Company registration number 13885384 (England and Wales)
AEOLIAN OFFSHORE LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
AEOLIAN OFFSHORE LTD
COMPANY INFORMATION
Director
Mr Ian Baylis
Company number
13885384
Registered office
2 Mariners Way
Cowes
Isle of Wight
PO31 8PD
Auditor
Robinson Rice Associates Limited
Chartered Accountants &
Chartered Tax Advisors
30 Crosby Road North
Crosby
Merseyside
L22 4QF
Business address
2 Mariners Way
Cowes
Isle of Wight
PO31 8PD
AEOLIAN OFFSHORE LTD
CONTENTS
Page
Strategic report
1 - 3
Director's report
4 - 5
Director's responsibilities statement
6
Independent auditor's report
7 - 9
Profit and loss account
10
Statement of comprehensive income
12
Balance sheet
11
Statement of changes in equity
13
Statement of cash flows
14
Notes to the financial statements
15 - 25
AEOLIAN OFFSHORE LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The director presents the strategic report for the year ended 31 December 2023.
Review of the business
2023 was a strong year financially and from a service delivery point of view. The key performance indicators set for the year were realised, most notably fleet occupancy, net profit and cash reserve target. Vessel Managers, Seacat Services, safely and successfully delivered 99.6% of the charter days sold, which is a very high technical availability figure. With challenges in the overall crewing market it also underlines strong crew retention.
Since quarter two 2023 market predications have been realised, with a strong outlook for some years to come. This has driven up vessel day rates and increased fleet occupancy as predicted. The secured charter outlook is extremely healthy with 2024 and beyond shaping up to be able to meet and potentially exceed all financial obligations and key performance indicators. In such a fast-paced market it’s very unusual to have this kind of visibility, a clear sign of the renewable energy industry remaining a strong growth sector.
AEOLIAN OFFSHORE LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Principal risks and uncertainties
Strategic risks
Competition in the market is increasing through consolidation by mergers and acquisitions, which is seeing the emergence of some larger operators. However, with the strong local content focus of the fleet, plus Seacat Services brand and service level recognised as market leading, we believe that Aeolian Offshore is in a strong market position.
There is an increasing focus on decarbonising vessel operations to assist in reaching global decarbonisation targets. The market is therefore actively in pursuit of vessels that can assist with these ambitious goals. Therefore, vessel owners and operators are experimenting with several technologies. These include battery hybrid, hydrogen dual fuel, foil optimisation systems and highly efficient hull forms.
All new build vessels incorporate green technologies and there is an active fleet refit programme aimed at decarbonisation.
Financial risks
The company has a significant level of cash flow risk in the form of payment terms on charter hire with large corporate customers. Should a customer default on a payment this can affect cash flow. This risk is managed in a few ways. Firstly, it is mandated by management to have a broad customer base and therefore to not be over exposed to one customer. Secondly, a cash reserve is held in case of late payment and finally the company is supported by its lenders should it be required.
The company has no interest related risk, as vessel loan interest rates are fixed for some time to come.
Vessel loans are provided in Euros and most of the income and expenses are in GBP. As such there can be big differences to loan balances as the company’s base currency is also GBP.
This could pose a corporation tax risk but, as the majority of the company’s activities are covered within the UK tonnage tax regime, this risk is minimal.
Compliance risks
As Seacat Services is a highly professional organisation that is audited and certified to the highest recognised industry accreditations, compliance risk is low.
Financial reporting risks
From a reporting point of view there is a risk that the value of the company’s assets, specifically the vessels, is not represented correctly. However, from the sale of two vessels previously under Seacat Services management, there is not likely to be downward risk on the fleet value compared to book value. Also, an independent professional fleet valuation is carried out annually. The most recent valuation shows a market value close to book value. Finally, the market in which the vessels operate is strengthening and is set to do so for a long period of time. This, combined with higher new build replacement costs, assists with strong fleet values.
Key performance indicators
An extensive set of operational KPI’s are defined with the vessel management company and reported to Aeolian Offshore monthly, quarterly, and annually. Aeolian Offshore has the following own KPI’s agreed by shareholders:
Target fleet occupancy, 85% paid charter days annually.
Minimum cash reserve, £500,000 Sterling.
Minimum Net Profit before tax and FOREX, 5% of gross charter income.
Target Net Profit before tax and FOREX, 15% of gross charter revenue.
EBITDA of c.£7mn GBP.
AEOLIAN OFFSHORE LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
Mr Ian Baylis
Director
2 September 2024
AEOLIAN OFFSHORE LTD
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
The director presents his annual report and financial statements for the year ended 31 December 2023.
