Registered number:
FOR THE YEAR ENDED 31 MARCH 2023
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COMPANY INFORMATION
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CONTENTS
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GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023
The principal activity of the Group is the provision of remotely operated vehicle (ROV) services to the oil & gas, offshore wind and utilities industries.
Business review
The Group delivered revenue of £52.9m (2022: £40.3m) and gross profit of £18.6m (2022: £14.0m). This performance reflects a record year for the Group, driven by strong demand for the Group’s services and continued strong performance on operational delivery. Commercial asset utilisation levels were strong at 50% across the entire fleet (2022: 38%) resulting in record operational ROV and personnel days. EBITDA* for the financial period was £11.0m (2022: £7.0m). This represents an EBITDA margin of 20.7% (2022: 17.3%) reflecting rates escalation and a more efficient cost structure in the business during the last twelve months. The strong EBITDA performance was the main driver of the cash balance increasing to £9.5m (2022: £3.6m). This is after further capex investment in the Group's ROV fleet of £3.1m (2022: £2.3m). The levels of activity have continued to grow since the end of the financial year resulting in profitability being at record monthly levels and on a trailing twelve-month basis. The Group is now benefitting from having several multi-vessel customers with truly global activity which helps reduce, but not eliminate, the traditionally seasonal nature of the northern hemisphere sector. Pricing in the market is also improving and the concepts of minimum contractual days and reservation fees for assets are now widespread. The market for ROV pilots is very tight and the Group has invested in dedicated recruitment resources which, along with our highly skilled crew, has ensured the Group has been able to maintain high levels of service. In summary, the financial and operational performance of the Group was the strongest in its 11-year history and has accelerated again since the end of the financial year. The prospects for the foreseeable future are very strong and the Group continues to make improvements across all areas of the business to ensure it can capitalise on further opportunities for growth. *Profit before interest, tax, depreciation, amortisation, foreign exchange and exceptional items
As reported in previous years' accounts, the Group has continued to focus on Environmental, Social and Governance (ESG) which is now part of its core practices and beliefs.
ROVOP now has a contracted core proportion of revenue from non oil and gas both in terms of offshore wind construction and, particularly, cable lay. These areas now constitute a significant ongoing percentage of the Group’s revenue and will continue to be the case based on the current customer and vessel mix.
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GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
Liquidity risk
The Group manages its liquidity risk by matching long term assets with long term debt and by maintaining sufficient cash and availability of funding through an adequate amount of committed credit facilities. The Group put in place a new external borrowing facility during the year, the details of which are contained in Note 21, and has prepared cash flow forecasts that show significant headroom under the related covenants. The Group also continues to have access to an invoice finance facility. Currency risk The Group's exposure to the risk of changes in foreign currency rates relates to its operating activities (when revenue or expenses are denominated in a different currency from its functional currency) as well as the new debt facility which is denominated in US Dollars (USD). The Company's principal exposure arises from income denominated in USD, with costs principally denominated in Sterling (GBP) which are not fully matched. The USD debt facility reduces the net FX exposure. The Group has entered into forward contracts to partially manage the residual USD exposure. Credit risk The Group has trade debtors of £10.8m (2022: £10.2m) and bank balances of £9.5m (2022: £3.6m). The Group has established procedures to minimise the risk of default by trade debtors including detailed credit checks undertaken before a customer is accepted as well as contractual rights of enforcement and remedy.
The Group sets a series of Key Performance Indicators (KPIs) related to the financial performance of the business within its annual budget and monitors these throughout the year.
KPIs are reviewed on a weekly basis and, as well as financial KPI’s such as revenue, ROV days delivered, project contribution per ROV day and EBITDA. operational KPIs are also measured and discussed across HSEQ, HR, Operations and ESG data. A key operational KPI is commercial asset utilisation as this is a main driver of profitability. Return on capital employed is another important metric reviewed on a regular basis, mainly when pricing potential new projects and making capital expenditure decisions.
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GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
The Directors recognise, both individually and collectively, their duty to act in a way which they consider, in good faith, would be most likely to promote the success of the Group for the benefit of its members as a whole in accordance with section 172 of the Companies Act 2006.
When making these decisions, the directors have given regard to: • the likely consequences of any decision in the long term; • the interests of the Group’s employees; • the need to foster the Group’s business relationships with suppliers, customers and others; • the impact of the Group’s operations on the community and the environment; • the desirability of the Group maintaining a reputation for high standards of business conduct; and • the need to act fairly as between shareholders of the Group. The majority of stakeholder engagement is carried out by the Board of directors who meet on a regular basis. The Board considers and discusses information from across the organisation to help it understand the impact of the Group's operations, and the interests and views of our key stakeholders. It also reviews strategy, financial and operational performance as well as information covering areas such as key risks and legal and regulatory compliance. As a result of these activities, the Board has an overview of engagement with stakeholders, and other relevant factors, which enables the directors to comply with their legal duty under section 172 of the Companies Act 2006
This report was approved by the Board and signed on its behalf.
