Corporate report

The Coal Authority annual report and accounts 2020 to 2021: Financial statements

Published 15 July 2021

Statement of Comprehensive Net Expenditure year ended 31 March 2021

	Note	2020-21 £000	2019-20 £000
Revenue from contracts with customers	4	15,986	16,777
Other operating income	4	879	1,504
Total operating income	4	16,865	18,281
Staff costs	3	(15,813)	(15,056)
Purchase of goods and services	3	(8,446)	(8,953)
Depreciation, revaluation and impairment charges	3	(9,406)	(14,965)
Operating expenditure before provision movement		(33,665)	(38,974)
Provisions movement	3	(244,003)	(27,316)
Total operating expenditure	3	(277,668)	(66,290)
Net operating income/(expenditure)		(260,803)	(48,009)
Finance expense		(3)	(9)
Net income/(expenditure) for the year		(260,806)	(48,018)
Other comprehensive net expenditure
Net (loss)/gain on revaluation of property, plant and equipment		(142)	55
Comprehensive net income/(expenditure) for the year		(260,948)	(47,963)

The Statement of Comprehensive Net Expenditure and supporting Notes to the Accounts have been prepared and presented in accordance with the 2020-21 Government Financial Reporting Manual (FReM) issued by HM Treasury.

The notes to the accounts form part of these accounts

Statement of Financial Position as at 31 March 2021

	Note	2021 £000	2020 £000
Non-current assets:
Property, plant and equipment	6	12,997	9,064
Investment property	7	191	330
Intangible assets	8	2,339	2,095
Total non-current assets		15,527	11,489
Current assets:
Assets classified as held for sale	9	732	1,015
Trade and other receivables	10	3,757	3,404
Cash and cash equivalents	11	10,834	5,108
Total current assets		15,323	9,527
Total assets		30,850	21,016
Current liabilities:
Trade and other payables	12	(18,080)	(13,581)
Provisions	13	(39,073)	(33,292)
Total current liabilities		(57,153)	(46,873)
Total assets less current liabilities		(26,303)	(25,857)
Non-current liabilities:
Other payables	12	(3,709)	(4,456)
Provisions	13	(2,489,927)	(2,272,708)
Total non-current liabilities		(2,493,636)	(2,277,164)
Net liabilities		(2,519,939)	(2,303,021)
Taxpayers’ equity and reserves:
General fund		(2,520,006)	(2,303,371)
Revaluation reserve		67	350
Total taxpayers’ equity and reserves		(2,519,939)	(2,303,021)

The financial statements were approved and authorised by the board and signed on its behalf by:

Lisa Pinney MBE

Chief Executive and Accounting Officer

1 July 2021

The notes to the accounts form part of these accounts

Statement of Cash Flows year ended 31 March 2021

	Note	2020-21 £000	2019-20 £000
Cash flows from operating activities:
Net income/(expenditure) for the year		(260,806)	(48,018)
Adjustments for non-cash transactions:
Depreciation, amortisation, impairment and revaluation of non-current assets	3	9,343	14,965
Profit on disposal of Property, plant and equipment and Investment properties	4	(557)	(1,099)
Loss on disposal of Property, plant and equipment	3	64	0
(Increase)/decrease in trade and other receivables		(326)	353
Increase/(decrease) in trade and other payables		1,393	(298)
Increase in provisions	3	223,000	9,000
Net cash outflow from operating activities		(27,889)	(25,097)
Cash flows from investing activities:
Purchase of non-financial assets:
Purchase of Property, plant and equipment		(10,304)	(11,231)
Purchase of intangible assets		(1,076)	(458)
Procceds from disposal of non-financial assets:		0	0
Proceeds from sale of Property, plant and equipment	4	884	1,099
Net cash outflow from investing activities		(10,496)	(10,590)
Net cash outflow from activities		(38,385)	(35,687)
Cash flows from financing activities:
Grant in aid from BEIS		44,111	34,795
Net financing		44,111	34,795
Net increase/(decrease) in cash and cash equivalents		5,726	(892)
Cash and cash equivalents at the beginning of the period		5,108	6,000
Cash and cash equivalents at the end of the period		10,834	5,108

The notes to the accounts form part of these accounts

Statement of Changes in Taxpayers’ Equity year ended 31 March 2021

	General fund £000	Revaluation reserve £000	Total reserves £000
Balance as at 1 April 2019	(2,289,805)	300	(2,289,505)
Changes in taxpayers’ equity for 2019-20
Grant in aid from BEIS – capital	10,515	0	10,515
Grant in aid from BEIS – revenue	24,280	0	24,280
Transfers between reserves	5	(5)	0
Net gain on revaluation of fixed assets	(55)	55	0
Disposal of Investment property (amounts payable to Consolidated Fund)	(293)	0	(293)
Comprehensive income/(expenditure) for the year	(48,018)	0	(48,018)
Balance as at 31 March 2020	(2,303,371)	350	(2,303,021)
Changes in taxpayers’ equity for 2020-21
Grant in aid from BEIS – capital	13,715	0	13,715
Grant in aid from BEIS – revenue	30,396	0	30,396
Transfers between reserves	4	(4)	0
Net loss on revaluation of fixed assets	0	(142)	(142)
Transfer of Revaluation reserve to General fund on disposal of assets	137	(137)	0
Disposal of Investment property (amounts payable to Consolidated Fund)	(81)	0	(81)
Comprehensive income/(expenditure) for the year	(260,806)	0	(260,806)
Balance as at 31 March 2021	(2,520,006)	67	(2,519,939)

The notes to the accounts form part of these accounts

Notes to the Accounts year ended 31 March 2021

1. Statement of accounting policies

1.1 Basis of preparation

The Coal Authority is an executive non-departmental public body (NDPB) established under the Coal Industry Act 1994 and is sponsored by the Department for Business, Energy and Industrial Strategy (BEIS). Under paragraph 15(1)(b) of Schedule 1 of the Act the Coal Authority is required to prepare a statement of accounts for each financial year in the form and on the basis set out in the Accounts Direction, as determined by the Secretary of State, with the consent of HM Treasury.

These financial statements have been prepared in accordance with the 2020-21 government Financial Reporting Manual (FReM), and addendum, issued by HM Treasury. The accounting policies contained in the FReM apply International Financial Reporting Standards (IFRS) as adapted or interpreted for the public sector context. Where the FReM permits a choice of accounting policy, the accounting policy which is judged to be most appropriate to the particular circumstances of the Coal Authority for the purpose of giving a true and fair view has been selected. The particular policies adopted are described below. They have been applied consistently in dealing with items that are considered material to the accounts.

1.2 Accounting convention

These accounts have been prepared under the historical cost convention modified to account for the revaluation of investments, Property, plant and equipment and Intangible assets.

1.3 Going concern

The Statement of Financial Position at 31 March 2021 shows net liabilities of £2,519.9 million. This reflects the inclusion of expenditure for liabilities falling due in future years, which cover periods of 50 and 100 years into the future. To the extent that they are not met from other sources of income, they may only be met by future grants or grants in aid from our sponsoring department, BEIS. This is because, under the normal conventions applying to parliamentary control over income and expenditure, such grants may not be issued in advance of need.

Paragraph 14(1) of Schedule 1 to the Coal Industry Act 1994 states:

‘The Secretary of State shall, in respect of each accounting year, pay to the Coal Authority such amount as he may determine to be the amount required by the Coal Authority for the carrying out during that year of its functions under this Act.’

On that basis, the board has a reasonable expectation that we will continue to receive funding so as to be able to meet our liabilities. The Coal Authority has therefore prepared its accounts on a going concern basis.

1.4 Grant in aid

Grant in aid is paid to the Coal Authority on an annual basis to cover the net cash revenue and capital requirements in the year. Grant in aid utilised in the settlement of its statutory and other obligations is credited to the general reserve in the year in which it is received because it is regarded as a contribution from a controlling party which gives rise to a financial interest in the Coal Authority.

1.5 Revenue from contracts with customers and other operating income

Revenue from contracts with customers

Income represents the amounts, exclusive of VAT, arising from leases/licences and invoiced sales of goods and services from contracts with customers.

Income is measured at the fair value of the consideration received or receivable and is recognised in the Statement of Comprehensive Net Expenditure, following performance of contractual obligations by the Coal Authority, where amounts can be reliably measured and it is probable that the economic benefits will flow to the Coal Authority. Where this applies to services income, the amount recognised will be dependent upon the stage of completion.

Income received in advance of discharging contractual obligations is held on the Statement of Financial Position, and is released to the Statement of Comprehensive Net Expenditure as contractual obligations are fulfilled.

Operating lease income

Lease income from head office freehold property is accounted for in equal annual amounts and recognised either over the term of the lease, or to a date where a break clause may be applied, whichever is the earliest.

