NORTH OFFSHORE LIMITED
SC328499
DIRECTORS' REPORT
AND
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
NORTH OFFSHORE LIMITED
COMPANY INFORMATION
Directors
Karl Lewis
Lee Garden
Andrew Hayes
John Campbell
Secretary
John Campbell
Company number
SC328499
Registered office
Saltire House
Blackness Avenue
Altens
Aberdeen
AB12 3PG
Business address
Saltire House
Blackness Avenue
Altens
Aberdeen
AB12 3PG
Auditor
Hall Morrice LLP
6 & 7 Queens Terrace
Aberdeen
AB10 1XL
Bankers
Bank of Scotland
48 Upperkirkgate
Aberdeen
AB10 1BA
Solicitors
Raeburn Christie Clark & Wallace
399 Union Street
Aberdeen
AB11 6BX
NORTH OFFSHORE LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Notes to the financial statements
11 - 23
NORTH OFFSHORE LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 OCTOBER 2023
- 1 -
The directors present the strategic report for the year ended 31 October 2023.
Fair review of the business
The company key performance indicators are turnover, gross profit, net profit, cash in hand and net asset position.
The company has seen turnover increase by 46% on the previous year to £13.5m. The directors are pleased with the performance of the company, which has continued to improve.
The company generated a gross profit of £3.0m (2022 - £2.2m), with a decreased gross margin of 22% (2022 - 24%).
Management have continued to closely monitor costs. This has helped the company to record an operating profit for the year of £1.3m (2022 - £587k) and a profit before tax of £1.2m (2022 - £590k).
At the balance sheet date the company had net assets of £6.1m (2022 - £5.2m) and net current assets of £5.9m (2022 - £4.8m), with a healthy cash position allowing the business to react quickly to any market opportunities or changes.
In addition to the above financial KPI's the company monitor the development, performance and position of the business using other key performance indicators.
The company are committed to health and safety and ensuring that all works are carried out with due care and vigilance to both staff and third parties.
Emphasis is placed on providing high quality products and services for its customers. Through the operation of a Quality Management System in accordance with ISO 9001 the company has maintained this quality during the year. To complement this system the company operates an Environmental Management System in accordance with ISO 14001 and together such standards have improved the overall management of the business. Efficiencies have been found, waste has been minimised and the company is more environmentally conscious.
The company continually strives to meet and improve health and safety, quality, environmental and energy policies.
Principal risks and uncertainties
The principal risk facing the company is the unpredictability of the local economy caused by the changes in oil prices. The directors have given due consideration to the impact on the company of such oil & gas sector downturns and consequently have sought to extend and diversify its client base. Over the past few years considerable work has been undertaken on government backed projects and this has served to alleviate pressures from local economy downturns. As a result, the adverse effect of competition has been de risked and the company’s profit margins have been maintained.
The directors are confident that the company is well placed to meet any challenges, with a strong management team in place and an excellent reserve base. The company has factored risk into their worst-case forecasts and believe that they have adequate funds to trade successfully and meet their liabilities as they fall due. The financial position of the company will continue to be monitored very closely by the directors.
Financial instruments
Financial management policies are set at a group level for the North Group Limited group of companies. The group strategy is to provide a complete refurbishment service both onshore, and offshore, together with the manufacture of specialist joinery and the supply of construction trades people, materials and equipment. The group therefore looks to secure the resources required for the future development of the business and to expand its capabilities, and as a result, the company's activities expose it to a number of financial risks including liquidity risk, interest rate risk, price risk and credit risk.
Liquidity risk
The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.
NORTH OFFSHORE LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 2 -
Interest rate risk
The company is exposed to fair value interest rate risk on its fixed rate borrowings and cash flow interest rate risk on floating rate deposits, bank overdrafts and loans. The company uses interest rate derivatives to manage the mix of fixed and variable rate debt so as to reduce its exposure to changes in interest rates.
Price risk
Contracts are subject to competitive tendering and the directors are confident that the company operates efficiently enough to meet the requirements of the market, and price their products and services appropriately.
Credit risk
Investments of cash surpluses, borrowings and derivative instruments are made through banks and companies which must fulfil credit rating criteria approved by the Board.
