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Registered number: 09652769
EQUITIX ESI CHP (NOTTINGHAM) LIMITED
FINANCIAL STATEMENTS
INFORMATION FOR FILING WITH THE REGISTRAR
FOR THE YEAR ENDED 31 MARCH 2020
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EQUITIX ESI CHP (NOTTINGHAM) LIMITED
REGISTERED NUMBER: 09652769
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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Creditors: amounts falling due after more than one year
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EQUITIX ESI CHP (NOTTINGHAM) LIMITED
REGISTERED NUMBER: 09652769
BALANCE SHEET (CONTINUED)
AS AT 31 MARCH 2020
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 on 24 March 2021.
The notes on pages 3 to 11 form part of these financial statements.
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EQUITIX ESI CHP (NOTTINGHAM) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
Equitix ESI CHP (Nottingham) Limited is a private company limited by shares incorporated in the United
Kingdom under the Companies Act 2006. The registered office is Unit G1, Ash Tree Court, Nottinghm Business Park, Nottingham, NG8 6PY. The principal activity of the company is the construction of a waste to energy power station and the subsequent receipt of revenue through electricity generation.
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 (see note 3).
The financial statements are prepared in Sterling (£), which is the functional currency of the limited liability partnership
The following principal accounting policies have been applied:
Equitix ESI CHP (Nottingham) Limited has net liabilities of £30,651,899 (2019: £12,053,792) inclusive of £11,148,002 (2019: £8,166,069) interest accruing on loans with related undertakings, as at the reporting date. The Company has produced long-term financial forecasts through the operational model, which show the Company is able to operate and meets its financial obligations as they fall due, and will be cash generating in future periods. The directors consider that the losses the company is currently experiencing is a result of a downturn in electricity prices, and is an impact felt across the industry. When considering future forecasts, the directors fully expect electricity prices to increase again and have used a prudent independent price curve when estimating future electricity sales, and these show that the company will be cash positive in future years.
In addition, the entity is aware of the impacts of Covid-19 and Brexit on the construction industry and as such they need to consider the impact on going concern in these financial statements. The Company had been affected post year end by the slow down in the construction industry, as a result of Covid-19, which has resulted in a slow down of the supply of wood waste. However, at the time of sign off, this was only a short term effect and production is back at expected levels. The company was supported during this period by finance provided by group/parent entities who injected finance to assist with short term cash flow requirements.
The parent and group entities associated with the company are aware of the losses to date, and the cash flow input required, and assurances have been given to the directors that the group will continue to give support for as long as it is needed, and in line with the requirements set out in the operational model. The future forecasted cash flows and operating profits of the business show that the company will be cash generative going forward. The directors are satisfied that, with the support from the group, the company can continue to meet its short term cash flow requirements to meet creditor repayments and therefore considers it appropriate to continue to prepare the financial statements as a going concern.
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EQUITIX ESI CHP (NOTTINGHAM) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
2.Accounting policies (continued)
Turnover from the sale of electricity is recognised when the Company has transferred the significant risks and rewards of ownership to the buyer and it is probable that the Company will receive the previously agreed upon payment. These criteria are considered to be met when the goods are delivered to the buyer.
Tangible fixed assets are recorded at historical cost less any accumulated depreciation and impairment losses; historical costs includes expenditure that is directly attributable to bring the asset 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, using the straight line method. The estimated useful life is as follows:
Plant and Machinery - 18 Years
The assets' residual values, useful lives and depreciation methods are reviewed annually, and adjusted prospectively if inappropriate, to reflect the new estimates.
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Assets under construction
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During the construction phase of the project, construction costs are included in the company's Balance Sheet within fixed assets under assets under construction. Costs incurred in respect of future activity on the contract are capitalised only to the extent it is probable they will be recovered. This is valued at the lower of cost and estimated net realisable value.
The recorded costs comprise directly attributable costs incurred during the period on the construction including construction costs, associated legal and professional fees and insurance. Upon completion, associated construction costs, having been capitalised to the balance sheet will be transferred to the relevant fixed asset category and will be depreciated over the life of the asset to the concession end.
A review for indicators of impairment is carried out at each reporting date, with the recoverable amount being estimated where such indicators exist. Where the carrying value exceed the recoverable amount, the asset is impaired accordingly. Prior impairments are also reviewed for possible reversal at each reporting date.
All borrowing costs are recognised in profit or loss in the year in which they are incurred.
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Operating leases: the Company as lessor
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Rentals income from operating leases is credited to profit or loss on a straight line basis over the term of the relevant lease.
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EQUITIX ESI CHP (NOTTINGHAM) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
2.Accounting policies (continued)
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.
