TEMPLEBOROUGH_BIOMASS_POW - Accounts

The Directors present the Strategic Report of Templeborough Biomass Power Plant Limited (the “Company”) for the period ended 31 December 2022. Details of the Directors who held office during the period and as at the date of this report are given on page 4.

The Company is a private company, limited by shares, and was incorporated under the laws of England and Wales on 29 April 2010.

The principal activity of the company is the generation of electricity from renewable biomass fuels, primarily waste wood, at Templeborough Biomass Power Plant, in Rotherham, South Yorkshire

The principal risks and uncertainties facing the Company, and an explanation of how they are managed, are set out below.

Competitive Risk

The company is reliant on certain key suppliers for contracts which are subject to periodic competitive tender. Renewal of these contracts is uncertain and based on financial and performance criteria. The board continually monitors these arrangements as part of the routine operation of the business.

Legislative risk

The company operates under two primary legislative frameworks. The electricity generation asset operates under a Licence granted from the Environment Agency [Permit number EPR/ GP3433WS] and UK Health and Safety Legislation and Guidance. These frameworks are subject to continuous revision and any new directive may have a material impact on the ability of the company to operate successfully.

A breach of these regulations or an accident could lead to damages or compensation to the extent such loss is not covered by insurance policies, adverse publicity or reputational damage.

The Company engages an independent health and safety consultant to ensure the ongoing appropriateness of its health and safety policies and procedures.

Regulatory risk

Regulatory risk may arise from a change in regulations and law that might affect industry or business. Renewable energy projects are dependent for their commercial viability on a suitable regulatory regime. There is a risk that the government may introduce retrospective changes to the regime that was agreed at the time the project commenced. This is unusual in the market and changes to the regulatory regime are more typically for future projects.

Both legislative and regulatory risk are managed by awareness of industry news and publications.

Fuel Availability and Prices

100 % of the fuel required for the plant is secured under a long-term contract with Esken Renewables, the leading waste wood biomass supplier in the UK, with a fixed price escalated in accordance with published inflation indices. This contract is underwritten by suitable guarantees and securities from Esken Renewables' parent company. A fall in the creditworthiness of Esken Renewables or its parent could have a negative impact on the Company.

Availability and Operating Performance

The availability and operating performance of the equipment used on biomass power plants may be impacted by accidents, mechanical failure, grid availability or damage which will directly impact on the revenues and profitability of that plant. Failures may be the result of a short-term issue or a long-term fundamental failure of one piece of equipment, for example, which could impact returns, if there is exposure to one manufacturer.

Operating and maintenance agreements and asset management agreements are put in place to monitor the investment on a daily basis. Insurance coverage is put in place for material damage and business interruption.

Asset Life

In the event that the asset does not operate for the period of time assumed or requires higher than expected maintenance expenditure to do so, it could have a material adverse effect on the financial performance and position of the Company.

The Board performs regular reviews and ensures that appropriate maintenance is performed. Regular maintenance ensures that equipment is in good working order to meet its expected life span.

Electricity Prices

The wholesale power price received for electricity generated is an important revenue stream. Future cashflows have been modelled using a forecast of power prices published by independent market experts. A fall in the achieved price below these forecasts would have a negative impact on the Company.

Financing Risk

The Company is financed by a loan provided by the parent company. The Company has received confirmation from Greencoat Mermaid Ltd that it will not demand repayment of this loan for at least 12 months from the date of approval of these financial statements unless the Company has sufficient cash to finance its ongoing obligations. Further details of the basis on which the financial statements are prepared on the going concern basis are set out in note 1.2.

The key financial and other performance indicators during the year were as follows:

Turnover has increased in the year by 15,132,867 (28.84%) from 2021. This increase has been primarily due to high brown power prices across the market following the rise in global gas prices.

Outlook

Waste wood arisings have continued at pre-pandemic levels throughout 2022. Arisings tend to follow GDP, so a recession in 2023 might impact waste wood availability, albeit that the supplier maintains strategic stocks across the country.

