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Registered number: 01203356









PIPEX LIMITED









ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 
PIPEX LIMITED
 
 
COMPANY INFORMATION


Directors
C P O'Neil 
I Broughton 




Company secretary
M J Quilter



Registered number
01203356



Registered office
C/O National Oilwell Varco
Stonedale Road, Unit 10

Oldends Lane Industrial Estate

Stonehouse

Gloucestershire

GL10 3RQ




Independent auditor
Ernst & Young LLP

4th Floor

2 Marischal Square

Broad Street

Aberdeen

AB10 1BL





 
PIPEX LIMITED
 

CONTENTS



Page
Strategic Report
1 - 2
Directors' Report
3 - 4
Directors' Responsibilities Statement
5
Independent Auditor's Report
6 - 9
Profit and Loss Account
10
Statement of Comprehensive Income
11
Balance Sheet
12
Statement of Changes in Equity
13
Notes to the Financial Statements
14 - 30

 
PIPEX LIMITED
 
 
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023

Introduction
 
The Directors present their Strategic Report for the year ended 31 December 2023.

Business review
 
The principal activity of the Company was the design, manufacture, supply and installation of innovative composite and thermoplastic products and systems to construction, industrial and military applications.  The Company’s products reduce weight, corrosion, maintenance, time and costs for customers, on projects in industries ranging from oilfield equipment to civil engineering. The Company operated within NOV Inc.'s international Fiber Glass Systems (FGS) business unit.  
On 1 November 2023 the Company sold its trade and assets to the parent company National Oilwell Varco UK Limited in exchange for a note amounting to GBP £5,971,000. The Company is not expected to have any further activity.

The Company's key financial performance indicators during the year were as follows: 

2023
2022
£000
£000



Turnover
12,880
12,957

Gross profit
3,257
3,235

Profit before taxation
1,796
2,999

Equity shareholders' funds
5,971
4,617

Turnover for 2023 was £12,880,000, compared to £12,957,000 in 2022. The Company generated a gross profit of £3,257,000 compared to £3,235,000 in 2022. Profit before taxation decreased from £2,999,000 in 2022 to £1,796,000 in 2023 mainly due to a gain on sale of intangible assets of £1,546,000 during the prior year not repeated.
The profit for the year is the main reason for increase in Equity shareholders’ fund, which increased from £4,617,000 to £5,971,000.
Future Developments
Following the sale of trade and assets during 2023, the Company is not expected to have any further activity and the Directors intend to take appropriate actions so that the Company can be struck off the Register of Companies. Prior to this, a due diligence process would be initiated and concluded. The timescale of this process is dependent on the outcome of the due diligence.

Principal risks and uncertainties
 
Foreign exchange risk
Prior to the business transfer, the Company was exposed to foreign exchange risk given given the Company's reliance on foreign suppliers. In addition, some oilfield sales were denominated in United States dollars and so fluctuations in that currency during the year would directly affect margins when those sales are translated into British pound sterling. The Company managed this risk by recognising when foreign currency exposure is expected and minimises the risk accordingly.  Following the business transfer, there is no longer any foreign exchange risk as the note receivable is denominated in British pound sterling.

Page 1

 
PIPEX LIMITED
 

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

Principal risks and uncertainties (continued)

Legislative risk
When designing a new product, the Company ensures that the legislative requirements of the end user are fully met.
Market risks
The sale of any oilfield equipment or services to the offshore oil and gas industry correlates strongly with the price of oil and drilling activity which is outside the Company's direct control. However, the Directors are confident that the Company is positioned in a manner that will enable it to meet the demands of its markets and business environment.


This report was approved by the board on 23 September 2024 and signed on its behalf.


I Broughton
Director
Page 2

 
PIPEX LIMITED
 
 
 
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023

The Directors present their report and the financial statements for the year ended 31 December 2023.

Results and dividends

The profit for the year, after taxation, amounted to £1,377,000 (2022 - £2,581,000).

No dividends were paid or proposed during either year.

Directors

The Directors who served during the year and to the date of this report were:

C P O'Neil 
R Oudendijk (resigned 30 March 2023)
I Broughton (appointed 30 March 2023)

Future developments

Likely future developments in the business of the Company are discussed in the Strategic Report.

