COMPANY REGISTRATION NO. 04261274 (England and Wales)
MERTHYR (SOUTH WALES) LIMITED
FORMERLY MILLER ARGENT (SOUTH WALES) LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
MERTHYR (SOUTH WALES) LIMITED
COMPANY INFORMATION
Director
Mr D Lewis
Company number
04261274
Registered office
C/O UHY Hacker Young
Lanyon House
Mission Court
Newport
South Wales
United Kingdom
NP20 2DW
Auditor
UHY Hacker Young
Lanyon House
Mission Court
Newport
South Wales
United Kingdom
NP20 2DW
MERTHYR (SOUTH WALES) LIMITED
CONTENTS
Page
Strategic report
1 - 3
Director's report
4 - 5
Director's responsibilities statement
6
Independent auditor's report
7 - 9
Profit and loss account
10
Statement of comprehensive income
11
Balance sheet
12
Statement of changes in equity
13
Notes to the financial statements
14 - 31
MERTHYR (SOUTH WALES) LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
- 1 -
The director presents the strategic report for the year ended 31 December 2020.
Fair review of the business
The results are presented on page 10.
The director
is
satisfied with the company's performance during the year. The company’s activities
consist of selling coal. The total tonnage of coal sales in the year was
575,551 (2019: 678,564) a 15% decrease. The average coal price achieved decreased by 25% to £69.81 per tonne.
GP% which is one of the company's key areas of operating effectiveness was -1
7.7
% for the year ended 31 December 2020 compared to 41.5% for the year ended 31 December 2019.
The gross profit includes £13.8m (2019:
£
4.5
m credit) of exceptional cost related to provision adjustments (see note
6
); adjusting for these items the GP% was
16.6
% compared to 3
3.9
% in 2019.
A major factor for this decrease was due to Covid-19. The national lockdown was announced 3 months into the financial year which caused immediate significant changes to production operations. The site changed from double to single shift operations, directly impacting the amount of coal being able to be produce. Approximately 17% of the workforce were furloughed too.
Overall loss before tax was £
11.3
m (2019: £
1
9.2
m
profit) and loss
for the year was
£
10.2m
(2019: £
1
5.2m profit)
which includes the exceptional costs mentioned above. The balance sheet on page
12
shows that the company's net assets are £
4.2m
(2019: £1
4.
5m
).
Principal risks and uncertainties
The company's principal activity is the reclamation of direct land to the east of Merthyr Tydfil, South Wales, through the operation of a surface coal mine. The principal risks and uncertainties faced by the company are documented below:
Market
The company works in close co-operation with the relevant regulatory authorities to satisfy both the planning permissions and licence requirements.
The world commodity markets determines the price of coal but the company minimises risk by securing fixed term contracts with key customers.
Operations
Our mining Engineers are constantly reviewing detailed geographical and engineering models to maximise efficiencies within the mine.
Heavy equipment is used in the restoration project and health and safety is of primary concern to the business. Working practices are designed to ensure safety and also minimise the impact of the project on local residents and the local environment.
Risk management
The principle risk for the company is to achieve sales for the product at satisfactory pricing levels. Currently these remain positive and are likely to be so for the foreseeable future.
The UK Steel and Cement sectors provide our key customer base. Our mine plan is fully-costed and regularly reviewed and includes appropriate allowances for contingencies such as adverse weather. The most significant variable cost is fuel. Coal prices and fuel costs are currently providing a natural hedge. Full account has been taken for funding the restoration obligation in the future costs and cash flows.
MERTHYR (SOUTH WALES) LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 2 -
Promoting the success of the company
This report sets out how the directors comply with the requirements of section 172 Companies Act 2006 and how these requirements have impacted on the decision making of the Merthyr (South Wales) Limited Directors.
Our director has always acted in good faith in ways which promotes the success of the company with regard to its members and stakeholders whilst maintaining the highest level of business conduct.
The company is governed by external planning consents, coal licences and coal resources and the company plans to operate safely and responsibly within these constraints.
On completion of coaling the site will be restored in accordance with the agreed terms of the reclamation project.
The likely consequences of any decision in the long term
The director constantly reviews the capital expenditure requirements with a view to the finite timescale of the reclamation project. Progress is constantly reviewed in order to achieve both the extraction and the restoration targets.
Funding is provided via the holding company where appropriate.
The interest of the company employees
The director recognises the importance of all Employees and their roles for the company to achieve its objectives in the reclamation project.
Health and safety is an absolute priority on site and additional measures were introduced immediately during Covid 19 to minimise any risk to the workforce.
Where possible, employees were encouraged to work from home
during the pandemic
. On site, additional cleaning, segregation and washing measures were introduced to reduce transmission risk of the virus. Shift patterns were changed to reduce risk of cross contamination of vehicles.
The company engages regularly with the workforce through toolbox talks and other forms of communication
The workforce will continue to operate under these protected procedures until there is an improvement in the covid situation. At that point the company will engage with the workforce to agree acceptable working practices going forward.
