Company registration No 04095614 (England & Wales)
MERCURY RECYCLING GROUP PLC
GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2011
CONTENTS
Directors
Advisors
Chairman's Statement
Directors' Report
Corporate Governance Statement
Directors' Remuneration Report
Statement of Directors' Responsibilities
Independent Auditors' Report
Consolidated Income Statement
Consolidated Statement Of Comprehensive Income
Consolidated Balance Sheet
Parent Company Balance Sheet
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Consolidated Cash Flow Statement
Company Cash Flow Statement
Notes to the Accounts
1
2
3
4 - 6
7 - 8
9 - 10
11
12 - 13
14
14
15
16
17
18
19
19
20- 43
YEAR ENDED
31 DECEMBER
2011
DIRECTORS
The Rt Hon The Lord Barnett JP PC Non-Executive Chairman
Lord Barnett is a Certified Accountant and was a former Senior Partner in what is now UHY Hacker Young
Manchester LLP. He was a Member of Parliament for nearly 20 years before being elevated to a peerage in
1983. During his political career, he was a member of the Cabinet between 1977 and 1979, Chief Secretary
to the Treasury, a Privy Counsellor, Chairman of
the Public Accounts Committee from 1979 to 1983,
Chairman of the House of Lords Select Committee on EU Monetary Policy from 1995 to 1998 and a Member
of the Select Committee on Bank of England Monetary Policy, which has now become the Select Committee
on Economic Affairs, from 1998 to 2004. He was Vice-Chairman of
the BBC from 1986 to 1993 and
Chairman of the Educational Broadcasting Trust.
Bryan Neill Managing Director
Bryan Neill joined Simister Engineering Services Limited in 1996, as a Sales and Marketing Director, after
spending 12 years with Glaxo Welcome PLC. During that time he qualified as a Member of the Institute of
Purchasing and Supply, and completed his service with Glaxo Welcome PLC as the UK Purchasing
Manager. He was appointed Managing Director of Simister in 1999, and was responsible for the design,
development and installation of the company’s recycling plant in the South of England. This was the first of
its type in the UK and is capable of processing all types of fluorescent tubes and street lighting. Under his
management, Simister enjoyed year on year growth, and he joined Mercury Recycling Group Plc as
Operations Director following the acquisition of Simister in December 2003. He was subsequently appointed
as Managing Director in 2008.
Giles Clarke Non-Executive Director
Giles Clarke is Chairman of the England and Wales Cricket Board, Westleigh Investments Holdings Limited,
Amerisur Resources plc, and of several private organisations. He founded Majestic Wine in 1981 and built it
into a national chain of wine warehouses.
He also co-founded Pet City in 1990, which he expanded
nationwide before it was listed and subsequently sold in 1996 for £150 million and co-founded Safestore
which was sold in 2003 for £40 million.
Nicholas Harrison Non-Executive Director
Nicholas Harrison qualified as an accountant with Arthur Andersen and subsequently held a number of senior
positions with other professional services organisations. He was Finance Director of Pet City and has held
finance director and chief executive positions in a number of private businesses. He is currently Chief
Executive of Westleigh Investments Holdings Limited, a director of Amerisur Resources plc and of a number
of private organisations.
MERCURY
RECYCLING GROUP
-PLC-
1
ADVISORS
Company secretary
Kirsti Jane Pinnell
Company number
04095614 (England and Wales)
YEAR ENDED
31 DECEMBER
2011
Registered office
Nominated Adviser
Broker
Auditors
Bankers
Solicitors
Registrar
Mercury House
17 Commerce Way
Trafford Park
Manchester M17 1HW
Shore Capital and Corporate Limited
Bond Street House
14 Clifford Street
London W1S 4JU
Shore Capital Stockbrokers Limited
Bond Street House
14 Clifford Street
London W1S 4JU
UHY Hacker Young Manchester LLP
St James Building
79 Oxford Street
Manchester M1 6HT
The Co-operative Bank Plc
PO Box 101
1 Balloon Street
Manchester M60 4EP
Kuit Steinart Levy LLP
3 St Mary's Parsonage
Manchester M3 2RD
Capita Registrars Limited
34 Beckenham Road
Beckenham
Kent BR3 4TU
MERCURY
RECYCLING GROUP
-PLC-
2
YEAR ENDED
31 DECEMBER
2011
CHAIRMAN'S STATEMENT
At the time of this statement, I hoped that MRG would have concluded the negotiations regarding the
acquisition of iron ore assets from Sylvania Platinum Limited. Unfortunately the transaction is taking longer to
conclude than we had originally anticipated, but I am hopeful that we will shortly be in a position to move
forward with the acquisition.
Sales for the year were £2,537,000 compared to £2,668,000 for the previous year. Operating losses after
non-recurring costs were £31,000 compared to a profit of £272,000 in 2010. The volume of lamps recycled
has been consistent with the previous period but the price being paid by the sole compliance scheme
company purchasing B2B lamp evidence, has been reduced. We have taken advice from Leading
Competition Counsel and we have been assured that we have very strong grounds for appeal. We have
done so, and are in detailed negotiations.
The results do not therefore give a full picture of our future prospects and I believe that future results will
demonstrate a change for the better. On the cost side, there have been substantial non-recurring costs
amounting to £160,000 including the cost of preparing the site for the battery recycling business, proposed
acquisition costs and a container write down resulting from a review of our container policy in the year. This
container review also resulted in a change in accounting policy for our Lampsafe containers, which was
accounted for as a prior period adjustment.
The new WEEE Recast consultation process has been moving forward and, as I previously explained, this
will be important to the lamp recycling sector, indeed it should further transform our position for the better.
I can also report that our preparations for the move into the battery recycling business are now complete and
that interest to date is very encouraging. Unfortunately the granting of battery treatment and export permits
has taken much longer than expected but we were eventually granted the permits in February 2012 and have
now started processing batteries on our newly installed battery sorting line.
I am hopeful that all this will ensure that Mercury Recycling Limited will have excellent prospects in both lamp
and battery recycling.
Once again I would like to thank all our staff for their contribution during these major changes to the Group.
Yours sincerely,
The Rt Hon The Lord Barnett JP PC
Chairman
MERCURY
RECYCLING GROUP
-PLC-
3
DIRECTORS' REPORT
YEAR ENDED
31 DECEMBER
2011
The Directors present their annual report, together with the audited financial statements for the year ended
31 December 2011. The Corporate Governance Statement set out on pages 7 to 8 forms part of this report.
Principal activity and business review
The principal activity of the Group for the year continued to be the recycling of fluorescent tubes, together
with the supply of elemental mercury, and the recycling of mercury contaminated waste. The principal activity
of the Company for the year was that of a holding company.
The Company is required by the Companies Act to include a business review in this report. The information
that fulfils the requirements of the business review can be found in the Chairman's Statement on page 3.
Dividends
The Directors do not propose the payment of a dividend for the year.
Directors and their interests
The directors, who served during the year were as follows:-
The Rt Hon The Lord Barnett JP PC
B Neill
G Clarke
N Harrison
J C Dwek (resigned 17 June 2011)
A J Leon (resigned 17 June 2011)
The beneficial and other interests of the Directors at the year end and their families in the shares of the
Company and its subsidiary undertakings were as follows:
The Rt Hon The Lord Barnett JP PC
B Neill
G Clarke
N Harrison
31 December 2011
10p ordinary
shares
Number
31 December 2010
10p ordinary
shares
Number
2,376,339
1,190,000
5,319,877
5,319,877
2,376,339
1,190,000
5,319,877
5,319,877
Mr G Clarke and Mr N Harrison's interests in 5,319,877 (2010 - 5,319,877) shares are through their
shareholding in Westleigh Investments Holdings Limited.
