Company registration number 03507933 (England and Wales)
UBU ENVIRONMENTAL LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2023
UBU ENVIRONMENTAL LTD
COMPANY INFORMATION
Director
M B Murphy
Secretary
E E Murphy
Company number
03507933
Registered office
Moss Lane
Off Sharp Street
Worsley
Manchester
M28 3LY
Auditor
Alexander & Co LLP
Centurion House
129 Deansgate
Manchester
M3 3WR
UBU ENVIRONMENTAL LTD
CONTENTS
Page
Strategic report
1 - 2
Director's report
3 - 4
Independent auditor's report
5 - 7
Profit and loss account
8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Notes to the financial statements
12 - 21
UBU ENVIRONMENTAL LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 31 JULY 2023
- 1 -

The director presents the strategic report for the year ended 31 July 2023.

Fair review of the business

UBU Environmental Ltd is a family owned and managed business being one of two subsidiary companies of which The Big Shed Limited is the ultimate parent company.

UBU have been incorporated since 1998 and employs around 113 direct staff, most of whom are employed as skilled HGV Truck mounted roadsweeper operatives.

UBU Environmental Ltd provides operated street cleaning roadsweeper hire, as well as more specialised cleansing machines such as jet vac tankers, high pressure jetters and beam rear suction sweepers.

Our principal customers are in the construction and house building sectors as well as highway maintenance and resurfacing contractors. We are a regional company and our typical areas of operation extend to within a 50 mile radius of the Salford depot, extending to North Wales, Leeds, Stoke and Cumbria.

UBU Environmental Limited is also licenced by the Environment Agency to receive and treat inert roadsweeper waste under the permitted code EWC 20 03 03.

The company benefits from trusted relationships with both new and long standing customers. These relationships are formed on the basis of consistent high levels of service, Euro 6 vehicle specification, annual fleet investment, commitment to people and their health and safety, and the ability to provide unrivalled planned and emergency hire solution.

Our experience in understanding this industry has allowed us to make confident and considered decisions during the year in relation to recruitment, training, asset investment, research and development, and service price point.

KPI

The performance of UBU showed an increase in year on year turnover of just over 12% which is principally attributed to changes in financing options as well as an increase in emergency works and the hire of more specialised vehicles to support localised flooding.

Profitability continues to increase which is testament to our continued planned investment in all areas of the business including our people, our systems and our assets. This makes us the number one choice for roadsweeper hire and roadsweeper waste treatment in the Greater Manchester region.

2023      2022             

Turnover                 17,585,513        15,676,925

            

Gross Profit                6,119,425         4,958,712                 

Net Current Assets            3,303,939         2,860,333        

 

 

UBU ENVIRONMENTAL LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 2 -
Principal risks and uncertainties

The Director considers that the key risks affecting the business are the economy in general, a notable rise in living costs, and the fluctuating costs and availability of gas oil due to the ongoing crisis in Ukraine.

In the last 2 years UBU made substantial investment into Euro 6 compliant roadsweepers to comply with emission targets and to proactively manage the potential for financial penalty in light of the anticipated GM Clean air zone.

The recent withdrawal of the GM clean air zone by Greater Manchester’s Air Quality Administration Committee is very disappointing as this gives unfair pricing advantage to other local roadsweeper companies with lesser overheads such as asset finance and enhanced maintenance costs.

Truck mounted roadsweeper assets have increased in price this year by approximately 25% and so we will plan to review our asset acquisition plan for 2023 / 2024 on this basis. The demographic of employee resources since Brexit continue to impact on the recruitment and retention of HGV drivers but further training and retention incentives have been implemented with great success.

Future developments

Environmental – As part of its asset acquisition review, UBU has been looking at other options in the market including hydrostatic roadsweepers. The hydrostatic sweeper offers advantages in terms of fuel consumption and exhaust emissions by automatically selecting the optimum shift schedule based on duty cycle and road conditions. The hydrostatic unit also eliminates the need for a second 'donkey' engine which would reduce additional maintenance, additional fuel costs and reduce exhaust and noise emissions. It also weighs less being a single-engine truck and it can carry a larger payload of swept materials. In the following 12 months we hope to have made a decision about the inclusion of hydrostatic to our fleet.