The need to foster the company’s business relationships with suppliers, customers and others
The director understands the importance of our suppliers to achieve the long-term plans of the business. Supplier relationships are key to the business and regular meetings and performance reviews are carried out to ensure the quality of supplies and services are maintained.
All customers are regularly contacted to support our relationship and to ensure quality standards and delivery terms are achieved.
Other stakeholders include governing bodies, local authorities, finance partners, regulatory bodies and residents.
The impact of the company’s operations on the community and environment
The director is aware of the impact of the restoration project on the local community and operates in ways which minimises the impact on the environment, wildlife and residents in the local community. Funding and sponsorship are provided for many local events.
Desirability of the company maintaining a reputation for high standards of business conduct
The director ensures the reputation of the company is maintained in all business transactions.
There is a commitment to ensure the workforce fully reflects society and is included as a key element to deliver the corporate plan.
The need to act fairly between members of the company
The group is family owned and regularly engages with the Director of the company.
MERTHYR (SOUTH WALES) LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 3 -
Mr D Lewis
Director
11 April 2022
MERTHYR (SOUTH WALES) LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
- 4 -
The director presents his annual report and financial statements for the year ended 31 December 2020.
Results and dividends
The results for the year are set out on page 10 and are discussed in the Strategic Report on page 1.
Director
The director who held office during the year and up to the date of signature of the financial statements was as follows:
Mr D Lewis
Mr L Jones
(Resigned 6 April 2020)
Auditor
UHY Hacker Young have expressed their willingness to continue in office as auditor and appropriate arrangements have been put in place for them to be deemed reappointment as auditor in the absence of an Annual General Meeting.
Energy and carbon report
We have reported on all sources of GHG emissions and Energy usage
:
2020
2019
Energy consumption
kWh
kWh
Aggregate of energy consumption in the year
937,010
-
2020
2019
Emissions of CO2 equivalent
metric tonnes
metric tonnes
Scope 1 - direct emissions
- Gas combustion
-
-
- Fuel consumed for owned transport
20,553.00
-
20,553.00
-
Scope 2 - indirect emissions
- Electricity purchased
910,923.00
-
Scope 3 - other indirect emissions
- Fuel consumed for transport not owned by the
2,739.00
-
Total gross emissions
934,215.00
-
Intensity ratio
Tonnes CO2e per £'m of revenue
0.0233
Quantification and reporting methodology
We have followed the 2019 HM Government Environmental Reporting Guidelines. We have also used the GHG Reporting Protocol – Corporate Standard and have used the 2020 UK Government’s Conversion Factors for Company Reporting.
Intensity measurement
The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per £'m of revenue.
MERTHYR (SOUTH WALES) LIMITED
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 5 -
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s
auditor
is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s
auditor
is aware of that information.
Impact of COVID-19
The national lockdown was announced in March 2020. Immediately significant changes were made to production operations. The site immediately changed from double to a single shift operation to reduce the risk of cross contamination between machine operators, who were kept to a single machine and a cleaning regime was introduced across the site. This directly impacted the amount of coal we were able to produce and resulted in us losing virtually all of the steam coal market along with other orders we had secured for an additional steel making customer. Approx. 17% of the workforce were furloughed and homeworking was introduced where practicable. Initially, during the April–July period, volumes reduced by approx. 23% for production and 29% Sales, compared to the corresponding period in 2019.
Contracts are now in place for 2021 with our customers and a pay award was implemented for the workforce. Through careful internal planning and management of the Covid-19 situation, we have retained the ability to respond to future increases in customer demand when it is safe to re-introduce the double shift and implement the return of the furloughed workforce.
Therefore a
t the time of approving the financial statements
,
t
he director has a reasonable expectation that the
company
has adequate resources to continue in operational existence for the foreseeable future. Thus
t
he director continues to adopt the going concern basis of accounting in preparing the financial statements.
On behalf of the board
Mr D Lewis
Director
11 April 2022
MERTHYR (SOUTH WALES) LIMITED
DIRECTOR'S RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2020
- 6 -
The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the director is required to:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and accounting estimates that are reasonable and prudent;
-
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
-
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The director is 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 enable them to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
MERTHYR (SOUTH WALES) LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF MERTHYR (SOUTH WALES) LIMITED
- 7 -
Opinion
We have audited the financial statements of Merthyr (South Wales) Limited (the 'company') for the year ended 31 December 2020 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102
The Financial Reporting Standard applicable in the UK and Republic of Ireland
(United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
-
give a true and fair view of the state of the company's affairs as at 31 December 2020 and of its loss for the year then ended;
-
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
-
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the
Auditor's
responsibilities for the audit of the
financial statements
section of our report. We are independent of the
company
in accordance with the ethical requirements that are relevant to our audit of the
financial statements
in the UK, including the FRC’s Ethical Standard
, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's 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 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 director with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The director is responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit
:
-
the information given in the strategic report and the director's
r
eport for the financial year for which the financial statements are prepared is consistent with the financial statements
; and
-
the strategic report and the director's report have been prepared in accordance with applicable legal requirements.
