REGISTERED NUMBER: 05881147 (England and Wales)

LANCASHIRE RENEWABLES LIMITED

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2025

Page

Company Information

1

Strategic Report

2

Report of the Directors

5

Report of the Independent Auditors

7

Statement of Profit or Loss and Other Comprehensive Income

9

Statement of Financial Position

10

Statement of Changes in Equity

11

Statement of Cash Flows

12

Notes to the Statement of Cash Flows

13

Notes to the Financial Statements

14

DIRECTORS:

S D I Smith

S G Turner

M E Clifford

J L Hugo

SECRETARY:

Lancashire County Council

REGISTERED OFFICE:

County Hall Democratic Services

Lancashire County Council

Preston

Lancashire

PR1 0LD

REGISTERED NUMBER:

05881147 (England and Wales)

AUDITORS:

Rushtons

Chartered Accountants

Statutory Auditors

Shorrock House

1 Faraday Court

Fulwood

Preston

Lancashire

PR2 9NB

The directors present their strategic report for the year ended 31 March 2025.

During the year the Company's principal activity was that of the transfer, transporting and processing of waste from households across Lancashire. In addition, the activity included the ongoing preservation of redundant processes within each of the waste treatment facilities as part of the agreed services as defined in the Service Level Agreement made between Lancashire Renewables Limited and Lancashire County Council.

The Company operates from two waste treatment facilities in Farington and Thornton under an agreement with its shareholder Lancashire County Council.

The principal activity involves the processing of residual and dry commingled waste utilising fixed infrastructure and mobile waste processing equipment, and the stock piling and transfer of other household waste streams. In addition, the Company transport the waste around the network utilising a fleet of vehicles.

Processing of residual waste enables the recovery of recyclable products such as ferrous and non-ferrous metals and refuse derived fuel (RDF). Refuse derived fuel is further processed and refined by third party processors to create electricity in energy from waste facilities (EFW) and used as a fuel in the cement industry (Kilns). Processing at both the Thornton Facility and Leyland Facility through a mass loss operation for the separated residual waste organic fraction, remains a permanent part of the operations.

Processing of dry commingled waste enables the separation and recovery of recyclable products for further third-party processing.

The company continues to solely provide services on behalf of Lancashire County Council and Blackpool Council to meet the wider waste objectives of the local authorities.

REVIEW OF BUSINESS

Lancashire Renewables Limited continues to play an integral part in meeting the waste objectives of its shareholder Lancashire County Council and their waste partner Blackpool Council.

Turnover increased by 4% in the year ended 31 March 2025. This is as a result of any changes to the service level agreement implemented during the year as part of Lancashire County Council wider strategy.

In line with expectations, the Company made a small operating profit or loss before interest and tax in the year to 31 March 2025. This is consistent with Lancashire County Council's wider waste strategy.

The Company's 'quick ratio' has increased to 93%, prior period 91%, this is in line with company expectations.

The average number of employees has increased by 17%. The increase in employee numbers is due to the change in services required by the local authority over the period.

Trade debtor days have increased by 92% bringing the average days to 25, 13 in the prior year. The Company has agreed satisfactory credit terms with Lancashire County Council, the main customer, timeliness of these payments influences debtor days.

Trade creditor days have decreased by 19%. This can be attributable to the change in services and timeliness of payments. Although the trade creditor days have decreased, the Company continues to meet liabilities as they fall due.

PRINCIPAL RISKS AND UNCERTAINTIES

The directors believe that the principal risks and uncertainties the Company is exposed to are significantly lower than those facing similar companies within the industry.

Lancashire Renewables Limited is exposed to minimal fixed asset risk as the majority of the fixed assets are owned by Lancashire County Council.

Risks and uncertainties have been comprehensively reviewed and mitigation strategies implemented as necessary.

The Company's operations expose it to a number of minimal financial risks. A risk management programme has been established to protect the company against the potential adverse effects of these financial risks.

The main risks arising from the company's financial instruments are:

Liquidity risk

The Company is dependent in the short term on future revenues to provide sufficient cash to meet liabilities as they fall due. Management review cash flow forecasts on a regular basis to determine whether the company has sufficient cash reserves to meet future working capital requirements and to fulfil the operating commitments of the contract with Lancashire County Council. Although current projections show the Company is more than capable of meeting its liabilities, Lancashire County Council has guaranteed cash flow into the Company until 31 December 2026, should the need arise.

The balances in Note 19 represent the maximum exposure to those liabilities.

Credit risk

The Company mitigates credit risk by undertaking thorough credit checks before offering deferred terms with its customers. Only once a customer has satisfied credit worthiness procedures and demonstrated an appropriate payment history will the company enter into a trading relationship.

