Company registration number 04296277 (England and Wales)
ENVIROWALES LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Faulkner House
Victoria Street
Rayner Essex LLP
St Albans
Chartered Accountants
Hertfordshire
AL1 3SE
ENVIROWALES LIMITED
COMPANY INFORMATION
Directors
Mr M E Sherling
Mr G C Hudson
Mr D A J Rintoul
Mr B H Smith
Mr I Crabbe
Mr R J Broad
(Appointed 31 October 2023)
Secretary
Mr M E Sherling
Company number
04296277
Registered office
Faulkner House
Victoria Street
St Albans
Hertfordshire
AL1 3SE
Auditor
Rayner Essex LLP
Faulkner House
Victoria Street
St Albans
Hertfordshire
AL1 3SE
ENVIROWALES LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 5
Independent auditor's report
6 - 8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Notes to the financial statements
12 - 26
ENVIROWALES LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -

The directors present the strategic report for the year ended 31 December 2023.

Fair review of the business

The directors are pleased with the performance of the company during the year, reporting operating profit of £1.4m (2022: £1.1m) and net profit of £0.6m (2022: £0.6m net profit). Revenues benefitted from an increase in sales volumes while prices remained at a similar level.

Principal risks and uncertainties

The principal risks and uncertainties faced by the company in the view of the directors are as follows:

 

Price risk

The industry in which the company operates is greatly affected by the price of lead. In particular the company is vulnerable to instability in the price of lead on the London Metal Exchange (LME). Consequently the directors undertake an on-going review of the price of lead per the LME, and believe that the company has the appropriate controls in place to react in a timely fashion to any significant change in the price of lead.

 

Operational risks

The success of the company is contingent upon continued sourcing of scrap batteries and lead at competitive prices and quality. In addition, success is also dependent on running the company's operations in an efficient manner.

 

Energy cost risk

Wholesale energy costs have seen increased volatility over recent years. The directors are taking a number of actions to manage the impact of price increases, including engaging market experts to offer advice, regular monitoring of the market and fixing some forward energy costs to reduce uncertainty.

 

Supply chain network uncertainty

Any delays in securing materials due to issues with global supply chains can cause problems. In particular, the group supplies the construction sector which is susceptible to delays and dependent on materials from different geographical locations. The directors seek to ensure that adequate levels on stock are held to meet the requirements of its customers.

Liquidity risk

The company has a significant level of fixed assets some of which are financed where applicable through hire purchase agreements so that the fixed term nature are partially matched to longer term liabilities. The majority of the company's net assets are made up of short term assets and liabilities.

Interest rate risk

The company finances its operations in the main through bank loans, overdrafts and asset based financing. The resulting interest costs are reviewed by the directors however, the board accepts that a certain amount of third party funding is required and therefore the board accepts the risk attached to interest rate fluctuations.

 

Cashflow risk

The board continually monitors the cash requirements of the company to ensure that there is the appropriate level of cover.

Development and performance

The directors consider the level of business and the year end position to be satisfactory.

Key performance indicators

The directors consider the following performance indicators to be key in their ongoing review of the business:

 

ENVIROWALES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Section 172 Statement

In accordance with section 172 of the Companies Act, each of our directors acts in the way he considers, in good faith, would most likely promote the success of the company for the benefit of its members as a whole. Our directors have regard, amongst other matters, to the:

 

 

As is normal for large companies, we delegate authority for day to day management of the company to senior managers and then engage management in setting, approving and overseeing the execution of strategy and related policies. During the year, we reviewed the company's financial and operational performance; key transactions; regulation; funding and pension matters, mechanisms of stakeholder engagement and diversity and inclusion. The Board review, discuss and approve, as necessary, all of these matters.

 

As set out above, decisions taken by the Board consider the interests of our key stakeholders and the impacts of these decisions.

On behalf of the board

Mr M E Sherling
Director
25 September 2024
ENVIROWALES LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -

The directors present their annual report and financial statements for the year ended 31 December 2023.

Principal activities

The principal activity of the company continued to be that of processing and recycling of metals and other materials.

Results and dividends

The results for the year are set out on page 9.

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

No preference dividends were paid.

