Company registration number 08441850 (England and Wales)
MARGAM GREEN ENERGY LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
MARGAM GREEN ENERGY LIMITED
COMPANY INFORMATION
Directors
H Unwin
(Appointed 27 April 2022)
M Patel
(Appointed 27 April 2022)
A Sarandidis
(Appointed 12 October 2023)
J Bergsma
(Resigned 27 April 2022)
P Dickson
(Resigned 27 April 2022)
Company number
08441850
Registered office
4th Floor The Peak
5 Wilton Road
London
United Kingdom
SW1V 1AN
Independent Auditor
Azets Audit Services
Ty Derw
Lime Tree Court
Cardiff Gate Business Park
United Kingdom
CF23 8AB
Solicitors
Orrick, Herrington & Sutcliffe (UK) LLP
107 Cheapside
London
United Kingdom
EC2V 6DN
MARGAM GREEN ENERGY LIMITED
CONTENTS
Page(s)
Strategic report
1 - 2
Directors' report
3 - 4
Directors' responsibilities statement
5
Independent auditor's report
6 - 8
Statement of comprehensive income
9
Statement of financial position
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 29
MARGAM GREEN ENERGY LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 1 -

The directors present the strategic report for the year ended 31 December 2022.

Fair review of the business

The principal activity of the Company continues to be the operation of a biomass energy plant for the generation of electricity.

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

 

2022

2021

 

£

£

Revenue

42,669,704

42,150,219

Operating profit/(loss)

12,702,604

12,811,829

Earnings before interest, tax, and depreciation

20.601,850

20,544,059

Electricity generated

242,035MWh

270,669MWh

Revenue increased in the year by £519,485 (1.2%). Revenue has increased on the prior year following high brown power prices.

 

Future 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.

 

The key value driver affecting operating UK renewable energy generators is the wholesale power price.

The directors do not expect any material change to its business as a result of the UK exiting the EU. A significant change in exchange rates could impact the power price. Further, the nature of the UK’s electricity market and relationship with that of the EU remains unclear.

 

The company intends to continue operation as a biomass energy plant, generating electricity from waste wood supply.

MARGAM GREEN ENERGY LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 2 -
Principal risks and uncertainties

In the ordinary course of business, the company is exposed to and manages a variety or risks in relation to its operating activities. The management of risk is fundamental to the company, with the board of directors having responsibility for the overall system of internal control and for reviewing its effectiveness.

The principal risks and uncertainties facing the company are broadly grouped as such as regulatory, fuel, technical and financial instrument risk.

 

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, publications and regular communication with industry experts and the regulator.

Fuel risk

The availability of woodchip in the market is subject to the ongoing operations of the UK construction industry and Household Waste Recycling Centres (HWRC). The company has mechanisms and processes in place that seek to mitigate the risk of insufficient volumes being available by ensuring buffer stocks are held by the fuel supplier and maintaining the ability to source fuel from European markets.

 

Technical risks

The company is exposed to technical risks with the operation of its biomass plant that could reduce availability for electricity generation, particularly with long lead times for certain components. To mitigate against this technical risk the company has contracted a team of experienced engineers who are responsible for monitoring and managing performance. Additionally, a store of key spare parts for the plant is maintained.

 

Macroeconomic

Russia's invasion of Ukraine during 2022 created geopolitical instability which impacted commodity prices, inflation rates and interest rates after the year end. At the time of signing these financial statements the macroeconomic environment has begun to stabilise, with inflation rates falling.

Financial instrument risks

Financial instrument risks are described in Notes 16 and 17.

Directors' Responsibilities Pursuant to Section 172 of the Companies Act 2006

In carrying out their roles, the directors have acted in a manner that promotes the success of the Company for the benefit of our stakeholders, following the principles set out in section 172(1)(a)-(f) of the Companies Act 2006.

 

On behalf of the board

H Unwin
Director
13 September 2024
MARGAM GREEN ENERGY LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 3 -
The directors present their annual report and the audited financial statements for the year ended 31 December 2022.
Principal activities

The principal activity of the company continued to be that of operation of a biomass energy plant for the generation of electricity.

Results and dividends

The results for the year are set out on page 9.