Consolidated fund income

Income collected under statute in relation to licensing activities is surrendered to the government as consolidated fund income when received, other than the element retained to finance licensing activities as a cost of collection.

The Coal Authority is deemed to be acting in the capacity of an agent and these income streams therefore fall outside of normal operating activities and are not reported through the Statement of Comprehensive Net Expenditure, but disclosed separately within the Notes to the Accounts.

Royalties and mining income are recognised on an accruals basis, relating to the period in which the income is earned, and following receipt of amounts owed cash payments are made to the consolidated fund.

1.6 Staff costs

Under IAS 19 Employee Benefits, all staff costs must be recorded as an expense as soon as the organisation is obligated to pay them. This includes the cost of any untaken leave as at the year end. The cost of the untaken leave has been determined using data from electronic leave records.

1.7 Pensions

Past and present employees are covered by the provisions of the Principal Civil Service Pension Scheme (PCSPS), which is an unfunded multi-employer defined benefit scheme. The Coal Authority recognises the expected cost of providing pensions on a systematic and rational basis, over the period during which it benefits from employees’ services by payment to the PCSPS of amounts calculated on an accruing basis. Liability for payment of future benefits is a charge on the PCSPS and is not the responsibility of the Coal Authority. The costs of all employer pension contributions are charged to the Statement of Comprehensive Net Expenditure when incurred.

1.8 Operating lease expenditure

Rentals are charged to the Statement of Comprehensive Net Expenditure in equal annual amounts over the lease term.

1.9 Research and development

Research

Expenditure is recognised as an expense in the period in which it is incurred.

Development

Expenditure is capitalised as an internally generated intangible asset only if the criteria of IAS 38 are met.

Where no internally generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it is incurred.

1.10 Taxation

VAT

The Coal Authority is involved in a number of statutory obligations and these are outside the scope of output VAT. The Coal Authority also makes exempt supplies relating to property lettings. Output VAT is charged on all other fee paying services. Where output VAT is charged, income is stated net of VAT.

No input VAT is recoverable where this can be directly attributable to a statutory function. A partial exemption calculation is performed on the recovery of input VAT for overhead departmental costs which carry out duties for both statutory and exempt functions.

Irrecoverable input VAT is charged to the relevant expenditure category.

Deferred taxation

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method.

Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill, or from the initial recognition (other than in a business combination) 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 Statement of Financial Position 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 Statement of Comprehensive Net Expenditure, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

1.11 Assets and liabilities inherited from the British Coal Corporation

Various assets and liabilities were transferred from the British Coal Corporation under a number of restructuring schemes made by the then Secretary of State for Trade and Industry pursuant to Section 12 of the Coal Industry Act 1994. The assets and liabilities included in these restructuring schemes were originally transferred into the Coal Authority’s accounts at their net book values, as previously stated in the financial statements of the British Coal Corporation, under the accounting policies adopted by the Coal Authority.

1.12 Property, plant and equipment

Assets are capitalised as property, plant and equipment if they are intended for use on a continuing basis and their original purchase cost, on an individual or group basis, is £2,000 or more.

Property

Freehold land and buildings relate to the Coal Authority’s head office and operational properties and are carried at fair value based on existing use, with external professional valuations undertaken biennially.

In addition, the Coal Authority owns a number of shafts that access abandoned mines. These are used in the monitoring of underground movements in water and gases. As there is no open market on which to base a valuation, these are held at nil value.

Non-property: Information technology, plant and machinery and furniture and fittings

In accordance with the FReM, the option has been taken to value these assets on a depreciated historical cost basis over the assets’ remaining service potential as a proxy to fair value, where assets have short useful economic lives or are of low value, or both.

At each reporting date the Coal Authority reviews asset carrying amounts, for both residual values and useful economic lives, to determine whether there is any indication that an impairment loss has been suffered.

An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount, where the recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.

Assets under construction are valued at cost.

Mine water treatment schemes and subsidence pumping stations

Operational schemes relating to coal are held at nil value on the Statement of Financial Position. The cost of building these schemes has been provided for in previous periods as these assets are commissioned to resolve legacy mining issues, for which the benefits have previously been received.

Costs incurred in the design, build, refurbishment and bringing the assets into working condition for their intended operational use are capitalised following completion of a feasibility study and gateway review. When the assets are brought into operational use, the carrying values are subject to an impairment review and are impaired to nil value, with the loss being recognised through the Statement of Comprehensive Net Expenditure.

Schemes that relate to metal mining activity are reviewed on an individual basis in accordance with the guidance provided under IAS 16 Property Plant and Equipment and other relevant standards. This review will be completed in conjunction with reference to the underlying contractual agreement in place with third parties.

Decommissioning costs are not provided for on the basis that the mine water schemes and subsidence pumping stations will continue to operate in perpetuity.

Assets under construction are valued at cost.

1.13 Depreciation

Property, plant and equipment assets are depreciated at rates calculated to write them down to their estimated residual value on a straight line basis over their estimated useful economic lives.

The rates of depreciation are as follows:

Freehold land: not depreciated

Long leasehold land: not depreciated

Operational properties: 50 years

Freehold buildings: 50 years

Information technology: 3 to 5 years

Plant and machinery: 3 to 5 years

Furniture and fittings: 5 to 10 years

Assets under construction are not depreciated until they are brought into operational use.

1.14 Investment properties

The Coal Authority holds a number of properties and is undertaking a rolling disposal programme, the timing of which is dependent on property market conditions. These have been classified as Investment properties and are not depreciated in accordance with IAS 40, but may be impaired or revalued to provide a carrying value at their estimated fair value.

Full valuations by external chartered surveyors are undertaken by means of a rolling programme over 5 years. A desk top review is undertaken by in-house chartered surveyors on those properties that have not been subject to a full external valuation during the year.

Gains and losses arising from changes in fair value of investment property are recognised in the Statement of Comprehensive Net Expenditure.

Investment properties identified as held for sale are disclosed where conditions established under IFRS 5 have been met.

1.15 Intangible assets

Expenditure on intangible assets consists of bespoke software development and other software licences and is capitalised where the cost is £2,000 or more.

Bespoke software development expenditure is either as a result of an external cost of development or as a result of work undertaken by the Coal Authority’s internal resources. Internal resource costs are only capitalised for detail design and implementation phases of the software development, using salary and associated payroll costs.

Intangible assets are reviewed annually for impairment and are carried at modified historic cost as a proxy for fair value.

Software licences and bespoke software are amortised on a straight line basis between 2-5 years over their estimated useful economic lives.

The mining records database was revalued upon transfer from the British Coal Corporation and is held at a nil value, being fully depreciated replacement cost.

1.16 Financial instruments

The Coal Authority does not hold any complex financial instruments. The only financial instruments included in the accounts are receivables and payables, as disclosed within Notes 10 and 12 to the Accounts.

Trade receivables, financial and other current assets are recognised initially at fair value and carried net of any provision for impairment, following customer level risk assessments and consideration of wider economic factors. A provision for impairment is made to recognise expected credit losses and when there is evidence that the Coal Authority will be unable to collect an amount due.

1.17 Security fund payables

Trade payables and other current liabilities include security fund payables. Licensees of mining operations are required to provide security to the Coal Authority to cover the potential future costs of settling subsidence damage liabilities within their areas of responsibility. One mechanism for providing security is by means of cash deposit. If the licensees fulfil their obligations, the deposits are returned, together with interest accrued under the terms of the lease/licence.

Deposits received are credited to security fund payables in order to recognise the Coal Authority’s liability to the licensees. Repayments of deposits or the costs of making mining properties secure on default of the licensee are provided from the grant in aid received.

Interest payable on deposits is charged to the Statement of Comprehensive Net Expenditure as it accrues.

The security fund payable is reduced by security costs incurred each year or when repayments are made to the licensee.

Other forms of security may include guarantee bonds in favour of the Coal Authority, escrow accounts, or charges over land. These arrangements do not give rise to any entries in the Coal Authority’s financial statements.

1.18 Provisions

The Coal Authority is responsible for dealing with liabilities relating to its ownership of abandoned coal mines. These include preventing and remediating mine water pollution, settling subsidence claims, making safe surface hazards, managing tips, rehabilitating opencast sites and dealing with closed colliery sites and spoil heaps.

Provisions are recognised when the Coal Authority has a present obligation (legal or constructive) as a result of a past event, that can be reliably measured, and it is probable that an outflow of economic benefits will be required to settle that obligation.

Provisions are made for the external costs of managing the Coal Authority’s obligations. Internal costs are not provided for.

Where the time value of money is material, the Coal Authority applies Consumer Price Index inflation rates to external costs and then discounts each provision to its present value using the nominal discount rates as specified annually by HM Treasury. These rates are disclosed within Note 13 to the Accounts.

