ACCOUNTS - Final Accounts
ACCOUNTS - Final Accounts
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Registered number:
(A company limited by guarantee)
for the year ended
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Company Information
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Contents
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Group strategic report
for the year ended 31 March 2020
Norfolk and Waveney Enterprise Services Ltd (Nwes) is a not for profit Enterprise Agency, with a wholly owned subsidiary in Nwes Property Services Ltd.
Nwes was first established in 1982 to promote entrepreneurship and offer ongoing support to individuals planning to start a small business, or to support SME businesses which are already established and are seeking to grow. Nwes has gone on to successfully support thousands of new and growing businesses across the East of England and London area. Working closely with local partners including Local Enterprise Partnerships (LEPs) and Growth Hubs, Nwes provides proactive and accessible business start up advice and ongoing support to growing SMEs by working with clients to deliver flexible and high quality interventions such as support with business planning, skills development, small business grants, loans and the provision of high calibre business workspace.
Following the appointment of a new Chief Executive in early 2018, a full review of Nwes Enterprise Services Ltd and Nwes Property Services Ltd, was undertaken, leading to a new and highly effective management and staffing structure, crucial financial efficiencies and improved operational processes being implemented.
These major improvements have led to a period of successful consolidation of Nwes activities across both the Enterprise Services and Property Management divisions of the business and which reflect the endeavour and commitment of the Directors, Senior Management and the Nwes team. Having overcome an earlier legacy of over ambitious expansion and high levels of expenditure, one particularly significant issue persisted into the 2019-20 financial year in that Nwes Property Services remained in discussion with the Borough Council of Kings Lynn and West Norfolk (BCKLWN) in order to meet its obligation to repay £2.75m to BCKLWN. This issue was created following a loan made to Nwes by the BCKLWN in 2014, to support the construction and development of the Kings Lynn Innovation Centre (Klic). In order to resolve this issue, the Klic Lease was returned to the BCKLWN in June 2019 at a value of £1.875m and the arrangement for Nwes to repay the remaining balance has now been agreed to the satisfaction of both parties. In addition, a challenging lease on a property in Wood Green taken out with Haringey Council in 2017 was surrendered during this period to mutual satisfaction, further strengthening the financial position of the Group. As well as bringing the business into a healthy financial position through the prudent and effective management changes made, bank borrowings have massively reduced and the strength of the Company’s position has been further enhanced by the sale of an investment property in January 2019. Our key Partners and the Bank have remained fully supportive throughout, and have welcomed this new and prudent financial approach. After her two year term, having resolved the majority of the key issues she inherited in early 2018, Chief Executive Joanna Clarke, took the decision to retire from Nwes Ltd at the end of 2019, leaving Executive Director, Lorraine Connellan to take the company forward and along with the Nwes Team, build on the new Nwes foundations as a well-run, robust, not for profit Company, with clear social ethics. The board would like to thank Joanna for her contribution in turning around the business. We would also like to thank Nicholas Doyle for his valuable contribution to the Group, Nicholas retired from the board in May 2020. The current Board has declared all the information that they are in possession of, including confirmation without limitation that any information in relation to related party transactions which have occurred during the period from April 2019 to March 2020, has been provided. It is also now very clear that Nwes can adopt the going concern basis in preparing the financial statements.
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Group strategic report (continued)
for the year ended 31 March 2020
Along with all businesses in the UK and indeed worldwide, the COVID pandemic, and particularly with Lockdown 1 commencing in March 2020 has created changes to how Nwes operates currently and potentially, how it will operate in the future. However, having successfully created remote access to all Nwes Enterprise business support services, along with implementing safe working practices within the properties utilised by our tenants and client base, services have continued to be successfully delivered. We are grateful to our partners and the Nwes team for their vigilance and flexibility during this challenging time and of course to our clients, for their patience and perseverance.
We will continue to assess both the external environment and our services to ensure that as far as possible we are able to future-proof the Nwes business and ensure it remains fit for purpose. It is clear that the economy has been seriously impacted by the pandemic, but we hope for an economic bounce back during 2021 whereby the services of Nwes and its partners will be even more vital in future years to support the restoration of confidence within the SME sector across our geography.
The vital period of consolidation across all business activities in Nwes which was started in April 2018 has meant that turnover has dropped to £5.117m, but this has brought a consequential drop in the cost of sales and administrative costs. The consolidated accounts are now showing an operational profit, however it should be noted that this profit includes release of capital grants on the disposal of the investment property.
