ACCOUNTS - Final Accounts
ACCOUNTS - Final Accounts
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Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2020
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UNDERGROUND MINING SERVICES LIMITED
COMPANY INFORMATION
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UNDERGROUND MINING SERVICES LIMITED
CONTENTS
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UNDERGROUND MINING SERVICES LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
The principal activities of the group consist of sinking vertical shafts and decline shafts, underground construction and design and engineering of these activities for the mining industry and civil infrastructure projects.
The Group profit for the year after taxation and minority interest amounted to $515,986 (2019: $3,328,731). The Group turnover from continued operations for the year to 31 December 2020 was $14,432,075 (2019: $9,865,993). The Group had turnover from discontinued operations of $nil in the year as a result of Shaft Sinkers Belgium BVBA being dissolved in the year. 2019 turnover from discontinued operations of $3,661,020 included turnover of $151,832 from Shaft Sinkers Belgium BVBA and turnover of $3,509,188 from Shaft Sinkers Mauritius Limited, which was disposed of in the prior year. The group made significant progress during the year on its strategic objectives. This includes the design and engineering of the new Botswana shaft complex, for which construction work on site commenced subsequent to the year end. Our JV based in the USA commenced construction works to sink a ventilation shaft for a US Government client during the year. However, for reasons unrelated to the JV, work on site was suspended in November 2020. The JV is in constant communication with the client, remains at site performing maintenance work and anticipates that the job will continue early 2022. Thankfully the impact of Covid-19 on our business was minimal despite the terrible human toll it has brought to the various jurisdictions in which we work. International travel into and out of these various jurisdictions and in particular, South Africa, has become more difficult, however our office based staff transitioned seamlessly to home work during periods of national lockdowns. Like every other employer, we see a future of some mix of office and home based work for our head office employees going forward.
The risk of inadequate funding or inappropriately managing the funding of the business is one of the primary risks that could affect the Group’s ability to trade. Other significant financial risks include the safeguarding of assets, inappropriate tendering prices that could cause the Group to lose potential contracts or undertake contracts which are unprofitable.
For each of these risks the Group has implemented appropriate policies and procedures and executive management regularly reviews performance against set targets. Daily reviews of cash management with rolling forecasts and strong controls have been implemented by executive management. Insurance is taken to protect the Group against the risk of fraud or theft of funds.
Safety
The Group had another good year with regards to Safety in 2020. The Lost Time Injury Frequency Rate (LTIFR) went from 1.99 during 2019 to 0.00 during 2020 (calculated per 1,000,000 hours, calendar year). Zero injury related incidents were recorded with one “Near Hit” and one “Damage” incident. The safety performance indicators for 2020 were as follows: Shifts worked: 29,461 (2019: 62,802); Hours worked: 222,340 (2019: 502,396); Non Lost Time Injuries: 0 (2019: 3 at a rate of 5.97 per 1,000,000 hours worked); Lost Time Injuries: 0 (2019: 1 at a rate of 1.99 per 1,000,000 hours worked); and Reportable Injuries: 0 (2019: 1 at a rate of 1.99 per 1,000,000 hours worked) There were no fatalities experienced during 2020. The last fatal incident was experienced in the Group during 2014. This is a remarkable achievement and every effort is made to ensure the ongoing prevention of fatalities. The following achievements are noted for 2020:
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UNDERGROUND MINING SERVICES LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
• Transitioned from the “old” OHSAS 18001 standard to the “new” ISO 45001 standard.
• External certification of the integrated management system was maintained. This includes ISO 9001, ISO 14001 & ISO 45001. (DEKRA, German Certification Body.) Induction program updated and rolled out. • All Safety, Health, Environment and Quality (SHEQ) Objectives for 2020 were achieved.
