EMPOWER_COMMUNITY_SOLAR_L - Accounts
EMPOWER_COMMUNITY_SOLAR_L - Accounts
The members present their annual report and financial statements for the year ended 31 December 2021.
The principal activity of Empower Community Solar LLP (the "LLP") in the year continued to be that of production of electricity.
The LLP owns an operational portfolio of 998 rooftop solar systems around the North Wales and York areas which were installed between June 2012 and August 2013. A 20 year lease has been granted to the LLP by the relevant housing authority for the roof access of each installation site.
The main source of income from these installations is the government backed feed in tariff ('FIT') and export tariff ('ET'), both of which are currently protected by UK government legislation and are increased annually in line with the Retail Price Index ('RPI') increases. All income is paid by the FIT licensee, based upon the generation data figures for each installation. Operational and maintenance costs are also fixed under long term contracts.
Going Concern
Notwithstanding net liabilities of £429,031 as at 31 December 2021, the LLP made a profit for the year ended of £56,475 and has net current assets of £232,920. The LLP's forecasts and projections, taking account of reasonable possible changes in trading performance, show that the LLP has adequate resources to continue in operational existence for a period of a least 12 months from the date of approval of the the financial statements. Accordingly, the members continue to adopt the going concern basis in preparing the financial statements.
The members' drawing policy allows each member to draw a proportion of their profit share, subject to the cash requirements of the business.
Profit will be allocated to each members current account in proportion to their capital commitment upon the annual audited accounts being approved. Members may take drawings from the Partnership provided that this does not cause their current account to become negative. Any such amounts causing the members would be due back to the partnership. The Members have no entitlement to interest on capital contributions and have no entitlement to receive back any part of this contribution.
The designated members who held office during the year and up to the date of signature of the financial statements were as follows:
The auditor, KPMG LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
so far as the members are aware, there is no relevant audit information of which the limited liability partnership's auditor is unaware, and the members have taken all the steps that ught to have taken as members in order to make themselves aware of any relevant audit information and to establish that the limited liability partnership's auditor is aware of that information.
In respect of the Ukraine-Russia conflict, the members have evaluated the short-term impact on the business and continue to monitor the long-term impacts, ensuring mitigating actions are in place where required. See note 1 for further details.
This report has been prepared in accordance with the special provisions relating to small LLPs within Part 15 of the Companies Act 2006.
The members are responsible for preparing the Members’ Report and the financial statements in accordance with applicable law and regulations.
The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008 require the members to prepare financial statements for each financial year. Under that law the members have elected to prepare the financial statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice), including Section 1A of FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland.
Under Regulation 8 of the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008 the members 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 LLP and of its profit or loss for that period. In preparing these financial statements, the members are required to:
select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
assess the LLP’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 LLP or to cease operations, or have no realistic alternative but to do so.
Under Regulation 6 of the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008, the members are responsible for keeping adequate accounting records that are sufficient to show and explain the LLP’s transactions and disclose with reasonable accuracy at any time the financial position of the LLP and enable them to ensure that its financial statements comply with those regulations. They are responsible for such internal control as they determine is necessary to enable 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 LLP and to prevent and detect fraud and other irregularities.
We have audited the financial statements of Empower Community Solar LLP (“the LLP”) for the year ended 31 December 2021 which comprise the Profit and Loss Account, the Balance Sheet, the Reconciliation of Members’ Interests, and related notes, including the accounting policies in note 1.
In our opinion the financial statements:
give a true and fair view, of the state of affairs of the LLP as at 31 December 2021 and of its profit for the year then ended;
have been properly prepared in accordance with UK accounting standards applicable to smaller entities, including Section 1A of FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland; and
have been prepared in accordance with the requirements of the Companies Act 2006 as applied to limited liability partnerships by the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008.
Basis for opinion
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 LLP in accordance with, UK ethical requirements including the FRC Ethical Standard. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.
we consider that the members’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate; we have not identified, and concur with the members’ assessment that there is not, a material uncertainty related to events or conditions that, individually or collectively, may cast significant doubt on the LLP's ability to continue as a going concern for the going concern period.
