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Registered number: 02979872
NATURAL CAPITAL PARTNERS EUROPE LIMITED
ANNUAL REPORT
INFORMATION FOR FILING WITH THE REGISTRAR
FOR THE YEAR ENDED 31 DECEMBER 2019
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NATURAL CAPITAL PARTNERS EUROPE LIMITED
REGISTERED NUMBER:02979872
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BALANCE SHEET
AS AT 31 DECEMBER 2019
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Debtors: amounts falling due after more than one year
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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Provisions for liabilities
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NATURAL CAPITAL PARTNERS EUROPE LIMITED
REGISTERED NUMBER:02979872
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BALANCE SHEET (CONTINUED)
AS AT 31 DECEMBER 2019
The financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime and in accordance with the provisions of FRS 102 Section 1A - small entities.
The financial statements have been delivered in accordance with the provisions applicable to companies subject to the small companies regime.
The Company has opted not to file the statement of comprehensive income in accordance with provisions applicable to companies subject to the small companies' regime.
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 4 to 16 form part of these financial statements.
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NATURAL CAPITAL PARTNERS EUROPE LIMITED
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STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2019
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Capital contribution relating to share based payment
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Capital contribution relating to share based payment
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NATURAL CAPITAL PARTNERS EUROPE LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Natural Capital Partners Europe Limited is a private limited company, limited by shares, domiciled and incorporated in England and Wales (registered number: 02979872). The address of the registered office is 167 Fleet Street, Third Floor, London, EC4A 2EA.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Section 1A of Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The following principal accounting policies have been applied:
The financial statements have been prepared on a going concern basis. In making this going concern assessment, the directors have given consideration to current performance, market conditions, cashflow forecasts, the impact of Brexit on the UK and EU economies, the likely impact of the COVID-19 pandemic and the Company’s ability to adapt its cost base in response to a range of potential scenarios depending on the impact and duration of COVID-19.
In addition to this, Natural Capital Partners Europe Limited, a wholly owned subsidiary of Natural Capital Partners Incorporated, has secured a written obligation from Natural Capital Partners Incorporated to provide operational and financial assistance for the foreseeable future, being a period of no less than 12 months from the date of the approval of these financial statements.
Whilst the ultimate impact and duration of the COVID-19 pandemic is uncertain, the directors believe that the combination of the current financial and operational results of Natural Capital Partners Europe Limited and the obligation from Natural Capital Partners Incorporated provides reasonable assurance that the Company can continue to operate as a going concern for the foreseeable future, being a period of no less than 12 months from the date of the approval of these financial statements. Accordingly, the directors have prepared these financial statements on a going concern basis.
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NATURAL CAPITAL PARTNERS EUROPE LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2.Accounting policies (continued)
Turnover is split into five categories and is accounted for as follows:
a) Ex post carbon
These projects only recognise the turnover where the carbon has already been sequestered, not in the future (ex ante).
Revenue is recognised on the latter of (i) signing of the client’s sale agreement and (ii) delivery or verification of the underlying emission reductions.
b) Renewable Energy Instruments
Guarantee of Origin means an EECS Certificate issued as an EECS GO under the Electricity Scheme of the EECS Rules in the applicable country of production, and which has the meaning given to “Guarantee of Origin” under Article 2 and Article 15 of the EU Directive 2009/28/EC of the European Parliament on the promotion of electricity produced from renewable energy sources in the internal electricity market.
Renewable Energy Certificate means a certificate, credit, allowance, green tag, or other transferable indicia, howsoever entitled, created by, or in accordance with, an Applicable Standard indicating generation of a particular quantity of energy, or product associated with the generation of a specified quantity of energy from a Renewable Energy Project. A REC is distinct from the actual energy produced and may be separately transferred or conveyed.
I-REC means a renewable energy instrument, certified by the I-REC Standard, indicating generation of electricity from an Eligible Renewable Resource.
PowerPlus™ Instrument means evidence of the generation of one (1) megawatt-hour (“MWh”) of energy resulting from an Eligible Renewable Resource, demonstrated by the retirement/cancellation (as applicable) of Emissions Reductions, in accordance with the rules and procedures of the corresponding Applicable Standard(s).
Revenue is recognised on the latter of (i) signing of the client’s sale agreement and (ii) delivery or the cancellation, attestation or retirement of the underlying instrument.
c) Forest Creation
Forest Creation involves the creation of forests within the UK, the Netherlands and the USA in accordance with the Woodland Carbon Code. The Company also provides additional services in the form of advice, content and various marketing related service, over the term of the agreement.