There have been no changes in interests since the year end.
Details of Directors' interest in share options and share warrants are provided in the Directors' remuneration
report on page 9 and 10.
Supplier payment policy
The Group's policy is to agree terms of payment with suppliers when agreeing the terms of each transaction.
Trade payables of the Group as at 31 December 2011 were equivalent to 48 (2010 - 45) day's purchases.
MERCURY
RECYCLING GROUP
-PLC-
4
YEAR ENDED
31 DECEMBER
2011
DIRECTORS' REPORT (continued)
Political contributions and charitable donations
The Group made no political contributions or charitable donations during this or the preceding year.
Substantial shareholdings
As at 4 April 2012 the Company had been notified of the following holdings of 3% or more of its issued share
capital other than the Directors' direct holdings on page 4:
HSDL Nominees Limited
GHC Nominees Limited
J C Dwek CBE
Ronald Atkins
L R Nominees Limited
Barclayshare Nominees Limited
Giltspur Nominees Limited
Going concern
Number of
ordinary shares Percentage
3,764,715
10.93%
3,491,668
10.58%
3,733,764
10.42%
1,667,500
4.65%
1,403,189
4.01%
1,255,248
3.26%
1,195,650
3.09%
The Company’s business activities,
its future development,
performance and position are set out in the Chairman’s statement on page 3. In addition, note 18 to the
financial statements includes the company’s objectives, policies and processes for managing its capital, its
financial risk management objectives and its exposures to credit risk and liquidity risk.
together with the factors likely to affect
The Directors have reviewed the financial resources and facilities available to deal with its business risks.
The Directors therefore feel well placed to manage the business risks successfully within its present financial
arrangements.
The Directors have a reasonable expectation that the Company has adequate resources to continue in
operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of
accounting in preparing the annual financial statements.
MERCURY
RECYCLING GROUP
-PLC-
5
YEAR ENDED
31 DECEMBER
2011
DIRECTORS' REPORT (continued)
Directors' indemnities
The Company has made qualifying third party indemnity provisions for the benefit of its Directors which were
in place during the year and remain in force at the date of this report.
Statement of disclosure to auditors
Each of the persons who is a Director at the date of approval of this annual report confirms that:
•
•
so far as the Director is aware, there is no relevant audit information of which the Company's
auditors are unaware; and
the Director has taken all the steps that he/she ought to have taken as a director in order to make
himself/herself aware of the relevant audit information and to establish that the Company's auditors
are aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of s418 of
Companies Act 2006.
the
This report was approved by the Board on 1 June 2012 and signed on its behalf by:
K J Pinnell
Company secretary
MERCURY
RECYCLING GROUP
-PLC-
6
YEAR ENDED
31 DECEMBER
2011
CORPORATE GOVERNANCE STATEMENT
Code of best practice
The Board acknowledges the importance of the UK Corporate Governance Code ("the Code") and has
reviewed the Group's consistency with the provisions of the Code as appended to the Listing Rules of the
Financial Services Authority. This statement explains how the Group has voluntarily applied principles of the
Code and confirms that it has consistently complied with these throughout the year.
The Board of Directors
The Group is controlled and led by the Board of Directors with an established schedule of matters reserved
for their specific approval. The Board meets regularly throughout the year and is responsible for the overall
Group strategy, acquisition and divestment policy, approval of major capital expenditure and consideration of
significant financial matters. It reviews the strategic direction of the Company and its individual subsidiaries,
their annual budgets, their progress towards achievement of these budgets and their capital expenditure
programmes.
The function of the Chairman is to supervise the Board and to ensure its effective control of the business,
and that of the Managing Director is to manage the Group on the Board's behalf.
All Board members have access, at all times, to sufficient information about the business, to enable them to
fully discharge their duties. Also, procedures exist covering the circumstances under which the Directors may
need to obtain independent professional advice.
The Board has established the following committees to fulfil specific functions:
The Audit Committee - was chaired by A J Leon and comprised of A J Leon and J C Dwek until their
resignation on 17 June 2011. From this date the committee was chaired by N Harrison and comprises of N
Harrison and G Clarke. It meets twice a year, monitoring and reviewing the Group's financial reporting and
internal control procedures.
Due to the nature and size of the Group at present it would not be appropriate for the Group to have its own
internal audit department reporting directly to the Audit Committee, this situation is reviewed annually.
The Remuneration Committee , chaired by Rt Hon The Lord Barnett JP PC throughout the period in
addition to A J Leon and J C Dwek to 17 June 2011 and subsequently comprising of N Harrison and G
Clarke. Meetings are convened during the year to monitor, assess and report to the full Board on all aspects
and policy relating to nomination, appointment and remuneration of executive Directors.
The Board, as a whole, determines the remuneration of the Non-Executive Directors.
Status of Non-executive directors
None of
the Non-Executive Directors would be deemed independent under the UK Corporate Code.
However, the Non-Executive Directors have considerable experience which the Company draws upon on a
regular basis. In addition, the Non-Executive Directors are sufficiently independent of management so as to
be able to exercise independent
judgement and bring an objective viewpoint and, thereby, protect and
promote the interest of shareholders.
MERCURY
RECYCLING GROUP
-PLC-
7
YEAR ENDED
31 DECEMBER
2011
CORPORATE GOVERNANCE STATEMENT (continued)
Internal control
The Board is responsible for ensuring that the Group maintains adequate internal control over the business
and its assets.
The effectiveness of the Group's system of internal financial controls, for the year to 31 December 2011 and
for the period to the date of approval of the financial statements, has been reviewed by the Directors. Whilst
they are aware that although no system can provide for absolute assurance against material misstatement or
loss, they are satisfied that effective controls are in place.
On the wider aspects of
relating to operational and compliance controls and risk
management, the Board, in setting the control environment, identifies, reviews, and regularly reports on the
key areas of business risk facing the Group.
internal control,
The Managing Director maintains close day to day involvement in all of the Group's activities which enables
control to be achieved and maintained. This includes the comprehensive review of both management and
technical reports, the monitoring of interest rates, environmental considerations, government and fiscal policy
issues, employment and information technology requirements and cash control procedures. In this way, the
key risk areas can be monitored effectively and specialist expertise applied in a timely and productive
manner.
Relations with shareholders
The Company maintains effective contact with its principal shareholders and welcomes communications from
its private investors.
MERCURY
RECYCLING GROUP
-PLC-
8
YEAR ENDED
31 DECEMBER
2011
DIRECTORS' REMUNERATION REPORT
Compliance
This report by the Remuneration Committee, on behalf of the Board, contains full details of the remuneration
of each Director during the year under review.
Directors' remuneration policy
The Remuneration Committee aims to ensure that the remuneration packages offered are competitive and
are designed to attract, retain and motivate executives of the right calibre.
Emoluments of the Directors
Salaries
£000
Fees
£000
Benefits
in kind
£000
2011
Total
£000
The Rt Hon The Lord
Barnett JP PC **
J C Dwek CBE *
A J Leon DL FCA *
B Neill ***
G Clarke ****
N Harrison ****
-
-
-
89
-
-
89
20
3
8
-
-
-
31
1
-
-
7
-
-
8
21
3
8
96
-
-
2010
Total
£000
21
4
12
95
-
-
128
132
In addition to the above fees, the Group was charged £13,500 (2010: £2,037) by Westleigh Investments
Holdings Limited for the services of G Clarke and N Harrison as Directors.