Financial instruments

Following the transfer of trade and assets during 2023, the Company is no longer exposed to any financial instrument risks. During the year the Company was exposed to the following principal risks and uncertainties:
Interest rate risk
Exposure to interest rate risk was limited to movements in the UK and US base rates. However, as the Company had no external debt other than its bank overdraft, its exposure to interest rate risk is considered low. 
Liquidity risk
The Company was a participant in a Zero Balancing Arrangement ("ZBA") cash pool facility headed by its parent undertaking, National Oilwell Varco UK Limited. This means the Company was charged no interest on its negative cash position.  This ZBA arrangement allowed for cash to be available to the Company to assist with working capital and liquidity needs as and when necessary. As such, the Directors considered the Company’s exposure to liquidity risk to be low.
Credit risk
The Company did have an element of credit risk attributable to its trade receivables, but was rigorous in its financial appraisal of potential customers before entering into sales contracts. The Company had a large and geographically diverse customer base which also mitigated the potential exposure on receivables. The amounts presented in the Balance Sheet were shown net of provisions for doubtful receivables. An allowance for impairment had been made where there is an identifiable loss event, or the likelihood of failure to be able to collect amounts based on previous experience and the current business situation for specific customers.
Price risk
The Directors believed that the Company was well placed to mitigate against this risk due to its diversity of product and flexibility of service.

Post balance sheet events

There have been no significant events affecting the Company since the year end.

Page 3

 
PIPEX LIMITED
 
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

Going concern

It is the responsibility of the Directors to prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business. During 2023, the Company has ceased all operational existence and in the near future the Directors intend to take appropriate actions so that the Company can be struck off the Register of Companies. Accordingly, they adopt a basis other than going concern in preparing the financial statements.

Disclosure of information to auditor

Each of the persons who are Directors at the time when this Directors' Report is approved has confirmed that:
 
so far as the Director is aware, there is no relevant audit information of which the Company's auditor is unaware, and

the Director has taken all the steps that ought to have been taken as a Director in order to be aware of any relevant audit information and to establish that the Company's auditor is aware of that information.

Auditor

In accordance with section 487 of the Companies Act 2006, Ernst & Young LLP will be deemed to have been reappointed as the auditor of the Company.
 

This report was approved by the board on 23 September 2024 and signed on its behalf.
 


I Broughton
Director

Page 4

 
PIPEX LIMITED
 
 
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023

The Directors are responsible for preparing the Strategic Report, the Directors' Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 in accordance with Section 10 of FRS 102 and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; 
provide additional disclosures when compliance with the specific requirements in FRS 102 is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Company’s financial position and financial performance;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006They 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.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report and a Directors’ Report, that comply with that law and those regulations. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website.

Page 5

 
 
 
 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF PIPEX LIMITED

Opinion


We have audited the financial statements of Pipex Limited 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 and the related notes 1 to 25, including a summary of significant accounting policiesThe financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards FRS 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.


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 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 United Kingdom, including the Financial Reporting Council'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.


Emphasis of matter – basis of preparation/financial statements prepared on a basis other than going concern


We draw attention to note 2.1 in the financial statements, which explains that trade has ceased, and the Directors intend to take appropriate actions so that the Company can be struck off the Register of Companies and therefore do not consider it to be appropriate to adopt the going concern basis of accounting in preparing the financial statements. Accordingly, the financial statements have been prepared on a basis other than going on concern.
Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are 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 this report, we do not express any form of assurance conclusion thereon. 
 
Page 6

 
 
 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF PIPEX LIMITED (CONTINUED)



Other information (continued)


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 the audit:


the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.


Matters on which we are required to report by exception
 

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.


We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:


adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.


Responsibilities of directors
 

As explained more fully in the Directors' Responsibilities Statement set out on page 5, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.


In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.


Page 7

 
 
 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF PIPEX LIMITED (CONTINUED)

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.


Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management. 
 
