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Registered number: 08372348
GCP BIOMASS 1 LTD
AUDITED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 MARCH 2020
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GCP BIOMASS 1 LTD
REGISTERED NUMBER:08372348
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BALANCE SHEET
AS AT 31 MARCH 2020
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Debtors: amounts falling due after more than one year
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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TOTAL ASSETS LESS CURRENT LIABILITIES
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Creditors: amounts falling due after more than one year
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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 7 form part of these financial statements.
Page 1
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
GCP Biomass 1 Ltd is a private company, limited by shares, incorporated in England and Wales, registered number 08372348. The registered office is 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 judgement in applying the Company's accounting policies (see note 3).
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 we no material departures from this standard.
The Company is in a net liability position and has been loss-making. The Company’s largest loan debtor, the carrying value of which is £39,229,763 (2019 - £37,190,191) at the year end date, operates 11 on-farm anaerobic digestion plants in the UK a number of which have suffered as a result of performance issues. The loan debtor has been unable to service the loan and the Company is reviewing the loan position with a view to restructuring. At the date of this report the financial impact of any restructuring on the Company has not been quantified.
The Company’s other loan debtor, the carrying value of which is £25,666,600 (2019 - £24,791,606) at the year end date, defaulted in 2017 and as a result of breaches of loan covenants with the senior loan creditor was put into lock-up. The loan debtor has been unable to service the loan and the Company is reviewing the loan position with a view to restructuring. At the date of this report the financial impact of any restructuring on the Company has not been quantified.
The directors having reviewed the financial position of the Company and uncertainty regarding the timing of operational cash flows have concluded that the loan debtors balance is not fully recoverable and have written this down. Nevertheless, the directors having assessed the risks to the business, including in relation to COVID-19, believe preparing the financial statements on a going concern basis is appropriate due to the ongoing support of its lender. This support gives the Company the financial resources to be able to meet its liabilities as they fall due for the foreseeable future.
Page 2
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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.
Interest receivable is recognised over the loan period using the effective interest method, which takes into account related fees and transaction costs.
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.
Short term creditors are measured at the transaction price. Other financial liabilities, including bank and other loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
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.
Tax is recognised in the Statement of income and retained earnings, 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 tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet in the countries where the Company operates and generates income.
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.
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.
Page 3
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
2.Accounting policies (continued)
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Financial instruments (continued)
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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.
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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Judgements in applying accounting policies and key sources of estimation uncertainty
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The key source of estimation uncertainty at the reporting date that has a risk of causing a material adjustment to the carrying amount of the loan debtor is the uncertainty regarding the amount and timings of cash flows from the Company’s loan debtors. The directors restated loan debtors to the best estimate of the present value of future cash flows based on revised forecasts but it is not possible to estimate reliably to confirm that the carrying value is materially correct.
The key assumption concerning the future and other key sources of estimation uncertainty at the reporting date that has a risk of causing a material adjustment to the carrying amount of the loan debtor and loan creditor is future inflation rates.
Loans are stated at amortised cost and the effective interest rate calculations are based on the directors' assumption that inflation will not exceed 3% per annum over the remaining loan term. If inflation was considerably in excess of 3% there could be a material impact on the carrying value of the loan.
Loan principals are subject to annual inflation indexation based on the Retail Price Index ("RPI") if inflation exceeds 3% in a given year indexation is applied at half the excess over 3%.
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.
The loan interest receivable and payable calculations and the associated amortised cost balances assume that all future loan capital and interest receipts and payments will be in accordance with the current loan agreements for the remaining loan term.
Page 4
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
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.
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Due after more than one year
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Other debtors comprise loans receivable balances accounted for at amortised cost.
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Creditors: Amounts falling due within one year
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Accruals and deferred income
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Page 5
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
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Creditors: Amounts falling due after more than one year
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External loans comprise loan notes accounted for at amortised cost and are repayable in instalments.
The loan notes are secured by a debenture over all assets of the Company, present and future.
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The aggregate amount of liabilities repayable wholly or in part more than five years after the balance sheet date is:
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Allotted, called up and fully paid
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1,000 (2019 - 1,000) 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.
In the current financial year comparative figures have been restated to reflect loan related charges contractually due to the Company's lender in the prior period. This adjustment has result in a charge to prior year profit and loss of £350,283.
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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.
Page 6
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
The Company's immediate and ultimate parent undertaking is GCP Intermediary Holdings Limited. The consolidated financial statements of GCP Intermediary Holdings Limited may be obtained from Companies House or from 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 not believe these will 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:
We do not express an opinion on the financial statements of the Company. Because of the significance of the matter described below we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.
Basis for disclaimer of opinion
The audit evidence available to us was limited because the directors are unable to substantiate and formally evidence the timing and amount of the future cash flows in relation to the Company's loan debtors. The carrying value of the loan debtors are stated at £64,896,363 (2019: £61,981,797) as at 31 March 2020. This is based on an assessment of all available information, but the directors are unable to ascertain whether this is materially correct due to significant uncertainty regarding the future cash flows over the remaining term of the loans. As a result we are unable to obtain sufficient appropriate audit evidence concerning the carrying amount of the loan debtors of £64,896,363 and their resulting recoverability.
The uncertainty regarding the level and timing of cash flows receivable from the debtors may mean the Company is unable to realise its assets and meet its liabilities as they fall due.
The audit report was signed on 6 April 2021 by Mark Nelligan FCA (Senior statutory auditor) on behalf of Wellden Turnbull Limited.
Page 7
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