Directors

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

Mr S B Kelly
(Resigned 31 March 2024)
Mr C P Green
(Resigned 2 November 2023)
Mr M E Sherling
Mr G C Hudson
Mr D A J Rintoul
Mr B H Smith
Mr I Crabbe
Mr R J Broad
(Appointed 31 October 2023)
Financial instruments

The company uses financial instruments comprising bank loans and bank overdrafts, together with various items such as trade debtors and trade creditors that arise directly from its operations. It is the objective of the board to ensure that the company has ready access to the funds that the board deems necessary at any time during the year. The board reviews future projections to highlight any times when requirements may exceed current levels to ensure that facilities are in place and available.

 

The main risks arising from the financial instruments are interest rate risk, liquidity risk and cash flow risk. The company reviews and agrees policies for managing these risks, as detailed in the strategic report, to minimise exposure.

Future developments

General economic conditions remain difficult, with factors including Russia's ongoing invasion of Ukraine and the global recovery from the Covid-19 pandemic contributing to increased energy cost volatility, general high inflation and comparatively high interest rates. The directors have taken action to mitigate these impacts where possible and expect financial performance to remain satisfactory.

Auditor

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

Energy and carbon report

The Company recognises the importance of its environmental responsibilities, monitors its impact on the environment and designs and implements policies to reduce any damage that might be caused by the Company's activities.

 

The Company operates in accordance with group policies. The Group's business strategy is shaped to respond to the risks and opportunities faced and climate change related risks and opportunities are built into this strategy.

ENVIROWALES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
Energy consumption
kWh
Aggregate of energy consumption in the year
83,010,573
Emissions of CO2 equivalent
Metric tonnes
Metric tonnes
Scope 1 - direct emissions
- Gas combustion
8,138
- Furnace fuel
8,539
- Fuel consumed for owned transport
503
17,180
Scope 2 - indirect emissions
- Electricity purchased
2,392
Scope 3 - other indirect emissions
- Fuel consumed for transport not owned by the company
943
Total gross emissions
20,515
Quantification and reporting methodology

We have followed the 2019 HM Government Environmental Reporting Guidelines. We have also used the 2023 UK Government’s Conversion Factors for Company Reporting.

Measures taken to improve energy efficiency

The company continues to seek opportunities for improved environmental performance. Projects of note in the period include the renewal of company commercial vehicles, providing a lower emission fleet, and further revisions to the furnace smelt processes to optimise energy usage. Further work is planned in the next and future periods as part of the Company’s commitment to continuous improvement.

Statement of directors' responsibilities

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

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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:

 

 

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.

ENVIROWALES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 5 -
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.

On behalf of the board
Mr M E Sherling
Director
25 September 2024
ENVIROWALES LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF ENVIROWALES LIMITED
- 6 -
Opinion

We have audited the financial statements of Envirowales Limited (the 'company') for the year ended 31 December 2023 which comprise 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 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 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:

ENVIROWALES LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF ENVIROWALES LIMITED
- 7 -
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 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:

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.

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.

The extent to which the audit was considered capable of detecting irregularities including fraud

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:

 

ENVIROWALES LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF ENVIROWALES LIMITED
- 8 -

We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

 

 

To address the risk of fraud through management bias and override of controls, we:

 

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

 

 

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.

 

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.

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.

Antony Federer FCA FCCA CF
Senior Statutory Auditor
For and on behalf of Rayner Essex LLP
25 September 2024
Chartered Accountants
Statutory Auditor
Faulkner House
Victoria Street
St Albans
Hertfordshire
AL1 3SE
ENVIROWALES LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
2023
2022
Notes
£
£
Turnover
3
86,132,535
82,122,973
Cost of sales
(70,943,953)
(66,545,701)
Gross profit
15,188,582
15,577,272
Administrative expenses
(13,907,796)
(14,485,656)
Other operating income
80,106
53,104
Operating profit
7
1,360,892
1,144,720
Interest receivable and similar income
8
3,038
-
0
Interest payable and similar expenses
9
(736,917)
(526,970)
Profit before taxation
627,013
617,750
Tax on profit
10
890,000
-
0
Profit for the financial year
1,517,013
617,750

The Statement of Comprehensive Income has been prepared on the basis that all operations are continuing operations.

