MERLIN ERD LIMITED
MERLIN ERD LIMITED
Company No:
MERLIN ERD LIMITED
ANNUAL REPORT AND UNAUDITED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023
PAGES FOR FILING WITH THE REGISTRAR
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023
PAGES FOR FILING WITH THE REGISTRAR
ANNUAL REPORT AND UNAUDITED FINANCIAL STATEMENTS
Contents
DIRECTORS' REPORT
DIRECTORS' REPORT (continued)
The directors present their annual report and the unaudited financial statements of the Company for the financial year ended 31 December 2023.
PRINCIPAL ACTIVITIES
Review of the Year
Merlin ERD Ltd is a world-class drilling consultancy and engineering services business that provides delivery assurance for extended reach, high-angle, and complex wells. It provides independent advice, guidance, and support for operators and service companies, from upfront engineering, training, the provision of drilling software, to execution in the field. Merlin ERD Ltd helps ensure project value is delivered and objectives are met. The Company has been providing these specialist drilling engineering services since 2007 delivering over 500 projects in 52 countries and training over 5,000 delegates via 300 courses delivered internationally.
Despite worsening geopolitical tensions, slowing global economic growth, and higher inflationary pressures, demand for hydrocarbons remained strong throughout 2023.
The year was transformational for the Company with the Employee Ownership Trust acquiring all but 0.3% of the founder’s shareholding, increasing its ownership to 95.4% with the balance being held directly by several employees or indirectly via a Share Incentive Plan. During the year, the Company generated revenues in line with pre-pandemic levels and a trading profit of £0.25mn, and additionally paid £0.35mn in bonuses to the employee team.
2023 reflected a positive year in which the Company progressed with planned recruitment, continued to invest in software development, service diversification, the digitalisation of its training offering, and worked to develop business and long-term revenue opportunity within the UAE. These investments have enabled the Company to present the market with more capacity, more capability, and a broader proposition; all aligned to further strengthen the opportunity pipeline and deliver sustainable profitable growth in 2024.
The Company continues to promote a more balanced approach towards people, planet, and profit. During 2023 it paid over £1m in taxes and pension contributions across the geographies in which it operated and built closer links with the local community. During 2024 it will progress plans to build more strength into the business through increased software sales, a continued focus on the long-term revenue opportunities associated with the UAE market, and continued development of service company relationships.
Fiercely independent and almost wholly employee-owned, the Company is well positioned to operate responsibly and to capitalise on continued market growth within the global oil and gas sector.
There is only one Merlin.
DIRECTORS
The directors, who served during the financial year and to the date of this report except as noted, were as follows:
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(Appointed 15 June 2023) |
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(Resigned 02 February 2023) |
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Approved by the Board of Directors and signed on its behalf by:
R J Ramage
Director |
BALANCE SHEET
BALANCE SHEET (continued)
Note | 2023 | 2022 | ||
£ | £ | |||
Fixed assets | ||||
Tangible assets | 3 |
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82,443 | 93,900 | |||
Current assets | ||||
Debtors | 4 |
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Cash at bank and in hand |
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1,995,701 | 2,874,512 | |||
Creditors: amounts falling due within one year | 5 | (
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Net current assets | 1,536,668 | 2,260,014 | ||
Total assets less current liabilities | 1,619,111 | 2,353,914 | ||
Provision for liabilities | (
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Net assets |
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Capital and reserves | ||||
Called-up share capital | 6 |
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Share premium account |
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Profit and loss account |
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Total shareholders' funds |
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Directors' responsibilities:
-
The members have not required the Company to obtain an audit of its financial statements for the financial year in accordance with section 476; -
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; and -
These financial statements have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies regime and a copy of the Profit and Loss Account has not been delivered.
The financial statements of Merlin ERD Limited (registered number:
R J Ramage
Director |
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies
The principal accounting policies are summarised below. They have all been applied consistently throughout the financial year and to the preceding financial year, unless otherwise stated.
General information and basis of accounting
Merlin ERD Limited (the Company) is a private company, limited by shares, incorporated in the United Kingdom under the Companies Act 2006 and is registered in Scotland. The address of the Company's registered office is Merlin House, Necessity Brae, Perth, PH2 0PF, United Kingdom.
