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xbrli:shares iso4217:GBP xbrli:pure

Registered number: 06606245










LOCAL GENERATION LIMITED










ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 
LOCAL GENERATION LIMITED
 
 
COMPANY INFORMATION


Directors
APS Keeling 
NF Hunter (resigned 6 September 2024)
M Kuessner (resigned 6 September 2024)
AM Duguid (resigned 6 September 2024)
ACM Parr (resigned 12 June 2023)
MN Viergutz (appointed 6 September 2024)
M Bolland (appointed 6 September 2024, resigned 20 November 2024)
RBA Maddan (appointed 6 September 2024)
CE Stoyell (appointed 20 November 2024)




Registered number
06606245



Registered office
Control Tower
Hemswell Cliff Industrial Estate

Hemswell Cliff

Gainsborough

DN21 5TU




Independent auditors
Ryecroft Glenton
Chartered Accountants & Statutory Auditors

32 Portland Terrace

Newcastle upon Tyne

NE2 1QP




Bankers
The Royal Bank of Scotland
14 - 15 Hereward Cross

Peterborough

PE1 1TB





 
LOCAL GENERATION LIMITED
 

CONTENTS



Page
Strategic Report
1 - 2
Directors' Report
3 - 4
Independent Auditors' Report
5 - 8
Statement of Income and Retained Earnings
9
Balance Sheet
10 - 11
Notes to the Financial Statements
12 - 28


 
LOCAL GENERATION LIMITED
 
 
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023

Principal activities
 
The Company’s principal activity during the year is the operation of a food waste Anaerobic Digestion (AD) Plant. The company provides solutions for food waste recycling which acts as a sustainable alternative to landfill. Through the AD process this waste is broken down to generate biogas. 

Business review
 
The financial results are detailed in the accompanying schedules. During the year the company saw overall turnover remain stable. The reduction in the average gas price over 2023 has resulted in a downturn in revenue from supply of energy, however the amount paid to the company to take food waste, by way of gate fee income, has increased which has mitigated the impact of the gas price drop.
Cost of sales were impacted significantly during the year due to the increased cost of feedstock and the associated transport cost, that increased in line with fuel costs. These cost increases could not be passed on through higher selling prices and this resulted in a drop in gross profit margin in 2023 compared with 2022. 
A significant roof repair was completed on one of the Anaerobic Digesters and this has had a cost increase impact on the overheads for 2023. 
The above has meant that the company have made a loss in 2023. 
In 2021 the parent company loan agreement was renegotiated, with repayment being in 10 years from the agreement date which resulted in improved liquidity. The company’s balance sheet remains strong with £5.6m in net assets.

Principal risks and uncertainties
 
Compliance with regulation, legal, health and safety and ethical standards are paramount for the company. The group have a dedicated compliance team to ensure that the company is fully compliant with all legislation. 
The volatility of wholesale power prices means that there is always an uncertainty surrounding revenue. Pricing and availability of feedstock material is also a principal risk, the group has a confident commercial team in place to ensure that there is a constant stream of commercially viable material

Financial key performance indicators
 
The Company’s financial key performance indicators for the year ended 31 December 2023, compare to the year ended 31 December 2022, are shown below.
                                   
2023             2022         Change
Gross Profit                 £3,638,182    £5,501,725     (£1,863,543)
Gross Profit Margin      32.7%                50%               (17.3%)
Adjusted EBITDA     (£565,074)   £2,604,963     (£3,170,037)
Adjusted EBITDA also inludes the loss on sale of tangible assets and the impairment of joint venture investments. 

 


Page 1

 
LOCAL GENERATION LIMITED
 

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023


This report was approved by the board on 14 February 2025 and signed on its behalf.



CE Stoyell
Director

Page 2

 
LOCAL GENERATION LIMITED
 
 
 
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023

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

Results and dividends

The loss for the year, after taxation, amounted to £1,690,747 (2022 - profit £494,469).

