H W Martin Waste Limited - Limited company accounts 20.1

REGISTERED NUMBER: 03843329 (England and Wales)

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2022

FOR

H W MARTIN WASTE LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

5

Independent Auditor's Report

8

Statement of Income and Retained Earnings

12

Statement of Financial Position

13

Notes to the Financial Statements

14

DIRECTORS:

H W Martin

K Martin

N C Faulconbridge

A N M Smith

R R Akers

D Nortcliffe

M Walters

REGISTERED OFFICE:

Fordbridge Lane

Blackwell

Alfreton

Derbyshire

DE55 5JY

REGISTERED NUMBER:

03843329 (England and Wales)

INDEPENDENT AUDITOR:

BDO LLP, statutory auditor

Two Snowhill

Birmingham

B4 6GA

The Directors present their Strategic report for H W Martin Waste Limited ("the Company") for the year-ended 31 July 2022.

PRINCIPAL ACTIVITIES AND BUSINESS REVIEW

The principal activities of the Company during the year under review were those of:

-

the management and operation of Household Waste Recycling Centres on behalf of Local Authorities;

-

the reception, processing and treatment of waste and recyclable materials through the Company's Material Recycling Facilities ("MRF's");

-

the treatment of plastic and glass through closed loop systems;

-

the management and operation of transfer stations for household and commercial waste and recyclable materials; and

-

the management, treatment and transport of all types of waste and recyclable products.

The Company is part of the H W Martin Group of Companies (the "Group") headed by H W Martin Holdings Limited.

The Company's profit for the financial year is £5,448,879 (2021: £4,949,322 profit).

The Company's key financial and performance indicators for the year are:

1.

Turnover increased by 7% to £53.5 million (2021: increased by 31% to £50.0 million);

2.

Profit before tax increased by 15% to £6.8 million (2021: increased by 73% to £5.9 million); and

3.

Shareholders' funds increased by 15% to £18.4 million (2021: increased by 23% to £15.9 million).

Investment in premises, machinery and key personnel have yielded further financial success for the Company and provided for an exceptionally strong balance sheet position with extremely low gearing.

The Company has shown industry leading financial and operational agility in focusing activity to meet the changing demands of the market.

Existing contracts have been successfully retained, most notably the management of the household waste recycling centres for Derby City and Derby County councils on a seven-year contract commencing October 2022 and for Cheshire West on a two year extension to an existing contract to April 2025 and also with Veolia on a two year contract for mixed dry recyclables arising from their Sheffield operation to July 2024.

Commitment to further investment in the Company's material recycling facilities to achieve greater efficiencies and volume capacity continues funded from existing cash reserves which are purposefully maintained by the Group for capital investment in the operating companies. These investments will provide the platform for further long-term security.

The Company continues to look to ways to improve its environmental performance and reduce the environmental impact of its activities and remains committed to a management system conforming to the 14001 Environmental Standard.

PRINCIPAL RISKS AND UNCERTAINTIES

The identification, assessment and management of opportunities and associated risks are an integral element of the business. Principal risks are:

Legislation and regulation

The impact of new legislation and regulation on operations may potentially increase costs. This risk is considered as a part of the tender approval process. Many contracts include provisions which allow the Company to pass increased costs so arising to the Client.

Competitive risk

All major contracts are subject to periodic competitive tender and therefore the renewal of these contracts is not guaranteed. The Company continues to maintain a very competitive cost base to give the best possible commercial advantage and actively targets long-term contracts.

Recyclable material market prices

The Group's waste and recycling activities are subject to fluctuating returns as prices of recyclable material vary due to worldwide demand. This risk is considered during the tender process and mitigated by a focus on securing contracts which deliver service rather than material lead returns, and by actively pursuing market price risk share with out Clients.

Health and safety

The Company acknowledges that its employees work within a hazardous environment and training is given to reflect and mitigate this risk. Policies and procedures are continually monitored and reviewed. The Group maintains its commitment to the 45001 Safety Management System.

Financial risk

The main risk arising from the Company's financial instruments is liquidity risk. This risk is managed by maintaining a high cash reserve and by capital funding from the Group providing sufficient liquidity to finance the Company's operations and to meet unanticipated costs.

