Company registration number 03587074 (England and Wales)
ERC EQUIPOISE LIMITED
ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
ERC EQUIPOISE LIMITED
COMPANY INFORMATION
Directors
Dr A Law
Mr D C Wilson
Mr P Chernik
(Resigned 1 November 2022)
Mr P Nicol
Mr P Dolan
Mrs K J Hall
(Appointed 8 July 2022)
Mr J A Culley
(Appointed 20 July 2022)
Dr J N F Hull
(Appointed 1 November 2022)
Secretary
Mr J A Culley
Company number
03587074
Registered office
Eastbourne House
2 Saxbys Lane
Lingfield
Surrey
RH7 6DN
Auditor
TC Group
3 Acorn Business Centre
Northarbour Road
Cosham
Portsmouth
PO6 3TH
Business address
6th floor
Stephenson House
2 Cherry Orchard Road
Croydon
Surrey
CR0 6BA
ERC EQUIPOISE LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 8
Income statement
9
Group statement of comprehensive income
10
Group statement of financial position
11
Company statement of financial position
12
Group statement of changes in equity
13 - 14
Company statement of changes in equity
15
Group statement of cash flows
16
Notes to the financial statements
17 - 36
ERC EQUIPOISE LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2023
- 1 -

The directors present the strategic report for the year ended 30 June 2023.

Fair review of the business

ERC Equipoise Ltd (ERCE or the Group) is an employee-owned independent energy consultancy with global expertise in resources, carbon auditing, oil and gas analytics and subsurface evaluation, including storage and sequestration. The Group is one of the leading auditors of oil and gas reserves in Europe and offers a wide variety of services from independent reserves reports and expert witness testimonials to technical reservoir consulting including geophysical and geological modelling. The Group is based in London, Singapore, Kuala Lumpur, Perth and Canada and provides services to energy companies, government agencies and financial institutions throughout the world.

 

The Group turnover was £12,136,988 (2022 - £10,930,455) during the year. The Group returned a profit of £356,334 (2022 - £267,903 loss before taxation). Prior year's loss was due to the impact of COVID-19 which has now passed allowing the company to return to standard trading practices. During the year we restructured our Asia Pacific operations in order to reduce costs and co-locate our technical staff with our key clients in the cities of Kuala Lumpur, Malaysia and Perth, Australia. This positions the Group to grow a sustainable market share in the Asia Pacific Region.

 

It is the Group’s intention to build on its position as one of the market leaders in the provision of independent strategic, technical and commercial advice to the global energy sector by continuing investment in staff, facilities and through revenue growth.

 

During the period the Group has continued to invest in the energy transition via ERC Evolution. “Evolution” advises clients that are involved in the energy transition journey, from the decarbonization of petroleum production to investment in renewable energy sources. The Group’s pre-existing investment in the energy transition has allowed Evolution to become a market leader in the provision of independent advisory services for UK based Carbon Capture and Storage projects. This has resulted in faster than anticipated Revenue growth of the Evolution business through the year. The Group continues to invest in Evolution to further enhance its market leading position in the UK and respond to the increasing levels of international activity in the energy transition. 

As at 30 June 2023, a provision for doubtful debt has been recognised in relation to two outstanding debtor balances. We have recognised this provision as there is sufficient doubt over the recoverability. One debtor owing £348,355 has become overdue during the year. This is due to a significant change in personnel responsible for the payment of this debt and the economic difficulties the customer is facing due to the political climate within the country. This debt has been fully provided for in the year. The other debtor owing £86,362 at 30 June 2023, has paid £22,220 post year end but has subsequently become overdue. This customer has been unable to pay due a cashflow shortage resulting in us becoming doubtful of the debt being recovered. We have recognised a provision for the full outstanding balance of £64,142 in the current year results.

ERC EQUIPOISE LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 2 -
Principal risks and uncertainties

The business faces a number of risks, which are reviewed on a regular basis by directors and management as part of their ongoing work. The risks considered by directors are those identified by management as principal risks to the business.

The group looks to reduce its exposure to these risks by servicing a variety of business streams through a multi- disciplinary approach across a number of different geographies and globally distributed operating bases.

 

Price risk

Recent global economic uncertainty, the energy transition and the war in Ukraine have introduced volatility into global energy prices. This volatility influences current and future demand for the Group’s services.

 

Credit risk

The Group’s financial assets are trade debtors and bank balances. The Group manages its debtors through regular review and follow-up of outstanding balances. The Group reviews its working capital requirements to ensure that credit risks can be adequately managed.

 

Foreign Exchange risk

The Group transacts predominately in GBP. The fluctuation of the GBP currency to the USD is not seen as a significant threat to the group.

Key performance indicators

The Group’s management use the following performance indicators to monitor performance:

 

• Turnover (£12,136,988) as shown on the consolidated profit and loss account;

 

• Profit before taxation (£356,334) as shown on the consolidated profit and loss account;

 

• Working capital, as shown on the company’s balance sheet.

