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Registered number: 04272075










Envar Composting Limited










Directors' report and financial statements

For the year ended 30 April 2024

 
Envar Composting Limited
 

Company Information


Directors
J H West 
T L Heathcote 
A M Sibley 




Registered number
04272075



Registered office
Stanford Bridge Farm
Station Road

Pluckley

Ashford

Kent

TN27 0RU




Business address
Cheffins
The Heath

Woodhurst

Huntingdon

PE28 3BS






Independent auditors
Kreston Reeves LLP
Statutory Auditor & Chartered Accountants

37 St Margaret's Street

Canterbury

Kent

CT1 2TU




Bankers
HSBC Bank Plc
38 High Street

Dartford

Kent

DA1 1DG





 
Envar Composting Limited
 

Contents



Page
Strategic report
 
1 - 2
Directors' report
 
3 - 4
Directors' responsibilities statement
 
5
Independent auditors' report
 
6 - 9
Statement of comprehensive income
 
10
Balance sheet
 
11
Statement of changes in equity
 
12
Notes to the financial statements
 
13 - 31


 
Envar Composting Limited
 

Strategic report
For the year ended 30 April 2024

Introduction
 
The principal activities of Envar Composting Limited is the processing of Green Waste and Food Waste from local authority customers producing a PAS100 Compost for use in agriculture and horticulture. 
As of 30 April 2024, Envar Operated 7 processing facilities with one transfer station.

Business review
 
During the trading year, turnover has increased by £5,115,909 to £17,395,185 (2023: £12,279,276). This has been driven by internal growth with the acquisition of four new sites.
Net assets have also grown by £4.3m to £11.2m (2023: £6.9m).

Principal risks and uncertainties
 
The daily management of the businesses and the execution of the strategies are subject to several risks. The predominate business risks affecting the Company are:
Market Risk
The Company is committed to providing green waste and food waste to the local authorities under three to five year contracts. There is a risk of regulatory changes with new government legislation that is due to be enacted within the next few years. The sale of compost to agriculture has been affected by the weather and the down turn in the agricultural markets and the horticulture market remains seasonal. House building and construction has taken a halt which has further impacted the market.
Envar continually monitoring these changes and adapt where necessary.
Operating Costs
Through the year, increased costs of operation caused by inflationary pressures have been widely seen particularly with regards materials used for machinery and purchase of new machinery. These are being closely monitored and mitigated where possible rather than simply passed on to customers unless unavoidable. investment in the latest machinery has also assisted in ensuring we have the most fuel-efficient assets within our operations, the benefit of which is passed through our services to our customers. 
Equipment
The supply of new equipment has lagged through the year with many manufacturers quoting up to twelve month order to delivery periods makes the CAPEX replacement program challenging when existing equipment requirements for servicing and repair escalate. Early communication with key suppliers of future equipment requirements is being carried out, endeavouring to mitigate potential delays.
 
Liquidity Risk
Regular increasing interest rates when funding expansion by borrowing is under close review, where possible, this continues to be minimised whilst ensuring the company has sufficient resources to meet the working capital needs of the business. A revolving credit facility setup during the year and invoice financing facilities are used to accommodate seasonal fluctuations and provide flexibility plus fund future growth opportunities.
Credit Risk
The majority of customers are local authority that come with less risk. However, with our other customers there are policies and procedures in place to mitigate this by looking at the appropriate credit ratings.
 
Page 1

 
Envar Composting Limited
 

Strategic report (continued)
For the year ended 30 April 2024

Health and safety
The Company is fully committed to the health and safety of all staff and any visitors of Company sites. Regular internal and external HSE led audits have been undertaken through the year with minor housekeeping centric improvements being recommended. Internal H&S managers routinely meet to share innovation and the latest best practice which is implemented relevant to the local operations within their jurisdiction. Ongoing staff one-to- one training and safety/hazard awareness courses are rolled out across the business locations as a matter of course.
Financial position
The financial position of the company is considered to be strong by the Directors and is in line with their expectations. The strength of the company is improving further throughout the coming period although challenging weather conditions during the summer period affected some operations. Positive consistent cash generation continues which contributes to reinvestment in staff and assets.
 

