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REGISTERED NUMBER: SC171923 (Scotland)









OCEAN KINETICS LIMITED

STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31ST DECEMBER 2023






OCEAN KINETICS LIMITED (REGISTERED NUMBER: SC171923)






CONTENTS OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST DECEMBER 2023




Page

Company Information 1

Strategic Report 2

Report of the Directors 4

Report of the Independent Auditors 6

Income Statement 10

Other Comprehensive Income 11

Balance Sheet 12

Statement of Changes in Equity 13

Cash Flow Statement 14

Notes to the Cash Flow Statement 15

Notes to the Financial Statements 17


OCEAN KINETICS LIMITED

COMPANY INFORMATION
FOR THE YEAR ENDED 31ST DECEMBER 2023







DIRECTORS: J Henderson
S M Strachan





SECRETARY: L W Henderson





REGISTERED OFFICE: Port Business Park
Gremista
Lerwick
Shetland
ZE1 0TW





REGISTERED NUMBER: SC171923 (Scotland)





AUDITORS: The Kelvin Partnership Ltd
Chartered Accountants & Registered Auditors
505 Great Western Road
Glasgow
G12 8HN

OCEAN KINETICS LIMITED (REGISTERED NUMBER: SC171923)

STRATEGIC REPORT
FOR THE YEAR ENDED 31ST DECEMBER 2023

The directors present their strategic report for the year ended 31st December 2023.

REVIEW OF BUSINESS
As shown in the profit and loss account on page 9 the profit for the year before taxation is £2,496,941 (£1,632,813 in 2022) mainly due to a 37% increase in turnover to £17,252,607 (£12,598,468 in 2022).

All sectors have experienced growth this year, particularly Marine and Aquaculture sectors where turnover has doubled. Large contracts successfully completed include decommissioning work, salvage works, cathodic protection and pier maintenance. Contracts include fitting out factor ships and works on decommissioning an oil rig.

The acquisition of Hamnavoe Engineering during the year provides us with a strategic base in Orkney. Our Orkney base has generated new customers as well as put us in a position to better serve existing customers.

We acquired 25% share capital of MMG Ocean Limited, a company based in Ireland, this year. MMG Ocean is performing well and has already generated several mutually beneficial contracts.

The company continues to invest in looking for work in alternative markets and to benefit from its ongoing investment in maintaining accreditations and training its employees to the highest standard.
The company's future work position is encouraging, and the directors are confident of a profitable future.

PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks and uncertainties affecting the company include the following:

Liquidity Risk
The company manages its liquidity risk by managing cash generated by its operations and having access to adequate working capital borrowing facilities, as required.

Business Risk
- Scottish Independence poses a threat, although it is difficult to quantify.
- Much of the existing and new business we are targeting is in England. If Scotland becomes independent it
would threaten our ability to bid and win this work.
- Fluctuations in salmon prices and also uncertainty in the Oil and Gas market continue to be a threat.

Financial risks
- Lack of local skilled labour and expensive accommodation keeps our labour costs high.
- Shortages and delays in getting some materials and increased material costs because of Brexit.
- High Inflation and its effect on material and labour costs.

OCEAN KINETICS LIMITED (REGISTERED NUMBER: SC171923)

STRATEGIC REPORT
FOR THE YEAR ENDED 31ST DECEMBER 2023


FUTURE DEVELOPMENTS

The Directors are confident we will continue to win business in oil and gas, marine, renewable, and utility sectors as well as increase our presence in decommissioning projects. Renewable Energy is a growth industry in Shetland, and we are strategically placed to take advantage. The Space industry is developing in the islands, and we are already achieving contracts.

The company will continue to expand the business by exploring new markets and services both in the UK and abroad and look at the possible future acquisitions of companies as well as organic growth.

Our continued investment in new equipment, machinery and training will allow us to continue to provide new services at cost effective prices. This will help the drive into new markets and allow us to offer a more complete service.

ON BEHALF OF THE BOARD:




S M Strachan - Director


24th September 2024

OCEAN KINETICS LIMITED (REGISTERED NUMBER: SC171923)

REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 31ST DECEMBER 2023

The directors present their report with the financial statements of the company for the year ended 31st December 2023.

