CNG_FUELS_LTD - Accounts

The Directors present the strategic report for CNG Fuels Ltd (the “Company”) and together with its subsidiaries (the “Group”) for the year ended 31 March 2021.

The principal activity of the Company and Group continues to be that of the construction, development and operation of compressed natural gas (Bio-CNG) fuelling stations in the UK. The directors considered the results for the year and the financial position at the year-end satisfactory. The Directors do not anticipate any changes in the Company’s and Group’s principal activity going forward.

The Group caters predominantly to the high mileage Heavy Goods Vehicle (HGV) segment, where customers run regular operating cycles with predictable refuelling patterns. The business charges a fixed margin to customers on volumes of Bio-CNG dispensed and passes through the cost directly of the fluctuating wholesale natural gas price and prevailing fuel duty rates determined by HMRC.

The Group mass balances renewable biomethane from only waste feedstocks through the natural gas pipeline grid to match the quantities of Bio-CNG dispensed to provide customers with a 100% renewable and sustainable low carbon fuel for their vehicles.

The Group completed the development of a CNG station in Erdington during the period and commenced the development of a station in Newark as well as its first CNG station in Scotland, located in Eurocentral industrial estate at Bellshill. During the year it continued work on its partially developed site in Saturn Park, Knowsley and commenced trailer based refuelling operations for customers on site. The Company made capital contributions of £157,178 to the Knowsley project via its former subsidiary undertaking, CNG Station Holdings Limited, which acts as a financing and management intermediary for that development, prior to its disposal by the Group.

During the period, the business completed a significant financing transaction with Foresight Investment Group, for a funding commitment of £80m into a new company, CNG Foresight Limited. This associate investment of the Group now owns all of the previously developed CNG stations and provides for a commitment by Foresight to spend the remaining funding on the development of future CNG stations exclusively under the new company. During the year, as well as developing and operating CNG stations that the Group owns directly, CNG Fuels has developed its fourth CNG Station for EIS companies managed by the Ingenious Group, for service fees and a right of first refusal to acquire those stations at a later date. CNG Fuels has previously provided its development and operational services to these EIS funded SPVs, to develop sites operated under the CNG Fuels brand for CNG Fuels contracted customers. CNG Fuels will provide similar development and operational services to the CNG Foresight group for service fees in addition to its ownership stake in the company.

The £80m commitment is funded via shareholder loans from Foresight Investment Group into CNG Foresight. On signing of the funding commitment, CNG Fuels acquired three EIS companies managed by the Ingenious Group, which held three CNG Stations previously developed and operated by CNG Fuels. These three CNG Stations were then subsequently acquired by CNG Foresight from the CNG Fuels Group. CNG Foresight also directly acquired from CNG Fuels, an SPV holding one further fully developed CNG station and another under construction during the year.

In the prior year, the Group added to its board of directors an independent Chairman, Shaun Kingsbury, the former CEO of the Green Investment Bank to strengthen its governance and decision-making capability.

The profit for the financial year amounted to £2,447,501 (2020: loss of £1,881,656, as restated) as shown on the Group statement of comprehensive income on page 11 and the net assets of the Group amounted to £4,455,513 (2020: £291,883, as restated) as shown on the Group statement of financial position on page 12.

The key business risks and uncertainties affecting the business relate to liquidity, credit and capital risk. These risks are outlined in the notes to the accounts, whilst other risks to the business are detailed in this report.

Covid-19

The year has been impacted both positively and negatively by the ongoing global pandemic Covid-19. The business has been negatively impacted by new station planning approvals and the construction of new stations, which have been slowed down by lockdowns and the requirements to work from home for planners, surveyors and contractors. However, due to the need for increased online shopping, both supermarket and parcel delivery customers, making up a large portion of our customer portfolio, have been extremely busy during the period requiring correspondingly more haulage activity and fuel demand.

Significant incident or failure at a station

The business supplies compressed natural gas to vehicles that run solely on that fuel, so the loss of availability of supply for customers could materially dent the confidence and slow uptake of the fuel as an alternative to diesel.

Loss of Key Employees

The business has developed an end-to-end solution for the origination, development and operation of its refuelling stations, and due to their unique nature has critical know-how dispersed through the growing workforce.

Biomethane supply materially impaired

Customers principally adopt compressed biomethane as a fuel for their carbon-saving credentials. The Company has supplied 100% of its Bio-CNG as RTFO-approved biomethane since September 2016, but any systematic impairment to the supply from sources or countries would affect the carbon saving credentials to an extent.

Ongoing Funding Risk

The business is rolling out a rapidly expanding network of Bio-CNG stations to meet growing customer demand, and the continued growth of the network is central to the customer adoption thesis. The sites are capital intensive to develop and therefore the business needs access to reliable and regular sources of funds to continue to develop the stations at an increasing rate.

CNG Fuels is in the process of expanding its funding commitment from existing providers with acceptable terms agreed, including the provision of a £2m working capital loan to cover the costs of business expansion activities.

Competition Risk

The business faces competition from diesel and other mass adoptable alternative fuels that it does not supply including Liquified Natural Gas (LNG) and HVO. These fuels have their own unique characteristics which make them attractive as alternatives, however, on balance, the business feels that market interest is trending towards Bio-CNG as the preferred fuel for the transition towards zero carbon transport.

Policy Risk

The business is supported by two principal government-implemented policies and frameworks, the Renewable Transport Fuel Obligation (RTFO) and the reduction in fuel duty on natural gas compared with diesel.

The RTFO framework is viewed as a robust piece of low carbon transport legislation with no end date and increasing obligations to supply renewable fuels continuing to increase until 2032. The business can generate Renewable Transport Fuel Certificates by supplying RTFO-approved biomethane. These, in turn, enable it to purchase growing supplies of biomethane to meet customer needs.

HMRC implemented fuel duty differential was extended in 2019 until 2032 at 24.7p/kg against 57.5p/litre of diesel, roughly a two-thirds saving of duty on an energy equivalent basis, and this differential is a direct benefit to customers to enable them to have reasonable payback period on the additional capital expenditure of buying vehicles that are more expensive to purchase than diesel equivalents.

Technology Risk

Biomethane uptake as an alternative to diesel relies on continued support from the original equipment manufacturers' (OEM) development of CNG heavy goods vehicles (HGVs) suitable for our customers’ needs. CNG vehicles are currently produced for UK use in multiple models by two OEMs, Scania and Iveco.

Alternative fuels such as hydrogen and electrically powered vehicles are not yet ready for early adoption due to availability and cost of the vehicles and fuel supply constraints, and therefore the business does not view the adoption of these vehicles as direct competition to the uptake of CNG vehicles running on biomethane for the foreseeable future.

Sustained dislocation in input or product prices

Customers in the haulage industry are sensitive to the cost of fuel in their supply chains, so the price at which biomethane can be supplied to its HGV fleets is important to be competitive with diesel as an alternative. Sustained high gas prices, a high electricity price to compress the gas, or a low or negative gas to diesel price spread could impair the speed of uptake of the vehicles, although with adoption underway and commercial benefits to running a low carbon fleet there would likely continue to be a trend towards biomethane as the only mass adoptable alternative to diesel currently market ready.