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.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

J Bergsma
(Resigned 27 April 2022)
P Dickson
(Resigned 27 April 2022)
J Reid
(Appointed 27 April 2022 and resigned 12 October 2023)
H Unwin
(Appointed 27 April 2022)
M Patel
(Appointed 27 April 2022)
A Sarandidis
(Appointed 12 October 2023)
Going concern

The Directors have prepared cash flow forecasts for the period to 30 September 2024, including undertaking plausible sensitivity analysis to those forecasts considering both the risk of reductions in revenues due to reduced output from the plant and lower energy prices. These forecasts and sensitivities indicate that the Company will generate sufficient cash to meet its obligation.

The Directors have concluded that the Company will be able to continue in operational existence for the foreseeable future. Consequently, the Directors have concluded that it is appropriate to prepare these financial statements on a going concern basis. Accordingly, these financial statements do not include any adjustments to the carrying amount or classification of assets and liabilities that would result if the Company was unable to continue as a going concern.

 

Financial instruments

The company has chosen to present information on its financial risk management policies in the Strategic report in accordance with Section 414 C (11) of the Companies Act 2006.

Directors' Liabilities
The company maintains liability and indemnity insurance for its directors and officers. The provision has been in place throughout the year and remain in place as of the date of signing.
Independent auditors

Azets Audit Services were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.

Energy and carbon report

In accordance with the Streamlined Energy and Carbon Reporting (SECR) regulations, the directors present the Company’s energy usage, related emissions, and energy efficiency actions:

MARGAM GREEN ENERGY LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 4 -

Metrics

Renewable energy generators avoid CO2 emissions on a net basis at a rate of approximately 0.40 tonnes of CO2/MWh. This conversion factor may vary depending on geography. In 2022, the asset’s CO2 emission reductions are approximately 106,467 tonnes per annum. The asset is also generating sufficient electricity to power 91,782 homes, at 2.9MWh per annum per home in the UK.

 

The third-party operations and maintenance (“O&M”) service providers report to the board asset on a monthly basis on a standard set of KPIs and qualitative factors, such as health and safety compliance of O&M providers, compliance with relevant laws and regulations, local community engagement and habitat management, where relevant. Any material ESG incidents are communicated to the directors. 

 

KPI data is supplemented by specialist external advisers such as environmental consultants, as required.  

 

Emissions disclosures

 

 

Period ended

31 December 2022

Scope 1 – Direct emissions (tonnes CO2)

 

10,332

Scope 2 – Indirect emissions (tonnes CO2)*

 

-

Scope 3 – Indirect emissions (tonnes CO2)

 

13,158

Total Scope 1, 2 and 3 emissions (tonnes CO2)

 

23,490

*The underlying investment does not import any electricity, but uses energy produced on site. As this energy is classed as a renewable source, under the GHG Protocol, this is considered to have zero scope 2 emissions.

 

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 SPV’s ownership interest. Scope emissions calculations will be verified by third party consultants. The sustainability indicators are subject to an annual review to ensure continuous improvement and 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 period, including those emissions associated with the manufacturing and transport of all equipment and material, before the asset was commissioned.

Statement of disclosure to auditors

Each director in office at the date of approval of this annual report confirms that:

On behalf of the board
H Unwin
Director
13 September 2024
MARGAM GREEN ENERGY LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 5 -

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 International Financial Reporting Standards (IFRSs) as adopted by the United Kingdom. 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, International Accounting Standard 1 requires that directors:

 

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.

MARGAM GREEN ENERGY LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF MARGAM GREEN ENERGY LIMITED
- 6 -
Opinion

We have audited the financial statements of Margam Green Energy Limited (the 'company') for the year ended 31 December 2022 which comprise the statement of comprehensive income, the statement of financial position, 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 UK adopted international accounting standards.

In our opinion the financial statements:

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:

MARGAM GREEN ENERGY LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF MARGAM GREEN ENERGY LIMITED
- 7 -
Matters on which we are required to report by exception

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:

Responsibilities of directors

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.

Auditor's responsibilities for the audit of the financial statements

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.

MARGAM GREEN ENERGY LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF MARGAM GREEN ENERGY LIMITED
- 8 -

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:

 

 

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.

