Company registration number SC335165 (Scotland)
NWH GROUP LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2022
NWH GROUP LIMITED
COMPANY INFORMATION
Directors
M P Williams
R A Williams
C D Williams
N G Black
(Appointed 13 May 2022)
R F D Ray
(Appointed 13 May 2022)
C D Robertson
(Appointed 13 May 2022)
G A Hill
(Appointed 13 May 2022)
Company number
SC335165
Registered office
Unit 5 Mayfield Industrial Estate
Mayfield
Dalkeith
Midlothian
United Kingdom
EH22 4AD
Auditor
Azets Audit Services
Titanium 1
King's Inch Place
Renfrew
Renfrewshire
United Kingdom
PA4 8WF
Bankers
The Royal Bank of Scotland PLC
36 St Andrew Square
Edinburgh
United Kingdom
EH2 2YB
NWH GROUP LIMITED
CONTENTS
Page
Strategic report
1 - 4
Directors' report
5 - 6
Independent auditor's report
7 - 9
Statement of comprehensive income
10
Balance sheet
11
Statement of changes in equity
12
Notes to the financial statements
13 - 29
NWH GROUP LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2022
- 1 -
The directors present the strategic report for the year ended 30 September 2022.
Principal activities
The principal activity of the group in the year under review was the collection, recycling, and production of resources in addition to other ancillary services. Waste collection services to the hospitality, retail, energy, healthcare, local authorities, commercial, industrial and construction sectors are provided.
Waste such as glass, food, dry mixed recycling, general residual, cardboard, paper, plastics, inert demolition spoil, soils, wood, green garden, asbestos, incinerator bottom ash, household, road sweepings, civic amenity is collected. This is undertaken by the fleet of trade refuse vehicles, skips, tippers, grabs and articulated vehicles which transport it to the Material Recycling Facilities.
Valuable products - cardboard, paper, washed sands & gravels, concrete, metals, refuse derived fuel, biomass, topsoil and animal bedding - are produced.
Headquartered in Midlothian, in central Scotland, the business services all of Scotland and the North East of England from ten sites.
Review of business performance
The company achieved turnover of £49.2m (2021: £30.9m) in the year generating an operating profit of £1.8m (2021: £2.0m). Profit before taxation in the year was £1.4m (2021: £1.9m).
Trading was robust through most of FY22 H1 following a strong rebound after the lifting of the pandemic restrictions. From mid Q2, significant headwinds impacted the trading performance. Capacity constraints from the national shortage of drivers (compounded by Brexit and the hiatus in new entrants during lockdowns), the reduced availability of both replacement and growth vehicles, delays in the sourcing, and the higher costs of, spare parts, the availability of, and the higher cost of, labour from the cost-of-living crisis and the significantly inflated cost of fuel and other overheads all hit the business. Against this background, the improved financial results are testament to the strategy of the company.
A new aggregate washplant was installed and commissioned in the year; this produces additional product (sand & gravel and crushed rock) to sell into the growth market of recycled aggregates. Further, it is aligned with our Circular Economy goals, extends the economic life of the Middleton quarry and reduces the waste to landfill.
FY22 was the first full year of operation of the new MRF at Leith; the operational efficiency benefits from the investment in previous years has improved productivity.
During the year a single trading entity was established, when the trade and assets at NWH Construction Services Ltd were transferred to NWH Group Limited. This is the first stage of moving to one operational system which will deliver one sole service delivery platform making us easier to buy from, increase operational efficiency, drive further automation, simplify business analysis and quicken all decision-making.
Key Performance Indicators ("KPIs")
One of the main tools to address risk is the extensive use of KPIs and continuous commercial planning within the long term strategic framework. As part of a rolling monthly performance cycle, the company monitors KPIs such as new business pipeline, service levels, collection movements and tonnages, vehicle and plant utilisation, processing throughput, profitability and liquidity on a daily and weekly basis which are reviewed both operationally and at board level.