All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary.
Future Developments
The company will continue to provide high quality products and services to its client base and to seek new opportunities in the market place in order to continually improve its key performance indicators.
John Campbell
Director
31 July 2024
NORTH OFFSHORE LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 OCTOBER 2023
- 3 -
The directors present their report and audited financial statements for the year ended 31 October 2023.
Principal activities
The principal activity of the company continued to be that of refurbishment of onshore and offshore property.
Results and dividends
The results for the year are set out on page 8.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Karl Lewis
Lee Garden
Andrew Hayes
John Campbell
Adam Howitt
(Appointed 12 March 2024 and resigned 4 June 2024)
Recardo Patrick
(Appointed 12 March 2024 and resigned 4 June 2024)
Auditor
Hall Morrice LLP were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
Statement of directors' responsibilities
The directors are responsible for preparing the Strategic report, 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 United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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 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 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.
NORTH OFFSHORE LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 4 -
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
John Campbell
Director
31 July 2024
NORTH OFFSHORE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF NORTH OFFSHORE LIMITED
- 5 -
Opinion
We have audited the financial statements of North Offshore Limited (the 'company') for the year ended 31 October 2023 which comprise the profit and loss account, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 October 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, 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.
Conclusions relating to going concern
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 Strategic report and the Directors' report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the Strategic report and the Directors' 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.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our 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.
NORTH OFFSHORE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF NORTH OFFSHORE LIMITED
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, as set out in the Directors' report, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
In identifying and assessing the risk of material misstatement due to non-compliance with laws and regulations we have:
Ensured that the engagement team had the appropriate competence, capabilities and skills to identify or recognise non-compliance with laws and regulations;
Identified the laws and regulations applicable to the entity through discussions with directors and management and through our own knowledge of the sector;
Focused on the specific laws and regulations we consider may have a direct effect on the financial statements, including FRS 102, the Companies Act 2006 and tax compliance regulations;
Focused on the specific laws and regulations we consider may have an indirect effect on the financial statements that are central to the entity’s ability to trade including those relating to employees, health and safety, and the environment;
Reviewed the financial statement disclosures and tested to supporting documentation to assess compliance with applicable laws and regulations;
Made enquiries of management and inspected legal correspondence;
Reviewed minutes of meetings of those charged with governance; and
Ensured the engagement team remained alert to instances of non-compliance throughout the audit.
NORTH OFFSHORE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF NORTH OFFSHORE LIMITED
- 7 -
In identifying and assessing the risk of material misstatement due to irregularities, including fraud and how it may occur, and the potential for management bias and the override of controls we have:
Obtained an understanding of the entity’s operations, including the nature of its revenue sources and of its objectives and strategies, to understand the classes of transactions, account balances, expected financial disclosures and business risks that may result in risk of material misstatement;
Obtained an understanding of the internal controls in place to mitigate risks of irregularities, including fraud;
Vouched balances and reconciling items in key control account reconciliations to supporting documentation;
Carried out detailed testing, on a sample basis, to verify the completeness, occurrence, existence and accuracy of transactions and balances;
Carried out detailed testing to verify the completeness, validity, existence and accuracy of income including cut-off testing and ensuring income recognition is in line with stated accounting policies;
Made enquiries of management as to where they consider there was a susceptibility to fraud, and their knowledge of any actual, suspected or alleged fraud;
Tested journal entries to identify any unusual transactions;
Performed analytical procedures to identify any significant or unusual transactions;
Investigated the business rationale behind any significant or unusual transactions; and
Evaluated the appropriateness of accounting policies and the reasonableness of accounting estimates.
We did not identify any matters relating to non-compliance with laws and regulations, or relating to fraud.