* Member of the Remuneration Committee up until 17 June 2011
** Chairman of the Remuneration Committee
*** Highest-paid Director during the year
**** Member of the Remuneration Committee from 17 June 2011
Pensions
No pension contributions were made during the year.
The Non-Executive Directors' appointments are not pensionable.
Directors' service contracts
The service contract of B Neill, the executive director, is terminable on 12 months notice.
The Non-Executive Directors' appointments are subject to three months notice, subject always to earlier
termination in specified circumstances.
MERCURY
RECYCLING GROUP
-PLC-
9
YEAR ENDED
31 DECEMBER
2011
DIRECTORS' REMUNERATION REPORT (continued)
Directors' share options and share warrants
Details of the individual share options held by the Directors as at 1 January 2011 and 31 December 2011,
are as follows:
Option
price (p)
1 January
2011
Exercised
Number
Cancelled
Re Issued
31 December
2011
B Neill
10p
750,000
-
-
-
750,000
The exercise period for the options held at 31 December 2011 is 21 November 2010 to 21 May 2020.
Throughout the year, share warrants were in issue over 8,399,966 shares held by Westleigh Investments
Holdings Limited, a company in which G Clarke and N Harrison are interested as directors and shareholders.
The warrants are exercisable at 10 pence per share and are exercisable up to 25 October 2016 providing the
average closing market price of the Company's shares exceeds 15 pence over a period of 30 consecutive
days
The market price of the Company's shares at 31 December 2011 was 7.25p with a range of 6.00p to 13.00p
during the year.
There were no movements in the Directors' share options or share warrants since the year end.
This report was approved by the Board on 1 June 2012 and signed on its behalf by:
Chairman of the Remuneration Committee
The Rt Hon The Lord Barnett JP PC
MERCURY
RECYCLING GROUP
-PLC-
10
YEAR ENDED
31 DECEMBER
2011
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and the financial statements in accordance
with applicable laws and regulations.
Company law requires the Directors to prepare such financial statements for each financial year. Under that
law the Directors are required to prepare group financial statements in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European Union and have also chosen to prepare
the parent company financial statements under IFRSs as adopted by the European Union. Under company
law the Directors must not approve the accounts unless they are 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 Directors are required to:
-
-
-
-
properly select and apply accounting polices;
present information, including accounting policies, in a manner that provides relevant, reliable,
comparable and understandable information;
provide additional disclosures when compliance with the specific requirements in IFRS are
insufficient to enable users to understand the impact of particular transactions, other events and
conditions on the entity's financial position and financial performance; and
make an assessment of the Company's ability to continue as a going concern.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and
explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position
of the company and enable them to ensure that the financial statements comply with the Companies Act
2006. They are also responsible for safeguarding the assets of
the Company and hence for taking
reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information
included on the Company’s website. Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other jurisdictions.
Directors' responsibility statement
We confirm that to the best of our knowledge:
1. the financial statements, prepared in accordance with International Financial Reporting Standards as
adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit
or loss of the company and the undertakings included in the consolidation taken as a whole; and
the business review, which is incorporated into the directors’ report,
2.
development and performance of
included in the consolidation taken as a whole,
uncertainties that they face.
the business and the position of
together with a description of
the
includes a fair review of
the company and the undertakings
the principal risks and
On behalf of the Board
B Neill
Director
1 June 2012
MERCURY
RECYCLING GROUP
-PLC-
11
INDEPENDENT AUDITORS' REPORT
YEAR ENDED
31 DECEMBER
2011
Registered Auditor
UHY Hacker Young Manchester LLP
St. James Building
79 Oxford Street
Manchester M1 6HT
1 June 2012
To the members of Mercury Recycling Group Plc
We have audited the financial statements of Mercury Recycling Group Plc for the year ended 31 December
2011 which comprise the Group Income Statement, the Group Statement of Comprehensive Income, the
Group and the Company Balance Sheets, the Group and Company Cash Flow Statements, the Group and
Company Statements of Changes in Equity and the related notes 1 to 25. The financial reporting framework
that has been applied in their preparation is applicable law and International Financial Reporting Standards
(“IFRSs”) as adopted by the European Union.
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 worked has been undertaken so that we might state to the Company’s
members those matters we are required to state to them in an auditors’ report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility to anyone other then the
Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we
have formed.
Respective responsibilities of Directors and Auditors
As explained more fully in the Statement of Directors Responsibilities, the Directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit and express and opinion on the financial statements in accordance with applicable
law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the
Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient
to give reasonable assurance that the financial statements are free from material misstatement, whether
caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to
the group’s and the parent company’s circumstances and have been consistently applied and adequately
disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall
presentation of the financial statements. In addition, we read all the financial and non-financial information in
the annual report to identify material
inconsistences with the audited financial statements. If we become
aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
MERCURY
RECYCLING GROUP
-PLC-
12
INDEPENDENT AUDITORS' REPORT (continued)
YEAR ENDED
31 DECEMBER
2011
Opinion on the financial statements
In our opinion:
•
•
•
the financial statements give a true and fair view of the Group and the parent Company's affairs as
at 31 December 2011 and of the Group's and the parent Company's loss for the year then ended;
the financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union; and
the financial statements have been prepared in accordance with the requirements of
Companies Act 2006.
the
Opinion on other matters prescribed by the Companies Act 2006
In our opinion, the information given in the Director's Report for the financial year for which the financial
statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
•
•
•
•
adequate accounting records have not been kept by the parent company, or returns adequate for
our audit have not been received from branches not visited by us; or
the parent company financial statements to be audited are not in agreement, with the accounting
records and returns; or
certain disclosures of Directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Michael Wasinski
Senior Statutory Auditor
for and on behalf of
UHY Hacker Young Manchester LLP
Chartered Accountants
Registered Auditor
MERCURY
RECYCLING GROUP
-PLC-
13
CONSOLIDATED INCOME STATEMENT
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating (loss)/profit
Finance costs
(Loss)/profit before tax
Tax
(Loss)/profit for the period
(Attributable to owners of the company)
(Loss)/earnings per share
- Basic
- Diluted
Note
3
4
6
7
8
8
YEAR ENDED
31 DECEMBER
2011
2011
£000
2010
Restated*
£000
2,537
2,668
(148)
(179)
2,389
2,489
(2,420)
(2,217)
(31)
(4)
(35)
(6)
(41)
(0.11p)
n/a
272
(7)
265
(14)
251
0.73p
0.72p
The income statement has been prepared on the basis that all operations are continuing operations.
There is no difference between the results as disclosed above and the results on an historical cost basis.