Each year the Statement of Comprehensive Net Expenditure includes the borrowing costs of provisions, being the adjustments to unwind 1 year’s discount so that liabilities are shown at current day price levels.

Provisions are utilised against the Statement of Comprehensive Net Expenditure or against Property, plant and equipment in the Statement of Financial Position as expenditure is incurred.

Significant Public Safety incidents are kept under review. Provisions will be released and an accrual recognised when the Coal Authority has a present obligation as a result of a past event, where there is certainty over the measurement of the obligation and that an outflow of economic benefits will be required to settle that obligation.

Specific provision periods have been established as follows:

Mine water treatment schemes: 100 years

Subsidence pumping stations: 100 years

Public safety and subsidence: 50 years

Tip management: 50 years

Provisions are calculated on the basis of scientific evidence, data and experience. Judgements are then made on the most relevant timescale for the provision, taking account of uncertainties and relevance to the users of the financial statements. When the Coal Authority moves into the following financial year, a further year is added to the provision, in the absence of data suggesting a discernible change in the assumptions underpinning the existing judgement.

Provisions are reviewed annually at the year end to ensure all obligations and work programmes have been provided for.

1.19 Contingent assets and liabilities

In addition to contingent liabilities or assets disclosed in accordance with IAS 37, the Coal Authority discloses for parliamentary reporting and accountability purposes certain statutory and non-statutory contingent liabilities where the likelihood of a transfer of economic benefit is remote, but which have been reported to parliament in accordance with the requirements of HM Treasury’s Managing Public Money.

Where the time value of money is material, contingent liabilities which are required to be disclosed under IAS 37 are stated at discounted amounts and the amount reported to parliament separately noted. Contingent liabilities that are not required to be disclosed by IAS 37 are stated at the amounts reported to parliament.

1.20 Accounting judgements, estimates and assumptions

In relation to provisions, to the extent that it is sometimes impracticable to ascertain and disclose the full extent of the possible effects of assumptions or management estimates at the end of a reporting period, based on the best existing knowledge at the time, it is reasonably possible that outcomes for the next accounting period could require material adjustments to the provisions balance of £2,529.0 million as at 31 March 2021.

Provisions balances in Note 13 are calculated over timescales which are supported by reasonable evidence. These liabilities may extend beyond stated periods, therefore management judgement has been taken to restrict the number of years to 100 for Mine Water Treatment and Subsidence Pumping, reflecting the absence of a precise estimate of the timeline for the liabilities and that an infinite provision would not be relevant to the decisions being made by the users of the financial statements.

Other than in the review and calculation of provisions, no material accounting judgements, estimates or assumptions were made by the Coal Authority in preparing these accounts.

1.21 New standards, amendments and interpretations not yet effective

The following standards were in issue but not yet effective and have not been adopted in these financial statements:

IFRS 16 “Leases”

Eliminates the distinction between operating and finance leases, as a lessee, and imposes a single model geared towards the recognition of all but low value or short term leases. There is no change in relation to the treatment of operating and finance leases as a lessor.

HM Treasury have issued implementation guidance covering adaptation and transition arrangements in application of the standard. As a result of COVID-19, HM Treasury have deferred the implementation for a second year and this will now be introduced to the FReM from 2022-23, effective from 1 April 2022, but have provided the option to elect to early adopt.

The Coal Authority has elected to early adopt from 2021-22, effective from 1 April 2021.

The implementation of the new standard will result in the recognition of leases on the Statement of Financial Position, measured at the present value of future lease payments;

• ‘Right of use’ assets, which will be subject to annual depreciation over the term of the lease and impairment assessments, related to any onerous lease obligations, charged to the Statement of Comprehensive Net Expenditure.

• Liabilities for the cash flow commitments associated with future payments and whereby interest charges (based on HM Treasury specified borrowing rates) will be expended through the Statement of Comprehensive Net Expenditure.

Exemptions as provided by the FReM will be adopted, whereby short-term (less than 12 months) and low value (less than £2,000) leases will be excluded from recognition.

As a consequence of establishing lease liabilities, the Coal Authority’s provisions balances will also be adjusted to remove cash flows for future operating expenses associated with leases.

As mandated by the FReM, adoption of the new standard will be on a cumulative catch-up basis, with the impact on previous years’ accounts being recognised within taxpayers’ equity at the beginning of the period.

The impact of the new standard on the financial statements for 2021-22 have been assessed as follows:

Statement of Financial Position - Opening balances

• Right of use assets £13.8 million (impaired following onerous lease assessment).

• Lease liabilities £18.9 million.

• Reduction to provisions liabilities £18.9 million.

• Increase in Taxpayers’ Equity £13.8 million.

The right of use assets balance has been impaired following an onerous lease assessment in respect of a former colliery site, which form no part of the Coal Authority’s ongoing operations.

Lease liabilities incorporate the cash flows for operating leases as disclosed in Note 15 to the Accounts, adjusted for exempt items mentioned above and following application of HMT-specified inflation and borrowing rates.

Statement of Comprehensive Net Expenditure

• Depreciation – right of use assets £0.3 million.

• Interest expense £0.3 million.

Expenditure associated with leases on the current recognition basis have been assessed at £0.5 million, with the difference attributable to the ‘front loading’ of interest charges.

IFRS17 “Insurance Contracts”

Provides a more standardised approach to accounting for insurance contracts, setting clearer expectations for recognition, classification and measurement of assets and liabilities in relation to insurance contracts issued and reinsurance contracts issued or held.

HM Treasury are consulting on the public sector interpretation of the standard, prior to adapting for the FReM, having already identified the practice of ‘self-insurance’ across the public sector as an area that will need to be considered. The standard is expected to be introduced to the FReM from 2023-24, effective from 1 April 2023.

The impact of the new standard will be considered further when implementation guidance has been developed and made available by HM Treasury, although at this stage it is considered that there will be no material impact on our accounts.

2. Statement of operating expenditure by operating segments

The following analysis by operating segment of gross expenditure, income, net (income)/expenditure and total assets is stated below in accordance with IFRS 8.

2020-21	Development & Information £000	Operations £000	Commercial & Innovation £000	Total £000
Expenditure incurred during the year before internal recharges	8,008	28,639	9,831	46,478
Internal recharges for data and services	(1,788)	0	1,788	0
Expenditure incurred during the year	6,220	28,639	11,619	46,478
Impairments	0	8,193	0	8,193
Less provision utilised	(1,230)	(19,773)	0	(21,003)
Adjustment to provisions	3,230	240,773	0	244,003
Gross expenditure	8,220	257,832	11,619	277,671
Income	(2,741)	(172)	(13,952)	(16,865)
Net (income)/expenditure	5,479	257,660	(2,333)	260,806
Total assets	6,039	19,098	5,713	30,850
Memo: net (income) / expenditure excluding provisions movements	3,479	36,660	(2,333)	37,806

2019-20	Development & Information £000	Operations £000	Commercial & Innovation £000	Total £000
Expenditure incurred during the year before internal recharges	7,424	26,156	9,969	43,549
Internal recharges for data and services	(2,178)	0	2,178	0
Expenditure incurred during the year	5,246	26,156	12,147	43,549
Impairments	0	13,750	0	13,750
Less provision utilised	(301)	(18,015)	0	(18,316)
Adjustment to provisions	7,301	20,015	0	27,316
Gross expenditure	12,246	41,906	12,147	66,299
Income	(3,110)	(244)	(14,927)	(18,281)
Net (income)/expenditure	9,136	41,662	(2,780)	48,018
Total assets	3,647	13,721	3,648	21,016
Memo: net (income) / expenditure excluding provisions movements	2,136	39,662	(2,780)	39,018

Segmental analysis

The reported segments as analysed above are consistent with the Coal Authority’s organisational structure, directors’ responsibilities and the management information used by the Coal Authority’s management team for the period reported.

Further information in relation to average number of persons employed, by segment, can be found in the Remuneration and staff report and fees and charges can be found in the Parliamentary accountability and audit report.

Development and information

Development and information provides data, information and expertise to help people make informed decisions.

Development manages our property and mineral estate. It provides planning advice to local authorities, coal mining licenses to operators, and permission, through a permit and indemnity process, to enter or intersect coal. Income from licensing and permissions indemnities provide the funding for these activities, which are charged at cost, plus an allowance for overhead recovery. Income from property and estate management is derived from operating lease rental income and profits on the disposal of property, including clawback arrangements.

Information includes the licensing and provision of mining information, as well as follow on support with its interpretation. Information is provided both internally and to external customers and charged at cost, plus an allowance for overhead recovery.