MERTHYR (SOUTH WALES) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF MERTHYR (SOUTH WALES) LIMITED
- 8 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identifie
d
material misstatements in the strategic report or the director's
r
eport
. 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:
-
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
-
the financial statements are not in agreement with the accounting records and returns; or
-
certain disclosures of
remuneration specified by law are not made; or
-
we have not received all the information and explanations we require for our audit.
Responsibilities of director
As explained more fully in the director's
r
esponsibilities
s
tatement, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the director determines is necessary to enable the preparation of
financial statements
that are free from material misstatement, whether due to fraud or error. In preparing the
financial statements
, the
director is
responsible for assessing the company
'
s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the company or to cease operations, or has
no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
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 auditor’s 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
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:
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
-
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
-
we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the relevant sector;
-
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006 and ISO standards;
-
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
-
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
MERTHYR (SOUTH WALES) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF MERTHYR (SOUTH WALES) LIMITED
- 9 -
We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
-
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
-
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
-
performed analytical procedures to identify any unusual or unexpected relationships;
-
tested journal entries to identify unusual transactions;
-
assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and
-
investigated the rationale behind significant or unusual transactions.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial statements, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
A further description of our responsibilities for the audit of the
financial statements
is located on the
Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities
.
This description forms part of our auditor’s report.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Mr Paul Byett (Senior Statutory Auditor)
For and on behalf of UHY Hacker Young
11 April 2022
Chartered Accountants
Statutory Auditor
Newport
South Wales
United Kingdom
MERTHYR (SOUTH WALES) LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2020
- 10 -
2020
2019
Notes
£
£
Turnover
3
40,179,313
58,975,573
Cost of sales (including exceptional cost of £13.8m (2019: £4.5m credit))
6
(47,304,878)
(34,489,831)
Gross (loss)/profit
(7,125,565)
24,485,742
Administrative expenses (including exceptional cost of £nil (2019: £1.3m))
5
(2,638,695)
(3,367,716)
Other operating income
231,202
Operating (loss)/profit
4
(9,533,058)
21,118,026
Interest receivable and similar income
9
17,797
Interest payable and similar expenses
10
(1,758,778)
(1,877,652)
(Loss)/profit before taxation
(11,274,039)
19,240,374
Tax on (loss)/profit
11
1,028,332
(4,040,137)
(Loss)/profit for the financial year
(10,245,707)
15,200,237
The profit and loss account has been prepared on the basis that all operations are continuing operations.
MERTHYR (SOUTH WALES) LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2020
- 11 -
2020
2019
£
£
(Loss)/profit for the year
(10,245,707)
15,200,237
Other comprehensive income
-
-
Total comprehensive income for the year
(10,245,707)
15,200,237
MERTHYR (SOUTH WALES) LIMITED
BALANCE SHEET
AS AT 31 DECEMBER 2020
31 December 2020
- 12 -
2020
2019
Notes
£
£
£
£
Fixed assets
Intangible assets
13
668,110
1,186,412
Tangible assets
15
12,964,462
24,628,070
Investments
14
10
10
13,632,582
25,814,492
Current assets
Stocks
17
852,598
2,134,052
Debtors
18
51,006,106
75,703,728
Cash at bank and in hand
25,533,316
14,047,777
77,392,020
91,885,557
Creditors: amounts falling due within one year
19
(19,429,917)
(48,318,621)
Net current assets
57,962,103
43,566,936
Total assets less current liabilities
71,594,685
69,381,428
Creditors: amounts falling due after more than one year
20
(3,060,038)
(5,862,710)
Provisions for liabilities
Provisions
22
64,129,242
48,769,142
Deferred tax liability
23
200,607
299,071
(64,329,849)
(49,068,213)
Net assets
4,204,798
14,450,505
Capital and reserves
Called up share capital
25
402
402
Profit and loss reserves
4,204,396
14,450,103
Total equity
4,204,798
14,450,505
The financial statements were approved by the board of directors and authorised for issue on 11 April 2022 and are signed on its behalf by:
Mr D Lewis
Director
Company Registration No. 04261274
MERTHYR (SOUTH WALES) LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
- 13 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 January 2019
402
14,249,866
14,250,268
Year ended 31 December 2019:
Profit and total comprehensive income for the year
-
15,200,237
15,200,237
Dividends
12
-
(15,000,000)
(15,000,000)
Balance at 31 December 2019
402
14,450,103
14,450,505
Year ended 31 December 2020:
Loss and total comprehensive income for the year
-
(10,245,707)
(10,245,707)
Balance at 31 December 2020
402
4,204,396
4,204,798
MERTHYR (SOUTH WALES) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
- 14 -
1
Accounting policies
Company information
Merthyr (South Wales) Limited is a
private
company
limited by shares
incorporated in
England and Wales
.