*Further details of the prior period adjustment are provided in notes 2 and 25.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
(Attributable to the owners of the Company)
2011
£000
(41)
-
(41)
2010
Restated*
£000
251
-
251
MERCURY
RECYCLING GROUP
-PLC-
14
CONSOLIDATED BALANCE SHEET
Non-current assets
Goodwill
Property, plant and equipment
Current assets
Trade and other receivables
Cash and bank balances
Current tax assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Current tax liabilities
Non-current liabilities
Trade and other payables
Borrowings
Deferred tax liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium
Other reserves
Retained earnings
Total equity
(Attributable to owners of the Company)
YEAR ENDED
31 DECEMBER
2011
Note
2011
£000
2010
Restated*
£000
2009
Restated*
£000
10
12
14
15
16
15
16
17
19
20
20
20
4,122
1,265
5,387
465
343
18
826
4,122
1,409
5,531
448
412
-
860
4,122
1,431
5,553
478
1
10
489
6,213
6,391
6,042
(234)
(68)
-
(302)
(24)
(88)
(167)
(279)
(581)
(270)
(86)
(17)
(373)
(33)
(155)
(157)
(345)
(718)
(249)
(139)
(25)
(413)
(42)
(225)
(158)
(425)
(838)
5,632
5,673
5,204
3,583
235
386
1,428
5,632
3,583
235
386
1,469
5,673
3,403
242
365
1,194
5,204
*Further details of the prior period adjustment are provided in notes 2 and 25.
These financial statements were approved by the Board and authorised for issue on 1 June 2012.
Signed on behalf of the Board
B Neill
Director
Company Registration No: 04095614
MERCURY
RECYCLING GROUP
-PLC-
15
PARENT COMPANY BALANCE SHEET
Non-current assets
Investments
Current assets
Trade and other receivables
Total assets
Current liabilities
Trade and other payables
Total liabilities
Net assets
Equity
Share capital
Share premium
Other reserves
Retained earnings
Total equity
(Attributable to owners of the Company)
Note
13
14
15
19
20
20
20
YEAR ENDED
31 DECEMBER
2011
2011
£000
2010
£000
3,954
3,954
1,241
5,195
(17)
(17)
1,188
5,142
(19)
(19)
5,178
5,123
3,583
235
1,320
40
5,178
3,583
235
1,320
(15)
.
5,123
These financial statements were approved by the Board and authorised for issue on 1 June 2012
Signed on behalf of the Board
B Neill
Director
Company Registration No: 04095614
MERCURY
RECYCLING GROUP
-PLC-
16
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
YEAR ENDED
31 DECEMBER
2011
Share
Capital
£000
Share
Premium
£000
Other
Reserve
£000
Retained
Earnings
£000
Total
Equity
£000
3,403
242
365
1,263
5,273
Balance at 1 January 2010
(As previously stated)
Effect of change in accounting
policy
As restated
Profit for the period (restated)
Warrants issued
-
3,403
-
-
242
-
Issue of share capital
180
(7)
Credit to equity for equity-settled
share based payments
Balance at 31 December 2010
(Restated)
Loss for the period
-
3,583
-
Balance at 31 December 2011
3,583
-
235
-
235
-
365
-
21
-
-
(69)
(69)
1,194
251
-
24
5,204
251
21
173
24
386
1,469
5,673
-
386
(41)
(41)
1,428
5,632
MERCURY
RECYCLING GROUP
-PLC-
17
COMPANY STATEMENT OF CHANGES IN EQUITY
Share
Capital
£000
Share
Premium
£000
Other
Reserve
£000
Retained
Earnings
£000
Balance at 1 January 2010
3,403
242
1,299
Loss for the period
Warrants issued
Issue of share capital
Credit to equity for equity-settled
share based payments
-
-
180
-
Balance at 31 December 2010
3,583
Profit for the period
-
Balance at 31 December 2011
3,583
-
-
(7)
-
235
-
235
-
21
-
-
1,320
-
1,320
14
(53)
-
-
24
(15)
55
40
YEAR ENDED
31 DECEMBER
2011
Total
Equity
£000
4,958
(53)
21
173
24
5,123
55
5,178
MERCURY
RECYCLING GROUP
-PLC-
18
CONSOLIDATED CASH FLOW STATEMENT
Note
21
Net cash from operating activities
Investing activities
Purchases of property, plant and equipment
Net cash used in investing activities
Financing activities
Proceeds on issue of equity
Repayment of borrowings
Net cash generated (used in)/from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning
of year
Cash and cash equivalents at end of year
21
21
COMPANY CASH FLOW STATEMENT
The parent company had no cash transactions during the year.
YEAR ENDED
31 DECEMBER
2011
2010
Restated
£000
525
(187)
(187)
194
(66)
128
466
(70)
396
2011
£000
169
(153)
(153)
-
(69)
(69)
(53)
396
343
MERCURY
RECYCLING GROUP
-PLC-
19
YEAR ENDED
31 DECEMBER
2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. General information
Mercury Recycling Group Plc is a company incorporated in the United Kingdom under the Companies Act
2006.
Adoption of new and revised Standards
In the current year, the following significant new and revised Standards and Interpretations have been
adopted none of which have affected the amounts reported in these financial statements.
IAS 24 - Related party disclosures
IAS 32 - Financial instruments: Presentation
The following standards were amended as part of Annual Improvements to IFRS (May 2010):
First-time adoption of international financial reporting standards
IFRS 1
IFRS 3 Business contributions
IFRS 7
IAS 1
IAS 27
IAS 34
Financial instruments disclosures
Presentation of financial statements
Consolidated and separate financial statements
Interim financial reporting
the date of authorisation of
At
interpretations which have not been applied in these financial statements were in issue but not yet effective:
the following significant standards and
these financial statements,
First-time adoption of international financial reporting standards
Financial instruments disclosures
Financial instruments
IFRS 1
IFRS 7
IFRS 9
IFRS 10 Consolidated financial statements
IFRS 11 Joint arrangements
IFRS 12 Disclosure of interest on other entities
IFRS 13 Fair value measurement
IAS 1
IAS 12
IAS 19
IAS 27 Consolidated and separate financial statements
IAS 28
Presentation of financial statements
Income Taxes
Employee benefits
Investment and associates
The Directors do not expect that the adoption of the standards listed above will have a material impact on the
financial statements of the Group in future periods.
2. Significant accounting policies
The financial statements are based on the following policies which have been consistently applied:
Basis of preparation
The Financial Statements have been prepared in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union.
The financial statements have been prepared on the historical cost basis. The principal accounting policies
are set out below.
MERCURY
RECYCLING GROUP
-PLC-
20
YEAR ENDED
31 DECEMBER
2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2. Significant accounting policies (continued)
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and all entities
controlled by the Company (its subsidiaries) made up to 31 December each year. Control is achieved where
the Company has power to govern the financial and operating policies of an investee entity so as to obtain
benefits from its activities.
Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains
control. The acquisition of WEEE Recycling Limited was accounted for as a group reconstruction using
merger accounting. Under IFRS 1, the Group has elected not to restate business combinations prior to the
transition date to IFRS of 1 January 2006.
The Group has taken advantage of s612 (2) of the Companies Act 2006 and has credited the premium
arising on the acquisition of Mercury Recycling Limited to other reserves.
Changes in accounting policy
In the year the Company changed its accounting policy for certain storage containers used in the operations
of the Group.
Accordingly the Group has changed its accounting policy in these financial statement, to one which provides
more reliable and relevant information in the underlying performance of the Group than the previous policy.
The Directors reviewed their policy on the capitalisation and depreciation of certain storage containers and
considered that due to a change in the operational focus of the Group such containers would be better
reflected as consumable items and charged to the income statement when issued to clients. Previously such
containers were included as assets and depreciated over their estimated useful lives.
In accordance with IAS 8 (Accounting for a change in accounting estimates and errors) the change has been
made retrospectively and the comparatives have been restated accordingly.
Full details of the impact of the change in accounting policy are provided in note 25.
Business combinations
On the acquisition of a business, fair values are attributable to the Group's share of net separable assets.
