SPEX_OFFSHORE_(UK)_LIMITE - Accounts

The directors of the company have elected not to include a copy of the profit and loss account within the financial statements.true

For the financial year ended 31 December 2020 the company was entitled to exemption from audit under section 477 of the Companies Act 2006 relating to small companies.

The directors acknowledge their responsibilities for complying with the requirements of the Companies Act 2006 with respect to accounting records and the preparation of financial statements.

The members have not required the company to obtain an audit of its financial statements for the year in question in accordance with section 476.

These financial statements have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies regime.

SPEX Offshore (UK) Limited is a private company limited by shares incorporated in Scotland. The registered office is Blackwood Partners LLP, Blackwood House, Union Grove Lane, Aberdeen, AB10 6XU. The company's registration number is SC398792. The trading address is Ground Floor, Unit 2 Dunnottar House, Howe Moss Drive, Kirkhill Industrial Estate, Aberdeen, AB21 0FN.

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 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest pound sterling.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

At the time of approving the financial statements, the directors have reviewed trading and cashflow forecasts for the next 12 months through to 31 December 2022 and are satisfied that the company will have sufficient financial resources to continue in operational existence for the foreseeable future.true

In making this assessment, the directors have taken into account the continued impact of the COVID-19 Pandemic, reduced activity levels in the Oil & Gas market and the support available from the parent company and from within the wider group.

The directors have also considered the ongoing litigation described in note 9 and, regardless of the final outcome of the case, do not believe a material outflow of cash is likely within twelve months of the date of signing these financial statements.

The parent company has confirmed that it will not seek repayment of intercompany loans due to the parent company and fellow subsidiaries of £2.6m (2019 - £2.0m) and has confirmed that financial support will be provided as required, to ensure that the company can meet its obligations as they fall due for a period of at least 12 months from the date of approval of these financial statements.

Subsequent to the year end, the shareholders of the parent company have provided the group with equity funding of £1.9m and deferred the repayment date of £4.3m of loan notes (and associated interest) due in June 2022 to 31 December 2023, which has provided further cashflow benefits for the group. In addition, the shareholders of the parent company have provided an indication of their intention to provide further funding of up to £1m, subject to the position of the group at that time, should this be required.

On this basis, the directors consider it appropriate to prepare the financial statements on a going concern basis.

Turnover represents amounts receivable for goods and services net of VAT and trade discounts. Revenue is recognised as services are provided and stock is despatched.

Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in 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.

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets, which include debtors, amounts due from fellow group companies 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 liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities, including creditors, bank loans, amounts due to fellow group companies are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

The tax expense represents the sum of the tax currently payable and deferred tax.

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 company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax 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 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.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received. Government grants are recognised in accordance with the accruals model. The income from the Job Retention Scheme is recognised as other operating income in the profit and loss account in the period to which the grant relates.

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

The following are considered to be either judgements that have had the most significant impact on the financial statements, or estimates that are dependent on assumptions which could change in the next financial year and have a material effect on the carrying amounts of assets and liabilities recognised at the balance sheet date:

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Going concern assessment is a judgement exercised by management (see note 1.2).

The Directors have made a critical judgement regarding a contingent liability, please see note 9.

The average monthly number of persons (including directors) employed by the company during the year was:

Amounts owed by group undertakings are interest free and repayable on demand.

Amounts owed to group undertakings are interest free and repayable on demand.

The profit and loss reserves represent cumulative realisable profits and losses.

The company has been named in litigation regarding an alleged breach of a licence agreement by former group companies. The litigation started in the US legal system and is now in the Scottish legal system.  At this stage it is too early in proceedings to conclude on the likely outcome either in terms of the likelihood of success in refuting the claims and if unsuccessful in so doing what the financial impact would be on the company. The company has not made a provision in the accounts for any liability that could arise if they were unsuccessful as they do not believe they have any liability and are continuing to refute the allegations.

Subsequent to the year end, the shareholders of the parent company have provided the group with equity funding of £1.9m and deferred the repayment of £4.3m of loan notes (and associated interest) due in June 2022 to 31 December 2023.

The company's immediate and ultimate parent company is SPEX Group Holdings Limited, a company registered in Scotland. The registered office of SPEX Group Holdings Limited is Blackwood House, Aberdeen, AB10 6XU.

No one individual controls SPEX Group Holdings Limited.