Company Registration No. SC714604 (Scotland)
ALLRIG HOLDCO LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
ALLRIG HOLDCO LIMITED
COMPANY INFORMATION
Director
Robert McInnes
(Appointed 9 November 2021)
Company number
SC714604
Registered office
Cirrus Building 6 International Avenue
A B Z Business Park
Dyce
Aberdeen
Scotland
AB21 0BH
Auditor
Consilium Audit Limited
169 West George Street
Glasgow
G2 2LB
ALLRIG HOLDCO LIMITED
CONTENTS
Page
Strategic report
1 - 2
Director's report
3 - 5
Independent auditor's report
6 - 8
Group statement of comprehensive income
9
Group statement of financial position
10
Parent company statement of financial position
11
Group statement of changes in equity
12
Parent company statement of changes in equity
13
Group statement of cash flows
14
Notes to the group financial statements
15 - 34
ALLRIG HOLDCO LIMITED
STRATEGIC REPORT
FOR THE PERIOD ENDED 31 DECEMBER 2022
- 1 -

The director presents the strategic report and consolidated financial statements for Allrig Holdco Limited and its subsidiaries listed in Note 13 of the financial statements ('the Group') for the period ended 31 December 2022.

 

Allrig Holdco Limited ('the Company') was incorporated on 9 November 2021, acquiring Allrig Energy Inc on 21 December 2021.The Group did not trade until 14 April 2022, when the Company acquired the businesses and assets as detailed in Note 26. The consolidated group trading results are for the period from 14 April 2022 to 31 December 2022.

Review of the business

I am pleased to present the trading results for the Group for the 14-month period from the date of incorporation to 31 December 2022. As this is the first reporting period of the Group, no prior period comparatives are applicable.

 

The loss for the period, after taxation, amounted to $1.5m.

 

The Group achieved revenues of $16.5m with a gross profit margin of 17%. However, $2.3m of this Group revenue related to revenue recognised on a percentage complete basis (65%) on a single contract in the UK. The contract completed in May 2023, however at a loss of $0.9m, so a loss provision of this full amount is included in the profit before tax for the period to 31 December 2022. Without this contract, the Group would have achieved a gross profit margin of 26%. In addition to the $0.9m loss provision included within the $1.5m loss for the period, is $0.5m of goodwill amortisation and impairment and $0.2m of legal fees incurred as a result of the acquisitions detailed in Note 26. Excluding these exceptional items, the Group would have achieved an underlying profit of $0.1m.

 

The trading results in 2022 were the result of the Group’s strategy of using its core technical, engineering and service capabilities to align our global operations across the regions with the needs of our customers.

 

                                            Group    

                                            2022    

                                            $000s    

Revenue                                        16,489    

Loss before tax                                        1,460    

Net (liabilities)                                        1,347    

         

Principal activities and review of the company

The Group is structured to deliver market-leading products and services to meet the technical and commercial challenges of oil and gas drilling companies.

ALLRIG HOLDCO LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
- 2 -

Principal risk and uncertainties

The management of the business and execution of the Group’s strategy is subject to some risks. The risks affecting the Group are set out below. Risks are formally reviewed by the director and appropriate processes are put in place to monitor and mitigate them. If more than one adverse event occurs, it is possible that the overall effect of such events would be compounded.

 

Going Concern

Due to the nature of the markets in which the Group operates and the type of contracts that the Group is able to tender for, there is a short lead time in potential contract awards. Although lead time is short, the outlook for 2024 and 2025 remain very positive.

 

Key Individuals

The Group’s future performance depends heavily on its ability to retain the services of its key employees and to be able to retain and attract the services of suitable personnel. The loss of the services of any such key employees could have an adverse impact on the business and the prospects of the Group.

 

Financial Risk Management

The Group’s financial risks are discussed in Note 16 to the consolidated financial statements.

 

Market and Economic Risk

The Group is also exposed to market and economic risks in the normal course of business. These risks include, but are not limited to, global oil and gas market conditions including specifically the offshore drilling segment, the Group’s ability to develop and market new products and services successfully, competition, pressures on pricing from suppliers and customers, disruptions to the supply of goods, technology changes, the ability to attract and retain talent, environmental issues and changes to legislation. The Group manages these risks by maintaining strong relationships with customers and suppliers and by its executive management board conducting business reviews on a regular basis to ensure the risks are appropriately managed.

 

Future developments

The Group’s strategy continues to be aligned with the needs of its key clients and we continue to invest in infrastructure local to key markets. This has seen the Group winning new business in significant markets such as UK and Mexico.

On behalf of the board

Robert McInnes
Director
5 April 2024
ALLRIG HOLDCO LIMITED
DIRECTOR'S REPORT
FOR THE PERIOD ENDED 31 DECEMBER 2022
- 3 -

The director presents his annual report and financial statements for the period ended 31 December 2022.

Results and dividends

Allrig Holdco Limited was incorporated on 9 November 2021, acquiring Allrig Energy Inc on 21 December 2021. The Group did not trade until 14 April 2022, when the Company acquired the businesses and assets as detailed in Note 26. The consolidated group trading results are for the period from 14 April 2022 to 31 December 2022.

 

The Group loss for the period, after taxation, amounted to $1.5m. The director recommends no dividend for the period.

Going concern

The director is required to state whether it is appropriate to adopt the going concern basis of accounting in preparing the financial statements, and to identify any material uncertainties to the Group’s ability to continue as a going concern over a period of at least 12 months from the date of approval of the financial statements.

