Esken Limited Annual Report & Accounts 2023
Annual Report & Accounts 2023
Esken Limited Annual Report & Accounts 2023
The board
conducted a
strategic review
and has decided to
pursue a sale of our
core businesses.
David Shearer,
Executive Chairman
Strategic Report
01 Introduction
02 Our story
03 Our strategy
04 Highlights
06 Esken at a glance
07 Investment case
08 Market review
12 Business model
14 Our strategy
16 Strategy in action
20 Chairman’s statement
24 Key performance indicators
26 Financial review
30 Operational review
34 Sustainability report
65 Non-financial information
statement
66 Stakeholder engagement
76 Risk management and
our principal risks
80 Principal risks and mitigations
85 Viability statement
p01-85
p86-130
Corporate Governance
86 Board of Directors
88 Corporate Governance
96 Nomination Committee Report
99 Audit Committee Report
103 ESG Committee Report
104 Directors’ Remuneration Report
128 Directors’ Report
p20-23
Chairman’s
Statement
p131-187
Financial Statements
131 Independent Auditor’s Report
137 Consolidated income statement
138 Consolidated statement
of comprehensive income
139 Consolidated statement
of financial position
140 Consolidated statement
of changes in equity
141 Consolidated statement
of cash flows
142 Notes to the consolidated
financial statements
187 Directors, officers
and advisers
Esken Limited Annual Report & Accounts 2023
01
Strategic Report Corporate Governance Financial Statements
Esken has made good progress securing
additional funding, supporting the growth
of its operating businesses and advancing
a realisation process that we believe will
ultimately allow Esken to deliver value to
its shareholders.
In November 2022, Esken secured a new debt facility
comprising of £50m of committed funding. Having secured
these funds, Esken had £50.3m of headroom at the year
end. This will be used to fund our liabilities connected to
Stobart Air and Propius and provide working capital for the
Group as we continue to advance our plans to sell both our
core operating business and our non-core assets.
The sale of Esken Renewables is at an advanced stage
working with a preferred bidder on an exclusive basis,
while we have also started the process to sell London
Southend Airport.
We have been pleased to see good progress made by
London Southend Airport both during the year under
review and in the current year. The airport signed a
multi-year partnership with easyJet in January 2023 and
the airline will now serve five destinations from the airport
following the start of flights to Amsterdam Schiphol and
the announcement in May 2023 that easyJet is restarting
its route to Charles de Gaulle airport in Paris at the end of
October 2023.
Our Renewables business saw increased revenues albeit at
a lower margin, reflecting principally an increased number
of unplanned outages at customer waste wood biomass
plants. The division is focused on steps to improve margins
going forward, including an optimised fleet size and strong
cost control.
Esken also made good recent progress, disposing of Star
Handling Limited (Star) post year end, its ground handling
operations at Manchester and Stansted Airports.
The sale of Star, the expected sale of non-core assets
and the progress we are making in disposing of Esken
Renewables gives us confidence that we can manage
our liabilities, and ultimately start to return value to
our shareholders.
David Shearer
Executive Chairman
20 June 2023
We secured a debt fund
raising in difficult market
conditions, completed a
strategic review, and are
now progressing with
our plans to sell our core
operating businesses.
David Shearer,
Executive Chairman
Introduction
David Shearer
Esken Limited Annual Report & Accounts 2023
02
Strategic Report
Our story
Our vision
Esken Limited Annual Report & Accounts 2023
03
Strategic Report Corporate Governance Financial Statements
Our mission
Our mission is to
enable our businesses
to create smarter
ways to supply
renewable fuel and
travel sustainably,
through continuous
improvement,
collaboration and
social responsibility.
Our purpose
Our purpose is
to support the
sustainable growth
of UK infrastructure
businesses that
benefit people,
communities and the
world around us.
Our strategy
Esken’s strategy is aligned with our vision
and purpose, aiming to deliver shareholder
value through the sale of sustainable UK
infrastructure businesses.
01
Optimise our core
businesses.
03
Maintain strict
financial discipline.
02
Reduce our
environmental footprint.
04
Dispose of assets
and realise value.
Take care
We’re committed to keeping
ourselves and others healthy
and safe. Every day. We focus on
total wellbeing and a people first
approach. We are committed to
being socially and environmentally
conscious and are trusted to keep
our word, be fair and be ethical.
Stay connected
We listen in order to understand,
are open-minded, honest,
straight-talking and find
connections and work as
one team.
Always improve
We never settle and are
always finding ways to improve.
We strive to learn more, and are
constantly evolving, thriving on
new ideas and new thinking to
make our business better.
Own it together
We’re proactive, agile and flexible,
taking pride in our can-do attitude.
We deliver ‘great’ every time
because service, quality and
success matter.
Our values
Esken Limited Annual Report & Accounts 2023
Esken Limited Annual Report & Accounts 2023
04
Strategic Report
Adjusted EBITDA
1
£5.6m
-46.9%
Loss before tax
£27.7m
+22.4%
Headroom
£50.3m
-30.9%
Financial highlights
• Esken’s core Renewables and Aviation businesses
generated a combined positive adjusted EBITDA of
£14.6m (2022: £19.5m). The reduction in combined
operating division adjusted EBITDA was a result of
unplanned outages impacting higher margin waste wood
supply within Esken Renewables and one-off payments
not repeating within the Aviation division.
• Group central significantly reduced its costs during the
year whilst there was no repeat of the £4.7m benefit
of the onerous lease exit in Non-Core Infrastructure in
the prior year. Overall Group adjusted EBITDA reduced
by 46.9% to £5.6m (2022 £10.6m). However, the Group
benefitted from the reversal of impairment of loan notes
and a reduction in property impairments in the year and,
as a result, total losses before tax improved by 22.4% to
£27.7m (2022 £35.7m).
• In November 2022, Esken secured a new lending facility
from funds managed by a specialty lender, comprising
£50m of committed funding. This facility was used
to fund Esken’s residual c.£44m of Propius legacy
liabilities, cancel the undrawn £19.1m RCF, and provide
working capital.
• As at 28 February 2023, Esken had headroom of £50.3m,
which is in line with management expectations. See note
33 for definition of headroom.
• At year end, the Group’s portfolio of non-core assets
had an aggregate book value of £43.1m (2022 £39.7m)
following the disposal of a portion of land in Widnes and
the reversal of impairment of loan notes during the year.
Since the period end, Esken completed the sale of Star
Handling Limited for up to £4.8m.
Operational highlights
Renewables
• Esken Renewables supplied 1.6m tonnes of biomass fuel,
up 9.4% on last year (2022: 1.5m tonnes). The overall
increase in the volume of fuel supplied reflected an
improvement in lower margin forestry by-product and
third-party fuel supply and resulted in revenue increasing
by 17.7% to £93.7m (2022 £79.7m).
• However, a series of unplanned outages at plants where
we supply higher margin waste wood fuel, coupled with
the impacts of inflation, resulted in a 9.5% reduction in
adjusted EBITDA to £18.4m (2022 £20.3m).
• During the year Esken Renewables finalised new supply
agreements and reduced ongoing costs through the
closure of its Port Clarence processing and storage site.
Aviation
• Staffing challenges and industrial action taking place at
airports across Europe reduced some planned flights
inbound to LSA at various points during the second half of
the year. As a result, passenger numbers reduced by 5.3%
from 94k to 89k.
• The Aviation Division received £1.4m related to the
recovery of airline marketing support payments and
delivered an adjusted EBITDA loss of £3.8m in FY23. In
the prior year, the Division reported a loss of £0.8m having
benefitted from £3.5m of one-off receipts associated with
Connect Airways and the conclusion of the partnership
with Teesside International Airport.
• London Southend Airport announced a multi-year
agreement with easyJet and added new routes to
Amsterdam and Paris and more flights to Faro.
Highlights
1 Adjusted EBITDA represents profit/(loss) before interest, tax, depreciation and
impairments. Refer to note 3 for reconciliation to statutory loss before tax.
Esken Limited Annual Report & Accounts 2023
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Strategic Report Corporate Governance Financial Statements
ESG
• Across its businesses Esken produced 23,633 tonnes
of carbon dioxide, representing a 11% decrease on the
baseline year for Scope 1 and 2 emissions.
• Esken has developed a Roadmap to Net Zero to reduce
its Scope 1 by 8% over the next 3-5 years and aims to
reduce its Scope 2 emissions to nil by 2030.
• Esken continued to collect and voluntarily reported
initial Scope 3 emissions data, with reduction plans
under review.
• Esken Renewables again undertook third-party
research with Logika Consultants to validate Scope 1-3
emissions data. The research established that whilst
Esken produced around 134,925 tonnes of greenhouse
gas (GHG) emissions in FY23, it saved the UK 620,000
tonnes of additional GHG emissions (equivalent to
taking c.430k cars off the road) by supplying biomass
power customers directly or via third parties over 1.1m
tonnes of waste wood that would have otherwise gone
to landfill, producing methane.
• Esken continued to support its charity partnerships
through fundraising and launched a volunteering
programme, contributing over 500 hours of volunteering
to benefit the communities in which we operate.
• The company established an ESG risk register
and put in place ESG performance KPIs linked to
Executive remuneration.
06
Strategic Report
Esken Limited Annual Report & Accounts 2023
Esken at a glance
Esken aims to realise value from its two
core businesses, Esken Renewables
and London Southend Airport.
London Southend Airport
London Southend Airport has ambitious plans
to become the next major London airport by
attracting airlines to its untapped, high-value
catchment area serving passengers in the east
of London and east of England.
The airport is located within one of the UK’s most affluent
and fastest growing regions, and residents in this area
are currently travelling across Essex and east London to
airports to the North, West and South of the capital. London
Southend Airport offers a better way for millions of people
living within its catchment area.
The team are working round the clock to encourage airlines
to add to the five popular routes the airport currently serves
and will attract passengers through direct road and rail
links with the centre of London, an award-winning quick
and easy passenger experience and modern, convenient
airport infrastructure.
For more information
see pages 18-19
Esken Renewables
Esken Renewables is one of the UK’s largest
suppliers of renewable fuel. It receives a gate
fee for taking waste wood from Household
Waste and Recycling Centres and suppliers,
largely operating in the construction industry.
It processes this waste wood into biomass fuel and supplies
it to renewable energy plants under long-term supply
contracts. It plays a major role in the UK’s circular economy
and helps to avoid hundreds of thousands of GHG emissions
by diverting waste wood from landfill.
For more information
see pages 16-17
Esken Limited Annual Report & Accounts 2023
07
Strategic Report Corporate Governance Financial Statements
Investment case
Actively working to dispose
of core businesses for value
Esken aims to secure the long-term
potential of its core businesses and deliver
value for Esken shareholders through a
managed disposal process.
The sale of Esken Renewables is at an
advanced stage working with a preferred
bidder on an exclusive basis, while we
have also started the process to sell
London Southend Airport.
Asset sale proceeds will be used to repay
debt and provide liquidity to the remaining
businesses up until the disposal programme
has been completed. The successful
conclusion of this process will result in the
return of value to shareholders.
London Southend Airport
is a modern, cost effective
London airport offering
capacity growth
London Southend Airport has the capacity
to grow sustainably as the aviation sector
recovers, as a result of its significant
catchment area serving the growing and
wealthy east of London and the east
of England.
Established London airports returning
to capacity constraints will accelerate
airlines’ demand for a new base with
a distinct catchment area and good
transport connections.
London Southend Airport can respond
to this opportunity, benefiting from an
award-winning passenger experience,
direct trains and the ability to grow
meaningfully, with sustainable aviation
at its core.
Esken Renewables is
a significant, profitable
supplier of renewable
fuel in a growth sector
Sustainably sourced biomass and other
forms of energy from waste will play an
increasingly critical role in the UK’s journey
to greater energy independence and its
strategy for delivering Net Zero in 2050.
As the UK’s largest biomass fuel supplier,
Esken Renewables is well placed to play
a leading role in supporting this. The
business is profitable, cash generative
and well invested with the infrastructure
in place to supply increasing volumes of
biomass fuel, and over time, other types
of renewable fuel.
Strategic Report
Esken Limited Annual Report & Accounts 2023
08
Biomass establishing itself as a truly
renewable fuel
Biomass energy generation with associated
carbon capture is a truly renewable fuel source.
The critical part is the sustainability of the biomass
fuel source. Waste wood and forestry by-products
are sustainable sources of biomass fuel and this
is the market Esken Renewables operates within,
providing essential services for waste biomass
products. It is not involved with the import of pellets
or other virgin products.
How Esken Renewables is responding
Esken Renewables is actively engaging with a range
of Government bodies to educate and ensure they
understand the importance of sustainably sourced
biomass fuel within the UK’s renewable energy mix.
Government increasingly sees biomass
playing a key part in the UK’s transition to
net zero
In August 2022 the UK Government launched a
consultation on how to support the development
of biomass energy generation. It stated that energy
generated by biomass plants using sustainably
sourced fuel while capturing carbon is a critical part
of its net zero ambitions, allowing the UK to produce
home-grown energy with ‘negative emissions’.
How Esken Renewables is responding
Esken Renewables is engaging with industry groups
to ensure they continue to proactively make the case
to Government for the important role that biomass
can play in UK Energy Security providing more power
in Britain, for Britain.
The energy crisis has put increased focus
on UK domestic energy generation
The reduction in gas supply from Russia has led
countries across Europe to reconsider their energy
security and review their ability to meet their energy
requirements domestically. Generating more energy
through renewable sources has been a particular
focus for the UK and biomass power stations will
seek to make their case to increase their share of the
UK energy mix. The UK’s 2050 Net Zero manifesto
targets an increase in biomass’s contribution from
8% of UK primary energy generation to 15%.
How Esken Renewables is responding
Esken Renewables is working closely with biomass
plants across the UK to ensure we can play our role
in supplying the fuel to deliver the targeted increase
in energy generation contributed by biomass in
the UK.
Market review
Esken Renewables
Strategic Report Corporate Governance Financial Statements
09
Esken Limited Annual Report & Accounts 2023
Strategic Report
UK continues to generate waste wood to
fuel the biomass sector
The majority of UK biomass plants are supplied with
fuel that comes from waste wood. That waste wood
is largely sourced from the UK construction industry
and Household Waste and Recycling Centres. Market
forecasts indicate that the volume of waste wood
arising from those sources will continue to keep pace
with demand, allowing the UK to maintain stable
generating capacity.
How Esken Renewables is responding
Esken Renewables is working with current and
potential new waste wood suppliers to ensure
there is sufficient material throughout the year and
that the supply chain is optimised to support the
transition to net zero.
Biomass plants expected to improve
operational reliability
The UK’s biomass plant infrastructure is still relatively
new with many just four years into operation. This
period included working under pandemic conditions,
which impacted the amount that teams could optimise
the infrastructure during that time. The heightened
demand for UK generated energy during the last year
has also added pressure to operate at full capacity for
extended periods.
How Esken Renewables is responding
Esken Renewables is working closely with its
biomass plant customers to ensure the fuel
that we supply is optimised to each plant’s
requirements in order to maximise efficiency,
and ultimately, receive more fuel.
Generating more energy
through renewable
sources has been a
particular focus for
the UK.
Nick Dilworth,
Executive Director, Renewables
Strategic Report
Esken Limited Annual Report & Accounts 2023
10
Market review continued
London Southend Airport
Summer sun is leading the recovery
The aviation market continues to recover with
short-haul leisure travel leading the way. Summer
sun destinations in Spain, Turkey, Portugal and
Greece are performing particularly well. However,
business travel and city breaks remain some way
behind pre-pandemic levels.
How LSA is responding
London Southend Airport is welcoming the return
of flights to popular Summer sun destinations
Faro, Palma and Malaga, with easyJet increasing
the frequency of flights to Faro.
Budget conscious holidays popular
in 2023
The cost of living crisis is not dampening people’s
enthusiasm for Summer holidays with airlines
such as easyJet and TUI reporting their strongest
ever forward bookings. But while demand
for flights remain high, consumer behaviour
is shifting toward booking shorter trips to
cheaper destinations.
How LSA is responding
London Southend Airport secured a multi-year
partnership with easyJet to grow their portfolio
of routes, and build further airline partnerships by
delivering a quick and easy passenger experience
serving proven Summer sun routes.
Strategic Report Corporate Governance Financial Statements
Esken Limited Annual Report & Accounts 2023
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Strategic Report
The London airport system is filling up
London airports are set to operate at around 94%
of pre-pandemic levels this Summer. Flights from
London to destinations such as Tenerife and Faro are
now far ahead of pre-pandemic levels, while day trip
type flights to destinations such as Edinburgh and
Munich are still some way off.
How LSA is responding
London Southend Airport is not waiting for other
London airports to fill up. Instead, it is having
proactive conversations with airlines to offer them
early mover advantage to base aircraft at the airport
now to secure peak slot capacity while they still can.
Airlines rethinking their priorities
The combination of short-haul demand and the
approaching return to capacity constraints means
airlines may rethink traditional strategies. Airlines
need to optimise revenue. This may lead to
prioritising long-haul and high capacity aircraft at
larger hub airports, while short-haul capacity moves
to smaller airports with lower operating costs.
How LSA is responding
London Southend Airport is delivering a clear
message to airlines: make money now by flying
proven routes that serve the airport’s growing
and affluent east London and east of England
catchment area.
Hub airports under pressure to
get greener
Hub airports such as Heathrow and Amsterdam
Schiphol are under the twin pressures of increasing
terminal capacity and building new runways, while
also reducing noise and emissions. This may create
an opportunity for smaller airports that can offer
capacity while operating within required emission
and noise levels.
How LSA is responding
London Southend Airport is progressing
conversations with airlines that can reduce their flight
times and fuel requirements by flying into London’s
most easterly airport while avoiding the spaghetti
junction that makes up London’s air space.
We are emerging from the
pandemic with a return to
flights and the expectation
of more flights and more
airlines to come.
Lewis Girdwood,
Executive Director, Aviation
Esken Limited Annual Report & Accounts 2023
12
Strategic Report
Business model
Esken’s business model is designed to support
the managed disposal of its assets and return
value to shareholders.
Within that context, Esken has set a strategy to deliver a successful asset disposal
programme for our core aviation and renewables businesses. We have set accountability from
Board level down through the core businesses and provide them with the support needed to
deliver our goals, with the Board monitoring progress.
Strategy
setting
Support
Measuring
progress
Employees
A successful disposal
programme aimed at
attracting the right buyers
to deliver sustained growth
will allow our people
to flourish.
Partners, customers
and suppliers
Our partners, customers
and suppliers will share in
the successful outcome
of our strategy and be able
to trust us to deliver on
their expectations.
Strategy setting
Esken undertook a strategic review to
consider the best way to tackle high
levels of debt incurred as it tackled
legacy issues, while also enabling
operating businesses to realise their
potential. The review concluded that it
is in the best interests of stakeholders
to dispose of these businesses and
use the proceeds to repay debt
and fund the remaining businesses
through to the conclusion of the
disposal programme.
Support
Esken provides a range of support and
guidance to its operating businesses.
Esken is currently transitioning these
support services so that they are
embedded within the operating
divisions. Doing so will ensure the
businesses are well placed following
the conclusion of the disposal
programme, while also reducing
central costs.
Measuring progress
Esken has put in place a robust
framework for measuring progress,
particularly in terms of financial
discipline and ESG performance.
Esken has strong cash flow modelling
and financial planning structures that
ensure our businesses are focused on
the bottom line, while also delivering
our strategic goal to create value for
our stakeholders.
By delivering our
strategic goals
we will create
value for our
stakeholders
Esken Limited Annual Report & Accounts 2023
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Strategic Report Corporate Governance Financial Statements
Shareholders and
banking partners
A successful disposal
programme will allow Esken
to repay debt and ultimately
return value to shareholders.
Communities
Finding the right buyers
that are committed to
growth will allow us to
help communities prosper
through the creation of local
employment opportunities,
and establish the
connections communities
need to thrive.
Regulators, government
agencies and unions
Maintaining a positive
dialogue helps us to share
our vision for our business
and provide reassurance that
we recognise the importance
of excellent standards of
business conduct.
Esken Limited Annual Report & Accounts 2023
Strategic Report
14
Our strategy
Esken’s strategy is to return value to
shareholders by realising value in our
aviation and renewables businesses.
01
Ensuring our core operating businesses
have the right management structure
and reporting lines, and a clear growth
strategy that will attract the right buyer
as part of the managed disposal process.
FY23 progress
Esken appointed John Upton as CEO of London Southend
Airport (LSA) and appointed two people to the LSA Board.
As a result, LSA has an experienced, entrepreneurial
team in place that is adopting a re-start-up mentality to
securing new airlines.
03
Continuously evaluating our portfolio
of non-core assets and realising value.
Book value of assets at 28 February
2023 is £43.1m.
FY23 progress
Esken continues to explore opportunities to realise value
through asset sales within its portfolio of non-core assets.
02
Ensuring these core businesses
are focused on reducing our
environmental footprint and positively
impacting our stakeholders.
FY23 progress
Esken developed the governance structure of its ESG
framework by placing greater focus on division-led
accountability for progress. This will be important as
the asset disposal programme progresses.
04
Maintaining strict financial discipline
through continuous evaluation of
performance metrics and assessment
of the most efficient capital structures.
FY23 progress
Esken continues to explore further opportunities
to reduce Group Central costs and is actively
transitioning Group support roles to the operating
divisions. This will result in increased efficiencies
in the event of disposals and reduce central costs
going forward.
We aim to do this by:
Esken Limited Annual Report & Accounts 2023
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Strategic Report Corporate Governance Financial Statements
01
LSA’s primary focus is to target
airline agreements that are
profitable and sustainable for
all parties, while developing
ancillary incomes from sources
including global logistics,
private jets, train station usage,
hotel occupancy and car
park revenue.
FY23 progress
LSA continues to progress discussions
with a wide range or airlines and in
January 2023 signed a multi-year
partnership agreement with easyJet
to operate from LSA.
02
The airport will continuously
seek to develop its airline
proposition of proven routes,
peak slots, cost-effective
operations, an enjoyable
passenger experience and
an attractive and growing
catchment area.
FY23 progress
LSA developed its proposition for
proven routes and announced the
popular return of flights to Amsterdam
starting from May 2023 and Paris from
October 2023.
03
LSA’s growth will be underpinned
by a focus on continuously
seeking to deliver benefits to the
community in which it operates.
This includes setting and
delivering on clear environmental
targets, providing economic
benefits and job opportunities
and acting as a trusted and
transparent local partner.
FY23 progress
LSA partnered with South East and
Central Essex Mind to launch a new
volunteering scheme for airport staff.
Airport team members contributed 174
hours to supporting the mental health
charities’ facilities in the Southend area,
alongside hosting a fundraising event
that raised £15,000 for the local charity.
London Southend Airport
Both our operating businesses are working toward clearly defined growth strategies:
01
Esken Renewables aims to
continue to strengthen its
relationships with existing and
new suppliers and customers,
allowing it to optimise
performance and work in
partnership to manage risks.
FY23 progress
Having developed a strategic
relationship with the Cramlington
biomass plant over recent years,
Esken Renewables was able to move
its biomass fuel supply agreement to
an exclusive basis in September 2022
and extended it by six years.
02
Continuously evaluate every
aspect of its supply chain
infrastructure to identify
opportunities to increase
efficiencies, optimise
competitive advantages
and deliver sustainable
improvements.
FY23 progress
Esken Renewables optimised its supply
strategy by closing its Port Clarence
site, having secured a new sub-supply
agreement to replace the service
provided by Port Clarence. This is
expected to deliver an additional
£0.9m of annual recurring EBITDA
from 1 April 2023.
03
Seek opportunities to
increase market share within
its core operations through
growing existing partnership
agreements, securing
new supply contracts and
expanding into adjacent
markets that leverage its
existing infrastructure.
FY23 progress
Esken Renewables is always working
to identify new strategic supply
agreements and during the year
secured a sub-supply arrangement
in Yorkshire, which started in
September 2022.
Esken Renewables
Strategic Report
Esken Limited Annual Report & Accounts 2023
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Strategy in action
Esken Renewables
Evaluating
every aspect of
its supply chain
infrastructure
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Esken Limited Annual Report & Accounts 2023
Strategic Report
During the year the Esken
Renewables’ management
team undertook a strategic
review of the business in order
to optimise its supply chain
infrastructure. This review
concluded with the difficult but
necessary decision to close its
Port Clarence storage site.
The original business case for the site was to receive
processed fuel to supply a new Port Clarence biomass
plant, as well as the Chilton biomass plant. Sadly, the
Port Clarence biomass plant was never commissioned.
As a result, the site only supplied Chilton biomass
plant and was never profitable. Added to this, the site
had experienced some local regulatory challenges.
Esken Renewables was able to secure a new
sub-supply agreement for the Chilton biomass plant
from an alternative source. Esken Renewables then
agreed with the landlord to exit the site and relocate
its transport operation to an alternative depot in
the area.
Securing a new sub-supply agreement for Chilton
and closing the Port Clarence site is expected to
deliver an additional £0.9m of annual recurring
EBITDA from 1 April 2023. The closure of the
Port Clarence site also generated a one-off cash
inflow of £0.9m after exit costs.
Securing a new sub-supply
agreement for Chilton and closing
the Port Clarence site is expected
to deliver an additional £0.9m of
annual recurring EBITDA.
Nick Dilworth,
Chief Operating Officer
Strategic Report
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Esken Limited Annual Report & Accounts 2023
Targeting
new airline
agreements
Strategy in action continued
London Southend Airport
Corporate Governance Financial Statements
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Strategic Report
Esken Limited Annual Report & Accounts 2023
easyJet relaunched its route
from London Southend
to Amsterdam which last
operated in March 2020. The
route to the Netherlands adds
further choice for customers in
London and across the region,
whether they’re looking for a
short city break or travelling
for business. Passengers will
also be able to make global
connections from Amsterdam
Schiphol Airport to onward
destinations across the world.
Flights will take off up to four times a week from 24 May
2023, and operate alongside Malaga, Majorca, Faro
and Paris from October 2023. The airline also added
extra flights to Faro, highlighting the popularity of the
Portuguese Summer favourite.
The Amsterdam route was previously very popular
and the airport has seen a lot of support from people
living within its catchment area as London Southend
Airport can offer one of the shortest, fastest routes
to Amsterdam thanks to its geographical location. Its
location also means flight distances can be minimised,
particularly with the airport lying outside of London
airspace. This in turn provides a fuel saving.
The addition of the Amsterdam route and increased
frequencies to Portugal means the airline will now
operate up to 18 weekly departures this Summer
– a 30% increase compared with last Summer.
The new Amsterdam route and
increased flights to Portugal means
easyJet will operate up to 18 weekly
departures – a 30% increase
compared with last Summer.
Nick Dilworth,
Chief Operating Officer
20
Strategic Report
Esken Limited Annual Report & Accounts 2023
Chairman’s statement
David Shearer
I am pleased to present
my Chairman’s statement
for the year to the end of
February 2023. This has
been a year when the
Group, in common with
many other businesses,
has faced a number
of challenges.
David Shearer,
Executive Chairman
Esken Limited Annual Report & Accounts 2023
21
Strategic Report Corporate Governance Financial Statements
We continued our journey towards
becoming a focused group with
interests in Renewables and
Aviation, while managing the exit
of non-core assets for value and
reducing residual liabilities.
Review of the year
The year has seen continued progress as we streamlined the
Group to focus on the core businesses of Renewables and
Aviation while completing a medium term debt refinancing
in difficult market conditions to support the Group through
the implementation of its strategy. The Board decided to
undertake a strategic review and concluded that it was in
the interests of all stakeholders to pursue a sale of the core
businesses. I refer to the detail of this review below but we
have made good progress with the sale of the Renewables
business at an advanced stage working with a preferred
bidder on an exclusive basis. The process for the sale of
London Southend Airport (LSA) is now under way.
This was all achieved against the backdrop of the Russian
invasion of Ukraine which had an immediate impact on
energy prices and a significant knock-on effect on the global
economy. This occurred just as the aviation industry was
finally emerging from the pandemic and created further
uncertainty with our airline customers. In addition, the
disruption to global supply chains as they recovered from
the pandemic led to strong inflationary pressures across the
developed world. The response from central banks was to
raise interest rates significantly and tighten money supply, all
of which impacted demand. These inflationary pressures and
interest rate increases affected the cost base of the Group.
In a year characterised by these significant geo-political
and economic events, we continued our journey toward
becoming a focussed group with interests in Renewables and
Aviation, while managing the exit of non-core assets for value
and reducing residual liabilities. These liabilities had arisen
through the historical decisions in relation to the guarantee
of aircraft lease arrangements by the Group in 2017 which
crystallised following the failure of Stobart Air as a result of
the pandemic in June 2021. A number of these aircraft had
been returned by the year end and the remaining liabilities
are due to run off during Q3 of FY24. In total the Group is
expecting to have spent £134.2m addressing these matters
from the administration of Connect Airways to conclusion,
meaning these funds were not otherwise available to reduce
debt or invest in the core operations. We continued to
streamline the cost base of the Group consistent with
the prevailing needs of the business.
In November 2022, we concluded a successful debt fund
raising with a medium-term facility of £50m to support the
operational needs of the business and settle the final residual
liabilities of Stobart Air and Propius. In view of the difficult
market conditions for raising debt at that time, the cost of
this funding was expensive but gave the Group certainty on
its funding needs going forward.
At LSA we changed the entire senior management team
to ensure the right leadership was in place to take that
business forward through the recovery. These changes were
a combination of internal promotions and external recruitment
and provide a good blend of knowledge of the operational
assets and a fresh perspective on the way forward. It was
clear in the second half of the year that aviation demand at
London airports would recover to pre pandemic levels and
LSA is starting to see the impact of this with a continuing
momentum in new routes operating from the airport.
Results
Esken Renewables supplied 1.62m tonnes of fuel to biomass
plant customers in the year to 28 February 2023, up 9.4%
on the prior year (2022 1.47m tonnes). However, this
increase reflected improved demand from biomass plants
to which Esken Renewables primarily supplies third party
and forestry by-product, which is at a lower margin. Higher
margin biomass plants that use waste wood experienced an
increased number of unplanned outages, particularly during
the winter months. This reduced the total volume of waste
wood supplied by Esken Renewables and the associated
gate fee income. This in turn resulted in adjusted EBITDA
reducing by 9.5% from £20.3m to £18.4m.
Esken Renewables has taken a number of steps to improve
margins going forward. The fleet has been optimised
to achieve the most efficient use of trucks and drivers,
and strong cost control has resulted in lower overheads.
Inflationary pressures have been eased by RPI-linked
indexation elements within the Division’s long-term customer
supply contracts, however these are retrospective in a
number of cases and as such the full benefit of indexation
will not be seen until FY24. Esken Renewables also took the
decision to close its Port Clarence site having entered into a
new sub-supply agreement to replace the supply provided
from Port Clarence. This is expected to deliver an additional
£0.9m of annual recurring adjusted EBITDA from 1 April 2023.
Esken Limited Annual Report & Accounts 2023
22
Strategic Report
Whilst LSA maintained adequate staffing levels during the
year, staffing challenges elsewhere across the aviation
sector led to the removal of planned flights at LSA at various
points particularly during the second half of the year. This
resulted in passenger numbers reducing by 5.3% from 94k
to 89k.
The Aviation division received £1.4m relating to the recovery
of previously paid airline marketing support payments and
delivered an adjusted EBITDA loss of £3.8m in FY23. In
the prior year, the Division reported a loss of £0.8m having
benefitted from £3.5m of one-off receipts associated with
Connect Airways and the conclusion of the partnership with
Teesside International Airport.
The airport continued to make progress despite the residual
impacts of the pandemic across the sector. It signed a multi-
year partnership with easyJet in January 2023 and easyJet
started operating a new route to Amsterdam at the end of
May 2023 with Paris staring October 2023. These two new
routes will operate year round. The addition of these routes
takes the number of destinations easyJet serves from the
airport to five including Malaga, Palma and Faro. The airline
has also announced an increase in the weekly frequency of
flights to Faro.
Central costs were significantly reduced during the year
as the business was streamlined whilst there was no
repeat of the £4.7m benefit of the onerous lease exit in
Non-Core Infrastructure in the prior year. Overall Group
adjusted EBITDA reduced by 46.9% to £5.6m (2022
£10.6m). However, the Group benefitted from the reversal
of impairment of loan notes and a reduction in property
impairments in the year and, as a result, total losses
before tax improved by 22.4% to £27.7m (2022 £35.7m).
At year end, the Group’s portfolio of non-core assets had an
aggregate book value of £43.1m (2022 £39.7m) following
the sale of a portion of land in Widnes and the reversal of
impairment of loan notes. Esken continues to work to realise
the value of its non-core assets and future proceeds will
be used to reduce debt and provide working capital as the
Group executes its realisation strategy. Since the year end
Esken completed the sale of Star Handling Limited for up to
£4.8m in May.
Strategic review of operating businesses
At the time of our interim results we announced that
a decision had been taken by the Board to conduct a
strategic review of the Group’s operational businesses.
This was prompted by the fact that the two core operating
Divisions were recovering at differing rates coming out
of the pandemic, there was limited synergy between the
two businesses, each had different strategic and financial
needs to realise the full potential of its business, and the
Group remained financially constrained to support those
future growth plans. In common with many companies at the
smaller end of the UK listed market, there also appeared to
be a disconnect between the share price and the potential
value of the businesses on a sum of the parts basis.
The Board worked with Canaccord Genuity in conducting
this review and the Board has concluded that the interests
of all stakeholders would be best served by seeking a new
owner for each of the core businesses through a managed
sale process. In each case the Renewables and Aviation
businesses will benefit from long term strategic owners with
access to capital to support growth ambitions, while offering
stability and certainty to staff, customers and suppliers. The
market will determine the value of each of these businesses
and the proceeds, in conjunction with the ongoing disposal
process of the non-core assets, will be used to repay
debt, provide working capital and ultimately return value
to shareholders.
In view of the different rates of recovery of the businesses
we initiated a sale of the Renewables business first and are
at an advanced stage of process with a preferred bidder
now undertaking due diligence. We have also started the
process for LSA which is the key strategic asset within the
Aviation business. The market for aviation has improved
significantly over the last six months with most external
analysis suggesting that capacity use at London airports
will have returned to pre pandemic levels this Summer. We
would expect to see continuing positive moves by our airline
partners in the months ahead which will offer support to
our market approach. LSA was a proven airport in the pre
pandemic period and is a key strategic asset in the provision
of passenger air services to London at a time when peak
time slots are starting to become constrained once more.
The Board is of the view that the airport has strong potential
within the right ownership structure along with capital to
support its medium to long term growth ambitions.
In May 2023 we announced the sale of Star Handling, our
ground handling business with operations at Manchester
and Stansted Airports, while retaining the ground handling
capability at LSA to support the airport. While this business
had been successful in winning contracts and delivering
for its airline clients it remained sub scale in a market
dominated by major international competitors and we took
the opportunity to exit for value at this time.
As we progress with these disposals we are reducing the
underlying cost base of the Group to a level sufficient to
support the remaining operations, including an exit from
the residual non -core assets. In line with this approach
we are exploring a move to the Standard segment of
the Main Market at the time of completing the disposal
of Renewables. The Board believe that moving from the
Premium segment will have a limited effect on shareholders
but will allow us to reduce the costs of being a listed
business while making it easier from an administrative
point of view to conclude the final delivery of the strategy.
Once there is clarity on the outcome of the sale processes
we will review the appropriate means to return value
to shareholders.
Chairman’s statement continued
Esken Limited Annual Report & Accounts 2023
23
Strategic Report Corporate Governance Financial Statements
Environmental, social and governance
We have continued to build on the last two years of our ESG
journey by increasing the ownership and delivery within our
operating divisions. In light of the outcome of the strategic
review the divisions have further enhanced their own
governance structure to include a Steering Group, Working
Groups and ownership and oversight of their own individual
implementation plans and KPI tracking.
We understand the importance of developing our plans to
reduce our carbon footprint and this year have developed
Net Zero Roadmaps for our operating divisions that aim to
bring our carbon footprint to zero by 2040. These roadmaps
are aligned with each division’s growth plans.
Our colleagues have continued to build relationships and
fundraise for our charitable partnerships. A partnership has
been developed with the Co-op Levy Share to contribute
a percentage of Esken’s apprenticeship levy to community
partners to take on apprentices. An employee volunteering
programme was also launched during Volunteers’ Week
and our colleagues contributed over 500 hours of
volunteering in the local community. Not only did this
benefit the chosen cause, but also provided invaluable
team building opportunities.
Board and people
I would like to express my personal thanks to my Board and
all of our colleagues at Esken for their hard work and support
over the last year. It has continued to be a challenging time
for everyone and I appreciate the efforts and dedication of
our staff through this difficult period. I do appreciate that
the decisions taken following the strategic review of our
operating businesses creates an element of uncertainty as
to the future, in particular for those people who work in the
Group support areas at the centre. In making the decision
to sell the core operating businesses we will have regard
to ensuring that new owners will offer long term security
to the workforce and the opportunity for these businesses
to grow. Throughout the implementation period, the senior
management team and myself have engaged actively with
staff affected and will offer support for those who need to
seek new roles outside the Group.
We have deferred any decisions around future Board
composition given the future direction of the Group. In
particular, while recognising that the Group does not meet
the diversity targets in respect of either gender or ethnicity,
the skill sets which we have around the Board table are best
placed to support the Group through its realisation strategy.
The Board has decided against adding additional Board
members in view of the revised strategic objectives.
Future
A successful conclusion to the sale process for Renewables
will allow the Group to reduce its core debt significantly
while providing working capital to facilitate the managed
reduction of Group support functions, facilitate the exit of
the remaining non-core assets and support the liquidity
needs of LSA through to its sale. There is no set timescale
on the completion of the airport sale as the Board wishes
to ensure that the value is optimised from a shareholder
perspective as aviation continues to recover. Following
the completion of these steps the remaining value will be
returned to shareholders.
David Shearer
Executive Chairman
20 June 2023
Esken Limited Annual Report & Accounts 2023
24
Strategic Report
Key performance indicators
We assess the Group’s performance according to a wide
range of measures and indicators. Our key performance
indicators (KPIs) help the Board and Executive
management team measure performance against
our strategic priorities and business plans.
23
23 23
22
22 22
21
21 21
Group: Financial
93,748
79,650
76,339
23 23 23
22 22 22
21 21 21
Esken Renewables
Revenue (£’000) Adjusted EBITDA
1
(£’000) Divisional operating cash flow
2
(£’000)
Renewables revenue increased by 17.7%
driven by RPI-linked indexation elements
within the division’s long-term customer
supply contracts and an increase in
supplier demand.
Reductions in gate fees and the challenges
of unplanned shutdowns at customer
plants have resulted in a £1.9m decrease in
adjusted EBITDA.
A £4.1m decrease in cash flow from operating
activities, driven by worsening of adjusted
EBITDA and large working capital receipts
received early prior to the start of the
current year.
12,798
15,440
17,924
10,005
20,308
18,388
120,004
104,633
101,404
5,637
10,611
(7,384)
Revenue (£’000) Loss before tax (£’000)
Net debt (£’m)
Adjusted EBITDA
1
(£’000)
Loss per share – total (pence)
Revenue has increased by 14.7% to £120.0m,
mainly due to RPI-linked customer contracts
in the Renewables division and strong
performance of the hotel and solar farm
in Aviation.
The decrease in adjusted EBITDA has been
outweighed by a £7.3m reversal of loan note
impairment and a reduction in impairments of
property assets, resulting in a loss before tax
improvement of £8.0m to a loss of £(27.7)m.
Net debt has increased from prior year mainly
due to the settlement of legacy Propius
liabilities, cash used in continuing operations
and interest accrued on the Carlyle
convertible loan.
Group adjusted EBITDA reduced by £5.0m to
a profit of £5.6m mainly due to £8.2m of one-
off adjustments in the prior year. Stripping
these out there has been a like-for-like
adjusted EBITDA improvement.
Earnings per share remains negative as the
Group recovers from the impact of COVID-19
and disposes of legacy underperforming
operating divisions.
290.1
250.8
247.3
(2.47)
(3.41)
(28.81)
(27,686)
(35,670)
(44,171)
25,455 (3,795) (6,646)23 2323
22 2222
21 2121
23,411 (773) (4,663)
24,742 (6,075) (4,050)
London Southend Airport
Revenue (£’000) Adjusted EBITDA
1
(£’000) Divisional operating cash flow
2
(£’000)
Aviation revenue increased by 8.7% due
to improved performance of the hotel,
solar farm and Star Handling, partly offset
by a £1.5m receipt related to Teesside
International Airport in the prior year
which has not been repeated.