Over 90 percent of income is derived from Lancashire County Council. The directors believe there is a very small credit risk associated with this debtor.

Currency risk

The majority of the Company's transactions are denominated in sterling and the Company is not exposed to significant currency risk.

FUTURE DEVELOPMENTS

Future Residual Waste Processing & Treatment

As part of the strategic objectives in relation to residual waste processing and treatment, future operational changes had now been concluded, effective 01 April 2025. These changes replicate the simplified and low risk mechanical biological treatment operational activities being undertaken at the Thornton waste recovery park since 2018. The combined residual waste processing capacity across the two waste recovery parks for financial year 2025/26 is 260,00 tonnes per annum.

Mechanical Biological Treatment Process (Farington)

The process undertaken at the Thornton waste recovery park since 2018 had now been replicated at the Farington waste recovery park; and as such, modification and reinstatement of mothballed and preserved processing equipment and infrastructure had now been concluded.

The mothballed green waste in vessel composting process at Thornton Facility had also been re purposed to treat residual waste following the modification and reinstatement of mothballed and preserved processing equipment and infrastructure.

Environmental Services

Shareholder investment in the previously mothballed educational service area located in the Environmental Education Centre had been concluded within the year and new educational services will commence from September 2025, which will be supported by dedicated staff, business systems and associated resources.

Organisational Structure

Organisational structure changes in support of the operational changes had also been concluded, with an increase in staffing levels to 250 and further increases scheduled through 2025/26 to 264.

Separately Collected Food Waste Treatment

Shareholder financial commitment to the reinstatement of the Anaerobic Digestion process at the Farington Waste Recovery Park had been approved, and work is now underway to refurbish and reinstate existing technology that is necessary to generate biogas and produce onsite electricity to offset grid demand, which will be support by capital investment of new technologies and supporting infrastructure. The commencement of the new food waste treatment process is currently scheduled to within the next financial year, 2026/27.

The financial results of the Company for the year ended 31 March 2025 are set out in the Statement of Profit or Loss.

KEY PERFORMANCE INDICATORS

The key financial and other performance indicators during the year were as follows:

2025

2024

Change

Turnover (£'000)

38,068

36,670

4%

Operating Profit before tax and interest (£'000)

12

23

(47%

)

Current assets as % of current liabilities

93%

91%

2%

Average number of employees

197

169

17%

Trade debtor days

25

13

92%

Trade creditor days

45

56

(19%

)

ON BEHALF OF THE BOARD:

D L King - Director

16 December 2025

The directors present their report with the financial statements of the company for the year ended 31 March 2025.

DIVIDENDS

No dividends will be distributed for the year ended 31 March 2025.

The profit for the year after taxation amounted to £nil (2023 - £nil). The directors do not recommend a final dividend (2023 - £nil).

DIRECTORS

J L Hugo has held office during the whole of the period from 1 April 2024 to the date of this report.

Other changes in directors holding office are as follows:

J I Oakes - resigned 23 May 2024

M J Salter - resigned 10 March 2025

M E Clifford - appointed 23 May 2024

No directors held any interest in the share capital of the Company in the current or prior year.

The directors benefitted from qualifying third party indemnity provisions in place during the financial year and at the date of this report.

DISABLED EMPLOYEES

The Company gives full consideration to applications for employment from disabled persons where the candidate's particular attitudes and abilities are consistent with adequately meeting the requirement of the job. Opportunities are available to disabled employees for training, career development and promotion.

Where existing employees become disabled, it is the Company's policy to provide continuing employment wherever practicable in the same or an alternative environment position and to provide appropriate training to achieve this aim.

GOING CONCERN

On 23rd July 2025, Lancashire Renewables Limited received a letter from Lancashire County Council, its parent undertaking, stating its ability and intention to continue to support and fund the Company until 31 December 2026. Consequently the Board of Lancashire Renewables Limited consider it appropriate to prepare the financial statements on a going concern basis.

The Board has prepared forecasts for the period to 31 December 2026 and anticipates that the Company will break even during this period. Results from 1 April 2025 up to the signing of this report support this assumption and further reinforces the decision to prepare the financial statements on a going concern basis.

POLICY AND PRACTICE ON PAYMENT OF CREDITORS

It is the Company's policy that payments to suppliers are made in accordance with agreed terms.