 

The director has considered this position and the trading outlook for the Group, and has taken account of reasonably possible changes in trading performance by preparing cash flows for the 12 month period, from the date of the approval of the financial statements to 31 March 2025, which based on certain assumptions show that the Group has adequate resources to meet its obligations over the 12 month period.

 

Due to the nature of the markets in which the Group operates and the type of contracts that the Group is able to tender for, there is a short lead time in potential contract awards. The cash flow forecasts for the 12 month period assumes cash flows from new sales contracts which have not yet been awarded.

 

If these contracts were not awarded as the Group has forecast, this would result in a position where the Group would not have sufficient resources to meet its obligations over a period of 12 months.

 

The Group does not have access to an overdraft for short term cashflow if there are delays in payments for customers. This means that the Group will sometimes seek to exercise other mitigations to provide headroom and management of cashflow in the immediate short term.

 

This creates material uncertainties that may cast significant doubt on the Group’s ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern. However, it is the director's view that the Group will have sufficient funds to make payments as they fall due.

Director

The director who held office during the period and up to the date of signature of the financial statements was as follows:

Robert McInnes
(Appointed 9 November 2021)
Directors liabilities

During the period, the Company had in force an indemnity provision in favour of all the directors of the Group against liability in respect of proceedings brought by third parties, subject to the conditions set out in section 234 of the Companies Act 2006. Such qualifying third-party indemnity provision remains in force as at the date of approving the director's report.

ALLRIG HOLDCO LIMITED
DIRECTOR'S REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
- 4 -
Employee

The Group places considerable value on the involvement of its employees and has continued to keep them informed on matters affecting them as employees and on the various factors affecting the performance of the Group. This is achieved through formal and informal meetings.

 

The Group gives full and fair consideration to applications for employment from disabled persons. Group policy supports the further training, career development and promotion of any disabled persons with the Group, including those persons who may have become disabled whilst employed with the Group.

 

Health and safety

Our goal is to integrate best practice health and safety into all our operations as we strive to eliminate injury and ill health and to manage any higher risk activities. We are equally committed to providing a healthy and safe working environment for all employees, contractors and visitors.

Future developments

The Group’s strategy continues to be aligned with the needs of its key clients and we continue to invest in infrastructure local to key markets. This has seen the Group winning new business in significant markets such as UK and Mexico.

Auditor

Consilium Audit Limited have indicated their willingness to be reappointed for another term and Pursuant to Section 487 of the Companies Act 2006, the auditor will be deemed to be re-appointed and Consilium Audit Limited will therefore continue in office.

Statement of director's responsibilities

The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the group and parent company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the director must not approve the financial statements unless he is 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, International Accounting Standard 1 requires that directors:

 

The director is 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 enable them to ensure that the financial statements comply with the Companies Act 2006. He is 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.

ALLRIG HOLDCO LIMITED
DIRECTOR'S REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
- 5 -
Statement of disclosure to auditor

Each director in office at the date of approval of this annual report confirms that:

 

This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.

On behalf of the board
Robert McInnes
Director
5 April 2024
ALLRIG HOLDCO LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF ALLRIG HOLDCO LIMITED
- 6 -

Disclaimer of opinion

We were engaged to audit the financial statements of Allrig Holdco Limited (the ‘parent company’) and its subsidiaries (the ‘group’) for the period ended 31 December 2022 which comprise the group statement of comprehensive income, the group and parent company statement of financial position, the group and parent company statement of changes in equity, the group statement of cash flows and the group and parent company notes to the financial statements, including significant accounting policies.

 

The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

We do not express an opinion on the accompanying financial statements of the Group. Because of the significance of the matters described in the basis for disclaimer of opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.

Basis for disclaimer of opinion

In seeking to form an opinion on the financial statements we considered the implications of the material uncertainties disclosed in Note 1 of the financial statements concerning the following matters:

 

 

 

There is potential for the uncertainties to interact with one another such that we have been unable to obtain sufficient appropriate audit evidence regarding the possible effect of the uncertainties taken together.

Opinions on other matters prescribed by the Companies Act 2006

Because of the significance of the matter described in the basis for disclaimer of opinion section of our report, we have been unable to form an opinion, whether based on the work undertaken in the course of the audit:

 

 

ALLRIG HOLDCO LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF ALLRIG HOLDCO LIMITED
- 7 -
Matters on which we are required to report by exception

Notwithstanding our disclaimer of an opinion on the financial statements, in the light of the knowledge and understanding of the company and its environment obtained in the course of the audit performed subject to the pervasive limitation described above, we have not identified material misstatements in the strategic report or the directors' report.

 

Arising from the limitation of our work referred to above:

 

 

 

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

 

 

 

Responsibilities of director

As explained more fully in the director's responsibilities statement, the director is 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 director determines 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 director is responsible for assessing the group's and parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our responsibility is to conduct an audit of the Group's financial statements in accordance with International Standards on Auditing (UK) and to issue an auditor's report.

 

However, because of the matters described in the basis for disclaimer of opinion section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.

 

We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

ALLRIG HOLDCO LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF ALLRIG HOLDCO LIMITED
- 8 -

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to him 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.