Where the cost of acquisition exceeds the fair values attributable to such net assets, the difference is treated
as purchased goodwill and capitalised in the balance sheet in the year of acquisition.
Goodwill
Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group's interest in
the fair value of the identifiable assets and liabilities of the subsidiary. Goodwill is initially recognised as an
asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill which
is recognised as an asset is reviewed for impairment annually. Any impairment is immediately recognised in
the income statement.
Government grants
Grants towards property, plant and equipment are treated as deferred income and released to the income
statement over the expected useful
the assets concerned. Grants towards expenditure are
recognised as income over the periods necessary to match with the related costs and are deducted in
reporting the related expense.
lives of
MERCURY
RECYCLING GROUP
-PLC-
21
YEAR ENDED
31 DECEMBER
2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2. Significant accounting policies (continued)
Research and development
Research expenditure is charged to the profit and loss account as incurred.
An internally-generated asset arising from any development
conditions are met:
- an asset is created that can be identified;
- it is probable that the asset created will generate future economic benefits; and
- the development cost of the asset can be measured reliably.
is recognised only if all of
the following
Revenue
Revenue is measured at the fair value of the consideration received or receivable for goods and services
provided in the normal course of business, net of discounts and value added tax.
Taxation
The tax expense represents the sum of the tax payable and deferred tax.
Deferred taxation is provided in full on timing differences which result in an obligation at the balance sheet
date to pay more tax, or a right to pay less tax, at a future date, at rates expected to apply when they
crystallise based on current tax rates and law. Timing differences arise from the inclusion of income and
expenditure in taxation computations in periods different from those in which they are included in financial
statements. Deferred tax is not provided on timing differences arising from revaluation of fixed assets where
there is no commitment to sell the asset. Deferred tax assets are recognised to the extent that it is regarded
as more likely than not that they will be recovered. Deferred tax assets and liabilities are not discounted.
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks
and rewards of ownership to the lessee. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets of the Group at their fair value, or if lower, at the
present value of future minimum lease payments. The corresponding liability to the lessor is included in the
balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and
reduction of the lease obligation using a sum of digits method.
Rentals payable under operating leases are charged to the income statement on a straight line basis over the
lease period.
Property, plant and equipment
Tangible fixed assets are stated at cost less depreciation. Depreciation is provided at rates calculated to
write off the cost less estimated residual value of each asset over its expected useful life, as follows:
Property alterations
Plant and machinery
Fixtures, fittings & equipment
Motor vehicles
10% straight line basis
10% - 25% straight line basis or reducing balance basis
10% - 25% straight line basis
25% reducing balance basis
MERCURY
RECYCLING GROUP
-PLC-
22
YEAR ENDED
31 DECEMBER
2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2. Significant accounting policies (continued)
Other intangible assets
Other intangible assets are stated at cost less amortisation. Amortisation is provided at rates calculated to
write off the cost less estimated residual value of each asset over its expected useful life, as follows:
Software
25% straight line basis
Retirement benefit costs
the schemes are held
The Group contributes to defined contribution pension schemes. The assets of
separately from those of the Group in an independently administered funds. Contributions payable for the
period are charged in the income statement.
Investments
Investments are stated at cost less any provision for the permanent diminution in value.
Financial instruments
Financial assets and financial
becomes a party to the contractual provisions of the instrument.
liabilities are recognised in the Group's balance sheet when the Group
Trade receivables
Trade receivables are measured at initial recognition at fair value, and are subsequently measured at
amortised cost using the effective interest rate method except for short-term receivables when recognition of
interest would be immaterial. Appropriate allowances for the estimated irrecoverable amounts are recognised
in the income statement when there is objective evidence that the asset is impaired.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other short term highly liquid
investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of
change in value.
Financial liability and equity
Interest bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs.
Finance charges, including premiums payable on settlement or redemption and direct issue costs, are
accounted for on an accrual basis in the income statement using the effective interest rate method and are
added to the carrying amount of the instrument to the extent that they are not settled in the period in which
they arise.
Trade and other payables
Trade payables and other financial
measured at amortised cost, using the effective interest rate method.
liabilities are initially measured at fair value, and are subsequently
The Group's activities expose it primarily to the financial risks of changes in interest rates on long term
borrowings.
MERCURY
RECYCLING GROUP
-PLC-
23
YEAR ENDED
31 DECEMBER
2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2. Significant accounting policies (continued)
Share-based payments
The Group issues equity-settled share-based payments to certain employees and other parties. Equity
settled share-based payments are measured at fair value at the date of grant.
In respect of employee related
share based payments, the fair value determined at the grant date is expensed on a straight-line basis over
the vesting period, based on the Group's estimate of shares that will eventually vest. In respect of other share
based payments, the fair value is determined at the date of grant and recognised when the associated goods
or services are received.
Operating segments
The Group considers itself to have a single purpose and therefore concludes that it has only one business
segment and only one geographic segment.
Critical accounting estimates and judgements
The Group makes estimates and assumptions regarding the future. Estimates and judgements are
continually evaluated based on historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances. In the future, actual experience may
differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year
are discussed below.
Impairment of goodwill
The Group is required to review, on an annual basis, whether goodwill has suffered any impairment. The
recoverable amount is determined based on value in use calculations. The use of this method requires the
estimation of future cash flows and the choice of a discount rate in order to calculate the present value of the
cash flows - actual outcomes may vary. If
then
impairment is made. No impairment was recognised in the period.
the carrying amount exceeds the recoverable amount
Useful lives of property, plant and equipment
Property, plant and equipment are amortised or depreciated over their useful lives. Useful lives are based on
the management's estimates of
the assets will generate revenue, which are based on
judgement and experience and periodically reviewed for continued appropriateness. Changes to estimates
can result in significant variations in the carrying value and amounts charged to the consolidated income
statement in specific periods.
the period that
MERCURY
RECYCLING GROUP
-PLC-
24
YEAR ENDED
31 DECEMBER
2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2. Significant accounting policies (continued)
Critical accounting estimates and judgements (continued)
Share based payments
The Group utilised an equity-settled share-based remuneration scheme for employees and other persons.
Services received, and the corresponding increase in equity, are measured by reference to the fair value of
the equity instruments at the date of grant, excluding the impact of any non-market vesting conditions. The
fair value of share options are estimated by using Black-Scholes valuation method as at the date of grant.
The assumptions used in the valuation include, among others, the expected volatility, expected life of the
options and number of options expected to vest.
3. Revenue
The revenue and profit on ordinary activities before taxation arise from the Group's principal activity.
The Group's revenue has been analysed by geographic area as follows:
United Kingdom
4. Operating (loss)/profit
Loss/(profit) for the year is shown after charging / (crediting):
Depreciation on tangible assets
Government grants
Profit on disposal of tangible assets
Operating leases:
-Land and buildings
-Other
Fees paid to the auditor are analysed as follows:
Audit fees (Group excluding parent company)
Audit fees (Parent company)
Tax consultancy
Other review reports
2011
£000
2010
£000
2,537
2,668
2011
£000
297
(9)
-
86
37
13
4
4
13
2010
Restated
£000
207
(9)
1
84
40
13
4
4
4
MERCURY
RECYCLING GROUP
-PLC-
25
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
5. Staff costs
Wages and salaries
Social security costs
Share based payments
Directors remuneration and fees (included above)
The aggregate remuneration paid to the highest paid director was
YEAR ENDED
31 DECEMBER
2011
2011
£000
980
100
-
2010
£000
928
96
24
1,080
1,048
179
96
134
95
The average monthly number of employees, including Directors, during
the year was as follows:
2011
Number
2010
Number
Administration and management
Operational and sales
11
30
41
8
31
39
In addition to directors remuneration and fees above, the Group was charged £13,500 (2010: £2,037) by
Westleigh Investments Holdings Limited for the services of G Clarke and N Harrison as Directors.
