The Directors present the strategic report for Renewable Transport Fuel Services Ltd (the “Company”) and its subsidiaries (the “Group”) for the year ended 31 March 2023.
The principal activity of the Company continues to be that of sourcing and delivery of biomethane for transport to CNG Fuels in the UK through an exclusive supply agreement. The demand and delivery of Biomethane increased by 54% during this financial year and is likely to go through further growth in the years to come. The Directors do not anticipate any changes in the Company’s principal activity going forward.
The Company mass balances renewable biomethane from biomass feedstocks through the natural gas pipeline grid in sufficient quantities to match those quantities of Bio-CNG dispensed to provide customers with a 100% renewable and sustainable low-carbon fuel for their vehicles. The Company is the primary supplier of biomethane to CNG Fuels, supplying on a back-to-back nil markup basis and has done so since its formation in early 2017.
The biomethane that the Company supplies to CNG Fuels is required to meet all of the sustainability criteria the RTFO requires to qualify as biomethane for transport. These requirements are available in the Department for Transport - RTFO Guidance Update for Biomethane, including as a chemical precursor and RTFO Compliance Guidance 2023. Furthermore, compliance with the RED voluntary scheme ISCC EU guidance documents is important to commence and continue an audited process of transporting biomethane from continental Europe to be imported into the UK. CNG Fuels receives the Biomethane from the Company and is audited each month by an accredited RTFO auditor (SGS) to prove compliance of the dispensed Biomethane with the RTFO requirements. Once the monthly supply has been deemed to be compliant it is eligible to receive Renewable Transport Fuel Certificates (RTFCs) which are able to be monetised through sale to other fuel suppliers who require them to meet their increasing biofuel-mandated obligation levels.
The Company contracted Biomethane from more than 20 different producers across Europe in the year ending 31st March 2023. The term of individual contracts in the sourcing portfolio are spread between a spot volume of 1-month to 12-year contracts. The exposure to volatility in the natural gas price, bio-premium and RTFC prices are managed using a variety of contract pricing models and hedging instruments.
The Company’s principal source of revenue is that generated by the sale of RTFCs to obligated fuel suppliers and these RTFCs are valued through a number of market-based factors and traded either directly between supplier counterparties or via a number of brokers.
Results and dividends
The profit for the financial year amounted to £7,602,375 (2022: profit of £5,458,537) as shown on page 10 and the net assets of the Group amounted to £9,537,859 (2022: £5,585,693) as shown on page 11.
Revenue has increased significantly in the year due to an increase of Biomethane distribution of 54% combined with an increase in the price of RTFCs, a dramatic increase in the market price of natural gas throughout the 2023 financial year and the need to perform additional natural gas trades to offset the natural gas price differences in sourcing and selling markets. The natural gas cost has risen approximately at the same rate as the revenue, and therefore this is not a driver of movement in the result for the year. The increase in net assets is the impact of the total comprehensive profits for the year minus dividends paid out.
The primary commercial business risks and uncertainties affecting the Group relate to considerations specified below. In addition to these risks, the Group is also exposed to cash flow, credit, liquidity and foreign exchange risk. Details of management policies to mitigate these risks are detailed in notes 1.15, 21 and 25 to the financial statements.
Biomethane supply materially impaired
Customers principally adopt compressed biomethane as a fuel for their carbon-saving credentials. The Company has supplied 100% of its Bio-CNG as RTFO-approved biomethane since September 2016, but any systematic impairment to the supply from sources or countries would affect the carbon saving credentials to an extent.
Inventory risk
CNG Fuels’ demand has been remarkably robust against recent market disruptions. If CNG Fuels does not dispense enough biomethane due to increase competition, the Company will still need to meet its obligations.
Competition Risk supply side
The Company competes with other attractive alternatives for feedstock and fuel options. The business faces competition from diesel and other mass adoptable alternative fuels that it does not supply including Liquified Natural Gas (LNG) and HVO. These fuels have their own unique characteristics which make them attractive as alternatives.
