Registered number: 05684308
FGS Organics Limited
Annual Report and Financial Statements
For the Year Ended 30 April 2024
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FGS Organics Limited
Company Information
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Statutory Auditor & Chartered Accountants
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FGS Organics Limited
Contents
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Directors' Responsibilities Statement
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Independent Auditor's Report
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Statement of Comprehensive Income
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Statement of Changes in Equity
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Notes to the Financial Statements
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FGS Organics Limited
Strategic Report
For the Year Ended 30 April 2024
The principal activities of FGS Organics is the recycling of Sludges and Liquid Waste to land. The core of the business, is from the waste recycling division and anaerobic digestion industry.
During the trading year, turnover for the year has decreased by £193,336 to £8,193,575 (2023: £8,386,911) and profit for the year has decreased by £481,621 to £895,758 (2023: £1,377,379).
The balance sheet value has increased with a net asset value of £5,164,640 (2023: £4,268,882). The company have invested a further £997k on assets to ensure reliability of the core fleet whilst also harnessing the latest
technology and environmental considerate machinery in order to minimise carbon impact.
In the year there has been economic uncertainties due to the nature of the industry causing some significant clients to go into administration. FGS Organics have been working on diversifying the client base to cover any losses in the year.
Principal risks and uncertainties
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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:
Staff
Availability of both seasonal labour and skilled permanent labour generally is causing concern and attention is focused on ensuring effective People Management by engaging with employees regularly including providing support as required, aiding retention of skilled personnel. To assist a dedicated Group Human Resources Director has been appointed looking after the People Assets of the businesses.
There has been a shift in employment of skilled LGV operators across the country. This is due to an ageing work force, loss of EU drivers, COVID 19 Pandemic causing a training gap and a poor life to work balance. Therefore, retention of these skilled personnel is essential.
Operating Costs
Through the year, increased costs of operation caused by inflationary pressures have been widely seen particularly with regards to labour costs, utilities, supply chains, energy and business insurance. 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 six to ten 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.
Page 1
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FGS Organics Limited
Strategic Report (continued)
For the Year Ended 30 April 2024
Credit Risk
The majority of customers who wish to trade on credit terms are subject to regular credit verification procedures and must trade within the credit limit allowance granted to their account which will be inextricably linked to their credit rating provided by outsourced specialist industry rating services. Credit account customers will not be allowed to place further orders for goods and services which will exceed their approved rating. Prepayment is required from customers requiring services ahead of a trade account being approved.
Trade debtors are reviewed on a weekly basis and provision is made for doubtful debts where considered necessary. In the case where debtors cannot settle their account within the agreed terms, an orderly installment payment plan is established to provide a certain and regular balance reduction; during this period, no further business will be placed on the account.
Legislative risk
Environmental standards in the UK continue to improve and the company is committed to being at the forefront of legislation led change. Any such change is viewed as positive, presenting more opportunities for the early adopter and swiftly capitalising upon these opportunities wherever possible.
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.
Financial key performance indicators
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The Directors consider operating profit and turnover to be the key measure of performance of the business. During the year the Company generated a operating profit of £1,199,742 (2023: £1,781,424).
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.
Page 2
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FGS Organics 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.
The profit for the year, after taxation, amounted to £895,758 (2023 - £1,377,379).
No dividends were declared by the company during the year (2023: £nil).
The directors who served during the year were:
Please refer to the Strategic report.
Disclosure of information to auditor
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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 auditor is 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 auditor is aware of that information.
Post balance sheet events
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There have been no significant events affecting the Company since the year end.
The auditor, Kreston Reeves LLP, will 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.
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FGS Organics 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;
∙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 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.
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FGS Organics Limited
Independent Auditor's Report to the Members of FGS Organics Limited
We have audited the financial statements of FGS Organics 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 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:
∙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.
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 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
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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.
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.
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FGS Organics Limited
Independent Auditor's Report to the Members of FGS Organics Limited (continued)
Opinion on other matters prescribed by the Companies Act 2006
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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
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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
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As explained more fully in the Directors' Responsibilities Statement set out on page 4, 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.