Key Performance Indicators (KPIs) help the board assess performance against Group priorities set out during the year.

• Volumes: The Group grew volumes dispensed at the operating stations by 95% through the period, an increase that reflected both additional numbers of customers as well as existing customers replacing larger numbers of diesel tractor units with CNG tractor units within their annual replacement cycles.

• Employees: During the year the Group increased the average number of employees from 12 to 22, adding functions such as a transport manager, site construction managers and site operations engineers, land origination and financial management.

• Station pipeline: The Group increased its land origination ability and increased the station pipeline for future development from less than ten active investigations to more than thirty being considered and under negotiation.

• Biomethane secured: The business supplied 100% RTFO-approved renewable biomethane from waste feedstocks to its customers every quarter of the year, meaning no fossil natural gas was supplied at all into customers’ vehicles providing them with the maximum reportable carbon savings available for the vehicles.

• UK capacity and coverage: The Group opened two stations during the year increasing its refuelling capacity for high mileage HGVs from 1300 to around 2000, against a total market size of around 130,000 vehicles in the segment.

The Group has four stations in near-term development with those sites having received planning consent or submitted planning applications. In addition, interest in trialling the fuel by potential customers is increasing at a rapid rate, and the order book in the near term for these trials is full.

Approved by the board and signed on its behalf by:

The directors present their annual report and financial statements for the year ended 31 March 2021.

The principal activity of the group continued to be that of the construction, development and operation of compressed natural gas fuelling stations in the UK.

The results for the year are set out on page 11.

No ordinary dividends were paid. The directors do not recommend payment of a further dividend.

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

The directors have the benefit of an indemnity which is a qualifying third party indemnity provision as defined by section 234 of the Companies Act 2006. This was in force throughout the financial period and still in force at the time of approving the financial statements.

After the reporting period, but prior to the date of signing this report, the following post reporting date events arose:

• The Group disposed of 2 subsidiaries, CNG Castleford Limited and CNG Avonmouth North Limited, for consideration of £300,000 each to CNG Foresight Limited.

• The Group signed an agreement to dispose of subsidiary CNG Corby Limited, for consideration of £600,000, to CNG Foresight Limited.

• The Group incorporated a number of new subsidiaries, including CNG Newton Aycliffe Limited, which was subsequently disposed of to CNG Foresight Limited, for consideration of £300,000.

• Fair value adjustments were made to a receivable relating to deferred consideration due to the Group, in relation to its disposal of CNG Station Holdings Limited. This reduction has resulted in fair value loss adjustments post reporting date to the value of £813,000.

More detail on these post reporting date events is given in the notes to the financial statements (note 36).

Please refer to the Group's strategic report for information around the future developments of the Group.

Deloitte LLP, Statutory Auditor were appointed as auditor and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.

Each director in office at the date of approval of this annual report confirms that:

•     so far as the director is aware, there is no relevant audit information of which the company's auditor is unaware, and

•     the director has taken all the steps that he / she ought to have taken as a director in order to make himself / herself aware of any relevant audit information and to establish that the company's auditor is aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.

The business is rolling out a rapidly expanding network of Bio-CNG stations to meet growing customer demand. The sites are capital intensive to develop and therefore the business needs access to reliable and regular sources of funds to continue to develop the stations at an increasing rate. The business is in the process of expanding its funding commitment from current related parties to secure a working capital loan in the near term to support the expansion of the business. Based on a review of post year-end funding and the latest cash flow forecasts available, the directors have at the time of approving the financial statements, a reasonable expectation that the Group will have adequate resources to continue in operational existence for the foreseeable future, being at least the next 12 months from the date which these financial statements are signed. Accordingly, the going concern basis has been adopted in the presentation of these financial statements.

The directors have also considered the emerging conflict in Ukraine in their assessment of the Group’s ability to continue in operational existence. Although this conflict has driven the market price of the wholesale gas up, post reporting date sales volumes continue to grow and in the short term the directors do not believe the conflict is directly or indirectly causing material impact to the Group’s ability continue as a going concern.

The directors have assessed the increased inflation environment that the business is operating in post year-end. This has led to inflation across the business in energy prices and some critical equipment manufactured for both new stations and the maintenance of existing ones. Price increases are being monitored and will affect margins for the business and customers’ ability to purchase fuel at higher prices and buy new vehicles to some extent as the economic outlook for the country remains unclear. The business does not have significant direct exposure to interest rate increases by the Bank of England to mitigate the high inflation.

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the group and parent company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the United Kingdom. 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, International Accounting Standard 1 requires that directors:

•     properly select and apply accounting policies;

•     present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

•     provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and

•     make an assessment of the company's ability to continue as a going concern.

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

In our opinion:

•     the financial statements of CNG Fuels Limited (the ‘parent company’) and its subsidiaries (the ‘group’) give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 March 2021 and of the group’s profit for the year then ended;

•     the group financial statements have been properly prepared in accordance with United Kingdom adopted international accounting standards and International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB);

•     the parent company financial statements have been properly prepared in accordance with United Kingdom adopted international accounting standards and as applied in accordance with the provisions of the Companies Act 2006; and

•     the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements which comprise:

•     the group statement of comprehensive income;

•     the group and company statement of financial position;

•     the group and company statements of changes in equity;

•     the group and company statement of cash flows; and

•     the related notes 1 to 57.

The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom adopted international accounting standards and, as regards the parent company financial statements, as applied in accordance with the provisions 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 auditor's responsibilities for the audit of the financial statements section of our report.

We are independent of the group and the parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

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

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

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

Other information

The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

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

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

A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

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

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.

We considered the nature of the group’s industry and its control environment, and reviewed the group’s documentation of their policies and procedures relating to fraud and compliance with laws and regulations. We also enquired of management about their own identification and assessment of the risks of irregularities.

We obtained an understanding of the legal and regulatory frameworks that the group operates in, and identified the key laws and regulations that:

• had a direct effect on the determination of material amounts and disclosures in the financial statements. These included UK Companies Act, tax legislation; and

• do not have a direct effect on the financial statements but compliance with which may be fundamental to the group’s ability to operate or to avoid a material penalty.

We discussed among the audit engagement team regarding the opportunities and incentives that may exist within the organisation for fraud and how and where fraud might occur in the financial statements.

As a result of performing the above, we identified the greatest potential for fraud in the following areas, and our specific procedures performed to address it are described below:

• Revenue recognition. Our procedures included:

‒ Obtaining an understanding of the relevant controls over key controls in relation to revenue recognition and testing key controls;

‒ Reviewing and assessing the commercial arrangements, to determine the correct point of revenue recognition for different agreements with customers; and

‒ For a sample of revenue recognised we have determined if revenue was appropriately recognised by agreement to appropriate supporting information.