Fraud and breaches of laws and regulations – ability to detect
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 members as to the LLP’s policies and procedures to prevent and detect fraud as well as whether they have knowledge of any actual, suspected or alleged fraud.
Reading minutes of meeting of those charged with governance.
Using analytical procedures to identify any unusual or unexpected relationships.
We communicated identified fraud risks throughout the audit team and remained alert to any indications of fraud throughout the audit.
As required by auditing standards and taking into account our overall knowledge of the control environment, we perform procedures to address the risk of management override of controls and the risk of fraudulent revenue recognition, in particular:
the risk that management may be in a position to make inappropriate accounting entries; and
the risk that revenue is overstated through recording revenues in the wrong period.
We did not identify any additional fraud risks.
We performed procedures including:
Comparing a sample of items within all material balances to supporting documentation to assess the validity of the entries.
Identifying journal entries to test based on risk criteria and comparing the identified entries to supporting documentation.
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 financial statements from our general commercial and sector experience and through discussion with the members and other management (as required by auditing standards) and discussed with the members and other management the policies and procedures regarding compliance with laws and regulations. We communicated identified laws and regulations throughout our team and remained alert of any indications of non-compliance throughout the audit.
The potential effect of these laws and regulations on the financial statements varies considerably.
Firstly, the LLP is subject to laws and regulations that directly affect the financial statements including financial reporting legislation (including related LLP’s legislation), distributable profits 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.
Secondly, the LLP is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation. We identified the following areas as those most likely to have such an effect: anti-bribery and certain aspects of LLP legislation recognising the financial nature of the LLP’s activities and its legal form. Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the members and other 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 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 financial statements, the less likely the inherently limited procedures required by auditing standards would identify it.
In addition, as with any audit, there remained a higher risk of non-detection of fraud, as these may involve collusion, 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.
Other information
The members are responsible for the other information, which comprises the members’ report. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work, we have not identified material misstatements in the other information.
Under the Companies Act 2006 as applied to limited liability partnerships 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 financial statements are not in agreement with the accounting records and returns; or
we have not received all the information and explanations we require for our audit; or
the members were not entitled to prepare financial statements in accordance with the small limited liability partnerships’ regime.
We have nothing to report in these respects.
As explained more fully in their statement set out on page 3, the members are responsible for: the preparation of the financial statements and for being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the LLP’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 LLP or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue 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 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
This report is made solely to the members of the LLP, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006, as required by Regulation 39 of the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008. Our audit work has been undertaken so that we might state to the LLP’s members 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 LLP and the LLP’s members, as a body, for our audit work, for this report, or for the opinions we have formed.
INTERESTS
2021
INTERESTS
2020
Empower Community Solar LLP is an LLP incorporated in England and Wales. The registered office is Sixth Floor, Capital Tower, 91 Waterloo Road, London, United Kingdom, SE1 8RT.
The LLP's principal activities are disclosed in the Members' Report.
These financial statements have been prepared in accordance with the Statement of Recommended Practice "Accounting by Limited Liability Partnerships" issued in December 2018, together with Section 1A of FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime.
The financial statements are prepared in sterling, which is the functional currency of the LLP. Monetary amounts in these financial statements are rounded to the nearest GBP.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The LLP has continued to produce electricity. Notwithstanding net liabilities of £429,031 as at 31 December 2021, the entity has net current assets of £232,920 and made a profit for the year ended of £56,475, and the financial statements have been prepared on a going concern basis which the Members consider to be appropriate for the following reasons.
The Members have prepared cash flow forecasts for a period of 12 months from the date of approval of these financial statements which indicate that, taking account of reasonably possible downsides, the LLP will have sufficient funds to meet its liabilities as they fall due for that period.
Those forecasts are dependent on Hermes Infrastructure Fund I LP not seeking repayment of the amounts currently due to other group entities that are controlled by Hermes Infrastructure Fund I LP, the intermediate parent, which at 31 December 2021 amounted to £3,561,816. Hermes Infrastructure Fund I LP has indicated that it does not intend to seek repayment of the amounts due at the balance sheet date, for the period covered by the forecasts.