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FGS Organics Limited
Independent Auditor's Report to the Members of FGS Organics Limited (continued)
Auditor's responsibilities for the audit of the financial statements
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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:
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, 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;
∙Physical inspection of tangible fixed assets susceptible to fraud or irregularity;
∙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.
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FGS Organics Limited
Independent Auditor's Report to the Members of FGS Organics Limited (continued)
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 Auditor's 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 Auditor's 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.
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.
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.
Tracey Becker (Senior Statutory Auditor)
for and on behalf of
Kreston Reeves LLP
Statutory Auditor
Chartered Accountants
Canterbury
28 January 2025
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FGS Organics Limited
Statement of Comprehensive Income
For the Year Ended 30 April 2024
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Interest payable and similar expenses
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Profit for the financial year
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There was no other comprehensive income for 2024 (2023:£NIL).
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The notes on pages 12 to 25 form part of these financial statements.
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Page 9
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FGS Organics Limited
Registered number: 05684308
Balance Sheet
As at 30 April 2024
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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Provisions for liabilities
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The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 12 to 25 form part of these financial statements.
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FGS Organics Limited
Statement of Changes in Equity
For the Year Ended 30 April 2024
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Comprehensive income for the year
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Comprehensive income for the year
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Page 11
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FGS Organics Limited
Notes to the Financial Statements
For the Year Ended 30 April 2024
FGS Organics Limited is a private company limited by shares and is incorporated in England and Wales with the registration number 05684308. The address of the registered office is Stanford Bridge Farm, Station Road, Pluckley, Ashford, Kent, TN27 0RU.
2.Accounting policies
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Basis of preparation of financial statements
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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 pound.
The following principal accounting policies have been applied:
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Financial reporting standard 102 - reduced disclosure exemptions
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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.
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Exemption from preparing consolidated financial statements
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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.
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.
The directors, and their connected companies, will also not draw upon their loans to the detriment of
the company's ability to meet its day to day working capital requirements.
Page 12
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FGS Organics Limited
Notes to the Financial Statements
For the Year Ended 30 April 2024
2.Accounting policies (continued)
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Foreign currency translation
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Functional and presentation currency
The Company's functional and presentational currency is Pound 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 the Statement of Comprehensive Income except when deferred in other comprehensive income as qualifying cash flow hedges.
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.
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FGS Organics Limited
Notes to the Financial Statements
For the Year Ended 30 April 2024
2.Accounting policies (continued)
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.
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.
The estimated useful lives range as follows:
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Assets under construction
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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.
Finance costs are charged to the Statement of Comprehensive Income 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.
Investments in subsidiaries are measured at cost less accumulated impairment.
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.
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Cash and cash equivalents
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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.
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FGS Organics Limited
Notes to the Financial Statements
For the Year Ended 30 April 2024
2.Accounting policies (continued)
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 receivables, cash and bank balances, are initially measured at their transaction price including transaction costs 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 receivables due with the operating cycle fall into this category of financial instruments.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting date.
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.
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments 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 payables, bank loans and other loans are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument 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.
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FGS Organics Limited
Notes to the Financial Statements
For the Year Ended 30 April 2024
2.Accounting policies (continued)
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Financial instruments (continued)
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Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables 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.
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.
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Current and deferred taxation
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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.
Page 16
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FGS Organics Limited
Notes to the Financial Statements
For the Year Ended 30 April 2024
2.Accounting policies (continued)
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Current and deferred taxation (continued)
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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.
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Provisions for liabilities
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Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to the Statement of Comprehensive Income in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the Balance Sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Balance Sheet.
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Judgements in applying accounting policies and key sources of estimation uncertainty
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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.
Tangible fixed assets
The company has recognised tangible fixed assets with a carrying value of £4,299,483 at the reporting date (see note 10). 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.
Page 17
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FGS Organics Limited
Notes to the Financial Statements
For the Year Ended 30 April 2024
3.Judgements in applying accounting policies (continued)
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.
Analysis of turnover by country of destination:
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The operating profit is stated after charging:
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Profit/(loss) on disposal
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During the year, the Company obtained the following services from the Company's auditor:
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Fees payable to the Company's auditor for the audit of the Company's financial statements
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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.
