ACCOUNTS - Final Accounts
ACCOUNTS - Final Accounts
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FOR THE YEAR ENDED 31 MARCH 2020
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CORNWALL AIRPORT LIMITED
COMPANY INFORMATION
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CORNWALL AIRPORT LIMITED
CONTENTS
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CORNWALL AIRPORT LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2020
STRATEGY AND OBJECTIVES
Cornwall Airport Limited (“the company”) is the operator of Cornwall Airport Newquay (“the airport”) on behalf of its ultimate shareholder (and landowner) Cornwall Council. The airport plays a strategically important role in the transport infrastructure of Cornwall and the Isles of Scilly, providing critical connectivity for business and leisure travellers. The continued growth in passengers and routes served by the airport is important in maintaining connectivity to the rest of the UK and the world. Growth in these areas is a primary objective of the business, but due to the airport’s geographic position and the propensity to fly of those who reside within its catchment, the company will not be financially sustainable by passengers alone. The company has a strategic focus to diversify its business activities ensuring a more balanced portfolio of activities (& revenue streams). The Enterprise Zone (Aerohub) is a key component of the strategy to attract aerospace inward investment to the region. This supports the partnership with the Cornwall & Isles of Scilly Local Enterprise Partnership. The current year has been largely successful in terms of these objectives. The last month of the financial year saw two significant challenges the administration of Flybe, the airport’s primary operator and the emerging risk of COVID-19.
Cornwall Airport Limited is a wholly-owned subsidiary of Corserv Limited, an intermediate holding company which oversees the various arms-length commercial companies for the ultimate shareholder, Cornwall Council. The shareholding transferred from Cornwall Council to Corserv Limited on 21 September 2016. The financial Subsidy (“Subsidy”) received by the Airport is a mixture of subsidy received direct from Cornwall Council and amounts received from the Corserv Group relating to group relief of tax losses. Full analysis of all amounts received, including the Subsidy are disclosed in Note 4 to the financial statements.
The business is focussed on increasing the number of passengers and routes from the airport at the same time growing revenue from non-passenger related activities i.e. property, training and business aviation. The passenger market for small regional airports has greater exposure to changes in the economic climate as much of air travel is discretionary spend and Cornwall has a lower propensity to fly than some of its competing catchments. Revenue diversification is key in reducing the company’s reliance on revenue from passenger related activities. The Airport is also a key economic enabler locally and it is currently estimated that the airport supports circa 500 jobs on the site and contributes over £62 million gross value to the Cornish economy. The cost base of the company is under continuous review, looking for opportunities to maximise efficiency and reduce costs where possible. The cost base is benchmarked against industry standards and comparable regional airports. High regulatory costs significantly impact small regional airports; the airport is no different and many of the costs result from regulations that govern the staffing and equipment requirements as set out by the Civil Aviation Authority and Department for Transport.
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CORNWALL AIRPORT LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
The financial year to 31 March 2020 saw a 10% decrease in passengers using Cornwall Airport Newquay (“The Airport”) directly attributable to poor Flybe performance in Q4 of 2019/2020 and subsequent administration of the airline.
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CORNWALL AIRPORT LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
The company was on target to achieve the budget of £1.095m subsidy before the Flybe administration. The failure of Flybe lead to bad debt and loss of income (consisting of lost PLS, handling and ancillary revenue from café, car hire and car parking) in Q4/2020. Unfortunately, this resulted in an increase in the subsidy for the first time in nine years.
The main priority in the year was to retain the performance of the London Public Service Obligation (PSO) which is the core of the route network (passenger throughput) and the largest single source of income to the Company. The PSO successfully operated to/from London-Heathrow and as forecast brought added value and benefit to the Airport and the economy of Cornwall by being globally connected through the UK main airport hub.