Principal activities
The principal activity of the company continued to be that of chartering out crewed seagoing vessels for activities relating to construction and maintenance of offshore wind farms.
Results and dividends
The results for the year are set out on page 10.
No ordinary dividends have been paid during the year. The directors have considered a dividend and voted for a dividend of £500,000 post year end.
Director
The director who held office during the year and up to the date of signature of the financial statements was as follows:
Mr Ian Baylis
Mr R Stoop
(Resigned 15 September 2023)
Financial instruments
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.
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.
The company’s principal foreign currency exposures arise from trading with overseas companies. Company policy permits but does not demand that these exposures may be hedged in order to fix the cost in sterling. This hedging activity involves the use of foreign exchange forward contracts.
Future developments
In June 2023 Aeolian Offshore took delivery of the second in class foil optimised Chartwell Ambitious design, Seacat Sovereign. This vessel continues the logical pathway to decarbonisation and has secured a long-term contract with an established customer.
An order has been placed with Mainstay Marine Solutions in Pembrokeshire, UK, for the construction of a Tier 3 (Ad-blue technology) low emission Hybrid-ready Chartwell Ambitious class to be named Seacat Mayflower. This vessel is being built specifically for a long-term operations contract with an established customer for whom UK local content is extremely important. This vessel will be delivered in August 2024.
The order book is strong for 2024 and beyond with target fleet occupancy of 85% set to be achieved. 2023 realised strong results, and this is set to continue as the market strengthens and continues to benefit from prolonged growth.
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.
AEOLIAN OFFSHORE LTD
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 5 -
Medium-sized companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
On behalf of the board
Mr Ian Baylis
Director
2 September 2024
AEOLIAN OFFSHORE LTD
DIRECTOR'S RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 6 -
The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the director is required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The director is responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
AEOLIAN OFFSHORE LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF AEOLIAN OFFSHORE LTD
- 7 -
Opinion
We have audited the financial statements of Aeolian Offshore Ltd (the 'company') for the year ended 31 December 2023 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows 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 December 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 director's 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 director with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The director is responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
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 director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the director's report have been prepared in accordance with applicable legal requirements.
AEOLIAN OFFSHORE LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF AEOLIAN OFFSHORE LTD
- 8 -
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 director's 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 director
As explained more fully in the director's responsibilities statement, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the director determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the director is responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our 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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation
Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with laws and regulations relate to those laws and regulations that have a direct impact on the financial statements such as the companies act and we considered the extent to which non compliance might have a material effect of the financial statements.
AEOLIAN OFFSHORE LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF AEOLIAN OFFSHORE LTD
- 9 -
Our audit response is based on:
- Enquiry of management, those charged with governance around actual and potential litigation and claims.
- Enquiry of entity staff in tax and compliance functions to identify any instances of non-compliance with laws and regulations.
- Reviewing minutes of meetings of those charged with governance together with legal and professional correspondence for any indication of none compliance.
- We evaluated managements incentives and opportunities for fraudulent manipulation of the Financial statements including manipulations of the results of the company through inappropriate journal entries or bias in assumptions relating to accounting estimates.
-Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.
- Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness.
- Challenging the assumptions and judgements made by management in significant accounting estimates in particular in relation to the carrying value of Vessels
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.
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.
Ms Beverley Rice FCA
Senior Statutory Auditor
For and on behalf of Robinson Rice Associates Limited
23 September 2024
Chartered Accountants
Statutory Auditor
Chartered Accountants &
Chartered Tax Advisors
30 Crosby Road North
Crosby
Merseyside
L22 4QF
AEOLIAN OFFSHORE LTD
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
Year
11 Months
ended
ended
31 December
31 December
2023
2022
Notes
£
£
Turnover
3
17,264,778
11,465,378
Cost of sales
(11,446,276)
(8,608,931)
Gross profit
5,818,502
2,856,447
Administrative expenses
(894,085)
(3,270,234)
Operating profit/(loss)
4
4,924,417
(413,787)
Interest receivable and similar income
6
5,880
7,743,450
Interest payable and similar expenses
7
(1,661,101)
(1,005,162)
Amounts written off investments
8
-
(575,040)
Profit before taxation
3,269,196
5,749,461
Tax on profit
9
(7,418)
13,222
Profit for the financial year
3,261,778
5,762,683
The profit and loss account has been prepared on the basis that all operations are continuing operations.
