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South West Investment Group (Capital) Limited

Annual Report and Financial Statements
Year Ended 31 March 2023

Registration number: 02360656

 

South West Investment Group (Capital) Limited

Contents

Company Information

1

Balance Sheet

2

Notes to the Financial Statements

3 to 12

 

South West Investment Group (Capital) Limited

Company Information

Registered office

Lowena House
Glenthorne Court
Truro Business Park
Truro
Cornwall
TR4 9NY

Auditors

PKF Francis Clark
Statutory Auditor
Lowin House
Tregolls Road
Truro
Cornwall
TR1 2NA

Directors

R G Coombs

N L Pooley

W R Baker

 

South West Investment Group (Capital) Limited

Balance Sheet

31 March 2023

Note

2023
£

2022
£

Fixed assets

 

Tangible assets

5

143

655

Current assets

 

Debtors

6

113,818

41,147

Investments

7

4,725,273

2,228,125

Cash at bank and in hand

 

2,094,844

7,571,582

 

6,933,935

9,840,854

Creditors: Amounts falling due within one year

8

(83,085)

(2,641,186)

Net current assets

 

6,850,850

7,199,668

Total assets less current liabilities

 

6,850,993

7,200,323

Creditors: Amounts falling due after more than one year

8

(2)

(101,500)

Net assets

 

6,850,991

7,098,823

Capital and reserves

 

Called up share capital

263,000

263,000

Other reserves

9

6,236,342

5,988,090

Profit and loss account

351,649

847,733

Shareholders' funds

 

6,850,991

7,098,823

These financial statements have been prepared and delivered in accordance with the special provisions relating to companies subject to the small companies regime within Part 15 of the Companies Act 2006.

Approved and authorised by the Board on 24 October 2023 and signed on its behalf by:
 

.........................................
N L Pooley
Director

Company Registration Number: 02360656

 

South West Investment Group (Capital) Limited

Notes to the Financial Statements

Year Ended 31 March 2023

1

General information

The company is a private company limited by share capital, incorporated in England and Wales.

The address of its registered office is:
Lowena House
Glenthorne Court
Truro Business Park
Truro
Cornwall
TR4 9NY

2

Accounting policies

Summary of significant accounting policies and key accounting estimates

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Statement of compliance

These financial statements have been prepared in accordance with Financial Reporting Standard 102 - 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' and the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of Section 1A of FRS102 have been applied other than where additional disclosure is required to show a true and fair view.

The financial statements are prepared in pounds sterling which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest pound.

Basis of preparation

These financial statements have been prepared using the historical cost convention.

The preparation of financial statements in conformity with FRS102 requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company's accounting policies. The areas involving a higher degree of judgement or complexity, or where assumptions and estimates are significant to the financial statements are outlined within this note.

Revenue recognition

Turnover comprises of fees and loan interest receivable on loans advanced by the company, and grants recognised in accordance with its policy as stated below.

Loan interest is recognised on an accruals basis, with monitoring fees in relation to loans advanced under certain funds being recognised on a receipts basis.

 

South West Investment Group (Capital) Limited

Notes to the Financial Statements

Year Ended 31 March 2023

Government grants

In relation to the South West Loan Fund, the Microcredit Loan Fund, the Cleantech Loan Fund and CDFA RGF Fund all capital grants received in advance of investment are carried forward on the balance sheet as deferred income.

Capital grants relating to loan investments in SMEs are recognised at the point at which loans are made and are released to the income and expenditure account. At the same time provisions for impairment are reflected as an expense.

For other older investments and the Seedbed fund, grants received (and then provided as loans) are accounted for on a 'net' basis whereby the profit and loss on grants received under lending arrangements made are only recognised when repayments are subsequently received from the loanee repaying the grant element of the loan. In the case of these funds, the directors believe this is to be the most appropriate accounting treatment to give a true and fair view given the nature of the investments.

Tax

Tax is recognised in profit or loss, except that a change attributable to an item of income or expense
recognised as other comprehensive income is also recognised directly in other comprehensive
income.

The current corporation tax charge is calculated on the basis of tax rates and laws that have been
enacted or substantively enacted by the reporting date in the countries where the company operates and generates taxable income.

In the current year the company's current tax charge is £Nil due to utilising brought forward losses. As at 31st March 2023 there is a deferred tax asset of £1,946k (2022: £2,039k), in relation to brought forward losses, which management have elected not to recognise in the financial statements.