Although much reduced by the critical actions implemented by the new Executive throughout 2018-19, pressure on liquidity in the Company remained from the 2017-18 year, which in turn had been carried forward from the 2016-17 year. Income from Nwes Property Services Ltd, the subsidiary Company of Nwes Ltd, continued to provide a source of cash flow to the business during 2019-20 in the form of intercompany loans, but with the gross profit in Nwes Property Services Ltd remaining at a similar level 15.5% current year from 15.4%. In addition, as mentioned previously, an investment property was sold during the early part of 2019 to create liquidity in the business to further reduce creditors and this included reducing bank borrowings in Nwes Property Services Ltd from £2.996m to £928k, with repayments continuing during 2020 bank borrowings now stand at £743k.
Despite this challenging period, Nwes has emerged as a robust organisation, delivering enterprise support activities from a platform of exemplary social ethics and values which are integral to its not for profit status and which are supported by the talented and committed team presently in post, together with the strong governance, support and direction the board provide.
Following the successful consolidation of the organisation’s operations and with ongoing funding and contracts to deliver enterprise and SME support, Nwes aims to continue to create new and growing businesses across the East of England and London, playing its part in supporting a post pandemic economic recovery and ensuring that generating economic and social benefit within the communities it serves remains at the core of all aspects of the business.
This report was approved by the board on 25 February 2021 and signed on its behalf.
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Directors' report
for the year ended 31 March 2020
The directors present their report and the financial statements for the year ended 31 March 2020.
The directors are responsible for preparing the Group strategic report, the Directors' report and the consolidated financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements and other information included in Directors' reports may differ from legislation in other jurisdictions.
The profit for the year, after taxation, amounted to £1,540,600 (2019 - £543,254).
The directors who served during the year were:
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Directors' report (continued)
for the year ended 31 March 2020
Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:
The auditors, Smith Cooper Audit Limited, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board on
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Independent auditors' report to the shareholders of Norfolk and Waveney Enterprise Services
We have audited the financial statements of Norfolk and Waveney Enterprise Services (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 March 2020, which comprise the Group Statement of comprehensive income, the Group and Company Balance sheets, the Group Statement of cash flows, the Group and Company Statement of changes in equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
∙the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
∙the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Group's or the parent Company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Independent auditors' report to the shareholders of Norfolk and Waveney Enterprise Services (continued)
The directors are responsible for the other information. The other information comprises the information included in the Annual Report, other than the financial statements and our Auditors' report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Group strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group strategic report or the Directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Independent auditors' report to the shareholders of Norfolk and Waveney Enterprise Services (continued)
As explained more fully in the Directors' responsibilities statement on page 3, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group's and the parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' report.
This report is made solely to the Company's shareholders in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's shareholders those matters we are required to state to them in an Auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's shareholders for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Chartered Accountants and Statutory Auditors
2 Lace Market Square
NG1 1PB
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Consolidated statement of comprehensive income
for the year ended 31 March 2020
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Registered number: 01633258
Consolidated balance sheet
as at
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 25 February 2021.
The notes on pages 15 to 37 form part of these financial statements.
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Registered number: 01633258
Company balance sheet
as at
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 15 to 37 form part of these financial statements.
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Consolidated statement of changes in equity
for the year ended 31 March 2020
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Company statement of changes in equity
for the year ended 31 March 2020
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Consolidated statement of cash flows
for the year ended 31 March 2020
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Consolidated Analysis of Net Debt
for the year ended 31 March 2020
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Notes to the financial statements
for the year ended 31 March 2020
Norfolk and Waveney Enterprise Services is a private company limited by guarantee and incorporated in the United Kingdom. The address of the registered office is given in the company information of these financial statements and this is also the place of business. The company's registration number is 01633258.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements.
The financial statements are presented in sterling which is the functional currency of the Company and have been rounded to the nearest £1.
The significant accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented unless otherwise stated.
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance Sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases.
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Notes to the financial statements
for the year ended 31 March 2020
2.Accounting policies (continued)
The Directors believe the Group's financial statements should be prepared on a going concern basis and have considered a period of twelve months from the date of approval of these financial statements.
Whilst the financial position of the Group has improved on the prior year, the Group continued to face demands on its working capital. Notably the company's subsidiary undertaking, NWES Property Services Limited (NWES PS), defaulted on its loan repayment of £2,750,000 to Borough Council of King's Lynn and West Norfolk (BCKLWN), in respect of funding received for the KLIC building held as one of the company's investment properties. However, subsequent to the yearend two significant events have occurred. NWES PS reached settlement with BCKLWN and a longer-term repayment plan agreed for amounts due to be paid in monthly instalments over 5 1/2 years to April 2026. Amounts outstanding at the balance sheet date are £1.27m and are classified as amounts due within one year, as the repayment plan was not agreed until after the balance sheet date. Secondly, on the 22nd February 2021 NWES PS sold two of its investment properties for £1.225m, which after repayment of loans, has yielded significant working capital for that company and in-turn, the Group. Whilst NWES Enterprise Solutions owes NWES PS in excess of £800k, the sale of the properties and current working capital levels, will ensure that there will be no requirement for NWES PS to seek repayment of amounts due for a minimum of twelve months from the date of approval of these financial statements. Furthermore, as a result of the property sales, NWES PS has sufficient reserves to declare a dividend to reduce the balance due from NWES Enterprise Services to NWES PS. The Group has not seen any significant financial impact as a result of the ongoing pandemic but the Directors acknowledge that uncertainty remains for all businesses in the current climate. The Directors have taken positive action to improve the demands on working capital and the overall financial position of the Group has not only improved during the year but has continued to do so since the yearend. Having due regard to forecast trading activities, cash flow forecasts and the ongoing pandemic, the Directors have concluded that whilst uncertainty remains in respect of future trading in the current climate, the Group can continue to adopt the going concern basis in preparing the financial statements.
