Company Registration No. SC200730 (Scotland)
CALEY OCEAN SYSTEMS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2023
CALEY OCEAN SYSTEMS LIMITED
COMPANY INFORMATION
Directors
T J Buchan
K R D Murray
Secretary
Brodies Secretarial Services Limited
Company number
SC200730
Registered office
Brodies House
31-33 Union Grove
Aberdeen
United Kingdom
AB10 6SD
Auditor
Johnston Carmichael LLP
Bishop's Court
29 Albyn Place
ABERDEEN
AB10 1YL
CALEY OCEAN SYSTEMS LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Directors' responsibilities statement
5
Independent auditor's report
6 - 8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Notes to the financial statements
12 - 24
CALEY OCEAN SYSTEMS LIMITED
STRATEGIC REPORT
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 1 -
The directors present the Strategic Report and financial statements of Caley Ocean Systems Limited (“the Company”) for the 9-month period ended 31 December 2023. The comparative period financial statements are prepared for the year ended 31 March 2023.
Fair review of the business
The Company offers the engineering, design, assembly, testing, installation and onsite support of lifting and handling equipment and other special purpose machinery. During the period, on the 4th of November 2023, the Company’s immediate parent Pryme Group Holdings Limited was acquired by Three60 Energy Limited.
2023 was another strong year for the Company with Turnover in the 9-month period of £33,505k (March 2023: £34,776k) representing significant growth over the previous financial period driven by increased work on existing contracts in renewable energy including offshore wind and nuclear. Following on from this, gross profit for the year increased to £6,162k (March 2023: £6,065k).
Going concern
At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future.
In making their assessment, the directors have reviewed cashflow and trading forecasts for the next 12 months, which include consideration of the compliance with terms associated with the Company lending facilities.
Based on their assessment, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Principal risk and uncertainty
The management of the business and execution of the Company (and the Group’s) strategy are subject to several risks. The key business risks affecting the core activities of the Company are set out below. Risks are reviewed by the board and appropriate processes put in place to monitor and mitigate them.
Liquidity risk
In order to maintain liquidity to ensure that sufficient funds are available for ongoing operations and future developments, the Company monitors the timing of cash flows and align this with its strategic planning. Forecasts are produced to assist management in identifying liquidity requirements and maintaining adequate resources.
The Company’s primary sources of finance are the operating cash flows and shareholder investment.
Credit risk
The Company’s principal financial assets are bank balances and cash and trade and other receivables. Its credit risk is primarily attributable to its trade receivables. The amounts presented in the balance sheet are net of allowances for doubtful receivables. An allowance for impairment is made where there is an identifiable loss event which, based on previous experience, is evidence of a reduction in the recoverability of cash flows. The credit risk in liquid funds is limited because the counterparties are banks with credit ratings assigned by international credit rating agencies.
The Company has no significant concentration of credit risk, with exposure spread over a number of customers.
CALEY OCEAN SYSTEMS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 2 -
Future developments
The strategy of the Directors is to continue to improve market share in existing markets following successful diversification efforts in recent years. The Directors aim to maximise profit margins by making improvements in operational performance and maintaining focus on the number of operational efficiencies implemented to keep the cost base as low as practical.
T J Buchan
Director
3 October 2024
CALEY OCEAN SYSTEMS LIMITED
DIRECTORS' REPORT
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 3 -
The directors present their annual report and financial statements for the period ended 31 December 2023.
Principal activities
The principal activities of the company continued to be the engineering, design, assembly, testing, installation and onsite support of lifting and handling equipment and other special purpose machinery.
Results and dividends
The results for the period are set out on page 9.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the period and up to the date of signature of the financial statements were as follows:
T J Buchan
K R D Murray
D J Hodkinson
(Resigned 31 December 2023)
Employees
Engagement with employees
As part of the Three60 Energy Group, the company places a strong emphasis on employee communication and involvement. Quarterly communications are conducted by the CEO and CFO to update the employees on the Groups performance and the Managing Director hold regular townhall meetings to update employees on their own individual locations' performance.