Loss of key employees
The Company has developed a unique trading business in which employees have developed critical know-how on the trading of biomethane with all the legislation and engineering behind it in order to meet all the regulatory requirementts.
Market Risk
The Company manages and monitors a combination of exposure it has, including natural gas prices, intercountry gas market spreads, GBP/EUR exchange rates, border capacity and gas shipping costs, biomethane supply costs and RTFC prices. The Company’s principle revenue source is from the sale of RTFCs generated at CNG Fuels stations from the supply of biomethane, and secondarily the sale of natural gas associated with the biomethane supply contracts from suppliers. So these are the principle risks the business must consider within its overall mitigation strategy.
Policy Risk
The business is supported by multiple principal government-implemented policies and frameworks the Renewable Transport Fuel Obligation (RTFO) and the EU RED and national legislations in European countries.
The RTFO framework is viewed as a robust piece of low carbon transport legislation with no end date and increasing obligations to supply renewable fuels continuing to increase until 2032. The business can generate Renewable Transport Fuel Certificates by supplying RTFO-approved biomethane. These, in turn, enable it to purchase growing supplies of biomethane to meet customer needs.
The EU RED framework assesses for example the classification of feedstocks, the multiplier between the first and the second generation feedstocks and greenhouse gas emissions calculations.
Ukraine Russia Conflict
The Ukraine-Russian conflict has led to significant dislocation of energy and commodity markets worldwide. These have led to a substantial increase in natural gas and electricity prices in Europe, while Europe looks for alternative suppliers for their energy needs. Energy prices, including diesel and natural gas as competitive fuels have been volatile and will remain so for the duration of the conflict. Sanctions against Russia and curtailing of Ukraine’s ability to produce and export regular goods and commodities have led to supply chain disruptions which will continue to be intermittent in nature until the resolution of the conflict. The business is working with suppliers to mitigate the effects of volatility in pricing and supply chain issues to the extent possible.
Inflation
A combination of COVID-19 and the Ukraine-Russia conflict, and a period of sustained low interest rates globally has led to an increased inflation environment that the business operated in. This has led to inflation across the business
Key Performance Indicators (KPIs) help the board assess performance against Group priorities set out during the year.
Volumes: The Company grew volumes of Biomethane dispensed by 54% through the period, an increase that reflected CNG Fuels’ performance in both additional numbers of customers as well as existing customers replacing larger numbers of diesel tractor units with CNG tractor units within their annual replacement cycles.
Biomethane secured: The business supplied 100% RTFO-approved renewable biomethane from waste feedstocks to CNG Fuels every quarter of the year, meaning no fossil natural gas was supplied at all into CNG Fuels customers’ vehicles providing them with the maximum reportable carbon savings available for the vehicles.
Employees: During the year the Company increased the average number of employees to 9 from 6.
The principal activities of the Company and the Group are expected to remain unchanged going forward. The Company strives to increase its biomethane sourcing capabilities and broaden the diversity of its supply portfolio, and actively explores opportunities in alternative sourcing markets within Europe and new pricing and contract models to align with supplier interests.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 March 2023.
The results for the year are set out on page 10.
Ordinary dividends were paid amounting to £3,749,238. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
At the time of approving the directors report, management liability insurance was in force for the benefit of the directors of the Group. This cover was also in force during the periods covered by the financial statements.
The Group became a subsidiary of Refuels N.V., a company incorporated in the Netherlands, on 9 May 2023. Please refer to note 36 of the Group financial statements for more information.
Please refer to the Group's strategic report for information around the future developments of the Group.
Price Bailey LLP Chartered Accountants and Statutory Auditor were appointed as auditor and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
The directors consider the Group to be well placed to continue in operational existence for the foreseeable future, for this reason the going concern basis of preparation has been adopted to produce these financial statements. The directors' reasoning for this includes recognition of the continued increase in the net asset position of the business, following further steady financial performance during the year. Growing cash reserves allow the business to continue to comfortably meet its liabilities as they fall due and drastically reduce any exposure to liquidity risk.
