Year Ended
Registration number:
South West Investment Group Limited
Contents
Company Information |
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Directors' Report |
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Statement of Directors' Responsibilities |
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Independent Auditor's Report |
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Consolidated Profit and Loss Account |
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Consolidated Balance Sheet |
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Balance Sheet |
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Consolidated Statement of Changes in Equity |
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Statement of Changes in Equity |
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Notes to the Financial Statements |
South West Investment Group Limited
Company Information
Directors |
P W G Duguid C H Allison - Chair W R Baker D I Brown C C Butters R L Pritchard |
Registered office |
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Auditors |
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South West Investment Group Limited
Directors' Report
Year Ended 31 March 2024
The directors present their report and the for the year ended 31 March 2024.
Fair review of the business
South West Investment Group Limited is the parent company of the SWIG group of companies (“SWIG”). SWIG is a provider of place-based debt funding for micro/SME businesses with a growth and development strategy. We seek a for-profit approach incorporating a strong set of responsibility values and recognising that our members cannot receive dividends so we can make long-term decisions to the benefit of our broader stakeholder groups. We operate from a core region of the South and West Country of England, roughly bounded by Cornwall to Hampshire to Gloucestershire. This is a vibrant region of over 5.75m people with a GDP contribution around £145bn and over 275,000 micro/SMEs. Through a portfolio of funding streams we are able to lend up to £250,000 to businesses and entrepreneurs on substantially unsecured terms in order to support growth where traditional lenders are often not willing to operate. We utilise the government-backed RLS and GGS guarantee schemes and can offer tax incentives to funders through the CITR programme.
During 23/24 we are pleased to report that SWIG has performed well with profits of £365k (22/23 - £372k) and an increase in net assets to £10.4m (22/23 - £10.1m). This is a pleasing outturn in a period of economic volatility and indicates that the platform being built by SWIG is finding a viable, vibrant and expanding community of entrepreneurs in the South and West Country.
SWIG is committed to its values-driven approach which ensures we make responsible loans to suitable businesses. We recognise our lending has impact beyond just the money and are proud to report £71.5m (22/23 - £44.6m) of social impact created in 23/24. In the year we have lent over £14.0m (22/23 - £14.1m) which was 43% to female-led businesses, 12% to minority-led businesses and 783 jobs were created or safeguarded. All our lending is aligned to UN-Sustainable Development Goals and we seek to implement net-zero carbon practises whenever an opportunity arises.
Throughout 23/24 our operational platform has been developing and growing with the utilisation of a new MIS system which has been successfully embedded.
During the year we were successful in winning fund management contracts with the British Business Bank (BBB) for the two small loan components of the South West Investment Fund (SWIF) representing an initial allocation of £20m to SWIG. This will deliver loans in the range of £25k-£100k. We also continue our relationship with BBB via the Start-Up loans programme which provides loans from £500-£25k. These facilities integrate well to achieve a balanced and fully liquid portfolio of smaller loans within our overall funding pool. Additionally we continue to lend from our own balance sheet with support of Triodos Bank and from SouthWest Loans Fund 2 (outlined below). We thus have strong visibility of reliable funding sources.
South West Investment Group Limited
Directors' Report
Year Ended 31 March 2024
Within the group there are two trading subsidiaries which are 100% owned:
South West Investment Group (Capital) Limited
The Company continues to consolidate its activity during 2023/24, which was begun in prior years, and is now holding the operational South-West Loans Fund 2 and is separately managing out the final collections from the existing portfolio of closed funds -
ACTIVE
South-West Loans Fund 2 (SWLF2) - launched in July 2020 with initial funds available of £5.7m. The Fund received CBILS accreditation in September 2020 and has been subsequently accredited to the RLS and GGS guarantee schemes. During the year the fund deployed 16 loans to the value of £2.2m. As at 31 March 2024 loans totalling £7.87m had been invested into 57 businesses. The Fund is managed by sister-company SWIG Finance Limited under a contract agreed at the initiation of the Fund.