On behalf of the board

Dr J N F Hull
Director
13 December 2023
ERC EQUIPOISE LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2023
- 3 -

The directors present their annual report and financial statements for the year ended 30 June 2023.

Principal activities

The principal activity of the company and group is the provision of strategic, technical and commercial consulting to energy businesses globally.

Results and dividends

The results for the year are set out on page 9.

Ordinary dividends were paid amounting to £162,925 relating to financial year ending 30 June 2021. The directors reserve the right to pay a dividend in respect of the financial year ending 30 June 2023.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

Dr A Law
Mr D C Wilson
Mr P Chernik
(Resigned 1 November 2022)
Mr P Nicol
Mr P Dolan
Mrs K J Hall
(Appointed 8 July 2022)
Mr J A Culley
(Appointed 20 July 2022)
Dr J N F Hull
(Appointed 1 November 2022)
Acquisition of own shares

During the year, the company purchased 1,400 Ordinary B shares from an employee and the shares were put back into the employee benefit trust. This occurred when the employee left the company. The total consideration paid was £12,600.

Auditor

TC Group were appointed as auditor to the group and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.

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 auditor of the company 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 auditor of the company is aware of that information.

On behalf of the board
Dr J N F Hull
Director
13 December 2023
ERC EQUIPOISE LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 30 JUNE 2023
- 4 -

The directors are responsible for preparing the Annual Report and the 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 United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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 group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

 

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

ERC EQUIPOISE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF ERC EQUIPOISE LIMITED
- 5 -
Opinion

We have audited the financial statements of ERC Equipoise Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 June 2023 which comprise the group income statement, the group statement of comprehensive income, the group statement of financial position, the company statement of financial position, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows 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:

Basis for opinion

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 group and parent 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 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 and 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.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are 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.

ERC EQUIPOISE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF ERC EQUIPOISE LIMITED
- 6 -

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

Matters on which we are required to report by exception

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, we have not identified material misstatements in the strategic report or the directors' report.

 

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:

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, the directors are 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 directors determine 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 directors are responsible for assessing the parent 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 directors either intend to liquidate the parent company or to cease operations, or have 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. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

Extent to which the audit was considered capable of detecting irregularities, including fraud

The objectives of our audit, in respect to fraud, are: to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses; and to respond appropriately to fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and its management.

 

ERC EQUIPOISE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF ERC EQUIPOISE LIMITED
- 7 -

Our approach was as follows:

Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Where the risk was considered to be higher, we performed audit procedures to address each identified fraud risk. These procedures included: testing manual journals; reviewing the financial statement disclosures and testing to supporting documentation; performing analytical procedures; and enquiring of management,and were designed to provide reasonable assurance that the financial statements were free from fraud or error.

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https:// www.frc.org.uk/Our-Work/Audit/Audit-and-assurance/Standards-and-guidance/Standards-and-guidance-for- auditors/Auditors-responsibilities-for-audit/Description-of-auditors-responsibilities-for-audit.aspx. This description forms part of our auditor’s report.

ERC EQUIPOISE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF ERC EQUIPOISE LIMITED
- 8 -

Use of our 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.