AEOLIAN OFFSHORE LTD
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 11 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
10
47,806,816
45,094,037
Current assets
Stocks
11
488,501
390,152
Debtors
12
3,172,239
3,046,434
Cash at bank and in hand
1,510,488
650,737
5,171,228
4,087,323
Creditors: amounts falling due within one year
13
(3,970,100)
(3,910,187)
Net current assets
1,201,128
177,136
Total assets less current liabilities
49,007,944
45,271,173
Creditors: amounts falling due after more than one year
14
(39,981,663)
(39,506,670)
Net assets
9,026,281
5,764,503
Capital and reserves
Called up share capital
17
1,820
1,820
Profit and loss reserves
9,024,461
5,762,683
Total equity
9,026,281
5,764,503
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
The financial statements were approved by the board of directors and authorised for issue on 2 September 2024 and are signed on its behalf by:
Mr Ian Baylis
Director
Company registration number 13885384 (England and Wales)
AEOLIAN OFFSHORE LTD
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
Year
Period
ended 31 December
ended 31 December
2023
2022
£
£
Profit for the year
3,261,778
5,762,683
Other comprehensive income
-
-
Total comprehensive income for the year
3,261,778
5,762,683
AEOLIAN OFFSHORE LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 13 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 February 2022
-
Period ended 31 December 2022:
Profit and total comprehensive income
-
5,762,683
5,762,683
Issue of share capital
17
1,820
-
1,820
Balance at 31 December 2022
1,820
5,762,683
5,764,503
Year ended 31 December 2023:
Profit and total comprehensive income
-
3,261,778
3,261,778
Balance at 31 December 2023
1,820
9,024,461
9,026,281
AEOLIAN OFFSHORE LTD
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 14 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from/(absorbed by) operations
19
7,737,898
(3,129,128)
Interest paid
(1,661,101)
(1,005,162)
Corporation tax paid
(396)
Net cash inflow/(outflow) from operating activities
6,076,401
(4,134,290)
Investing activities
Purchase of tangible fixed assets
(5,009,614)
(46,571,155)
Purchase of investments
(575,040)
Interest received
5,880
19
Dividends received
94,172
7,649,259
Net cash used in investing activities
(4,909,562)
(39,496,917)
Financing activities
Proceeds from issue of shares
1,820
Proceeds from new bank loans
2,758,001
42,877,874
Repayment of bank loans
(2,121,949)
(774,204)
Net cash generated from financing activities
636,052
42,105,490
Net increase/(decrease) in cash and cash equivalents
1,802,891
(1,525,717)
Cash and cash equivalents at beginning of year
650,737
Effect of foreign exchange rates
(943,140)
2,176,454
Cash and cash equivalents at end of year
1,510,488
650,737
AEOLIAN OFFSHORE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 15 -
1
Accounting policies
Company information
Aeolian Offshore Ltd is a private company limited by shares incorporated in England and Wales. The registered office is 2 Mariners Way, Cowes, Isle of Wight, PO31 8PD.
1.1
Reporting period
The current accounting period is a 12 month period whilst the previous year was an 11 month period
1.2
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 financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
1.3
Going concern
Atruet the time of approving the financial statements, the director has a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the director continues to adopt the going concern basis of accounting in preparing the financial statements.
1.4
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, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
Turnover comprises charter income and is recognised as when significant risks and rewards have been transferred to the customer.
1.5
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.
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:
Vessels
Depreciated to 50% of their purchase price over 15 years. Refit costs are depreciated over 5 years.
Engines
Expected lifetime 18,000 hours, depreciated per hour operated
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.
AEOLIAN OFFSHORE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
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.
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.
1.8
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.
1.9
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.
AEOLIAN OFFSHORE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 17 -
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.
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.
AEOLIAN OFFSHORE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 18 -
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.
1.10
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.
1.11
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The company is a member of the UK tonnage tax regime which is an alternative method of calculating profits chargeable to corporation tax based on tonnage of the ships operated. This covers the majority of vessels in the company.
For the vessels outside of the UK tonnage tax regime, 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.
Due to being members of the UK tonnage tax regime, no deferred tax has arisen during the year on the tonnage tax vessels.
1.12
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.
AEOLIAN OFFSHORE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the director is required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised 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.
3
Turnover and other revenue
2023
£
£
Turnover analysed by class of business
Chartering vessels
17,264,778
11,465,378
2023
£
£
Other revenue
Interest income
5,880
19
Dividends received
-
7,743,431
4
Operating profit/(loss)
2023
Operating profit/(loss) for the year is stated after charging/(crediting):
£
£
Exchange (gains)/losses
(943,140)
2,176,454
Fees payable to the company's auditor for the audit of the company's financial statements
9,150
9,150
Depreciation of owned tangible fixed assets
2,296,836
1,477,118
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
Number
Number
Total
AEOLIAN OFFSHORE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
5
Employees
(Continued)
- 20 -
Crew are employed by the management company, Seacat Services, as per management agreement, therefore there are no employees during the year.