We obtained an understanding of the legal and regulatory frameworks that are applicable to the Company and determined that the most significant are those that relate to the reporting framework (FRS 102 and the Companies Act 2006) and the relevant tax compliance regulations in the United Kingdom. In addition, the Company has to comply with laws and regulations relating to its operations, including health and safety, employees, GDPR and anti-bribery and corruption.
We understood how Pipex Limited is complying with those frameworks by making enquiries of management to understand how the Company maintains and communicates its policies and procedures in this area. We corroborated our enquiries through our examination of board minutes and by obtaining copies of communications in these areas, noting there was no contradictory evidence.
We assessed the susceptibility of the Company’s financial statements to material misstatement, including how fraud might occur by making enquiries with management and other employees within the Company to understand the entity's policies and procedure. We also obtained documentation on the entity-level controls environment to determine whether it supports the prevention, detection, and correction of material misstatements, including those that are due to fraud. We considered the risk of management override and determined that revenue recognition may present a fraud risk.
Based on this understanding, we designed our audit procedures to identify non compliance with such laws and regulations. Our procedures involved enquiry with management and considering whether any events or conditions during the audit might have indicated non-compliance with laws and regulations. Our procedures on revenue included using a risk-based approach to agree revenue to contracts and funds received. We also tested the mathematical accuracy of and key inputs to the calculations and formulae used in the percentage of completion calculation.
Our procedures on journal entry testing included a focus on journals meeting our defined risk criteria, including those posted by those charged with governance, based on our understanding of the business and enquiry with management. Where instances of higher risk journals were identified, we performed additional audit procedures to address each identified risk. These procedures included testing transactions back to source information. We incorporated unpredictability into our testing of manual journals and into our testing of revenue recognition.
Our procedures on judgements and estimates made in the financial statements included challenging the assumptions made and models used in determining estimates and sought to obtain both contradictory and corroborative evidence to challenge and/or support estimate inputs.


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 auditor's report.


Page 8

 
 
 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF PIPEX LIMITED (CONTINUED)

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 2006Our 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.





Tom Sanders (Senior statutory auditor)
  
for and on behalf of
Ernst & Young LLP, Statutory Auditor
 
Aberdeen

23 September 2024
Page 9

 
PIPEX LIMITED
 
 
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2023

2023
2022
Note
£000
£000

  

Turnover
     4 
12,880
12,957

Cost of sales
  
(9,623)
(9,722)

Gross profit
  
3,257
3,235

Administrative expenses
  
(1,648)
(1,833)

Other operating income
  
157
17

Gain on disposal of tangible fixed assets
  
-
6

Operating profit
 5 
1,766
1,425

Gain on sale of intangible assets
  
-
1,546

Interest receivable
 9 
30
28

Profit before tax
  
1,796
2,999

Tax on profit
 10 
(419)
(418)

Profit for the financial year
  
1,377
2,581

The notes on pages 14 to 30 form part of these financial statements.

Page 10

 
PIPEX LIMITED
 

STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023

2023
2022
£000
£000


Profit for the financial year

  

1,377
2,581


Other comprehensive income
  
-
-

Total comprehensive income for the year
  
1,377
2,581

The notes on pages 14 to 30 form part of these financial statements.

Page 11

 
PIPEX LIMITED
REGISTERED NUMBER: 01203356

BALANCE SHEET
AS AT 31 DECEMBER 2023

2023
2022
Note
£000
£000

Fixed assets
  

Tangible assets
 11 
-
3,981

  
-
3,981

Current assets
  

Stocks
 12 
-
2,233

Debtors: amounts falling due within one year
 13 
5,971
6,118

  
5,971
8,351

Creditors: amounts falling due within one year
 14 
-
(7,664)

Net current assets
  
 
 
5,971
 
 
687

Total assets less current liabilities
  
5,971
4,668

Creditors: amounts falling due after more than one year
 15 
-
(51)

  

Net assets
  
5,971
4,617


Capital and reserves
  

Called up share capital 
 16 
61
61

Share premium account
 17 
19
19

Capital redemption reserve
 17 
14
14

Share based payment reserve
 17 
-
32

Capital contribution reserve
 17 
2,527
2,527

Profit and loss account
  
3,350
1,964

  
5,971
4,617


The financial statements were approved and authorised for issue by the board and were signed on its behalf on 23 September 2024.

I Broughton
Director

The notes on pages 14 to 30 form part of these financial statements.