Directors

The directors who served during the year were:

APS Keeling 
NF Hunter (resigned 6 September 2024)
M Kuessner (resigned 6 September 2024)
AM Duguid (resigned 6 September 2024)
ACM Parr (resigned 12 June 2023)

Directors' responsibilities statement

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 judgments 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 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 3

 
LOCAL GENERATION LIMITED
 
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

Going concern

At 31 December 2023 the Company had net current liabilities of £575,473 (2022: £1,168,271) and net assets of £5,587,982 (2022: £7,278,729). The Company is dependent upon the funds provided by GVO B-1 Limited, the 76% shareholder of the Company. At the year end there are amounts due to GVO B-1 Limited by Local Generation Limited of £2,757,537 (2022: £1,266,911). The ultimate parent, GVO B-1 Limited has been provided with a letter of support that will allow it to make available such funds as are needed by the Company to continue in operational existence for at least 12 months from signing off so the Company can meet its liabilities that fall due for payment, should it be needed.
Having reviewed the Company's current position and forecasts for the next twelve months which shows promising results, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the going concern basis was adopted in preparing the financial statements.

Future developments

Into 2024/25 the Company is working on a new profile for waste costs and is looking to reduce these without impacting the quality or quantity of gas produced. There are no current plans to expand the business, but efficiencies are always being looked at to ensure that the plant is working at optimised capacity to ensure a better financial performance.

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.

Auditors

The auditorsRyecroft Glentonwill be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

This report was approved by the board on 14 February 2025 and signed on its behalf.
 





CE Stoyell
Director

Page 4

 
LOCAL GENERATION LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF LOCAL GENERATION LIMITED
 

Opinion


We have audited the financial statements of Local Generation Limited (the 'Company') for the year ended 31 December 2023, which comprise the Statement of Income and Retained Earnings, the Balance Sheet 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 31 December 2023 and of its loss 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.


Page 5

 
LOCAL GENERATION LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF LOCAL GENERATION LIMITED (CONTINUED)


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.


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 3, 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.


Page 6

 
LOCAL GENERATION LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF LOCAL GENERATION LIMITED (CONTINUED)


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.


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

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows: 
- the responsible individual ensured that the engagement team collectively had the appropriate     competence, capabilities and skills to identify or recognise non-compliance with applicable laws and    regulations;
- we identified the laws and regulations applicable to the Company through discussions with directors and    other management, and from our commercial knowledge and experience of the waste to energy sector;
- we focused on specific laws and regulations which we considered may have a direct material effect on    the financial statements or the operations of the Company, including the Companies Act 2006;
- we assessed the extent of compliance with the laws and regulations identified above through making    enquiries of management and inspecting legal correspondence made available to us; and
- we ensured that the identified laws and regulations were communicated within the audit team regularly    and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the Company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by: 
- making enquiries of management as to where they considered there was susceptibility to fraud and their    knowledge of actual, suspected and alleged fraud; 
- considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and    regulations; and
- we reviewed the control environment and reported back to management our control recommendations.
To address the risk of fraud through management bias and override of controls, we: 
- performed analytical procedures to identify any unusual or unexpected relationships;
- tested journal entries to identify unusual transactions; and
- assessed whether judgements and assumptions made in determining the accounting estimates set out in   Note 3 were indicative of potential bias.




 
Page 7

 
LOCAL GENERATION LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF LOCAL GENERATION LIMITED (CONTINUED)


In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
- agreeing financial statement disclosures to underlying supporting documentation;
- enquiring of management as to actual and potential litigation and claims;
- discussing laws and regulations with legal counsel and those responsible for monitoring compliance such                                           as the Chief Safety and Compliance Officer; and
- discussed laws and regulations with the group's legal counsel and those with responsibility for monitoring   laws and regulations.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.


A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report.


Use of our report
 

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 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.





Andrew Cameron (Senior Statutory Auditor)
  
for and on behalf of
Ryecroft Glenton
 
Chartered Accountants
Statutory Auditors
  
32 Portland Terrace
Newcastle upon Tyne
NE2 1QP

14 February 2025
Page 8

 
LOCAL GENERATION LIMITED
 
 
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 31 DECEMBER 2023

2023
2022
Note
£
£

  

Turnover
 4 
11,136,105
11,010,015

Cost of sales
  
(7,497,923)
(5,508,290)

Gross profit
  
3,638,182
5,501,725

Administrative expenses
  
(5,426,404)
(4,808,390)

Exceptional administrative expenses
 10 
(300,156)
-

Other operating income
 5 
71,250
82,500

Operating (loss)/profit
  
(2,017,128)
775,835

Interest payable and similar expenses
 8 
(16,442)
(13,643)

(Loss)/profit before tax
  
(2,033,570)
762,192

Tax on (loss)/profit
 9 
342,823
(267,723)

(Loss)/profit after tax
  
(1,690,747)
494,469

  

  

Retained earnings at the beginning of the year
  
1,543,560
1,049,091

  
1,543,560
1,049,091

(Loss)/profit for the year
  
(1,690,747)
494,469

Retained earnings at the end of the year
  
(147,187)
1,543,560

There were no recognised gains and losses for 2023 or 2022 other than those included in the statement of income and retained earnings.
There was no other comprehensive income for 2023 (2022: £NIL).