Business risk
Our ability to identify and manage the risks to our business is critical to our success. The Directors have identified the following key operational risks: • Project Performance: Ineffective and inefficient project management could lead to additional costs being incurred which will affect the overall project performance and therefore the financial performance of the Group. Managing contract risk is essential as the Group may commit to contractual terms and conditions that expose it to excessive financial risks and potential cost overruns. Since the formation of the Group, policies and procedures have been instituted for contract approval including bid approval models, peer review and Board approval. Experienced management teams have been recruited for all service offerings with the relevant technical and industry knowledge. All contracts are reviewed by internal legal staff and regular project performance reviews are undertaken involving finance, commercial and operational personnel. • Safety Risk: Due to the nature of the Group’s operations, safety is a significant issue for the Company. Failure to maintain high levels of safety can result in harm and serious injury to our employees and significantly impact our ability to carry out our business. A comprehensive set of safety procedures are in place and these are regularly reviewed and updated for any new risks which have been identified. In addition, the Group regularly introduces new safety campaigns to improve performance. A dedicated Safety, Health, Environment, Quality and Training department (SHEQT) monitors safety performance and events on a daily basis. Each site has a dedicated safety officer responsible for managing safety matters, including monitoring the progress of action plans, reporting on safety incidents and ensuring the Group’s policies are being adhered to. • Political Risk: There are political, social and labour relations risks in some of the geographies where the Group operates. The political, social or economic environment in any jurisdiction may change leading to the inability to realise the expected results from our projects. The Group seeks to mitigate these risks where possible by diversifying both geographically and in terms of end users. Political risks are mitigated through contractual terms agreed. • Legal and Regulatory: Changes in standards, laws and regulations in the countries where we operate affect our business. Some of the jurisdictions in which the Group operates pose particular and often heightened reputational issues that need to be managed appropriately. We are conscious of the risk of failure to comply with anti-bribery, anti-corruption, anti-money laundering and/or sanctions laws and regulations which could lead to financial penalties and criminal prosecutions. We adhere to the principle of self-regulation backed by appropriate policies and management review. The Group actively monitors regulatory and political developments on a continuous basis to ensure we are in compliance with all relevant regulations. We have developed a Group-wide anti-bribery and corruption policy which has been implemented throughout the Group. • Commodity Cycle: The Group’s customers operate in markets which are closely linked to the global economic environment and the commodities cycle. As a result, demand for the Group’s services are impacted by changes in global economic performance. The Group seeks to mitigate this risk by pursuing a strategy to increase geographic, commodity and end market diversity. • South African Operations, Black Economic Empowerment: The ability to generate work in South Africa, the traditional home base of the Group, requires compliance with the South African Government’s black economic empowerment policies and depends on the South African Companies BBBEE ratings. The various elements of the BBBEE scorecard are tracked monthly and management continuously explores how to improve the rating.
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UNDERGROUND MINING SERVICES LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
The group utilises the following key performance indicators;
• Order Book and Pipeline: value of contracts on hand, high probably awards, tenders submitted, prospects and leads. • Contribution and Contribution Margin: Project-level Revenues less Cost of Sales. • Overheads and Under-recovered Overheads. • Cash Flow. In the opinion of the directors, disclosure of information on the key performance indicators would be seriously prejudicial to the interests of the Group.
This report was approved by the board on 28 January 2022 and signed on its behalf.
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UNDERGROUND MINING SERVICES LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
The directors present their report and the financial statements for the year ended 31 December 2020.
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 judgements and accounting estimates that are reasonable and prudent;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the 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 profit for the year, after taxation and minority interests, amounted to $515,986 (2019 - $3,328,731).
During the year the company paid a dividend of $Nil (2019: $Nil).
The directors who served during the year were:
Management's review of developments and future prospects and principal risks and uncertainties are included in the Strategic Report.
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UNDERGROUND MINING SERVICES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
The Group is involved in mining construction projects. These projects are typically significant contractual arrangements spanning multiple financial reporting periods. Subsequent to the year end, the group was awarded contracts for the design of new shafts in South America and North America. The group is involved in continuous tendering and business development initiatives in order to secure new contracts and the volume of new contract awards since the beginning of 2021 is the highest since the group was formed in 2015.