Page 12

 
PIPEX LIMITED
 

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


Called up share capital
Share premium account
Capital redemption reserve
Share based payment reserve
Capital contribut-
ion reserve
Profit and loss account
Total equity

£000
£000
£000
£000
£000
£000
£000


At 1 January 2022
61
19
14
50
2,527
(589)
2,082


Comprehensive income for the year

Profit for the year
-
-
-
-
-
2,581
2,581
Total comprehensive income for the year
-
-
-
-
-
2,581
2,581

Equity distribution: excess share based payments recharge (note 17)
-
-
-
-
-
(29)
(29)

Realisation of share based payment reserve (note 17)
-
-
-
(1)
-
1
-

Amounts paid for vested restricted share awards (note 17)
-
-
-
(72)
-
-
(72)

Share based payments (note 18)
-
-
-
55
-
-
55



At 1 January 2023
61
19
14
32
2,527
1,964
4,617


Comprehensive income for the year

Profit for the year
-
-
-
-
-
1,377
1,377
Total comprehensive income for the year
-
-
-
-
-
1,377
1,377

Realisation of share based payment reserve (note 17)
-
-
-
(9)
-
9
-

Amounts paid for vested restricted share awards (note 17)
-
-
-
(112)
-
-
(112)

Share based payments (note 18)
-
-
-
123
-
-
123

Transferred to parent company
-
-
-
(34)
-
-
(34)


At 31 December 2023
61
19
14
-
2,527
3,350
5,971


Page 13

 
PIPEX LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

1.


General information

Pipex Limited is a limited liability company incorporated in England and Wales.The registered office is Stonedale Road, Unit 10, Oldends Lane Industrial Estate, Stonehouse, Gloucestershire, GL10 3RQ. 

2.Accounting policies

 
2.1

Basis of preparation of financial statements

The financial statements have been prepared in accordance with FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ and the Companies Act 2006. It is the responsibility of the Directors to prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business. The Company has ceased all operational existence and in the near future the Directors intend to formally strike off the Company. Accordingly, they adopt a basis other than going concern in preparing the financial statements. No adjustments were necessary to the amounts at which the remaining assets and shareholders' funds are included in these financial statements.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:

 
2.2

Financial Reporting Standard 102 - reduced disclosure exemptions

The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
• the requirements of Section 7 Statement of Cash Flows;
• the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
• the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47,
  11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
• the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a),
  12.29(b) and 12.29A;
• the requirements of Section 26 Share-based Payment paragraphs 26.18(b), 26.19 to 26.21 and
  26.23;
• the requirements of Section 33 Related Party Disclosures paragraph 33.7.
The information required by sections 11, 12 and 26 noted above is included in the consolidated financial statements of NOV Inc. as at 31 December 2023 and these financial statements may be obtained from its principal office at 10353 Richmond Avenue, Houston, Texas, 77042, USA.

Page 14

 
PIPEX LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.3

Foreign currency translation

Functional and presentation currency
The Company's functional and presentation currency is British pound sterling (GBP). The Company's financial statements are prepared in GBP and rounded to the nearest £'000.

Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Profit and Loss Account except when deferred in other comprehensive income as qualifying cash flow hedges.
All foreign exchange gains and losses are presented in the Profit and Loss Account within 'Administrative expenses'.

  
2.4

Research and development

In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. Intangible assets are recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that its cost can be reliably measured. The capitalised development costs are subsequently amortised on a straight line basis over their useful economic lives, which range from 3 to 6 years.
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.

Page 15

 
PIPEX LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.5

Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:

Sale of goods

Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
the Company has transferred the significant risks and rewards of ownership to the buyer;
the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
the amount of revenue can be measured reliably;
it is probable that the Company will receive the consideration due under the transaction; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Rendering of services

Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
the amount of revenue can be measured reliably;
it is probable that the Company will receive the consideration due under the contract;
the stage of completion of the contract at the end of the reporting period can be measured reliably; and
the costs incurred and the costs to complete the contract can be measured reliably.

Construction contracts
Revenue arising from construction contracts is recognised by reference to the stage of completion. Stage of completion is measured by reference to the proportion that costs incurred for work performed to date bear to the estimated total costs. Costs incurred for work performed to date do not include costs relating to future activity, such as for materials or prepayments.