NWH GROUP LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2022
- 2 -
Principal risks and uncertainties
The nature of the company's business and strategy are subject to a number of risks. The directors are of the opinion that the adopted risk management processes assist to identify, monitor and mitigate these risks.
The company operates a Risk, Health and Safety Committee with the purpose of reviewing and making recommendations on the adequacy and reliability of risk identification, mitigation and reporting. It fulfils the Board’s corporate governance and supervisory responsibility for risk, health and safety and for developing policy to ensure best practice as well as the health and wellbeing of staff, contractors and visitors to the sites.
Risk Management Committees
The committee meets quarterly ensuring the objectives, measures and targets of the company’s policy are appropriate, adhered to and reported on. Risks addressed include regulatory, people & safety, business continuity, legal, reputational, environmental and community. A risk management plan is prepared and reviewed annually.
The Safety, Health, Environment, Fire and Quality Committee meets monthly and comprises all site managers. Its findings feed into the monthly Operational and Main Board meetings as well as the Risk, Health and Safety Committee.
The principal risks and uncertainties that affect the business are:
Compliance
This is the largest risk facing the company; from health and safety legalisation, environmental regulation and vehicular rules. Compliance has maximum focus in the business and is addressed through constant review and is one of the company’s core values. The Compliance Director sits on the Board with responsibility for delivering a fully compliant business.
Macroeconomic climate
A challenging economic environment has been created by Brexit, the pandemic, the conflict in Ukraine, an inflationary market, rising finance costs and the cost of living crisis. The company’s strategy is robust enough to counter these headwinds.
Environment
The company is cognisant of its environmental responsibilities and processes and systems are in place to manage the impact on, as well as protect and enhance, the environment. There is strict adherence to the SEPA and EA waste management regulations.
Credit risk
The company's principal financial assets are bank balances, cash and trade debtors. The company's credit risk is primarily attributable to its trade debtors. Credit Risk is managed by monitoring the aggregate amount and duration of exposure to any one customer. Trade debtors are insured on an individual account basis. The amounts presented in the balance sheet are net of allowances for doubtful debts, estimated by company's management based on prior experiences and their assessment of the current environment.
Liquidity risk
The financial risk management policy is to ensure continuity of funding for operations via facilities where limits have been established based on growth requirements of the business, together with inter-company debt and through acquiring an element of the Group's fixed assets under finance leases as appropriate. The group has an Invoice Finance Facility with RBS, providing flexibility to meet the growth requirements of the business. No treasury transactions or derivatives are entered into.
NWH GROUP LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2022
- 3 -
Legislation
Waste recycling is a regulated sector which can impact the revenue opportunities. The Scottish Government and its delivery body, Zero Waste Scotland, have introduced ambitious waste recycling policies such as waste reduction targets for food, the introduction of Deposit Return Scheme for glass bottles and plastic containers and a landfill ban on municipal biodegradable waste by 2025. Major Scottish cities introduced Low Emission Zones from June 2022 which are designed to target the most polluting vehicles; our fleet has been modernised to ensure it is compliant with the new regulations. The business has visibility of changes to the legal environment and the prevailing political sentiment and plans accordingly.
Human resources
People are the company’s greatest asset and there is a continuing reliance on high calibre employees as the business grows. To deliver this, investment has been, and will continue to be, made to increase capacity and capability through the business. In addition, the apprenticeship program and the Driver Academy ensures the business has a process to meet the constant need for high quality drivers.
End markets
The company operates in the construction sector which has experienced challenges in previous years. The risk faced by the company is significantly diversified as there is increasing sales activity in other markets eg hospitality, local government, facilities management, manufacturing, industrial, commercial, retail and leisure.
Commodities market
Volatility in global commodity prices can impact the revenues generated from the resource produced. Working with industry partners helps to mitigate any downside risk.
Business infrastructure
The business is reliant on various software and IT systems. Further improvements to our operational systems continued to be implemented throughout the business offering greater stability, analysis and reporting capability.
Acquisitions
A key plank of the growth strategy is through acquisitions. There are many potential deals sourced and only those that are aligned to the strategy of, and have a strong culture fit with, NWH are progressed. This disciplined approach limits the risk of poor integration.