Financial key performance indicators
 
The Directors consider operating profit to be the key measure of performance of the business. During the year the Company generated a combined operating profit of £3,811,638 (2023: £997,119) and a further strengthening of the balance sheet by £4m.
Post year end events
No post year end events.


This report was approved by the board on 24 January 2025 and signed on its behalf.



T L Heathcote
Director

Page 2

 
Envar Composting Limited
 

 
Directors' report
For the year ended 30 April 2024

The directors present their report and the financial statements for the year ended 30 April 2024.

Principal activity

The principal activity of the company continued to be that of waste management services. 

Results and dividends

The profit for the year, after taxation, amounted to £2,767,202 (2023 - £558,323).

Disclosures relating to energy have been included in the consolidated financial statements of Heathcote Holdings Limited.

Directors

The directors who served during the year were:

J H West 
T L Heathcote 
A M Sibley 

Future developments

Please refer to the Strategic report.

Engagement with suppliers, customers and others

The Directors engagement with employees, suppliers, customers and others is detailed in the strategic report on pages 1 to 2.

Greenhouse gas emissions, energy consumption and energy efficiency action

Disclosures relating to energy have been included in the consolidated financial statements of Heathcote Holdings Limited.

Disclosure of information to auditors

Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:
 
so far as the director is aware, there is no relevant audit information of which the Company's auditors are unaware, and

the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

Post balance sheet events

There have been no significant events affecting the Company since the year end.
Page 3

 
Envar Composting Limited
 

 
Directors' report (continued)
For the year ended 30 April 2024

Auditors

The auditorsKreston Reeves LLPwill be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

This report was approved by the board and signed on its behalf.
 





T L Heathcote
Director
Date: 24 January 2025

Page 4

 
Envar Composting Limited
 

Directors' responsibilities statement
For the year ended 30 April 2024

The directors are responsible for preparing the Strategic report, the Directors' 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

 In preparing these financial statements, the directors are required to:

select suitable accounting policies for the Company's financial statements and then apply them consistently;

make judgements and accounting estimates that are reasonable and prudent;

state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

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

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006They 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.

Page 5

 
Envar Composting Limited
 

 
Independent auditors' report to the members of Envar Composting Limited
 

Opinion


We have audited the financial statements of Envar Composting Limited (the 'Company') for the year ended 30 April 2024, which comprise the Statement of comprehensive income, the Balance sheet, the Statement of changes in equity and the related notes, including a summary of significant accounting policiesThe 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:

give a true and fair view of the state of the Company's affairs as at 30 April 2024 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.

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 Auditors' 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 United Kingdom, including the Financial Reporting Council'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 Auditors' report thereon. The directors are responsible for the other information contained within the Annual ReportOur 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.

Page 6

 
Envar Composting Limited
 

 
Independent auditors' report to the members of Envar Composting Limited (continued)


Opinion on other matters prescribed by the Companies Act 2006
 

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

the information given in the Strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.

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:

adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.

Responsibilities of directors
 

As explained more fully in the Directors' responsibilities statement set out on page 5, 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.

Auditors' 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 Auditors' 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:
Page 7

 
Envar Composting Limited
 

 
Independent auditors' report to the members of Envar Composting Limited (continued)


Capability of the audit in detecting irregularities, including fraud
Based on our understanding of the company and industry, and through discussion with the directors and other management (as required by auditing standards), we identified that the principal risks of non-compliance with laws and regulations related to health and safety, anti-bribery and employment law. We considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006, Statement of Recommended Practice, taxation and pension legislation. We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit. We 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 management override. Audit procedures performed by the engagement team:
 
Discussions with management and assessment of known or suspected instances of non-compliance with laws and regulations (including health and safety) and fraud;
Assessment of identified fraud risk factors;
Challenging assumptions and judgments made by management in its significant accounting estimates;
Confirmation of related parties with management, and review of transactions throughout the period to identify any previously undisclosed transactions with related parties outside the normal course of business; and
Physical inspection of tangible fixed assets susceptible to fraud or irregularity; and
Performing analytical procedures with automated data analytics tools to identify any unusual or unexpected relationships, including related party transactions, that may indicate risks of material misstatement due to fraud; and
Identifying and testing journal entries, in particular any manual entries made at the year end for financial statement preparation

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

As part of an audit in accordance with ISAs (UK), we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion of the effectiveness of the Company's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our Auditors' report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our Auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
 
Page 8

 
Envar Composting Limited
 

 
Independent auditors' report to the members of Envar Composting Limited (continued)



We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

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 2006Our 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 Auditors' 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.