Power prices during the year were well above budget, primarily reflecting high gas prices. The average N2EX Day Ahead auction price was £203.79/MWh (2021: £117.43/MWh). Forward power prices over the period 2023-2026 remain high. High power prices again drove strong cash generation in 2022 and the Company should continue to benefit from strong cash generation over the next few years through its balanced exposure to power prices.

High power prices have inevitably been considered by the Government in the context of balancing the country’s fiscal position. The Manager has clarity in relation to the Electricity Generator Levy at a rate of 45 per cent of annual average power revenue above an index linked £75/MWh. FITs are excluded from the levy and the Company also benefits from a £10 million annual allowance. The levy applies from 1 January 2023 until 31 March 2028.

The Government’s Review of Electricity Market Arrangements (“REMA”) continues, with a second round of consultation expected shortly. The aim of REMA is to accommodate a higher proportion of renewable generation and storage on the electricity network in line with the UK’s target to decarbonise the electricity sector by 2035.

In general, the outlook for the Company is very encouraging, with proven operational and financial performance.

On behalf of the board

The directors present their annual report and financial statements for the year ended 31 December 2022.

The principal activity of the company continued to be that of the ownership and operations of a biomass power plant in Rotherham, South Yorkshire.

The results for the year are set out on page 15.

No ordinary 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 auditor, Azets Audit Services, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

Corporate and Social Responsibility

Environmental, Social and Governance Matters

The directors and Manager strive to maintain the highest standards of corporate governance and effective risk identification and management. The directors and Manager support the recommendations of the Task Force on Climate-Related Financial Disclosures (‘TCFD’) and refer to them for guidance on addressing climate related risks and opportunities in order to enhance disclosures. These disclosures are categorised between the four thematic areas, as recommended by the TCFD.

Carbon footprint indicators are measured in line with the industry standard GHG Protocol based on an equity control approach, meaning emissions from the Company’s operations are weighted according to the SPVs’ ownership interest. Scope emissions calculations will be verified by third party consultants. The sustainability indicators are subject to an annual review to ensure that the Manager continues to improve transparency on ESG matters.   

Scope 3 emissions are the result of activities from assets not owned or controlled by the Company, but that the Company indirectly impacts in its value chain. Scope 3 emissions include all sources not within the Company’s Scope 1 and 2 boundary and include, inter alia, emissions arising from the construction of assets acquired in the year, including those emissions associated with the manufacturing and transport of all equipment and material, before the asset was commissioned.

Targets

The Manager has set a commitment to cut scope 1 and 2 emissions intensity by 50% by 2030, using 2022 as a baseline. In 2022, the Manager standardised the carbon footprints of the funds it manages by following a consistent methodology across all our companies, to ensure that figures are consistent going forward in net zero trajectories.

Climate Related Risks

Transition risks

Short term (1-3 years)

Policy and legal - Increased carbon and climate-related regulations and associated compliance costs

Reputation - We only expect renewable energy to become more important along road to a net-zero economy. Thus, we do not believe there are reputational risks which would impact the Company through the investment strategy. Failing to disclose against regulatory ESG standards, such as the TCFD, could carry reputational risk. We mitigate this through ensuring our ESG Committee is monitoring compliance with Manager’s ESG policy and horizon scanning for ESG regulatory developments.

Physical risks

Acute

Short term - Flood risk may disrupt supply chains. To mitigate this risk, flood and weather patterns are assessed on a site-specific basis through competent consultants and equipment providers at the development stage.

Medium term - Flood risk may disrupt supply chains. To mitigate this risk, flood and weather patterns are assessed on a site-specific basis through competent consultants and equipment providers at the development stage.

Long term - Extreme weather events such as storms, flooding, and heatwaves may disrupt supply chains and hinder maintenance or construction work on projects in the portfolio. Failure to carry out maintenance work can reduce or even stop electrical output, impacting company revenue. We mitigate this risk through keeping supply chains as short as possible and disruption risk managed through strategic spares to improve resilience.

Chronic

Sea level rise increases flood risk. We mitigate this through our investment processes. Prior to an investment, we will review environmental factors such as flood risk. These are long term obligations which not only have to be complied with in construction, but through the life of the asset. For certain assets, we will also look at the plant to ensure the design complies with specifics of the geotechnical reports for a site i.e., depth of piles or if the site is in a higher risk flood area appropriate installation of drainage mitigation solutions such as swales and drainage channels.