NWH GROUP LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2022
- 4 -
2023 Outlook
Building on the strong performance in 2022, the focus for FY23 is securing the foundations for growth in the current challenging economic conditions. The unsettled macroeconomic and geopolitical tensions have presented supply chain challenges, a tightening labour market and rising fuel and energy costs. This is negated by the diversity of our markets, geographies and service offering as well as the significant amount of repeat work we undertake.
Growth is forecast to be delivered through both an increase in sales and margin improvement. The main drivers will be the full year benefit of the upgraded aggregate processing capability, increased efficiency at the MRFs and biomass processing site and the deeper driver pool capacity.
As part of the data governance strategy, Andrew Baker was appointed as Chief Information Officer in early 2023. He will lead the creation of an environment that drives continual improvement in, and optimises, data quality as well as the establishment of an appropriate framework of processes and roles.
Acquisition targets which meet the business’ strategy and will continue to be considered.
M P Williams
Director
25 April 2023
NWH GROUP LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2022
- 5 -
The directors present their annual report and financial statements for the year ended 30 September 2022.
Results and dividends
The results for the year are set out on page 10.
During the year under review interim dividends were paid amounting to £546k (2021: £820k). The directors recommend that no final dividend be paid.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
M P Williams
R A Williams
C D Williams
N G Black
(Appointed 13 May 2022)
R F D Ray
(Appointed 13 May 2022)
C D Robertson
(Appointed 13 May 2022)
G A Hill
(Appointed 13 May 2022)
Disabled persons
Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the company continues and that the appropriate training is arranged. It is the policy of the company that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.
Employee involvement
The company's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.
Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the company's performance.
There is no employee share scheme at present, but the directors are considering the introduction of such a scheme as a means of further encouraging the involvement of employees in the company's performance.
Auditor
The auditor, Azets Audit Services, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
NWH GROUP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2022
- 6 -
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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.
Strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of financial instruments and risk.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
M P Williams
Director
25 April 2023
NWH GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF NWH GROUP LIMITED
- 7 -
Opinion
We have audited the financial statements of NWH Group Limited (the 'company') for the year ended 30 September 2022 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 30 September 2022 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the 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.
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.
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 strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
NWH GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF NWH GROUP LIMITED
- 8 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an 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.
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.
NWH GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF NWH GROUP LIMITED
- 9 -
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Reviewing minutes of meetings of those charged with governance;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias.
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 of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
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.
David MacCallum (Senior Statutory Auditor)
For and on behalf of Azets Audit Services
27 April 2023
Chartered Accountants
Statutory Auditor
Titanium 1
King's Inch Place
Renfrew
Renfrewshire
United Kingdom
PA4 8WF
NWH GROUP LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 SEPTEMBER 2022
- 10 -
2022
2021
Notes
£
£
Turnover
3
49,248,264
30,854,639
Cost of sales
(40,754,878)
(25,533,965)
Gross profit
8,493,386
5,320,674
Administrative expenses
(6,697,595)
(3,455,560)
Other operating income
24,548
182,201
Operating profit
4
1,820,339
2,047,315
Interest payable and similar expenses
7
(411,306)
(172,561)
Profit before taxation
1,409,033
1,874,754
Tax on profit
8
297,431
(482,443)
Profit for the financial year
1,706,464
1,392,311
NWH GROUP LIMITED
BALANCE SHEET
AS AT
30 SEPTEMBER 2022
30 September 2022
- 11 -
2022
2021
Notes
£
£
£
£
Fixed assets
Goodwill
10
850,699
963,857
Other intangible assets
10
25,512
49,264
Total intangible assets
876,211
1,013,121
Tangible assets
11
26,503,864
16,832,451
27,380,075
17,845,572
Current assets
Stocks
12
380,118
248,500
Debtors
13
8,326,357
5,859,117
Cash at bank and in hand
520,989