CLOSED
The Company is responsible for the final collection phases of a number of closed funds. These are both collecting loans due and administratively closing the contracts, vehicles and bank accounts. This is not a material cashflow but a significant and important function which takes time to finalise.
The Company continues to work to collect due loans on closed funds and in close cooperation with our sister company, SWIG Finance, are successfully deploying SWLF2 to viable SMEs in our chosen geography. We remain in close communication with the providers of the relevant funding and ensure compliance with lending agreements.
SWIG Finance Limited
The company, which trades under the name of SWIG Finance, is a Community Development Finance Institution (CDFI) which undertakes lending as well as fund management and related services to provide debt finance to micro/SME businesses in South and West Country of England. It is authorised and regulated by the Financial Conduct Authority in relation to its consumer credit regulated activities and fund management activities.
The Company manages a portfolio of debt funds, this portfolio provides a range of funding available upto £250k and allows a diversified revenue base for the business -
Start-up Loans - SWIG Finance is the region’s Delivery Support Partner of personal loans for business purposes up £25,000. Revenue is fee based with no retained interest. We delivered 428 loans in the year.
South West Investment Fund (SWIF) - in July 2023 SWIG Finance was the appointed as Fund Manager for the small debt element of SWIF which is a £200m fund from British Business Bank focussed on the South West region. By the year end 31 loans totalling £1.94m had been deployed. The Fund is developing well and proving to be a stable source of liquidity in the £25k-100k layer of our lending portfolio. The investment phase lasts until 2028, by which time we are contracted to deliver £20m. New subsidiaries have been incorporated under SWIG Finance for the operation of this Fund.
South West Loans Fund II - is managed on behalf of South West Investment Group (Capital) Ltd. It is a £5.7m fund for the region (excluding Cornwall and the Isles of Scilly), providing loans up to £250k for eligible and supportable SMEs. This fund is on the balance sheet of SWIG Capital where revenues and risks are recognised. Revenue for SWIG Finance is fee based with a small performance element.
Triodos Bank facility - now in its sixth year of lending, this facility which is available across the whole region, provides loans upto £250k. This facility is on-balance sheet for SWIG-Finance where revenues and risks are recognised. Revenue is interest-based plus arrangement fees from clients. Demand for this lending has remained strong, and we accessed further funding from Triodos Bank during the year. At year-end our loan book stood at £9.4m (22/23 - £8.9m).
CDFIs like SWIG Finance lend on a cashflow-basis rather than on security availability. We complement other lenders who make centralised, automated lending decisions. We get to know our clients’ businesses in a holistic manner, challenge business plans, understand their motivations, background and experience. We have pride in taking a people-centric approach to risk-management where other lenders maybe more focussed on security. Ours is a more resource-intensive business model which utilises people rather than algorithms. However our ongoing investment in training, recruitment and a new MIS / loan management system seeks to provide optimum client service and greater platform capacity to allow us to scale our operations further in future.
South West Investment Group Limited
Directors' Report
Year Ended 31 March 2024
Within the group there are two trading subsidiaries which are 100% owned:
South West Investment Group (Capital) Limited
The Company continues to consolidate its activity during 2023/24, which was begun in prior years, and is now holding the operational South-West Loans Fund 2 and is separately managing out the final collections from the existing portfolio of closed funds -
ACTIVE
South-West Loans Fund 2 (SWLF2) - launched in July 2020 with initial funds available of £5.7m. The Fund received CBILS accreditation in September 2020 and has been subsequently accredited to the RLS and GGS guarantee schemes. During the year the fund deployed 16 loans to the value of £2.2m. As at 31 March 2024 loans totalling £7.87m had been invested into 57 businesses. The Fund is managed by sister-company SWIG Finance Limited under a contract agreed at the initiation of the Fund.
CLOSED
The Company is responsible for the final collection phases of a number of closed funds. These are both collecting loans due and administratively closing the contracts, vehicles and bank accounts. This is not a material cashflow but a significant and important function which takes time to finalise.