Disabled employees
Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled every effort is made to ensure that their employment with the company continues and that appropriate training is arranged. It is the policy of the group that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.
Employee consultation
The company places considerable value on the involvement of its employees and has continued to keep them informed on matters affecting them as employees and on various factors affecting the company and the Three60 Energy Group.
Equal opportunities
It is the company's policy to promote an environment free from discrimination, harassment and victimisation, where everyone will receive equal treatment regardless of age, gender, colour, ethnic or national origin, disability, hours of work, nationality, religion or belief, marital or civil partner status, disfigurement, political opinions or sexual orientation. All decisions relating to employment practices will be objective, free from bias and based solely on work criteria and individual merit.
Going concern
At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future.
In making their assessment, the directors have reviewed cashflow and trading for the next 12 months, which include consideration of the compliance with terms associated with the Company lending facilities.
Based on their assessment, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
CALEY OCEAN SYSTEMS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 4 -
Qualifying third party indemnity provisions
The company has made qualifying third party indemnity provisions for the benefit of its directors during the period. These provisions remain in force at the reporting date.
Financial instruments
The company does not use derivatives for either financial risk management or for speculative purposes. The company's financial risk management objectives. policies and exposure to financial risks are not considered material for the assessment of the company's assets, liabilities, financial position or result for the year and as such, no further disclosure is considered necessary.
Auditor
Johnston Carmichael LLP were appointed as auditor to the company during the current period and are deemed to be reappointed under section 487(2) of the Companies Act 2006.
Matters addressed in the strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of future developments.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
T J Buchan
Director
3 October 2024
CALEY OCEAN SYSTEMS LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 5 -
The directors are responsible for preparing the strategic report, 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 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 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.
CALEY OCEAN SYSTEMS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF CALEY OCEAN SYSTEMS LIMITED
- 6 -
Opinion
We have audited the financial statements of Caley Ocean Systems Limited (the 'company') for the period ended 31 December 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 December 2023 and of its profit for the period then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor 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.
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 our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial period 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.
CALEY OCEAN SYSTEMS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF CALEY OCEAN SYSTEMS LIMITED
- 7 -
Matters on which we are required to report by exception
In the light of our 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 and 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 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.
Auditor 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.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Extent to which the audit is 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.
We assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations by considering their experience, past performance and support available.
All engagement team members were briefed on relevant identified laws and regulations and potential fraud risks at the planning stage of the audit. Engagement team members were reminded to remain alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
We obtained an understanding of the legal and regulatory frameworks that are applicable to the company and the sector in which it operates, focusing on those provisions that had a direct effect on the determination of material amounts and disclosures in the financial statements. The most relevant frameworks we identified include:
CALEY OCEAN SYSTEMS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF CALEY OCEAN SYSTEMS LIMITED
- 8 -
Extent to which the audit is considered capable of detecting irregularities, including fraud (continued)
We gained an understanding of how the company is complying with these laws and regulations by making enquiries of management and those charged with governance. We corroborated these enquiries through our review of submitted returns, external inspections, relevant correspondence with regulatory bodies and board meeting minutes.
We assessed the susceptibility of the financial statements to material misstatement, including how fraud might occur, by meeting with management and those charged with governance to understand where it was considered there was susceptibility to fraud. This evaluation also considered how management and those charged with governance were remunerated and whether this provided an incentive for fraudulent activity. We considered the overall control environment and how management and those charged with governance oversee the implementation and operation of controls. In areas of the financial statements where the risks were considered to be higher, we performed procedures to address each identified risk. We identified a heightened fraud risk in relation to:
In addition to the above, the following procedures were performed to provide reasonable assurance that the financial statements were free of material fraud or error:
Reviewing the level of and reasoning behind the company’s procurement of legal and professional services;
Performing audit procedures over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and assessing judgements made by management in their calculation of accounting estimates for potential management bias;
Performing audit work procedures over the occurrence and cut-off of contract revenue including reconciling invoiced revenue directly to sales invoiced and the sales ledger and undertaking appropriate sales cut-off procedures;
Completion of appropriate checklists and use of our experience to assess the company’s compliance with the Companies Act 2006; and
Agreement of the financial statement disclosures to supporting documentation.
