Company registration number 09272760 (England and Wales)
SUNGROW POWER UK LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
SUNGROW POWER UK LIMITED
COMPANY INFORMATION
Director
Mr J Li
Company number
09272760
Registered office
Suite 2
2nd Floor Moorgate House
201 Silbury Boulevard
Milton Keynes
Buckinghamshire
MK9 1LZ
Auditor
Alliotts LLP
Manfield House
1 Southampton Street
London
WC2R 0LR
SUNGROW POWER UK LIMITED
CONTENTS
Page
Strategic report
1 - 3
Director's report
4 - 5
Independent auditor's report
6 - 8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 26
SUNGROW POWER UK LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The director presents the strategic report for the year ended 31 December 2023.
Principal activities
The principal activity of the company continued to be that of selling power inverters and storage batteries.
Review of the business
The results for the year and the financial position of the Company are shown in the financial statements.
The company has seen strong sales growth during 2023 as market conditions continued to improve in the company's end markets and activity level increased.
Gross profit margin has steadily increased to 6.24% (2022 – 4.35%) during the year. Loss before tax £5,951,903 in 2023 (2022 profit of £161,654), was impacted due to provision for bad debts with one customer, the loss in foreign exchange variance, and legal provision for the liquidated damages during the year. As we have projected last year, our company had a substantial increase in gross profit in 2023.
The successful execution of new solar panel farm contracts has been instrumental in augmenting our turnover and gross profitability. These projects have provided invaluable experience and expertise, positioning us as a prominent player in the renewable energy sector.
As part of our growth strategy, we aim to present a balanced and comprehensive review of the development and performance of our business during the year and its position at the year-end. Our review is consistent with the size and non-complex nature of our business and is written in the context of the risks and uncertainties that we face.
Principal risks and uncertainties
The directors consider the principal risks and uncertainties for the Company as below:
Competitive risks
The Company operates in a competitive industry and a continually evolving environment. The Company place great emphasis on distributing new and innovative solution to meet ever-changing customer requirements.
Political risks
After years of negotiation, the UK and European Union reached agreement after Brexit that defined their future relationship. The Company has taken all reasonale steps to continues its operation with minimal impact to its business.
Credit risk
The Company’s credit risk primarily arises from its trade debtors. Credit risk is managed by assessing the creditworthiness of new customers and where necessary adjusting credit exposure to existing customers based on monitoring payments against contractual terms.
Liquidity risk
The company manages liquidity risk by regular reviews of the cash flow position of the business and ensuring facilities are readily available for future use.
Taking into account these risks and uncertainties, we realise that any plans for the future development of the business may be affected by unforeseen future events beyond our control.
SUNGROW POWER UK LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Key performance indicators
The director considers that the company’s key financial performance indicators are those that communicate its financial performance and strength as a whole and these are:
2023 2022
Turnover £69,322,595 £63,894,210
Gross Profit £4,328,365 £2,780,021
Gross Profit Margin 6.24% 4.35%
Profit/(loss) Before Taxation £(5,951,903) £161,654
(excluding exceptional costs)
Promoting the success of the company
Under s172 of the Companies Act 2006 directors of UK companies have a duty to promote the success of their company for the benefit of the members as a whole and, in doing so, have regard to:
The likely consequences of any decision in the long term;
The interests of the company’s employees:
The need to foster the company’s business relationships with suppliers, customers and others;
The impact of the company’s operations on the community and the environment;
The desirability of the company maintaining a reputation for high standards of business conduct; and
The need to act fairly as between members of the company.
The Director consider the following areas to be of key importance in his fulfilment of this duty:
Key Decisions
Decisions are taken by directors either in directors' meetings or by written resolution. In making those decisions, each director acts in a way they consider would be most likely to promote the success of the Company for the benefit of its members, and in doing so have regard to the likely consequences of any decision in the long term and the interests of various stakeholders.
Employees
The directors maintain oversight of employee welfare using formal business management data and by direct engagement with employees. The directors have access to data on compensation and benefits, industry benchmarking,employee satisfaction surveys,employee retention data and Environment, Health and Safety reports.
Suppliers, customers and others
Details of how the directors have regard to the Company's relationship with suppliers and customers is set out in the Director's report.