James Blake FCA (Senior Statutory Auditor)
For and on behalf of TC Group
21 December 2023
Statutory Auditor
3 Acorn Business Centre
Northarbour Road
Cosham
Portsmouth
PO6 3TH
ERC EQUIPOISE LIMITED
GROUP INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2023
- 9 -
2023
2022
Notes
£
£
Revenue
3
12,136,988
10,930,455
Other operating income
22,615
59,415
Other external expenses
(54,850)
(96,620)
Staff costs
6
(7,434,755)
(7,034,146)
Depreciation
4
(91,057)
(183,736)
Other operating expenses
(4,178,679)
(3,880,296)
Operating profit/(loss)
4
400,262
(204,928)
Share of profits of associates and joint ventures
-
5,891
Investment income
2,908
133
Finance costs
8
(46,836)
(21,199)
Other gains and losses
-
(47,800)
Profit/(loss) before taxation
356,334
(267,903)
Tax on profit/(loss)
9
36,892
(232,380)
Profit/(loss) for the year
24
393,226
(500,283)
Profit/(loss) for the financial year is all attributable to the owners of the parent company.
ERC EQUIPOISE LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
- 10 -
2023
2022
£
£
Profit/(loss) for the year
393,226
(500,283)
Other comprehensive income
Currency translation (loss)/gain
(97,159)
158,276
Total comprehensive income for the year
296,067
(342,007)
Total comprehensive income for the year is all attributable to the owners of the parent company.
ERC EQUIPOISE LIMITED
GROUP STATEMENT OF FINANCIAL POSITION
AS AT
30 JUNE 2023
30 June 2023
- 11 -
2023
2022
Notes
£
£
£
£
Non-current assets
Property, plant and equipment
11
103,487
96,213
Investments
12
104
104
Other receivables
14
-
26,276
103,591
122,593
Current assets
Trade and other receivables
14
2,371,062
3,182,976
Investments
15
500,000
-
0
Cash and cash equivalents
3,911,764
3,931,286
6,782,826
7,114,262
Current liabilities
16
(1,894,566)
(2,173,979)
Net current assets
4,888,260
4,940,283
Total assets less current liabilities
4,991,851
5,062,876
Non-current liabilities
17
(458,334)
(678,333)
Net assets
4,533,517
4,384,543
Equity
Called up share capital
23
17,017
17,017
Merger Reserve
24
1,030,498
1,030,498
Capital redemption reserve
24
1,561
1,561
Other reserves
24
(526,382)
(590,131)
Retained earnings
24
4,010,823
3,925,598
Total equity
4,533,517
4,384,543
The financial statements were approved by the board of directors and authorised for issue on 13 December 2023 and are signed on its behalf by:
13 December 2023
Dr J N F Hull
Mr D C Wilson
Director
Director
ERC EQUIPOISE LIMITED
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
30 June 2023
- 12 -
2023
2022
Notes
£
£
£
£
Non-current assets
Property, plant and equipment
11
59,920
77,183
Investments
12
50,511
50,512
110,431
127,695
Current assets
Trade and other receivables
14
3,444,378
3,766,186
Investments
15
500,000
-
0
Cash and cash equivalents
3,263,043
3,365,133
7,207,421
7,131,319
Current liabilities
16
(1,511,185)
(1,433,083)
Net current assets
5,696,236
5,698,236
Total assets less current liabilities
5,806,667
5,825,931
Non-current liabilities
17
(458,334)
(678,333)
Net assets
5,348,333
5,147,598
Equity
Called up share capital
23
17,017
17,017
Capital redemption reserve
24
1,561
1,561
Other reserves
24
(526,382)
(590,131)
Retained earnings
24
5,856,137
5,719,151
Total equity
5,348,333
5,147,598

As permitted by s408 Companies Act 2006, the company has not presented its own income statement and related notes. The company’s profit for the year was £347,828 (2022 - £1,405,303 profit).

The financial statements were approved by the board of directors and authorised for issue on 13 December 2023 and are signed on its behalf by:
13 December 2023
Dr J N F Hull
Mr D C Wilson
Director
Director
Company registration No. 03587074
ERC EQUIPOISE LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
- 13 -
Share capital
Merger Reserve
Capital redemption reserve
Other reserves - EBT own share reserve
Other reserves - Share based payment reserve
TOTAL Other reserves
Retained earnings
Total
Notes
£
£
£
£
£
£
£
£
Balance at 1 July 2021
17,017
1,030,498
1,561
(611,397)
21,266
(590,131)
4,267,605
4,726,550
Year ended 30 June 2022:
Profit for the year
-
-
-
-
-
-
(500,283)
(500,283)
Other comprehensive income:
Currency translation differences
-
-
-
-
-
-
0
158,276
158,276
Total comprehensive income
-
-
-
-
-
-
(342,007)
(342,007)
Balance at 30 June 2022
17,017
1,030,498
1,561
(611,397)
21,266
(590,131)
3,925,598
4,384,543
ERC EQUIPOISE LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
Share capital
Merger Reserve
Capital redemption reserve
Other reserves - EBT own share reserve
Other reserves - Share based payment reserve
TOTAL Other reserves
Retained earnings
Total
Notes
£
£
£
£
£
£
£
£
- 14 -
Year ended 30 June 2023:
Profit for the year
-
-
-
-
-
-
393,226
393,226
Other comprehensive income:
Currency translation differences
-
-
-
-
-
-
0
(97,159)
(97,159)
Total comprehensive income for the year
-
-
-
-
-
-
296,067
296,067
Dividends
10
-
-
-
-
-
-
(162,925)
(162,925)
Proceeds received on exercise of share options
-
-
-
36,778
-
36,778
-
36,778
Net disposal cost of own shares issued
-
-
-
55,271
-
55,271
(55,271)
-
Share based payment transfer on realisation - EMI options exercised
22
-
-
-
-
(7,354)
(7,354)
7,354
-
Share based payment transfer on realisation - EMI options lapsed
-
-
-
-
(8,346)
(8,346)
-
(8,346)
Net cost of purchase of own shares
-
-
-
(12,600)
-
(12,600)
-
(12,600)
Balance at 30 June 2023
17,017
1,030,498
1,561
(531,948)
5,566
(526,382)
4,010,823
4,533,517
ERC EQUIPOISE LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
- 15 -
Share capital
Capital redemption reserve
Other reserves - EBT own share reserve
Other reserves - Share based payment reserve
TOTAL Other reserves
Retained earnings
Total
Notes
£
£
£
£
£
£
£
Balance at 1 July 2021
17,017
1,561
(611,397)
21,266
(590,131)
4,313,848
3,742,295
Year ended 30 June 2022:
Profit for the year
-
-
-
-
-
1,405,303
1,405,303
Other comprehensive income:
Total comprehensive income for the year
-
-
-
-
-
1,405,303
1,405,303
Balance at 30 June 2022
17,017
1,561
(611,397)
21,266
(590,131)
5,719,151
5,147,598
Year ended 30 June 2023:
Profit for the year
-
-
-
-
-
347,828
347,828
Other comprehensive income:
-
-
-
-
-
-
-
Total comprehensive income for the year
-
-
-
-
-
347,828
347,828
Dividends
10
-
-
-
-
-
(162,925)
(162,925)
Proceeds received on exercise of share options
-
-
36,778
-
36,778
-
36,778
Net disposal cost of own shares issued
-
-
55,271
-
55,271
(55,271)
-
Share based payment transfer on realisation - EMI options exercised
22
-
-
-
(7,354)
(7,354)
7,354
-
Share based payment transfer on realisation - EMI options lapsed
-
-
-
(8,346)
(8,346)
-
(8,346)
Net cost of purchase of own shares
-
-
(12,600)
-
(12,600)
-
(12,600)
Balance at 30 June 2023
17,017
1,561
(531,948)
5,566
(526,382)
5,856,137
5,348,333
ERC EQUIPOISE LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
- 16 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
29
1,184,831
120,112
Interest paid
(46,836)
(21,199)
Income taxes paid
(80,352)
(267,194)
Net cash inflow from operating activities
1,057,643
(168,281)
Investing activities
Purchase of property, plant and equipment
(98,331)
(29,935)
Purchase of Investments
(500,000)
-
Interest received
2,908
133
Net cash used in investing activities
(595,423)
(29,802)
Financing activities
Purchase of treasury shares
(12,600)
-
0
Proceeds received on exercise of share options
36,778
-
Repayment of borrowings
(219,999)
-
Proceeds of new bank loans
-
(201,667)
Payment of finance leases obligations
(22,468)
(88,897)
Dividends paid to equity shareholders
(162,925)
-
0
Net cash generated from/(used in) financing activities
(381,214)
(290,564)
Net increase/(decrease) in cash and cash equivalents
81,006
(488,647)
Cash and cash equivalents at beginning of year
3,931,286
4,259,113
Effect of foreign exchange rates
(100,528)
160,820
Cash and cash equivalents at end of year
3,911,764
3,931,286
ERC EQUIPOISE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
- 17 -
1
Accounting policies
Company information