Tangible assets

Tangible assets are stated in the balance sheet at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.

Depreciation

Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:

Asset class

Depreciation method and rate

Fixtures and fittings

15% straight line

Computer equipment

33% straight line

Intangible assets

Intangible fixed assets relate to software costs.

Software costs have a finite useful life, and are carried at cost less accumulated amortisation and impairment losses.

 

South West Investment Group (Capital) Limited

Notes to the Financial Statements

Year Ended 31 March 2023

Amortisation

Amortisation is provided on intangible assets so as to write off the cost, less any estimated residual value, over their useful life as follows:

Asset class

Amortisation method and rate

Software costs

Straight line over three years

Investments and loan provisioning

Loan balances are reviewed regularly and those that are no longer considered to be recoverable are written off.

Where there is any doubt about the recoverability of a loan, an assessment is made of the amount that is considered to be at risk, and of the probability that a default will occur in order to arrive at a provision for doubtful debts.

Loan receivable provisions are made in the profit and loss account where there is objective evidence of an event giving rise to impairment under an incurred loss model (rather than an expected loss model whereby the basis is that a loss may occur in future) in accordance with FRS 102 11.21 to 23.
 

Financial instruments

Classification
The company holds the following financial instruments:

• Short term trade and other debtors and creditors;
• Current asset investments arising on the issuing of funds to third parties;
• Bank loans; and
• Cash and bank balances.

All financial instruments are classified as basic.

 Recognition and measurement
The company has chosen to apply the recognition and measurement principles in FRS102.

Financial instruments are recognised when the company becomes party to the contractual provisions of the instrument and derecognised when in the case of assets, the contractual rights to cash flows from the assets expire or substantially all the risks and rewards of ownership are transferred to another party, or in the case of liabilities, when the company’s obligations are discharged, expire or are cancelled.

Except for bank loans, such instruments are initially measured at transaction price, including transaction costs, and are subsequently carried at the undiscounted amount of the cash or other consideration expected to be paid or received, after taking account of impairment adjustments.

Bank loans are initially measured at transaction price, including transaction costs, and are subsequently carried at amortised cost using the effective interest method.


 

 

South West Investment Group (Capital) Limited

Notes to the Financial Statements

Year Ended 31 March 2023

Accounting estimates and judgements

In applying the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amounts 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 if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The areas where management have made significant judgements are as follows:

Provisioning of loan book
Management incorporate specific provisions against certain loan balances, based on the advice provided to them by their fund managers.

Provisions against loan receivables are recognised when management judge there is sufficient objective evidence of an impairment event.

Provisions are reviewed on a regular meeting by management as part of their quarterly board meetings.

Given the economic uncertainty and downturn following the pandemic together with the current cost of living, inflation, supply chain and wage challenges, it is anticipated that this will impact on the recoverability of loans in the future. However, it is not possible to estimate the full impact at this point in time. This is partly due to the government support available to businesses. This has allowed businesses to minimise their losses whilst not defaulting on their loans. As a result there have been no significant changes at the time these accounts are approved that have been observed which would result in a significant loan impairment. However, as government support packages cease, businesses may face financial difficulties.
 

 

South West Investment Group (Capital) Limited

Notes to the Financial Statements

Year Ended 31 March 2023

Going concern

The company has performed well in 22/23 and the outlook for operations in 23/24 remains positive. There is strong demand across our sector for affordable loan facilities despite the macro-economic headwinds of inflation and interest rates being higher than we have experienced in recent years. In preparing and approving these financial statements the directors have given due consideration to all economic factors that can impact our business model.

The company has strong net assets, £6,851k (2022 - £7,099k), and trades profitably £374k (2022 - £35k).

The company utilises Government-backed loan guarantee schemes and will ensure a continued focus on our loan portfolios to ensure losses are minimised as far as possible. We recognise the present economic situation is challenging but we remain optimistic that loan-losses will be within anticipated and risk-mitigated criteria.

The Board considers it is appropriate for the accounts to be prepared on a going concern basis for the reasons set out above and especially given the Company’s strong balance sheet and cash reserves outlined which provides sufficient headroom to deal with any potential loan write offs that may occur in the next 12 months from the date of approval of the financial statements.

3

Staff numbers

The average number of persons employed by the company (including directors) during the year, was 1 (2022 - 2).