Community and the environment
The directors paid particular attention to ensuring the positive impact of its business operations on a wide range of communities in the UK.
The directors promoted the engagement of the Company in key industry bodies and partnerships to strengthen our relationships with suppliers, customers and stakeholders.
The products sold by the company aim to remain at the cutting edge of sustainable energy production for years to come.
SUNGROW POWER UK LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
Mr J Li
Director
24 September 2024
SUNGROW POWER UK LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
The director presents his annual report and financial statements for the year ended 31 December 2023.
Results and dividends
The results for the year are set out on page 9.
No ordinary dividends were paid. The director does not recommend payment of a final dividend.
Director
The director who held office during the year and up to the date of signature of the financial statements was as follows:
Mr J Li
Business relationships
The directors have regard to the need to foster the Company's business relationships with suppliers, customers and others and the effect of that regard as set out below.
Relationships with suppliers
The directors have considered the need to foster long-term and sustainable relationships with suppliers to support its business growth.
In doing so the directors obtain regular reports from the Company's procurement team, which is tasked with managing and maintaining relationships with the Company's suppliers. The procurement team's responsibilities include establishing long-term and cooperative relationships with suppliers, to establish an open, sound, and collaborative value chain that targets shared success, and treating suppliers with kindness and respect.
The directors require the procurement team to maintain close oversight of the Company's contractual obligations to suppliers and ensure compliance. Among other measures, the directors have implemented Key Performance Indicators in respect of on-time-payment.
Relationships with customers
The directors have also considered the need to build and maintain positive and strong relationships with its customers in order to promote positive brand awareness and drive future sales growth.
Customer centricity is one of Sungrow's core values. The directors maintain close oversight of the Company's relationships with its customers, to ensure that a collaborative approach to working is maintained, and strive to achieve a win-win business outcome between customers and the Company. The directors regularly consider the impact of the changing business environment on customers, and the necessary responses by the Company.
Auditor
In accordance with the company's articles, a resolution proposing that Alliotts LLP be reappointed as auditor of the company will be put at a General Meeting.
Energy and carbon report
As the company has not consumed more than 40,000 kWh of energy in this reporting period, it qualifies as a low energy user under these regulations and is not required to report on its emissions, energy consumption or energy efficiency activities.
SUNGROW POWER UK LIMITED
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 5 -
Statement of director's responsibilities
The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has 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 director must not approve the financial statements unless he is 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 director is required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The director is 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. He is 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.
Strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of risks relating to financial instruments.
Statement of disclosure to auditor
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.
On behalf of the board
Mr J Li
Director
24 September 2024
SUNGROW POWER UK LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF SUNGROW POWER UK LIMITED
- 6 -
Opinion
We have audited the financial statements of Sungrow Power UK Limited (the 'company') for the year ended 31 December 2023 which comprise 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 2023 and of its loss for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
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 director's 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 director with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The director is 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 director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the director's report have been prepared in accordance with applicable legal requirements.
SUNGROW POWER UK LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF SUNGROW POWER UK LIMITED (CONTINUED)
- 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 director's 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.
Responsibilities of director
As explained more fully in the director's responsibilities statement, the director is 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 director determines 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 director is 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 director either intends to liquidate the company or to cease operations, or has 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Extent to which the audit was considered captable of detecting irregularities, including fraud
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the solar equipment sector;
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation, data protection, anti-bribery, employment, environmental and health and safety legislation;
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
SUNGROW POWER UK LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF SUNGROW POWER UK LIMITED (CONTINUED)
- 8 -
Audit response to risks identified
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
reviewed all transactions listed;
assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and
investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
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.
Nicholas Nicolaou FCCA
Senior Statutory Auditor
For and on behalf of Alliotts LLP
24 September 2024
Chartered Accountants
Statutory Auditor
Manfield House
1 Southampton Street
London
WC2R 0LR
SUNGROW POWER UK LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
2023
2022
Notes
£
£
Turnover
3
69,322,595
63,894,210
Cost of sales
(64,994,230)
(61,114,189)
Gross profit
4,328,365
2,780,021
Administrative expenses
(9,189,520)
(2,618,778)
Legal settlement provision
4
(1,090,748)
Operating (loss)/profit
5
(5,951,903)
161,243
Interest receivable and similar income
9
411
(Loss)/profit before taxation
(5,951,903)
161,654
Tax on (loss)/profit
10
1,194,878
488,165
(Loss)/profit for the financial year
(4,757,025)
649,819
The profit and loss account has been prepared on the basis that all operations are continuing operations.