4,456,638
9,227,464
10,564,255
Creditors: amounts falling due within one year
14
(27,269,856)
(21,478,185)
Net current liabilities
(18,042,392)
(10,913,930)
Total assets less current liabilities
9,337,683
6,931,642
Creditors: amounts falling due after more than one year
15
(5,505,098)
(4,358,849)
Provisions for liabilities
Deferred tax liability
18
1,098,418
999,090
(1,098,418)
(999,090)
Net assets
2,734,167
1,573,703
Capital and reserves
Called up share capital
20
100,001
100,001
Profit and loss reserves
21
2,634,166
1,473,702
Total equity
2,734,167
1,573,703
The financial statements were approved by the board of directors and authorised for issue on 25 April 2023 and are signed on its behalf by:
M P Williams
Director
Company Registration No. SC335165
NWH GROUP LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2022
- 12 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 October 2020
100,001
901,391
1,001,392
Year ended 30 September 2021:
Profit and total comprehensive income for the year
-
1,392,311
1,392,311
Dividends
9
-
(820,000)
(820,000)
Balance at 30 September 2021
100,001
1,473,702
1,573,703
Year ended 30 September 2022:
Profit and total comprehensive income for the year
-
1,706,464
1,706,464
Dividends
9
-
(546,000)
(546,000)
Balance at 30 September 2022
100,001
2,634,166
2,734,167
NWH GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2022
- 13 -
1
Accounting policies
Company information
NWH Group Limited is a private company limited by shares incorporated in Scotland. The registered office is Unit 5 Mayfield Industrial Estate, Mayfield, Dalkeith, Midlothian, United Kingdom, EH22 4AD.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
- Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
- Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: Interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
- Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
- Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of NWH Holdings Limited. These consolidated financial statements are available from its registered office, Unit 5, Mayfield Industrial Estate, Mayfield, Dalkeith, Midlothian, EH22 4AD.
1.2
Business combinations
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.
Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.
NWH GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2022
1
Accounting policies
(Continued)
- 14 -
1.3
Going concern
At 30 September 20true22, the company had net current liabilities of £18,042,392 (2021: £10,913,930).
This is largely due to balances owed to its parent entity, who have confirmed that it will continue to support the entity and not demand repayment of their loans until such time that the company has the ability and means to repay them.
The current and future financial position of the company, including its cash flows and liquidity, has been reviewed by the directors. The directors have prepared detailed financial projections for a period extending over 12 months from the date of approval of these financial statements. These projections have also been sensitised to reflect plausible downside scenarios. Based on these projections, the directors have a reasonable expectation that the company has adequate resources with sufficient levers available to continue in operational existence for the foreseeable future and to meet its obligations as they fall due.
As such, the directors consider that it is appropriate to prepare the financial statements on the going concern basis.
1.4
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
Revenue relates to the collection and processing of materials, sale of recycled materials and skip hire.
Revenue from collection services is recognised when the materials have been collected and the loads weighed upon return to the processing facility. Revenue from processing services is recognised at the point in time when the processing service takes place. Revenue from the sale of recycled materials is recognised when the significant risks and rewards of ownership of the goods have transferred to the buyer. Turnover from skip hire is recognised on despatch of the skip to the customer.
1.5
Intangible fixed assets - goodwill
Goodwill, being the amount paid in connection with the acquisition of a business in 2005 has been fully amortised.
Goodwill, being the amount paid in connection with the acquisition of a business in 2017 and 2021 is being amortised over 10 years.
For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.
NWH GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2022
1
Accounting policies
(Continued)
- 15 -
1.6
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Software
33% on cost
1.7
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Freehold land and buildings
2% on cost
Leasehold land and buildings
20% on cost
Plant and equipment
20% on cost
Computer equipment
33% on cost
Motor vehicles
10% - 20% on cost
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 credited or charged to profit or loss.
1.8
Borrowing costs related to fixed assets
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
1.9
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
NWH GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2022
1
Accounting policies
(Continued)
- 16 -
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.