Risks linked to water scarcity (expected to increase in some areas as the biomass energy production process is water-intensive).

As at 31 December 2022, the Company had current assets of £23 million (2021: £24 million), net liabilities of £24 million (2021: net liabilities of £38 million) and had cash balances of £5.2 million (2021:£5.3 million). The Company continues to meet its day-to-day liquidity requirements though its cash resources. As at 31 December 2022, the Company owed parent company Greencoat Mermaid Ltd £169.2 million (2021: £198.2 million) as disclosed in note 16. The Company has received confirmation from Greencoat Mermaid Ltd that it will not demand repayment of the loan or seek repayment of interest on this loan for at least 12 months from the date of approval of this report unless the Company has sufficient cash to finance its ongoing obligations.

The Company will continue making repayments in the coming year.

The Manager has considered the impact of the Government’s windfall tax on UK electricity generators, including renewables. The tax applies to revenue earned on power prices in excess of £75 per MWh, which is higher than the prices that underlying investments require to generate cash surpluses. As a result of this, the Manager does not consider the windfall tax has created any material uncertainty over the assessment of the Company as a going concern.

The Directors and Manager have reviewed the Company’s forecasts and projections taking into account foreseeable changes in investment and trading performance, as well as consideration to worse case outcomes, which show that the Company has sufficient financial resources to meet its current obligations as they fall due for a period of at least 12 months from the date of approval of this report.

On the basis of this review, and after making due enquiries, the directors and the Manager have a reasonable expectation that the Company has adequate resources to continue in operational existence for at least 12 months from the date of approval of this report. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

The directors are responsible for preparing the annual report and the 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 United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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 of the profit or loss of the company 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;

•     prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

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 enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

We have audited the financial statements of Templeborough Biomass Power Plant Limited (the 'company') for the year ended 31 December 2022 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows 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 Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

•     give a true and fair view of the state of the company's affairs as at 31 December 2022 and of its profit 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

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our 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.

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us 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

•     certain disclosures of remuneration specified by law are not made; or

•     we have not received all the information and explanations we require for our audit.

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the 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 the directors either intend to liquidate the company 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 an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a 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 the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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.

Extent to which the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.

We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework.  Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.  This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.

In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:

• Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud; 

• Reviewing minutes of meetings of those charged with governance;

• Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection; 

• Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;

• Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias. 

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation.  This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance.  The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Use of our report

This report is made solely to the company's members, as a body, 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 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 company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

The profit and loss account has been prepared on the basis that all operations are continuing operations.

Templeborough Biomass Power Plant Limited is a private company limited by shares incorporated in England and Wales. The registered office is 4th Floor, The Peak, 5 Wilton Road, London, United Kingdom, SW14 1AN.

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

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 financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

As at 31 December 2022, the Company had current assets of £2true3 million (2021: £24 million), net liabilities of £24 million (2021: net liabilities of £38 million) and had cash balances of £5.2 million (2021:£5.3 million). The Company continues to meet its day-to-day liquidity requirements though its cash resources. As at 31 December 2022, the Company owed parent company Greencoat Mermaid Ltd £169.2 million (2021: £198.2 million) as disclosed in note 16. The Company has received confirmation from Greencoat Mermaid Ltd that it will not demand repayment of the loan or seek repayment of interest on this loan for at least 12 months from the date of approval of this report unless the Company has sufficient cash to finance its ongoing obligations.

The Company will continue making repayments in the coming year.

The Manager has considered the impact of the Government’s windfall tax on UK electricity generators, including renewables. The tax applies to revenue earned on power prices in excess of £75 per MWh, which is higher than the prices that underlying investments require to generate cash surpluses. As a result of this, the Manager does not consider the windfall tax has created any material uncertainty over the assessment of the Company as a going concern.