Adjusted EBITDA loss increased mainly due
to £3.5m of one-off benefits in the prior year
related to Connect Airways and Teesside
International Airport not being repeated.
Savings in airline marketing costs helped
mitigate the adverse movement.
Reduction due to one-off receipts for
Teesside and Connect in the prior year cash
profit, partially offset by recovery of airline
marketing costs in the current year.
23 23
22 22
21 21
Esken Limited Annual Report & Accounts 2023
25
Strategic Report Corporate Governance Financial Statements
Group: Financial
23 23
22 22
21 21
Esken Renewables
Tonnes supplied (MT) Volume of waste wood received (MT)
There was an overall 9.3% increase in tonnes
supplied to customers, consisting of an
increase in volumes supplied on lower margin
contracts and a decrease in volumes to
higher margin contracts which were impacted
by unplanned plant shutdowns.
The competitive market for waste wood,
in addition to the reduced ability of several
processing sites to take in material during
times of unplanned customer plant closures,
resulted in a 4.8% reduction in waste
wood received.
453
425
476
1,616
1,410
1,478
50,264
72,738
77,408
Headroom (£’000)Cash flow from operating activities (£’000)
The Group had £50.3m of cash headroom
available at the year end, driven by the term
loan £44.8m, offset by cash outflows for
working capital, discontinued operations and
lease payments.
A reduction in cash profit in addition to
demands on working capital has resulted in
Group cash flow generated from operating
activities reducing by £5.7m.
(21,151)
(14,484)
(29,443)
23
22
21
195*
195
191
Taking climate action
(Tonnes CO
2
per £m of revenue)
These figures for CO
2
represent the
equivalent amounts of CO
2
for greenhouse
gases for Scope 1 and 2 emissions and using
FY19 as baseline data. For more information
see page 60.
London Southend Airport
Total passenger numbers at LSA Cargo tonnage (thousand tonnes)
Challenges in the aviation sector led to
the removal of planned flights during
Summer 2022 driving a 5.3% reduction
in passenger volume.
The ending of the contract with London
Southend Airport’s global logistics partner in
September 2022 led to the 54.3% reduction
in cargo tonnage.
3.2
24.0
7.0
89,017
147,208
93,957
23 23
22 22
21 21
23
22
21
23
22
21
99.5
99.5
99.5
Minimising our environmental impact
(% of waste)
This number is calculated across all our
divisions for waste that is recycled and
converted into energy. Waste that cannot
be recycled makes up the remaining 0.5%.
23
22
21
34,092
50,414
37,382
Developing our people
(Number of hours of training)
Reporting the number of hours invested in
training fulfils our commitment to developing
our people to give them the skills they need
to meet their personal development goals.
23
22
21
Group: ESG
Accident/incident rate
The Reporting of Injuries, Diseases and
Dangerous Occurrences Regulations (RIDDOR)
2013 regulates the statutory obligation to
report deaths, injuries, diseases and dangerous
occurrences that take place at work or in
connection with work. The reported figure is
arrived at by dividing the number of RIDDORs
by the number of hours worked, multiplied
by 100,000.
23
22
21
0.40
0.44
0.43
* Scope 1-2.
1 Adjusted EBITDA represents loss before interest, tax, depreciation and impairments.
2 See note 33 for an explanation of the divisional operating cash flow alternative performance measure.
26
Financial review
Lewis Girdwood
Following the Board’s
strategic review, we
now have a roadmap
to realising the Group’s
underlying value for
all shareholders.
Lewis Girdwood,
Chief Financial Officer
Strategic Report
Esken Limited Annual Report & Accounts 2023
Esken Limited Annual Report & Accounts 2023
27
Strategic Report Corporate Governance Financial Statements
Strategic review
The Board has concluded that it is in the best interests of all
stakeholders to secure the long-term potential of the Group’s
operating divisions, Esken Aviation and Esken Renewables, and
deliver value for the Esken shareholders through a managed
disposal of both of the businesses. A sale process for Esken
Renewables is at an advanced stage working with a preferred
bidder on an exclusive basis. A sale of the Aviation business
will focus on London Southend Airport (LSA) with the aim of
securing a buyer with the capital to drive growth at the airport
over the long term.
Renewables
Adjusted EBITDA for the division was lower than anticipated
at the start of the financial year at £18.4m due to a number of
challenges. An increased number of unplanned shutdowns at
customer plants have resulted in a lower than expected supply
of biomass material by the division, along with increases in
associated costs. Gate fee income has been reduced as a
result of a more competitive market for waste wood impacting
volumes and prices, in addition to the reduced ability of
several processing sites to take in waste wood during times
of unplanned customer plant closures. The transport margin
has been adversely affected by high fuel costs and the rollover
impact of wage inflation due to driver shortages last year.
The division has taken mitigating actions to counter these
challenges: the fleet size has been reduced to achieve the most
efficient use the trucks and drivers, and strong cost control
has resulted in lower than anticipated overheads. Inflationary
pressures have been eased by RPI-linked indexation elements
within the division’s long-term customer supply contracts.
However, these are retrospective in a number of cases and as
such the true benefits of indexation will not be seen until FY24.
Aviation
The division serviced three routes for passenger flights during
the year, however airline take up of available slots at the
airport was lower than expected and passenger numbers are
still well below pre-COVID-19 levels. Due to the slow take up
management decided that the best course of action was for LSA
to be closed to commercial flights for Winter 2022/2023. The
division’s cargo contract with its global logistics partner ceased
in September 2022 resulting in an estimated £3.8m reduction
in adjusted EBITDA for FY23 and FY24. These downsides have
been partly offset by cash benefits of receipt of airline marketing
costs and a number of commercial initiatives including filming
and other media opportunities.
LSA has secured a multi-year agreement with easyJet. The
airline will operate a new route to Amsterdam, in addition to the
three existing destinations of Malaga, Majorca and Faro. For the
Summer 2023 season LSA will operate around 30% more flights
in Summer 2023 than in Summer 2022 due to the new route
and an increase in the number of flights to Faro.
Liquidity
On 9 November 2022, the Group signed a three-year £50m
term loan agreement, see note 22 for further details. The new
loan will be used to settle maintenance and lease liabilities
in Propius, fees payable for cancellation of the old Revolving
Credit Facility (RCF) and entry into the facility itself, and provide
working capital for the Group. This loan was fully drawn on
15 December 2022 and on the same day the Group cancelled
its £19.1m RCF with Lloyds and AIB. Going forward, the Group
will operate all corporate banking through Barclays. The Group’s
headroom at the year end is £50.3m and includes £5.3m of
ring-fenced cash in LSA. The Group also has non-core assets
with a net book value of £43.1m.
Non-core assets and sale of Star Handling
In August 2022, the Group disposed of another plot of land at
Widnes for £3.5m at net book value. Management is exploring
a number of options for the Group’s remaining non-core assets.
On 15 May 2023, the Group disposed of Star Handling Limited,
our ground handling business with operations at Manchester
and Stansted Airports, to Skytanking UK Ltd for a maximum cash
consideration of £4.8m.
Discontinued operations
Four of the eight ATR aircraft leased by Propius have been
successfully returned to the lessor by the year end, with the
remaining four to be returned in the period to September 2023.
The Group agreed the early hand back of two of the four
aircraft returned, resulting in maintenance savings of £2.0m.
At 28 February 2023, the Group has c.£25.2m of obligations
relating to leases, maintenance and other aircraft-related costs,
that will be settled within one year, see note 33 for breakdown
of the costs. The remaining costs have been fully provided for
in these financial statements.
Revenue
2023
£m
2022
£m Movement
Renewables 93.7 79.7 17.7%
Aviation 25.5 23.4 8.7%
Revenue from two main
operating divisions 119.2 103.1 15.6%
Investments – – 0.0%
Non-Strategic
Infrastructure 0.6 0.7 -7.1%
Group Central
and Eliminations 0.2 0.8 -79.6%
Total revenue 120.0 104.6 14.7%
Revenue from continuing operations has increased by
14.7% to £120.0m. Revenue from our two main operating
divisions, Renewables and Aviation, has increased by 15.6%
to £119.2m. RPI-linked contracts in the Renewables division
have been the main driver of the increase in the division’s
revenue year-on-year. Revenue in the Aviation division
increased due to improved performance of the hotel, solar
farm and Star Handling, partly offset by a £1.5m one-off
receipt in the prior year related to Teesside settlement not
repeating in the current year.
Esken Limited Annual Report & Accounts 2023
28
Strategic Report
Financial review continued
In the Non-Strategic Infrastructure division a £4.7m one-off
receipt in the prior year relating to the agreement to exit a
long-term onerous property lease has not been repeated
in the current year. This is the main driver of the decrease
in adjusted EBITDA to a £1.7m loss (2022: £3.3m gain). The
Group Central and Eliminations division’s adjusted EBITDA
loss decreased by 41.0% to £7.3m (2022: £12.2m) mainly
due to one-off legal fees and an increase in the provision for
part 1 claims relating to LSA in the prior year which have not
been repeated.
Business segments
The business segments reported in the financial statements
are Renewables, Aviation, Investments and Non-Strategic
Infrastructure, which represent the operational and reporting
structure of the Group. The Operational review contains further
details about the performance of the operating divisions.
The fair value of the investment in Logistics Development
Group plc (LDG), increased by £1.0m (2022: £1.2m decrease)
due to an increase in the LDG share price. The gain on
revaluation of the investment to current market share
price is presented in the consolidated statement of
comprehensive income.
The Non-Strategic Infrastructure division continues to
realise value from its property assets when the time and
price is right. At 28 February 2023, the book value of
Infrastructure assets held was £43.1m (2022: £39.7m).
During the year, there was a disposal of a portion of
Widnes land generating net proceeds of £3.5m (2022: £nil).
Following commercial discussions regarding a potential
disposal of the Group’s investment in, and shareholder loan
notes issued to, Mersey Bioenergy Holdings Limited (MBHL),
the Group recognised a reversal of impairment of the loan
notes from £nil to £7.3m.
Depreciation
Depreciation has reduced from £20.7m to £18.3m due to
an overall reduction in the asset base across the Group.
Impairments and reversal of impairment of loan notes
There was an impairment of £1.0m of assets relating to the
Port Clarence site in the Renewables division ahead of the
disposal of the site post year end. The £7.3m reversal of
impairment of MBHL loan notes is presented on a separate
line, impairment of loan notes, on the consolidated
income statement.
Net finance costs
Finance costs increased by £3.3m to £24.8m, mainly due
to full year’s interest charged on the CGI convertible debt
instrument in the current year, but only part year in the prior.
Finance income increased by £1.8m to £4.0m primarily due
to gains on the revaluation of Esken Limited’s intercompany
US Dollar denominated loan with Propius.
Tax
The tax credit on continuing operations of £2.5m (2022:
£9.9m) reflects an effective tax rate of 9.1% (2022: 27.7%).
The effective rate is lower than the standard rate of 19%,
mainly due to the net release of provisions relating to
uncertain tax positions. Deferred tax has been calculated at
a blended rate. The amounts expected to unwind pre 1 April
2023 are calculated at 19% and the amounts expected to
unwind post 1 April 2023 are calculated at 25%.
Profitability
2023
£m
Restated
1
2022
£m Movement
Adjusted EBITDA
2
Renewables 18.4 20.3 -9.5%
Aviation (3.8) (0.8) -390.9%
Adjusted EBITDA from two
main operating divisions 14.6 19.5 -25.3%
Investments
3
– – 0.0%
Non-Strategic
Infrastructure (1.7) 3.3 -151.8%
Group Central
and Eliminations (7.3) (12.2) 41.0%
Adjusted EBITDA 5.6 10.6 -46.9%
Depreciation (18.3) (20.7)
Impairments (1.0) (6.0)
Operating loss (13.7) (16.1)
Reversal of impairment
of loan notes 7.3 –
Finance costs (net)
(20.7) (19.2)
Share of post-tax losses
of associates and joint
ventures
3
(0.6) (0.4)
Loss before tax (27.7) (35.7)
Tax 2.5 9.9
Loss for the year from
continuing operations (25.2) (25.8)
Loss from discontinued
operations, net of tax (0.0) (2.4)
Loss for the year (25.2) (28.2)
1 The 2022 results have been restated where required due to prior period
adjustments, see note 34.
2 Adjusted EBITDA represents profit/(loss) before interest, tax, depreciation and
impairments. Refer to note 3 for reconciliation of divisional adjusted EBITDA to
loss before tax.
3 In the prior year the share of post-tax losses of associates and joint ventures
was presented as part of adjusted EBITDA. This year it is presented on its own
line as part of the loss before tax.
Adjusted EBITDA and profit before tax are the Group’s key
measures of profitability. Adjusted EBITDA has decreased by
46.9% to £5.6m (2022: £10.6m) and the loss before tax has
decreased by £8.0m to £27.7m (2022: £35.7m).
In the Renewables division, performance has been hit by
unplanned shutdowns of customer plants and the impact
of market pressures on gate fee receipts, leading to a 9.5%
decrease in adjusted EBITDA to £18.4m (2022: £20.3m).
The Aviation division adjusted EBITDA loss has increased
by 390.9% to £3.8m (2022: £0.8m) primarily due to one-off
receipts in the prior year of £3.5m associated with Connect
Airways and the conclusion of the partnership with Teesside
International Airport not being repeated in the current year.
Esken Limited Annual Report & Accounts 2023
29
Strategic Report Corporate Governance Financial Statements
Discontinued operations
The results of Propius, our aircraft leasing business are
presented as discontinued as it is abandoned in line with the
IFRS 5 definition of a discontinued operation. The decrease
in the loss from discontinued operations of £2.4m to £0.1m
is primarily due to the provision of maintenance and other
aircraft related costs being made in the prior year.
Loss per share
Loss per share from continuing operations was 2.47p (2022:
3.12p). Total basic loss per share was 2.47p (2022: 3.41p).
Balance sheet
2023
£m
Restated
1
2022
£m
Non-current assets 352.7 359.3
Current assets 86.2 89.2
Non-current liabilities (272.7) (244.9)
Current liabilities (126.3) (133.0)
Net assets 39.9 70.6
The overall value of property, plant and equipment (PPE) of
£263.4m (2022: £269.9m) has decreased in the year mainly
due to the depreciation charge across the Group and the
impairment of Port Clarence assets, partly offset by the
reclass of Widnes land from property inventories, and fixed
asset additions related to terminal improvements at LSA and
plant and machinery in Renewables.
There has been a £7.3m reversal of impairment of MBHL
loan notes and a £3.1m increase in trade receivables, offset
by a £10.8m decrease in property inventory and a £2.5m
decrease in cash, see following section on the major cash
flows in the year.
Non-current liabilities have increased from £244.9m to
£272.7m. In the year a £44.8m liability was recognised on
the balance sheet relating to the term loan and an interest
accrual of £12.2m on the CGI convertible debt. These
increases are partially offset by a £19.3m reduction in
lease liabilities, due to capital repayments, and a £13.3m
reduction in non-current provisions, mainly due to
maintenance payments.
Current liabilities have reduced mainly due to a reduction
in corporation tax provisions.
Debt and gearing
2023
Restated
1
2022
Loans and borrowings £340.4m £300.0m
Cash £(50.3m) (£52.7m)
Net debt £290.1m £247.3m
Adjusted EBITDA/interest 0.2 0.6
Net debt/total assets 66.1% 55.1%
Gearing 726.8% 350.5%
See note 22 for more details on net debt. The alternative
performance measures of net debt and gearing are
explained in note 33.
During the year the Group signed a three year £50m term
loan, following the loan the £19.1m RCF with current bank
lenders was cancelled.
Cash flow
2023
£m
2022
£m
Operating cash flow (10.5) 3.2
Investing activities 9.6 (5.2)
Financing activities 22.4 82.2
Increase in the year 21.5 80.2
Discontinued operations (24.9) (39.9)
Restricted cash 1.0 –
At beginning of year 52.7 12.4
Cash at end of year 50.3 52.7
Discontinued cash flows in the year relates to Propius lease,
maintenance and other aircraft related costs.
Restricted cash relates to money held in escrow within the
Renewables division as security for one of its contracts.
Investing activities include inflows of £3.5m received from
the sale of a portion of Widnes land, £2.2m from the sale of
PPE and £1.7m for the receipt of the capital element of net
investment in leases.
Financing activities includes net proceeds from the term
loan of £44.8m. Offsetting this there were outflows of
£16.4m for the repayment of the capital element of lease
obligations and £6.8m for interest payments.
Lewis Girdwood
Chief Financial Officer
20 June 2023
We have simplified
the Group and made
progress in both
operating divisions
supported by smart
cost management
where appropriate.
Strategic Report
Esken Limited Annual Report & Accounts 2023
30
Esken Renewables supplied
1.62m tonnes of fuel to biomass
plant customers in the year to
28 February 2023, up 9.4% on the
prior year (2022 1.47m tonnes).
However, this increase reflected improved demand from
biomass plants to which Esken Renewables primarily
supplies third party and forestry by-product, at a lower
margin. Higher margin biomass plants that use waste wood
experienced an increased number of unplanned outages,
particularly during the winter months. This reduced the
total volume of waste wood supplied by Esken Renewables
and the associated gate fee income. Ongoing fluctuations
in UK construction supply chains also led to a market wide
reduction in waste wood, further impacting gate fee income
and margins.
The overall increase in volume supplied resulted in revenue
increasing 17.7% to £93.7m (2022 £79.7m) but the reduction
in higher margin waste wood income resulted in adjusted
EBITDA reducing by 9.5% from £20.3m to £18.4m.
Margins are expected to improve as biomass plant
customers continue to better understand their infrastructure
and optimise performance. Margins will also be supported
by continued annual contracted indexation revisions that
reflect the cost inflation experienced during the year. RPI
linked contracts for two of the six largest plants were
revised to reflect higher costs in April 2022 with a further
two revised by the end of the first half of the financial year.
The remaining two contracts were revised in January 2023.
Further steps were taken to optimise ongoing margins
through the closure of Esken Renewables’ Port Clarence
processing and storage site, which had originally been
built to service the Port Clarence biomass plant, which was
never commissioned. The processing site had never been
profitable as a result.
Operational review
Renewables
Esken Renewables took the decision to close the site having
entered into a new sub-supply agreement to support the
Chilton Biomass plant, replacing the supply provided from
Port Clarence. The sub-supply agreement and closure of
Port Clarence is expected to deliver an additional £0.9m of
annual recurring EBITDA from 1 April 2023.
A new sub-supply arrangement in Yorkshire and the
Cramlington supply contract moving to an exclusive basis
from September 2022 will also support improved recurring
revenues going forward, and Esken Renewables continues to
seek further supply agreements and strategic partnerships.
Nick Dilworth
Chief Operating Officer
20 June 2023
Corporate Governance Financial StatementsStrategic Report
31
Esken Limited Annual Report & Accounts 2023
Strategic Report
Key points
• The overall increase in volume supplied
resulted in revenue increasing 17.7% to
£93.7m (FY22: £79.7m).
• EBITDA reduced by 9.5% from £20.3m
to £18.4m.
• Margins are expected to improve as
biomass plant customers continue to
better understand their infrastructure
and optimise performance.
Strategic Report
Esken Limited Annual Report & Accounts 2023
32
Strategic Report
Operational review continued
London Southend Airport
The Aviation Division saw a return
of passenger flights in summer
2022 and this momentum has
continued into the 2023 season.
In the prior year, the Division reported a loss of £0.8m having
benefitted from £3.5m of one-off receipts associated with
Connect Airways and the conclusion of the partnership with
Teesside International Airport. The adjusted EBITDA loss of
£3.8m included positive contributions from the airport hotel,
London Southend Jet Centre, and Star Handling.
Key points
• Passenger numbers during the year
reduced by 5.3% from 94k in FY22 to 89k
in FY23.
• The Aviation division delivered an adjusted
EBITDA loss of £3.8m in FY23 compared
to a loss of £0.8m in the prior year when it
benefitted from £3.5m of one-off receipts
relating to Connect Airways and Teesside
International Airport.
The aftereffects of the pandemic continued to impact the
aviation sector during the year. Whilst LSA continued to
maintain adequate staffing levels, several aviation businesses
saw their staffing numbers reduce during the last two years
and the industry experienced challenges in recruiting people
back into aviation. During the summer months, many airline
staff also went on strike, causing airlines to both continue
to retrench to traditional hub bases and remove flights if
there weren’t staff available to operate them. The challenges
elsewhere in turn led to the removal of planned flights at LSA at
various points over the summer, reducing passenger numbers
by 5.3% from 94k to 89k.
LSA has continued to position itself for recovery despite the
legacy challenges that followed the pandemic. This recovery
will be built on having in place a strong management team that
is taking a proactive approach to airline engagement while
continuing to develop the airport proposition.
John Upton joined the airport team as CEO in September
2022 and has sought to engender an entrepreneurial spirit
in the business. John leads a new management team with
the Finance Director and Business Development Director
appointed toward the beginning of the year under review.
They are joined by a recently promoted operations and
commercial directors in a newly formed operational Board.
That team are regularly engaging with airlines on both based
and non-based flying, using the data from 40 previously
proven routes to indicate the profit opportunities arising
from operating at LSA.
Corporate Governance Financial Statements
Esken Limited Annual Report & Accounts 2023
33
Strategic Report Corporate Governance Financial Statements
Those airlines are increasingly aware that London’s traditional
airport hubs are now very close to pre-pandemic operating
levels and that peak slot capacity is reaching a cliff edge. LSA
is therefore making the case for profitable and sustainable
growth capacity now, serving the fast-growing east London
and east of England catchment area. Direct rail access to
London Liverpool Street and Stratford, the UK’s busiest train
station, with further connections to the Elizabeth Line 30
minutes away in Shenfield also add to the attractiveness of
the airport’s location.
The airport’s affluent and growing catchment area, direct,
quick rail access to London and modern airport infrastructure
were important factors that led to LSA signing a multi-year
partnership with easyJet in January 2023. easyJet started
operating a new route to Amsterdam at the end of May 2023
with Paris staring October 2023. These two new routes will
operate year round. The addition of these routes takes the
number of destinations easyJet serves from the airport to
five including Malaga, Palma and Faro. The airline has also
announced an increase in the weekly frequency of flights
to Faro.
LSA will also aim to build on its positive engagement last
Summer with airlines following a small number of flights that
were added by Blue Air to Bucharest, Sky Express to Athens
and Wideroe to Bergen in late July. The airport team will also
continue to explore further logistics opportunities following
a successful operation supporting a new logistics partner on
a temporary basis from January through to March 2023.
The Board of Esken believe LSA has the potential to grow well
beyond the 2.1m passengers that it welcomed in FY20. The
Board concluded that the best way to help the airport achieve
this potential, and deliver value for Esken shareholders, is
through a managed disposal process. A key objective will be
to find the right buyer with the capital to support the growth
prospects of the airport over the long term and benefit airline
partners, customers and local stakeholders.
Lewis Girdwood
Chief Financial Officer
20 June 2023
London Southend
Airport is making the
case for profitable and
sustainable growth
capacity now.
34
Strategic Report
Esken Limited Annual Report & Accounts 2023
Sustainability report
Nick Dilworth
Against a backdrop of
challenging headwinds we
have continued to build on
the last two years of our ESG
journey and have developed
policies and programmes
to enhance the positive
impact made in our local
communities, produced
further plans to reduce
Esken’s carbon footprint
and developed plans
towards Net Zero.
Nick Dilworth
Chief Operating Officer
Strategic Report Corporate Governance Financial Statements
35
Esken Limited Annual Report & Accounts 2023
Esken has a robust governance structure to drive continuity,
accountability and transparency. This governance structure
is set out in detail in this report. As an evolution of the
approach to embedding a positive culture towards ESG, for
FY24 we have ensured that each of the operating divisions
has the governance structure, strategy and delivery plans
in place, along with measurable KPIs to maintain progress.
A newly established Working Group structure and Steering
Group for each operating divisions will help further develop
their individual policies and programmes. This also helps
address the outcomes from the strategic review.
Our ESG governance structure aims to bring a cultural change
throughout the business. The ESG Board Sub-Committee
ensure the PLC Board have full oversight of ESG delivery and
progress, while the accountable body is the Steering Group
who manage the risks and opportunities of ESG. Colleagues
who support the implementation of ESG through the Working
Groups are delivering against the agreed five-pillar framework
and delivery plan.
This year across the five-pillar framework the Steering
Group developed reportable KPIs, which have been set out
in this report. These KPIs have been monitored throughout
the year and have been linked to the Executive Directors’
remuneration. This is the first year of this new approach
to monitoring and reporting progress and aligns the
sponsorship of ESG across the business.
Esken has further embedded ESG risk across the business
into each of the operating companies and the core
corporate functions, and this is reported in the taking
climate action section of this report, as part of the
Climate-Related Financial Disclosures (TCFD) statement.
Esken has for the second year reported against the
TCFD guidelines and disclosures. Each of the TCFD
recommended disclosures and the related recommendations
covering Governance, Strategy, Risk Management and
Metrics & Targets are on pages 57 to 61. Mitigating the
environmental impact of the operating divisions remains a
focus. Colleagues have been continuing to work on data
collection and reporting, and this has informed Esken’s first
Roadmap to Net Zero. The Roadmap has been developed
for each operating division and reduction plans have
been set out in this report.
The social impact programmes have developed further to
bring about more positive impact in the local communities
of the operating companies. Colleagues have continued
to build relationships and fundraise for the charitable
partnerships. A partnership has been developed with the
Co-op Levy Share to contribute a percentage of Esken’s
apprenticeship levy to community partners to take on
apprentices. An employee volunteering programme was
launched during Volunteers’ Week and our colleagues
contributed over 500 hours of volunteering in the local
community. Not only did this benefit the chosen cause,
but also provided invaluable team building opportunities.
The overall ESG strategy has been enhanced throughout
the year. Esken, as members of Business in the Community,
participated in the Responsible Business Tracker. This
helped inform Esken’s ESG strategy and further supported
the individual operating divisions’ delivery plans.
Nick Dilworth
Chief Operating Officer
20 June 2023
36
Strategic Report
Esken Limited Annual Report & Accounts 2023
Sustainability report continued
Governance
The ESG five-pillar framework and
strategy has been developed on
the materiality assessment and
materiality matrix. The overall
strategy has enhanced following
the participation of the Business
in the Community Responsible
Business Tracker. We also continue
to work to align our priorities to the
UN Sustainability Goals.
The governance structure supports the development of
ESG metrics to measure and monitor progress. Each pillar
has established KPIs and these are linked to Executive
remuneration and ESG performance. Individual colleagues
also have ESG embedded into their appraisals.
The business continues to develop its risk register to embed
ESG across all business divisions and core group functions.
We have maintained our investment in public policy to keep
abreast of new legislation and regulations emerging and to
meet all future compliance needs including the TCFD.
The structure we have established at Esken ensures each
one of these areas is addressed through the process.
There are three main layers of the governance structure,
being Working Groups, Steering Group and ESG Board
Sub-Committee. As part of the evolution to embed an ESG
culture across the business, the governance structure will
be enhanced across the business divisions to continue to
deliver the ESG programme. Furthermore, this approach will
afford flexibility to cater for the conclusion of the strategic
review by Esken.
From the bottom up we have established Working Groups
that meet monthly to monitor the progress of each of the
implementation plan deliverables under each of the five
pillars. These Working Groups consist of representatives of
each of our divisions. As part of the transition process each
Working Group will increase representation from across the
divisions. This increase will support further engagement,
drive continued cultural change across the businesses
and improve continuity for the transition period.
The accountable body for ESG delivery is the Steering
Group. The updates from the Working Groups are reviewed
by the Steering Group to keep the delivery plans on track
and for all approvals. To bring more accountability at
divisional level we are introducing an additional Steering
Group within the divisions that will be accountable
for reviewing each divisional Working Group and their
individual implementation plans. The Group wide Steering
Group will still meet to ensure delivery against the overall
implementation plan and that all regulatory and legal
compliance is in place.
A strong governance
programme drives
accountability, continuity
and transparency and is
responsible for setting
strategy, identifying
risks and opportunities
and ensuring we are
legally compliant.
Strategic Report Corporate Governance Financial Statements
37
Esken Limited Annual Report & Accounts 2023
Audit Committee
Esken Renewables
Steering Group
London Southend Airport
Steering Group
ESG Board
Sub-Committee
Remuneration
Committee
ESG Steering Group
Five-Pillar Working Groups
The ESG Board Sub-Committee will continue to meet monthly where all the updates from Working Groups and the Steering
Group are discussed and reviewed.
In 2019 we ran a materiality assessment and the matrix was used to develop our five-pillar framework. We have made further
progress and now align our priorities to the UN Sustainability Goals. As we continue to develop our ESG programme we will
undertake a materiality assessment within a five-year period.
Materiality matrix
Esken Limited Annual Report & Accounts 2023
38
Strategic Report
Sustainability report continued
ESG KPIs
Esken established reportable KPIs to measure progress against
the strategy. These reportable KPIs have been linked to Executive
Directors’ remuneration.
Building sustainable
communities
To be a good neighbour by having a
positive social impact in the communities
in which we operate.
p42
KPIs to achieve this are:
Objective Achievement against target
Each division will have a charity partnership
and match fundraising activity up to £5k for
each partnership
100% achieved.
Each of the charity partnerships received funding from
the business in addition to the fundraising by colleagues.
Deliver an employee volunteering programme
and commit to 500 hours of volunteering
across the Group
100% achieved.
502 hours of volunteering given back to the local
community.
Steering Group members to join BITC’s
mentoring programme
0% achieved.
In light of the strategic review the timeline has
been delayed.
Esken Limited Annual Report & Accounts 2023
39
Strategic Report Corporate Governance Financial Statements
Developing our people
Becoming an Employer of Choice.
p46
KPIs to achieve this are:
Objective Achievement against target
Managers to complete the appropriate
level of management development as
detailed in the Esken Ascend Management
and Leadership Programme
Through the ASPIRE programme we have three
development programmes for junior, middle and senior
leaders. All line managers participating in one of the three
programmes, some colleagues have completed or are in
progress with more than one of them:
1. Management Essentials – a suite of e-learning
modules for all managers below Executive level.
2. Apprenticeship programmes to gain formal
qualifications, CMI accredited at Levels 3, 5 and 7.
3. Leadership Framework for review against the Esken
Leadership Competence Framework.
100% achieved.
Currently 100% of line managers are enrolled in one of the
three programmes we have available, and we also support
a range of future managers on the Level 3 programme
as well as a shorter Management Essentials programme,
enabling our top talent to gain valuable and relevant
training and development.
Improve engagement levels with our people as
measured by our staff surveys
0% achieved.
Employee Engagement has reduced by 3% overall since
the last survey.
Complete Gender Pay Gap report (FY22)
100% achieved.
Reported and submitted on 3 April 2023.
Complete Ethnicity Pay Gap reports
(FY21 & FY22)
100% achieved.
Reported and submitted on 3 April 2023.
Equal Pay audit (FY22)
0% achieved.
In light of the strategic review the timeline has
been delayed.
Esken Limited Annual Report & Accounts 2023
40
Strategic Report
Sustainability report continued
ESG KPIs continued
Excelling in health, wellbeing,
safety and security
Taking climate action
To create a Roadmap to Net Zero to
help the UK deliver on its Net Zero
carbon emissions target.
To embed visible, felt leadership
within the senior management team.
KPIs to achieve this are:
Objective Achievement against target
All senior managers to attend a cultural
safety workshop
100% achieved.
An external Cultural Safety Leadership event was held in
December with colleagues attending either in person or,
due to adverse weather, virtually via Teams.
All senior managers to complete a predetermined
number of safety leadership tours
100% achieved.
Target was exceeded with 271 tours completed against
a target of 252, giving a final result of 108%.
All Esken Group welfare facilities to be
assessed for regulatory compliance and where
necessary brought up to minimum standard
100% achieved.
All 28 facilities were inspected this year.
Managers to perform a formal wellbeing
check-in with their teams
76% achieved.
Of the 367 employees who participated in the appraisal
and my check in process, 76% had a formal wellbeing
discussion. Next year all employees will participate in the
appraisal process or my check in process.
KPIs to achieve this are:
Objective Achievement against target
To submit data to measure and report
GHG emissions
100% achieved.
The data gathered has been used to calculate Esken’s
overall carbon footprint.
To voluntarily report Scope 3 GHG emissions
100% achieved.
The data collected has been reported in the taking climate
action section.
To achieve external verification on baseline
data and Roadmap to Net Zero with Science
Based Approach
50% achieved.
The Roadmap is complete and reduction targets set
against the plan. However time constraints did not allow
for external verification.
p50
p56
Esken Limited Annual Report & Accounts 2023
41
Strategic Report Corporate Governance Financial Statements
Minimising our environmental
footprint
To minimise our impact on the environment
by responsible management.
KPIs to achieve this are:
Objective Achievement against target
Increase the number of EV charging points
across the Group
100% achieved.
London Southend Airport has installed EV charging at
the airport.
A third of purchased energy to come from
renewable sources
0% achieved.
This will be further considered with the renewal of the
energy contract.
A reduction in overall waste generated across
the Group
0% achieved.
The business has been very focused on waste reduction;
however, this year there was a marginal increase.
p62
42
Strategic Report
Esken Limited Annual Report & Accounts 2023
Sustainability report continued
Building
sustainable
communities
Overview
Esken is committed to delivering a social
impact programme to have a positive
impact in the communities in which
it operates. The Building Sustainable
Communities pillar is focused on charitable
giving, colleague volunteering and
education, employment and skills; using
local demographics to inform programmes.
The internal governance Working Group
informs the priorities, projects and
monitors progress through KPIs.
2020 2021 2022 2023
Building Sustainable
Communities
Fundraising for Charity
Partners
N/A N/A £27,40 8 £21,830
Number of
Volunteering Hours
N/A N/A 75 502
Strategic Report Corporate Governance Financial Statements
43
Esken Limited Annual Report & Accounts 2023
Charitable giving
Charitable giving is a positive way to support our colleagues
to engage with positive social impact programmes. Each of
our operational divisions have continued to support their
charity partners this financial year. The charity partnerships
include FareShare, Help for Heroes, and South East and
Central Essex Mind (SECE Mind). Our colleagues have
participated in fundraising activities for each partnership
and Esken committed to matching up to £5,000 of
fundraising for each partnership.
Colleague volunteering
Following last year’s pilot volunteering day, Esken
launched a colleague volunteering programme during
Volunteers’ Week on 1 to 7 June 2022. Esken partnered
with Neighbourly to provide volunteering opportunities.
Neighbourly has a network of around 20,000 good causes,
including small charities and community groups that
business can support the community in many different ways.
Esken recognises that volunteering benefits our people,
our local communities and our business. This provided
colleagues with an opportunity to volunteer their time
and skills for up to one day a year. Esken’s volunteering
framework aims to provide colleagues with opportunities
to volunteer individually or as a team, in person or remotely
to support one of our charitable partnerships, tackling
our environmental impact and supporting education,
employment and skills programmes and initiatives. This
year 84 volunteers contributed 502 hours and supported
12 good causes.
London Southend
Airport and SECE Mind
London Southend Airport hosted the Mental Elf
run, an annual fundraising activity which sees
colleagues and people from the local community
run, walk or jog as many laps of the runway in two
hours, this year saw 100 runners complete 197
laps. Fundraising included tickets sales, JustGiving
donations and donations on the day. The money
raised will support the Somewhere To Turn mental
health support phone line.
The team also supported SECE Mind and their
Nelson’s Gate residential facility. The volunteers
cleared rubbish, painted, weeded, built garden
furniture and planted herbs. The new wellbeing
garden will be used by residents for growing
their own vegetables for cooking, 1:1 mentoring
sessions, art and yoga sessions.
Esken Renewables
& FareShare
Esken Renewables People Forum voted for the
fundraising activity and chose to sign the team up
for a bikeathon. The Charity Committee sourced
the equipment through PureGym who provided the
bikes for the event at no cost. During the course
of the two days in October, over 50 colleagues
participated, cycling 900 miles. The money raised for
the bikeathon will be donated to FareShare, the UK’s
largest charity fighting hunger and food waste.
Esken Limited Annual Report & Accounts 2023
44
Strategic Report
Sustainability report continued
Building sustainable communities continued
Education, employment and skills
Esken works with partners to invest in local education
programmes, employment initiatives, and provide skills
development in the local community. We continue to better
understand our internal skills and recruitment requirements
alongside understanding the skills development needs in
our local communities to inform and develop our social
impact programmes.
As member of Business in the Community (BITC) the Steering
Group had committed to supporting the BITC mentoring
programme. This year, in light of the strategic review, the
timeline to engage with the programme was reconsidered.
Esken Renewables in partnership with InStep developed an
LGV driver apprenticeship programme. This was to upskill
and develop colleagues to support and increase capacity.
Long term, the objective was to create a new pipeline
and alleviate the driver shortage issues seen across the
industry. This programme has supported 12 people through
the programme to become drivers. This has significantly
reduced agency drivers and made significant cost savings.
London Southend Airport has continued to work with
local partners to enhance the educational experience and
skills development of local young people. The team have
committed to a 60-minute mentor programme with Chase
High School – an initiative aimed at helping Year 8 students
who may be disengaged about their future GCSE options,
potential careers, or other related issues that are on
their mind.
Colleagues have hosted a number of student visits to
offer real life experience of working at the airport. These
have included students completing both Level 2 and 3
of their Travel and Tourism course. Students from Sutton
House Academy came for a tour to speak to the teams
about future careers. South Essex College students met
to develop a ‘Supported Internship’ programme, a type of
study programme specifically aimed at young people aged
16 to 24, who want to move into employment, and who have
additional learning needs and an Education Health and Care
Plan (EHCP).
Volunteering
To kick-start the volunteering programme
Neighbourly arranged for colleagues across the
business to volunteer at a local charity, Sam’s
Diamonds Cancer Support in Widnes.
Sam’s Diamonds Cancer Support provides a positive
environment with workshops, social meet ups and
health & wellbeing activities, and they signpost
people to local services that they may need. They
offer friendship between survivors and work as a
team to get through a cancer diagnosis. The Garden
of Hope is a new community space used to host our
Diamond meet ups, workshops and is safe space for
hobbyists to come and go, and help make the space
something special.
On 25 July 2022 Esken’s volunteers began working
on the Garden of Hope by building structures,
painting, grass cutting and much more. The
volunteers had a great experience and invited Sam to
meet the team on 30 October 2022 to coincide with
Breast Cancer Awareness and Movember. She spoke
about recognising cancer, learning how to spot and
feel signs (Men and Women), male breast cancer and
her own story.
Apprenticeship Levy and
Co-op
Apprenticeships continue to be a popular choice
for professional development and are supported
throughout the business. This year we have also
begun to utilise unspent apprenticeship levy funds
through the Co-op Levy Share site, matching
community and voluntary organisations in need of
levy funding with businesses who have levy available
to transfer.
Through the apprenticeship levy transfer process, we
have taken the opportunity to partner with Balance
Care, part of the Kibo Hospital Services Ltd, to
support their care home staff who provide services in
Mental Health, Learning Disability and Complex Care
Supported Living. We are supporting two employees
to gain their Level 2 Adult Care Worker qualification.
Esken Limited Annual Report & Accounts 2023
45
Strategic Report Corporate Governance Financial Statements
Armed Forces Covenant
Across all our operational divisions we are proud signatories
of the Armed Forces Covenant. With 6% of our colleagues
declaring their ex-service status, we recognise the benefits
from the transferable skills of armed forces professionals.
We continue to proactively encourage ex-service personnel
to join the business working with the Career Transition
Partnership, developing relationships with local Reservist
Units and work with recruitment agencies who share our
ethos and are also Armed Forces Covenant accredited.
Internally, there is pride amongst our ex-service colleagues
for the support and recognition given to key commemorative
days, such as Armistice Day and for reservice duty and
training. Working with People Champions they ensure
the best support for our colleagues, including an internal
communications network with an Ex-Forces Yammer Group.
The business continues to develop policies and processes
to support our armed forces veterans, volunteers, reservists
and partners.