Brian Thomson BA(Hons) CA (Senior Statutory Auditor)
For and on behalf of Consilium Audit Limited
Chartered Accountants
Statutory Auditor
169 West George Street
Glasgow
Scotland
G2 2LB
5 April 2024
ALLRIG HOLDCO LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 31 DECEMBER 2022
- 9 -
Period
ended
31 December
2022
Notes
$
Turnover
4
16,489,394
Cost of sales
(13,664,400)
Gross profit
2,824,994
Other operating income
1,722
Administrative expenses
(4,185,801)
Operating loss
5
(1,359,085)
Finance costs
9
(50,359)
Loss before taxation
(1,409,444)
Income tax expense
10
(50,079)
Loss and total comprehensive income for the period
(1,459,523)
Loss for the financial period is all attributable to the owners of the parent company.
Total comprehensive income for the period is all attributable to the owners of the parent company.
ALLRIG HOLDCO LIMITED
GROUP STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
31 December 2022
- 10 -
2022
Notes
$
Non-current assets
Property, plant and equipment
12
217,371
Current assets
Inventories
14
621,491
Trade and other receivables
15
7,954,444
Cash and cash equivalents
655,475
9,231,410
Current liabilities
Trade and other payables
18
6,621,171
Current tax liabilities
37,405
Borrowings
20
2,528,305
Provisions for liabilities
21
864,131
10,051,012
Net current liabilities
(819,602)
Non-current liabilities
Trade and other payables
18
713,250
Borrowings
20
31,134
744,384
Net liabilities
(1,346,615)
Equity
Called up share capital
23
1
Other reserves
112,907
Retained earnings
(1,459,523)
Total equity
(1,346,615)
The financial statements were approved and signed by the director and authorised for issue on 5 April 2024
Robert McInnes
Director
ALLRIG HOLDCO LIMITED
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
31 December 2022
- 11 -
2022
Notes
$
Non-current assets
Investments
13
1,076,000
Current assets
Trade and other receivables
16
385,089
Current liabilities
Trade and other payables
19
1,781,219
Net current liabilities
(1,396,130)
Net liabilities
(320,130)
Equity
Called up share capital
23
1
Retained earnings
(320,131)
Total equity
(320,130)

As permitted by s408 Companies Act 2006, the company has not presented its own income statement and related notes. The company's loss for the period was $320,131.

The financial statements were approved and signed by the director and authorised for issue on 5 April 2024
Robert McInnes
Director
Company Registration No. SC714604
ALLRIG HOLDCO LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 DECEMBER 2022
- 12 -
Share capital
Translation reserve
Retained earnings
Total
Notes
$
$
$
$
Balance at 9 November 2021
-
-
-
-
Period ended 31 December 2022:
Loss and total comprehensive income for the period
-
-
(1,459,523)
(1,459,523)
Issue of share capital
23
1
-
-
1
Exchange differences on consolidation
-
112,907
-
112,907
Balance at 31 December 2022
1
112,907
(1,459,523)
(1,346,615)
ALLRIG HOLDCO LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 DECEMBER 2022
- 13 -
Share capital
Retained earnings
Total
Notes
$
$
$
Balance at 9 November 2021
-
-
-
Period ended 31 December 2022:
Loss and total comprehensive income for the year
-
(320,131)
(320,131)
Issue of share capital
23
1
-
1
Balance at 31 December 2022
1
(320,131)
(320,130)
ALLRIG HOLDCO LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 31 DECEMBER 2022
- 14 -
2022
Notes
$
$
Cash flows from operating activities
Cash generated from/(absorbed by) operations
28
(1,667,192)
Interest paid
(50,359)
Tax paid
(12,674)
Net cash inflow/(outflow) from operating activities
(1,730,225)
Investing activities
Purchase of a group of companies, net of cash acquired
198,217
Purchase of a business trade and assets
(294,000)
Purchase of property, plant and equipment
(133,355)
Net cash generated from/(used in) financing activities
(229,138)
Financing activities
Proceeds from issue of shares
1
Proceeds from borrowings
2,299,776
Proceeds of new bank loans
278,929
Repayment of bank loans
(76,775)
Net cash generated from/(used in) financing activities
2,501,931
Net increase in cash and cash equivalents
542,568
Cash and cash equivalents at beginning of year
-
0
Effect of foreign exchange rates
112,907
Cash and cash equivalents at end of year
655,475
ALLRIG HOLDCO LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
- 15 -
1
Accounting policies
Company information

Allrig Holdco Limited is a private company limited by shares incorporated in Scotland. The registered office is Cirrus Building 6 International Avenue, A B Z Business Park, Dyce, Aberdeen, Scotland, AB21 0BH. The company's principal activities and nature of its operations are disclosed in the director's report.

 

The group consists of Allrig Holdco Limited and all of its subsidiaries.

 

Financial statements are for the 14 month period to 31 December 2022, although the group did not commence trading until 14 April 2022.

1.1
Accounting convention

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, except as otherwise stated.

The financial statements are prepared in US dollars, which is the functional currency of the group. Monetary amounts in these financial statements are rounded to the nearest $.

The financial statements have been prepared prepared under the historical cost convention. The principal accounting policies adopted are set out below.

1.2
Business combinations

The cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill.

The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date.

 

Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date.

1.3
Basis of consolidation

The consolidated group financial statements consist of the financial statements of the parent company Allrig Holdco Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.

 

All financial statements are made up to 31 December 2022. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

 

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.