Andrew Howells (Senior Statutory Auditor)
For and on behalf of Azets Audit Services
13 September 2024
Chartered Accountants
Statutory Auditor
Ty Derw, Lime Tree Court
Cardiff Gate Business Park
Cardiff
United Kingdom
CF23 8AB
MARGAM GREEN ENERGY LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
- 9 -
2022
2021
Notes
£
£
Revenue
4
42,669,704
42,150,219
Cost of sales
(25,188,167)
(25,067,599)
Gross profit
17,481,537
17,082,620
Administrative expenses
(4,778,933)
(4,270,791)
Operating profit
5
12,702,604
12,811,829
Finance costs
7
(9,522,719)
(9,145,910)
Other gains and losses
8
1,969,381
3,981,016
Profit before taxation
5,149,266
7,646,935
Income tax expense
9
(3,989,668)
(1,100,383)
Profit and total comprehensive income for the year
1,159,598
6,546,552

The Statement of comprehensive income has been prepared on the basis that all operations are continuing operations.

 

The notes on pages 13 to 29 are an integral part of these financial statements.

MARGAM GREEN ENERGY LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2022
31 December 2022
- 10 -
2022
2021
Notes
£
£
ASSETS
Non-current assets
Property, plant and equipment
10
107,128,602
113,326,069
Other receivables
11
1,878,000
1,759,221
109,006,602
115,085,290
Current assets
Trade and other receivables
11
11,004,849
13,926,845
Cash and cash equivalents
33,721,965
15,111,979
44,726,814
29,038,824
Total assets
153,733,416
144,124,114
EQUITY
Called up share capital
20
202
202
Share premium account
21
17,142,036
17,142,036
Retained earnings
(27,120,242)
(28,279,840)
Total equity
(9,978,004)
(11,137,602)
LIABILITIES
Non-current liabilities
Borrowings
14
144,862,058
57,447,585
Deferred tax liabilities
19
9,237,888
5,248,220
154,099,946
62,695,805
Current liabilities
Trade and other payables
18
3,213,730
12,118,047
Borrowings
14
6,397,744
78,478,483
Derivative financial instruments
-
0
1,969,381
9,611,474
92,565,911
Total liabilities
163,711,420
155,261,716
Total equity and liabilities
153,733,416
144,124,114
The financial statements were approved by the board of directors and authorised for issue on 13 September 2024 and are signed on its behalf by:
H Unwin
Director
Company registration number 08441850
MARGAM GREEN ENERGY LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
- 11 -
Share capital
Share premium account
Retained earnings
Total
Notes
£
£
£
£
Balance at 1 January 2021
201
14,142,037
(34,826,390)
(20,684,152)
Year ended 31 December 2021:
Profit and total comprehensive income for the year
-
-
6,546,550
6,546,550
Transactions with owners in their capacity as owners:
Issue of share capital
20
1
2,999,999
-
3,000,000
Balance at 31 December 2021
202
17,142,036
(28,279,840)
(11,137,602)
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
-
1,159,598
1,159,598
Balance at 31 December 2022
202
17,142,036
(27,120,242)
(9,978,004)
MARGAM GREEN ENERGY LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 12 -
2022
2021
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
26
14,500,750
20,977,596
Interest paid
(9,522,719)
(3,930,325)
Net cash inflow from operating activities
4,978,031
17,047,271
Investing activities
Purchase of property, plant and equipment
(1,701,779)
(1,196,313)
Net cash used in investing activities
(1,701,779)
(1,196,313)
Financing activities
Proceeds from borrowings
93,812,217
-
Repayment of bank loans
(78,478,483)
(9,166,591)
Net cash generated from/(used in) financing activities
15,333,734
(9,166,591)
Net increase in cash and cash equivalents
18,609,986
6,684,367
Cash and cash equivalents at beginning of year
15,111,979
8,427,612
Cash and cash equivalents at end of year
33,721,965
15,111,979
MARGAM GREEN ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 13 -
1
Accounting policies
Company information

Margam Green Energy Limited is a private company limited by shares incorporated in England and Wales. The company is domiciled in England having its registered address at 4th Floor The Peak, 5 Wilton Road, London, England, SW1V 1AN. The company's principal activities and nature of its operations are disclosed in the directors' report.