The registered office is
C/O UHY Hacker Young, Lanyon House, Mission Court, Newport, South Wales, United Kingdom, NP20 2DW.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in
sterling
, which is the functional currency of the company.
Monetary a
mounts
in these financial statements are
rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares
publicly available consolidated financial statements
, including this company,
which are
intended to give a true and fair view of the assets, liabilities,
financial position and profit or loss
of the group
.
T
he company has
therefore
taken advantage of
e
xemptions from the following disclosure requirements:
-
Section 4 ‘Statement of Financial Position’ – Reconciliation of the opening and closing number of shares
;
-
Section 7 ‘Statement of Cash Flows’ – Presentation of a statement of cash
f
low and related notes and disclosures
;
-
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’ – Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income
;
-
Section 26 ‘Share based Payment’ – Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements
;
-
Section 33 ‘Related Party Disclosures’ – Compensation for key management personnel
.
The financial statements of the company are consolidated in the financial statements of
Gwent Holdings Limited
. These consolidated financial statements are available from its registered office,
C/O UHY Hacker Young, Lanyon House, Mission Court, Newport, NP20 2DW.
The company has taken advantage of the exemption under section 400 of the
Companies Act 2006 not to prepare consolidated accounts. The
financial statements
present information about the company as an individual entity and not about its group
.
Merthyr (South Wales) Limited is a wholly owned subsidiary of Gwent Holdings Limited and the results of Merthyr (South Wales) Limited are included in the consolidated financial statements of Gwent Holdings Limited which are available from C/O UHY Hacker Young, Lanyon House, Mission Court, Newport, NP20 2DW.
MERTHYR (SOUTH WALES) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
1
Accounting policies
(Continued)
- 15 -
1.2
Going concern
The national lockdown was announced in March 2020. Immediately significant changes were made to production operations. The site immediately changed from double to a single shift operation to reduce the risk of cross contamination between machine operators, who were kept to a single machine and a cleaning regime was introduced across the site. This directly impacted the amount of coal we were able to produce and resulted in us losing virtually all of the steam coal market along with other orders we had secured for an additional steel making customer. Approx. 17% of the workforce were furloughed and homeworking was introduced where practicable. Initially, during the April–July period, volumes reduced by approx. 23% for production and 29% Sales, compared to the corresponding period in 2019.
true
Contracts are now in place for 2021 with our customers and a pay award was implemented for the workforce. Through careful internal planning and management of the Covid-19 situation, we have retained the ability to respond to future increases in customer demand when it is safe to re-introduce the double shift and implement the return of the furloughed workforce.
Therefore a
t the time of approving the financial statements
,
t
he director has a reasonable expectation that the
company
has adequate resources to continue in operational existence for the foreseeable future. Thus
t
he director continues to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover
relates to amounts derived from coal sales and other services. Turnover
is recognised at the fair value of the consideration received or receivable
, and
is shown net of VAT and other sales related taxes
.
The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of
coal
is recognised when the significant risks and rewards of ownership have passed to the buyer
(usually on dispatch of the goods)
, the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.4
Intangible fixed assets other than goodwill
Intangible fixed assets represent mining rights and are amortised on a coal extraction basis.
1.5
Tangible fixed assets
Tangible fixed assets
are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Land and buildings Freehold
Coal extraction basis
Plant and machinery
3-15 years
Deferred stripping costs
Not depreciated
Mining projects
Coal extraction basis
Restoration asset
Coal extraction basis
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and
is credited or charged to profit or loss
.
MERTHYR (SOUTH WALES) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
1
Accounting policies
(Continued)
- 16 -
Deferred stripping costs
Stripping costs incurred during the production stage of operations are deferred and included within fixed assets. The amount of stripping cost deferred is based on the ratio of overburden removed to coal extraction. Stripping costs incurred in the period are deferred to the extent the current period ratio exceeds the life of mine ratio. Such deferred costs are charged against profits to the extent that, in subsequent periods, the ratio is below the life of mine ratio.
Mining projects
Mining projects include the costs of site establishment and costs incurred prior to commencement of operations and costs transferred from intangible fixed assets.
Restoration and closure costs
The total costs of reinstatement of soil excavation and of surface restoration are recognised as a provision at site commissioning when the obligation arises. The amount provided represents the present value of the expected costs. Costs are charged to the provision as incurred and the unwinding of the discount is included in the interest charge for the year. An asset is created for an amount equivalent to the initial provision. This is charged to the profit and loss account on a coal extraction basis over the life of the site.
1.6
Fixed asset investments
Interests in subsidiaries
are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
The investments are assessed for impairment at each reporting date
and
any
impairment
losses are recognised immediately in
profit
or
loss
.
1.7
Impairment of fixed assets
At each reporting
period
end date, the
company
reviews the carrying amounts of its tangible
and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the
company
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in
profit
or
loss
, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
1.8
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
MERTHYR (SOUTH WALES) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
1
Accounting policies
(Continued)
- 17 -
1.9
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset
, with
the net amounts presented in the financial statements
,
when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Debtors and creditors with no stated interest rate and receivable or payable within one year are recorded at transaction price. Any losses arising from impairment are recognised in the profit and loss account in other administrative expenses
.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in
profit
or
loss
, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those
held
at
fair value through profit and loss
, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected.