PRINCIPAL ACTIVITY
The principal activity of the company in the year under review was that of the provision of engineering and fabrication services.

DIVIDENDS
The total interim dividends for the year ended 31st December, 2023 is £325,000.

RESEARCH AND DEVELOPMENT
During the period the company continued to design, develop and implement engineering solutions for the oil and gas industry.

DIRECTORS
The directors shown below have held office during the whole of the period from 1st January 2023 to the date of this report.

J Henderson
S M Strachan

Other changes in directors holding office are as follows:

M G Boyes ceased to be a director after 31st December 2023 but prior to the date of this report.

DONATIONS
The company made charity donations during the year totalling £25,748.

STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing the Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

-select suitable accounting policies and then apply them consistently;
-make judgements and accounting estimates that are reasonable and prudent;
-prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

OCEAN KINETICS LIMITED (REGISTERED NUMBER: SC171923)

REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 31ST DECEMBER 2023


STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS
So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

ON BEHALF OF THE BOARD:





S M Strachan - Director


24th September 2024

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF
OCEAN KINETICS LIMITED

Opinion
We have audited the financial statements of Ocean Kinetics Limited (the 'company') for the year ended 31st December 2023 which comprise the Income Statement, Other Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and Notes to the Cash Flow Statement, Notes to the Financial Statements, including a summary of 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 31st 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.

Basis for opinion
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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information
The directors are responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon.

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.

In connection with our audit of the financial statements, 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 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 the audit:
- the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and
- the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF
OCEAN KINETICS LIMITED


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 Report of the Directors.

We have nothing to report in respect of the following matters where 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 directors' remuneration specified by law are not made; or
- we have not received all the information and explanations we require for our audit.
- the directors were not entitled to prepare the financial statements in accordance with the small companies regime
and take advantage of the small companies' exemption from the requirement to prepare a Strategic Report or in
preparing the Report of the Directors.

Responsibilities of directors
As explained more fully in the Statement of Directors' Responsibilities set out on page four, 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 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.

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF
OCEAN KINETICS LIMITED


Auditors' responsibilities for the audit of the financial statements
We have been appointed as auditor under section 485 of the Companies Act 2006 and report in accordance with the Acts and relevant regulations made or having effect thereunder.

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 a Report of the Auditors 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:

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outline above, to detect material misstatements in respect of irregularities, including fraud. The extent to which these can detect irregularities, including fraud is detailed below.

To assess the susceptibility of the company's financial statements to material misstatement, including how fraud may occur.

- We enquired of the directors of the companies policies and procedures to detect fraud as well as whether they have knowledge of any actual, suspected or alleged fraud
- Reading Board minutes
- Using analytical procedures to identify any unusual or unexpected transactions

We communicated identified fraud risks throughout the audit team and remained alert to any indications of fraud within the company.

As required by auditing standards we perform procedures to address the risk of management override of controls and in particular that the company's management may be in a position to make inappropriate accounting entries and the risk of bias in accounting estimates and judgements such as prepayments, accruals, depreciation and valuation of contracts.

We did not identify any additional fraud risks.

In determining the audit procedures, we took into account the results of our evaluation and testing of the operating effectiveness of the company's fraud risk management controls.

We also performed procedures including:

- Identifying journal entries to test for all full scope components based on risk criteria and comparing the identified entries to supporting documentation. These included, as relevant, those posted to unusual accounts
- Assessing significant accounting estimates for bias
- Reviewing large and unusual transactions outside the ordinary course of the company's business.
- Identifying undisclosed related parties

We discussed with management matters related to actual or suspected fraud and considered any implications for our audit.

We ensured that the audit team collectively had the necessary competence and skills to recognise non-compliance with laws and regulations.

We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements and through discussion with the directors (as required by auditing standards).

As the company is regulated our assessment of risks involved gaining an understanding of the control environment including the company's procedures for complying with regulatory requirements.

We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit.


REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF
OCEAN KINETICS LIMITED

The potential effect of these laws and regulations on the financial statement varies considerably.