Tracey Becker (Senior statutory auditor)
for and on behalf of
Kreston Reeves LLP
Statutory Auditor
Chartered Accountants
Canterbury

28 January 2025
Page 9

 
Envar Composting Limited
 

Statement of comprehensive income
For the year ended 30 April 2024

2024
2023
Note
£
£

  

Turnover
 4 
17,395,185
12,279,276

Cost of sales
  
(9,256,684)
(8,250,139)

Gross profit
  
8,138,501
4,029,137

Administrative expenses
  
(4,326,928)
(3,032,018)

Other operating income
 5 
65
-

Operating profit
 6 
3,811,638
997,119

Income from fixed assets investments
  
4,288,600
-

Amounts written off investments
  
(3,910,299)
-

Interest receivable and similar income
 10 
28,510
19,623

Interest payable and similar expenses
 11 
(643,514)
(388,018)

Profit before tax
  
3,574,935
628,724

Tax on profit
 12 
(807,733)
(70,401)

Profit for the financial year
  
2,767,202
558,323

There was no other comprehensive income for 2024 (2023:£NIL).

The notes on pages 13 to 31 form part of these financial statements.

Page 10

 
Envar Composting Limited
Registered number: 04272075

Balance sheet
As at 30 April 2024

2024
2023
Note
£
£

Fixed assets
  

Intangible assets
 13 
3,974,147
-

Tangible assets
 14 
8,162,390
8,108,391

Investments
 15 
12,897,358
6,245,462

  
25,033,895
14,353,853

Current assets
  

Stocks
 16 
128,439
104,870

Debtors: amounts falling due within one year
 17 
6,513,300
3,075,129

Cash at bank and in hand
 18 
333,278
246,739

  
6,975,017
3,426,738

Creditors: amounts falling due within one year
 19 
(6,203,810)
(4,679,721)

Net current assets/(liabilities)
  
 
 
771,207
 
 
(1,252,983)

Total assets less current liabilities
  
25,805,102
13,100,870

Creditors: amounts falling due after more than one year
 20 
(15,860,778)
(6,322,654)

Provisions for liabilities
  

Deferred tax
 23 
(303,411)
95,495

Net assets
  
9,640,913
6,873,711


Capital and reserves
  

Called up share capital 
 24 
1
1

Profit and loss account
 25 
9,640,912
6,873,710

  
9,640,913
6,873,711


The financial statements were approved and authorised for issue by the board and were signed on its behalf by: 




T L Heathcote
Director
Date: 24 January 2025

The notes on pages 13 to 31 form part of these financial statements.

Page 11

 
Envar Composting Limited
 

Statement of changes in equity
For the year ended 30 April 2024


Called up share capital
Profit and loss account
Total equity

£
£
£


At 1 May 2022
1
6,315,387
6,315,388


Comprehensive income for the year

Profit for the year
-
558,323
558,323


Other comprehensive income for the year
-
-
-


Total comprehensive income for the year
-
558,323
558,323


Total transactions with owners
-
-
-



At 1 May 2023
1
6,873,710
6,873,711


Comprehensive income for the year

Profit for the year
-
2,767,202
2,767,202


Other comprehensive income for the year
-
-
-


Total comprehensive income for the year
-
2,767,202
2,767,202


Total transactions with owners
-
-
-


At 30 April 2024
1
9,640,912
9,640,913


Page 12

 
Envar Composting Limited
 

 
Notes to the financial statements
For the year ended 30 April 2024

1.


General information

Envar Composting Limited is a private company limited by shares and is incorporated in England and Wales with the registration number 04272075. The address of the registered office is Stanford Bridge Farm, Station Road, Pluckley, Ashford, Kent, TN27 0RU.