PAS 115 - After the successful publication of PAS 115 in 2021, UBU looked to further develop its aims to divert all roasweeper waste from landfill through an application to Innovate UK for funding to support a Knowledge Transfer Partnership. UBU were overwhelmingly successful with their application and commenced work with MMU in September 2022. This collaboration created a post for an academic associate at UBU and the KTP runs until March 2025.

UBU has continued its work with City Of Trees Charity and supported them with a donation of £10,000 in this accounting period to support their work to create better and greener spaces for people in the GM area. UBU also provides its 'waste derived soils' for free so that the charity can grow tree whips at their nursery in Prestwich.

The Director is delighted that with ongoing support and staff engagement UBU will continue to achieve its long term objectives which are to provide a circular economy solution to all producers of waste that use its roadsweeping services.

By order of the board

E E Murphy
Secretary
22 February 2024
UBU ENVIRONMENTAL LTD
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 JULY 2023
- 3 -

The director presents his annual report and financial statements for the year ended 31 July 2023.

Principal activities

The principal activity of the company continued to be that of hiring out operated street cleaning machinery including road sweeper and jet vac tanker hire. The company also collects, transports and treats wet roadsweeper and gully waste collected by its vehicles during the hire period.

Results and dividends

The results for the year are set out on page 8.

Ordinary dividends were paid amounting to £4,000,000. The director does not recommend payment of a further dividend.

Director

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

M B Murphy
Statement of director's responsibilities

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

 

Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the director must not approve the financial statements unless he is 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 director is required to:

 

 

The director is 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. He is also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Statement of disclosure to auditor

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.

Medium-sized companies exemption

This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.

UBU ENVIRONMENTAL LTD
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 4 -
By order of the board
E E Murphy
Secretary
22 February 2024
UBU ENVIRONMENTAL LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF UBU ENVIRONMENTAL LTD
- 5 -
Opinion

We have audited the financial statements of UBU Environmental Ltd (the 'company') for the year ended 31 July 2023 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity 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).

In our opinion the financial statements:

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 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 director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

 

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

 

Our responsibilities and the responsibilities of the director 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 director is 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:

UBU ENVIRONMENTAL LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF UBU ENVIRONMENTAL LTD
- 6 -
Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the director's 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:

Responsibilities of director

As explained more fully in the director's responsibilities statement, the director is 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 director determines 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 director is 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 director either intends to liquidate the company or to cease operations, or has 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.

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

Capability of the audit in 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.

Based on our understanding of the company, we identified that the principal risks of non-compliance with laws and regulations related to breaches of the legal and regulatory framework that the company operates in. We considered the extent to which non-compliance might have a material effect on the financial statements. The key laws and regulations we considered in this context included Companies Act 2006, GDPR, employment law, health and safety and tax legislation.

We also evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related to the posting of inappropriate journal entries to manipulate financial results and potential management bias in accounting estimates.

UBU ENVIRONMENTAL LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF UBU ENVIRONMENTAL LTD
- 7 -

As a result of the above, our audit procedures performed included:

 

There are inherent limitations in the audit procedures described above. The test nature and other inherent limitations of an audit, together with the inherent limitations of any accounting and internal control system, mean that there is an unavoidable risk that even some material misstatements in respect of irregularities may remain undiscovered even though the audit is properly planned and performed in accordance with ISAs (UK).

We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, 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 or intentional misrepresentations, or through collusion.

Our examination should therefore not be relied upon to disclose all such material misstatements or frauds, errors or instances of non-compliance that might exist. The responsibility for safeguarding the assets of the company and for the prevention and detection of fraud, error and non-compliance with law or regulations rests with the directors of UBU Environmental Limited.

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.

Gary Kramrisch
Senior Statutory Auditor
For and on behalf of Alexander & Co LLP
22 February 2024
Chartered Accountants
Statutory Auditor
Centurion House
129 Deansgate
Manchester
M3 3WR
UBU ENVIRONMENTAL LTD
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 JULY 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
17,585,513
15,676,925
Cost of sales
(11,466,088)
(10,718,213)
Gross profit
6,119,425
4,958,712
Administrative expenses
(600,966)
(567,646)
Other operating income
18,160
59,071
Operating profit
4
5,536,619
4,450,137
Interest receivable and similar income
6
36,713
2,801
Interest payable and similar expenses
7
(28,642)
(22,473)
Profit before taxation
5,544,690
4,430,465
Tax on profit
8
(1,008,139)
(660,019)
Profit for the financial year
4,536,551
3,770,446

The profit and loss account has been prepared on the basis that all operations are continuing operations.