The Directors and Manager have reviewed the Company’s forecasts and projections taking into account foreseeable changes in investment and trading performance, as well as consideration to worse case outcomes, which show that the Company has sufficient financial resources to meet its current obligations as they fall due for a period of at least 12 months from the date of approval of this report.

On the basis of this review, and after making due enquiries, the directors and the Manager have a reasonable expectation that the Company has adequate resources to continue in operational existence for at least 12 months from the date of approval of this report. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

The directors have considered the adoption of the going concern basis in preparing the financial statements given the continued uncertainty in the economic climate and have formed the opinion there are no material uncertainties with respect to the company's ability to continue as a going concern for the foreseeable future. In forming this view, the directors have considered the company's current and forecasted performance, including the impact of reasonable downside sensitivities and all foreseeable uncertainties. The directors have also received a letter of support from parent company Greencoat Mermaid Limited as the principal support for the going concern assumption, giving confirmation that the parent will support ongoing operations from at least 12 months of the date of the signing of the financial statements. Accordingly they continue to adopt the going concern basis of accounting in preparing the financial statements.

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

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 credited or charged to profit or loss.

Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The company considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.

Entities in which the company has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

The interest rate applied has been 10.8%

At each reporting period end date, the company 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 company 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.

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

Cash and cash equivalents are basic financial assets and 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 company 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 company's balance sheet when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with 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.

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

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 assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

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 company 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.

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Provision for the future cost of decommissioning and demobilization of plant and is recognised in full in the year in which the legal obligation is incurred. When the liability is initially recorded, this cost is capitalised by increasing the carrying value of the related assets.

The amount recognised is the present value of the estimated future expenditure determined in accordance with statutory conditions and requirements. The provision increases as the discount factors applied in calculating the present value of estimated future expenditure unwind. The unwinding of the discount is included within interest payable in the profit and loss account. The capitalised cost is depreciated as part of the overall capital costs of related assets.

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

In the application of the company’s accounting policies, the directors 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 (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Property, plant and equipment are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and the residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessment considers issues such as future market conditions, remaining life of the asset and project disposal values.

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

The present value of the future costs associated with the closure and restoration of sites is estimated by management through consideration of the known costs of comparable processes. Management have estimated the cost of decommissioning and restoration activities in future periods and discounted the estimate cost to present value using an appropriate discount rate.

The valuation of renewables obligations certificates is a combination of a determined quantity and an expected recycle value. The actual recycle value is not published by Ofgem until October each year. As such, management have used judgement based on their knowledge and experience of the business to determine the expected recycle value at the year end.

All revenue arose within the United Kingdom. All revenue arises from continuing activities and is attributable to the Company's principal activity and single class of business being the generation and sale of electricity and related services.

The average monthly number of persons (including directors) employed by the company during the year was:

The company has no employees other than directors in current and prior years.

The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

Details of the company's subsidiaries at 31 December 2022 are as follows:

Amounts owed to group undertakings are unsecured, repayable in 2039 and interest is accrued at a rate of 10.83% in the year.

The long-term loans are unsecured.

The loan is repayable in 2039 and interest is accrued at a rate of 10.83%. Interest is payable on a quarterly basis and upon repayment of the loan. Accrued interest may be capitalised when agreed in writing between borrower and lender.

The provision recognised relates to decommissioning costs expected to be incurred in future periods in relation to the power plant. No decommissioning costs are currently expected to be incurred within the next year. The directors have formed an expectation of the future costs expected to be incurred in future periods based on the best available evidence.

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:

The deferred tax set out above is expected to reverse in a period greater than one year and relates to accelerated capital allowances and losses that are expected to mature within future periods.

During the year the Company entered into transactions in the ordinary course of business with other related parties. The Company has taken advantage of the exemption under FRS 102.33.1A which states "Disclosures need not be given of transactions entered into between two or more members of a group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member."

The immediate parent company is Greencoat Mermaid Limited.

The ultimate parent company and controlling party is Greencoat Mermaid Limited, a company incorporated in England and Wales. The registered address for the company and from which the financial statements can be obtained is 4th Floor, The Peak, 5 Wilton Road, London, SW1V 1AN. Greencoat Mermaid heads the largest and smallest group of which the company is a member.