BROOK_GREEN_TRADING_LIMIT - Accounts
BROOK_GREEN_TRADING_LIMIT - Accounts
The directors present the strategic report for the year ended 31 March 2021.
The company continues to operate under the Preferred Supplier Agreement (PSA) with SCMI Limited. The agreement enables the company to manage trading associated risks such as commodity and liquidity risk more effectively and provides the opportunity for working capital to be deployed in scaling the business and achieving faster growth.
The company has established a risk-based framework in order to identify and manage risks. The principal risks and uncertainties relating to the company are as follows:
Market risk - Market risks are risks associated with fluctuations in the market. The company has implemented strict policies and procedures to manage and monitor the risks associated with its trading activities. In order to mitigate the corresponding exposures, the company uses various financial instruments to ensure it is adequately hedged. Trading and financial controls are carried out separately and an integrated information system enables real time monitoring of trading activities.
Credit risk - Credit risk is the risk that a customer or supplier will fail to meet its contractual obligations. The main area of risk that is relevant to the company is supplier credit risk (security deposits and prepayments to suppliers and distributors).
Liquidity risk - Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fall due. In order to manage liquidity, the company maintains a combination of short and long term cashflow forecasts. The PSA with SCMI Limited also helps to protect against liquidity risk relating to market exposure.
External factors - The company is exposed to external economic and geopolitical environments that affect the UK energy supply industry.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 March 2021.
The results for the year are set out on page 7.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
No preference dividends were paid. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The company operates a treasury function which is responsible for managing the liquidity, interest and foreign currency risks associated with the company’s activities.
The company’s principal financial instruments include derivative commodity instruments, the purpose of which is to manage commodity risks arising from the company’s activities, and trade credit facilities, the main purpose of which is to provide finance for the company’s operations. In addition, the company has various other financial assets and liabilities such as trade debtors and trade creditors arising directly from its operations. Derivative transactions which the company enters into principally comprise forward commodity contracts.
The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.
Investments of cash surpluses, borrowings and derivative instruments are made through banks and companies which must fulfil credit rating criteria approved by the Board.
The auditor, Fisher, Sassoon & Marks, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
As the company is not a quoted company; a UK unquoted company that qualifies as a large entity nor; a UK unquoted parent company or LLP of a group headed by them that qualify as a large group it is is not required to report on its emissions, energy consumption or energy efficiency activities.
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; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
We have audited the financial statements of Brook Green Trading Limited (the 'company') for the year ended 31 March 2021 which comprise the income statement, the statement of financial position, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 101 ‘Reduced Disclosure Framework’ (United Kingdom Generally Accepted Accounting Practice).
give a true and fair view of the state of the company's affairs as at 31 March 2021 and of its loss for the year then ended; have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
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 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the gas and power sector;
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including OFGEM, Companies Act 2006, taxation legislation, data protection, anti-bribery, anti-money-laundering, employment, environmental and health and safety legislation;
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud;
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations; and
understanding the design of the company’s remuneration policies.
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates as set out in note 2 were indicative of potential bias; and
investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
agreeing financial statement disclosures to underlying supporting documentation;
reading the minutes of meetings of those charged with governance;
enquiring of management as to actual and potential litigation and claims; and
reviewing correspondence with HMRC, relevant regulators including OFGEM and reviewing the company’s compliance monitoring procedures and findings.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any. Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or through collusion.
A further description of our responsibilities is available on the Financial Reporting Council's website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
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 the company’s member for our audit work, for this report, or for the opinions we have formed.
Brook Green Trading Limited is a private company limited by shares incorporated in England and Wales. The registered office is 80 Hammersmith Road, London, United Kingdom, W14 8UD. The company's principal activities and nature of its operations are disclosed in the directors' report.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The company meets the definition of a qualifying entity under FRS 101 Reduced Disclosure Framework. These financial statements for the year ended 31 March 2021 are the first financial statements of Brook Green Trading Limited prepared in accordance with FRS 101. The company transitioned from FRS102 to FRS 101 for all periods presented and the date of transition to FRS 101 was 1 April 2020.
As permitted by FRS 101, the company has taken advantage of the following disclosure exemptions from the requirements of IFRS:
inclusion of an explicit and unreserved statement of compliance with IFRS;
presentation of a statement of cash flows and related notes;
disclosure of the objectives, policies and processes for managing capital;
disclosure of key management personnel compensation;
disclosure of the categories of financial instrument and the nature and extent of risks arising on these financial instruments;
the effect of financial instruments on the statement of comprehensive income;
comparative period reconciliations for the number of shares outstanding and the carrying amounts of property, plant and equipment, intangible assets, investment property and biological assets;
disclosure of the future impact of new International Financial Reporting Standards in issue but not yet effective at the reporting date;
comparative narrative information;and
related party disclosures for transactions with the parent or wholly owned members of the group.