SECTION 172(1) STATEMENT

The Directors are required to explain how they undertake their duties in respect of requirements under Section 172(1) ("S172(1)") of the 2006 Companies Act to promote the success of the Group for the benefit of the Shareholders and other key stakeholders. This S172(1) statement explains how the Group's Directors ("the Board") have considered the interest of all key stakeholders.

The Directors of the Group act in the way they consider, in good faith, would be most likely to promote the success of the Group for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to:

1. the likely consequences of any decision in the long term;

2. the interests of the Group's employees;

3. the need to foster the Group's business relationships with suppliers and customers;

4. the impact of the Group's operations on the community and environment;

5. maintaining the Group's reputation for high standards of business conduct;

6. the need to act fairly between members of the Group.

The Board considers its employees, customers, suppliers and shareholders to be its major stakeholders. The directors of the Group and the operating companies have a responsibility to ensure good relationships are maintained with key stakeholders, as they are recognised as being vital for the long-term success of the Group. The Board has recognised that there are various factors that could affect the relationships with key stakeholders. These factors, and how they are managed, have been discussed in the "Principal risks and uncertainties" section of the Strategic report. Key performance indicators which help the Board to understand the strength of the Group's relationships with key stakeholders have been presented and discussed further in the "Principal activities and business review" section of the Strategic report.

SECTION 172(1) STATEMENT - continued

When taking decisions for the long-term future of the Group, the Board informally takes into consideration the interests of all key stakeholders in its deliberations. Significant events and decisions taken during the year with respect to investment and growth of the Group have been discussed further in the "Principal activities and business review" section of the Strategic report.

The Board considers that appropriate remuneration, benefits and employment procedures are in place which fairly reward its employees in relation to the local communities in which they operate and identify opportunities for employee development where practical. Action taken during the year with respect to engagement with employees has been discussed further in the "Engagement with Employees" section of the Strategic report.

The Board endeavours to maintain good long-term supplier relationships by contracting on standard business terms and prompt payment within agreed terms. There are long-standing relationships with some key suppliers to ensure the quality and continuity of the supply chain. The Board receive regular updates on both existing and new customer relationships to ensure any decision making takes into account the commercial and service requirements of the customer base. Action taken during the year with respect to engagement with suppliers and customers has been discussed further in the "Principal activities and business review" section of the Strategic report.

The Board recognises that the Group has to maintain the highest standards of integrity in the conduct of each of the Group's operations throughout the country. Consequently, the Board aims to ensure all of its operations minimise harm and contribute as far as practical to the local communities in which it operates. The Board recognises the importance of maintaining high standards of business conduct and operates according to a full suite of policies. These include Health & Safety, protecting the environment, looking after our people and maintaining the high quality of our service. Health & Safety developments have been discussed in the "Principal risks and uncertainties" section of the Strategic report.

The Board has taken the following key decisions during the year:

-

Further significant and ongoing capital investment in the material recycling facilities ("MRF's"), operated by H W Martin Waste Limited, to increase input capacity, improve product quality and generate economic efficiencies;

-

The roll-out across the group of an electronic purchase invoice authorisation system, improving the robustness of internal controls in this area and streamlining the process for efficiency; and

-

The refocus of a senior director to the overall strategic development of the Group.

ON BEHALF OF THE BOARD:

N C Faulconbridge - Director

16 January 2023

The Directors present their report with the financial statements of the Company for the year-ended 31 July 2022.

DIVIDENDS

No interim dividends were paid during the year ended 31 July 2022.

The directors recommend final dividends per share as follows:

Ordinary £1 shares

£600

A £1 shares

NIL

The total distribution of dividends for the year ended 31 July 2022 will be £ 3,000,000 .

FUTURE DEVELOPMENTS

The Company is stable and will continue to invest in its existing operations going forwards so as to maximise revenues, profits and cash flows.

DIRECTORS

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

H W Martin

K Martin

N C Faulconbridge

A N M Smith

R R Akers

Other changes in directors holding office are as follows:

M J Faulconbridge - resigned 15 February 2022

D Nortcliffe - appointed 15 February 2022

M Walters was appointed as a director after 31 July 2022 but prior to the date of this report.

BREXIT RISK

The Directors are continuing to monitor the potential impact on its customers and suppliers, market access and possible effects on foreign currency exchange rates.

