Exhibit 99.1

NESSCO GROUP HOLDINGS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED 31 MARCH 2012

 

1

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Nessco Group Holdings Limited

Registered Number SC340634

Consolidated Financial Statements

Year ended 31 March 2012

CONTENTS

 

		Page
Independent auditors’ report		3
Consolidated profit and loss account		4
Consolidated statement of recognised gains and losses		5
Consolidated and Company balance sheets		6
Consolidated cash flow statement		7
Notes to the consolidated cash flow statement		8
Notes to the consolidated financial statements		9 – 23

 

2

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Nessco Group Holdings Limited

 

INDEPENDENT AUDITORS’ REPORT

Johnston Carmichael LLP

29 Albyn Place

Aberdeen

AB10 1YL

Independent Auditors’ Report

The Board of Directors

Nessco Group Holdings Limited:

We have audited the accompanying consolidated balance sheets of Nessco Group Holdings Limited and its subsidiary undertakings as of 31 March 2012 and 2011 and the related consolidated profit and loss accounts and cash flow statements for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the United States generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Nessco Group Holdings Limited and its subsidiary undertakings as of 31 March 2012 and 2011, and the results of their operations and their cash flows for the years then ended in conformity with generally accepted accounting principles in the United Kingdom.

Accounting principles generally accepted in the United Kingdom vary in certain significant respects from U.S. generally accepted accounting principles. Information relating to the nature and effects of such differences is presented in note 26 to the consolidated financial statements.

 

/s/ Johnston Carmichael LLP

Johnston Carmichael LLP

Aberdeen, United Kingdom

September 17th 2012

 

3

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CONSOLIDATED PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED 31 MARCH 2012

Nessco Group Holdings Limited

 

								2012								2011
		Notes		£				£				£				£
Turnover		2
Continuing operations					33,218,864								16,866,987
Discontinued operations					25,170								440,287
Total turnover									33,244,034								17,307,274
Cost of sales		3							(27,651,542	)							(13,699,575	)
Gross profit		3							5,592,492								3,607,699
Distribution costs		3							(597,327	)							(594,116	)
Administrative expenses		3							(2,625,591	)							(2,314,739	)
Operating profit		4
Continuing operations					2,609,680								775,162
Discontinued operations					(240,106	)							(76,318	)
Total operating profit									2,369,574								698,844
Loss on sale of subsidiary undertakings									—								(52,567	)
Loss on restructuring									(317,037	)							—
Profit on ordinary activities before interest									2,052,537								646,277
Other interest receivable and similar income									3,648								9,213
Interest payable and similar charges		5							(1,056,774	)							(1,091,143	)
Profit/(loss) on ordinary activities before taxation									999,411								(435,653	)
Tax on profit/(loss) on ordinary activities		6							(465,642	)							(69,489	)
Profit/(loss) on ordinary activities after taxation									533,769								(505,142	)

 

4

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CONSOLIDATED STATEMENT OF RECOGNISED GAINS AND LOSSES

FOR THE YEAR ENDED 31 MARCH 2012

Nessco Group Holdings Limited

 

		2012				2011
		£				£
Profit/(Loss) for the financial year			533,769				(505,142	)
Unrealised surplus on revaluation of properties			—				197,211
Total recognised gains and losses relating to the year			533,769				(307,931	)

 

5

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CONSOLIDATED AND COMPANY BALANCE SHEETS

AS AT 31 MARCH 2012

Nessco Group Holdings Limited

 

				Consolidated								Company
				2012				2011				2012				2011
		Notes		£				£				£				£
Fixed assets
Intangible assets		8			3,852,698				4,469,130				—				—
Tangible assets		9			4,167,823				4,223,693				34,746				55,139
Investments		10			—				—				14,009,441				14,009,441
					8,020,521				8,692,823				14,044,187				14,064,580
Current assets
Stocks		11			670,368				881,656				—				70,082
Debtors		12			14,377,700				6,548,277				293,128				391,335
Cash at bank and in hand					4,160,795				2,679,044				—				1,813
					19,208,863				10,108,977				293,128				463,230
Creditors: amounts falling due within one year		13			(13,703,662	)			(6,342,366	)			(3,997,883	)			(3,339,193	)
Net current assets					5,505,201				3,766,611				(3,704,755	)			(2,875,963	)
Total assets less current liabilities					13,525,722				12,459,434				10,339,432				11,188,617
Creditors: amounts falling due after more than one year		14			(11,693,826	)			(11,824,072	)			(11,693,826	)			(11,824,072	)
					1,831,896				635,362				(1,354,394	)			(635,455	)
Capital and reserves
Called up share capital		17			1,462,765				800,000				1,462,765				800,000
Revaluation reserve		18			197,211				197,211				—				—
Profit and loss account		18			171,920				(361,849	)			(2,817,159	)			(1,435,455	)
Shareholders’ funds		19			1,831,896				635,362				(1,354,394	)			(635,455	)