ERC Equipoise Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Eastbourne House, 2 Saxbys Lane, Lingfield, Surrey, RH7 6DN.

 

The group consists of ERC Equipoise Limited and all of its subsidiaries as listed in note 16 to these accounts.

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 amounts 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.

The 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. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:

 

1.2
Business combinations

In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.

 

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.

ERC EQUIPOISE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 18 -
1.3
Basis of consolidation

The consolidated group financial statements consist of the financial statements of the parent company ERC Equipoise Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in associates.

 

All financial statements are made up to 30 June 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

 

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.

Entities other than subsidiary undertakings, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.

Investments in joint ventures and associates are carried in the group statement of financial position at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.

 

If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.

 

Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.

1.4
Going concern

At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

1.5
Revenue

Revenue is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods 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.

Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the outcome can be estimated reliably. Revenue is calculated as a proportion of total contract value, based on the stage of completion.

 

Amounts recoverable on contracts, which are included in debtors, are stated at the net sales value of the work done after provision for contingencies and anticipated future losses on contracts, less amounts received as progress payments on account. Excess payments on account are included in creditors as payments on account.

ERC EQUIPOISE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 19 -
1.6
Property, plant and equipment

Property, plant and equipment 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:

Leasehold land and buildings
over life of lease
Plant and machinery
20% straight line
Fixtures, fittings and equipment
25% straight line
Computer equipment
1.5 - 3 years straight line
Cycles
100% straight line
Office equipment
20%, 25% or 100% straight line

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 recognised in the income statement.

1.7
Non-current investments

Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.

 

In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

1.8
Impairment of non-current assets

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

 

The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.

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

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

ERC EQUIPOISE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 20 -
1.9
Cash and cash equivalents

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

1.10
Financial instruments

The group 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 group's statement of financial position when the group becomes party to the contractual provisions of the instrument.

Basic financial assets

Basic financial assets, which include trade and other receivables and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

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.

Classification of financial liabilities

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 group after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including trade and other payables, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

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

 

Trade payables 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 payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

ERC EQUIPOISE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 21 -
1.11
Equity instruments

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

1.12
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 income statement 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 group’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.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. 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 income statement, 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 if, and only if, there is 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.

1.13
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 non-current 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.

1.14
Retirement benefits

Contributions to employees' personal pension schemes are charged to the profit and loss account in the year to which they relate.