UBU ENVIRONMENTAL LTD
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 JULY 2023
- 9 -
2023
2022
£
£
Profit for the year
4,536,551
3,770,446
Other comprehensive income
-
-
Total comprehensive income for the year
4,536,551
3,770,446
UBU ENVIRONMENTAL LTD
BALANCE SHEET
AS AT
31 JULY 2023
31 July 2023
- 10 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
10
599,938
793,683
Current assets
Debtors
11
3,108,547
3,445,082
Cash at bank and in hand
5,425,857
2,291,775
8,534,404
5,736,857
Creditors: amounts falling due within one year
12
(5,230,465)
(2,876,524)
Net current assets
3,303,939
2,860,333
Total assets less current liabilities
3,903,877
3,654,016
Creditors: amounts falling due after more than one year
13
-
0
(244,826)
Provisions for liabilities
Deferred tax liability
15
53,809
95,673
(53,809)
(95,673)
Net assets
3,850,068
3,313,517
Capital and reserves
Called up share capital
17
1
1
Profit and loss reserves
3,850,067
3,313,516
Total equity
3,850,068
3,313,517

These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.true

The financial statements were approved and signed by the director and authorised for issue on 22 February 2024
M B Murphy
Director
Company registration number 03507933 (England and Wales)
UBU ENVIRONMENTAL LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JULY 2023
- 11 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 August 2021
1
2,543,070
2,543,071
Year ended 31 July 2022:
Profit and total comprehensive income
-
3,770,446
3,770,446
Dividends
9
-
(3,000,000)
(3,000,000)
Balance at 31 July 2022
1
3,313,516
3,313,517
Year ended 31 July 2023:
Profit and total comprehensive income
-
4,536,551
4,536,551
Dividends
9
-
(4,000,000)
(4,000,000)
Balance at 31 July 2023
1
3,850,067
3,850,068
UBU ENVIRONMENTAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2023
- 12 -
1
Accounting policies
Company information

UBU Environmental Ltd is a private company limited by shares incorporated in England and Wales. The registered office is Moss Lane, Off Sharp Street, Worsley, Manchester, M28 3LY.

1.1
Accounting convention

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.

This 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:

 

 

The financial statements of the company are consolidated in the financial statements of The Big Shed Limited. These consolidated financial statements are available from its registered office, Moss Lane Off Sharp Street, Worsley, Manchester, England, M28 3LY.

1.2
Going concern

Atruet the time of approving the financial statements, the director has a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the director continues to adopt the going concern basis of accounting in preparing the financial statements.

1.3
Turnover

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.

 

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

UBU ENVIRONMENTAL LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
1
Accounting policies
(Continued)
- 13 -

Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.

1.4
Research and development expenditure

Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.

1.5
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

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

Plant and equipment
25% reducing balance
Computers
20% straight line

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 credited or charged to profit or loss.

1.6
Impairment of fixed assets

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

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

 

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

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

1.7
Cash and cash equivalents

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

UBU ENVIRONMENTAL LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
1
Accounting policies
(Continued)
- 14 -
1.8
Financial instruments

The company 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 company's balance sheet when the company becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset, with 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

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.

Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Impairment of financial assets

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.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company 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.

Classification of financial liabilities

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 company after deducting all of its liabilities.

UBU ENVIRONMENTAL LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
1
Accounting policies
(Continued)
- 15 -
Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares 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.

Other financial liabilities

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

 

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

1.9
Equity instruments

Equity instruments issued by the company 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 company.

1.10
Taxation

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

Current 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 company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

UBU ENVIRONMENTAL LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
1
Accounting policies
(Continued)
- 16 -
Deferred tax

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

1.11
Employee benefits

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

 

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

 

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

1.12
Retirement benefits

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

1.13
Leases

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 except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

1.14
Government grants

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

 

A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.

UBU ENVIRONMENTAL LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 17 -
2
Judgements and key sources of estimation uncertainty

In the application of the company’s accounting policies, the director is 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.