We have audited the financial statements of Renewable Transport Fuel Services Limited (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 31 March 2023 which comprise the group statement of comprehensive income, the group and parent company statement of financial position, the group and parent company statement of changes in equity, the group and parent company statement of cash flows and the group and parent company notes to the financial statements, including significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards.
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 Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, 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 group's and parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Other information:
The financial statements for the period ended 31 March 2022 were not audited.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our 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 group Strategic Report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the Group 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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company 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.
As explained more fully in the directors' responsibilities statement, 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 group and parent 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 group or parent company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
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.
We gained an understanding of the legal and regulatory framework applicable to the company and the industry in which it operates and considered the risk of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations. This included those regulations directly related to the financial statements, including financial reporting, tax legislation and distributable profits and industry regulations including renewable fuel obligations, GDPR, employment law and health and safety.
We communicated the identified laws and regulations with the audit team and remained alert to any indications of non-compliance throughout the audit. We carried out specific procedures to address the risks identified.
These included the following:
Agreeing the financial statement disclosures to underlying supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
Enquiries of management including those responsible for key regulations; and
Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud.
In addressing the risk of management override of controls, we carried out testing of journal entries and other adjustments for appropriateness, assessing whether the judgements made in making accounting estimates are indicative of a potential bias and evaluating the business rationale of significant transactions outside the normal course of business.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance.
The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities is available on the Financial Reporting Council's website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's 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 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
The income statement has been prepared on the basis that all operations are continuing operations.
Renewable Transport Fuel Services Limited is a private company limited by shares incorporated in England and Wales. The registered office is 55 Station Road, Beaconsfield, England, HP9 1QL. The Company's principal activities and nature of its operations are disclosed in the directors' report.
The Group consists of Renewable Transport Fuel Services Limited and all of its subsidiaries.
The financial statements are prepared in sterling, which is the functional currency of the Group. Monetary amounts in these financial statements are rounded to the nearest £.
The cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill.
The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date.
Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date.
The consolidated Group financial statements consist of the financial statements of the parent company Renewable Transport Fuel Services Limited together with all entities controlled by the parent company (its subsidiaries) and the Group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 March 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the Group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
Revenue from the sale of goods is recognised at the point in time when control of the goods has transferred to the customer. This is generally when the goods are delivered to the customer.
The group recognises revenue from the following major sources:
Natural Gas
Biomethane Premium
RTFC Revenue
The nature, timing of satisfaction of performance obligations and significant payment terms of the group's major sources of revenue are as follows:
Biomethane is purchased from producers and shipped via gas pipelines to the UK. The natural gas component of the Biomethane is sold off on the National Balancing (NBP) Virtual Trading Point, operated by National Grid, the transmissions system operator in the UK, as natural gas. Natural gas is sold via monthly, quarterly or annual forward contracts or against the spot price (some day ahead and weekend price benchmark). Invoices are raised the month following delivery of the sale, with manual journal bookings recognising the revenue in the month the revenue relates to. This results in contract asset balances being recognised within the statement of financial position until the customer invoice is generated.
The portion of the Biomethane that remains after the natural gas has been sold off is the BioPremium, which passes into inventory. The volume sold is equivalent to the amount of compressed natural gas that customers have dispensed into trucks. The volume is known immediately after the end of the month, with sales invoices being raised to customers in the month following delivery and manual journal bookings recognising the revenue in the month of sale. This results in contract asset balances being recognised within the statement of financial position for the period in which the control of goods changes hands, until the corresponding sales invoice is raised the month after.
Renewable transport fuel certificates (RTFC) revenue arises from the sale of such certificates to customers with revenue being recognised at the point the certificate is delivered to the client. There is no right of return or warranty on the RTFC, hence revenue is recognised in full without possible provision immediately after the transfer of control of the certificate.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.
The Group had no non-current investments at the current or previous reporting date. Please refer to the accounting policies of the parent company (note 39).
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.
The Group recognises financial debt when the Group becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.
Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.
Financial liabilities are derecognised when, and only when, the group’s obligations are discharged, cancelled, or they expire.