2.Accounting policies

 
2.1

Basis of preparation of financial statements

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 3).

The company's financial statements are presented to the nearest £. 

The following principal accounting policies have been applied:

 
2.2

Financial Reporting Standard 102 - reduced disclosure exemptions

The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
the requirements of Section 7 Statement of Cash Flows;
the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A;
the requirements of Section 33 Related Party Disclosures paragraph 33.7.

This information is included in the consolidated financial statements of Heathcote Holdings Limited as at 30 April 2024 and these financial statements may be obtained from Stanford Bridge Farm, Station Road, Pluckley, Ashford, Kent, TN27 0RU.

 
2.3

Exemption from preparing consolidated financial statements

The Company is a parent company that is also a subsidiary included in the consolidated financial statements of a larger group by a parent undertaking established under the law of any part of the United Kingdom and is therefore exempt from the requirement to prepare consolidated financial statements under section 400 of the Companies Act 2006.

 
2.4

Going concern

The directors have a reasonable expectation that the company will continue in operational existence for the foreseeable future. Because of this, the financial statements have been prepared on a going concern basis.

Page 13

 
Envar Composting Limited
 

 
Notes to the financial statements
For the year ended 30 April 2024

2.Accounting policies (continued)

 
2.5

Foreign currency translation

Functional and presentation currency

The Company's functional and presentational currency is Pounds sterling.

Transactions and balances

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

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

Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Statement of comprehensive income within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income'.

 
2.6

Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:

Sale of goods

Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
the Company has transferred the significant risks and rewards of ownership to the buyer;
the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
the amount of revenue can be measured reliably;
it is probable that the Company will receive the consideration due under the transaction; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Rendering of services

Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
the amount of revenue can be measured reliably;
it is probable that the Company will receive the consideration due under the contract;
the stage of completion of the contract at the end of the reporting period can be measured reliably; and
the costs incurred and the costs to complete the contract can be measured reliably.

Page 14

 
Envar Composting Limited
 

 
Notes to the financial statements
For the year ended 30 April 2024

2.Accounting policies (continued)

 
2.7

Finance costs

Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

 
2.8

Borrowing costs

All borrowing costs are recognised in profit or loss in the year in which they are incurred.

 
2.9

Intangible assets

Goodwill

Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer’s interest in the fair value of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight-line basis to the Statement of comprehensive income over its useful economic life.

Other intangible assets

Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.

 
2.10

Tangible fixed assets

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

At each reporting date the Company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.

The Company adds to the carrying amount of an item of fixed assets the cost of replacing part of such an item when that cost is incurred, if the replacement part is expected to provide incremental future benefits to the Company. The carrying amount of the replaced part is derecognised. Repairs and maintenance are charged to profit or loss during the period in which they are incurred.

Page 15

 
Envar Composting Limited
 

 
Notes to the financial statements
For the year ended 30 April 2024

2.Accounting policies (continued)


2.10
Tangible fixed assets (continued)

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.

Depreciation is provided on the following basis:

Leasehold land and buildings
-
Land is not depreciated. Leasehold buildings 10 - 20 years straight line basis
Plant and equipment
-
5 - 10 years straight line basis
Motor vehicles
-
5 - 10 years straight line basis
Fixtures and fittings
-
5 - 10 years straight line basis
Computers
-
3 years straight line basis
Assets under construction
-
Not depreciated

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.

 
2.11

Impairment of fixed assets and goodwill

Assets that are subject to depreciation or amortisation are assessed at each balance sheet date to determine whether there is any indication that the assets are impaired. Where there is any indication that an asset may be impaired, the carrying value of the asset (or cash-generating unit to which the asset has been allocated) is tested for impairment. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's (or CGU's) fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Non-financial assets that have been previously impaired are reviewed at each balance sheet date to assess whether there is any indication that the impairment losses recognised in prior periods may no longer exist or may have decreased.

 
2.12

Valuation of investments

Investments in subsidiaries are measured at cost less accumulated impairment.

 
2.13

Stocks

Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Work in progress and finished goods include labour and attributable overheads.

At each balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.