1.1
Accounting convention

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the United Kingdom and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, except as otherwise stated.

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, except for derivative financial instruments that have been measured at fair value. The principal accounting policies adopted are set out below. The accounting policies been applied consistently, other than where new policies have been adopted.

1.2
Going concern

The directors have at the time of approving the financial statements, a reasonable expectation that the truecompany has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

 

The Directors have concluded that the Company will be able to continue in operational existence for the foreseeable future. Consequently, the Directors have concluded that it is appropriate to prepare these financial statements on a going concern basis. Accordingly, these financial statements do not include any adjustments to the carrying amount or classification of assets and liabilities that would result if the Company was unable to continue as a going concern.

MARGAM GREEN ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 14 -
1.3
Revenue

Revenue comprises amounts received and receivable in respect of generated electricity and Renewable Obligation Certificates (ROCs). Revenue in respect of both energy generation and ROCs is recognised over time. Under the terms of its Power Purchase Agreements (PPA) with customers, ROCs are immediately transferable to the customer.

Revenue from PPAs with customers is recognised when control of the goods are transferred to the customer at an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods. Revenue on the generation of energy is recognised based upon the value of units supplied during the year at the price under the PPA, with the number of units determined by energy volumes recorded on the plant meters and market settlement systems. The company has concluded that it is the principle in its revenue arrangements because it typically controls the goods before they are transferred to the PPA counterparty.

All revenue recognised in the year relates to performance obligations satisfied in the year. There are no significant judgements taken in respect of the recognition of revenues.

While the performance obligation is satisfied as the electricity is generated, payment is generally invoiced within 30 days from supply of the energy or 90 days from transfer of the ROCs, with the related amount recognised as a trade receivable or accrued income until payment is received from the customer. Payment terms under the Power Purchase Agreement are 10 business days from invoice date.

The company has no material contract assets or liabilities other than trade debtors and accrued income as disclosed in note 11. There is only one operating activity and all revenue is generated within the United Kingdom.

 

1.4
Property, plant and equipment

Property, plant and equipment are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses. Such cost includes borrowing costs for long-term construction projects.

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:

Plant and equipment
6% per annum straight-line

Freehold land is not depreciated.

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.

1.5
Impairment of tangible and intangible assets

At each reporting 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.

MARGAM GREEN ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 15 -

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.

1.6
Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.7
Financial assets

Financial assets are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of the financial assets.

 

At initial recognition, financial assets classified as fair value through profit and loss are measured at fair value and any transaction costs are recognised in profit or loss. Financial assets not classified as fair value through profit and loss are initially measured at fair value plus transaction costs.

Financial assets at fair value through profit or loss

When any of the above-mentioned conditions for classification of financial assets is not met, a financial asset is classified as measured at fair value through profit or loss. Financial assets measured at fair value through profit or loss are recognized initially at fair value and any transaction costs are recognised in profit or loss when incurred. A gain or loss on a financial asset measured at fair value through profit or loss is recognised in profit or loss, and is included within finance income or finance costs in the statement of income for the reporting period in which it arises.

Financial assets held at amortised cost

Financial instruments are classified as financial assets measured at amortised cost where the objective is to hold these assets in order to collect contractual cash flows, and the contractual cash flows are solely payments of principal and interest. They arise principally from the provision of goods and services to customers (eg trade receivables). They are initially recognised at fair value plus transaction costs directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment where necessary.

MARGAM GREEN ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 16 -
Financial assets at fair value through other comprehensive income

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.

The company has made an irrevocable election to recognize changes in fair value of investments in equity instruments through other comprehensive income, not through profit or loss. A gain or loss from fair value changes will be shown in other comprehensive income and will not be reclassified subsequently to profit or loss. Equity instruments measured at fair value through other comprehensive income are recognized initially at fair value plus transaction cost 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 recognized through other comprehensive income are directly transferred to retained earnings when the equity instrument is derecognized or its fair value substantially decreased. Dividends are recognized as finance income in profit or loss.

Impairment of financial assets

Financial assets carried at amortised cost and FVOCI are assessed for indicators of impairment at each reporting end date.