Operations

Operations includes environmental programmes (mine water and subsidence pumping stations) that protect and enhance the environment and public safety and subsidence work (claims, hazards, mine entry inspections and tip management) that keep people safe and provide peace of mind. Income includes management fees, charged against UK Coal security funds, associated with discharging public safety liabilities during the year.

Commercial and innovation

Commercial and innovation activities create value and minimise cost to the taxpayer.

Commercial income is derived from the provision of mining reports, which are charged at commercial rates, and, advisory and technical services which are charged at either cost recovery, plus an allowance for overhead recovery, or at commercial rates. Advisory and technical services include the provision of metal mine water treatment programmes for the Department for Environment, Food & Rural Affairs (Defra) in England and Natural Resources Wales (NRW), supporting Welsh Government with the safe management of tips, and supporting national infrastructure projects and local authorities in managing the risks associated with mining.

Innovation activities are focused on efficiency and net cost reduction, as well as providing income streams from ochre sales and providing power to the national grid, both as a by-product of the Coal Authority’s coal mine water treatment activities.

MDA Hub Limited (for the provision of mining reports) and Defra (for the provision of advisory and technical services, relating to the delivery of an ongoing metal mine water treatment programme) provided income streams of greater than 10% of the revenue from contracts with customers in both financial years. The directors do not consider reliance on either of these customers to pose a significant risk to the Coal Authority’s operations.

Analysis of operating income by segment

2020-21	Development & Information £000	Operations £000	Commercial & Innovation £000	Total £000
Mining reports	0	0	7,906	7,906
Advisory and technical services	0	0	5,956	5,956
Data licensing and mining information	1,197	0	0	1,197
Licensing and permissions indemnities	769	0	0	769
By-products	0	0	52	52
Other income	106	0	0	106
Revenue from contracts with customers	2,072	0	13,914	15,986
Profit on disposal of Property, plant and equipment and Investment properties	557	0	0	557
Rental income	112	78	38	228
Public safety management fee	0	80	0	80
Other income	0	14	0	14
Other operating income	669	172	38	879
Total operating income	2,741	172	13,952	16,865

2019-20	Development & Information £000	Operations £000	Commercial & Innovation £000	Total £000
Mining reports	0	0	9,489	9,489
Advisory and technical services	0	0	5,342	5,342
Data licensing and mining information	994	0	0	994
Licensing and permissions indemnities	834	0	0	834
By-products	0	0	59	59
Other income	59	0	0	59
Revenue from contracts with customers	1,887	0	14,890	16,777
Profit on disposal of Property, plant and equipment and Investment properties	1,099	0	0	1,099
Rental income	124	73	37	234
Public safety management fee	0	146	0	146
Other income	0	25	0	25
Other operating income	1,223	244	37	1,504
Total operating income	3,110	244	14,927	18,281

3. Expenditure

	Note	2020-21 £000	£000	2019-20 £000	£000
Staff costs:
Wages and salaries		11,014		10,904
Social security costs		1,207		1,147
Other pension costs		2,819		2,687
Agency staff costs		773		318
Sub-total			15,813		15,056
Purchase of goods and services:
Operating leases
Equipment		160		182
Land and buildings		131		162
			291		344
Goods and services
Expenditure incurred during the year		28,552		25,951
Less provision utilised	13	(21,003)		(18,316)
			7,549		7,635
Research and development expenditure		437		532
Auditors’ remuneration and expenses		65		55
Travel and subsistence		104		387
			606		974
Sub-total			8,446		8,953
Depreciation, revaluation and impairment charges:
Depreciation and amortisation
Property, plant and equipment	6	594		538
Intangibles	8	880		832
			1,474		1,370
Revaluation
Property, plant and equipment	6	63		(2)
Investment properties	7	(348)		(153)
Assets held for sale	9	(40)		0
			(325)		(155)
Impairments:
Property, plant and equipment	6	8,193		13,749
Intangibles	8	0		1
			8,193		13,750
Loss on disposal of assets:
Property, plant and equipment	6		64		0
Sub-total			9,406		14,965
Provisions movement:
Other provisions movements	13	218,320		81,814
Borrowing costs of provisions (unwinding of discount)	13	40,683		41,502
Discount rate changes	13	(15,000)		(96,000)
Sub-total			244,003		27,316
Total operating expenditure			277,668		66,290

Staff and related costs of £462,000 were charged to capital projects during 2020-21 (2019-20: £257,000). Other staff and related disclosures are included in the staff and remuneration report within the accountability report.

Staff costs include 1 exit package (2019-20: 1 exit package). Further information is available in the Exit packages disclosure in the Remuneration and staff report.

No auditors’ remuneration and expenses have been incurred for professional fees associated with non-audit work during either 2020-21 or 2019-20.

Detailed information on provisions and provisions movements is provided in Note 13 to the Accounts.

Income

4.1 Revenue from contracts with customers

	2020-21 £000	2019-20 £000
Mining reports	7,906	9,489
Advisory and technical services	5,956	5,342
Data licensing and mining information	1,197	994
Licensing and permissions indemnities	769	834
By-products	52	59
Other income	106	59
Revenue from contracts with customers	15,986	16,777

Income is recognised in line with IFRS 15 – Revenue from contracts with customers.

Mining reports, licensing and permissions indemnities, data licensing and mining information, and by-products income is recognised when performance obligations are satisfied at a point in time.

Advisory and technical services income is recognised as performance obligations are satisfied over time.

No assets are recognised from costs to obtain or fulfil a contract with a customer, and no significant judgements have been made in determining the satisfaction of performance obligations or in determining and allocating the transaction price to performance obligations.

Further information is provided on products and services in Note 2 to the Accounts and Fees and charges in the Parliamentary accountability and audit report.

4.2 Other operating income

	2020-21 £000	2019-20 £000
Profit on disposal of Property, plant and equipment and Investment properties (detailed in table below)	557	1,099
Rental income	228	234
Public safety management fee	80	146
Other income	14	25
Other operating income	879	1,504

Rental income relates to operating lease income from property.

The public safety management fee relates to charges made against the security fund as the liabilities are discharged during the year. Further information on the security fund is provided in Note 12 to the Accounts and accounting policy Note 1.17 to the Accounts.

Profit on disposal of Property, plant and equipment and Investment properties:	2020-21 £000	2019-20 £000
Proceeds from clawback on sale of land	557	1,090
Proceeds from sale of investment properties	0	9
Total proceeds	557	1,099
Fair value of investment properties	0	0
Profit on disposal of property, plant and equipment	557	1,099

Where the British Coal Corporation or the Coal Authority’s sale agreements, in the disposal of land, include provisions for restrictive covenants or clawback, proceeds are received at a future date when these provisions have been satisfied. This could include the removal of a restrictive covenant or following development of the land, recognising the Coal Authority’s share of the increased value.

Further information is provided on products and services in Note 2 to the Accounts and Fees and charges in the Parliamentary accountability and audit report.

4.3 Consolidated fund income

The Coal Authority acts as an agent on behalf of the consolidated fund (HM Treasury). Cash collected and payable to the consolidated fund is reduced to cover the Coal Authority’s cost of collection. This income adjustment is included within licensing and permissions indemnities income within Note 4.1 to the Accounts.

	£000	2020-21 £000	£000	2019-20 £000
Production related rent (gross)	196		346
Cost of collection	(15)		(25)
Expected credit losses	0		50
Production related rent (net)		181		371
Incidental coal (gross and net)		0		2
Options for lease		18		9
Property sale proceeds		258		418
Income payable to the consolidated fund		457		800

	2020-21 £000	2019-20 £000
Balances held at start of year	472	53
Income payable to the consolidated fund	457	800
Payments made to the consolidated fund	(911)	(381)
Balances held at end of year	18	472

Production related rent is earned on each tonne of coal extracted from existing operating coal mining sites.

Incidental coal is royalty income from other sites where coal production is incidental to the main purpose of the activity being carried out.

Options for lease for future coal mining sites are granted in the form of a conditional licence and option for lease for the coal. Income is recognised on the granting of the option. The site cannot become operational until certain conditions (for example, planning consent) have been met and payments are made annually based on the area of the option.

Property sale proceeds are recognised as consolidated fund income where the initial purchase was made from grant in aid in previous periods. Income is recognised following the exchange of contracts and on completion of the sale of property.

Cost of collection relates to the element of income retained to finance licensing activities. Expected credit losses relate to amounts owed that have been assessed as unrecoverable.

Balances held at end of year represent amounts still to be remitted to the consolidated fund.

Consolidated fund payments amounted to £911,000 (2019-20: £381,000), being cash collections of £472,000 (2019-20: £53,000) relating to prior year and £439,000 (2019-20: £328,000) relating to current year.