Revenue is recognised over the period for which the Group is obligated to perform these services, usually twelve to twenty-four months.
d) Assessments and consulting
Assessment services are provided to ensure businesses are correctly reporting and measuring their carbon emissions. Revenue is recognised when the service is provided. For annual assessments this is deemed to have occurred over a twelve-month period.
Consulting services are provided to help businesses evaluate the benefits of offset inclusive carbon management strategies which will deliver reductions in carbon emissions.
This revenue is recognised on a straight-line basis across the period the service is provided.
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NATURAL CAPITAL PARTNERS EUROPE LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2.Accounting policies (continued)
e) Program Management
Program Management services are provided in relation to “Catalyst” transactions. Catalyst transactions involve a client providing funding towards developing a project and typically receiving carbon instruments from the project in the future. Natural Capital Partners provides client and project management services as well as marketing support for the duration of the contract. Revenues relating to program management fees are recognised over the period of the transaction in a straight line. Revenue relating to the 'Catalyst' element is recognised based on when the initiative and/or carbon instruments are deemed to have been delivered.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date and that results in an obligation to pay more tax or right to pay less tax in the future. A deferred tax asset is only recognised when it is probable that there will be sufficient future profits to recover against the asset.
Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences are expected to reverse based on tax rates and laws that have been enacted or substantially enacted by the balance sheet date. Deferred tax is measured on a non-discounted basis.
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Operating leases: the Company as lessee
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Costs in respect of operating leases are charged to the Statement of Comprehensive Income on a straight-line basis over the lease term.
Incentives received to enter into an operating lease are released to the Statement of Comprehensive Income, to reduce the lease expense, on a straight-line basis over the period of the lease.
Inventories consist of:
∙Carbon credits - a tradable monetary security which is equal to one tonne of a greenhouse gas, such as carbon dioxide
∙Renewable energy instruments - a tradable monetary security which represents one unit of renewable electricity that has been produced, usually one megawatt per hour. The unit is separate from the underlying electricity.
Inventory is stated at the lower of cost and net realisable value. Provision is made where necessary for slow moving inventory.
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NATURAL CAPITAL PARTNERS EUROPE LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2.Accounting policies (continued)
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Foreign currency translation
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Functional and presentation currency
The Company's functional and presentational currency is GBP.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, as follows.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The estimated useful lives range as follows:
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NATURAL CAPITAL PARTNERS EUROPE LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2.Accounting policies (continued)
The Company participates in a share option programme through its parent company, Natural Capital Partners Incorporated. The share option programme allows group employees to acquire shares of the Company. The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options granted is measured using the Black-Scholes model, taking into account the terms and conditions upon which the options were granted.
Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options measured immediately before and after the modification is also charged to the Statement of Comprehensive Income over the remaining vesting period. At each balance sheet date, the Company revises its estimates of the number of options that are expected to vest.
Defined contribution pension plan
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Balance Sheet. The assets of the plan are held separately from the Company in independently administered funds.
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Provisions for liabilities
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Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the Balance Sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Balance Sheet.
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NATURAL CAPITAL PARTNERS EUROPE LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2.Accounting policies (continued)
Financial assets and financial liabilities are recognised in the Balance Sheet when the Company becomes a party to the contractual provisions of the instrument.
Trade and other debtors and creditors are classified as basic financial instruments and measured at initial recognition at transaction price. Debtors and creditors are subsequently measured at amortised cost. A provision is established when there is objective evidence that the Company will not be able to collect all amounts due.
Financial liabilities and equity instruments issued by the Company are classified in accordance with the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
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The average monthly number of employees, including directors, during the year was 11 (2018 - 14).
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Certain employees participate in the Group share option scheme.
During the prior year there was a modification to the Group share option scheme, which increased the fair value of the options in issue.
The cost of the Group share-based payment expense is allocated to the Company in proportion to the share options held by employees within the Company.
During the year, a share-based payment expense of £3,701 (2018: £87,911) was recognised by the Company.
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NATURAL CAPITAL PARTNERS EUROPE LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
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NATURAL CAPITAL PARTNERS EUROPE LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
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Charge for the year on owned assets
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Deferred tax asset in respect of losses carried forward
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Movement in deferred tax asset
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The unprovided deferred tax asset is £603,339 (2018: £596,263).