Firstly, the entity is subject to very strict laws and regulations that directly affect the financial statements including financial reporting legislation, including the Companies Act 2006, FRS102, UK Corporate tax laws and UK Vat laws. We assessed the extent of the compliance with these laws and regulations by carrying out a review of the financial statement disclosures and a review of correspondence with the tax authorities.

Secondly the entity is subject to many other laws and regulations including Environmental Waste regulations, the AML regulations, GDPR, Employment law, and Health and Safety, where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements.

Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the directors and management and inspection of regulatory and legal correspondence, if any.

Therefore if a breach of operational regulations is not disclosed to us or evident from the relevant correspondence, an audit will not detect that breach.

Context of the ability of the audit to detect fraud or breaches of laws and regulations
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatement in the financial statements, even though we had properly planned and performed our audit in accordance with accounting standards. For example, the further removed non-compliance with laws and regulations from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standard would identify it.

In addition, with any audit, there remained a higher risk of non-detection of fraud, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

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 a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.




Brian Meldrum CA (Senior Statutory Auditor)
for and on behalf of The Kelvin Partnership Ltd
Chartered Accountants & Registered Auditors
505 Great Western Road
Glasgow
G12 8HN

26th September 2024

OCEAN KINETICS LIMITED (REGISTERED NUMBER: SC171923)

INCOME STATEMENT
FOR THE YEAR ENDED 31ST DECEMBER 2023

31.12.23 31.12.22
Notes £    £   

TURNOVER 3 17,252,607 12,598,468

Cost of sales 11,021,432 7,577,772
GROSS PROFIT 6,231,175 5,020,696

Operating and administrative expenses 3,666,099 3,347,624
2,565,076 1,673,072

Other operating income 70,001 53,377
OPERATING PROFIT 6 2,635,077 1,726,449


Interest payable and similar expenses 7 138,136 93,636
PROFIT BEFORE TAXATION 2,496,941 1,632,813

Tax on profit 8 410,518 46,116
PROFIT FOR THE FINANCIAL YEAR 2,086,423 1,586,697

OCEAN KINETICS LIMITED (REGISTERED NUMBER: SC171923)

OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31ST DECEMBER 2023

31.12.23 31.12.22
Notes £    £   

PROFIT FOR THE YEAR 2,086,423 1,586,697


OTHER COMPREHENSIVE INCOME - -
TOTAL COMPREHENSIVE INCOME
FOR THE YEAR

2,086,423

1,586,697

OCEAN KINETICS LIMITED (REGISTERED NUMBER: SC171923)

BALANCE SHEET
31ST DECEMBER 2023

31.12.23 31.12.22
Notes £    £    £    £   
FIXED ASSETS
Intangible assets 10 60,097 -
Tangible assets 11 7,533,535 6,543,617
Investments 12 218,365 300
7,811,997 6,543,917

CURRENT ASSETS
Stocks 13 1,322,154 1,449,361
Debtors 14 5,724,250 4,463,029
Cash at bank and in hand 193,898 13,464
7,240,302 5,925,854
CREDITORS
Amounts falling due within one year 15 3,541,574 3,188,876
NET CURRENT ASSETS 3,698,728 2,736,978
TOTAL ASSETS LESS CURRENT
LIABILITIES

11,510,725

9,280,895

CREDITORS
Amounts falling due after more than one
year

16

(2,455,453

)

(2,437,849

)

PROVISIONS FOR LIABILITIES 21 (666,915 ) (216,112 )
NET ASSETS 8,388,357 6,626,934

CAPITAL AND RESERVES
Called up share capital 22 10,000 10,000
Retained earnings 23 8,378,357 6,616,934
SHAREHOLDERS' FUNDS 8,388,357 6,626,934

The financial statements were approved by the Board of Directors and authorised for issue on 24th September 2024 and were signed on its behalf by:





S M Strachan - Director


OCEAN KINETICS LIMITED (REGISTERED NUMBER: SC171923)

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31ST DECEMBER 2023

Called up
share Retained Total
capital earnings equity
£    £    £   
Balance at 1st January 2022 10,000 5,904,237 5,914,237

Changes in equity
Dividends - (874,000 ) (874,000 )
Total comprehensive income - 1,586,697 1,586,697
Balance at 31st December 2022 10,000 6,616,934 6,626,934