Turnover principally consists of rental income, management charges and grant income.
Rental, contract and training course income and management charges are recognised on an accruals basis as to match the revenue earned to the period in which the services are provided. Capital grant income is released in line with the terms and conditions of any grant or in the useful economic life of the asset to which the funding relates. Revenue grants are recognised in the profit and loss so as to match them with the relevant expenditure for which they have been granted.
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Notes to the financial statements
for the year ended 31 March 2020
2.Accounting policies (continued)
Rentals paid under operating leases are charged to profit or loss on a straight line basis over the lease term.
Where assets leased to a third party give rights approximating to ownership (finance lease), the lessor recognises as a receivable an amount equal to the net investment in the lease i.e. the minimum lease payments receivable under the lease discounted at the interest rate implicit in the lease. This receivable is reduced as the lessee makes capital payments over the term of the lease.
A finance lease gives rise to two types of income: profit or loss equivalent to the profit or loss resulting from outright sale of the asset being leased, at normal selling prices, reflecting any applicable discounts, and finance income over the lease term.
Assets obtained under hire purchase contracts and finance leases are capitalised as tangible fixed assets. Assets acquired by finance lease are depreciated over the shorter of the lease term and their useful lives. Assets acquired by hire purchase are depreciated over their useful lives. Finance leases are those where substantially all of the benefits and risks of ownership are assumed by the company. Obligations under such agreements are included in creditors net of the finance charge allocated to future periods. The finance element of the rental payment is charged to profit or loss so as to produce a constant periodic rate of charge on the net obligation outstanding in each period.
Grants are accounted under the accruals model as permitted by FRS 102. Grants relating to expenditure on tangible fixed assets are credited to profit or loss at the same rate as the depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income.
Grants of a revenue nature are recognised in the Consolidated statement of comprehensive income in the same period as the related expenditure.
Interest income is recognised in profit or loss using the effective interest method.
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
All borrowing costs are recognised in profit or loss in the year in which they are incurred.
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Notes to the financial statements
for the year ended 31 March 2020
2.Accounting policies (continued)
Defined contribution pension plan
The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group 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 Group in independently administered funds.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Balance sheet date, except that:
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.
Exceptional items are transactions that fall within the ordinary activities of the Group but are presented separately due to their size or incidence.
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Notes to the financial statements
for the year ended 31 March 2020
2.Accounting policies (continued)
Depreciation is provided on the following basis:
Individual freehold and leasehold properties are carried at current year value at fair value at the date of the revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations are undertaken with sufficient regularity to ensure the carrying amount does not differ materially from that which would be determined using fair value at the Balance sheet date.
Fair values are determined from market based evidence normally undertaken by professionally qualified valuers.
Revaluation gains and losses are recognised in other comprehensive income unless losses exceed the previously recognised gains or reflect a clear consumption of economic benefits, in which case the excess losses are recognised in profit or loss.
Assets that are subject to depreciation or amortisation are assessed at each balance sheet date to determine whether there is any indication that the assets are impaired. Where there is any indication that an asset may be impaired, the carrying value of the asset (or cash-generating unit to which the asset has been allocated) is tested for impairment. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's (or CGU's) fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Non-financial assets that have been previously impaired are reviewed at each balance sheet date to assess whether there is any indication that the impairment losses recognised in prior periods may no longer exist or may have decreased.
Investment property is carried at fair value determined annually by external valuers and derived from the current market rents and investment property yields for comparable real estate, adjusted if necessary for any difference in the nature, location or condition of the specific asset. No depreciation is provided. Changes in fair value are recognised in profit or loss.
Investments in subsidiaries are measured at cost less accumulated impairment. An entity is treated as an associated undertaking where the Group exercises significant influence in that it has the power to participate in the operating and financial policy decisions. Where the Group's share of net liabilities in an associate exceeds the carrying value of its investment, the share of reported losses is not recognised.