 

The expected credit losses associated with these assets are estimated on a forward-looking basis. A broad range of information is considered when assessing credit risk and measuring expected credit losses, including past events, current conditions, and reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.

 

For trade receivables, the simplified approach permitted by IFRS 9 is applied, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

 

 

Derecognition of financial assets

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.

1.8
Financial liabilities

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'.

MARGAM GREEN ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 17 -
Financial liabilities at fair value through profit or loss

Financial liabilities are classified as measured at fair value through profit or loss when the financial liability is held for trading. A financial liability is classified as held for trading if:

 

 

Financial liabilities at fair value through profit or loss are stated at fair value with any gains or losses arising on remeasurement recognised in profit or loss.

Other financial liabilities

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.

Derecognition of financial liabilities

Financial liabilities are derecognised when, and only when, the company’s obligations are discharged, cancelled, or they expire.

1.9
Equity instruments

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.

1.10
Derivatives

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.

1.11
Taxation

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

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement 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.

MARGAM GREEN ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 18 -
Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary 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 income statement, 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.

1.12
Foreign exchange

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.

2
Adoption of new and revised standards and changes in accounting policies

In the current year, the following new and revised Standards and Interpretations have been adopted by the company and have an effect on the current period or a prior period or may have an effect on future periods:

 

Changes to other Standards or Interpretations issued by the IASB and effective for an annual period that begins on or after 1 January 2022 and omitted because they are not relevant to the company.

Standards which are in issue but not yet effective

At the date of authorisation of these financial statements, the following Standards and Interpretations, which have not yet been applied in these financial statements, were in issue but not yet effective (and in some cases had not yet been adopted by the EU):

Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting Policies
1 January 2023
Amendments to IAS 8: Definition of Accounting Estimates
1 January 2023
Amendments to IAS 12: Deferred Tax Related to Assets and Liabilities arising from a Single Transaction
1 January 2023
MARGAM GREEN ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 19 -
3
Critical accounting estimates and judgements

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, 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.

 

In the course of preparation of these financial statements, no judgements or estimates have been made in the application of accounting policies.

4
Revenue
2022
2021
£
£
Revenue analysed by class of business
Sale of electricity
21,091,314
20,325,499
ROCs and associated income
19,336,903
19,731,270
Other income
2,241,487
2,093,450
42,669,704
42,150,219
2022
2021
£
£
Revenue analysed by geographical market
UK
42,669,704
42,150,219
5
Operating profit
2022
2021
£
£
Operating profit for the year is stated after charging:
Fees payable to the company's auditors for the audit of the company's financial statements
28,500
76,688
Depreciation of property, plant and equipment
7,899,246
7,732,230
6
Employees

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

2022
2021
Number
Number
3
2

No remuneration was paid out to Directors of the company as they provided negligible qualifying services to the company (2021: £nil). The company has no employees other than the Directors (2021: none).

MARGAM GREEN ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 20 -
7
Finance costs
2022
2021
£
£
Interest on bank overdrafts and loans
1,651,989
2,526,266
Other interest payable
7,870,730
6,619,644
Total interest expense
9,522,719
9,145,910
8
Other gains and losses
2022
2021
£
£
Change in value of financial assets at fair value through profit or loss
1,969,381
3,981,016
9
Income tax charge/(credit)
2022
2021
£
£
Deferred tax
Origination and reversal of temporary differences
2,654,764
1,100,383
Changes in tax rates
838,347
-
0
Adjustment in respect of prior periods
496,557
-
0
3,989,668
1,100,383

The charge for the year can be reconciled to the profit/(loss)before taxation per the Statement of comprehensive income as follows:

2022
2021
£
£
Profit before taxation
5,149,266
7,646,935
Expected tax charge based on a corporation tax rate of 19.00% (2021: 19.00%)
978,361
1,452,918
Effect of expenses not deductible in determining taxable profit
1,435,213
913,463
Adjustment in respect of prior years
-
0
(3,323,119)
Group relief
(257,519)
-
0
Deferred tax adjustments in respect of prior years
496,557
747,278
Differences in tax rates
838,347
1,309,843
Deferred tax not provided
498,709
-
0
Taxation charge for the year
3,989,668
1,100,383
MARGAM GREEN ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 21 -
10
Property, plant and equipment
Freehold land
Plant and equipment
Total
£
£
£
Cost
At 1 January 2021
1,200,000
131,153,095
132,353,095
Additions
-
0
1,293,526
1,293,526
At 31 December 2021
1,200,000
132,446,621
133,646,621
Additions
-
0
1,701,779
1,701,779
At 31 December 2022
1,200,000
134,148,400
135,348,400
Accumulated depreciation and impairment
At 1 January 2021
-
0
12,588,322
12,588,322
Charge for the year
-
0
7,732,230
7,732,230
At 31 December 2021
-
0
20,320,552
20,320,552
Charge for the year
-
0
7,899,246
7,899,246
At 31 December 2022
-
0
28,219,798
28,219,798
Carrying amount
At 31 December 2022
1,200,000
105,928,602
107,128,602
At 31 December 2021
1,200,000
112,126,069
113,326,069

Included within Property, Plant and Equipment is a total of £33,805,480 (2021: £33,805,480) of interest capitalised, of which £17,760,330 (2021: £17,760,330) relates to the bank loan and facility charges and £16,045,150 (2021: £16,045,150) relates to intercompany loan interest.

11
Trade and other receivables
Current
Non-current
2022
2021
2022
2021
£
£
£
£
Trade receivables
749,755
2,974,226
-
-
Amounts owed by fellow group undertakings
43,241
-
0
-
0
-
0
Other receivables
100
100
1,878,000
1,759,221
Prepayments
10,211,753
10,952,519
-
-
11,004,849
13,926,845
1,878,000
1,759,221

Trade receivables disclosed above are classified as loans and receivables and are therefore measured at amortised cost.

Included in other debtors due after more than one year is the sum of £1,750,000. This reflects a requirement in the purchase power agreement between Margam Green Energy and its priciple customer that this level of credit support is maintained to the end of the contract period.

MARGAM GREEN ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 22 -
12
Trade receivables - credit risk
Fair value of trade receivables

The directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value.

Expected credit loss assessment
2022
2021
Balance
Rate
Loss allowance
Balance
Rate
Loss allowance
Trade receivables
£
%
£
£
%
£
Under 90 days
126,298
-
-
646,861
-
-
90-180 days
263,807
-
-
-
-
-
270-360 days
359,650
-
-
-
-
-
Older than 360 days
-
-
-
4,088,047
-
1,760,682
749,755
-
4,734,908
1,760,682

A provision for doubtful debts of £0 (2021: £1,760,682 ) is included in the above.

No significant receivable balances are impaired at the reporting end date.

13
Cash and cash equivalents

Restricted cash of £Nil (2021: £3,434,265 ) and cash equivalents £33,721,965 (2021: £13,436,935 ) relate to project bank accounts that have restrictions put in place by the company’s lender with regard to the nature of proceeds and payments that can be lodged or withdrawn.

14
Borrowings
Current
Non-current
2022
2021
2022
2021
£
£
£
£
Borrowings held at amortised cost:
Bank loans
-
78,478,483
-
-
Loans from parent undertaking
6,397,744
-
144,862,058
57,447,585
2022
2021
£
£
Secured borrowings included above:
Bank loans
-
78,478,483
Loans from fellow group undertakings, including accrued interest
151,259,803
57,447,585
151,259,803
135,926,068

Borrowings at 31 December 2022 consists of a loan due from the company's immediate parent, it is repayable on 31 March 2042 and bears interest at 6.5%.

MARGAM GREEN ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 23 -
15
Financial instruments

Fair value

The company uses the hierarchy as set out in IFRS 7 Financial Instruments: Disclosure for determining the fair value of derivatives by valuation technique. Assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

 

Level 1: quoted (unadjusted) market prices in active markets for identical assets or liabilities;

Level 2: valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and

Level 3: valuation techniques for which the lowest level input that is significant to the fair value measurement is not observable.

The fair value of all financial assets and liabilities is based on the present value of the cash flows discounted at prevailing market rates at each balance sheet date and are considered to fall within the level 2 techniques of IFRS 13 “Fair Value Measurement”.