The Ministry of Defence Employer Recognition Scheme
recognises companies for their support to the Armed
Forces community including reservists, veterans, spouses,
Cadet Forces Adult Volunteers and cadets. This year
Esken Renewables were awarded the Gold Award with Star
Handling, and London Southend Airport received the Silver
Award. The covenant itself is a promise that those who have
served, or do serve, in the armed forces and their families
are treated fairly.
Responsible procurement
At Esken we understand the importance of working with
our supply chain to positively contribute to our positive
social impact and mitigating our environmental impact. The
focus this year has been to better understand the supply
chain by size and location to better inform the responsible
procurement programme.
Supplier Code of Conduct
Esken has a Supplier Code of Conduct which sets out what
suppliers can expect from Esken as well as the importance
of fairness, social responsibility, sustainability and
transparency that Esken expects from its supply chain.
Modern slavery
This year on Anti-Modern Slavery Day we wrote to our
colleagues to raise awareness of the issue of modern
slavery and how to spot someone who is being forced to
work and have the confidence to report their concerns.
We have also reviewed our policy and we have established
compulsory training for all our colleagues.
Esken’s Modern Slavery Statement and Modern Slavery and
Human Trafficking Policy is available to download on our
corporate website (www.esken.com).
46
Strategic Report
Esken Limited Annual Report & Accounts 2023
Sustainability report continued
Developing
our people
Overview
We believe in providing a structure for
career development and have put in place
a development programme to support
our employees from Level 2 through to
Level 7, providing progression pathways
from basic compliance training through to
professionally recognised qualifications,
and preparing people for current and
future opportunities within Esken.
Strategic Report Corporate Governance Financial Statements
47
Esken Limited Annual Report & Accounts 2023
22
23
21
20
22
23
21
20
2020
339
2021
201
2022
138
2023
117
2020
233
2021
52
2022
71
2023
98
2020
22%
2021
55%
2022
43%
2023
45%
2020
81%
2021
84%
2022
87%
2023
90%
2020
55
2021
31
2022
65
2023
45
2020
23%
2021
22%
2022
18%
2023
15%
2020
377
2021
157
2022
95
2023
142
2020
1,482
2021
912
2022
778
2023
753
2020
19%
2021
15%
2022
13%
2023
10%
2020
6
2021
2
2022
36
2023
38
Colleagues with more than five years’ service
Attrition: Leavers within six months of start date
Attrition rate %
Full-time %
Average hours training per year per colleague
% colleagues with more than five years’ service
Attrition: Leavers within twelve months of start date
Total Number of colleagues
Part-time %
Number of Apprenticeships
22
23
21
20
22
23
21
20
22
23
21
20
22
23
21
20
22
23
21
20
22
23
21
20
22
23
21
20
22
23
21
20
Esken Limited Annual Report & Accounts 2023
48
Strategic Report
Sustainability report continued
Developing our people continued
The new Esken Leadership Framework identifies competences
and behaviours and is designed so leaders can score
themselves on a Likert scale of developing to mature leader.
Each of the competences are interdependent with the Esken
Values, embedding these deeper into the performance
management process. This new process has been piloted
within a new Leadership Appraisal process with the Executive
teams. This focuses on leadership reflection and self-
awareness and incorporated 360 degree feedback reviews
for the first time to provide a rich source of data upon which
to reflect.
Progress has been made to further transform HR processes
through automation and self-service. Providing this level of
automation to reduce the transactional burden on the People
Teams so they can provide greater value to managers and
a higher level of assurance around the compliance to key
processes as digital records are more easily audited. Work
has been completed in the following processes: Absence,
Probation, Legal Obligations such as Declaration of Interest,
Hospitality, Entertainment and Gifts reporting, Contract End
Alerts, Leavers, Return to Work, Onboarding.
Recruitment
The Applicant Tracking System (ATS) has become an
integral part of the business, used by all recruiting managers
with support from the People Teams. Further training has
been provided for hiring managers on functionality of the
system to reduce the administration of hiring and to provide
applicants with a positive experience. Feedback from
applicants has been gathered at the end of the process
through an NPS email. This can then be tracked back to
the job, department or recruiting manager for feedback
and further development if required.
Colleague engagement
Across all our operational divisions we conducted an
Colleague Survey in January 2023. The purpose of the survey
was to measure progress against the three key areas of
improvement from our December 2021 survey. These priority
areas were culture and ways of working, senior leadership
communications, and line manager support and guidance.
The response rate was 68%, which was 3% lower than the
survey conducted in 2021. The overall engagement score was
73% – two percentage points lower than 2021.
Talent and performance
Compliance training and Learning Hub
This year the focus has been on compliance training
across the business to ensure all colleagues undertake a
basic level of training in the key areas of Safety, Health &
Wellbeing, Diversity & Inclusion, IT, and Legal. There has
been a focus on compliance with all new employees being
asked to complete the programme within 28 days. This
has been delivered through e-learning via the Learning
Hub. The business continues to seek new ways to deliver
training and development interventions with a minimal
impact to operations and proportionate cost to the business.
The monitoring of completions and refresher training has
largely been automated through the Learning Hub. This
year the training records for the operational divisions have
been transferred to the Learning Hub, enabling managers
and senior leadership teams to view their dashboards; this
provides timely reminders and immediate management
information for training completions.
ATC project
A significant level of resource has been spent on digitising
the training programme for Air Traffic Control (ATC) to the
Learning Hub. The project will enable trainers and instructors
to monitor the standard and completion of training criteria,
with an improved level of rigour in training documentation
and reporting. The ATC department have been equipped with
tablets to enable them to record training and professional
development in real time, with reminders when training is
due and alerted when documentation is not complete.
Leadership Framework
Esken’s Ascend Management & Leadership Programme has
development opportunities at team leader and supervisory
level. This enables experienced managers to consolidate
and hone their management skills through a Level 5
apprenticeship, both validated by CMI. This year the focus
has been on leadership, specifically the senior leadership
in the business by offering a Level 7 strategic leadership
apprenticeship, in partnership with Imperial College.
Engage Engage Manage Lead Lead Inspire
CMI Level 3
(Certificate)
Team leader/
supervisor
or first line
managers
Management
essentials
New or
refresher
training for
all levels
CMI Level 5
(Diploma)
Mid-level
managers
CMI Level 6
Chartered
(Degree level)
Senior
managers
CMI Level 7
(Masters
level)
Senior
leaders
Executive
coaching
Senior
leadership
talent
Esken Limited Annual Report & Accounts 2023
49
Strategic Report Corporate Governance Financial Statements
Esken Renewables
Engagement
Esken Renewables has developed a number of ways
to engage colleagues from across the business
who are spread across multiple sites and working
in operational roles.
The People Forum; meets bimonthly and comprised
of People Champions from all departments and
geographical locations. The aim of the People
Forum is to contribute to improving communications,
colleague engagement and Company culture. This
forum helps drive change to improve the levels of
colleague engagement.
A National Driver Representative Forum meets
quarterly, with additional six-weekly meetings locally
with driver representatives and the respective
operations managers. The Forum ensures the driver
population can contribute ideas and feedback on
how we can work together to make our business
even better for our colleagues, teams and customers.
On a quarterly basis Richard Jenkins, CEO of
Renewables division, and the Board hold a Live
Event. These events provide a wider business
update discussing performance, health and
safety, continuous improvement, ESG and the
people agenda. These events are recorded and
made available for all colleagues. The Live Events
coincide with the publication of our quarterly
newsletter, Fuel For Thought, featuring articles
and stories from across the business.
New questions for this survey were included to better
understand colleague engagement achieving a scoring
of 80%.
Theme scores show that there are strong relationships
between line managers and their teams demonstrating
that engagement is high.
Diversity, inclusion and belonging
We recognise that inclusion and belonging is much more
than statutory protected characteristics. Using the Business
in the Community (BITC) model, we’ve developed our
strategy to ensure all characteristics of inclusion and
belonging are integrated.
Ethnicity Pay Gap reporting
This year we have voluntarily completed Gender Pay
Gap Reports for FY21 (reportable April 2022), and FY22
(reportable April 2023).
Esken are committed to a fair and equitable pay reward
system for all. Voluntarily reporting the ethnicity pay gap
has identified the gaps in our data gathering, which has
impacted the overall information garnered from the reports.
The total ethnicity declaration across the business is 61%.
Improving the data collection will be a focus for the business
to improve the pay gap reporting.
With the limited data available, we were unable to identify
the gaps in the Ethnicity Pay Gap report for 2021. With
similar limited data declaration in the Ethnicity Pay Gap
report for 2022, it was not possible to identify any true
pay gaps.
Policies
In line with proposed upcoming legislation, we have
refreshed and rewritten our Carers Leave Policy and
introduced new Domestic Violence and Fertility Leave
Policies as part of our Family Friendly commitment.
Diversity, inclusion and belonging
Class
Culture
Gender Accent
Personality Nationality
Age
Education
Ethnicity
Religious
status
Parental
status
Marital
status
Disability
Dimensions
of Difference
Physical
qualities
Gender
expression
Mental
health
50
Strategic Report
Esken Limited Annual Report & Accounts 2023
Excelling in health
& wellbeing, safety
and security
Sustainability report continued
Overview
Esken’s health and safety provides
strategic leadership to its operational
divisions and has developed a strategy
to provide a roadmap to excellence. This
is underpinned by safety performance
KPIs, a set of safety performance metrics,
individually tailored to the specific
requirements of each operational division.
The Board approved the Target Operating
Model and the accompanying KPIs, which
provide the framework for the risk and
safety management process.
Strategic Report Corporate Governance Financial Statements
51
Esken Limited Annual Report & Accounts 2023
2020
274
2021
230
2022
366
2023
404
Number of Incidents
2020
18
2021
8
2022
8
2023
7
Number of RIDDOR Accidents
2020
39
2021
13
2022
17
2023
18
Number of Lost Time Accidents including RIDDOR
Incident Frequency Rate
2020
0.59
2021
0.43
2022
0.50
2023
0.40
Accident Frequency Rate for RIDDOR Accidents
2020
1.27
2021
0.70
2022
1.07
2023
1.03
Accident Frequency Rate Lost Time Accidents including RIDDOR
2020
8.82
2021
12.32
2022
22.99
2023
23.17
Strategy
The health and safety strategy provides a framework for
safety excellence, underpinned by a mission to move the
risk and safety culture forward from compliance towards
an embedded safety culture.
Esken has four key themes of the health and safety strategy
which are culture, leadership, risk process, and compliance,
each underpinned with their KPIs. These KPIs measure the
positive actions the business is taking to build a robust risk
and safety management culture.
In the first year, the focus has been on gap analysis. This
has provided benchmark compliance data, an understanding
of risk at a front line and established leadership behaviours.
The culture theme aims to drive positive behavioural change
across the business. The steps taken have improved
incident reporting, investigation, and feedback. The team
have also benchmarked welfare facilities across all sites to
bring colleagues’ working environments up to standard.
The leadership theme ensures the senior leadership team
are accountable and leading the safety agenda. Senior
Leadership Safety Tours demonstrates leadership across
all operational sites. The senior leadership team monitor
safety training completion rates, introduced performance
psychology training, and targeted toolbox talks to
operational colleagues.
The risk processes theme has focused on producing
comprehensive operational risk profiling. This requires all
operational tasks be risk assessed, understood and has
robust incident and crisis management plans in place to
deal with identified risks.
The safety and compliance function continue to audit and
support our operational divisions to ensure regulatory
compliance with positive moves towards more aspirational
external standards.
23
22
21
20
23
22
21
20
23
22
21
20
23
22
21
20
23
22
21
20
23
22
21
20
Esken Limited Annual Report & Accounts 2023
52
Strategic Report
22
23
21
20
22
23
21
20
22
23
21
20
22
23
21
20
22
23
21
20
22
23
21
20
Governance
Esken has enhanced its health, safety and welfare
governance across the business. The business has
established colleague safety committees and management
safety review boards. These are monitored and reported to
divisional, Group, and PLC Board meetings, where risk and
safety is always the first agenda item.
The Group Head of Risk and Safety submits a formal
monthly report to the Group and PLC Boards and provides
a consistent overview of operational risk issues. There
are monthly meetings of the Group’s risk and safety
professionals and a formal ESG monthly update.
Esken leads the strategy for health and safety across all the
business. This is supported by the individual operational
division health and safety function, who implement policy
and process. The operational divisions carry out operational
audits with Esken providing secondary audits of operational
systems and processes. Further assurance is provided by
internal audit, who this year also audited Esken’s Risk and
Safety team.
This year the internal audit have commenced a three-year
programme to audit all operational divisions against all
clauses of the ISO45001 International health and safety
management standard. To deliver this, the internal
audit team have attained an external ISO45001 Lead
Auditor qualification.
Sustainability report continued
Excelling in health and wellbeing, safety and security continued
2020
151
2021
118
2022
139
2023
154
2020
16
2021
6
2022
12
2023
11
Number of Lost Time Accidents including RIDDOR
Number of Incidents
2020
7
2021
4
2022
6
2023
3
Number of RIDDOR Accidents
2020
16.36
2021
15.95
2022
19.35
2023
21.03
2020
1.73
2021
0.81
2022
1.67
2023
1.50
Accident Frequency Rate Lost Time Accidents including RIDDOR
Incident Frequency Rate
2020
0.76
2021
0.54
2022
0.84
2023
0.41
Accident Frequency Rate for RIDDOR Accidents
Esken Renewables
Esken Limited Annual Report & Accounts 2023
53
Strategic Report Corporate Governance Financial Statements
22
23
21
20
22
23
21
20
22
23
21
20
22
23
21
20
22
23
21
20
22
23
21
20
Performance in the year
The safety performance throughout the operational divisions
has again led to an overall decrease in RIDDOR reportable
colleague accidents year-on-year of 12.5% across all
divisions for the year ended 28 February 2023, compared
with the year ended 28 February 2022.
This gives an Accident Frequency Rate of 0.34, which
when converted to the HSE metric of Accidents per 100,000
workers gives a figure of 784, which compares favourably
to the average for all industries of 1,650 determined by the
latest HSE Labour Force Survey of 2019/2020 to 2021/2022.
HSE Stress Management Standards
To understand the work-related stress the business might
place on our colleagues, it is necessary to risk assess our
performance using the HSE Stress Management Standards
as a performance benchmark to provide a gap analysis
and action plan. A gap analysis has been carried out by
occupational psychologists, Park Health. The executive
summary from Park Health notes that there is an opportunity
to adopt an organisational vision for stress and mental
health across all business focusing on positive mental
health and proactive prevention of ill health.
2020
37
2021
31
2022
62
2023
52
2020
1
2021
0
2022
1
2023
0
Number of RIDDOR Accidents
2020
3
2021
1
2022
2
2023
0
Number of Lost Time Accidents including RIDDOR
Number of Incidents
2020
7.71
2021
10.70
2022
21.29
2023
16.46
2020
0.19
2021
0.00
2022
0.30
2023
0.00
Accident Frequency Rate for RIDDOR Accidents
Incident Frequency Rate
2020
0.68
2021
0.40
2022
0.71
2023
0.00
Accident Frequency Rate Lost Time Accidents including RIDDOR
London Southend Airport
Esken Limited Annual Report & Accounts 2023
54
Strategic Report
Sustainability report continued
Excelling in health and wellbeing, safety and security continued
Esken Renewables
compliance
This year focus has been on the standard of
Respiratory Protective Equipment on the operating
sites within Esken Renewables to improve the level
of protection for colleagues to reduce skin and eye
contact with dust, as well as improving the protection
of lungs. A series of site tours demonstrated to
operational colleagues the need for the change in
RPE and to engage them in the selection process.
A number of options has been explored for full
face covered RPE and a supplier was selected that
provided longevity battery life for the powered
unit, along with identical replacement parts for the
Powered and Non-Powered options. The units were
distributed across six locations in the business
and the supplier provided for face fit testing and
training in the correct use and maintenance of
the equipment.
Wellbeing
Esken understands the importance of the wellbeing of our
colleagues and has created a programme of support in line
with the four pillars of wellbeing: physical, emotional, mental
and social.
The business has mandatory induction training for all
new starters, with a focus on health and wellbeing. The
mandatory manager training, Management Essentials,
delivered through the Learning Management System, which
requires all managers to undertake additional training in
many aspects of colleague wellbeing support and personal
development.
Line managers play a significant part in the success of
the wellbeing of their colleagues. Their role to support
colleagues and signpost benefits, makes a substantial
difference to the success of our wellbeing strategy across
the organisation. We recognise it’s not just the initiatives
in place but ensuring colleagues are aware of them. The
business has invested in wellbeing support and we want
to ensure it reaches the people who really need it.
Inclusive wellbeing is an important part of us being able to
create an inclusive workplace culture. The inclusive access
to wellbeing benefits spans gender, age, pay grades, job
role, and location. The result is that every single colleague,
regardless of location or position, is able to access both
telephone and digitally-led quality wellbeing material and
support 24/7.
Wellbeing data is gathered and used to identify links
between wellbeing, current working practices, and inform
future wellbeing priorities. We are proud that a culture has
been developed where colleagues feel able to speak up
more freely about their mental wellness. Over the past 12
months 15% of the workforce have utilised our Colleague
Assistance Programme, up by 31% from the previous year,
who otherwise would have needed to source their own
support, or indeed receive no support at all.
As we emerged from the pandemic and started to operate
within the new norm, financial wellbeing became our priority.
Many colleagues have had to take pay cuts or been on
furlough pay for a long period and with the cost of living
crisis the strategy was split into Savings for Today – Savings
for Tomorrow. This supports colleagues to make immediate
savings as well as helping them save for the future.
A salary sacrifice scheme for pension contributions has
been piloted which allows participating colleagues to benefit
from savings to their net pay; as the pilot evolves, more
colleagues will be able to access the programme. The new
pension scheme via Cushon will also provide an array of
financial benefits to pension members such as Corporate
ISAs, LISAs and access to GIAs, further supporting the
Benefits for Today – Benefits for Tomorrow financial
wellbeing strategy.
Esken Limited Annual Report & Accounts 2023
55
Strategic Report Corporate Governance Financial Statements
London Southend
Airport risk process
Building on existing corporate risk London Southend
Airport (LSA) has focused attention on embedding
Operational Risk, Incident, and Crisis Management
frameworks across all levels of the business. This
identified the corporate risk level, risk ownership,
and risk approach with operational managers. Each
of the top risks now require a first response incident
management plan to be in place. This provides
assurance that top operational risks are being
mitigated. Consequently, this transitioned LSA’s
emergency response process from being primarily
blue light incident-led to the widely recognised
Bronze, Silver, or Gold tiered response, triggered
by business disruption thresholds.
This was achieved by working with the senior
leadership team, managers, and colleagues from
across the operation. A series of workshops with
facilitated exercises have supported colleagues to
identify and own their specific risks and mitigation.
For the second year running during Know Your Numbers
Week colleagues were able to access free personal medical
assessments across multiple business locations. Early
diagnosis of key health conditions means colleagues are
able to get treatment early and remain in the business rather
than potentially having to take sick leave further down the
line. For a very reasonable cost per head, those who wanted
a personal medical assessment were able to be assessed
irrespective of pay grade or job role.
Our physical health campaigns have been developed to
be relevant and inclusive to all parts of the business. For
example, Back Care Awareness Week targeted HGV drivers,
baggage handlers and hybrid workers predominantly based
at home.
56
Strategic Report
Esken Limited Annual Report & Accounts 2023
Sustainability report continued
Taking climate
action
Overview
Esken is committed to decarbonisation
across all its operating divisions in line
with the UK Government’s Net Zero 2050
target. The focus for the business is to
develop a carbon reduction plan for each
of the operating divisions with the overall
aim to establish a Roadmap to Net Zero.
Strategic Report Corporate Governance Financial Statements
57
Esken Limited Annual Report & Accounts 2023
2023
28%
(2022: 25%)
(2021: 22%)
(2020: 19%)
2023
196
(2022: 191)
(2021: 198)
(2020: 147)
% electricity from
renewable sources
Tonnes CO
2
e per
£m of revenue
TCFD Statement
Esken has made climate-related financial disclosures
consistent with the TCFD recommendations and
recommended disclosures in this TCFD summary
against: Governance (all recommended disclosures),
Strategy (disclosures (a) and (b)), Risk Management
(all recommended disclosures) and Metrics & Targets
(disclosure (a) and (b).
Esken has not included climate-related financial
disclosures consistent with the TCFD recommendations
and recommended disclosures in relation to strategy
(disclosure (c) – scenario analysis) and metrics and targets
(disclosure (c) metrics used by the business. For strategy
disclosures further work will be undertaken however in
light of the strategic review of the overall business it is
unlikely this will be achieved in the coming financial year.
Metrics and targets are in place to achieve net zero but
in light of the business undertaking a strategic review,
COVID-19 recovery and a new management team, the
targets and metrics are long term. However the business
will bring forward these deliverables when the future of
the business has emerged from the strategic review and
COVID-19 to meet the required disclosures.
Governance
Esken has established a governance structure that has
oversight for all environmental risks and opportunities.
At the top level of management of the business Esken
has an Environmental, Social, Governance (ESG) Board
Sub-Committee. Ginny Pulbrook, ESG Board sponsor holds
monthly meetings to be appraised of the month’s progress
against the ESG strategy. Ahead of all meetings, minutes
and actions are shared, this provides the Board with full
visibility of risks and opportunities. Further updates are
given to the Audit Committee, Remuneration Committee
and full Board, which provides progress against the strategy,
risk register and KPIs.
The accountable body for ESG at Esken is the Steering
Group. Membership is comprised of representatives across
the operating divisions and core functions. Chaired by Nick
Dilworth, Chief Operating Officer as Executive ESG Sponsor,
the Steering Group has oversight of all ESG activity, reviews
the strategy and the data that informs programmes,
monitors progress against KPIs, and assesses risks to the
business. The Steering Group are responsible for aligning
the strategy to changes in government policy, legislation
and regulation to ensure the business is compliant across
the environmental and social agenda.
Working Groups comprised of representatives from
each business division meet monthly to deliver progress
against the ESG strategy as set out against the five-pillar
framework. The focus of the taking climate action Working
Group has been on data collection, development of the
Roadmap to Net Zero and overall environmental strategy.
Strategy
Esken’s Environmental, Social, and Governance strategy
has been developed through a materiality assessment and
materiality matrix. Through this process the ESG five-pillar
framework has been developed and each pillar has reported
its priorities and progress in this report. The ‘taking climate
action’ pillar sets out the measures that are being taken to
mitigate climate impacts on the business, manage climate-
related risks and provide information on climate and
energy performance.
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Strategic Report
The climate-related strategy has a governance structure
that drives transparency, continuity, and accountability
for delivery against the strategy. It has established a
risk management process, where climate-related risk is
embedded into each operational division risk register and
each core function, furthermore climate-related risk is part
of the budgeting and capex process. The strategy has been
developed on data, to inform the required intervention and
metrics to measure and report progress.
As members of Business in the Community Esken participated
in the Responsible Business Tracker, a peer benchmark of
businesses’ ESG programme. The output of the Responsible
Business Tracker feedback has further informed the ESG
strategy and overall carbon reduction plan.
As the strategy developed, consideration has been given
to the financial impact on the specific business sectors,
the products and services, and the impact of changes
to legislation and regulation to the business assets and
infrastructure. Further attention has been given to the
access of capital, operating costs and revenue, acquisitions
and divestments, capital and expenditure, and capital
allocation. It will also help identify the interdependencies
which will affect the spend, to positively impact the
elimination of carbon from our operations.
Climate-related scenario analysis will help us to understand
and quantify how climate-related events and their
associated risks and opportunities may impact the Group’s
business, strategy and performance.
During the last year we have enhanced our understanding of
climate risk, and started to develop and consider potential
strategies for the business to both mitigate the impact
of climate change and also to reduce the Group’s impact
on the climate. Developing our Roadmap to Net Zero
reduction will be a key step for the business in determining
the way forward, and our intention is that our plans will be
considered against a range of different scenarios.
However, we have not yet implemented detailed scenario
analysis, as we do not consider that we have sufficiently
progressed in our journey to fully understand the potential
risks, opportunities or solutions. This is particularly
challenging as our core businesses (Esken Renewables and
Aviation) are distinct and very different. We are also aware
that changing technology will be key to the delivery of our
ambitions, and we are reliant on significant changes and
advances in such areas as aircraft fuels; and alternatives to
diesel power for HGVs and our operating plant in Renewables.
Our intention is to develop scenario analysis exercises and
complete both quantitative and qualitative assessments
of climate risks particularly relevant to our activities,
which will be scored across different time horizons and
climate scenarios.
Risk management
The successful management of risk is a fundamental
part of Esken’s activities and is critical to the delivery
of our business plan. This includes the understanding,
management, monitoring and reporting of climate-related
risk factors where the challenges we face, both physical
and transitional, continue to increase.
Esken’s formal approach to risk management is delivered
through the application of our risk management framework,
which articulates the risk appetite, and sets out our approach
to and responsibilities for the identification, evaluation
and management of risk. Climate-related risk has been
increasingly embedded within the Esken’s risk management
process, and during the year the Board, through the Audit
Committee, reviewed the risk framework to increase the
emphasis on climate-related risk. Our risk appetite states:
“Appetite for climate-related risk is low, and Esken is
implementing arrangements to assess and address physical
and transitional risks for its activities.”
Sustainability report continued
Taking climate action continued
The Board
Audit
Committee
EMB and Divisional Boards
Corporate, divisional and
functional risk registers
Corporate risk
management process
Principal and corporate
risk information
Activity and risk information
ESG activity information, including
risks and mitigations
Divisions and Group functions
ESG Working Groups
ESG
Committee
ESG Steering Group
ESG risk register
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Strategic Report Corporate Governance Financial Statements
Our approach to risk management includes a corporate
risk register, covering Esken’s most significant risks, and
underlying risk registers for each of the operating divisions
and key corporate functions and activities. Each register is
reviewed formally at least quarterly and significant risks are
escalated from the underlying registers to the corporate
register, to ensure there is appropriate consideration at the
most senior levels. We have a specific ESG risk register,
which is reviewed by Esken’s Head of ESG and the ESG
Sub-Committee, and the corporate risk register and
operating divisions’ registers include climate-related risks.
The diagram below summarises the information flows and
integration of ESG risk with Esken’s risk management process.
Identifying climate change risk
Our structure of business-led Working Groups, reporting
to an ESG Steering Group, and then to the ESG Committee
provides detailed knowledge and expertise in each area,
ensuring that they are best placed to identify both physical
and transitional risks and develop their workstream plans
and activities. The reporting lines ensure that those risk-
led plans developed by the Working Groups are subject to
effective review and challenge prior to their submission
to the ESG Committee for agreement.
The Corporate, Aviation and Renewables risk registers
are updated each month and reported to the Esken
Management Board (EMB) / Divisional Operating Board
(as appropriate). The Group function risk registers, which
include a specific ESG risk register, are updated at least
quarterly, and any high risks in those are regularly reviewed
by the EMB to assess whether they should be escalated
to the corporate risk register. During the year we have also
undertaken an exercise with the divisions and for key Group
functional areas such as People, to identify any specific
ESG-related risks that should be added to those registers
for ongoing monitoring.
The Audit Committee receives and reviews the Corporate
risk register at each meeting, and we have a full Board
review of Group risks annually, which includes consideration
of ESG risks.
This integrated approach (documented in our Group risk
management framework) provides clear visibility of ESG-
related risk through the ESG governance framework, within
the divisions, with senior Group executive leadership, and at
Board level.
Addressing climate change risk
The business-led Working Groups have developed plans for
a range of activities under our ESG banner, with a particular
focus on climate change. A range of focused plans have
been developed to reduce our impact on the environment,
and to mitigate the potential risk to the business from the
physical risks of climate change.
We evaluate risks using a scale which takes into account
different potential impacts, and we consider the
timescale over which impacts may arise and change.
When considering climate-related risk we have based our
assessments over the following time scales:
• short term – within 5 years
• medium term – 5 to 10 years
• long term – over 10 years
Our assessment of exposure to key climate-related risks over time includes:
Risk Status Timescale
Loss of asset, inability to access
or use assets through extreme
weather events
Currently low risk, but this is likely to increase
if the trend of increasingly severe weather events
continues.
Medium to long term
Asset values deteriorate (e.g.
not meeting increasing energy or
efficiency standards)
Low to medium risk, and in the medium term this
is likely to increase as we seek to, for example,
replace our HGV fleet and Renewables plant with
greener alternatives.
Medium to long term
Potentially significant cost of
compliance
We consider this to be a medium risk – there are costs
across our business, from asset management, the
implementation of more energy efficient/low emissions
solutions, the need to reduce waste and water usage,
and for the collection and reporting of increasing
amounts of data.
The costs of delivery on our decarbonisation pathway
may also be significant.
Short to medium term
Loss of investor interest If we do not deliver effective climate risk reduction
solutions, it is possible that investors’ confidence may
be reduced.
Short to medium term
Inability to access green funding
options
Access to cheaper financing through green funding
options will not be available to the Group if it does not
fulfil the requirements.
Short to medium term
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60
Strategic Report
Metrics and targets
Esken’s baseline Scope 1 and 2 data is FY18/19, the
year-on-year comparisons are set out in the tables below.
The baseline data has been used to inform the Roadmap
to Net Zero. The reduction targets have been developed
into KPIs and aligned to Executive Director remuneration.
Both Esken Renewables and London Southend Airport
have developed Roadmaps to Net Zero by 2040 and have
identified short, medium, long-term reduction targets for
both Scope 1 and 2 carbon emissions.
Roadmap to Net Zero
Esken is committed to reducing its operational impact on the
climate and in line with government policy has developed a
Roadmap to Net Zero for each of its operating divisions.
The business has established robust data collection which
has underpinned the reduction targets for decarbonisation
for both Esken Renewables and London Southend Airport.
The focus has been Esken’s direct emissions and developing
a reduction plan for Scope 1 and 2 emissions while
continuing to develop Scope 3 emissions’ data collection,
reporting and reduction plans. The Roadmap to Net Zero
and target reduction emissions includes:
Scope 1
• Esken Renewables Scope 1 emissions are 94% of their
overall carbon footprint. Diesel makes up 97% of their
Scope 1 emissions. Diesel removal along with gas oil will
reduce Esken Renewables Scope 1 emissions to 0%. In
the short-term an 8% reduction, aggregated over the next
three to five years, would be achieved with the new fleet
replacement. Esken Renewables will also replace small
vehicles and trial biofuels on sites.
• London Southend Airport Scope 1 emissions are 13% and
they have established a long-term reduction plan which
will replace airside fleet, remove diesel and petrol from
airside vehicles and source zero emission alternatives
to oil-fired heating, which will achieve London Southend
Airport’s Scope 1 emissions by 2040.
Scope 2
• Esken Renewables Scope 2 emissions are 8%. London
Southend Airports Scope 2 emissions are 87%. Both
Esken Renewables and London Southend Airport have
established a medium-term reduction plan to move to a
renewable energy contract by 2030 reducing Scope 2
emissions by 100%.
Esken’s carbon footprint calculations
Carbon data reporting methodology
In the FY22/23 Esken had emissions of 23,633 tonnes of
carbon dioxide equivalent (tCO
2
e) which is a decrease
of 2,827 tCO
2
e against the baseline year of FY18/19. The
intensity ratio that has been reported is tCO
2
e emissions per
£m revenue (tCO
2
e/£m) and this ratio saw a 9% increase
compared to the baseline year.
Esken continues to illustrate the year-on-year comparison
beginning with the benchmark year of FY18/19 total gross
emissions data, to include all Scope 1 and Scope 2 emissions.
Scope 3 emissions have been reported separately.
Energy consumption by source
Over the last two financial years we have been able to
establish the energy consumption for Esken Group across all
business divisions. The methodology used is the operational
control approach for calculating carbon emissions. All
emission sources estimated to be greater than 1% have
been included in the statement of energy consumption.
The results for financial year FY22/23 state that the total
energy consumption was 12.8 million kWh with an intensity
ratio of 0.11 million kWh/£m (energy consumption per million
pound revenue).
Carbon data reporting methodology
The methodology used to prepare Esken’s carbon data
calculation has been detailed below:
• Based on Defra and BEIS, Environmental Reporting
Guidelines (March 2022).
• For Esken’s carbon footprint the intensity metric used for
total Greenhouse Gas (GHG) emissions per £m revenue
(tCO
2
e/£m) for normalising emissions.
• For Esken Renewables’ carbon footprint the intensity
metric used for total Greenhouse Gas (GHG) emissions
per tonnage of wood supplied (tCO
2
e/tonnes).
• For London Southend Airport’s carbon footprint the
intensity metric used for total Greenhouse Gas (GHG)
emissions per passenger (tCO
2
e/passenger).
• All Scope 1 to 3 emission sources estimated to be greater
than 1% have been deemed material and are included.
• Scope 1 to 3 data has all been collected from within
the UK.
• Includes emissions that Esken is responsible for based on
an operational control approach.
• The baseline year is FY18/19 and compared to the current
reporting year of FY22/23.
Operational control
The operational control approach accounts for Esken’s
Scope 1 to 3 emissions from all its operations. This includes
all sites that are operated by Esken whether they are owned
or leased. This approach to consolidation is different to
the financial control basis that is used to compile the
Company accounts.
Definition of operational control
The definition of the operational control where Esken is
deemed to have operational control. If the Group or one
of its subsidiaries has the full authority to introduce and
implement its operating policies at each individual site.
The following operational divisions were captured within
the FY22/23 reporting year:
Company divisions
Division Under Company operational control
Aviation London Southend Airport
London Southend Jet Centre
Solar Farm
Holiday Inn Southend
Star Handling
Energy Esken Renewables
Sustainability report continued
Taking climate action continued
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Strategic Report Corporate Governance Financial Statements
Esken’s carbon footprint
Greenhouse Gas (GHG) Emission Source
FY18/19
tCO
2
e
FY19/20
tCO
2
e
FY20/21
tCO
2
e
FY21/22
tCO
2
e
FY22/23
tCO
2
e
Total change
baseline
FY18/19
tCO
2
e
Scope 1 (fuels, business travel, refrigerant) 23,523 23,987 19,623 17,234 19,579 3,949
Scope 2 (Electricity) 2,968 2,420 3,353 2,765 4,089 1,121
Scope 3 emissions
Esken has improved its data collection and carbon reporting to begin to report Scope 3 emissions. These are indirect
emissions are from outside of Esken’s operation and include supply chain, transport and distribution, leased assets, business
travel, waste and business travel and commuting. Esken will continue to work with the supply chain, customers, airlines and
passengers to enhance data collection and reporting.
Esken Scope 3 emissions
FY18/19
tCO
2
e
FY19/20
tCO
2
e
FY20/21
tCO
2
e
FY21/22
tCO
2
e
FY22/23
tCO
2
e
Total change
baseline
FY18/19
tCO
2
e
Scope 3 (water, aviation fuel, business travel,
fuel, materials used, waste) N/A N/A N/A 119,447 114,537 (4,911)
Strategic Report
Esken Limited Annual Report & Accounts 2023
62
Sustainability report continued
Minimising our
environmental
footprint
Overview
Esken is committed to reducing the
environmental impact of its operational
divisions. In addition to reducing carbon
through the Roadmap to Net Zero the
business is focused on the areas of
energy, air quality, noise, waste, and
water. Through the governance structure
the Working Group monitor, report, and
create interventions in all of the focus
areas. We continue to work towards
external verification to drive forward
a positive environmental programme.
2020 2021 2022 2023
Reportable environmental incidents
0 1 1 4
Volume and % of recovered waste used for energy
feedstock by Esken Renewables
83 71 78 69
Waste diverted from landfill to turn into fuel
1.2 1.0 1.2 1.1
Total waste
1.4 1.4 1.5 1.6
Group waste recycled or converted into energy
99.5 99.5 99.5 99.5
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Strategic Report Corporate Governance Financial Statements
Energy efficiencies
As the business develops its Roadmap to Net Zero, there
has been focused attention on Scope 2 emissions. As
the business prepares for the Energy Saving Opportunity
Scheme (ESOS) assessment, a review of recommendations
from the previous audit has been undertaken and built into
Scope 2 reduction plan, as the business continues to drive
energy efficiencies. The overall objective for the Roadmap to
Net Zero is to move to a 100% renewable energy tariff within
the next 10 years.
The solar farm at London Southend Airport has estimated
the positive impact that the renewable energy generation
has in terms of carbon emissions. In the last year the solar
PV plant achieved a total energy output of 1,992,145 kWh.
There have been 172 hours of zero import, this is the
estimated number of hours that 100% of the site’s electrical
load was from the solar panels. This equates to 514 of
total number of average UK households that this system
could have provided yearly electricity for. The total mass of
carbon emissions that the solar panels have enabled the
airport to save is 984 tonnes of CO
2
. This is the equivalent
of 5,708,107 trees planted, as the electricity generated has
offset the same amount of CO
2
as planting this many trees.
Esken Renewables plays a vital role in delivering the UK’s
renewable energy targets with biomass power plants
throughout the UK. Through the supply of biomass products
to biomass partners and customers, Esken Renewables
enables the production of low carbon energy for use by
homes and businesses. This year Esken Renewables’
customers used the total of 1,616,000 tonnes of biomass,
generating an estimated 2,060,000 MWh of electricity,
which is sufficient to power around 710,000 homes.
Additionally Esken Renewables uses some waste heat from
the site at Widnes, saving up to 9,867 tonnes of CO
2
per year.
Managing noise
Across all Esken’s operating divisions, noise is managed
responsibly to minimise the impact on the communities living
close to all our operational sites.
Esken Renewables complies with all Local Planning Authority
standards by undertaking independent noise assessments
at processing plants. To further minimise noise impacts from
the operation Esken Renewables continues to invest in the
latest models of processing equipment and vehicles.
London Southend Airport offers a number of initiatives
to monitor noise, resident engagement and works
collaboratively with airlines, ground handlers, and regulators
to reduce noise. An example would be noise surcharges
of higher fees relating to night-time operations, to further
encourage the use of quieter planes and operations.
Community and resident engagement supports the
careful management of noise complaints, monitoring and
a management system to improve policies, procedures
and performance. The online self-service system WebTrak
provides an easy, quick and efficient way to register a
noise complaint whilst allowing users to view all aircraft
movements around the airport.
The Community Noise forum is continually reviewed
to ensure the terms of reference, membership and
communications can be improved. The quarterly meetings
are led by an independent Chair with a clear agenda to
discuss local noise concerns, provide transparency on
airport controls and operations, and identify where noise
abatement measures could be improved. Membership is
being reviewed to include more community groups and
Parish Councils. Through the Community Noise Forum
discussions, London Southend Airport acquired electric
ground power units specifically to reduce noise from the
night-time cargo loading/unloading operations.
Promoting a circular economy
Esken Renewables, by the very nature of the business,
enables the circular economy by producing biomass fuel
products previously destined for landfill delivery to energy
from waster plants. A full waste management solution plays
a vital part of the circular economy within the waste wood
sector, striving to improve the social and environmental
credentials of the products and services sourced.
Sustainable forest management
Esken Renewables has a Forestry Certification Scheme,
where custom driven requirements for virgin material is
done so under the FSC Chain of Custody Standard, allowing
transfer claims for various types of FSC material from source
to customer. All forest biomass is sourced from sustainably
managed UK forests that are certified against sustainable
forest management standards.
Protecting air quality
Esken has air quality monitoring in place to remain
under government guidelines. This monitoring also
informs mitigation programmes to ensure colleagues and
communities have clean and healthy air. London Southend
Airport works with airlines to bring cleaner aircraft to
the airport. Esken Renewables continues to review dust
suppression equipment with the aim of reducing the
potential for off-site impacts.
Protecting biodiversity
As part of a thorough planning process, all operating
divisions protect biodiversity by undertaking impact
assessments. Throughout the operational management
important biodiversity impacts are identified and mitigated
against through established management plans.
Esken Renewables, when developing new sites, will consider
biodiversity issues as part of the formal planning, permitting,
and licensing to minimise any potential adverse impacts on
the local ecosystem.
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Strategic Report
Carbon emission
Diesel makes up 93% of Esken Renewables’ carbon
footprint. As the business develops a Roadmap to
Net Zero, the key objective is to minimise diesel
usage by sourcing alternative fuels and reducing
the carbon footprint.
Esken Renewables have worked with suppliers and
piloted schemes to explore the interventions to reduce
diesel usage in the business. A full HGV, van, and car
fleet audit has been carried out to ensure the correct
day-to-day operational levels. The pilot schemes have
helped address issues of fuel efficiency, which also
impact the bottom line with the current cost of diesel.