ENVIROWALES LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 10 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
11
5,362,950
6,114,280
Current assets
Stocks
12
5,515,632
5,183,800
Debtors
13
24,338,220
19,863,629
Cash at bank and in hand
474,168
576,584
30,328,020
25,624,013
Creditors: amounts falling due within one year
15
(44,352,205)
(40,130,677)
Net current liabilities
(14,024,185)
(14,506,664)
Total assets less current liabilities
(8,661,235)
(8,392,384)
Creditors: amounts falling due after more than one year
16
(427,852)
(2,123,716)
Provisions for liabilities
Deferred tax liability
19
809,861
899,861
(809,861)
(899,861)
Net liabilities
(9,898,948)
(11,415,961)
Capital and reserves
Called up share capital
21
3,938,277
3,938,277
Profit and loss reserves
24
(13,837,225)
(15,354,238)
Total equity
(9,898,948)
(11,415,961)
The financial statements were approved by the board of directors and authorised for issue on 25 September 2024 and are signed on its behalf by:
Mr M E Sherling
Director
Company registration number 04296277 (England and Wales)
ENVIROWALES LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 January 2022
3,938,277
(15,971,988)
(12,033,711)
Year ended 31 December 2022:
Profit and total comprehensive income
-
617,750
617,750
Balance at 31 December 2022
3,938,277
(15,354,238)
(11,415,961)
Year ended 31 December 2023:
Profit and total comprehensive income
-
1,517,013
1,517,013
Balance at 31 December 2023
3,938,277
(13,837,225)
(9,898,948)
ENVIROWALES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
1
Accounting policies
Company information

Envirowales Limited is a private company limited by shares incorporated in England and Wales. The registered office is Faulkner House, Victoria Street, St Albans, Hertfordshire, AL1 3SE.

 

The principal trading address of the company is Rassau Industrial Estate, Ebbw Vale, Gwent, Wales, NP23 5SD.

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, modified to include certain financial instruments at fair value. 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 International Metal Industries Limited. These consolidated financial statements are available from its registered office: Faulkner House, Victoria Street, St Albans, Herts, AL1 3SE.

1.2
Going concern

At the time of approving the financial statements, the directors have a reasonable expectation that the company has 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. true

In adopting the going concern basis for preparing the financial statements, the directors have considered the business activities and the group's principal risks and uncertainties. The group in which the company is a member meets its day-to-day working capital requirements through use of its cash and banking facilities.

In assessing the appropriateness of the going concern assumption, the directors have prepared detailed cash flow forecasts using the latest information available which show that the group can continue to meet its obligations as they fall due. The directors are therefore satisfied that the group will continue to operate within facilities agreed with the group’s bankers.

ENVIROWALES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
1.3
Turnover

Turnover represents amounts receivable for goods and services net of VAT and trade discounts.

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 despatch 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.

1.4
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 machinery
5 to 25 years straight line
Fixtures, fittings & equipment
3 to 5 years straight line
Motor vehicles
3 to 5 years 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.

1.5
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.

ENVIROWALES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
1.6
Stocks

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

 

Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

1.7
Cash at bank and in hand

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.

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.The impairment loss is recognised in profit or loss.

ENVIROWALES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
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.

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
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.

ENVIROWALES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 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.

1.10
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.

1.11
Retirement benefits

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

1.12
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 asset's 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.

1.13
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.

ENVIROWALES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 17 -
1.14
Foreign exchange
Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. All differences are taken to profit and loss account.
2
Judgements and key sources of estimation uncertainty

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

 

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

 

There are not considered to be any estimates or assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities of the company.

3
Turnover and other revenue

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

2023
2022
£
£
Turnover
Turnover
86,132,535
82,122,973
Turnover analysed by geographical market
2023
2022
£
£
United Kingdom
80,901,063
70,708,625
Europe
5,231,472
10,938,836
Rest of the world
-
475,512
86,132,535
82,122,973
ENVIROWALES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
4
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
16,000
16,000
For other services
Taxation compliance services
12,295
14,525
All other non-audit services
60,665
53,080
72,960
67,605
5
Employees

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

2023
2022
Number
Number
Production
153
136
Administration
24
23
Total
177
159

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
5,430,732
5,101,596
Social security costs
572,075
572,447
Pension costs
259,818
256,460
6,262,625
5,930,503
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
240,346
249,706
Company pension contributions to defined contribution schemes
14,427
16,264
254,773
265,970

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2022 - 2).