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Page 18
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FGS Organics Limited
Notes to the Financial Statements
For the Year Ended 30 April 2024
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The average monthly number of employees, including the directors, during the year was as follows:
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Persons (including directors)
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Total salaries are recharged from other group companies within Heathcote Holdings Limited, the total recharged during the year totaled £1,196,019 (2023: £1,048,932).
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Interest payable and similar expenses
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Loans from group undertakings
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Finance leases and hire purchase contracts
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Current tax on profits for the year
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Origination and reversal of timing differences
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Taxation on profit on ordinary activities
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Page 19
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FGS Organics Limited
Notes to the Financial Statements
For the Year Ended 30 April 2024
9.Taxation (continued)
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Factors affecting tax charge for the year
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The tax assessed for the year is higher than (2023 - higher than) the standard rate of corporation tax in the UK of 25% (2023 - 19.49%). The differences are explained below:
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Profit on ordinary activities before tax
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Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 25% (2023 - 19.49%)
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Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
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Capital allowances for year in excess of depreciation
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Adjustments to deferred tax charge in respect of prior periods
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Deferred tax not recognised
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Remeasurement of deferred tax for changes in tax rates
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Total tax charge for the year
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Factors that may affect future tax charges
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There were no factors that may affect future tax charges.
Page 20
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FGS Organics Limited
Notes to the Financial Statements
For the Year Ended 30 April 2024
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Assets under construction
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Transfers between classes
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The net book value of assets held under finance leases or hire purchase contracts, included above, are as follows:
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Investments in subsidiary companies
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Page 21
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FGS Organics Limited
Notes to the Financial Statements
For the Year Ended 30 April 2024
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The following were subsidiary undertakings of the Company:
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Envar Composting (North) Limited
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Amounts owed by group undertakings
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Prepayments and accrued income
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Cash and cash equivalents
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Creditors: Amounts falling due within one year
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Amounts owed to group undertakings
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Other taxation and social security
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Obligations under finance lease and hire purchase contracts
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Accruals and deferred income
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Page 22
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FGS Organics Limited
Notes to the Financial Statements
For the Year Ended 30 April 2024
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Creditors: Amounts falling due after more than one year
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Net obligations under finance leases and hire purchase contracts
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Amounts owed to group undertakings
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Obligations under finance leases and hire purchase contracts are secured against the assets to which they relate.
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Hire purchase and finance leases
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Minimum lease payments under hire purchase fall due as follows:
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Page 23
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FGS Organics Limited
Notes to the Financial Statements
For the Year Ended 30 April 2024
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Charged to profit or loss
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The provision for deferred taxation is made up as follows:
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Accelerated capital allowances
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Short term timing differences
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Losses and other deductions
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Allotted, called up and fully paid
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1 (2023 - 1) Ordinary shares share of £1.00
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Profit and loss account
This reserve comprises all current and prior period retained profits and losses after deducting any distributions made to the company's shareholders.
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At 30 April 2024 the Company had capital commitments as follows:
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Contracted for but not provided in these financial statements
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Page 24
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FGS Organics Limited
Notes to the Financial Statements
For the Year Ended 30 April 2024
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Commitments under operating leases
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At 30 April 2024 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
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Later than 1 year and not later than 5 years
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22.Other financial commitments
On 21 December 2021, an unlimited composite company guarantee was given by FGS Organics Limited
and other companies within the Heathcote Holdings group to HSBC Plc.
At 30 April 2024, the total exposure amounted to £21,975,000 (2023: £7,875,000).
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Related party transactions
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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:
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Sales to companies controlled by key management personnel
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Purchases from companies controlled by key management personnel
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Amounts due from companies controlled by key management personnel
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The immediate parent company is FGS Agri Limited, a company incorporated in England and Wales. FGS Agri Limited owns 100% of the issued share capital in FGS Organics Limited.
The ultimate parent company is Heathcote Holdings Limited due to its 100% shareholding of FGS Agri Limited. The ultimate controlling party is T L Heathcote by virtue of his majority shareholding.
The results of FGS Organics Limited are included in the consolidated financial statements of Heathcote Holdings Limited which are available from Stanford Bridge Farm, Station Road, Pluckley, Ashford, Kent.
Page 25
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