BLUE_PHOENIX_LIMITED - Accounts

The directors present the strategic report for the year ended 31 December 2020.

The Company commenced the year with a plan to consolidate a market leading position in the UK further supporting its vision to be the partner of choice for the energy from waste industry in the field of recycling incinerator bottom ash (“IBA”) by bringing into full efficient operation its newest operating facility at Ferrybridge. As for everyone in 2020 plans had to be adapted with the outbreak of Covid-19 in UK in March 2020 when the first country wide lock down of the UK introduced by the UK Government. However, as the waste recycling supply chain, in which Company operates was, designated an “essential service” at the outset by UK Government, the Company continued to trade satisfactorily throughout 2020, considering the challenging economic environment that emerged over the year.

The health and well-being of its people is the Company’s number one priority and a range of measures to protect its staff were implemented to address Covid-19 control. Due to the dedication, commitment and hard work of its people, the Company functioned adequately throughout 2020 with all 12 production sites operating throughout 2020. The Company did experience a period of reduced level of demand and lower prices for some recycled products at the initial “shock point” of Covid-19 impact, especially during a short period of closure of the construction industry, but there was also an element of recovery by the end of the year.

The Company is very satisfied with all operations during 2020. While operating profit of £8.0m in 2020 was not a significant fall from the £8.3 generated in 2019, the 2020 result is after absorbing substantial Covid 19 created impacts. In summary these impacts were: recycled metals prices impacted by demand; loss of IBAA revenue during the UK construction site Covid 19 lockdown, together with increased stockpile management costs; and additional staff costs resulting from site numbers used to initially set up Covid 19 safe working practices.

The Ferrybridge plant is now well established, some additional IBA volume was added in the year too. At the end of the year, the Company’s contract with London Energy, from which 0.09 million tonnes of IBA was received for processing in 2020, terminated. Total IBA processed in 2020 was 1.6 million tonnes, The Company therefore playing its part in diverting approximately to 6.5million tonnes of waste from landfill.

The UK left the European Union on 31 December 2020. Whilst all the Company’s IBA for recycling is sourced in the UK there are material sales of non-ferrous metals to remaining EU nations. With forward planning, including an element of avoiding heavy volumes of shipments to the EU around 31 December 2020, significant financial impact of port disruption was avoided, with transits continuing as required.

The Environment Agency reissued the Regulatory Position Statement (“RPS”) that governs the use and application of the Company’s recycled aggregate product, Incinerator Bottom Ash Aggregate, (“IBAA”), with minor amendments. This latest version, RPS247, is valid until 31 January 2023. Industry bodies, of which the Company is a member, continue their dialogue with The Environment Agency with regards to seeking a more permanent regulatory regime for the use of IBAA.

Future developments

The Company continues to pursue improvements to existing processing plants to improve the health and safety of its employees and better separation of products sold to customers. New IBA processing contracts, and IBAA products are being explored, with the possibility of further new sites being built when long term contracts are secured to support such investment.

The Company has contracts to receive 1.5 million tonnes of IBA for processing in 2021, with opportunities for additional amounts also being pursued.

Some of the company’s product selling prices are linked to wider supply and demand commodity pricing. The Company operates a through put model, and so some prices will rise and fall with their associated commodity benchmark. The Company does not take speculative positions on the future price of its commodity price linked products.

With Covid-19 continuing, the Company continues to monitor the situation and is taking appropriate measures to adapt to the changing conditions. The Company is in a strong financial position and its cash flow also remains strong. Given the unpredictable nature of the Covid-19, it is not yet possible to determine fully further possible impacts on the Company’s results for the current financial year, however, the Company expects satisfactory results in 2021.

The Company uses various financial instruments which include cash and various items, such as trade debtors and trade creditors that arise directly from its operations. The main purpose of these financial instruments is to raise finance for the Company's operations.

The existence of these financial instruments exposes the Company to a number of financial risks, which are described in more detail below.

The Company policy throughout the year has been to manage these risks through the day to day involvement of management in business decisions. The directors review and agree policies for managing each of these risks.

Liquidity risk

The Company seeks to manage such risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably.

Interest rate risk

The Company finances its operations through retained profits, bank facilities and lease agreements. Competitive rates of interest are sought from the market when new interest bearing finance is brought into the business operation. The balance sheet includes trade debtors and creditors which do not attract interest.

Foreign exchange risk

While the Company trades predominately in Sterling, Euro cash flows are also managed. The Company seeks to firstly match common currency payments and receipts, taking into account future cash flow requirements, to minimise exposure to exchange rate movement and to minimise foreign exchange costs.

Credit risk

The principal credit risk arises from the Company's trade debtors. In order to manage credit risk the directors set limits for customers based on a combination of payment history and third party credit references. Credit limits are reviewed on a regular basis with debt ageing and collection history, influencing insured limits agreed between the Company and credit insurers from time to time.