ALLRIG HOLDCO LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 16 -
1.4
Going concern

As at 31 December 2022, the net liabilities of the Group are $1,346,615.true

 

The director is required to state whether it is appropriate to adopt the going concern basis of accounting in preparing the financial statements, and to identify any material uncertainties to the Group’s ability to continue as a going concern over a period of at least 12 months from the date of approval of the financial statements.

 

The director has considered this position and the trading outlook for the Group, and has taken account of reasonably possible changes in trading performance by preparing cash flows for the 12 month period, from the date of the approval of the financial statements to 31 March 2025, which based on certain assumptions show that the Group has adequate resources to meet its obligations over the 12 month period.

 

Due to the nature of the markets in which the Group operates and the type of contracts that the Group is able to tender for, there is a short lead time in potential contract awards. The cash flow forecasts for the 12 month period assumes cash flows from new sales contracts which have not yet been awarded.

 

If these contracts were not awarded as the Group has forecast, this would result in a position where the Group would not have sufficient resources to meet its obligations over a period of 12 months.

 

The Group does not have access to an overdraft for short term cashflow if there are delays in payments for customers. This means that the Group will sometimes seek to exercise other mitigations to provide headroom and management of cashflow in the immediate short term.

 

This creates material uncertainties that may cast significant doubt on the Group’s ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern. However, it is the director's view that the Group will have sufficient funds to make payments as they fall due.

1.5
Revenue

Revenue from contracts with customers is recognised when control of the services is transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those services. The Group has generally concluded that it is the principle in its revenue arrangements because it typically controls the services before transferring to the customer.

 

Rendering of services

The Group renders offshore and onshore oil and gas field services. The contracts are of short term nature and revenue for these services is recognised at a point in time when control of the service is transferred to the customer, generally on completion of the services.

 

The Group considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated. In determining the transaction price for the Group sale, the Group considers the effects of variable consideration, the existence of significant financing components, noncash consideration, and consideration payable to the customer (if any). The Group concluded that there was no other separate performance obligation.

 

Variable considerations

If the consideration in a contract includes a variable amount, the Group estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved.

 

ALLRIG HOLDCO LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 17 -
1.6
Goodwill

Goodwill represents the excess of the cost of acquisition of a group of companies over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less impairment losses. Amortisation is calculated to write off the cost of goodwill on a straight-line basis over its estimated useful life of 10 years.

 

The gain on a bargain purchase is recognised in profit or loss in the period of the acquisition.

1.7
Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses. Cost comprises the aggregate amount paid and the fair value of any other consideration given to acquire the asset and includes the cost directly attributable to making the asset capable of operating as intended.

Depreciation is provided on all plant and equipment, other than assets under construction, on a straight-line basis over its expected useful life as follows:

 

Plant and machinery                -    over 2 to 15 years

Fixtures and fittings                -    over 2 to 15 years

Computers                    -    over 2 to 15 years

Motor vehicles                    -    over 2 to 15 years

The carrying values of plant and equipment are reviewed for impairment if events or changes in circumstances indicate the carrying value may not be recoverable, and are written down immediately to their recoverable amount. Useful lives and residual values are reviewed annually and where adjustments are required these are made prospectively.

 

An item of plant or equipment is derecognised upon disposal or where no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the derecognising of the asset is included in the income statement in the period of derecognising.

1.8
Non-current investments

Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

1.9
Impairment of tangible and intangible assets

At each reporting end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.

ALLRIG HOLDCO LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 18 -

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

 

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

1.10
Inventories

Inventories are valued at the lower of cost and net realisable. Costs are those expenses incurred in bringing each product to its present location and condition and are determined using the weighted average method.

 

Net realisable value is based on estimated selling price less any further costs to be incurred on disposal.

1.11
Financial assets

Financial assets are recognised in the Group's statement of financial position when the Group becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of the financial assets.

 

At initial recognition, financial assets classified as fair value through profit and loss are measured at fair value and any transaction costs are recognised in profit or loss. Financial assets not classified as fair value through profit and loss are initially measured at fair value plus transaction costs.

Financial assets at fair value through profit or loss

When any of the above-mentioned conditions for classification of financial assets is not met, a financial asset is classified as measured at fair value through profit or loss. Financial assets measured at fair value through profit or loss are recognized initially at fair value and any transaction costs are recognised in profit or loss when incurred. A gain or loss on a financial asset measured at fair value through profit or loss is recognised in profit or loss, and is included within finance income or finance costs in the statement of income for the reporting period in which it arises.

Financial assets held at amortised cost

Financial instruments are classified as financial assets measured at amortised cost where the objective is to hold these assets in order to collect contractual cash flows, and the contractual cash flows are solely payments of principal and interest. They arise principally from the provision of goods and services to customers (eg trade receivables). They are initially recognised at fair value plus transaction costs directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment where necessary.

ALLRIG HOLDCO LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 19 -
Financial assets at fair value through other comprehensive income

Debt instruments are classified as financial assets measured at fair value through other comprehensive income where the financial assets are held within the group’s business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

 

A debt instrument measured at fair value through other comprehensive income is recognised initially at fair value plus transaction costs directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognised through other comprehensive income are directly transferred to profit or loss when the debt instrument is derecognised.

The parent company has made an irrevocable election to recognize changes in fair value of investments in equity instruments through other comprehensive income, not through profit or loss. A gain or loss from fair value changes will be shown in other comprehensive income and will not be reclassified subsequently to profit or loss. Equity instruments measured at fair value through other comprehensive income are recognized initially at fair value plus transaction cost directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognized through other comprehensive income are directly transferred to retained earnings when equity instrument is derecognized or its fair value substantially decreased. Dividends are recognized as finance income in profit or loss.

