Greenchem (Solutions) Limited

The purpose of the Strategic report is to inform members of the company and help them assess how the directors have performed their duty under section 172 (duty to promote success of the company). PRINCIPAL ACTIVITY The principal activity of the company during the year was that of the supply of chemical additives to diesel exhaust emission to lower the Nitrous Oxide levels (NOx) to ensure the vehicle is Euro emission compliant. BUSINESS REVIEW The company achieved a turnover of £39,371,321 in the year and a profit before tax of £1,679,487. The Directors are pleased with the results and the margin made in 2021. It was a very turbulent year to predict, Turnover was above budget. Q1 was a good start, above forecast then it seemed the demand for energy on a global scale started to increase after the world started to emerge from covid. This had an impact of the gas price and we saw it increase month on month, peaking in December with cost 5 times higher than at the start of the year. Prices to customers also increased but the demand did not slow down. This explains the high turnover and high cost of sales. Average sales price doubled throughout the year and urea availability was in question as ammonia plants were mothballed due to high gas prices. The Commercial Truck market sales was up by 13% and strong in all sectors. Passing on the costs to the end user in a timely manner has proved challenging. Key risk for 2022 will be urea price increasing due to global tenders and a shortage of ammonia with factories remaining closed but above all the impact of Russia invading Ukraine and the uncertainty that come with this regarding the urea/ gas supply and costs. The rapid increase in cost will be difficult to pass onto the customer base and will depend on the competition imposing an increase or not. The fuel price increasing we face the prospect of Increased logistics rates from hauliers which will have major impact on the margin. Fortunately, the market has become used to fluctuating prices, mostly up! The company manages the risk by increasing the locations we can collect AdBlue from. GreenChem (Solutions) Ltd will continuously strive to improve efficiency and plan to open 1 new blending site to reduce logistics costs. The AdBlue forecast for 2022 is lower volume and margin than 2021 but higher turnover due to significant cost increase.