GOING CONCERN

The Company funds both day-to-day operations and longer-term strategic development from its liquid resources, including working capital generated from operations. The Directors have considered the level of the liquid resources and the expected future profitability of both the Company and the wider Group, and are satisfied that, under anticipated trading conditions, there are sufficient available resources for the Company to meet its trading requirements through a period of at least 12 months from the date of signing these financial statements to 31 January 2024. For this reason, they have concluded that it is appropriate to use the going concern basis on presenting these financial statements.

COVID-19

Since 31 December 2019, the spread of COVID-19 has severely impacted many local economies around the globe. The Directors have considered the reasonably plausible impact of the COVID-19 outbreak on the Company's trading and cash flows. The Directors consider the potential impact of COVID-19 to be minimal on the grounds of the Company's performance since the outbreak began and post year-end, the type of service they provide as a Company and the continued liquidity support of the Group.

ENGAGEMENT WITH EMPLOYEES

A policy of equal opportunity employment is followed at all times by the Company. During the year, the policy of providing employees with information about the Company has been continued through internal media methods in which employees have also been encouraged to present their suggestions and views on the Company's performance. Regular meetings are held between local management and employees to allow a free flow of information and ideas.

The Company gives full consideration to applications for employment from disabled persons where the requirements of the job can be adequately fulfilled by a handicapped or disabled person. Where existing employees become disabled, it is the Company's policy wherever practicable to provide continuing employment under normal terms and conditions and to provide training and career development and promotion to disabled employees wherever appropriate.

STREAMLINED ENERGY AND CARBON REPORTING

The Company, as a large company, is required to disclose information required in accordance with The Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018. However, the Company is not obliged to report this information as it is a subsidiary undertaking of H W Martin Holdings Limited as at 31 July 2022, and the required information is included within the consolidated Streamlined Energy and Carbon Report of H W Martin Holdings Limited for the year-ended 31 July 2022.

DIRECTORS' RESPONSIBILITIES STATEMENT

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

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including Financial Reporting Standard 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 accounting estimates that are reasonable and prudent;

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

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

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

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITOR

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

AUDITOR

The auditor, BDO LLP, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

N C Faulconbridge - Director

16 January 2023

Other information (continued)

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.

Other Companies Act 2006 reporting

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

-

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

-

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

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

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

-

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

-

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

-

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

-

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

Responsibilities of Directors

As explained more fully in the 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 Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue 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.

Auditor's responsibilities for the audit of the financial statements (continued)

Extent to which the audit was 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:

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our procedures included the following:

-

We made enquiries of management and the directors concerning the Company's policies and procedures relating to:

-

identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;

-

detecting and responding to the risks of fraud and whether they had knowledge of any actual, suspected or alleged fraud; and

-

the internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations.

We corroborated our enquires through the review of board minutes.

-

We obtained an understanding of the legal and regulatory frameworks applicable to the Company based on our understanding of the business, sector experience and discussions with management. The most significant considerations for the Company are compliance with UK Accounting Standards, the Companies Act 2006, corporate taxes, VAT legislation, employment taxes and health and safety legislation.

-

We discussed amongst the engagement team to assess how and where fraud might occur in the financial statements, any potential indicators of fraud and non-compliance with laws and regulation.

Based on our understanding of the environment and assessment of the incentive and opportunity for fraud and non-compliance with laws and regulations gained from the above work we designed and executed the following procedures:

-

We reviewed correspondence with the relevant authorities to identify any irregularities or instances of non-compliance with laws and regulations.

-

We tested the appropriateness of accounting journals and other adjustments made in the preparation of the financial statements. We obtained a complete population of all journals in the year and test any which we considered were indicative of management override.

-

We reviewed the Company's accounting policies for non-compliance with relevant standards. Our work also included considering significant accounting estimates for evidence of misstatement or possible bias and testing any significant transactions that appeared to be outside the normal course of business.

-

We also tested manual journals posted to revenue that were either material or fell outside of our expectations based on our understanding of the Company, agreeing them to supporting documentation to check that they were appropriate, correctly recorded and supported by appropriate evidence.

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

Auditor's responsibilities for the audit of the financial statements (continued)

Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.

A further description of our responsibilities is available on the Financial Reporting Council's website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

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.

Gareth Singleton (Senior Statutory Auditor)

for and on behalf of BDO LLP, statutory auditor

Two Snowhill

Birmingham

B4 6GA

16 January 2023

BDO LLP is a limited liability partnership registered in England and Wales (with

registered number OC305127).