 

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CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 MARCH 2012

Nessco Group Holdings Limited

 

						2012								2011
		£				£				£				£
Net cash inflow from operating activities							2,827,676								610,213
Returns on investments and servicing of finance
Interest received			3,648								9,213
Interest paid			(739,779	)							(569,238	)
Net cash outflow for returns on investments and servicing of finance							(736,131	)							(560,025	)
Taxation							(41,625	)							(15,311	)
Capital expenditure and financial investment
Payments to acquire tangible assets			(273,724	)							(238,725	)
Receipts from sales of tangible assets			12,841								18,700
Net cash outflow for capital expenditure							(260,883	)							(220,025	)
Acquisitions and disposals
Sale of subsidiary undertakings (net of cash acquired)			—								547,433
Net cash inflow for acquisitions and disposals							—								547,433
Net cash inflow before management of liquid resources and financing							1,789,037								362,285
Financing
Repayment of bank loans			(2,081,438	)							(589,775	)
Issue of ordinary share capital			600,000								—
Issue of loan funding			1,400,000								—
Net cash outflow from financing							(81,438	)							(589,775	)
Increase/(decrease) in cash in the year							1,707,599								(227,490	)

 

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NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 MARCH 2012

Nessco Group Holdings Limited

 

1.	Reconciliation of operating profit to net cash inflow from operating activities

 

		2012 £				2011 £
Operating profit			2,369,574				698,844
Depreciation of tangible assets			325,360				330,969
Amortisation of intangible assets			616,432				616,432
Profit on disposal of tangible assets			(12,841	)			(18,476	)
Decrease/(Increase) in stocks			79,524				(497,590	)
Increase in debtors			(7,994,145	)			(2,627,036	)
Increase in creditors within one year			7,443,772				2,107,070
Net cash inflow from operating activities			2,827,676				610,213

 

2.	Analysis of net debt

 

		1 April 2011				Cash flow				Other non-cash changes				31 March 2012
		£				£				£				£
Net cash:
Cash at bank and in hand			2,679,044				1,481,751				—				4,160,795
Bank overdrafts			(244,759	)			225,848				—				(18,911	)
			2,434,285				1,707,599				—				4,141,884
Debts falling due within one year			(589,776	)			589,776				(355,588	)			(355,588	)
Debts falling due after one year			(5,090,338	)			1,491,662				302,766				(3,295,910	)
Other loans			(6,733,643	)			(1,400,000	)			(264,173	)			(8,397,816	)
			(12,413,757	)			681,438				(316,995	)			(12,049,314	)
Net debt			(9,979,472	)			2,389,037				(316,995	)			(7,907,430	)

 

3.	Reconciliation of net cash inflow to movement in net debt

 

		2012 £				2011 £
Increase/(decrease) in cash in the year			1,707,599				(227,490	)
Net cash outflow from decrease in debt			681,438				589,775
Amortisation of debt issue costs			(103,401	)			(94,717	)
Accrual of redemption premium			(213,594	)			(213,594	)
Movement in net debt in the year			2,072,042				53,974
Opening net debt			(9,979,472	)			(10,033,446	)
Closing net debt			(7,907,430	)			(9,979,472	)

 

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2012

Nessco Group Holdings Limited

 

1	Accounting policies

 

1.1.	Accounting convention

The financial statements are prepared under the historical cost convention.

 

1.2.	Compliance with accounting standards

The financial statements are prepared in accordance with applicable United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), which have been applied consistently (except as otherwise stated).

 

1.3.	Basis of consolidation

The consolidated profit and loss account and balance sheet include the financial statements of the company and its subsidiary undertakings made up to 31 March 2012. The results of subsidiaries sold or acquired are included in the profit and loss account up to, or from the date control passes. Intra-group sales and profits are eliminated fully on consolidation.

 

1.4.

Turnover

Turnover represents amounts (excluding value added tax) derived from the provision of goods and services to customers.

