Consolidated Financial Statements
Balaena LTD
For the year ended 30 June 2024
Registered number: 12030661
|
Company Information
|
|
|
Peter John Andrew Furmston
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chartered Accountants & Statutory Auditors
|
|
12 - 15 Donegall Square West
|
|
|
|
|
|
|
|
|
|
The Royal Bank of Scotland International Limited (trading as NatWest International)
|
|
|
|
|
|
|
|
|
|
|
|
Trusted Novus Bank Limited (formerly Jyske Bank)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gibraltar International Bank
|
|
|
|
|
|
|
|
|
|
|
|
Hassans International Law Firm Limited
|
|
Madison Building, Midtown
|
|
|
|
|
|
|
|
|
|
Contents
|
|
|
|
|
|
Independent Auditor's Report
|
|
Consolidated Statement of Comprehensive Income
|
|
Consolidated Balance Sheet
|
|
|
|
Consolidated Statement of Changes in Equity
|
|
Company Statement of Changes in Equity
|
|
Consolidated Statement of Cash Flows
|
|
Consolidated Analysis of Net Debt
|
|
Notes to the Financial Statements
|
|
|
Group strategic report
For the year ended 30 June 2024
The directors present their strategic report for the period ended 30 June 2024.
Balaena Ltd (‘the Group’) is based in the United Kingdom and its main business activities are the delivery of sustainable engineering solutions for freshwater, wastewater, renewable energy and maritime projects.
In the year ended 30 June 2024, the Group generated turnover of £36,372,281 (2023: £45,591,948) and made a loss before tax of £12,539,975 (2023: profit of £1,433,971). The Directors were pleased with the turnover of the Group which remains mainly attributable to its ship repair subsidiary. This entity has remained both profitable and cash generative and has continued trading strongly into the current year. The loss incurred primarily relates to interest and redemption fee costs associated with the loan provided by Cheyne European Strategic Value Credit Fund II to facilitate the acquisition of the ship repair business in 2022. This loan was refinanced in the year with a £48,000,000 facility from Trusted Novus Bank which is repayable in May 2036. The Group’s ability to secure this funding underlines the long term prospects of the Group.
The Directors are now focused on securing key new business opportunities for the Group and are in discussions with various interested parties regarding funding potential acquisitions. In addition, the Group’s offshore Island Utility Platform development business continues to move forward positively with its initial project now at signed Memorandum of Understanding stage.
In summary, the Group continues to be cash generative with access to finance and fund new projects as required.
Principal risks and uncertainties
|
The main risk to the Group is the loss of clients due to overly competitive pricing by competitors. Secondly, the risk of an ever-changing regulatory environment which require compliance with all of the latest regulatory requirements and guidance. Due to the ongoing conflict in Ukraine, and ongoing global energy crisis, there has also
been a significant increase in the cost of living across the UK and wider areas.
Directors' statement of compliance with duty to promote the success of the Group
|
This section of the Strategic report describes how the directors have had regard to the matters set out in Section 172 (1) (a) to (f), and forms the directors' statement required under section 414CZA of the Companies Act 2006.
A vital component of delivering on the Group’s primary objective which is to deliver long term value for the shareholder is to ensure the board balances short-term and long-term decision making.
The directors take an active interest in the Group’s employee base. The board is involved in setting employee strategy and ensuring that employees’ best interests are kept in mind during all decision-making processes that would have an impact upon employees. Investment in people is a key part of the Group’s strategy; bringing in the right people and developing the skills of the current workforce. Ongoing, regular training is available for all employees.
The board recognises that the Group’s long-term strategic goals can only be achieved through engagement with, and consideration of, all stakeholders including our employees, customers, suppliers and regulators. The consideration of stakeholder needs and engagement with stakeholders is not new to the Group and a continued focus on building long lasting relationships with stakeholders has been key to the Group’s success to date.
As a UK based Group, the operational impacts on society, community and the environment are at the forefront of directors’ decision making when evaluating the effectiveness and sustainability of the Group’s operations.
Page 1
|
Group strategic report (continued)
For the year ended 30 June 2024
Directors' statement of compliance with duty to promote the success of the Group (continued)
There is a long-held belief amongst the board that the success of the Group is built on its reputational equity which it has built up over a significant period of time. The board insists on a high quality of service to be provided to its customers and has a zero-tolerance policy with regards to activity which could damage this reputation. The board fosters this by creating a culture of putting the customer first in every transaction. Training is also put in place to ensure all employees are aware of activities and behaviours that could risk reputational damage and engagement is encouraged in this process. A testament to this approach is the significant number of repeat customers choosing to renew their products and services with the Group period after period.