5. Taxation

	2020-21 £000	2019-20 £000
Current tax	0	0
Deferred tax	0	0

Corporation tax is calculated at 19% (2019-20: 19%) of the estimated assessable profit for the year.

The charge can be reconciled to the Statement of Comprehensive Net Expenditure as follows:

	2020-21 £000	2019-20 £000
Net expenditure for the year	(260,806)	(48,018)
Tax at the UK corporation tax rate of 19% (2019-20: 19%)	(49,553)	(9,123)
Tax effect of expenses that are not deductible in determining taxable profit	1,759	2,790
Tax effect of temporary differences on Property, plant and equipment not recognised	(63)	(140)
Tax effect of losses created/(utilised) in the period not recognised	1,915	3,628
Tax effect of temporary differences on provisions not recognised	42,382	1,712
Tax effect of grant in aid finance for revenue purposes	3,560	1,133
Tax expense for the year	0	0

The following are the major deferred tax (assets)/liabilities:

Recognised at 31 March:

	2021 £000	2020 £000
Tax losses	0	0
Provisions	0	0
Property, plant and equipment	0	0
Revaluation of assets	0	0
Total	0	0

Unrecognised at 31 March:

	2021 £000	2020 £000
Tax losses	(14,262)	(12,347)
Provisions	(480,565)	(438,184)
Property, plant and equipment	(5,328)	(5,430)
Revaluation of assets	0	0
Total	(500,155)	(455,961)

No deferred tax asset has been recognised on excess carried forward tax losses due to the unpredictability of future profit streams against which the unused losses can be offset. The losses may be carried forward indefinitely.

Deferred tax has also not been recognised in respect of temporary differences arising on taxed reserves. Reserves totaling £2,529.0 million at 31 March 2021 will be deductible when the expenditure is charged against the provision in later periods.

The deferred tax balances not recognized have been calculated using the 19% corporation tax rate. The government announced that the corporation tax rate will increase to 25%, effective 1 April 2023.

6. Property, plant and equipment

	Land	Buildings £000	Information technology £000	Plant and machinery £000	Furniture and fittings £000	Mine water schemes £000	Subsidence pumping stations £000	Assets under construction £000	Total £000
Cost or valuation
At 1 April 2020	4,362	2,737	6,215	1,579	600	109,567	16,721	1,161	142,942
Additions	2,371	486	199	404	143	7,214	445	1,329	12,591
Reclassifications	1,340	(1,263)	0	38	26	63	142	(346)	0
Disposals	0	0	(169)	(225)	(54)	0	0	0	(448)
Transfer from assets held for sale	0	398	0	0	0	0	0	0	398
Revaluations	0	(399)	0	0	0	0	0	0	(399)
At 31 March 2021	8,073	1,959	6,245	1,796	715	116,844	17,308	2,144	155,084
Depreciation
At 1 April 2020	0	92	5,451	1,447	600	109,567	16,721	0	133,878
Charged in year	0	111	417	59	7	0	0	0	594
Disposals	0	0	(169)	(161)	(54)	0	0	0	(384)
Revaluations	0	(194)	0	0	0	0	0	0	(194)
Impairments	0	0	73	256	0	7,277	587	0	8,193
At 31 March 2021	0	9	5,772	1,601	553	116,844	17,308	0	142,087
Net book value at 31 March 2020	4,362	2,645	764	132	0	0	0	1,161	9,064
Net book value at 31 March 2021	8,073	1,950	473	195	162	0	0	2,144	12,997

The Coal Authority owns all of its assets and has no finance leases or Private Finance Initiative (PFI) contracts.

Valuations of head office land and buildings and properties that are held for operational purposes are undertaken on a biennial basis (Note 1.12 to the Accounts). Changes in valuation are reflected as appropriate in land and buildings.

A valuation was undertaken of the head office land and buildings as at 31 March 2021 by external Chartered Surveyors (Lambert Smith Hampton, a multi-disciplinary chartered surveying practice) in accordance with Royal Institution of Chartered Surveyors’ guidelines. The valuation of £2,975,000 is reflected above, with the next valuation due to be undertaken in March 2023. A loss of £205,000 has been recognised through the Revaluation Reserve (£142,000) and in the Statement of Comprehensive Net Expenditure (£63,000).

The valuation of £2,975,000 comprises land at £1,415,000 and buildings at £1,560,000, resulting in a reclassification of £1,340,000. Previous valuations provided no split between land and buildings, with past valuations being applied only to buildings.

During the year, 2 properties previously classified as assets held for sale have been determined as required for operational purposes for an extended period, and therefore transferred back to Property, plant and equipment.

A valuation was undertaken of all properties held for operational purposes as at 31 March 2020 by external Chartered Surveyors (Valuation Office Agency – District Valuation Services) in accordance with Royal Institution of Chartered Surveyors’ guidelines. The valuations totaling £398,000 are reflected above (current net book value of £389,000), with the next valuation due to be undertaken in March 2022.

Costs incurred in the development, construction or refurbishment of mine water schemes and subsidence pumping stations are recognised as assets under construction until such time that they are brought into operational use, whereby the assets are then subject to an impairment review and impaired to nil with a charge being made to the Statement of Comprehensive Net Expenditure.

	Land £000	Buildings £000	Information technology £000	Plant and machinery £000	Furniture and fittings £000	Mine water schemes £000	Subsidence pumping stations £000	Assets under construction £000	Total £000
Cost or valuation
At 1 April 2019	4,172	3,618	5,913	1,411	600	99,765	13,135	5,238	133,852
Additions	190	6	15	171	0	7,849	1,258	541	10,030
Reclassifications	0	17	305	0	0	1,953	2,343	(4,618)	0
Disposals	0	0	(18)	(3)	0	0	(15)	0	(36)
Transfer to Assets held for sale	0	(924)	0	0	0	0	0	0	(924)
Revaluations	0	20	0	0	0	0	0	0	20
At 31 March 2020	4,362	2,737	6,215	1,579	600	109,567	16,721	1,161	142,942
Depreciation
At 1 April 2019	0	18	5,084	1,062	600	99,765	13,135	0	119,664
Charged in year	0	111	385	42	0	0	0	0	538
Disposals	0	0	(18)	(3)	0	0	(15)	0	(36)
Revaluations	0	(37)	0	0	0	0	0	0	(37)
Impairments	0	0	0	346	0	9,802	3,601	0	13,749
At 31 March 2020	0	92	5,451	1,447	600	109,567	16,721	0	133,878
Net book value at 31 March 2019	4,172	3,600	829	349	0	0	0	5,238	14,188
Net book value at 31 March 2020	4,362	2,645	764	132	0	0	0	1,161	9,064

7. Investment properties

Land	2021 £000	2020 £000
Fair value at 1 April	330	542
Disposals	0	(293)
Transfer to Assets held for sale	(487)	(72)
Revaluations	348	153
Fair value at 31 March	191	330

The Coal Authority owns all of its investment properties and undertakes a 5 year rolling programme to ensure that all material investment properties are subject to an external valuation. 2020-21 is the fourth year of the current rolling programme.

All investment properties that have not been subject to an external valuation during the year have been subject to an internal valuation, undertaken by a suitably qualified Coal Authority property manager. Internal valuations have been established using appropriate property indices to reflect the movement in the property market over the previous year.

There are no material rental incomes or operating costs in respect of Investment properties.

8. Intangible assets

	Information technology £000	Software licences £000	Assets under construction £000	Total £000
Cost or valuation
At 1 April 2020	19,777	1,405	247	21,429
Additions	138	0	986	1,124
Reclassifications	135	0	(135)	0
At 31 March 2021	20,050	1,405	1,098	22,553
Amortisation
At 1 April 2020	17,985	1,349	0	19,334
Charged in year	860	20	0	880
Impairments	0	0	0	0
At 31 March 2021	18,845	1,369	0	20,214
Net book value at 31 March 2020	1,792	56	247	2,095
Net book value at 31 March 2021	1,205	36	1,098	2,339

The Coal Authority owns all of its intangible assets.

Information technology includes information systems developed in-house or by third parties and assets under construction consist predominantly of cost incurred in the further development of these information systems.

	Information technology £000	Software licences £000	Assets under construction £000	Total £000
Cost or valuation
At 1 April 2019	19,406	1,366	172	20,944
Additions	210	39	236	485
Reclassifications	161	0	(161)	0
At 31 March 2020	19,777	1,405	247	21,429
Amortisation
At 1 April 2019	17,167	1,334	0	18,501
Charged in year	817	15	0	832
Impairments	1	0	0	1
At 31 March 2020	17,985	1,349	0	19,334
Net book value at 31 March 2019	2,239	32	172	2,443
Net book value at 31 March 2020	1,792	56	247	2,095

9. Assets held for sale

	Land £000	Buildings £000	Total £000
Fair value at 1 April 2020	91	924	1,015
Transfers to Property, plant and equipment	0	(398)	(398)
Transfers from Investment properties	487	0	487
Disposals	(81)	(331)	(412)
Revaluations	40	0	40
Fair value at 31 March 2021	537	195	732

Land comprises a number of packages previously held under Investment properties and subject to annual valuations (see Note 7 to the Accounts).

