Registered number: 04742766
Deep Sea Recovery Limited
Unaudited
Financial statements
Information for filing with the registrar
For the year ended 31 October 2023
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Deep Sea Recovery Limited
Chartered accountants' report to the board of directors on the preparation of the unaudited statutory financial statements of Deep Sea Recovery Limited for the year ended 31 October 2023
In order to assist you to fulfil your duties under the Companies Act 2006, we have prepared for your approval the financial statements of Deep Sea Recovery Limited for the year ended 31 October 2023 which comprise the Balance sheet and the related notes from the Company's accounting records and from information and explanations you have given us.
As a practising member firm of the Institute of Chartered Accountants in England and Wales (ICAEW), we are subject to its ethical and other professional requirements which are detailed at https://www.icaew.com /regulation.
This report is made solely to the Board of directors of Deep Sea Recovery Limited, as a body, in accordance with the terms of our engagement letter dated 28 February 2024. Our work has been undertaken solely to prepare for your approval the financial statements of Deep Sea Recovery Limited and state those matters that we have agreed to state to the Board of directors of Deep Sea Recovery Limited, as a body, in this report in accordance with ICAEW Technical Release TECH07/16AAF. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than Deep Sea Recovery Limited and its Board of directors, as a body, for our work or for this report.
It is your duty to ensure that Deep Sea Recovery Limited has kept adequate accounting records and to prepare statutory financial statements that give a true and fair view of the assets, liabilities, financial position and loss of Deep Sea Recovery Limited. You consider that Deep Sea Recovery Limited is exempt from the statutory audit requirement for the year.
We have not been instructed to carry out an audit or review of the financial statements of Deep Sea Recovery Limited. For this reason, we have not verified the accuracy or completeness of the accounting records or information and explanations you have given to us and we do not, therefore, express any opinion on the statutory financial statements.
Kreston Reeves LLP
Chartered Accountants
2nd Floor
168 Shoreditch High Street
London
E1 6RA
26 July 2024
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Deep Sea Recovery Limited
Registered number: 04742766
Balance sheet
As at 31 October 2023
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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The directors consider that the Company is entitled to exemption from audit under section 477 of the Companies Act 2006 and members have not required the Company to obtain an audit for the year in question in accordance with section 476 of the Companies Act 2006.
The directors acknowledge their responsibilities for complying with the requirements of the Companies Act 2006 with respect to accounting records and the preparation of financial statements.
The financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime and in accordance with the provisions of FRS 102 Section 1A - small entities.
The financial statements have been delivered in accordance with the provisions applicable to companies subject to the small companies regime.
The Company has opted not to file the statement of comprehensive income in accordance with provisions applicable to companies subject to the small companies' regime.
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 26 July 2024.
The notes on pages 3 to 10 form part of these financial statements.
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Deep Sea Recovery Limited
Notes to the financial statements
For the year ended 31 October 2023
The Company is a private limited company, incorporated and domiciled in England and Wales. The Company's registered office is 2nd Floor, 168 Shoreditch High Street, London, E1 6RA. The principal activity of the company is that of researching and developing novel engineering technologies for sub-sea flotation devices to be used for the lifting, lowering and handling of heavy equipment and materials for the offshore oil and gas, and renewable energy markets.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with FRS 102 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland' and the requirements of the Companies Act 2006. The disclosure requirements of Section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.
The following principal accounting policies have been applied:
The financial statements have been prepared on a going concern basis despite the company reporting a loss of £58,724 (2022: £10,317), net current liabilities of £545,649 (2022: £419,398) and net liabilities of £635,503 (2022: £577,063) for the year ended 31 October 2023.
Amounts falling due after more than one year, which are due to related parties and previously related parties, have been subordinated in favour of other creditors of the company. The relevant parties have agreed that repayment is flexible, at the discretion of the directors and dependent upon the company having surplus cash flow from trading over and above its day-to-day requirements. It is the directors' current expectation, and that of the creditors, that these balances will not be paid within the next 12 months.
Amounts falling due within 12 months and which are due to the directors, have been subordinated in favour of other short-term creditors. Informal arrangements have been reached with those creditors, to the satisfaction of the directors, such that they will only demand payment once the company has been properly capitalised.
The directors are actively negotiating investment into the company and have been working under a structured programme with advisers and specialist agencies to reposition the company and its offering to the offshore renewables, and other marine sectors, including oil and gas and defence.
Pending proper capitalisation, the directors confirm that they will continue to provide the necessary financial support to the company in order for it to meet its liabilities as and when they fall due and, if necessary, for a period of at least 12 months from the date of approval of these financial statements.
Grants are accounted under the accruals model as permitted by FRS 102. Grants relating to expenditure on tangible fixed assets are credited to profit or loss at the same rate as the depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income.
Grants of a revenue nature are recognised in the Statement of comprehensive income in the same period as the related expenditure.