SUNGROW POWER UK LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 10 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
11
205,557
172,104
Current assets
Stocks
12
47,712,392
26,085,697
Debtors
13
79,246,129
63,710,559
Cash at bank and in hand
115,964
226,327
127,074,485
90,022,583
Creditors: amounts falling due within one year
14
(128,693,431)
(89,764,235)
Net current (liabilities)/assets
(1,618,946)
258,348
Total assets less current liabilities
(1,413,389)
430,452
Creditors: amounts falling due after more than one year
15
(139,979)
(119,997)
Provisions for liabilities
Provisions
16
4,311,910
1,418,708
(4,311,910)
(1,418,708)
Net liabilities
(5,865,278)
(1,108,253)
Capital and reserves
Called up share capital
19
100,000
100,000
Profit and loss reserves
(5,965,278)
(1,208,253)
Total equity
(5,865,278)
(1,108,253)
The financial statements were approved and signed by the director and authorised for issue on 24 September 2024
Mr J Li
Director
Company registration number 09272760 (England and Wales)
SUNGROW POWER UK LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 January 2022
100,000
(1,858,072)
(1,758,072)
Year ended 31 December 2022:
Profit and total comprehensive income
-
649,819
649,819
Balance at 31 December 2022
100,000
(1,208,253)
(1,108,253)
Year ended 31 December 2023:
Loss and total comprehensive income
-
(4,757,025)
(4,757,025)
Balance at 31 December 2023
100,000
(5,965,278)
(5,865,278)
SUNGROW POWER UK LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash absorbed by operations
23
(88,742)
(2,703,857)
Income taxes refunded/(paid)
58,000
(7,604)
Net cash outflow from operating activities
(30,742)
(2,711,461)
Investing activities
Purchase of tangible fixed assets
(79,621)
(172,119)
Interest received
411
Net cash used in investing activities
(79,621)
(171,708)
Net decrease in cash and cash equivalents
(110,363)
(2,883,169)
Cash and cash equivalents at beginning of year
226,327
3,109,496
Cash and cash equivalents at end of year
115,964
226,327
SUNGROW POWER UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 13 -
1
Accounting policies
Company information
Sungrow Power UK Limited is a private company limited by shares incorporated in England and Wales. The registered office is Suite 2, 2nd Floor Moorgate House, 201 Silbury Boulevard, Milton Keynes, Buckinghamshire, MK9 1LZ.
1.1
Accounting convention
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.
1.2
Going concern
The accounts have been prepared on the going concern basis, as the ultimate parent company has confirmed they will provide continued financial support for at least 12 months from the date of signing the financial statements. The Company meets its day-to-day working capital requirements through trading facilities provided by its ultimate parent company.
The director believes that the company can successfully manage its business risks and, after making relevant enquiries, the director has a reasonable expectation that the company will have access to adequate resources to continue to trade for the foreseeable future and he believes it is appropriate to continue to adopt the going concern basis in preparing the annual report and accounts. No adjustments have been made should the parent company withdraw its support to the company.
1.3
Turnover
Turnover represents amounts receivable for goods and services net of VAT and trade discounts.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on delivery of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue from the sale of services is recognised according to the stage of completion of the contract, when the outcome of the contract can be ascertained with reasonable certainty, and the stage of completion can be reliably estimated.
1.4
Tangible fixed assets
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:
Leasehold improvements
5 years straight line
Plant and machinery
5 years straight line
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.
SUNGROW POWER UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
1.5
Impairment of fixed assets
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.
1.6
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and those overheads that have been incurred in bringing the stocks to their present location and condition.
Where goods are in transit to customers directly from suppliers at the year end date, these items are included in closing stock at cost, subject to this, being lower than the net realisable value.
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.
1.7
Cash and cash equivalents
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.
1.8
Financial instruments
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.
SUNGROW POWER UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
Basic financial assets
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
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.
Impairment of financial assets
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.
Derecognition of financial assets
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.
Classification of financial liabilities
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
Basic financial liabilities, including creditors, bank loans and loans from fellow group companies 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.