Changes in equity
Dividends - (325,000 ) (325,000 )
Total comprehensive income - 2,086,423 2,086,423
Balance at 31st December 2023 10,000 8,378,357 8,388,357

OCEAN KINETICS LIMITED (REGISTERED NUMBER: SC171923)

CASH FLOW STATEMENT
FOR THE YEAR ENDED 31ST DECEMBER 2023

31.12.23 31.12.22
Notes £    £   
Cash flows from operating activities
Cash generated from operations 1 2,641,257 1,322,316
Interest paid (123,079 ) (86,657 )
Interest element of hire purchase payments
paid

(15,057

)

(6,979

)
Tax paid - (5,147 )
Net cash from operating activities 2,503,121 1,223,533

Cash flows from investing activities
Purchase of intangible fixed assets (69,343 ) -
Purchase of tangible fixed assets (1,602,763 ) (1,210,255 )
Purchase of fixed asset investments (218,065 ) (300 )
Sale of tangible fixed assets 12,000 -
Net cash from investing activities (1,878,171 ) (1,210,555 )

Cash flows from financing activities
New loans in year - 835,000
Loan repayments in year (298,411 ) (805,285 )
New HP loans in year 637,069 29,977
HP capital repayments in year (221,812 ) (170,189 )
Amount introduced by directors 80,317 721,268
Amount withdrawn by directors (173,542 ) (202,478 )
Equity dividends paid (325,000 ) (874,000 )
Government grants 117,860 73,223
Net cash from financing activities (183,519 ) (392,484 )

Increase/(decrease) in cash and cash equivalents 441,431 (379,506 )
Cash and cash equivalents at beginning of
year

2

(247,533

)

131,973

Cash and cash equivalents at end of year 2 193,898 (247,533 )

OCEAN KINETICS LIMITED (REGISTERED NUMBER: SC171923)

NOTES TO THE CASH FLOW STATEMENT
FOR THE YEAR ENDED 31ST DECEMBER 2023

1. RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM
OPERATIONS
31.12.23 31.12.22
£    £   
Profit before taxation 2,496,941 1,632,813
Depreciation charges 613,404 484,602
(Profit)/loss on disposal of fixed assets (3,313 ) 27,054
Government grants (70,001 ) (53,377 )
Finance costs 138,136 93,636
3,175,167 2,184,728
Decrease/(increase) in stocks 127,207 (643,827 )
Increase in trade and other debtors (1,220,936 ) (127,976 )
Increase/(decrease) in trade and other creditors 559,819 (90,609 )
Cash generated from operations 2,641,257 1,322,316

2. CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts:

Year ended 31st December 2023
31.12.23 1.1.23
£    £   
Cash and cash equivalents 193,898 13,464
Bank overdrafts - (260,997 )
193,898 (247,533 )
Year ended 31st December 2022
31.12.22 1.1.22
£    £   
Cash and cash equivalents 13,464 131,973
Bank overdrafts (260,997 ) -
(247,533 ) 131,973


OCEAN KINETICS LIMITED (REGISTERED NUMBER: SC171923)

NOTES TO THE CASH FLOW STATEMENT
FOR THE YEAR ENDED 31ST DECEMBER 2023

3. ANALYSIS OF CHANGES IN NET DEBT

At 1.1.23 Cash flow At 31.12.23
£    £    £   
Net cash
Cash at bank and in hand 13,464 180,434 193,898
Bank overdrafts (260,997 ) 260,997 -
(247,533 ) 441,431 193,898
Debt
Finance leases (175,859 ) (415,257 ) (591,116 )
Debts falling due within 1 year (298,372 ) (8,816 ) (307,188 )
Debts falling due after 1 year (1,520,877 ) 307,227 (1,213,650 )
(1,995,108 ) (116,846 ) (2,111,954 )
Total (2,242,641 ) 324,585 (1,918,056 )

OCEAN KINETICS LIMITED (REGISTERED NUMBER: SC171923)

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST DECEMBER 2023

1. STATUTORY INFORMATION

Ocean Kinetics Limited is a private company, limited by shares , registered in Scotland. The company's registered number and registered office address can be found on the Company Information page.