The amount of profits attributable to the stage of completion of a long term contract is recognised when the outcome of the contract can be foreseen with reasonable certainty. Turnover for such contracts is stated at the cost appropriate to their stage of completion plus attributable profits, less the amounts recognised in previous years. Provision is made for any losses as soon as they are foreseen.

 

1.5.

Goodwill

Goodwill arising on consolidation is written off in equal annual instalments over its estimated useful economic life which is considered to be 10 years.

 

1.6.	Tangible fixed assets and depreciation

Tangible fixed assets other than freehold land are stated at cost or valuation less depreciation. Depreciation is provided at rates calculated to write off the cost or valuation less estimated residual value of each asset over its expected useful life, as follows:

 

Freehold buildings		2% per annum
Fixtures, fittings and computers		10-33% per annum
Motor vehicles		20-33% per annum
Equipment hired to customers		10-33% per annum

No depreciation is charged against land.

 

1.7.	Investments

Fixed asset investments are stated at cost less provision for diminution in value.

Current asset investments are stated at the lower of cost and net realisable value.

 

1.8.	Stock and work in progress

Stocks are stated at the lower of average cost and net realisable value. Short-term work in progress is valued at the lower of cost (wages, materials and on cost) and net realisable value.

 

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 MARCH 2012

 

Nessco Group Holdings Limited

 

1.9.	Long term contracts

Where the outcome of the contract cannot be foreseen with reasonable certainty, contract work in progress is stated at cost incurred, less those costs transferred to the profit and loss account, after deducting foreseeable losses and payments on account not matched with turnover.

Uninvoiced amounts recoverable on long term contracts are included in debtors and represent turnover recognised in excess of payments on account.

 

1.10.

Pensions

The company operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the company in an independently administered fund. The amount charged against profits represents the contributions payable to the scheme in respect of the accounting period.

 

1.11.

Taxation

Deferred tax is provided in full on timing differences which result in an obligation at the balance sheet date to pay more tax, or right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law. Timing differences arise from inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in the financial statements. Deferred tax assets are recognised to the extent that it is regarded as more likely than not they will be recovered. Deferred tax is not recognised when fixed assets are revalued unless by the balance sheet date there is a binding agreement to sell the revalued assets and the gain or loss expected to arise on sale has been recognised in the financial statements. Deferred tax assets and liabilities are not discounted.

 

1.12.

Foreign currency translation

Transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities expressed in foreign currencies are translated using the rate of exchange ruling at the balance sheet date and the gains and losses on translation are included in the profit and loss account. Differences on exchange are included in operating profit.

 

1.13.

Finance costs

Finance costs of financial liabilities are recognised in the profit and loss account over the term of such instruments at a constant rate on the carrying amount.

 

2

Turnover

The total turnover of the group for the year has been derived from its principal activity.

Segmental analysis by geographical area

The analysis by geographical area of the group’s turnover is set out as below:

 

		2012				2011
		£				£
Geographical segment
UK and North Sea			10,107,970				7,578,651
Rest of the World			23,136,064				9,728,623
			33,244,034				17,307,274

 

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 MARCH 2012

 

Nessco Group Holdings Limited

 

3	Cost of sales, gross profit, distribution costs and administration expenses

 

						2012												2011
		Continuing operations				Discontinued operations				Total				Continuing operations				Discontinued operations				Total
		£				£				£				£				£				£
Cost of sales			27,632,125				19,417				27,651,542				13,398,750				300,825				13,699,575
Gross profit			5,586,739				5,753				5,592,492				3,468,237				139,462				3,607,699
Distribution costs			597,327				—				597,327				594,116				—				594,116
Administration costs			2,379,732				245,859				2,625,591				2,098,959				215,780				2,314,739

 

4	Operating profit

 

		2012				2011
		£				£
Operating profit is stated after charging:
Amortisation of intangible assets			616,432				616,432
Depreciation of tangible assets			329,594				330,969
Loss on foreign exchange transactions			—				56,251
Operating lease rentals			1,439,310				1,574,985
Fees payable to the group’s auditor for the audit of the group’s annual accounts (company £6,000; 2011: £4,075)			29,500				24,075
and after crediting:
Profit on disposal of tangible assets			(12,841	)			(18,476	)
Profit on foreign exchange transactions			(5,181	)			—

 

5	Interest payable

 