ERC EQUIPOISE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 22 -
1.15
Share-based payments

For cash-settled share-based payments, a liability is recognised for the goods and services acquired, measured initially at the fair value of the liability. At the balance sheet date until the liability is settled, and at the date of settlement, the fair value of the liability is remeasured, with any changes in fair value recognised in profit or loss for the year.

Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the option pricing model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.

When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.

 

Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.

1.16
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 statement of financial position 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.

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

1.17
Government grants

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

 

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.

1.18
Foreign exchange

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

ERC EQUIPOISE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 23 -
1.19

Intermediate payment arrangements

Shares held by the ERC Equipoise Employee Benefit Trust are classified as an 'Other reserve' within capital and reserves and recognised at cost. Consideration received for the sale of such shares is also recognised in equity with any difference between the proceeds from sale and the original cost taken to the profit and loss reserve. No gain or loss is recognised on the purchase, sale issue or cancellation of equity shares.

2
Judgements and key sources of estimation uncertainty

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

 

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

Critical judgements

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

Valuation of share based payments

The share option pricing model used is for the fair value of the options to be 20% of the exercise price.

Provision for doubtful debts

As at 30 June 2023, a provision for doubtful debt has been recognised in relation to two outstanding debtor balances. We have recognised this provision as there is sufficient doubt over the recoverability. One debtor owing £348,355 has become overdue during the year. This is due to a significant change in personnel responsible for the payment of this debt and the economic difficulties the customer is facing due to the political climate within the country. This debt has been fully provided for in the year. The other debtor owing £86,362 at 30 June 2023, has paid £22,220 post year end but has subsequently become overdue. This customer has been unable to pay due a cashflow shortage resulting in us becoming doubtful of the debt being recovered. We have recognised a provision for the full outstanding balance of £64,142 in the current year results.

3
Revenue
2023
2022
£
£
Revenue analysed by class of business
Oil and gas evaluation and energy transition services
12,136,988
10,930,455
ERC EQUIPOISE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
3
Revenue
(Continued)
- 24 -
2023
2022
£
£
Revenue analysed by geographical market
UK
5,456,683
1,640,787
Europe
2,118,141
2,609,487
Rest of World
4,562,164
6,680,181
12,136,988
10,930,455
4
Operating profit/(loss)
2023
2022
£
£
Operating profit/(loss) for the year is stated after charging/(crediting):
Exchange differences apart from those arising on financial instruments
measured at fair value through profit or loss
47,358
(87,792)
Government grants
-
0
(9,956)
Depreciation of owned property, plant and equipment
68,589
94,839
Depreciation of property, plant and equipment held under finance leases
22,468
88,897
Operating lease charges
232,952
365,595
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the group and company
20,000
18,250
6
Employees

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

Group
Company
2023
2022
2023
2022
Number
Number
Number
Number
Directors
4
3
3
2
Technical
52
60
36
43
Sales
2
3
1
2
Business Support
11
9
10
8
Total
69
75
50
55
ERC EQUIPOISE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
6
Employees
(Continued)
- 25 -

Their aggregate remuneration comprised:

Group
Company
2023
2022
2023
2022
£
£
£
£
Wages and salaries
6,409,021
6,044,995
4,521,975
4,125,125
Social security costs
588,432
635,483
496,708
509,863
Pension costs
437,302
353,668
362,314
327,057
7,434,755
7,034,146
5,380,997
4,962,045
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
516,552
690,470
Company pension contributions to defined contribution schemes
24,796
22,800
541,348
713,270

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2022 - 1).

The number of directors who exercised share options during the year was 1 (2022 - 0).
Remuneration disclosed above includes the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
N/A
284,306
Company pension contributions to defined contribution schemes
N/A
9,675
8
Finance costs
2023
2022
£
£
Interest on bank overdrafts and loans
46,836
19,831
Interest on finance leases and hire purchase contracts
-
0
1,368
Total finance costs
46,836
21,199
ERC EQUIPOISE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 26 -
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
225,166
224,947
R&D Enhanced relief claim
(210,533)
-
0
Total UK current tax
14,633
224,947
Foreign current tax on profits for the current period
7,957
-
0
Over provision of overseas deferred tax
(12,954)
-
0
Total current tax
9,636
224,947
Deferred tax
Origination and reversal of timing differences
(6,746)
7,433
R&D Enhanced relief claim
(39,782)
-
0
Total deferred tax
(46,529)
7,434
Total tax (credit)/charge
(36,892)
232,380

The actual (credit)/charge for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:

