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Registered number: 08159325
E2 ENERGY PLC
DIRECTORS' REPORT AND AUDITED FINANCIAL STATEMENTS
FOR THE PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2021
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E2 ENERGY PLC
COMPANY INFORMATION
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B V Corcoran (resigned 29 July 2021)
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T A Costello (resigned 3 June 2020)
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I Greer (resigned 29 July 2021)
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N A Wood (appointed 29 July 2021)
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L J B Roberts (appointed 29 July 2021)
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KPMG Channel Islands Limited
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GY1 1WR
Appointed: 27 July 2021
Previously:
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Armstrong Watson Audit Limited
York House
Thornfield Business Park
Standard Way
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Northallerton
North Yorkshire
DL6 2XQ
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E2 ENERGY PLC
CONTENTS
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Independent Auditor's Report
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Consolidated Statement of Comprehensive Income
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Consolidated Statement of Financial Position
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Company Statement of Financial Position
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Consolidated Statement of Changes in Equity
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Company Statement of Changes in Equity
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Notes to the Financial Statements
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E2 ENERGY PLC
DIRECTORS' REPORT
FOR THE PERIOD ENDED 30 JUNE 2021
The directors present their report and the financial statements for the period from 1 January 2020 to 30 June 2021.
On 28 June 2021 the accounting reference period was extended so as to end on 30 June 2021 (an 18 month period), as such the previous year's figures are not fully comparable.
Principal activity
The principal activity of the company is the maintenance and operation of wind turbines.
Risk Management and Control
In the ordinary course of business, the Company is exposed to and manages a variety of risks in relation to its activities, including financial risk. The management of credit, interest rate, liquidity and operational risks are fundamental to the Company, with the Board of Directors having responsibility for the overall system of internal control and for reviewing its effectiveness.
The key areas of risk in relation to the use of financial statements are listed below and are properly addressed by the management of the Company:
Credit risk: Losses due to the inability or unwillingness of a customer to meet its obligations. This is mitigated by the Company entering into price agreements with creditworthy counterparties for the purchase of electricity to be generated by the wind turbine plant.
Liquidity risk: Failure to meet financial obligations in a timely and cost effective manner due to mismatches in the maturity profile of assets and liabilities. The Company closely monitors its cash flow levels and financial obligations to anticipate its future cash commitments.
Operational risk: Failure to meet expected levels of generation output due to technical issues affecting performance of the plant. The Company has sought to mitigate this risk by the appointment of Bluefield Services Ltd, as its dedicated asset manager, with responsibility for closely monitoring the performance of the plant, ensuring activities conducted by 3rd party contractors are completed in a timely fashion and, as required, contractual protections are enforced. The Company also has insurance policies in place that protect against generation loss in situations out of the Company’s control.
Price risk: Eighteen percent of the income generated by the Company is linked to power market prices and so in the unlikely event of a major structural shift in power prices due to reduced demand or excess energy supply, there could be an impact on the company’s earnings. A rolling programme of PPA contract expiries has been implemented to mitigate risk, alongside the fact the company receives eighty two percent of its income from the government backed FIT regime.
Covid 19 risk: During the period there has been limited impact on the business and its activities. In order to minimise the risk of disruption to the wind plants, mitigating steps including executing safe remote working policies with key service providers and contractors, have been consistently reviewed by management. The Directors have continued to review the forecasts to ensure a true and fair reflection of the impact, if any, of Covid 19.
Management are continuously monitoring the impact of Covid 19 and do not expect a significant impact in the future. Refer to Note 2.3 for Covid impact on going concern.
Results and dividends
The loss for the period, after taxation, amounted to £537,758. (2019: £352,457)
No dividends were distributed in the period or the prior year.
Page 1
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E2 ENERGY PLC
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 JUNE 2021
Directors' responsibilities statement
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The Directors are responsible for preparing 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 Section 1A of FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice applicable to smaller entities). 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 and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙assess the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
∙ use the going concern basis of accounting unless they either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
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 responsible for such internal control as they determine is necessary to e the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the company and to prevent and detect fraud and other irregualrities.
The Directors who served during the period from 1 January 2020 up to the date of signing the financial statements were:
B V Corcoran (resigned 29 July 2021)
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T A Costello (resigned 3 June 2020)
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I Greer (resigned 29 July 2021)
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N A Wood (appointed 29 July 2021)
L J B Roberts (appointed 29 July 2021)
Qualifying third party indemnity provisions
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The Company has made qualifying third party indemnity provisions for the benefit of its directors which were in force throughout the period and at the date of this report.