Equity instruments issued by the parent company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer payable at the discretion of the company.
The Group enters into foreign exchange forward contracts in order to manage its exposure to foreign exchange risk. The company also enters into natural gas forward contracts in order to manage its exposure to fluctuations in the price of its key inventories. These are held as financial instruments at fair value through profit and loss as they represent instruments held for trading purposes of the business rather than that held for speculative investments, and there is an demonstrable traded market for such instruments, which gives rise to a monetary value of such derivatives.
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.
A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability. A derivative is presented as a non-current asset or liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are classified as current assets or liabilities.
The tax expense represents the sum of the tax currently payable and deferred tax.
Equity-settled share-based payments are measured at fair value at the date of grant, or earlier if there was a shared understanding of the terms of the scheme, by reference to the fair value of the equity instruments granted using the Black-Scholes model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.
When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.
Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.
In the current year, the following new and revised standards, amendments and interpretations have been adopted by the Group. The impact of the adoption of these standards and amendments is not deemed to have a material effect on the current or prior period, and is not anticipated to have a material effect on future periods:
Amendment to IAS 12 - Deferred Tax related to Assets and Liabilities arising from a Single Transaction
Amendments to IAS 8 - Definition of Accounting Estimates
Amendments to IAS 1 and IFRS Practice Statement 2 - Disclosure of Accounting policies
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform
IFRS 17 Insurance Contracts, including Amendments to IFRS 17 and Initial Application of IFRS 17 and IFRS 9 - Comparative Information
Annual Improvements to IFRS 108-2020: Amendment to IFRS 1 First Time Adoption of IFRS (Subsidiary as a First-time Adopter), Amendments to IFRS 9 Financial Instruments (Fees in the '10 per cent' test for Derecognition of Financial Liabilities) and Amendment to IAS 41 Agriculture (Taxation in Fair Value Measurements).
Amendment to IAS 37 - Onerous Contracts: Costs of Fulfilling a Contract
Amendment to IAS 16 - Property Plant and Equipment: Proceeds before Intended Use
Amendments to IFRS 3 - Reference to the Conceptual Framework
At the date of authorisation of these financial statements, the following standards and interpretations, which have not yet been applied in these financial statements, were in issue but not yet effective (and in some cases had not yet been adopted by the UK):
Amendments to IAS 1 Presentation of Financial Statements: Non-current Liabilities with Covenants, Deferral of Effective Date Amendment (published 15 July 2020) and Classification of Liabilities as Current or Non-Current (Amendments to IAS 1) (published 23 January 2020).
Lease Liability in a Sale and Leaseback (Amendment to IFRS 16)
The directors anticipate that the adoption of these standards, amendments and interpretations in future periods will not have a material impact on the financial statements of the Group.
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.
The average monthly number of persons (including directors) employed by the group during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2022 - 2).
The charge for the year can be reconciled to the loss per the income statement as follows:
In the March 2021 Budget it was announced that legislation will be introduced in Finance Bill 2021 to increase the main rate of UK corporation tax from 19% to 25%, effective 1 April 2023 . The expected future impact of this will be an increase in current tax charges for any UK profits taxed at the main rate.
At the both the current and prior period reporting date, the Group had no unused tax losses carried forward. The Group has recognised a deferred tax asset of £26,577 on temporary timing differences of £106,309. £20,985 of this deferred tax asset relates to the unrecognised position at 31 March 2022, adjusted for a change in tax rate used in calculating deferred tax from 19% to 25%.
Goodwill relates to the acquisition of an incorporated business in the prior period, Renewable Energy Fuels B.V. Goodwill represents the excess consideration paid over the fair value of the net assets acquired at the date of acquisition.
The directors do not believe the underlying cash generating unit to have suffered any indicators of impairment at the current or comparative reporting date.
The directors consider that the carrying amounts of financial assets carried at amortised cost in the financial statements approximate to their fair values.