6
Interest receivable and similar income
2023
£
£
Interest income
Interest on bank deposits
5,880
19
Income from fixed asset investments
Income from shares in group undertakings
7,743,431
Total income
5,880
7,743,450
2023
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
5,880
19
7
Interest payable and similar expenses
2023
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
1,661,101
1,003,695
Other finance costs:
Other interest
1,467
1,661,101
1,005,162
8
Amounts written off investments
2023
£
£
Other gains and losses
-
(575,040)
AEOLIAN OFFSHORE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
9
Taxation
2023
£
£
Current tax
UK corporation tax on profits for the current period
607
396
Deferred tax
Origination and reversal of timing differences
6,811
(13,618)
Total tax charge/(credit)
7,418
(13,222)
The actual charge/(credit) 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
£
£
Profit before taxation
3,269,196
5,749,461
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (: 19.00%)
621,147
1,092,398
Adjustments in respect of prior years
2,000
Effect of change in corporation tax rate
(3,268)
Depreciation on assets not qualifying for tax allowances
18,550
109,194
Other non-reversing timing differences
623
Dividend income
(1,471,251)
Assessable under Tonnage Tax
(634,279)
149,825
Write off of investment
109,257
Taxation charge/(credit) for the year
7,418
(13,222)
AEOLIAN OFFSHORE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
10
Tangible fixed assets
Vessels
Engines
Total
£
£
£
Cost
At 1 January 2023
42,605,907
3,965,248
46,571,155
Additions
4,037,119
972,496
5,009,615
At 31 December 2023
46,643,026
4,937,744
51,580,770
Depreciation and impairment
At 1 January 2023
955,518
521,600
1,477,118
Depreciation charged in the year
1,588,577
708,259
2,296,836
At 31 December 2023
2,544,095
1,229,859
3,773,954
Carrying amount
At 31 December 2023
44,098,931
3,707,885
47,806,816
At 31 December 2022
41,650,389
3,443,648
45,094,037
Debenture including fixed charge over all present freehold and leasehold property; First Fixed Charge over book and other debts, chattels, goodwill and uncalled capital, both present and future; and First Floating Charge over all assets and undertaking both present and future dated 31 August 2022.
11
Stocks
2023
£
£
Raw materials and consumables
488,501
390,152
12
Debtors
2023
Amounts falling due within one year:
£
£
Trade debtors
2,755,096
2,588,775
Other debtors
163,414
202,794
Prepayments and accrued income
246,922
241,247
3,165,432
3,032,816
Deferred tax asset (note 16)
6,807
13,618
3,172,239
3,046,434
AEOLIAN OFFSHORE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
13
Creditors: amounts falling due within one year
2023
Notes
£
£
Bank loans
15
2,758,059
2,597,000
Trade creditors
1,164,821
1,303,469
Corporation tax
607
396
Other creditors
160
172
Accruals and deferred income
46,453
9,150
3,970,100
3,910,187
Security is provided against vessels in the full sum of the loans outstanding
14
Creditors: amounts falling due after more than one year
2023
Notes
£
£
Bank loans and overdrafts
15
39,981,663
39,506,670
Security is provided against vessels in the full sum of the loans outstanding
Amounts included above which fall due after five years are as follows:
Payable by instalments
26,348,106
28,003,394
Payable other than by instalments
2,606,399
2,664,167
28,954,505
30,667,561
15
Loans and overdrafts
2023
£
£
Bank loans
42,739,722
42,103,670
Payable within one year
2,758,059
2,597,000
Payable after one year
39,981,663
39,506,670
The long-term loans are secured by mortgages over vessels
Long term loans are repayable in full at the end of the term with option to renegotiate further terms. Interest rates are charged at an average of 4% on loans.
AEOLIAN OFFSHORE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 24 -
16
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Assets
Assets
2023
Balances:
£
£
Tax losses
6,807
13,618
2023
Movements in the year:
£
Asset at 1 January 2023
(13,618)
Charge to profit or loss
6,811
Asset at 31 December 2023
(6,807)
The deferred tax asset set out above is expected to reverse within 12 months and relates to the utilisation of tax losses against future expected profits of the same period.
The majority of vessels are part of the Tonnage Tax regime. Two vessels are excluded from the regime and the deferred tax is in respect of trading losses arising on those two vessels.