During the year 6 packages of land have been sold, with a further 6 transferred from Investment properties. 8 packages of land are scheduled for disposal during 2021-22.

Buildings comprise a specific regional property which was previously used for operational purposes to provide temporary accommodation to members of the public whose own properties had been affected as a result of past mining activities. Properties are identified for disposal when no longer required for operational purposes due to decreasing activity levels in the region. Proceeds from the sale of these properties are paid into the UK Coal security fund to cover subsidence liabilities, as the property relates to previously called-in security.

During the year 2 properties have been sold and 2 properties have subsequently been determined as required for operational purposes for an extended period, and therefore transferred back to Property, plant and equipment. One remaining property is scheduled for disposal during 2021-22.

In January 2020 the directors approved a property disposal strategy, including the sale of assets through private treaty or at auction. A programme of disposals is presented and agreed by the executive leadership team on an annual basis, the latest being September 2020.

	Land £000	Buildings £000	Total £000
Fair value at 1 April 2019	0	0	0
Transfers from Investment properties	91	924	1,015
Fair value at 31 March 2020	91	924	1,015

10. Trade receivables, financial and other current assets

Amounts falling due within 1 year	2021 £000	2020 £000
VAT	496	424
Trade and other receivables	283	1,081
Prepayments	1,584	1,151
Accrued income	1,534	1,109
Expected credit losses	(140)	(361)
Balance at 31 March	3,757	3,404

There are no amounts falling due after more than 1 year.

Expected credit losses relate to amounts that have been assessed at a customer level as unrecoverable. These losses have been reassessed and reflect the reduction in economic uncertainty as a result of COVID-19.

11. Cash and cash equivalents

	2021 £000	2020 £000
Balance at 1 April	5,108	6,000
Net change in cash and cash equivalent balances	5,726	(892)
Balance at 31 March	10,834	5,108
The following balances were held at:
Government Banking Services	10,834	5,108
Balance at 31 March	10,834	5,108

Cash balances incorporate £2,181,000 (2020: £2,910,000) of ring fenced funds held in a separate account. These ring fenced funds represent receipts from UK Coal following disclaiming the lease/ licence for Thoresby Colliery and from bond providers following the termination of operations of ATH Resources PLC, Benhar Developments Ltd and Scottish Coal Company Ltd. The balances will be offset against the settlement of the operators’ liabilities. Balances are to remain ring fenced until such time that all future liabilities are settled.

12. Trade payables and other current liabilities

Amounts falling due within 1 year:	2021 £000	2020 £000
Other taxation and social security	580	591
Trade and other payables	1,117	752
Security fund payables	143	143
Liabilities in relation to called-in security	484	738
Amounts due to government (consolidated fund income)	18	472
Accruals	15,467	10,691
Deferred income	271	194
Balance at 31 March	18,080	13,581

Security fund payables (due within 1 year and after more than 1 year) relate to cash receipts from licensed coal operators and are held by the Coal Authority until such time that either, the licensee fulfils their obligations under the terms of a lease/licence, whereby the cash is returned to the operator, or to ensure debts and future liabilities are settled should a licensee fail to meet their obligations under a lease/licence. These cash receipts are not ring fenced, but are recognised as an operating cash inflow, with any payments being recognised as a cash outflow financed by grant in aid.

The amounts due to government represent amounts still to be remitted to the consolidated fund (HM Treasury) once cash has been collected in relation to licensing activities. The balance consists of trade receivables of £1,000 (2020: £26,000), cash of £nil (2020: £418,000) and accrued income of £17,000 (2020: £28,000). See Note 4.3 to the Accounts for further details.

Liabilities in relation to called-in security are in respect of the expected costs of settling future subsidence claims following the termination of operations and disclaiming of a lease/licence. (Called-in security is in the form of cash receipts or property assets. Cash receipts are ring fenced. Property assets generate further cash receipts on disposal. See Notes 6, 9 and 11 to the Accounts for further details). Amounts due within 1 year and after more than 1 year are in respect of UK Coal - Thoresby Colliery. Amounts due after 1 year are also in respect of ATH Resources PLC, Benhar Developments Ltd and the Scottish Coal Company Ltd.

Amounts falling due after more than 1 year:	2021 £000	2020 £000
Security fund payables:
In more than 1 year, but not more than 2 years	272	164
In more than 2 years, but not more than 5 years	108	108
In more than 5 years	1,068	1,173
Liabilities in relation to called-in security:
In more than 1 year, but not more than 2 years	0	410
In more than 2 years, but not more than 5 years	1,614	0
In more than 5 years	647	2,601
	2,261	3,011
Balance at 31 March	3,709	4,456

Where cash has been received from bond providers, any amounts not utilised, following the settlement of all future liabilities, will remain payable to the respective bond provider.

Analysis of movements on security fund payables:	2021 £000	2020 £000
Opening balance - falling due within 1 year	143	143
Opening balance - falling due after more than 1 year	1,445	1,611
Opening balance	1,588	1,754
Invoiced and cash receipts	1	1
Interest payable	2	9
Repayments	0	(105)
Utilisation	0	(71)
Movements during the year	3	(166)
Closing balance - falling due within 1 year	143	143
Closing balance - falling due after more than 1 year	1,448	1,445
Closing balance	1,591	1,588

Analysis of movements on liabilities in relation to called-in security:	2021 £000	2020 £000
Opening balance - falling due within 1 year	738	1,637
Opening balance - falling due after more than 1 year	3,011	3,907
Opening balance	3,749	5,544
Invoiced and cash receipts	24	0
Bond proceeds transferred	(15)	(65)
Utilisation	(1,013)	(1,730)
Movements during the year	(1,004)	(1,795)
Closing balance - falling due within 1 year	484	738
Closing balance - falling due after more than 1 year	2,261	3,011
Closing balance	2,745	3,749

13. Provisions for liabilities and charges

	Mine water schemes £000	Public safety and subsidence £000	Subsidence pumping stations £000	Other property related provisions £000	Total 2020-21 £000	Total 2019-20 £000
Opening balance	1,810,000	300,000	131,000	65,000	2,306,000	2,297,000
Utilised against operating spend	(10,002)	(7,747)	(1,089)	(2,165)	(21,003)	(18,316)
Utilised against capital spend	(11,213)	0	(445)	0	(11,658)	(9,922)
Created/ (released)	202,053	16,701	3,159	8,065	229,978	91,736
Borrowing costs of provisions (unwinding of discount)	32,162	5,046	2,375	1,100	40,683	41,502
Discount rate change	(13,000)	(1,000)	0	(1,000)	(15,000)	(96,000)
Closing balance	2,010,000	313,000	135,000	71,000	2,529,000	2,306,000

Provisions and movements in provisions are provided for in line with accounting policies stated in Note 1.18 to the Accounts.

The provision for liabilities and charges at 31 March 2021 is £2,529.0 million (2020: £2,306.0 million). Forecast cash flows, which reflect the Coal Authority’s latest assumptions, included within this provision before inflation and discounting are forecast at £2,508.0 million (2020: £2,275.0 million).

In calculating each provision at its present value, CPI (Consumer Price Index) inflation has been applied to cash flows that are based on 2021 prices and then nominal discount rates, as specified by HM Treasury, have been applied. Specified rates used are presented below:

CPI Inflation	2020-21	2019-20
Year 1	1.2%	1.9%
Year 2	1.6%	2%
Years 3-100	2%	2%

Nominal Discount Rate	2020-21	2019-20
Short term (Years 1-5)	(0.02%)	0.51%
Medium term (Years 6-10)	0.18%	0.55%
Long term (Years 11-40)	1.99%	1.99%
Very long term (Years 41-100)	1.99%	1.99%

The change in rates has resulted in a decrease to the provisions balance of £15.0 million for 2020-21 (2019-20: decrease of £96.0 million).

Where provisions remain calculated over a period of 50 or 100 years, it is necessary to add another year onto the provisions to maintain that timeframe. Forecast cash flows associated with the additional year are £27.3 million (2019-20: £25.4 million).

Other key assumptions and sensitivities in establishing the provisions at 31 March 2021 are explained below.

Mine water schemes

The provision relating to mine water treatment schemes is £2,010.0 million (2020: £1,810.0 million).