This report was approved by the board on 27 March 2025 and signed on its behalf.
Simon James Gillett
Director
|
Page 2
|
Directors' report
For the year ended 30 June 2024
The directors present their report and the financial statements for the year ended 30 June 2024.
Directors' responsibilities statement
|
The directors are responsible for preparing the Group strategic report, the Directors' report and the consolidated 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including 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 the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙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 Group 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 the Group and to 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 the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements and other information included in Directors' reports may differ from legislation in other jurisdictions.
The directors who served during the year were:
|
Peter John Andrew Furmston
|
|
Disclosure of information to auditor
|
So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which Group's auditors are unaware, and each director has taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that Group's auditors are aware of that information.
Page 3
|
Directors' report (continued)
For the year ended 30 June 2024
The auditor, Grant Thornton (NI) LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board on 27 March 2025 and signed on its behalf.
Simon James Gillett
Director
|
Page 4
|
Independent Auditor's Report to the Members of Balaena LTD
We have audited the financial statements of Balaena LTD (the 'parent Company') and its subsidiaries (the 'Group'), which comprise the Consolidated Statement of comprehensive income, the Consolidated and Company Balance sheets, the Consolidated Statement of cash flows, the Consolidated and Company Statement of changes in equity for the financial year ended 30 June 2024, and the related notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
In our opinion, Balaena LTD's financial statements:
∙give a true and fair view in accordance with United Kingdom Generally Accepted Accounting Practice of the assets, liabilities and financial position of the Group's and the Company as at 30 June 2024 and of the Group financial performance and cash flows for the financial year then ended; 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 'Responsibilities of the auditor for the audit of the financial statements' section of our report. We are independent of the Group and Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, namely the FRC's Ethical Standard and the ethical pronouncements established by Chartered Accountants Ireland, applied as determined to be appropriate in the circumstances of the entity. 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 Group's or the parent Company's ability to continue as a going concern for a period of at least twelve months from the date 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.
Page 5
|
Independent Auditor's Report to the Members of Balaena LTD (continued)
Other information comprises information included in the annual report, other than the financial statements and our auditor’s report thereon, including the Directors’ Report.
The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies in the financial statements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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 Directors' report and the Strategic Report for the financial year for which the financial statements are prepared is consistent with the financial statements, and
∙the Directors' report and the Strategic 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 we have obtained in the course of the audit, we have not identified material misstatements in the Directors' report and the Strategic 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 by the parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
∙the parent Company 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.
Page 6
|
Independent Auditor's Report to the Members of Balaena LTD (continued)
Responsibilities of management and those charged with governance for the financial statements
|
As explained more fully in the Directors' responsibilities statement, management is responsible for the preparation of the financial statements which give a true and fair view in accordance with United Kingdom Generally Accepted Accounting Practice, including FRS 102, and for such internal control as directors determine necessary to enable the preparation of financial statements are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Group and 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 management either intend to liquidate the Group and Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group and Company's financial reporting process.
Responsibilities of the auditor for the audit of the financial statements
|
The objectives of an auditor 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 their 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 an auditor's 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.
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. Owing to the inherent limitations of an audit, there is an unavoidable risk that material misstatement in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with ISAs (UK).
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below:
Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws and regulations related to compliance with Data Privacy law, Employment Law, Environmental Regulations, Health & Safety, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the local law and tax Companies Act 2006 and UK tax legislation.
Page 7
|
Independent Auditor's Report to the Members of Balaena LTD (continued)
We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to manipulate financial performance and management bias through judgements and assumptions in significant accounting estimates, in particular in relation to significant one-off or unusual transactions. We apply professional scepticism through the audit to consider potential deliberate omission or concealment of significant transactions, or incomplete/inaccurate disclosures in the financial statements.
In response to these principal risks, our audit procedures included but were not limited to:
∙inquiries of management board on the policies and procedures in place regarding compliance with laws and regulations, including consideration of known or suspected instances of non-compliance and whether they have knowledge of any actual, suspected or alleged fraud;
∙inspection of the group’s regulatory and legal correspondence and review of minutes of board and director’s meetings during the year to corroborate inquiries made;
∙gaining an understanding of the internal controls established to mitigate risk related to fraud;
∙discussion amongst the engagement team in relation to the identified laws and regulations and regarding the risk of fraud, and remaining alert to any indications of non-compliance or opportunities for fraudulent manipulation of financial statements throughout the audit;
∙identifying and testing journal entries to address the risk of inappropriate journals and management override of controls;
∙designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing;
∙challenging assumptions and judgements made by management in their significant accounting estimates, including the estimated useful of tangible assets and the estimated settlement of underwriting-based targets; and
∙review of the financial statement disclosures to underlying supporting documentation and inquiries of management.