During the year until 31/12/2019 all other routes performed in line with budget and market expectations with no significant trends or specific route underperforming. Prior to the outbreak of the COVID-19 pandemic within the UK, Route development negotiations for Summer 2020 continued as planned with a focus on improving year-round connectivity to the North East and Scotland. These discussions were initially positive, though outputs were largely curtailed by the onset of the pandemic and cessation of most Summer 2020 flying throughout the UK regional airport sector. Aerodrome activity continued to increase significantly with the Airport handling in excess of 40,000 air transport movements. The Airport is used extensively for commercial and military flight training as well as business aviation. These business sectors all experienced growth in the year. Following the announcement of the UK’s EU exit strategy, activity on the Aerohub marginally increased with a handful of investors and new business relocating during Q4 2019/2020. Brexit continues to affect investor interest in the site and the company in conjunction with Cornwall Development Company will look to explore alternative funding programmes moving forward. The company operates a defined benefit scheme for a number of its employees. This scheme, part of the Cornwall Council Local Government Pension Scheme, has assets held in trust funds separately from those of the company. In the current year, a deed of variation to the partnership agreement between Cornwall Council and entities within the Corserv Group was signed. This took effect from 1 April 2019 and provided for a pension pass-through arrangement. This transferred the existing defined benefit pension scheme liability for the group, and all future assets and liabilities, of the defined benefit pension scheme to Cornwall Council. Though the company will no longer be liable for the historic pension scheme liability or any future liabilities, the company will be required to pay contributions as calculated by the scheme actuary going forward and therefore have accounted for the scheme as if it were a defined contribution pension scheme from 1 April 2019. In line with guidance under FRS 102, the gain on transfer of the defined pension scheme liability of £1,426,000 as at 1 April 2019 to Cornwall Council has been recognised in other comprehensive income.
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CORNWALL AIRPORT LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
FUTURE DEVELOPMENTS
The company’s strategy continues to focus on two key business objectives of recovery of passenger traffic and increased tenant activity on the Aerohub site.
The passenger side of the airport’s business has seen industry-leading growth over the last few years but the impact of COVID-19 on the sector will drive a significant downturn throughout FY20-21. Recovery to previous levels of market demand and passenger income is likely to take several years, driven by the impact of travel restrictions as well as the broader economic downturn caused by the pandemic. The company will work in partnership with its shareholder in protecting as many routes as possible and secure a new operator for the LON-PSO service as soon as possible. This will be the key priority for the protection of income and connectivity to/from Cornwall. During the year, Cornwall’s bid to be the preferred site for the UK’s Spaceport was successful. It is anticipated this will bring substantial investment to Cornwall and the Airport, and see the airport established as the Virgin Orbit base for the launch of sub orbital satellite systems in the UK. Over the last 12 months the airport has been supporting the BID which has been managed by the Cornwall & Isles of Scilly Local Enterprise Partnership. Spaceport Cornwall team have taken occupancy of a new office facility at the Aerohub.
GOING CONCERN
The global COVID-19 pandemic has developed rapidly since March 2020. The impact of the virus on operations and decisions taken by government to contain the spread of the virus have negatively affected the company’s performance since the completion of these accounts. The current known impacts of COVID-19 on the Airport are: • 94% reduction in passenger numbers are forecast in 20/21 period. • Revenue is forecasted to reduce by 60% mainly due to the reduced income from passenger numbers. Income from property and tenants on site operating aviation services remains strong. • Terminal facilities have been closed for the majority of the year due to decisions taken to contain the virus. • Loss of its main customer, Flybe, which operated 70% of its routes. These developments are forecasted to result in a significant increase in the level of subsidy required in 20/21 and continuing trading uncertainty as we progress into 21/22 Whilst the directors remain confident that following the resumption of air travel, the company is well-positioned to recover its principal sources of income, the uncertainty of the pace of this resumption in passenger demand, the possibility of further outbreaks of COVID-19 variants and consequential restrictions on air travel, and lack of visibility of further government financial support beyond April 2021 result in a material uncertainty with regard to the going concern position. In response to these matters the entity has taken the following actions; • Cornwall Council has committed to providing additional revenue funding over the FY20/21 and FY 21/22 period to ensure the future viability of the Airport and it is recognised the significant economic value the airport brings to Cornwall. • Management have undertaken a full review of the business and in the summer 2020 implemented a staff restructure which removed circa £1.3m from the cost base of the organisation. • The business has further mitigated its cost based through the continued use of the Job Retention Scheme and recovery of bad debts from the owner of the Flybe plane which was retained at the airport following the collapse of Flybe. • Its ultimate shareholder, Cornwall Council, has provided a letter of support until 31/03/2022 for all creditors. • In the latest business plan it is planned that losses from Cornwall Airport will be sold to Cormac Solutions Limited under Group Tax Relief to mitigate these losses across the Group and support liquidity. • The company will take advantage of the UK Government’s Airport & Ground Operators Support Scheme which was published in Feb 2021. • Cornwall Council has provided a guarantee of support under the terms of the PSOA due to be announced in March 2021.