At the time of approval of these financial statements, the Covid-19 outbreak continues to cause impact to the global economy. The management of the Group do not believe that the economic effect of the outbreak will have a direct impact on its ability to continue to provide its service. However, the demand for these services will be dependent on the overall economic environment. The management will closely monitor the situation and act accordingly to mitigate any impact. The directors are not aware of any other material event which occurred after the reporting date and up to the date of this report.
The auditors, Simmons Gainsford LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board on
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UNDERGROUND MINING SERVICES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF UNDERGROUND MINING SERVICES LIMITED
We do not express an opinion on the accompanying financial statements of the Group and parent company. Because of the significance of the matter described in the basis for disclaimer of opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.
The year ended 31 December 2019 results of Shaft Sinkers Belgium BVBA and Shaft Sinkers Mauritius Limited included in these consolidated financial statements were unaudited due to management having been denied access to the relevant companies’ financial records retained in the locations where the projects were operated. On this basis, we were unable to obtain sufficient appropriate audit evidence on the group companies’ results which are deemed significant in these consolidated financial statements. There were no other satisfactory audit procedures that we could adopt to confirm that these results are properly recorded. Please refer to note 2.2 for the details of the unaudited results. As a result of these matters, we were unable to determine whether any adjustments might have been found necessary in respect of the elements making up the comparative Consolidated Balance Sheet, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes In Equity, and the Consolidated Statement of Cash Flows.
As we were unable to substantiate the opening balances for the current year, we were unable to determine whether any adjustments might have been found necessary in respect of the amounts making up the Consolidated Statement of Comprehensive Income and the Consolidated Statement of Changes In Equity and Consolidated Statement of Cashflows in the year ended 31 December 2020. As Shaft Sinkers Belgium BVBA had been dissolved and Shaft Sinkers Mauritius Limited had been disposed of by the year end date, no adjustment would be necessary in the Consolidated Balance Sheet. In addition, were any adjustment to the group companies’ results to be required, the strategic report would also need to be amended.
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UNDERGROUND MINING SERVICES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF UNDERGROUND MINING SERVICES LIMITED (CONTINUED)
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 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.
Opinion on other matters prescribed by the Companies Act 2006
Because of the significance of the matter described in the basis for disclaimer of opinion section of our report, we have been unable to form an opinion, whether based on the work undertaken in the course of the audit: • the information given in the Group Strategic Report and Director's Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and • the Group Strategic Report and Director's Report has been prepared in accordance with applicable legal requirements.
Notwithstanding our disclaimer of an opinion on the financial statements, 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 performed subject to the pervasive limitation described above, we have not identified material misstatements in the strategic report or the directors’ report.
Arising from the limitation of our work referred to above: • we have not obtained all the information and explanations that we considered necessary for the purpose of our audit; and • we were unable to determine whether adequate accounting records and returns have been kept. 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: • the financial statements are not in agreement with the accounting records and returns; or • certain disclosures of directors’ remuneration specified by law are not made.
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UNDERGROUND MINING SERVICES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF UNDERGROUND MINING SERVICES LIMITED (CONTINUED)
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
In order to identify and assess the risks of material misstatements, including fraud and non-compliance with laws and regulations that could be expected to have a material impact on the financial statements, we have considered: • the results of our enquiries of management and those charged with governance of their assessment of the risks of fraud and irregularities; • the nature of the Company, including its management structure and control systems (including the opportunity for management to override such controls); • management’s incentives and opportunities for fraudulent manipulation of the financial statements including the Company’s remuneration and bonus policies and performance targets; and • the industry and environment in which it operates. We also considered UK tax and pension legislation and laws and regulations relating to employment and the preparation and presentation of the financial statements such as the Companies Act 2006. Based on this understanding we identified the following matters as being of significance to the entity: • laws and regulations considered to have a direct effect on the financial statements including UK financial reporting standards, Company Law, tax and pension legislation and distributable profits legislation; • the timing of the recognition of commercial income; • compliance with legislation relating to GDPR, health and safety; and local employment law; • management bias in selecting accounting policies and determining estimates; • inappropriate journal entries; • manipulation of specific performance measures to meet remuneration targets; • recoverability of trade and other receivables; • the requirement to impair its inventories and investments and the amount of any such impairment; and • understatement of liabilities.