Impairment of financial assets

Financial assets, other than those measured at fair value through profit or loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.

1.12
Financial liabilities

The Group recognises financial debt when the Group becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.

Other financial liabilities

Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

Derecognition of financial liabilities

Financial liabilities are derecognised when, and only when, the group’s obligations are discharged, cancelled, or they expire.

1.13
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

ALLRIG HOLDCO LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 20 -
Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.14
Provisions

Provisions are recognised when the group has a legal or constructive present obligation as a result of a past event and it is probable that the Group will be required to settle that obligation, and a reliable estimate can be made of the amount of the obligation.

 

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

 

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

1.15
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of inventories or non-current assets.

 

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

1.16
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.17
Foreign exchange

Transactions in currencies other than US dollar are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

ALLRIG HOLDCO LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
- 21 -
2
Critical accounting estimates and judgements

In the application of the Group's accounting policies, the director is required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

 

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.

Critical judgements
Short-term leases and low-value assets

The Group applied the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applied the lease of low-value assets recognition exemption to leases of office and warehouses that are considered to be low value. Lease payments on short-term leases and leases of low- value assets are recognised as expense on a straightline basis over the lease term.

Where the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be derived from active markets, they are determined using valuation techniques including the discounted cash flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. The judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

Key sources of estimation uncertainty
Allowance for expected credit losses of trade receivables

The Group uses a provision matrix to calculate expected credit losses for trade receivables. The provision rates are based on days past due for groupings of various customer segments that have similar loss patterns. The provision matrix is initially based on the Group’s historical observed default rates. The Group will calibrate the matrix to adjust the historical credit loss experience with forward-looking information. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.

 

Any difference between the amounts actually collected in future periods and the amounts expected will be recognised in the statement of comprehensive income.

Useful lives of property, plant and equipment

The Group's management determines the estimated useful lives of its property and equipment and investment properties for calculating depreciation. This estimate is determined after considering the expected usage of the asset or physical wear and tear. Management reviews the residual value and useful lives annually and future depreciation charge would be adjusted where the management believes the useful lives differ from previous estimates.

Fair value of financial instruments

When the fair value of financial assets and financial liabilities recorded in the statement of financial position cannot be derived from active markets, their fair value is determined using valuation techniques including the discounted cash flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. The judgment includes consideration of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

ALLRIG HOLDCO LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
2
Critical accounting estimates and judgements
(Continued)
- 22 -
Long-term contracts

Determining whether contract revenue and contract costs have been estimated and recognised according to the stage of completion of each contract, ensuring consistency between periods.

3
Adoption of new and revised standards and changes in accounting policies

In the current period, the following new and revised standards and interpretations have been adopted by the group and have an effect on the current period or a prior period or may have an effect on future periods:

 

Standards which are in issue but not yet effective

At the date of authorisation of these financial statements, the following standards and interpretations, which have not yet been applied in these financial statements, were in issue but not yet effective (and in some cases had not yet been adopted by the EU):

 

4
Revenue
2022
$
Revenue analysed by class of business
Rendering of services
13,762,065
Sale of parts
2,727,329
16,489,394

The group has elected not to disclose the segmental information by geographical split as it would be prejudicial to the group.

ALLRIG HOLDCO LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
- 23 -
5
Operating (loss)/profit
2022
$
Operating loss for the period is stated after charging/(crediting):
Exchange losses
9,984
Depreciation of property, plant and equipment
141,021
Amortisation of goodwill
34,328
Impairment of goodwill
423,373
Release of negative goodwill to income (Note 26)
(201,236)
6
Auditor's remuneration
2022
Fees payable to the company's auditor and associates:
$
For audit services
Audit of the financial statements of the group and company
60,000
7
Employees

The average monthly number of persons (including directors), since the date of acquisition, employed by the group during the period was:

2022
Number
Operations
45
Sales
7
Administration
21
Total
73

Their aggregate remuneration comprised:

2022
$
Wages and salaries
1,952,588
Social security costs
53,249
Pension costs
13,197
2,019,034
8
Director's remuneration
2022
$
Remuneration for qualifying services
235,312
ALLRIG HOLDCO LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
- 24 -
9
Finance costs
2022
$
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
50,359
10
Income tax expense
2022
$
Current tax
Foreign taxes and reliefs
50,079
50,079

No deferred tax asset has been recognised in relation to unrelieved tax losses due to the uncertainty over the timing of recognition of such losses.

11
Intangible assets
Goodwill
$
Cost
Additions - purchased
457,701
At 31 December 2022
457,701
Amortisation and impairment
Charge for the year
34,328
Impairment loss
423,373
At 31 December 2022
457,701
Carrying amount
At 31 December 2022
-
0

The director has assessed the carrying value of the goodwill at the year-end, and due to the losses recognised across the group has impaired the carrying value of this to £nil.