It has reduced the requirement to repair the HGV,
van, and small vehicle fleet and reduced maintenance
spend. Through market research, the business
engaged new suppliers to better understand new
fuel types and introduce new technology that have
the capability of user requirements. This stakeholder
engagement has been key as there are impacts to
supply and service levels, commercial needs and
timeframe required.
The HGV fleet replacement programme will bring about
efficiencies and reduce the carbon footprint by 8%.
The small vehicle pilot would reduce carbon by 0.5%.
The changes introduced required new ways of
working, fuel sources and technology and the
business recognised the importance of engaging
colleagues from the outset of all pilot schemes. The
aim is to improve the brand reputation, become an
employer of choice, increase driver recruitment, and
improve our driver colleague morale and retention.
Conserving water
As part of the overall Roadmap to Net Zero, Esken aims to
reduce waste consumption across all its operational divisions,
the priorities are to drive efficient water usage, prevent
pollution and limit discharge. This year London Southend
Airport rolled out a waterpipe repair programme and achieved
a 24.9% reduction on forecasted water usage.
Managing waste
Across all Esken’s operating divisions the aim is to minimise
waste, manage waste generated, and zero waste to landfill.
Esken Renewables ensure all office-based waste and
residual waste streams arising from biomass fuel are sent for
further treatment and recycling. London Southend Airport
works with a local business to deliver zero waste to landfill
with all remaining non-recycling waster used to generate
energy. Across all sites colleagues have made a concerted
effort to reduce postage by moving to online billing and
subscriptions further reducing waste created.
Sustainability report continued
Minimising our environmental footprint continued
Esken Limited Annual Report & Accounts 2023
65
Strategic Report Corporate Governance Financial Statements
Non-financial information statement
In line with the Non-Financial Reporting Directive, we have set out below where relevant information we need to report on
can be found.
Reporting requirement Policies and standards Reference in Annual Report
1. Environmental matters • Environmental, Social & Governance
(ESG) Policy General Statement
• ESG framework
• Group Environmental Policy
• Sustainable Procurement Policy
• Our story page 2
• Sustainability report pages 34 to 65
• Stakeholder engagement and s172
pages 66 to 72
• Key performance indicators pages
24 to 25
• Principal risks and mitigations pages
80 to 84
2. Colleagues • Recruitment Policy
• Group Health & Safety Policy
• Equality, Diversity & Inclusion Policy
• Our story page 2
• Developing our people pages 46 to
49
• Stakeholder engagement and s172
pages 66 to 72
• Excelling in health & wellbeing,
safety and security pages 50 to 55
3. Human rights • Modern Slavery Statement
• Modern Slavery & Human Trafficking
Policy
• Dignity at Work Policy
• Data Protection Policy
• Safeguarding Policy
• Building sustainable communities
pages 42 to 45
• Stakeholder engagement and s172
pages 66 to 72
4. Social matters • Sustainability report pages 34 to 65
• Principal risks and mitigations pages
80 to 84
• Stakeholder engagement and s172
pages 66 to 72
5. Anti-corruption & anti-bribery • Anti-Bribery & Corruption Policy
• Whistleblowing Policy
• Ethics & Business Integrity Policy
• Stakeholder engagement and s172
pages 66 to 72
• Principal risks and mitigations pages
80 to 84
6. Business model • Business model, pages 12 to 13
7. Principal risks • Cyber Risk Policy • Risk management and our principal
risks, pages 76 to 79
8. Non-financial KPIs • Key performance indicators, pages
24 to 25
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66
Strategic Report
Stakeholder engagement
Section 172(1) statement
In their discussions and decisions during the year ended 28 February
2023, the Directors of the Company have acted in the way that they
consider, in good faith, would be most likely to promote the success
of the Company for the benefit of its members as a whole (having
regard to stakeholders and the matters set out in sub-sections 172(1)
(a)-(f) of the Companies Act 2006 (the 2006 Act).
Esken’s strategy is to drive sustainable shareholder value
over the medium-term through growth in our aviation and
renewables business, which this year we are doing in the
context of the outcome of the strategic review referred to
on page 22.
We believe that its key stakeholders are:
1. Our employees – they are the foundation on which all of
our achievements are built. They need to be engaged
with our customers and suppliers to drive the growth we
seek. Their knowledge and expertise are valuable assets
we seek to nurture.
2. Our customers – our customers are the foundations
of our business success. They must be engaged as
partners as we seek to build sustainable relationships to
support the building of value in the medium term.
3. Our suppliers – our suppliers provide us with our waste
wood supplies which are so essential to our market-
leading position in the biomass sector and our airline
partners in Southend are essential to driving passenger
footfall through our airport.
When making decisions in our business, the Board takes into
account (amongst other issues):
• the likely long-term consequences of any decisions we
make;
• the interests of our employees;
• the need to foster our business relationships with
suppliers, customers and others;
• the impact of our operations on the community and
environment;
• our desire to maintain a reputation for high standards of
business conduct; and
• the need to act fairly, as between members.
These factors are also borne in mind when developing
our strategic priorities, our policies, and in guiding our
behaviours and values.
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67
Strategic Report Corporate Governance Financial Statements
Our Executive Chairman, together with the Company
Secretary, produces an agenda for each Board meeting
that ensures the requirements of s172 are always met
and addressed.
For example:
• We have standing items on agendas for meetings where
the Executive Directors present and update the Board on
our strategic progress, business development, financial
performance and risk management. Reports on corporate
governance and ‘horizon scanning’ are also included
where timely and appropriate.
• Papers presented to the Board are required to address
relevant stakeholder interests as appropriate.
• Regular presentations and reports to the Board are
made on matters such as health and safety, our ESG
framework, risks and risk management. The Board
also considers regularly our competitors and the wider
industries in which our businesses operate.
• Our Board minutes detail decisions that the Board has
made, and the relevant factors that the Board has taken
into account when reaching those decisions.
4. The communities in which we operate – as a key supplier
or owner of significant infrastructure assets in the
communities in which we operate, we must be mindful of
the impact of our operations on those communities and
also seek to harness the benefits which they can bring.
Within our ESG framework, which sets out our ambitions
on social impact and environmental mitigation, the Board
are committed to decision-making that supports our
commitments to our people and planet.
5. Regulators and government bodies – regulators have a
key part to play in guiding and shaping the Group’s core
operations (from the Environment Agency providing
the regulatory framework within which our biomass
processing and storage facilities operate, to the Civil
Aviation Authority, which has a critical part to play in
shaping the running of our airports, and the various
financial regulators which govern the way we operate as
a public company).
6. Shareholders and financiers – we rely on all of the
stakeholders who finance our operations in both the
short and long term (from our shareholders who have
provided our long-term financing for the future, to
our key banking partners who provide key help with
our immediate financing requirements for our ongoing
operations and the legacy liabilities which the Group
is subject to, to the asset finance providers who assist
us with the financing of opex and capex on which the
businesses depend).
Within our ESG framework, which sets out our ambitions
on social impact and environmental mitigation, the Board
are committed to decision-making that supports our
commitments to our people and planet. Details of our ESG
programme can be found in our Sustainability Report starting
on page 34. By positively engaging with our stakeholders,
we are able to prepare for policy changes, reduce risk and
enhance collaborative projects.
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68
Strategic Report
Stakeholder engagement continued
In common with many businesses, we
find many employees wanting to work
more flexibly than before, and demanding
that employers put their health and
wellbeing front and centre of the people
agenda. Creating a great employee
experience and attractive place to work
has never been more important.
What have we done:
Across all our operational divisions we conducted a
Colleague Survey in January 2023. The purpose of the
survey was to measure progress against the three key areas
of improvement from our December 2021 survey. These
priority areas were set out in our 2022 Annual Report:
• Culture and ways of working.
• Senior leadership communications.
• Line manager support and guidance.
Our survey response rate was 68%, which was 3% lower
than the survey conducted in 2021. The overall engagement
score was 73% – two percentage points lower than 2021.
New questions for this survey included the following scoring
80%, 33%, and 55% respectively:
• I enjoy my job.
• The reward and benefits I receive are fair for the work I do.
• I understand what benefits are available to me.
These scores show that there are strong relationships
between line managers and their teams and that
engagement is high.
Highest scoring individual questions are in our line
management and engagement categories; 89% believe their
line manager treats them with respect. This is the highest
scoring question, the biggest improvement and the most
above external benchmark.
Perceptions of line management support are strong
and have improved significantly since the last survey.
Perceptions of line management support are strong
across all divisions. Eight of the 33 managers with enough
responses achieved an overall line management support
score of over 90%.
Senior leadership communication is key to levels of
engagement and so it is important to maintain focus here
and scores have improved since 2021, and there have also
been good improvements in approaches to heath, safety
and wellbeing.
• Engagement can be difficult to influence directly, so
analysis has been undertaken to identify which questions
from the survey align most closely to the engagement
questions. Focus here will help us to maintain and improve
levels of employee engagement. These are known as the
‘drivers of engagement’ and each team/division will have
its own set of questions that drive engagement the most in
that area.
Themes Response favourability Comparison
Line Manager Support
7%14%79%
+25
Senior Leadership Communication
25%23%52%
+7
Ways of Working
25%21%54%
+6
Environmental, Social & Governance
15%35%49%
0
Engagement
7%20%73%
-2
Employees
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Esken celebrates inclusion
and belonging so it’s
imperative for every single
employee to have a voice.
We want to listen and take on
board our employees’ views.
The Employee Survey is an opportunity for employees to be
completely honest, and tell us what they think is working
well and what isn’t. Clear and honest feedback from our
workforce is vital and I’d like to thank our employees for
once again playing their part.
• Our highest scoring questions as an organisation overall are in our Line Management and
Engagement categories. 89% believe their line manager treats them with respect. This is the
highest scoring question, the biggest improvement and the most above external benchmark.
Question Response breakdown
Vs External
Benchmark Vs 2019 Vs 2021
I understand how the
work I do contributes
to the success of
my division
5%12%83%
-4 +2 n/a
My division is
committed to making a
positive difference to
our people, community
and environment
15%35%49%
-15 n/a 0
At work, my
opinions count
22%21%57%
-7 +4 +12
The reasons for
change are clearly
communicated to me
27%23%51%
-4 +14 +6
My divisional leadership
team provide a clear
vision for the overall
direction of my division
26%26%48%
-15 +6 +3
= Engagement
favourable
neutral
unfavourable
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Stakeholder engagement continued
Maintaining strong and respectful
relationships with our business partners,
customers and suppliers is key to our
long-term success in developing valuable
growth from our operating assets.
Regular communication with our customers enables
us to better understand their needs, expectations and
priorities. Our procurement function helps us formalise our
engagements with suppliers and strategic partners as we
recognise the benefits that this can bring to our business.
Our approach is to engage with and develop relationships
with sustainable suppliers wherever possible.
How did we engage with them?
• Suppliers are currently engaged on an individual basis via
our procurement functions within the divisions.
• We hold quarterly reviews with our strategic partners and
framework suppliers.
• We attend supplier forums and networking events.
• We implement supplier onboarding processes where
appropriate.
• We have a Supplier Code of Conduct.
What did we talk about and how did we respond?
Key examples of how we engaged with our suppliers and how we responded to those issues during the year are as follows:
Business What did we talk about? How did we respond?
Esken Renewables Esken Renewables engaged with Cramlington
biomass plant regarding its existing fuel supply
arrangements following a change in ownership
of the facility.
Through renegotiating its fuel supply
agreement, Esken Renewables secured
exclusivity of supply to the biomass plant
supplying a range of biomass fuels whilst also
extending the contract by six years.
London Southend Airport We talked to easyJet about their reintroduction
at the airport during the year. This included
service levels, costs and routes.
In support of our re-start-up activity for London
Southend Airport, and following productive
commercial negotiations, we signed a multi-
year partnership with easyJet. This now
encompasses an enhanced route offering for
the term of the partnership.
Star Handling We communicated with customers about
our staffing levels and readiness for
Summer operations.
We adapted our staffing levels accordingly and
ensured that we were appropriately staffed
and ready to execute handling plans for
each customer.
Partners, customers and suppliers
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We recognise the importance of
contributing to, and working with,
the communities in which we operate
and seek to do this through a range
of activities such as volunteering
and community forums.
How did we engage with them?
• Social media channels and via our website.
• Airport Consultative Committee meetings.
• Independent focus group forums on noise and
accessibility.
• Directly through Community Newsletter launched
in 2022.
• Independent focus group forums on noise and
accessibility.
• Work with local schools and colleges.
• Community fundraising events and
volunteering events.
What did we talk about and how did we respond?
Key examples of how we engaged with our communities and how we responded to those issues during the year are as follows:
Business What did we talk about? How did we respond?
Esken Renewables Esken Renewables engaged with a number
of charities close to our Head Office in the
Merseyside and Halton area as to how our
colleagues could help through volunteering.
We engaged on a number of volunteering
events with local charities which included
tidying up a relaxation garden for people, giving
access support at Sam’s Diamonds Cancer
Support (Widnes, Merseyside), Christmas
hamper packing for Crisis (Bootle, Merseyside)
and spending a day at Incredible Edibles
(Knowsley, Merseyside), prepping beds for
planting and revamping and recultivating a
picnic area for visitors to the site.
The communities in which we operate
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Stakeholder engagement continued
London Southend Airport • Kept the community updated on airport
developments, new routes and services.
• Local employment and procurement
opportunities.
• The targets and initiatives aimed at
reducing the impact of our operations on
the local environment.
• Issues such as noise, employability and
social support.
• We have attended events at local schools
and colleges, supporting the introduction of
young people to the world of work.
• We continued our two-year partnership
with the South East and Central Essex Mind
(SECE Mind) charity running events for our
own staff and enabling support for the wider
community, providing volunteers for an SECE
Mind charity project and generating donations
through staff and wider community activities.
• Developed a brand new website to
give passengers a far simpler, seamless
digital experience.
• Head of People, Michelle Ball has recently
been appointed a Governor of USP College
and will utilise this collaboration to encourage
future talent for the airport, and the provision
of technical skills development for our
developing colleagues.
• Michelle is also proud to be one of the
Board Members of SEATS (South East
Essex Technical Skills Limited) a work-
based technical university that will be
delivering degree-based learning through
work placement.
• The airport continues to work with a number
of local authority organisations, charities and
third parties to give students, young adults,
cadets and interns experience as to what it is
like to work at an airport.
• We were awarded the Armed Forces
Covenant Silver Award.
Star Handling • Star Handling engaged with a number of
charities relevant to our business as to
how our colleagues could help through
volunteering.
• We also considered how we might engage
with our community to better inform them
about our business.
• We engaged on a number of volunteering
events with local charities which included a
Volunteer Day at the Southend Community
Apple Orchard, a Help for Heroes charity
collection and we took part in a charity
football match day in Liverpool where we
were the only representative to field a female
player. Star Handling was awarded the Armed
Forces Covenant Silver Award.
• We attended a recruitment fair in Manchester
city centre educating the local community
about our industry and to try to fill jobs locally.
The communities in which we operate
continued
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We strive to create positive and
constructive relationships with regulators
and other bodies that authorise and
regulate our business activities or the
industries in which we operate.
We feel that maintaining a positive dialogue helps us to share
our vision for our business and provides reassurance that we
recognise the importance of excellent standards of business
conduct and wish to retain our reputation in this regard.
How did we engage with them?
During the year we undertook another redundancy
programme. We carried out a union-led collective
redundancy consultation with our unionised employees. This
required us to work very closely with union representatives,
in an open and transparent manner in order to manage this
difficult situation as efficiently and carefully as possible.
A lot of time was spent during the year liaising with the
UK Government on the impact of the pandemic on the
aviation industry. Our Aviation division has also fed in to the
Department of Transport study on the impact of the airport.
What did we talk about and how did we respond?
Key examples of how we engaged with our regulators and other relevant bodies and how we responded to those issues
during the year are as follows:
Business What did we talk about? How did we respond?
Esken Renewables We discussed our operations at our Port
Clarence site, particularly with regard to
dust emanating from the site.
We have closed down our operations at
Port Clarence and moved to a different
mode of operating.
London Southend Airport The CAA continued its series of regular
audits of our operations.
We successfully passed our CAA aerodrome
audit in late 2022. The CAA made only minor
recommendations for improvement.
Star Handling We discussed pay and conditions with
unions representing our workforce.
We reached an agreed settlement for wage
increases for the year ahead.
Regulators, government bodies and unions
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Stakeholder engagement continued
Effect and impact – example Board decisions and how the Board
considered stakeholder views
The following are some of the decisions made by the Board this year which demonstrate how colleagues’ interests, the need
to foster business relationships with other key stakeholders, and other section 172 matters have been taken into account in
discussions and decision-making:
Decision to undertake a limited update to our remuneration policy
Decisions considered
by the Board Stakeholders considered
How did we engage
and deliberate? Effect of engagement
How the business would
respond to the need to
renew its remuneration
policy in light of the
ongoing strategic review.
Shareholders and
employees.
We wrote to shareholders
and communicated to them
our proposal to undertake
only a limited review of
our remuneration policy in
2023 and offered them an
opportunity to discuss that
approach with them.
A policy was prepared and
is to be put to shareholders
at the AGM in July 2023.
Shareholders and banking partners
Esken’s Board is committed to two-way
communication with its shareholders
and banking partners. The benefits of
this approach were particularly apparent
during a year which required us to refresh
our key banking relationship for the Group.
Our open and transparent approach to
engagement helped us secure the support
we needed in order to protect our
long-term growth aspirations.
How did we engage them?
The Executive Chairman and Chief Financial Officer regularly
engaged with shareholders throughout the year in order
to keep them informed of the steps we were taking to
manage the business. This engagement ultimately helped
shareholders and banking partners understand our position
as we sought to replace our main banking relationship and
secure ongoing funding for our key legacy obligations.
We also sought to update our shareholders on material
events and activities such as the news that our logistics
partner was closing its base at LSA and our decision to
implement the strategic review of our operating businesses.
We also consulted with shareholders over the decision
to undertake a limited update to our remuneration policy
pending the outcome of the strategic review.
Investor presentations were carried out to accompany the
results and we held a number of live broadcasts during
the year to engage with retail investors and potential
new investors regarding our business strategy and
business model.
What did we talk about?
• The financial and operational performance of
the business;
• The future of the Group and the need for the
strategic review;
• Our financing and general banking requirements; and
• Our remuneration policy.
How did we respond?
• We have sought feedback from our shareholders
following the major announcements we have made;
• We have worked hard during the recovery from the
pandemic to keep our shareholders updated with
our progress against plans and how our business
operations have been affected by the global crisis;
• We worked closely with our finance partners to
complete a new £50m facility for the Group;
• We held our AGM and encouraged shareholders to
provide questions in advance for the Board to
respond to; and
• We will continue to hold webcasts to engage with
retail investors as this method of communication
was well received.
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The decisions taken with regard to remuneration in reaction
to the cost of living crisis and external economic factors
Decisions considered
by the Board Stakeholders considered
How did we engage
and deliberate? Effect of engagement
Cost of living awards
relating to pay across
the Group and other
related matters.
The Group’s employees. We took extensive advice
from our remuneration
advisors with regard to
market developments
and pay.
We listened to what our
employees told us in our
regular communications
channels with them.
We made available to our
employees our Employee
Assistance Programme and
communicated the benefits
of this programme to them
and encouraged them
to take advantage of the
advice on offer.
We implemented cost-of-
living award (COLA) pay
increases across the Group
on a differential basis, such
that those earning the least
saw the greatest level of
increase in basic pay.
Our most senior staff will
receive no COLA pay
increase in FY24.
The decision to reshape Star Handling following the ending of our
relationship with a key logistics partner at LSA
Decisions considered
by the Board Stakeholders considered
How did we engage
and deliberate? Effect of engagement
We reduced our staffing
levels overall to cope with
the downturn in activity
at LSA.
We split the business into
two separate operating
companies to ensure that a
sale of the business could be
achieved without losing the
support of the team at LSA
for the easyJet operation.
We ultimately opted to sell
the business for Manchester
and Stansted stations to
Skytanking UK Ltd.
Our staff.
Our customers.
Our shareholders
and financiers.
We consulted with staff
about the necessary
redundancies associated
with the lost logistics
business.
We consulted with
customers about the
continuation of business
in the face of the possible
sale of the business and its
eventual disposal, to ensure
that service contracts could
be renewed effectively.
We made sure our bankers
understood the logic for
disposing of the business
and ensured that they
agreed to the sale.
We minimised redundancies
and redeployed staff where
possible.
We renewed several key
ground handling relationships
and kept our customers
informed about our
intentions.
Our financiers approved the
sale of the business.
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Risk management and our principal risks
Our decision-making must be
informed by a clear understanding
of our business risks and
opportunities, and our appetite
for those risks.
Responsibilities
The Board has overall responsibility for the management of
risk and the identification of principal risks that may affect
the Group’s objectives. It determines the nature and extent
of risk exposure that the business is willing to take in pursuit
of its strategy.
Our framework for risk management is approved by the
Board. It sets out how we identify, evaluate and report
on our current and emerging risks, and incorporates the
assessment of the controls and mitigation strategies
we have in place for each documented risk. We apply
a consistent evaluation framework, providing a robust
basis for considering threats and opportunities across
our activities. Changes to the risk profile of the business,
alongside significant and emerging risks, are escalated to
and considered by the Audit Committee.
The Audit Committee, on behalf of the Board, has
responsibility for maintaining oversight of the Group’s
framework for risk management, for monitoring our risk
management processes and approving relevant disclosures.
It has responsibility for monitoring financial reporting and
external audit plans and outputs, as well as providing
assurance to the Board in relation to financial, operational
and compliance controls, all of which are designed to
manage our exposure to risk.
The Group’s financial and operational performance
and reputation is subject to several potential risks and
uncertainties. These risks could, either separately or in
combination, have a material impact on our performance,
customers, employees, suppliers, partners and the
environment, and may impact our shareholder returns. Risks
can be mitigated or managed, in some cases, and in others
we have developed plans to manage the consequences.
Our approach
Risk management is embedded in our business decision-
making processes.
The Board has approved the delegated authority matrix and
key policies, which ensure that decisions around accepting
risk are escalated to the right level within the organisation.
The Audit Committee reviews the risk register at each
meeting, with particular focus on the principal risks and any
emerging risks, additional or deleted risks, and provides
updates to the Board. Our principal and corporate risks are
documented in a format which includes a comprehensive
overview of the key controls in place to mitigate the risk and
the potential impact. Changes to the principal risks can only
be made with approval from the Audit Committee or Board.
The Audit Committee also receives presentations from
senior managers, and external advisors and assurance
providers, to ensure that its members have a comprehensive
understanding of the risks facing the business, and the
mitigation strategies considered and implemented.
The Esken Management Board regularly reviews and updates
the corporate risk register, and this is reported to each meeting
of the Audit Committee, highlighting any changes in risk, to the
key controls or changes to the evaluation of our risk exposure.
The Management Board review includes consideration of
any significant risks identified in the underlying business or
functional risk registers, to decide whether these need to be
escalated to the corporate risk register.
Board
Approves the risk framework
Articulates the Group’s appetite for risk
Receives risk and assurance information from the Audit Committee and the management team
Audit Committee
Receives and reviews risk information, including a detailed assessment of the corporate risk register each meeting
Receives assurance from a range of sources: management, external audit, independent advisors, internal audit
Considers any significant risk issues arising and agrees the approach to management of the outcome
Assesses the effectiveness of the risk management process
Management
Reviews business activities and operations to identify, document and evaluate current and emerging risks
Determines and develops appropriate mitigation strategies to ensure that risks remain within the Board’s agreed risk appetite
Ensures that mitigations and controls are operating effectively
Provides management assurance and information to the Audit Committee and Board
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Responsibility for the delivery of risk management activities
is delegated to the level that is most appropriately placed to
oversee and manage each risk.
This regular review and challenge of risk information ensures that
there is robust and regular consideration of the principal risks
facing the Group by the Directors, taking into account the risks
that could threaten our business model, future performance,
solvency or liquidity or the Group’s strategic objectives.
There were no new significant weaknesses identified
in the risk management process during the year and no
changes were made to the framework by either the senior
management team or the Audit Committee.
Risk appetite and awareness
Risk awareness exists through our decision-making
processes and is embedded in systems, policies, leadership,
governance and behaviours.
The level of risk considered appropriate to accept in achieving
our business objectives is determined by the Board.
Board risk management objectives
The Group’s risk management objectives are to have:
• robust and well defined processes for the identification
and evaluation of current and emerging risks;
• consistent analysis and evaluation of the likelihood and
impact of key risks;
• proactive consideration of risk within key decision-
making processes;
• awareness of the risks that could prevent Esken Group
from delivering its strategic objectives;
• risk awareness promoted as a key part of our culture,
with everyone associated with our business recognising
that the management of risk is part of their day job; and
• a proportionate approach to the management of risk,
which balances the requirement to document risk
and control decisions with processes which are not
overly bureaucratic.
Overall, our risk management processes are designed to
ensure that the Board is aware of the key risks affecting the
Group, has information available to monitor the positions
taken and has the opportunity to challenge the approach
taken to the mitigation.
Business risk management process
Within divisions and Group functions, significant business risks
are identified and reviewed at Director level at least quarterly,
with results reported at divisional Board/performance review
meetings. Business managers across the Group own and
manage these risks, with regular reports to the relevant
senior management team, and through them to the Esken
Management Board, the Audit Committee and the Board.
Information from the risk process is used to prioritise and
plan focus areas for the completion of assurance work,
which is also reported to the Audit Committee.
The Group has no appetite
for risk in areas relating to the
health, safety and welfare of our
staff, customers and the wider
community in which we work.
Appetite for climate-related
risk is low and the Group is
implementing arrangements to
assess and address physical and
transitional risks for its activities.
We have an increasing appetite for
risk in relation to activities which
are directed towards creating
additional demand for our services
to drive revenues and increase
financial returns for the Group.
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Board
Divisional MDs/CEOs and Group senior managers
Risk management framework
Risk owners
Business risks
(summarised in risk registers)
Audit Committee
Corporate
risk register
Internal
Audit
Head of
Internal Audit
Aviation Renewables
Star
Handling
Group
Other
assurance
activities
e.g.
H&S audits,
regulatory
compliance
inspections
Executive
Management
Risk management and our principal risks continued
Environmental, social and governance risk
We have continued to strengthen our approach to the
management of environmental, social and governance (ESG)
risk during the year, investing in understanding how we
can best mitigate climate-related risks. Our risk framework
has been updated to reflect this additional emphasis, and
reference to climate-related risk has been added to the
Group’s stated risk appetite.
We have overarching ESG and climate-related risks within
the corporate risk register, within key business risk registers,
and we have also developed a separate ESG risk register.
Within the overall focus on ESG initiatives, climate-related
risk remains one of the Group’s principal risks, as we seek to
both reduce our impact on the environment and the impact
of climate change on our activities, assets and finances.
Potential impacts include from climate-related risk include:
• reduction in demand for flights;
• changes in demand or regulation around the
sustainable energy market;
• reduction in asset values, for example if they are not
efficient in their design or use of energy;
• loss of investors, if we are not taking action in relation to
climate-related risk;
• higher costs, for goods and services e.g. utilities,
insurances, or where we are required to implement more
expensive working methods or sustainable materials/
supplies;
• increasing regulatory burden, as regulation is used to
drive change; and
• increasingly severe and/or frequent adverse weather
events, causing, for example, flooding, or storms causing
disruption to activities or damage to properties.
Emerging risk
Our risk reviews include consideration of emerging risks,
both for the corporate risk register and the underlying
divisional and business registers. During the year, we have
added a number of risks to the corporate risk register and
documented and evaluated the controls we have in place for
each, to assess the current level of exposure. None of these
risks are currently considered to be principal risks and we
will continue to monitor the position for each.
Independent
assurance
Management
assurance
Management
assurance
Management
assurance
Group registers include:
Finance, People, IT, ESG, Procurement, Legal,
Safety & Compliance, Communications, Carlisle
Risk
information
Risk
information
Independent
assurance
Risk
information
Risk information
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Emerging risks identified include:
• Tax increases – we consider it likely that there will be
personal and corporate tax increases which may have an
impact on the business.
• Compliance with funding conditions – we have agreed
new funding arrangements during the year, and ensuring
we continue to comply with the lender’s requirements
is essential.
We have also continued to monitor those risks flagged as
emerging risks in our report last year, and of the four risks
reported, two – interest rate rises and cost inflation – are
now considered to be principal risks.
Principal risks
Principal risks are those which are considered material to the
Group’s development, performance, position or future prospects.
The principal risks are captured in the corporate risk register and
are reviewed by the Audit Committee, which considers:
• any substantial changes to principal risks, control
frameworks or the evaluation of exposure to risk;
• any significant risk incidents arising; and
• progress with any additional mitigating actions which
have been agreed.
Changes in principal risk during the year
There have been a number of changes to our principal risks
during the year, with new risks:
• Cost inflation – costs are increasing, particularly through
energy price increases and wage inflation. We are able
to recover some of these through indexation and price
increases on our customer contracts in the Renewables
division, but we have less opportunity to recover costs
within Aviation as the level of activity is low.
• Interest rate rises – which are increasing the cost of debt
for the Group.
• Major system or equipment failure – we rely on systems
and equipment in both Aviation and Esken Renewables,
and failure of a significant element may have a material
impact on the delivery of operations.
The evaluation of exposure to some of our previously
reported principal risks has changed during the year and,
where relevant, the direction of the change is included in the
detailed principal risks section below.
We have removed a number previously reported principal
risks, and these include:
• Impact of the COVID-19 pandemic.
• Failure of a significant customer for Esken Renewables, as
the majority of these businesses have now been operating
for some years and have improved financial stability, we
have taken the decision to amalgamate this risk within the
more general risk around loss of a key customer.
• Significant breach of key legislation – our management
teams are committed and experienced, and we have
enhanced our Group governance processes significantly
during the last two years. In our view, the likelihood of a
significant breach is now sufficiently low to remove this.
• Environmental or other protests (e.g. drone attacks)
impacting on our ability to deliver operations. The
reduction in activity at London Southend and within Star
Handling has reduced the potential impact of this risk,
and Esken Renewables has sophisticated route planning
and customer prioritisation arrangements, to manage
operations effectively, should issues arise.
Principal risk heat map as at 28 February 2023
All risks are evaluated on a consistent basis across the Group, which includes both the likelihood of the risk
crystallising and the potential impact. Our model evaluates both inherent exposure (i.e. before any mitigating
controls or actions) and residual, or current, exposure (i.e. after controls and mitigations). This assessment
allows us to see the positive impact of control on the underlying inherent risk.
The heat map summarises current principal risk residual exposures.
Impact
1
2
3
4
5
Likelihood
2 41 3 5
1
2
3
5
67
4
98 10
11
1 Liquidity shortage, loss of funding support
2 Cost increases, inflation
3 Passenger numbers at LSA fail to increase
4 Impact of parent company guarantees/
other guarantees
5 Cyber crime, significant data loss
or breach
6 Interest rate rises
7 Impact of climate change
8 Major system or equipment failure
9 Loss of a significant customer
10 Significant breach of customer-related
regulatory or licence conditions
11 Major aircraft incident, at one of our
operated or serviced airports
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Principal risks and mitigations
Potential impact Risk mitigation Direction of risk
Business area – Group wide
1. Liquidity shortage, loss of funding support
We are reliant on funding support
from our partners and on effective
cash management measures within
the business, particularly as it
has taken longer than anticipated
to recover operations at London
Southend Airport.
Cash shortages may impact on our
ability to invest and deliver on our
strategy and business plans.
We are in regular working contact with our funding
partners, to ensure they are fully informed of relevant
activities and issues, and we are in compliance with
their requirements.
The CFO and Treasurer work with divisional Finance
Directors to closely monitor and forecast cash
requirements. Decisions around significant expenditure
commitments are controlled through our delegated
authority matrix and also our capex process.
Any additional funding sought through, for example,
operating leases, is approved by the Group Treasurer.
Business performance and projected cash inflows from
our trading operations are subject to detailed budgetary
review and variance analysis.
Business area – Group wide
2. Cost increases, inflation
During the year we have seen inflation
rise to levels above those seen in the
UK for a number of years. In addition to
general price inflation, there have been
significant increases in fuel prices and
energy costs.
Combined, these resulted in cost of
living pressures, which impacted on
wage inflation.
Whilst we are able to pass on
some part of these cost increases
through increases in charges and
contract rates to Esken Renewables
customers, this is not possible for the
Aviation division where activity and
revenues are low.
We have robust cash management procedures in place,
supported by formal delegations of authority and
processes for procurement. There is regular variance
analysis of financial results and forecasts.
We have completed remuneration planning and
benchmarking exercises, and scenario analysis during
the year to understand the potential impact of wage
inflation and increases in other elements of spend.
Where possible, we have contracts in place for key
goods and services to provide some cost certainty.
Where appropriate, for both spot pricing and
contracted revenues, we have sought to increase
our rates, passing on cost increases to our customers
and maintaining margins.
New
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Strategic Report Corporate Governance Financial Statements
Potential impact Risk mitigation Direction of risk
Business area – Aviation
3. Passenger numbers at London Southend
do not recover to anticipated levels
Flight operations from Southend were
significantly impacted by the COVID-19
pandemic, and activity levels have
not yet returned to the level that we
had anticipated. The length of the
lockdown impacted on our partner
airlines, resulting in their restructuring
and a contraction in the number of
operating bases.
If activities levels remain low the airport
may not deliver the revenues budgeted
by the Group in the short term or on its
overall growth ambitions in the medium
to long term.
We are working closely with our partner
airlines to understand their plans and to
accurately forecast activity.
Our plans and forecasts have been adjusted
over the year to reflect the expected position
for FY24.
Business area – Group wide
4. Parent company guarantees and other company guarantees
The Group has given parent company
guarantees for potential liabilities
associated with some activities of
the Group.
The most significant of these relate to
commitments made in relation to Propius,
and we are working through the closure
of those.
Other guarantees relate to Renewables
contracts; and rent and rates for
buildings previously occupied by
businesses which are no longer
part of the Group.
The position in relation to the guarantees
is continuously monitored.
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Strategic Report
Principal risks and mitigations continued
Potential impact Risk mitigation Direction of risk
Business area – Group wide
5. Cyber crime attack, data loss or breach
Successful delivery of our business
operations relies on technology
solutions and therefore we require
system resilience and strong
information security across the Group.
A significant cyber crime incident,
for example, a ransomware attack
impacting on key systems, could
impact on our ability to operate for
a period of time.
We are also at risk from cyber attacks
on, or system failures in, our key third
party system providers, where we rely
on their solutions and services.
A significant data breach or loss could
impact on the Group’s ability to deliver
its business and could also result
in investigation by the Information
Commissioner’s Office (ICO) or other
regulatory body, with the potential
for fines and costs for remedial action.
We continuously monitor and invest in our information
security framework.
Our data and systems are primarily cloud-based, with
providers selected because of their ability to provide
secure, robust data storage facilities and tools, and
high quality security routines and resources.
Staff training is provided to enhance awareness of the
risks and we have a suite of policies in place governing
the use and management of data and information
technology resources.
During the year, our GDPR Working Group has
overseen activities designed to further strengthen
our approach to information security and compliance.
The majority of data we process is not sensitive,
and we do not hold detailed financial or similar
information about our customers or suppliers.
Business area – Group wide
6. Interest rate rises
Interest rates have risen significantly
during the year.
We have an overarching finance
facility, and also leases for equipment
and assets used by the business.
Rate rises may impact both the
Group’s ability to utilise funding to
deliver operational activities, and
to fund growth and investment in
the business.
The agreement of finance terms and rates is controlled
through our delegated authority matrix, with the CFO
and Group Treasurer responsible for evaluation of
financing costs and charges.
Interest rate rises are primarily externally driven and, as
we are therefore not able to fully mitigate the potential
for interest rate rises, we are focused on managing and
mitigating the consequences.
New
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Strategic Report Corporate Governance Financial Statements
Potential impact Risk mitigation Direction of risk
Business area – Group wide
7. Impact of climate-related risks
As described in the ESG risk section
above, climate-related risk may have
an increasing impact across the
business, which could include:
• Adverse weather events
impacting on operations.
• Asset maintenance costs
increasing, as higher standards
are applied.
• Asset values reducing, for
example if property assets are
not energy efficient or if locations
are impacted by flooding or other
extreme weather/environmental
conditions.
• Increasing regulatory burden.
• Increasing costs, for example if
additional taxes are introduced to
drive behaviours, or if energy costs
are significantly increased.
Our divisions consider climate-related risk in investment
and activity decisions, with material commitments
approved through the Group delegated authority matrix.
This includes, for example, the assessment of new
technology solutions for equipment and processes.
The mitigation of climate-related risk is also an area of
focus within our ESG governance framework, with a Board
level Steering Group and Working Groups in place across
each area of the business. Their work has included the
development of a Roadmap to Net Zero for carbon.
Business area – Aviation/Esken Renewables
8. Major systems or equipment failure
Delivery of business operations
depends on a range of key systems
and equipment. Examples include
processing equipment at our Esken
Renewables sites; fleet assets
for the movement of Renewables
raw materials and product; and
aerodrome systems such as
baggage and passenger screening,
radar, and air traffic control systems
within Aviation.
A significant system or equipment
failure could have a material
impact on operations, particularly
where there is a long lead time for
replacement parts or repair, and
there could be a significant financial
cost involved.
We have a range of measures designed to reduce
breakdowns, down time and repair costs, including:
• new asset purchases may include warranty and
maintenance contracts;
• significant kit will have repair and maintenance
programmes, with regular servicing;
• service schedules and guidelines are adhered to; and
• our vendors take on procedures for providers of parts,
spares, repairs and servicing include relevant checks
such as insurance, certifications and qualifications.
We have competent trained staff in place, or
access to external appropriately qualified support
for specialist equipment.
We have an ongoing replacement programme for some
areas such as vehicle fleet assets and Renewables plant.
Budgeting and spend approval processes
incorporate consideration of asset age, usage, and
significance to the business.
New
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Strategic Report
Potential impact Risk mitigation Direction of risk
Business area – All operating divisions
9. Loss of significant customer
In some areas of the Group
there is reliance on a small
number of customers. Loss of a
significant customer would impact
on revenues and profits, and
challenge cost models.
Relationship management of significant customers
remains a priority, with both divisional and Group
senior management closely involved.
Significant contract renewals are monitored and
planned for, with input from Group to support
divisional teams. Bids and negotiations are governed
by the delegated authority matrix, ensuring that
commercial decisions are taken at the right level.
Within Renewables, as our more significant customers
have matured, they have built resilience in their
operations and their financial positions.
Business area – All operating divisions
10. Significant breach of customer licence or regulatory conditions
Our businesses operate in complex
areas, with a number of regulatory
bodies, from the Civil Aviation
Authority, to the Environment Agency
and Department for Transport, having
frameworks that we must adhere to.
A significant breach to the conditions
of licence, regulatory or operating
requirements could lead to the loss
of our operating licences or approvals.
This could have a significant impact
on the Group’s revenues and profits,
as activities could be curtailed whilst
remedial actions were taken.
Significant breaches could also
impact on the business reputation
with the regulators, customers or
other stakeholders.
We have experienced management teams with
business systems in place designed to ensure that
licence and regulatory requirements are recognised
and fully addressed. These include appropriate
induction, training and oversight arrangements.
Responsibilities are clearly allocated within the
Group and divisional structure.
There are oversight arrangements, including an
operational audit programme, undertaken by a
central Group team.
Business area – Aviation and Aviation Services
11. Major aircraft incident at our operated airports
An incident (related to a Group
activity) resulting in the loss of an
aircraft and/or passenger, or which
rendered the airport out of use for
a significant period of time.
Activities are undertaken in compliance with the
requirements of the Civil Aviation Authority and other
appropriate regulations, with comprehensive operational
arrangements in place to ensure activities are carried out
appropriately and to a consistently high standard.
We have competent and experienced management and
operational teams in place, with compliance monitoring
routines checking against our documented, standard,
operating procedures.
We have regular programmes of internal inspections, and
are subject to external reviews by the relevant regulators.
Principal risks and mitigations continued
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Strategic Report Corporate Governance Financial Statements
Viability statement
The Directors have assessed the viability of the Group over a 20-month period from
the date of signing to February 2025, considering the Group’s current position and
the potential impact of the principal risks documented in the principal risks and
mitigation controls section.