Our audit procedures were designed to respond to the risk of material misstatements in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve intentional concealment, forgery, collusion, omission or misrepresentation. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Jenny Junnier (Senior Statutory Auditor)
For and on behalf of Johnston Carmichael LLP
3 October 2024
Statutory Auditor
Bishop's Court
29 Albyn Place
ABERDEEN
AB10 1YL
CALEY OCEAN SYSTEMS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 9 -
Period
Year
ended
ended
31 December
31 March
2023
2023
Notes
£
£
Turnover
3
33,504,785
34,775,720
Cost of sales
(27,342,584)
(28,710,111)
Gross profit
6,162,201
6,065,609
Administrative expenses
(3,198,376)
(3,150,356)
Other operating income
214,606
156,000
Operating profit
4
3,178,431
3,071,253
Gain on disposal of fixed assets
-
592,560
Interest payable and similar expenses
7
(22,941)
(48,531)
Profit before taxation
3,155,490
3,615,282
Tax on profit
8
(220,679)
(239,462)
Profit and total comprehensive income for the financial period
2,934,811
3,375,820
The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
CALEY OCEAN SYSTEMS LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 10 -
31 December
31 March
2023
2023
Notes
£
£
£
£
Fixed assets
Tangible assets
9
330,730
562,887
Current assets
Debtors
10
13,101,647
12,163,031
Cash at bank and in hand
3,201,714
6,736,147
16,303,361
18,899,178
Creditors: amounts falling due within one year
11
(6,290,781)
(12,486,118)
Net current assets
10,012,580
6,413,060
Total assets less current liabilities
10,343,310
6,975,947
Creditors: amounts falling due after more than one year
12
-
(21,670)
Provisions for liabilities
Provisions
14
448,149
Deferred tax liability
15
15,519
9,446
(463,668)
(9,446)
Net assets
9,879,642
6,944,831
Capital and reserves
Called up share capital
17
80,000
80,000
Profit and loss reserves
18
9,799,642
6,864,831
Total equity
9,879,642
6,944,831
The financial statements were approved by the board of directors and authorised for issue on 3 October 2024 and are signed on its behalf by:
T J Buchan
Director
Company Registration No. SC200730
CALEY OCEAN SYSTEMS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 11 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 April 2022
80,000
3,489,011
3,569,011
Year ended 31 March 2023:
Profit and total comprehensive income for the year
-
3,375,820
3,375,820
Balance at 31 March 2023
80,000
6,864,831
6,944,831
Period ended 31 December 2023:
Profit and total comprehensive income for the period
-
2,934,811
2,934,811
Balance at 31 December 2023
80,000
9,799,642
9,879,642
CALEY OCEAN SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 12 -
1
Accounting policies
Company information
Caley Ocean Systems Limited is a private company limited by shares incorporated in Scotland. The registered office is Brodies House, 31-33 Union Grove, Aberdeen, United Kingdom, AB10 6SD.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
Prior year comparative presentation of Gross amounts due to/by contract customers have been restated to show gross project positions rather than the net position, this change in presentation had no impact to the prior year profit and loss account with impact only between Gross amounts due to/from contract customers, see debtors note at note10 and creditors at note 11
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements (where applicable):
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Three60 Energy Limited. These consolidated financial statements are available from its registered office C/O Brodies Llp, 90 Bartholomew Close, London, United Kingdom, EC1A 7EB.
1.2
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Reporting period
During the current period, the company shortened its accounting reference date to 31 December from 31 March to align with that of its ultimate parent undertaking. As a result, the current period covers the 9 months to 31 December 2023 whereas the comparative period covers the 12 months ended 31 March 2023. The prior year amounts (including related notes) are therefore not directly comparable.
