SPA_ENVIRONMENTAL_CARE_PL - Accounts


Company Registration No. 03281431 (England and Wales)
SPA ENVIRONMENTAL CARE PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
SPA ENVIRONMENTAL CARE PLC
COMPANY INFORMATION
Directors
Mr C P R Nicholson
Mr T G Watts
Mr N A Davis
(Appointed 13 May 2021)
Secretary
Mr K Wright
Company number
03281431
Registered office
The Lairage
Bearley Road
Bearley
Stratford Upon Avon
Warwickshire
CV37 0EX
Auditor
Whitley Stimpson Limited
Penrose House
67 Hightown Road
Banbury
Oxfordshire
OX16 9BE
Bankers
Natwest Bank Plc
26 High Street
Warwick
Warwickshire
CV34 4FA
SPA ENVIRONMENTAL CARE PLC
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 25
SPA ENVIRONMENTAL CARE PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
- 1 -

The directors present the strategic report for the year ended 31 December 2020.

Fair review of the business

The Covid-19 pandemic has had a great influence on our valued customers in 2020.

We were able to continue our high standards of service with our annual renewals of gritting vehicles, even though the requirements of our clients were much reduced due to their Covid-related staff absences. The Covid-19 'lockdown' continued to some extent for the whole year.

 

No members of staff were made redundant even with reduced sales. As our work is outdoors, a plentiful supply of PPE helped safeguard their wellbeing.

 

Two ambulances were purchased and refurbished. These were loaned to the esteemed Warwickshire Fire Brigade who bravely undertook to support the NHS with Mortuary Support and Patient Support.

 

Turnover for the year fell to £1,314,588 leading to a loss before tax being incurred of £106,924. This was largely caused by a milder than expected winter and customer contacts have not been lost as a result of this.

 

Our potholing division continues to thrive and has seen an increase in business again this year.

 

Looking to the future, the effects of Covid-19 will diminish. Our high standards of service excellence and staff loyalty will continue, and will be rewarded, by increased sales acquisitions and a brighter future for ourselves and our clients.

Principal risks and uncertainties

The company's operations expose it to a variety of financial risks that include price risk, credit risk, liquidity risk and interest rate risk. The directors and senior management monitor financial risk management.

 

The impact of Covid-19 continues to present a source of risk and uncertainty and this has been further covered in the going concern accounting policy.

Development and performance

The position of the company at the year end is disclosed on the balance sheet.

Key performance indicators

Turnover decreased by 23.45% to £1,314,588.

 

Gross profit decreased from 41.61% to 27.38% of sales.

 

Loss before taxation increased from 5.72% to 8.13% of sales.

SPA ENVIRONMENTAL CARE PLC
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 2 -
Directors' statement of compliance with duty to promote the success of the Company

The directors of the company, as those of all UK companies, must act in accordance with a set of general duties. These duties are detailed in section 172 of the UK Companies Act 2006 which is summarised as follows:

 

"A director of a company must act in the way they consider, in good faith, would be most likely to promote the success of the company for benefit of its shareholders as a whole and in doing so, have regard to the likely consequences of any decisions in the long term; the interests of the company's employees; the need to foster the company's business relationships with suppliers, customers and others; the impact of the company's operations on the community and environment; the desirability of the company maintaining a reputation for high standards of business conduct; and the need to act fairly as between shareholders and the company".

 

The directors are fully aware of their responsibilities to promote the success of the company in accordance with section 172 of the Companies Act 2006. Details of how the directors have fulfilled these duties when dealing with strategic decisions are covered in the Directors' Report.

On behalf of the board

Mr C P R Nicholson
Director
1 February 2022
SPA ENVIRONMENTAL CARE PLC
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
- 3 -

The directors present their annual report and financial statements for the year ended 31 December 2020.

Principal activities

The principal activities of the company continued to be that of commercial landscape maintenance, winter gritting maintenance and pothole repair.

 

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

Mr C P R Nicholson
Mrs L Hindle
(Resigned 31 March 2021)
Mr T G Watts
Mr N A Davis
(Appointed 13 May 2021)
Auditor

In accordance with the company's articles, a resolution proposing that Whitley Stimpson Limited be reappointed as auditor of the company will be put at a General Meeting.

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
Mr C P R Nicholson
Director
1 February 2022
SPA ENVIRONMENTAL CARE PLC
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2020
- 4 -

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.