In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override. In addressing the risk of fraud through management override of controls, we tested the appropriateness of journal entries and other adjustments; assessed whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluated the business rationale of any significant transactions that are unusual or outside the normal course of business.

In addition to the above, our procedures to respond to the risks identified included the following:

• reviewing financial statement disclosures by testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;

• performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;

• enquiring of management and in-house legal counsel concerning actual and potential litigation and claims, and instances of non-compliance with laws and regulations; and

• reading minutes of meetings of those charged with governance reviewing correspondence with HMRC.

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 directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the group and of the parent company and their environment obtained in the course of the audit, we have not identified any material misstatements in the strategic report or the directors’ report.

Under the Companies Act 2006 we are required to report in respect of the following matters if, in our opinion:

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

• the parent company financial statements 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.

We have nothing to report in respect of these matters.

Use of our report

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

CNG Fuels Ltd is a private company limited by shares and incorporated in the United Kingdom under the Companies Act 2006 and is registered in England and Wales. The registered office is 250 Wharfedale Road, Winnersh Triangle, Wokingham, Berkshire, RG41 5TP. The Group's principal activities and nature of its operations are disclosed in the directors' report.

The Group consists of CNG Fuels Ltd and all of its subsidiaries, which are listed in note 15 of the financial statements.

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the United Kingdom and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, except as otherwise stated.

This is the first year the financial statements have been prepared under IFRS, and more information about transitional adjustments can be seen in note 40 of the notes to the Group financial statements.

The financial statements are prepared in sterling, which is the functional currency of the group. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention, except for the revaluation of certain financial instruments held at fair value. The principal accounting policies adopted are set out below.

The cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill.

The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date.

Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date.

The consolidated group financial statements consist of the financial statements of the parent company CNG Fuels Ltd together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.

All financial statements are made up to 31 March 2021. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

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

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

The business is rolling out a rapidly expanding network of Bio-CNG stations to meet growing customer demand. The sites are capital intensive to develop and therefore the business needs access to reliable and regular sources of funds to continue to develop the stations at an increasing rate. The business is in the process of expanding its funding commitment from current related parties to secure a working capital loan in the near term to support the expansion of the business. Based on a review of post year-end funding and the latest cash flow forecasts available, the directors have at the time of approving the financial statements, a reasonable expectation that the Group will have adequate resources to continue in operational existence for the foreseeable future, being at least the next 12 months from the date which these financial statements are signed. Accordingly, the going concern basis has been adopted in the presentation of these financial statements.true

The directors have also considered the emerging conflict in Ukraine in their assessment of the Group’s ability to continue in operational existence. Although this conflict has driven the market price of the wholesale gas up, post reporting date sales volumes continue to grow and in the short term the directors do not believe the conflict is directly or indirectly causing material impact to the Group’s ability continue as a going concern.

The directors have assessed the increased inflation environment that the business is operating in post year-end. This has led to inflation across the business in energy prices and some critical equipment manufactured for both new stations and the maintenance of existing ones. Price increases are being monitored and will affect margins for the business and customers’ ability to purchase fuel at higher prices and buy new vehicles to some extent as the economic outlook for the country remains unclear. The business does not have significant direct exposure to interest rate increases by the Bank of England to mitigate the high inflation.

Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The group recognises revenue when it transfers control of a product or satisfies the performance obligations of services delivered to a customer.

When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.

The group recognises revenue from the following major sources:

• Sales of natural gas

• Sales of biomethane

• Reiumbursement of operating costs

• Station management fees

• EPC contracts

The nature, timing of satisfaction of performance obligations and significant payment terms of the group's major sources of revenue are as follows:

Natural gas sales relate to charges for the cost of natural gas drawn by customers. Natural gas costs are market driven which change monthly. Natural Gas revenue is recognised at the point of sale and customers are invoiced monthly. Revenues relating to natural gas are presented gross of fuel duty tax chargeable to customers and payable to HMRC, in line with industry standard accounting practices relating to production taxes.

Biomethane revenue is derived from the sale of biomethane to customers. Biomethane costs are market driven which change monthly. Biomethane revenue is recognised at the point of sale and customers are invoiced monthly.

Revenue relating to the reimbursement of operating costs is derived from recharges of costs incurred by the Group in its servicing and management of Stations operated by entities outside of the group. Recharges are made at cost and invoiced to customers monthly as the costs are incurred by the Group.

Revenue relating to the Station Management fees is derived from charges levied by the Group to entities it is engaged to operate and manage Stations for. Revenue is recognised as the service is delivered to the customer on a monthly basis.

EPC contract revenue relates to services delivered by the Group to customers for the Engineering, Procurement and Construction (EPC) of Compressed Natural Gas (CNG) dispensing stations in the UK. The Group recognises EPC revenue as specific milestones in the EPC process are satisfied, as specified within the underlying contracts in place with the customer to which the development is being delivered.

Property, plant and equipment are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Assets in the course of construction are not depreciated.

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.

In the separate financial statements of the parent Company, interests in subsidiaries, associates, joint ventures and other unlisted investments are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

In the consolidated financial statements of the Group, other unlisted investments continue to be held as per the policy detailed above. Interests in associates and joint ventures are measured initially at cost and then subsequently recognise the Group's share of profits as permitted under the equity method detailed in IAS 28.

A subsidiary is an entity controlled by the parent company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

An associate is an entity, being neither a subsidiary nor a joint venture, in which the group holds a long-term interest and has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.

Entities in which the group has a long term interest and shares joint control under a contractual arrangement are classified as joint ventures.

Other unlisted investments are those made in entities where neither control, significant influence or a joint control arrangement exists, due to the percentage of voting share capital owned by the group being below the threshold required to demonstrate such control or significant influence.

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

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

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

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

Inventories are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition.

Net realisable value is the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

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

Financial assets are recognised in the group's statement of financial position when the group becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of the financial assets.

At initial recognition, financial assets classified as fair value through profit and loss are measured at fair value and any transaction costs are recognised in profit or loss. Financial assets not classified as fair value through profit and loss are initially measured at fair value plus transaction costs.

When any of the above-mentioned conditions for classification of financial assets is not met, a financial asset is classified as measured at fair value through profit or loss. Financial assets measured at fair value through profit or loss are recognized initially at fair value and any transaction costs are recognised in profit or loss when incurred. A gain or loss on a financial asset measured at fair value through profit or loss is recognised in profit or loss, and is included within finance income or finance costs in the statement of income for the reporting period in which it arises.

Financial instruments are classified as financial assets measured at amortised cost where the objective is to hold these assets in order to collect contractual cash flows, and the contractual cash flows are solely payments of principal and interest. They arise principally from the provision of goods and services to customers (eg trade receivables). They are initially recognised at fair value plus transaction costs directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment where necessary.

Financial assets, other than those measured at fair value through profit or loss, are assessed for indicators of impairment at each reporting end date.