2023
2022
£
£
Profit/(loss) before taxation
356,334
(500,283)
Expected tax charge/(credit) based on the standard rate of corporation tax in the UK of 20.50% (2022: 19.00%)
73,048
(95,054)
Tax effect of expenses that are not deductible in determining taxable profit
(2,370)
18,706
Permanent capital allowances in excess of depreciation
-
0
(1,224)
Unrecognised deferred tax assets in relation to overseas tax losses
91,868
295,432
Effective change of tax rate
-
0
14,520
R&D Enhanced relief claim
(250,315)
-
0
Over provision of overseas tax
(12,954)
-
Disallowed expenditure - ineligible expense
8,388
-
Effect of overseas tax rate at lower rates
55,443
-
Taxation (credit)/charge
(36,892)
232,380
ERC EQUIPOISE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 27 -
10
Dividends
2023
2022
Recognised as distributions to equity holders:
£
£
Interim paid
162,925
-
11
Property, plant and equipment
Group
Leasehold land and buildings
Plant and machinery
Fixtures, fittings and equipment
Computer equipment
Total
£
£
£
£
£
Cost
At 1 July 2022
306,397
81,745
164,603
1,323,229
1,875,974
Additions
-
0
3,025
29,890
65,416
98,331
At 30 June 2023
306,397
84,770
194,493
1,388,645
1,974,305
Depreciation and impairment
At 1 July 2022
283,671
79,571
150,959
1,265,560
1,779,761
Depreciation charged in the year
22,724
2,759
6,632
58,942
91,057
At 30 June 2023
306,395
82,330
157,591
1,324,502
1,870,818
Carrying amount
At 30 June 2023
2
2,440
36,902
64,143
103,487
At 30 June 2022
22,726
2,174
13,644
57,669
96,213
Company
Leasehold land and buildings
Plant and machinery
Fixtures, fittings and equipment
Computer equipment
Total
£
£
£
£
£
Cost
At 1 July 2022
306,397
81,745
159,283
1,256,774
1,804,199
Additions
-
0
3,025
264
56,685
59,974
At 30 June 2023
306,397
84,770
159,547
1,313,459
1,864,173
Depreciation and impairment
At 1 July 2022
283,671
79,571
147,718
1,216,056
1,727,016
Depreciation charged in the year
22,724
2,759
5,086
46,668
77,237
At 30 June 2023
306,395
82,330
152,804
1,262,724
1,804,253
Carrying amount
At 30 June 2023
2
2,440
6,743
50,735
59,920
At 30 June 2022
22,726
2,174
11,565
40,718
77,183
ERC EQUIPOISE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 28 -
12
Fixed asset investments
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Investments in subsidiaries
13
100
100
50,507
50,507
Investments in associates
-
0
-
0
-
0
1
Unlisted investments
4
4
4
4
104
104
50,511
50,512
Movements in non-current investments
Group
Shares in subsidiaries
Other investments
Total
£
£
£
Cost or valuation
At 1 July 2022 and 30 June 2023
100
4
104
Carrying amount
At 30 June 2023
100
4
104
At 30 June 2022
100
4
104
Movements in non-current investments
Company
Shares in subsidiaries and associates
Other investments
Total
£
£
£
Cost or valuation
At 1 July 2021
50,507
4
50,511
Additions
-
-
-
At 30 June 2023
50,507
4
50,511
Impairment
At 1 July 2021
-
-
-
Impairment losses
-
-
-
At 30 June 2023
-
-
Carrying amount
At 30 June 2023
50,507
4
50,511
At 30 June 2022
50,508
4
50,512
ERC EQUIPOISE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 29 -
13
Subsidiaries

Details of the company's subsidiaries at 30 June 2023 are as follows:

Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Indirect
Equipoise Solutions Limited
Eastbourne House, 2 Saxbys Lane, Surrey. RH7
6DN
Ordinary
100.00
-
ERC Energy Resource Consultants
Limited
As above
Ordinary
100.00
-
ERC Evolution Limited
As above
Ordinary
100.00
-
ERCE Limited (dormant)
As above
Ordinary
100.00
-
Petroleum Geoscience Limited
(dormant)
As above
Ordinary
100.00
-
Reservoir Management Limited
(dormant)
As above
Ordinary
100.00
-
ERC Equipoise PTE. Ltd
48 Tras Street, #03-01, Singapore 078987
Ordinary
100.00
-
ERCE Australia Pty Ltd
Suite 35, 4 Ventor Avenue, West Perth, AW 6005, Australia
Ordinary
0
100.00
ERCE Malaysia Sdn. Bhd.
Level 26, Menara Maxis, Kuala Lumpur City Centre, 50088 Kuala Lumpur
Ordinary
0
49.00

Other than where indicated as dormant, all companies in the group provide services consistent with the principal activities of the group.

 

ERC Equipoise Pte. Ltd. holds a 49% interest in ERCE Malaysia Sdn. Bhd., a company registered in Malaysia and has a principal activity of oil and gas consultancy. The remaining 51% shareholding is held by a local trust in the name of Rusli Jusoh, to meet ownership requirements in Malaysia, however in substance the company has exclusive control over the strategic and operating decisions of ERCE Malaysia Sdn. Bhd. and the benefits of the returns generated by ERCE Malaysia Sdn. Bhd. Accordingly, ERCE Malaysia Sdn. Bhd. has been consolidated within these financial statements as if it were a wholly owned subsidiary, with no minority interest recognised.