1.10
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.11
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.12
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
NWH GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2022
1
Accounting policies
(Continued)
- 17 -
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.13
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.14
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
NWH GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2022
1
Accounting policies
(Continued)
- 18 -
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.15
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.16
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.17
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
NWH GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2022
1
Accounting policies
(Continued)
- 19 -
1.18
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
Government grants relating to turnover are recognised as income over the periods when the related costs are incurred. Grants relating to an asset are recognised in income systematically over the asset's expected useful life. If part of such a grant is deferred it is recognised as deferred income rather than being deducted from the asset's carrying amount.
1.19
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
2
Judgements and key sources of estimation uncertainty
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 where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The key sources of estimation uncertainty in applying accounting policies in the financial statements are:
- Useful economic lives of intangible and tangible assets
- Residual values of tangible assets
- Fair value of assets acquired in business combination
The annual amortisation or depreciation charge for intangible and tangible assets is sensitive to changes in the estimated useful economic lives and residual values of assets. The useful economic lives and residual values are assessed annually and amended when necessary to reflect current estimates, based on technological advancements, future investments, economic utilisation and physical condition of the assets.
The directors review the debtors ledger for customers who have overdue balances. Provision are made against balances which present a credit risk to the company. The directors also monitor customers' insured limits to mitigate the risk of bad or doubtful debts.
Fair values of assets acquired in business combinations are assessed by management based on their knowledge of the industry and physical conditions of the assets acquired.
Stock to tip provisions are measured at the directors best estimate of the company's obligations in respect of unusable or unsellable materials held on site.
NWH GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2022
- 20 -
3
Turnover and other revenue
2022
2021
£
£
Turnover analysed by class of business
Collection
24,631,896
10,314,023
Processing
24,616,368
20,540,616
49,248,264
30,854,639
2022
2021
£
£
Other revenue
Grants received
174,833
The directors consider there to be one geographical market of turnover, the United Kingdom.
4
Operating profit
2022
2021
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants
(174,833)
Fees payable to the company's auditor for the audit of the company's financial statements
36,000
17,500
Depreciation of owned tangible fixed assets
1,596,720
939,552
Depreciation of tangible fixed assets held under finance leases
1,918,035
1,209,660
Loss/(profit) on disposal of tangible fixed assets
21,326
(48,884)
Amortisation of intangible assets
207,129
289,833
Operating lease charges
2,130,974
1,497,694
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
Drivers
133
75
Recycling
142
23
Directors
6
3
Administration
60
45
Total
341
146
NWH GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2022
5
Employees
(Continued)
- 21 -
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
12,285,852
6,050,838
Social security costs
1,313,084
567,422
Pension costs
78,049
28,923
13,676,985
6,647,183
6
Directors' remuneration
2022
2021
£
£
Remuneration for qualifying services
142,437
22,113
Company pension contributions to defined contribution schemes
3,879
443
146,316
22,556
7
Interest payable and similar expenses
2022
2021
£
£
Interest on finance leases and hire purchase contracts
328,665
165,089
Other interest
82,641
7,472
411,306
172,561
Borrowing costs excluded from interest payable and included in the cost of assets during the year are as follows:
Intangible fixed assets
(17,815)
8
Taxation
2022