		2012				2011
		£				£
On bank loans and overdrafts			309,840				382,606
On other loans wholly repayable within five years			429,939				400,226
Amortisation of debt issue costs			103,401				94,717
Loan redemption interest accrual			213,594				213,594
			1,056,774				1,091,143

 

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 MARCH 2012

 

Nessco Group Holdings Limited

 

6

Taxation

 

		2012				2011
		£				£
Domestic current year tax
U.K. corporation tax			443,952				56,160
Adjustment for prior years			—				(14,221	)
Total current tax			443,952				41,939
Deferred tax
Deferred tax charge current year			21,690				39,081
Adjustment resulting from changes in tax rate			—				(11,531	)
			465,642				69,489
Factors affecting the tax charge for the year
Profit/(loss) on ordinary activities before taxation			999,411				(435,653	)
Profit/(loss) on ordinary activities before taxation multiplied by standard rate of UK corporation tax of 26.00% (2011 - 28.00%)			259,847				(121,983	)
Effects of:
Non deductible expenses			186,147				179,509
Depreciation on ineligible assets			13,849				15,142
Differences between capital allowances and depreciation			(16,407	)			(23,030	)
Adjustments to previous periods			—				(14,221	)
Non chargeable disposals			—				14,719
Small companies relief			—				(9,049	)
Other tax adjustments			516				852
			184,105				163,922
Current tax charge for the year			443,952				41,939

No provision has been made for deferred tax arising on the revaluation of the company’s land and buildings. The tax on the gains arising on revaluation would only become payable if the properties were sold without rollover relief being available. The tax that would be payable in such circumstances is estimated to be £435,355. These assets are expected to be used in the continuing operations of the business and therefore no tax is expected to be paid in the foreseeable future.

 

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 MARCH 2012

 

Nessco Group Holdings Limited

 

7	Loss for the financial year

As permitted by section 408 Companies Act 2006, the holding company’s profit and loss account has not been included in these financial statements. The loss for the financial year is made up as follows:

 

		2012				2011
		£				£
Holding company’s loss for the financial year			(1,381,704	)			(997,931	)
8       Intangible fixed assets
Group						Goodwill £
Cost
At 1 April 2011 and at 31 March 2012							6,206,866
Amortisation
At 1 April 2011							1,737,736
Charge for the year							616,432
At 31 March 2011							2,354,168
Net book value
At 31 March 2012							3,852,698
At 31 March 2011							4,469,130

 

9	Tangible fixed assets

 

Group		Land and buildings Freehold				Equipment hired to customers				Fixtures, fittings & equipment				Total
		£				£				£				£
Cost or valuation
At 1 April 2011			4,086,605				2,104,788				830,120				7,021,513
Additions			—				148,556				125,168				273,724
Disposals			—				(2,916	)			(38,217	)			(41,133	)
At 31 March 2012			4,086,605				2,250,428				917,071				7,254,104
Depreciation
At 1 April 2011			306,605				1,744,936				746,279				2,797,820
On disposals			—				(2,916	)			(38,217	)			(41,133	)
Charge for the year			53,266				220,146				56,182				329,594
At 31 March 2012			359,871				1,962,166				764,244				3,086,281
Net book value
At 31 March 2012			3,726,734				288,262				152,827				4,167,823
At 31 March 2011			3,780,000				359,852				83,841				4,223,693

 

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 MARCH 2012

 

Nessco Group Holdings Limited

 

9	Tangible fixed assets (continued)

Group

The land and buildings were valued on an open market basis by Ryden, chartered surveyors, in December 2010.

Included within land and buildings is land of £1,395,000 (2011: £1,395,000) which is not depreciated.

Comparable historical cost for the land and buildings included at valuation:

 

		£
Cost
At 1 April 2011 and at 31 March 2012			2,765,605
Depreciation based on cost
At 1 April 2011			503,816
Charge for the year			34,899
At 31 March 2012			538,715
Net book value
At 31 March 2012			2,226,890
At 31 March 2011			2,261,789

 

Company		Plant and machinery				Fixtures, fittings & equipment				Total
		£				£				£
Cost
At 1 April 2011			27,570				435,150				462,720
Additions			—				5,176				5,176
Disposals			(12,374	)			(25,843	)			(38,217	)
At 31 March 2012			15,196				414,483				429,679
Depreciation
At 1 April 2011			24,412				383,169				407,581
On disposals			(12,374	)			(25,843	)			(38,217	)
Charge for the year			93				25,476				25,569
At 31 March 2012			12,131				382,802				394,933
Net book value
At 31 March 2012			3,065				31,681				34,746
At 31 March 2011			3,158				51,981				55,139

 

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 MARCH 2012

 

Nessco Group Holdings Limited

 

10	Intangible fixed assets

 

Company		Shares in group undertakings
		£
Cost and net book value
At 31 March 2011 and 2012			14,009,441

In the opinion of the directors, the aggregate value of the company’s investment in subsidiary undertakings is not less than the amount included in the balance sheet.