Based on this assessment, the Directors have a reasonable
expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over
the period, subject to the assumption that the material
uncertainty regarding funding, that is more fully explained in
the basis of preparation in respect of going concern in note 1,
is satisfactorily resolved. As discussed further in the Business
Review on page 12, Esken undertook a strategic review to
consider the best way to tackle high levels of debt incurred
as it tackled legacy issues, while also enabling operating
businesses to realise their potential. The review concluded
it is in the best interests of stakeholders to dispose of these
businesses and use the proceeds to repay debt and fund
the remaining businesses through to the conclusion of the
disposal programme currently estimated to be finalised by
February 2025. With the disposal of Renewables heading
towards completion and the process to dispose of London
Southend Airport (LSA) underway, there is no sensible reason
to extend the viability review beyond February 2025.
In making this statement, the Directors have considered the
resilience of the Group, taking account of its current position,
including reliance on the disposal proceeds to be generated
by the disposal of the Renewables business and disposing
of non-core assets, over the going concern period to June
2024, as detailed in the basis of preparation in respect of
going concern. This funding will support the Group in clearing
the Group’s term loan and provide operational cash for LSA.
The exchangeable bond will also be settled at the appropriate
date, after taking account of the secured exchangeable LDG
plc shares. The principal risks facing the business in the
severe but plausible scenarios and the effectiveness of any
mitigating actions, including a delay in the disposal of the
Renewables business by 3 months and a reduction in 2025
Aviation operational and trading performance due to the
slower recovery following the COVID-19 pandemic, have also
been taken into account. The severe but plausible scenarios
only include non-core asset disposal proceeds of £9m, and
there is potential to raise a further £35.8m based on year
end February 2023 book values. This robust assessment
has considered the potential impacts of these risks on the
business model, future performance, solvency and liquidity
over the period to February 2025. For further information
please refer to the basis of preparation in respect of going
concern disclosure in note 1.
Esken Limited Annual Report & Accounts 2023
86
Corporate Governance
Board of Directors
David Shearer
Executive Chairman
Appointment to the Board
1 June 2019
Background/experience
David joined the Board on 1 June 2019
and was appointed Non-Executive
Chairman on 23 July following the 2019
AGM. He became Executive Chairman
on an interim basis with effect from
9 February 2021 and this was confirmed
as a permanent appointment with effect
from 3 November 2021.
David is an experienced Independent
Director, corporate financier and
turnaround specialist. He is Non-Executive
Chairman of Speedy Hire Plc, Amber River
Group (formerly Socium Group Holdings
Limited) and the Scottish Edge Fund.
David was previously the senior partner
of Deloitte LLP for Scotland and Northern
Ireland, and a UK Executive Board member
of the firm until 2003. Since then, David
has held the positions of Co-Chairman of
Martin Currie (Holdings) Limited, Chairman
of Mouchel Group plc and Crest Nicholson
plc and a Non-Executive Director of
City Inn Limited, in each case standing
down after completing the successful
restructuring of these businesses.
David was also Non-Executive Chairman
of Aberdeen New Dawn Investment Trust
plc, Liberty Living Group plc and Liberty
Living Finance plc; Senior Independent
Director of Renold plc, STV Group plc
and Superglass Holdings plc and a Non-
Executive Director of Mithras Investment
Trust plc and a Governor of The Glasgow
School of Art.
Committee membership
Chairman of the Nomination Committee.
Lewis Girdwood
Chief Financial Officer
Executive Director – Aviation
Appointment to the Board
1 April 2019
Background/experience
Lewis was appointed Chief Financial
Officer on 1 April 2019 and became
Executive Director – Aviation with effect
from 3 November 2021.
Lewis previously served as Chief Financial
Officer to IAG Cargo Limited, which
provides global cargo services to British
Airways, Iberia, Aer Lingus and other
IAG airlines. Prior to that, he was Head
of Financial Planning and Analysis at
easyJet, responsible for financial business
partnering across the airline.
Lewis has also held senior finance roles
at Premier Foods PLC, British Bakeries Ltd
and Racal Electronics Group International.
He is currently a member of the Audit
Committee of charity Tommy’s and Audit
Committee Chairman and Non-Executive
Director of Aurrigo International plc.
Nick Dilworth
Chief Operating Officer
Executive Director – Renewables
Appointment to the Board
1 September 2018
Background/experience
Nick was appointed Chief Operating
Officer in September 2018, having worked
as Group Commercial Director since
October 2017, and became Executive
Director – Renewables with effect from
3 November 2021.
Nick previously worked for BES Utilities,
where he was Managing Director. He has
also previously occupied a number of
leadership roles at Practice Plan Limited
and Medenta Finance and has a strong
commercial background.
Nick qualified as a Chartered Accountant
with BDO LLP before joining Grant
Thornton as a corporate financier.
He is currently a Non-Executive Director
of AirPortr Ltd.
Committee membership
Member of the Environmental, Social
and Governance (ESG) Committee and
Executive Sponsor for ESG.
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David Blackwood
Deputy Chairman and Senior
Independent Director
Appointment to the Board
1 March 2019
Background/experience
David has significant experience at senior
levels of finance, audit and risk. He is
currently Non-Executive Chairman of
Smith’s News plc. He has previously been
Independent Non-Executive Director and
Senior Independent Director of The Go-
Ahead Group PLC and Audit Committee
Chairman and Senior Independent
Director of Scapa plc and Dignity plc.
Previously, David was the Chief Financial
Officer of Synthomer plc, where he
served for seven years until 2015, prior
to which he held a number of senior roles
with ICI plc.
David has previously served as a member
of the Cabinet Office Audit and Risk
Committee and the Board for Actuarial
Standards. He is a member of the Institute
of Chartered Accountants in England and
Wales and a Fellow of the Association of
Corporate Treasurers.
David was appointed as Senior
Independent Director with effect from
1 November 2020 and Deputy Chairman
with effect from 3 November 2021.
Committee membership
Chairman of the Audit Committee and
member of the Remuneration and
Nomination Committees.
Ginny Pulbrook
Non-Executive Director
Appointment to the Board
1 October 2018
Background/experience
With a background in investment banking
and financial public relations, Ginny brings
more than 30 years’ experience as a
Board level advisor to quoted companies
in the infrastructure, industrial and
support services sectors. Her specific
areas of expertise include high-profile
capital markets transactions, ESG and
change management.
Ginny is currently a partner at Capital
Market Communications (Camarco) and
is Vice Chair and Chair of the Nomination
Committee of Carers UK, the leading
charity for unpaid carers.
Previous positions include Co-Founder
and Director of Citigate Dewe Rogerson,
Chair of Patrons’ Programme and
Development Council Member of the
Natural History Museum.
Ginny is the designated Non-Executive
Director for People Engagement within
Esken and the Chair of its ESG Committee.
Committee membership
Member of the Remuneration, Nomination
and Audit Committees and Chair of the
ESG Committee.
Clive Condie
Non-Executive Director
Appointment to the Board
1 July 2020
Background/experience
Clive was Chairman of London Luton
Airport until June 2018, a position he
held for almost five years. Besides being
Chairman, he was Interim CEO during
2014. Clive was also a Director of Exolum
Pipeline System Ltd (formerly CLH-PS
Ltd), the owner and operator of the UK’s
largest fuel pipeline and storage facility
until resigning in March 2021.
Clive has 40 years’ experience in the
aviation industry, having worked for
Manchester Airport and British Airways
amongst others. Clive has also served
on the Boards of a number of airports,
including London Luton Airport for some
20 years, Lima in Peru and Curaçao in the
Dutch Antilles.
Clive is a fellow of the Royal Aeronautical
Society.
Committee membership
Member of the Remuneration, Nomination
and Audit Committees and Chairman of
the Remuneration Committee.
Corporate Governance
88
Esken Limited Annual Report & Accounts 2023
Corporate Governance
Dear Shareholder
I am pleased to present the Corporate Governance Report
for the year ended 28 February 2023 on behalf of the Board.
The past year has been a challenging one across the globe
and our business along with its employees have again
shown great resilience in the face of ongoing uncertainty.
We have ensured that Esken’s governance framework has
continued to support the business’ operation. The Board
is committed to delivering high standards of corporate
governance – commensurate with size, stage of growth and
nature of activities of the Group – to its shareholders and
other stakeholders.
We continue to operate in accordance with the revised 2018
UK Corporate Governance Code (the Code) and set out
below further information on how we have applied the Code
to our business.
The UK Corporate Governance Code
This report has been prepared in accordance with the Code
and takes into account other UK regulations that address
governance matters. The Board considers the Company was
in full compliance with the relevant provisions of the Code
throughout the financial year ended 28 February 2023,
except as follows:
• I am Executive Chairman and, as such, we do not
separate the roles of Chairman and Chief Executive as
required by Provision 9 of the Code; having consulted
with our shareholders on this matter. In the context of
the current position of the business, and particularly the
strategic review we have reported on above, we do not
see that any change to this position in the near term is
sensible or possible.
The Code can be downloaded from the website of the
Financial Reporting Council (www.frc.org.uk).
The Board and Committee evaluations this year have been
undertaken internally and have been thorough. We will give
consideration to an external evaluation of the Board in due
course as our practices develop.
Stakeholder engagement
In a year where our ways of working have continued to be
impacted by external factors, the importance of regular
engagement with our stakeholders, and in particular our
employees, cannot be underestimated. We recognise
the importance of incorporating stakeholder views in our
strategic planning and decision-making.
Six members Gender split
●
Executive Chairman (1)
●
Executive Directors (2)
●
Non-Executive Directors (3)
●
Male (5)
●
Female (1)
The Board’s primary
responsibility is to ensure
that the Group provides
long-term and sustainable
growth for its shareholders.
David Shearer,
Executive Chairman
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Further information on our stakeholders and our approach to
shareholder engagement can be found on pages 66 to 75.
Environmental, social and governance
We recognise the increasing importance of ESG as a key
area of focus for our stakeholders, and as a business we
are very mindful of the impact on the environment and
the communities in which we operate. We have set out on
pages 34 to 64 how we are progressing against our strategy
in this area.
Opportunities and risks
The consideration of opportunities and risks remains a key
area of focus for the Board. The Board reviews the Group’s
risk appetite annually and regularly considers the principal
and emerging risks relevant to our business, together with
mitigations and controls.
Our Strategic Report sets out in more detail how the Board
assesses and manages risk and we list the Group’s principal
risks and how we seek to mitigate those risks on pages 76
to 84.
Leadership and Board effectiveness
To enable us to deliver sustainable and long-term value to
our shareholders, the Board must function effectively in
supporting, challenging and guiding management to deliver
the Group’s strategy.
The effectiveness of the Board and the effective leadership
of the executive team has most certainly been under pressure
as we have navigated the continued effects of the post-
pandemic impacts on our business. I have been impressed
with the determination and resilience that my colleagues
have continued to demonstrate and their significant efforts
to continuously adapt our business in response, whilst also
striving to ensure that we have been able to conclude and
begin to implement our strategic review.
The non-executive members of the Board have continued to
commit their time and broad business expertise to support
the Executive Directors through this period. This is a true
measure of Board effectiveness.
Further information in relation to the key areas of focus for
the Board this year and expected areas of focus for next
year are outlined on pages 90 to 95 of this report.
Board appointments
We are not currently intending to recruit for an additional
Non-Executive Director, even though John Coombs stepped
down from the Board at our AGM in July 2022. We feel that
a Board of six Directors, of whom three are independent,
provides the right mix of skills and experience and is
sufficient for the needs of the business at the present time,
particularly in light of the outcome of the strategic review.
I assumed the role of Executive Chairman, initially on an
interim basis, to support Esken. Whilst in principle this goes
against Provision 9 of the Code, this decision was taken in
exceptional circumstances and we consulted with major
shareholders regarding our decision on announcement of
the Chief Executive’s resignation in 2021. David Blackwood
became Deputy Chairman to support this framework and
give shareholders and other Board members a channel for
communication should they require it.
I remain as Executive Chairman with responsibility for
stakeholder management, execution of strategy and
executive leadership. Lewis Girdwood, CFO, has the
additional role of Executive Director – Aviation with main
Board responsibility for that division. Nick Dilworth, COO,
has the additional role of Executive Director – Renewable
with main Board responsibility for that business, in addition
to his executive responsibility for ESG and he has also
played a key role in helping to lead Star Handling prior to
its sale in May 2023. This structure continues to have the
support of major shareholders and the Board believe it is
in the best interests of investors in terms of a streamlined
structure and minimising cost to the business. In order to
maintain strong corporate governance, David Blackwood
is Deputy Chairman and Senior Independent Director so
that the Board and shareholders have a point of reference
independent from the Chairman. This leadership structure
will remain in place pending the full outcome of the
implementation of the strategic review. The Board will
review this structure on an annual basis and seek input
from its major shareholders as the business evolves.
As is set out elsewhere in this report, John Coombs, who
has served as a Non-Executive Director since 2014, stepped
down from the Board with effect from the 2022 AGM. We did
not replace John as we felt that a Board with six members is
sufficient for our purposes for now, in view of the reduction in
scale of the Group’s operations over the last period and the
ongoing strategic review which may reduce them still further.
We will keep the position under review and ensure that we
take steps to provide adequately for Board succession at the
point when this becomes an issue. While recognising that the
Board does not meet the expected target for diversity and
that this will now not change in the short term; at present
it is right not to add additional cost into the business. Clive
Condie has assumed the role of chairing the Remuneration
Committee as a successor to John.
The Board has worked especially hard during the year
to support our business operations and colleagues in
navigating the continued sustained level of uncertainty and
I would like to extend my thanks to my Board colleagues for
their ongoing commitment.
AGM
We will notify shareholders about our AGM in due course,
with our intention being that it will be held in person in July
2023. Shareholders are welcome to submit questions for the
Board in advance of the meeting. For further details please
refer to the AGM Notice that will be sent out to shareholders
under separate cover.
Anti-bribery and corruption policy
It is our policy to conduct all of our business in an honest
and ethical manner. We take a zero-tolerance approach
to bribery and corruption and are committed to acting
professionally, fairly and with integrity in all our business
dealings and relationships wherever we operate and
implementing and enforcing effective systems to counter
bribery and corruption. We will uphold all laws relevant to
countering bribery and corruption in all the jurisdictions
in which we operate. Most importantly, we remain bound
by and are committed to upholding UK laws, including the
Bribery Act 2010, in respect of our conduct both at home
and abroad.
Corporate Governance Report
This Corporate Governance Report sets out our approach to
governance, provides further information on the operation of
the Board and its Committees, and explains how the Group
complies with the Code.
David Shearer
Executive Chairman
20 June 2023
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90
Corporate Governance
Corporate Governance continued
Governance framework
The Board is structured to allow for focus on business strategy, as well as monitoring performance of the Group and regular
review of controls and risks across the business.
The key features of the Group’s governance structure are shown in the schematic below:
Shareholders
Esken Management Board
Policies and procedures
Divisional leaders
Divisional teams
Functional leaders
Functional teams
Nomination Committee
The Nomination Committee
takes the lead role in
evaluating the Board of
Directors by examining the
skills and characteristics
required for performance.
This includes making
recommendations to the
Board regarding structure,
size and composition,
succession planning and
appointments.
Remuneration Committee
The Remuneration
Committee supports the
Board in determining and
agreeing the remuneration
policy to ensure appropriate
incentives are available
to encourage enhanced
performance and fair and
responsible rewards for
individual contributions
towards the Group’s
success.
Audit Committee
The Audit Committee
oversees the review and
monitoring of the integrity
of financial information
provided to shareholders,
the Group’s internal and
external audit processes,
and ensures compliance
with laws, regulations and
ethical codes of practice.
ESG Committee
The ESG Committee
oversees the development
and recommendation
of the Group’s strategy
on environmental, social
and governance issues.
This includes setting our
ESG KPIs, which are set
out elsewhere in this
document.
Executive Chairman
Responsible for leadership of the Board and ensuring that it operates effectively
Deputy Chairman
Point of reference independent from the Chairman
Board of Directors
Responsible for effective leadership, setting the business strategy and overseeing
delivery of the strategy in order to obtain long-term growth for shareholders
Board Committees
Support the Board in its work with specific areas of review and oversight
Group management team
Implementation of the Group’s policies
Executive Chairman
The Executive Chairman has responsibility for setting the strategy which is agreed
and overseen by the Board and for managing the business
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Responsibilities of the Board
The Board is collectively responsible for the long-term
success of the Company, including the effective oversight
of the Group and its businesses. The Board’s primary
responsibility is to set the Company’s strategic objectives
and ensure that these are monitored and resources are
available (both financial and human resources) to meet
them. As part of the Board’s oversight of operations, it also
ensures maintenance of a sound system of internal control
and risk management. The Board has established the
Group’s purpose, values and strategy, and seeks to satisfy
itself that these are aligned with its culture. All Directors
must act with integrity, lead by example and promote the
desired culture.
In accordance with the Code, the Board has a formal
schedule of matters that are reserved for its consideration,
including significant investments of capital expenditure,
dividend policy and changes to Group capital structure.
The Board’s main areas of focus during the year are set out
on page 93.
Board composition and independence
The Board continues to have an effective balance of
Executive and Non-Executive Directors. As at 28 February
2023, the Board consisted of six individuals: an Executive
Chairman, three independent Non-Executive Directors and
two Executive Directors. John Coombs stepped down from
the Board at the AGM in 2022 and will not be replaced in the
immediate future.
David Shearer has the role of Executive Chairman to provide
stability and continuity to the Board and the business.
His position as Executive Chairman continues for the
foreseeable future and is subject to an annual review by
the Board. The Board met this year to consider that matter
and has determined that he should continue as Executive
Chairman, having taken advice from the Non-Executive
Directors who met (led by the Deputy Chairman) to appraise
his performance.
The Board believes that it has an appropriate composition
and blend of backgrounds, skills and experience to fulfil
its duties effectively and, importantly, to comply with
the Code. However, the Board continues to keep its
membership, and that of its Committees, under review, to
ensure that an acceptable balance is maintained, and that
the collective skills and experience of its members continue
to be refreshed. We continue to believe that all of our
Non-Executive Directors are independent.
The Board is satisfied that all Directors have sufficient time
to devote to their roles and that undue reliance is not placed
on any individual.
Board Committees
As set out in the diagram on page 90, the Board has
established committees to carry out certain aspects of its
duties. Each is chaired by a Non-Executive member of the
Board and has written terms of reference which are available
on the Esken website www.esken.co.uk
The Chair of each Committee reports regularly to the Board
as to how that Committee has discharged its responsibilities.
Board operation
The Board operates both formally, through Board and
Committee meetings, and informally, through regular contact
among Directors. The Board held seven scheduled meetings
during the course of the year. The Audit, Nomination
and Remuneration Committees held three, two and four
scheduled meetings respectively. The ESG Committee was
formally established during the year and met eight times.
The Board and Committees also meet as required on an
ad hoc basis to deal with urgent business, including the
consideration and approval of transactions that are reserved
for the Board.
The table at the foot of the page shows the Directors’
attendance at Board and Committee meetings during the
year ended 28 February 2023. Each meeting was attended
by every Board member eligible to attend, other than
where noted.
The agenda and relevant briefing papers are distributed
by the Company Secretary on a timely basis, usually one
week in advance of each Board and Committee meeting, via
Board portal software. This allows Directors secure access
to the Board and Committee papers they need before,
during and after meetings and facilitates better Board
communications for increased engagement and effective
decision-making while enhancing corporate governance.
The ESG Committee’s agenda and papers are administered
by the Group’s Head of ESG.
Board meetings are an opportunity for the Non-Executive
Directors to challenge the performance of the divisions
against strategic objectives and key performance indicators
(KPIs), to review transactions which have taken place since
the preceding meeting and to receive reports from the
Board’s Committees.
All meetings of the Board and its Committees have minutes
recorded by the Company Secretary (or by the Head of
ESG in the case of the ESG Committee). Board minutes
are reviewed and approved by the Chairman in the first
instance, circulated to the Board for further comments and
tabled at the next Board meeting for approval. Committee
minutes are also reviewed by the Chairman of that meeting
and then tabled for approval at the next meeting. Any
concerns raised by Directors are clearly recorded in the
minutes of each meeting.
David
Shearer
David
Blackwood
Ginny
Pulbrook
Clive
Condie
Lewis
Girdwood
Nick
Dilworth
John
Coombs
1
Board
7 meetings
7/7 7/7 7/7 7/7 7/7 7/7 3/7
Audit Committee
3 meetings
3/3 3/3 3/3 1/3
Remuneration Committee
4 meetings
2
6/6 6/6 6/6 2/6
Nomination Committee
2 meetings
2/2 2/2 2/2 2/2 2/2
1 John Coombs left the Board in July 2022.
2 The Remuneration Committee held two unscheduled meeting during the year.
Esken Limited Annual Report & Accounts 2023
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Corporate Governance
Individual Directors’ key responsibilities
All Directors bring their experience to the Board. Directors are encouraged to keep their skillset up to date and the Company
provides support in this regard where needed. All Directors are required to submit themselves for re-election at each AGM.
This is a requirement of the Articles of Association. The key responsibilities of individual Directors are set out below.
Title Responsibility
Executive Chairman and
Deputy Chairman
The positions of Chairman and Chief Executive have been held by the same individual in the
position of Executive Chairman. In discharging his role as Chairman of the Board, the Executive
Chairman is responsible for leading the Board, ensuring its effectiveness and looking after the
interests of shareholders as a whole. The Deputy Chairman deputises for the Executive Chairman
where necessary, particularly with regard to matters affecting the Executive Chairman personally
and to provide a point of contact for shareholders independent from the Chairman. He can also
act as a sounding board for other Directors where they feel unable to address issues with the
Executive Chairman. At Esken, the role of Deputy Chairman and Senior Independent Director
are combined.
Executive Directors
The Group does not have a Chief Executive. The Executive Chairman has responsibility for
stakeholder management, execution of strategy and executive leadership. The other Executive
Directors are responsible for the day-to-day management of the business alongside the
Executive Chairman. They are, together, accountable for developing the Group’s strategy and
budget for Board approval and for monitoring the financial, operational and service performance
of the Group. Lewis Girdwood, CFO, has the additional role as Executive Director – Aviation
with main Board responsibility for that division. Nick Dilworth, COO, has the additional role of
Executive Director – Renewables with main Board responsibility for that business, in addition to
his executive responsibility for ESG.
The Esken Group Management Board (the Company’s senior leadership team) comprises the
Executive Chairman, the two other Executive Directors, Group People Director, Group General
Counsel and Company Secretary, and the leaders of the Group’s key operating divisions.
Meetings of this group are held monthly to discuss general business activity and also to discuss
strategic issues in the business. Senior management from across the divisions will also attend the
Esken Group Management Board meetings by invitation.
Chief Operating Officer
The Chief Operating Officer is responsible for all operational matters affecting the Group. Nick
Dilworth, COO, has the additional role of Executive Director – Renewables with main Board
responsibility for that business, in addition to his executive responsibility for ESG.
Chief Financial Officer
The Chief Financial Officer is responsible for ensuring sound financial management of the Group’s
business and providing strategic and financial guidance to ensure that the Company’s financial
commitments are met. Lewis Girdwood, CFO, has the additional role as Executive Director –
Aviation with main Board responsibility for that division.
Senior Independent
Director
At Esken, the role of Deputy Chairman and Senior Independent Director (SID) are combined. In
addition to the role as a Non-Executive Director, the role of the SID is to provide a sounding board
for the Executive Chairman and to serve as an intermediary for other Directors where necessary.
The SID makes himself available to shareholders if they have concerns which cannot be dealt with
by the Executive Chairman, and also makes himself available to other Directors if they have any
concerns regarding the Executive Chairman. The SID meets with Non-Executive members of the
Board at least once a year without the Executive Chairman being present, or the other Executive
Directors, in order to review the Executive Chairman’s performance in his role.
The Board considers this role and the role of Deputy Chairman to be of particular importance
given that David Shearer carries out the role of Executive Chairman.
Non-Executive Directors
The Non-Executive Directors provide a breadth of experience and independent judgement
to Board discussions. Their role is to challenge and support the executive team whilst being
ultimately responsible for overseeing corporate governance and protecting shareholder interests.
Each Director has specialist knowledge that helps provide the Board with valuable insights and,
in some situations, key contacts in related industries.
The appointment letters of the Non-Executive Directors are available for inspection at each AGM,
and at the Company’s registered office during normal business hours.
Company Secretary
The Company Secretary’s role is to act as advisor to the Board on matters relating to corporate
governance and, in conjunction with the Executive Chairman, to ensure good information flows
between the Board, its various Committees, the Non-Executive and Executive Directors and the
Esken Management Board.
The Non-Executive Directors have access to the Company Secretary’s advice and services in
addition to independent, professional advice if required (at the Group’s expense).
Corporate Governance continued
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Governance
and risk
• Discussed outcomes/themes from the internal Board effectiveness review;
• Received training and updates on relevant new laws and regulations, corporate governance,
Directors’ responsibilities, and whistleblowing;
• Considered the continuation of arrangements in place for the position of Executive Chairman
and the need for a replacement for a departing Non-Executive Director; and
• Approved the appointment of a new Assistant Company Secretary.
Strategy
• Board Strategy Day held to discuss and review the implementation of strategy;
• Monitored performance against strategic objectives;
• Reviewed and adapted business priorities;
• Successfully completed the Group’s refinancing in December 2022; and
• Agreed and announced the strategic review of the Group’s businesses and oversees
its implementation.
Leadership and
a responsible
business
• Oversaw the embedding of its new executive leadership structure;
• Appointed a new leader for London Southend Airport;
• Kept under review the level and impact of health and safety incidents and near misses and
restructured the Group’s management of health and safety; and
• Monitored level and content of communication to employees across the Group, focusing in
particular on wellbeing.
Financial
performance and
stewardship
• Approved the annual operating and capital expenditure budgets;
• Reviewed monthly business performance reports against budget and forecast;
• Reviewed and approved the half-year and full-year results and related announcements;
• Implemented robust cash controls to manage liquidity; and
• Reviewed and negotiated a revised credit facility.
Shareholder
engagement
• Informed and consulted with key investors on the Group’s financial performance and strategic
financing initiatives during the year;
• Consulted with larger shareholders in relation to the announcement of the strategic review;
• Reviewed feedback from roadshows and presentations to shareholders;
• Approved the Annual Report and Accounts and information to shareholders for the AGM; and
• Informed shareholders of its decision to propose that the Group ‘renew’ its remuneration
policy at the 2023 AGM, with a full review to be conducted in 2024 after completion of the
strategic review.
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94
Corporate Governance
Experience of the Board
The members of the Board maintain the appropriate balance
of status, experience, independence and knowledge of
the Company to enable them to discharge their respective
duties and responsibilities and to ensure that the
requirements of the business can be met.
The experience which each member of the Board brings to
their role is outlined in the Board biographies on pages 86
and 87.
Directors’ terms of appointment
Further details of the Directors’ service contracts and letters
of appointment are set out in the Directors’ Remuneration
Report on page 114 and 115.
Expected Board focus for next year
It is anticipated that the following areas will also
receive focus by the Board during the year ending
28 February 2024:
• The full implementation of the decisions stemming from
the strategic review.
• Review for the ongoing structure and resourcing of
the Group as the outcomes of the strategic review are
implemented which will include the ongoing financing
of London Southend Airport and senior leadership roles,
capabilities and requirements; and ESG development and
implementation.
• The development of London Southend Airport and the
financing of its operations.
Information, induction and professional development
The Executive Chairman is responsible for ensuring all
Directors receive comprehensive information on a regular
basis to enable them to perform their duties properly.
Updates, where necessary, are provided at Board meetings
and governance updates are provided to keep all Directors
up to date with regulatory requirements.
New Directors receive an appropriate induction on joining
the Board, typically including meeting members of the
senior management team and visits to operational sites.
All Directors have access to the advice and services of the
Company Secretary, who is responsible to the Board for
ensuring that Board procedures are complied with.
ESG Policy
Our approach to issues regarding sustainability is
continuously evolving and we anticipate further focus on
this in future Annual Reports. More information about the
Group’s approach to ESG matters can be found on pages 34
to 64.
Whistleblowing Policy
The Group’s Whistleblowing Policy sets out procedures
to enable all employees to report any concerns about
wrongdoing or dangers in the workplace such as theft,
fraud or malpractice. The Group has an independently-
run, confidential hotline where any such concerns can be
reported. The Directors and Audit Committee consider that
all whistleblowing allegations have been appropriately dealt
with. There were none during the year.
The Whistleblowing Policy can be found on the Group’s
website and via Sharepoint.
Internal control and risk management
The Directors’ responsibilities in connection with the
financial statements are set out in the Directors’ Report
on page 128. The Board, through the Audit Committee, is
responsible for the Group’s system of internal control and for
reviewing its effectiveness.
The Board considers risk assessment, implementation of
mitigating actions and internal control to be fundamental
to delivering the Group’s strategy. Internal control gives the
Board reasonable but not absolute assurance.
The Board has an ongoing process for identifying, evaluating
and managing the principal risks faced by the Group and
maintains a risk register.
The system of internal control is based upon:
• The Board’s overall responsibility;
• The Group’s organisational structure, with established
lines of accountability, as well as clearly-defined levels
of authority;
• Regular review by the Board and the Audit Committee;
• Support by Company policies in other areas, such as
finance; and
• Management rather than elimination of the risk of failure
to achieve strategic objectives. Systems of internal
control can only provide reasonable and not absolute
assurance against material misstatement or loss.
The Audit Committee and the Board have reviewed the
effectiveness of internal control (including financial,
operational and compliance controls together with risk
management in accordance with the Code) over the period
of this report, and to the date of its publication. Systems
compliance and confirmation of corrective actions are the
subject of a detailed report which is submitted to the Board
at each meeting.
The Audit Committee reviews the independence of the
auditor at the interim stage and at year end. The Audit
Committee has a policy of reviewing the status of the
auditing firm and its lead engagement partner after five
years from initial appointment, and each year thereafter.
A new auditor was appointed during the year.
The Group has a business systems internal audit function
which reviews performance against the agreed policies and
procedures. The Board agreed an internal audit programme
for the year ended 28 February 2023 to cover financial
controls and procedures.
Corporate Governance continued
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Shareholder relations
The Company is committed to maintaining good
communications with its shareholders and engaging
regularly. Senior Executives, including the Executive
Chairman and CFO, have had ongoing dialogue during the
year with individual institutional shareholders in order to
develop an understanding of their views. These views are
periodically fed back to the Board to ensure that all of the
Directors, in particular the Non-Executive Directors, develop
an understanding of the views of major shareholders about
the Company.
During the year, shareholders are kept informed of
the progress of the Group through regular corporate
communications: the annual results announcement; the
interim statement; trading updates and press releases
regarding other important developments as well as the
distribution of regulated information.
Twice a year, general presentations are given to analysts
and investors covering the annual and half-year results.
In addition, members of the Board meet with institutional
investors and analysts on a periodic basis.
The AGM is a forum for communication with shareholders.
Chairs of each Committee attend the AGM to address
any queries about their Committee’s performance during
the year.
The Company Secretary generally deals with enquiries
from individual shareholders. Our corporate website
www.esken.com contains published information and
press releases and is a key form of engagement with
our stakeholders, including our shareholders. It provides
information about compliance, business announcements,
financial results and reporting.
Further information on how Esken engages with
shareholders and other stakeholders can be found on
pages 66 to 75.
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Corporate Governance
Nomination Committee Report
Dear Shareholder
I am pleased to present the Nomination Committee Report
for the year ended 28 February 2023 and to provide
shareholders with an overview of the work carried out
during the period under review.
Role of the Committee
The Nomination Committee is required to meet at least
once a year, or more often if so required, to carry out its key
functions and duties. These include:
• To regularly review the structure, size and composition
(including the skills, knowledge, experience and diversity)
of the Board and make recommendations to the Board
with regard to any changes;
• To ensure plans are in place for orderly succession to
Board and senior management positions, and oversee the
development of a diverse pipeline for succession, taking
into account the challenges and opportunities facing the
Company, and the skills and expertise needed on the
Board in the future;
• To be responsible for identifying and nominating for the
approval of the Board, candidates to fill Board vacancies
as and when they arise;
• To review the results of the Board performance
evaluation process that relate to the composition of the
Board and succession planning; and
• To recommend the re-election of Directors under the
annual re-election provisions of the Code.
Attendance
The Nomination Committee met twice during the year.
Details of individual attendance by its members is shown
in the chart on page 91.
Board appointments
The Committee continued to pause the recruitment of a
second Non-Executive Director following the appointment
of Clive Condie in July 2020, on which it had reported
previously. Although John Coombs left the Board in July
2022, the Nomination Committee and the Board as a whole
believe that a Board comprising six Directors is appropriate
given the reduced size of the Group, and will not be looking
to recruit a further Director at this stage. The Committee
recommended the appointment of Clive Condie to take over
the role as Chairman of the Remuneration Committee after
John Coombs’ departure in July 2022, and also approved
Ginny Pulbrook to take on the role of Chair of the ESG
Committee with effect from 1 March 2022 along with her
role as the Designated People Director.
I am pleased to present the
Nomination Committee Report for
the year ended 28 February 2023
and to provide shareholders with
an overview of the work carried
our during the period under review.
David Shearer,
Chairman of the Nomination Committee
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Board evaluation
An internal Board evaluation was undertaken during the year
led by our Company Secretary. A questionnaire was circulated
to all Board members and used as an aide-mémoire for the
Company Secretary to hold one-to-one discussions with
each Director to consider the performance of the Board as a
whole and address individual Director performance, the Board
dynamics and ways of working. The results of the evaluation
were reviewed in February 2023. Separately, the Deputy
Chairman met with Board members to discuss the Executive
Chairman’s performance during the year.
Discussions from the Board evaluation were focused on
risk management, Group strategy, financial monitoring
and performance, Board diversity as well as the overall
performance of the Board and each of its Committees.
The review, together with further discussions held during
the year, highlighted that the Board continues to operate
effectively, and offers strong support to management.
Areas identified as opportunities to develop the Board’s
effectiveness further include:
• Following the conclusion of the implementation of the
outcome of the strategic review, to consider again the
appropriate size and structure of the Board and the
expertise and experience required of its membership.
• Following the conclusion of the implementation of the
outcome of the strategic review, to examine again
the diversity of the Board and the Group’s senior
management team.
• To widen the scope of senior executive management who
attend Board meetings to report on performance and to
discuss strategic initiatives.
• To arrange for the Board to undertake a revised
programme of visits to key sites across the Group.
• To review and reinvigorate the Board’s consideration
of succession planning for the Board and senior
management across the Group once the size and scope
of the Group is known following the disposal of its
operating businesses.
Further steps are being taken based on the most recent
review, but the Company believes that the actions taken
during 2022 continued to offer assurance with regards to
the operation of the Board and governance structures.
In addition to evaluation of the Board as a whole, separate
appraisals are held for individual Directors. The Executive
Chairman conducts annual appraisals with the other
Executive Directors and has regular one-to-one discussions
with them about their performance.
Nomination Committee membership
– David Shearer, Executive Chairman
– Ginny Pulbrook, Non-Executive Director
– David Blackwood, Non-Executive Director
– Clive Condie, Non-Executive Director
The Chairman may also invite others to attend meetings
of the Committee as required, such as the other
Executive Directors and the Group People Director.
Key activities during the year
– Consideration of Non-Executive and Executive
leadership roles in the Group.
– Appointment of new Remuneration Committee
Chair.
– Board evaluation.
– Re-election of Directors.
– Approval of the appointment of John Upton at
London Southend Airport.
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Corporate Governance
Diversity
All new appointments to the Board and all of its Committees
are made on merit, taking into account the specific skills,
knowledge and experience of candidates and irrespective of
personal characteristics such as ethnicity, religion or gender.
The appointment of additional Non-Executive Directors will
be used as an opportunity to further increase the diversity
of the Board and its Committees.
The Board is aware of the requirements in Rule 9.8.6 of the
Listing Rules which would require of a company incorporated
in the United Kingdom that:
• At least 40% of the Board are women.
• At least one of the senior Board positions (Chair, Chief
Executive Office, Senior Independent Director or Chief
Financial Officer) is a woman.
• At least one member of the Board is from a minority
ethnic background (which is defined by reference to
categories recommended by the Office for National
Statistics (ONS)) excluding those listed, by the ONS,
as coming from a white ethnic background).
The Company is not incorporated in the United Kingdom
but can report, on a voluntary basis, that it has not complied
with these requirements as at a reference date of
28 February 2023.
The Board recognises that the level of diversity at Board level
is below that which it would typically expect. However, given
the difficult position which the Group has been in during the
past year and the financial constraints which it has faced,
it is not considered appropriate at this time to enlarge the
Board for the sole purpose of addressing these matters.
As and when the Company completes any disposal of its
operating businesses this position will be reviewed again.
Succession planning
Succession planning has not been a principal area of focus
for the Committee during the year as Committee members
have instead focused their time and effort in supporting the
business in its refinancing and other major initiatives. It did,
however, implement a change in the leadership for London
Southend Airport, welcoming John Upton as its new Chief
Executive. Nick Dilworth also took on a leadership role for
Star Handling after the departure of its Managing Director
during the year and the restructuring of the business after
the loss of the Group’s key logistics partner.
The Committee plans to review its approach to succession
planning after completion of the strategic review, to ensure
that our approach to Board and senior executive recruitment
and composition continues to allow for the development of
a diverse pipeline for succession, taking into account the
challenges and opportunities facing the Company, and the
skills and expertise needed on the Board to support the
Esken strategy.
Committee effectiveness
The aforementioned internally facilitated Board performance
review included a review of the performance of the Committee
and it concluded that the Committee performs effectively.
The Committee has recommended the re-election of all
Directors at the AGM in 2023.
Esken welcomes feedback from shareholders on our report
and there will be an opportunity to ask questions about the
activities of the Committee at our 2023 AGM.
David Shearer
Chairman of the Nomination Committee
20 June 2023
Nomination Committee Report continued
More widely, the Group continues the development of its
Equality, Diversity and Inclusion strategy which is reported
upon in detail on page 49 of this Annual Report. For the year
ended 28 February 2023, the gender split at Board level
was 16.7% women and 83.3% men (following the departure
of John Coombs). Women represented 14.3% of the Esken
Management Board and 26.0% of other senior management
(i.e. direct reports of Esken Management Board members).
Overall, our entire workforce is 71% men and 29% women.
Number of Board
members
Percentage of the
Board
Number of senior
positions on the
Board (CEO, CFO, SID
and Chair)
Number in executive
management
Percentage
of executive
management
Men 5 83% 3 6 86%
Women 1 17% 0 1 14%
Other categories 0 0% 0 0 0%
Not specified/prefer not to say 0 0% 0 0 0%
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Audit Committee Report
Dear Shareholder
Having conducted careful reviews, the Audit Committee
(Committee) concluded that the 2023 Annual Report
is fair, balanced and understandable and advised the
Board accordingly.
Other Directors, including the Executive Chairman, Chief
Operating Officer and Chief Financial Officer, the Group
Financial Director and the Group’s internal and external
auditors attend meetings by invitation. As Chairman, I also
meet independently with the external auditor, internal
auditor and Chief Financial Officer. I have an open and
professional relationship with each of them and I am
confident in their capabilities and the level of assurance
that they provide.
Details of the membership of the Committee, the key
activities of the Committee during the year, the matters
related to the engagement of the external auditor and
an overview of our risk management and internal control
framework are set out in this report. Also included are
details of the significant accounting matters and judgements
considered by the Committee and how these have been
addressed during the year.
The Committee terms of reference are available on the
Group’s website at www.esken.com
David Blackwood
Chairman of the Audit Committee
20 June 2023
On behalf of the Audit
Committee I am pleased to
present our Audit Committee
Report for the year ended
28 February 2023.
David Blackwood,
Chairman of the Audit Committee
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Corporate Governance
Audit Committee Report continued
Audit Committee membership
– David Blackwood, Audit Committee Chairman
– Ginny Pulbrook, Non-Executive Director
– Clive Condie, Non-Executive Director
– John Coombs, Non-Executive Director
(resigned 31 July 2022)
Key activities during the year
– Audit tender.
– Ensuring the Annual Report is fair, balanced and
understandable.
– Reviewing significant judgements and estimates
applied in the preparation of the interim review
and Annual Report.
– Review of going concern disclosures and
viability statement.
– Impairments and asset carrying values review.