Where required, equivalent disclosures are given in the group accounts of CF Partners Management Holdings Limited. The group accounts of CF Partners Management Holdings Limited are available to the public and can be obtained from 80 Hammersmith Road, London, W14 8UD.
The company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.
Brook Green Trading Limited is a wholly owned subsidiary of Brook Green Supply Limited and the results of Brook Green Trading Limited are included in the consolidated financial statements of the ultimate parent CF Partners Management Holdings Limited which are available from 80 Hammersmith Road, London, W14 8UD.
These financial statements are prepared on the going concern basis. The directors have a reasonable expectation that the company will continue in operational existence for the foreseeable future. The directors are aware of certain global uncertainties, in relation to the substantial increase in global commodity prices, which may cause doubt on the company's ability to continue as a going concern.
To assess any potential impact on the Company, the directors have assessed the Company's funding requirements, liquidity and financial position and have concluded that the going concern basis is appropriate. In making this assessment, the directors have placed reliance on the Company's access to the liquidity facility made available by SCMI Limited which will continue for the foreseeable future.
Turnover is measured at the fair value of the consideration received or receivable, and represents amounts receivable for commodities sold and services provided in the normal course of business, stated net of discounts and value added taxes. The Company recognises turnover when the amount of turnover can be reliably measured; when it is probable the future economic benefits will flow to the entity; and when specific criteria have been met for each of the Company's activities as described below.
Turnover comprises the notional contractual value physically settled plus the net gain on financially settled trades and for spot transactions and related futures trades through the year. Turnover from the sale of spot trades is reported and recognised based on the gross amount received or receivable, as the Company is exposed to the benefits and risks associated with changes in market prices of the products.
The company recognises revenue from the following major sources:
Power
Gas
The nature, timing of satisfaction of performance obligations and significant payment terms of the company's major sources of revenue are as follows:
Revenue from the sale of electricity is a function based on the end user consumption of the customers of Brook Green Supply Limited (according to meter read data) and tariff rates (specified by contract terms). Revenue is recognised net of sales discounts.
Revenue from the supply of gas is also a function of end user consumption of the customers of Brook Green Supply Limited (according to meter read data) and tariff rates (specified by contract terms). Revenue is recognised net of sales discounts.
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
The intangible fixed asset has an indefinite useful life and is not amortised.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.
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.
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.
Financial instruments measured at fair value, into a fair value hierarchy based on the valuation technique used to determine fair value.
Level I quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 inputs other than quoted prices included within Level I that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e.derived from prices)
Level 3 inputs for the asset or liability that are not based on observable market data (unobservable inputs)
Debt instruments are classified as financial assets measured at fair value through other comprehensive income where the financial assets are held within the company’s business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A debt instrument measured at fair value through other comprehensive income is recognised initially at fair value plus transaction costs directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognised through other comprehensive income are directly transferred to profit or loss when the debt instrument is derecognised.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.
The company recognises financial debt when the company becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.
it has been incurred principally for the purpose of repurchasing it in the near term, or on initial recognition it is part of a portfolio of identified financial instruments that the manages together and has a recent actual pattern of short-term profit taking, or it is a derivative that is not designated and effective hedging instrument.
Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.
Financial liabilities are derecognised when, and only when, the company’s obligations are discharged, cancelled, or they expire.
Equity instruments issued by the company 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 company.
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.
A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability. A derivative is presented as a non-current asset or liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are classified as current.
The tax expense represents the sum of the tax currently payable and deferred tax.
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
The charge for the year can be reconciled to the (loss)/profit per the income statement as follows:
Other receivables disclosed above are classified as loans and receivables and are therefore measured at amortised cost.
The directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value. No significant receivable balances are impaired at the reporting end date.
SCMI Limited has a fixed and floating charge over the assets of the company.
The Company is a party to a gas and electricity contracts and derivatives entered into for market trading purposes. These contracts are held at fair value,being the difference between the contract value and the notional index for the commodity.
At the balance sheet date, total fair value amount of outstanding forward and derivative contracts that the Company has committed are as below. All fair value is classified as level 2.
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon during the current and prior reporting period.
There was no remuneration of key management personnel in the year, including directors.
At the year end the company owed CFP Trading Limited, a fellow group company registered in Malta, £618,965 (2020: £203,334). This amount is unsecured and interest free.
At the year end the parent entity, Brook Green Supply Limited, owed the company £21,802,236 (2020: £20,377,043). Of this amount, £12,984,896 relates to payables for gas and power delivered in March 2021.