ALLRIG HOLDCO LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
- 25 -
12
Property, plant and equipment
Plant and machinery
Fixtures and fittings
Computers
Motor vehicles
Total
$
$
$
$
$
Cost
Additions
9,425
296,769
47,723
2,837
356,754
Foreign currency adjustments
-
0
1,653
(15)
-
0
1,638
At 31 December 2022
9,425
298,422
47,708
2,837
358,392
Accumulated depreciation and impairment
Charge for the period
1,752
123,221
14,475
1,573
141,021
At 31 December 2022
1,752
123,221
14,475
1,573
141,021
Carrying amount
At 31 December 2022
7,673
175,201
33,233
1,264
217,371
13
Investments (company)
Non-current
2022
$
Investments in subsidiaries
1,076,000
Investment in subsidiary undertakings
The Company has the following investments in subsidiaries:
Company
Country of Incorporation
Class of Shares Held
Ownership
Allrig Asia PTE Limited
Singapore
Ordinary
100%
Allrig Energy Inc.
USA
Ordinary
100%
Allrig Limited
UK
Ordinary
100%
Allrig AS **
Norway
Ordinary
100%
IRM Energy SA De CV Mexico
Mexico
Ordinary
100%
Allrig Middle East DMCC *
UAE
Ordinary
100%
Allrig India PTE Limited *
India
Ordinary
100%
Allrig Asia Sdn Bhd *
Malaysia
Ordinary
100%
Allrig Repair and Maintenance of Oil and Gas Equipment LLC *
UAE
Ordinary
49%***
* Investment held through subsidairy undertaking.
** Dissolved 8 November 2023.
*** Although the shareholding is 49%, the group has full rights to keep the profits and to settle all liabilities.
Nature of business
All companies in the above table are Oil and Gas Service companies.
ALLRIG HOLDCO LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
- 26 -
14
Inventories
2022
$
Work-in-progress
597,135
Non-part inventories
24,356
621,491
15
Trade and other receivables (group)
2022
$
Trade receivables
5,525,886
Contract assets
1,108,652
VAT recoverable
11,165
Other receivables
666,014
Prepayments
642,727
7,954,444
16
Trade and other receivables (company)
2022
$
Amounts owed by fellow group undertakings
352,613
Other receivables
1
Prepayments
32,475
385,089
ALLRIG HOLDCO LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
- 27 -
17
Financial risk management objectives and policies

The Group’s principal financial liabilities comprise accounts payable and accruals, excluding advance from

customers and VAT payable, deferred consideration, loans from related parties and bank borrowing.

The main purpose of these financial liabilities is to finance the Group’s operations.

 

The Group has various financial assets such as bank balances, cash in hand, trade receivables, amounts due from related parties and deposits.

 

The management has overall responsibility for the Group and oversight of the Group’s risk management framework and for developing and monitoring the Group’s risk management policies. The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions, products and services offered. The Group’s management oversees the management of these risks. The Group through its training and management standards and procedures, aims to develop a disciplined and constructive control environment, in which all the employees understand their roles and obligations.

 

The main risks arising from the Group’s financial instruments are:

 

Interest rate risk

The interest rate risk is the risk that the fair value of future cash flows of financial instrument will fluctuate because of changes in market interest rates.

 

The Group is not exposed to any significant interest rate risk since there is no significant floating interest-bearing assets or liabilities at reporting date.

 

Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Group is exposed to credit risk on its trade receivables, amounts due from related parties, bank balances, deposits and advance to employees as follows:

 

                                        2022

                                        $

Trade receivables                                    5,525,886

Bank balances                                    651,992

Due from related parties                                298,006

Deposits                                        287,323

Advances to employees                                7,966

Total                                        6,771,173

 

Bank balances

Credit risk from balances with banks is managed by the Group’s finance department in accordance with the

Group’s policy. Counterparty credit limits are reviewed and updated throughout the year.

ALLRIG HOLDCO LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
17
Financial risk management objectives and policies
(Continued)
- 28 -

Trade receivables

Credit risks related to trade receivables are managed subject to the Group’s policy, procedures and control relating to customer credit risk management. Credit limits are established for all customers based on the credit quality of customers is assessed by management. Outstanding customer trade receivables are regularly monitored. The requirement for impairment is analysed at each reporting date on an individual basis for major customers. Additionally, a large number of minor trade receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on actually incurred historical data. The Group does not hold collateral as security. The Group’s five largest customers account for 81% of outstanding trade receivables at 31 December 2022. An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses.

 

The provision rates are based on days past due for groupings of various customer segments with similar loss patterns (i.e., by geographical region, product type, customer type and rating). The calculation reflects the probability weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions. The Group does not hold collateral as security. The letters of credit and other forms of credit insurance are considered integral part of trade receivables and considered in the calculation of impairment. Set out below is the information about the credit risk exposure on the Group’s trade receivables using a provision matrix:

 

                                        2022

                                        $

Estimated total gross carrying amount at default                    6,149,526

Expected credit loss %                                10.14%

Expected credit loss                                623,640

Amounts due from related parties

Amounts due from related parties relate to transactions arising in the normal course of business with minimal credit risk. The maximum exposure to credit risk at the reporting date is the carrying value of the financial assets disclosed above.

 

Liquidity risk

The Group limits its liquidity risk by ensuring that adequate internally generated funds, if required, are available. The Group’s terms of service require amounts to be paid within 30-60 days of the date of invoice.The table below summarises the maturities of the Group’s undiscounted financial liabilities at 31 December, based on contractual payment dates and current market interest rates.