On behalf of the board

The directors present their annual report and financial statements for the year ended 31 December 2020.

The principal activity of the Company continued to be the processing and marketing of incinerator bottom ash (IBA).

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

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

Ordinary dividends were paid amounting to £8,000,000 (2019: £13,439,673). The directors do not recommend payment of a final dividend.

The auditor, KPMG LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

DEFRA Carbon Factors 2018 has been used as the methodology for calculating the company’s emissions.

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 they have elected to prepare the financial statements in accordance with UK accounting standards and applicable law (UK Generally Accepted Accounting Practice), including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland.

Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

•     select suitable accounting policies and then apply them consistently;

•     make judgements and estimates that are reasonable and prudent;

•     state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

•     assess the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and

•     use the going concern basis of accounting unless they either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

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 responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the company and to prevent and detect fraud and other irregularities.

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the Company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the Company’s auditor is aware of that information.

We have audited the financial statements of Blue Phoenix Limited (“the company”) for the year ended 31 December 2020 which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity, and related notes, including the accounting policies in note 1.

In our opinion the financial statements:

•     give a true and fair view of the state of the company’s affairs as at 31 December 2020 and of its profit for the year then ended;

•     have been properly prepared in accordance with UK accounting standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland; and

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

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of the company in accordance with, UK ethical requirements including the FRC Ethical Standard. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.

Going concern

The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the company or to cease its operations, and as they have concluded that the company’s financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over its ability to continue as a going concern for at least a year from the date of approval of the financial statements (“the going concern period”).

In our evaluation of the directors’ conclusions, we considered the inherent risks to the company’s business model and analysed how those risks might affect the company’s financial resources or ability to continue operations over the going concern period.

Our conclusions based on this work:

• we consider that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate;

• we have not identified, and concur with the directors’ assessment that there is not, a material uncertainty related to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for the going concern period.

However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the above conclusions are not a guarantee that the company will continue in operation.

Strategic report and directors' report

The directors are responsible for the strategic report and the directors’ report. Our opinion on the financial statements does not cover those reports and we do not express an audit opinion thereon.

Our responsibility is to read the strategic report and the directors’ report and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work:

•     we have not identified material misstatements in the strategic report and the directors’ report;

•     in our opinion the information given in those reports for the financial year is consistent with the financial statements; and

•     in our opinion those reports have been prepared in accordance with the Companies Act 2006.

Under the Companies Act 2006 we are required to report to you if, in our opinion:

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

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

•     certain disclosures of directors’ remuneration specified by law are not made; or

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

We have nothing to report in these respects.

As explained more fully in their statement set out on page 6, the directors are responsible for: the preparation of the financial statements and for being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the 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 our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not 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 aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.

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.

Blue Phoenix Limited is a private Company limited by shares incorporated in England and Wales. The registered office is 1 Victoria Stables, Essex Way, Bourne, Lincolnshire, PE10 9JZ.

These financial statements have been 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.

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 £1,000.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

The Company's parent undertaking, Phoenix Advance Limited, includes the Company in its consolidated financial statements. The consolidated financial statements of Phoenix Advance Limited are available to the public and may be obtained from 1 Victoria Stables, Essex Way, Bourne, Lincolnshire, PE10 9JZ. In these financial statements, the Company is considered to be a qualifying entity (for the purposes of this FRS) and has applied the exemptions available under FRS 102 in respect of the following disclosure:

• Reconciliation of the number of shares outstanding from the beginning to end of the period;

• Cash Flow Statement and related notes; and

• Key Management Personnel compensation.

The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these financial statements.

The directors continue to adopt the going concern basis in preparing the financial statements which they consider to be appropriate for the following reasons. true

Forecasts have been prepared for the 12 months following the date of approval of these financial statements showing continued profitability and positive cash generation, even when taking into account reasonably possible downsides arising from the uncertainty around current COVID 19 pandemic and Brexit negotiations. In addition, the forecasts also consider the potential financial impact of downward pressure on global metal prices and potential exchange rate impacts whereby sales fall by 10% and costs remain the same. These forecasts indicate that the company is expected to be able to operate within the level of its current cash position and available facilities and that the Company will have sufficient funds to meet is liabilities as they fall due for that period.

Although the Group has experienced a period of reduced level of demand and lower prices for some recycled products we continue to monitor the situation and performance in 2021 is currently ahead of forecast expectations. The directors are confident that this will continue as the Group continues to operate without significant disruption and, as a designated “essential service”, did so throughout the lockdown period in the UK.