TURNOVER

4

53,520,668

49,995,307

Cost of sales

(32,859,287

)

(32,215,453

)

GROSS PROFIT

20,661,381

17,779,854

Administrative expenses

(13,847,589

)

(11,836,537

)

PROFIT BEFORE TAXATION

7

6,813,792

5,943,317

Tax on profit

9

(1,364,913

)

(993,995

)

PROFIT FOR THE FINANCIAL YEAR

5,448,879

4,949,322

Retained earnings at beginning of year

15,822,147

12,872,825

Dividends

10

(3,000,000

)

(2,000,000

)

RETAINED EARNINGS AT END OF YEAR

18,271,026

15,822,147

FIXED ASSETS

Tangible assets

11

4,380,501

4,776,276

Investments

12

5,000

5,000

4,385,501

4,781,276

CURRENT ASSETS

Stocks

13

272,200

174,346

Debtors: amounts falling due within one year

14

11,865,116

9,753,392

Cash at bank

7,184,629

7,018,608

19,321,945

16,946,346

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

15

5,311,420

5,780,475

NET CURRENT ASSETS

14,010,525

11,165,871

TOTAL ASSETS LESS CURRENT LIABILITIES

18,396,026

15,947,147

CAPITAL AND RESERVES

Called up share capital

18

5,436

5,436

Share premium

19

119,564

119,564

Retained earnings

19

18,271,026

15,822,147

SHAREHOLDERS' FUNDS

18,396,026

15,947,147

The financial statements were approved by the Board of Directors and authorised for issue on 16 January 2023 and were signed on its behalf by:

N C Faulconbridge - Director

1.	STATUTORY INFORMATION

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

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

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

Going concern

The Company funds both day-to-day operations and longer-term strategic development from its liquid resources, including working capital generated from operations. The Directors have considered the level of the liquid resources and the expected future profitability of both the Company and the wider Group, and are satisfied that, under anticipated trading conditions, there are sufficient available resources for the Company to meet its trading requirements through a period of at least 12 months from the date of signing these financial statements to 31 January 2024. For this reason, they have concluded that it is appropriate to use the going concern basis on presenting these financial statements.

Financial Reporting Standard 102 - reduced disclosure exemptions

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

•

the requirements of Section 7 Statement of Cash Flows;

•

the requirement of paragraph 3.17(d);

•

the requirements of paragraphs 11.42, 11.44, 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);

•

the requirements of paragraphs 12.26, 12.27, 12.29(a), 12.29(b) and 12.29A;

•

the requirements of paragraphs 26.18(b), 26.19 to 26.21 and 26.23;

•

the requirement of paragraph 33.7.

Preparation of consolidated financial statements

The financial statements contain information about H W Martin Waste Limited as an individual Company and do not contain consolidated financial information as the parent of a group. The Company is exempt under Section 400 of the Companies Act 2006 from the requirements to prepare consolidated financial statements as it and its subsidiary undertaking are included by full consolidation in the consolidated financial statements of its parent, H W Martin Holdings Limited, Fordbridge Lane, Blackwell, Alfreton, DE55 5JY.

Turnover

Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

i. Sale of goods

The Company sells recyclable materials. Turnover from sale of goods is recognised on sale to the customer, which is considered the point of delivery.

ii. Sale of services

The Company offers various waste management services. Turnover is determined by reference to the value of the work carried out to date in the accounting period in which the services are rendered.

Tangible fixed assets

Investments in subsidiaries

Investments in subsidiary undertakings are measured at cost less accumulated impairment.

Stocks

Financial instruments

The Company only enters into basic financial instruments transactions that result in the recognition of basic financial assets and liabilities. The Company has chosen to adopt the Section 11 of FRS 102 in respect of financial instruments.

i. Financial assets

Basic financial assets, including trade and other debtors, amounts owed by group undertakings and cash and bank balances, are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.

Such assets are subsequently carried at amortised cost using the effective interest method.

At the end of each reporting period, financial assets measured at amortised cost are assessed for objective evidence of impairment. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset's original effective interest rate. The impairment loss is recognised in the Income Statement.

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been had the impairment not previously been recognised. The impairment reversal is recognised in the Income Statement.

Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party or (c) control of the asset has been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions.

ii. Financial liabilities

Basic financial liabilities, including trade and other creditors and amounts owed to group undertakings that are classified as debt, are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade creditors are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest rate method.