Further details of the Directors' remuneration are given in the Directors' Remuneration Report on pages 9
and 10.
6. Finance costs
On bank loans and overdrafts
7. Tax
a) Tax charge for the period
Corporation tax:
Current year
Adjustments in respect of prior years
Deferred tax (note 17)
2011
£000
4
2011
£000
-
(4)
(4)
10
6
2010
£000
7
2010
Restated
£000
30
(15)
15
(1)
14
MERCURY
RECYCLING GROUP
-PLC-
26
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
7. Tax (continued)
b) Factors affecting the tax charge for the period
Profit on ordinary activities for the year before taxation
Profit on ordinary activities for the year before taxation multiplied by
standard rate of UK corporation tax of 20.25% (2010 - 21%)
Effects of :
Capital allowances for the period in excess of depreciation
Losses brought forward
Adjustments in respect of prior years
Other tax adjustments
Tax expense for the year
YEAR ENDED
31 DECEMBER
2011
2011
£000
(35)
(7)
(1)
-
(4)
6
(6)
2010
Restated
£000
265
56
(24)
(4)
(15)
2
15
c) Factors that may affect future tax charges - The Group has estimated unutilised tax losses/expenses
amounting to £380,000 (2010 - £531,000) the values of which are not recognised in the balance sheet. The
losses represent a potential deferred taxation asset of £80,000 (2010 - £149,000) which would be
recoverable should the Group make sufficient suitable taxable profits in the future.
8. (Loss)/earnings per share
(Loss)/profit for the period
(Loss)/earnings per share
Basic (cents per share)
Diluted (cents per share)
2011
£000
(41)
(0.11p)
n/a
2010
Restated
£000
251
0.73p
0.72p
Basic - The calculation of basic earnings per share is based on a loss of £41,000 (2010 - Profit - £251,000
restated) and on 35,827,462 (2010 - 34,509,795) ordinary shares, being the weighted average number of
ordinary shares in issue during the year.
MERCURY
RECYCLING GROUP
-PLC-
27
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
8. (Loss)/earnings per share (continued)
Diluted - The diluted earnings per share is based on the loss for the year of £41,000 (2010 - Profit -
£251,000 restated) and on 35,827,462 (2010 - 34,509,795) ordinary shares as adjusted for share options
below:
YEAR ENDED
31 DECEMBER
2011
Basic weighted average number of shares
Dilutive potential ordinary shares:
Dilution caused by options
Diluted weighted average number
2011
Number
2010
Number
35,827,462
34,509,795
n/a
117,793
n/a
34,627,588
As the Group reports a loss for the current period, then in accordance with IAS 33, the share options are not
considered dilutive. Details of such instruments which could potentially dilute basic earnings per share in the
future are included in note 19.
Under IAS 33, the share warrants in issued during the year were not considered to be diluting as the market
based vesting conditions of the warrants had not been met at the year end. Further details are provided in
note 19.
9. Profit attributable to owners of the parent company
As permitted by Section 408 of the Companies Act 2006, the profit and loss account of the parent Company
is not presented as part of these accounts. The parent Company's profit for the financial year amounted to
£55,000 (2010 - Loss - £53,000).
10. Goodwill
Group
Cost:
At 1 January 2010, 31 December 2010 and at 31 December 2011
Goodwill
£000
4,122
Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (CGUs)
that are expected to benefit
from the business combination. The Group reviews goodwill annually for
impairment, or more frequently if there are indications that goodwill might be impaired.
The Group prepares cash flow forecasts derived from the most recent
management and extrapolates cash flows based on estimated growth rates.
financial budgets approved by
The Directors consider that no impairment occurred to the goodwill.
11. Other intangible assets
At 1 January 2010, 31 December 2010 and at 31 December 2011 the Group had software costing £4,000
which was fully amortised.
MERCURY
RECYCLING GROUP
-PLC-
28
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
12. Property, plant and equipment
Group
Cost:
At 1 January 2011
Additions
Disposals
At 31 December 2011
Depreciation:
At 1 January 2011
On disposals
Provided during the year
At 31 December 2011
Net book value at 31 December 2011
Net book value at 31 December 2010 (Restated)
Group
Cost:
At 1 January 2010 (As previously reported)
Prior period adjustment
At 1 January 2010
Additions
Disposals
At 31 December 2010
Depreciation:
At 1 January 2010 (As previously reported)
Prior period adjustment
At 1 January 2010
On disposals
Provided during the year
At 31 December 2010
Net book value at 31 December 2010
Net book value at 31 December 2009
Net book value at 31 December 2010 (As previously reported)
Net book value at 31 December 2009 (As previously reported)
All non-current assets are located in the United Kingdom.
Property
Plant and
alterations machinery
£000
£000
85
-
-
85
49
-
8
57
28
36
2,489
153
(314)
2,328
1,116
(314)
289
1,091
1,237
1,373
Property
Plant and
alterations machinery
Restated
£000
£000
85
-
85
-
-
85
39
-
39
-
10
49
36
46
36
46
2,434
(128)
2,306
186
(3)
2,489
971
(50)
921
(2)
197
1,116
1,373
1,385
1,459
1,463
YEAR ENDED
31 DECEMBER
2011
Total
£000
2,574
153
(314)
2,413
1,165
(314)
297
1,148
1,265
1,409
Total
Restated
£000
2,519
(128)
2,391
186
(3)
2,574
1,010
(50)
960
(2)
207
1,165
1,409
1,431
1,495
1,509
MERCURY
RECYCLING GROUP
-PLC-
29
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
13. Investments
Company
Cost:
At 1 January 2011 and at 31 December 2011
Accumulated impairment losses:
At 1 January 2011 and at 31 December 2011
Net book value at 31 December 2011
Net book value at 31 December 2010
YEAR ENDED
31 DECEMBER
2011
Subsidiary
undertakings
£000
3,954
-
3,954
3,954
Details of the investments in which the Company holds 20% or more of the nominal value of any class of
share capital, all of which are included in the consolidated accounts and are registered in England and
Wales, are as follows:
Name of company
Holding
Proportion of
voting rights
and shares held
Nature of
business
Subsidiary undertakings
WEEE Recycling Limited
Ordinary shares
100%
Dormant Holding company
Mercury Recycling Limited
Ordinary shares
Lampsafe Service Limited
Ordinary shares
Envirolite Limited
Ordinary shares
Envirolite Midlands Limited
Ordinary shares
Battnet Limited
Ordinary shares
100%
100%
100%
100%
100%
Recycling
Dormant
Dormant
Dormant
Dormant
During the year the Group acquired 100% of the share capital of Battnet Limited. The nominal value of the
shares acquired was £1. Battnet Limited was incorporated on 1 June 2011 and its year end is 31 December
2011. It has remained dormant throughout the period since incorporation.
MERCURY
RECYCLING GROUP
-PLC-
30
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
14. Trade and other receivables
YEAR ENDED
31 DECEMBER
2011
Trade receivables
Amounts owed from Group undertakings
Prepayments and accrued income
Group
Company
2011
£000
346
-
119
465
2010
Restated
£000
337
-
111
448
2011
£000
-
1,241
-
1,241
2010
£000
-
1,181
7
1,188
Credit risk
The Group's principal
receivables.
financial assets are bank balances, cash balances,
trade receivables and other
The Group's credit risk is primarily attributable to its trade receivables. The amounts presented in the balance
sheet are net of allowances for doubtful receivables.