 
2.14

Debtors

Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

Page 16

 
Envar Composting Limited
 

 
Notes to the financial statements
For the year ended 30 April 2024

2.Accounting policies (continued)

 
2.15

Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

 
2.16

Financial instruments

The Company has elected to apply the provisions of Section 11 “Basic Financial Instruments” 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 trade and other debtors, cash and bank balances, are initially measured at their transaction price (adjusted for transaction costs except in the initial measurement of financial assets that are subsequently measured at fair value through profit and loss) and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.

Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash equivalents, trade and most other debtors due with the operating cycle fall into this category of financial instruments.

Other financial assets

Other financial assets, which includes investments in equity instruments which are not classified as subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in fair value being recognised in the profit or loss. Where other financial assets are not publicly traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.

Impairment of financial assets

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

Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.

If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
Page 17

 
Envar Composting Limited
 

 
Notes to the financial statements
For the year ended 30 April 2024

2.Accounting policies (continued)


2.16
Financial instruments (continued)


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 the deduction of all its liabilities.

Basic financial liabilities, which include trade and other creditors, bank loans and other loans are initially measured at their transaction price (adjusting for transaction costs except in the initial measurement of financial liabilities that are subsequently measured at fair value through profit and loss). When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future payments discounted at a market rate of interest, discounting is omitted where the effect of discounting is immaterial.

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

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

Derecognition of financial instruments

Derecognition of financial assets

Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Company transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Company will continue to recognise the value of the portion of the risks and rewards retained.

Derecognition of financial liabilities

Financial liabilities are derecognised when the Company's contractual obligations expire or are discharged or cancelled.

 
2.17

Creditors

Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

 
2.18

Operating leases: the Company as lessee

Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.

Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.

Page 18

 
Envar Composting Limited
 

 
Notes to the financial statements
For the year ended 30 April 2024

2.Accounting policies (continued)

 
2.19

Pensions

Defined contribution pension plan

The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.

The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Balance sheet. The assets of the plan are held separately from the Company in independently administered funds.

 
2.20

Provisions for liabilities

Provisions are recognised when an event has taken place that gives rise to a legal or constructive obligation, a transfer of economic benefits is probable and a reliable estimate can be made.
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
 
Increases in provisions are generally charged as an expense to profit or loss.

 
2.21

Interest income

Interest income is recognised in profit or loss using the effective interest method.

 
2.22

Current and deferred taxation

The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company operates and generates income.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:
The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.


Page 19

 
Envar Composting Limited
 

 
Notes to the financial statements
For the year ended 30 April 2024

3.


Judgements in applying accounting policies and key sources of estimation uncertainty

The preparation of the financial statements requires the directors to make judgements, estimates and assumptions that can affect the amounts reported for assets and liabilities, and the results for the year. The nature of estimation is such though that actual outcomes could differ significantly from those estimates.
The following judgements have had the most significant impact on amounts recognised in the financial statements:
Lease commitments
The company has entered into a range of lease commitments in respect of property, plant and equipment. The classification of these leases as either financial or operating leases requires the directors to consider whether the terms and conditions of each lease are such that the company has acquired the risks and rewards associated with the ownership of the underlying assets.
Goodwill and intangible assets
The company has recognised goodwill and other intangible assets arising from business combinations with a carrying value of £3,983,534 at the reporting date (see note 13). On acquisition the company determines a reliable estimate of the useful life of goodwill and intangible assets based upon factors such as the expected use of the acquired business, forecasts of expected future results and cash flows, and any legal, regulatory or contractual provisions that can limit useful life. At each subsequent reporting date the directors consider whether there are any factors such as technological advancements or changes in market conditions that indicate a need to reconsider the useful life of goodwill and intangible assets.
Tangible fixed assets
The company has recognised tangible fixed assets with a carrying value of £8,162,390 at the reporting date (see note 14). These assets are stated at their cost less provision for depreciation and impairment. The company’s accounting policy sets out the approach to calculating depreciation for immaterial assets acquired. For material assets such as land and buildings the company determines at acquisition reliable estimates for the useful life of the asset, its residual value and decommissioning costs. These estimates are based upon such factors as the expected use of the acquired asset and market conditions. At subsequent reporting dates the directors consider whether there are any factors such as technological advancements or changes in market conditions that indicate a need to reconsider the estimates used.
Where there are indicators that the carrying value of tangible assets may be impaired the company undertakes tests to determine the recoverable amount of assets. These tests require estimates of the fair value of assets less cost to sell and of their value in use. Wherever possible the estimate of the fair value of assets is based upon observable market prices less incremental cost for disposing of the asset. The value in use calculation is based upon a discounted cash flow model, based upon the company’s forecasts for the foreseeable future which do not include any restructuring activities that the company is not yet committed to or significant future investments that will enhance the asset’s performance. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well expected future cash flows and the growth rate used for extrapolation purposes.