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CORNWALL AIRPORT LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
• The business is well positioned geographically and has routes ready to resume once restrictions are removed similar to pre COVID-19 levels.
In addition to the considerable operational and financial actions taken above, numerous positive developments including the commencement of mass vaccination of the UK population, the announcement of the company’s role in supporting the 2021 G7 summit to be held in Cornwall, and the elevated appetite amongst airlines and consumers for domestic air travel in the Summer 2021 period lead the directors to hold a positive outlook and have prepared the financial reporting on a going concern basis.
Key Performance Indicators (“KPIs”)
The major KPIs are monitored on a monthly basis and reported to the Board, with any unexpected variance being reviewed and investigated.
The Subsidy is reported for KPI purposes excluding the lease/rent payments to Cornwall Council, the property owner, as this is a circular transaction with the shareholder – this is disclosed fully in Note 4 to the financial statements.
On Time Performance (OTP) was broadly comparable to the previous year.
The ratio in the number of complaints v passengers increased by 76% compared to the previous year as a result of the aerodrome being closed for an hour resulting in a number of cancelled flights, implementation of the strict Flybe cabin bag policy and in the last two quarters of the year regarding Flybe not having the PSO route on sale from March 2020.
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CORNWALL AIRPORT LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
Operational business risks
The most significant business risks are those that emerged during March 2020:
∙Flybe administration and overnight the airport losing 70% route network
∙COVID-19 and impact on aviation and general demand for air travel
Mitigation to this risk is provided in part by the security of the PSO which is attached to the London Heathrow route and is underwritten by the DfT & Cornwall Council. The high throughput in passengers and the open book scrutiny of the PSO contract will keep any financial exposure to a minimum.
All risks are being managed and reported monthly to the Board of Directors as part of the Risk Register standard agenda item.
Credit risk and cash flow risk The company’s principal financial assets are bank balances, cash, trade and other debtors. The company’s credit risk is primarily attributable to its trade debtors. The amounts presented in the balance sheet are net of allowances for any debts considered doubtful. An allowance for impairment is made where there is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of the cash flows. As per Note 2.2 to the financial statements, the company relies on the support provided by Cornwall Council and the Corserv Group. As a consequence, the risk is considered low to any credit or cash flow impacts.
This report was approved by the board on 9 March 2021 and signed on its behalf.
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CORNWALL AIRPORT LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2020
The directors present their report and the financial statements for the year ended 31 March 2020.
The loss for the year, after taxation, amounted to £7,857 (2019: loss £142,547).
No dividend is recommended.
The directors who served during the year were:
Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:
Post balance sheet events and the company’s response to the global pandemic are disclosed in the strategic report.
The auditors, Bishop Fleming LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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CORNWALL AIRPORT LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MARCH 2020
The directors are responsible for preparing the Strategic Report, the Directors' 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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:
∙select suitable accounting policies for the company's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙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 company's transactions and disclose with reasonable accuracy at any time the financial position of the company and to 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.
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CORNWALL AIRPORT LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CORNWALL AIRPORT LIMITED
We have audited the financial statements of Cornwall Airport Limited (the 'company') for the year ended 31 March 2020, which comprise the Income Statement, the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Cash Flows, the Statement of Changes in Equity and the related notes, 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 the financial statements:
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 Auditors' 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 United Kingdom, including the Financial Reporting Council'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.