The presentation currency of the financial statements is the Pound Sterling (£).


2. ACCOUNTING POLICIES

Basis of preparing the financial statements
These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

Going Concern Basis

The financial statements have been prepared on the going concern basis. The directors believe that the company has adequate resources and support to continue to operate for the foreseeable future.

Turnover
The turnover shown in the profit and loss account represents the sales value of work done during the year, exclusive of Value Added Tax.

Goodwill
Goodwill arising on the acquisition of businesses, representing any excess of the fair value of the consideration given over the fair value of the identifiable assets and liabilities acquired, is capitalised and written off on a straight line basis over its useful economic life of 5 years.

Intangible assets
Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

Tangible fixed assets
Depreciation is provided at the following annual rates in order to write off the cost less estimated residual value of each asset over its estimated useful life.

Freehold Property-2% straight line
Leasehold Property-2% straight line
Boats-8-25% straight line
Plant & Machinery-15-33% straight line
Motor Vehicles-20% straight line

Investments in associates
Investments in associate undertakings are recognised at cost.

Stocks and work in progress
Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.

Where the final outcome of a contract cannot be assessed with reasonable certainty the work in progress is valued at the lower of cost and net realisable value.

Cost includes all direct expenditure and an appropriate proportion of fixed and variable overheads.

Financial instruments
Financial instruments are classified and accounted for, according to the substance of the contractual arrangement, as either financial assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

OCEAN KINETICS LIMITED (REGISTERED NUMBER: SC171923)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31ST DECEMBER 2023

2. ACCOUNTING POLICIES - continued

Taxation
Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Research and development
Expenditure on research and development is included within the profit and loss account in the year in which it is incurred.

Hire purchase and leasing commitments
Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the lease.

Assets held under hire purchase agreements are capitalised and disclosed under tangible fixed assets at their fair value. The capital elements of the future payments are treated as a liability and the interest is charged to the profit and loss account on a straight line basis.

Pension costs and other post-retirement benefits
The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate.

Deferred government grants
Deferred government grants in respect of capital expenditure are treated as deferred income and are credited to the profit and loss account over the estimated useful life of the assets to which they relate.

Long term contracts
The company classifies as long term those contracts where the contract activity extends over more than one accounting period.

The amount recognised as turnover represents the value of work carried out during the year. Where the outcome of a contract can be assessed with reasonable certainty attributable profit is recognised in proportion to the amount of turnover recognised in the financial statements. Full provision is made for any foreseeable losses and these are included in accruals under creditors due within one year.

Where the amount recognised as turnover exceeds the payments on account received and receivable in respect of that contract, the balance is included in debtors as amounts recoverable on contracts. Retentions and payments on account receivable are included in debtors. Payments on account received in excess of the value of work done are included in creditors.

OCEAN KINETICS LIMITED (REGISTERED NUMBER: SC171923)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31ST DECEMBER 2023

2. ACCOUNTING POLICIES - continued

Exceptional item
The company defines exceptional items as material items which derive from events or transactions that fall within the ordinary activities of the company and which individually, or, if of a similar type, in aggregate, need to be disclosed by virtue of their size or incidence if the financial statements are to give a true and fair view.

3. TURNOVER

The turnover and profit before taxation are attributable to the one principal activity of the company.

An analysis of turnover by geographical market is given below:

31.12.23 31.12.22
£    £   
United Kingdom 16,955,903 10,995,468
Europe 296,704 1,376,442
United States of America - 226,558
17,252,607 12,598,468

4. EMPLOYEES AND DIRECTORS
31.12.23 31.12.22
£    £   
Wages and salaries 3,522,968 3,156,331
Social security costs 367,776 367,686
Other pension costs 244,536 203,402
4,135,280 3,727,419

The average number of employees during the year was as follows:
31.12.23 31.12.22

Production 66 62
Admin and management 14 12
80 74

5. DIRECTORS' EMOLUMENTS
31.12.23 31.12.22
£    £   
Directors' remuneration 133,267 146,025
Directors' pension contributions to money purchase schemes 53,710 62,424