SPA ENVIRONMENTAL CARE PLC
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF SPA ENVIRONMENTAL CARE PLC
- 5 -

Qualified opinion on financial statements

We have audited the financial statements of Spa Environmental Care Plc (the 'company') for the year ended 31 December 2020 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows 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 FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion, except for the effects of the matter described in the basis for qualified opinion paragraph, the financial statements:

  •     give a true and fair view of the state of the company's affairs as at 31 December 2020 and of its loss for the year then ended;

  •     have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

  •     have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for qualified opinion

The client was unable to provide to us supporting calculations for income received under the Coronavirus Job Retention Scheme ("CJRS"). The Coronavirus Job Retention Scheme claims had been made by the former bookkeeper who unexpectedly passed away during the year end 31 December 2020. We were unable to satisfy ourselves by alternative means concerning the CJRS income received in the year ended 31 December 2020, which is included within other income at £46,908, by using other audit procedures. Consequently we were unable to determine whether any adjustment to this amount was necessary.

 

In addition, there were a number of older balances on the purchase ledger for which no invoices were available to support the balance, as these had been retained by the bookkeeper and were not accessible following her sudden passing. We were unable to satisfy ourselves by alternative means concerning the trade creditors at 31 December 2020, which are included in the balance sheet at £91,650, by using other audit procedures, Consequently we were unable to determine whether any adjustment to this amount was necessary.

 

Were any adjustments to these balances to be required, the strategic report would also need to be amended.

 

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 qualified opinion.

Key audit matters

Except for the matter described in the basis for qualified opinion section, we have determined that there are no key audit matters to be communicated in our report.

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.

SPA ENVIRONMENTAL CARE PLC
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SPA ENVIRONMENTAL CARE PLC
- 6 -

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.

As described in the basis for qualified opinion section of our report, we were unable to satisfy ourselves concerning the value of trade creditors of £91,650 at 31 December 2020 and Coronavirus Job Retention Scheme income of £46,908 in the year end 31 December 2020. We have concluded that where the other information refers to the trade creditors balance, CJRS income, or related balances, it may be materially misstated for the same reason.

Opinions on other matters prescribed by the Companies Act 2006

Except for the possible effects of the matter described in the basis for qualified opinion section of our report, 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.

Matters on which we are required to report by exception

Except for the matter described in the basis for qualified opinion section of our report, 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 and the directors' report.

 

Arising solely from the limitation on the scope of our work relating to trade creditors and CJRS income, referred to above:

  •     we have not obtained all the information and explanations that we considered necessary for the purposes of our audit; and

  •     we were unable to determine whether adequate accounting records have been kept.

 

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

 

  •     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.

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.

SPA ENVIRONMENTAL CARE PLC
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SPA ENVIRONMENTAL CARE PLC
- 7 -
Auditor's responsibilities for the audit of the financial statements

Our responsibility is to conduct an audit of the company’s financial statements in accordance with International Standards on Auditing (UK) and to issue an auditor’s report. However, because of the matter described in the basis for disclaimer of opinion section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.

 

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 Standards and we have fulfilled our other ethical responsibilities in accordance with these requirements.

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.

Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws and regulations related to the risk of revenue recognition being materially misstated due to fraud, and the calculation of the management charges. We considered the extent to which non-compliance might have a material effect on the financial statements, and considered those laws and regulations that have a direct impact on the financial statements such as the Companies Act 2006 and tax legislation. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks related to revenue.

 

Audit procedures performed included:

  • Discussion amongst the audit team regarding the susceptibility of the client to fraud;

  • Consideration of the risk of fraud when documenting and reviewing internal controls and procedures;

  • Enquiring of management how they assess the risk of fraud, and identify and respond to the risks of fraud;

  • Enquiring of management whether they have any knowledge of actual or suspected frauds or non-compliance with laws and regulations;

  • Review of how those charged with governance exercise oversight of management's process for identifying and responding to the risk of fraud;

  • Substantive testing of revenue and debtors;

  • Review of journals for unusual items;

  • Review relevant tax correspondence;

  • Review VAT return entries and perform analytical procedures on VAT balances;

  • Substantive testing on fixed assets including having sight of the assets to confirm existence;

  • Verification of employees; and

  • Review of bank reconciliations for evidence of window dressing.

There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

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.

SPA ENVIRONMENTAL CARE PLC
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SPA ENVIRONMENTAL CARE PLC
- 8 -

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.

