Biowise Limited - Limited company accounts 20.1

REGISTERED NUMBER: 04305295 (England and Wales)

Biowise Limited

Strategic Report, Report of the Directors and

Financial Statements for the Year Ended 31st December 2021

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

5

Income Statement

8

Other Comprehensive Income

9

Balance Sheet

10

Statement of Changes in Equity

11

Notes to the Financial Statements

12

DIRECTORS:

J A C Landau

R M Wilkes

S J Wardell

REGISTERED OFFICE:

Albion House

Albion Lane

Willerby

East Yorkshire

HU10 6TS

REGISTERED NUMBER:

04305295 (England and Wales)

AUDITORS:

Smailes Goldie

Chartered Accountants

Statutory Auditor

Regent's Court

Princess Street

Hull

East Yorkshire

HU2 8BA

BANKERS:

Virgin Bank Plc

10 Paragon Street

Hull

HU1 3ND

The directors present their strategic report of the company for the year ended 31 December 2021. The directors are pleased with the company's performance and results for the year.

The principal activity of the group is treatment of residential organic waste serving long term Local Authority contracts through a combination of IVC, ASP and OWC composting technology.

REVIEW OF BUSINESS

The company has performed in line with forecast across all business activities.

PRINCIPAL RISKS AND UNCERTAINTIES

Like many businesses the most significant risk affecting the company are considered to be rising inflation, fuel and energy costs, all of which will present challenges to trading into 2022 and beyond.

FUTURE DEVELOPMENT AND PERFORMANCE

To maintain and improve profit levels over the short to medium term there will be a real focus on cost minimisation and improved efficiencies. This strategy will be complimented by ongoing carefully managed growth, striving to expand our client base in the north of England and regional areas beyond; especially where there are demonstrable synergies to existing skill-sets, facilities and profitability.

KEY PERFORMANCE INDICATORS

Week by week comparisons between previous year tonnage against the current year will be used to ensure the business stays on track. This enables time for intervention as required. Key cost drivers including fuel, electricity and offtakes will be monitored closely to ensure costs are kept to a minimum at no less than monthly intervals.

The current portfolio of KPI's will continue to be formulated and reviewed on a monthly basis.

As always safety, compliance and the environment form the keystone of any decision making.

ON BEHALF OF THE BOARD:

S J Wardell - Director

18th May 2022

The directors present their report with the financial statements of the company for the year ended 31st December 2021.

DIVIDENDS

The total distribution of dividends for the year ended 31st December 2021 will be £61,134.

DIRECTORS

The directors shown below have held office during the whole of the period from 1st January 2021 to the date of this report.

J A C Landau

R M Wilkes

S J Wardell

GOING CONCERN

The company has net assets of £6,008,290 at 31 December 2021; made a profit before tax of £2,166,444 in the year; and is highly cash generative. Financial forecasts for the next two financial years show similar profitability and cash generation going forward and demonstrate the company's ability to service its debts and manage working capital with significant headroom. The directors are therefore satisfied that the financial statements should be prepared on a going concern basis.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

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.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

AUDITORS

The auditors, Smailes Goldie, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

S J Wardell - Director

18th May 2022

Opinion

We have audited the financial statements of Biowise Limited (the 'company') for the year ended 31st December 2021 which comprise the Income Statement, Other Comprehensive Income, Balance Sheet, Statement of Changes in Equity and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31st December 2021 and of its profit for the year then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

-	have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other Matter

The corresponding figures relating to the prior period were not audited.

Other information

The directors are responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

-	the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

-	adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

-	the financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of directors' remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page three, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, anti-bribery, Environment Agency legislation, and health and safety legislation. An understanding of these laws and regulations and the extent of compliance was obtained through discussion with management and inspecting legal and regulatory correspondence.

We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by making enquiries of management and considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.

To address the risk of fraud through management bias and override of controls, we:

-

performed analytical procedures to identify any unusual or unexpected relationships;

-

tested journal entries to identify unusual transactions;

-

assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and

-

investigated the rationale behind significant or unusual transactions.

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

-

agreeing financial statement disclosures to underlying supporting documentation;

-

reading the minutes of meetings of those charged with governance;

-

enquiring of management as to actual and potential litigation and claims; and

-

reviewing correspondence with relevant regulators and the limited liability partnership's legal advisors.

Due to the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.