The number of directors to whom retirement benefits were accruing was as follows:

Money purchase schemes 3 3

OCEAN KINETICS LIMITED (REGISTERED NUMBER: SC171923)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31ST DECEMBER 2023

6. OPERATING PROFIT

The operating profit is stated after charging/(crediting):

31.12.23 31.12.22
£    £   
Hire of equipment 1,102,568 735,858
Other operating leases 288,867 269,134
Depreciation - owned assets 604,158 484,601
(Profit)/loss on disposal of fixed assets (3,313 ) 27,054
Goodwill amortisation 9,246 -
Auditors' remuneration 15,000 15,000
Foreign exchange differences 3,465 (106 )
Amortisation of government grants re fixed assets (83,495 ) (71,351 )

7. INTEREST PAYABLE AND SIMILAR EXPENSES
31.12.23 31.12.22
£    £   
Bank overdraft interest 2,161 6,681
Bank loan interest 120,918 79,960
Interest on overdue tax, etc - 16
Hire purchase interest 15,057 6,979
138,136 93,636

8. TAXATION

Analysis of the tax charge
The tax charge on the profit for the year was as follows:
31.12.23 31.12.22
£    £   
Current tax:
UK corporation tax (21,084 ) -
(Over)/under provision prior year (19,201 ) (14 )
Total current tax (40,285 ) (14 )

Deferred tax 450,803 46,130
Tax on profit 410,518 46,116

OCEAN KINETICS LIMITED (REGISTERED NUMBER: SC171923)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31ST DECEMBER 2023

8. TAXATION - continued

Reconciliation of total tax charge included in profit and loss
The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The difference is explained below:

31.12.23 31.12.22
£    £   
Profit before tax 2,496,941 1,632,813
Profit multiplied by the standard rate of corporation tax in the UK of 25%
(2022 - 19%)

624,235

310,234

Effects of:
Expenses not deductible for tax purposes 785 7,627
Capital allowances in excess of depreciation (219,156 ) (54,813 )
Utilisation of tax losses (165,159 ) (2,979 )
Adjustments to tax charge in respect of previous periods (19,201 ) (14 )
Research and development enhancement (247,636 ) (245,372 )
Research and development expenditure credit 6,931 4,504

Refund for R&D tax credits (21,084 ) (19,201 )
Deferred tax movement 450,803 46,130
Total tax charge 410,518 46,116

The company has trading losses available to carry forward of approximately £994,000 (2022: £1,655,000). These losses have been included in the deferred tax calculation.

OCEAN KINETICS LIMITED (REGISTERED NUMBER: SC171923)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31ST DECEMBER 2023

9. DIVIDENDS
31.12.23 31.12.22
£    £   
A Ordinary shares of £1 each
Dividends paid on ordinary
shares - 145,500
B Ordinary shares of £1 each
Dividends paid on ordinary
shares 75,000 481,000
C Ordinary shares of £1 each
Dividends paid on ordinary
shares 20,000 30,500
D Ordinary shares of £1 each
Dividends paid on ordinary
shares - 2,000
E Ordinary shares of £1 each
Dividends paid on ordinary
shares - 10,000
F Ordinary shares of £1 each
Dividends paid on ordinary
shares 20,000 51,000
G Ordinary shares of £1 each
Dividends paid on ordinary
shares 30,000 22,000
H Ordinary shares of £1 each
Dividends paid on ordinary
shares 30,000 22,000
I Ordinary shares of £1 each
Dividends paid on ordinary
shares 30,000 22,000
J Ordinary shares of £1 each
Dividends paid on ordinary
shares 30,000 22,000
K Ordinary shares of £1 each
Dividends paid on ordinary
shares 30,000 22,000
L Ordinary shares of £1 each
Dividends paid on ordinary
shares 30,000 22,000
M Ordinary shares of £1 each
Dividends paid on ordinary
shares 30,000 22,000
325,000 874,000

OCEAN KINETICS LIMITED (REGISTERED NUMBER: SC171923)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31ST DECEMBER 2023

10. INTANGIBLE FIXED ASSETS
Goodwill
£   
COST
Additions 69,343
At 31st December 2023 69,343
AMORTISATION
Amortisation for year 9,246
At 31st December 2023 9,246
NET BOOK VALUE
At 31st December 2023 60,097