4.


Turnover

Analysis of turnover by country of destination:

2024
2023
£
£

United Kingdom
17,395,185
12,102,076

Rest of Europe
-
177,200

17,395,185
12,279,276


Page 20

 
Envar Composting Limited
 

 
Notes to the financial statements
For the year ended 30 April 2024

5.


Other operating income

2024
2023
£
£

Other operating income
65
-



6.


Operating profit

The operating profit is stated after charging:

2024
2023
£
£

Exchange differences
625
478

Other operating lease rentals
605,407
450,627


7.


Auditors' remuneration

During the year, the Company obtained the following services from the Company's auditors:


2024
2023
£
£

Fees payable to the Company's auditors for the audit of the Company's financial statements
16,000
8,250

The Company has taken advantage of the exemption not to disclose amounts paid for non-audit services as these are disclosed in the consolidated accounts of the parent Company.


8.


Employees

Staff costs were as follows:


2024
2023
£
£

Wages and salaries
2,481,426
2,013,300

Social security costs
280,116
234,149

Cost of defined contribution scheme
68,626
54,164

2,830,168
2,301,613


The directors are remunerated through other group companies. 

The average monthly number of employees, including the directors, during the year was as follows:


        2024
        2023
            No.
            No.







Persons (including directors)
75
49

Page 21

 
Envar Composting Limited
 

 
Notes to the financial statements
For the year ended 30 April 2024

9.


Income from investments

2024
2023
£
£



Dividends received from unlisted investments
4,288,600
-



10.


Interest receivable

2024
2023
£
£


Other interest receivable
28,510
19,623


11.


Interest payable and similar expenses

2024
2023
£
£


Bank interest payable
569,281
317,469

Finance leases and hire purchase contracts
74,233
70,549

643,514
388,018


12.


Taxation


2024
2023
£
£

Corporation tax


Current tax on profits for the year
160,336
-


160,336
-


Total current tax
160,336
-

Deferred tax


Origination and reversal of timing differences
647,397
70,401

Total deferred tax
647,397
70,401


Tax on profit
807,733
70,401
Page 22

 
Envar Composting Limited
 

 
Notes to the financial statements
For the year ended 30 April 2024
 
12.Taxation (continued)


Factors affecting tax charge for the year

The tax assessed for the year is lower than (2023 - lower than) the standard rate of corporation tax in the UK of 25.00% (2023 - 19.49%). The differences are explained below:

2024
2023
£
£


Profit on ordinary activities before tax
3,574,935
628,724


Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 25% (2023 - 19.49%)
893,734
122,558

Effects of:


Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
1,300,703
25

Fixed asset differences
42,490
(89,949)

Adjustments to deferred tax charge in respect of prior periods
310,696
52,797

Other timing differences leading to an increase (decrease) in taxation
(214,363)
-

Non-taxable income
(41,875)
(18,908)

Dividends from UK companies
(1,072,150)
-

Recognised on hive up of other entities
(352,238)
-

Remeasurement of deferred tax for changes in tax rates
-
3,878

Group relief
(421,481)
-

Deferred tax not recognised
362,217
-

Total tax charge for the year
807,733
70,401


Factors that may affect future tax charges

Deferred taxes have been measured using rates substantively enacted at the reporting date and reflected in these financial statements.

Page 23

 
Envar Composting Limited
 

 
Notes to the financial statements
For the year ended 30 April 2024

13.