Page 9

 
LOCAL GENERATION LIMITED
REGISTERED NUMBER: 06606245

BALANCE SHEET
AS AT 31 DECEMBER 2023

2023
2022
Note
£
£

Fixed assets
  

Tangible assets
 11 
10,265,280
11,234,550

Investments
 12 
-
232,887

  
10,265,280
11,467,437

Current assets
  

Stocks
 13 
80,482
45,107

Debtors: amounts falling due within one year
 14 
3,098,526
4,186,814

Cash at bank and in hand
 15 
534,905
579,084

  
3,713,913
4,811,005

Creditors: amounts falling due within one year
 16 
(4,289,386)
(5,979,276)

Net current liabilities
  
 
 
(575,473)
 
 
(1,168,271)

Total assets less current liabilities
  
9,689,807
10,299,166

Creditors: amounts falling due after more than one year
 17 
(3,403,512)
(1,979,301)

Provisions for liabilities
  

Deferred tax
 21 
(698,313)
(1,041,136)

  
 
 
(698,313)
 
 
(1,041,136)

Net assets
  
5,587,982
7,278,729


Capital and reserves
  

Called up share capital 
 22 
14,313
14,313

Share premium account
 23 
5,720,856
5,720,856

Profit and loss account
 23 
(147,187)
1,543,560

  
5,587,982
7,278,729


Page 10

 
LOCAL GENERATION LIMITED
REGISTERED NUMBER: 06606245
    
BALANCE SHEET (CONTINUED)
AS AT 31 DECEMBER 2023

The financial statements were approved and authorised for issue by the board and were signed on its behalf on 14 February 2025.




CE Stoyell
Director

The notes on pages 12 to 28 form part of these financial statements.

Page 11

 
LOCAL GENERATION LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

1.


General information

Local Generation Limited is a private company limited by shares, incorporated in England and Wales (Registration number: 06606245). The registered office address is Control Tower, Hemswell Cliff Industrial Estate, Hemswell Cliff, Gainsborough, DN21 5TU. 
The principal activity of the company is the generation of green electricity and gas by operating an anaerobic digestion plant as a sustainable alternative to landfill, selling the plant capacity and utilising the outputs.

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 judgment in applying the Company's accounting policies (see note 3).

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 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 33 Related Party Disclosures paragraph 33.7.

This information is included in the consolidated financial statements of GVO B-1 Limited as at 31 December 2023 and these financial statements may be obtained from Companies House, Cardiff.

Page 12

 
LOCAL GENERATION LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.3

Going concern

At 31 December 2023 the Company had net current liabilities of £575,473 (2022: £1,168,271) and net assets of £5,587,982 (2022: £7,278,729). The Company is dependent upon the funds provided by GVO B-1 Limited, the 76% shareholder of the Company. At the year end there are amounts due to GVO B-1 Limited by Local Generation Limited of £2,757,537 (2022: £1,266,911). The ultimate parent, GVO B-1 Limited has been provided with a letter of support that will allow it to make available such funds as are needed by the Company to continue in operational existence for at least 12 months from signing off so the Company can meet its liabilities that fall due for payment, should it be needed.
Having reviewed the Company's current position and forecasts for the next twelve months which shows promising results, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the going concern basis was adopted in preparing the financial statements.

 
2.4

Foreign currency translation

Functional and presentation currency

The Company's functional and presentational currency is GBP.

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 Income and Retained Earnings within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income'.

Page 13

 
LOCAL GENERATION LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.5

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. 
Revenue from the sale of energy is recognised at the point at which the energy is produced.  Revenue from energy sales that is contingent on future notification of past events is recognised when notification is received.
Revenue from sales of food waste services (gate fees) is recognised on the date that food waste is received.