11. TANGIBLE FIXED ASSETS
Freehold Short Long Plant and
property leasehold leasehold machinery Totals
£    £    £    £    £   
COST
At 1st January 2023 396,258 1,365,496 3,097,759 4,829,401 9,688,914
Additions 257,150 39,174 - 1,306,439 1,602,763
Disposals - - - (50,383 ) (50,383 )
At 31st December 2023 653,408 1,404,670 3,097,759 6,085,457 11,241,294
DEPRECIATION
At 1st January 2023 - 81,376 606,717 2,457,204 3,145,297
Charge for year 10,177 28,093 61,955 503,933 604,158
Eliminated on disposal - - - (41,696 ) (41,696 )
At 31st December 2023 10,177 109,469 668,672 2,919,441 3,707,759
NET BOOK VALUE
At 31st December 2023 643,231 1,295,201 2,429,087 3,166,016 7,533,535
At 31st December 2022 396,258 1,284,120 2,491,042 2,372,197 6,543,617

Hire purchase agreements

Included within the net book value of £7,533,536 is £1,216,271 (2022: £603,576) relating to assets held under hire purchase agreements. The depreciation charged to the financial statements in the year in respect of such assets amounted to £100,806 (2022: £54,196).

OCEAN KINETICS LIMITED (REGISTERED NUMBER: SC171923)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31ST DECEMBER 2023

12. FIXED ASSET INVESTMENTS
Interest
in
associate
£   
COST
At 1st January 2023 300
Additions 218,065
At 31st December 2023 218,365
NET BOOK VALUE
At 31st December 2023 218,365
At 31st December 2022 300

13. STOCKS
31.12.23 31.12.22
£    £   
Raw materials 1,199,425 1,224,157
Work-in-progress 122,729 225,204
1,322,154 1,449,361

14. DEBTORS
31.12.23 31.12.22
£    £   
Amounts falling due within one year:
Trade debtors 3,464,834 2,732,603
Retention receivable 45,655 38,948
Amounts recoverable on contracts 1,676,110 1,316,669
Other debtors 65,014 64,614
Corporation tax recoverable 72,498 32,213
Prepayments and accrued income 351,489 258,799
5,675,600 4,443,846

Amounts falling due after more than one year:
Retentions receivable 48,650 19,183

Aggregate amounts 5,724,250 4,463,029

Other debtors includes tax payable under CTA 2010 s455 of £63,115 (2022: £63,115) which will be recoverable when the amount owed by J Henderson is repaid.

OCEAN KINETICS LIMITED (REGISTERED NUMBER: SC171923)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31ST DECEMBER 2023

15. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
31.12.23 31.12.22
£    £   
Bank loans and overdrafts (see note 17) 301,972 551,545
Other loans (see note 17) 5,216 7,824
Hire purchase contracts (see note 18) 253,885 129,896
Payments on account 102,126 658,786
Trade creditors 1,235,936 822,935
PAYE & NIC 107,251 98,274
VAT 591,003 195,621
Other creditors 23,357 32,411
Directors' current accounts 231,364 324,589
Accruals and deferred income 598,751 290,577
Deferred government grants 90,713 76,418
3,541,574 3,188,876

16. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE
YEAR
31.12.23 31.12.22
£    £   
Bank loans (see note 17) 1,213,650 1,515,661
Other loans (see note 17) - 5,216
Hire purchase contracts (see note 18) 337,231 45,963
Deferred government grants 904,572 871,009
2,455,453 2,437,849

17. LOANS

An analysis of the maturity of loans is given below:

31.12.23 31.12.22
£    £   
Amounts falling due within one year or on demand:
Bank overdrafts - 260,997
Bank loans 301,972 290,548
Other loans 5,216 7,824
307,188 559,369

Amounts falling due between two and five years:
Bank loans - 2-5 years 974,585 1,158,069
Other loans - 2-5 years - 5,216
974,585 1,163,285

Amounts falling due in more than five years:

Repayable by instalments
Bank loans over 5 years 239,065 357,592

OCEAN KINETICS LIMITED (REGISTERED NUMBER: SC171923)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31ST DECEMBER 2023