Holdings of more than 20%

The company holds more than 20% of the share capital of the following companies:

 

Company		Country of registration or incorporation		Shares held
				Class		%
Subsidiary undertakings
NesscoInvsat Limited		England		Ordinary		100
Countryflow Limited		Scotland		Ordinary		100
Nessco Caspian Limited		Scotland		Ordinary		100

The principal activity of these undertakings for the last relevant financial year was as follows:

 

		Principal activity
NesscoInvsat Limited		Provision of telecommunication services to the global oil and gas industry
Countryflow Limited		Dormant
Nessco Caspian Limited		Dormant

 

11	Stocks and work in progress

 

		Group								Company
		2012				2011				2012				2011
		£				£				£				£
Work in progress			518,766				615,132				—				3,420
Finished goods and goods for resale			151,602				266,524				—				66,662
			670,368				881,656				—				70,082

 

15

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 MARCH 2012

 

Nessco Group Holdings Limited

 

12

Debtors

 

		Group								Company
		2012				2011				2012				2011
		£				£				£				£
Trade debtors			8,610,131				4,183,830				112,615				232,174
Amounts recoverable on long term contracts			5,257,666				1,808,142				—				—
Other debtors			319,252				350,374				114,485				81,943
Prepayments and accrued income			62,445				56,035				32,383				37,141
Deferred tax asset (see note 15)			128,206				149,896				33,645				40,077
			14,377,700				6,548,277				293,128				391,335

The deferred tax asset calculated at 25% (2011: 26%) is wholly in respect of decelerated capital allowances. The deferred tax asset has been recognised on the basis that the directors considered it more likely than not that there will be suitable taxable profits in the foreseeable future against which the deferred tax asset can be utilised.

 

13	Creditors : amounts falling due within one year

 

		Group								Company
		2012				2011				2012				2011
		£				£				£				£
Bank loans and overdrafts			374,499				834,545				374,499				834,545
Trade creditors			3,899,348				1,933,303				22,275				16,294
Amounts owed to group undertakings			—				—				3,300,972				1,596,653
Corporation tax			443,952				41,625				—				—
Taxes and social security costs			157,031				140,409				16,328				15,528
Other creditors			87,258				57,626				—				19,049
Accruals and deferred income			8,741,574				3,334,858				283,809				857,124
			13,703,662				6,342,366				3,997,883				3,339,193

Bank loans and overdrafts are secured by a standard security over the group’s premises and a floating charge over the assets of the group.

 

16

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 MARCH 2012

 

Nessco Group Holdings Limited

 

14	Creditors : amounts falling due after more than one year

 

		Group								Company
		2012				2011				2012				2011
		£				£				£				£
Bank loans			3,295,910				5,090,329				3,295,910				5,090,329
Other loans			8,397,816				6,733,643				8,397,816				6,733,643
Preference shares classed as a financial liability			100				100				100				100
			11,693,826				11,824,072				11,693,826				11,824,072
Analysis of loans
Not wholly repayable within five years by instalments			2,558,684				4,948,887				2,558,684				4,948,887
Not wholly repayable within five years other than by instalments			4,080,000				3,411,226				4,080,000				3,411,226
Wholly repayable within five years			5,410,630				4,053,645				5,410,630				4,053,645
			12,049,314				12,413,758				12,049,314				12,413,758
Included in current liabilities			(355,588	)			(589,786	)			(355,588	)			(589,786	)
			11,693,726				11,823,972				11,693,726				11,823,972
Instalments not due within five years			1,616,630				1,878,770				1,616,630				1,878,770
Preference shares classified as financial liabilities
In more than five years			100				100				100				100

The bank loans and overdraft are secured by a standard security over the group’s premises and a floating charge over the assets of the group.

The first bank loan, initially totalling £4,128,500 was drawn down in June 2008 and, is repayable in 84 monthly instalments from date of drawdown. It bears interest at Libor plus 2%.