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UNDERGROUND MINING SERVICES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF UNDERGROUND MINING SERVICES LIMITED (CONTINUED)
We communicated the outcomes of these discussions and enquiries, as well as consideration as to where and how fraud may occur in the entity, to all engagement team members. Audit procedures undertaken in response to the potential risks relating to irregularities (which include fraud and non-compliance with laws and regulations) comprised: • enquiries of management and those charged with governance as to whether the entity complies with such laws and regulations; • enquiries with the same concerning any actual or potential litigation or claims; • discussion with the same regarding any known or suspected instances of non-compliance with laws and regulation and fraud; • inspection of relevant legal correspondence; • assessment of matters reported to management and the result of the subsequent investigation; • obtaining an understanding of the relevant controls during the year; • obtaining an understanding of the policies and controls over the recognition of income and testing their implementation during the year; • review documentation relating to compliance with the regulations relating to health and safety including health and safety certificates; and fire assessment reports; • challenging assumptions made by management in their specific accounting policies and estimates, in particular in relation to depreciation of tangible fixed assets; impairment of investments; carrying value of inventories; • identifying and testing journal entries, in particular any journal entries posted with unusual account combinations or crediting revenue; • assessing the recovery of debtors in the year since the balance sheet date and challenging assumptions made by management regarding the recovery of balances which remain outstanding; • assess the completeness of material trade and other payables; • reviewing the financial statements for compliance with the relevant disclosure requirements; • performing analytical procedures to identify any unusual or unexpected relationships or unexpected movements in account balances which may be indicative of fraud; • reviewing correspondence with HMRC; • evaluating the underlying business reasons for any unusual transactions; and • considered the implementation of controls during the year. No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity’s controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. As explained above, there is an unavoidable risk that material misstatements may not be detected, even though the audit has been planned and performed in accordance with ISAs (UK).
A further description of our 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 Auditors' report.
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UNDERGROUND MINING SERVICES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF UNDERGROUND MINING SERVICES LIMITED (CONTINUED)
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 Auditors' 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.
for and on behalf of
Chartered Accountants
Statutory Auditors
14th Floor
33 Cavendish Square
W1G 0PW
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UNDERGROUND MINING SERVICES LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2020
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UNDERGROUND MINING SERVICES LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
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UNDERGROUND MINING SERVICES LIMITED
REGISTERED NUMBER: 09411191
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2020
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UNDERGROUND MINING SERVICES LIMITED
REGISTERED NUMBER: 09411191
CONSOLIDATED BALANCE SHEET (CONTINUED)
AS AT 31 DECEMBER 2020
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 28 January 2022.
The notes on pages 23 to 44 form part of these financial statements.
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UNDERGROUND MINING SERVICES LIMITED
REGISTERED NUMBER: 09411191
COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2020
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UNDERGROUND MINING SERVICES LIMITED
REGISTERED NUMBER: 09411191
COMPANY BALANCE SHEET (CONTINUED)
AS AT 31 DECEMBER 2020
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own profit and loss account in these financial statements. The profit after tax of the parent company for the period was $4,959,452 (2019: $54,331 loss).
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 23 to 44 form part of these financial statements.