ENGAGEMENT WITH EMPLOYEES

The Company operates a framework for employee information and consultation which complies with the requirements of the Information and Consultation of Employees Regulations 2004. During the year, the policy of providing employees with information, including information relating to the economic and financial factors affecting the performance of the company has been continued through the three monthly business review sessions, where employees are encouraged to attend and participate.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors 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 UK-adopted international accounting standards. 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 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 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.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

AUDITORS

The auditors, Rushtons, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

D L King - Director

16 December 2025

Opinion

We have audited the financial statements of Lancashire Renewables Limited (the 'company') for the year ended 31 March 2025 which comprise the Statement of Profit or Loss and Other Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity, the Statement of Cash Flows and Notes to the Statement of Cash Flows, Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the UK.

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 March 2025 and of its profit for the year then ended;

-	have been properly prepared in accordance with IFRSs as adopted by the UK; 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 UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The directors are responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon.

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.

In connection with our audit of the financial statements, 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 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.

Opinions 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 Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Directors 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 Report of the Directors.

We have nothing to report in respect of the following matters where 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 Statement of Directors' Responsibilities set out on pages five and six, 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 necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors 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 our procedures are capable of detecting irregularities, including fraud is detailed below:

In identifying and assessing the risks of material misstatements in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered a number of issues, such as the nature of the company's industry, their control environment and business performance. We also discussed amongst our engagement team how and where fraud might occur and any potential indicators of fraud.

We obtained an understanding of the legal and regulatory framework that the company operates in and focussed our attention on any laws and regulations which might be considered as "showstoppers". We also looked at internal controls in place at the company, established to mitigate risks related to fraud or non-compliance with laws and regulations.

In response to other identified risks, we reviewed the financial statement disclosures, we made enquiries of the company as to potential litigation and claims, we performed analytical procedures to look for unusual trends or unexpected relationships and we read any available meeting minutes.

We also addressed the risk of fraud through management override of controls by testing appropriate journal entries and other adjustments. We also assessed accounting estimates and considered any significant transactions that might be considered unusual in the normal course of business.

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 Report of the Auditors.

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 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 a Report of the Auditors 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.

Adam Calvert (Senior Statutory Auditor)

for and on behalf of Rushtons

Chartered Accountants

Statutory Auditors

Shorrock House

1 Faraday Court

Fulwood

Preston

Lancashire

PR2 9NB

16 December 2025

CONTINUING OPERATIONS

Revenue

3

38,068

36,670

Cost of sales

(35,842

)

(35,131

)

GROSS PROFIT

2,226

1,539

Administrative expenses

(2,214

)

(1,516

)

OPERATING PROFIT

12

23

Finance costs

5

(12

)

(23

)

PROFIT BEFORE INCOME TAX

6

-

-

Income tax

8

-

-

PROFIT FOR THE YEAR

-

-

Other comprehensive income

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

-

-

ASSETS

NON-CURRENT ASSETS

Owned

Property, plant and equipment

9

-

-

Right-of-use

Property, plant and equipment

9, 14

496

1,008

496

1,008

CURRENT ASSETS

Trade and other receivables

10

4,996

4,079

Cash and cash equivalents

11

1,380

3,463

6,376

7,542

LIABILITIES

CURRENT LIABILITIES

Trade and other payables

12

6,377

7,543

Financial liabilities - borrowings

Lease liabilities

13, 14

466

706

6,843

8,249

NET CURRENT LIABILITIES

(467

)

(707

)

NON-CURRENT LIABILITIES

Financial liabilities - borrowings

Lease liabilities

13, 14

29

301

NET LIABILITIES

-

-

SHAREHOLDERS' EQUITY

Called up share capital

15

3,600

3,600

Retained earnings

16

(3,600

)

(3,600

)

TOTAL EQUITY

-

-

The financial statements were approved by the Board of Directors and authorised for issue on 16 December 2025 and were signed on its behalf by:

D L King - Director

Called up

share

Retained

Total

capital

earnings

equity

£'000

£'000

£'000

Balance at 1 April 2023

3,600

(3,600

)

-

Changes in equity

Balance at 31 March 2024

3,600

(3,600

)

-

Changes in equity

Balance at 31 March 2025

3,600

(3,600

)

-

Cash flows from operating activities

Cash generated from operations

1

(1,142

)

1,705

Lease interest paid

(12

)

(23

)

Net cash from operating activities

(1,154

)

1,682

Cash flows from investing activities

Purchase of tangible fixed assets

(417

)

(237

)

Net cash from investing activities

(417

)

(237

)

Cash flows from financing activities

Payment of lease liabilities

(512

)

(701

)

Net cash from financing activities

(512

)

(701

)

(Decrease)/increase in cash and cash equivalents

(2,083

)