 
2.6

Government grants

Grants are accounted under the accruals model as permitted by FRS 102 and have no specific conditions attached to them. Grants relating to expenditure on tangible fixed assets are credited to profit or loss at the same rate as the depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income.
Grants of a revenue nature, including furlough, are recognised in the Profit and Loss Account in the same period as the related expenditure.

 
2.7

Interest income

Interest income is recognised in profit or loss using the effective interest method.

Page 16

 
PIPEX LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.8

Pensions

The Company operated a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Balance Sheet. The assets of the plan are held separately from the Company in independently administered funds.

 
2.9

Share-based payments

The Company participated in a group share-based payment plan, in which the ultimate parent grants share options and restricted shares directly to the employees of the Company. These share-based payment transactions are treated as equity-settled in the financial statements of the Company as there is no obligation to provide shares to its employees.
The cost of equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted and is recognised as an expense over the vesting period, which ends on the date on which the relevant employees become fully entitled to the award. Fair value is determined using an appropriate pricing model. In valuing equity-settled transactions, no account is taken of any vesting conditions, other than conditions linked to the price of the shares of the ultimate parent company (market conditions). No expense is recognised for awards that do not ultimately vest for failure to meet service conditions or non-market vesting conditions.
At each Balance Sheet date before vesting, the cumulative expense is calculated, representing the extent to which the vesting period has expired and management’s best estimate of the achievement or otherwise of non-market conditions on the number of equity instruments that will ultimately vest as described above. The movement in cumulative expense since the previous Balance Sheet date is recognised in the Profit and Loss Account, with a corresponding entry in equity.
There is a contractual recharge agreement in place requiring the Company to reimburse a fellow group company for the cost of the share-based payments. The cost of these transactions to the Company is measured at fair value, which is established initially at the grant date and at each Balance Sheet date thereafter until the awards are settled. During the vesting period a liability is recognised representing the product of the fair value of the award and the portion of the vesting period expired as at the Balance Sheet date. From the end of the vesting period until settlement, the liability represents the full fair value of the award as at the balance sheet date. The liability recognised during the vesting period and changes in the carrying amount for the liability are recognised in equity as a repayment of capital contribution for the equity-settled awards and anything in excess of that contribution is a distribution.

Page 17

 
PIPEX LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.10

Taxation

The tax expense for the year comprises current and deferred tax. Tax is recognised in the Profit and Loss Account, except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in Other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the Balance Sheet date in the countries where the Company operates and generates income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Balance Sheet date, except that:
 • The recognition of deferred tax assets is limited to the extent that it is probable that they will be  recovered against the reversal of deferred tax liabilities or other future taxable profits; and
 • Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the Balance Sheet date.

 
2.11

Intangible assets

Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses. Intangible assets are amortised on a straight line basis to the Profit and Loss Account over the useful economic life.
The useful lives are determined by reference to the expected period over which economic benefits are expected to be derived. 

 The estimated useful lives range as follows:

Software
-
5
years 

At each reporting date the Company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.

Page 18

 
PIPEX LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.12

Tangible fixed assets

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
At each reporting date the Company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount. 

Land is not depreciated. Depreciation on other assets is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.

The estimated useful lives range as follows:

Freehold buildings
-
35 years
Plant and machinery
-
12 years
Office equipment
-
5 years

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.

 
2.13

Impairment of fixed assets

Assets that are subject to depreciation or amortisation are assessed at each Balance Sheet date to determine whether there is any indication that the assets are impaired.  Where there is any indication that an asset may be impaired, the carrying value of the asset (or cash-generating unit to which the asset has been allocated) is tested for impairment.  An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.  The recoverable amount is the higher of an asset's (or CGU's) fair value less costs to sell and value in use.  For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Non-financial assets that have been previously impaired are reviewed at each Balance Sheet date to assess whether there is any indication that the impairment losses recognised in prior periods may no longer exist or may have decreased.

 
2.14

Stocks

Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a weighted average basis. Work in progress and finished goods include labour and attributable overheads.
At each Balance Sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss. 

Page 19

 
PIPEX LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.15

Debtors

Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

 
2.16

Creditors

Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

 
2.17

Dividends

Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.


3.