The company funds its working capital requirements from its available cash balances as well as a revolving credit facility of £1.4 m and external loan facilities (more detail of which given in note 17). The revolving credit facility is undrawn at the date of approval of these financial statements. The loans are subject to financial covenants, however these covenants are measured on a group wide basis (being the group headed by Blue Phoenix Group B.V. (formerly Inashco B.V.), together the “Blue Phoenix Group”). Directors have therefore made appropriate enquiries and reviewed the forecasts prepared by the Blue Phoenix Group. These forecasts indicate that the Blue Phoenix Group will be able to comply with the relevant covenants even in reasonably possible downside scenarios at the Blue Phoenix Group level.

Consequently, the Directors are confident that the Company will have sufficient funds to continue to meet its liabilities as they fall due for at least 12 months from the date of approval of the financial statements and therefore have prepared the financial statements on a going concern basis.

Turnover represents income receivable from the processing and marketing of incinerator bottom ash in the period exclusive of Value Added Tax and trade discounts.

For all streams of income i.e. gate fees, management fees, sale of aggregates and metals, revenue is recognised when the product leaves the site for either processing (in the case of metals) or delivery to a customer.

One of the Company's income streams is the receipt of a tonnage fee from incinerator operators for taking IBA from them and thereby reducing their landfill burden. Owing to the nature and location of each site, some contracts provide for this fee to be paid on collection or delivery of the IBA to our processing site, whereas others provide for payment when the processed material leaves the site. The directors believe the most appropriate accounting policy is that revenue is recognised with the contractual position.

Research expenditure is written off to the profit and loss account in the year in which it is incurred. Development expenditure is written off in the same year unless the directors are satisfied as to the technical, commercial and financial viability of the individual projects. In this situation, the expenditure is capitalised and amortised over the period from which the Company is expected to benefit.

Tangible fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses.

Where parts of an item of tangible fixed assets have different useful lives, they are accounted for as separate items of tangible fixed assets, for example land is treated separately from buildings.

Leases in which the entity assumes substantially all the risks and rewards of ownership of the leased asset are classified as finance leases. All other leases are classified as operating leases. Leased assets acquired by way of finance lease are stated on initial recognition at an amount equal to the lower of their fair value and the present value of the leased asset or, if lower, the present value of the minimum lease payments. The present value of the minimum lease payments is calculated using the interest rate implicit in the lease. Lease payments are accounted for as described at 1.10 below.

The Company assesses at each reporting date whether tangible fixed assets (including those leased under a finance lease) are impaired.

Depreciation is charged to the profit and loss account on a straight-line basis over the estimated useful lives of each part of an item of tangible fixed assets. Leased assets are depreciated over the shorter of the lease term and their useful lives. Land is not depreciated. The estimated useful lives are as follows:

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost is based on the first-in first-out principle and includes expenditure incurred in acquiring the stocks, production or conversion costs and other costs in bringing them to their existing location and condition. In the case of manufactured stocks and work in progress, cost where appropriate includes a share of overheads based on normal operating capacity.

Trade and other debtors / creditors

Trade and other debtors are recognised initially at transaction price. Trade and other creditors are raised initially at transactions price plus attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any impairment losses in the case of trade debtors.

Interest-bearing borrowings classified as basic financial instruments

Interest-bearing borrowings are recognised initially at the present value of future payments discounted at a market rate of interest. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost using the effective interest method, less any impairment losses.

Investments in ordinary shares

Investments in equity instruments are measured initially at fair value, which is normally the transaction price. Transaction costs are excluded if the investments are subsequently measured at fair value through profit and loss. Subsequent to initial recognition investments that can be measured reliably are measured at fair value with changes recognised in profit or loss. Other investments are measured at cost less impairment in profit or loss.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Company's cash management are included as a component of cash and cash equivalents for the purpose only of the cash flow statement.

Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the profit and loss account except to the extent that it relates to items recognised directly in equity or other comprehensive income, in which case it is recognised directly in equity or other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided on timing differences which arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in the financial statements.

Deferred tax is measured at the tax rate that is expected to apply to the reversal of the related difference, using tax rates enacted or substantively enacted at the balance sheet date. Deferred tax balances are not discounted.

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

Defined contribution plans and other long term employees benefits

A defined contribution plan is a post-employment benefit plan under which the Company pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an expense in the profit and loss account in the periods during which services are rendered by employees.

Operating lease

Payments (excluding costs for services and insurance) made under operating leases are recognised in the profit and loss account on a straight-line basis over the term of the lease unless the payments to the lessor are structured to increase in line with expected general inflation; in which case the payments related to the structured increases are recognised as incurred. Lease incentives received are recognised in profit and loss over the term of the lease as an integral part of the total lease expense.

Finance lease

Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability using the rate implicit in the lease. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent rents are charged as expenses in the periods in which they are incurred.

