The directors present the strategic report for the year ended 31 December 2023.
The company was incorporated on 18 July 2018 to be a holding company providing financing, including equity, for the acquisition of Brent Holding AS and its subsidiaries. On 14 March 2019, Colombo Bidco Limited, a UK entity and a fully owned subsidiary of the company, acquired all the shares in Brent Holding AS, which was the owner of the Tampnet group. Colombo Holdco Ltd is wholly owned by Colombo Investment Holdings Limited, a UK entity.
The profit for the financial year was 148,388 NOK as at 31 December 2023. The company has net assets of 2,926,598 NOK at the year end.
Going concern
The company and group are supported through being self-sufficient on future cashflows in order to secure continued operations. The company and the group meet its day-to-day working capital requirements through its bank facilities. The current economic conditions continue to create uncertainty, due to geopolitical developments, but we also saw a continued good level of oil and gas demand and oil and gas prices leading to increased demand for the group’s products. The group’s forecasts and projections, considering reasonably possible changes in trading performance, show that the group should be able to operate within the level of its current bank facilities.
Having assessed the principal risks and the other relevant matters, the directors consider it appropriate to adopt the going concern basis of accounting in preparing its financial statements. Most of the income is contracted and fixed and scenarios have been run assuming very little income from variable revenue, but which still demonstrate liquidity and compliance within debt covenants.
The group's telecom infrastructure plays a key role in enabling new and cost-effective ways of operating offshore assets. The modern oil industry is developing remote and intelligent operations where more manpower and expertise can be placed onshore and decision making is both improved and accelerated. Consequently, the offshore market demand for low latency, high capacity and reliable telecommunication services is fundamentally strong. In 2023 the market started well and has been strong throughout the year. As a result, investments, and the activity level has been high in general in the offshore industry. This does not only relate to the Oil and Gas Industry but also especially in the energy transition areas such as windfarms as well as early signs of demand coming in the Carbon Capture area. Decommissioning of fixed production units are normal and exploration activity has been on a normal level. These factors have impacted our revenue growth positively.
The group has high expectations for the increasing coverage of the group's 4G network which continued in 2023 as well as starting to plan for the rollout of 5G for the future, in addition to the increased coverage from further extending our Fibre Optic Cable (FOC) network. We have also started to make inroads using new satellite technology, LEO, especially for the Rig market.
Entering the offshore renewable energy sector is a key strategic priority and although early in our development, successful inroads were made into these new markets during the year and we are expecting this development to accelerate during the year.
Our network operations centre performed well delivering continued high-quality services and uptimes to our clients and proving the robustness of our well invested network infrastructure, despite the usual weather related challenges.
The Board of Directors are satisfied with the development of group and the company and results for the period.
The company aims to deliver sustainable value by identifying and responding successfully to risks. Risk management is integrated into the process of planning and performance management at a group level. Monitoring and accountability for the management of these risks occur through quarterly performance reviews at a group level.
Prices and markets
Being a holding company for a group of companies providing telecommunication services to the offshore industry where the oil and gas industry is a large part, the group is susceptible to changes in the oil price. Oil, gas, product prices and margins can be very volatile, and are subject to international supply and demand. A decrease in these prices is likely to have an adverse effect on revenues for our customers, with an increasing risk of delay of offshore projects, decommissioning of oil producing installations or possible insolvency of clients. The group actively seeks to enter into long term agreements with its clients and has a base of such agreements with highly solvent clients. The oil price has been relatively stable during 2022 and 2023 and together with the oil consumption have in general been quite positive for investments in the sector. The impact on clients and thus revenue have been positive, with clients requiring more services than previous years.
Regulatory
The company remains exposed to changes in the regulatory environment such as new laws and regulations (whether imposed by international treaty whereby national or local government in the jurisdiction in which it operates), changes in tax or royalty regimes. Such factors could reduce the company's profitability, limit its opportunities for new access, require it to divest or write down certain assets or curtail certain operations, or affect the adequacy of its provisions, tax, environmental and legal liabilities.
Reporting
External reporting of financial and non-financial data is reliant on the integrity of systems and people. Failure to report data accurately and in compliance with external standards could result in regulatory action, legal liability and damage to the company's reputation.
Safety and operational risks
The nature of the company’s operations exposes the company to a limited range of health, safety, security and environmental risks. In many of the group’s major structural projects, risk allocation and management is shared with third parties, such as contractors, sub-contractors and associates.
The parent company is a holding company and is reliant on its subsidiaries to be profitable. The group revenue is driven by the total capacity of telecommunication services provided annually to the offshore industry. In 2023 the market started well and has been stable throughout the year. As a result, investments have returned to normal, and the activity level has been high in general in the offshore industry. This does not only relate to the Oil and Gas Industry but also especially in the energy transition areas such as windfarms as well as early signs of demand coming in the Carbon Capture area. Decommissioning of fixed production units are back to normal and exploration activity has been on a fairly high level. These factors have impacted our revenue growth positively.
The group has continued to identify and acquire new contract opportunities in the sector and continues to create sales initiatives that are increasing the total capacity of offshore telecommunication services provided to customers.
On behalf of the board
The directors present their annual report and audited financial statements for the year ended 31 December 2023.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The results for the year are set out on page 9.
Preference dividends were paid amounting to NOK 151,686,758. The directors do not recommend payment of a further dividend.
The company’s performance largely reflects interest income and interest expenses received from and paid to other companies within the group. As such the company’s financial performance would be anticipated to be relatively consistent year on year subject to any significant changes in interest rates applied and/ or changes in the level of intercompany indebtedness.