744

Cash and cash equivalents at beginning of year

2

3,463

2,719

Cash and cash equivalents at end of year

2

1,380

3,463

1.	RECONCILIATION OF PROFIT BEFORE INCOME TAX TO CASH GENERATED FROM OPERATIONS

2025

2024

£'000

£'000

Profit before income tax

-

-

Depreciation charges

929

937

Finance costs

12

23

941

960

Increase in trade and other receivables

(917

)

(486

)

(Decrease)/increase in trade and other payables

(1,166

)

1,231

Cash generated from operations

(1,142

)

1,705

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of these Statement of Financial Position amounts:

Year ended 31 March 2025

31.3.25

1.4.24

£'000

£'000

Cash and cash equivalents

1,380

3,463

Year ended 31 March 2024

31.3.24

1.4.23

£'000

£'000

Cash and cash equivalents

3,463

2,719

1.	STATUTORY INFORMATION

Lancashire Renewables Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the Company Information page.

2.	ACCOUNTING POLICIES

Basis of preparation

These financial statements have been prepared in accordance with UK-adopted international accounting standards and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention.

These financial statements have been prepared in accordance with International Accounting Standards in conformity with the Companies Act 2006, and with those parts of the Companies Act 2006 applicable to companies reporting under International Accounting Standards in conformity with the Companies Act 2006.

The presentational currency is Pounds Sterling as this is the currency in which the majority of transactions are based and figures in the financial statements have been rounded to the nearest thousand.

The Company uses the historical cost measurement basis to prepare the financial statements, unless stated otherwise.

Accounting standards adopted in the year

The accounting policies adopted are consistent with those of the previous financial year. There are no new amended IFRS, IAS and IFRIC interpretations which are mandatory for accounting periods ending 31 March 2024 and thereafter which have a material effect on the Company's financial statements.

Revenue from contracts with customers

The Company is in the business of providing waste collection, transportation of waste and processing of waste services.

Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company has generally concluded that it is the principal in its revenue arrangements because it typically controls the goods or services before transferring them to the customer.

The Company considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated. In determining the transaction price for the services, the Company considers the effects of variable consideration and existence of a significant financing component.

Variable consideration

If the consideration in a contract includes a variable amount, the Company estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved.

Significant financing component

The Company receives advance payments from customers for the waste services it provides. There is a significant financing component for these contracts. The Company applies the practical expedient for short- term advances received from customers. That is, the promised amount of consideration is not adjusted for the effects of a significant financing component if the period is between the transfer of the promised goods or service and the payment is one year or less.

Cash and cash equivalents

Cash and cash equivalents in the statement of financial position comprises cash at bank and in hand. For the purpose of the cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above.

Right-of-use assets

The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows:

Plant and machinery 3 to 15 years

Motor vehicles and other equipment 3 to 5 years

If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The right-of-use of assets are also subject to impairment which are recognised in the statement of profit and loss in expense categories consistent with the function of the impaired asset.

Taxation

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on the tax rates and laws that are enacted or substantively enacted by the Balance Sheet date.

Deferred Tax

Deferred tax is provided in full using the balance sheet liability method. Deferred tax is the future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities shown on the balance sheet. Deferred tax assets and liabilities are not recognised if they arise in the following situations: the initial recognition of goodwill; or the initial recognition of assets and liabilities that affect neither accounting nor taxable profit. The amount of deferred tax provided is based on the expected manner of recovery or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. The carrying amount of the deferred tax asset is reviewed at each balance sheet date and reduced to the extent that it is no longer probable

that sufficient taxable profit will be available to allow all or part of the asset to be recovered. The carrying value of the deferred tax asset at 31 March 2025 was £nil (2024 - £nil).

The directors believe that the brought forward losses are unlikely to be utilised in the future.

Leases

The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Company as lessee

The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

Lease liabilities

At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease reflects the Company exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying a mount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments or a change in the assessment of an option to purchase the underlying asset.

Short-term leases and leases of low-value assets

The Company applies the short-term lease recognition exemption too its short-term leases of machinery and equipment (i.e.,those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.

Employee benefits - salary sacrifice and automatic-enrolment schemes

The company operates its own salary sacrifice and automatic enrolment pension schemes. A salary sacrifice scheme is a post-employment benefit plan under which the company pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to salary sacrifice pension plans are recognised as an expense in the income statement in the period during which services are rendered by employees.

Those employees not part of the salary sacrifice scheme are enrolled in the automatic enrolment scheme, unless opted out. The automatic enrolment scheme operates and is accounted for in the same way as the salary sacrifice scheme. Amounts owed to the pension schemes at the year-end are shown in current liabilities.