The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision. The expected loss rates are based on the Group's historical credit losses experienced over the three year period to the year end. Other factors such as the wider economic environment that the Group and its customers operate in are also considered, with any impairments recorded in the statement of comprehensive income within administrative expenses.

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.

The group recognises financial debt when the group becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.

Financial liabilities are classified as measured at fair value through profit or loss when the financial liability is held for trading. A financial liability is classified as held for trading if:

•     it has been incurred principally for the purpose of repurchasing it in the near term, or

•     on initial recognition it is part of a portfolio of identified financial instruments that managed together and has a recent actual pattern of short-term profit taking, or

•     it is a derivative that is not designated and effective hedging instrument.

Financial liabilities at fair value through profit or loss are stated at fair value with any gains or losses arising on remeasurement recognised in profit or loss.

Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

Financial liabilities are derecognised when, and only when, the group’s obligations are discharged, cancelled, or they expire.

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

The Group enters into foreign exchange forward contracts in order to manage its exposure to foreign exchange risk. These are held as financial instruments at fair value through profit and loss as they represent instruments held for trading purposes of the business rather than that held for speculative investments, and there is an demonstrable traded market for such instruments, which gives rise to a monetary value of such derivatives.

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability. A derivative is presented as a non-current asset or liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are classified as current.

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax 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 goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

Provisions are recognised when the group has a legal or constructive present obligation as a result of a past event and it is probable that the group will be required to settle that obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of inventories or non-current assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Termination benefits are recognised immediately as an expense when the group is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted which are calculated by a series of commercial business valuations using models including discounted cash flows. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.

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

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

At inception, the group assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the group recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within property, plant and equipment, apart from those that meet the definition of investment property.

The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs and an estimate of the cost of obligations to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of other property, plant and equipment. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the group's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the group is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments in an optional renewal period, or penalties for early termination of a lease.

The lease liability is subsequently measured at amortised cost using the effective interest method. It is remeasured when there is a change in: future lease payments arising from a change in an index or rate; the group's estimate of the amount expected to be payable under a residual value guarantee; or the group's assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of rental premises that have a lease term of 12 months or less, or for leases of low-value assets including IT equipment. The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.

Government grants are recognised when there is reasonable assurance that the grant conditions will be met and the grants will be received.

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

In the current year, the following new and revised standards and interpretations have been adopted by the group and have an effect on the current period or a prior period or may have an effect on future periods:

• Amendment to IFRS 16, ‘Leases’ – Covid-19 related rent concessions

• Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform

At the date of authorisation of these financial statements, the following standards and interpretations, which have not yet been applied in these financial statements, were in issue but not yet:

• Amendments to IFRS 3, ‘Business combinations’, IAS 16,’ Property, plant and equipment’, and IAS 37 ‘Provisions, contingent liabilities and contingent assets’

• IAS 17 and some annual improvements on IFRS 1, IFRS 9, IAS 41 and IFRS 16

• Amendments to IAS 1 Presentation of financial statements’ on classification of liabilities

The directors anticipated that the adoption of these standard and the interpretations in future period will have no material impact on the financial statements of the company.

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

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

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.

There were no critical accounting judgements identified.

Property, plant and equipment assets are depreciated over their estimated economic useful lives, taking into account residual values where appropriate. The actual useful lives of assets and their estimated residual values are considered annually and can vary based on a number of factors. The assessment of residual values consider the condition, remaining useful live and projected disposal value of the asset.

No fees were paid to the Group's auditor with respect to non-audit remuneration.

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

Their aggregate remuneration comprised:

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2020 - 2).

Gains on the disposal of subsidiaries relate to the accounting profit recognised upon disposal of the following former subsidiary undertakings of the Group:

• Hams Warrington Limited. The entire issued share capital of that entity was disposed of for consideration of £6,083,395 on 4 December 2020. The Group recognised accounting gains upon disposal of £140,140 in relation to the sale of this subsidiary.

• Lavant Down Northampton Limited. The entire issued share capital of that entity was disposed of for consideration of £3,950,000 on 4 December 2020. The Group recognised accounting losses upon disposal of £458,172 in relation to the sale of this subsidiary.

• Oxford Erdington Limited. The entire issued share capital of that entity was disposed of for consideration of £6,475,000 on 4 December 2020. The Group recognised accounting gains upon disposal of £551,246 in relation to the sale of this subsidiary.

• CNG Eurocentral Limited. The entire issued share capital of that entity was disposed of for consideration of £300,000 on 17 February 2021. The Group recognised accounting gains upon disposal of £299,900 in relation to the sale of this subsidiary.

• CNG Station Holdings Limited, along with its subsidiaries CNG Knowsley Limited and CNG Leyland Limited. The entire issued share capital of CNG Station Holdings Limited was disposed of for consideration of £7,724,286 on 4 December 2020. The Group recognised accounting gains upon disposal of £7,869,400 in relation to the sale of this subsidiary.

The accounting gains and losses upon disposals of the subsidiaries listed above are in relation to any difference between consideration received and the net assets or liabilities of the subsidiaries disposed.

Changes in the fair value of derivative liabilities relate to the fair value movement recognised on forward foreign exchange contract derivative instruments.

Gains arising on the release of financial liabilities owed by the Group relate to the write off of informal intercompany loans owed by Group undertakings to non-Group companies.

The charge for the year can be reconciled to the loss per the income statement as follows:

In the March 2021 Budget it was announced that legislation will be introduced in Finance Bill 2021 to increase the main rate of UK corporation tax from 19% to 25%, effective 1 April 2023 . The expected future impact of this will be an increase in current tax charges for any profits taxed at the main rate.

The Group has tax adjusted losses carried forward of £6,463,226 (2020: £4,335,528) and timing differences relating to accelerated capital allowances of £nil (2020: £656,820), for which a deferred tax asset of £1,101,830 (2020: £669,058) has not been recognised.

Included within property, plant and equipment are assets held under hire purchase contracts with net book values of £898,022 (2020: £833,301).

Property, plant and equipment includes right-of-use assets, as follows:

During the year, the Company made investments in the following associates and joint ventures:

• Renewable Transport Fuel Services Limited (RTFS): £2,104,145 on 13 July 2020

• CNG Foresight Limited: £1 on 4 December 2020

The Group's appropriate share of joint venture profit of £126,036 in relation to RTFS has been recognised during the year under the equity method of accounting permitted by IAS 28.

Details of the company's subsidiaries at 31 March 2021 are as follows:

The following subsidiaries were either trading or were not dormant for parts of the year and have claimed exemption under section 479A of the Companies Act 2006 not to be audited individually for the year ended 31 March 2021:

• Hams Infrastructure Limited

• Lavant Down Agricultural Services Limited

• Lavant Down Washington Limited

• Oxford Infrastructure Limited

• Oxford Larkhall Limited

• CNG Crewe Ltd

CNG Fuels Ltd as parent of the group has given a statutory guarantee under section 479C of the Companies Act 2006, guaranteeing all of the outstanding liabilities to which the subsidiary is subject to at the year end.