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2019
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UNDERGROUND MINING SERVICES LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
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UNDERGROUND MINING SERVICES LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2020
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UNDERGROUND MINING SERVICES LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
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UNDERGROUND MINING SERVICES LIMITED
CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 DECEMBER 2020
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UNDERGROUND MINING SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Underground Mining Services Limited is a private company limited by shares, and is incorporated in England and Wales. The address of its registered office is 3rd Floor, 1 Ashley Road, Altrincham, Cheshire, WA14 2DT.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements is in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in applying the Group's accounting policies (see note 3). The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Cmprehensive Icome in these financial statements. The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases. In accordance with the transitional exemption available in FRS 102, the group has chosen not to retrospectively apply the standard to business combinations that occurred before the date of transition to FRS 102, being 01 January 2018.
Included in the consolidated financial statements are the unaudited 2020 results of Shaft Sinkers Belgium BVBA. The management has been denied access to the accounting records kept at the roject site and these records are necessary for the audit. A disclaimer of opinion is given in the auditors' report of these consolidated financial statements by virue of this.
These consolidated financial statements included net assets of $nil (2019: unaudited net liabilities of $54,694) for Shaft Sinkers Belgium BVBA as these were fully impaired and also all liabilities were settled as at 31 December 2020. The unaudited 2020 net loss of Shaft Sinkers Belgium BVBA included in these consolidated financial statements are $147,385 (2019: net profit of $97,458). The results of the dormant subsidiary undertakings are not included in the consolidated financial statements. The aggregated results of these dormant subsidiaries are immaterial on a group basis. In preparing the separate financial statements of the parent company, advantage has been taken of the disclosure exemptions available in FRS 102 whereby no Statement of Cash Flows has been
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UNDERGROUND MINING SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.Accounting policies (continued)
presented for the parent company.
The Group is involved in mining construction projects. These projects are typically significant contractual arrangements spanning multiple financial reporting periods. Subsequent to the year end, the group was awarded contracts for the design of new shafts in South America and North America. The group is involved in continuous tendering and business development initiatives in order to secure new contracts and the volume of new contract awards since the beginning of 2021 is the highest since the group was formed in 2015.
The directors have prepared cash flow forecasts for a period of 12 months from the date of approval of these financial statements based on the company’s secured order book. The possible effects of Covid-19 have been considered in these cash flow forecasts. The Company has obtained confirmation from Zachary Asset Holdings Limited, the parent undertaking of the Group, that it does not intend to demand repayment of these facilities for at least 12 months from the date of signing these financial statements, unless the Group is in a position to do so without impacting going concern. Based on these indications the directors believe that it remains appropriate to prepare the financial statements on a going concern basis.
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UNDERGROUND MINING SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.Accounting policies (continued)
Functional and presentation currency
Transactions and balances
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UNDERGROUND MINING SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.Accounting policies (continued)
Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied: • the amount of revenue can be measured reliably; • it is probable that the Group will receive the consideration due under the contract; • the stage of completion of the contract at the end of the reporting period can be measured reliably; and • the costs incurred and the costs to complete the contract can be measured reliably. Revenue is attributable to sales globally. In the opinion of the directors, disclosure of the geographical and sales type analysis of turnover would be prejudicial to the company.
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UNDERGROUND MINING SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.Accounting policies (continued)
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UNDERGROUND MINING SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
An entity is treated as a joint venture where the Group is a party to a contractual agreement with one or more parties from outside the Group to undertake an economic activity that is subject to joint control.
An entity is treated as an associated undertaking where the Group exercises significant influence in that it has the power to participate in the operating and financial policy decisions. In the consolidated accounts, interests in associated undertakings are accounted for using the equity method of accounting. Under this method an equity investment is initially recognised at the transaction price (including transaction costs) and is subsequently adjusted to reflect the investors share of the profit or loss, other comprehensive income and equity of the associate. The Consolidated statement of comprehensive income includes the Group's share of the operating results, interest, pre-tax results and attributable taxation of such undertakings applying accounting policies consistent with those of the Group. In the Consolidated balance sheet, the interests in associated undertakings are shown as the Group's share of the identifiable net assets, including any unamortised premium paid on acquisition.