Because of the inherent limitations of an audit, there is an unavoidable risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. The risk of not detecting a material misstatement due to fraud is inherently more difficult than detecting those that result from error as fraud may involve intentional concealment, forgery, collusion, omission or misrepresentation. In addition, the further removed any non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
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 them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Robert J C Bain MA CA CTA
Senior Statutory Auditor
For and on behalf of Hall Morrice LLP
Statutory Auditor
Aberdeen
31 July 2024
NORTH OFFSHORE LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 OCTOBER 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
13,490,742
9,238,561
Cost of sales
(10,462,828)
(7,011,685)
Gross profit
3,027,914
2,226,876
Administrative expenses
(1,733,622)
(1,676,422)
Other operating income
33,832
36,050
Operating profit
4
1,328,124
586,504
Interest receivable and similar income
8
46,226
3,048
Fair value gains and losses on investment properties
(150,000)
Profit before taxation
1,224,350
589,552
Tax on profit
9
(267,153)
(71,685)
Profit for the financial year
957,197
517,867
The Statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
NORTH OFFSHORE LIMITED
BALANCE SHEET
AS AT
31 OCTOBER 2023
31 October 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
10
40,297
26,545
Investment properties
11
160,000
310,000
200,297
336,545
Current assets
Stocks
12
19,231
19,986
Debtors
13
4,513,275
3,758,614
Cash at bank and in hand
5,623,835
3,477,275
10,156,341
7,255,875
Creditors: amounts falling due within one year
14
(4,227,100)
(2,423,615)
Net current assets
5,929,241
4,832,260
Total assets less current liabilities
6,129,538
5,168,805
Provisions for liabilities
15
(9,316)
(5,780)
Net assets
6,120,222
5,163,025
Capital and reserves
Called up share capital
18
1
1
Profit and loss reserves
19
6,120,221
5,163,024
Total equity
6,120,222
5,163,025
The financial statements were approved by the board of directors and authorised for issue on 31 July 2024 and are signed on its behalf by:
John Campbell
Director
Company Registration No. SC328499
NORTH OFFSHORE LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 OCTOBER 2023
- 10 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 November 2021
1
4,645,157
4,645,158
Year ended 31 October 2022:
Profit and total comprehensive income for the year
-
517,867
517,867
Balance at 31 October 2022
1
5,163,024
5,163,025
Year ended 31 October 2023:
Profit and total comprehensive income for the year
-
957,197
957,197
Balance at 31 October 2023
1
6,120,221
6,120,222
NORTH OFFSHORE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
- 11 -
1
Accounting policies
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The company has taken advantage of the exemption from disclosing the following information, as permitted by the reduced disclosure regime within FRS102:
Section 7 'Statement of Cash Flows' and Section 3 'Financial Statement Presentation' paragraph 3.17(d);
Section 11 'Basic Financial Instruments' and Section 12 'Other Financial Instrument Issues' - Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument;
Section 33 'Related Party Disclosures' - Compensation for key management personnel.
The company has taken advantage not to disclose transactions and balances with other members of the group.
North Offshore Limited is a wholly owned subsidiary of North Group Limited and the results of North Offshore Limited are included in the consolidated financial statements of North Group Limited which are available from Saltire House, Blackness Avenue, Altens, Aberdeen, AB12 3PG.
1.2
Going concern
At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for at least twelve months from the date of signing the financial statements. The company has obtained written confirmation from the directors that they are willing to provide financial support to the company for a period of at least 12 months from the date of signing the financial statements. Thus the directors have continued to adopt the going concern basis of accounting in preparing the financial statements.true
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts and settlement discounts.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
NORTH OFFSHORE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
1
Accounting policies (continued)
- 12 -
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Tenants improvements
10% Straight line
Plant and machinery
10% - 33.33% Straight line
Fixtures, fittings and equipment
25% - 33.33 Straight line
Motor vehicles
25% Straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.5
Investment properties
Investment properties, which are properties held to earn rentals and/or for capital appreciation, are initially recognised at cost, which includes the purchase costs and any directly attributable expenditure. Subsequently they are measured at fair value at the reporting end date. Changes in fair value are recognised in profit or loss.
1.6
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible 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 company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
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.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. 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.
1.7
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
NORTH OFFSHORE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
1
Accounting policies (continued)
- 13 -
1.8
Work in progress
Where the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the reporting end date. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.
When it is probable that total contract costs will exceed total contract turnover, the expected loss is recognised as an expense immediately.
Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred where it is probable that they will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred. When costs incurred in securing a contract are recognised as an expense in the period in which they are incurred, they are not included in contract costs if the contract is obtained in a subsequent period.
1.9
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.10
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
NORTH OFFSHORE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
1
Accounting policies (continued)
- 14 -
Impairment of financial assets
Financial assets, other than those held at fair value through profit and 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 have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
NORTH OFFSHORE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
1
Accounting policies (continued)
- 15 -
1.11
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.12
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account 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 company’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 liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing 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 profit and loss account, 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 company 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.
1.13
Provisions
Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company 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 the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
1.14
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 stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.15
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
NORTH OFFSHORE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
1
Accounting policies (continued)
- 16 -
1.16
Leases
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
1.17
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
1.18
Foreign exchange
Transactions in currencies other than pounds sterling 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.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are 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 where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows:
Revaluation of investment properties
The company carries its investment properties at fair value, with changes in fair value being recognised in profit or loss. The fair value at each reporting date is normally determined by the directors at estimated market value. Annual professional valuations are not obtained due to the cost involved and the fact that the directors have no intention to sell the investment properties in the medium to long term. Periodic professional valuations are obtained when there is considered to have been a material change in the economic environment. The carrying amount of the investment properties is disclosed in note 11.
Useful economic lives of tangible fixed assets
The annual depreciation charge for tangible assets is sensitive to changes in the estimated useful lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets. See note 10 for the carrying amount of each asset and note 1.4 for the useful economic lives for each class of asset.
Revenue recognition
In recognising revenue with reference to the stage of completion at the year end date, there has to be reliable estimates made of the outcome of each contract, the stage of completion, future costs and collectability of billings. This results in key judgements and estimates which impact upon the results for the year.
NORTH OFFSHORE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 17 -
3
Turnover
The directors are of the opinion that disclosure of the different classes of turnover would be seriously prejudicial to the company's interest. Such disclosure has therefore not been made.
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Property rental income
(13,135)
(36,050)
Government grants
(20,697)
(17,828)
Depreciation of owned tangible fixed assets
19,738
27,746
Profit on disposal of tangible fixed assets
(2,500)
(3,750)
Operating lease charges
140,000
140,000
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
16,800
10,000
In accordance with SI 2008/489 the company has not disclosed the fees payable to the company's auditor for 'Other services' as this information is included in the consolidated financial statements of North Group Limited.
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Management and administration
20
20
Production
50
45
Total
70
65
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
2,443,160
2,062,061
Social security costs
241,395
211,129
Pension costs
53,575
52,942
2,738,130
2,326,132
NORTH OFFSHORE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 18 -
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
55,898
55,053
Company pension contributions to defined contribution schemes
3,760
3,760
59,658
58,813
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2022 - 1).
8
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
45,790
2,217
Other interest income
436
831
Total income
46,226
3,048
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
306,288
112,331
Adjustments in respect of prior periods
(42,671)
(40,550)
Total current tax
263,617
71,781
Deferred tax
Origination and reversal of timing differences
3,536
(96)
Total tax charge
267,153
71,685
Changes to the UK corporation tax rates were substantively enacted as part of Finance Bill 2023 (on 10 January 2023). These changes included an increase in the main rate to 25% from April 2023. Deferred taxes at the balance sheet date, in relation to UK companies, are measured using tax rates enacted as at the balance sheet date (25%).