Details of the group's associates at 31 March 2021 are as follows:

Associate investments are accounted for using the equity method in these consolidated financial statements as set out within the Group's accounting policies.

CNG Foresight Limited represents an investment whereby the Group exerts significant influence but does not control the entity. The 50% holding of Ordinary shares represent 49% of voting rights, per the terms of the Articles of Association of CNG Foresight Limited.

CNG Foresight Limited draws its accounts up to 31 March and during the period from incorporation of this associate on 21 October 2020 to its first year end of 31 March 2021, the associate paid no dividends to the Group and recorded a total comprehensive loss of £1,321,827. The Group's unrecognised share of the associate's loss during the year was 50% of this at £660,914.

A summary of the financial position of this associate at 31 March 2021 is as follows, no comparative information is available due to this being the first period end of the associate):

• Non-current assets: £33,127,703

• Current assets: £3,646,775

• Current liabilities: £5,296,545

• Non-current liabilities: £32,799,758

• Net liabilities and total equity at 31 March 2021: £1,321,825

The carrying amount of the Group's interest in this associate is £1 being the nominal share value of the equity holding of the associate.

Details of the group's joint ventures at 31 March 2021 are as follows:

Joint venture investments are accounted for using the equity method in these consolidated financial statements as set out within the Group's accounting policies.

Renewable Transport Fuel Services Limited (RTFS) represents an investment whereby the Group shares joint control with 2 other shareholders, but does not individually exert control over the entity.

RTFS has previously drawn its statutory financial statements up to 31 December but will file to 31 March from 2022 onwards. The Group's interest in this joint venture commenced upon its acquisition of the 30% Ordinary shareholding on 13 July 2020. During the period to 31 March 2021, the joint venture paid no dividends to the Group and recorded a total comprehensive profit of £420,121. The Group's has recognised its share of profits in line with its 30% holding, which is £126,036.

A summary of the financial position of this joint venture at 31 March 2021 is as follows:

• Current assets: £4,983,411

• Current liabilities: £3,200,150

• Non-current liabilities: £8,981

• Net assets and total equity at 31 March 2021: £1,774,280

The carrying amount of the Group's interest in this joint venture is £2,230,181, for which a reconciliation can be seen in note 14.

Amounts owed by related parties consist of deferred consideration due from CNG Foresight Limited, for the disposal of two of the Group's former subsidiaries CNG Station Holdings Limited and Oxford Erdington Limited. The fair value of these receivables at the year end was £1,250,000 and £250,000 respectively. The remaining £320,374 relates to informal intercompany loans which are unsecured, repayable on demand and do not bear interest.

Included within trade receivables are £960,202 of debts due from related parties conducted under standard payment terms.

Included within trade receivables are £150,000 of debts which have been fully provided against (2020: £nil). Trade receivables outstanding at the reporting date, for which no provision for bad and doubtful debts has been made, can be analysed with respect to balances past due as follows:

• Current within terms: £970,706

• Within 1 month past due: £465,883

All such debts have since been settled post year end.

The directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value.

No significant receivable balances are impaired at the reporting end date.

At 31 March 2021, trade receivables are shown net of an allowance for doubtful debts of £150,000 (2020: £nil). Write-offs relating to bad debts amounted to £3,007 during the year (2020: £259), while reversals and new provisions were all £nil during the year (2020: £nil), with the allowance for doubtful debts being an existing provision arising upon the acquisition of subsidiaries during the year.

The expected credit loss rate applied to trade receivables is based on the Group's historical credit losses experienced over the three year period to 31 March 2021, which are materially nil in the case of ongoing operations. As such, management has not elected to provide for any expected credit losses arising against trade receivables outstanding at the period end. The directors have considered the nature of the relationship with the Group's primary trade receivable, CNG Foresight Limited Group, in their assessment of the credit risk of this customer, and judge it to be remote.

The £150,000 allowance for doubtful debts relates to legacy balances contained within acquisitions made during the year. The balances against which the provisions relate are fully provided for and are not receivables that have arisen as part of the Group's main revenue streams or ongoing trading activities. As such, these balances have not been considered as part of the Group's overall expected credit loss modelling considerations.

Other loans of £400,000 (2020: £400,000) included within non-current borrowings relate to loan notes provided to the Group by non-bank lenders, which are unsecured and are not due to be repaid within 12 months of the statement of financial position date. The loan notes bear interest at an 8.5% fixed rate.

The secured debts within other loans of £nil (2020: £1,806,338) were held by one of the Group's former subsidiaries, CNG Station Holdings Limited. These loans were secured by way of fixed and floating charges against all the undertaking, property and other assets of CNG Stattion Holdings Limited and the assets of its subsidiaries CNG Leyland Limited and CNG Knowsley Limited. CNG Station Holdings Limited and its subsidiary undertakings have been disposed of during the year.

The secured debts outstanding at the previous year end were for term loan facilities, secured by way of fixed and floating charges, held by GCP Asset Backed Income (UK) Limited, against all the undertaking, property and other assets of CNG Station Holdings Limited and the assets of its subsidiaries CNG Leyland Limited and CNG Knowsley Limited. The charges contain a negative pledge restricting the Chargor from, except with prior written consent of the Security Agent, creating or permitting to subsist any security on, or in relation to, any charged asset other than any security created by this charge. Interest is charged at 7.5% per annum on each interest payment date on outstanding loans. Repayments are due on the basis of a percentage of the outstanding principal on the relevant repayment dates. Final maturity of the facility will arise in January 2025.

Included within trade payables are amounts owed to related parties of £3,541,623 conducted under standard payment terms.

Amounts owed to related parties consist of informal intercompany loans due to CNG Foresight Limited Group. These loans are unsecured, carry no interest and are repayable on demand.

Deferred consideration relates to amounts payable upon the purchase of the associate investment Renewable Transport Fuel Services Limited. The balances payable were unsecured, interest free, and were settled in February and April 2022 respectively.

The following table details the remaining contractual maturity for the group's financial liabilities with agreed repayment periods. The contractual maturity is based on the earliest date on which the group may be required to pay.

Responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidity risk management framework for the management of the company's funding and liquidity management requirements. The company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

Discounted lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:

As a result of the adoption of IFRS, the Group has applied IFRS 16 Leases as the standard to which it recognises and accounts for its leasing arrangements. Leases of land under long term agreements are now recognised as right of use assets, depreciated over the term of the lease and corresponding lease liabilities recognised for the present value of future payments due under the lease. The Group also recognises right of use assets in respect of long term leases for the hire of motor vehicles.

Operating lease payments represent rentals payable by the group for serviced office tenancy agreements. Agreements are not for longer than 12 months with rentals fixed at the outset. These leases are exempt from treatment under IFRS 16 Leases, due to their short term nature.

Amounts recognised in profit or loss as an expense during the period in respect of lease arrangements are as follows:

Set out below are the future cash outflows to which the lessee is potentially exposed that are not reflected in the measurement of lease liabilities:

Included within land and buildings costs committed to are serviced office tenancy agreements committed to after the balance sheet date but before the date of signing this report.