Judgements in applying accounting policies and key sources of estimation uncertainty

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the Balance Sheet date and the amounts reported for revenues and expenses during the year. However, the nature of estimation means that actual outcomes could differ from those estimates. The following judgements and estimates have had the most significant effect on amounts recognised in the financial statements.
a. Critical judgements in applying the entity’s accounting policies
In the course of preparing the financial statements, no judgements have been made in the process of applying the Company’s accounting policies, other than those involving estimations (which are described below) that have had a significant effect on the amounts recognised in the financial statements.
b. Critical accounting estimates and assumptions 

(i) Revenue recognition – percentage of completion method
The Company applies the percentage of completion method ("POC") in accounting for construction contracts as outlined in accounting policy 2.5. The use of the POC method requires management to determine the stage of completion by reference to the contract costs incurred for work performed to date in proportion to the estimated total contract costs. Based on this estimated stage of completion, a respective portion of the expected revenue is recognised. If circumstances arise that may change the original estimates of revenues, costs or extent of progress towards completion, estimates are revised. These revisions may result in increases or decreases in estimated revenues and costs and are reflected in the Profit and Loss Account in the period in which the circumstances that give rise to the revision become known. 
Experience, systematic use of the project execution model and focus on core competencies reduce, but do not eliminate, the risk that estimates associated with POC estimates may change significantly. 

Page 20

 
PIPEX LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

4.


Turnover

Turnover represents the amounts derived from provision of goods and services which fall within the Company's ordinary activities, stated net of value added tax.
A geographical analysis of turnover is as follows:


2023
2022
£000
£000



Europe
9,331
6,780

Far East
2,621
1,433

Americas
570
3,988

Middle East
274
35

Africa
84
721

12,880
12,957

An analysis of turnover by category is as follows:

2023
2022
£000
£000



Provision of services and construction contracts
6,773
8,583

Sale of goods
6,107
4,374

12,880
12,957


5.


Operating profit

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

2023
2022
£000
£000

Research & development charged as an expense
117
111

Exchange differences
9
(31)

Operating leases - plant and machinery
47
54

Depreciation of tangible fixed assets (note 11)
241
323

Government grants
(17)
(17)

Impairment of stock
193
139

Auditor's remuneration (note 6)
38
40

Page 21

 
PIPEX LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

6.


Auditor's remuneration

2023
2022
£000
£000

Fees payable to the Company's auditor for the audit of the Company's

 financial statements
38
40


7.


Employees

Staff costs, excluding Directors' remuneration, were as follows:


2023
2022
£000
£000

Wages and salaries
3,556
3,800

Social security costs
349
372

Share based payments (note 18)
91
105

Cost of defined contribution pension scheme (note 21)
178
187

4,174
4,464


On 1 November 2023, all employees were transferred to the parent company, National Oilwell Varco UK Limited. The average monthly number of employees, excluding the Directors, during the year was as follows:


        2023
        2022
            No.
            No.







Administrative and support
15
16



Production
71
77

86
93

Page 22

 
PIPEX LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

8.


Directors' remuneration

2023
2022
£000
£000

Directors' emoluments
481
259

Amounts receivable under long-term incentive schemes
134
67

Company contributions to defined contribution pension schemes
22
12

637
338


The Directors of the Company are also directors of the immediate holding company and fellow UK group companies.
Two of the Directors are employed and paid by the immediate holding company. The Directors do not believe it is practicable to apportion their time, and therefore their remuneration, between services as a Director and employee of the immediate holding company and their services as a Director of fellow group companies.
The other Director was employed and paid by a group company outside the UK. The remuneration attributable to this Director for their service as a Director of the UK group companies, included within the aggregate directors' remuneration above, is represented by the charges borne by the holding Company under a contractual recharge agreement in respect of qualifying services as a Director of the holding company and fellow UK group companies. 
The highest paid Director during the financial year received remuneration of £471,000 
(2022 - £277,000). The value of the Company's contributions paid to a defined contribution pension scheme in respect of the highest paid Director amounted to £16,000 (2022 - £12,000).
During the year retirement benefits were accruing to 2 Directors 
(2022 - 1) in respect of defined contribution pension schemes. 
During the year 2 Directors
 (2022 - 1) received shares in respect of qualifying services and no Directors (2022 - nil) exercised share options.