Intangible assets




Goodwill

£



Cost


Additions
4,089,199



At 30 April 2024

4,089,199



Amortisation


Charge for the year on owned assets
115,052



At 30 April 2024

115,052



Net book value



At 30 April 2024
3,974,147



At 30 April 2023
-



Page 24
 


 
Envar Composting Limited


 

 
Notes to the financial statements
For the year ended 30 April 2024


14.


Tangible fixed assets






Freehold property
Leasehold improvements
Plant and machinery
Motor vehicles
Fixtures and fittings
Office equipment
Assets under construction
Total

£
£
£
£
£
£
£
£



Cost or valuation


At 1 May 2023
1,012,644
-
11,620,609
98,999
30,231
81,332
492,760
13,336,575


Additions
319,454
-
1,154,486
128,347
-
52,352
4,696
1,659,335


Transfers intra group
56,995
126,128
204,433
6,818
-
6,811
(59,265)
341,920


Disposals
-
-
(447,500)
-
-
-
(197,324)
(644,824)


Transfers between classes
-
-
200,000
-
-
40,867
(240,867)
-



At 30 April 2024

1,389,093
126,128
12,732,028
234,164
30,231
181,362
-
14,693,006



Depreciation


At 1 May 2023
147,070
-
4,914,307
63,235
25,107
78,465
-
5,228,184


Charge for the year on owned assets
53,506
1,402
1,590,282
38,280
3,156
17,591
-
1,704,217


Disposals
-
-
(401,785)
-
-
-
-
(401,785)



At 30 April 2024

200,576
1,402
6,102,804
101,515
28,263
96,056
-
6,530,616



Net book value



At 30 April 2024
1,188,517
124,726
6,629,224
132,649
1,968
85,306
-
8,162,390



At 30 April 2023
865,574
-
6,706,302
35,764
5,124
2,867
492,760
8,108,391


Page 25
 
Envar Composting Limited
 

 
Notes to the financial statements
For the year ended 30 April 2024

14.


Tangible fixed assets (continued)

During the year, the company completed construction of several silos and therefore reclassified the items from assets under construction to freehold property and plant and machinery at the date they were brought into use.
The net book value of assets held under finance leases or hire purchase contracts, included above, are as follows:

 
2024
2023
£
£



Plant and machinery
2,556,918
3,045,783

2,556,918
3,045,783


15.


Fixed asset investments





Investments in subsidiary companies

£



Cost or valuation


At 1 May 2023
6,245,462


Additions
14,497,394


Amounts written off
(3,910,299)


Transfer to goodwill
(3,935,199)



At 30 April 2024
12,897,358






Net book value



At 30 April 2024
12,897,358



At 30 April 2023
6,245,462

During the year, the company acquired two new investments, Tamar Organics Limited (now EnVar Organics Limited) and New Earth Solutions (Kent) Limited (now Envar Composting Kent Limited). Tamar Organics Limited has been hived up into the company and as such a transfer has been made to goodwill and a resulting impairment in the carrying value has been recognised. 
Also in the year the trade and assets of EnVar Composting (Surrey) Limited was hived up into the company and a capital reduction undertaken in the subsidiary, resulting in an impairment in the investment carrying value.

Page 26

 
Envar Composting Limited
 

 
Notes to the financial statements
For the year ended 30 April 2024

Subsidiary undertakings


The following were subsidiary undertakings of the Company:

Name

Class of shares

Holding

West London Composting Limited
Ordinary
100%
L.J. Grundon & Sons Limited
Ordinary
100%
Envar Composting (Surrey) Limited
Ordinary
100%
Envar Organics Limited
Ordinary
100%
Envar Composting Kent Limited
Ordinary
100%

The registered office address of each of the above entities is Stanford Bridge Farm, Pluckley, Ashford, Kent, TN27 0RU.


16.


Stocks

2024
2023
£
£

Raw materials and consumables
118,439
84,870

Finished goods and goods for resale
10,000
20,000

128,439
104,870



17.


Debtors

2024
2023
£
£


Trade debtors
2,996,481
1,636,864

Amounts owed by group undertakings
1,815,637
700,842

Other debtors
41,531
128,000

Prepayments and accrued income
1,659,651
609,423

6,513,300
3,075,129



18.


