The directors present the strategic report and audited financial statements for the year ended 31 December 2024.
The group's principal activity is the provision of consultant engineering services and sale of oilfield equipment.
The results of the group show a comprehensive income for the year of $17,679 (2023 - $725,563) and turnover of $13,115,980 (2023 - $20,344,771).
The key risks and uncertainties affecting both the group and the company are considered to relate to the international energy sector in general, where a continuation of a sustained downturn in oil and gas prices, coupled with continued reduction in exploration levels would have a negative impact on future profitability. To meet these challenges,both the group and the company continue to strive to develop and deepen both customer and supplier relationships, and to expand the customer base. In addition to this, the group , the company and the ITECO Group are actively supplying to, and investing in, the geothermal energy market.
Price Risk:
The group has no significant exposure to price risk which will affect the valuation of its financial assets and liabilities.
Credit Risk:
The group’s exposure to credit risk arises from trade and other receivables, margin deposits and cash and cash equivalents placed with the banks. Banking transactions are limited to the branches of international banks operating in the countries of operation. The group has policies and procedures in place to ensure that it is not exposed to undue credit risk and for monitoring and follow up of the debtors. The group's exposure to credit risk on trade receivables is influenced mainly by the individual characteristics of each customer and the demographics of customer's customer base, including the default risk of the industry and country in which customers operate.
Liquidity Risk:
Liquidity Risk is managed locally with group support available should the company need it. Cash flow forecasts are maintained and monitored daily in order to effectively manage liquidity.
Given the straightforward nature of the business, the group's directors are of the opinion that analysis using KPIs is not necessary for an understanding of the development, performance or position of the business.
The outlook is positive for the foreseeable future. The directors regularly review the cost base and the operational structure of the group to ensure maximum efficiency. The groups members have complimentary activities and support each company in the group well.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2024.
The company changed name from Petroleum Equipment Supply Engineering Company Limited to PESECO Limited on 3 September 2024.
Financial risk management and future outlook are outlined in the strategic report.
The results for the year are set out on page 8. The financial statements are prepared in US dollars.
No ordinary dividends were paid. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
There are no events that have occurred after the reporting date of 31 December 2024 that require to be disclosed by the directors in this report.
This has been disclosed in the Strategic Report.
FRS 101 - Reduced Disclosure Framework is not applicable as a basis for the preparation of group consolidated accounts and the directors have elected to apply FRS 102 - The Financial Reporting Standard applicable in the UK and Republic of Ireland, effective for the financial year ending 31 December 2024. See notes 24 and 27 for further details.
The auditor, MHA, previously traded through the legal entity MacIntyre Hudson LLP. In response to regulatory changes, MacIntyre Hudson LLP ceased to hold an audit registration with the engagement transitioning to MHA Audit Services LLP.
MHA will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
Both the group and the company meet their day-to-day working capital requirements through its cash reserves and continued trading. Both continue to work closely with Barclays and makes use of a trade loan facility which helps with cashflow management.
The group's and the company's forecasts and projections, taking account of potential changes in trading performance, show that they both will be able to operate within the level of its current cash reserves. After making enquiries, the directors have a reasonable expectation that both the group and the comapny have adequate resources to continue in operational existence for the foreseeable future. The group and the company can also rely on financial support from its parent company, if required. Both therefore continue to adopt the going concern basis in preparing financial statements.
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
We have audited the financial statements of PESECO Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2024 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for 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 and parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
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 year for which the financial statements are prepared is consistent with the financial statements; and
The strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
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 specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud is detailed below:
Agreement of the financial statements disclosure to underlying supporting documentation, review of correspondence and enquiries of management and those charged with governance.
Enquiry of management and those charged with governance around actual and potential litigation and claims.
Enquiry of entity staff in tax and compliance functions to identify any instances of non-compliance with laws and regulations
Reviewing financial statement calculations disclosures and discussing the applicability of those disclosures with relevant finance staff, the appropriateness of accounting policies as they apply to the company
Audited the risk of management override of controls, including through testing manual accounting entries and other adjustments for appropriateness, and evaluating the business rationale of significant transactions outside the normal course of business. In particular, our testing focussed on revenue recognition and the calculation of accrued and deferred income.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in 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.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was $40,884 (2023 - $493,073 profit).
PESECO Limited (the company) is a private limited liability company in the United Kingdom, incorporated and domiciled in Scotland. The company changed name from Petroleum Equipment Supply Engineering Company Limited to PESECO Limited on 3 September 2024. The company’s principal activities are the provision of consultant engineering services and sale of oilfield equipment.
The company's principal place of business is Badentoy Park, Portlethen, United Kingdom, same as the company's registered office.
The parent company is Iteco General Trading DMCC, incorporated and domiciled in the UAE.
The group consists of PESECO Limited and its subsidiary PESECO B.V.
Summary of Significant Accounting Policies
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
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 US dollars, 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.
These financial statements for the year ended 31 December 2024 are the first financial statements of PESECo Limited prepared in accordance with FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland. The date of transition to FRS 102 was 1 January 2023. An explanation of how transition to FRS 102 has affected the reported financial position and financial performance is given in notes 24 and 27.
The consolidated group financial statements consist of the financial statements of the parent company PESECO Limited together with all entities controlled by the parent company (its subsidiaries).