Exceptional items are transactions that fall within the ordinary activities of the Company but are presented separately due to their size or incidence.
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Impairment of fixed assets and goodwill
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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.
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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EQUITIX ESI CHP (NOTTINGHAM) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
2.Accounting policies (continued)
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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 group loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
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 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 Company 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.
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EQUITIX ESI CHP (NOTTINGHAM) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
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Judgments in applying accounting policies and key sources of estimation uncertainty
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The estimates and judgments that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the financial year are as follows:
During the period of construction, all costs incurred as a direct result of financing, designing and constructing the site were capitalised.
In calculating the impairment charge shown at Notes 8 and 9, the impairment calculations used by management used an estimated discounted factor of 3%. This estimated discount factor was based on their experience in the industry, current economic forecasts, and future expected returns. It is considered to be a fair representation of the future value of money.
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The average monthly number of employees, including directors, during the year was 0 (2019 - 0).
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Impairment of fixed asset
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During the year the directors performed an impairment review of the asset represented at Note 6, in light of the recent financial performance of the company, and the expected short term future performance. Based on the future expected cash flows of the company, and an appropriate discount factor, the directors felt that the above impairment was required. This will be reviewed on an annual basis.
The dispute settlement is in relation to a dispute with a creditor which was settled during the year. This was a one off item.
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EQUITIX ESI CHP (NOTTINGHAM) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
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Assets under construction
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Transfers between classes
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Charge for the year on owned assets
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Transfers between classes
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Included within plant and machinery are all costs relating to the build of the asset, built on long term leasehold land. It is not possible to split out the specific components of the asset as it was built as one contract with the construction company.
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Prepayments and accrued income
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EQUITIX ESI CHP (NOTTINGHAM) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
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Cash and cash equivalents
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Creditors: Amounts falling due within one year
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Other taxation and social security
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Accruals and deferred income
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Creditors: Amounts falling due after more than one year
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Loans due to related parties
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Accruals of loan interest
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Included within creditors, amounts falling due after more than one year is an amount of £29,737,862 (2019: £29,737,862) in respect of liabilities payable or repayable by installments which fall due for payment after more than five years from the reporting date, due to related parties as outlined in Note 17. During the period ending 31 March 2016, the Company approved the issue of up to £29,737,862 loan notes. The loan notes are repayable in March 2036. Interest is accrued at a rate of 10% from the date of issue until redemption. The interest accruing on the loan amounted to £2,981,933 for the year, payable in half yearly installments commencing March 2021. The loan notes are secured by a fixed and floating charge over all the property or undertaking of the Company.
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EQUITIX ESI CHP (NOTTINGHAM) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
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Financial assets measured at fair value through profit or loss
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Financial liabilities measured at fair value through profit or loss
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Financial assets measured at fair value through profit or loss.
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Allotted, called up and fully paid
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250,000 (2019 - 250,000) A Ordinary shares of £1.00 each
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Related party transactions
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During the year £nil (2019: £357,000) was received from Energy Savings Investments LP as consideration for the loan notes issued, with total loan notes issued at the year end totalling £14,611,000 (2019: £14,611,000). This amount is shown within creditors falling due after more than one year.
During the year £nil (2019: £372,000) was received from Equitix Energy Efficiency Fund Limited Partnerships consideration for the loan notes issued with total loan notes issued at the year end totaling £15,127,000 (2019: £15,127,000). This amount is shown within creditors falling due after more than one year.
The Limited Partnerships are the shareholders of the immediate parent company.
The loan note interest of £2,981,934 (2019: £2,937,188) was charged in the period by Energy Saving Investments LP and Equitix Energy Efficiency Fund Limited Partnership and is shown within creditors falling due after more than one year. The total interest due at the year end is £11,148,002 (2019: £8,166,069).
Equitix Management Services Ltd (EMS) provided finance management services to the company during the year. EMS charged £29,150 in the year of which £7,950 remains outstanding and is shown within creditors falling due within one year. Equitix Management Services is a related company by way of it's mutual ultimate parent company.
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EQUITIX ESI CHP (NOTTINGHAM) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
The immediate parent company is Equitix ESI CHP Limited. The Directors consider the Company to be jointly owned by Equitix Energy Efficiency Fund Limited Partnership (the ultimate parent of Equitix Energy Efficiency Fund Holco Limited, a company incorporated in the United Kingdom) and Energy Saving Investments Limited Partnership, a limited partnership registered in England & Wales. Copies of the financial statements for each company can be obtained from Companies House.
The auditors' report on the financial statements for the year ended 31 March 2020 was unqualified.
The audit report was signed on 24 March 2021 by Grahame Maughan (Senior Statutory Auditor) on behalf of Ryecroft Glenton.
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