In order to comply with legislation, including the Water Environment (Water Framework Directive) (England and Wales) Regulations 2003 and the Water Environment and Water Services (Scotland) Act 2003, a strategy has been developed to design and build a further 9 schemes by 2027 to remediate existing pollution identified by the Environment Agency (EA), Natural Resources Wales (NRW) and Scottish Environment Protection Agency (SEPA). A further 17 preventative schemes are programmed to be built to avoid new pollution based on scientific projections of water quality and levels.

The legislation includes the principle of disproportionate cost and since 2010-11 this principle has been applied in assessing the viability of remedial schemes, through cost benefit analysis. Schemes will be deferred whilst new technologies are sought to build schemes for a cost in line with the benefits generated. Should such technology not become available these schemes may not be built and are therefore not provided for. Currently 54 schemes have been deferred, at average scheme build cost of £2.9 million and operating costs of £0.1 million per annum.

Cash flows over the next 100 years, before inflation and discounting, based on latest forecast and which are within the Coal Authority’s control, total £1,994.4 million (2020: £1,785.1 million). Cash flows are calculated over 100 years as scientists have concluded that the conditions for causing pollution will continue in perpetuity and there is no foreseeable option to dispense with treatment schemes. These cash flows incorporate:

• The estimated cost of commissioning the build of future schemes at £94.5 million (2020: £81.7 million). The 10 year rolling programme for preventative scheme builds has been updated to include 2 new schemes. The programme, and associated cost, is subject to review with key stakeholders (Defra, NRW and SEPA).

• The estimated cost of a capital maintenance and refurbishment programme, including solar panel installation, maintenance and replacement, at £679.2 million (2020: £640.3 million). These costs relate to both existing and future schemes, and are reassessed each year to reflect changes to the future scheme build programme.

• The estimated cost of operating schemes, which include efficiencies as they are delivered through an ongoing innovation programme, for the next 100 years at £1,220.7 million (2020: £1,063.1 million). These costs relate to both existing and future schemes (per the latest build programme), as they are built and become operational, and are reassessed each year based on experience and actual costs incurred. Operating costs at scheme level vary dependent upon the size and type of treatment scheme, the volume of water flow, as well as the chemistry and quality of the water. Operating costs have increased by £157.6 million as a result of changes to the future programme (£103.1 million), including 2 new preventative schemes, and as well as costs remaining subject to sustained pressure, particularly power, leading to significant cost increases (£54.5 million).

In assessing the provisions there are inherent uncertainties in respect of future costs and timing of cash flow, which impact on the provision. These include new technologies; environmental standards and regulations; the impacts of adverse weather as a result of climate change; price inflation of construction and operating costs; positioning of schemes and related land costs; the number of future preventative schemes required and the length of time they will be required to operate. Reasonable assumptions and best information have been used to inform the future costs and scientific evidence and experience has underpinned one of the more sensitive elements of the assumption, namely that underlying water treatment obligations will likely extend for many hundreds of years.

A management judgement has been taken to restrict the number of years to 100 for mine water treatment and subsidence pumping, reflecting the absence of a precise estimate of the timeline for the liabilities and that an infinite provision would not be relevant to the decisions being made by the users of the financial statements.

Public safety and subsidence

The provision relating to public safety and subsidence activity is £313.0 million (2020: £300.0 million).

Subsidence provisions relate to the estimated cost of settlement of subsidence claims. The Coal Authority has obligations under the 1994 Act and Subsidence Act 1991 to investigate and settle claims in respect of coal mining subsidence damage arising outside designated areas of responsibility associated with licenses granted to coal mining operators.

Public safety provisions relate to surface hazards and the costs of treating ground collapses, shaft collapses and other hazards relating to former coal mining activities. The Coal Authority has obligations under the 1994 Act and Subsidence Act 1991 to investigate and treat hazards arising from coal mining and to have regard for public safety.

Cash flows over the next 50 years, before inflation and discounting, based on latest forecast and which are within the Coal Authority’s control, total £308.9 million (2020: £295.3 million). Cash flows are calculated over 50 years as the Coal Authority expects to settle subsidence claims and treat surface hazards for a considerable period of time, as the conditions for subsidence and surface hazards will always be in existence. These cash flows incorporate:

• The estimated costs for investigating and treating claims at £5.6 million per annum (2020: £5.4 million per annum). Costs are reassessed each year based on experience and actual expenditure incurred over periods of up to 10 years.

• The estimated annual costs for the ongoing mine entry inspection programme through to 2024 at £0.5 million per annum (2020: £0.5 million per annum). Mine entry inspections and re-inspections are undertaken as part of a risk assessed rolling programme, and alternate every 5 years. The next 5 year cycles commence from 2025 at a cost of £0.7 million per annum and 2030 at a cost of £0.4 million per annum (2020: £0.7 million and £0.4 million per annum).

The obligations arising from public safety and tip management are considered to have shorter timeframes, as remediation actions taken and ground settlement may mitigate the present scale of risk. Management have made a judgement to assess the potential liability over a timeline of 50 years, in the absence of definitive data to enable precise measurement. Each year the timeline is considered and reviewed, with data not yet showing a reduction in the scale of incidents, and as such the 50 year timeline has been retained. Inherent uncertainties for public safety and subsidence are significantly higher than for mine water schemes and subsidence pumping stations.

Significant uncertainties beyond 50 years include; new technologies or methods of treatment which may be introduced; the impacts of adverse weather as a result of climate change; price inflation of contractor and material costs; new planning regulations to stabilise land prior to development; regeneration projects; or land stabilisation programmes. In addition to new damage, as time passes, shallow workings and shafts which have been treated in the past may need further remediation and monitoring. It is difficult to predict where surface hazards will next occur, or the profile and approach towards managing public safety and subsidence events, which impacts on the ability to reliably determine costs associated with these issues.

Subsidence pumping stations

The provision relating to subsidence pumping stations is £135.0 million (2020: £131.0 million).

Subsidence pumping station provisions relate to the costs of 83 pumping stations which control water on land affected by subsidence. This includes obligations under the Doncaster Drainage Act 1929.

Cash flows over the next 100 years, before inflation and discounting, based on latest forecast and which are within the Coal Authority’s control, total £133.9 million (2020: £129.9 million). Cash flows are calculated over 100 years as scientific evidence indicates that due to the effects of subsidence, certain pumping stations will be required and operated in perpetuity. These cash flows incorporate:

• The estimated cost of a refurbishment programme, which is due to complete by 2034, at £11.1 million (2020: £11.7 million). There is an ongoing requirement to continue refurbishment beyond 2034 and into the foreseeable future. This ongoing refurbishment programme has been incorporated at £0.6 million per annum (2020: £0.6 million per annum). The programme, and associated cost, is subject to review with key stakeholders (Environment Agency and Internal Drainage Boards).

• The estimated cost of operating these stations for the next 100 years at £0.7 million per annum (2020: £0.7 million per annum).

Beyond 100 years the inherent uncertainties of the future costs and timing of cash flows cannot be reliably measured and therefore prevent provisions being made.

Significant uncertainties beyond 100 years include; the expected operational life of the stations and plant and machinery; the impact of adverse weather as a result of climate change; and, the levels of refurbishment or replacement that may be required.

Other property related provisions

The provision relating to other property is £71.0 million (2020: £65.0 million).

The Coal Authority provides for costs to meet its statutory obligations. These liabilities are managed by our Property and Public Safety and Subsidence teams. When made aware of a site requiring rehabilitation, restoration or requiring future expenditure related to safety and security, provisions are initially recognised following an assessment of the action required and where costs can be reliably estimated, and subsequently kept under review.

These include the following items and associated cash flows, before inflation and discounting, reflecting latest assumptions:

• Obligations under the Bridgewater Canal Act 1907 to maintain elements of the canal which have been affected by coal mining subsidence. A 50 year programme of works has been prepared and costs estimated at £39.6 million remain at 31 March 2021 (2020: £34.1 million).

• Obligations under the 1994 Act, the Mines and Quarries (Tips) Act 1969 and the Mines and Quarries (Tips) Regulations 1971 to have regard to public safety. Tips may become insecure when water or ground conditions make them unstable. The Coal Authority has responsibility for 41 tips and keeps them secure, monitors water drainage, constructs tunnels and ponds to capture the water runoff and undertakes a regular programme of maintenance. Costs over the next 50 years have been forecast at £17.0 million (2020: £17.0 million), incorporating annual costs at £0.3 million per annum (2020: £0.3 million per annum). Beyond 50 years the inherent uncertainties of the future costs and timing of cash flows prevent provisions being made. Significant uncertainties beyond 50 years include the future costs of major repair projects following adverse weather conditions.

• Closed colliery site obligations are assessed to be £13.9 million (2020: £13.2 million) and relate to returning colliery sites to a condition that is safe and secure and consistent with any required planning permission or lease requirement.

