Business_&_Enterprise_Fin - Accounts

The directors of the company have elected not to include a copy of the Director's Report and 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.

Business & Enterprise Finance (NE) Limited is a private company limited by guarantee incorporated in England and Wales. The registered office is Devere House, Vicar Lane, Little Germany, Bradford, BD1 5AH. The company is a single member company limited by guarantee, the liability of the member is £1.

These financial statements have been prepared in accordance with 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 are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £1.

The financial statements have been prepared under the historical cost convention, modified to include the revaluation of certain financial instruments at fair value. The principal accounting policies adopted are set out below.

The financial statements of the company are consolidated in the financial statements of West and North Yorkshire Chamber of Commerce and Industry. These consolidated financial statements are available from its registered office, Devere House, Vicar Lane, Little Germany, Bradford BD1 5AH.

The company has taken advantage of the disclosure exemptions of Section 33.1A of FRS 102 which permit it to not present details of its transactions with members of the group, on the grounds that those entities are related by virtue having the same control as defined by 33.11(b).

Towards the end of the financial year, coronavirus Covid-19 resulted in a global pandemic affecting trading businesses globally, including within the UK.true The speed and severity of the impact has been unprecedented and while the UK Government has introduced considerable measures to help business through this extremely challenging time, the full impact of Covid-19 on the company is currently unknown.

The company provides finance to businesses. Their ability to repay loans advanced may be impacted by the economic consequences of the pandemic and that impact could be significant, particularly given the period over which the pandemic could impact the economy remains unknown. As part of a proactive plan developed by the executive team, proactive measures were undertaken to mitigate the worst effects of the lockdown. This plan is reviewed on an ongoing basis and is subject to a formal quarterly review in line with its current Covid-19 contingency plans. Nevertheless, there remains a heightened risk of bad debts as a result of the pandemic.

The company is in a fortunate position as it benefits from a group guarantee facility loans advanced. Much of the existing portfolio is backed by the Enterprise Finance Guarantee Scheme (“EFGS”), a Government scheme which effectively underwrites 75% of loans where recovery options have been exhausted. Business & Enterprise Finance Limited, this company's parent company, also benefits from it being a delivery partner for the British Business Bank’s (“BBB”) enhanced Coronavirus Business Interruption Loan Scheme (CBILS), which is the Government’s specific response to the current crisis.

Since 23 March 2020, CBILS provides a 80% guarantee on all the loans made subsequent to that date, with the Scheme paying financing interest for 12 months. A number of the historical loans, as part of the proactive exercise undertaken by the executive team, have also been placed onto the CBILS programme. The portfolio covered by EFGS and CBILS is approximately 77%. On the basis that the significant proportion of the company’s portfolio of loans are guaranteed by Government under EFGS or CBILS, the directors continue to believe it appropriate to adopt the going concern basis of accounting in preparing the financial statements. They are also confident that their proactive response through their Covid-19 contingency planning has also served to reduce the risk of capital losses through this time.

Income represents earned interest and fees chargeable in respect of the provision of loan finance to customers. All turnover is shown net of VAT.

Income from interest and fees is calculated in line with the underlying agreement and recognised upon receipt.

Contract income is accrued when the underlying conditions of the contract are met and income is deemed to be receivable.

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

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:

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.

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.

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, 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.

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

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.

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

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

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.

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

Government grants received for the purpose of providing loans in accordance with the company's principal activity are either credited to a deferral account or included within other loans and released to a Funding Reserve upon the fulfilment of various conditions relating to the grant.

Grants of a revenue nature are credited to income in the period in which the associated expenditure is incurred.

Other reserve - Funding reserve

Funding provided under Government/EU backed business support initiatives for the purpose of providing loans to individuals who would otherwise be excluded from mainstream finance is credited to the balance sheet according to conditions attaching to the funding.  Where funding is unconditional and the probability of clawback by the funder is considered remote it is credited to a funding reserve, otherwise funding is credited to a deferred income account within other loans.

Where loans have been made using this funding any losses arising are charged to the funding reserve or deferred income account as appropriate. 

Amounts held within the funding reserve and deferred income account are retained until such time as all terms and conditions of the funding have been met and funds become freely available for lending by the company.

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

The company's trade is the provision of finance to organisations who are largely unable to obtain finance from alternative sources. Consequently there is an increased risk of debts becoming irrecoverable. The company's policy on loan receivables is to pursue all available methods to recover the balance outstanding. Once all methods have been exhausted, the balance is written off in full to either the funding reserve (where the loan receivable has been funded via grant funding) or the profit and loss account (all non-grant funded loan receivables). For non-grant funded loan receivables, a portfolio approach is taken to bad debt provisioning based on the collective experience of the group. On this basis, 6% of advances are carried as a bad debt provision, which is based on the group's actual experience over the last 10 years.

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

Other debtors include £883,848 (2019 - £720,163) of loans which are made on a commercial basis. These loans are recognised net of unearned interest on the basis that borrowers can repay their funding early, with no financial penalty being incurred.

The loans included within other debtors are net of a bad debt provision totalling £34,384 (2019 - £nil), as calculated per the policy documented in note 2.

The company is subject to a cross-company guarantee with Business & Enterprise Finance Limited in respect of borrowings from Unity Trust Bank. As such, the company has fixed and floating charges over its assets. At the year end, borrowings in relation to these charges amounted to £2,323,231 (2019 - £1,965,335).

The immediate parent company is Business & Enterprise Finance Limited ("BEF") by virtue of its single member guarantee.

By virtue of its single member guarantee in BEF the ultimate parent company is West and North Yorkshire Chamber of Commerce and Industry ("WNYCC"), a company registered in England and Wales, the registered office of which is Devere House, Vicar Lane, Little Germany, Bradford BD1 5AH.

The financial statements of the company are consolidated into the financial statements of WNYCC. Copies of the group financial statements are available from WNYCC's registered office. WNYCC is the smallest and largest group into which Business & Enterprise Finance (NE) Limited is consolidated.

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.