All financial statements are made up to 31 December 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
The principal activities, risks and uncertainties and future outlook are set out in the Strategic and Directors’ Report on pages 1 to 3. Both the group and the company meet its day-to-day working capital requirements through its cash reserves and continued trading. Both the group and the company continue to work closely with Barclays and makes use of a trade loan facility which helps with cash flow management. The group's and the company's forecasts and projections, taking account of potential changes in trading performance, show that the company will be able to operate within the level of its current cash reserves. The group can also rely on financial support from its parent company, if required. After making enquiries, the directors have a reasonable expectation that both the group and the company have adequate resources to continue in operational existence for the foreseeable future. Both the group and the company therefore continue to adopt the going concern basis in preparing financial statements.
Turnover comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the group’s activities. Turnover is shown net of value-added tax, returns, rebates and discounts.
The group recognises revenue when the amount of revenue can be measured reliably, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the group's activities. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of the arrangement.
Sale of goods is recognised when the group has delivered products to the customer, the customer has accepted the products and collectability of the related receivables is reasonably assured. Revenue from services is recognised in the periods services are provided and accrued if delivered but not invoiced at the year end. Where the products have not been delivered or the services have not been performed, but settlements have been received in advance, revenue recognition is deferred until completion of delivery of the products or performance of the services.
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 recognised in the profit and loss account.
Interests in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and 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, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group 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.
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 group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, 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.
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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group 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 group.
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised directly in equity. In this case, the tax is also recognised in equity.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
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 profit and loss account, 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 if, and only if, there is 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.
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.
The company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the company pays fixed contributions into a separate entity. Once the contributions have been paid the company has no further payment obligations. The contributions are recognised as an expense in the statement of income and retained earnings when they fall due. Amounts not paid are shown in accruals as a liability in the balance sheet. The assets of the plan are held separately from the company in independently administered funds.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss 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 leased asset are consumed.
Foreign Currency Translation
(a) Functional and Presentation Currency:
Items included in the financial statements of the company are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). This is also the presentation currency of the company. The financial statements are presented in United States Dollars (USD), which is the company's functional currency.
(b) Transactions and Balances:
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit and loss account. Foreign exchange gains and losses are presented in the profit and loss account within "Administrative Expenses".
(c) Translation of subsidiary balances
Changes in the fair value of derivative financial instruments that are designed and effective as hedges Foreign exchange gains and losses that arise as a result of translating subsidiary transactions where that subsidiary uses a different functional currency are reported in other comprehensive income and recorded direct to equity as a currency translation reserve.
In the application of both the group's and 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.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The company makes estimates and assumptions concerning the future. The resulting accounting estimates may, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows:
(a) Impairment of trade and other receivables
The impairment charge reflects estimates of losses arising from the failure or inability of the parties concerned to make the required payments. The charge is based on aging of the customers' accounts, the customers' creditworthiness and the historic write-off experience. Changes to the estimated impairment charge may be required if the financial condition of the customers was to improve or deteriorate.
(b) Income tax
The company is subject to income taxes in the UK. Significant judgement is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain. The company recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.
(c) Provision for inventory write-down
The company carries out a review of all items held in inventory each year, focussing on the carrying value of each item. Professional judgement is used to determine whether a provision should be made and, if so, the value of the write-down. When arriving at a decision, consideration is made as to the current market conditions, the age and condition of the material, the storage location and the demand and availability of the product.
(d) Functional currency
The company considers the functional currency that should be applied to the financial statements. The parent company is judged to have US dollars as its functional currency by virtue of the level of revenue and cost of sales transactions conducted in that currency. For the same reason, the subsidiary is considered to have its functional currency as Euros and the subsidiary results are translated to US dollars for the purposes of the consolidation.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual (credit)/charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
PESECo Limited acquired the entire share capital of PESECo B.V. on 1 July 2024 for €1. The Dutch company is now a 100% subsidiary of the UK company.
Goodwill represents the amount paid for the subsidiary in excess of the net liabilities of the subsidiary on date of acquisition. Goodwill is being amortised over a period of five years.
At 1 July 2024, the following assets and liabilities were recognised:
Current assets $2,891,671
Current liabilities $3,159,881
The subsidiary generated turnover of $3,622,245 and a profit of $66,757 for the period since the acquisition date.
Details of the company's subsidiaries at 31 December 2024 are as follows:
Bank loans represent the balance due at 31 December 2024 on a trade loan facility with Barclays Bank PLC. The bank holds a floating charge over the assets of the company.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The deferred tax asset set out above is expected to reverse within 12 months and relates to the utilisation of tax losses against future expected profits of the same period.
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
All shares rank pari passu in all respects.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
As a wholly owned subsidiary of Iteco General Trading DMCC, the company has taken advantage of the exemption in section 33.1 of FRS 102 not to disclose transactions with wholly owned group companies.
There are no events that have occurred after the reporting date of 31 December 2024 that require to be disclosed in these financial statements.
As of financial years up to and including 31 December 2023, the financial statements have been prepared in accordance with United Kingdom Accounting Standards, in particular, Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) and the Companies Act 2006 (the Act) as applicable to companies using FRS 101.
FRS 101 - Reduced Disclosure Framework is not applicable as a basis for the preparation of group consolidated accounts and the directors have elected to apply FRS 102 - The Financial Reporting Standard applicable in the UK and Republic of Ireland, effective for the financial year ending 31 December 2024.
This change enables the company to prepare consolidated financial statements in accordance with UK GAAP, offering a more complete and transparent view of the financial position and performance of the group as a whole. It also supports improved comparability and consistency in financial reporting across group entities.
These financial statements for the year ended 31 December 2024 are the first financial statements of PESECo Limited prepared in accordance with FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland. The reported financial position and financial performance for the previous period are not affected by the transition to FRS 102.