Sensitivity of trends and assumptions

The calculations as explained above necessarily include estimates and assumptions, therefore, due to their nature, provisions balances are reasonably sensitive. For example:

should estimated future cash flows increase or decrease by £1.0 million per annum:

• in relation to Public safety and subsidence and tip management, the total provision over 50 years at current day prices would increase or decrease by £51.0 million (2%)

• in relation to Mine water schemes or Subsidence pumping stations, the total provision over 100 years in current day prices would increase or decrease by £101.0 million (4%)

should inflation or discount rates as specified by HM Treasury change, there would be an impact on the provisions balance:

• an increase in the inflation rates of 0.5% would increase the total provision held by £648.0 million (26%)

• a decrease in the inflation rates of 0.5% would decrease the total provision held by £476.0 million (19%)

• an increase in the discount rates of 0.5% would decrease the total provision held by £474.0 million (19%)

• a decrease in the discount rates of 0.5% would increase the total provision held by £651.0 million (26%)

Analysis of timing of discounted flows:	Mine water schemes £000	Public safety and subsidence £000	Subsidence pumping stations £000	Other property related provisions £000	Total £000
Up to 2022	28,670	6,941	2,024	1,438	39,073
Between 2022 and 2026	124,313	26,517	7,403	6,035	164,268
Between 2026 and 2041	341,162	96,194	21,207	30,169	488,732
Thereafter	1,515,855	183,348	104,366	33,358	1,836,927
Total	2,010,000	313,000	135,000	71,000	2,529,000

14. Capital commitments

Contracted capital commitments at 31 March not otherwise included in these accounts:

Property, plant & equipment:	£000	2021 £000	£000	2020 £000
Land and buildings	39		680
Mine water schemes	900		959
Information technology	242		0
		1,181		1,639
Intangible assets		306		35
Total		1,487		1,674

Land and buildings commitments represent maintenance and refurbishment of Head Office buildings.

Mine water schemes represent amounts relating to the build and maintenance of metal mine water schemes, and are recoverable from the Department for Environment, Food & Rural Affairs (Defra).

Information technology commitments relate to hardware and incorporate an amount of £169,000 in relation to new monitoring equipment for mine water schemes.

Intangible asset commitments are for software development activities including £222,000 in relation to monitoring equipment for mine water schemes.

15. Commitments under leases

15.1 Operating leases (lessee)

Total future minimum lease payments under operating leases are given in the table below for each of the following periods:

	2021 £000	2020 £000
Land and buildings:
Within 1 year	550	527
Between 1 to 5 years	1,875	1,807
After 5 years	12,404	12,118
	14,829	14,452
Other:
Within 1 year	107	113
Between 1 to 5 years	66	145
After 5 years	0	0
	173	258
Total	15,002	14,710

Land and building leases represent commitments of future expenditure on property held for operational purposes and for the Coal Authority’s disaster recovery offices. Of this future expenditure, £1,474,000 (2020: £1,415,000) represent amounts that will be recoverable from Defra in relation to metal mine water schemes.

The remaining balance is substantially included within the provisions balances provided for mine water schemes, subsidence pumping stations and other property related provisions (Note 13 to the Accounts).

Other leases represent commitments of future expenditure for vehicles and IT equipment.

15.2 Operating leases (lessor)

Total future minimum income receipts under operating leases in relation to head office freehold property rental and other income are given in the table below for each of the following periods:

Head office - freehold property:	2021 £000	2020 £000
Within 1 year	193	185
Between 1 to 5 years	162	323
Total	355	508

The Coal Authority has no finance leases or Private Finance Initiative (PFI) contracts.

16. Contingent liabilities

Licensees of mining operations are required to provide security to the Coal Authority to cover the anticipated future costs of settling subsidence damage liabilities within their areas of responsibility. Outside the areas of responsibility of the holders of licences under Part II of the 1994 Act, the Coal Authority is responsible for making good subsidence damage. Where an area of responsibility is extinguished this would transfer to the Coal Authority who would become responsible for the discharge of outstanding subsidence liabilities. The Coal Authority also has an ongoing liability to secure and keep secured the majority of abandoned coal mines. In all cases the liability for operating collieries is the responsibility of the licensees/lessees and security is held to address those liabilities.

The above liabilities have been provided for within the Public Safety and Subsidence provision (Note 13 to the Accounts) based on analysis of trends and claims experience. However it is possible that significant, unexpected events outside of this provision may materialise. It is expected that any deficit will be covered by future allocations of grant in aid.

Where liabilities transferred under the various Coal Authority Restructuring Schemes (CARS) have crystallised due to planning conditions, agreements, claims etc, provision has been made in these financial statements. It has not, however, been possible to quantify contingent liabilities that may arise in the future. It is expected that any costs will be covered by future allocations of grant in aid.

The Coal Authority is subject to various claims and legal actions in the ordinary course of its activities. Where appropriate, provisions are made in the accounts on the basis of information available and in accordance with guidance provided under the Financial Reporting Manual (FReM) and International Financial Reporting Standards (IFRS). The Coal Authority does not expect that the outcome of the above issues will materially affect its financial position.

In addition to the contingent liabilities outlined above the following should be noted:

Environmental Information Regulations 2004

The Coal Authority is aware of potential legal proceedings in respect of past fees paid for mining information.

If we receive formal notification to commence legal proceedings, the Coal Authority will strongly defend its position.

17. Contingent assets

By virtue of the seventh and ninth Coal Authority Restructuring Schemes (CARS 7 and 9) the Coal Authority is the beneficiary of restrictive covenants and clawback provisions relating to land and properties sold by the British Coal Corporation. In the event that the purchasers are able to retrospectively secure added value by obtaining planning consent for alternative uses the Coal Authority will receive a share of the added value. Quantification of this asset is not possible.

18.Related party transactions

The Coal Authority is a Non-Departmental Public Body (NDPB) of the Department for Business, Energy and Industrial Strategy (BEIS) and received grant in aid during the year, as well as surrendering income due to the consolidated fund in relation to statutory licensing activities.

BEIS continues to provide a consolidated annual report and accounts for the core department and incorporating NDPBs, including the Coal Authority, that are classified within its consolidation boundary.

In addition, the Coal Authority had a number of transactions with other government departments and bodies. The most significant of these transactions include the purchase of goods and services from the Ministry of Housing, Communities and Local Government and the provision of advisory and technical services to the Department for Environment, Food & Rural Affairs (Defra).

There have been no material transactions undertaken between board or executive members, or other related parties, and the Coal Authority during the year, that require disclosure.

19. Events after the reporting period

There were no significant events after the reporting period that require disclosure.

Date accounts authorised for issue

The Chief Executive and Accounting Officer has authorised these accounts to be issued on the date they were certified by the Comptroller and Auditor General.

ACCOUNTS DIRECTION GIVEN BY THE SECRETARY OF STATE FOR BUSINESS, ENERGY AND INDUSTRIAL STRATEGY IN ACCORDANCE WITH THE COAL INDUSTRY ACT 1994

1. This direction applies to the Coal Authority.

2. The Coal Authority shall prepare accounts for the financial year ended 31 March 2021 and subsequent financial years in compliance with the accounting principles and disclosure requirements of the edition of the Government Financial Reporting Manual issued by HM Treasury and the Financial Reporting Manual Addendum 2020-21 issued by HM Treasury on 27 April 2021 (collectively referred to as “the FReM”) which were in force for the financial year for which the accounts are being prepared, together with any additional disclosure or other requirements as agreed with the Department.

3. The accounts shall be prepared so as to: (a) give a true and fair view of the state of affairs at 31 March 2021 and subsequent financial year-ends and of the income and expenditure, total recognised gains and losses and cash flows for the financial year then ended; and (b) provide disclosure of any material expenditure or income that has not been applied to the purposes intended by Parliament or material transactions that have not conformed to the authorities which govern them.

4. Compliance with the requirements of the FReM will, in all but exceptional circumstances, be necessary for the accounts to give a true and fair view. If, in these exceptional circumstances, compliance with the requirements of the FReM is inconsistent with the requirement to give a true and fair view, the requirements of the FReM should be departed from only to the extent necessary to give a true and fair view. In such cases, informed and unbiased judgement should be used to devise an appropriate alternative treatment which should be consistent with both the economic characteristics of the circumstances concerned and the spirit of the FReM. Any material departure from the FReM should be discussed in the first instance with the Department for Business, Energy and Industrial Strategy who will consult HM Treasury as necessary.

5. This Direction supersedes the Direction dated 22 June 2020.

Christopher Whelan

Assistant Director - Coal Liabilities Unit (An official of the Department for Business, Energy and Industrial Strategy authorised to act on behalf of the Secretary of State)

5 May 2021