If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when
the company
transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts,
are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
s
ubsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in
profit
or
loss
in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as
being measured at
fair value th
r
ough profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
MERTHYR (SOUTH WALES) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
1
Accounting policies
(Continued)
- 18 -
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the
profit and loss account
because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The
company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the
profit and loss account
, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the
company
has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.11
Provisions
Provisions are recognised when the
company
has a legal or constructive present obligation as a result of a past event, it is probable that the
company
will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation.
Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision i
s
measured at present value
,
the unwinding of the discount is recognised as a finance cost in
profit
or
loss
in the period
in which
it arises.
1.12
Employee 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.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
MERTHYR (SOUTH WALES) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
1
Accounting policies
(Continued)
- 19 -
1.14
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair
value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
1.15
Government grants
Government grants are recognised at the fair value of the asset receive
d
or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met
. Where a
grant does not specify performance conditions
it
is recognised in income when the proceeds are received or receivable
. A grant received before the recognition criteria are satisfied is recognised as a liability.
MERTHYR (SOUTH WALES) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 20 -
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the director is required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant
effect on amounts recognised in the financial statements.
Restoration provisions
The restoration provision is based on managements best estimate of the cash flow expected in order to restore the mine in accordance with the planning consent. Changes to any of the factors included in the estimate can have a significant impact on the overall expected cost; in particular the overall cost is significantly impacted by the cost of fuel. As discussed further in notes
6
and 2
2
the provision was re-assessed during the year
and the prior year
and as a consequence the estimate was increased by approximately £13.8
m in 20
20
of which £
13.8
m was
debited to the profit and loss account
in 20
20
(£
5.2
m
reduction in
201
9 of which £4.5m was credited to the profit and loss account with the remainder credited to the restoration asset). This is regarded as an exceptional item, refer to note
6
. The main cause of the increase is significant anticipated increases in fuel costs following changes to fuel duty.
Restoration asset
A restoration asset was created for an amount equipment to the initial provision. The asset is amortised on a unit of production basis. The carrying value of the restoration asset is therefore susceptible to the same uncertainties as the provision. The amortisation charge is affected by estimates of remaining reserves.
Other assets amortised on the unit of production basis
Mining rights (Intangible) and Mining Projects (Tangible) are also amortised on a unit of production basis, therefore the amortisation of these assets is also affected by the estimate of future recoverable reserves.
Deferred stripping
As disclosed in section 1 above costs are deferred to the extent that the current ratio of overburden to coal exceeds the ratio expected in the company's life of mine (LOM) projections and costs are released when the current ratio is below the LOM rate. These ratios are derived from extensive geographical survey and bore-hole testing, however the asset can clearly be significantly affected by managements judgement and estimate of future coal recovery and much shift.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2020
2019
£
£
Turnover analysed by class of business
Coal sales
31,213,209
47,236,920
Washing services
8,950,770
10,430,487
Other
15,334
1,308,166
40,179,313
58,975,573
MERTHYR (SOUTH WALES) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
3
Turnover and other revenue
(Continued)
- 21 -
2020
2019
£
£
Other revenue
Interest income
17,797
-
Grants received
231,202
All turnover relates to the UK by origin and destinations.
Grants received
includes £
231,202
of
furlough income from the UK Government due to the Covid-19 pandemic.
4
Operating (loss)/profit
2020
2019
Operating (loss)/profit for the year is stated after charging/(crediting):
£
£
Government grants
(231,202)
Depreciation of owned tangible fixed assets
6,771,313
8,135,691
Depreciation of tangible fixed assets held under finance leases
1,207,335
1,365,389
Loss on disposal of tangible fixed assets
1,541,131
70,946
Amortisation of intangible assets
518,302
1,372,377
5
Auditor's remuneration
2020
2019
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
37,000
40,500
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2020
2019
Number
Number
Site operatives
124
131
Management and administration
21
23
Total
145
154
MERTHYR (SOUTH WALES) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
6
Employees
(Continued)
- 22 -
Their aggregate remuneration comprised:
2020
2019
£
£
Wages and salaries
5,763,005
5,914,600
Social security costs
588,575
657,716
Pension costs
162,559
163,576
6,514,139
6,735,892
7
Exceptional item
Restoration provision/asset
A
s
discussed in note 22 during the year the directors again reassessed the restoration provision based on current operating costs in particular diesel prices and as a result
increased
it by £
13.8
m to £
64.1
m
;
t
his followed an internal re
-
evaluation as well as a review by independent consultants.
£13.8m was debited to the profit and loss account.
The increase was principally a result of significant anticipated increases in fuel costs following the fuel duty changes which mean that the duty charge to the company increases from 11.14p per litre to 57.95p per litre from 1 April 2022.
