Company No:
Contents
The directors present their annual report and the unaudited financial statements of Merlin ERD Limited for the financial year ended 31 December 2025.
PRINCIPAL ACTIVITIES
Review of the Year
Merlin is a world-class drilling consultancy and engineering services business that provides delivery assurance for extended reach, high-angle, and complex wells. It provides independent advice, guidance, and support for operators and service companies, from upfront engineering, training, the provision of drilling software, to execution in the field. The Company helps ensure project value is delivered, and objectives are met.
Despite continuing geopolitical tensions, slowing global economic growth, and inflationary pressures, demand for hydrocarbons remained strong during the first half of 2025. This demand was complemented by growth in the geothermal and carbon capture, usage, and storage markets, both of which contributed to revenues during the year. Market activity during the second half of 2025 presented a more challenging backdrop with lower commodity prices, more geopolitical uncertainty, and an oversupplied oil market. However, this reached an inflection point late Q4 with pipeline growth and operational activity migrating back towards planned levels.
As a result of these headwinds, annual revenues were down by a third year-on-year, realising a marginal trading loss but still maintaining a healthy £0.35m distribution to the beneficiaries of the Employee Ownership Trust. Notwithstanding the disappointing second half, the Company continued to take a long term perspective with further investment in software development, service diversification and strengthening its relationships with global operators and service companies. The business also developed a deep technical and commercial partnership with a US entity registered in Delaware that is developing an Agentic AI platform specifically for the Oil and Gas industry. Focused on shaping the future of drilling engineering, Merlin is providing the subject matter expertise to complement their D-tech capability.
These investments have enabled the Company to present the market with more capacity, more capability, and a broader proposition; all aligned to further strengthen the opportunity pipeline and deliver sustainable profitable growth in 2026.
The Company continues to promote a more balanced approach towards people, planet, and profit. During 2025 it paid over £1m in taxes and pension contributions across the geographies in which it operated and built closer links with the local community.
During 2026, it will progress plans to build more strength into the business through increased sales of software, training tools, and agentic AI solutions for market participants globally. 2026 will also see Merlin investing in emerging market business development with plans for a permanent presence in South America.
Independent and wholly employee-owned, Merlin is well positioned to operate responsibly and to capitalise on continued growth within the global drilling markets whether it be for oil, gas, geothermal energy, or carbon capture, usage and storage.
DIRECTORS
The directors, who served during the financial year and to the date of this report except as noted, were as follows:
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(Appointed 10 March 2025) |
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(Appointed 29 September 2025) |
Approved by the Board of Directors and signed on its behalf by:
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Ronald John Ramage
Director |
| Note | 2025 | 2024 | ||
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| Fixed assets | ||||
| Tangible assets | 3 |
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| 83,090 | 76,942 | |||
| Current assets | ||||
| Debtors | 4 |
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| Cash at bank and in hand |
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| 1,733,441 | 2,412,765 | |||
| Creditors: amounts falling due within one year | 5 | (
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| Net current assets | 1,481,631 | 1,884,424 | ||
| Total assets less current liabilities | 1,564,721 | 1,961,366 | ||
| Provision for liabilities |
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| Net assets |
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| Capital and reserves | ||||
| Called-up share capital | 6 |
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| Share premium account |
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| Profit and loss account |
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| Total shareholders' funds |
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Directors' responsibilities:
The financial statements of Merlin ERD Limited (registered number:
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Ronald John Ramage
Director |
The principal accounting policies are summarised below. They have all been applied consistently throughout the financial year and to the preceding financial year, unless otherwise stated.
Merlin ERD Limited (the Company) is a private company, limited by shares, incorporated in the United Kingdom under the Companies Act 2006 and is registered in Scotland. The address of the Company's registered office is Merlin House, Necessity Brae, Perth, PH2 0PF, United Kingdom.
The financial statements have been prepared under the historical cost convention, modified to include certain items at fair value, and in accordance with Section 1A of Financial Reporting Standard 102 (FRS 102) ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ issued by the Financial Reporting Council and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime.
The financial statements are presented in pounds sterling which is the functional currency of the Company and rounded to the nearest £.
Professional services
Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.
Software licences
Revenue from software licences is recognised over the period of the underlying licence.
Short term benefits
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised as an expense when the Company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Defined contribution schemes
The Company operates a defined contribution scheme. The amount charged to the Profit and Loss Account in respect of pension costs and other post-retirement benefits is the contributions payable in the financial year. Differences between contributions payable in the financial year and contributions actually paid are included as either accruals or prepayments in the Balance Sheet.
Current tax is provided at amounts expected to be paid (or recoverable) using the tax rates and laws that have been enacted or substantively enacted at the Balance Sheet date.
Deferred tax
Deferred tax arises as a result of including items of income and expenditure in taxation computations in periods different from those in which they are included in the Company's financial statements. Deferred tax is provided in full on timing differences which result in an obligation to pay more or less tax at a future date, at the average tax rates that are expected to apply when the timing differences reverse, based on current tax rates and laws. Deferred tax assets and liabilities are not discounted.
| Leasehold improvements |
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| Plant and machinery |
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| Fixtures and fittings |
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| Office equipment |
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Rentals under operating leases are charged on a straight-line basis over the lease term.
Assets, other than those measured at fair value, are assessed for indicators of impairment at each Balance Sheet date. If there is objective evidence of impairment, an impairment loss is recognised in the Profit and Loss Account as described below.
Non-financial assets
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.
Financial assets and liabilities are only offset in the Balance Sheet when, and only when there exists a legally enforceable right to set off the recognised amounts and the Company intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs 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.
Basic financial liabilities
Basic financial liabilities, including creditors, 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 creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Equity instruments
Equity instruments issued by the Company are recorded at the fair value of cash or other resources received or receivable, net of direct issue costs. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the Company.
| 2025 | 2024 | ||
| Number | Number | ||
| Monthly average number of persons employed by the Company during the year, including directors |
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| Leasehold improve- ments |
Plant and machinery | Fixtures and fittings | Office equipment | Total | |||||
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| Cost | |||||||||
| At 01 January 2025 |
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| Additions |
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| At 31 December 2025 |
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| Accumulated depreciation | |||||||||
| At 01 January 2025 |
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| Charge for the financial year |
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| At 31 December 2025 |
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| Net book value | |||||||||
| At 31 December 2025 | 15,047 | 8,974 | 4,614 | 54,455 | 83,090 | ||||
| At 31 December 2024 | 9,731 | 10,558 | 5,428 | 51,225 | 76,942 |
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| Trade debtors |
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| Corporation tax |
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| Other debtors |
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| £ | £ | ||
| Trade creditors |
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| Taxation and social security |
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| Other creditors |
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| £ | £ | ||
| Allotted, called-up and fully-paid | |||
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Other financial commitments
| 2025 | 2024 | ||
| £ | £ | ||
| Total commitments under non-cancellable operating leases not provided for in the accounts |
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The leasing commitment represents the lease of the Company's business premises which runs to 2039.
The Merlin ERD Employee Ownership Trust holds a controlling interest in the Company. Contributions of £nil (2024 - £11,838) were made to the Trust in the year ended 31 December 2025.