The directors present the strategic report for the year ended 30 June 2023.
Fletchers Waste Management Limited (FWML) was incorporated on 2nd December 2019. The principal activity is that of a dormant holding company. The Company was incorporated in order to acquire the entire share capital of Fletcher Plant Limited (FPL) on the 31st January 2020, in order to enable the management buyout of FPL; FPL is a company that provides waste management services across the UK.
In addition, FWML acquired the entire share capital of Retford Waste Limited (RWL) on 30th September 2020; RWL is a company that provides waste management services to commercial and domestic customers predominantly within a 30 mile radius of its waste transfer facility in North Nottinghamshire.
Performance Review
Group turnover for the year grew by approximately 24% on the previous year from £18.3m in 2022 to £22.8m in 2023, which is a very positive outcome and undoubtably benefits from an element of post-Covid rebound in activity levels.
Gross profits increased by £2.7m, from £5.8m in 2022 to £8.5m in 2023 and as a percentage of sales the 2023 numbers were 6% higher than 2022 as a result of a combination of factors including sales mix and the inclusion of semi-fixed costs in cost of sales.
Distribution costs rose by £0.9m from £1.9m in 2022 to £2.8m in 2023, which is a 2% increase as a percentage of sales year on year and reflects the continued high cost of diesel and the full year impact of the removal of red diesel in April 2022. In real terms distribution costs should be taken into account when considering gross profits, as they are largely variable in line with sales and as such would better reflect the underlying change in the business.
Administration costs rose by £0.8m, with 50% of this increase being related to salary costs, both from additional people and the much publicised levels of inflationary pressure on labour costs. In addition, the company was impacted by a small number of bad debts in the year which together amounted to £0.1m; whilst disappointing, this cost remains a small percentage of turnover compared to industry norms.
The net result from all of the aforementioned changes was an operating profit of £1.3m, which compares favourably to £0.3m in 2022, particularly given the fuel costs increases and ongoing investment in the future of the group.
Future Prospects, Development and Performance
Trading since the year end has been positive, with all areas of the business performing in line with expectations. Sales to December 2023, the Group’s half-year, are in excess of £12m and as such are tracking at levels consistent with the numbers achieved in these financial statements.
The main risk to the Group is slow economic growth and the resulting impact on the Group’s main customer segments, however as waste generally is a growing challenge for all elements of the economy, it is hoped that the growing demand for better waste recovery will out-strip downturns in any one customer segment.
The following are the main key performance indicators of the Company:
Turnover per driver hour - this is a measure of the amount of turnover generated from each hour certain of our drivers are on the road. The goal is to increase the utilisation/productivity of our drivers by reducing the amount of unnecessary time spent at our depots.
Tonnage of waste processed per productive labour hour - this measures the labour hours per tonne of processed waste and provides management with the means to increase productivity through better management of all productive labour.
Aged debtors - measured monthly to monitor our debtor collection performance; the Group uses a range of credit monitoring tools to ensure that existing and new accounts meet our credit risk profile.
Customer quote conversions - this measures the number of customer quotes which turn into orders and seeks to drive up the effectiveness of our sales team.
On 11 March 2024, the Group was sold to DM Topco Limited, a member of the Beauparc Utilities Group. This sale represents an exciting next step in the Group’s future and will enable it to unlock further opportunities that exist within both the Sheffield City Region and nationally.
On behalf of the board
The directors present their annual report and financial statements for the year ended 30 June 2023.
The results for the year are set out on page 8.
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 auditor, BHP LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
We have audited the financial statements of Fletchers Waste Management Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 June 2023 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
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 parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the 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.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the 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 the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
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 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.
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 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 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.
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations
we identified the laws and regulations applicable to the group through discussions with the directors and other management, and from our commercial knowledge and experience of the sector
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the group, including Companies Act 2006, taxation legislation, employment, environmental and health and safety legislation
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the group’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships
tested journal entries to identify unusual transactions
assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias
investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
agreeing financial statement disclosures to underlying supporting documentation
enquiring of management as to actual and potential litigation and claims
discussions with senior management regarding relevant regulations and reviewing the group’s legal and professional fees.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities 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.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
These financial statements have been prepared in accordance with the provisions relating to medium-sized groups.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £96 (2022 - £453 loss).