NORTH OFFSHORE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
9
Taxation (continued)
- 19 -
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Profit before taxation
1,224,350
589,552
Expected tax charge based on the standard rate of corporation tax in the UK of 23% (2022: 19%)
275,724
112,015
Tax effect of expenses that are not deductible in determining taxable profit
562
347
Adjustments in respect of prior years
(42,671)
(40,550)
Other permanent differences
(590)
(1)
Remeasurement of deferred tax for changes in tax rates
351
(23)
Fixed asset differences
33,777
(103)
Taxation charge for the year
267,153
71,685
10
Tangible fixed assets
Tenants improvements
Plant and machinery
Fixtures, fittings and equipment
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 November 2022
13,475
225,542
141,887
144,804
525,708
Additions
33,490
33,490
Disposals
(28,480)
(28,480)
At 31 October 2023
13,475
225,542
141,887
149,814
530,718
Depreciation and impairment
At 1 November 2022
13,475
222,525
139,474
123,689
499,163
Depreciation charged in the year
3,017
1,352
15,369
19,738
Eliminated in respect of disposals
(28,480)
(28,480)
At 31 October 2023
13,475
225,542
140,826
110,578
490,421
Carrying amount
At 31 October 2023
1,061
39,236
40,297
At 31 October 2022
3,017
2,413
21,115
26,545
NORTH OFFSHORE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 20 -
11
Investment properties
2023
£
Fair value
At 1 November 2022
310,000
Net gains or losses through fair value adjustments
(150,000)
At 31 October 2023
160,000
Investment properties comprise of five flats held for rental purposes. The fair value of the investment properties have been arrived at on the basis of a valuation carried out at 30 November 2023 by Allied Surveyors Scotland, who are not connected with the company. The valuations were made on an open market value basis by reference to market evidence of transaction prices for similar properties.
The directors are of the opinion that this valuation is appropriate as at 31 October 2023.
If investment properties were stated on an historical cost basis rather than a fair value basis, the amounts would have been included as follows:
2023
2022
£
£
Cost
310,000
310,000
12
Stocks
2023
2022
£
£
Raw materials and consumables
19,231
19,986
13
Debtors
As restated
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
2,377,905
1,395,333
Gross amounts owed by contract customers
54,941
36,500
Corporation tax recoverable
40,550
Amounts owed by group undertakings
2,000,000
2,250,000
Other debtors
60,316
21,770
Prepayments and accrued income
20,113
14,461
4,513,275
3,758,614
NORTH OFFSHORE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 21 -
14
Creditors: amounts falling due within one year
2023
2022
£
£
Trade creditors
2,881,762
1,186,312
Corporation tax
306,288
112,331
Other taxation and social security
149,223
448,525
Accruals and deferred income
889,827
676,447
4,227,100
2,423,615
The bank holds a bond and floating charge over all assets of the company. There is also a standard security over the premises held by the group at Blackness Avenue, Altens, Aberdeen, AB12 3PG.
15
Provisions for liabilities
2023
2022
£
£
Deferred tax liabilities
16
9,316
5,780
16
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
9,628
6,092
Short term timing differences
(312)
(312)
9,316
5,780
2023
Movements in the year:
£
Liability at 1 November 2022
5,780
Charge to profit or loss
3,536
Liability at 31 October 2023
9,316
NORTH OFFSHORE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 22 -
17
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
53,575
52,942
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
Contributions totalling £2,000 (2022 - £2,000) were payable to the scheme at the end of the year and are included in creditors.
18
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
1
1
1
1
The company's ordinary shares, which carry no right to fixed income, each carry the right to one vote at general meetings of the company.
19
Reserves
Profit and loss reserves
This reserve records the accumulated distributable profits made by the company net of distributions to shareholders.
20
Operating lease commitments
Lessor
At the reporting end date the company had contracted with tenants for the following minimum lease payments:
2023
2022
£
£
Within one year
975
1,465
21
Events after the reporting date
On 12 March 2024, the entire share capital of North Offshore Limited's parent company, North Group Limited was purchased by Dunham Massey Investment Group No6 Ltd. On 4 June 2024, the entire share capital of Dunham Massey Investment Group No6 Ltd was purchased by the previous owners of North Group Limited prior to the 12 March 2024 sale.
22
Directors' transactions
As at 31 October 2023 one of the directors was due the company £50,000 (2022 - £nil). The loan is interest free with no set repayment terms.
NORTH OFFSHORE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 23 -
23
Ultimate controlling party
The largest group in which the results of the Company are consolidated is that headed by North Group Limited incorporated in the United Kingdom. No other group financial statements include the results of the Company. The consolidated accounts for North Group Limited are available to the public and a copy may be obtained from Saltire House, Blackness Avenue, Altens, Aberdeen, AB12 3PG.
24
Company information
North Offshore Limited is a private company limited by shares incorporated in Scotland. The registered office is Saltire House, Blackness Avenue, Altens, Aberdeen, AB12 3PG.
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