The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission, or misrepresentation.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Stephen Bramall BSc FCA (Senior Statutory Auditor)

for and on behalf of Smailes Goldie

Chartered Accountants

Statutory Auditor

Regent's Court

Princess Street

Hull

East Yorkshire

HU2 8BA

18th May 2022

TURNOVER

13,347,161

11,050,797

Cost of sales

8,956,532

7,024,086

GROSS PROFIT

4,390,629

4,026,711

Administrative expenses - impairment charges

565,096

-

Administrative expenses - others

1,455,583

1,437,209

2,020,679

1,437,209

2,369,950

2,589,502

Other operating income

23,667

55,085

OPERATING PROFIT

4

2,393,617

2,644,587

Interest receivable and similar income

797

4,736

2,394,414

2,649,323

Interest payable and similar expenses

5

227,970

260,415

PROFIT BEFORE TAXATION

2,166,444

2,388,908

Tax on profit

6

758,616

430,686

PROFIT FOR THE FINANCIAL YEAR

1,407,828

1,958,222

PROFIT FOR THE YEAR

1,407,828

1,958,222

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

1,407,828

1,958,222

FIXED ASSETS

Intangible assets

8

-

-

Tangible assets

9

8,292,534

8,496,266

Investments

10

-

355,000

8,292,534

8,851,266

CURRENT ASSETS

Debtors

11

4,000,919

1,745,791

Cash at bank

420,199

2,224,133

4,421,118

3,969,924

CREDITORS

Amounts falling due within one year

12

2,651,438

2,834,710

NET CURRENT ASSETS

1,769,680

1,135,214

TOTAL ASSETS LESS CURRENT LIABILITIES

10,062,214

9,986,480

CREDITORS

Amounts falling due after more than one year

13

(3,011,909

)

(4,530,024

)

PROVISIONS FOR LIABILITIES

17

(1,042,015

)

(771,193

)

ACCRUALS AND DEFERRED INCOME

18

-

(23,667

)

NET ASSETS

6,008,290

4,661,596

CAPITAL AND RESERVES

Called up share capital

19

130

130

Revaluation reserve

20

720,385

720,385

Retained earnings

20

5,287,775

3,941,081

SHAREHOLDERS' FUNDS

6,008,290

4,661,596

The financial statements were approved by the Board of Directors and authorised for issue on 18th May 2022 and were signed on its behalf by:

S J Wardell - Director

Called up

share

Retained

Revaluation

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1st January 2020

130

2,554,253

720,385

3,274,768

Changes in equity

Dividends

-

(571,394

)

-

(571,394

)

Total comprehensive income

-

1,958,222

-

1,958,222

Balance at 31st December 2020

130

3,941,081

720,385

4,661,596

Changes in equity

Dividends

-

(61,134

)

-

(61,134

)

Total comprehensive income

-

1,407,828

-

1,407,828

Balance at 31st December 2021

130

5,287,775

720,385

6,008,290

1.	STATUTORY INFORMATION

Biowise Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the Company Information page.

The presentation currency of the financial statements is the Pound Sterling (£).

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

The financial statements continue to be prepared on a going concern basis.

The significant accounting polices applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented unless otherwise stated.

Going concern

The company has net assets of £6,008,290 at 31 December 2021; made a profit before tax of £2,166,444 in the year; and is highly cash generative. Financial forecasts for the next two financial years show similar profitability and cash generation going forward and demonstrate the company's ability to service its debts and manage working capital with significant headroom. The directors are therefore satisfied that the financial statements should be prepared on a going concern basis.

Financial Reporting Standard 102 - reduced disclosure exemptions

The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":

•

the requirements of Section 7 Statement of Cash Flows;

•

the requirement of paragraph 3.17(d);

•

the requirement of paragraph 33.7.

Preparation of consolidated financial statements

The financial statements contain information about Biowise Limited as an individual company and do not contain consolidated financial information as the parent of a group. The company is exempt under Section 399(2A) of the Companies Act 2006 from the requirements to prepare consolidated financial statements.

Turnover

Turnover is measured at the fair value of the consideration received or receivable net of VAT and trade discounts. The policies adopted for the recognition of turnover are as follows:

When the outcome of a transaction can be estimated reliably, turnover from the provision of waste management services is recognised when the service has been provided.

Intangible assets

Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

Other intangibles are being amortised evenly over their estimated useful life of five years.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Freehold property

-

2% on cost

Short leasehold

-

Over lease term

Plant and machinery

-

10% - 25% on cost

The company has taken the exemption conferred in section 35.10(c) of FRS 102 and used the fair value of freehold land at the date of transition as its deemed cost.