ERC EQUIPOISE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 30 -
14
Trade and other receivables
Group
Company
2023
2022
2023
2022
Amounts falling due within one year:
£
£
£
£
Trade receivables
1,659,160
2,561,352
1,031,636
1,689,164
Gross amounts owed by contract customers
44,782
99,321
38,713
6,638
Corporation tax recoverable
52,386
-
0
52,386
-
0
Amounts owed by group undertakings
-
-
1,778,827
1,655,538
Other receivables
121,354
85,830
84,129
75,345
Prepayments and accrued income
397,893
387,515
362,804
290,280
2,275,575
3,134,018
3,348,495
3,716,965
Deferred tax asset (note 20)
55,705
48,958
56,101
49,221
2,331,280
3,182,976
3,404,596
3,766,186
Amounts falling due after more than one year:
Other receivables
-
0
26,276
-
0
-
0
Deferred tax asset (note 20)
39,782
-
0
39,782
-
0
39,782
26,276
39,782
-
Total debtors
2,371,062
3,209,252
3,444,378
3,766,186

Included in the trade receivables balance is an amount of £235,118 (2022 - £479,726) which is receivable from a single customer and is more than 360 days past due. An amount of £236,753 was received from this single customer in the year ended 30 June 2023. Management has determined that the amount is recoverable because there was a history of repayments from the customer to the Company, and the customer has been in communication with management during and after the reporting period regarding the settlement of the outstanding receivable. Management has also placed reliance on the customer being a state-owned company and that the risks of default and/or any amounts not recoverable are highly improbable despite the outstanding balance having aged more than 360 days. No provision for bad debt has been made with respect to the balance outstanding from this customer.

 

Included in amounts owed by group undertakings to the company are amounts owed to the parent company by group subsidiaries where there is no formal loan agreement in place. The Directors have reviewed the intercompany debts owed to the parent. It is the Directors opinion is that as funds become available these debts are to be reduced via available free cash. Current cash flow forecasts show some or part of the current intercompany debts will remain by the end of the next financial period. This is due to smaller group entities having less consistent revenue streams, consequently intercompany debt will fluctuate from time to time as part of a larger industry business cycle and the fact that most of the intercompany debt comes from group businesses in their start-up phase. The directors foresee that any remaining intercompany debt balance will be recoverable in the longer term.

 

 

 

 

ERC EQUIPOISE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 31 -
15
Current asset investments
Group
Company
2023
2022
2023
2022
£
£
£
£
Short term deposits
500,000
-
500,000
-

ERC Equipoise Ltd entered into a fixed deposit agreement with the bank for £500,000 that matures on 14 February 2024.

16
Current liabilities
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Bank loans
18
220,000
220,000
220,000
220,000
Obligations under finance leases
19
-
0
22,468
-
0
22,468
Payments received on account
89,378
113,638
57,284
63,992
Trade payables
516,416
554,620
400,369
357,699
Amounts owed to group undertakings
-
0
-
0
4,562
-
0
Corporation tax payable
-
0
13,352
-
0
16,860
Other taxation and social security
212,062
258,978
124,829
171,334
Other payables
426,683
593,611
342,209
309,137
Accruals and deferred income
430,027
397,312
361,932
271,593
1,894,566
2,173,979
1,511,185
1,433,083
17
Non-current liabilities
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Bank loans and overdrafts
18
458,334
678,333
458,334
678,333
Amounts included above which fall due after five years are as follows:
Payable by instalments
18,333
18,333
18,333
18,333
ERC EQUIPOISE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
(Continued)
- 32 -
18
Borrowings
Group
Company
2023
2022
2023
2022
£
£
£
£
Bank loans
678,334
898,333
678,334
898,333
Payable within one year
220,000
220,000
220,000
220,000
Payable after one year
458,334
678,333
458,334
678,333

The UK parent company applied to Bank of Scotland PLC for a coronavirus business interruption loan of £1.1 million. The loan was received on 21 July 2020 and has a term of 6 years. Monthly repayments have been made starting in August 2021. A fixed and floating charge over all the property and undertaking of the company is registered at Companies House in favour of Bank of Scotland PLC for the loan.

19
Finance lease obligations
Group
Company
2023
2022
2023
2022
£
£
£
£
Future minimum lease payments due under finance leases:
Within one year
-
0
22,468
-
0
22,468

Finance lease payments represented rentals payable by the company or group for certain items of plant and machinery. Leases included purchase options at the end of the lease period, and no restrictions were placed on the use of the assets. The average lease term was 3 years. All leases were on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

20
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:

Assets
Assets
2023
2022
Group
£
£
Accelerated capital allowances
2,832
9,676
Tax losses
39,782
-
Retirement benefit obligations
16,623
3,032
Dilapidation provisions
36,250
36,250
95,487
48,958
ERC EQUIPOISE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
20
Deferred taxation
(Continued)
- 33 -
Assets
Assets
2023
2022
Company
£
£
Accelerated capital allowances
3,228
9,939
Tax losses
39,782
-
Retirement benefit obligations
16,623
3,032
Dilapidation provisions
36,250
36,250
95,883
49,221
Group
Company
2023
2023
Movements in the year:
£
£
Asset at 1 July 2022
(48,958)
(49,221)
Credit to profit or loss
(46,529)
(46,662)
Asset at 30 June 2023
(95,487)
(95,883)
21
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
437,302
353,668

The group operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.