 

Financial assets

Financial assets that are debt instruments measured at amortised cost

 

 

Carrying value

 

Fair value

 

2022

 

2021

 

2022

 

2021

 

£

 

£

 

£

 

£

Cash and cash equivalents

33,721,965

 

13,436,935

 

33,721,965

 

13,436,935

Restricted cash and cash equivalents

-

 

3,434,265

 

-

 

3,434,265

Trade and other receivables

12,461,114

 

12,866,901

 

12,461,114

 

12,866,901

Total

46,183,079

 

29,738,101

 

46,183,079

 

29,738,101

 

Current receivables which are level 2 assets, all due within one year, and have been provided for where impaired, have a carrying value that is considered to be materiality in line with their fair value due to the short-term maturity of these items.

 

Financial liabilities

Derivative financial liabilities

 

Carrying value

 

Fair value

 

2022

 

2021

 

2022

 

2021

 

£

 

£

 

£

 

£

Interest rate swap

-

 

1,969,381

 

-

 

1,969,381

Total

-

 

1,969,381

 

-

 

1,969,381

 

The fair value of interest rate swaps has been valued calculating the present value of future cash flows estimated using forward rates from third part market price quotations. The models incorporate various inputs including the credit quality of counterparties and interest rate curves. At 31 December 2021, the marked-to-market value of the derivatives was calculated, using significant variable inputs.

MARGAM GREEN ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
15
Financial instruments
(Continued)
- 24 -
Financial liabilities at amortised cost
The carrying value of trade and other payables which are level 2 liabilities, all due within one year, is considered to equate to fair value due to the short-term nature of these borrowings.
The primary valuation technique used for borrowings and other debt classified as level 2 is discounting of the future associated cash flows using the market rate at each balance sheet date.  The Directors have assessed this as equal to the current market rate for equivalent borrowing
16
Liquidity risk

The following table details the remaining contractual maturity for the company's financial liabilities with agreed repayment periods. The contractual maturity is based on the earliest date on which the company may be required to pay.

On demand
1 – 3 months
3 months to 1 year
5+ years
Total
£
£
£
£
£
At 31 December 2021
Loans and debtors due to related parties
5,508,620
-
57,442,837
-
62,951,457
Bank borrowings
-
-
78,478,483
-
78,478,483
Interest rate swap
-
-
1,969,381
-
1,969,381
Trade payables
-
986,517
-
-
986,517
Other payables
-
4,422,669
-
-
4,422,669
5,508,620
5,409,186
137,890,701
-
148,808,507
At 31 December 2022
Loans and debtors due to related parties
6,397,744
-
-
144,862,059
151,259,803
Trade payables
-
157,745
-
-
157,745
Other payables
-
3,055,985
-
-
3,055,985
6,397,744
3,213,730
-
144,862,059
154,473,533
MARGAM GREEN ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 25 -
17
Market risk
Market risk management

The company is exposed to market risk, credit risk and liquidity risk. The company’s senior management oversees the management of these risks, and the Directors review and agree policies for managing each of these risks, which are summarised below.

 

Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise a number of types of risk, the following are discussed below: interest rate risk and currency risk. Financial instruments affected by market risk include: loans and borrowings, deposits and derivative financial instruments.

 

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. At 31 December 2022 the company's borrowings were at a fixed rate of interest.

 

Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The company manage this exposure through active monitoring of exchange rate movements.

 

Credit risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The company is exposed to credit risk from its operating activities (primarily for other receivables) and from its financing activities, including deposits with banks and financial institutions, and other financial instruments. The maximum exposure to credit risk, in the event that counterparties’ fail to perform their obligations as at period end (in relation to each class of recognised financial assets), is the carrying amount of those assets as indicated in the Statement of Financial Position.

 

Liquidity risk

Liquidity risk is the risk that the company may not be able to generate sufficient cash resources to settle its obligations in full as they fall due. The Board holds regular meetings with management to ensure sufficient cash is available for operations.

 

Management of capital

The primary objective of the company’s management of capital is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value. The company manages its capital structure and makes adjustments to it, in light of changes in economic conditions. No changes were made in the objectives, policies or processes during the year ended 31 December 2022.