Investments in subsidiaries

Investments in subsidiaries are stated at cost less provision for impairment.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Research and development

Expenditure on research and development is written off in the year in which it is incurred.

Hire purchase and leasing commitments

Assets obtained under hire purchase contracts are capitalised as tangible assets and depreciated over their useful lives. Obligations under such agreements are included in creditors net of finance charge allocated to future periods. The finance element of the rental payment is charged to the profit and loss account so as to produce a constant periodic rate of charge on the net obligation outstanding in each period.

Share based payments

The cost of equity-settled transactions with employees is measured by reference to their fair value of the financial instrument granted at the date at which they are granted and is recognised as an expense over the vesting period, which starts once the vesting conditions have been met and ends once the relevant employee becomes fully entitled to the award.

3.	EMPLOYEES AND DIRECTORS

2021

2020

£

£

Wages and salaries

1,331,125

1,032,848

Social security costs

131,086

101,035

Other pension costs

104,633

92,126

1,566,844

1,226,009

The average number of employees during the year was as follows:

2021

2020

Direct labour

43

39

2021

2020

£

£

Directors' remuneration

137,549

137,512

4.	OPERATING PROFIT

The operating profit is stated after charging:

2021

2020

£

£

Other operating leases

34,091

33,227

Depreciation - owned assets

656,915

717,671

Loss on disposal of fixed assets

18,941

37,080

Foreign exchange differences

-

28

Impairment charge against investment in subsidiary (see note 10)

355,000

-

Impairment charge against group loan

210,096

-

5.

INTEREST PAYABLE AND SIMILAR EXPENSES

2021

2020

£

£

Bank interest

1,662

609

Bank loan interest

67,767

77,809

Hire purchase

158,541

181,997

227,970

260,415

6.

TAXATION

Analysis of the tax charge

The tax charge on the profit for the year was as follows:

2021

2020

£

£

Current tax:

UK corporation tax

481,891

335,438

Corporation tax under-provided in previous years

5,903

-

Total current tax

487,794

335,438

Deferred tax:

Origination and reversal of timing differences

48,414

125,313

Effect of changes in tax rates

222,408

-

Over-provided previously

-

(30,065

)

Total deferred tax

270,822

95,248

Tax on profit

758,616

430,686

Reconciliation of total tax charge included in profit and loss

The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below:

2021

2020

£

£

Profit before tax

2,166,444

2,388,908

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2020 - 19%)

411,624

453,893

Effects of:

Expenses not deductible for tax purposes

12,512

20,567

Adjustments to tax charge in respect of previous periods

5,903

(30,065

)

Change in tax rates on opening deferred tax provision

222,408

-

Impairment of assets not tax deductible

107,368

-

Capital allowances super deduction

(1,199

)

-

Group relief

-

(13,709

)

Total tax charge

758,616

430,686

UK corporation tax has been charged at 19% (2020: 19%).

In the Spring Budget 2021, the Government announced that from 1st April 2023 the corporation tax rate will increase to 25%. The deferred tax provision has been based on the rates applicable to the years in which the timing differences reverse.

7.

DIVIDENDS

2021

2020

£

£

Ordinary shares of £1 each

Interim

61,134

571,394

8.	INTANGIBLE FIXED ASSETS

Other

intangibles

£

COST

At 1st January 2021

and 31st December 2021

65,533

AMORTISATION

At 1st January 2021

and 31st December 2021

65,533

NET BOOK VALUE

At 31st December 2021

-

At 31st December 2020

-

9.	TANGIBLE FIXED ASSETS

Freehold

Short

Plant and

property

leasehold

machinery

Totals

£

£

£

£

COST

At 1st January 2021

4,885,509

1,044,905

4,835,429

10,765,843

Additions

14,447

-

479,934

494,381

Disposals

-

-

(169,770

)

(169,770

)

At 31st December 2021

4,899,956

1,044,905

5,145,593

11,090,454

DEPRECIATION

At 1st January 2021

445,245

69,660

1,754,672

2,269,577

Charge for year

81,526

69,660

505,729

656,915

Eliminated on disposal

-

-

(128,572

)

(128,572

)

At 31st December 2021

526,771

139,320

2,131,829

2,797,920

NET BOOK VALUE

At 31st December 2021

4,373,185

905,585

3,013,764

8,292,534

At 31st December 2020

4,440,264

975,245

3,080,757

8,496,266