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Deep Sea Recovery Limited
Notes to the financial statements
For the year ended 31 October 2023
2.Accounting policies (continued)
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
The company recognises internally generated intangible fixed assets at cost less accumulated amortisation and impairment losses.
Expenditure on the development of engineering technologies for sub-sea flotation devices is recognised as an internally generated intangible asset on the basis that an identifiable asset has been created and it is probable that this asset will generate future economic benefits.
All qualifying development expenditure is amortised on a straight-line basis over its useful economic life of ten years starting with the date from which development of the technology is complete and starts generating commercial revenue.
The company maintains comprehensive records to calculate the underlying value of its intellectual property and exploitation rights, despite Financial Reporting Standards restricting the ability to recognise this value on the Balance Sheet.
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
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25% per annum straight line
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33% per annum straight line
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The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
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Deep Sea Recovery Limited
Notes to the financial statements
For the year ended 31 October 2023
2.Accounting policies (continued)
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
The Company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
The Company has elected to apply the recognition and measurement provisions of IFRS 9 Financial Instruments (as adopted by the UK Endorsement Board) with the disclosure requirements of Sections 11 and 12 and the other presentation requirements of FRS 102.
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 trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.
Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
Other financial assets
Other financial assets, which includes investments in equity instruments which are not classified as subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in fair value being recognised in the profit or loss. Where other financial assets are not publicly traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting date.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of
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Deep Sea Recovery Limited
Notes to the financial statements
For the year ended 31 October 2023
2.Accounting policies (continued)
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Financial instruments (continued)
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the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Company after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other payables, bank loans and other loans are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Other financial instruments
Derivatives, including forward exchange contracts, futures contracts and interest rate swaps, are not classified as basic financial instruments. These are initially recognised at fair value on the date the derivative contract is entered into, with costs being charged to the profit or loss. They are subsequently measured at fair value with changes in the profit or loss.
Debt instruments that do not meet the conditions as set out in FRS 102 paragraph 11.9 are subsequently measured at fair value through the profit or loss. This recognition and measurement would also apply to financial instruments where the performance is evaluated on a fair value basis as with a documented risk management or investment strategy.
Derecognition of financial instruments
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Company transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Company will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Company's contractual obligations expire or are discharged or cancelled.
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Deep Sea Recovery Limited
Notes to the financial statements
For the year ended 31 October 2023
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The average monthly number of employees, including directors, during the year was 2 (2022 - 2).
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Charge for the year on owned assets
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Page 7
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Deep Sea Recovery Limited
Notes to the financial statements
For the year ended 31 October 2023
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Prepayments and accrued income
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Creditors: Amounts falling due within one year
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Other taxation and social security
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Included in Accruals is a balance of £85,000 which is secured by a charge over 25% of the company's patent portfolio, the value of which is not reflected in these accounts.
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Creditors: Amounts falling due after more than one year
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Share capital treated as debt
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Deep Sea Recovery Limited
Notes to the financial statements
For the year ended 31 October 2023
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Shares classified as equity
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Allotted, called up and fully paid
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1,000 (2022 - 1,000) Ordinary shares of £0.01 each
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Shares classified as debt
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Allotted, called up and fully paid
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87,879 (2022 - 87,879) 3% Non-cumulative Redeemable Preference Shares shares of £1.00 each
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The earliest redemption date of the Preference Shares is 31st October 2026. Until sufficient profit is earned or new capital subscribed, these share will remain outstanding.
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Share premium account
During the year options over 57 Ordinary Shares were exercised at £5 per share, resulting in a Share Premium of £284.
Profit & loss account
The profit and loss account comprises all current and prior period retained profits and losses.
Share capital
This represents the nominal value of shares that have been issued by the company.
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Deep Sea Recovery Limited
Notes to the financial statements
For the year ended 31 October 2023
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Related party transactions
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During the year P Pritchard advanced the company £790 (2022: £Nil) as a short-term loan and incurred expenses of £2,201 (2022: £1,324 *The comparative figures for prior year have been corrected and restated). At 31 October 2023 £48,800 (2022: £45,809 *The comparative figures for prior year have been corrected and restated) remains due for repayment within 12 months.
During the year R Stevens advanced the company £Nil (2022: £3,050) as a short-term loan and incurred expenses of £2,546 (2022: £5,206 *The comparative figures for prior year have been corrected and restated). At 31 October 2023 £127,555 (2022: £125,008 *The comparative figures for prior year have been corrected and restated) remains due for repayment within 12 months.
During the year, Etwelle Management Limited, a company owned by R Stevens, advanced a working capital loan of £16,000 to the company on an unsecured, interest free basis. This balance is subordinated in favour of other creditors falling due within one year but ranks ahead of repayment obligations to the directors individually.
At 31 October 2023, the company owed £46,127 (2022: £46,127) to P Pritchard and £41,752 (2022: £41,752) to R Stevens in respect of preference shares issued. These amounts are included in Creditors: Amounts owed in more than one year.
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