Crofthead Biogas Limited |
Notes to the accounts |
for the year ended 31 March 2024 |
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1 |
Accounting policies |
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Accounting convention |
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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 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view. |
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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 £. |
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The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below. |
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Going concern |
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At the date of approval of the financial statements, the company have prepared and approved up- to-date management accounts, budgets and cash flow projections which include key revenue and cost assumptions that the directors consider reasonable and prudent. The loan note holders have stated that they will not will not seek early repayment of the loan where this would be detrimental to the going concern status of the company. |
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Having considered the matters above, the company is of the view that it will have sufficient resources to continue to operate and meet debts as they fall due for the foreseeable future. The financial statements have therefore been prepared on a going concern basis. |
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Turnover |
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Turnover represents amounts receivable from the generation of gas (biomethane) and electricity through anaerobic digestion, net of VAT. Turnover from the sale of biomethane is recognised when gas is exported to the grid, that being the point at which the significant risks and rewards of ownership have passed to the buyer. |
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Tangible fixed assets |
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Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses. |
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Tangible fixed assets other than freehold land are stated at cost less depreciation. Where a substantial period of time is required to bring an asset into use, attributable finance costs are capitalised and included in the cost of the relevant asset. Depreciation is provided at rates calculated to write off the cost less estimated residual value of each asset over its expected useful life, as follows: |
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Plant and machinery |
5% straight line |
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Motor Vehicles |
25% straight line |
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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. |
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Impairment of fixed assets |
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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. |
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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. |
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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. |
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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. |
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Cash at bank and in hand |
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Cash at bank and in hand 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. |
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Financial instruments |
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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. |
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Financial instruments are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument. |
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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. |
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Basic financial assets |
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Basic financial assets, which include debtors, 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. |
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Basic financial liabilities |
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Basic financial liabilities, including creditors and loan notes, 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. |
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Loan notes are subsequently carried at amortised cost, using the effective interest rate method. |
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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. |
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Equity instruments |
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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. |
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Deferred tax |
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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. |
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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. Where items recognised in other comprehensive income or equity are chargeable to or deductible for tax purposes, the resulting current or deferred tax expense or income is presented in the same component of comprehensive income or equity as the transaction or other event that resulted in the tax expense or income. 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. |
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Tax |
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A current tax liability is recognised for the tax payable on the taxable profit of the current and past periods. A current tax asset is recognised in respect of a tax loss that can be carried back to recover tax paid in a previous period. Deferred tax is recognised in respect of all timing differences between the recognition of income and expenses in the financial statements and their inclusion in tax assessments. Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date and that are expected to apply to the reversal of the timing difference, except for revalued land and investment property where the tax rate that applies to the sale of the asset is used. Current and deferred tax assets and liabilities are not discounted. |
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Foreign exchange |
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Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the income statement for the period. |
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Leases |
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Rentals payable under operating leases are charged against income on a straight line basis over the lease term. |
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2 |
Critical accounting judgements and key sources of estimation uncertainty |
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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. |
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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. |
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Critical judgements |
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The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements. |
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Impairment of fixed assets |
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At each reporting period end, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication of impairment. If there is any such indication, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). |
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Deferred Tax |
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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. |
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3 |
Operating loss |
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2024 |
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2023 |
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Operating loss for the year is stated after charging: |
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Fees payable to the company's auditor for the audit of the company's financial statements |
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7,500 |
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7,000 |
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4 |
Employees |
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2024 |
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2023 |
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Average number of persons employed by the company |
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- |
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5 |
Tangible fixed assets |
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Plant and machinery |
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Motor vehicles |
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Total |
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£ |
£ |
£ |
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Cost |
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At 1 April 2023 |
18,564,053 |
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79,800 |
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18,643,853 |
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Additions |
207,676 |
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- |
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207,676 |
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Disposals |
- |
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- |
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- |
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At 31 March 2024 |
18,771,729 |
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79,800 |
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18,851,529 |
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Depreciation |
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At 1 April 2023 |
1,848,097 |
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58,520 |
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1,906,617 |
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Charge for the year |
948,108 |
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15,960 |
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964,068 |
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On disposals |
- |
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- |
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- |
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At 31 March 2024 |
2,796,205 |
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74,480 |
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2,870,685 |
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Net book value |
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At 31 March 2024 |
15,975,524 |
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5,320 |
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15,980,844 |
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At 31 March 2023 |
16,715,956 |
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21,280 |
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16,737,236 |
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Included within the carrying amount of plant and machinery is loan interest totalling £3,091,961 (2023: £3,273,841) arising on the loan notes detailed in note 8. |
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6 |
Debtors |
2024 |
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2023 |
£ |
£ |
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Trade debtors |
212,116 |
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25,588 |
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Deferred tax asset |
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- |
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175,179 |
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Other debtors |
1,757,300 |
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1,500,812 |
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1,969,416 |
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1,701,579 |
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7 |
Creditors: amounts falling due within one year |
2024 |
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2023 |
£ |
£ |
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Finance lease |
5,102 |
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11,792 |
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Trade creditors |
408,997 |
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732,227 |
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Other creditors |
841,679 |
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352,042 |
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Loan notes |
994,500 |
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688,500 |
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2,250,278 |
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1,784,561 |
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8 |
Creditors: amounts falling due after one year |
2024 |
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2023 |
£ |
£ |
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Finance lease |
- |
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5,102 |
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Loan notes due 1 - 5 years |
2,851,500 |
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1,683,000 |
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Loan notes due after 5 years |
20,257,445 |
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19,653,337 |
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23,108,945 |
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21,341,439 |
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Interest of 10% per annum is payable on loan notes totalling £24,103,445 (2023: £22,024,837). During the year, £2,283,177 (2023: £2,134,887) was charged. The loan notes are secured by way of fixed and floating charge over the entire assets and undertaking of the company, including leasehold land at Crofthead Farm, Dumfries. Security is in favour of Iona Capital Limited as security trustee. The ultimate beneficiaries of this security are the holders of the loan notes. |
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9 |
Deferred Taxation |
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The directors have considered future profit projections and have recognised tax losses to the extent that they will be utilised against future taxable profits. |
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2024 |
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2023 |
£ |
£ |
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At 1 April 2023 |
- |
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295,930 |
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Movement for the year |
- |
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(120,751) |
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At 31 March 2024 |
- |
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175,179 |
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10 |
Called up share capital |
2024 |
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2023 |
£ |
£ |
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Ordinary share capital Issued and fully paid |
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200 Ordinary shares of £1 each |
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200 |
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200 |
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11 |
Operating lease commitments |
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Lessee |
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The company has entered into a lease of land for a fixed charge of £20,000 per annum, subject to inflationary increases. The lease expires in September 2040. |
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12 |
Related party transactions |
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