SUNGROW POWER UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
Other financial liabilities
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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.9
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs.
1.10
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 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
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.
SUNGROW POWER UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 17 -
1.11
Provisions
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.
The warranty provision is for the costs associated with sold products which customers are entitled to return for repair or outright replacement.
1.12
Employee benefits
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.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.14
Leases
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.
1.15
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.
SUNGROW POWER UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the director is 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.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Revenue recognition
In determining the point of revenue recognition management are required to determine when the risks and rewards of ownership are transferred to the end customer. This is based on the performance obligations under the relevant contract with the customer, usually delivery completion of the goods. There is some degree of judgement on managements assessment of when the risks and reward of ownership are effectively transferred to the customer. This evaluation revolves around identifying the performance obligations outlined in the relevant contract with the customer, with a primary focus on the completion of delivery for the goods.
Key sources of estimation uncertainty
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.
Warranty provision
Provisions for the expected cost of warranty obligations under local sale of goods legislation are recognised at the date of sale of the relevant products. This provisions based on the directors' best estimate of the expenditure required to fulfil the company's obligation. To arrive at this estimate, the company relies on historical data and warranty terms,carefully evaluating the expected cost of settling potential warranty claims. Additionally, the company reviews past warranty claims to gain insights into the frequency and nature of expenses incurred. Any uncertainties or contingencies associated with warranty claims are also taken into consideration during the estimation process.
Tangible fixed assets
Fixed assets are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and 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 assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values.
Bad debt provision
The company has made a provision for potential irrecoverable bad debts. To assess this provision, management reviews outstanding accounts receivable and their aging, analyses customer creditworthiness, considers economic conditions, and uses historical data to understand patterns of recovery and default rates. Based on this analysis, management makes a probability assessment of the likelihood of recovering outstanding debts and establishes a provision for irrecoverable bad debts.
Contract stage of completion
In determining the revenue to recognise for services provided under contract, management are required to use judgement and estimation to ascertain the stage of completion of works delivered. In making this determination management make reference to performance obligations within the contract such as final customer acceptance.
SUNGROW POWER UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
69,256,967
63,837,633
Overseas
65,628
56,577
69,322,595
63,894,210
2023
2022
£
£
Other revenue
Interest income
-
411
4
Legal Settlement Provision
2023
2022
£
£
Expenditure
Legal settlement provision
1,090,748
-
Costs associated with a provision for a legal settlement with a customer have been recognised as an exceptional item as management consider these to be one-off and not expected to recur in future periods.
5
Operating (loss)/profit
2023
2022
Operating (loss)/profit for the year is stated after charging:
£
£
Exchange losses
1,507,812
19,259
Depreciation of owned tangible fixed assets
44,048
19,320
Loss on disposal of tangible fixed assets
2,120
-
Operating lease charges
97,737
26,561
6
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
45,000
40,000
SUNGROW POWER UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
7
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
39
22
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
2,951,758
1,463,223
Social security costs
345,573
177,669
Pension costs
115,547
51,398
3,412,878
1,692,290
8
Director's remuneration
2023
2022
£
£
Remuneration for qualifying services
184,240
233,874
Company pension contributions to defined contribution schemes
9,025
4,951
193,265
238,825
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
n/a
233,874
Company pension contributions to defined contribution schemes
n/a
4,951
As total directors' remuneration was less than £200,000 in the current year, no disclosure is required for 2023.