  
2.6

Government grants

Grants are accounted under the accruals model as permitted by FRS 102. Grants relating to expenditure on tangible fixed assets are credited to the Statement of Comprehensive Income at the same rate as the depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income.
The amount of government grants receivable is presented in deferred income and is credited to the Profit and Loss Account over the useful economic lives of the assets to which the grants relate. 

 
2.7

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.

 
2.8

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.

 
2.9

Borrowing costs

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

Page 14

 
LOCAL GENERATION LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.10

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.

 
2.11

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.


 
2.12

Exceptional items

Exceptional items are transactions that fall within the ordinary activities of the Company but are presented separately due to their size or incidence.

 
2.13

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.

Page 15

 
LOCAL GENERATION LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)


2.13
Tangible fixed assets (continued)

Land is not depreciated. Depreciation on other assets is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.

Capital works in progress are not depreciated until they are completed and revenue generating.
 
Depreciation is provided on the following basis:

Freehold land and buildings
-
10 to 20 years
Plant and machinery
-
5 to 20 years
Combined heat and power generation engine
-
10 to 20 years
Fixtures, fittings and office equipment
-
5 to 10 years
Capital works in progress
-
nil until complete

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.

Included in Freehold property is land at a value of £1,374,921 which is not depreciated.

 
2.14

Valuation of investments

Investments in joint ventures are measured at cost less accumulated impairment. The investments are reviewed annually for any impairment triggers.

 
2.15

Associates and joint ventures

Associates and Joint Ventures are held at cost less impairment.

 
2.16

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.

 
2.17

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

 
LOCAL GENERATION LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.18

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.

 
2.19

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.

 
2.20

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

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.


3.


Judgments in applying accounting policies and key sources of estimation uncertainty

The estimates and judgements that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the financial period are as follows:
Depreciation
Tangible fixed assets are depreciated over their useful lives taking into account residual values where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. Residual values consider matters such as future market conditions, the remaining estimated life of the asset and the discount required to apply cash flows on estimated disposal values to calculate their net present values.

Page 17

 
LOCAL GENERATION LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

4.


Turnover

An analysis of turnover by class of business is as follows:


2023
2022
£
£

Supply of energy
6,903,535
7,460,324

Gate fees
3,620,882
3,057,507

Intercompany sales
611,688
492,184

11,136,105
11,010,015


All turnover arose within the United Kingdom.


5.


Other operating income

2023
2022
£
£

Other operating income
-
11,250

Government grants receivable
71,250
71,250

71,250
82,500



6.


Auditors' remuneration

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


2023
2022
£
£

Fees payable to the Company's auditors for the audit of the Company's financial statements
17,760
15,800

Page 18

 
LOCAL GENERATION LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

7.


Employees

Staff costs were as follows:


2023
2022
£
£

Wages and salaries
811,660
687,115

Social security costs
85,174
75,088

Cost of defined contribution scheme
16,512
12,834

913,346
775,037


The average monthly number of employees, including directors, during the year was 25 (2022 - 21).


8.


Interest payable and similar expenses

2023
2022
£
£


Bank interest payable
315
3,170

Finance leases and hire purchase contracts
16,127
10,473

16,442
13,643


9.


Taxation


2023
2022
£
£

Corporation tax


Current tax on profits for the year
-
201,565


Total current tax
-
201,565

Deferred tax


Origination and reversal of timing differences
(342,823)
66,158

Total deferred tax
(342,823)
66,158


Tax on (loss)/profit
(342,823)
267,723
Page 19

 
LOCAL GENERATION LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
 
9.Taxation (continued)


Factors affecting tax charge for the year

The tax assessed for the year is higher than (2022 - higher than) the standard rate of corporation tax in the UK of 23.52% (2022 - 19%). The differences are explained below:

2023
2022
£
£


(Loss)/profit on ordinary activities before tax
(2,033,570)
762,192


(Loss)/profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 23.52% (2022 - 19%)
(478,296)
144,816

Effects of:


Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
125,372
86,030

Capital allowances for year in excess of depreciation
50,027
(29,281)

Unrelieved tax losses carried forward
302,897
-

Deferred tax movement
(342,823)
66,158

Total tax charge for the year
(342,823)
267,723


Factors that may affect future tax charges

There were no factors that may affect future tax charges.