Included within investments is a loan receivable principal balance of £500,000 (2022: £500,000) due to the Group. The loan is due to mature in May 2023, having previously been extended from December 2022. It carries an interest rate of 5% per annum, payable upon maturity. The carrying value of the loan receivable includes accrued interest calculated at the effective interest method.
Details of the company's subsidiaries at 31 March 2023 are as follows:
Contract asset balances relate to revenue that is recognised as performance obligations of such contracts are satisfied, in most instances this is the delivery and change in control of goods sold to customers. The timing of the corresponding trade receivable invoice being raised is typically the following month, and so contract asset balances are carried on the statement of financial position until such time which the sales invoice is processed.
Contract liability balances relate to revenue that is invoiced to contract customers before performance obligations of such contracts are satisfied, which in most instances is the delivery and change in control of goods sold to customers. Where such revenue is invoiced in advance of delivery and change in control of the goods to the customer, it is deferred accordingly to the period in which criteria for recognition of the revenue is satisfied. This is typically within 1-2 months of the deferral period, with contract liabilities being carried on the statement of financial position until the sale is fulfilled or credited.
Included within trade receivables are ledger debts due from related parties of £4,450,886 (2022: £3,126,403) conducted at market rate on standard credit terms.
The directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value.
No significant receivable balances are impaired at the reporting end date.
At 31 March 2023, trade receivables are shown net of an allowance for doubtful debts of £Nil (2022: £Nil). Write-offs, reversals and new provisions were all £Nil during the year (2022: £Nil).
The expected credit loss rate applied to trade receivables is based on the Group's historical credit losses experienced over the the three year period to 31 March 2023, which are nil due to the probability of default being so low the required impairment would be immaterial. As such, management has not elected to provide for any expected credit losses arising against trade receivables outstanding at the year end. Management has also considered the fact that materially all of its trade receivable balances at the reporting date are with related parties and judges the associated credit risk with such customers to be remote.
Included within trade payables are ledger debts due to related parties of £1,335,105 (2022: £1,437,682) conducted at market rate on standard credit terms.
The Company registered supplier guarantee deposits of €300,000 in 2021, secured by way of fixed charge and a negative pledge, with The Royal Bank of Scotland Plc. At the year end, no balance was outstanding to suppliers covered by this guarantee.
The directors consider that the carrying amounts of financial liabilities carried at amortised cost in the financial statements approximate to their fair values.
The following table details the remaining contractual maturity for the group's financial liabilities with agreed repayment periods. The contractual maturity is based on the earliest date on which the group may be required to pay.
The following are the major deferred tax liabilities and assets recognised by the group and movements thereon during the current and prior reporting period.
In accordance with IAS 37, the Group has identified certain contracts that are onerous as of 31 March 2023. The costs of fulfilling these contracts exceed the economic benefits the Group expects to derive from them.
As of 31 March 2023, the total unavoidable costs related to these contracts amount to £1,080,808. This reflects the lowest amount of net cost that the Group would incur if it were to fulfil the obligations under these contracts, or to exit them immediately.
A provision of £1,080,808 has been recognized for the present obligation under these contracts, which is a result of a past event, the outflow of resources embodying economic benefits is probable, and a reliable estimate can be made of the amount of the obligation. The estimate of provision has been determined based on the best information available at the end of the reporting period.
The Group continually reviews the status and estimates associated with these contracts, and revisions to estimates, if any, will be recognized in the period in which they are determined.
At the balance sheet date, the Parent company had two share option agreements in place. Options are exercisable at prices agreed in the executed agreements. The vesting period is over four years, with 25% of total options granted vesting at the first, second, third and fourth anniversary of the effective date (date of grant). If the options remain unexercised after a period of ten years from the date of grant, the options expire. Options are forfeited if a qualifying exit event or insolvency of the option holder arises. The options are to be settled in equity.
The weighted average share price at the date of exercise for share options exercised during the year was £0.01 (2022: N/A).
The options outstanding at 31 March 2023 had an exercise price ranging from £0.00001 to £0.01, and a remaining contractual life of 7 years (31 March 2022: 8 years).
