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Registered number: 10103679
STRACATHRO RENEWABLE ENERGY LTD
AUDITED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 MARCH 2020
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STRACATHRO RENEWABLE ENERGY LTD
REGISTERED NUMBER:10103679
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BALANCE SHEET
AS AT 31 MARCH 2020
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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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Provisions for liabilities
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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 income and retained earnings 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 2 to 9 form part of these financial statements.
Page 1
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STRACATHRO RENEWABLE ENERGY LTD
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
Stracathro Renewable Energy Limited is a private company, limited by shares, incorporated in England and Wales, registration number 10103679. The registered office 24 Savile Row, London, W1S 2ES.
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 preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies.
These financial statements are presented in sterling, which is the functional currency of the Company and rounded to the nearest £.
The following principal accounting policies have been applied:
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Compliance with accounting standards
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The financial statements have been prepared using FRS102 The Financial Reporting Standard applicable in the UK and the republic of Ireland, including the disclosure and presentation requirements of Section 1A, applicable to small companies. There were no material departures from this standard.
Due to the underperformance of the Company during the current and prior periods the lender stepped in and took control of the day to day operations of the plant with a view to improving performance and providing short term working capital to the Company. The Directors believe that, with the support of the lender, operational output will increase and the plant will generate sufficient cashflows to enable the Company to support itself. On this basis the financial statement have been prepared on a going concern basis.
In assessing the appropriateness of the going concern basis of preparation, the Directors have taken into account the key risks of the business, including the uncertainty in relation to the impact of COVID-19. In doing so the Directors have considered the Company's business model and availability of cash resources. The Directors have prepared financial models over the life of the loan which support this position. Having undertaken this assessment the Directors consider that the Company, with the support of its lender, will continue to generate sufficient cash flow to meet its liabilities as they fall due for payment and it is therefore appropriate to prepare the financial statements on a going concern basis.
Page 2
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STRACATHRO RENEWABLE ENERGY LTD
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
2.Accounting policies (continued)
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:
Rendering of services
Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
∙the amount of revenue can be measured reliably;
∙it is probable that the Company will receive the consideration due under the contract;
∙the stage of completion of the contract at the end of the reporting period can be measured reliably; and
∙the costs incurred and the costs to complete the contract can be measured reliably.
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Operating leases: the Company as lessee
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Rentals paid under operating leases are charged to profit or loss on a straight line basis over the lease term.
Interest payable is recognised using the effective interest method, which takes into account related fees and transaction costs. Interest payable is included within cost of sales as it is directly attributable to the interest receivable included in revenue.
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Current and deferred taxation
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The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company operates and generates income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Page 3
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STRACATHRO RENEWABLE ENERGY LTD
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
2.Accounting policies (continued)
Exceptional items are transactions that fall within the ordinary activities of the Company but are presented separately due to their size or incidence.
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.
At each reporting date the company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
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Anaerobic digestion asset
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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.
Stocks are valued at the lower of cost and net realisable value after making due allowance for obsolete and slow-moving stocks. Stocks relate to feedstock purchased prior to its use in the energy generation process.
Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
Short term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
Page 4
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STRACATHRO RENEWABLE ENERGY LTD
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
2.Accounting policies (continued)
The Company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan.
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the statement of income and retained earnings.
For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
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Judgements in applying accounting policies and key sources of estimation uncertainty
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Estimates and judgements are continually evaluated and are based on historical experience, independent forecasts and other factors that are believed to be reasonable under the circumstances.
Carrying value of tangible fixed assets
In determining the fixed asset carrying values, management have made a judgement in respect of the useful economic life of the anaerobic digestion plant. Management have decided that the economic benefits will be realised on a straight line basis over 18 years and as such, tangible fixed assets will be depreciated over this period. In making this judgement, management considered cash flows that will be derived from the Company's tangible fixed assets and the recoverable amount at the end of the 18 year period and are satisfied with the accounting policy.
The Company has taken advantage of the exemption not to disclose amounts paid for non audit services
as these are disclosed in the group accounts of the parent Company.
There were no employees in the year under review apart from the directors who did not receive any remuneration.
Page 5
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STRACATHRO RENEWABLE ENERGY LTD
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
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Charge for the year on owned assets
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Borrowing costs totalling £1,076,469 have been included in the cost of tangible fixed assets which comprises loan interest only (2019- £1,076,469). Borrowing costs are depreciated over the assets useful economic life.
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Page 6
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STRACATHRO RENEWABLE ENERGY LTD
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
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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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Loans with a group undertaking
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Accruals and deferred income
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Charged to profit or loss
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Page 7
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STRACATHRO RENEWABLE ENERGY LTD
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
10.Deferred taxation (continued)
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The deferred taxation balance is made up as follows:
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Accelerated capital allowances
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Tax losses carried forward
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Allotted, called up and fully paid
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100 (2019 - 100) Ordinary shares of £0.01 each
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Profit and loss account
The profit and loss account represents cumulative profits and losses net of all adjustments.
The Company has an obligation to restore the operational site which houses the anaerobic digestion asset at the end of the lease agreement. No provision is included in the accounts as the amount cannot be measured reliably.
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Commitments under operating leases
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At 31 March 2020 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
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Later than 1 year and not later than 5 years
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The operating land lease expires in 2041.
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Page 8
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STRACATHRO RENEWABLE ENERGY LTD
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
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Related party transactions
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The Company is exempt under the terms of Financial Reporting Standard 102 (FRS 102) paragraph
33.1A, from disclosing related party transactions with other group companies, on the grounds that the
Company is wholly owned within the Group and the Company is included in consolidated financial
statements prepared by the Group.
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The Company's immediate parent company is IQB Debt Midco Limited, a company registered in England and Wales. The ultimate parent company is GCP Intermediary Holdings Limited. The consolidated financial statements of GCP Intermediary Holdings Limited may be obtained from Companies House or its registered office 24 Savile Row, London, W1S 2ES.
Subsequent to the year end global economies have been impacted as a result of the COVID-19 virus
epidemic. The resolution and impact on the business and wider economy at this stage is uncertain, but
the directors having assessed the impact and risk of the current market conditions on the Company do
believe these will not have any material impact on the Company. Details of the directors going concern
assessment is set out in note 2.3.
The auditors' report on the financial statements for the year ended 31 March 2020 was qualified.
The qualification in the audit report was as follows:
The Directors assumed control of the Company part the way through the year and arranged for the operations and maintenance provider responsible for managing the plant to be replaced. During this transition records regarding inventory were not retained preventing management from providing documentation to support the inventory value held at 31 March 2020, which are included in the balance sheet at £418,918. Consequently we were unable to determine whether any adjustment to this amount was necessary.
The audit report was signed on 18 March 2021 by Mark Nelligan FCA (senior statutory auditor) on behalf of Wellden Turnbull Limited.
Page 9
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