Date:
1 February 2022
Ian Parker (Senior Statutory Auditor)
For and on behalf of Whitley Stimpson Limited
Chartered Accountants
Statutory Auditor
Penrose House
67 Hightown Road
Banbury
Oxfordshire
OX16 9BE
SPA ENVIRONMENTAL CARE PLC
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2020
- 9 -
2020
2019
Notes
£
£
Turnover
3
1,314,588
1,717,394
Cost of sales
(954,719)
(1,002,868)
Gross profit
359,869
714,526
Administrative expenses
(503,470)
(799,233)
Other operating income
46,908
-
0
Operating loss
4
(96,693)
(84,707)
Interest receivable and similar income
8
4
-
0
Interest payable and similar expenses
9
(10,235)
(13,609)
Loss before taxation
(106,924)
(98,316)
Tax on loss
10
(9,686)
(12,115)
Loss for the financial year
(116,610)
(110,431)
Other comprehensive income
Revaluation of tangible fixed assets
175,167
-
0
Total comprehensive income for the year
58,557
(110,431)

The profit and loss account has been prepared on the basis that all operations are continuing operations.

SPA ENVIRONMENTAL CARE PLC
BALANCE SHEET
AS AT
31 DECEMBER 2020
31 December 2020
- 10 -
2020
2019
Notes
£
£
£
£
Fixed assets
Tangible assets
12
1,515,634
1,416,994
Investments
13
2
2
1,515,636
1,416,996
Current assets
Stocks
15
12,430
30,000
Debtors
16
649,043
650,781
Cash at bank and in hand
84,984
1,001
746,457
681,782
Creditors: amounts falling due within one year
17
(474,779)
(546,268)
Net current assets
271,678
135,514
Total assets less current liabilities
1,787,314
1,552,510
Creditors: amounts falling due after more than one year
18
(427,228)
(260,667)
Provisions for liabilities
Deferred tax liability
21
171,091
161,405
(171,091)
(161,405)
Net assets
1,188,995
1,130,438
Capital and reserves
Called up share capital
23
50,000
50,000
Revaluation reserve
341,986
166,819
Profit and loss reserves
797,009
913,619
Total equity
1,188,995
1,130,438
The financial statements were approved by the board of directors and authorised for issue on 1 February 2022 and are signed on its behalf by:
Mr C P R Nicholson
Director
Company Registration No. 03281431
SPA ENVIRONMENTAL CARE PLC
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
- 11 -
Share capital
Revaluation reserve
Profit and loss reserves
Total
£
£
£
£
Balance at 1 January 2019
50,000
166,819
1,024,050
1,240,869
Year ended 31 December 2019:
Loss and total comprehensive income for the year
-
-
(110,431)
(110,431)
Balance at 31 December 2019
50,000
166,819
913,619
1,130,438
Year ended 31 December 2020:
Loss for the year
-
-
(116,610)
(116,610)
Other comprehensive income:
Revaluation of tangible fixed assets
-
175,167
-
175,167
Total comprehensive income for the year
-
0
175,167
(116,610)
58,557
Balance at 31 December 2020
50,000
341,986
797,009
1,188,995
SPA ENVIRONMENTAL CARE PLC
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2020
- 12 -
2020
2019
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from/(absorbed by) operations
25
11,892
(158,750)
Interest paid
(10,235)
(13,609)
Income taxes paid
(10,072)
(10,734)
Net cash outflow from operating activities
(8,415)
(183,093)
Investing activities
Purchase of tangible fixed assets
(14,102)
(182,156)
Proceeds on disposal of tangible fixed assets
-
0
21,930
Receipts arising from loans made
390
(390)
Interest received
4
-
0
Net cash used in investing activities
(13,708)
(160,616)
Financing activities
Repayment of bank loans
222,697
(32,190)
Payment of finance leases obligations
(64,516)
20,716
Net cash generated from/(used in) financing activities
158,181
(11,474)
Net increase/(decrease) in cash and cash equivalents
136,058
(355,183)
Cash and cash equivalents at beginning of year
(51,074)
304,109
Cash and cash equivalents at end of year
84,984
(51,074)
Relating to:
Cash at bank and in hand
84,984
1,001
Bank overdrafts included in creditors payable within one year
-
0
(52,075)
SPA ENVIRONMENTAL CARE PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
- 13 -
1
Accounting policies
Company information

Spa Environmental Care Plc is a private company limited by shares incorporated in England and Wales. The registered office is The Lairage, Bearley Road, Bearley, Stratford Upon Avon, Warwickshire, CV37 0EX.

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, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.

1.2
Going concern

Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

1.3
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 from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.

1.4
Intangible fixed assets - goodwill

Acquired goodwill is written off in equal annual instalments over its estimated useful economic life of 10 years.