Cash and cash equivalents

2024
2023
£
£

Cash at bank and in hand
333,278
246,739


Page 27

 
Envar Composting Limited
 

 
Notes to the financial statements
For the year ended 30 April 2024

19.


Creditors: Amounts falling due within one year

2024
2023
£
£

Trade creditors
1,331,300
519,937

Amounts owed to group undertakings
2,200,815
1,991,651

Corporation tax
97,107
-

Other taxation and social security
420,238
140,855

Obligations under finance lease and hire purchase contracts
959,078
1,019,235

Other creditors
13,674
60,907

Accruals and deferred income
1,181,598
947,136

6,203,810
4,679,721



20.


Creditors: Amounts falling due after more than one year

2024
2023
£
£

Bank loans
10,000,000
-

Net obligations under finance leases and hire purchase contracts
610,778
1,072,654

Amounts owed to group undertakings
5,250,000
5,250,000

15,860,778
6,322,654



21.


Loans


Analysis of the maturity of loans is given below:


2024
2023
£
£


Amounts falling due 1-2 years

Bank loans
10,000,000
-


10,000,000
-



10,000,000
-


Page 28

 
Envar Composting Limited
 

 
Notes to the financial statements
For the year ended 30 April 2024

22.


Hire purchase and finance leases


Minimum lease payments under hire purchase fall due as follows:

2024
2023
£
£


Within one year
959,078
1,019,235

Between 1-5 years
5,860,778
6,322,654

6,819,856
7,341,889


23.


Deferred taxation




2024


£






At beginning of year
95,495


Charged to profit or loss
(647,397)


Arising on business combinations
248,491



At end of year
(303,411)

The deferred tax balance is made up as follows:

2024
2023
£
£


Accelerated capital allowances
(305,497)
(619,672)

Tax losses carried forward
-
715,167

Timing of pension contributions
2,086
-

(303,411)
95,495

Comprising:

Liability
(303,411)
95,495

(303,411)
95,495



24.


Share capital

2024
2023
£
£
Allotted, called up and fully paid



1 (2023 - 1) Ordinary shares share of £1.00
1
1


Page 29

 
Envar Composting Limited
 

 
Notes to the financial statements
For the year ended 30 April 2024

25.


Reserves

Profit and loss account

The reserve comprises all current and prior retained profits and losses after deducting any distributions made to the company's shareholders.


26.


Capital commitments


At 30 April 2024 the Company had capital commitments as follows:

2024
2023
£
£


Contracted for but not provided in these financial statements
271,698
-

271,698
-


27.


Pension commitments

The Company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Company  in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £68,626 (2023 - £54,164). Contributions totaling £13,674 (2023 - £8,341) were payable to the fund at the balance sheet date and are included in creditors.


28.


Commitments under operating leases

At 30 April 2024 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:

2024
2023
£
£


Not later than 1 year
530,139
376,690

Later than 1 year and not later than 5 years
819,243
251,126

Later than 5 years
1,000,000
-

2,349,382
627,816




29.Other financial commitments

On 21 December 2021, an unlimited composite company guarantee was given by Envar Composting Limited and other companies within the Heathcote Holdings group to HSBC Plc.
At 30 April 2024, the total exposure amounted to £21,875,000 (2023: £7,875,000).

Page 30

 
Envar Composting Limited
 

 
Notes to the financial statements
For the year ended 30 April 2024

30.


Related party transactions

The company is exempt from disclosing related party transactions with other companies that are wholly
owned within the group. The following are related party transactions outside of the group:


2024
2023
£
£

Sales to entities controlled by key management personnel
326,527
25
Amounts due from entities controlled by key management personnel
206,949
-
533,476
25


31.


Controlling party

Envar Composting Limited is a wholly owned subsidiary of FGS Organics Limited, a company incorporated in England and Wales.
Heathcote Holdings Limited is the ultimate parent company of FGS Agri Limited due to its 100% shareholding. The ultimate controlling party is TL Heathcote by virtue of his majority shareholding.
The results of the company for the year are included in the consolidated financial statements of Heathcote Holdings which are available from Stanford Bridge Farm, Station Road, Pluckley, Ashford, Kent, TN27 0RU.

Page 31