 

At 31 December 2022        Less than 3 months    3 to 12 months    1 to 5 years    Total

                $            $        $        $

Trade payables            3,404,526        -        -        3,404,526

Loans from related parties        -            2,299,784    -        2,299,784

Other payables            724,007            -        713,250        1,437,257

Accrued expenses        1,369,874        -        -        1,369,874

Deferred consideration        1,095,112        -        -        1,095,112

Bank borrowing            81,520            147,001        31,134        259,655

Social security and other taxation    27,652            -        -        27,652

Total                6,702,691        2,446,785    744,384        9,893,860

 

 

Currency risk

The Group is not exposed to any significant currency risk as it has the majority of its transactions, assets and liabilities denominated in USD. As the UAE Dirham (AED) is currently pegged to the US Dollar, balances in AED are not considered to represent significant currency risk.

ALLRIG HOLDCO LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
- 29 -
18
Trade and other payables (group)
Current
Non-current
2022
2022
$
$
Trade payables
3,404,526
-
Accruals
1,369,874
-
Deferred consideration
1,095,112
-
Social security and other taxation
27,652
-
Other payables
724,007
713,250
6,621,171
713,250

Terms and conditions of the above financial liabilities:

 

19
Trade and other payables (company)
2022
$
Trade payables
209,698
Amounts owed to fellow group undertakings
384,409
Accruals
92,000
Deferred consideration
1,095,112
1,781,219
20
Borrowings
Current
Non-current
2022
2022
$
$
Borrowings held at amortised cost:
Bank loans
228,521
31,134
Other loans
2,299,784
-
2,528,305
31,134
ALLRIG HOLDCO LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
20
Borrowings
(Continued)
- 30 -

UK

 

Term loan - USD 43,954

 

During 2020, Allrig Limited received a $60,000 (£50,000) Bounce Back Loan from HSBC Bank UK. Interest on this loan is charged at 2.5%. Repayments of $1,073 (£887) per month over 5 years began in August 2021, with the Final Repayment Date July 2026.

 

The repayment amount and timing of each instalment is based on a fixed interest rate of 2.5% payable on the outstanding principal amount of the Loan and applicable until the Final Repayment Date.

 

Middle East

 

Term loan – USD 215,701

 

During 2022, Allrig Middle East DMCC obtained a term loan amounting to AED 1,030,000 (USD 278,929) for a period of 12 months from a commercial bank based in UAE. The loan carries interest rate of 20.75% per annum. The term loan has been obtained for the purpose of financing working capital.

 

Private loan - USD 2,299,784

 

In 2022, Allrig Middle East DMCC obtained two private loans amounting to USD 1,999,809 and USD 299,975. These loans carry fixed interest rates of 5% and 25% per annum, respectively, and are repayable within one year from the date of loan agreement.

 

21
Provisions for liabilities
2022
$
Loss making provision for the EA1 Contract
864,131
Movements on provisions:
$
At 9 November 2021
-
Additional provisions in the year
864,131
At 31 December 2022
864,131

The provision recognised on the EA1 Contract relates to forecast losses relating to the long term contract.

22
Retirement benefit schemes
Defined contribution schemes

Allrig Limited operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.

The total costs charged to income in respect of defined contribution plans is $13,197.

ALLRIG HOLDCO LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
- 31 -
23
Share capital
2022
2022
Ordinary share capital
Number
$
Issued and fully paid
1 Ordinary share of $1 each
1
1

During the year the Company issued 1 share at par value.

24
Capital risk management

The primary objective of the Group’s capital management is to ensure that it maintains healthy capital ratios in order to support its business and maximise shareholder’s value.

 

The Group manages its capital structure and makes adjustments to it, in light of changes in business conditions. No changes were made in the objectives, policies or processes during the period ended 31 December 2022. Capital comprises share capital and retained earnings/ (accumulated losses) and is measured at $1,346,615 as at 31 December 2022.

The group is not subject to any externally imposed capital requirements.

25
Fair values of financial instruments

Financial instruments comprise financial assets and financial liabilities.

 

Financial assets consist of cash and bank balances, trade receivables, deposits, advances to employees and amount due from related parties. Financial liabilities consist of trade payables, accrued expenses, amounts due to related parties, loans from related parties and bank borrowing.

 

The fair value of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

 

The fair value of the Group's financial assets and liabilities are not materially different from their carrying values largely due to the short-term maturities of these instruments.

ALLRIG HOLDCO LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
- 32 -
26
Acquisitions
Acquisition of a group of companies

On 13 April 2022 the group acquired 100% percent of the issued capital of Allrig Limited, Allrig Asia Pte Ltd and Allrig AS.

Book Value
Adjustments
Fair Value
Net assets of business acquired
$
$
$
Property, plant and equipment
173,636
-
173,636
Inventories
382,112
-
382,112
Trade and other receivables
4,036,478
-
4,036,478
Cash and cash equivalents
250,053
-
250,053
Borrowings
(27,442,579)
27,385,006
(57,573)
Trade and other payables
(10,056,805)
6,489,826
(3,566,979)
Retirement benefit pension scheme
(599,429)
-
(599,429)
Total identifiable net assets
(33,256,534)
33,874,832
618,298
Non-controlling interests
-
Goodwill
457,702
Total consideration
1,076,000
The consideration was satisfied by:
$
Cash
51,836
Deferred consideration
1,024,164
1,076,000
Contribution by the acquired business for the reporting period included in the group statement of comprehensive income since acquisition:
$
Revenue
13,684,475
Loss after tax
(1,280,169)

The adjustment to the fair value of the Borrowings and Trade and Other Payables relates to the forgiveness of intercompany and related party balances, as set out in the Share Purchase Agreement.