22
Share-based payment transactions
Number of share options
2023
2022
Number
Number
Outstanding at 1 July 2022
9,706
9,706
Exercised
(3,512)
-
Expired
(3,716)
-
Outstanding at 30 June 2023
2,478
9,706
Exercisable at 30 June 2023
2,478
9,706
ERC EQUIPOISE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
22
Share-based payment transactions
(Continued)
- 34 -

The entity operates a share option scheme to incentivise senior employees, which enables employees to acquire shares held by the ERC Equipoise Limited Employment Benefit Trust. The exercise price of the options is set to the estimated market price of the shares at grant.

 

2,478 options outstanding at 30 June 2022 had an exercise price of £11.23 and were exercisable based on performance related conditions.

 

 

23
Share capital
Group and company
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary B shares of 10p each
170,179
170,179
17,017
17,017

All share classes rank equally in respect of rights to capital and income.

 

21,215 of the Ordinary B shares are held in an employee benefit trust controlled by the entity (2022 - 23,327).

During the year, the company purchased 1,400 Ordinary B shares from an employee and the shares were put back into the employee benefit trust. This occurred when the employee left the company. The total consideration paid was £12,600.

24
Reserves
Merger reserve

In the year to June 2012, ERC Energy was acquired and merged with Equipoise into ERC Equipoise Limited. Goodwill on acquisition was calculated and amortised over a useful life of 5 years. The difference between the fair value of the assets acquired and the price paid is represented by the merger reserve account upon consolidation of ERC Energy Resource Consultants Limited.

Capital redemption reserve

The capital redemption reserve was created in May 2019 when the company bought back and cancelled shares from an employee who was retiring.

Other reserves - EBT own share reserve

The own shares reserve comprises the cost of shares held in an employee benefit trust. The employee benefit trust is used to purchase shares from employees when they leave or retire from the company. The shares in the employee benefit trust are used when employees exercise EMI options.

Other reserves - Share based payment reserve

The share option reserve comprises the accumulated share-based payment expenses on unexpired EMI options granted to employees.

25
Financial commitments, guarantees and contingent liabilities

ERC Equipoise Limited holds two guarantees with Lloyd's bank as at 30 June 2023. One guarantee for £118,587 is not 100% cash backed and the other guarantee for US$196,491 is 100% cash backed. No provisions are recognised in relation to these guarantees as it is not probable that a future sacrifice of economic benefits will be required.

ERC EQUIPOISE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 35 -
26
Operating lease commitments
Lessee

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:

Group
Company
2023
2022
2023
2022
£
£
£
£
Within one year
298,288
196,377
245,066
107,951
Between two and five years
317,908
27,612
317,908
-
616,196
223,989
562,974
107,951
27
Related party transactions
Transactions with related parties

During the year the group entered into the following transactions with related parties:

Services received
Sales invoices raised
2023
2022
2023
2022
£
£
£
£
Group and Company
Entities controlled by common directors
120,825
175,657
-
-
Other related parties
-
-
5,847
15,549

The following amounts were outstanding at the reporting end date:

Amounts due to related parties
2023
2022
£
£
Group and Company
Entities controlled by common directors
-
65,003
Other related parties
2,400
2,400
28
Directors' transactions

Dividends totalling £43,390 (2022 - £0) were paid in the year in respect of shares held by the company's directors.

ERC EQUIPOISE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 36 -
29
Cash generated from group operations
2023
2022
£
£
Profit/(loss) for the year after tax
393,226
(500,283)
Adjustments for:
Share of results of associates and joint ventures
-
(5,891)
Loss on disposal of associates and joint ventures
-
47,800
Taxation (credited)/charged
(36,892)
232,380
Finance costs
46,836
21,199
Investment income
(2,908)
(133)
Depreciation and impairment of property, plant and equipment
91,057
183,736
Movements in working capital:
Decrease/(increase) in trade and other receivables
937,105
287,624
Decrease in trade and other payables
(243,593)
(146,320)
Cash generated from operations
1,184,831
120,112
30
Analysis of changes in net funds - group
1 July 2022
Cash flows
Exchange rate movements
30 June 2023
£
£
£
£
Cash at bank and in hand
3,931,286
81,006
(100,528)
3,911,764
Borrowings excluding overdrafts
(898,333)
219,999
-
(678,334)
Obligations under finance leases
(22,468)
22,468
-
-
3,010,485
323,473
(100,528)
3,233,430
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