The Company continues to work to collect due loans on closed funds and in close cooperation with our sister company, SWIG Finance, are successfully deploying SWLF2 to viable SMEs in our chosen geography. We remain in close communication with the providers of the relevant funding and ensure compliance with lending agreements.
SWIG Finance Limited
The company, which trades under the name of SWIG Finance, is a Community Development Finance Institution (CDFI) which undertakes lending as well as fund management and related services to provide debt finance to micro/SME businesses in South and West Country of England. It is authorised and regulated by the Financial Conduct Authority in relation to its consumer credit regulated activities and fund management activities.
The Company manages a portfolio of debt funds, this portfolio provides a range of funding available upto £250k and allows a diversified revenue base for the business -
Start-up Loans - SWIG Finance is the region’s Delivery Support Partner of personal loans for business purposes up £25,000. Revenue is fee based with no retained interest. We delivered 428 loans in the year.
South West Investment Fund (SWIF) - in July 2023 SWIG Finance was the appointed as Fund Manager for the small debt element of SWIF which is a £200m fund from British Business Bank focussed on the South West region. By the year end 31 loans totalling £1.94m had been deployed. The Fund is developing well and proving to be a stable source of liquidity in the £25k-100k layer of our lending portfolio. The investment phase lasts until 2028, by which time we are contracted to deliver £20m. New subsidiaries have been incorporated under SWIG Finance for the operation of this Fund.
South West Loans Fund II - is managed on behalf of South West Investment Group (Capital) Ltd. It is a £5.7m fund for the region (excluding Cornwall and the Isles of Scilly), providing loans up to £250k for eligible and supportable SMEs. This fund is on the balance sheet of SWIG Capital where revenues and risks are recognised. Revenue for SWIG Finance is fee based with a small performance element.
Triodos Bank facility - now in its sixth year of lending, this facility which is available across the whole region, provides loans upto £250k. This facility is on-balance sheet for SWIG-Finance where revenues and risks are recognised. Revenue is interest-based plus arrangement fees from clients. Demand for this lending has remained strong, and we accessed further funding from Triodos Bank during the year. At year-end our loan book stood at £9.4m (22/23 - £8.9m).
CDFIs like SWIG Finance lend on a cashflow-basis rather than on security availability. We complement other lenders who make centralised, automated lending decisions. We get to know our clients’ businesses in a holistic manner, challenge business plans, understand their motivations, background and experience. We have pride in taking a people-centric approach to risk-management where other lenders maybe more focussed on security. Ours is a more resource-intensive business model which utilises people rather than algorithms. However our ongoing investment in training, recruitment and a new MIS / loan management system seeks to provide optimum client service and greater platform capacity to allow us to scale our operations further in future.
Outlook
There are strong macro-economic challenges at present with relatively high interest rates and stubborn inflation but we continue to feel good demand across our region from small businesses and entrepreneurs. We remain on course to develop our infrastructure, processes, ambitions and people to equally meet the increasing demand and the new funding opportunities that we believe will become available in due course.
We provide affordable gap funding in a market-sector that is not attractive to security-focussed lenders and we are therefore a springboard for our clients to grow. Our interest rates are well below many unsecured lenders and we are proud to operate strictly responsible lending criteria. We remain committed to the utilisation of the RLS/GGS guarantee scheme and the CITR tax credit scheme for funders.
These are of course challenging times for many micro/SME businesses and in response we have continued to commit to the relationships we have with our existing customers, providing whatever support we can, whilst focussing on new lending to the many businesses that can adapt and flourish in a rapidly changing business environment.
We understand that a business is nothing without its staff. The Directors recognise and value the commitment, professionalism, loyalty and expertise of our team at all levels. We appreciate that the post-Covid environment and the cost of living impacts have created exceptional challenges and we wish to thank all team members for their contributions, patience, cooperation and alignment.