CALEY OCEAN SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
1.4
Turnover
Turnover and profit are recognised on long-term contracts as contract activity progresses and is calculated by reference to the cost of work performed to date as a proportion of the total contract cost where the outcome can be assessed with reasonable certainty. Management judgement is applied to the cost incurred assessment to ensure that valid work has been performed against the costs invoiced to ensure an appropriate level of progress is recognised. Provisions for foreseeable losses are recognised in full when identified. Turnover derived from variations on long term contracts is recognised only when they have been accepted by the customer. Where the value of work performed on a long term contract is less than the actual work performed by reference to the proportion of overall estimated contract costs incurred, the difference is recorded as amounts recoverable on long term contracts and included within debtors due within one year. Where the invoiced value of work performed on a long-term contract is more than the actual value of work performed by reference to the proportion of overall estimated contract cost incurred, the difference is recorded as amounts due on long-term contracts and included within creditors due within one year.
1.5
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
Tennant's improvements
10% straight line
Plant and equipment
10% straight line
Fixtures, fittings & office equipment
10% straight line
Motor vehicles
25% straight line
Other fixed assets
20% straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to the statement of comprehensive income.
1.6
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the statement of comprehensive income.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the statement of comprehensive income.
CALEY OCEAN SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
1.7
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.8
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include certain debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in the statement of comprehensive income.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in the statement of comprehensive income.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
CALEY OCEAN SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
Basic financial liabilities
Basic financial liabilities, including certain creditors, bank loans and loans from fellow group companies, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.9
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the statement of comprehensive income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
CALEY OCEAN SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
1.11
Provisions
Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
1.12
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.14
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to the statement of comprehensive income on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.15
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in the statement of comprehensive income.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
CALEY OCEAN SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
2
Judgements and key sources of estimation uncertainty
(Continued)
- 17 -
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Recoverability of third party debtors and related party balances
The company makes an estimate of the recoverable value of trade and other debtors. When assessing impairment of trade and other debtors with third parties, management consider factors including the current credit rating of the debtor, the aging profile of debtors and historical collection experience.
The carrying value of trade and other debtors at the reporting date is outlined at note 10.
Recognition of research and development relief
The company employs the services of specialist tax advisors in preparing research and development technical reports for use in the tax returns, which in turn are prepared by external tax specialists. The estimated R&D relief recognised in the period is £215k (Year ended 31 March 2023 - £156k).
Contract revenue and margin recognition
The key assumptions used in arriving at the turnover from construction contracts and the value of construction contract debtors are:
the margin expected to be generated on specific contracts;
for construction contracts in foreign currencies the exchange rate used; and
estimated stage of completion.
The margins are assessed on a contract by contract basis. The exchange rate is the average exchange rate at the balance sheet date unless the future income has been hedged.
3
Turnover and other revenue
Period
Year
ended
ended
31 December
31 March
2023
2023
£
£
Turnover analysed by class of business
Contract revenue
33,504,785
34,775,720
4
Operating profit
Period
Year
ended
ended
31 December
31 March
2023
2023
Operating profit for the period is stated after charging:
£
£
Exchange differences
77,303
Fees payable to the company's auditor for the audit of the company's financial statements
18,500
10,000
Depreciation of owned tangible fixed assets
250,869
60,098
Operating lease charges
127,256
109,669
CALEY OCEAN SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 18 -
5
Employees
The average monthly number of persons (including directors) employed by the company during the period was:
Period
Year
ended
ended
31 December
31 March
2023
2023
Number
Number
Direct
51
57
Administration
24
16
Total
75
73
Their aggregate remuneration comprised:
Period
Year
ended
ended
31 December
31 March
2023
2023
£
£
Wages and salaries
3,582,985
3,478,778
Social security costs
334,939
378,957
Pension costs
178,820
181,622
4,096,744
4,039,357
6
Directors' remuneration
The directors of Caley Ocean Systems Limited are also directors of other Three60 Energy Group companies, it is not considered practical to apportion directors remuneration to this company on the basis of the level of service and accordingly no allocation has been made. In lieu of directors remuneration, administrative and other support costs the company accepts a management recharge from the Group.