 

1.5
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.

SPA ENVIRONMENTAL CARE PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
1
Accounting policies
(Continued)
- 14 -

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% straight lline
Plant and equipment
10% reducing balance
Fixtures and fittings
10% reducing balance
Motor vehicles
10% reducing balance

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.

1.6
Fixed asset investments

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

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

An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The company considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.

Entities in which the company has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.

1.7
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.

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.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. 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.

SPA ENVIRONMENTAL CARE PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
1
Accounting policies
(Continued)
- 15 -
1.8
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.

1.9
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.

1.10
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.

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.

SPA ENVIRONMENTAL CARE PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
1
Accounting policies
(Continued)
- 16 -
1.11
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.

1.12
Taxation

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

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.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the 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.

1.13
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.

1.14
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.15
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.

SPA ENVIRONMENTAL CARE PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
1
Accounting policies
(Continued)
- 17 -
1.16
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.

 

A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.

1.17
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.

3
Turnover and other revenue
2020
2019
£
£
Turnover analysed by class of business
Principal activities
1,314,588
1,717,394
2020
2019
£
£
Other significant revenue
Interest income
4
-
Grants received
46,908
-
0
2020
2019
£
£
Turnover analysed by geographical market
United Kingdom
1,314,588
1,717,394
SPA ENVIRONMENTAL CARE PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 18 -
4
Operating loss
2020
2019
Operating loss for the year is stated after charging/(crediting):
£
£
Government grants
(46,908)
-
0
Depreciation of owned tangible fixed assets
90,629
99,636
(Profit)/loss on disposal of tangible fixed assets
-
0
1,267

During the year ended 31 December 2020, the company received government grants amounting to £46,908 (2019: £nil). This was in relation to claims made under the coronavirus job retention scheme. The company is not subject to any further conditions associated with this income.

5
Auditor's remuneration
2020
2019
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
8,560
6,000
6
Employees

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

2020
2019
Number
Number
Cost of sales staff
11
10
Directors
3
4
Total
14
14

Their aggregate remuneration comprised:

2020
2019
£
£
Wages and salaries
479,678
438,694
Social security costs
44,953
51,367
Pension costs
12,068
12,315
536,699
502,376
SPA ENVIRONMENTAL CARE PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 19 -
7
Directors' remuneration
2020
2019
£
£
Remuneration for qualifying services
120,558
110,000
Company pension contributions to defined contribution schemes
-
0
2,557
120,558
112,557
8
Interest receivable and similar income
2020
2019
£
£
Interest income
Interest on bank deposits
4
-
0

Investment income includes the following:

Interest on financial assets not measured at fair value through profit or loss
4
-
0
9
Interest payable and similar expenses
2020
2019
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
1,638
4,675
Other finance costs:
Interest on finance leases and hire purchase contracts
8,597
8,915
Other interest
-
0
19
10,235
13,609
10
Taxation
2020
2019
£
£
Deferred tax
Origination and reversal of timing differences
9,686
12,115
SPA ENVIRONMENTAL CARE PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
10
Taxation
(Continued)
- 20 -

The actual charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:

2020
2019
£
£
Loss before taxation
(106,924)
(98,316)
Expected tax credit based on the standard rate of corporation tax in the UK of 19.00% (2019: 19.00%)
(20,316)
(18,680)
Tax effect of expenses that are not deductible in determining taxable profit
1,438
-
0
Gains not taxable
33,282
18,680
Permanent capital allowances in excess of depreciation
-
0
12,115
Under/(over) provided in prior years
(4,718)
-
0
Taxation charge for the year
9,686
12,115
11
Intangible fixed assets
Goodwill
£
Cost
At 1 January 2020 and 31 December 2020
15,000
Amortisation and impairment
At 1 January 2020 and 31 December 2020
15,000
Carrying amount
At 31 December 2020
-
0
At 31 December 2019
-
0
SPA ENVIRONMENTAL CARE PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 21 -
12
Tangible fixed assets
Freehold land and buildings
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 January 2020
525,340
1,060,736
86,773
775,835
2,448,684
Additions
-
0
352
-
0
13,750
14,102
Revaluation
175,167
-
0
-
0
-
0
175,167
At 31 December 2020
700,507
1,061,088
86,773
789,585
2,637,953
Depreciation and impairment
At 1 January 2020
507
641,636
39,437
350,110
1,031,690
Depreciation charged in the year
-
0
41,945
4,735
43,949
90,629
At 31 December 2020
507
683,581
44,172
394,059
1,122,319
Carrying amount
At 31 December 2020
700,000
377,507
42,601
395,526
1,515,634
At 31 December 2019
524,833
419,100
47,336
425,725
1,416,994
13
Fixed asset investments
2020
2019
Notes
£
£
Investments in subsidiaries
14
2
2
14
Subsidiaries