We look to 24/25 with enthusiasm for growth, new relationships and even greater impact achievements, whilst recognising the macro-economic and risk-management challenges that remain.
South West Investment Group Limited
Directors' Report
Year Ended 31 March 2024
Directors of the group
The directors who held office during the year were as follows:
Going concern
The group has performed well in 23/24 and the outlook for operations in 24/25 remains positive. There is strong demand across our sector for affordable loan facilities despite the macro-economic headwinds of inflation and interest rates being higher than we have experienced in recent years. In preparing and approving these financial statements the directors have given due consideration to all economic factors that can impact our business model.
The group has strong net assets, £10,449k (2023 - £10,083k), and trades profitably £365k (2023 - £372k). Our lending capacity outlook gives cause for optimism that our budgets and plans will be achieved. The new SWIF facility secured this year will provide access to new lending facilities from the British Business Bank which underpins the anticipated financial performance and further diversifies the portfolio of lending sources.
The group utilises Government-backed loan guarantee schemes and will ensure a continued focus on our loan portfolios to ensure losses are minimised as far as possible. We recognise the present economic situation is challenging but we remain optimistic that loan-losses will be within anticipated and risk-mitigated criteria.
The Board considers it is appropriate for the accounts to be prepared on a going concern basis for the reasons set out above and especially given the group’s strong balance sheet and cash reserves outlined which provides sufficient headroom to deal with any potential loan write offs that may occur in the next 12 months from the date of approval of the financial statements.
Disclosure of information to the auditor
Each director has taken steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditor is aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditor is unaware.
South West Investment Group Limited
Directors' Report
Year Ended 31 March 2024
Small companies provision statement
This report has been prepared in accordance with the special provisions relating to companies subject to the small companies regime within Part 15 of the Companies Act 2006.
Approved by the
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South West Investment Group Limited
Statement of Directors' Responsibilities
The directors acknowledge their responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and the company and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:
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select suitable accounting policies and apply them consistently; |
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make judgements and accounting estimates that are reasonable and prudent; |
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state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and |
• |
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. |
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group's and the company's transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
South West Investment Group Limited
Independent Auditor's Report to the Members of South West Investment Group Limited
Opinion
We have audited the financial statements of South West Investment Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 March 2024, which comprise the Consolidated Profit and Loss Account, Consolidated Balance Sheet, Balance Sheet, Consolidated Statement of Changes in Equity, Statement of Changes in Equity, and Notes to the Financial Statements, including a summary of 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 group's and the parent company's affairs as at 31 March 2024 and of the group's profit for the year then ended; |
• | have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and |
• | have been prepared in accordance with the requirements of the Companies Act 2006. |
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor responsibilities for the audit of the financial statements section of our report. We are independent of the group 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 group and parent company's ability to continue as a going concern for a period of at least twelve months from when the original financial statements were 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 directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. 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.
In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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.
South West Investment Group Limited
Independent Auditor's Report to the Members of South West Investment Group Limited
We have nothing to report in this regard.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
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the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
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the Directors' Report has been prepared in accordance with applicable legal requirements. |
Matters on which we are required to report by exception
In the light of our knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Directors' Report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
• | adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or |
• | the parent company financial statements are not in agreement with the accounting records and returns; or |
• | certain disclosures of directors' remuneration specified by law are not made; or |
• | we have not received all the information and explanations we require for our audit. |
Responsibilities of directors
As explained more fully in the Statement of Directors' Responsibilities set out on page 7, 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 group’s and the parent 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 group or the parent company or to cease operations, or have no realistic alternative but to do so.
South West Investment Group Limited
Independent Auditor's Report to the Members of South West Investment Group Limited
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:
Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with laws and regulations related to acts by the company which were contrary to applicable laws and regulations, including fraud.
We considered those laws and regulations that have a direct impact on the preparation of the financial statements, including, but not limited to the reporting framework (FRS 102 and Companies Act 2006) and the relevant tax compliance regulations in the UK. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to fraudulent financial reporting.