Page 2
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E2 ENERGY PLC
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 JUNE 2021
Disclosure of information to auditor
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Each of the persons who are Directors at the time when this Directors' Report is approved has confirmed that:
∙so far as the Director is aware, there is no relevant audit information of which the Company and the Group's auditor is unaware, and
∙the Director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company and the Group's auditor is aware of that information.
Post statement of financial position events
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The share capital of the Company's parent company, Arena Capital Partners Limited was purchased by Arena
Wind Holdings Limited on 16 December 2020. The share capital of Arena Wind Holdings Limited was purchased by New Road Wind Limited on 29 July 2021.
The auditors, KPMG Channel Islands Limited were appointed as auditors on 27 July 2021, have indicated their willingness to continue in office and will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
In preparing this report, the directors have taken advantage of the small companies exemptions provided by section 415A of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
Page 3
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E2 ENERGY PLC
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF E2 ENERGY PLC
We have audited the consolidated financial statements of E2 ENERGY PLC (the "Company") and its subsidiary (together, the "Group"), which comprise the consolidated statement of financial position and the company's statement of financial position as at 30 June 2021, the consolidated statements of comprehensive income, changes in equity and the company's statement of changes in equity for the period from 1 January 2020 to 30 June 2021, and notes, comprising significant accounting policies and other explanatory information.
In our opinion, the accompanying consolidated financial statements:
∙give a true and fair view of the state of the Group's and of the Company's affairs as at 30 June 2021 and of the Group's loss for the period from 1 January 2020 to 30 June 2021;
∙are properly prepared in accordance with United Kingdom accounting standards, including Section 1A of FRS 102 The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland; and
∙have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of the Company and Group in accordance with, UK ethical requirements including FRC Ethical Standards. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.
The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Group or the Company or to cease their operations, and as they have concluded that the Group and the Company's financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over its ability to continue as a going concern for at least a year from the date of approval of the consolidated financial statements (the "going concern period").
In our evaluation of the directors' conclusions, we considered the inherent risks to the Group and the Company's business model and analysed how those risks might affect the Group and the Company's financial resources or ability to continue operations over the going concern period.
Our conclusions based on this work:
• we consider that the directors' use of the going concern basis of accounting in the preparation of the consolidated financial statements is appropriate; and
• we have not identified, and concur with the directors' assessment that there is not, a material uncertainty related to events or conditions that, individually or collectively, may cast significant doubt on the Group and the Company's ability to continue as a going concern for the going concern period.
However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the above conclusions are not a guarantee that the Group and the Company will continue in operation.
Page 4
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E2 ENERGY PLC
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF E2 ENERGY PLC (CONTINUED)
Fraud and breaches of laws and regulations - ability to detect
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Identifying and responding to risks of material misstatement due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:
• enquiring of management as to the Group’s policies and procedures to prevent and detect fraud as well as enquiring whether management have knowledge of any actual, suspected or alleged fraud;
• reading minutes of meetings of those charged with governance; and
• using analytical procedures to identify any unusual or unexpected relationships.
As required by auditing standards, we perform procedures to address the risk of management override of controls, in particular the risk that management may be in a position to make inappropriate accounting entries. On this audit we do not believe there is a fraud risk related to revenue recognition because the Group’s revenue streams are simple in nature with respect to accounting policy choice, and are easily verifiable to external data sources or agreements with little or no requirement for estimation from management. We did not identify any additional fraud risks.
We performed procedures including
• Identifying journal entries and other adjustments to test based on risk criteria and comparing any identified entries to supporting documentation; and
• incorporating an element of unpredictability in our audit procedures.
Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the consolidated financial statements from our general sector experience and through discussion with management (as required by auditing standards), and discussed with management the policies and procedures regarding compliance with laws and regulations.
The Group is subject to laws and regulations that directly affect the consolidated financial statements including financial reporting legislation and taxation legislation and we assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
The Group is subject to other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the consolidated financial statements, for instance through the imposition of litigation or impacts on the Group and the Company’s ability to operate. We identified company law as being the area most likely to have such an effect. Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of management and inspection of regulatory and legal correspondence, if any. Therefore if a breach of operational regulations is not disclosed to us or evident from relevant correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the consolidated financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the consolidated financial statements, the less likely the inherently limited procedures required by auditing standards would identify it.
In addition, as with any audit, there remains a higher risk of non-detection of fraud, as this may involve collusion,
Page 5
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E2 ENERGY PLC
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF E2 ENERGY PLC (CONTINUED)
forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.