 

South West Investment Group (Capital) Limited

Notes to the Financial Statements

Year Ended 31 March 2023

4

Profit before tax

Arrived at after charging/(crediting)

2023
£

2022
£

Exceptional charge

(3,491)

20,040

In 2018, a full provision in respect of the EU Structural and Investment Funds (ESIF) funds - South West Loans Fund Convergence - was recognised on the understanding that these would be transferred to the Cornwall and Isles of Scilly Investment fund, being the new fund holding organisation for these funds. The provision provided in the accounts for the year ended 31 March 2022 was based on the valuation of the fund as at that date.

During the year the final payments were made to the original fund holders totalling £2.581m (previous years £0.125m).

The movement in the current year reflects the difference between the provisions, adhoc cash receipts received during the year and the final payments made to the various fund holders.
 

 

South West Investment Group (Capital) Limited

Notes to the Financial Statements

Year Ended 31 March 2023

5

Tangible assets

Furniture, fittings and equipment
 £

Total
£

Cost or valuation

At 1 April 2022

2,938

2,938

At 31 March 2023

2,938

2,938

Depreciation

At 1 April 2022

2,283

2,283

Charge for the year

512

512

At 31 March 2023

2,795

2,795

Carrying amount

At 31 March 2023

143

143

At 31 March 2022

655

655

6

Debtors

2023
£

2022
£

Amounts due from group undertakings

-

36,466

Other debtors

113,818

4,681

113,818

41,147

 

South West Investment Group (Capital) Limited

Notes to the Financial Statements

Year Ended 31 March 2023

7

Investments

Investments
£

Total
£

Cost or valuation

At 1 April 2022

2,395,399

2,395,399

Loan book advances

3,401,620

3,401,620

Repayments

(839,593)

(839,593)

Written off

(11)

(11)

At 31 March 2023

4,957,415

4,957,415

Provision

At 1 April 2022

167,274

167,274

Movement in provision

64,868

64,868

At 31 March 2023

232,142

232,142

Carrying amount

At 31 March 2023

4,725,273

4,725,273

At 31 March 2022

2,228,125

2,228,125

Of total investments above £3,605,124 (2022: £1,702,001) is recoverable in more than one year.

 

South West Investment Group (Capital) Limited

Notes to the Financial Statements

Year Ended 31 March 2023

8

Creditors

Creditors: amounts falling due within one year

2023
 £

2022
 £

Due within one year

Trade creditors

12,423

9,732

Amounts due to group undertakings

42,803

-

Social security and other taxes

943

2,366

Other creditors

26,916

42,170

Exceptional provision

-

2,586,918

83,085

2,641,186

Creditors: amounts falling due after more than one year

2023
£

2022
£

Due after one year

Deferred income

2

101,500

9

Other reserves

Other reserves are the Business Development Reserve which is a subdivision of the profit and loss reserve.

Whilst it remains a distributable reserve, it should be noted that all of the Business Development Fund is accrued from funds managed by the company where there are conditions established over the future use of the profits from those funds.

The Directors of South West Investment Group (Capital) Limited actively monitor changes in EU regulations, or other requirements, to assess any impact they may have on the amounts held in the Business Development Fund. In the event that there is a known change in the applicable terms and conditions relating to such funds, or if an obligation were to arise either legally or constructively to transfer such funds to another body, then an appropriate transaction in respect of the amount due would be recognised at that time.

A provision has been recognised in respect of certain elements of this reserve of £Nil (2022: £2.59m) for amounts that have or expect to be requested. During the current year, £2.59m (2022: £0.125m) was paid.

 

South West Investment Group (Capital) Limited

Notes to the Financial Statements

Year Ended 31 March 2023

10

Financial commitments, guarantees and contingencies

Amounts not provided for in the balance sheet

The total amount of financial commitments not included in the balance sheet is £78,948 (2022 - £Nil). This relates to loan agreements signed before the balance sheet date but were not subsequently drawndown until after.

11

Audit report

The Independent Auditors' Report was unqualified. The name of the Senior Statutory Auditor who signed the audit report was Duncan Leslie ACA, who signed for and on behalf of PKF Francis Clark on 24 November 2023.

12

Parent and ultimate parent undertaking

The company's immediate parent is South West Investment Group Limited, incorporated in England and Wales. The registered office of this company is Lowena House, Glenthorne Court, Truro Business
Park, Truro, Cornwall, TR4 9NY.

The most senior parent entity producing publicly available financial statements is South West Investment Group Limited. These financial statements are available upon request from Companies House, Crown Way, Cardiff, CF14 3UZ.