The second bank loan, totalling £2,621,500, is repayable in 120 monthly instalments, commencing June 2013. It bears interest at Libor plus 1.75%.

Within other loans, there is a balance of £3,559,900, repayable in June 2013. It bears interest at 10% per annum, with a redemption premium of 30% of capital balance also payable. There is also a balance of £1,400,000 which bears interest at 14% per annum with no fixed redemption date. The remainder of the other loans are non-interest bearing, and are repayable on the sale of the company.

 

17

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 MARCH 2012

 

Nessco Group Holdings Limited

 

15	Provisions for liabilities

The deferred tax asset (included in debtors, note 12) is made up as follows:

 

		Group				Company
		2012				2012
		£				£
Balance at 1 April 2011			(149,896	)			(40,077	)
Charge for the year			21,690				6,432
Balance at 31 March 2012			(128,206	)			(33,645	)

 

		Group								Company
		2012				2011				2012				2011
		£				£				£				£
Decelerated capital allowances			(116,322	)			(137,729	)			(21,761	)			(27,910	)
Other timing differences			(11,884	)			(12,167	)			(11,884	)			(12,167	)
			(128,206	)			(149,896	)			(33,645	)			(40,077	)

 

16	Pension and other post-retirement benefit commitments

The group operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the group in an independently administered fund. The pension cost charge represents contributions payable by the group to the fund. Contributions totalling £18,844 (2011—£14,719) were payable to the fund at the year end and are included in creditors.

Defined contribution

 

		2012				2011
		£				£
Contributions payable by the group for the year			139,289				109,052

 

18

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 MARCH 2012

 

Nessco Group Holdings Limited

 

17	Share capital

 

		2012				2011
		£				£
Allotted, called up and fully paid
422,765 A Ordinary shares of £1 each			422,765				360,000
440,000 B Ordinary shares of £1 each			440,000				440,000
600,000 C Ordinary shares of £1 each			600,000				—
			1,462,765				800,000

On 19 May 2011, there was an increase in the A Ordinary share capital of 62,765 £1 shares.

On 4 October 2011, 300,000 C Ordinary shares of £1 each were issued for a total consideration of £300,000. On 20 March 2012, a further 300,000 C Ordinary shares of £1 each were issued for a total consideration of £300,000.

On a sale or return of capital, the A ordinary and B ordinary shares are paid £1 per share. The C ordinary shares are paid £1 per share plus a 10% return for every complete year since date of issue of the C ordinary shares. Any remaining surplus is then distributed to the A Ordinary and B Ordinary shares on a pro rata basis. None of the shares have a right of redemption. The preference shares have a right to a cumulative dividend of 10p per annum in respect of each share held. The other shares have no right to a dividend.

 

18	Statement of movements on reserves

 

Group		Revaluation reserve				Profit and loss account
		£				£
Balance at 1 April 2011			197,211				(361,849	)
Profit for the financial year			—				533,769
Balance at 31 March 2012			197,211				171,920

 

Company		Profit and loss account
		£
Balance at 1 April 2011			(1,435,455	)
Loss for the financial year			(1,381,704	)
Balance at 31 March 2012			(2,817,159	)

 

19

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 MARCH 2012

 

Nessco Group Holdings Limited

 

19	Reconciliation of movements in shareholders’ funds

 

Group		2012 £				2011 £
Profit/(loss) for the financial year			533,769				(505,142	)
Proceeds from issue of shares			662,765				—
Other recognised gains and losses			—				197,211
Net addition/(depletion in) to shareholders’ funds			1,196,534				(307,931	)
Opening shareholders’ funds			635,362				943,293
Closing shareholders’ funds			1,831,896				635,362
Company		2012				2011
		£				£
Loss for the financial year			(1,381,704	)			(997,931	)
Proceeds from issue of shares			662,765				—
Net depletion in shareholders’ funds			(718,939	)			(997,931	)
Opening shareholders’ funds			(635,455	)			362,476
Closing shareholders’ funds			(1,354,394	)			(635,455	)

 

20	Contingent liabilities

Group

A cross guarantee exists between all group companies for all sums due to Clydesdale Bank PLC. At the year end, the group had contingent liabilities totalling £1,911,711 (2011—£1,076,516) in respect of tender and performance bonds.