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NATURAL CAPITAL PARTNERS EUROPE LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
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Due after more than one year
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Prepayments and accrued income
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Amounts owed by group undertakings
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Prepayments and accrued income
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Creditors: Amounts falling due within one year
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Amounts owed to group undertakings
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Other taxation and social security
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Accruals and deferred income
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The amounts payable by group undertakings are unsecured, bear interest at 7.5% (2018: 7.5%) and are repayable on demand by Natural Capital Partners Americas, LLC.
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NATURAL CAPITAL PARTNERS EUROPE LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
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Creditors: Amounts falling due after more than one year
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Accruals and deferred income
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Provision balance represents a provision for dilapidation cost relating to the UK office which is anticipated to be incurred in 2020.
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Allotted, called up and fully paid
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68,200 (2018 - 23,800) Ordinary shares of £0.01 each
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Nil (2018 - 44,400) 'A' preferred shares of £0.01 each
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In accordance with the Articles of the Company, all A Preferred shares have been converted to Ordinary shares.
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NATURAL CAPITAL PARTNERS EUROPE LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Share premium account
The share premium account is used to record the aggregate amount or value of premiums paid when the Company's shares are issued at an amount in excess of nominal value.
Other reserves
This reserve relates to the capital contribution from the parent in respect of share-based payments and are not distributable.
Profit and loss account
This reserve relates to the cumulative retained earnings less amounts distributed to shareholders.
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Related party transactions
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The Company has taken advantage of the exemption in FRS 102 Section 33.1A to not disclose transactions with wholly owned group entities.
The Company operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £25,844 (2018: £28,870). Contributions totalling £7,501 (2018: £88) were payable to the fund at the balance sheet date and are included in creditors.
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NATURAL CAPITAL PARTNERS EUROPE LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
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Financial commitments and contingent liabilities
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At 31 December 2019 the Company had future minimum lease payments under non-cancellable operating leases as follows:
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Later than 1 year and not later than 5 years
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At 31 December, the Company had commitments to make the following payments to its carbon offset partners:
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Natural Capital Partners Europe Limited is the main contracting party with suppliers on behalf of companies within the Group. Commitments in relation to its own customers will be financed by deferred income, whilst commitments in respect of the Group will be recharged to fellow group entities at arm’s length.
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Post balance sheet events
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The COVID-19 worldwide pandemic has significantly impacted life and businesses globally and could impact the Company operating results in 2020 and beyond. The Company is a wholly owned subsidiary of Natural Capital Partners Incorporated, a global company, who has more than 300 clients in 34 countries and has a widely diversified supply chain that is spread across 64 countries on six continents. Natural Capital Partners Incorporated’s client base is diverse and includes large technology companies, large financial services companies, global consultancies, as well as SME’s that are part of our well capitalized companies supply chain.
Natural Capital Partners Incorporated has a widely distributed employee base with a diverse geographic footprint that has experienced varying impacts of the virus itself and as a result has seen a wide variety of population movement restrictions, including some locations with next to no restrictions. In addition, Natural Capital Partners Incorporated had implemented a ‘Work from Anywhere’ policy as part of our business continuity planning and the closing of our physical offices had little if any impact on the operations of the Company. At the date of the approval of these financial statements, the directors believe it is difficult to estimate the total impact that COVID-19 will have on Natural Capital Partners Incorporated and its subsidiaries, but the pandemic may significantly reduce revenue for a number of months. This may also lead to a delay in the receipt of the Company’s accounts receivables. See note 2.2 for details of the impact of the COVID-19 pandemic on the going concern status of the Company.
Furthermore, due to the timing of the impact of the COVID 19 pandemic being after the balance sheet date, this is classified as a non-adjusting post balance sheet event and thus the net book value of year end assets has not been re-evaluated to consider any possible impairment arising from the impact of COVID 19.
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NATURAL CAPITAL PARTNERS EUROPE LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
The ultimate and immediate parent company, and controlling party, is Natural Capital Partners Incorporated, which is incorporated in the United States of America.
Natural Capital Partners Incorporated is the parent undertaking of the largest and smallest group to consolidate these financial statements. Copies of Natural Capital Partners Incorporated’s consolidated financial statements are available on request from Natural Capital Partners Europe Limited, 167 Fleet Street, 3rd Floor, London, EC4A 2EA.
The auditor's report on the financial statements for the year ended 31 December 2019 was unqualified.
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In their report, the auditors emphasised the following matter without qualifying their report:
We draw attention to note 2.2 and note 17 of the financial statements which describe the impact of COVID-19 on the Group. Our opinion is not modified in respect of this matter.
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The audit report was signed on 21 May 2020 by Andrew Bond (Senior Statutory Auditor) on behalf of Nexia Smith & Williamson.
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