18. LEASING AGREEMENTS

Minimum lease payments fall due as follows:

Hire purchase contracts
31.12.23 31.12.22
£    £   
Net obligations repayable:
Within one year 253,885 129,896
Between one and five years 337,231 45,963
591,116 175,859

Non-cancellable operating leases
31.12.23 31.12.22
£    £   
Within one year 18,587 26,127
Between one and five years 311,355 51,735
In more than five years 3,797,059 3,932,366
4,127,001 4,010,228

19. SECURED DEBTS

The following secured debts are included within creditors:

31.12.23 31.12.22
£    £   
Bank overdraft - 260,997
Bank loans 1,515,622 1,806,209
Other loans 5,216 13,040
1,520,838 2,080,246

Securities held over the company's assets are as follows:

1. Bond and floating charge over the company assets.
2. Standard security over lease of land and buildings at Port Business Park, Gremista, Lerwick, Shetland.
3. Standard security over lease of land and buildings at Stronachs building at Port Business Park, Gremista, Lerwick, Shetland.
4. Negative pledge over the lease of Unit 4, Commerce Centre, Aberdeen.

OCEAN KINETICS LIMITED (REGISTERED NUMBER: SC171923)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31ST DECEMBER 2023

20. DEFERRED GOVERNMENT GRANTS

Included in creditors falling due after more than one year are deferred government grants as follows:

31.12.23 31.12.22
£ £
Received and receivable:
At 1st January 2023 1,260,228 1,169,030
Receivable during year 131,354 91,198
At 31st December 2023 1,391,582 1,260,228
Amortisation:
At 1st January 2023 312,801 241.450
Credit to profit and loss
account


83,496


71.351
At 31st December 2023 396,297 312,801

At 31st December 2023 995,285 947,427

21. PROVISIONS FOR LIABILITIES
31.12.23 31.12.22
£    £   
Deferred tax: FA allowances 666,915 216,112

Deferred
tax
£   
Balance at 1st January 2023 216,112
Movement in period 450,803
Balance at 31st December 2023 666,915

22. CALLED UP SHARE CAPITAL

Allotted, issued and fully paid:
Number: Class: Nominal 31.12.23 31.12.22
value: £    £   
7,000 A Ordinary £1 7,000 7,000
1,500 B Ordinary £1 1,500 1,500
200 C Ordinary £1 200 200
200 D Ordinary £1 200 200
200 E Ordinary £1 200 200
200 F Ordinary £1 200 200
100 G Ordinary £1 100 100
100 H Ordinary £1 100 100
100 I Ordinary £1 100 100
100 J Ordinary £1 100 100
100 K Ordinary £1 100 100
100 L Ordinary £1 100 100
100 M Ordinary £1 100 100
10,000 10,000

OCEAN KINETICS LIMITED (REGISTERED NUMBER: SC171923)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31ST DECEMBER 2023

23. RESERVES
Retained
earnings
£   

At 1st January 2023 6,616,934
Profit for the year 2,086,423
Dividends (325,000 )
At 31st December 2023 8,378,357

Dividends proposed after the period end not recognised as a liability amounted to £376,000 (2022: £159,000)

24. PENSION COMMITMENTS

The company operates a defined contribution pension scheme for its employees. The assets of the schemes are held separately from those of the company in independently administered funds. The pension cost charge represents contributions payable by the company to the funds and amounted to £230,198 (2022: £148,403). The unpaid contributions outstanding at the year end included in creditors are £nil (2022: £12,915).

25. CONTINGENT LIABILITIES

There is a contingent liability to repay some of the grants the company received should any of the conditions be breached in the next 2 years.

26. OTHER FINANCIAL COMMITMENTS

As part of its normal trading, the company had outstanding performance bonds at 31st December 2023 and 31st December 2022.

27. RELATED PARTY DISCLOSURES

J Henderson
Director and shareholder

During the year the company rented land and property of which the director was a beneficial owner. The rent paid during the period was £32,229 (2022 - £30,200).

28. ULTIMATE CONTROLLING PARTY

The controlling party is J Henderson.