In the prior year the provision was reduced by £
5.2
m with £
0.7
m bring credited to the restoration asset and the remaining £
4.5
m was credited to the profit and loss account.
Bad debt write off
During the
prior
year, £1.3m of bad debts were written off in relation to British Steel Limited who went into liquidation on 22 May 2019. This resulted in a £1.3m reduction in profit.
8
Director's remuneration
2020
2019
£
£
Remuneration for qualifying services
36,000
9
Interest receivable and similar income
2020
2019
£
£
Interest income
Interest on bank deposits
17,797
Investment income includes the following:
Interest on financial assets not measured at fair value through profit or loss
17,797
MERTHYR (SOUTH WALES) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 23 -
10
Interest payable and similar expenses
2020
2019
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
1
38,687
Other finance costs:
Interest on finance leases and hire purchase contracts
210,777
154,220
Unwinding of discount on provisions
1,548,000
1,548,000
Other interest
136,745
1,758,778
1,877,652
11
Taxation
2020
2019
£
£
Current tax
UK corporation tax on profits for the current period
(929,868)
4,254,010
Adjustments in respect of prior periods
(80,094)
Total current tax
(929,868)
4,173,916
Deferred tax
Origination and reversal of timing differences
(133,649)
(133,779)
Changes in tax rates
35,185
Total deferred tax
(98,464)
(133,779)
Total tax (credit)/charge
(1,028,332)
4,040,137
MERTHYR (SOUTH WALES) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
11
Taxation
(Continued)
- 24 -
The actual (credit)/charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:
2020
2019
£
£
(Loss)/profit before taxation
(11,274,039)
19,240,374
Expected tax (credit)/charge based on the standard rate of corporation tax in the UK of 19.00% (2019: 19.00%)
(2,142,067)
3,655,671
Tax effect of expenses that are not deductible in determining taxable profit
61,385
39,426
Gains not taxable
(143,419)
Adjustments in respect of prior years
25,606
Effect of change in corporation tax rate
35,185
Permanent capital allowances in excess of depreciation
948,107
(62,177)
Depreciation on assets not qualifying for tax allowances
212,477
381,611
Taxation (credit)/charge for the year
(1,028,332)
4,040,137
12
Dividends
2020
2019
£
£
Final paid
15,000,000
13
Intangible fixed assets
Mining rights
£
Cost
At 1 January 2020 and 31 December 2020
8,609,663
Amortisation and impairment
At 1 January 2020
7,423,251
Amortisation charged for the year
518,302
At 31 December 2020
7,941,553
Carrying amount
At 31 December 2020
668,110
At 31 December 2019
1,186,412
MERTHYR (SOUTH WALES) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 25 -
14
Fixed asset investments
2020
2019
Notes
£
£
Investments in subsidiaries
16
10
10
MERTHYR (SOUTH WALES) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 26 -
15
Tangible fixed assets
Land and buildings Freehold
Plant and machinery
Deferred stripping costs
Mining projects
Restoration asset
Total
£
£
£
£
£
£
Cost
At 1 January 2020
9,300,414
48,083,739
7,390,547
29,881,269
27,769,375
122,425,344
Additions
1,393,172
1,393,172
Deferral reversal
(600,000)
(600,000)
Disposals/adjustment
(318,000)
(23,659,795)
(23,977,795)
At 31 December 2020
8,982,414
25,817,116
6,790,547
29,881,269
27,769,375
99,240,721
Depreciation and impairment
At 1 January 2020
7,682,368
37,815,005
26,371,640
25,928,261
97,797,274
Depreciation charged in the year
536,394
5,105,146
1,533,235
803,873
7,978,648
Eliminated in respect of disposals
(19,499,663)
(19,499,663)
At 31 December 2020
8,218,762
23,420,488
27,904,875
26,732,134
86,276,259
Carrying amount
At 31 December 2020
763,652
2,396,628
6,790,547
1,976,394
1,037,241
12,964,462
At 31 December 2019
1,618,046
10,268,734
7,390,547
3,509,629
1,841,114
24,628,070
MERTHYR (SOUTH WALES) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
15
Tangible fixed assets
(Continued)
- 27 -
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2020
2019
£
£
Plant and machinery
1,832,432
3,874,244
Depreciation charge for the year in respect of leased assets
1,207,335
1,365,389
16
Subsidiaries
Details of the company's subsidiaries at 31 December 2020 are as follows:
Name of undertaking
Nature of business
Class of
% Held
shares held
Direct
Indirect
Ffos-y-fran (Commoners) Limited
Dormant
Ordinary
100.00
0
Merthyr (Nominee No.1) Limited
Dormant
Ordinary
100.00
0
The registered office address for all of the above is Cwmbargoed Disposal Point Fochriw Road, Cmwbargoed, Merthyr Tydfil, Wales, CF48 4AE.