The primary responsibility for the prevention and detection of irregularities including fraud rests with those charged with governance and management. As with any audit, there remains a risk of non-detection or irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or override of internal controls.
The purpose of our audit work and to whom we owe our responsibilities
|
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.
Page 8
|
Independent Auditor's Report to the Members of Balaena LTD (continued)
Neal Taylor FCA (Senior Statutory Auditor)
for and on behalf of
Grant Thornton (NI) LLP
Chartered Accountants
Statutory Auditors
Belfast
27 March 2025
Page 9
|
Consolidated statement of comprehensive income
For the year ended 30 June 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)/profit on ordinary activities before taxation
|
|
|
|
Tax on profit on ordinary activities
|
|
|
|
(Loss)/profit for the financial year
|
|
|
|
(Loss)/profit for the year and Total comprehensive (loss)/profit attributable to:
|
|
|
|
Owners of the parent Company
|
|
|
|
|
|
|
|
The Group has no discontinued activities in the period, accordingly, the above results for the Group relate solely to continuing activities and include all recognised gains and losses and all items of comprehensive income at arriving at the consolidated loss for the period. The consolidated loss is stated on an historical cost basis.
The notes on pages 17 to 46 form part of these financial statements.
|
Page 10
|
|
|
|
Balaena LTD
Registered number:12030661
|
Consolidated balance sheet
As at 30 June 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Creditors: amounts falling due within one year
|
|
|
|
|
|
Net current assets/(liabilities)
|
|
|
|
|
|
Total assets less current liabilities
|
|
|
|
|
|
Creditors: amounts falling due after more than one year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' (deficit)/funds
|
|
|
|
|
|
|
|
|
|
|
|
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 27 March 2025.
The notes on pages 17 to 46 form part of these financial statements.
Page 11
|
|
|
|
Balaena LTD
Registered number:12030661
|
Company balance sheet
As at 30 June 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares in group undertakings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Creditors: amounts falling due within one year
|
|
|
|
|
|
|
|
|
|
|
|
Total assets less current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit and loss account brought forward
|
|
|
|
|
|
Loss/(profit) for the year
|
|
|
|
|
|
Profit and loss account carried forward
|
|
|
|
|
|
Shareholders' (deficit)/funds
|
|
|
|
|
|
|
|
|
|
|
|
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 27 March 2025.
The notes on pages 17 to 46 form part of these financial statements.
Page 12
|
Consolidated statement of changes in equity
For the year ended 30 June 2024
|
|
|
Equity attributable to owners of parent Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company statement of changes in equity
For the year ended 30 June 2024
Page 13
|
Consolidated statement of cash flows
For the year ended 30 June 2024
Cash flows from operating activities
|
|
|
Profit/(loss) on ordinary activities before taxation
|
|
|
|
|
|
|
|
|
|
|
|
Loss on disposal of tangible assets
|
|
|
Interest payable and other charges
|
|
|
|
|
|
|
|
|
|
|
|
(Decrease)/increase in creditors
|
|
|
|
|
|
Foreign currency contract losses
|
|
|
|
|
|
|
|
|
Net cash (used in)/generated from operating activities
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
Acquisitions of intangible fixed assets
|
|
|
Acquisitions of tangible fixed assets
|
|
|
|
|
|
Acquisition of subsidiary undertakings (net of cash received)
|
|
|
Net cash from investing activities
|
|
|
Cash flows from financing activities
|
|
|
Proceeds from issuance of loans
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(Decrease)/increase in cash at bank and in hand
|
|
|
Cash and cash equivalents at beginning of year
|
|
|
Cash and cash equivalents at the end of year
|
|
|
|
|
|
Cash and cash equivalents at the end of year comprise:
|
|
|
Page 14
|
Consolidated statement of cash flows (continued)
For the year ended 30 June 2024
The notes on pages 17 to 46 form part of these financial statements.
|
Page 15
|
Consolidated Analysis of Net Debt
For the year ended 30 June 2024
The notes on pages 17 to 46 form part of these financial statements.
|
Page 16
|
Notes to the financial statements
For the year ended 30 June 2024
Balaena LTD is a private company limited by shares incorporated and registered in England. The address of its registered office and principal place of business is The Gaia Energy Centre, Delabole, Cornwall, England.