Fletchers Waste Management Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Clement Works, Clement Street, Sheffield, S9 5EA.
The group consists of Fletchers Waste Management Limited and all of its subsidiaries as detailed in note 13.
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 £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
Comparative amounts in relation to auditors remuneration (Note 5), directors remuneration (Note7) and NBV of assets held on hire purchase (Note 11) have been restated within the relevant notes to reflect their accurate balances. This has no impact on the profit or the reserves.
The consolidated group financial statements consist of the financial statements of the parent company Fletchers Waste Management Limited together with all entities controlled by the parent company (its subsidiaries).
All financial statements are made up to 30 June 2023. 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.
At the time of approving the financial statements, the directors have a reasonable expectation that the group and the company have adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
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 profit and loss account.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible 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).
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally 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.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method 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. Financial assets classified as receivable within one year are not amortised.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. 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 profit or loss.
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 profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies 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. Financial liabilities classified as payable within one year are not amortised.
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. Amounts payable 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 method.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
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 profit and loss account 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 liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing 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 costs of short-term employee benefits are recognised as a liability and an expense.
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 company 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.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease.
In the application of the group’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 following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Significant estimates and assumptions have been made relating to the costs of waste disposal included within accruals. Assessment of the anticipated costs of disposal have been made when determining the value of provision required. In determining this provision, judgements regarding the tonnage and costs of disposal per tonne of waste held at the year-end are made. Estimates are based on historical experience and knowledge of the composition of the waste held at the year-end.
The average monthly number of persons (including directors) employed by the group and 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 5 (2022 - 5).
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:
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
Details of the company's subsidiaries at 30 June 2023 are as follows:
Obligations under finance leases are secured by a fixed charge over the assets to which they relate.
Included in other creditors is an invoice discounting facility of £1,026,228 (2022: £1,404,728). This is secured by an all assets debenture over the present and future assets of the subsidiary company Fletcher Plant Limited.
Obligations under finance leases are secured by a fixed charge over the assets to which they relate.
The other long-term loans are secured by way of a cross guarantee and debenture between the group.
Finance lease payments represent rentals payable by the company or group for certain items of plant and machinery.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
Accrued pension contributions at the year end in respect of defined contribution schemes amounted to £8,281 (2022: £9,306)
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Amounts contracted for but not provided in the financial statements:
On 11 March 2024 Fletchers Waste Management Limited and its subsidiary undertakings were acquired by DM TopCo Limited a member of the Beauparc Utilities Group.
S A Lythgoe and R P Fletcher are directors of the group and hold a cross guarantee and debenture between the following group companies: Fletchers Waste Management Limited, Fletcher Plant Limited and Mr Rubble Limited in relation to loan notes due to them which are held within Fletcher Waste Management Limited.
On the 31 January 2020, Fletchers Waste Management Limited acquired 100% of the share capital of Fletcher Plant Limited. As part of the acquisition loan notes totalling £8,768,000 were issued to R P Fletcher and S A Lythgoe, who remain shareholders of Fletchers Waste Management Limited.
During the year £916,073 was repaid in respect of the loan notes. At the year end the balance remaining on the loan notes is £5,370,641 (2022: £6,286,714 (restated due to the prior year adjustment see note 27)) and is included within creditors due more than one year.
Payments to related party pension schemes totalled £215,000 (2022: £185,000) in relation to property rental agreements.
The group entered into transactions with other business interests of Mr G Leverett, a director of the group A summary of these transactions is set out below:
Materials Market Limited
During the year the group made purchases of £542,672 (2022: £Nil). A balance of £82,763 (2022: £Nil) was owed to Materials Market and is included in trade creditors at the year end.
On 11 March 2024 Fletchers Waste Management Limited was acquired by DM TopCo Limited a company incorporated in the Republic of Ireland and a member of the Beauparc Utilities Group. From this date DM TopCo Limited became its immediate parent undertaking.
Group and Company
Amounts owed by a director totalling £20,506 has been reclassified and netted off the loan notes due to the same director.
The prior period adjustment does not give rise to any effect upon profit or equity as previously reported.