17
Stocks
2020
2019
£
£
Coal stocks
748,656
2,022,020
Other stocks
103,942
112,032
852,598
2,134,052
18
Debtors
2020
2019
Amounts falling due within one year:
£
£
Trade debtors
5,082,185
10,639,322
Unpaid share capital
402
402
Amounts due from parent undertakings
45,583,468
64,814,989
Other debtors
60,065
Prepayments and accrued income
340,051
188,950
51,006,106
75,703,728
MERTHYR (SOUTH WALES) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 28 -
19
Creditors: amounts falling due within one year
2020
2019
Notes
£
£
Obligations under finance leases
21
3,430,067
1,700,350
Trade creditors
912,887
941,725
Amounts due to group undertakings
37,976,121
Corporation tax
4,849,073
4,533,694
Other taxation and social security
6,665,189
1,041,295
Other creditors
2,251,552
10
Accruals and deferred income
1,321,149
2,125,426
19,429,917
48,318,621
20
Creditors: amounts falling due after more than one year
2020
2019
Notes
£
£
Obligations under finance leases
21
3,060,038
5,862,710
21
Finance lease obligations
2020
2019
Future minimum lease payments due under finance leases:
£
£
Within one year
3,430,067
1,700,350
In two to five years
3,060,038
5,862,710
6,490,105
7,563,060
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3.7 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
T
he liabilities are secured against the assets to which they relate.
22
Provisions for liabilities
2020
2019
£
£
Operating provisions
64,129,242
48,769,142
MERTHYR (SOUTH WALES) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
22
Provisions for liabilities
(Continued)
- 29 -
Movements on provisions:
Operating provisions
£
At 1 January 2020
48,769,142
Additional provisions in the year
13,812,100
Unwinding of discount
1,548,000
At 31 December 2020
64,129,242
The provision relates to the costs of returning land disturbed during mining activities including aftercare costs. Restorations will commence while mining operations are ongoing and the provision is expected to be largely utilised over the next
8
years.
As discussed in note
6
the provision was reassessed in 20
20
and 201
9
and
increased by £13.8m and
reduced by £5.2m retrospectively.
23
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
2020
2019
Balances:
£
£
Accelerated capital allowances
200,607
300,279
Other timing differences
-
(1,208)
200,607
299,071
2020
Movements in the year:
£
Liability at 1 January 2020
299,071
Credit to profit or loss
(98,464)
Liability at 31 December 2020
200,607
The deferred tax liability set out above is expected to reverse over the life of the asset and relates to accelerated capital allowances that are expected to mature within the same period.
MERTHYR (SOUTH WALES) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 30 -
24
Retirement benefit schemes
2020
2019
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
162,559
163,576
The company operates a defined contribution pension scheme for all qualifying employees.
The assets of the scheme are held separately from those of the company in an independently administered fund.
25
Share capital
2020
2019
2020
2019
Ordinary share capital
Number
Number
£
£
Issued and not fully paid
Ordinary A share of £1 each
1
1
1
1
Ordinary B share of £1 each
1
1
1
1
Ordinary C shares of £1 each
400
400
400
400
402
402
402
402
26
Operating lease commitments
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2020
2019
£
£
Within one year
4,788
9,285
Between two and five years
6,783
16,359
11,571
25,644
27
Related party transactions
Transactions with related parties
The company has taken advantage of the exemption, under the terms of FRS 102, section 33.1A, not to disclose related party transactions with wholly owned subsidiaries within the group.
During the year the company paid royalties of £
2,137,323
(2019: £1,56
7
,00
4
) to Geraint Morgan Legacy Ltd, of which Mr D Lewis is a director. At the year end an amount of £
2,251,140
(2019: £453,775) was due to Geraint Morgan Legacy Ltd and this amount was included within creditors due within one year.
MERTHYR (SOUTH WALES) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 31 -
28
Ultimate controlling party
The company is a wholly owned subsidiary of Merthyr Holdings Limited, Formerly, Miller Argent Holdings Limited, a company incorporated in Great Britain and registered in England and Wales.
Merthyr Holdings Limited is owned by Gwent Investments Limited which is 100% owned by Gwent Holdings Limited, the ultimate parent undertaking. Both Gwent Investments Limited and Gwent Holdings Limited are registered in England & Wales.
Gwent Holdings Limited is the parent of the smallest and largest group of which the company is a member for which group accounts are prepared. Copies of the Gwent Holdings Limited accounts can be obtained from the company's registered office; c/o UHY Hacker Young, Lanyon House, Mission Court, Newport, NP20 2DW.
The ultimate controlling party is Mrs J H Lewis by virtue of their shareholding in Gwent Holdings Limited.