ENVIROWALES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
6
Directors' remuneration
(Continued)
- 19 -
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
149,355
179,492
Company pension contributions to defined contribution schemes
9,551
11,462
7
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange differences apart from those arising on financial instruments measured at fair value through profit or loss
18,068
11,117
Government grants
(80,106)
(53,104)
Depreciation of owned tangible fixed assets
1,482,596
1,539,980
Depreciation of tangible fixed assets held under finance leases
342,344
328,085
Profit on disposal of tangible fixed assets
(51,788)
-
Cost of stocks recognised as an expense
66,571,092
62,500,694
Operating lease charges
779,824
750,201
8
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
3,038
-
0
9
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
408,409
274,189
Interest on finance leases and hire purchase contracts
78,343
79,624
Interest on invoice finance arrangements
249,653
162,173
Other interest on financial liabilities
512
10,984
736,917
526,970

 

 

 

ENVIROWALES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
10
Taxation
2023
2022
£
£
Deferred tax
Origination and reversal of timing differences
(90,000)
-
0
Changes in tax rates
(800,000)
-
0
Total deferred tax
(890,000)
-
0

The actual (credit)/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
627,013
617,750
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2022: 19.00%)
156,753
117,373
Tax effect of expenses that are not deductible in determining taxable profit
(136,668)
(8,175)
Tax effect of utilisation of tax losses not previously recognised
(90,193)
(317,013)
Permanent capital allowances in excess of depreciation
90,135
207,815
Research and development tax credit
(20,027)
-
0
Deferred tax movements
(890,000)
-
0
Taxation credit for the year
(890,000)
-

The company has estimated tax losses of £14,455,418 (2022: £13,147,703) available for carry forward against future trading profits.

ENVIROWALES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
11
Tangible fixed assets
Plant and machinery
Fixtures, fittings & equipment
Motor vehicles
Total
£
£
£
£
Cost
At 1 January 2023
26,192,341
364,264
1,021,513
27,578,118
Additions
603,975
34,208
450,631
1,088,814
Disposals
(14,000)
-
0
(122,442)
(136,442)
At 31 December 2023
26,782,316
398,472
1,349,702
28,530,490
Depreciation and impairment
At 1 January 2023
20,569,871
360,541
533,426
21,463,838
Depreciation charged in the year
1,544,619
8,514
271,807
1,824,940
Eliminated in respect of disposals
(14,000)
-
0
(107,238)
(121,238)
At 31 December 2023
22,100,490
369,055
697,995
23,167,540
Carrying amount
At 31 December 2023
4,681,826
29,417
651,707
5,362,950
At 31 December 2022
5,622,470
3,723
488,087
6,114,280

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

2023
2022
£
£
Plant and machinery
341,864
300,850
Motor vehicles
448,248
-
0
790,112
300,850
Depreciation charge for the year in respect of leased assets
342,344
328,085
12
Stocks
2023
2022
£
£
Raw materials and consumables
1,116,088
1,430,376
Work in progress
3,177,656
2,559,543
Finished goods and goods for resale
1,221,888
1,193,881
5,515,632
5,183,800
ENVIROWALES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
13
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
1,829,012
1,384,719
Amounts owed by group undertakings
16,870,315
13,288,545
Other debtors
1,378,318
1,336,545
Prepayments and accrued income
656,308
1,049,553
20,733,953
17,059,362
2023
2022
Amounts falling due after more than one year:
£
£
Deferred tax asset (note 19)
3,604,267
2,804,267
Total debtors
24,338,220
19,863,629

Amounts owed by group undertakings are due within one year, interest free and unsecured.

14
Financial instruments
2023
2022
£
£
Carrying amount of financial assets
Debt instruments measured at amortised cost
20,077,645
16,009,809
Carrying amount of financial liabilities
Measured at amortised cost
43,832,185
41,282,287
15
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans
17
1,944,464
1,805,544
Obligations under finance leases
18
424,671
351,908
Trade creditors
8,436,220
7,046,192
Amounts owed to group undertakings
23,897,499
21,793,781
Taxation and social security
947,872
972,106
Other creditors
7,629,081
6,371,191
Accruals and deferred income
1,072,398
1,789,955
44,352,205
40,130,677

Included in other creditors is £4,367,442 (2022: £3,271,147) in respect of asset based financing facilities. The facilities are secured against the assets of the company and group.