The financial statements have been prepared under the historical cost convention, modified to include certain items at fair value, and in accordance with Section 1A of Financial Reporting Standard 102 (FRS 102) ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ issued by the Financial Reporting Council and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime.
The financial statements are presented in pounds sterling which is the functional currency of the company and rounded to the nearest £.
The company has taken advantage of the exemption under section 399 of the Companies Act 2006 not to prepare consolidated accounts, on the basis that the group of which this is the parent qualifies as a small group. The financial statements present information about the company as an individual entity and not about its group.
Foreign currency
Turnover
Professional services
Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.
Software licences
Revenue from software licences is recognised over the period of the underlying licence.
Employee benefits
Short term benefits
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.
Defined contribution schemes
The Company operates a defined contribution scheme. The amount charged to the Profit and Loss Account in respect of pension costs and other post-retirement benefits is the contributions payable in the financial year. Differences between contributions payable in the financial year and contributions actually paid are included as either accruals or prepayments in the Balance Sheet.
Taxation
Current tax is provided at amounts expected to be paid (or recoverable) using the tax rates and laws that have been enacted or substantively enacted at the Balance Sheet date.
Deferred tax
Deferred tax arises as a result of including items of income and expenditure in taxation computations in periods different from those in which they are included in the Company's financial statements. Deferred tax is provided in full on timing differences which result in an obligation to pay more or less tax at a future date, at the average tax rates that are expected to apply when the timing differences reverse, based on current tax rates and laws. Deferred tax assets and liabilities are not discounted.
Tangible fixed assets
Leasehold improvements |
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Other property, plant and equipment |
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Leases
Rentals under operating leases are charged on a straight-line basis over the lease term.
Impairment of assets
Assets, other than those measured at fair value, are assessed for indicators of impairment at each Balance Sheet date. If there is objective evidence of impairment, an impairment loss is recognised in the Profit and Loss Account as described below.
Non-financial assets
Cash and cash equivalents
Financial instruments
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument.
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.
Financial assets and liabilities are only offset in the Balance Sheet when, and only when there exists a legally enforceable right to set off the recognised amounts and the Company intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs.
Financial assets are derecognised when and only when the contractual rights to the cash flows from the financial asset expire or are settled, or the Company transfers to another party substantially all of the risks and rewards of ownership of the financial asset, or the Company, despite having retained some, but not all, significant risks and rewards of ownership, has transferred control of the asset to another party.
Basic financial liabilities
Basic financial liabilities, including creditors and bank loans are initially recognised at transaction price.
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.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
Equity instruments
Equity instruments issued by the Company are recorded at the fair value of cash or other resources received or receivable, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the Company.
2. Employees
2023 | 2022 | ||
Number | Number | ||
Monthly average number of persons employed by the Company during the year, including directors |
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3. Tangible assets
Leasehold improve- ments |
Other property, plant and equipment |
Total | |||
£ | £ | £ | |||
Cost | |||||
At 01 January 2023 |
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Additions |
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At 31 December 2023 |
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Accumulated depreciation | |||||
At 01 January 2023 |
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Charge for the financial year |
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At 31 December 2023 |
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Net book value | |||||
At 31 December 2023 |
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At 31 December 2022 |
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4. Debtors
2023 | 2022 | ||
£ | £ | ||
Trade debtors |
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Corporation tax |
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Other debtors |
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5. Creditors: amounts falling due within one year
2023 | 2022 | ||
£ | £ | ||
Trade creditors |
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Corporation tax |
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Other taxation and social security |
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Other creditors |
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6. Called-up share capital
2023 | 2022 | ||
£ | £ | ||
Allotted, called-up and fully-paid | |||
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7. Financial commitments
Other financial commitments
2023 | 2022 | ||
£ | £ | ||
Total commitments under non-cancellable operating leases not provided for in the accounts |
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The leasing commitment represents the lease of the company's business premises which runs to 2039.
8. Related party transactions
In 2017 an Employee Ownership Trust was formed and acquired a controlling interest of 721,000 shares from the existing shareholders. Contributions of £621,186 (2022 - £Nil) were made to the trust in the year ended 31 December 2023.
At the year end, there was a balance of £1,862 due from an employee share incentive plan trust. The directors assessed the recoverability of the loan and confirmed this was not expected to be repaid so the loan was impaired in the year to £Nil (2022 - £Nil).