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DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2023
The directors present their report and the financial statements for the year ended 31 March 2023.
The profit for the year, after tax, amounted to £3.4m (2022: loss of £6.6m).
The current year profit includes non-cash charges for interest of £5.8m (2022: £6.4m) and depreciation of £7.5m (2022: £7.1m).
The directors who served during the year were:
The directors are confident that the prospects for the market for the Group's services, coupled with the wider global customer base that has been built up over the last two years, will continue to drive growth in the business. The Group continues to generate a significant proportion of its revenue from offshore wind construction and cable lay. Activity on the vessels on which our assets are placed continues to be strong and looks set to continue for the foreseeable future. As a result of this high commercial utilisation and the improvement in pricing across the market, the Group continues to look at opportunities to increase the size of its fleet through the second-hand market as well as new-build work class ROVs.
The Group and Company, in partnership with certain customers, continues to look for innovative systems and processes to ensure a high-quality service delivery.
The Group has regular dialogue with all of its stakeholders across a wide variety of issues from commercial to environmental and believes that this approach is beneficial to the future for all interested parties.
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DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
The Group fully recognises its responsibility to protect the environment and has a strong environmental policy, objectives and guidelines in place which are reviewed and updated regularly. The Group complies with all regulations covering the processing and disposal of toxic & non-toxic waste and uses qualified licensed contractors for the collection and disposal of waste where appropriate.
The following disclosures cover the Group’s UK subsidiaries’ emissions for the financial periods ending 31 March 2022 and 31 March 2023: Energy use During the current reporting period, a total of 269,051kWh (2022: 215,279kWh) of energy was used and a total of 51 tonnes of CO2e (2022: 44 tonnes of CO2e) was emitted. The increase in emissions was primarily due to the increased use of gas and electricity due to various reasons such as weather conditions and more personnel returning to work in our offices post-Covid as well as increased activity in the workshops and across the business generally to meet higher customer demand. Energy efficiency action The Group is committed to energy efficiency and the protection of the environment. This commitment and the Group’s intentions are outlined in the corporate HSEQ policy, and procedures are in place to assess environmental aspects and impacts and reduce the corporate impact on the environment. Examples of measures the Group takes to reduce environmental impacts and increase the efficiency of energy consumption are provided as follows:
∙Modern buildings with motion activated LED lighting systems
∙Thermostatic controls on heating and cooling systems
∙Commitment to electricity and gas use reduction year on year contained within the corporate management system objectives
∙Roll out of Carbon Net Zero Road Map to plan progress towards attainment of Net Zero operations in line with the government’s 2050 target
∙ROVOP is fully certified in line with ISO 14001:2015, by NQA
Intensity ratio In the 2023 financial year, the Group emitted 0.97 tonnes of CO2e per £1 million turnover (2022: 1.10 tonnes). Methodology Data in relation to energy consumption has been gathered by the in house HSEQ department, using metrics provided from meter readings, vehicle mileage logs and fuel bills.
∙Electricity – amount purchased for use in the Aberdeen office and warehouse.
∙Gas combustion amount purchased for central heating in the Aberdeen office.
∙Transport – amount of energy used by the Group when it is responsible for buying the fuel; includes fleet vehicles, hire cars, fuel/mileage claims refunded to employees when on business
No subsidiaries within the Group meet the reporting criteria, other than ROVOP Limited which has chosen not to disclose the information in its accounts. Therefore, no information is disclosed in respect of subsidiaries.
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DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
There have been no significant events affecting the Group since the year end.
The auditor, Anderson Anderson & Brown Audit LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the Board and signed on its behalf.
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DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MARCH 2023
The directors are responsible for preparing the Group strategic report, the Directors' report and the consolidated financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ROVOP HOLDINGS LIMITED
We have audited the financial statements of ROVOP Holdings Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 March 2023, which comprise the Consolidated statement of comprehensive income, the Consolidated balance sheet, the Company balance sheet, the Consolidated statement of cash flows, the Consolidated statement of changes in equity, the Company statement of changes in equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's or the parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ROVOP HOLDINGS LIMITED (CONTINUED)
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Group strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group strategic report or the Directors' report.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ROVOP HOLDINGS LIMITED (CONTINUED)
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 Group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
We obtained an understanding of the legal and regulatory frameworks within which the company operates, focusing on those laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements. The laws and regulations we considered in this context were the Companies Act 2006 and UK Taxation legislation. We considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following areas:
∙timing of revenue recognition
∙compliance with relevant laws and regulations which may impact on the financial statements and those that the company needs to comply with for the purpose of trading
∙management judgements applied in calculating provisions
∙management override of controls to manipulate the Group’s key performance indicators to meet targets.