10.


Exceptional items

2023
2022
£
£


Joint venture loan write off
300,156
-

300,156
-

Page 20

 
LOCAL GENERATION LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

11.


Tangible fixed assets





Freehold land and buildings
Combined Heat & Power Generation Engine
Plant and machinery
Fixtures, fittings and office equipment
Capital works in progress
Total

£
£
£
£
£
£



Cost or valuation


At 1 January 2023
3,874,532
1,277,119
13,079,950
95,292
5,811
18,332,704


Additions
-
-
189,380
75,517
-
264,897


Disposals
-
-
(14,469)
-
-
(14,469)


Transfers between classes
-
-
5,811
-
(5,811)
-



At 31 December 2023

3,874,532
1,277,119
13,260,672
170,809
-
18,583,132



Depreciation


At 1 January 2023
934,751
597,260
5,525,218
40,925
-
7,098,154


Charge for the year on owned assets
125,299
119,286
927,595
9,646
-
1,181,826


Charge for the year on financed assets
-
-
32,452
11,328
-
43,780


Disposals
-
-
(5,908)
-
-
(5,908)



At 31 December 2023

1,060,050
716,546
6,479,357
61,899
-
8,317,852



Net book value



At 31 December 2023
2,814,482
560,573
6,781,315
108,910
-
10,265,280



At 31 December 2022
2,939,781
679,859
7,554,732
54,367
5,811
11,234,550

The net book value of assets held under finance leases or hire purchase contracts, included above, are as follows:


2023
2022
£
£



Plant and machinery
270,431
302,883

Fixtures, fittings and office equipment
64,189
-

334,620
302,883

Page 21

 
LOCAL GENERATION LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

12.


Fixed asset investments





Investment in joint ventures

£



Cost 


At 1 January 2023
232,887



At 31 December 2023

232,887



Impairment


Charge for the period
232,887



At 31 December 2023

232,887



Net book value



At 31 December 2023
-



At 31 December 2022
232,887


13.


Stocks

2023
2022
£
£

Finished goods
80,482
45,107

80,482
45,107


Page 22

 
LOCAL GENERATION LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

14.


Debtors

2023
2022
£
£


Trade debtors
1,939,713
2,235,717

Amounts owed by group undertakings
170,293
646,842

Amounts owed by joint ventures
-
309,513

Other debtors
243,885
229,772

Prepayments and accrued income
744,635
764,970

3,098,526
4,186,814


Details of amounts owed by group undertakings and related parties are included below in Note 26.


15.


Cash and cash equivalents

2023
2022
£
£

Cash at bank and in hand
534,905
579,084

Less: bank overdrafts
(19)
-

534,886
579,084


Page 23

 
LOCAL GENERATION LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

16.


Creditors: Amounts falling due within one year

2023
2022
£
£

Bank overdrafts
19
-

Bank loans (Note 18)
-
21,573

Other loans (Note 18)
816,218
816,218

Trade creditors
1,614,079
1,762,601

Amounts owed to group undertakings
931,203
2,143,879

Amounts owed to joint ventures
102,310
191,754

Corporation tax
2,857
2,857

Other taxation and social security
86,569
733,581

Obligations under finance lease and hire purchase contracts
53,503
38,753

Other creditors
2,787
1,546

Accruals and deferred income
679,841
266,514

4,289,386
5,979,276


Details of amounts owed to group undertakings and related parties are included below in Note 26.


17.


Creditors: Amounts falling due after more than one year

2023
2022
£
£

Net obligations under finance leases and hire purchase contracts
197,028
192,193

Amounts owed to group undertakings
2,757,537
1,266,911

Government grants received
448,947
520,197

3,403,512
1,979,301


The Company signed a loan agreement with its parent company on 31 December 2021. The loan becomes repayable from the 10th anniversary of the loan agreement date, and is unsecured and interest free.

Page 24

 
LOCAL GENERATION LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

18.


Loans


Analysis of the maturity of loans is given below:


2023
2022
£
£

Amounts falling due within one year

Bank loans
-
21,573

Other loans
816,218
816,218


816,218
837,791




816,218
837,791


The bank loan relates to a loan from Royal Bank of Scotland which was repaid in March 2023.The loan was secured and had an annual interest rate of 3.6%. There is a fixed and floating charge over the undertaking which has now been satisfied after the year end. 