ALLRIG HOLDCO LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
26
Acquisitions
(Continued)
- 33 -
Acquisition of a business

On 31 August 2022 the group acquired the trade and certain assets and liabilities of Allrig Corporate.

Book Value
Adjustments
Fair Value
Net assets of business acquired
$
$
$
Property, plant and equipment
49,763
-
49,763
Trade and other receivables
2,097,041
-
2,097,041
Trade and other payables
(1,651,568)
-
(1,651,568)
Total identifiable net assets
495,236
-
495,236
Non-controlling interests
-
Negative goodwill
(201,236)
Total consideration
294,000
The consideration was satisfied by:
$
Cash
294,000
Contribution by the acquired business for the reporting period included in the group statement of comprehensive income since acquisition:
$
Revenue
2,804,919
Profit after tax
140,777

The negative goodwill has been released to the income statement in the period.

27
Related party transactions

Related parties represent associated companies, subsidiaries, directors and key management personnel of the Group, and entities controlled, jointly controlled or significantly influenced by such parties. Pricing policies and terms of these transactions are approved by the Group’s management. Transactions are not necessarily on an arm’s length basis.

 

During the period ended 31 December 2022, Hive Investments US Limited, a company which Robert McInnes was a director of, sold its entire interest in Allrig Limited, Allrig Middle East DMCC, Allrig Asia PTE Ltd and Allrig AS to Allrig Holdco Limited, of which Robert McInnes is the sole director. Under the share purchase agreement, all the outstanding balances due to the Hive Group of Companies up to13 April 2022 have been fully waived.

ALLRIG HOLDCO LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
- 34 -
28
Cash absorbed by operations
2022
$
Loss for the period after tax
(1,459,523)
Adjustments for:
Taxation charged
50,079
Finance costs
50,359
Amortisation and impairment of intangible assets
256,465
Depreciation and impairment of property, plant and equipment
141,021
Increase in provisions
864,131
Movements in working capital:
Increase in inventories
(239,379)
Increase in trade and other receivables
(1,821,243)
Increase in trade and other payables
490,898
Cash absorbed by operations
(1,667,192)
2022-12-312021-11-09falseCCH SoftwareCCH Accounts Production 2023.300Robert McInnesSC714604bus:Consolidated2021-11-092022-12-31SC714604bus:Director12021-11-092022-12-31SC7146042021-11-092022-12-31SC714604bus:RegisteredOfficebus:Consolidated2021-11-092022-12-31SC714604bus:ConsolidatedGroupCompanyAccounts2021-11-092022-12-31SC714604bus:Consolidated2022-12-31SC714604core:ContinuingOperationsbus:Consolidated2021-11-092022-12-31SC714604core:RetainedEarningsAccumulatedLossesbus:Consolidated2021-11-092022-12-31SC714604core:RetainedEarningsAccumulatedLosses2021-11-092022-12-31SC7146042022-12-31SC714604core:CurrentFinancialInstrumentsbus:Consolidated2022-12-31SC714604core:CurrentFinancialInstruments2022-12-31SC714604bus:Consolidated2021-11-08SC714604core:Non-currentFinancialInstrumentsbus:Consolidated2022-12-31SC714604core:ShareCapitalbus:Consolidated2022-12-31SC714604core:OtherReservesSubtotalbus:Consolidated2022-12-31SC714604core:RetainedEarningsAccumulatedLossesbus:Consolidated2022-12-31SC714604core:ShareCapital2022-12-31SC714604core:RetainedEarningsAccumulatedLosses2022-12-31SC714604core:Non-currentFinancialInstruments2022-12-31SC714604core:ShareCapitalbus:Consolidated2021-11-092022-12-31SC714604core:ShareCapital2021-11-092022-12-31SC714604bus:Consolidated12021-11-092022-12-31SC714604core:Goodwillbus:Consolidated2021-11-092022-12-31SC714604core:FinancialInstrumentsFairValueThroughProfitOrLossbus:Consolidated2021-11-092022-12-31SC714604core:Held-to-maturityFinancialAssetsbus:Consolidated2021-11-092022-12-31SC714604core:Available-for-saleFinancialAssetsbus:Consolidated2021-11-092022-12-31SC714604core:ForeignTaxbus:Consolidated12021-11-092022-12-31SC714604core:Goodwillbus:Consolidated2022-12-31SC714604core:FurnitureFittingsbus:Consolidated2021-11-092022-12-31SC714604core:PlantMachinerybus:Consolidated2021-11-092022-12-31SC714604core:ComputerEquipmentbus:Consolidated2021-11-092022-12-31SC714604core:MotorVehiclesbus:Consolidated2021-11-092022-12-31SC714604core:FurnitureFittingsbus:Consolidated2022-12-31SC714604core:PlantMachinerybus:Consolidated2022-12-31SC714604core:ComputerEquipmentbus:Consolidated2022-12-31SC714604core:MotorVehiclesbus:Consolidated2022-12-31SC714604bus:CompanyLimitedByGuarantee2021-11-092022-12-31SC714604bus:FullIFRSbus:Consolidated2021-11-092022-12-31SC714604bus:FullAccounts2021-11-092022-12-31SC714604bus:Auditedbus:Consolidated2021-11-092022-12-31xbrli:purexbrli:sharesiso4217:GBP