will not be material.