We draw attention to note 2.2 in the financial statements, which explains there is uncertainty around the ongoing impact of COVID-19, the pace of resumption in passenger air travel, and the level of future financial support. As stated in note 2.2, these events or conditions, along with the other matters as set out in note 2.2, indicate that a material uncertainty exists that may cast significant doubt on the company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
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 Auditors' 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.
We have nothing to report in this regard.
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CORNWALL AIRPORT LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CORNWALL AIRPORT LIMITED (CONTINUED)
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
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:
As explained more fully in the Directors' Responsibilities Statement 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.
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 Auditors' Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report.
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CORNWALL AIRPORT LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CORNWALL AIRPORT LIMITED (CONTINUED)
This report is made solely to the company's members 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 Auditors' 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 for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Chartered Accountants
Statutory Auditors
Salt Quay House
4 North East Quay
Sutton Harbour
PL4 0BN
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CORNWALL AIRPORT LIMITED
INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2020
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CORNWALL AIRPORT LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2020
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CORNWALL AIRPORT LIMITED
REGISTERED NUMBER:06098925
STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2020
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 18 to 33 form part of these financial statements.
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CORNWALL AIRPORT LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2020
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CORNWALL AIRPORT LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2019
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CORNWALL AIRPORT LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2020
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CORNWALL AIRPORT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
The company (registered number 06098925) is a private company, limited by shares and registered in England and Wales. The registered office is St Mawgan House, Cornwall Airport Newquay, St Mawgan, Newquay, Cornwall, TR8 4RQ.
2.ACCOUNTING POLICIES
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the company's accounting policies (see note 3).
The following principal accounting policies have been applied:
The financial statements for the year ended 31 March 2020 have been prepared on a going concern basis as the directors remain confident that the company will meet its working capital requirements until at least 31 March 2022 from the cash held by the company at the balance sheet date, additional revenue funding from Cornwall Council and the sale of tax losses within the Corserv Group.
In addition to the support provided by Cornwall Council under the terms of the Public Service Obligation Agreement and the sale of tax losses within the Corserv Group, the company expects to receive further support through several sources of COVID-19-specific relief, including a Cornwall Council Cabinet resolution to commit additional revenue funding over the FY20-21 and FY21-22 period, support through the UK Government’s Airport & Ground Operators Support Scheme, and continued use of the Coronavirus Job Retention Scheme for the duration of its operation. Whilst the directors remain confident that following the resumption of air travel, the company is well-positioned to recover its principal sources of income, the uncertainty of the pace of this resumption in passenger demand, the possibility of further outbreaks of COVID-19 variants and consequential restrictions on air travel, and lack of visibility of further financial support beyond April 2021 result in a material uncertainty that may cast significant doubt on the entity's ability to continue as a going concern.
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CORNWALL AIRPORT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
2.ACCOUNTING POLICIES (continued)
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company 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:
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:
Other revenue includes proceeds from other members of the Cornwall Council group of companies. It includes receipts for tax losses for the period transferred to other members of the Corserv Group and subsidy from the Council for rental charges and residual trading losses. Revenue is recognised in the period of trading to which the subsidy relates.
Rentals paid under operating leases are charged to the Income Statement on a straight line basis over the lease term.
Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.
Interest income is recognised in profit or loss using the effective interest method.
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CORNWALL AIRPORT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
2.ACCOUNTING POLICIES (continued)
DEFINED CONTRIBUTION PENSION PLAN
The company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the company pays fixed contributions into a separate entity. Once the contributions have been paid the company has no further payment obligations. The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the company in independently administered funds. DEFINED BENEFIT PENSION PLAN The company participates in the local government pension scheme for certain employees, a defined benefit scheme managed by Cornwall Council. The assets of the scheme are invested independently of the finances of the company. Contributions are made to the scheme in accordance with recommendations of an independent actuary in respect of current and future service. There is a Partnership Agreement with Cornwall Council that confirms that Cornwall Council remains liable for any deficit in the local government pension scheme. The contributions payable to the scheme are agreed with the Council. Therefore, the scheme is accounted for by the Company as if it were a defined contribution scheme.