Ernst & Young LLP were appointed as auditors 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.
Directors’ confirmations
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.
Basis for 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 the period to 30 June 2024.
Our responsibilities and the responsibilities of the directors with respect to going concern are
described in the relevant sections of this report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the company’s ability to continue as a going concern.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and directors’ report have been prepared in accordance with applicable legal requirements.
As explained more fully in the directors’ responsibilities statement, 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.
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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management.
We obtained an understanding of the legal and regulatory frameworks that are applicable to the company and determined that the most significant are the Companies Act 2006, UK tax legislation, and UK Health & Safety legislation.
We understood how the Company is complying with those frameworks by performing enquiries from management and those responsible for legal and compliance procedures. We corroborated our enquiries through the review of the following documentation or completion of the following procedures:
Review of all minutes of management meetings held during the year through the most recent meeting held prior to the approval of these financial statements;
Review of the Company’s code of conduct in their employee handbook setting out the key principles and requirements for all staff in relation to compliance with laws and regulations;
Review of accounting policies and disclosures for compliance with FRS 102 and Companies Act 2006 requirements; and
Review of any relevant correspondence received from regulatory bodies.
We assessed the susceptibility of the company’s financial statements to material misstatement, including how fraud might occur by holding a discussion within the audit team which included identification of related parties, understanding the Company’s business and its control environment and assessing the inherent risk for relevant assertions at the significant account level. We also held discussion with management to gain an understanding of those areas of the financial statements which were susceptible to fraud, as identified by management. Following these procedures, the fraud risk identified was around manipulation of revenue recognition to increase revenue. We then considered the controls that the Company established to address risks identified by the entity or that otherwise seek to prevent, deter, or detect fraud. We gained an understanding of the entity level controls and policies that the Company applies.
Based on this understanding we designed our audit procedures to identify noncompliance with such laws and regulations. Our procedures involved performing detailed analytical review, reviewing accounting estimates for evidence of management bias, testing of journal entries and enquiries of management regarding their knowledge of any instances of noncompliance with laws and regulations that could impact the financial statements.
A further description of our responsibilities for the audit of the financial statements is located 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.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
Colombo Holdco Limited is a private company in the United Kingdom, limited by shares and incorporated in England and Wales. The registered office is 1 Park Row, Leeds, Yorkshire, England, LS1 5AB.
The financial statements are prepared in NOK which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest NOK 000.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 4 ‘Statement of Financial Position’: Reconciliation of the opening and closing number of shares;
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
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; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
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, 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.
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.
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, 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.
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.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
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.
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.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
The key area of judgment required by the directors is the consideration of the carrying value of investments i.e. subsidiaries and whether there is any requirement for impairment to be recorded in respect of those subsidiaries.
An impairment exists when the carrying value of subsidiary exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from transactions conducted at arm’s length for similar assets or observable market prices less incremental costs for disposing of the asset.
The value in use calculation is based on a DCF model. The cash flows are derived from the budget and prognoses for the next five years and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the performance of the subsidiary being tested. The recoverable amount is most sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes.
The cost of the group audit fee has been primarily borne by Tampnet UK Limited, another company within the group. Of those costs borne by Tampnet UK Limited, the directors consider that the element of that audit fee to be disclosed in respect of the audit of this company's financial statements for the period ended 31 December 2023 is NOK 60,113 (2022 - NOK 48,000).
The average monthly number of persons (including directors) employed by the company during the year was:
No remuneration has been paid to the directors in the period in respect of duties undertaken on behalf of the company.
The actual charge for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:
Investments represent the company's investment in its only direct subsidiary, Colombo Bidco Limited, which is wholly owned by the company as detailed in note 10 below.
Details of the company's subsidiaries at 31 December 2023 are as follows:
Registered office addresses (all UK unless otherwise indicated):
Amounts owed by group undertakings represent loans to its immediate subsidiary, Colombo Bidco Limited. Interest on these advances is charged at 10% per annum on the loans which are repayable on 14 March 2029. No instalments are due to be repaid before the final date of maturity.
Amounts owed to group undertakings are unsecured, repayable on demand and do not attract interest.
Amounts owed to group undertakings represent loans from other companies within the group along with a 500M NOK from both of the 50% shareholders of Colombo Topco Limited, the ultimate parent of the group. Interest on these advances is charged at 10% per annum on the loans which are repayable on 14 March 2029. No instalments are due to be repaid before the final date of maturity.
Loans from group undertakings are as disclosed in note 13 above.
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
2 ordinary shares of 1 EUR (at par value of 9.50 NOK) were issued at par upon incorporation on 18 July 2018.
On 14 March 2019, 9,344,949 ordinary shares at a par value of 1 NOK were issued for 100 NOK per share i.e. each share was issued at a share premium of 99 NOK per share.
On 29 March 2019, 6,885 of shares with a par value of 1 NOK were issued for EUR 1,024 (NOK 9.728) per share and a further one share with a par value of 1 NOK was issued for EUR 15,000,000.
On 23 December 2021, 277,462,295,411 of preference shares were issued at a par value of 0.01 NOK per share.
There is a single class of ordinary and preference shares. There are no restrictions on the distribution of dividends and the repayment of capital.
In accordance with the exemption allowed by section 33.1A of FRS 102, no disclosure is made of transactions with wholly owned member companies of the Colombo Topco Group or investees of the group qualifying as related parties.