ELC_(BARROW)_LIMITED - Accounts

The directors of the company have elected not to include a copy of the profit and loss account within the financial statements.true

These financial statements have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies regime.

ELC (Barrow) Limited is a private company limited by shares incorporated in England and Wales. The registered office is Richard House, 9 Winckley Square, Preston, PR1 3HP and its place of business is Duke Street, Barrow-in-Furness, Cumbria, LA14 2LB.

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 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.

The financial statements have been prepared with early application of the FRS 102 Triennial Review 2017 amendments in full.

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 certain financial assets at fair value. The principal accounting policies adopted are set out below.

These financial statements are prepared on the going concern basis.  The health care centre is currently in its build phase during which set up and construction costs have been, and will continue to be incurred, with little or no corresponding income and this has resulted in a net liability position on the balance sheet. 

The directors have reviewed the future liquidity requirements and have considered the cash flow forecasts of the company. The company produces long-term financial forecasts which show the company is able to operate and meet its financial obligations as they fall due, including compliance with all loan covenants. Post year end, the completion date was delayed, and as a result the company was in receipt of liquidated and ascertained damages from the contractor which has enabled the company to meet its financial obligations as they have fallen due.  Based on this review and future business prospects of the company, the directors believe the company will be able to meet its liabilities as they fall due.

Having regard to the above and after making other enquiries, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future.  Accordingly, they continue to adopt the going concern basis in preparing the annual report and accounts.

The comparatives cover a long period of account, from the incorporation date of 18 October 2016 to 31 March 2018.

Cash at bank and in hand 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.

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, apart from those being held under service concession arrangements as per accounting policy 1.7.

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, which include debtors, assets held under service concession arrangements 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.

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, including creditors, bank loans and loans from fellow group companies, 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.

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.

The company holds an asset which falls under a service concession arrangement whereby the company has contracted with a public sector customer (the ‘grantor’). Under this concession contract, the company (the ‘operator’) is constructing a health centre which will be leased to the grantor upon completion under a 25 year lease.

To fall within the scope of section 34 of FRS 102, Service Concession Arrangements, a contract must satisfy the following two criteria:

•     The grantor controls or regulates what services the operator must provide using the infrastructure assets, to whom, and at what price; and

•     The grantor controls, through ownership, beneficial entitlement or otherwise, any significant residual interest in the infrastructure at the end of the term of the agreement.

Pursuant to section 34 of FRS 102, such infrastructure is not recognised within property, plant and equipment because the arrangement does not convey the right to control the use of the public service assets to the operator. Instead the infrastructure is held within financial assets, under the financial asset model.

The financial asset model applies when the operator has an unconditional right to receive cash or another financial asset from the grantor. The operator initially recognises the financial asset at fair value for the consideration received or receivable, based on the fair value of the construction services provided. Any changes in fair value or recognised through the profit and loss account.

As the asset is still under construction at the balance sheet date it is being held under the financial asset model stated above. Upon completion it shall be accounted for in accordance with Section 11 of FRS 102, Basic Financial Instruments.

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 following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

The service concession arrangement undertaken by the company is considered to fall within the scope of section 34 of FRS102, as described in the accounting policies. This judgement has been based upon consideration of the nature and terms of the lease agreement. The directors have concluded that the grantor controls, through ownership, beneficial entitlement or otherwise, the significant residual interest in the asset at the end of the term of the lease agreement.

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

Under the service concession arrangements, the company is holding a financial asset which is recognised at the fair value of the construction services provided. The directors have estimated the fair value by applying a profit margin to the construction costs incurred to the balance sheet date. The profit margin used is typical of those used within similar markets and agrees to the margin used in the financial models provided to the senior debt lender.

The company had no employees during the current or prior period.

The bank loan is secured over the freehold land, containing a fixed charge and a floating charge over all the property and the undertakings of the company.

The bank loan is secured over the freehold land, containing a fixed charge and a floating charge over all the property and the undertakings of the company.

As the income statement has been omitted from the filing copy of the financial statements, the following information in relation to the audit report on the statutory financial statements is provided in accordance with s444(5B) of the Companies Act 2006:

The auditor's report was unqualified.

A cross company guarantee is in place in favour of Aviva between the company and ELC (Barrow) Holdco Limited. At the balance sheet date, borrowings payable by these companies to Aviva amounted to £13,254,063 (2018: £12,905,385).

During the current year the directors concluded that the company holds an asset which falls under the framework of concession contracts as detailed per accounting policy 1.7. In last year's accounts this asset was held at cost as an asset under construction within property, plant and equipment, however this has now been re-classified as a financial asset being held at fair value. As a result of this re-statement, the prior year reported loss has been adjusted to reflect the fair value gain of £32,651 arising at 31 March 2018.

The company has taken advantage of the exemption permitted under Section 33 'Related Party Disclosures' paragraph 33.1A from disclosing transactions with wholly owned group companies.

Barbentas Development LLP, incorporated in England and Wales, is the ultimate parent of ELC (Barrow) Limited.