9
Interest receivable and similar income
2023
2022
£
£
Interest income
Other interest income
411
SUNGROW POWER UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
10
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
(42)
Deferred tax
Origination and reversal of timing differences
(1,194,878)
(488,123)
Total tax credit
(1,194,878)
(488,165)
The actual credit for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
(Loss)/profit before taxation
(5,951,903)
161,654
Expected tax (credit)/charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
(1,399,888)
30,714
Tax effect of expenses that are not deductible in determining taxable profit
272,463
4,481
Tax effect of income not taxable in determining taxable profit
(2,480)
Unutilised tax losses carried forward
11,033
Change in unrecognised deferred tax assets
(510,590)
Adjustments in respect of prior years
(7,989)
Effect of change in corporation tax rate
(70,675)
Permanent capital allowances in excess of depreciation
(374)
(24,994)
Depreciation on assets not qualifying for tax allowances
3,596
3,671
Deferred tax adjustments in respect of prior years
7,989
Taxation credit for the year
(1,194,878)
(488,165)
SUNGROW POWER UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
11
Tangible fixed assets
Leasehold improvements
Plant and machinery
Total
£
£
£
Cost
At 1 January 2023
89,299
108,382
197,681
Additions
79,621
79,621
Disposals
(4,294)
(4,294)
At 31 December 2023
89,299
183,709
273,008
Depreciation and impairment
At 1 January 2023
8,930
16,647
25,577
Depreciation charged in the year
17,860
26,188
44,048
Eliminated in respect of disposals
(2,174)
(2,174)
At 31 December 2023
26,790
40,661
67,451
Carrying amount
At 31 December 2023
62,509
143,048
205,557
At 31 December 2022
80,369
91,735
172,104
12
Stocks
2023
2022
£
£
Work in progress
2,174,935
663,272
Finished goods and goods for resale
45,537,457
25,422,425
47,712,392
26,085,697
13
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
37,518,350
4,353,439
Corporation tax recoverable
58,000
Amounts owed by group undertakings
172,437
145,037
Other debtors
1,037,224
67,051
Prepayments and accrued income
38,839,273
58,603,065
77,567,284
63,226,592
Deferred tax asset (note 17)
1,678,845
483,967
79,246,129
63,710,559
SUNGROW POWER UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
14
Creditors: amounts falling due within one year
2023
2022
£
£
Trade creditors
23,441
79,213
Amounts owed to group undertakings
60,043,230
54,186,458
Taxation and social security
5,126,541
2,031,007
Other creditors
62,788,561
33,067,117
Accruals and deferred income
711,658
400,440
128,693,431
89,764,235
15
Creditors: amounts falling due after more than one year
2023
2022
£
£
Other creditors
139,979
119,997
The creditors are payments received for warranty extensions of 5 years which are accounted as deferred income.
16
Provisions for liabilities
2023
2022
£
£
Warranty provisions
3,221,162
1,418,708
Legal provision
1,090,748
-
4,311,910
1,418,708
Movements on provisions:
Warranty provisions
Legal provision
Total
£
£
£
At 1 January 2023
1,418,708
-
1,418,708
Additional provisions in the year
1,802,454
1,090,748
2,893,202
At 31 December 2023
3,221,162
1,090,748
4,311,910
The warranty provision has been made to cover costs associated with sold products for a period of 5 years which customers are entitled to return for repair or outright replacement.
The legal provision had been made to cover amounts due under a liquidated damages claim relating to one customer in the amount of £1,090,748. Management reached a settlement agreement post year end for full and final settlement for this amount.
SUNGROW POWER UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 24 -
17
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Assets
Assets
2023
2022
Balances:
£
£
Accelerated capital allowances
(38,816)
(26,631)
Tax losses
1,692,604
508,958
Other short term timing differences
25,057
1,640
1,678,845
483,967
2023
Movements in the year:
£
Asset at 1 January 2023
(483,967)
Credit to profit or loss
(1,194,878)
Asset at 31 December 2023
(1,678,845)
The deferred tax asset set out above is expected to reverse within 12 months and relates to the utilisation of tax losses against future expected profits of the same period.
Deferred tax assets are recognised in respect of tax losses of £6,770,415 (2022 - £2,035,833).
18
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
115,547
51,398
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
19
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
100,000
100,000
100,000
100,000
The company has one class of Ordinary shares which carry full and equal rights to participate in voting in all circumstances and in dividends and capital distributions
SUNGROW POWER UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 25 -
20
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
74,510
74,510
Between two and five years
316,058
304,144
In over five years
301,418
387,842
691,986
766,496
21
Related party transactions
Balances with related parties
The following amounts were outstanding at the reporting end date:
Amounts owed by
Amounts owed to
related parties
related parties
2023
2022
2023
2022
£
£
£
£
Entities with control, joint control or significant influence over the company
142,786
41,499,370
53,352,205
Other related parties
29,651
145,037
18,543,860
834,253
22
Ultimate controlling party
The immediate parent company of Sungrow Power UK Limited is Sungrow Power (Hong Kong) Co., Ltd, a company registered in Hong Kong. The ultimate parent company is Sungrow Power Supply Co., Ltd.