Audit procedures performed by the engagement team include, but were not limited to, discussion and inquiries with management of compliance with laws and regulations and review of correspondence and contracts with third parties. We also addressed the risk of management override of internal controls, including testing of journals and evaluating whether there was evidence of bias by the Directors that represented a risk of material misstatement due to fraud.
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. This risk increases the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements as we are less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment, collusion, omission or misrepresentation.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
South West Investment Group Limited
Independent Auditor's Report to the Members of South West Investment Group Limited
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.
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Lowin House
Tregolls Road
Cornwall
TR1 2NA
South West Investment Group Limited
Consolidated Profit and Loss Account
Year Ended 31 March 2024
Note |
2024 |
As restated |
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Turnover |
|
|
|
Cost of sales |
( |
( |
|
Gross profit |
|
|
|
Administrative expenses |
( |
( |
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Other operating income |
|
|
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Operating profit |
|
|
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Other interest receivable and similar income |
|
|
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Interest payable and similar expenses |
( |
( |
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(841,231) |
(387,462) |
||
Profit before tax |
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Tax on profit |
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Profit for the financial year |
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Profit/(loss) attributable to: |
|||
Owners of the company |
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South West Investment Group Limited
Consolidated Balance Sheet
31 March 2024
Note |
2024 |
2023 |
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Fixed assets |
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Intangible assets |
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Tangible assets |
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Other financial assets |
5 |
14,000 |
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Current assets |
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Debtors |
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Investments |
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|
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Cash at bank and in hand |
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Creditors: Amounts falling due within one year |
( |
( |
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Net current assets |
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Total assets less current liabilities |
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Creditors: Amounts falling due after more than one year |
( |
( |
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Net assets |
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Capital and reserves |
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Other reserves |
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Profit and loss account |
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Equity attributable to owners of the company |
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Shareholders' funds |
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These financial statements have been prepared and delivered in accordance with the provisions applicable to small companies subject to the small companies regime.
Approved and authorised by the
.........................................
Director
Company Registration Number: 02463497
South West Investment Group Limited
Balance Sheet
31 March 2024
Note |
2024 |
2023 |
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Fixed assets |
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Investments |
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Current assets |
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Debtors |
- |
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Cash at bank and in hand |
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|
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||
Creditors: Amounts falling due within one year |
( |
( |
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Net current assets |
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Net assets |
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Capital and reserves |
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Profit and loss account |
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|
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Shareholders' funds |
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Approved and authorised by the
......................................... |
These financial statements have been prepared and delivered in accordance with the provisions applicable to small companies subject to the small companies regime.
Company Registration Number: 02463497
South West Investment Group Limited
Consolidated Statement of Changes in Equity
Year Ended 31 March 2024
Business Development Fund |
Profit and loss account |
Total |
|
At 1 April 2023 |
|
|
|
Profit for the year |
- |
|
|
Transfer between reserves |
|
( |
- |
Total comprehensive income |
|
|
|
At 31 March 2024 |
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|
|
Business Development Fund |
Profit and loss account |
Total |
|
At 1 April 2022 |
|
|
|
Profit for the year |
- |
|
|
Transfer between reserves |
|
( |
- |
Total comprehensive income |
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At 31 March 2023 |
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South West Investment Group Limited
Statement of Changes in Equity
Year Ended 31 March 2024
Profit and loss account |
Total |
|
At 1 April 2023 |
|
|
Loss for the year |
( |
( |
At 31 March 2024 |
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Profit and loss account |
Total |
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At 1 April 2022 |
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Profit for the year |
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At 31 March 2023 |
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South West Investment Group Limited
Notes to the Financial Statements
Year Ended 31 March 2024
General information |
The company is a private company limited by guarantee without share capital, incorporated in England and Wales.
The address of its registered office is:
Accounting policies |
Summary of significant accounting policies and key accounting estimates
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Statement of compliance
These financial statements have been prepared in accordance with Financial Reporting Standard 102 - 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' and the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of Section 1A of FRS102 have been applied other than where additional disclosure is required to show a true and fair view.