9.


Interest receivable

2023
2022
£000
£000


Interest receivable from group company
30
28

Page 23

 
PIPEX LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

10.


Taxation


2023
2022
£000
£000

Corporation tax


Current tax on profits for the year
431
23

Adjustments in respect of previous periods
(12)
-


Double taxation relief
-
(23)

Group taxation relief
-
276


419
276

Foreign tax


Foreign tax on income for the year
-
23

Total current tax
419
299

Deferred tax


Adjustments in respect of previous periods
-
(170)

Losses utilised
-
289

Total deferred tax
-
119


Taxation on profit
419
418

Factors affecting tax charge for the year

The tax assessed for the year differs from the standard rate of corporation tax in the UK of 23.52% (2022 -  19%). The differences are explained below:

2023
2022
£000
£000


Profit before tax
1,796
2,999


Profit multiplied by standard rate of corporation tax in the UK of 23.52% (2022 - 19%)
422
570

Effects of:


Expenses not deductible for tax purposes
20
11

Adjustments in respect of previous periods
(12)
(170)

Other timing differences (fixed assets and share options)
(11)
7

Total tax charge for the year
419
418

Page 24

 
PIPEX LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
 
10.Taxation (continued)


Factors that may affect future tax charges

UK corporation tax is calculated at 23.52% (2022 - 19%) of the estimated assessable profit or loss for the year.
As at 31 December 2022, the Company had an unrecognised deferred tax asset of £39,000 in relation to UK tax losses.


11.


Tangible fixed assets





Freehold land
Freehold buildings
Plant and machinery
Office equipment
Total

£000
£000
£000
£000
£000



Cost


At 1 January 2023
227
4,122
4,535
443
9,327


Additions
-
16
109
25
150


Disposals
-
-
(12)
-
(12)


Transfers to parent company
(227)
(4,138)
(4,632)
(468)
(9,465)



At 31 December 2023

-
-
-
-
-



Depreciation


At 1 January 2023
-
2,033
3,061
252
5,346


Charge for the year
-
62
169
10
241


Disposals
-
-
(12)
-
(12)


Transfers to parent company
-
(2,095)
(3,218)
(262)
(5,575)



At 31 December 2023

-
-
-
-
-



Net book value



At 31 December 2023
-
-
-
-
-



At 31 December 2022
227
2,089
1,474
191
3,981

Page 25

 
PIPEX LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

12.


Stocks

2023
2022
£000
£000

Raw materials and consumables
-
2,222

Work in progress (goods to be sold)
-
9

Finished goods and goods for resale
-
2

-
2,233



13.


Debtors

2023
2022
£000
£000


Trade debtors
-
1,283

Amounts owed by parent undertakings
5,971
1,762

Amounts owed by fellow subsidiary undertakings
-
2,275

Other debtors
-
14

VAT receivable
-
44

Prepayments
-
106

Accrued income
-
495

Corporation tax receivable
-
139

5,971
6,118


Trade debtors at 31 December 2022 are stated after provisions for impairment of £nil. 
Amounts owed by parent undertakings at 31 December 2023 is represented by a loan note receivable in respect of the sale of trade and assets to National Oilwell Varco UK Limited, the immediate parent undertaking, on 1 November 2023.
Amounts owed by parent undertakings at 31 December 2022 includes £1,705,000
 represented by a loan facility with NOV International Holdings LLC with principal of $2,030,000 and interest rate of 2.17%, repayable to the Company in whole or in part at any time before the maturity date of 30 September 2025. As the Company has the right to demand early repayment, the balance was presented as due within one year. This loan was transferred to the parent company on 1 November 2023.
Amounts owed by fellow subsidiary undertakings at 31 December 2022 represent balances receivable in the normal course of business and are expected to be settled within 12 months.
None of the other balances are interest bearing.

Page 26

 
PIPEX LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

14.


Creditors: Amounts falling due within one year

2023
2022
£000
£000

Payments received on account
-
604

Trade creditors
-
1,502

Amounts owed to parent undertaking
-
3,640

Amounts owed to fellow subsidiary undertakings
-
406

Group relief
-
276

Accruals
-
646

Deferred income
-
590

-
7,664


None of the above balances are interest bearing.


15.