Interest payable and Interest receivable

Interest payable and similar expenses include interest payable, finance expenses on shares classified as liabilities and finance leases recognised in profit or loss using the effective interest method, unwinding of the discount on provisions, and net foreign exchange losses that are recognised in the profit and loss account (see foreign current accounting policy).

Other interest receivable and similar income includes interest receivable on funds invested and net foreign exchange gains.

Interest income and interest payable are recognised in profit and loss as they accrue, using the effective interest method. Dividend income is recognised in the profit and loss account on the date the entity's right to receive payments is established. Foreign currency gains and losses are reported on a net basis.

Transactions in foreign currencies are translated to the Company's functional currency at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet are retranslated to the functional currency at the foreign exchange rate ruling at that date. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are retranslated to the functional currency at foreign exchange rates ruling at the dates the fair value was determined. Foreign exchange differences arising on translation are recognised in the profit and loss account.

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising in consolidation, are translated to the Group's presentational currency, Sterling, at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated at an average rate for the year where this rate approximates to the foreign exchange rates ruling at the dates of the transactions. Foreign exchange differences arising on retranslation are recognised in other comprehensive income. The amount of foreign exchange profit in the year is £652,396, with a loss of £427,000 in the prior year.

Dividends

Final dividends are only provided if they have been declared before the balance sheet date.

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 where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

The directors believe that there are no judgements that have a significant effect on the financial statements and no estimates with a risk of material adjustment in the next year.

The average monthly number of persons (including directors) employed by the Company 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 (2019 - 2).

A reduction in the UK corporation tax rate from 19% to 17% (effective 1 April 2020) was substantively enacted on 6 September 2016. The March 2020 Budget announced that a rate of 19% would instead continue to apply with effect from 1 April 2020, and this change was substantively enacted on 17 March 2020.

The March 2021 Budget announced that the corporation tax rate would increase to 25% to apply with effect from 1 April 2023. This will increase the company's future current tax charge accordingly.

On the 3 March 2021 Budget it was announced that the UK tax rate will increase to 25% from 1 April 2023. This will have a consequential effect on the company’s future tax charge. If this rate change had been substantively enacted at the current balance sheet date the deferred tax liability would have increased by £12,000.

The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

At the year end the net carrying amount of Plant and equipment leased under finance lease was £7,731,862 (2019: £9,540,465).

Amounts due to and from group undertakings are repayable on demand.

Finance lease and hire purchase creditors are secured on the assets concerned.

The bank loans are secured by a fixed and floating charge over the Company's assets.

Capex Facility had an interest rate of LIBOR 3.75% which matures in March 2024. Quarterly payments are due from December 2020 to maturity. The carrying value of this loan at 31 December 2020 was £2,163,000.

Under the terms of the facilities agreement, both the Company and the parent Company, Phoenix Advance Limited, were deemed to be guarantors of the bank loans. The covenants attached to the banking facility are tested on a group wide basis at a Blue Phoenix Group level.

The group has an unutilised RCF of £1.4m. At year end £0.6m of this was pledged to cover bank guarantees that the Group is required to provide to the Environment Agency.

Finance lease payments represent rentals payable by the Company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

The following are the major deferred tax liabilities and assets recognised by the Company and movements thereon:

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

Ordinary and Preference Shares shall rank pari passu subject to the rights and restrictions contained in the Company's Articles of Association.

Ordinary £1 Shares confer one vote per share held.

At the reporting end date the Company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

During the year £2,996,722 was recognised as an expense in the profit and loss account in respect of operating leases (2019: £2,528,727).

Amounts contracted for but not provided in the financial statements:

As the Company is wholly owned, it is entitled to take advantage of the exemption available under FRS 102 from the disclosures relating to transactions with other group companies.

The following amounts were outstanding at the reporting end date:

The premises from which the head office operates are owned by D M York, a director of the Company. The rent paid in the year by the Company was £30,000 (2019: £31,000). There was no balance outstanding at the year-end (2019: £nil). All transactions are considered to be on an arm's length basis.

Held within debtors there is a significant amount owing to the company from related parties. The directors have assessed the position and deem this related party balance recoverable.

The immediate parent undertaking is Phoenix Advance Limited which owns 100% of the share capital in the company.

The directors consider the ultimate controlling party to be Blue Phoenix Group B.V. (formerly Inashco B.V.) by virtue of their majority shareholding in the equity of Phoenix Advance Limited.

The smallest group for which group financial statements are prepared is that headed by Phoenix Advance Limited. Consolidated accounts for this group are available from Companies House, Crown Way, Cardiff, CF14 3UZ.

The largest group in which the results of the Company are consolidated is that headed by Blue Phoenix Group B.V. (formerly Inashco B.V.). The consolidated financial statements of this group are available to the public and may be obtained from the registered office address of Watermanweg 106 A, 7e Verdieping, 3067 GG, Rotterdam, The Netherlands.