18
Trade and other payables
2022
2021
£
£
Trade payables
157,745
6,495,137
Accruals
2,415,614
4,422,669
Social security and other taxation
640,371
1,200,241
3,213,730
12,118,047
MARGAM GREEN ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 26 -
19
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon during the current and prior reporting period.

ACAs
Tax losses
Interest rate swaps
Loan relationship deficit
Total
£
£
£
£
£
Liability at 1 January 2021
8,528,374
(3,249,962)
(1,130,575)
-
4,147,837
Deferred tax movements in prior year
Charge/(credit) to profit or loss
2,184,580
(1,722,427)
638,230
-
1,100,383
Liability at 1 January 2022
10,712,954
(4,972,389)
(492,345)
-
5,248,220
Deferred tax movements in current year
Charge/(credit) to profit or loss
1,713,017
770,043
-
171,704
2,654,764
Effect of change in tax rate - profit or loss
540,953
243,172
-
54,222
838,347
Other
3,454
226,684
492,345
(225,926)
496,557
Liability at 31 December 2022
12,970,378
(3,732,490)
-
0
-
9,237,888

Deferred tax provision

 

Deferred tax has not been recognised on restricted interest of £24,364,863 (2021: £32,279,797) under Corporate Interest Restriction rules. This has not been recognised as the current criteria have not been met but may be in the future.

 

Factors that may affect future tax charges

 

Increase in the UK corporation tax rate from 19% to 25% was substantively enacted on 1 April 2023. Any deferred tax balance at 31 December 2022 has been calcuated using 25%.

20
Called up share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Authorised
Ordinary shares of 1p each
20,200
20,200
202
202
Issued and fully paid
Ordinary shares of 1p each
20,200
20,200
202
202

The balances classified as share capital and share premium represents the proceeds (both nominal value and share premium) on issue of the company’s equity share capital comprising £0.01 ordinary shares.

MARGAM GREEN ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 27 -
21
Share premium account
2022
2021
£
£
At the beginning of the year
17,142,036
14,142,037
Issue of new shares
-
2,999,999
At the end of the year
17,142,036
17,142,036
22
Capital commitments

The company has entered into contracts of which there are outstanding contractual commitments of £nil as at 31 December 2022 (2021: £97,213) for the replacement of fuel conveyors.

23
Capital risk management

The company is not subject to any externally imposed capital requirements.

MARGAM GREEN ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 28 -
24
Related party transactions

As at 31 December 2022, the company had a loan payable of £151,259,803 to the new Parent company, Greencoat Brecon Limited. During the period, the company accrued total interest payable on the loan of £6,397,744. The accrued interest remained payable at the end of the period and has been added to the loan principal balance.

 

The company had a change of ownership on 27 April 2022, the company settled the loan and accrued interest payable to the previous owners CEP Biomass Energy Limited. At 31 December 2021 company had a loan payable to CEP Biomass Energy Limited of £57,447,585 and accrued interest of £5,197,800. CEP Biomass Energy Limited owed the Company unpaid share capital totalling £100

 

During the year there was a receivable of expenses paid on behalf of Greencoat Breacon Limited totalling £43,241.

 

MARGAM GREEN ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 29 -
25
Controlling party

The company’s immediate parent undertaking is Greencoat Brecon Limited, a company incorporated in the United Kingdom.

Greencoat Brecon Limited is owned by Greancoat Wilton LP, Greeancoat Tachbrook LP, Greencoat Renewable Income LP and Greencoat Solar LP. Greencoat Tachbrook LP and Greencoat Renewable Income LP owns 42.85% and 34.72% shareholding respectively. No other individual company owns more than 25% of the shareholding.

 

26
Cash generated from operations
2022
2021
£
£
Profit for the year before income tax
5,149,266
7,646,935
Adjustments for:
Finance costs
9,522,719
9,132,871
Depreciation and impairment of property, plant and equipment
7,899,246
7,732,230
Fair value movement on interest rate swap
(1,969,381)
(3,981,016)
Movements in working capital:
Decrease/(increase) in trade and other receivables
2,803,217
(3,525,134)
(Decrease)/increase in trade and other payables
(8,904,317)
3,971,709
Cash generated from operations
14,500,750
20,977,595
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