7
Interest payable and similar expenses
Period
Year
ended
ended
31 December
31 March
2023
2023
£
£
Interest on bank overdrafts and loans
21,891
-
Interest payable to group undertakings
1,050
48,531
22,941
48,531
CALEY OCEAN SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 19 -
8
Taxation
Period
Year
ended
ended
31 December
31 March
2023
2023
£
£
Current tax
UK corporation tax on profits for the current period
214,606
156,275
Adjustments in respect of prior periods
(929)
Total current tax
214,606
155,346
Deferred tax
Origination and reversal of timing differences
6,100
63,928
Changes in tax rates
20,188
Adjustment in respect of prior periods
(27)
Total deferred tax
6,073
84,116
Total tax charge
220,679
239,462
The actual charge for the period can be reconciled to the expected charge for the period based on the profit or loss and the standard rate of tax as follows:
Period
Year
ended
ended
31 December
31 March
2023
2023
£
£
Profit before taxation
3,155,490
3,615,282
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2023: 19.00%)
788,873
686,904
Tax effect of expenses that are not deductible in determining taxable profit
477
93,114
Tax effect of income not taxable in determining taxable profit
(5,523)
Adjustments in respect of prior years
(27)
(929)
Effect of change in corporation tax rate
20,188
Group relief
(628,364)
(554,290)
Fixed asset differences
59,720
(2)
Taxation charge for the period
220,679
239,462
A change in the UK Corporation tax rate to 25% took effect from 1 April 2023. This change has had a consequential effect on the tax charge with the standard rate of tax in the current year reflective of a marginal tax rate arising from the period straddling the 19% and 25% tax rates. Deferred tax has been calculated at 25%.
CALEY OCEAN SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 20 -
9
Tangible fixed assets
Tennant's improvements
Plant and equipment
Fixtures, fittings & office equipment
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 April 2023
516,118
94,875
356,077
14,881
981,951
Additions
4,096
37,705
41,801
Disposals
(23,089)
(23,089)
At 31 December 2023
497,125
94,875
393,782
14,881
1,000,663
Depreciation and impairment
At 1 April 2023
36,462
94,875
272,846
14,881
419,064
Depreciation charged in the period
198,665
52,204
250,869
At 31 December 2023
235,127
94,875
325,050
14,881
669,933
Carrying amount
At 31 December 2023
261,998
68,732
330,730
At 31 March 2023
479,656
83,231
562,887
10
Debtors
31 March
31 December
2023
2023
Restated
Amounts falling due within one year:
£
£
Trade debtors
2,205,668
1,016,565
Gross amounts owed by contract customers
2,945,542
7,609,711
Corporation tax recoverable
233,751
Amounts owed by group undertakings
7,736,438
3,153,398
Other debtors
3,265
Prepayments and accrued income
210,734
149,606
13,101,647
12,163,031
Amounts owed by group undertakings are repayable on demand and bear no interest.
Prior year comparative presentation of Gross amounts owed by contract customers have been restated to show gross project positions rather than the net position, this change in presentation had no impact to the prior year profit and loss account with impact only between Gross amounts owed to/by contract customers, see creditors at note 11 for the corresponding adjustment.
CALEY OCEAN SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 21 -
11
Creditors: amounts falling due within one year
31 March
31 December
2023
2023
Restated
Notes
£
£
Bank loans
13
9,997
Trade creditors
1,311,636
1,707,726
Gross amounts owed to contract customers
4,223,864
9,829,598
Amounts owed to group undertakings
35,061
226,236
Corporation tax
1,373
Other taxation and social security
417,754
202,041
Other creditors
1,195
1,646
Accruals and deferred income
299,898
508,874
6,290,781
12,486,118
The company has granted a floating charge on all its assets to secure its the ongoing bank facilities of an intermediate parent entity.