3
Turnover and other revenue

An analysis of the company's turnover is as follows:

2023
2022
£
£
Turnover analysed by class of business
Roadsweeping
17,585,513
15,676,925
2023
2022
£
£
Other revenue
Interest income
36,713
2,801
Grants received
-
43,781
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Research and development costs
68,657
66,818
Government grants
-
(43,781)
Fees payable to the company's auditor for the audit of the company's financial statements
7,884
7,771
Depreciation of tangible fixed assets
198,931
339,402
Operating lease charges
25,000
25,000
5
Employees

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

2023
2022
Number
Number
113
109
UBU ENVIRONMENTAL LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
5
Employees
(Continued)
- 18 -

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
4,587,525
4,206,344
Social security costs
511,972
485,086
Pension costs
97,431
90,826
5,196,928
4,782,256
6
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
35,424
829
Other interest income
1,289
1,972
Total income
36,713
2,801
7
Interest payable and similar expenses
2023
2022
£
£
Interest on finance leases and hire purchase contracts
9,132
22,473
Other interest
19,510
-
0
28,642
22,473
8
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
1,180,408
829,246
Adjustments in respect of prior periods
(130,405)
(234,900)
Total current tax
1,050,003
594,346
Deferred tax
Origination and reversal of timing differences
(41,864)
65,673
Total tax charge
1,008,139
660,019

The corporation tax rate increased from 19% to 25% in the year. As the current accounting year includes periods of corporation tax rates at both 19% and 25%, a marginal rate has been used.

UBU ENVIRONMENTAL LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
8
Taxation
(Continued)
- 19 -

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:

2023
2022
£
£
Profit before taxation
5,544,690
4,430,465
Expected tax charge based on the standard rate of corporation tax in the UK of 21.01% (2022: 19.00%)
1,164,689
841,788
Group relief
(11,573)
(47,633)
Under/(over) provided in prior years
(130,405)
(234,900)
Deferred tax adjustments in respect of prior years
(14,218)
77,139
Changes in tax rate
(4,417)
22,962
Disallowable expenditure
4,282
663
Capital allowances and depreciation
(219)
-
0
Taxation charge for the year
1,008,139
660,019
9
Dividends
2023
2022
£
£
Final paid
4,000,000
3,000,000
10
Tangible fixed assets
Plant and equipment
Computers
Total
£
£
£
Cost
At 1 August 2022
1,193,262
-
0
1,193,262
Additions
-
0
5,186
5,186
At 31 July 2023
1,193,262
5,186
1,198,448
Depreciation and impairment
At 1 August 2022
399,579
-
0
399,579
Depreciation charged in the year
198,931
-
0
198,931
At 31 July 2023
598,510
-
0
598,510
Carrying amount
At 31 July 2023
594,752
5,186
599,938
At 31 July 2022
793,683
-
0
793,683
UBU ENVIRONMENTAL LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 20 -
11
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
2,717,981
3,047,271
Amounts owed by group undertakings
408
-
0
Other debtors
77,433
49,547
Prepayments and accrued income
312,725
348,264
3,108,547
3,445,082
12
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Obligations under finance leases
14
217,383
319,835
Trade creditors
549,490
693,903
Amounts owed to group undertakings
3,136,681
376,246
Corporation tax
667,608
749,288
Other taxation and social security
586,396
624,309
Other creditors
67,896
49,868
Accruals and deferred income
5,011
63,075
5,230,465
2,876,524
13
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Obligations under finance leases
14
-
0
244,826
14
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
217,383
319,835
In two to five years
-
0
244,826
217,383
564,661

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. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

UBU ENVIRONMENTAL LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 21 -
15
Deferred taxation

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

Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
53,809
95,673
2023
Movements in the year:
£
Liability at 1 August 2022
95,673
Credit to profit or loss
(41,864)
Liability at 31 July 2023
53,809

The deferred tax liability set out above is expected to reverse within 48 months and relates to accelerated capital allowances that are expected to mature within the same period.

16
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
97,431
90,826

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.

17
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
1
1
1
1
18
Ultimate controlling party

The company's immediate parent company is The Big Shed Limited, a company registered in England and Wales. The registered office of The Big Shed Limited is Moss Lane Off Sharp Street, Worsley, Manchester, England, M28 3LY.

 

The smallest and largest group in which the results for UBU Environmental Limited are consolidated and are publicly available for the current financial year is that headed by The Big Shed Limited.

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