19.


Hire purchase and finance leases


Minimum lease payments under hire purchase fall due as follows:

2023
2022
£
£


Within one year
53,503
38,753

Between 1-5 years
57,088
179,655

Over 5 years
139,940
12,538

250,531
230,946

Hire purchase contracts are secured over the assets being financed.

Page 25

 
LOCAL GENERATION LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

20.


Financial instruments

2023
2022
£
£

Financial assets


Financial assets measured at fair value through profit or loss
2,353,891
3,421,844


Financial liabilities


Financial liabilities measured at fair value through profit or loss
(6,901,188)
(6,469,450)


Financial assets that are debt instruments measured at amortised cost within the company comprise trade and other debtors, amounts owed by group companies and joint ventures.  


Financial liabilities measured at amortised cost within the group comprise trade creditors, accruals, bank and other loans, amounts owed to group and amounts owed to joint venures. 


21.


Deferred taxation




2023


£






At beginning of year
(1,041,136)


Charged to profit or loss
342,823



At end of year
(698,313)

The provision for deferred taxation is made up as follows:

2023
2022
£
£


Accelerated capital allowances
(1,020,270)
(1,041,136)

Tax losses carried forward
321,957
-

(698,313)
(1,041,136)

Page 26

 
LOCAL GENERATION LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

22.


Share capital

2023
2022
£
£
Allotted, called up and fully paid



14,313 (2022 - 14,313) Ordinary shares of £1.00 each
14,313
14,313



23.


Reserves

Share premium account

This presents the excess amounts paid on issue of ordinary shares over their nominal value. 

Profit and loss account

The profit and loss account includes all current and prior period retained profits and losses. 


24.


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 to the Company to the fund and amounted to £16,512 (2022: £12,834). Contributions totalling £4,073 (2022: £3,064) were payable to the fund at the balance sheet date and are included in creditors.


25.


Commitments under operating leases

At 31 December 2023 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:

2023
2022
£
£


Not later than 1 year
22,463
19,561

Later than 1 year and not later than 5 years
10,101
17,595

32,564
37,156

Page 27

 
LOCAL GENERATION LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

26.


Related party transactions

The Company is a member of a group headed by GVO B-1 Limited. 
The Company has received loans from its Parent, GVO B-1, the balance of which at the year end was £2,757,537 (2022: £1,266,911). Amounts owed to group undertakings are unsecured, interest free and repayable from the 10th anniversary of the loan agreement date.
Sales to the parent company totalled £32,276 (2022: £9,799). Purchases totalled £26,204 (2022: £24,446). At the year end, included in trade debtors is £16,692 (2022: £nil).
The Company had transactions with fellow subsidiary companies during the year. Sales totalled £685,323 (2022: £2,596,513). Purchases totalled £2,008,056 (2022: £1,411,383). The amount outstanding from fellow subsidiaries at the year end was £151,561 (2022: £608,617) and the amount owing to these subsidiaries was £924,718 (2022: £1,942,314).
In addition to the above, the Company had amounts owed from the subsidiary companies totalling £2,040 (2022: £38,225) and owed amounts of £6,485 (2022: £201,565). Amounts due between related parties and group undertakings are unsecured, interest free, and repayable on demand. No amounts with related parties have been waived or written off.
During the year, the Company had transactions with a joint venture which have all been concluded under normal market conditions. Purchases totalled £933,172 (2022: £830,112) in the year and at the year end, £102,310 (2022: £191,754) was owed. A loan balance from this joint venture of £300,156 was written off in the year after the joint venture entered liquidation post year end.
During the year, the Company made related party transactions and had balances outstanding with entities who had common directorships. The Company made sales of £29,721 (2022: £nil) from these entities during the year. At the year-end, the amount outstanding to these related parties were £nil (2022: £nil).
The above balances can be seen in Notes 14, 16 and 17 respectively as amounts owed by/to group undertakings.


27.


Controlling party

GVO B-1 Limited is the ultimate parent and controlling company by virtue of its majority shareholding in the company.  The registered office of GVO B-1 Limited is Control Tower Hemswell Cliff Industrial Estate, Hemswell Cliff, Gainsborough, DN21 5TU.
GVO B-1 Limited is also the holding company of the smallest and largest group in which this company's results are consolidated.

Page 28