 

21	Financial commitments

At 31 March 2012 the group had annual commitments under non-cancellable operating leases as follows:

 

		Other
		2012				2011
		£				£
Expiry date:
Within one year			407,535				283,707
Between two and five years			444,186				1,199,721
			851,721				1,483,428

At 31 March 2012 the company had annual commitments under non-cancellable operating leases as follows:

 

		Other
		2012				2011
		£				£
Expiry date:
Between two and five years			16,800				16,800

 

20

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 MARCH 2012

 

Nessco Group Holdings Limited

 

22	Directors’ remuneration

 

		2012				2011
		£				£
Remuneration for qualifying services			197,565				172,179
Company pension contributions to defined contribution schemes			25,469				21,392
Directors fees			73,483				53,922
			296,517				247,493

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2011 - 1).

Remuneration disclosed above include the following amounts paid to the highest paid director:

 

Remuneration for qualifying services			108,602				106,164
Company pension contributions to defined contribution schemes			21,935				21,392

 

23

Employees

Number of employees

The average monthly number of employees (including directors) during the year was:

 

		2012				2011
		Number				Number
Marketing and business development			13				13
Administration			22				21
Technical			71				53
			106				87
Employment costs		2012				2011
		£				£
Wages and salaries			4,320,247				3,500,455
Social security costs			415,148				332,827
Other pension costs			139,289				109,052
			4,874,684				3,942,334

 

24	Related party relationships and transactions

Group and company

The company has taken advantage of the exemption available in FRS 8 “Related party disclosures” whereby it has not disclosed transactions with any wholly owned subsidiary undertaking.

 

21

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 MARCH 2012

 

Nessco Group Holdings Limited

 

25	Post balance sheet event

On 5 July 2012 RigNet Inc. a company registered in the United Kingdom that provides managed remote communications solutions for the global oil and gas industry announced that they had agreed to acquire all of the issued and outstanding share capital of the Company, for £29.5m in cash with RigNet paying up to an additional £1.6m through to November 2012 upon satisfaction of certain post-closing events.

 

26	Differences between United Kingdom and United States generally accepted accounting principles

The Group prepares its financial statements in accordance with accounting principles generally accepted in the United Kingdom (“UK GAAP”), which differ in certain respects from those principles that the Group would have followed had its financial statements been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”). The material differences between UK and US GAAP, which affect the consolidated financial statements, are described below, and their effect on the financial statements is summarised as follows:

Consolidated Statements of Profit / (Loss) and Balance Sheets

 

		2012				2011
		£				£
Profit (Loss) on ordinary activities after taxation in accordance with UK GAAP			533,769				(505,142	)
US GAAP adjustments:
Goodwill amortization			616,432				616,432
US GAAP adjustments before taxation			616,432				616,432
Tax effect of US GAAP adjustments			—				—
US GAAP adjustments after taxation			616,432				616,432
Profit / (Loss) on ordinary activities after taxation in accordance with US GAAP			1,150,201				111,290

 

		2012				2011
		£				£
Shareholders’ equity under UK GAAP			1,831,896				635,362
Goodwill amortisation			616,432				616,432
Cumulative effect of goodwill amortisation			1,737,736				1,121,304
Shareholders’ equity under US GAAP			4,186,064				2,373,09

 

(a)

£6,206,866 of goodwill, representing excess of the fair value of the consideration given over the fair value of the separable net asset acquired, was recognized in the consolidated financial statements for the acquisition of the entire issued share capital of the Company’s subsidiary, NesscoInvsat Limited, in 2008. In accordance with UK GAAP requirements, this goodwill is being amortised over a period of ten years which is the period over which the directors believe the benefit will be received.

 

22

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 MARCH 2012

 

Nessco Group Holdings Limited

 

26	Differences between United Kingdom and United States generally accepted accounting principles (continued)

Under US GAAP and more specifically in accordance with Financial Accounting Standards Board Accounting Standards Codification (ASC) 805, “Business Combinations”, this goodwill should not be amortised, but should be tested, at least annually, for impairment at the reporting unit level. As a result of the variance in UK and US GAAP, a reconciling difference has been shown in the Consolidated statements of loss and deficit and balance sheets for the fiscal year’s 2012 and 2011, respectively.

Consolidated Statement of Cash Flows

There are no material differences between cash or funds flows reported in the primary financial statements and cash flows under UK GAAP that would be reported in a statement of cash flows prepared in accordance with accounting principles generally accepted in the United States.

 

23