On 24 May 2022, the company acquired 100% ownership over Blackloch Limited and its underlying subsidiary, Salalah Limited. Balaena Delta Limited, an indirect subsidiary of the Company, acquired 100% ownership over Gibdock Limited. These acquisitions had been accounted for using acquisition accounting.
These consolidated financial statements include the results of the Company and its subsidiary undertakings (collectively referred to as the 'Group'). The Company's subsidiary undertakings, the ultimate ownership percentage of the Company, the subsidiary undertakings' principal activities and country of incorporation are as follows:
|
|
|
|
|
Country of registration or incorporation
|
|
|
|
|
|
|
|
Balaena Consulting Limited
|
|
|
|
|
|
Balaena Consulting Limited (Gibraltar)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Country of registration or incorporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ship repair and conversion
|
|
|
|
|
|
|
|
|
|
Page 17
|
Notes to the financial statements
For the year ended 30 June 2024
The registered office address of the subsidiaries are as follows:
|
|
Registered Office Address
|
|
|
The Gaia Energy Centre, Delabole, Cornwall, England
|
|
Balaena Consulting Limited
|
The Gaia Energy Centre, Delabole, Cornwall, England
|
|
Balaena Consulting (Gibraltar) Limited
|
Madison Building, Midtown, Queensway, Gibraltar.
|
|
|
Main Wharf Road, The Dockyard, Gibraltar
|
|
|
Registered Office Address
|
|
|
The Gaia Energy Centre, Delabole, Cornwall, England
|
|
|
Madison Building, Midtown, Queensway, Gibraltar.
|
|
|
Madison Building, Midtown, Queensway, Gibraltar.
|
|
|
Main Wharf Road, The Dockyard, Gibraltar
|
|
|
Main Wharf Road, The Dockyard, Gibraltar
|
Page 18
|
Notes to the financial statements
For the year ended 30 June 2024
|
Statement of compliance and basis of preparation
|
The consolidated financial statements have been prepared under the historical cost convention and in accordance with applicable Generally Accepted Accounting Practice.
The consolidated financial statements have been prepared on a going concern basis in accordance with applicable United Kingdom accounting standards, including FRS 102 - The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland and with the Companies Act 2006.
In the year ended 30 June 2024, the Group generated turnover of £36,372,281 (2023: £45,591,948) and made a loss before tax of £12,539,975 (2023: profit of £1,433,971). The Directors were pleased with the turnover of the Group which remains mainly attributable to its ship repair subsidiary. This entity has remained both profitable and cash generative and has continued trading strongly into the current year. The loss incurred primarily relates to interest and redemption fee costs associated with the loan provided by Cheyne European Strategic Value Credit Fund II to facilitate the acquisition of the ship repair business in 2022. This loan was refinanced in the year with a £48,000,000 facility from Trusted Novus Bank which is repayable in May 2036. The Group’s ability to secure this funding underlines the long term prospects of the Group.
The Directors are now focused on securing key new business opportunities for the Group and are in discussions with various interested parties regarding funding potential acquisitions. In addition, the Group’s offshore Island Utility Platform development business continues to move forward positively with its initial project now at signed Memorandum of Understanding stage. In summary, the Group continues to be cash generative with access to finance and fund new projects as required.
Further, the directors have assessed the Group's ability to continue as a going concern, taking into account the confirmation from the ultimate controlling party, Simon Gillett, that he is committed to providing the necessary ongoing financial support to enable the Group to meet its financial obligations as they fall due for at least 12 months from the date of approval of these financial statements.
Based on this, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.
The consolidated financial statements are presented in Pound Sterling (£) which is the functional currency of the Group. The functional currency is the currency of the primary economic environment in which the Group operates. The amounts presented in the consolidated financial statements have been rounded to the nearest Pound Sterling.
3.Accounting policies
The accounting policies applied in the preparation of these consolidated and separate financial statements are set out below and in the following pages.
The Group's financial statements consolidate the financial statements of the Company and all its subsidiary undertakings made up from 1 July 2023 to 30 June 2024.