Amounts owed to group undertakings are repayable on demand and bear no interest.
Prior year comparative presentation of Gross amounts owed to contract customers have been restated to show gross project positions rather than the net position, this change in presentation had no impact to the prior year profit and loss account with impact only between Gross amounts owed to/by contract customers, see debtors note at note10 for the corresponding adjustment.
12
Creditors: amounts falling due after more than one year
31 December
31 March
2023
2023
Notes
£
£
Bank loans and overdrafts
13
21,670
13
Loans and overdrafts
31 December
31 March
2023
2023
£
£
Bank loans
31,667
Payable within one year
9,997
Payable after one year
21,670
CALEY OCEAN SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 22 -
14
Provisions for liabilities
31 December
31 March
2023
2023
£
£
Contract provisions
448,149
-
Movements on provisions:
Contract provisions
£
Additional provisions in the year
448,149
Contract provisions relate to managements estimation of the future losses expected to be incurred on construction contracts with customers in place over the year end, which are expected to complete during 2024.
15
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
31 December
31 March
Liabilities
Liabilities
2023
2023
Balances:
£
£
Accelerated capital allowances
15,519
9,446
31 December
2023
Movements in the period:
£
Liability at 1 April 2023
9,446
Charge to profit or loss
6,073
Liability at 31 December 2023
15,519
CALEY OCEAN SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 23 -
16
Retirement benefit schemes
31 December
31 March
2023
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
178,820
181,622
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund. At the reporting date, outstanding pension contributions of £Nil (31 March 2023: £Nil) were due to the fund by the company and are included within creditors due within one year.
17
Share capital
31 December
31 March
31 December
31 March
2023
2023
2023
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary A shares of £1 each
51,200
51,200
51,200
51,200
Ordinary B shares of £1 each
28,800
28,800
28,800
28,800
80,000
80,000
80,000
80,000
The company's share classes rank pari passu in all respects.
18
Profit and loss reserves
Profit and loss reserves represent the accumulated profits and losses of the company, less distributions made to the shareholders.
19
Financial commitments, guarantees and contingent liabilities
The company is subject to a cross guarantee provided in respect of certain group-wide banking facilities. These facilities are secured by fixed and floating charges over the assets and undertakings of the company and all other group-wide facility participants.
20
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
31 December
31 March
2023
2023
£
£
Within one year
202,475
202,475
Between two and five years
692,367
714,233
In over five years
608,002
735,258
1,502,844
1,651,966
CALEY OCEAN SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 24 -
21
Performance Bonds
As at 31 December 2023, the Company has issued performance bonds and guarantees amounting to £1,531,582 (2022: £nil) in favour of various customers. These bonds and guarantees are provided to ensure the completion of projects in accordance with contractual terms.
The performance bonds and guarantees are as follows:
The Company has assessed the likelihood of these guarantees being called upon and has determined that no provision is required as at the reporting date.
22
Related party transactions
The company has taken advantage of the exemption available in accordance with Section 33 of FRS 102 "Related party disclosures" whereby it has not disclosed transactions with any wholly owned subsidiary undertakings of the group.
23
Ultimate controlling party
The immediate parent undertaking of the company is Pryme Group Holdings Limited, a company whose registered address is Brodies House, 31-33 Union Grove, Aberdeen, Scotland, AB10 6SD.
The ultimate parent undertaking is Three60 Energy Limited, a company whose registered address is C/O Brodies Llp, 90 Bartholomew Close, London, United Kingdom, EC1A 7EB. Three60 Energy Limited is the smallest and largest group company which prepares consolidated financial statements including Caley Ocean Systems Limited.
The ultimate controlling part of Three60 Energy Limited is considered to be Simmons Private Equity II LP, a Limited Partnership incorporated in Guernsey, by virtue of its ownership of the share capital.
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