The following are the major deferred tax liabilities and assets recognised by the group and movements thereon during the current and prior reporting period.

During the year, a prior period error was identified where deferred tax liabilities were not previously recognised in the statement of financial position with corresponding charges to taxation through the income statement. Corrections have now been made to reflect the impact on tax charges in the income statement and provisions for liabilities and equity at 1 April 2019 and at 31 March 2020 .

Any deferred tax asset arising on tax adjusted losses the subsidiary of the Group had at the reporting dates are offset against deferred tax liabilities arising on accelerated capital allowances (ACAs) accordingly on the face of the statement of financial position. This is due to the fact any tax implications arising on disposal of assets for which ACAs have been claimed, can directly be offset against eligible trading losses for purposes of calculating any corporation liability for the period in which a liability may arise.

Deferred tax assets on provisions related to the timing differences provided for on the carrying value of provisions relating to decommissioning liabilities, of which more detail can be seen in the notes to these financial statements.

The corporation tax rate used to calculate deferred tax at 1 April 2019 was 19%, whereas all subsequent periods have been calculated using 25%, being the corporation tax rate substantively enacted and the prevailing rate expected to apply upon reversal of such timing differences.

Decommissioning provisions relate to obligations arising from terms included in the lease of the land upon which one of the Group's assets is situated. The Group has an obligation to remove equipment and restore the site to its original condition when the lease commenced and the provision reflects the present value of the expected future cash flows to carry out such work. Economic outflows relating to this provision are expected to arise no earlier than the end of the lease, currently being June 2031. A degree of uncertainty exists as to the timing of such outflows, due to the anticipated renewal of land leases beyond current and optional renewal terms.

Due to the timing of the expected outflow the provision relates to, the present value of the provision has been calculated by inflating forecast costs at 2% per annum, being the UK's long term inflation rate target. The inflated future outflow has then been discounted back to present value using a discount rate of 1.3%, derived from the rate applicable to borrowing instruments available over comparable time periods.

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

At the year end, £2,548 of pension charges in relation to a defined contribution scheme were accrued (2020: £1,478).

At the balance sheet date, the Group had a number of share option agreements in place with employees. Options are exercisable at points in time and at prices as agreed in the executed agreements. The vesting period of these options vary between one to five years. If the options remain unexercised after a period of ten years from the date of the agreement, the options expire. Options are forfeited if a qualifying exit event as specified in the agreements occurs. The options are to be settled in equity.

For employee share options, the fair value of equity instruments granted is assessed at the date of the grant of options. This value is established by using commercial business valuations, included discounted cash flows, which consider a range of factors in arriving at the allocation of fair value to the quantity of the options which have been granted and subsequently vest over time. With respect to volatility, considerations factored into pricing models are limited due to lack of observable market data for comparable listed entities, although models used by their nature factor in a certain degree of volatility with regards to the future performance of the Group.

The options outstanding at 31 March 2021 had an exercise price ranging from £0.01 to £53.34 (2020: £0.01 only), and a weighted average remaining contractual life of 8 years (2020: 8 years).

The company has one class of Ordinary shares which are each entitled to one vote in any circumstance. Each share is entitled pari passu to dividend payments or any other distribution, or to participate in a distribution arising from a winding up of the company.

During the year, the company issued 28,122 Ordinary shares of £0.01 each at a premium of £53.33 per share.

During the year, a historic understatement of the value of share premium of £1,071 was identified and corrected within the share premium account.

28,122 Ordinary shares of £0.01 each were allotted during the year at a premium of £53.33 per share.

In the prior year, 33,214 Ordinary shares of £0.01 each were allotted at a premium of £53.33 per share. The correction referred to above reflects an accounting true-up of increases to the share premium account in respect of this and earlier share issues.

On 4 December 2020, the Group acquired 100 percent of the issued capital of Hams Infrastructure Limited. This acquisition also included the acquired entity's subsidiaries, Hams Infrastructure Services Limited and Hams Warrington Limited. This acquisition was accounted for as an asset acquisition, rather than a business combination under criteria specified in IFRS 3 Business Combinations.

Total consideration paid for the acquisition was £5,860,286, which was satisfied by the issuance of loan notes. The loan notes were subsequently settled on the same date as the acquisition. The net cash acquired as a result of this acquisition of assets was £210,064, which was solely attributable to cash and cash equivalents acquired.

On 4 December 2020, the Group acquired 100 percent of the issued capital of Lavant Down Agricultural Services Limited. This acquisition also included the acquired entity's subsidiaries, Lavant Down Washington Limited and Lavant Down Northampton Limited. This acquisition was accounted for as an asset acquisition, rather than a business combination under criteria specified in IFRS 3 Business Combinations.

Total consideration paid for the acquisition was £5,737,914, which was satisfied by the issuance of loan notes. The loan notes were subsequently settled on the same date as the acquisition. The net cash acquired as a result of this acquisition of assets was £171,326, which was solely attributable to cash and cash equivalents acquired.

On 4 December 2020, the Group acquired 100 percent of the issued capital of Oxford Infrastructure Limited. This acquisition also included the acquired entity's subsidiaries, Oxford Larkhall Limited and Oxford Erdington Limited. This acquisition was accounted for as an asset acquisition, rather than a business combination under criteria specified in IFRS 3 Business Combinations.

Total consideration paid for the acquisition was £5,928,693, which was satisfied by the issuance of loan notes. The loan notes were subsequently settled on the same date as the acquisition. The net cash acquired as a result of this acquisition of assets was £572,521, which was solely attributable to cash and cash equivalents acquired.

On 17 February 2021 the group disposed of its 100% holding in CNG Eurocentral Limited. Included in these financial statements are profits of £nil arising from the group's interests in CNG Eurocentral Limited up to the date of its disposal.

On 4 December 2020 the group disposed of its 100% holding in CNG Station Holdings Limited. Included in these financial statements are profits of £614,550 arising from the group's interests in CNG Station Holdings Limited up to the date of its disposal. This disposal includes CNG Station Holding Limited's subsidiary undertakings, CNG Leyland Limited and CNG Knowsley Limited.

During the year, the Group had a term loan borrowing facility with GCP Asset Backed Income (UK) Limited (also known as Gravis), under which the agreement required a former subsidiary of the Group, CNG Station Holdings Limited, to maintain certain ratios of the following:

- Default loan life cover of 1.20:1.

- Lock-up debt service cover of 1.40:1

- Default debt service cover of 1.1:1

The subsidiary has complied with these capital requirements during the year reported up to the date of its disposal from the Group on 4 December 2020.

CNG Fuels Ltd Group disposed of its subsidiary CNG Avonmouth North Limited on 16 April 2021. The Group received £300,000 in consideration.

CNG Fuels Ltd Group disposed of its subsidiary CNG Castleford Limited on 26 October 2021. The Group received £300,000 in consideration.