At each reporting date the company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
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CORNWALL AIRPORT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
2.ACCOUNTING POLICIES (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
The estimated useful lives range as follows:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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 first in, first out basis.
At each reporting 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.
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.
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 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 company's cash management.
Short term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
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CORNWALL AIRPORT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
2.ACCOUNTING POLICIES (continued)
Provisions are made where an event has taken place that gives the company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the company becomes aware of the obligation, and are measured at the best estimate at the Statement of Financial Position date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Statement of Financial Position.
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CORNWALL AIRPORT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
2.ACCOUNTING POLICIES (continued)
The company 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 and loans to related parties.
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.
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 Income Statement.
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 company would receive for the asset if it were to be sold at the reporting date.
Financial assets and liabilities are offset and the net amount reported in the Statement of Financial Position when there is an 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.
Preparation of the financial statements requires management to make significant judgements and estimates. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the
circumstances. Critical accounting estimates and assumptions: The company makes estimates and assumptions concerning the future. The resulting accounting estimates and assumptions will, by definition, seldom equal the related actual results. There are no estimates and assumptions that are judged to have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the financial statements.
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CORNWALL AIRPORT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
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CORNWALL AIRPORT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
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CORNWALL AIRPORT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
There were no factors that may affect future tax charges.
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CORNWALL AIRPORT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
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CORNWALL AIRPORT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
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CORNWALL AIRPORT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
Profit and loss account
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CORNWALL AIRPORT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
The Company operates a defined contributions pension scheme. The assets of the scheme are held
separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £174,839 (2019: £99,535). Contributions totalling £28,112 (2019: £21,760) were payable to the fund at the reporting date and are included in creditors.
The company operates a Defined Benefit Pension Scheme.
Some employees of the Company are members of the Cornwall Council LGPS, a multi-employer scheme administered by Cornwall Council under the regulations governing the Local Government Pension Scheme, a defined benefit scheme. A pension pass through arrangement is in place with Cornwall Council whereby the council is liable to the pension fund for the historic and future liabilities and assets of the scheme in respect of these employees with contribution rates set by the actuary of the Cornwall Council LGPS. In line with guidance issued under FRS 102, the scheme is therefore accounted for as if it were a defined contribution pension scheme. The pension cost charge represents contributions payable by the Company to the fund. The total contributions made in 2019 were £190,000 of which employer contributions were £137,000 and employee contributions were 2019: £53,000. Contributions totalling £13,889 (2019: £14,279) were payable to the fund at the reporting date and are included in creditors.
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CORNWALL AIRPORT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
21.PENSION COMMITMENTS (CONTINUED)
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CORNWALL AIRPORT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
21.PENSION COMMITMENTS (CONTINUED)
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CORNWALL AIRPORT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
In the current year, a deed of variation to the partnership agreement between Cornwall Council and entities within the Corserv Group, including Cornwall Airport Limited, was signed. This took effect from 1 April 2019 and provided for a pension pass-through arrangement. This transferred the existing defined benefit pension scheme liability for the company, and all future assets and liabilities, of the defined benefit pension scheme to Cornwall Council. Though Cornwall Airport Limited will no longer be liable for the historic pension scheme liability or any future liabilties, the company will be required to pay contributions as calculated by the scheme actuary going forward and therefore have accounted for the scheme as if it were a defined contribution pension scheme from 1 April 2019.
IIn line with guidance under FRS 102, the gain on transfer of the defined pension scheme liability of £1,426,000 as at 1 April 2019 to Cornwall Council has been recognised in other comprehensive income.
The company's immediate parent is Corserv Limited.
The ultimate parent is Cornwall Council. The immediate parent undertaking produces consolidated financial statements, which incorporate the results of this company. Copies of the consolidated financial statements of Corserv Limited are available on request from Corserv Head Office, Higher Trenant Road, Wadebridge, Cornwall, PL27 6TW.
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