The financial statements are prepared in pounds sterling which is the functional currency of the group and company. Monetary amounts in these financial statements are rounded to the nearest pound.
South West Investment Group Limited
Notes to the Financial Statements
Year Ended 31 March 2024
Basis of preparation
These financial statements have been prepared using the historical cost convention.
The preparation of financial statements in conformity with FRS102 requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the group and company's accounting policies. The areas involving a higher degree of judgement or complexity, or where assumptions and estimates are significant to the financial statements are outlined within this note.
Basis of consolidation
The consolidated financial statements consolidate the financial statements of the company and its subsidiary undertakings drawn up to 31 March 2024.
As a consolidated profit and loss account is published, a separate profit and loss account for the parent company is omitted from the group financial statements by virtue of section 408 of the Companies Act 2006.
A subsidiary is an entity controlled by the company. Control is achieved where the company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
The purchase method of accounting is used to account for business combinations that result in the acquisition of subsidiaries by the group. The cost of a business combination is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the business combination. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Any excess of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised is recorded as goodwill.
Inter-company transactions, balances and unrealised gains on transactions between the company and its subsidiaries, which are related parties, are eliminated in full.
In accordance with exemptions granted under Section 408 of the Companies Act 2006 a separate profit and loss account dealing with the results of the company has not been produced. The loss attributable to the parent for the year was £0.1m (2023 - profit of £0.6m).
South West Investment Group Limited
Notes to the Financial Statements
Year Ended 31 March 2024
Going concern
The group has performed well in 23/24 and the outlook for operations in 24/25 remains positive. There is strong demand across our sector for affordable loan facilities despite the macro-economic headwinds of inflation and interest rates being higher than we have experienced in recent years. In preparing and approving these financial statements the directors have given due consideration to all economic factors that can impact our business model.
The group has strong net assets, £10,449k (2023 - £10,083k), and trades profitably £365k (2023 - £372k). Our lending capacity outlook gives cause for optimism that our budgets and plans will be achieved. The new SWIF facility secured this year will provide access to new lending facilities from the British Business Bank which underpins the anticipated financial performance and further diversifies the portfolio of lending sources.
The group utilises Government-backed loan guarantee schemes and will ensure a continued focus on our loan portfolios to ensure losses are minimised as far as possible. We recognise the present economic situation is challenging but we remain optimistic that loan-losses will be within anticipated and risk-mitigated criteria.
The Board considers it is appropriate for the accounts to be prepared on a going concern basis for the reasons set out above and especially given the group’s strong balance sheet and cash reserves outlined which provides sufficient headroom to deal with any potential loan write offs that may occur in the next 12 months from the date of approval of the financial statements.
Reclassification of comparative amounts
Revenue recognition
Turnover comprises of fees and loan interest receivable on loans advanced by the group, and grants recognised in accordance with its policy as stated below.
Loan interest is recognised on an accruals basis, with monitoring fees in relation to loans advanced under certain funds being recognised on a receipts basis.
South West Investment Group Limited
Notes to the Financial Statements
Year Ended 31 March 2024
Government grants
Capital grants received in advance of investment are carried forward on the balance sheet as deferred income.
Capital grants relating to loan investments in SMEs are recognised at the point at which loans are made and are released to the income and expenditure account. At the same time provisions for impairment are reflected as an expense.
For other older investments held where European grants were claimed against the cost of a loan to an SME, the grant has been deducted from the cost.
The deduction of the amount of grant from the gross cost of a loan is a departure from the Companies Act requirements concerning capital grants. The directors believe this to be a prudent policy given the nature of the investments with regard to risk and felt that the accounting treatment adopted is therefore necessary to give a true and fair view.
When repayments are received from borrowers in excess of the cost held on the balance sheet, the grant element is credited to the profit and loss account. At the same time the previously unrecognised grant element of the loan is realised along with its repayment in the loans.