Creditors: Amounts falling due after more than one year

2023
2022
£000
£000

Deferred government grants
-
51



16.


Share capital

2023
2022
£
£
Allotted, called up and fully paid



24,073 Ordinary A shares of £1 each
24,073
24,073
32,208 Ordinary B shares of £1 each
32,208
32,208
2,985 Ordinary C shares of £1 each
2,985
2,985
1,267 Ordinary D shares of £1 each
1,267
1,267

60,533

60,533

Ordinary shares class A, B, and C have voting rights, rights to dividends and return of capital parri passu attached to them. Ordinary shares class D provide rights to dividends and return of capital parri passu, however have no voting rights attached to them. 


Page 27

 
PIPEX LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

17.


Reserves

Share premium account

This reserve records the amount above the nominal value received for shares issued, less transaction costs.

Capital redemption reserve

The capital redemption reserve represents the nominal value of redeemed shares.

Capital contribution reserve

This reserve records amounts received from fellow group entities, which are not repayable.

Share based payments reserve

At each Balance Sheet date, the cumulative cost of equity-settled transactions with employees is calculated. The movement in cumulative expense since the previous Balance Sheet date is recognised in the Profit and Loss Account, with a corresponding entry in equity. During 2020, a recharge agreement was entered into with the parent company. From 2020 onwards, the parent company recharges the Company annually for the equivalent cost for vested restricted share awards and this is recorded as a reduction to the Share based payment reserve, with a corresponding entry in creditors. The realised element of the Share based payment reserve is transferred annually to the Profit and loss reserve.


18.


Share based payments

All employees and related Share based payments obligations were transferred to National Oilwell Varco UK Limited on 1 November 2023.
Senior Executive Plan
Share options in the company's ultimate parent undertaking, NOV Inc., were granted to senior executives. The exercise price of the options is equal to the closing market price of NOV Inc. common stock on the date of the grant. The options vest over a three year period starting from one year from the date of the grant and expire ten years from the date of the grant. There are no cash settlement alternatives.
Restricted shares
NOV Inc. issued restricted stock awards with no exercise price to officers and key employees in addition to share options. During the year the Company granted restricted shares to key employees at a fair value of £18.11 (2022 - £12.36). These shares will vest in three equal amounts annually on the anniversary of the date of grant.


19.


Contingent liabilities

At the year end there were no contingent liabilities. During the year and the prior year, the parent company, National Oilwell Varco UK Limited entered into guarantees given for performance bonds and contracting agreements on behalf of the Company.  At the 31 December 2023 these amounted to nil (2022 - £1,239,000). Any liability would be borne by the parent company.

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PIPEX LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

20.


Capital commitments


2023
2022
£000
£000


Contracted for but not provided in these financial statements
-
61


21.


Pension commitments

The Company operated a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the Company to the scheme and amounted to £178,000 (2021 - £187,000).
Contributions totaling £nil
 (2022 - £nil) were payable to the scheme at the Balance Sheet date.


22.


Commitments under operating leases

At 31 December 2023 the Company had no future minimum lease payments due under non-cancellable operating leases.  Amounts in the prior year were as follows:

2023
2022
£000
£000


Not later than 1 year
-
9


23.


Related party transactions

As permitted by FRS 102, the Company has not disclosed transactions entered into between two or more wholly owned members of the NOV Inc. group.
During the current year, the Company entered into transactions, in the ordinary course of business, with other related parties. These related parties are members of the NOV Inc. group which are not wholly owned by the ultimate parent. Transactions entered into, include sales of £13,000 with NOV Oil and Gas Services Ghana Limited.  No balances were outstanding at the year end. During the prior year the Company had no related party transactions to report.



24.


Post balance sheet events

There have been no significant events affecting the Company since the year end.

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PIPEX LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

25.


Controlling party

The Company's immediate parent company is National Oilwell Varco UK Limited, a company incorporated in England and Wales.
The Company’s ultimate parent undertaking is NOV Inc., a company incorporated in the United States of America. The consolidated accounts of NOV Inc. are those of the smallest and largest group of which the Company is a member and for which group accounts are prepared. Copies of these accounts are available from its principal office at 10353 Richmond Avenue, Houston, Texas 77042, USA.

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