Registered Number:
FOR THE YEAR ENDED 31 MARCH 2023
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COMPANY INFORMATION
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CONTENTS
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STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023
The principal activity of the Company is the provision of remotely operated vehicle (ROV) services to the oil & gas, offshore wind and utilities industries.
The Company delivered revenue of £46.2m (2022: £37.0m) and gross profit of £12.0m (2022: £7.4m). This performance reflects another very strong year of demand for the Company’s services as well as a strong performance on operational delivery. Commercial asset utilisation levels were were strong resulting in record operational ROV and personnel days. EBITDA* for the financial period was £6.4m (2022: £2.3m).
The strong EBITDA performance was the main driver of the cash balance of the Company increasing to £8.0m (2022: £2.4m). The levels of activity have continued to grow since the end of the financial year resulting in profitability being at record levels on a trailing twelve-month basis. The Company is now benefiting 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 Company has invested in dedicated recruitment resource which, along with our highly skilled crew, has ensured the Company has been able to maintain a high standard of service. In summary, the financial and operational performance of the Company was the strongest to date and has accelerated again since the end of the financial year. The prospects for the foreseeable future are very strong and the Company 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 last year’s accounts, the Group, in conjunction with shareholders, has continued to focus on Environmental, Social and Governance (ESG) and has now embedded environmental awareness and reporting into its core practices and beliefs.
The Company continues to see strength in Renewables and is actively focusing on securing new opportunities in non oil and gas both in terms of offshore wind construction and, particularly, cable lay. These areas now constitute a significant percentage of the Company’s revenue and it is anticipated that this will continue to be the case based on the current customer and vessel mix.
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
Market risk
The business primarily operates in the subsea drill support, survey construction, inspection, repair, maintenance and decommissioning markets for oil, gas and offshore wind markets on a worldwide basis. Success is driven by the Company's ability to successfully tender, win and execute projects across these markets. The principal risks and uncertainties arise from the impact on the business of market conditions in its operating markets. Oil prices have historically been a key driver of these conditions and have been impacted significantly over the last twelve months by supply issues, most recently due to the conflict in Ukraine. As noted previously the oil price is a key factor in the levels of capital expenditure by certain customers with consequent impacts on trading levels and market prices. The Company continues to benefit from high levels of sector expenditure. The focus on energy transition over the last 12-18 months has presented the business with both opportunity and risk but the emerging balanced view towards energy security presents a positive outlook for both traditional and new energy and the Group is well positioned to serve both sectors. Further, the impact of the Covid 19 pandemic is lower now than twelve months ago but there clearly remains a risk that it could return impacting the international mobility of the Company’s crews, though the business has shown that it can operate successfully under these conditions. Liquidity risk The Company 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. Currency risk The Company's exposure to the risk of changes in foreign currency rates relates primarily to its operating activities (when revenue or expenses are denominated in a different currency from the Company's functional currency). The Company's principal exposure arises from income denominated in US Dollars (USD), with costs principally denominated in Sterling (GBP) which are not fully matched. The Group has entered into forward contracts to partially manage the residual USD exposure. Credit risk The Company has trade debtors of £9.2m (2022: £8.8m) and bank balances of £8.0m (2022: £2.4m). The Company has established procedures to minimise the risk of default by trade debtors including detailed credit checks undertaken before a customer is accepted.
The Company 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, there is also discussion on HSEQ, HR, Operations and ESG data. A key operational KPI is commercial asset utilisation as this is a key 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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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
Section 172 (1) (a) to (f) requires the Company directors to consider, both individually and collectively, that they 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 in the decisions taken during the current year.
∙When making these decisions the directors have given regard to:
∙The likely consequences of any decisions on the long-term
∙The interests of the Company’s employees
∙The need to foster the Company’s business relationships with suppliers, customers and others
∙The impact of the Company’s operations on the community and environment
∙The desirability of the Company maintaining a reputation for high standards of business conduct, and
∙The need to act fairly between shareholders of the Company
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 Company’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 £399k (2022 loss - £943k).
Operating profit before exceptional items was £6.4m (2022 - £2.3m).
The directors who served during the year were:
The directors are confident that the prospects for the market for the Company’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 Company continues to generate a significant portion 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 Company 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 continues to look for innovative systems and processes to ensure a high-quality service delivery.
There have been no significant events affecting the Company since the year end.
The auditors, 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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DIRECTOR'S RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MARCH 2023
The directors are responsible for preparing the Strategic report, the Directors' report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Company's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙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 Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ROVOP LIMITED
We have audited the financial statements of ROVOP Limited (the 'Company') for the year ended 31 March 2023, which comprise the Statement of comprehensive income, the Balance sheet, the Statement of changes in equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' report thereon. The directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ROVOP LIMITED (CONTINUED)
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report or the Directors' report.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ROVOP 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 Auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
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, UK and overseas 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 Company’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 Auditors' report.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ROVOP 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 Auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, 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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STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2023
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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 13 to 25 form part of these financial statements.
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STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2022
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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 the provision of remotely operated vehicle (ROV) services to the oil & gas and offshore wind and utilities industries.
The financial statements are prepared on a going concern basis, which assumes that the Company and wider Group that it is a member of will continue to meet its liabilities as they fall due.
The Group is now in a strong position with regards to availability of working capital to meet its ongoing obligations and trade successfully. During the financial year demand for services increased significantly and strong revenue levels post year end are ensuring 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 Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
∙the requirements of Section 7 Statement of Cash Flows;
∙the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
∙the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
∙the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A;
∙the requirements of Section 26 Share-based Payment paragraphs 26.18(b), 26.19 to 26.21 and 26.23;
∙the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of ROVOP Holdings Limited as at 31 March 2023 and these financial statements may be obtained from Companies House.
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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)
Grants of a revenue nature are recognised in the Statement of comprehensive income in the same period as the related expenditure. The Company contributes to a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations. The contributions are recognised as an expense in the Statement of comprehensive income when they fall due. Amounts not paid are shown in accruals as a liability in the Balance sheet. The assets of the plan are held separately from the Company in independently administered funds. 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)
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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 Company 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 has been fully provided for. The trade debtors figure in Note 15 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 capital investment plans. The deferred tax asset has not been recognised at this stage as the timing of its reversal is uncertain.
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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
12.Tax (continued)
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
12.Tax (continued)
The Company has tax losses carried forward of £6,142,572 (2022 - £5,487,738) which are available for use against taxable profits in future years. The associated deferred tax asset has not been recognised due to the uncertainty around the timing of its reversal.
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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 accounts for the prior year have been restated to incorporate an amendment to the revenue recognition policy which has been incorrectly applied across the group. The adjustment has resulted in a reduction in cost of sales in the prior period of £424,900 and therefore a reduction in the loss for the financial year. Net assets and the profit and loss account available for distribution have increased by £424,900.
The Company had provided a cross corporate guarantee to fellow subsidiaries within the group in regards to loan agreements. These loan agreements were settled during the period and the security discharged.
The Company contributes to a defined contribution pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the scheme and amounted to £229,691 (2022 - £213,220). Contributions totalling £70,317 (2022 - £60,526) 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 immediate parent company at 31 March 2023 is
The Company is included in the consolidated financial statements of Copies of the consolidated financial statements of ROVOP Holdings Limited can be requested from Silvertrees Drive, Westhill, Aberdeen, United Kingdom, AB32 6BH. 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.
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