Company registration number 12954448 (England and Wales)
HEAT MIDCO 2 LIMITED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
PAGES FOR FILING WITH REGISTRAR
HEAT MIDCO 2 LIMITED
CONTENTS
Page
Balance sheet
1
Notes to the financial statements
2 - 6
HEAT MIDCO 2 LIMITED
BALANCE SHEET
AS AT
30 APRIL 2024
30 April 2024
- 1 -
2024
2023
Notes
£
£
£
£
Fixed assets
Investments
3
22,074,086
22,074,086
Current assets
Debtors
4
176,627
266,027
Cash at bank and in hand
4,877
6,067
181,504
272,094
Creditors: amounts falling due within one year
5
(5,415,337)
(4,156,074)
Net current liabilities
(5,233,833)
(3,883,980)
Total assets less current liabilities
16,840,253
18,190,106
Creditors: amounts falling due after more than one year
6
(19,670,551)
(18,954,572)
Net liabilities
(2,830,298)
(764,466)
Capital and reserves
Called up share capital
-
0
-
0
Other reserves
1,865,323
1,865,323
Profit and loss reserves
(4,695,621)
(2,629,789)
Total equity
(2,830,298)
(764,466)

These financial statements have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies regime.

The directors of the company have elected not to include a copy of the trueincome statement within the financial statements.

The financial statements were approved by the board of directors and authorised for issue on 28 January 2025 and are signed on its behalf by:
Mr D Spencer
Director
Company registration number 12954448 (England and Wales)
HEAT MIDCO 2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
- 2 -
1
Accounting policies
Company information

Heat Midco 2 Limited is a private company limited by shares incorporated in England and Wales. The registered office is 80 Cheapside, London, EC2V 6EE.

1.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

The company has taken advantage of the exemption under section 399 of the Companies Act 2006 not to prepare consolidated accounts, on the basis that the group of which this is the parent qualifies as a small group. The financial statements present information about the company as an individual entity and not about its group.

1.2
Going concern

The company generated a trueloss for the year of £2,065,832 (2023: £1,814,233) and has net current liabilities of £5,233,833 (2023: £3,883,980) and net liabilities of £2,830,298 (£764,466) at 30 April 2024.

December 2024 has seen the refinance of the business with a working capital injection from the investors of £950k. Alongside this, the group has also renewed the financial agreement with Shawbrook Bank which sees the loan agreement extended for an additional 2 years to November 2027. The covenants attached to the financial agreement have also been revised. The directors have prepared financial forecasts which include the impact of the working capital injection and the renewed and extended financial agreement which demonstrate that the business should have the facilities it requires to trade and will be able to meet the revised financial covenants.

The accounts have been prepared on a going concern basis which assumes the company will have sufficient funds to continue to pay its debts as and when they fall due and thus continue to trade. The directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future based on its forecasts and projections. At the year end date, the amount due to other group companies includes £5,026,968 (2023: £3,767,104), which, although technically payable on demand, has no scheduled repayment date. The directors have received confirmation from these group companies that intercompany debt will not be called for settlement before all third party creditors have been satisfied, and that they will provide financial support to the company as it is required.

Having due consideration to each of the above factors, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future and so the accounts are prepared on a going concern basis.

1.3
Fixed asset investments

Interests in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

HEAT MIDCO 2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2024
1
Accounting policies
(Continued)
- 3 -
1.4
Cash and cash equivalents

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

1.5
Financial instruments

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

 

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including creditors, bank loans and loans from fellow group companies, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

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

Derecognition of financial liabilities

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

1.6
Taxation

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

HEAT MIDCO 2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2024
1
Accounting policies
(Continued)
- 4 -
Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

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

2
Employees

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

2024
2023
Number
Number
Total
-
0
-
0

The service contracts of the directors are held with Heat Holdco Limited. Directors' remuneration costs are met by fellow subsidiary company, Inciner8 Limited.