2021
£
£
Current tax
UK corporation tax on profits for the current period
(148,804)
(47,150)
Adjustments in respect of prior periods
(1,122)
46,478
Total current tax
(149,926)
(672)
NWH GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2022
8
Taxation
2022
2021
£
£
(Continued)
- 22 -
Deferred tax
Origination and reversal of timing differences
(147,505)
501,865
Changes in tax rates
93,279
Adjustment in respect of prior periods
(112,029)
Total deferred tax
(147,505)
483,115
Total tax (credit)/charge
(297,431)
482,443
The actual (credit)/charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2022
2021
£
£
Profit before taxation
1,409,033
1,874,754
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
267,716
356,203
Tax effect of expenses that are not deductible in determining taxable profit
10,122
9,744
Adjustments in respect of prior years
(1,122)
46,478
Group relief
30,945
Research and development tax credit
(148,804)
(47,150)
Deferred tax adjustments in respect of prior years
(112,029)
Fixed asset timing differences
(287,125)
(159,298)
Tax losses carried back
90,907
Remeasurement of deferred tax to current tax rate
23,839
239,781
Enhanced deduction for R&D expenditure
(110,209)
(34,921)
Surrender of tax losses for R&D tax credit
194,985
61,783
Adjust in respect of business reorganisations
(246,833)
Taxation (credit)/charge for the year
(297,431)
482,443
9
Dividends
2022
2021
£
£
Final paid
546,000
820,000
NWH GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2022
- 23 -
10
Intangible fixed assets
Goodwill
Software
Total
£
£
£
Cost
At 1 October 2021
1,927,409
140,580
2,067,989
Transfers on group reorganisations
88,034
88,034
Transfers
(17,815)
(17,815)
At 30 September 2022
1,927,409
210,799
2,138,208
Amortisation and impairment
At 1 October 2021
963,552
91,316
1,054,868
Amortisation charged for the year
113,158
93,971
207,129
At 30 September 2022
1,076,710
185,287
1,261,997
Carrying amount
At 30 September 2022
850,699
25,512
876,211
At 30 September 2021
963,857
49,264
1,013,121
11
Tangible fixed assets
Freehold land and buildings
Leasehold land and buildings
Plant and equipment
Computer equipment
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 October 2021
1,567,309
68,654
18,018,941
164,952
6,931,852
26,751,708
Additions
345,411
329,695
241,512
266,547
6,229,905
7,413,070
Transfers on group reorganisation
370,519
594,119
4,938,048
98,723
6,001,409
Disposals
(1,611,019)
(12,750)
(1,623,769)
Transfers
17,815
17,815
At 30 September 2022
2,283,239
992,468
21,587,482
548,037
13,149,007
38,560,233
Depreciation and impairment
At 1 October 2021
386,091
7,351
7,136,057
88,269
2,301,489
9,919,257
Depreciation charged in the year
73,562
41,738
1,720,513
115,746
1,563,196
3,514,755
Eliminated in respect of disposals
(1,370,393)
(7,250)
(1,377,643)
At 30 September 2022
459,653
49,089
7,486,177
204,015
3,857,435
12,056,369
Carrying amount
At 30 September 2022
1,823,586
943,379
14,101,305
344,022
9,291,572
26,503,864
At 30 September 2021
1,181,218
61,303
10,882,884
76,683
4,630,363
16,832,451
NWH GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2022
11
Tangible fixed assets
(Continued)
- 24 -
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2022
2021
£
£
Plant and equipment
7,432,224
6,037,668
Motor vehicles
6,422,802
3,292,254
13,855,026
9,329,922
12
Stocks
2022
2021
£
£
Raw materials and consumables
380,118
248,500
13
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
7,287,319
4,034,839
Corporation tax recoverable
148,804
503,278
Amounts owed by group undertakings
375,821
Other debtors
49,965
431,915
Prepayments and accrued income
840,269
513,264
8,326,357
5,859,117
Included within trade debtors is £7,482,005 (2021: £4,021,020) which is subject to an invoice discounting arrangement.
NWH GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2022
- 25 -
14
Creditors: amounts falling due within one year
2022
2021
Notes
£
£
Obligations under finance leases
16
3,332,344
2,289,167
Invoice finance borrowings
17
4,327,852
2,167,626
Trade creditors
2,971,641
4,582,025
Amounts owed to group undertakings
11,023,965
8,801,004
Taxation and social security
1,737,414
186,769
Other creditors
523,235
619,341
Accruals and deferred income
3,353,405
2,832,253
27,269,856
21,478,185
Included within Amounts owed to group undertakings is a balance of £nil (2021 - £195,599) due to HMRC in relation to VAT. This is payable on behalf of the company by NWH Holdings Limited.
The VAT liability has been recognised in NWH Group Limited in the current year given the trade of the group goes through NWH Group Limited.