Page 19
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Notes to the financial statements
for the year ended 31 March 2020
2.Accounting policies (continued)
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.
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.
In the Consolidated statement of cash flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Group's cash management.
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.
Provisions are made where an event has taken place that gives the Group 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 Group 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.
Page 20
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Notes to the financial statements
for the year ended 31 March 2020
2.Accounting policies (continued)
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 Consolidated statement of comprehensive income.
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.
For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Group would receive for the asset if it were to be sold at the balance sheet date.
Financial assets and liabilities are offset and the net amount reported in the Balance sheet when there is an 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.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or income as appropriate. The company does not currently apply hedge accounting for interest rate and foreign exchange derivatives.
Page 21
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Notes to the financial statements
for the year ended 31 March 2020
The preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and expenses during the year. However, the nature of estimation means that actual outcomes could differ from those estimates. Management consider the following to be significant accounting estimates:
Capital grant income recognition Capital grants are released in line with the terms attached to the grant agreements however management judgment is necessary to ensure an appropriate recognition period in the absence of explicit terms within the grant agreements. Investment property revaluation The company carries its investment property at fair value, with changes in fair value being recognised in the profit and loss account. The company has engaged an independent valuation specialist to determine the fair value for properties in the past couple of years. Financial instruments Fair values have been estimated at the amount the company would expect to pay over the term of the interest rate swap loan based on prevailing rates of interest.
Page 22
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Notes to the financial statements
for the year ended 31 March 2020
Page 23
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Notes to the financial statements
for the year ended 31 March 2020
Page 24
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Notes to the financial statements
for the year ended 31 March 2020
Page 25
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Notes to the financial statements
for the year ended 31 March 2020
12.Taxation (continued)
If the Group's freehold investment properties were sold at the amounts they are carried in the Statement of financial position, this would result in net chargeable losses. No deferred tax has been recorded in relation to these losses.
Page 26
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Notes to the financial statements
for the year ended 31 March 2020
Page 27
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Notes to the financial statements
for the year ended 31 March 2020
13.Tangible fixed assets (continued)
Page 28
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Notes to the financial statements
for the year ended 31 March 2020
Page 29
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Notes to the financial statements
for the year ended 31 March 2020
One freehold property has been disposed in the period at valuation of £1,875,000.
Two properties have been impaired by £460,000 to align with their combined post year end sales value of £1,225,000. The final freehold property has been revalued in the year by Roche Chartered Surveyors but the valuation remains unchanged from the amount held in the prior year accounts. The valuations included within the accounts are the higher of either vacant possession or existing use basis.
Page 30
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Notes to the financial statements
for the year ended 31 March 2020
Page 31
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Notes to the financial statements
for the year ended 31 March 2020
Debenture loans and bank loans are secured by way of fixed charges over certain freehold investment properties.
Obligations under hire purchase contracts are secured against the assets to which they relate. Certain amounts reported in other creditors have been renegotiated since the 31 March 2020 and are no longer all repayable within one year - see Note 30 to the financial statements.
Page 32
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Notes to the financial statements
for the year ended 31 March 2020
Bank loans have interest payable at 1.2% above LIBOR. Debenture loans are subject to interest at 5.5%. All bank loans are secured by way of fixed charges over certain freehold investment properties and other Group assets.
Deferred income to be released in over five years was in relation to a lease agreement with a tenant of Rouen House repayable over the lease term totalling £nil (2019: £83,544).
Page 33
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Notes to the financial statements
for the year ended 31 March 2020
Page 34
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Notes to the financial statements
for the year ended 31 March 2020
Page 35
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Notes to the financial statements
for the year ended 31 March 2020
Revaluation reserve
Profit and loss account
The company is a private company limited by guarantee and consequently does not have share capital. Each of the members is liable to contribute an amount not exceeding £1 towards the assets of the company in the event of liquidation.
The Group has a guarantee relating to a performance bond with Harlow Council. The maximum value of the guarantee is £135,000 and no liability is expected to arise in respect of this.
The Parent Company has a guarantee in respect of the bank borrowings of its subsidiary limited to £3,800,000. The bank borrowings of the subsidiary NWES Property Services Limited amounted to £743,061 (2019: £928,826). No liability is expected to arise in respect of this guarantee.
The Group operates a defined contribution pension scheme for the benefit of employees who wish to make provisions for pensions. The pension cost charge in the year represents contributions payable by the Group to the scheme and amounted to £50,337 (2019: £62,260).
Contributions totalling £24,588 (2019: £20,286) were payable to the scheme at the end of the year.
Page 36
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NORFOLK AND WAVENEY ENTERPRISE SERVICES
(A company limited by guarantee)
Notes to the financial statements
for the year ended 31 March 2020
Page 37
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