Page 19
|
Notes to the financial statements
For the year ended 30 June 2024
3.Accounting policies (continued)
A subsidiary is an entity controlled by the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Where the Group owns less than 50% of the voting powers of an entity but controls the entity by virtue of an agreement with other investors which give it control of the financial and operating policies of the entity it accounts for that entity as a subsidiary.
Where a subsidiary has different accounting policies to the Group, adjustments are made to those subsidiary's financial statements to apply the Group's accounting policies when preparing the consolidated financial statements.
Any subsidiary undertakings sold or acquired during the period are included up to, or from, the dates of change of control or change of significant influence, respectively.
Where control of a subsidiary is lost, the gain or loss is recognised in the consolidated statement of comprehensive income. The cumulative amounts of any exchange differences on translation, recognised in equity, are not included in the gain or loss on disposal and are transferred to retained earnings. The gain or loss also includes amounts included in other comprehensive income that are required to be reclassified to profit or loss but excludes those amounts that are not required to be reclassified.
Where control of a subsidiary is achieved in stages, the initial acquisition that gave the Group control is accounted for as a business combination. Thereafter, where the Group increases its controlling interest in the subsidiary the transaction is treated as a transaction between equity holders. Any difference between the fair value of the consideration paid and the carrying amount of the minority interest acquired is recognised directly in equity. No changes are made to the carrying value of assets, liabilities or provisions for contingent liabilities.
All intra-group transactions, balances, income and expenses are eliminated on consolidation.
Page 20
|
Notes to the financial statements
For the year ended 30 June 2024
3.Accounting policies (continued)
|
|
Business combination and goodwill
|
Business combinations are accounted for by applying the purchase method.
The cost of a business combination is the fair value of the consideration given, liabilities incurred or assumed and of equity instruments issued plus the costs directly attributable to the business combination. Where control is achieved in stages the cost is the consideration at the date of each transaction.
Contingent consideration is initially recognised at estimated amount where the consideration is probable and can be measured reliably. Where (i) the contingent consideration is not considered probable or cannot be reliably measured but subsequently becomes probable and measurable or (ii) contingent consideration previously measured is adjusted, the amounts are recognised as an adjustment to the cost of the business combination.
On acquisition of a business, fair values are attributable to the identifiable assets, liabilities and contingent liabilities unless the fair value cannot be measured reliably, in which case the value is incorporated in goodwill. Where the fair value of contingent liabilities cannot be reliably measured they are disclosed on the same basis as other contingent liabilities.
Goodwill recognised represents the excess of the fair value and directly attributable costs of the purchase consideration over the fair values to the Group's interest in the identifiable net assets, liabilities and contingent liabilities acquired.
On acquisition, goodwill is allocated to cash-generating units that are expected to benefit from the combination.
Goodwill is amortised over its expected useful life. Amortisation is provided at 10 years on a straight line basis. Goodwill is assessed for impairment when there are indicators of impairment and any impairment is charged to the profit and loss. Reversals of impairment are recognised when the reasons for the impairment no longer apply.
Page 21
|
Notes to the financial statements
For the year ended 30 June 2024
3.Accounting policies (continued)
|
|
Turnover and expense recognition
|
Turnover is the total amount receivable by the Company in the ordinary course of business with outside customers for services provided and contract work performed, net of trade discounts. Turnover is attributable to one continuing activity.
Turnover is recognised when risks and rewards have passed to the customers and the amount can be measured reliably. Turnover relates solely to income from rendering of services.
Where the outcome of a project contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the balance sheet date. This is normally measured by the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs, except where this would not be representative of the stage of completion. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.
Where the outcome of a project contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred where it is probable they will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.
Costs and expenses are recognised in the profit and loss account upon utilisation of the related goods or services by the Company. As applicable, they are measured at the invoiced amount.
|
|
Operating leases: the Group as lessee
|
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases net of any incentives received from the lessor are charged to the profit and loss account on a straight line basis over the period of the lease.
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 5 to 10 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 22
|
Notes to the financial statements
For the year ended 30 June 2024
3.Accounting policies (continued)
The tax charge for the year is calculated using tax rates and laws applicable to the year to which they relate, based in results for the period.
Any current tax assets or liabilities comprise those claims from, or obligations to, tax authorities relating to the current or prior reporting period, that are unallocated or unpaid at the end of the reporting period. All changes to current tax assets or liabilities are recognised as a component of tax payable in the consolidated profit and loss account.