The directors are responsible for the directors' report. Our opinion on the consolidated financial statements does not cover that report and we do not express an audit opinion thereon.
Our responsibility is to read the directors' report and, in doing so, consider whether, based on our consolidated financial statements audit work, the information therein is materially misstated or inconsistent with the consolidated financial statements or our audit knowledge. Based solely on that work:
• we have not identified material misstatements in the directors' report;
• in our opinion the information given in that report for the financial year is consistent with the consolidated financial statements; and
• in our opinion that report has been prepared in accordance with the Companies Act 2006.
Matters on which we are required to report by exception
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Under the Companies Act 2006, we are required to report to you if, in our opinion:
∙•adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
• the parent financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit; or
• the directors were not entitled to prepare the consolidated financial statements in accordance with the small companies regime and take advantage of the small companies exemption from the requirement to prepare a strategic report
We have nothing to report in these respects.
Page 6
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E2 ENERGY PLC
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF E2 ENERGY PLC (CONTINUED)
Respective responsibilities
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Directors' responsibilities
As explained more fully in their statement set out on page 2, the directors are responsible for: the preparation of the consolidated financial statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error; assessing the Group and 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 they either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities
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Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not 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 aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements.
A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.
The purpose of our audit work and to whom we owe our responsibilities
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This report is made solely to the Company's member, 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 member those matters we are required to state to them in an auditor’s 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 its member, as a body, for our audit work, for this report, or for the opinions we have formed.
Rachid Frihmat (Senior Statutory Auditor)
For and on behalf of
KPMG Channel Islands Limited (Statutory Auditor)
Chartered Accountants
Guernsey
1 June 2022
Page 7
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E2 ENERGY PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2021
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Interest payable and similar expenses
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Loss for the financial Period
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(Loss) for the Period attributable to:
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Owners of the parent Company
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Total comprehensive income for the Period attributable to:
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Owners of the parent Company
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There were no recognised gains and losses for the current and prior period other than those included in the consolidated statement of comprehensive income.
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There was no other comprehensive income for the current and prior period.
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The notes on pages 15 to 28 form part of these financial statements.
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All amounts relate to continuing activities of the company.
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Page 8
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E2 ENERGY PLC
REGISTERED NUMBER: 08159325
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
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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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Provisions for liabilities
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Net assets excluding pension asset
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Page 9
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E2 ENERGY PLC
REGISTERED NUMBER: 08159325
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 30 JUNE 2021
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Equity attributable to owners of the parent Company
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The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 15 to 28 form part of these financial statements.
Page 10
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E2 ENERGY PLC
REGISTERED NUMBER: 08159325
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
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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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Provisions for liabilities
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Page 11
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E2 ENERGY PLC
REGISTERED NUMBER: 08159325
COMPANY STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 30 JUNE 2021
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Profit and loss account brought forward
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Profit and loss account carried forward
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The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 15 to 28 form part of these financial statements.
Page 12
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E2 ENERGY PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 JUNE 2021
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Equity attributable to owners of parent Company
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Comprehensive income for the year
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Other comprehensive income for the year
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Total comprehensive income for the year
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Shares issued during the year
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Total transactions with owners
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Comprehensive income for the Period
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Other comprehensive income for the Period
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Total comprehensive income for the Period
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Total transactions with owners
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The notes on pages 15 to 28 form part of these financial statements.
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Page 13
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E2 ENERGY PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 JUNE 2021
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Comprehensive income for the year
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Other comprehensive income for the year
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Total comprehensive income for the year
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Contributions by and distributions to owners
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Shares issued during the year
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Total transactions with owners
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Comprehensive income for the year
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Other comprehensive income for the Period
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Total comprehensive income for the Period
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Total transactions with owners
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The notes on pages 15 to 28 form part of these financial statements.
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Page 14
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E2 ENERGY PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2021
E2 Energy PLC ("The Company") is a private company limited by shares, registered in England and Wales. The address of the registered office at The Tramshed, 25 Lower Park Row, Bristol, BS1 5BN.
On 28 June 2021 the accounting reference period was extended so as to end on 30 June 2021 (an 18 month period), as such the previous year's figures are not fully comparable.
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 FRS 102, The Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland and the requirements of the Companies Act 2006.
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 company has taken advantage of the exemption as provided in paragraph 33.1A of FRS 102, 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with group undertakings.