2020-12-31
2020-01-01
false
CCH Software
CCH Accounts Production 2022.100
No description of principal activity
Mr D Lewis
Mr L Jones
04261274
2020-01-01
2020-12-31
04261274
bus:Director1
2020-01-01
2020-12-31
04261274
bus:Director15
2020-01-01
2020-12-31
04261274
bus:Director2
2020-01-01
2020-12-31
04261274
bus:RegisteredOffice
2020-01-01
2020-12-31
04261274
2020-12-31
04261274
2019-01-01
2019-12-31
04261274
core:RetainedEarningsAccumulatedLosses
2019-01-01
2019-12-31
04261274
core:RetainedEarningsAccumulatedLosses
2020-01-01
2020-12-31
04261274
core:OtherResidualIntangibleAssets
2020-12-31
04261274
core:OtherResidualIntangibleAssets
2019-12-31
04261274
core:DevelopmentCostsCapitalisedDevelopmentExpenditure
2020-12-31
04261274
core:DevelopmentCostsCapitalisedDevelopmentExpenditure
2019-12-31
04261274
2019-12-31
04261274
core:LandBuildings
core:OwnedOrFreeholdAssets
2020-12-31
04261274
core:PlantMachinery
2020-12-31
04261274
core:FurnitureFittings
2020-12-31
04261274
core:ComputerEquipment
2020-12-31
04261274
core:MotorVehicles
2020-12-31
04261274
core:LandBuildings
core:OwnedOrFreeholdAssets
2019-12-31
04261274
core:PlantMachinery
2019-12-31
04261274
core:FurnitureFittings
2019-12-31
04261274
core:ComputerEquipment
2019-12-31
04261274
core:MotorVehicles
2019-12-31
04261274
core:CurrentFinancialInstruments
core:WithinOneYear
2020-12-31
04261274
core:CurrentFinancialInstruments
core:WithinOneYear
2019-12-31
04261274
core:Non-currentFinancialInstruments
core:AfterOneYear
2020-12-31
04261274
core:Non-currentFinancialInstruments
core:AfterOneYear
2019-12-31
04261274
core:CurrentFinancialInstruments
2020-12-31
04261274
core:CurrentFinancialInstruments
2019-12-31
04261274
core:ShareCapital
2020-12-31
04261274
core:ShareCapital
2019-12-31
04261274
core:RetainedEarningsAccumulatedLosses
2020-12-31
04261274
core:RetainedEarningsAccumulatedLosses
2019-12-31
04261274
core:ShareCapital
2018-12-31
04261274
core:RetainedEarningsAccumulatedLosses
2018-12-31
04261274
2018-12-31
04261274
core:ShareCapitalOrdinaryShares
2020-12-31
04261274
core:ShareCapitalOrdinaryShares
2019-12-31
04261274
core:LandBuildings
core:OwnedOrFreeholdAssets
2020-01-01
2020-12-31
04261274
core:PlantMachinery
2020-01-01
2020-12-31
04261274
core:FurnitureFittings
2020-01-01
2020-12-31
04261274
core:ComputerEquipment
2020-01-01
2020-12-31
04261274
core:MotorVehicles
2020-01-01
2020-12-31
04261274
core:OwnedAssets
2020-01-01
2020-12-31
04261274
core:OwnedAssets
2019-01-01
2019-12-31
04261274
core:LeasedAssets
2020-01-01
2020-12-31
04261274
core:LeasedAssets
2019-01-01
2019-12-31
04261274
1
2020-01-01
2020-12-31
04261274
1
2019-01-01
2019-12-31
04261274
core:UKTax
2020-01-01
2020-12-31
04261274
core:UKTax
2019-01-01
2019-12-31
04261274
2
2020-01-01
2020-12-31
04261274
2
2019-01-01
2019-12-31
04261274
core:DevelopmentCostsCapitalisedDevelopmentExpenditure
2019-12-31
04261274
core:DevelopmentCostsCapitalisedDevelopmentExpenditure
2020-01-01
2020-12-31
04261274
core:Non-currentFinancialInstruments
2020-12-31
04261274
core:Non-currentFinancialInstruments
2019-12-31
04261274
core:LandBuildings
core:OwnedOrFreeholdAssets
2019-12-31
04261274
core:PlantMachinery
2019-12-31
04261274
core:FurnitureFittings
2019-12-31
04261274
core:ComputerEquipment
2019-12-31
04261274
core:MotorVehicles
2019-12-31
04261274
2019-12-31
04261274
core:Subsidiary1
2020-01-01
2020-12-31
04261274
core:Subsidiary2
2020-01-01
2020-12-31
04261274
core:Subsidiary1
1
2020-01-01
2020-12-31
04261274
core:Subsidiary2
2
2020-01-01
2020-12-31
04261274
core:WithinOneYear
2020-12-31
04261274
core:WithinOneYear
2019-12-31
04261274
core:BetweenTwoFiveYears
2020-12-31
04261274
core:BetweenTwoFiveYears
2019-12-31
04261274
bus:PrivateLimitedCompanyLtd
2020-01-01
2020-12-31
04261274
bus:FRS102
2020-01-01
2020-12-31
04261274
bus:Audited
2020-01-01
2020-12-31
04261274
bus:FullAccounts
2020-01-01
2020-12-31
xbrli:pure
xbrli:shares
iso4217:GBP