The Company has one customer representing more than 15% of the trade receivables. At the year end the
debt from this customer amounted to £123,939, representing debts due from December 2011 within the
credit terms. Other than this balance, exposure is spread over a large number of customers. Income from this
customer exceeded 10% of total revenue and amounted to £1,198,000.
15. Trade and other payables
Trade payables
Taxation and social security costs
Other payables
Accruals and deferred income
Due within 12 months
Due after more than 12 months
Group
2011
£000
140
51
18
49
258
(234)
24
2010
£000
155
65
15
68
303
(270)
33
Company
2011
£000
-
-
5
12
17
(17)
-
2010
£000
-
-
5
14
19
(19)
-
Included in deferred income for
government grants as follows:-
the Group are deferred
Brought forward at 1 January
Released to income statement during the year
Carried forward at 31 December
Due within 12 months
Due after more than 12 months
2011
£000
42
(9)
2010
£000
51
(9)
33
(9)
24
42
(9)
33
MERCURY
RECYCLING GROUP
-PLC-
31
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED
31 DECEMBER
2011
16. Borrowings
Bank overdrafts
Bank loans
The borrowings are repayable as follows:
On demand or within one year
In the second year
In the third to fifth years
Due for settlement within 12 months
Due for settlement after more than 12 months
Group
Company
2011
£000
-
156
156
Group
2011
£000
68
68
20
156
(68)
88
2010
£000
16
225
241
2010
£000
86
68
87
241
(86)
155
2011
£000
-
-
-
Company
2011
£000
-
-
-
-
-
-
2010
£000
-
-
-
2010
£000
-
-
-
-
-
-
The bank borrowings are secured by a Group mortgage debenture incorporating a fixed and floating charge
over the assets of the Group. Additional security is provided by assignment over life policy on a Director of
the Company. All bank borrowings were denominated in sterling.
17. Deferred tax
Balance at 1 January
Income statement
Balance at 31 December
The deferred tax liability is made up as follows:
Group
2011
£000
2010
Restated
£000
157
10
158
(1)
167
157
Group
2011
£000
2010
£000
Accelerated tax depreciation
167
157
MERCURY
RECYCLING GROUP
-PLC-
32
YEAR ENDED
31 DECEMBER
2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
18. Financial instruments
The Group's policies as regards derivatives and financial instruments are set out in the accounting policies in
note 2. The Group does not trade in financial instruments.
Capital risk management
The Group manages its capital
they will be able to continue as going concern whilst
maximising the return to stakeholders through the optimisation of the debt and equity balance. The Group's
overall strategy remains unchanged from 2010.
to ensure that
The capital structure of the Group consists of debt, which includes the borrowings disclosed in note 17, cash
and cash equivalents and equity attributable to equity holders of the parent company.
The Group is not subject to any externally imposed capital requirements.
Interest rate risk profile
The Group is exposed to interest rate risk because the Group borrows funds at both fixed and floating
interest rates.
The Group's exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity
risk management section of this note.
Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial
loss to the company. The Group has adopted a policy of only dealing with creditworthy counterparties as a
means of mitigating the risk of financial loss from defaults. The Group's exposure and the credit ratings of its
counterparties are continuously monitored and the aggregate value of the transactions concluded is spread.
Trade receivables consist of a large number of customers, spread across diverse industries and geographical
areas. On-going credit evaluation is performed on the financial condition of the accounts receivable.
MERCURY
RECYCLING GROUP
-PLC-
33
YEAR ENDED
31 DECEMBER
2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
18. Financial instruments (continued)
Liquidity Risk Management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has established
an appropriate liquidity risk management framework for the management of the Group's short, medium and
long term funding and liquidity management requirements. The Group manages liquidity risk by maintaining
adequate reserves and banking facilities' by continuously monitoring forecast and actual cash flows, and by
matching the maturity profiles of financial assets and liabilities. Details of additional undrawn facilities that the
group has at its disposal to manage liquidity are set out below.
Financial facilities
Secured bank overdraft facility
- amount used
- amount unused
Agreed facility
Secured bank loan facilities with various maturity dates through to 2011
- amount used
- amount unused
Agreed facility
2011
£000
38
262
300
156
-
156
2010
£000
16
284
300
225
-
225
Financial assets
The Group has no financial assets, other than short-term receivables and sterling cash deposits of £343,000
(2010 - £412,000). The cash deposits attract variable rates of interest. At the year end of the effective rate
was 0.125%.
Financial liabilities
The Group's financial liabilities consist of bank loans, bank overdrafts and hire and lease purchase creditors.
Interest rates charged on these are as follows:
Weighted
average
effective
interest
%
3.16
3.16
1-5 years
£000
5+ years
£000
156
241
-
-
Total
£000
156
241
31 December 2011
Variable interest rate
31 December 2010
Variable interest rate
Currency exposures
At 31 December 2011 the Group had no currency exposures and all assets and liabilities were denominated
in Sterling
MERCURY
RECYCLING GROUP
-PLC-
34
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
19. Share capital
Group and Company
Allotted, called up and fully paid
35,827,462 (2010 - 35,827,462) ordinary shares of 10p each
The Company has one class of ordinary share which carry no right to fixed income.
YEAR ENDED
31 DECEMBER
2011
2011
£000
2010
£000
3,583
3,583
Share options
The Company has a share option scheme for certain employees and former employees of the Group. The
share options in issue during the year were as follows:
Date
granted
Exercise
price
As at
1 January
2011
No
Exercised
in year
No
Lapsed/
Cancelled
No
Re-Issued
No
As at
31 December
2011
No
24 February 2003
21 May 2010
10p
10p
58,335
1,600,000
-
-
-
-
-
-
58,335
1,600,000
The exercise period of the above options are as follows:
Date
granted
Exercise period
24 February 2003
21 May 2010
to 23 February 2013
to 21 May 2020
No options were issued or exercised in the period.
As at
31 December
2011
No
58,335
1,600,000
MERCURY
RECYCLING GROUP
-PLC-
35
YEAR ENDED
31 DECEMBER
2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
19. Share capital (continued)
Share warrants
As at 31 December 2011 the warrants in issue were; 8,399,966 issued at a price of 0.25p each with an expiry
date of 24 September 2016.
the Placing pursuant to the terms of a warrant instrument
The share warrants were issued as part of
executed by the Company and dated 24 September 2010. Under the warrant Instrument, 8,399,966 warrants
were created, with each Warrant granting the holder the right to subscribe for one Ordinary Share at a price
of 10p per share (subject to adjustment in limited circumstances such as a subdivision or consolidation of the
Company's share capital) payable in cash on exercise.
The warrants are exercisable within six years of being issued subject to the average closing market price of
the Company's shares having been at least 15p per Ordinary Share over a period of at least 30 consecutive
days (unless the Board waives this condition). The Company shall procure that the Ordinary Shares issued
pursuant to the exercise of warrants are admitted to trading on AIM. The warrants themselves will not be
dealt with or admitted to trading on any market and are only transferable in limited circumstances by their
holders.