– Funding package review for £50m debt facility,
cancellation of Revolving Credit Facility (RCF)
and transition of banking arrangements from
Lloyds to Barclays.
– Disclosure of strategic review.
– Confirmation of external auditor independence.
– Approval of the external audit plan and strategy
of the new auditors for the year ended 28
February 2023.
– Approve the internal audit plan for the year
ended 28 February 2023.
– Review the external audit findings for the year
ended 28 February 2022.
– Review of the findings from the external review
conducted by the auditor for the interim period
to 31 August 2022.
– Review the findings from internal audits
conducted during the year.
– Committee terms of reference review.
– Consider and review the activity and
effectiveness of the Whistleblowing Policy.
The Committee terms of reference are available on
the Group’s website at www.esken.com
Audit Committee membership during the year
The members of the Committee and their meeting
attendance during the year are set out below. All members
of the Committee are independent Non-Executive
Directors. The Company Secretary acts as the Committee’s
secretary. David Blackwood, Committee Chairman, is a
qualified accountant and is considered by the Board and
the Nomination Committee to hold the requisite recent and
relevant financial experience for the purposes of the UK
Corporate Governance Code and competence in accounting
or audit for the purposes of Disclosure and Transparency
Rule 7.1.
Committee member
Meeting
attendance
David Blackwood 3/3
Ginny Pulbrook 3/3
Clive Condie 3/3
John Coombs 1/3
Fair, balanced and understandable information
The Committee acknowledges that, as a whole, the Annual
Report needs to be fair, balanced and understandable in
order to provide the information necessary for shareholders to
assess the Group’s position and performance, business model
and strategy. The Committee advises the Board on whether
it believes that the Annual Report meets this requirement. In
order for the Committee to make this assessment it considers
reports from management that monitor financial performance,
received during the year and at year end in support of the
financial statements, and also reports from the external
auditor on the findings of its annual audit.
Formal review processes are in place to ensure that the Annual
Report is factually accurate. Following a detailed review, the
Committee concluded that the Annual Report is fair, balanced
and understandable and advised the Board accordingly.
The responsibility statement of the Directors in respect of
the Annual Report is on page 130.
Engagement of the external auditor
The external auditor is engaged to express an opinion on the
Group’s financial statements. The audit includes the review
and testing of the systems of internal financial control and
the data contained in the financial statements, to the extent
necessary for expressing an audit opinion on the truth and
fairness of the financial statements.
KPMG LLP (KPMG) had been the Group’s auditor since 2012
and per the Financial Reporting Council ten-year mandatory
tenure requirement, the audit was put out to tender for the
28 February 2023 year end, including the 31 August 2022
interim review. Mazars LLP (Mazars) were appointed as
the Group’s auditor and the lead partner is Tim Hudson. In
accordance with UK regulations, the Company’s auditor will
adhere to a lead partner rotation every five years. Mazars
provides the Committee with relevant reports, reviews and
advice throughout the year, as set out in their terms of
engagement.
During the tender process the Committee assessed the
proposal from Mazars and was satisfied that they have the
required attributes to provide a robust audit that will be
effective and provide an appropriate independent challenge
of the Group’s management.
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Engagement of the external auditor continued
The Committee has adopted a policy which sets out a
framework for determining whether it is appropriate to
engage the Group’s auditor for non-audit services and for
pre-approving non-audit fees. A full copy of this policy is
available on the Group’s website.
The overall objective of the policy is to ensure that the
provision of non-audit services does not impair the external
auditor’s independence or objectivity. This includes, but is
not limited to, assessing:
• The scope of the work to be undertaken;
• Any threats to independence and objectivity resulting
from the provision of such services;
• Whether the skills and experience of the audit firm make
it a suitable supplier of the non-audit service;
• Whether there are safeguards in place to ensure that
there is no threat to objectivity and independence in the
conduct of the audit resulting from the provision of such
non-audit services by the external auditor, the nature of
the non-audit services, the related fee levels and the fee
levels individually and in aggregate, relative to the audit
fee; and
• The criteria which govern the compensation of the
individuals performing the audit.
Non-audit fees charged by the auditor in the year were
£130,000 compared to an audit fee of £795,000. The non-
audit fees relate to the half-year review. The objectivity
and independence of the auditor has been reviewed and
considered to be safeguarded.
Internal audit
The Group’s Risk & Safety team performs audits
against documented processes. Reports summarising
findings and key actions are discussed at each Board
meeting and circulated to the Executive Directors and
divisional management.
The Group has a dedicated internal financial audit function
which is operated by an independent external firm. The
scope of these audits is prepared by the Chief Financial
Officer and approved by the Committee at the beginning
of the financial year.
There were two projects completed during the year and
reports were produced summarising the findings and
recommendations. Significant issues identified within these
reports are considered in detail along with the mitigation
plans to resolve them. The Committee is provided with a
summary of the reports and an update is provided at each
meeting on the progress of any ongoing or planned projects.
Significant accounting matters
As part of monitoring the integrity of the financial
statements, the Committee reviews whether suitable
accounting policies have been adopted and whether
management has made appropriate judgements and
estimates. The Committee seeks support from the external
auditor as part of its review.
The significant accounting matters reviewed for the year
ended 28 February 2023 are set out below:
Going concern
and funding/new
£50m debt facility/
cancellation of RCF/
change of banking
provider
On 15 December 2022, the Group raised £50m of debt via a three year term loan, with a one year
extension at the discretion of the lender. This enabled the Group to cancel the RCF and change
banking provider from Lloyds to Barclays.
Cash forecasts have been prepared which show that the Group has sufficient funds to meet its
liabilities as they fall due until at least June 2024 and therefore the financial statements have been
prepared on a going concern basis. However, this is highly dependant on the successful completion
of the Group’s disposal plans, which indicate the existence of a material uncertainty related to
events or conditions that may cast significant doubt on the ability of the Group to continue as a
going concern.
The Committee is satisfied that although the Group has material uncertainty, it is a going concern
and the Annual Report has been prepared on this basis. The Committee has reviewed the
disclosures about going concern and is satisfied that they are appropriate.
Hand back
of aircraft /
maintenance
reserves
During the year, four of the eight leased ATR aircraft were handed back to the lessor. Under the
conditions of the hand back, for two of the aircraft that were returned early, the Group continued to
pay monthly rent payments until the original hand back date in April 2023, but has benefitted from a
maintenance cost saving. For the two aircraft returned in line with the agreed hand back schedule,
all rental payments ceased on redelivery.
The year end maintenance reserve provision is material to the Group and has been constructed
in line with the requirements of the four remaining ATR leases. Estimates used in calculating this
provision include the cost of exclusions within engine overhauls, airframe check costs and propeller
blade repairs required. These estimates have been made based on previous overhauls completed
and utilising the extensive knowledge and experience of staff that previously worked for Stobart Air
(the previous lessor of the aircraft).
The Committee has reviewed the provision and is comfortable with the presentation as current, the
disclosures in relation to the provision estimates and the overall quantum.
Esken Limited Annual Report & Accounts 2023
102
Corporate Governance
Defined benefit
pension surplus/
obligation
An independent actuary calculates the IAS 19 valuation presented in the consolidated statement of
financial position. The data used in the valuation is obtained directly from the administrators of the
scheme and the underlying assumptions are reviewed and signed-off by management. Judgement
is required in preparing the underlying assumptions such as interest rate and inflation. A surplus is
recognised because there is a legal right to surplus in the trust deed.
The Committee has considered the carrying value of the surplus together with the assumptions
underlying the valuation and is satisfied with the valuation and presentation.
Impairment of
property, plant and
equipment and
intangible assets
For certain property assets, namely land at Widnes and Runcorn and Carlisle Lake District Airport, a
classification and value review was conducted. This resulted in the transfer of land at Widnes from
property inventory to property, plant and equipment and no impairment to the carrying values of
these properties.
Impairment reviews were carried out for intangible assets and property, plant and equipment within
the Aviation and Renewables divisions. The recoverable amount of all assets subject to impairment
review were above the carrying value of these assets so no impairments were required in the year.
The judgements used in the impairment reviews largely relate to the assumptions underlying the
fair value less costs to sell for Aviation and value-in-use calculations for Renewables, primarily
the achievability of long-term business plans and macroeconomic assumptions, together with the
appropriateness of the discount factors used.
The Committee has considered the carrying values of the assets together with the assumptions
underlying the impairment reviews and is satisfied that no impairments are required.
Audit Committee Report continued
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Financial StatementsCorporate GovernanceStrategic Report
ESG Committee Report
• to monitor and review the Group’s compliance with the
recommendations and requirements of the Task Force
on Climate-Related Financial Disclosures (TCFD) and
to approve any relevant disclosures mandated thereby
under the Listing Rules;
• to ensure that ESG risks (including those mandated by
the TCFD) are identified, assessed and managed in line
with the Group’s relevant risk mitigation framework;
• to recommend ESG KPIs for adoption by the Group,
including for use by the Group in incentive schemes and
annual bonus schemes;
• to monitor and review the overall implementation of the
Company’s ESG strategy;
• to monitor, review and consider all recommendations in
response to ESG issues raised and review the execution
and implementation of plans previously approved by the
Committee including recommending corrective actions,
where applicable; and
• to monitor, review and consider stakeholder engagement
in ESG activities and review key external disclosures.
Attendance
The ESG Committee met eight times during the year.
The meetings have addressed all areas of environmental,
social and governance, and a summary is below:
• Environment – data collection and reporting; review of the
Roadmap to Net Zero.
• Social – charitable giving, employee volunteering,
diversity and wellbeing.
• Governance – review of strategic implementation plan,
KPIs and risk register.
Committee effectiveness
The internally facilitated Board performance review included
a review of the performance of the Committee and it
concluded that the Committee performs effectively.
Esken welcomes feedback from shareholders on our report
and there will be an opportunity to ask questions about the
activities of the Committee at our 2023 AGM.
Ginny Pulbrook
Chairman of the ESG Committee
20 June 2023
ESG Committee membership
– Ginny Pulbrook, Non-Executive Director
– Nick Dilworth, Chief Operating Officer and
Executive Director, Renewables
– Sundeep Sangha, Head of ESG
The Chairman may also invite others to attend
meetings of the Committee as required.
I am pleased to present the ESG
Committee Report for the year
ended 28 February 2023 and
to provide shareholders with an
overview of the work carried our
during the period under review.
Ginny Pulbrook,
Chairman of the ESG Committee
Dear Shareholder
I am pleased to present the ESG Committee Report for the
year ended 28 February 2023 and to provide shareholders
with an overview of the work carried out during the period
under review.
The outcome of the work of ESG Committee can be seen
elsewhere in this report, most notably in the Sustainability
report on pages 34 to 64.
Role of the Committee
The ESG Committee has overall responsibility:
• to recommend the Group’s ESG strategy for adoption
by the Board and ensure that it remains fit for purpose
and consistent with the Company’s purpose, culture
and values whilst supporting the Company’s long-term
sustainable success;
• to ensure that short-term and long-term objectives for
the Company’s ESG activities are in place;
Esken Limited Annual Report & Accounts 2023
104
Corporate Governance
Directors’ Remuneration Report
On behalf of the Group’s
Remuneration Committee,
I’m happy to present this
year’s report, for what has
been another challenging
year for our employees.
Clive Condie,
Chairman of the Remuneration Committee
Our current Directors’ remuneration policy, which was
supported by 96% of our shareholders at the AGM on
30 July 2020, is available in our 2020 Annual Report at
www.esken.com/investors and has been the policy guiding
our decisions during the year. The Annual Report on
Remuneration, which provides details of the remuneration
earned by Directors for the year ended 28 February 2023
and how we intend to apply our new Directors’ remuneration
policy in the year ending 28 February 2024 (assuming that it
is approved by shareholders), is set out on pages 108 to 116
and will be subject to a separate vote at the AGM.
As announced to our shareholders on 9 November 2022,
Esken has conducted a strategic review of its operating
businesses and has concluded that it is in the best interests
of all stakeholders to secure the long-term potential of these
businesses and deliver value for Esken shareholders through
a managed disposal process. In line with the requirements
of the UK remuneration regulations, we submit the Directors’
remuneration policy for the approval of our shareholders at
least every three years. The current policy was approved
by shareholders at the 2020 AGM and we will therefore be
submitting a Directors’ remuneration policy for approval at the
AGM in 2023. Given the timing of the strategic review and the
resulting disposal processes, the Remuneration Committee
considers it appropriate to not make any significant changes
to the policy at this stage, but instead we are proposing to
roll-forward the current policy with minimal changes. Our
intention is to undertake a detailed review during the 2023/24
financial year following the completion of the disposal
processes, and subject to the outcome of the review, to
consult with our shareholders in advance of seeking approval
for a revised policy at the 2024 AGM.
It is also highly likely that we will wish to instigate
remuneration structures for our Executive Directors that
may fall outside the scope of our remuneration policy which
recognise the impact of the strategic review and align their
interests with those of shareholders in seeking to maximise
value from the disposals process. Those matters will be put
to shareholders for specific approval in due course.
Remuneration decisions during the year
The past year has seen some remuneration challenges for
the Company and the Committee to deal with. The Group
continued to face significant financial pressure during the
year, and kept in place strict financial discipline in order
to preserve liquidity and protect operational capability for
the long term. You will have read elsewhere in this report
the steps the Group took to achieve this. A third year of
considerable financial and operational pressures posed
significant challenges for our staff and will continue to do so
in the year ahead. We have been very mindful this year that
our continued recovery from the pandemic (particularly in
the aviation sector), the current inflation and energy crisis
and our ability to continue to steer the business through the
uncertain landscape ahead would in part be dependent on
our ability to retain our key staff or replace those who no
longer remain with us. Remuneration has a significant part to
play in retaining and recruiting key executives and that has
been reflected in the work of the Committee this year.
No bonus scheme for Executive Directors was put in place
for the year ended 28 February 2022 but it was reinstated
in the year ended 28 February 2023. Our Executive
Directors were awarded bonuses of 25% (Lewis Girdwood)
and 20% (Nick Dilworth) of their salary (from a maximum
entitlement of 100%) and details on the achievement against
1.1 Annual Statement by the
Remuneration Committee
Chairman
Dear Shareholder
On behalf of the Board and as Chairman of the
Remuneration Committee (Committee), I am pleased to
present the Directors’ Remuneration Report (DRR) for the
year ended 28 February 2023. As a Guernsey registered
company, we are not obliged to follow the UK Companies
Act regulations (specifically the Large and Medium sized
Companies and Group (Accounts and Reports) Regulations
2008, as amended) governing Directors’ remuneration
disclosure and voting, but we elect to do so.
I took over as Chairman of the Committee in July 2022 after
John Coombs stepped down from the role after many years
of service and I would like to take this opportunity to thank
John again on behalf of the Board.
Esken Limited Annual Report & Accounts 2023
105
Financial StatementsCorporate GovernanceStrategic Report
Remuneration Committee members
1
– Clive Condie, Committee Chairman
– Ginny Pulbrook, Non-Executive Director
– David Blackwood, Non-Executive Director
1 John Coombs was a member of the Committee and its Chairman until
he stepped down from the Board at the AGM in July 2022.
Activities during the year
During the year the Committee met six times and
a summary of the main areas dealt with by the
Committee is set out below.
Consideration and decisions on:
• Levels of base salaries for Executive Directors and
other Executives within its remit.
• Executive Directors’ bonus arrangements.
• Performance of Long-Term Incentive Plans (LTIPs)
over the year.
• LTIP grants.
• Directors’ Remuneration Report.
• Terms of appointment for the new CEO of London
Southend Airport.
• Review of the terms of reference of the
Committee.
• Review the Company’s Remuneration Policy and
communicate with shareholders over its content.
• Reward and retention arrangements for executives
in light of the potential sale of the Group’s two
main businesses.
Contents of the Directors’
Remuneration Report
1.1 Annual Statement by the Remuneration
Committee Chairman.
1.2 Remuneration at a glance.
1.3 Directors’ remuneration policy.
1.4 Annual Report on remuneration.
The Directors’ Remuneration Report is not subject
to audit.
The Committee has written terms of reference which
are available in the ‘About’ section of the Group’s
website at: www.esken.com
performance conditions and discretions exercised are set
out on page 109 below. No bonus was awarded to them for
achievement against financial performance targets at the
discretion of the Committee as the Group continued to be
unprofitable and the two operating divisions missed their
own financial performance targets. Cost-of-living awards
were able to be implemented for the first time since 2020
where possible (but not for the Executive Directors) for the
year ended 28 February 2023.
The awards granted under the approved LTIP in 2020
in respect of performance for the three years ending 28
February 2023 did not vest, as the threshold performance
targets were not met. However, we were able to make an
LTIP grant over ordinary shares representing 150% of salary
for both Nick Dilworth and Lewis Girdwood on 5 July 2022.
When considering these awards, the Committee discussed
the proposed quantum in light of the prevailing market
conditions and the Company’s then share price. Following
a third year of considerable financial and operational
pressures, the Committee was also conscious that the
Company’s ability to continue to steer the business through
the uncertain landscape ahead would, in part, be dependent
on its ability to retain key staff. In addition, in view of the
significant issues which the business had faced over the last
three years, a number of which were legacy matters, all of
the previously-issued LTIPs were unlikely to vest. As a result,
the Committee did make LTIP awards for FY23, although
with quantum reduced from 200% of salary to 150%. As with
the awards in respect of the Company’s 2022 financial year,
the Committee approved a wholly TSR-based performance
measure for those awards on the basis that this would be
closely aligned to shareholder interests. The performance
targets attached to these awards are linked to an increase in
the price of the Company’s ordinary shares measured over
the Company’s 2023, 2024 and 2025 financial years. Full
details of these targets are set out on page 117.
Looking forward to the year ending February 2024
The remuneration for the Executive Chairman and our two
Executive Directors were set last year and there is no need
to change those arrangements in the year ahead. We will not
make cost of living increases in their base fees/salaries for
the coming year. The Executive Directors will also participate
in a bonus scheme. However, in light of the strategic review
and considering the exceptional difficulties which this review
poses in terms of setting performance targets for the bonus,
the Committee is still considering the appropriate bonus and
will make further details available in due course. If any award
is proposed outside of the remuneration policy, shareholder
support would be sought. The Executive Chairman does not
participate in our bonus scheme.
In view of the outcome of the strategic review, the
Committee does not expect to make LTIP awards to the
Executive Directors (or other staff) in the usual way during
the year. Instead, the Committee is currently considering
an alternative form of incentive plan which recognises
the impact of the strategic review and aligns participants’
interests with those of shareholders in seeking to maximise
value from the disposals process. Those matters will be put
to shareholders for specific approval in due course. The
Executive Chairman does not participate in our long-term
incentive schemes.
At the 2023 AGM, we will seek approval from shareholders
for our new remuneration policy. Further illustrations of
how the remuneration policy will be operated in certain
circumstances for the financial year ending 28 February
2024 are included on page 107.
Clive Condie
Chairman of the Remuneration Committee
20 June 2023
Esken Limited Annual Report & Accounts 2023
106
Corporate Governance
1.2 Remuneration at a glance
Performance highlights
Adjusted EBITDA Loss before tax
£5.6m (£27.7m)
Aviation – Adjusted EBITDA Renewables – Adjusted EBITDA
(£3.8m) £18.4m
LTIP outcomes Shareholding guidelines
LTIP awards were granted
in July 2021 with vesting
based on TSR performance
over a three-year period
ended 28 February 2023.
Performance against those
measures was below threshold
and the awards will not vest.
Purpose:
To align Executive
Directors’ interests
with those of
shareholders
Guidelines for
Executive Directors:
To build up
shareholdings of at
least 200% of salary
Current shareholdings
(percentage of salary):
Nick Dilworth 3.7%
Lewis Girdwood 9.9%
Bonus structure
outcomes
Bonus outcome
The Executive Directors were
granted a bonus equivalent
to 100% of their salary in
the year.
70% payable based on profit
targets for the Group.
30% based on personal
performance targets.
EBT:
EBT for the period
was a loss of £27.7m
No bonus for the
Executive Directors
is payable
Personal targets:
Mr Dilworth: 20%
of salary
Mr Girdwood: 25% of
salary
Further details on our shareholding guidelines, and how these are affected post-employment, can be found on page 112.
These guidelines do not apply to the Executive Chairman, who does not participate in the Group’s LTIPs.
Directors’ Remuneration Report continued
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Financial StatementsCorporate GovernanceStrategic Report
Implementation of the remuneration policy in 2024
Element Purpose
Key features/Alignment
to strategy Directors
Salary, benefits
and pension
To reflect an individual’s
role and experience
and to provide
fixed remuneration
on a market
competitive basis.
Salary increases
normally reflect salary
increases for the
wider workforce.
Pension provision for
any newly-appointed
Executive Directors
will be in line with the
wider workforce.
Having regard to the impact of the energy crisis and
other financial pressures on the wider workforce, the
Company is budgeting for cost of living increases for
wages in the year ahead. However, it is also mindful
that these pressures affect the lowest paid staff
the most acutely and so have offered the greatest
increases to those staff. There will be no increase
in fees or salaries for the Executive Chairman or the
Executive Directors in FY24.
Bonus To reward the
achievement of
short-term strategic
objectives and
motivate executives
to achieve stretching
financial goals.
Up to 150% of salary.
Deferral into shares
enhances alignment
with shareholders
where the maximum
opportunity is more
than 100% of salary.
The Executive Directors will participate in a bonus
scheme. However, in light of the strategic review
and considering the exceptional difficulties which
this review poses in terms of setting performance
targets for the bonus, the Committee is still
considering the appropriate bonus and will make
further details available in due course. If any award
is proposed outside of the remuneration policy,
shareholder support would be sought. The Executive
Chairman does not participate in the Company’s
bonus scheme.
LTIP Rewards long-term
value creation.
Annual awards of up to
200% of salary.
Aligns Executive
Directors’ interests with
those of shareholders
through the use
of performance metrics,
delivery in shares and
a two-year holding
period after vesting.
Due to the exceptional circumstances of the
strategic review, our intention is that no awards will
be made during the year to the Executive Directors.
Instead, the Committee is currently considering an
alternative form of incentive plan which recognises
the impact of the strategic review and aligns
participants’ interests with those of shareholders
in seeking to maximise value from the disposals
process. Those matters will be put to shareholders
for specific approval in due course.
Shareholding
requirement
Aligns Executive
Directors’ interests with
those of shareholders.
Executive Directors are
expected to build
a shareholding equal
to at least 200% of
their salary.
A post-employment
shareholding
requirement further
aligns Executive
Directors’ interests with
those of shareholders.
See above.
Esken Limited Annual Report & Accounts 2023
108
Corporate Governance
1.3 Directors’ remuneration policy
As described in the statement from the Committee’s
Chairman on page 104 – given the ongoing strategic
review and the resulting disposals of key businesses, the
Committee considers it appropriate not to make significant
changes at this stage to the Directors’ remuneration policy
approved at the 2020 AGM. Instead, the Committee is
proposing a ‘roll-forward’ of the policy approved in 2020,
with minimal changes. Our intention is to undertake a
detailed review during the Company’s 2023/24 financial
year and may consult with our shareholders in advance of
seeking approval for a revised policy at our 2024 AGM. This
part of the Directors’ Remuneration Report sets out the
Directors’ remuneration policy, which, subject to shareholder
approval at the 2023 AGM, shall take binding effect from the
close of that meeting. The changes proposed to the policy
approved in 2020 are relatively minor and reflect only those
matters which relate to the remuneration of the Executive
Chairman.
The key principles that underpin the design of our new
remuneration policy for Executive Directors are to:
• attract, retain and motivate high-calibre talent to ensure
continued success of the Group;
• recognise and reward stretching performance taking into
account the skills and experience of the Directors and the
nature and complexities of their responsibilities;
• encourage and support an entrepreneurial and high
performance culture, providing incentives that are aligned
to medium and longer-term business strategy;
• align the interests of the Executive Directors, senior
management and employees with those of shareholders;
• ensure that remuneration and incentives adhere to the
principles of good corporate governance, support good
risk management practice and promote sustainable Group
performance; and
• have a competitive mix of fixed remuneration and
short-term and long-term incentives, with an appropriate
proportion of the package determined by stretching
targets linked to the Group’s performance.
David Shearer is currently combining the roles of Chairman
and Chief Executive on a basis which we have reported on
in the past and which our shareholders were consulted on
prior to his role being made permanent at the end of 2021.
As a result, certain elements of his remuneration (such as
participation in our bonus scheme, receipt of LTIP awards
and certain benefits) differ from those of the other Executive
Directors and will continue to do so for the coming year. Any
change to those arrangements will be considered as part of
the revised policy proposed for approval at the 2024 AGM.
The Company is incorporated in Guernsey and, accordingly,
is not subject to the provisions of UK legislation relating to
the making of remuneration payments and payments for loss
of office to Directors. Notwithstanding this, the Company
has prepared this policy by reference to the requirements of
the UK’s Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008 (as amended),
and any payment made to a Director after this policy has
become effective will be consistent with this policy.
The policy is determined by the Remuneration Committee.
Directors’ Remuneration Report continued
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Financial StatementsCorporate GovernanceStrategic Report
Policy for Executive Directors
Component Purpose and link to strategy Operation Maximum opportunity Performance measures
Base salary Core element of fixed
remuneration reflecting
an individual’s role
and experience.
The Committee ordinarily reviews
base salaries annually taking
into account a number of factors
including (but not limited to) the
value of the individual, the scope
of their role, their skills and
experience and performance.
The Committee also takes into
consideration:
• pay and conditions of the
workforce generally; and
• Group profitability and
prevailing market conditions.
Whilst there is no maximum
salary, increases will
normally be within the range
of salary increases awarded
(in percentage of salary
terms) to other employees
of the Group. However,
higher increases may be
awarded in appropriate
circumstances, such as:
• on promotion or
in the event of an
increase in scope of
the role or individual’s
responsibilities;
• where an individual has
been appointed to the
Board at a lower than
typical market salary
to allow for growth in
the role, in which case
larger increases may
be awarded to move
salary positioning to
a typical market level
as the individual gains
experience;
• a change in size or
complexity of the Group
and/or significant market
movement.
Increases may be
implemented over such time
period as the Committee
deems appropriate.
While no formal performance
conditions apply, an
individual’s performance
in their role is taken into
account in determining any
salary increase.
Benefits Fixed remuneration provided
on a market competitive
basis.
Benefits include the use of a
company car (or cash in lieu),
medical cover for the Executive
Director and their partner and
dependent children and death-
in-service cover.
The Company operates a tax
qualifying Save-As-You-Earn
Scheme (the SAYE scheme), in
which Executive Directors can
participate on the same terms as
other qualifying employees.
Other benefits may be
provided based on individual
circumstances, which may
include relocation costs, travel
and accommodation expenses.
Reimbursed expenses may
include a gross-up to reflect
any tax or social security due in
respect of the reimbursement.
Whilst the Committee
has not set an absolute
maximum on the level of
benefits Executive Directors
may receive, the value is
set at a level which the
Committee considers to be
appropriately positioned
taking into account the
nature and location of
the role and individual
circumstances.
The limits on participation in
the SAYE scheme and the
permitted discount when
setting the option price for
SAYE scheme options are
prescribed by the applicable
tax legislation.
The Executive Chairman
does not receive any cash
benefits (save that he is
covered by the Group’s
death-in-service policy
and is paid his reasonable
expenses) and does
not participate in the
SAYE scheme.
Not applicable.
Esken Limited Annual Report & Accounts 2023
110
Corporate Governance
Component Purpose and link to strategy Operation Maximum opportunity Performance measures
Retirement
benefits
Provide a competitive
means of saving to deliver
appropriate income
in retirement.
The Company operates a defined
contribution scheme.
In appropriate circumstances,
an Executive Director may
receive a salary supplement
in lieu of some or all of the
contributions that would
otherwise be made to a
pension scheme.
For the Chief Financial
Officer and Chief Operating
Officer in office at the date
on which this Policy takes
effect, this is capped at 10%
of salary (effective as at 1
March 2023). The Executive
Chairman is not paid a
pension contribution.
In the case of any Executive
Director appointed after the
date on which this Policy
takes effect, a percentage
of salary not exceeding the
percentage applicable to
the majority of the Group’s
workforce worldwide
(or such sub-set of that
workforce as the Committee
determines) from time
to time.
Not applicable.
Annual bonus To reward the achievement
of short-term strategic
objectives and motivate
executives to achieve
stretching financial goals.
Deferral of part of the
bonus into shares provides
longer-term alignment
with the interests of
shareholders.
Targets and objectives are
reviewed annually and any payout
is determined by the Committee
after the year end.
The Committee has discretion
to vary any formulaic payout
where it believes the outturn
does not reflect the Committee’s
assessment of overall performance
or is not appropriate in the context
of circumstances that were
unexpected or unforeseen at the
start of the financial year, or for
any other reason the Committee
considers appropriate.
Where the bonus maximum
opportunity is up to 100% of salary
any bonus earned will ordinarily
be paid in cash. Where the bonus
opportunity is more than 100% of
salary, up to 60% of any bonus
earned will ordinarily be paid in
cash with the remainder deferred
into shares, for up to two years.
Deferred bonus awards may take
the form of conditional shares or
nil cost options.
Deferred bonus awards may
incorporate the right to receive
additional shares calculated by
reference to the value of dividends
and special dividends which
would have been paid on the
shares up to the time at which
the shares can first be acquired;
this amount may be calculated
assuming that the dividends have
been reinvested in the Company’s
shares on a cumulative basis.
Recovery provisions apply, as
referred to on page 111.
The maximum annual bonus
opportunity is up to 150% of
base salary. The Executive
Chairman does not
participate in the Company’s
bonus scheme.
Targets (which may be
based on financial or
strategic measures) and
individual objectives are
determined to reflect the
Company’s strategy.
Ordinarily, at least 50%
of the bonus opportunity
is based on a financial
measure or measures, which
may include but are not
limited to EBITDA or other
measures of profit.
The balance of the
bonus opportunity will
be based on one or more
financial measures and/
or the delivery of one or
more strategic/individual
measures.
Subject to the Committee’s
discretion to vary formulaic
outcomes, vesting of the
bonus in respect of any
financial measure will
be up to 50% for target
achievement, rising to 100%
for meeting or exceeding a
stretch level of performance.
Subject to the Committee’s
discretion to vary formulaic
outcomes, for strategic
or individual measures,
vesting will be determined
by the Committee between
0% and 100% based on its
assessment of the extent to
which the relevant measure
is achieved.
Directors’ Remuneration Report continued
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Financial StatementsCorporate GovernanceStrategic Report
Component Purpose and link to strategy Operation Maximum opportunity Performance measures
LTIP Rewards longer-term
value creation and aligns
Executive Directors’
interests with those of
shareholders through the
use of performance metrics,
delivery in shares and a
two-year holding period
after vesting.
Under the LTIP, the Committee
may grant awards as conditional
shares or as nil cost options.
Awards will usually vest following
the assessment of the applicable
performance conditions typically
assessed over three years, but
will then be subject to a holding
period of two years following the
performance period.
The holding period will be
implemented either on the basis:
that the award is not released
to the Executive Director so that
they can acquire shares until
the end of the holding period; or
that the Executive Director can
acquire shares following vesting
but that (other than regarding
sales to cover tax liabilities) the
award is not released so that
they can dispose of those shares
until the end of the holding
period.
The Committee has discretion
to vary any formulaic vesting
outturn applying to an LTIP
award where it believes the
outturn does not reflect the
Committee’s assessment
of overall performance or is
not appropriate in the context
of circumstances that were
unexpected or unforeseen
at the date of grant or for any
other reason the Committee
considers appropriate.
LTIP awards may incorporate
the right to receive additional
shares calculated by reference
to the value of dividends and
special dividends which would
have been paid on the shares up
to the time at which the shares
can first be acquired; this amount
may be calculated assuming
that the dividends have been
reinvested in the Company’s
shares on a cumulative basis.
Recovery provisions apply, as
referred to on page 111.
The maximum award in
respect of any financial
year is 200% of base salary.
The Executive Chairman
does not participate in the
Company’s LTIP scheme.
At least 50% of the
performance measures
under the LTIP will
normally be based on
financial measures (which
may include, but are not
limited to, EPS and TSR).
The balance of the LTIP
opportunity will be based
on one or more financial
measures and/or non-
financial measures.
Subject to the Committee’s
discretion to vary formulaic
outcomes, awards will vest
up to 25% for threshold
performance rising to 100%
for maximum performance.
Recovery provisions (malus and clawback)
Malus and clawback may be applied to the annual bonus and LTIP awards in the event of material error in assessing a
performance condition, misstatement of results, material failure of risk management, material misconduct, material health
and safety failure, corporate failure or serious reputational damage or any other circumstances similar in nature or effect.
Malus may be applied up to payment of the annual bonus and up until vesting in the case of the LTIP. After payment of the
annual bonus, clawback may be applied for two years (including via the cancellation or reduction of any deferred bonus
award). After vesting of an LTIP award, clawback may be applied for up to two years (including via the cancellation or
reduction of any LTIP award which remains subject to a holding period).
Esken Limited Annual Report & Accounts 2023
112
Corporate Governance
Explanation of performance conditions
Performance measures for the LTIP and annual bonus are
selected to reflect the Company’s strategy. Stretching
performance targets are set each year by the Committee
taking into account a number of different factors.
Due to the exceptional circumstances of the strategic
review, for the year ending 28 February 2024, the Executive
Directors will participate in a bonus scheme but the
Committee is still considering the appropriate bonus and will
make further details available in due course. If any award is
proposed outside of the remuneration policy, shareholder
support will be sought. In addition, the Committee has been
unable to finally determine the terms for an appropriate
long-term incentive plan. The Committee is currently
considering an alternative form of incentive plan which
recognises the impact of the strategic review and aligns
participants’ interests with those of shareholders in seeking
to maximise value from the disposals process. Those
matters will be put to shareholders for specific approval in
due course.
The Committee may vary or substitute any performance
condition if an event occurs which causes it to determine that
it would be appropriate to do so (including to take account of
acquisitions or divestments, a change in strategy or a change in
prevailing market conditions), provided that any such variation
or substitution is fair and reasonable and (in the opinion of the
Committee) the change would not make the condition materially
less demanding than the original condition would have been but
for the event in question. If the Committee were to make such
a variation, an explanation would be given in the next Directors’
Remuneration Report.
Operation of share plans
The Committee may amend the terms of awards and options
under its share plans in accordance with the plan rules,
including in the event of a variation of the Company’s share
capital or a demerger, special dividend or other similar event
or otherwise in accordance with the rules of those plans.
The Committee may operate any such plan in accordance
with its rules. Share awards granted under any such plan
may be settled in whole or in part in cash, although the
Committee would only settle an Executive Director’s award
in cash where the particular circumstances made this the
appropriate course of action (for example where a regulatory
reason prevented the delivery of shares).
In the event of a change of control, unvested awards
under the LTIP will vest and be released to the extent
determined by the Committee taking into account
the relevant performance conditions and, unless the
Committee determines otherwise, the extent of vesting so
determined shall be reduced to reflect the proportion of the
performance period that has elapsed. Any deferred bonus
shares will vest on a change of control or other relevant
event. In the event of a change of control SAYE scheme
options will become exercisable in accordance with the plan
rules and applicable tax legislation, which do not provide for
any discretion as to the extent of exercise.
Shareholding guidelines
Executive Directors (excluding the Executive Chairman) are
expected to build a shareholding equal to 200% of their
annual salary within the later of five years of appointment to
the Board. Shares subject to LTIP awards which have vested
but not been released (that is which are in a holding period)
or which have been released but have not been exercised
and shares subject to deferred bonus awards count towards
the guidelines on a net of assumed tax basis.
Reflecting best practice, the Committee has adopted a post-
cessation shareholding requirement. This requires that for 12
months following cessation, an Executive Director must retain
such of their ‘relevant’ shares as have a value (as at cessation)
equal to their in-service shareholding guideline and 50% of
this guideline for a further 12 months. If the Executive Director
holds less than the required number of ‘relevant’ shares at any
time they must retain all the ‘relevant’ shares they hold. Shares
which the Executive Director has purchased or which have
been acquired pursuant to share awards granted before this
requirement was first approved by shareholders at the 2020
AGM or acquired pursuant to SAYE scheme options are not
‘relevant’ shares for these purposes. The Committee retains the
discretion to vary the post-cessation shareholding requirement
in appropriate circumstances.
Policy for Non-Executive Directors
Component Purpose and link to strategy Operation Maximum opportunity
Fees and
benefits
To provide fees within a market
competitive range reflecting
the individual, responsibilities,
the role and the expected
time commitment.
To provide benefits where
appropriate which are relevant to
the requirements of the role.
The fees of an Executive or
Non-Executive Chairman
would be determined by the
Committee and the fees of the
Non-Executive Directors are
determined by the Chairman
and the Executive Directors.
An Executive or Non-Executive
Chairman and the Non-
Executive Directors may be
eligible to receive benefits such
as travel and other reasonable
expenses.
Reimbursed expenses may
include a gross-up to reflect
any tax or social security due in
respect of the reimbursement.
Fees are set taking into account
the responsibilities of the role and
expected time commitment.
The fees paid comprise a base fee
and additional fees for the roles
of Senior Independent Director,
Chairman of the Audit Committee,
Chairman of the Remuneration
Committee and Chairman of the ESG
Committee. Additional fees may also
be paid for additional responsibilities
and/or time commitments.
Where benefits are provided they will
be provided at a level considered to
be appropriate taking into account
the individual circumstances.
Directors’ Remuneration Report continued
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Financial StatementsCorporate GovernanceStrategic Report
Minimum
performance
Total Remuneration
Total Remuneration
Total Remuneration
Minimum
performance
Minimum
performance
Performance in line
with expectations
Performance in line
with expectations
Performance in line
with expectations
Maximum
performance
Maximum
performance
Maximum
performance
Nick Dilworth
David Shearer
Lewis Girdwood
Salary and benefits
Annual Bonus
£800,000
£400,000
£600,000
£200,000
£800,000
£400,000
£600,000
£200,000
£389,500
£400,000
£388,500
£557,000
£400,000
£556,000
£724,500
£400,000
£723,500
100%
100% 100% 100%
30% 30%
70% 70%54% 54%100%
46% 46%
£0
£0
£800,000
£400,000
£600,000
£200,000
£0
Policy for the remuneration of employees more generally
The Group aims to provide a remuneration package that
is competitive and which is appropriate to promote the
long-term success of the Company. The Company will
apply this policy fairly and consistently, and does not intend
to pay more than is necessary to attract and motivate
colleagues. A greater proportion of the Executive Directors’
remuneration package is ‘at risk’ and determined by
reference to the performance conditions. Certain senior
members of staff are eligible to earn a bonus based broadly
on the same criteria as the Executive Directors and some
are also invited to participate in the LTIP again, on a broadly
similar basis to the Executive Directors.
The Committee is kept informed of salary increases and
remuneration outcomes across the wider workforce and how
decisions are made.
Illustrations of application of the policy
The following charts provide an illustration, for each of the
Executive Directors and the Executive Chairman, of the
application of the policy in the year ending 28 February
2024, but without taking account of any remuneration
initiatives which may be put to shareholders for approval
in due course. The charts show the split of remuneration
between fixed pay (that is base salary, benefits, employer
pensions contributions/salary supplement) and annual
bonus on the basis of minimum remuneration, remuneration
receivable for performance in line with the Company’s
expectations and maximum remuneration. The Committee
does not intend to make any further awards under the LTIP
and information has not been included in these illustrations
on the basis of an LTIP award.
In illustrating the potential reward the following assumptions have been made.
Fixed pay Annual bonus
Minimum performance Base salary applying
with effect from 1 March
2023, employer pension
contributions at an assumed
rate of 10% on the salary
effective as at 1 March 2023,
and benefits disclosed in the
single figure table on page
116 for FY 2023.
No bonus.
Performance in line with
expectations
Bonus equal to 50% of salary is earned.
Maximum performance Bonus equal to 100% of salary is earned (the maximum
bonus for the year ending 28 February 2023).
Esken Limited Annual Report & Accounts 2023
114
Corporate Governance
Recruitment remuneration policy
The remuneration package for the appointment of a new
Executive Director would, as far as possible, be set in
accordance with the terms and maximum levels of the policy.
When determining appropriate remuneration arrangements,
the Committee may include other elements of pay, which it
considers are appropriate. However, this discretion is capped
and is subject to the limits referred to below.