CNG Fuels Ltd Group completed an agreement for the disposal of its subsidiary CNG Corby Limited in late August 2022. The Group will receive £600,000 in consideration under the terms of the agreement.

CNG Newton Aycliffe Limited was incorporated as a subsidiary of the Group on 21 April 2021. The Group disposed of this subsidiary on 20 July 2022, receiving £300,000 in consideration.

Within these financial statements, deferred consideration receivable of £1,250,000 has been recognised at the year end in relation to the Group's disposal of CNG Station Holdings Limited. This consideration is contingent on costs in relation to the development of CNG Knowsley Limited's asset completing within the budgeted EPC milestones. Deferred consideration of £1,250,000 represented the fair value as at the statement of financial position date. However, subsequent to the year end, cost overruns have been incurred and the fair value of the deferred consideration receivable is now estimated to be £437,000, a reduction of £813,000 from the original deferred consideration due. The revision to deferred consideration is considered to be a non-adjusting post balance sheet event and will be reflected in future financial statements.

The remuneration of key management personnel, including directors, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures.

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

Sale to related parties in the year relate to revenues invoiced to CNG Foresight Limited (and its subsidiaries), an associate of the Group. These transactions were conducted at market rate and are derived from contracts in place covering the fulfilment of EPC Developments, reimbursement of operating costs and station management fees provided by the Group.

Purchase of goods from joint ventures in which the Group is a joint venturer (Renewable Transport Fuel Services Limited) relate to the procurement of Biomethane supplies for the Group. These purchases were conducted at market rate.

Sales of former Group subsidiaries relate to the consideration received from CNG Foresight Limited for the disposal of a number of the Group's former subsidiary undertakings. These transactions were conducted on an arm's length basis, derived from independent valuations established by the purchaser, to which the Group had no influence over.

The following amounts were outstanding at the reporting end date:

Amounts owed to related parties consist of trade payable and informal intercompany loan balances, which bear no interest and are unsecured. In the case of trade payable balances, these are due within the supplier's standard credit terms. Informal intercompany loans are repayable on demand.

The following amounts were outstanding at the reporting end date:

Amounts owed by related parties consist of trade receivable and informal intercompany loan balances, which bear no interest and are unsecured. In the case of trade receivable balances, these are due within the Group's standard credit terms. Informal intercompany loans are repayable on demand.

CNG Fuels Ltd is owned by a number of shareholders and individually no shareholder can exert control.

The Group has adopted International Financial Reporting Standards (IFRS) for the preparation of these financial statements. This is the first time of adoption of IFRS and the date of transition is 1 April 2019.

Previously, the parent Company of the Group prepared its financial statements in accordance with FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" (FRS 102) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime.

Adjustments to the financial statements arising due to the adoption of IFRS have been made to the statement of financial position, statement of comprehensive income and the statement of cash flows of the Group. No recognition or reversal of impairment losses arose upon transition.

The Group has applied the modified retrospective approach as permitted under IFRS 1 in its adoption of IFRS 16 Leases, whereby the adopted is permitted to measure the lease liability at the present value of the remaining lease payments at the date of transition, rather than the inception of the lease in question.

No other adjustments arising upon transition to IFRS arose, other than those detailed below.

As a result of the adoption of IFRS, the Group is now applying IFRS 16 Leases and has carried out an assessment of any leases in effect at the date of transition and later, which require accounting for under the standard. The adjustments above relate to the transitional accounting effect of recognising a lease for land upon which one of the Group's assets is situated and leases relating to the long term hire of motor vehicles.

Amounts restated as a result of the adoption of IFRS 16 impacting the year to 31 March 2020 were as follows:

• An increase in property, plant and equipment additions at cost of £1,292,914

• An increase in lease liabilities carried forward of £1,231,170

• An increase in depreciation charged for year and accumulated depreciation carried forward of £67,667

• An increase in finance costs charged of £49,433

• A decrease in administrative expenses of £111,177

• A decrease in equity carried forward of £5,923

During the year, a number of accounting errors in the prior year were identified and corrected by way of prior period adjustments. Details of the corrections made and impact on the financial statements are detailed below.

Costs previously treated as capital expenditure within property, plant and equipment, have been re-classified as revenue expenditure within administrative expenses relating to research and development activities. Depreciation thereon has been reversed. Finally, the repayable corporation tax credit in relation to the subsequent R&D claim has been recognised as a credit to the income statement and corresponding receivable.

Amounts restated as a result of this prior year adjustment impacting the year to 31 March 2020 were as follows:

• An increase in administrative expenses (R&D expenditure) of £464,555

• An decrease in administrative expenses (depreciation) of £46,455

• An increase in taxation credits of £202,177

• A increase in tax receivables of £202,177

• A decrease in property, plant and equipment additions at cost of £464,555

• A decrease in property, plant and equipment accumulated depreciation of £46,455

• A decrease in total equity of £215,923

An error was identified whereby revenues and cost of sales that related to the year ended 31 March 2020 were not accrued to the financial statements for that accounting period. A correction has been made to recognise these revenues and costs in the comparative income statement.

Amounts restated as a result of this prior year adjustment impacting the year to 31 March 2020 were as follows:

• An increase in revenue of £140,968

• An increase in cost of sales of £603,758

• An increase in accrued income of £140,968

• An increase in accrued expenses of £603,758

• A decrease in total equity of £462,790

A prior period error was identified whereby share based payment expenses were not recognised for share options in place with employees. A charge has been made to the comparative income statement to reflect the vesting of the shares in proportion with the fair value of total equity instruments granted.

Amounts restated as a result of this prior year adjustment impacting the statement of financial position at 1 April 2019 were as follows:

• An increase to other reserves of £223,953

• A decrease in retained earnings £223,953

• No change to total equity

Amounts restated as a result of this prior year adjustment impacting the year to 31 March 2020 were as follows:

• An increase in administrative expenses relating to equity settled share based payments of £95,480

• An increase to other reserves of £319,433

• A decrease in retained earnings £319,433

• No change to total equity

During the year a prior period error was identified in that appropriate decommissioning liabilities were not recognised in respect of obligations the Group is party to, to restore its leasehold property assets to their original condition upon the end of the lease. The appropriate increase in cost to property, plant and equipment and accompanying depreciation thereon is now accounted for as a prior year adjustment, along with the corresponding long term provision for the liability.

Amounts restated as a result of this prior year adjustment impacting the statement of financial position at 1 April 2019 were as follows:

• An increase in property, plant and equipment cost brought forward of £163,758

• An increase in property, plant and equipment accumulated depreciation brought forward of £20,790

• An increase in non current provisions for liabilities brought forward of £168,023

• A decrease in total equity brought forward of £25,055

Amounts restated as a result of this prior year adjustment impacting the year to 31 March 2020 were as follows:

• An increase in property, plant and equipment cost carried forward of £163,758

• An increase in property, plant and equipment accumulated depreciation carried forward of £32,100

• An increase in depreciation charged of £11,310

• An increase in finance costs charged of £2,435

• An increase in non current provisions for liabilities carried forward of £170,458

• A decrease in total equity carried forward of £38,800

During the year, a prior period error was identified where deferred taxation liabilities were not recognised within provisions for liabilities. Adjustments have now been made to reflect the impact of recognition of the appropriate deferred tax liabilities at the prevailing rates of tax applicable to that point in time.