The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
• the requirements of Section 4 Statement of Financial Position paragraph 4.12(a)(iv);
• the requirements of Section 7 Statement of Cash Flows;
• the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
• the requirements of Section 11 Financial Instruments paragraphs 11.41(b), 11.41(c), 11.41(e), 11.41(f), 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
• the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A;
• the requirements of Section 33 Related Party Disclosures paragraph 33.7.
The Company's presentational and functional currency is GBP.
The preparation of financial statements in compliance with FRS 102 Section 1A 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).
The following principal accounting policies have been applied:
Page 15
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E2 ENERGY PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2021
2.Accounting policies (continued)
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.
On 26 March 2018 the Group's parent Company acquired Wind Energy One Limited. Post this transaction, in May 2018, E2 Energy PLC acquired the shareholding of Wind Energy One Limited from its parent company via a share for share exchange. This represented a group restructure and not an acquisition.
As such there has been no change in the interest held in Wind Energy One Limited between 26 March 2018 and May 2018. Therefore the financial statements of E2 Energy PLC represent a continuation of the activities and operations of the Group from 26 March 2018. Accordingly, merger accounting has been used to account for this transaction as it meets the criteria as per the Companies Act 2006 and FRS 102.
Therefore, the Group continues to recognise a merger reserve which arose on a past business combination that was accounted for as a merger in accordance with UK GAAP as applied at that time.
The directors have considered the on-going situation with regard to COVID-19 as part of their going concern assessment. The view of the directors is that, while they acknowledge the significant disruption that the pandemic will bring over the coming weeks and months, the directors feel that the group is well placed to negotiate the unique set of conditions currently facing the UK economy. The group has continued to trade positively after the year end and the current levels of cash is positive. The directors have taken strategic measures as appropriate to safeguard the group.
In reaching their conclusion, the directors have considered cash flow forecasts that cover a period of 12 months from the date of sign off which have been adjusted for the impact of COVID-19, applied sensitivity analyses as appropriate and have taken advantage of wider financial support measures that have been announced by the UK government. Despite the company having net liabilities at the period end of £381,845 (2019: £78,282) the company's directors, shareholders and the wider group have indicated their continuing support to allow the adoption of the going concern basis.
Turnover derived from turbine rental and feed in tariffs is recognised in the period in which the rental or feed in tariff period relates. Turnover 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. Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other taxes.
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 Period in which they are incurred.
Page 16
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E2 ENERGY PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2021
2.Accounting policies (continued)
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Current and deferred taxation
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The tax expense for the Period comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the Company and the Group operate and generate income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Statement of Financial Position 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;
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and
∙Where they relate to timing differences in respect of interests in subsidiaries, associates, branches and joint ventures and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future.
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 reporting date.
Goodwill
Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer’s interest in the fair value of the Group's share of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight line basis to the Consolidated Statement of Comprehensive Income over its useful economic life.
Other intangible assets
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
Page 17
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E2 ENERGY PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2021
2.Accounting policies (continued)
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
The Company adds to the carrying amount of an item of fixed assets the cost of replacing part of such an item when that cost is incurred, if the replacement part is expected to provide incremental future benefits to the Company. The carrying amount of the replaced part is derecognised. Repairs and maintenance are charged to the Statement of Comprehensive Income during the period in which they are incurred.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
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Over the expected useful life of the asset - 20 years
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The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Investments in subsidiaries are measured at cost less accumulated impairment.
Investments in unlisted Group shares, whose market value can be reliably determined, are remeasured to market value at each balance sheet date. Gains and losses on remeasurement are recognised in the Consolidated Statement of Comprehensive Income for the period. Where market value cannot be reliably determined, such investments are stated at historic cost less impairment.
Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at transaction value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
Short term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at transaction value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
Page 18
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E2 ENERGY PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2021
2.Accounting policies (continued)
The Group 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 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 reporting date.
Financial assets and liabilities are offset and the net amount reported in the Statement of Financial Position 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.