The smallest and largest group into which the entity is consolidated is Sungrow Power Supply Co., Ltd, a company registered in China. Sungrow Power Supply Co., Ltd prepares group financial statements and these can be obtained from No.1699 Xiyou Rd.,New & High Tech Zone, Hefei, 230088, China.
SUNGROW POWER UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 26 -
23
Cash absorbed by operations
2023
2022
£
£
(Loss)/profit for the year after tax
(4,757,025)
649,819
Adjustments for:
Taxation credited
(1,194,878)
(488,165)
Investment income
(411)
Loss on disposal of tangible fixed assets
2,120
-
Depreciation and impairment of tangible fixed assets
44,048
19,320
Increase in provisions
2,893,202
317,278
Movements in working capital:
Increase in stocks
(21,626,695)
(25,232,380)
Increase in debtors
(14,398,692)
(58,636,499)
Increase in creditors
38,949,178
80,667,181
Cash absorbed by operations
(88,742)
(2,703,857)
24
Analysis of changes in net funds
1 January 2023
Cash flows
31 December 2023
£
£
£
Cash at bank and in hand
226,327
(110,363)
115,964
2023-12-312023-01-01falseCCH SoftwareCCH Accounts Production 2024.200Mr J Lifalsefalse092727602023-01-012023-12-3109272760bus:Director12023-01-012023-12-3109272760bus:RegisteredOffice2023-01-012023-12-31092727602023-12-31092727602022-01-012022-12-3109272760core:Exceptional12023-01-012023-12-3109272760core:Exceptional12022-01-012022-12-3109272760core:RetainedEarningsAccumulatedLosses2022-01-012022-12-3109272760core:RetainedEarningsAccumulatedLosses2023-01-012023-12-31092727602022-12-3109272760core:LeaseholdImprovements2023-12-3109272760core:ComputerEquipment2023-12-3109272760core:LeaseholdImprovements2022-12-3109272760core:ComputerEquipment2022-12-3109272760core:CurrentFinancialInstrumentscore:WithinOneYear2023-12-3109272760core:CurrentFinancialInstrumentscore:WithinOneYear2022-12-3109272760core:Non-currentFinancialInstrumentscore:AfterOneYear2023-12-3109272760core:Non-currentFinancialInstrumentscore:AfterOneYear2022-12-3109272760core:CurrentFinancialInstruments2023-12-3109272760core:CurrentFinancialInstruments2022-12-31092727602022-12-3109272760core:ShareCapital2023-12-3109272760core:ShareCapital2022-12-3109272760core:RetainedEarningsAccumulatedLosses2023-12-3109272760core:RetainedEarningsAccumulatedLosses2022-12-3109272760core:ShareCapital2021-12-3109272760core:RetainedEarningsAccumulatedLosses2021-12-31092727602021-12-3109272760core:LeaseholdImprovements2023-01-012023-12-3109272760core:ComputerEquipment2023-01-012023-12-3109272760core:UKTax2023-01-012023-12-3109272760core:UKTax2022-01-012022-12-310927276012023-01-012023-12-310927276012022-01-012022-12-3109272760core:LeaseholdImprovements2022-12-3109272760core:ComputerEquipment2022-12-3109272760core:Non-currentFinancialInstruments12023-12-3109272760core:Non-currentFinancialInstruments12022-12-3109272760core:WithinOneYear2023-12-3109272760core:WithinOneYear2022-12-3109272760core:BetweenTwoFiveYears2023-12-3109272760core:BetweenTwoFiveYears2022-12-3109272760core:MoreThanFiveYears2023-12-3109272760core:MoreThanFiveYears2022-12-3109272760core:UltimateParent2023-01-012023-12-3109272760core:OtherGroupMember12023-01-012023-12-3109272760core:UltimateParent2023-12-3109272760core:UltimateParent2022-12-3109272760core:OtherGroupMember12023-12-3109272760core:OtherGroupMember12022-12-3109272760bus:PrivateLimitedCompanyLtd2023-01-012023-12-3109272760bus:FRS1022023-01-012023-12-3109272760bus:Audited2023-01-012023-12-3109272760bus:FullAccounts2023-01-012023-12-31xbrli:purexbrli:sharesiso4217:GBP