3
Fixed asset investments
2024
2023
£
£
Shares in group undertakings and participating interests
22,074,086
22,074,086
4
Debtors
2024
2023
Amounts falling due within one year:
£
£
Other debtors
176,627
266,027
HEAT MIDCO 2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2024
- 5 -
5
Creditors: amounts falling due within one year
2024
2023
£
£
Trade creditors
70,307
80,562
Amounts owed to group undertakings
5,026,968
3,767,104
Taxation and social security
5,840
6,009
Other creditors
312,222
302,399
5,415,337
4,156,074

Amounts owed to group undertakings are interest free and payable on demand.

 

Note 8 to the financial statements provides details on guarantees and security.

6
Creditors: amounts falling due after more than one year
2024
2023
£
£
Bank loans
11,186,224
11,036,224
Amounts owed to group undertakings
8,484,327
7,918,348
19,670,551
18,954,572

Within bank loans is a loan of £10,386,224 (2023: £11,036,224) which falls due for repayment on 4 November 2026. If the group of which the company is part has ‘excess cashflow’ defined within the facilities, it may be liable to repay a proportion of the loan earlier under the terms set out in the facilities.

 

Security for the loan takes the form of a charge granted to the bank supported by a guarantee provided by other group companies as detailed in note 8 to the financial statements.

 

Also included within bank loans due in less than one year is a Revolving Credit Facility ("RCF") of £800,000 (2023: £nil). Interest is charged on this at a rate of 3.50% over LIBOR. Security for the facility takes the form of a fixed and floating charge over all of the property or undertaking of the company.

 

Amounts owed to group undertakings include balances of £8,484,327 (2023: £7,918,348) constituting financing loans, where the transactions are measured at the present value of future payments discounted at a market rate of interest. The discount is recognised as a capital contribution within equity where the loan is from the parent entity. The discount is recognised as a distribution received within the statement of comprehensive income where the loan is from a subsidiary undertaking. The loans are payable in full on 31 October 2026.

 

Note 8 to the financial statements provides details on guarantees and security.

7
Audit report information

As the income statement has been omitted from the filing copy of the financial statements, the following information in relation to the audit report on the statutory financial statements is provided in accordance with s444(5B) of the Companies Act 2006.

The auditor's report is unqualified and includes the following:

HEAT MIDCO 2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2024
7
Audit report information
(Continued)
- 6 -
Opinion

In our opinion the financial statements:

Emphasis of matter

We draw attention to note 1.2 of the financial statements, which describes management’s overview of the going concern basis for the company and the post year-end refinance that has taken place. Our opinion is not modified in respect of this matter.

Senior Statutory Auditor:
Andrew Moss
Statutory Auditor:
DSG Audit
Date of audit report:
28 January 2025
8
Financial commitments, guarantees and contingent liabilities

The company has granted a charge to Shawbrook Bank to secure a guarantee in respect of borrowings owed to Shawbrook Bank due from the company, Inciner8 Limited, Inciner8 Holdings Limited, and Heat Midco Limited.

 

The company has granted a debenture to Chiltern Capital Nominees (Heat) Limited (the security trustee for the "Secured Parties": Chiltern Capital Nominees (Heat) Limited, the company and each of the group companies listed below, and the holders of the loan notes issued by the ultimate parent company, Heat Holdco Limited) to secure a composite guarantee given under an intercreditor deed in respect of borrowings owed to the Secured Parties due from the company, Inciner8 Limited, Inciner8 Holdings Limited, Heat Midco Limited, and Heat Holdco Limited.

9
Related party transactions

During the year the company paid fees and expenses of £221,626 (2023: £196,167) to Chiltern Capital LLP which is related to the company by virtue of the management relationship services provided to the nominee shareholder of the group.

 

No other transactions were undertaken with related parties such as are required to be disclosed.

10
Parent company

The immediate parent company is Heat Midco Limited and the ultimate parent company is Heat Holdco Limited which does not prepare consolidated financial statements which are available to the public by virtue of the exemption available due to the size of the group.

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