Deferred tax recognised in respect of all timing differences at the reporting date, except as otherwise indicated. Deferred tax assets are only 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. If and when all conditions for retaining tax allowances for the cost of a fixed asset have been met, the deferred tax is reversed. Deferred tax is calculated using the tax rates and laws that have been enacted or substantively enacted by the reporting date that are expected to apply to the reversal of the timing difference. Deferred tax assets and deferred tax liabilities are offset only if:
- the Group has a legally enforceable right to set off current tax assets against current tax liabilities, and
- the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously.
Exceptional items are transactions that fall within the ordinary activities of the Group but are presented separately due to their size or incidence.
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. All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
Amortisation is provided on the following basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other intangible fixed assets
|
|
|
|
The carrying values of intangible assets are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.
Page 23
|
Notes to the financial statements
For the year ended 30 June 2024
3.Accounting policies (continued)
Tangible fixed assets are stated at cost less accumulated depreciation and any accumulated impairment losses. The cost includes all expenditure that is directly attributable to the acquisition of the assets.
The Group adds to the carrying amount of an item of fixed assets the cost of replacing part of such an item when that cost is incurred, if the replacement part is expected to provide incremental future benefits to the Group. The carrying amount of the replaced part is derecognised. Repairs and maintenance are charged to consolidated comprehensive income during the period in which they are incurred.
Depreciation is provided on the following basis:
|
|
|
|
|
|
|
Straight line over the shorter of the duration of the lease or the asset's useful economic life
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The carrying values of tangible fixed assets are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the consolidated statement of comprehensive income.
|
|
Investment in shares in group undertakings
|
The Company’s investment in shares in group undertakings is accounted for in the separate financial statements at cost, less any impairment loss.
Page 24
|
Notes to the financial statements
For the year ended 30 June 2024
3.Accounting policies (continued)
|
|
Impairment of non-financial assets
|
At each reporting date, non-financial assets are reviewed to determine whether there is any indication that those assets have suffered an impairment loss. If there is an indication of possible impairment, the recoverable amount of any affected asset is estimated and compared with its carrying amount. If the estimated recoverable amount is lower, the carrying value is reduced to its estimated recoverable amount and an impairment loss is recognised immediately in profit or loss.
If the circumstances that gave rise to the impairment loss subsequently reverse, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but not in excess of the amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
Goodwill does not generate independent cash inflows and it must therefore be tested for impairment as part of a cash-generating unit (CGU). If impairment is identified in the period, the impairment loss is first allocated to the goodwill within the CGU, then to the other assets of the unit pro rata on the basis of the carrying amount of each of those assets. In doing so, the carrying amount of any asset in a CGU is not reduced below the higher of fair value less costs to sell (where determinable), value in use (where determinable), and zero. Any excess amount of the impairment loss which cannot be allocated to an asset because of the mentioned restriction is allocated to the other assets of the unit pro rata on the basis of the carrying amount of those other assets.
Any impairment losses recognised in respect of goodwill cannot be subsequently reversed, even if the original circumstances giving rise to the impairment cease to apply.
Stocks are stated at the lower of cost and net realisable value after making due allowances for obsolete and slow-moving stocks. Cost includes all costs incurred in bringing the stock items to their present condition (purchase cost on first in first out basis).
At each reporting 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 25
|
Notes to the financial statements
For the year ended 30 June 2024
3.Accounting policies (continued)
Debtors consist of trade debtors, amounts due from connected person and connected companies, restricted cash, amounts recoverable on long-term contracts, prepayments and other debtors. Debtors are measured at transaction price, less any impairment.
Trade debtors are recognised and carried at original amounts for goods and services provided as a result of the carrying on the principal activities of the Group less any provision for bad debts. An estimate for bad debt is made when the director considers that collection of the full amount of the invoice is no longer probable and amounts are charged to the consolidated statement of comprehensive income account when identified.
Amounts due from connected person and companies consist of other debtors owned by the Group's related parties.
Prepayments represent the value of goods and services invoiced to the Group that are yet to be provided at the balance sheet date. Prepayments are recognised upon payment of purchase invoices by the Group and are measured by time apportioning the value of the invoices over the period of receipt of the relevant goods or services.
Other debtors relate to amounts owed to the Group that did not arise from the provision of those goods and services as a result of the carrying on of the principal activities of the Group. They are recognised when the directors consider that it is probable that the future economic benefits will flow to the Group and these benefits can be reliably measured. Other debtors are measured at the directors' estimate of the value of the proceeds likely to be received by the Group.
Restricted cash pertains to the blocked account in relation to the loan.