The Members have considered the impact of the Russia-Ukraine conflict and potential implications on the LLP’s future operations. This consideration included, but is not limited to; the liquidity of the LLP, covering an assessment of the impact of a temporary reduction in income, and the business contingency plans to cope with sustained periods of remote working.
The Members further considered the impact of the Russia-Ukraine conflict on the underlying portfolio investment, and concluded that whilst the investment maybe impacted by global demand and through rising energy costs it is deemed to be sufficiently robust to remain operational. The Members acknowledge that the investment is subject to various challenges from the Russia-Ukraine conflict but considers the investment to be fundamentally sound with appropriate mitigating actions in place where required. Whilst there are significant wider market uncertainties which may impact investments and investors, the Members do not believe this will significantly impact the liquidity of the LLP over a period of at least 12 months from the date that the financial statements have been signed off. For these reasons, the Members have adopted the going concern basis in preparing these financial statements.
Turnover is generated from feed in tariff ('FIT') and export tariff ('ET') under a UK government scheme associated with electricity export to the grid. It is recognised net of VAT, trade discounts, and other sales taxes when the electricity is physically exported.
Members' participation rights are the rights of a member against the LLP that arise under the members' agreement (for example, in respect of amounts subscribed or otherwise contributed remuneration and profits).
Members' participation rights in the earnings or assets of the LLP are analysed between those that are, from the LLP's perspective, either a financial liability or equity, in accordance with section 22 of FRS 102. A member's participation rights including amounts subscribed or otherwise contributed by members, for example members' capital, are classed as liabilities unless the LLP has an unconditional right to refuse payment to members, in which case they are classified as equity.
All amounts due to members that are classified as liabilities are presented within 'Loans and other debts due to members' and, where such an amount relates to current year profits, they are recognised within ‘Members' remuneration charged as an expense’ in arriving at the relevant year’s result. Undivided amounts that are classified as equity are shown within ‘Members' other interests’. Amounts recoverable from members are presented as debtors and shown as amounts due from members within members’ interests.
Once an unavoidable obligation has been created in favour of members through allocation of profits or other means, any undrawn profits remaining at the reporting date are shown as ‘Loans and other debts due to members’ to the extent they exceed debts due from a specific member.
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
At each reporting period end date, the LLP reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the LLP estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
The LLP has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the LLP's statement of financial position when the LLP becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the limited liability partnership after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
No provision has been made in the financial statements of the LLP for taxation. Each Member is liable for any tax liability arising out of their interest in the LLP.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to the profit and loss account so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Equity instruments
Equity instruments issued by the LLP are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the LLP.
In the application of the LLP's accounting policies, the members are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following judgements and estimates have had the most significant effect on amounts recognised in the financial statements.
Revenue is generated under a UK government scheme associated with electricity exported to the grid, and is recognised when the electricity is physically exported.
Accrued income is estimated based on the value of electricity which has been generated but is yet to be invoiced, based on the tariff prices in effect at the balance sheet date.
Tangible fixed assets are measured at cost less depreciation and impairment losses.
Determining whether tangible fixed assets are impaired requires an estimation of the value in use of these assets. The value in use calculation requires the LLP to estimate the future cash flows expected to arise from the assets and a suitable discount rate in order to calculate the present value. On this basis, no impairment loss has been recognised in the current year.
Included in amounts falling due within one year are amounts due to group undertakings. These amounts are repayable on demand and will be recalled once it is determined that sufficient funds are available to make the repayment.
Finance lease payments represent rentals payable by the LLP for plant and machinery, under a lease agreement with HGPE ASG2 Assetco LLP. The average lease term is 20 years and the lease carries an interest rate of 6.2% per annum.
In respect of the Ukraine-Russia conflict, the members have evaluated the short-term impact on the business and continue to monitor the long-term impacts, ensuring mitigating actions are in place where required.
The LLP has taken advantage of the exemption contained within Section 33 of FRS 102 from the requirement to disclose details of transactions within the group.
The ultimate controlling party is Federated Hermes, Inc. Copies of the financial statements for Federated Hermes, Inc. may be obtained online or at 1001 Liberty Avenue, Pittsburgh, PA 15222-3779, United States of America.