15
Creditors: amounts falling due after more than one year
2022
2021
Notes
£
£
Obligations under finance leases
16
5,505,098
4,358,849
16
Finance lease obligations
2022
2021
Future minimum lease payments due under finance leases:
£
£
Within one year
3,332,344
2,289,167
In two to five years
5,505,098
4,358,849
8,837,442
6,648,016
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 5 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
Finance lease liabilities are secured over the assets they were used to acquire.
NWH GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2022
- 26 -
17
Loans and overdrafts
2022
2021
£
£
Invoice finance borrowings
4,327,852
2,167,626
Payable within one year
4,327,852
2,167,626
The Royal Bank of Scotland holds a bond and floating charge over the whole assets of the company together with cross guarantees between NWH Group Limited and other group companies. The total amount of debt over which cross guarantees had been provided amounted to £10,704,545 (2021: £9,473,345).
RBS Invoice Finance Ltd (RBSIF) hold a floating charge in relation to the purchased debts. RBSIF's floating charge shall insofar as it relates to the purchased debts, but no further or otherwise, rank in priority to the bank's floating charge.
18
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2022
2021
Balances:
£
£
Accelerated capital allowances
3,052,779
1,626,903
Tax losses
(1,953,181)
(594,475)
Other timing differences
(1,180)
(33,338)
1,098,418
999,090
2022
Movements in the year:
£
Liability at 1 October 2021
999,090
Credit to profit or loss
(147,505)
Other
246,833
Liability at 30 September 2022
1,098,418
The Finance Bill 2021 was substantively enacted on 24 May 2021 changing the main rate of corporation tax from 19% to 25% after 1 April 2023. The closing deferred tax has been measured in accordance with the rate substantively enacted at the Balance Sheet date that would be expected to apply on reversal of the timing differences.
NWH GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2022
- 27 -
19
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
78,049
28,923
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
20
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
100,001
100,001
100,001
100,001
Each share holds the right to one vote. Dividends are allotted in proportion to shareholdings. If the company was to be dissolved on a winding up basis distributions would be shared in proportion to shareholdings. Issued shares hold no right of redemption.
21
Profit and loss reserves
2022
2021
£
£
At the beginning of the year
1,473,702
901,391
Profit for the year
1,706,464
1,392,311
Dividends declared and paid in the year
(546,000)
(820,000)
At the end of the year
2,634,166
1,473,702
22
Operating lease commitments
Lessee
2022
2021
£
£
Within one year
766,229
240,326
Between two and five years
1,878,565
474,345
In over five years
4,136,674
1,730,959
6,781,468
2,445,630
NWH GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2022
- 28 -
23
Capital commitments
Amounts contracted for but not provided in the financial statements:
2022
2021
£
£
Acquisition of tangible fixed assets
804,546
2,249,761
24
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Sales
Sales
Purchases
Purchases
2022
2021
2022
2021
£
£
£
£
Other related parties
680
300,000
165,000
Management charges receivable
2022
2021
£
£
Other related parties
12,000
-
The following amounts were outstanding at the reporting end date:
2022
2021
Amounts due to related parties
£
£
Other related parties
300,000
440,000
The following amounts were outstanding at the reporting end date:
2022
2021
Amounts due from related parties
£
£
Other related parties
-
415,317
The company has taken exemption provided by Paragraph 33.1A of Financial Reporting Standard 102 and accordingly has not disclosed any transactions with group undertakings.
NWH GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2022
- 29 -
25
Ultimate controlling party
The company is a 100% subsidiary of NWH Holdings Limited, a company registered in Scotland.
The largest and smallest group into which the results of the company are consolidated is that headed by NWH Holdings Limited. The consolidated accounts of this company are available to the public and may be obtained from Companies House.
No other group accounts include the results of the company.
The company is under the control of the directors, M P Williams, C D Williams and R A Williams, by virtue of their majority shareholding in NWH Holdings Limited.
26
Group reorganisation
On 1 October 2021, the trade and net assets of the fellow subsidiary company NWH Construction Services Ltd were transferred to NWH Group Limited. The net assets were transferred for a consideration equal to net book value in exchange for an intercompany loan.
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