Base salary will be set at a level appropriate to the role and
the experience of the Executive Director being appointed.
This may include agreement on future increases up to market
rate, in line with increased experience and/or responsibilities,
subject to good performance, where it is considered
appropriate. Pension will be provided in line with the policy.
Other than as regards any ‘buyout’ award which would be
determined as set out below, the Committee will not offer
non-performance related incentive payments (for example
a ‘guaranteed sign-on bonus’).
Other elements may be included in appropriate
circumstances, including:
• an interim appointment being made to fill an Executive
Director role on a short-term basis;
• if exceptional circumstances require that the Chairman or
a Non-Executive Director takes on an executive function
on a short-term basis;
• if an Executive Director is recruited at a time in the year
when it would be inappropriate to provide a bonus or
long-term incentive award for that year as there would
not be sufficient time to assess performance. Subject
to the limit on variable remuneration set out below, the
quantum in respect of the months employed during the
year may be transferred to the subsequent year so that
reward is provided on a fair and appropriate basis; and
• if the Director will be required to relocate in order to
take up the position, it is the Company’s policy to allow
reasonable relocation, travel and subsistence payments.
Any such payments will be at the discretion of the
Committee.
The Committee may also alter the performance measures,
performance period, vesting period and holding period
of the annual bonus or long-term incentive opportunity if
the Committee determines that the circumstances of the
recruitment merit such alteration. The rationale will be
clearly explained in the next Directors’ Remuneration Report.
The maximum level of variable remuneration which may be
granted (excluding ‘buyout’ awards as referred to below) is
350% of salary.
The Committee may make payments or awards in respect of
hiring an employee to ‘buyout’ remuneration arrangements
forfeited in connection with leaving a previous employer. In
doing so, the Committee will take account of relevant factors
including any performance conditions attached to the forfeited
arrangements and the time over which they would have
vested. The Committee will generally seek to structure ‘buyout’
awards or payments on comparable basis to the remuneration
arrangements forfeited. Any such payments or awards are
excluded from the maximum level of variable remuneration
referred to above. ‘Buyout’ awards will ordinarily be granted
on the basis that they are subject to forfeiture or ‘clawback’ in
the event of departure within 12 months of joining the Group,
although the Committee will retain discretion not to apply
forfeiture or clawback in appropriate circumstances.
Any share awards referred to in this section will be granted
as far as possible under the Company’s ordinary share plans.
If necessary, and subject to the limits referred to above,
recruitment awards may be granted outside of these plans.
Where a position is filled internally, any ongoing
remuneration obligations or outstanding variable pay
elements shall be allowed to continue in accordance with
their terms.
Fees payable to a newly-appointed Chairman or Non-
Executive Director will be in line with the policy.
Policy on service contracts
The service contracts for the Executive Directors are dated
as set out in the table below:
Executive Director Position Date of contract Date of commencement
David Shearer Executive Chairman 15 May 2019 (as amended 17 June 2021
and 29 July 2022)
1 June 2019
Lewis Girdwood Chief Financial Officer 29 March 2019 1 April 2019
Nick Dilworth Chief Operating Officer 30 October 2017 (amended 1 August 2018) 1 September 2018
The Company’s policy is for service agreements with
Executive Directors to be capable of termination by either
the Company or the Executive Director by the giving of
six months’ notice in the case of Lewis Girdwood and
Nick Dilworth. David Shearer was originally appointed as
a Non-Executive Chairman of the Company and took on
executive responsibilities from 9 February 2021. His letter of
appointment can be terminated on three months’ notice.
Non-Executive Directors are engaged under letters of
appointment that set out their duties and responsibilities.
Non-Executive Directors are ordinarily appointed for an
initial period of three years, subject to annual shareholder
re-election. The continued appointment of each
Non-Executive Director is subject to the requirements
of the Company’s Articles of Incorporation.
Directors’ Remuneration Report continued
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115
Financial StatementsCorporate GovernanceStrategic Report
The Non-Executive Directors’ letters of appointment are dated as set out in the table below:
Non-Executive Director Commencement date
David Blackwood 1 March 2019
Clive Condie 1 July 2020
Ginny Pulbrook 1 October 2018
Policy on payments for loss of office
The following table summarises the Company’s policy on the determination of payments for loss of office by Executive
Directors. Where appropriate, the Committee would have regard to the departing Executive Director’s duty to mitigate loss.
Provision Treatment
Fixed remuneration Salary/fees, benefits (including health cover, a company car or allowance and life and health
insurance) and pension will be paid to the date of termination.
Payments in lieu of
notice
Where a payment in lieu of notice is made, this will include salary, benefits and pension (or a cash
equivalent) until the end of the notice period that would otherwise have applied. Alternatively,
the Company, may continue to provide the relevant benefits. Unless the Committee determines
otherwise, amounts will be paid in equal monthly instalments.
Annual bonus This will be reviewed on an individual basis. The decision whether or not to award a bonus in full
or in part will be dependent on a number of factors including the circumstances of the departure
and contribution to the business during the bonus period. Any bonus would typically be pro-rated
to reflect time in service to termination and paid at the usual time (although the Committee retains
discretion not to apply pro-ration and/or to pay the bonus earlier in appropriate circumstances).
If an Executive Director ceases employment with the Group as a result of death, ill-health, injury,
disability or for any other reason at the Committee’s discretion, any outstanding deferred bonus
awards would typically continue and vest at the normal vesting date, although the Committee
retains discretion to vest any such award at the date of cessation. In either case, the award will vest
in full. In other leaver circumstances, deferred bonus awards will lapse.
LTIP If an Executive Director ceases employment with the Group as a result of death, ill-health, injury,
disability or for any other reason at the Committee’s discretion before an award under the LTIP vests,
the award will usually be released on the ordinary release date (although the Committee retains
discretion to release the award as soon as reasonably practicable after the cessation of employment
or at some other time, such as following the end of the performance period but before the end of
the holding period). In either case, the award will vest to the extent determined by reference to the
performance conditions and, unless the Committee determines otherwise, the proportion of the
performance period that has elapsed at cessation.
If an Executive Director ceases employment with the Group after an award under the LTIP has
vested but before it is released (that is the Executive Director ceases employment during a holding
period), the award will continue and be released at the normal release date (unless the cessation
is for summary dismissal, in which case the awards will lapse). The award will be released to the
extent it has vested by reference to the performance conditions. The Committee retains discretion
to release the award at cessation.
Other payments The Committee reserves the right to make additional exit payments where such payments are
made in good faith in discharge of an existing legal obligation (or by way of damages for breach
of such obligation) or by way of settlement or compromise of any claim arising in connection with
the termination of a Director’s office or employment. Payments may include, but are not limited to,
paying any fees for outplacement assistance and/or the Director’s legal and/or professional advice
fees in connection with their cessation of office or employment and payments in respect of accrued
but untaken holiday.
Where a ‘buyout’ or other award is made in connection with recruitment, the leaver provisions would
be determined at the time of the award.
Options under the Company’s SAYE scheme will vest on cessation in accordance with the plan rules,
which do not allow discretionary treatment.
The Non-Executive Directors and the Executive Chairman are not entitled to compensation on termination of
their appointment.
Esken Limited Annual Report & Accounts 2023
116
Corporate Governance
Views of shareholders
We are committed to engaging appropriately with our shareholders and our aim is to have an open dialogue on all relevant
matters, including remuneration. Each year there are meetings with major shareholders to review the Group’s performance
and financial position. Executive pay is on the table for discussion at such meetings and we believe that it is better to do so
as part of an overall review that puts pay in the context of overall Group performance.
Consideration of employment conditions elsewhere in the Group
Whilst the Committee does not formally consult with employees as part of its process when determining Executive Director
pay, it does take into account pay practices and policies for employees across the wider Group. This includes the general
basic salary increases, benefits and remuneration arrangements and employment conditions.
Legacy remuneration arrangements
The Committee reserves the right to make any remuneration payments and/or payments for loss of office (including
exercising any discretions available to it in connection with such payments) notwithstanding that they are not in line with the
policy if the terms of the payment were agreed:
• before the policy comes into effect; or
• at a time when the relevant individual was not a Director of the Company and, in the opinion of the Committee, the
payment was not in consideration for the individual becoming a Director of the Company.
For these purposes, ‘payments’ includes the Committee satisfying awards of variable remuneration and, in relation to an
award over shares, the terms of the payment are ‘agreed’ at the time the award is granted.
1.4 Annual Report on remuneration
The Committee has implemented the remuneration policy during the year in accordance with the policy approved by
shareholders at the AGM held in July 2020.
Single figure of total remuneration for Executive Directors
The table below sets out the single figure of total remuneration (and its breakdown into its constituent parts) for each
Executive Director for the years ended 28 February 2023 and 28 February 2022:
£’000
Salary Taxable benefits Pension
Total fixed
remuneration
1
Bonus
Long-term
incentives vesting
Total variable
remuneration Total remuneration
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Nick
Dilworth 335.0 292.9 21.0 20.7 33.5 47.5 389.5 361.1 67.0 – – – 67.0 – 456.5 361.1
Lewis
Girdwood 335.0 283.5 20.0 20.0 33.5 28.8 388.5 332.3 83.8 – – – 83.8 – 472.3 332.3
David
Shearer
1
402.7 358.8 – – – – 402.7 358.8 – – – – – – 402.7 358.8
1 David Shearer was originally appointed as Non-Executive Chairman on terms appropriate to that position. Although being appointed as Executive Chairman he does
not receive certain benefits or a pension and does not participate in the Company’s bonus or long-term incentive schemes. His salary was increased to £350,000 per
annum with effect from 9 February 2021. As a result, £8,750 was paid to him during the year ended 28 February 2022 which related to the period at the end of February
2021 but was paid to him following the completion of the previous financial year. His salary was increased to £400,000 per annum with effect from 10 February 2022.
As a result, £2,708 was paid to him during the year ended 28 February 2023 which related to the period at the end of February 2022 but was paid to him following the
completion of the previous financial year.
Salary
The annual salary of the Executive Directors as at the dates stated were as follows:
Executive Director
Salary effective
1 March 2023
Salary effective
1 March 2022
Nick Dilworth £335,000 £335,000
Lewis Girdwood £335,000 £335,000
David Shearer £400,000 £400,000
The Executive Chairman and the Executive Directors will not see an increase to their salaries in the coming year, despite
increases for the workforce as a whole, at their request.
Directors’ Remuneration Report continued
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Financial StatementsCorporate GovernanceStrategic Report
Benefits
The Company currently provides other benefits which comprise standard executive medical cover and death-in-service
cover to Executive Directors. The Executive Chairman does not have the standard executive medical cover but is covered
by the death-in-service cover. Executive Directors (other than the Executive Chairman) are also entitled to a company car
of a size and type deemed appropriate for the proper performance of their duties, or a cash allowance in lieu. During the
period, Nick Dilworth and Lewis Girdwood opted to take an additional salary supplement of £20,000 in lieu of an equivalent
car benefit.
Pension
For the financial year ended 28 February 2023, the Executive Directors (other than the Executive Chairman) received a
pension contribution or a cash supplement in lieu of contributions to a pension plan, or a combination of pension contribution
and cash supplement equal to 10% of their salary. Pension contributions are based on salary only. Nick Dilworth’s pension
contribution was reduced from 20% of salary to 10% from 1 November 2021.
Annual bonus
The Executive Directors (other than the Executive Chairman) were granted a bonus equivalent to 100% of their salary in the
year. Payment of that bonus was subject to meeting certain targets, with 70% payable based on profit targets for the Group
and 30% based on personal performance targets. The profit target related to Earnings Before Tax (EBT) (after recharges)
for the Group. The bonus needed to be self-funded so was only payable if the target had been achieved and enough profit
generated, in excess of the target, to cover the bonus itself. The Company retained a discretion to assess the quality of the
annual EBT performance to determine whether adjustments were required to provide a true representation of the annual
performance. There were three target levels for the profit element of the bonus:
Threshold Target Stretch Actual
EBT (loss), £000 (40,771) (38,830) (33,005) (27,686)
% of bonus vesting 0% 35% 70% 0%
Despite the EBT being at a level sufficient to justify a payment of bonus, the Committee exercised its discretion to reduce
the payout to zero in light of the continued losses made by the Group and by its two main operating divisions, which both
missed their own profit targets for the year. Nick Dilworth was also paid a sum of 20% of his salary related to achievement of
his personal targets. Lewis Girdwood was also paid a sum of 25% of his salary related to achievement of his personal targets.
The personal targets set were as follows:
Target Overall Achievement
Nick Dilworth Achievement of Group KPIs for ESG
1
20%
Delivery of Esken Renewables budget for the year
Complete strategic review of Star Handling and
execute on the decision
Achieve substantial progress in the realisation of
non-core assets
Lewis Girdwood Refinance the banking arrangements and facilities 25%
Rebuild the Aviation management team including
the recruitment of a CEO with appropriate
objectives set
Improve processing of management reports and
ensure robust and timely information for Board
and EMB
Support and implement findings from the Operating
Model Review
Achieve ESG objectives for the year
1
1 The achievement against the Group’s ESG objectives for the year are shown in detail on pages 38 to 41 above.
Esken Limited Annual Report & Accounts 2023
118
Corporate Governance
LTIPs for the year ended February 2023
Esken granted long-term incentive awards in respect of the financial year ended 28 February 2023 over its ordinary
shares to Nick Dilworth and Lewis Girdwood in July 2022 in an amount equivalent to 150% of salary. When considering the
FY23 LTIP awards, the Committee discussed the proposed quantum in light of the prevailing market conditions and the
Company’s then share price. Following a third year of considerable financial and operational pressures, the Committee was
also conscious that the Company’s ability to continue to steer the business through the uncertain landscape ahead would,
in part, be dependent on its ability to retain key staff. The Committee recognises that remuneration has a significant part to
play in retaining and recruiting key executives. In view of the significant issues which the business had faced over the last
three years, a number of which were legacy matters, all of the previously-issued LTIPs were unlikely to vest. As a result,
the Committee reduced the quantum of awards from 200% of salary to 150%. The Committee does not intend to make any
further awards to Executive Directors under the LTIP.
The awards made to Nick Dilworth and Lewis Girdwood were as follows:
Date of LTIP grant
Market price
on date of
grant
Number
of shares
comprised in
award
Face value of
awards
(% of salary)
Performance
period Vesting/lapse date
Nick Dilworth 5 July 2022 £0.1067 4,709,466 150% 3 years 1 March 2024
Lewis Girdwood 5 July 2022 £0.1067 4,709,466 150% 3 years 1 March 2024
As with the awards in respect of the Company’s 2022 financial year made in December 2021, the Committee approved a
wholly TSR-based performance measure for those awards on the basis that this would be closely aligned to shareholder
interests. The performance targets attached to these awards are linked to an increase in the price of the Company’s ordinary
shares measured over the Company’s 2023, 2024 and 2025 financial years (i.e. from 1 March 2022 to 28 February 2025),
subject to a general financial performance underpin, as set out in the table below (with straight-line vesting between
these points):
Vesting Esken’s three-year TSR
Threshold 25% of maximum a share price of 20.0p at vesting
Stretch 100% of maximum a share price of 30.0p at vesting
The Committee considered these to be a stretching but attainable targets for management and aligned to long-term value
creation for shareholders. In assessing whether or not a particular share price has been achieved, the Committee will also
take into account the ‘per share’ value of any dividend paid on ordinary shares during the performance period, assuming that
the dividend was reinvested into ordinary shares on the ex-dividend date.
Directors’ Remuneration Report continued
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Outstanding share awards
The table below sets out details of Directors’ outstanding share awards held under the LTIP as at 28 February 2023,
including those interests awarded during the financial year.
Type
of
award
Date of LTIP
grant
Market
price on
date of
grant
2
Number of
performance
shares at
1 March 2022
Granted
during the
year
Vested
during
the
year
Lapsed
during the
year
Number of
performance
shares at
28 February
2023
Performance
period
Vesting/lapse
date
1
Nick
Dilworth
2014
LTIP
3 July 2019 £1.173 669,735
3
– – 669,735 – 3 years 3 July 2022
2020
LTIP
31 August
2021
£0.19 2,868,422 – – – 2,868,422 3 years 1 March 2023
2020
LTIP
21 December
2021
£0.139 4,820,144 – – – 4,820,144 3 years 1 March 2024
2020
LTIP
5 July 2022 £0.107 – 4,709,466 – – 4,709,466 3 years 1 March 2025
8,358,301 4,709,466 – 699,735 12,398,032
Lewis
Girdwood
2014
LTIP
3 July 2019 £1.173 453,650
3
– – 453,650 – 3 years 3 July 2022
2020
LTIP
31 August
2021
£0.19 2,789,474 – – 2,789,474 3 years 1 March 2023
2020
LTIP
21 December
2021
£0.139 4,820,144 – – – 4,820,144 3 years 1 March 2024
2020
LTIP
5 July 2022 £0.107 – 4,709,466 – – 4,709,466 3 years 1 March 2025
7,523,268 4,709,466 – 453,650 12,319,084
1 The vesting date may be a short period after the end of term date to allow any consideration of discretion by the Committee as well as administrative matters to take
place.
2 As set out in last year’s Directors’ Remuneration Report, this is the price at the date the Committee agreed to grant the award.
3 After adjustment for the impact of the equity fundraising undertaken by the Company in 2020 and 2021.
Save As You Earn scheme
There were no options granted under a Save As You Earn (SAYE) scheme during the year ended 28 February 2023.
Directors’ shareholding and share interests
Details of the Directors’ interests in shares are shown in the table on page 106
Esken has a formal shareholding requirement whereby Executive Directors are expected to build a shareholding equal to the
value of 200% of their annual salary, to be achieved within the later of five years of their appointment to the Board or the
introduction of this guideline on 27 June 2017. This requirement does not apply to the Executive Chairman.
Executive Directors are also subject to the requirement that for 12 months following their cessation as Executive Director, the
relevant Director must retain an equal value of ‘relevant’ shares (as at cessation) as held during service, and 50% of this value
for a further 12 month period. Shares which are purchased by an Executive Director, or which have been acquired pursuant
to share awards granted before the current remuneration policy was approved by shareholders (30 July 2020), or acquired
pursuant to SAYE scheme options are not ‘relevant’ shares for the purposes of the post-employment requirement.
Based on the share price at 28 February 2023, Nick Dilworth and Lewis Girdwood have yet to meet the full requirement, with
their holdings as a percentage of salary set out on page 106. All of the shares held by Mr Dilworth and Mr Girdwood have
been purchased by them in the market or as part of the Company’s fundraising exercises as no long-term incentive awards
have vested for them during their employment.
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Share interests of Directors and connected persons at 28 February 2023
The following table shows the Directors’ interests in shares as at 28 February 2023 (or the relevant date of cessation
of employment).
Beneficially owned
Outstanding under
share award
arrangements
1
Total interest in shares
Executive Directors
David Shearer 1,226,785 – 1,226,785
Nick Dilworth 220,396 12,398,032 12,618,428
Lewis Girdwood 585,714 12,319,084 12,904,798
Non-Executive Directors
John Coombs
2
348,577 – 348,577
Ginny Pulbrook 53,214 – 53,214
David Blackwood 383,818 – 383,818
Clive Condie 327,857 – 327,857
1 Executive Directors’ outstanding share awards are under the LTIP. Awards under the LTIP are subject to performance conditions as set out in detail for each grant in the
Annual Report on Remuneration for the year in respect of which the award was granted.
2 John Coombs left the Board in July 2022.
There have been no changes in the holdings of the Directors between 28 February 2023 and 21 June 2023, save that Nick
Dilworth had 2,868,422 LTIPs lapse and Lewis Girdwood had 2,789,474 LTIPs lapse.
Percentage change in the remuneration in Director and employee remuneration
2020/2021 2021/2022 2022/2023
Base Salary
%
Taxable
benefits
%
Annual
bonus
%
Base Salary
%
Taxable
benefits
%
Annual
bonus
%
Base Salary
%
Taxable
benefits
%
Annual
bonus
%
Executive Directors
David Shearer
1
20.0% – – 85.4% – – 14.3% – –
Nick Dilworth (8.3%) – – 19.4% 0.5% – 14.4% 1.5% N/A
4
Lewis Girdwood (1.8%) 9.3% – 18.9% – – 18.2% – N/A
4
Non-Executive
Directors
John Coombs
2
(8.5%) – – 9.3% – – (58.4%) – –
Ginny Pulbrook
3
(6.0%) – – 16.6% – – 8.7% – –
David Blackwood 3.9% – – 19.6% – – – – –
Clive Condie – – – 50.0% – – – – –
Employee
population 16.4% (28.1%) – (18.0%) (2.0%) – 2% (10%) N/A
4
1 David Shearer joined the Board after the beginning of the financial year ended 29 February 2020 (appointed with effect 1 June 2019). He assumed additional Executive
responsibilities as a result of Warwick Brady leaving employment with the Group. The increase between 2021 and 2022 has been calculated on the basis that the
£8,750 paid in respect of the period 9 February 2021 to 28 February 2021 had been paid in the year ended 28 February 2021. The increase between 2022 and 2023 has
been calculated on the basis that the £2,783 paid in respect of the period 10 February 2022 to 28 February 2022 had been paid in the year ended 28 February 2022.
2 John Coombs left the Board in July 2022.
3 Ginny Pulbrook became Chair of the ESG Committee during the year.
4 Mr Dilworth and Mr Girdwood did not receive a bonus in FY22. The bonus paid to them in FY23 is shown on page 106. Employees received no bonuses in FY22 and an
average bonus of £701 in FY23.
The above table shows the percentage year-on-year change in salary, benefits and bonus earned (between the year ended
28 February 2020, 29 February 2021 and 28 February 2022 and the year ended 28 February 2021, 28 February 2022 and
28 February 2023) for all Directors and for the average of all other employees in the Group.
Directors’ Remuneration Report continued
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Employee average remuneration has been calculated on a median basis. Employees working part-time have had their
remuneration grossed up to full-time for the purpose of the calculation. Employees on zero-hour contracts and those
identified as being under the furlough scheme during the year have had their remuneration included at actual rates in
the calculation.
Employees across the Group have been chosen as the comparator, as the Committee felt that the relatively small number
of colleagues employed by Esken Limited (5% of overall employee population) would not be representative of the employee
population across the wider Group.
The percentage change table reflects a reduction in the employee population from 912 on 28 February 2021 to 778 on
28 February 2022 and then to 756 at 28 February 2023.
Payments to past Directors
There were no payments of money or other assets to former Directors during the year.
Historical TSR performance chart
The chart below shows the TSR performance of Esken against the FTSE 250 and FTSE SmallCap for the last ten years.
Esken has been a member of both the FTSE 250 and FTSE SmallCap during the period shown.
Feb 2013 Feb 2014 Feb 2015 Feb 2016 Feb 2017 Feb 2018 Feb 2021
Feb 2022 Feb 2023
Feb 2020Feb 2019
Esken Group Limited FTSE 250 (excl. Investment Trusts) FTSE SmallCap (excl. Investment Trusts)
300
350
250
200
150
100
50
0
Chief Executive remuneration outcomes
The table below shows the total remuneration figure for the Chief Executive for the last ten years. The total remuneration
figure includes the annual bonus and any long-term incentives which vested based on performance in those years.
Chief Executive
For the year ended 28/29 February
Andrew Tinkler Warwick Brady David Shearer
2014 2015 2016 2017 2018
1
2018
2
2019 2020 2021 2022
3
2022
3
2023
Chief Executive’s
total single figure of
remuneration £’000 251.2 1,309.3 931.3 951.1 235.3 648.8 915.8 601.5 545.8 118.0 358.8 402.7
Bonus paid % of
maximum – 76.3% 96.6% 97.0% 91.0% 91.0% 73.0% – – – N/A N/A
LTIP vesting % of
maximum – – – – 100% – – – – – N/A N/A
1 Andrew Tinkler stepped down from the position of Chief Executive on 30 June 2017. The remuneration figure used represents one-third of his single figure
remuneration and takes account of the alterations made to his level of remuneration for the year, as explained in the notes to the single figure table on page 61 of the
Directors’ Remuneration Report in the 2019 Annual Report.
2 Warwick Brady was appointed as Chief Executive on 1 July 2017. The remuneration figure used represents the total single figure remuneration.
3 In the year ended 28 February 2022, Warwick Brady was employed by the Company until 30 April 2021 and David Shearer was Executive Chairman for the whole year.
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Corporate Governance
Chief Executive pay ratio
The following table compares the Chief Executive Officer’s single total figure remuneration (as set out on page 116), with the
total remuneration of the Group’s employees, paid at the 25th, 50th and 75th percentiles. The figure used is a combination of
the remuneration for Warwick Brady and David Shearer in respect of 2021/2022.
Pay ratios have been calculated using Option A as this is considered to be the most statistically accurate. Under Option A,
we determined the total full-time equivalent remuneration for all our UK employees, ranked those employees based on their
full-time equivalent remuneration and then identified the lower quartile, median and upper quartile employees based on this
ranking. The employees were identified by reference to their remuneration as at 28 February 2022, in respect of 2021/2022,
and 28 February 2023, in respect of 2022/2023 and on corresponding dates for earlier years. Employees working part-time
have had their remuneration grossed up for the purpose of this calculation. Zero-hour contract and furloughed employees’
remuneration is included at the actual rate of pay.
Year Methodology 25th percentile
50th percentile
(median) 75th percentile
2019/2020 Option A 1:28 1:21 1:15
2020/2021 Option A 1:25 1:19 1:13
2021/2022 Option A 1:17 1:13 1:10
2022/2023 Option A 1:17 1:13 1:9
The Committee considers that the median pay ratio for the year ended 28 February 2023 is consistent with the pay, reward
and progression on policies for the Group’s UK employees taken as a whole.
We have set out below further detail of the base salary and total remuneration received by employees during the year used
for the calculation above. Total remuneration was calculated on the same basis as the Chief Executive Officer single figure
table set out on page 116.
25th percentile
50th percentile
(median) 75th percentile
Base salary £23,459 £30,689 £41,684
Total remuneration £23,970 £31,329 £42,709
Relative importance of spend on pay
The table below shows the year-on-year change in losses, staff costs and distributions to shareholders.
2023 2022 % change
Remuneration paid to or receivable by all employees of the
Group (including Directors) £28.9m £28.4m 1.8%
Distributions to shareholders nil nil 0%
Loss for the year from continuing operations (£25.2m) (£25.8m) 4.5%
Directors’ Remuneration Report continued
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Single figure of total remuneration for Non-Executive Directors
The table below sets out the single figure of total remuneration (and its breakdown into its constituent parts) for each
Non-Executive Director.
Non-Executive Director
Fees (£’000) Taxable benefits (£’000) Total (£’000)
2023 2022 2023 2022 2023 2022
John Coombs
1
26.0 62.5 – – 26.0 62.5
Ginny Pulbrook
2
62.5 57.5 – – 62.5 57.5
David Blackwood
3
72.5 72.5 – – 72.5 72.5
Clive Condie
4
58.8 52.5 – – 58.8 52.5
1 Includes base fee of £52,500 plus additional fees of £10,000 for chairing the Remuneration Committee. John Coombs left the Board in July 2022.
2 Include base fee of £52,500 plus additional fees of £5,000 for acting as Designated Non-Executive Director with effect from 1 October 2020 and £5,000 for acting as
Chair of the ESG Committee.
3 Includes base fee of £52,500 plus additional fees of £10,000 for chairing the Audit Committee and fulfilling the role of Deputy Chairman and Senior Independent
Director.
4 Includes base fee of £52,500 plus additional fees of £10,000 for chairing the Remuneration Committee from July 2022.
Non-Executive Directors’ fees for the year ended 28 February 2023
There were no changes to Non-Executive Director fees in the year ended 28 February 2023.
External appointments
During the year, Lewis Girdwood had an external appointment for which he was remunerated.
Service contracts and letters of appointment
The terms and conditions of appointment of Non-Executive Directors and the service contracts of the Executive Directors
are available for inspection at the Company’s registered office during normal business hours.
Non-Executive Directors are engaged under letters of appointment that set out their duties and responsibilities and are
subject to annual shareholder re-election.
Name Commencement Notice period
1
Nick Dilworth
2
1 September 2018 6 months
Lewis Girdwood 1 April 2019 6 months
David Shearer
3
1 June 2019 3 months
Ginny Pulbrook 1 October 2018 3 months
David Blackwood 1 March 2019 3 months
Clive Condie 1 July 2020 3 months
1 Notice periods apply in the same manner for both Directors and the Company.
2 Nick Dilworth’s contract was varied with effect from 1 September 2018 on his appointment to the Board.
3 David Shearer’s terms of appointment have been amended with effect from 9 February 2021 to reflect his role as Executive Chairman and with effect from 10 February
2022 when his role as Executive Chairman was made permanent.
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Corporate Governance
Implementation of the policy for the year ending
28 February 2024
This section provides a summary of how the Committee
intend to implement the Directors’ remuneration policy in the
financial year ending 28 February 2024.
Salary
It was agreed during the previous year that the salaries
for the Executive Directors would be as set out below
in recognition of their enhanced duties further to the
Company’s announcement in that regard on 3 November
2021 – the increases for Lewis Girdwood and Nick Dilworth
taking effect from 3 November 2021 and that for David
Shearer from 10 February 2022 – and there were no further
increases in the year nor will there be any changes in the
upcoming financial year.
Executive Director Salary
David Shearer £400,000
Nick Dilworth £335,000
Lewis Girdwood £335,000
Benefits
The Group does not currently envisage any adjustments
to benefits for the year ending 28 February 2024, except
as necessary to reflect the market cost of providing the
benefits described.
Pension
No changes in pension are proposed for the year ending
28 February 2024. Company contributions to a pension
plan will remain at 10% for the Chief Financial Officer and
the Chief Operating Officer. No pension contribution is paid
to David Shearer. As set out in the Directors’ remuneration
policy any new Executive Director will receive a pension
contribution not exceeding the percentage applicable to the
majority of the Group’s workforce. This principle will apply to
any new Executive appointments.
Annual bonuses
In light of the strategic review and considering the
exceptional difficulties which this review poses in terms of
setting performance targets for the bonus, the Committee is
still considering the appropriate bonus and will make further
details available in due course. If any award is proposed
outside of the remuneration policy, shareholder support
would be sought. Full details of the bonus plan and the
outcomes will be disclosed in next year’s remuneration report.
LTIP
LTIPs for the year ending 28 February 2024 will not be
granted to the Chief Financial Officer and the Chief
Operating Officer. Due to the exceptional circumstances of
the strategic review, the Committee is currently considering
an alternative form of incentive plan which recognises
the impact of the strategic review and aligns participants’
interests with those of shareholders in seeking to maximise
value from the disposals process. Those matters will be put
to shareholders for specific approval in due course and will
also be disclosed in full in next year’s Annual Report.
Non-Executive Directors’ fees
For the financial year ending 28 February 2024, the
Non-Executive Director fees remain unchanged and will
therefore be as set out below.
Fee
Non-Executive base fee £52,500
Additional fees
Committee Chair £10,000
Deputy Chairman and Senior
Independent Director £10,000
Chair of ESG committee £5,000
Designated Non-Executive Director
for People Engagement £5,000
The Remuneration Committee
Remuneration Committee members
During the year, the Committee comprised the following
independent Non-Executive Directors:
John Coombs, Committee Chairman until his departure from
the Board in July 2022
Clive Condie, Committee Chairman from July 2022
Ginny Pulbrook
David Blackwood
Attendance at Committee meetings is shown on page 125.
While no others have rights of attendance or voting, the
Committee may invite the Executive Chairman, external
advisers and others holding key positions to attend some or
all of its meetings.
No individual was present when their own remuneration
was being discussed. The Company Secretary attended
meetings as secretary to the Committee.
Overview and role of the Committee
The role of the Committee is to determine and recommend
to the Board a fair and responsible remuneration framework
for ensuring that the Company’s Executive Directors and
designated senior management are appropriately rewarded
and incentivised for their contribution to Group performance.
The Committee determines Executive Director remuneration,
reviews and approves remuneration for other senior
Executives, and oversees the remuneration policy for the
broader workforce. The remuneration of Non-Executive
Directors is decided by the Board, on the recommendation of
the Chairman of the Board and the Executive Directors, and is
determined within the limits set out in the Company’s Articles
of Association and the Directors’ remuneration policy.
Committee membership
The membership of the Committee is determined by the
Group Board and is confined to Independent Non-Executive
Directors, with the Company Secretary acting as secretary
to the Committee.
Directors’ Remuneration Report continued
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External advisors
During the year ended 28 February 2023, the Committee received external advice from Deloitte LLP who were appointed
as independent advisors to the Committee in January 2019. Deloitte LLP is a founding member of the Remuneration
Consultants’ Group and as such voluntarily operates under a code of conduct in relation to executive remuneration
consulting in the UK. Fees of £44,000 were paid in respect of remuneration services during the year which included advising
on best practice, on remuneration matters, updates on legislative requirements and the remuneration policy to be proposed
to the 2023 AGM.
Committee activities during the year
During the year, the Committee met six times and a summary of the main activities and decisions dealt with by the
Committee are set out below:
• Levels of base salaries for Executive Directors and other Executives within its remit.
• Executive Directors’ bonus arrangements.
• Performance of LTIPs over the year.
• LTIP grants.
• Directors’ Remuneration Report.
• Terms of appointment for the new CEO of London Southend Airport.
• Review of the terms of reference of the Committee.
• Review the Company’s remuneration policy and communicate with shareholders over its content.
• Consider the appropriate remuneration structures of the Group in light of the outcome of the strategic review.
All members of the Committee are Independent Non-Executive Directors, as defined under the UK Corporate Governance Code.
Committee attendance for the year ended 28 February 2023:
Number of meetings Meetings attended
John Coombs 6 2
Ginny Pulbrook 6 6
David Blackwood 6 6
Clive Condie 6 6
Under its terms of reference – the Committee shall have a Chairman and at least two members, all of whom shall be independent.
Statement of shareholder voting
At last year’s AGM on 13 July 2022, the Directors’ Remuneration Report received the following votes:
AGM Item for approval
Votes for
(% total votes cast)
Votes against
(% total votes cast) Votes withheld
17 August 2022 Approval of the Directors’ Remuneration Report 98.56% 1.44% 104,745
30 July 2020 Approval of the Directors’ remuneration policy 96.02% 3.98% 44,929
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Corporate Governance
Our approach to remuneration
We are required by the Code to report to you on various
matters relating to remuneration, and in particular with
regard to those matters set out in Provisions 40 and 41 of
the Code. These matters are as follows:
The strategic rationale for Executive Directors’
remuneration policies, structures and any
performance metrics:
The key principles that underpin the design of our
remuneration policy for Executive Directors, including the
structure of remuneration, are to:
• Attract, retain and motivate high-calibre talent to ensure
continued growth and success of the Group;
• Recognise and reward stretching performance taking into
account the skills and experience of the Directors and the
nature and complexities of their responsibilities;
• Encourage and support an entrepreneurial and high
performance culture, providing incentives that are aligned
to medium and longer-term business strategy;
• Align the interests of the Executive Directors, senior
management and employees with those of shareholders;
• Ensure that remuneration and incentives adhere to the
principles of good corporate governance, support good
risk management practice and promote sustainable Group
performance; and
• Have a competitive mix of fixed remuneration and short-
term and long-term incentives, with an appropriate
proportion of the package determined by stretching
targets linked to the Group’s performance.
The reasons why the remuneration is appropriate using
internal and external measures, including pay ratios and
pay gaps:
We regularly review the remuneration of our Executive
Directors to align it to the strategy and results of the Group,
to remuneration in our industry more generally and for senior
executives of the type and quality we wish to employ, and
we remain cognisant of the relative pay of our employees.
We believe that our remuneration structures reflect these
requirements and benchmarks, but we are conscious that
remuneration and our ability to pay bonuses and make long-
term incentive awards has been impacted by the pandemic,
the current economic position in the UK and the overall
performance of the Group in recent years that will need to be
addressed during FY24, and most recently by the decision of
the Group to dispose of its two main operating businesses.
A description, with examples of how the Remuneration
Committee has addressed the factors in Provision 40 of
the Code, is as follows:
a. Clarity – we believe our remuneration arrangements are
transparent and promote effective engagement with
shareholders and the workforce. We report in full on
Executive Director remuneration in our Annual Report
and we engage regularly with our workforce on many
matters, including executive pay. We have a Board
member, Ginny Pulbrook, who acts as a direct link
with our employees and we use our various employee
engagement forums to ensure we are aware of the
diverse view of our employees;
b. Simplicity – we believe that our base remuneration,
bonus and long-term incentive awards are simple and
easy for stakeholders to understand, avoid complexity
and their rationale and operation are easy to understand.
Our remuneration policy was supported by our
shareholders at 2020’s AGM, after consultation with
them, and we continue to implement our policy in all
of our considerations with regard to remuneration;
c. Risk – we strive to ensure that our remuneration
arrangements avoid reputational and other risks from
excessive rewards, and behavioural risks that can arise
from target-based incentive plans, and that possible risks
are identified and mitigated. We have robust clawback
arrangements in our incentive structures and require
holding periods for shares issued under LTIP awards
and bonuses. We closely monitor the assessment of
performance against targets set, and our Audit Committee
provides a robust check and challenge with regards to
the assessment of the Group’s financial performance and
systems of financial control and risk management;
d. Predictability – the range of possible values of rewards to
individual Directors and any other limits or discretions have
been identified and explained at the time of approving
the policy by shareholders in 2020 and are further set
out in respect of the proposed new policy on page 113.
We review the likely outcome of remuneration structures
against the Group’s projected financial performance but
also strive to ensure that the elements of remuneration
incentivise recipients to deliver exceptional performance;
Directors’ Remuneration Report continued
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e. Proportionality – we believe that the link between individual
awards, the delivery of strategy and the long-term
performance of the Company is clear (rewards are geared
to the generation of long-term value for shareholders
and appropriately reference performance of the business
over both the short and longer term via the balance
between annual bonus and long-term incentive awards)
and we do not believe that outcomes should reward
poor performance. The Committee retains a discretion
over bonuses and vesting of awards in circumstances
where the financial position of the Group is not reflected
in the outcome of individual award criteria. Despite a
bonus having been earned, no payment was made to
the Executive Directors in respect of bonus related to
financial performance in FY23 due to the overall financial
position of the Group and the performance of its main
businesses; and
f. Alignment to culture – incentive schemes should drive
behaviours consistent with the Company’s purpose,
values and strategy. Esken has a strategy to develop
valuable growth assets from aviation and energy from
waste. We believe that our remuneration structures have
been clearly dedicated to rewarding our Executives for
the development of long-term value via our LTIP awards
(which reward performance based on stretching financial
performance targets, including TSR) whilst also motivating
good performance in the short term via the annual bonus
scheme. We have adjusted our approach to remuneration
in reaction to the immediate goal of realising value for
shareholders from the disposal of the Group’s two main
businesses after the outcome of the strategic review, with
rewards being refocused to the retention of key staff
required to implement those disposals.
An assessment of whether the remuneration policy
has operated as intended in terms of performance
and quantum:
We believe that the remuneration policy has operated as
intended in terms of Company performance and quantum,
whilst recognising that FY23 was a another challenging
year for the Group, as it was the third year in a row in which
remuneration outcomes were challenged by the ongoing
business environment. We also recognise that the Company
needs to return to a position where it offers competitive
salaries, a bonus scheme and long-term incentive awards in
order to be able to retain its key Executives responsible for
implementing the immediate strategic objective of disposing
of the Group’s two main businesses.
The Company’s engagement with shareholders and the
impact this has had on policy and outcomes with regard
to remuneration:
Details on how we engaged with our shareholders during
the year is set out on page 74. We consulted widely with
them in 2020 in relation to setting our remuneration policy,
which was subsequently approved by shareholders at our
2020 AGM, but our engagement with them during FY23 was
more limited. We did, however, write to shareholders, inviting
comments, ahead of proposing the new remuneration policy
to the 2023 AGM and will consult fully ahead of adopting a
revised policy in 2024.
The Company’s engagement with the workforce to
explain executive remuneration and how it aligns with
wider Company pay policy:
The extent of our engagement with the workforce is set
out on pages 68 to 69 of this report. We engage with
them directly via our People Forums and via their union
representatives. In our Aviation division, we have consulted
extensively on pay and conditions with UNITE, the union,
and employees directly.