In addition to the charge to administrative expenses through the income statement detailed above, share based payment charges of £14,023 (2022: £34,449) were recognised for equity settled share based transactions as additional costs to non-current fixed asset subsidiary investments.
At the end of the year the Parent company had one class of issued Ordinary share capital. Each share has attached to it one equally ranking vote, rights to a dividend and capital distributions rights.
On 13 October 2022, 200 Ordinary shares of £0.00001 each were issued at a premium of £0.01 each.
The Share Based Payment reserve represents the cumulative share based payment charges recognised by the Group in relation to employee share options in issue and their respective vesting charges to 31 March 2023. The share based payments are due to be settled in equity and more information can be seen in note 28.
Transfers during the year relate to the transfer of accumulated vesting charges relating to exercised or forfeited share options from the share based payment reserve to retained earnings.
With the exception of the change in ultimate parent company referred to in note 36 to the Group financial statements, the Group had no events after the reporting date to disclose.
The remuneration of key management personnel, including directors, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures.
During the year the group entered into the following transactions with related parties:
Sales of goods to related parties represent revenue recognised for the sale of Biomethane Premium, conducted at the Group's normal market prices.
Purchases of goods from related parties represent costs recognised for the purchase of RTFC's for onward sale.
Purchase of services from entities with joint control or significant influence over the Group in the prior period primarily relate to consulting fees charged for employee expenses and management fees. Other notable charges include brokering fees. Purchase of services from other related parties in both the current year and prior period relate to management fees charged to Group entities.
Interest received from related parties relates to unsecured loans issued to related parties carrying 5% interest per annum.
In the prior period, the Group incurred interest charges of £9,022 on unsecured loan borrowings which were fully repaid at 31 March 2022.
The following amounts were outstanding at the reporting end date:
The following amounts were outstanding at the reporting end date:
Amounts due to related parties consist of trade payable balances conducted under the supplier's standard credit terms.
Amounts due from related parties consist of:
Trade receivable balances of £4,450,886 (2022: £3,126,402) arising from trade conducted at market rate and payable within the Group's standard credit terms agreed with customers.
Loan receivables of £531,597 (2022: £506,250) which are unsecured and carry interest of 5% per annum. The receivable is due to mature in May 2023.
The Group has not made any allowance for bad or doubtful debts in respect of related party debtors, nor has any guarantee been given or received during the current year or prior period regarding related party transactions.
At the reporting date, Renewable Transport Fuel Services Limited (RTFS) was owned by a number of shareholders and individually no shareholder could exert control.
On 9 May 2023, Refuels N.V., a company incorporated in the Netherlands, acquired an indirect controlling interest in RTFS. From this date, Refuels N.V. is now considered to be the ultimate parent company of RTFS. Its registered office is Evert van de Beekstraat 1- 104, The Base B 1118CL Amsterdam. Refuels N.V. is owned by a number of shareholders and individually no shareholder can exert control.
Refuels N.V. will be the smallest and largest parent company to consolidate the results of the RTFS Group. The first set of consolidated statutory financial statements in which the Group will be consolidated, will be drawn up to 31 March 2024.
The Group has adopted International Financial Reporting Standards (IFRS) for the preparation of these financial statements. This is the first time of adoption of IFRS and the date of transition is 1 January 2021.
Previously, the parent Company of the Group prepared its financial statements in accordance with FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" (FRS 102) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime.
No adjustments arose upon adoption of IFRS.
The consolidated Group statement of income, statement of financial position, statement of changes in equity and statement of cash flows, have not previously been stated, due to this being the first year of consolidated financial statements being prepared. As such, no Group statements are presented with comparatives as restated. Please refer to note 39 to the company financial statements, relating to a prior period restatement arising on the company statement of financial position, as a result of a change in accounting policy.
As permitted by s408 of the Companies Act 2006, the company has not presented its own income statement related notes. The company's profit for the year was £5,982,481 (2022 - £4,954,815 as restated).