Trade receivables

Trade receivables, which generally have 30 day terms, are recognised and carried at the transactional price. The expected credit loss is assessed through credit management tools which allows for an assessment to be made when there is objective evidence that the company will not be able to recover balances in full.

Trade payables

Trade payables are recognised and carried at their original invoiced value.

Operating profit

Operating profit is states after charging cost of sales, administrative costs and exceptional items but before interest and tax charges.

Financial asset and liability recognition

Financial assets are classified, at initial recognition, as financial assets at fair value through profit and loss, loans and receivables, held to maturity investments, AFS financial assets, or as derivatives designed as hedging instruments in an effective hedge, as appropriate. All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognised initially at fair value, and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

Exceptional Items

Exceptional items are classified as one-off costs or non operating restructuring costs that do not form part of ordinary trading activities.

Going concern

On 23 July 2025, Lancashire Renewables Limited received a letter from Lancashire County Council, its parent undertaking, stating its ability and intention to continue to support and fund the Company until 31 December 2026. Consequently the Board of Lancashire Renewables Limited consider it appropriate to prepare the financial statements on a going concern basis.

The Board has prepared forecasts for the period to 31 December 2026 and anticipates that the Company will break even during this period. Results from 1 April 2025 up to the signing of this report support this assumption and further reinforces the decision to prepare the financial statements on a going concern basis.

Judgement and key sources of estimation

The preparation of financial statements in conformity with International Accounting Standards in conformity with the Companies Act 2006 requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts in the financial statements.

Leases -Estimating the incremental borrowing rate

The Company cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (IBR) to measure lease liabilities. The IBR is the rate of interest that the Company would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the Company 'would have to pay', which requires estimation when no observable rates are available or when they need to be adjusted to reflect the terms and conditions of the lease. The Company estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity- specific estimates.

Provisions

Provisions are recognised in the Balance Sheet when there is a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation.

3.

REVENUE

Revenue from contracts with customers

2025

2024

£'000

£'000

The company's revenue comprises:

Sales to third party

392

1,058

Sales to a related party

37,678

35,612

38,070

36,670

4.	EMPLOYEES AND DIRECTORS

2025

2024

£'000

£'000

Wages and salaries

7,736

6,185

Social security costs

770

595

Other pension costs

281

230

8,787

7,010

The average number of employees during the year was as follows:

2025

2024

Engineering and maintenance

50

37

Operational

118

105

Administration and supervisory

29

27

197

169

Amounts relating to bonuses, overtime, employee allowances and other short term employee benefits are included within 'wages and salaries'.

The Company operates its own salary sacrifice and automatic enrolment pension schemes and contributes up to 5% matched of individual employee contributions. The cost to the Company of making these contributions during the year ended 31 March 2025 was £281,000 (2024 - £230,000).

2025

2024

£

£

Directors' remuneration

-

-

The average monthly number of directors during the year ended 31 March 2025 was 5 (2024 - 5) and no emoluments were paid to directors (2024 - £nil).

The directors are employees of the parent company, Lancashire County Council. Their services to the Company are inconsequential to their other roles hence no remuneration is disclosed as being in respect of their services to the Company.

5.	NET FINANCE COSTS

2025

2024

£'000

£'000

Finance costs:

Leasing

12

23

6.	PROFIT BEFORE INCOME TAX

The profit before income tax is stated after charging:

2025

2024

£'000

£'000

Depreciation expense on right-of-use assets

929

937

Foreign exchange differences

7

3

Expenses relating to short term leases

58

118

Expenses relating to low value leases

54

43

Employee benefit expenses

380

313

7.	AUDITORS' REMUNERATION

2025

2024

£'000

£'000

Fees payable to the company's auditors for the audit of the company's financial statements

30

30

Auditors' remuneration for non audit work

3

-

8.	INCOME TAX

Analysis of tax expense

No liability to UK corporation tax arose for the year ended 31 March 2025 nor for the year ended 31 March 2024.

Factors affecting the tax expense

The tax assessed for the year is the same as (2024 - higher) the standard rate of corporation tax in the UK. The difference is explained below:

2025

2024

£'000

£'000

Profit before income tax

-

-

Profit multiplied by the standard rate of corporation tax in the UK of 25% (2024 - 25%)

-

-

Effects of:

Expenses not deductible

9

3

Utilisation of losses

(9

)

(3

)

Tax expense

-

-

DEFERRED TAXATION

There are carried forward losses of £3,327,000 at 31 March 2025 (2024: £3,336,000) which can be potentially offset against future taxable profits. The tax losses have not been recognised due to the uncertainty of the timing of their utilisation.