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UNDERGROUND MINING SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.Accounting policies (continued)
In the Consolidated statement of cash flows, cash are shown net of bank overdrafts that are repayable on demand and form an integral part of the Group's cash management.
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UNDERGROUND MINING SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.Accounting policies (continued)
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UNDERGROUND MINING SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
The application of the going concern basis of preparation of these financial statements is a critical judgement by the Directors (refer to note 2.3). The carrying amount of fixed assets requires management to exercise judgement with regard to the continued value in use vs fair value less costs to sell, particularly because of the group's trading position and outlook. Given the nature of activities, the group's contracts span multiple financial reporting periods and revenue recognised can be subject to retention until completion of projects in the ordinary course of business. As such, trade receivables require management to consider the overall contract position, performance and outlook. Key sources of estimation uncertainty Impairment of financial assets The impairment provisions for financial assets are based on assumptions about risk of default and expected loss rates. The group uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the group’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period. Allowance for slow moving, damaged and obsolete stocks Management assesses whether stock is impaired by comparing its cost to its estimated net realisable value. Where an impairment is necessary, stock items are written down to net realisable value. The write down is included in cost of sales. Impairment testing The group reviews and tests the carrying value of assets when events or changes in circumstances suggest that the carrying amount may not be recoverable. When such indicators exist, management determine the recoverable amount by performing value in use and fair value calculations. These calculations require the use of estimates and assumptions. When it is not possible to determine the recoverable amount for an individual asset, management assesses the recoverable amount for the cash generating unit to which the asset belongs. Useful lives of property, plant and equipment Management assess the appropriateness of the useful lives of property, plant and equipment at the end of each reporting period. The useful lives of motor vehicles, furniture and computer equipment are determined based on group replacement policies for the various assets. Individual assets within these classes, which have a significant carrying amount are assessed separately to consider whether replacement will be necessary outside of normal replacement parameters. The useful life of manufacturing equipment is assessed annually based on factors including wear and tear, technological obsolescence and usage requirements. When the estimated useful life of an asset differs from previous estimates, the change is applied prospectively in the determination of the depreciation charge.
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UNDERGROUND MINING SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
3.Judgements in applying accounting policies (continued)
Provisions are inherently based on assumptions and estimates using the best information available.
The geographical and sales type analysis of turnover are not disclosed in these financial statements as such information would be prejudicial to the company in the opinion of the directors.
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UNDERGROUND MINING SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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UNDERGROUND MINING SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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UNDERGROUND MINING SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
12.Taxation (continued)
In the March 2021 Budget announcement in the United Kingdom, it was announced that the Corporation Tax rate will increase to 25% for larger companies from 1 April 2023.
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13.Tangible fixed assets (continued)
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UNDERGROUND MINING SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Page 38
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UNDERGROUND MINING SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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UNDERGROUND MINING SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Page 40
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UNDERGROUND MINING SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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UNDERGROUND MINING SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
A loan of $3,572,150 (2019: $2,821,996 included in amount falling due within one year) from Zachary Asset Holdings Limited to the parent company is secured by the following securities pledged in favor of the lender:
- Share charge over entire share capital of UMS Management Services South Africa (Pty) Ltd.
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UNDERGROUND MINING SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
20.Share capital (continued)
Foreign exchange reserve
Profit and loss account
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UNDERGROUND MINING SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
At the time of approval of these financial statements, the Covid-19 outbreak has caused an impact to the global economy. The management of the Group do not believe that the economic effect of the outbreak will have a direct impact on its ability to continue to provide its service. However, the demand for these services will be dependent on the overall economic environment. The management will closely monitor the situation and act accordingly to mitigate any impact. On this basis, the directors do not consider there to be any adjustments necessary to these financial statements.
The Group's holding company is Zachary Asset Holdings Ltd which holds 100% of the Group's equity. Zachary Asset Holdings Ltd is incorporated in Jersey.
The ultimate controlling party of the group is the Haller Family.
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