Amounts recoverable on long term contracts are stated at cost plus attributable profit less foreseeable losses and payments on account received in excess of turnover recognised. The value of amounts recoverable on long term contracts is reflected in turnover and in debtors (amounts recoverable on contracts) at cost plus attributable profit. The balance of any payments received on account, in excess of recognised turnover, is separately disclosed within creditors. Cost includes all direct costs incurred in bringing the contract to its present state of completion.
Cash at bank and in hand consist of unrestricted cash balances.
Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management. This is presented as part of Creditors: amounts falling due within one year in the consolidated statement of financial position.
Page 26
|
Notes to the financial statements
For the year ended 30 June 2024
3.Accounting policies (continued)
Creditors consist of trade and other creditors, income tax payable, taxation and other taxes and social security costs, accruals, amounts due to connected persons and companies, obligations under finance lease, and loan payable. Creditors are measured at the transaction price. Creditors are derecognised from the consolidated statement of financial position only when the obligation are extinguished either through discharge, cancellation or expiration.
Accruals represent the value of goods and services provided to the Group at the balance sheet date for which no invoice has been received. Accruals are recognised upon receipt of goods and services by the Group and are measured at the directors' estimate of the value of the invoice likely to be received by the Group.
Creditors are classified as creditors: amounts falling due within one year if payment is due to be settled within one year or less after the end of the financial year or the Group does not have an unconditional right to defer settlement of the creditor for at least 12 months after the end of the financial year.
|
|
Foreign currency translation
|
Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date. All differences are taken to the consolidated profit and loss account.
The Company provides a range of benefits to employees a discussed below.
Short-term benefits
Short-term benefits, including holiday pay and other similar non-monetary benefits, are recognised as an expense in the period in which the service is received.
Defined contribution pension plan
The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.
The contributions are recognised as expense in the consolidated statement of comprehensive income when they fall due. Amounts not paid are shown in accruals as a liability in the consolidated statement of financial position. The assets of the plan are held separately from the Group in independently administered funds.
Called up share capital represents the nominal value of shares that have been issued.
Profit and loss account includes all current and prior period retained profits and losses less declared 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.
Page 27
|
Notes to the financial statements
For the year ended 30 June 2024
3.Accounting policies (continued)
|
|
Related party relationships and transactions
|
Related party transactions are transfers of resources, services or obligations between the Group and its related parties, regardless whether a price is charged. Parties are considered to be related if one party has direct or indirect control of the other party, the parties are subject to common control from the same sources, one party has influence over the financial and operating policies of the other party to an extent that the other party might be inhibited from pursuing at all times its own separate interests or the parties, entering a transaction, are subject to influence from the same source to such an extent that one of the parties to the transaction has subordinated its own separate interests.
|
|
Events after the balance sheet date
|
Any post-year-end event that provides additional information about the Group's consolidated financial position at the end of reporting period (adjusting event) is reflected in the consolidated financial statements. Post-year-end events that are not adjusting events, if any, are disclosed when material to the consolidated financial statements.
|
|
Provisions and contingencies
|
Provisions are recognised when present obligations as a result of a past event will probably lead to an outflow of economic resources from the Group and amounts can be estimated reliably. The timing or amount of the outflow may still be uncertain. Contingent liabilities are potential liabilities that may occur as a result of present obligations depending on the outcome of uncertain future events. Contingent liabilities are recognised in the consolidated financial statements if the contingency is probable and the amount of the liability can be reasonably estimated. Contingent assets are potential economic benefits that may be received by the Group depending on the outcome of uncertain future events. Contingent assets are not recognised in the consolidated financial statements.
|
|
Parent company statement of comprehensive income
|
The directors have taken advantage of the exemption from including the parent company's statement of comprehensive income account in the consolidated financial statements on the ground that the Group is required to prepare group accounts including a consolidated statement of comprehensive income.
Page 28
|
Notes to the financial statements
For the year ended 30 June 2024
|
Significant judgments in applying accounting policies and key sources of estimation uncertainty
|
The presentation of the consolidated financial statements in accordance with FRS 102 requires management to make judgements and estimates that affect amounts reported in the consolidated financial statements and the related notes. Judgements and estimates are based on different factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual results may ultimately differ from these estimates.