Amounts owed to group undertakings are due within one year, interest free and unsecured.

ENVIROWALES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
16
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans and overdrafts
17
-
0
1,805,576
Obligations under finance leases
18
427,852
318,140
427,852
2,123,716
17
Loans and overdrafts
2023
2022
£
£
Bank loans
1,944,464
3,611,120
Payable within one year
1,944,464
1,805,544
Payable after one year
-
0
1,805,576

The banking facilities provided to the company and group by HSBC PLC and HSBC Invoice Financing (UK) Limited are secured by way of a fixed and floating charge over the assets of the company and it's fellow group companies which include certain former group companies.

 

The loan facilities provided by HSBC PLC are wholly repayable within 24 months. The loans bear interest at 3.5% above the HSBC Bank Base Rate.

18
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
424,671
351,908
In two to five years
427,852
318,140
852,523
670,048
ENVIROWALES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 24 -
19
Deferred taxation

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

Liabilities
Liabilities
Assets
Assets
2023
2022
2023
2022
Balances:
£
£
£
£
ACAs
809,861
899,861
-
-
Tax losses
-
-
3,604,267
2,804,267
809,861
899,861
3,604,267
2,804,267
2023
Movements in the year:
£
Asset at 1 January 2023
(1,904,406)
Credit to profit or loss
(90,000)
Effect of change in tax rate - profit or loss
(800,000)
Asset at 31 December 2023
(2,794,406)

Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so.

20
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
259,818
256,460

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.

21
Share capital
2023
2022
£
£
Ordinary share capital
Issued and fully paid
2,038,277 Ordinary shares of £1 each
2,038,277
2,038,277
Preference share capital
Issued and fully paid
1,900,000 Preference shares of £1 each
1,900,000
1,900,000
Total equity share capital
3,938,277
3,938,277
ENVIROWALES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 25 -
22
Financial commitments, guarantees and contingent liabilities

The banking facilities provided to the company and group by HSBC PLC and HSBC Invoice Financing (UK) Limited are secured by way of a fixed and floating charge over the assets of the company and of it's fellow group companies which include certain former group companies.

Further fixed charges have been created in favour of the Welsh Ministers securing the assets of group companies providing cross guarantees for all group companies in respect of the group's debt facilities.

 

The company provides a bankers guarantee for £106,835 in favour of Nature Resource Wales.

 

23
Operating lease commitments
Lessee

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

2023
2022
£
£
Within one year
1,155
6,740
Between two and five years
-
0
1,155
1,155
7,895
24
Profit and loss reserves
2023
2022
£
£
At the beginning of the year
(15,354,238)
(15,971,988)
Profit for the year
1,517,013
617,750
At the end of the year
(13,837,225)
(15,354,238)
25
Ultimate controlling party

The company's immediate parent undertaking is Envirolead Recycling Limited, a subsidiary of Envirolead Midco Limited. The company's ultimate parent company is Industrial Metals Holdings Limited, a company incorporated in the Isle of Man.

 

International Metal Industries Limited is the parent company of Envirolead Midco Limited. International Metal Industries Limited has included the financial statements of Envirowales Limited in their consolidated group accounts, copies of which are available upon request: Faulkner House, Victoria Street, St Albans, Herts, AL1 3SE.

 

The ultimate controlling party is Mr M E Sherling by virtue of his voting rights on his shareholding in the ultimate parent company.

 

ENVIROWALES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 26 -
26
Related party transactions and balances

The company has taken advantage of FRS 102 section 33.1A to not disclose transactions entered into between two or more members of a group, provided that any subsidiary which is party to the transaction is wholly owned by such a member.

 

During the year the following expenditure was incurred from the following related entities which share a common director. All transactions were entered into at arm’s length:

 

 

At the balance sheet date the following balances were owed from/(to) the following entities which share a common director and/or shareholder:

 

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