Warrants represent subscription rights for ordinary shares in Mercury Recycling PLC. The warrant reserve
represents the fair value of these warrants.
Warrants may be exercised in whole or in part (and from time to time) prior to the final exercise date. The
warrants are non-transferable.
20. Reserves
Group
At 1 January 2011 (As previously reported)
Prior period adjustment
At 1 January 2011 (Restated)
Loss for the year
At 31 December 2011
Breakdown of other reserves is as follows
Other
reserves
Share
premium
account
£000
£000
386
-
386
-
386
235
-
235
-
235
Retained
earnings
Restated
£000
1,547
(78)
1,469
(41)
1,428
Warrant
reserve
£000
Other
reserve
account
£000
Total
other
reserves
£000
At 1 January 2011 and at 31 December 2011
21
365
386
MERCURY
RECYCLING GROUP
-PLC-
36
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED
31 DECEMBER
2011
20. Reserves (continued)
Company
At 1 January 2011
Profit for the year
At 31 December 2011
Breakdown of other reserves is as follows
Company
Other
reserves
£000
1,320
-
1,320
Share
premium
account
£000
235
-
235
Retained
earnings
£000
(15)
55
40
Warrant
reserve
£000
Other
reserve
account
£000
Total
other
reserves
£000
At 1 January 2011 and at 31 December 2011
21
1,299
1,320
The Group and Company have taken advantage of section 612 (2) of the Companies Act 2006 and have
credited the premium arising on the acquisition of Mercury Recycling Limited to the other reserve account.
The balance classified as share premium is the premium on the issue of the Group's equity share capital,
comprising 10p ordinary shares less any costs of issuing the shares.
The warrant reserve represents the estimated fair value of share warrants issued.
MERCURY
RECYCLING GROUP
-PLC-
37
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
21. Cash generated from operations
Group
Operating (loss)/profit
Depreciation on property, plant and equipment
Decrease in deferred income
Share based payment expense
Loss on disposal of property, plant and equipment
Operating cash flows before movements in working capital
Movement in receivables
Movement in payables
Cash generated by operations
Interest paid
Income tax paid
Net cash from operations
Cash and cash equivalents
Cash and bank balances
Bank overdrafts
2011
£000
343
-
343
YEAR ENDED
31 DECEMBER
2011
2010
Restated
£000
272
207
(9)
24
1
495
40
21
556
(7)
(24)
525
2009
£000
1
(71)
(70)
2011
£000
(31)
297
(9)
-
-
257
(19)
(35)
203
(4)
(30)
169
2010
£000
412
(16)
396
MERCURY
RECYCLING GROUP
-PLC-
38
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
21. Cash generated from operations (continued)
Company
Operating profit
Decrease in payable
Net cash from operations
YEAR ENDED
31 DECEMBER
2011
2011
£000
(55)
55
-
2010
£000
(40)
40
-
All payments and receipts are dealt with through the subsidiary and the Company has no cash and cash
equivalents.
22. Financial Commitments
(a) At the balance sheet date, the Group had outstanding operating lease arrangements for future minimum
lease payments under-non cancellable operating leases, which fall due as follows:
Within one year
In the second to fifth years inclusive
After five years
Land and buildings
Other
2011
£000
86
171
-
2010
£000
86
257
-
2011
£000
38
34
1
2010
£000
87
41
11
(b) The Group had no capital commitments contracted for but not provided for in the financial statements.
23. Related party transactions
Company
Included in debtors is £1,240,643 (2010 - £1,181,486) due from Mercury Recycling Limited a wholly owned
subsidiary of
the Company. During the year the Company charged a management charge to Mercury
Recycling Limited amounting to £308,390 (2010 - £290,037). The Company also paid £13,500 (2010 -
£2,037) to Westleigh Investments Holdings Limited (in which G Clarke and N Harrison are materially
interested) for the provision of services as non-executive directors. All transactions are considered to be on
terms equivalent to those that prevail in arm's length transactions.
24. Control
The Directors consider that there is no overall controlling party.
MERCURY
RECYCLING GROUP
-PLC-
39
YEAR ENDED
31 DECEMBER
2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
25. Change in accounting policy
The impact of the change in accounting policy, described in note 2, on the previously reported figures is
detailed below:
Consolidated income statement
2010
As previously
2010
stated Adjustment
£000
£000
Restated
£000
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit
Finance costs
Profit before tax
Tax
Profit for the period
(Attributable to owners of the Company)
2,668
(137)
2,531
(2,251)
280
(7)
273
(13)
260
-
(42)
(42)
34
(8)
-
(8)
(1)
(9)
Earnings per share
- Basic
0.75p
(0.02p)
- Diluted
0.75p
(0.03p)
2,668
(179)
2,489
(2,217)
272
(7)
265
(14)
251
0.73p
0.72p
MERCURY
RECYCLING GROUP
-PLC-
40
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
25. Change in accounting policy (continued)
Consolidated balance sheets
YEAR ENDED
31 DECEMBER
2011
Non-current assets
Goodwill
Property, plant and equipment
Current assets
Trade and other receivables
Cash and bank balances
Total assets
Current liabilities
Trade and other payables
Borrowings
Current tax liabilities
Non-current liabilities
Trade and other payables
Borrowings
Deferred tax liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium
Other reserves
Retained earnings
Total equity
(Attributable to owners of the Company)
2010
As previously
2010
stated Adjustment
£000
£000
Restated
£000
4,122
1,495
5,617
441
412
853
-
(86)
(86)
7
-
7
4,122
1,409
5,531
448
412
860
6,470
(79)
6,391
(270)
(86)
(35)
(391)
(33)
(155)
(140)
(328)
(719)
5,751
3,583
235
386
1,547
5,751
-
-
18
18
-
(17)
(17)
1
(78)
(78)
(78)
(270)
(86)
(17)
(373)
(33)
(155)
(157)
(345)
(718)
5,673
3,583
235
386
1,469
5,673
MERCURY
RECYCLING GROUP
-PLC-
41
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
25. Change in accounting policy (continued)
Consolidated balance sheets
YEAR ENDED
31 DECEMBER
2011
Non-current assets
Goodwill
Property, plant and equipment
Current assets
Trade and other receivables
Cash and bank balances
Current tax assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Current tax liabilities
Non-current liabilities
Trade and other payables
Borrowings
Deferred tax liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium
Other reserves
Retained earnings
Total equity
(Attributable to owners of the Company)
2009
As previously
2009
stated Adjustment
£000
£000
Restated
£000
4,122
1,509
5,631
471
1
10
482
-
(78)
(78)
7
-
-
7
4,122
1,431
5,553
478
1
10
489
6,113
(71)
6,042
(249)
(139)
(39)
(427)
(42)
(225)
(146)
(413)
(840)
5,273
3,403
242
365
1,263
5,273
-
-
14
14
-
(12)
(12)
2
(69)
-
-
-
(69)
(69)
(249)
(139)
(25)
(413)
(42)
(225)
(158)
(425)
(838)
5,204
3,403
242
365
1,194
5,204
MERCURY
RECYCLING GROUP
-PLC-
42
YEAR ENDED
31 DECEMBER
2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
25. Change in accounting policy (continued)
Consolidated cash flows - Year to 31 December 2010
Net cash from operating activities
Purchase of property, plant and equipment
2010
As previously
2010
stated Adjustment
£000
£000
Restated
£000
567
229
(42)
(76)
525
153
MERCURY
RECYCLING GROUP
-PLC-
43