Amounts restated as a result of this prior year adjustment impacting the statement of financial position at 1 April 2019 were as follows:

• An increase in deferred tax provisions for liabilities of £156,997

• A decrease in total equity brought forward of £156,997

Amounts restated as a result of this prior year adjustment impacting the year to 31 March 2020 were as follows:

• An increase in deferred tax provisions for liabilities of £164,205

• An increase in deferred taxation charges recognised in the income statement of £7,208

• A decrease in total equity carried forward of £164,205

As permitted by s408 Companies Act 2006, the company has not presented its own income statement and related notes. The company’s profit for the year was £1,275,914 (2020 - £1,561,107 loss).

CNG Fuels Ltd is a private company limited by shares and incorporated in the United Kingdom under the Companies Act 2006 and is registered in England and Wales. The registered office is 250 Wharfedale Road, Winnersh Triangle, Wokingham, Berkshire, RG41 5TP. The Company's principal activities and nature of its operations are disclosed in the directors' report.

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the United Kingdom and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, except as otherwise stated.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

In the current year, the following new and revised Standards and Interpretations have been adopted by the company and have an effect on the current period or a prior period or may have an effect on future periods:

• Amendment to IFRS 16, ‘Leases’ – Covid-19 related rent concessions

• Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform

At the date of authorisation of these financial statements, the following Standards and Interpretations, which have not yet been applied in these financial statements, were in issue but not yet:

• Amendments to IFRS 3, ‘Business combinations’, IAS 16,’ Property, plant and equipment’, and IAS 37 ‘Provisions, contingent liabilities and contingent assets’

• IAS 17 and some annual improvements on IFRS 1, IFRS 9, IAS 41 and IFRS 16

• Amendments to IAS 1 Presentation of financial statements’ on classification of liabilities

The directors anticipated that the adoption of these standard and the interpretations in future period will have no material impact on the financial statements of the company.

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

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

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.

There were no critical accounting judgements identified.

The annual depreciation and amortisation charge for tangible and intangible assets are sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. The directors have reviewed the asset lives and associated the residual values of all intangible and tangible fixed assets and have concluded the asset lives and the residual values are appropriate.

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

Their aggregate remuneration comprised:

Included within property, plant and equipment are assets held under hire purchase contracts with net book values of £898,022 (2020: £833,301).

Property, plant and equipment includes right-of-use assets, as follows:

Details of the company's principal operating subsidiaries are included in the notes to the group financial statements.

During the year, the Company made investments in the following associates and joint ventures:

• Renewable Transport Fuel Services Limited: £2,104,145 on 14 July 2020

• CNG Foresight Limited: £1 on 4 December 2020

Capital contributions were also made to the Company's former subsidiary undertaking, CNG Station Holdings Limited, whereby a loan due from the subsidiary of £157,178 was forgiven.

The Company disposed of the following subsidiaries which were carried at costs of:

• CNG Eurocentral Limited, disposed on 17 February 2021, with an investment carrying value of £100

• CNG Station Holdings Limited, disposed on 4 December 2020, with an investment carrying value of £157,278

During the year, the Company carried out impairment reviews of its subsidiary investments and concluded the investment in Lavant Down Agricultural Services Limited was impaired, with an impairment loss of £371,141 recognised through the income statement to reflect its recoverable value.

Amounts owed by subsidiaries, group undertakings and related parties consist of informal intercompany loans, which are unsecured, do not bear interest and are repayable on demand.

Other loans of £400,000 (2020: £400,000) included within non-current borrowings relate to informal loans provided to the group by non-bank lenders, which are not secured and are not due to be repaid within12 months of the balance sheet date.

Loans from subsidiary undertakings consist of loan note instruments which are unsecured and carry fixed rate interest at 4% per annum, which is capitalised annually. The loan notes mature December 2030.

Amounts owed to subsidiaries, group undertakings and related parties consist of informal intercompany loans, which are unsecured, do not bear interest and are repayable on demand.

Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:

Assets held under hire purchase contracts are secured against the assets to which they relate.

The Company has adopted International Financial Reporting Standards (IFRS) for the preparation of these financial statements. This is the first time of adoption of IFRS and the date of transition is 1 April 2019.

Previously, the financial statements of the Company were prepared in accordance with FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" (FRS 102) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime.

Adjustments to the financial statements arising due to the adoption of IFRS have been made to the statement of financial position, statement of comprehensive income and the statement of cash flows of the Company. No recognition or reversal of impairment losses arose upon transition.

The Company has applied the modified retrospective approach as permitted under IFRS 1 in its adoption of IFRS 16 Leases, whereby the adopted is permitted to measure the lease liability at the present value of the remaining lease payments at the date of transition, rather than the inception of the lease in question.

No other adjustments arising upon transition to IFRS arose, other than those detailed below.

During the year, the Company has adopted IFRS 16 - Leases for its accounting of any leases it is party to. This has resulted in contracts for the leasing of motor vehicles, previously recognised as operating leases through the income statement, being restated for as right-of-use assets on the statement of financial position. The impact of this on the comparative year is as follows:

• An increase in administrative expenses relating to depreciation charges on right-of-use assets of £21,347

• An increase in finance costs of £6,075

• A decrease in administrative expenses relating to motor vehicle leasing charges £39,177.

• An increase in profit and total equity at 31 March 2020 of £11,755.

Total equity as previously reported at the date of transition has not changed as a result of IFRS transition adjustments, but is affected by prior period adjustments as detailed in the subsequent note.

During the year, a number of accounting errors in the prior year were identified and corrected by way of prior period adjustments. Details of the corrections made and the impact to the Company financial statements are detailed below.

The following adjustments detailed in note 41 to Group financial statements are made in respect to the Company:

• 1: R&D

• 2: Sales and cost of sales cut off

• 3: Share options

• 6: Shareholder loan received in advance of share issuance

• 7: Fuel duty tax presentation

The following adjustments had an impact on total equity of the Company at 1 April 2019:

• 3: a reduction in retained earnings of £223,953 and an increase in share based payment reserves of the same amount

• 6: a reduction in other reserves of £1,466,317.

• These adjustments resulted in a net decrease to total equity of £1,466,317 at 1 April 2019.

Adjustments 1, 2 and 3 had the following impact on total equity at 31 March 2020:

• 1: a reduction in retained earnings of £215,923

• 2: a reduction in retained earnings of £462,790

• 3: a reduction in retained earnings of £319,433 and an increase in share based payment reserves of the same amount

• These adjustments resulted in a net decrease to total equity of £678,713 at 31 March 2020