Financial liabilities are derecognised when the liability is extinguished (i.e. when the contractual obligation is discharged, cancelled or expires).

iii. Offsetting

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Taxation

Taxation expense for the year comprises current and deferred tax recognised in the reporting period. Tax is recognised in the Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case tax is also recognised in other comprehensive income or directly in equity respectively.

Current or deferred taxation assets and liabilities are not discounted.

i. Current tax

Current tax is the amount of tax payable in respect of the taxable profit for the year or prior years. Tax is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the statement of financial position date.

Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

ii. Deferred tax

Deferred tax arises from timing differences that are differences between taxable profits and total comprehensive income as stated in the financial statements. These timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements.

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the statement of financial position date, except that:

-

the recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and

-

any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair value of liabilities acquired and the amount that will be assessed for tax.

Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Foreign currencies

i. Functional and presentational currency

The Company's functional and presentation currency is the pound sterling.

ii. Transactions and balances

Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.

At each period-end, foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Income Statement.

Leasing arrangements: the company as a lessee

At inception the Company assesses agreements that transfer the right to use assets. The assessment considers whether the arrangement is, or contains, a lease based on the substance of the arrangement.

i. Operating leased assets

Leases that do not transfer all the risks and rewards of ownership are classified as operating leases. Payments under operating leases are charged to the Income Statement on a straight-line basis over the period of the lease.

ii. Lease incentives

Incentives received to enter into an operating lease are credited to the Income Statement, to reduce the lease expense, on a straight-line basis over the period of the lease, unless another systematic basis is representative of the time pattern of the benefit from the use of the leases asset.

Employee benefits

The Company provides a range of benefits to employees, including paid holiday arrangements and defined contribution pension plans.

i. Short-term benefits

Short-term benefits, including holiday pay and other similar non-monetary benefits, are recognised as an expense in the period in which the service is received.

ii. Defined contribution pension plans

The company operates a defined contribution pension scheme for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid, the Company has no further payment obligations. Contributions payable to the company's pension scheme are charged to the Income Statement in the period to which they relate. Amounts not paid are shown in other creditors as a liability in the statement of financial position. The assets of the plan are held separately from the Company in independently administered funds.

Distributions to equity holders

Dividends and other distributions to the Company's shareholders are recognised as a liability in the financial statements in the period in which they are approved by the Company's shareholders. These amounts are recognised in retained earnings.

3.	CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Preparation of the financial statements did not require management to make any significant judgements or estimates.

4.

TURNOVER

The turnover and profit before taxation are attributable to the principal activities of the Company.

An analysis of turnover by class of business is given below:

2022

2021

£

£

Sale of goods

5,777,596

4,548,012

Rendering of services

47,743,072

45,447,295

53,520,668

49,995,307

An analysis of turnover by geographical market is given below:

2022

2021

£

£

United Kingdom

53,520,668

49,995,307

53,520,668

49,995,307

5.	EMPLOYEES AND DIRECTORS

2022

2021

£

£

Wages and salaries

8,205,658

7,038,731

Social security costs

897,242

758,896

Other pension costs

195,802

186,270

9,298,702

7,983,897

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

2022

2021

Direct labour

222

194

Administration and management

31

29

253

223

6.	DIRECTORS' EMOLUMENTS

2022

2021

£

£

Directors' remuneration

1,167,391

1,200,953

Information regarding the highest paid director is as follows:

2022

2021

£

£

Emoluments etc

373,600

727,181

Company contributions to defined contribution pension schemes in respect of the directors amounted to £17,083 (2021: £13,333). The value of the Company's contributions in respect of the highest paid director amounted to £nil (2021: £10,000).

7.	PROFIT BEFORE TAXATION

The profit is stated after charging/(crediting):

2022

2021

£

£

Operating lease rentals

7,563

15,001

Depreciation - owned assets

1,504,010

1,378,978

Profit on disposal of fixed assets

(5,591

)

(44,246

)

8.	AUDITORS' REMUNERATION

2022

2021

£

£

Fees payable to the Company's auditor and its associates for the audit of the Company's financial statements

25,000

24,000

Taxation compliance services

6,000

4,000

9.

TAXATION

Analysis of the tax charge

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

2022

2021

£

£

Current tax:

UK corporation tax

1,115,520

997,279

Deferred tax

249,393

(3,284

)

Tax on profit

1,364,913

993,995

UK corporation tax has been charged at 19% (2021 - 19%).