17
Share capital
2023
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
1820 of £1 each
1,820
1,820
1,820
1,820
18
Capital commitments
Amounts contracted for but not provided in the financial statements:
2023
£
£
Acquisition of tangible fixed assets
1,729,810
-
AEOLIAN OFFSHORE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 25 -
19
Cash generated from/(absorbed by) operations
2023
£
£
Profit for the year after tax
3,261,778
5,762,683
Adjustments for:
Taxation charged/(credited)
7,418
(13,222)
Finance costs
1,661,101
1,005,162
Investment income
(5,880)
(7,743,450)
Depreciation and impairment of tangible fixed assets
2,296,835
1,477,118
Foreign exchange gains on cash equivalents
943,140
(2,176,454)
Other gains and losses
-
575,040
Movements in working capital:
Increase in stocks
(98,349)
(390,152)
Increase in debtors
(226,788)
(2,938,644)
(Decrease)/increase in creditors
(101,357)
1,312,791
Cash generated from/(absorbed by) operations
7,737,898
(3,129,128)
20
Analysis of changes in net debt
1 January 2023
Cash flows
Exchange rate movements
31 December 2023
£
£
£
£
Cash at bank and in hand
650,737
1,802,891
(943,140)
1,510,488
Borrowings excluding overdrafts
(42,103,670)
(636,052)
-
(42,739,722)
(41,452,933)
1,166,839
(943,140)
(41,229,234)
AEOLIAN OFFSHORE LTD
MANAGEMENT INFORMATION
FOR THE YEAR ENDED 31 DECEMBER 2023
2023-12-312023-01-01falseCCH SoftwareCCH Accounts Production 2024.210Mr Ian BaylisMr R Stoopfalsetrue138853842023-01-012023-12-3113885384bus:Director12023-01-012023-12-3113885384bus:Director22023-01-012023-12-3113885384bus:RegisteredOffice2023-01-012023-12-31138853842023-12-31138853842022-02-012022-12-3113885384core:RetainedEarningsAccumulatedLosses2022-02-012022-12-3113885384core:RetainedEarningsAccumulatedLosses2023-01-012023-12-31138853842022-12-3113885384core:PlantMachinery2023-12-3113885384core:Non-standardPPEClass1ComponentTotalPropertyPlantEquipment2023-12-3113885384core:PlantMachinery2022-12-3113885384core:Non-standardPPEClass1ComponentTotalPropertyPlantEquipment2022-12-3113885384core:CurrentFinancialInstrumentscore:WithinOneYear2023-12-3113885384core:CurrentFinancialInstrumentscore:WithinOneYear2022-12-3113885384core:Non-currentFinancialInstrumentscore:AfterOneYear2023-12-3113885384core:Non-currentFinancialInstrumentscore:AfterOneYear2022-12-3113885384core:CurrentFinancialInstruments2023-12-3113885384core:CurrentFinancialInstruments2022-12-3113885384core:Non-currentFinancialInstrumentscore:MoreThanFiveYears2023-12-3113885384core:Non-currentFinancialInstrumentscore:MoreThanFiveYears2022-12-3113885384core:ShareCapital2023-12-3113885384core:ShareCapital2022-12-3113885384core:RetainedEarningsAccumulatedLosses2023-12-3113885384core:RetainedEarningsAccumulatedLosses2022-12-3113885384core:ShareCapital2022-01-3113885384core:RetainedEarningsAccumulatedLosses2022-01-3113885384core:ShareCapital2022-02-012022-12-311388538412023-01-012023-12-311388538412022-02-012022-12-311388538422023-01-012023-12-311388538422022-02-012022-12-31138853842022-12-31138853842022-01-3113885384core:PlantMachinery2023-01-012023-12-3113885384core:Non-standardPPEClass1ComponentTotalPropertyPlantEquipment2023-01-012023-12-3113885384core:UKTax2023-01-012023-12-3113885384core:UKTax2022-02-012022-12-311388538432023-01-012023-12-311388538432022-02-012022-12-3113885384core:PlantMachinery2022-12-3113885384core:Non-standardPPEClass1ComponentTotalPropertyPlantEquipment2022-12-3113885384core:Non-currentFinancialInstruments2023-12-3113885384core:Non-currentFinancialInstruments2022-12-3113885384bus:PrivateLimitedCompanyLtd2023-01-012023-12-3113885384bus:FRS1022023-01-012023-12-3113885384bus:Audited2023-01-012023-12-3113885384bus:FullAccounts2023-01-012023-12-31xbrli:purexbrli:sharesiso4217:GBP