For financial liabilities measured at amortised cost, the impairment loss is measured as the difference between a liability's carrying amount and the present value of estimated cash flows discounted at the liability's original effective interest rate. If a financial liability has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
Page 19
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E2 ENERGY PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2021
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Judgements in applying accounting policies and key sources of estimation uncertainty
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In preparing these financial statements, the directors have made the following judgements:
a) Going concern - refer to note 2.3
b) The key source of estimation uncertainty in the financial statements is the useful economic life of fixed assets and calculation thereof. This is currently set at the lease term for which the related turbines will be fully operational. If the useful economic life were to shorten by a year the impact on profit and loss would be an additional charge of approximately £25,000 per annum. Given the assets remain cash positive and there are no changes in their upkeep or maintenance management do not consider the risk of their impairment as a key estimate or judgement.
c) Accrued income is calculated on the actual electricity generated which is not able to be invoiced as it is yet to be validated by external parties or for various other reasons. Estimates are sometimes made with regards to price on portions of income or other certain aspects of the accrued income based on management's best information of the price at the time such as contracted prices or recent history of transactions.
d) A determination of the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with an assessment of the net effect of future planning strategies.
e) The fair value of the group's intangible assets are subject to ongoing assessment for impairment. The assessment considers the fair value in use of the underlying assets. The model provides headroom based on assumptions linked to growth, committed cash outflows and discount rates for the time value of money. These discount rates are set at 6.1% when the model would indicate impairment. If the discount rate was increased by 1% the impact on the carrying value of intangible assets would be a reduction in the carrying value of £236,000.
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All turnover arose within the United Kingdom.
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The directors who served during the year were remunerated by other companies within the group headed by Arena Capital Partners Limited. It is impractical to allocate that remuneration on the basis of services provided to individual companies within the group.
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The average monthly number of employees, including directors, during the Period was 2 (2019 - 2).
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Parent company profit for the year
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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 loss after tax of the parent Company for the period / year was £318,864 (2019 - loss £221,468).
Page 20
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E2 ENERGY PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2021
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Fair value of turbine future cashflows
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Charge for the Period on owned assets
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The intangible assets are being amortised over 10 years.
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Page 21
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E2 ENERGY PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2021
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Charge for the Period on owned assets
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Page 22
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E2 ENERGY PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2021
8.Tangible fixed assets (continued)
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Charge for the Period on owned assets
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The Directors have identified no circumstances that would suggest a change in useful economic life or carrying value of assets to that reflected in the balance sheet.
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Page 23
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E2 ENERGY PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2021
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Investments in subsidiary companies
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The following was a subsidiary undertaking of the Company:
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The aggregate of the share capital and reserves as at 30 June 2021 and the profit or loss for the Period ended on that date for the subsidiary undertaking were as follows:
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Aggregate of share capital and reserves
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Amounts owed by group undertakings
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Prepayments and accrued income
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Page 24
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E2 ENERGY PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2021
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Cash and cash equivalents
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Creditors: Amounts falling due within one year
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Amounts owed to group undertakings
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Accruals and deferred income
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The bank loans are secured by the company.
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Creditors: Amounts falling due after more than one year
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Amounts owed to group undertakings
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The amounts owed to group undertakings are interest free and will not be recalled to the detriment of E2 Energy PLC and its subsidiary.
The bank loans are secured against all of the assets of the company by way of debenture.
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Page 25
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E2 ENERGY PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2021
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Amounts falling due within one year
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Amounts falling due 1-2 years
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Amounts falling due 2-5 years
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Amounts falling due after more than 5 years
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The bank loans are secured against all of the assets of the company by way of debenture.
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Charged to profit or loss
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Arising on business combinations
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Page 26
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E2 ENERGY PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2021
15.Deferred taxation (continued)
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Charged to profit or loss
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The provision for deferred taxation is made up as follows:
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Accelerated capital allowances
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Arising on business combinations
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The Group has £1,453,151 of taxable losses not recognised at 19% as a deferred tax asset. This is because they are unlikely to be utilised in the short term.
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Allotted, called up and fully paid
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50,000 (2019 - 50,000) Ordinary shares of £1.00 each
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Merger Reserve
For details of merger reserve refer to accounting policy note 2.2.
Page 27
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E2 ENERGY PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2021
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Commitments under operating leases
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At 30 June 2021 the Group and the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
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Later than 1 year and not later than 5 years
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Related party transactions
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The company has taken advantage of the exemption contained in Section 33 of FRS 102 "Related Party Disclosures" from disclosing transactions with the entities which are part of the group, since 100% of the voting rights in the company are controlled within the group.
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The share capital of the Company's parent company, Arena Capital Partners Limited was purchased by Arena Wind Holdings Limited on 16 December 2020. The share capital of Arena Wind Holdings Limited was purchased by New Road Wind Limited on 29 July 2021.
The Company's immediate parent company is Arena Capital Partners Limited (a company registered in the UK).
The ultimate controlling party is Arena Capital Partners Limited (a company registered in Ireland) by virtue of its shareholdings.
Page 28
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