We discussed these risks with client management, designed audit procedures to address these risks including:
∙reviewed internal documentation and correspondence with regulators for evidence or irregularities
∙testing a sample of sales transactions to source documents and review of recognition of income around the year end
∙consideration of the assumptions applied whether the judgements applied in calculation of provisions were appropriate
∙reviewed areas of judgement and tested a sample of journal entries for indicators of management bias
∙performed analytical procedures to identify any unusual or unexpected relationships which may be an indication of material misstatement due to fraud
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities 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.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ROVOP HOLDINGS LIMITED (CONTINUED)
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Statutory Auditor
Kingshill View
Prime Four Business Park
Kingswells
AB15 8PU
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2023
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CONSOLIDATED BALANCE SHEET
AS AT 31 MARCH 2023
The financial statements were approved and authorised for issue by the Board and were signed on its behalf by:
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COMPANY BALANCE SHEET
AS AT 31 MARCH 2023
The financial statements were approved and authorised for issue by the Board and were signed on its behalf by:
The notes on pages 20 to 39 form part of these financial statements.
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
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COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
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CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2023
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CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
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CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 MARCH 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
The Company is a private company limited by shares and is incorporated in the UK. The address of the registered office is Silvertrees Drive, Westhill, Aberdeen, AB32 6BH. The principal activity of the Company is to act as a holding company for the Group. The principal activity of the Group is the provision of remotely operated vehicle (ROV) services to the oil & gas and offshore wind industries.
The financial statements are prepared on a going concern basis, which assumes that the Group and Company will continue to meet its liabilities as they fall due.
The Group generated strong cash flows during the year and has continued to do so during the early months of the new financial year. Projections show the financial position continuing to improve with record levels of utilisation of the Group’s ROVs and associated crews. Industry projections show this demand increasing for the foreseeable future. This will ensure there continues to be sufficient working capital for the Group to meet its financial obligations.
As a result of the above considerations, the directors have continued to adopt the going concern basis of accounting in preparing the annual financial statements.
3.Accounting policies
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
3.Accounting policies (continued)
Functional and presentation currency
Transactions and balances
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
3.Accounting policies (continued)
Grants of a revenue nature are recognised in the Consolidated statement of comprehensive income in the same period as the related expenditure.
In accordance with FRS 28 (Corresponding amounts), the comparative figures in the profit and loss account have been re-classified to show the results on a comparable basis with the current year.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
3.Accounting policies (continued)
Provisions are charged as an expense to the Statement of comprehensive income in the year that the company becomes aware of the obligation, and are measured at the best estimate at the Balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Balance sheet.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
3.Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
3.Accounting policies (continued)
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
3.Accounting policies (continued)
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Useful economic lives of tangible fixed assets The annual depreciation charge for tangible fixed assets is sensitive to changes in the useful economic lives and residual values of the assets. Useful lives and residual values are reassessed annually. They are assessed where necessary to reflect current estimates based on economic utilisation and physical condition. Impairment of debtors The Group makes an assessment of the recoverable value of trade and other debtors. When assessing impairment of trade and other debtors, management consider various factors including the ageing profile of debtors and historical experience. On this basis, certain overdue balance have been fully provided for. The trade debtors figure in Note 16 is shown net of this provision. Tax Management estimation is required to determine the amount of deferred tax assets that can be recognised, based upon likely timing and level of future taxable profits together with an assessment of the effect of future tax planning strategies. As disclosed at Note 11 the deferred tax asset has not been recognised.
The whole of the turnover is attributable to the provision of remotely operated vehicle (ROV) services.
Analysis of turnover by country of destination:
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
11.Tax (continued)
The Group has a deferred tax asset in its UK companies of £4,394,028 (2022 restated - £5,719,035) which has not been recognised due to the uncertainty around the timing of its reversal.
The most recent Finance Act announced an increase to the main rate of corporation tax to 25% from April 2023. This increase in rate will have an impact on future tax charges. The deferred tax charge has been calculated based on the rate of 25%.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
The Group contributes to a defined contribution pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounted to £238,916 (2022: £285,686). Contributions totalling £70,317 (2022: £75,162) were payable to the fund at the balance sheet date and are included in creditors.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
The ultimate parent company is ROVOP Guernsey Limited, a company incorporated in Guernsey with its registered office at PO Box 656, East Wing, Trafalgar Court, Les Banques, St Peter Port, Guernsey, GY1 3PP.
The directors believe that there is no ultimate controlling party.
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