Details of the company's subsidiaries at 31 December 2020 are as follows:

Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Gritting Dot Com Limited
England
Ordinary
100.00
Pothole.Uk.Com Limited
England
Ordinary
100.00
15
Stocks
2020
2019
£
£
Raw materials and consumables
12,430
30,000
SPA ENVIRONMENTAL CARE PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 22 -
16
Debtors
2020
2019
Amounts falling due within one year:
£
£
Trade debtors
628,852
640,349
Corporation tax recoverable
10,072
-
0
Other debtors
10,119
10,432
649,043
650,781
17
Creditors: amounts falling due within one year
2020
2019
Notes
£
£
Bank loans and overdrafts
19
38,403
84,264
Obligations under finance leases
20
57,666
72,260
Trade creditors
99,765
288,544
Taxation and social security
189,219
63,869
Other creditors
10,388
2,144
Accruals and deferred income
79,338
35,187
474,779
546,268
18
Creditors: amounts falling due after more than one year
2020
2019
Notes
£
£
Bank loans and overdrafts
19
362,911
146,428
Obligations under finance leases
20
64,317
114,239
427,228
260,667

The company is due to make repayments by monthly instalments after more than 5 years relating to borrowings received from National Westminster Bank plc.

Amounts included above which fall due after five years are as follows:
Payable by instalments
38,335
-
SPA ENVIRONMENTAL CARE PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 23 -
19
Loans and overdrafts
2020
2019
£
£
Bank loans
401,314
178,617
Bank overdrafts
-
0
52,075
401,314
230,692
Payable within one year
38,403
84,264
Payable after one year
362,911
146,428

National Westminster Bank plc have a freehold 1st legal charge over the company's property at The Lairage, Bearley Road, Bearley, Warwickshire, CV37 0EX. This is held as security for borrowings amounting to £230,000 that were taken out in October 2020.

20
Finance lease obligations
2020
2019
Future minimum lease payments due under finance leases:
£
£
Within one year
72,260
72,260
In two to five years
49,723
114,239
121,983
186,499

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 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

21
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:

Liabilities
Liabilities
2020
2019
Balances:
£
£
Accelerated capital allowances
113,674
129,709
Tax losses
(7,560)
-
Revaluations
64,977
31,696
171,091
161,405
SPA ENVIRONMENTAL CARE PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
21
Deferred taxation
(Continued)
- 24 -
2020
Movements in the year:
£
Liability at 1 January 2020
161,405
Charge to profit or loss
9,686
Liability at 31 December 2020
171,091

The deferred tax liability set out above is expected to reverse within [12 months] and relates to accelerated capital allowances that are expected to mature within the same period.

22
Retirement benefit schemes
2020
2019
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
12,068
12,315

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.

23
Share capital
2020
2019
2020
2019
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
50,000
50,000
50,000
50,000
24
Financial commitments, guarantees and contingent liabilities

On 10 June 2010, the company obtained a legal mortgage with National Westminster Bank plc which includes a fixed charge over the Lane at Airfield Farm, the premises from which the trading activities are undertaken.

SPA ENVIRONMENTAL CARE PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 25 -
25
Cash generated from/(absorbed by) operations
2020
2019
£
£
Loss for the year after tax
(116,610)
(110,431)
Adjustments for:
Taxation charged
9,686
12,115
Finance costs
10,235
13,609
Investment income
(4)
-
0
(Gain)/loss on disposal of tangible fixed assets
-
0
1,267
Depreciation and impairment of tangible fixed assets
90,629
99,636
Movements in working capital:
Decrease/(increase) in stocks
17,570
(21,384)
Decrease/(increase) in debtors
11,420
(268,697)
(Decrease)/increase in creditors
(11,034)
115,135
Cash generated from/(absorbed by) operations
11,892
(158,750)
26
Analysis of changes in net debt
1 January 2020
Cash flows
31 December 2020
£
£
£
Cash at bank and in hand
1,001
83,983
84,984
Bank overdrafts
(52,075)
52,075
-
0
(51,074)
136,058
84,984
Borrowings excluding overdrafts
(178,617)
(222,697)
(401,314)
Obligations under finance leases
(186,499)
64,516
(121,983)
(416,190)
(22,123)
(438,313)
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