Distinguishing operating and finance leases
The Group is a party in a lease agreement as a lessee. Critical judgement is required to be exercised by management in order to distinguish the lease agreements as either an operating or a finance lease by looking at the transfer or retention of the significant risks and rewards of ownership of the properties covered by the agreements. Failure to make the right judgement will result in either overstatement or understatement of assets and liabilities. Based on management's assessment, the Group's leases are operating and finance leases.
Useful lives and residual values of tangible and intangible fixed assets
The Group estimates the useful lives of tangible and intangible fixed assets based on the period over which the assets are expected to be available for use. The Group estimates the residual values of tangible and intangible fixed assets based on the amount expected to be currently obtained from the disposal of the asset, net of estimated costs of disposal, if the assets were already of the age and in the condition expected at the end of its useful life. The estimated useful lives and residual values of tangible and intangible fixed assets are reviewed periodically and are updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence and legal or other limits on the use of the assets. The carrying amounts of intangible and tangible fixed assets are analysed in notes 10 and 11, respectively.
Impairment of non-financial assets
An adequate allowance for impairment is provided when objective evidence of impairment exists. Where there are indicators of impairment of individual assets, the Group performs impairment test based on fair value less costs to sell calculation or a value in use calculation. The fair value less costs to sell calculation is based on available data from binding sales transactions in an arm's length transaction on similar assets or observable market prices, if any, less incremental costs for disposing of the asset. The value in use calculation is based on a discounted cash flow model. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash inflows and the growth rate used for extrapolation purposes.
No impairment of the Group's non-financial assets was recognised during the period ended 30 June 2024 (2023: £nil). The carrying values of intangible and tangible fixed assets are shown in notes 10 and 11, respectively.
An adequate allowance for impairment of debtors is provided where objective evidence of impairment exists. The Group evaluates the amount of allowance for impairment based on available facts and circumstances affecting the collectability of the accounts, including, but not limited to, the length of the Group's relationship with its customers, the customers' current credit status, average age of accounts, collection experience and historical loss experience.
The carrying value of debtors is shown in note 14.
Determining realisable amount of deferred tax assets
Management judgement is required in order to determine the amount of deferred tax assets to be recognised. The extent to which deferred tax assets can be recognised is based on an assessment of the Group’s future taxable income against the deductible temporary differences that can be utilised. Deferred tax asset recognised by the Group as at 30 June 2024 and 2023 are shown under debtors in note 14.
Page 29
|
Notes to the financial statements
For the year ended 30 June 2024
|
Consolidated (loss)/profit on ordinary activities before taxation
|
|
This is stated after charging:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortisation of intangible fixed assets (see note 10)
|
|
|
|
Depreciation of tangible assets (see note 11)
|
|
|
|
Operating lease rentals - land buildings
|
|
|
|
|
|
|
|
Fees payable to the Group's auditor for the audit of the Company and its subsidiaries
|
|
|
|
Fees for other assurance and non-audit services
|
|
|
|
|
|
|
|
Emoluments and other benefits
|
|
|
|
|
|
|
|
|
|
|
|
Staff costs (including directors' emoluments)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wages and salaries (including salaries of directors, see note 6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of employees during the period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 30
|
Notes to the financial statements
For the year ended 30 June 2024
|
|
|
|
|
Current tax on profits for the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed asset timing differences
|
|
|
|
Short term timing differences
|
|
|
|
|
|
|
|
|
|
|
|
Tax on profit on ordinary activities
|
|
|
|
Factors affecting tax charge for the year/period
|
|
The tax assessed for the year/period is higher than (2023 -higher than) the standard rate of corporation tax in the UK of 25% (2023 - 20.28%). The differences are explained below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)/profit on ordinary activities before tax
|
|
|
|
(Loss)/profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 25% (2023 -20.28%)
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to tax charge in respect of prior periods
|
|
|
|
|
|
|
|
|
|
|
|
Movement in deferred tax not recognised
|
|
|
|
Remeasurement of deferred tax for changes in tax rates
|
|
|
|
Assessable tax losses carried forward
|
|
|
|
Difference between depreciation and capital allowance
|
|
|
|
Difference in tax rates between Gibraltar and UK
|
|
|
|
Net eliminated profit and loss transactions
|
|
|
|
Total tax charge for the year/period
|
|
|
Page 31
|
Notes to the financial statements
For the year ended 30 June 2024
|
This includes redemption premium of £8,125,000 as a result of the refinancing of Cheyne loan during the year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge for the period (see note 5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 32
|
Notes to the financial statements
For the year ended 30 June 2024
10.Intangible assets (continued)
Page 33
|