Renewable Transport Fuel Services Limited is a private company limited by shares incorporated in England and Wales. The registered office is 55 Station Road, Beaconsfield, England, HP9 1QL. The company's principal activities and nature of its operations are disclosed in the directors' report.
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the United Kingdom and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, except as otherwise stated.
This is the first year the financial statements have been prepared under IFRS, and more information about transitional adjustments can be seen in note 37 of the notes to the Group financial statements.
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 Company applies accounting policies consistent with those applied by the Group, other than as stated below. To the extent that an accounting policy is relevant to both Group and parent company financial statements, please refer to the Group financial statements for disclosure of the relevant accounting policy.
Interests in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
The policy stated above was adopted during the year and represents a change in accounting policy from the prior period financial statements of the parent company. Previously, the company initially measured interests in subsidiaries at cost and subsequently at fair value with changes in fair value recognised in profit or loss.
The average monthly number of persons (including directors) employed by the Company during the year was:
Their aggregate remuneration comprised:
The directors consider that the carrying amounts of financial assets carried at amortised cost in the financial statements approximate to their fair values.
Included within investments is a loan receivable principal balance of £500,000 (2022: £500,000) due to the Group. The loan is due to mature in May 2023, having previously been extended from December 2022. It carries an interest rate of 5% per annum, payable upon maturity. The carrying value of the loan receivable includes accrued interest calculated at the effective interest method.
Contract asset balances relate to revenue that is recognised as performance obligations of such contracts are satisfied, in most instances this is the delivery and change in control of goods sold to customers. The timing of the corresponding trade receivable invoice being raised is typically the following month, and so contract asset balances are carried on the statement of financial position until such time which the sales invoice is processed.
Contract liability balances relate to revenue that is invoiced to contract customers before performance obligations of such contracts are satisfied, which in most instances is the delivery and change in control of goods sold to customers. Where such revenue is invoiced in advance of delivery and change in control of the goods to the customer, it is deferred accordingly to the period in which criteria for recognition of the revenue is satisfied. This is typically within 1-2 months of the deferral period, with contract liabilities being carried on the statement of financial position until the sale is fulfilled or credited.
Included within trade receivables are ledger debts due from related parties of £4,450,886 (2022: £3,126,403) conducted at market rate on standard credit terms.
Included within trade payables are ledger debts due to related parties of £1,335,105 (2021: £1,437,682) conducted at market rate on standard credit terms.
The Company registered supplier guarantee deposits of €300,000 in 2021, secured by way of fixed charge and a negative pledge, with The Royal Bank of Scotland Plc. At the year end, no balance was outstanding to suppliers covered by this guarantee.
Except as detailed below, the directors consider that the carrying amounts of financial liabilities carried at amortised cost in the financial statements approximate to their fair values.
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon during the current and prior reporting period.
Please refer to note 26 to the Group financial statements for more information on the provision recognised by the parent company.
The Company has adopted International Financial Reporting Standards (IFRS) for the preparation of these financial statements. This is the first time of adoption of IFRS and the date of transition is 1 January 2021.
Previously, the Company prepared its financial statements in accordance with FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" (FRS 102) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime.
No adjustments arose upon adoption of IFRS. The Company statement of financial position remained unchanged as a result of the adoption of IFRS, other than the impact of the prior period adjustment referred to in note 53.
As a result of the change in accounting policy regarding measurement of interests in subsidiaries stated within the Company accounting policies (note 39), the Company has recognised a prior period adjustment to retrospectively restate the statement of financial position, result for the period and total equity at 31 March 2022.
The adjustment reflects removing the fair value uplift on the carrying value of the investment in the subsidiary, and restating at historic cost less accumulated impairment. The impact of this prior year adjustment is as follows:
A reduction in profit for the period of £480,850, being the reversal of fair value uplift on investment in subsidiary (£5,435,665 as previously stated, £4,954,815 as restated).
A reduction in the carrying value of non-current investments in subsidiaries of the same amount (£939,094 as previously stated, £458,244 as restated).
A reduction in total equity at 31 March 2022 of £480,850 (£5,557,342 as previously stated, £5,076,492 as restated).