The discretion applied to remuneration outcomes
and why:
In advance of the final assessment of results, the Committee
applied discretion to not pay bonuses to the Executive
Directors related to the profit performance of the Group for the
year ended 28 February 2023. The Committee and the Board
as a whole felt that this was necessary in light of the continued
losses made by the Group during the year and the failure
of the Group’s two main divisions to hit their profit targets.
When results were finally assessed, no bonus related to profit
performance was, in fact, payable to the Executive Directors in
any event.
Approval
The Directors’ Remuneration Report has been approved
by the Board of Directors.
Signed on behalf of the Board of Directors.
Clive Condie
Chairman of the Remuneration Committee
20 June 2023
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Directors’ Report
As at 28 February 2023, the Company held no treasury shares.
The share capital of Esken Limited at 28 February 2023
was made up of 1,025,336,741 ordinary shares of 10p and
the total number of voting rights was 1,025,336,741. The
ordinary shares are listed on the London Stock Exchange.
Each ordinary share has one vote to be cast at meetings of
shareholders.
Shareholdings, voting rights and Articles of Incorporation
The Board has absolute discretion to decline to register
any transfer of any share which is not a fully paid share or
on which the Company has a lien, provided that this would
not prevent dealings in the share from taking place on an
open and proper basis on the London Stock Exchange
(if applicable).
The Articles also provide that the Board may decline to
register a transfer of shares if:
(a) In relation to a share in a certified form, if evidence on
title cannot be provided;
(b) It is in respect of more than one class of share; or
(c) It is in favour of more than four joint transferees; or
(d) It is in favour of any Non-Qualified Holder (as defined in
the Articles).
Registration of a transfer of an uncertified share may only
be refused in the circumstances set out in the rules and
regulations applicable to CREST and where, in the case of a
transfer to joint holders, the number of joint holders to whom
the uncertified shares is to be transferred exceeds four.
The Board, under the Articles of Incorporation, may appoint
a Director but any such Director must stand for election
at the next General Meeting. Directors are elected or
re-elected by ordinary resolution at a General Meeting.
Under the Articles, Directors retire and offer themselves
for re-election annually. The Articles of Incorporation may
only be amended by a special resolution.
Substantial shareholdings
The table below sets outs, as at 28 April 2023 those
shareholders who owned 3% or more of the issued ordinary
shares of the Company.
Name
Number of
ordinary shares
28 April 2023 %
Toscafund 285,077,383 27.80
Strategic Value Partners
92,002,715 8.97
Harwood Capital Mgt Group
81,870,883 7.98
Mr Richard Griffiths
60,959,176 5.95
Cyrus Capital Partners
53,763,529 5.24
Schroders
50,769,846 4.95
Hargreaves Lansdown PLC
43,207,280 4.21
JPMorgan Chase & Co
42,823,547 4.18
Tetragon Financial Group Limited
33,170,440 3.24
Up to 20 June 2023, being the last practicable date
before publication of this report, there were no changes to
constituents of the major shareholders list above.
Introduction
As a Guernsey registered Company, we are not obliged to
follow the UK Companies Act 2006 but we choose to do
so as indicated in relevant places in the Directors’ Report.
The Directors’ Report also sets out certain information in
accordance with the requirements of the Financial Conduct
Authority’s Listing Rules and Disclosure and Transparency
Rules (DTR).
The Directors’ Report should be read in conjunction with
the Strategic Report (pages 1 to 85 and Governance
(pages 83 to 130) which are incorporated by reference into
the Directors’ Report.
Results, dividends and post balance sheet events
The financial statements set out the results of the Group for
the year ended 28 February 2023 and are shown on pages
131 to 188.
There were no dividends paid in respect of the year ended
28 February 2023.
On 15 May 2023, the Group disposed of its wholly owned
subsidiary Star Handling Limited to Skytanking UK Ltd for a
maximum cash consideration of £4.8m. See note 30 of the
financial statements for further details.
Directors’ and Officers’ insurance and indemnities
During the financial year, the Group has maintained an
appropriate level of Directors’ and Officers’ insurance whereby
Directors were indemnified against liabilities to third parties to
the extent permitted by Guernsey company law.
The Group has also, in addition to the indemnity granted
to the Directors under the Articles of Incorporation,
entered into instruments of indemnity with each Director.
These instruments of indemnity contain provisions that
are permitted by the director liability provisions of the
Companies Act 2006 (in accordance with the Listing Rules),
The Companies (Guernsey) Law, 2008 and the Articles of
Incorporation and remain in force as at the date of this report.
Directors’ interests
No Director had any interests in contracts of significance
in relation to the Company’s business during the year. The
Directors’ Interests in share options are detailed in the
Remuneration Report on page 120.
Political donations
No donations were made for political purposes during the
year in question.
Financial instruments
In relation to the use of financial instruments by the Group:
(a) the Group does not use hedge accounting, and (b) the
exposure of the Group to price risk, credit risk, liquidity risk
and cash flow risk, is set out in note 1 to the accounts on
page 144 and note 22 on page 172.
Modern Slavery Act
Our statement on modern slavery in our supply chain is
available on our corporate website (www.esken.com).
Share capital
Details of the authorised and issued share capital and
reserves of the Company are shown in note 27 to the
financial statements.
Esken Limited Annual Report & Accounts 2023
129
Financial StatementsCorporate GovernanceStrategic Report
Other information
The Company has chosen to set out in the Strategic Report certain information which would be required under Section 414C
(11) of the Companies Act 2006 (if that Act were to apply to the Company) to be contained in the Directors’ Report. That
information, together with other disclosures required by the Companies Act 2006 (as if that Act applied to the Company)
and the DTR, can be found on the pages listed below.
Corporate governance DTR 7.2.1R to DTR 7.2.11R Pages
Directors’ biographical details and dates
of appointment
Companies Act 2006 Section 416(1)(a)
1
Pages 86 to 87
Directors’ interests in shares Page 120
Diversity DTR 7.2.8AR Page 98
Engaging with stakeholders Paragraphs 11B and 11C, Schedule 7, 2008 Regulations
1
Pages 66 to 75
Employee engagement Companies (Miscellaneous Reporting) Regulations 2018 Pages 68 to 69
Future developments in the business Paragraphs 7(1)(a) and 7(2), Schedule 7,
2008 Regulations
1
Pages 22 to 23
and 183
Greenhouse gas (GHG) emissions Paragraphs 15-20, Schedule 7, 2008 Regulations
1
Page 61
Energy and carbon information Companies (Directors’ Report) and Limited
Liability Partnerships (Energy and Carbon Report)
Regulations 2018
Pages 56 to 61
Risk management and internal control: Paragraph 6, Schedule 7, 2008 Regulations and
DTR 4.1.11R(6)
1
Pages 76 to 84
How the business manages risk
Policy with regard to financial instruments Paragraph 6, Schedule 7, 2008 Regulations and
DTR 4.1.11R(6)
1
Pages 128 and 144
1 As if the Companies Act 2006 and the 2008 Regulations applied to the Company.
Going concern
The Group’s business activities, together with factors likely
to affect its future performance and position, are set out
in the Chairman’s Statement on pages 20 to 23 and the
financial position of the Group, its cash flows and funding
are set out in the Financial review on pages 26 to 29.
For detailed going concern disclosures, please refer to
note 1 on page 131.
Directors’ responsibilities
The Directors are responsible for preparing the annual
financial statements in accordance with Companies
(Guernsey) Law 2008 and UK-adopted international
accounting standards. Our Guernsey registration dates
back to January 2002, the days of the Westbury Property
Fund. We have looked at options to re-register in the UK and
have found it to be too complicated and costly to enact at
this time. Guernsey company law requires the Directors to
prepare Group financial statements for each financial year.
Under that law they have elected to prepare the Group
financial statements in accordance with UK-adopted
international accounting standards and applicable law.
Under common 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 its profit or loss for that period.
In preparing those financial statements, the Directors are
required to:
• Select suitable accounting policies and apply them
consistently.
• Make judgements and estimates that are reasonable,
relevant and reliable.
• State whether they have been prepared in accordance
with UK-adopted international accounting standards.
• Assess the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going
concern.
• Use the going concern basis of accounting unless they
either intended to liquidate the Company or to cease
operations, or have no realistic alternative but to do so.
The Directors are responsible for such internal control as
they determine is necessary to enable the preparation
of financial statements that are free from material
misstatement, whether due to fraud or error, and have
general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the
Company and to prevent and detect fraud and other
irregularities.
Esken Limited Annual Report & Accounts 2023
130
Corporate Governance
Disabled persons
Job applicants are not asked about health or disability
before a job offer is made, except in the very limited
circumstances allowed by law: for example, to check that
the applicant could perform an intrinsic part of the job
(taking account of any reasonable adjustments), or to see if
any adjustments might be needed at interview because of
a disability. If an employee is disabled or becomes disabled,
we consider what reasonable adjustments or support may
be appropriate.
Directors are responsible for keeping proper accounting
records that disclose with reasonable accuracy at any
time the financial position of the Group and enable them
to ensure that the financial statements comply with the
Companies (Guernsey) Law 2008.
They are also responsible for safeguarding the assets of
the Group and hence for taking reasonable steps for the
prevention of fraud and other irregularities.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Group’s website. Legislation in Guernsey governing
the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
The Board and senior Executives of the Group are
accountable to the shareholders and communicate
with them on a regular basis in a number of ways.
Communication methods and channels include:
• Annual General and Extraordinary Meetings.
• Announcements on the London Stock Exchange.
• Regular briefings on the Group’s website.
• Biannual presentations to institutional shareholders.
Responsibility statement of the Directors in respect of
the Annual Report and Group financial statements
The Directors confirm to the best of their knowledge that:
• The financial statements, prepared in accordance with
UK-adopted international accounting standards, give
a true and fair view of the assets, liabilities, financial
position and profit or loss of the Group.
• The Annual Report includes a fair view of the
development and performance of the business and the
position of the Group and the undertakings included
in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that
the Group faces.
• The Directors consider the Annual Report and Accounts,
taken as a whole, to be fair, balanced and understandable
and to contain the information necessary for shareholders
to assess and provide the Group’s position and
performance, business model and strategy.
• A robust assessment of the principal risks facing the
Group, including those that would threaten its business
model, future performance, solvency and liquidity has
taken place.
Auditor
The Company’s external auditors are Mazars. A resolution
to reappoint Mazars as auditors to the Company will be
proposed at the forthcoming Annual General Meeting.
The Directors who held office at the date of the approval of
this Directors’ Report confirm that, so far as they are each
aware, there is no relevant audit information of which the
Group’s auditor is unaware; and each Director has taken all
the steps that they ought to have taken as Director to make
themselves aware of any relevant audit information and
establish that the Group’s auditor is aware of that information.
Annual General Meeting
We will notify shareholders about our AGM in due course,
with our intention being that it will be held in person on
12 July 2023. Shareholders are welcome to submit questions
for the Board in advance of the meeting. For further details
please refer to the AGM Notice that will be sent out to
shareholders under separate cover.
The Directors’ Report was approved by the Board and
signed on its behalf by:
Matthew Joy
Company Secretary
20 June 2023
Directors’ Report continued
Esken Limited Annual Report & Accounts 2023
131
Strategic Report Financial StatementsCorporate Governance
Independent Auditor’s Report
to the members of Esken Limited
Opinion
We have audited the financial statements of Esken Limited and its subsidiaries (together the ‘group’) for the year ended
28 February 2023, which comprise the consolidated income statement, consolidated statement of comprehensive income,
consolidated statement of financial position, consolidated statement of changes in equity, consolidated statement of
cash flows for the year then ended and the related 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 UK-adopted international
accounting standards.
In our opinion, the financial statements:
• give a true and fair view of the state of the group’s affairs as at 28 February 2023 and of the group’s loss for the year
then ended;
• have been properly prepared in accordance with UK-adopted international accounting standards; and
• comply with the Companies (Guernsey) Law 2008.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the “Auditor’s responsibilities for the audit of the financial
statements” section of our report. We are independent of the 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 as applied to listed entities
and public interest entities 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.
Material uncertainty related to going concern
We draw attention to note 1 in the financial statements, which indicates the existence of a material uncertainty which may
cast significant doubts over the group’s ability to continue as a going concern.
Explanation of material uncertainty
As set out in note 1, the availability of sufficient liquidity for the group’s requirements during the next twelve months from the
date of these financial statements is dependent on a number of factors. In particular these include the successful completion
and receipt of proceeds from the proposed sale of the group’s Renewables business by 31 December 2023, and the ability
to raise an additional short-term facility of up to £5 million to provide liquidity for London Southend Airport (LSA) prior to
31 July 2023.
As stated in note 1, these events or conditions as set forth in this note to the financial statements indicate that a material
uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern. Our opinion is not
modified in respect of this matter.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate. In forming our conclusions, we have evaluated the directors’
assessment of the group’s ability to continue to adopt the going concern basis of accounting. Our procedures on going
concern included but were not limited to:
• Evaluated management’s risk assessment process and relevant controls for identifying going concern and viability risks.
• Evaluated the historical accuracy of cash flow forecasts to assess the accuracy of the forecasting process.
• Gained an understanding of the status of the ongoing re-financing activities being undertaken by the group and the
group’s current trading performance.
• Reviewed and challenged management’s going concern assessment, including evaluating the reasonableness of the
underlying assumptions and assessing the consistency with cashflow forecasts used elsewhere.
• Discussed with management and external advisors on the current status of the process for disposal of the Renewables
business. This included challenging the reasonableness of forecasted proceeds and timing of completion of the disposal
of the Renewables business and non-core assets.
• Discussed with management the progress made in finalising the required short-term facility to enable LSA to meet its
liquidity requirements prior to a potential default in July 2023.
• Performed sensitivity analysis and critically assessed different scenarios included in management’s going concern
assessment. This included evaluating the achievability of the actions considered by the directors to achieve the funding,
and the possible additional mitigating actions considered by the directors.
• Assessed the forecast compliance with financing covenants during the going concern period.
• Reviewed the adequacy and appropriateness of the financial statement disclosures. This included whether the going
concern disclosures in note 1 to the financial statements gives a full and accurate description of identified risks and
mitigating actions.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
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132
Financial Statements
Independent Auditor’s Report continued
to the members of Esken Limited
Material uncertainty related to going concern continued
Explanation of material uncertainty continued
In relation to Esken Limited’s reporting on how it has applied the UK Corporate Governance Code, we have nothing material
to add or draw attention to in relation to:
• the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the
going concern basis of accounting; and
• the directors’ identification in the financial statements of the material uncertainty related to the group’s ability to continue
as a going concern over a period of at least twelve months from the date of approval of the financial statements.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement (whether
or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy; the allocation
of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context
of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
We summarise below the key audit matters in forming our opinion above, together with an overview of the principal audit
procedures performed to address each matter and our key observations arising from those procedures. The matters set
out below are in addition to the “Material uncertainty related to going concern” above which, by its nature, is also a key
audit matter.
These matters, together with our findings, were communicated to those charged with governance through our Audit
Completion Report.
Key Audit Matter How our scope addressed this matter
Revenue recognition
Refer to the group’s accounting policy and further
disclosures on Revenue on pages 144 and note 3
respectively.
The group’s revenue for the year of £120 million (2022:
£105 million) is a highly material balance comprising several
revenue streams with varying performance obligations and
revenue recognition requirements.
Revenue recognition is prone to risk of fraud, especially
given revenue is a key performance indicator for the
group and the ongoing strategic business review. Revenue
recognition also involves certain levels of judgement
including the determination of when performance
obligations are satisfied. We identified that the risk of
fraud relates to:
a) Cut-off and completeness of revenue related to the
delivery of processed material to biomass plants and
related accrued income within the Renewables business;
and
b) Cut-off for product revenue and occurrence of service
revenue within the Aviation business.
Our audit procedures included, but were not limited to:
• Understanding the key business process and assessing
the design and implementation of relevant revenue
controls.
• Reviewing relevant customer contracts and ensuring that
revenue has been recognised in accordance with those
contracts and IFRS 15.
• Performing data analytical procedures to identify unusual
relationships and outliers between revenue, trade
receivables and cash received for renewables revenue.
• Performing substantive testing procedures on samples
of revenue transactions in Renewables and Aviation and
agreeing to relevant support for occurrence and accuracy.
• Addressing the cut-off risk in Renewables and Aviation
by testing a sample of transactions around year end
to ensure they have been recorded in the appropriate
period; and in Renewables agreeing accrued revenue
to post-year end invoices and cash receipts.
• In respect of the completeness risk in Renewables,
agreeing a sample of revenue transactions selected from
a reciprocal population to the revenue general ledger.
• Reading the financial statements to assessing the
appropriateness of the disclosures.
Our observations
Based on our work performed revenue for the year is
fairly stated.
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Strategic Report Financial StatementsCorporate Governance
Key Audit Matter How our scope addressed this matter
Valuation of LSA cash generation unit (CGU)
Refer to the group’s accounting policy and further
disclosures on LSA impairment on pages 145 and
note 13 respectively.
The group’s cash generating units include the assets
within the LSA CGU with a carrying amount of
£151 million (2022: £154 million).
Determining the recoverable amount of the LSA CGU
under
IAS 36 Impairment
involves making judgement
and estimates about future cash flows, and the use
of subjective assumptions.
Management has determined the recoverable amount
of LSA CGU using fair value less cost to sell to be in
excess of £250 million (2022: £360 million), indicating
a headroom of £99m (2022: £206 million) and no
impairment.
Given the history of ongoing losses, there is a risk that
the carrying value of the LSA CGU may be inappropriate.
Our audit procedures included, but were not limited to:
• Understanding the methodology applied by the
management in calculating the recoverable amount of
the CGU and relevant controls.
• Challenging management’s impairment assessment
including the appropriateness of key assumptions including
the forecast EBITDA, exit multiple and discount rate.
• Using the assistance of our internal experts in challenging
the appropriateness of management’s key assumptions
based on knowledge of the industry and by considering
contradictory evidence.
• Checking the mathematical accuracy of management’s
impairment assessment.
• Validating the historical accuracy of forecasts used in
the impairment calculation and assessing management’s
ability to accurately forecast.
• Validating consistency of cashflow forecasts to those
used in the going concern assessment.
• Performing sensitivity analyses on management’s cash
flow forecast and key assumptions.
• Considering alternative evidence supporting the carrying
amount.
• Reviewing the appropriateness of the financial statement
disclosures.
Our observations
Based on the procedures performed, the carrying value of
the CGU is reasonable.
Our application of materiality and an overview of the scope of our audit
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and
extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect
of misstatements, both individually and on the financial statements as a whole. Based on our professional judgement, we
determined materiality for the financial statements as a whole as follows:
Group materiality
Overall materiality £1.2 million
How we determined it We determined overall materiality for the group by applying a benchmark of approximately
1% of group’s total revenue.
Rationale for
benchmark applied
We considered total revenue to be a critical component for determining materiality given the
group’s focus on revenue as a key performance measure.
Performance
materiality
Performance materiality is set to reduce to an appropriately low level the probability that the
aggregate of uncorrected and undetected misstatements in the financial statements exceeds
materiality for the financial statements as a whole.
Based on our risk and internal control assessments including considerations applicable to
first-year audit, we have set performance materiality at £0.6 million which represents 50%
of overall materiality.
Reporting threshold We agreed with the directors that we would report to them misstatements identified during
our audit above £36,000 as well as misstatements below that amount that, in our view,
warranted reporting for qualitative reasons.
Key audit matters continued
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134
Financial Statements
Our application of materiality and an overview of the scope of our audit continued
Our audit of the group was undertaken to the materiality and performance materiality levels specified above.
An overview of the scope of our audit, including the extent to which the audit was considered capable of detecting
irregularities, including fraud
As part of designing our audit, we assessed the risk of material misstatement in the financial statements, whether due to
fraud or error, and then designed and performed audit procedures responsive to those risks. In particular, we looked at
where the directors made subjective judgements, such as assumptions on significant accounting estimates.
We tailored the scope of our audit to ensure that we performed sufficient work to be able to give an opinion on the financial
statements as a whole. We used the outputs of our risk assessment, our understanding of the group, its environment,
controls, and critical business processes, to consider qualitative factors to ensure that we obtained sufficient coverage
across all financial statement line items.
Our group audit scope included the parent company (Esken Limited) and subsidiaries financial statements. Based on our
risk assessment, four components including the parent company were subject to full scope audit by the group audit team,
and three components were subject to audit procedures over one or more account balance and/or disclosures by the group
audit team. Under the direct supervision of the group audit partner, the component audit teams performed full scope audit
on two components and audit procedures over one or more account balance and/or disclosures on three components. The
components scoped in for audit procedures over one or more account balances and/or disclosures were not individually
financially significant enough to require a full scope audit for group purposes, but the group audit risk assessment identified
specific material balances and/or disclosures to be addressed. The remaining fourteen components were subject to
analytical procedures and review of financial information at group level.
We set out below a summary of the group approach to demonstrate the coverage of group revenue, profit before tax, net
assets and total assets resulting from auditing significant components including the parent company.
Coverage of key benchmarks:
Revenue Loss before tax Total assets
Full scope audit 87% 77% 84%
Audit procedures over one or more balances and/or disclosures 12% 6% 11%
Total coverage 99% 83% 95%
The group audit team also tested the consolidation process and carried out analytical procedures to confirm our conclusion
that there were no significant risks of material misstatement of the aggregated financial information.
The group engagement team approved the component materiality, which ranged from £50,000 to £450,000 having
regard to the mix of size and risk profile of the group across the components. The scope of the audit work performed was
predominantly substantive as we placed no reliance upon the group’s internal control over financial reporting.
Other information
The other information comprises the information included in the Annual Report and Accounts other than the financial
statements and our auditor’s report thereon. The directors are responsible for the other information. Our opinion on the
financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report,
we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements, or our knowledge obtained in the course of our audit or otherwise appears to
be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work
we have performed, we conclude that there is a material misstatement of this other information, we are required to report
that fact.
We have nothing to report in this regard.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which the Companies (Guernsey) Law, 2008
requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the group; or
• the consolidated financial statements are not in agreement with the accounting records; or
• we have not received all the information and explanations we require for our audit.
Independent Auditor’s Report continued
to the members of Esken Limited
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Strategic Report Financial StatementsCorporate Governance
Corporate governance statement
The Listing Rules require us to review the directors’ statement in relation to going concern, longer-term viability and that
part of the Corporate Governance Statement relating to Esken Limited’s compliance with the provisions of the UK Corporate
Governance Statement specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit:
• Directors’ statement with regards the appropriateness of adopting the going concern basis of accounting and any material
uncertainties identified, set out on page 130;
• Directors’ explanation as to its assessment of the entity’s prospects, the period this assessment covers and why they
period is appropriate, set out on page 85;
• Directors’ statement on fair, balanced and understandable, set out on page 99;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks, set out on page 76;
• The section of the annual report that describes the review of effectiveness of risk management and internal control
systems, set out on page 94; and
• The section describing the work of the audit committee, set out on page 100.
Responsibilities of Directors
As explained more fully in the directors’ responsibilities statement set out on page 130, 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 group’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 group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
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 auditor’s report.
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
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.
Based on our understanding of the group and its industry, we considered that non-compliance with the following laws and
regulations might have a material effect on the consolidated financial statements including employment regulation, health
and safety regulation, anti-money laundering regulation, taxation legislation, environmental and aviation regulations.
To help us identify instances of non-compliance with these laws and regulations, and in identifying and assessing the risks
of material misstatement in respect to non-compliance, our procedures included, but were not limited to:
• Gaining an understanding of the legal and regulatory framework applicable to the group, the industry in which it operates,
the group’s structure, and considering the risk of acts by the group which were contrary to the applicable laws and
regulations, including fraud;
• Inquiring of the directors, management and, where appropriate, those charged with governance, as to whether the group
complies with laws and regulations, and discussing their policies and procedures regarding compliance with laws and
regulations;
• Inspecting correspondence with relevant licensing or regulatory authorities;
• Reviewing minutes of directors’ meetings in the year; and
• Discussing amongst the engagement team the laws and regulations listed above and remaining alert to any indications
of non-compliance.
We also considered those laws and regulations that have a direct effect on the preparation of the financial statements,
such as tax legislation, pension legislation, the Companies (Guernsey) Law 2008, and Listing Rules.
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Financial Statements
Independent Auditor’s Report continued
to the members of Esken Limited
Irregularities, including fraud, are instances of non-compliance with laws and regulations continued
In addition, we evaluated the directors’ and management’s incentives and opportunities for fraudulent manipulation of the
financial statements, including the risk of management override of controls, and determined that the principal risks were
related to posting manual journal entries to manipulate financial performance, revenue recognition fraud risks as explained
under the key audit matter section, and management bias through judgements and assumptions in significant accounting
estimates and significant one-off transactions.
Our procedures in relation to fraud included but were not limited to:
• Making enquiries of the directors and management on whether they had knowledge of any actual, suspected or alleged
fraud;
• Gaining an understanding of the internal controls established to mitigate risks related to fraud;
• Discussing amongst the engagement team the risks of fraud;
• Addressing the risks of fraud through management override of controls by performing journal entry testing;
• Considering remuneration incentive schemes and performance targets for Directors and key management personnel.
The primary responsibility for the prevention and detection of irregularities, including fraud, rests with both those charged
with governance and management. As with any audit, there remained a risk of non-detection of irregularities, as these may
involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls.
The risks of material misstatement that had the greatest effect on our audit are discussed in the “Key audit matters”
section of this report. A further description of our responsibilities is available on the Financial Reporting Council’s website
at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Other matters which we are required to address
Following the recommendation of the audit committee, we were appointed on 30 June 2022 by the audit committee to
audit the financial statements for the year ending 28 February 2023 and subsequent financial periods. The period of total
uninterrupted engagement is 1 year, covering the year ended 28 February 2023.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group and we remain independent
of the group in conducting our audit.
Our audit opinion is consistent with our additional report to the audit committee.
Use of the audit report
This report is made solely to the company’s members as a body in accordance with section 262 of the Companies
(Guernsey) Law, 2008. 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.
As required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial
statements will form part of the ESEF-prepared annual financial report filed on the National Storage Mechanism of the
Financial Conduct Authority in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditor’s report
provides no assurance over whether the annual financial report has prepared using the single electronic format specified in
the ESEF RTS.
Tim Hudson
Senior Statutory Auditor
for and on behalf of Mazars LLP
Chartered Accountants and Statutory Auditor
1 St Peter’s Square
Manchester
M2 3DE
20 June 2023
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Strategic Report Financial StatementsCorporate Governance
Consolidated income statement
for the year ended 28 February 2023
Notes
Year ended
28 February 2023
£’000
Restated
1
Year ended
28 February 2022
£’000
Continuing operations
Revenue 4 12 0,0 0 4 104,633
Other income 6 2,220 8,36 4
Operating expenses 7 (116,587 ) (10 2,386 )
Adjusted EBITDA 5,63 7 10,611
Depreciation 13 (1 8, 28 4 ) (20,7 49 )
Impairments 13 (1,016 ) (5 , 970 )
Operating loss (13, 6 6 3 ) (1 6,1 08 )
Reversal of impairment of loan notes 9 7, 3 0 2 –
Finance costs 10 (24 ,78 6 ) (21, 44 6 )
Finance income 9 4 ,02 7 2, 240
Share of post-tax losses of associates and joint ventures
2
14 (56 6 ) (35 6 )
Loss before tax (2 7, 6 8 6 ) (3 5 , 6 70 )
Tax 11 2,508 9, 8 6 5
Loss for the year from continuing operations (2 5 ,1 7 8 ) (25 , 8 0 5 )
Discontinued operations
Loss from discontinued operations, net of tax 5 (59 ) (2,386 )
Loss for the year (25, 237 ) (28 ,19 1 )
Notes
Year ended
28 February 2023
Restated
1
Year ended
28 February 2022
Loss per share expressed in pence per share – continuing operations
Basic 12 (2.47 )p (3 . 12 )p
Diluted 12 (2.47 )p (3. 12 )p
Loss per share expressed in pence per share – total
Basic 12 (2.47 )p (3.41 )p
Diluted 12 (2.47 )p (3.4 1 )p
1 The 2022 results have been restated where required due to prior period adjustments, see note 34.
2 In the prior year the share of post-tax losses of associates and joint ventures was presented as part of adjusted EBITDA. This year it is presented on its own line as part
of the loss before tax.
The notes on pages 142 to 186 are an integral part of these consolidated financial statements.
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138
Financial Statements
Consolidated statement of comprehensive income
for the year ended 28 February 2023
Notes
Year ended
28 February 2023
£’000
Restated
1
Year ended
28 February 2022
£’000
Loss for the year (25, 237 ) (28 ,19 1 )
Exchange differences from discontinued operations, net of tax (7, 0 1 7 ) (1, 8 24 )
Other comprehensive expense – items that are or may be reclassified
subsequently to profit or loss, net of tax (7, 0 1 7 ) (1, 8 24 )
Remeasurement of defined benefit plan 23 324 1, 876
Change in fair value of financial assets classified as fair value through other
comprehensive income 15 963 (1 ,1 8 7 )
Tax on items relating to components of other comprehensive income 11 (3 41 ) (417 )
Other comprehensive income – items that will not be reclassified to
profit or loss, net of tax 946 272
Other comprehensive expense for the year, net of tax (6, 07 1 ) (1, 5 52 )
Total comprehensive expense for the year (31 , 3 0 8 ) (2 9, 74 3 )
1 The 2022 results have been restated where required due to prior period adjustments, see note 34.
Of the total comprehensive expense for the year, a loss of £24 ,232,000 (2022: £25 ,533, 000 ) is in respect of continuing
operations and a loss of £7 ,07 6, 000 (2022: £4,210 , 000 ) is in respect of discontinued operations.
The notes on pages 142 to 186 are an integral part of these consolidated financial statements.
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Consolidated statement of financial position
as at 28 February 2023
Notes
28 February 2023
£’000
Restated
1
28 February 2022
£’000
Non-current assets
Property, plant and equipment 13 26 3 , 41 2 269 ,944
Investment in associates and joint ventures 14 450 1,0 16
Other financial assets 15 15, 32 4 14 ,1 0 5
Intangible assets 16 54 ,66 9 54,6 69
Net investment in leases 28 1 6,888 1 7, 7 6 3
Defined benefit pension surplus 23 1,9 37 348
Other receivables 18 – 1,4 95
Current assets
Inventories 17 1,72 9 12, 552
Trade and other receivables 18 3 4 ,1 9 5 23, 8 8 3
Cash and cash equivalents 22 4 9, 2 6 4 52,73 8
Restricted cash 22 1,0 0 0 –
Total assets 438, 86 8 4 4 8 , 513
Non-current liabilities
Loans and borrowings 22 (2 5 9, 8 41 ) (222,981 )
Other liabilities 20 (8 ,894 ) (8,6 4 3 )
Provisions 25 (3, 9 4 2 ) (13,279 )
(27 2 ,67 7 ) (24 4,9 03 )
Current liabilities
Trade and other payables 19 (2 7, 6 1 1 ) (3 0,16 0 )
Loans and borrowings 22 (8 0, 52 1 ) (7 7, 0 9 9 )
Corporation tax 11 (5 8 3 ) (5 ,1 1 0 )
Provisions 25 (1 7, 5 6 0 ) (20 , 6 74 )
(1 26,275 ) (133, 0 4 3 )
Total liabilities (398,952 ) (377 ,946 )
Net assets 39,916 70,5 67
Capital and reserves
Issued share capital 27 102,5 34 102, 53 4
Share premium 403, 225 4 03 , 2 25
Foreign currency exchange reserve (6,7 99 ) 218
Reserve for own shares held by employee benefit trust
(7,596 ) (7,596 )
Retained deficit (451 ,448 ) (427 , 814 )
Group shareholders’ equity 39,916 70, 5 67
1 The 2022 results have been restated where required due to prior period adjustments, see note 34.
The notes on pages 142 to 186 are an integral part of these consolidated financial statements. The financial statements were
approved and authorised for issue by the Board of Directors on 20 June 2023 and were signed on its behalf by:
David Shearer Nick Dilworth
Executive Chairman Director
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Financial Statements
Consolidated statement of changes in equity
for the year ended 28 February 2023
For the year ended 28 February 2023
Notes
Issued share
capital
£’000
Share
premium
£’000
Foreign
currency
exchange
reserve
£’000
Reserve for
own shares
held by EBT
£’000
Retained
deficit
£’000
Total
equity
£’000
Balance at 1 March 2022 (restated) 102,5 34 403, 225 218 (7, 5 9 6 ) (4 2 7, 8 1 4 ) 70, 5 6 7
Loss for the year – – – – (25, 237 ) (25, 237 )
Other comprehensive expense for
the year – – (7, 0 1 7 ) – 946 (6,0 7 1 )
Total comprehensive expense for
the year – – (7, 0 1 7 ) – (2 4 , 29 1 ) (31 , 3 0 8 )
Employee benefit trust – – – – (3 ) (3 )
Share-based payment charge 26 – – – – 630 630
Tax on share-based payment charge 24 – – – – 30 30
Balance at 28 February 2023 10 2,5 34 403, 225 (6 ,79 9 )
(7,596 ) (451,448 )
For the year ended 28 February 2022 (restated
1
)
Notes
Issued share
capital
£’000
Share
premium
£’000
Foreign
currency
exchange
reserve
£’000
Reserve for
own shares
held by EBT
£’000
Retained
deficit
£’000
Total
equity
£’000
Balance at 1 March 2021 62,4 92 3 9 0,3 36 3,826 (7 ,480 ) (4 0 0, 8 6 1 ) 4 8 , 3 13
Prior period adjustments 34 – – – – 1,2 04 1, 20 4
Balance at 1 March 2021 – restated 6 2,4 92 3 9 0,3 36 3,826 (7 ,480 ) (399,657 ) 4 9, 517
Loss for the year – – – – (28 ,19 1 ) (28 ,19 1 )
Other comprehensive (expense)/
income for the year – – (1, 824 ) – 272 (1, 5 52 )
Total comprehensive expense for
the year – – (1, 824 ) – (27 ,919 ) (2 9 ,74 3 )
Issue of ordinary shares 27 4 0 , 0 42 12, 8 8 9 – – (60 0 ) 52, 3 3 1
Employee benefit trust – – – (116 ) (4 ) (12 0 )
Reclassification of exchange
differences on disposal of subsidiaries – – (1, 78 4 ) – – (1, 7 8 4 )
Share-based payment charge 26 – – – – 28 5 28 5
Tax on share-based payment charge 24 – – – – 81 81
Balance at 28 February 2022 1 02, 53 4 403, 225 218
(7,596 )
(427,814 ) 70,5 67
1 The 2022 results have been restated where required due to prior period adjustments, see note 34.
The notes on pages 142 to 186 are an integral part of these consolidated financial statements.
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Consolidated statement of cash flows
for the year ended 28 February 2023
Notes
Year ended
28 February 2023
£’000
Year ended
28 February 2022
£’000
Cash (used in)/generated from continuing operations 31 (8 , 4 8 1 ) 3, 291
Cash outflow from discontinued operations 5 (10 ,610 ) (17 ,775 )
Income taxes paid (2 ,0 6 0 ) –
Net cash outflow from operating activities (21, 151 ) (1 4,484 )
Purchase of property, plant and equipment net of financing 1,705 (3 , 0 1 5 )
Proceeds from the sale of property inventory 3,539 –
Proceeds from the sale of property, plant and equipment 2 ,1 9 7 1 ,11 5
Receipt of capital element of net investment in lease 1,72 5 1, 5 47
Cash disposed on liquidation/disposal of subsidiary undertakings 5 – (3 6 2 )
Acquisition of other investments 15 – (4, 90 0 )
Interest received 451 415
Cash inflow/(outflow) from discontinued operations 5 2 ,17 1 (7 ,808 )
Net cash inflow/(outflow) from investing activities 11,7 8 8 (13 , 0 0 8 )
Proceeds from the issue of ordinary shares (net of issue costs) 27 – 52, 3 3 0
Proceeds from issue of convertible debt (net of costs) 22 – 111,4 5 9
Proceeds from new borrowings (net of costs) 22 4 4,7 84 –
Proceeds from grants 21 1,705 2,60 0
Principal element of lease payments 22 (16, 6 0 3 ) (17,026 )
Net repayment of revolving credit facility (net of costs) 22 (850 ) (5 8 ,1 6 5 )
Interest paid 10 (6 ,6 58 ) (8, 99 2 )
Cash outflow from discontinued operations 5 (1 6, 4 8 9 ) (14 , 3 8 4 )
Net cash inflow from financing activities 5,889 6 7, 8 2 2
(Decrease)/increase in cash and cash equivalents (3,474 ) 40, 33 0
Cash and cash equivalents at beginning of year 52,7 38 12 , 4 0 8
Cash and cash equivalents at end of year 4 9, 2 6 4 52, 73 8
Cash transferred from unrestricted cash 22 1,00 0 –
Cash, cash equivalents and restricted cash 50, 26 4 52, 73 8
The notes on pages 142 to 186 are an integral part of these consolidated financial statements.
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142
Financial Statements
Notes to the consolidated financial statements
for the year ended 28 February 2023
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Financial Statements
1 Accounting policies of Esken Limited continued
Notes to the consolidated financial statements
continued
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Strategic Report Financial StatementsCorporate Governance
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Financial Statements
1 Accounting policies of Esken Limited continued
Notes to the consolidated financial statements
continued
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Financial Statements
1 Accounting policies of Esken Limited continued
Notes to the consolidated financial statements
continued
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Financial Statements
1 Accounting policies of Esken Limited continued
Notes to the consolidated financial statements
continued
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Financial Statements
3 Segmental information continued
Notes to the consolidated financial statements
continued
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Financial Statements
4 Revenue continued
Notes to the consolidated financial statements
continued
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Financial Statements
Notes to the consolidated financial statements
continued
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Financial Statements
Notes to the consolidated financial statements
continued
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Financial Statements
11 Tax continued
Notes to the consolidated financial statements
continued
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Financial Statements
13 Property, plant and equipment continued
Notes to the consolidated financial statements
continued
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Financial Statements
14 Investments in associates and joint ventures continued
Notes to the consolidated financial statements
continued
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Financial Statements
Notes to the consolidated financial statements
continued
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Financial Statements
Notes to the consolidated financial statements
continued
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Financial Statements
22 Financial assets and liabilities continued
Notes to the consolidated financial statements
continued
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Financial Statements
22 Financial assets and liabilities continued
Notes to the consolidated financial statements
continued
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Financial Statements
23 Employee benefits – pension schemes continued
Notes to the consolidated financial statements
continued
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Financial Statements
23 Employee benefits – pension schemes continued
Notes to the consolidated financial statements
continued
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Financial Statements
Notes to the consolidated financial statements
continued
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Financial Statements
26 Share-based payments continued
Notes to the consolidated financial statements
continued
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Financial Statements
26 Share-based payments continued
Notes to the consolidated financial statements
continued
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Financial Statements
Notes to the consolidated financial statements
continued
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186
Financial Statements
34 Prior year restatement continued
Notes to the consolidated financial statements
continued
187187
Executive Directors
David Shearer Appointed 1 June 2019 as Director, appointed 9 February 2021 as Executive Chairman
Nick Dilworth Appointed 1 September 2018
Chief Operating Officer and Executive Director – Renewables
Lewis Girdwood Appointed 1 April 2019
Chief Financial Officer and Executive Director – Aviation
Non-Executive Directors
David Blackwood Appointed 1 March 2019
Deputy Chairman and Senior Independent Director
Ginny Pulbrook Appointed 1 October 2018
Clive Condie Appointed 1 July 2020
Company Secretary
Matthew Joy
Registered office
Floor 2, Trafalgar Court, Les Banques, St Peter Port, Guernsey GY1 4LY
Registered number
39117
Administrator
Ocorian Administration (Guernsey) Limited
Floor 2, Trafalgar Court, Les Banques, St Peter Port, Guernsey GY1 4LY
Auditor
Mazars LLP
1 St Peter’s Square, Manchester M2 3DE
Banker
Barclays Bank plc
1st Floor, 3 Hardman Street, Spinningfields, Manchester M3 3HF
Corporate Broker and Financial Adviser
Canaccord Genuity Limited
88 Wood Street, London EC2V 7QR
Corporate Broker
Liberum Capital Limited
25 Ropemaker Street, London EC2Y 9LY
Financial Adviser
UBS Investment Bank
5 Broadgate, London EC2M 2QS
Directors, officers and advisers
Esken Limited
esken.com
Esken Limited Annual Report & Accounts 2023