Tax
Tax is recognised in profit or loss, except that a change attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.
Deferred tax is recognised on all timing differences at the balance sheet date unless indicated below. Timing differences are differences between taxable profits and the results as stated in the consolidated profit and loss account and other comprehensive income. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
The carrying amount of deferred tax assets are reviewed at each reporting date and a valuation allowance is set up against deferred tax assets so that the net carrying amount equals the highest amount that is more likely than not to be recovered based on current or future taxable profit.
Tangible assets
Tangible assets are stated in the balance sheet at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.
The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.
Depreciation
Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:
Asset class |
Depreciation method and rate |
Fixtures and fittings |
15% per annum |
Computer equipment |
33% straight line |
South West Investment Group Limited
Notes to the Financial Statements
Year Ended 31 March 2024
Goodwill
Negative goodwill is included in fixed assets and is released to the profit and loss account over the periods in which the fair value of the non monetary assets purchased on the same acquisition are recovered.
Intangible assets
Intangible fixed assets relate to software costs and project costs. Project costs in turn relate to compliance costs incurred in previous years.
Software costs have a finite useful life, and are carried at cost less accumulated amortisation and impairment losses.
Amortisation
Amortisation is provided on intangible assets so as to write off the cost, less any estimated residual value, over their useful life as follows:
Asset class |
Amortisation method and rate |
Negative goodwill |
33% straight line |
Software costs |
33% straight line |
Project costs |
20% straight line |
Investments and loan provisioning
Loan balances are reviewed regularly and those that are no longer considered to be recoverable are written off.
Where there is any doubt about the recoverability of a loan, an assessment is made of the amount that is considered to be at risk, and of the probability that a default will occur in order to arrive at a provision for doubtful debts.
Loan receivable provisions are made in the profit and loss account where there is objective evidence of an event giving rise to impairment under an incurred loss model (rather than an expected loss model whereby the basis is that a loss may occur in future) in accordance with FRS 102 11.21 to 23.
Defined contribution pension obligation
A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the group has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to an employee's service in the current and prior periods.
Contributions to defined contribution plans are recognised as employee benefit expenses when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.
South West Investment Group Limited
Notes to the Financial Statements
Year Ended 31 March 2024
Financial instruments
Classification
• Short term trade and other debtors and creditors;
• Bank loans; and
• Cash and bank balances.
All financial instruments are classified as basic.
Recognition and measurement
Financial instruments are recognised when the group and company becomes party to the contractual provisions of the instrument and derecognised when in the case of assets, the contractual rights to cash flows from the assets expire or substantially all the risks and rewards of ownership are transferred to another party, or in the case of liabilities, when the group and company’s obligations are discharged, expire or are cancelled.
Such instruments are initially measured at transaction price, including transaction costs, and are subsequently carried at the undiscounted amount of the cash or other consideration expected to be paid or received, after taking account of impairment adjustments.
South West Investment Group Limited
Notes to the Financial Statements
Year Ended 31 March 2024
Critical accounting estimates and judgements
In applying the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
The areas where management have made significant judgements are outlined below:
Recognition of deferred tax asset
There exists certain tax losses at a group level upon which no deferred tax asset is being recognised on the grounds of prudence. This year the directors decided to recognise a deferred tax asset of £52k (2023 - £57k) on consideration of the expected trading and taxable profits based on forecasts.
Provisioning of loan book
Management incorporate specific provisions against certain loan balances, based on the advice provided to them by their fund managers.
Provisions against loan receivables are recognised when management judge there is sufficient objective evidence of an impairment event.
The financial statements recognise an investment loan provision increase of £0.3m (2023 - £0.2m increase in provision). In the case of SWIG Finance loans, this is net of amounts expected to be recovered through the EFG, CBILS and RLS protection, which provides 75% - 80% cover on bad loans providing certain conditions are met.
Consolidation of SWIF Smaller Loans Limited Partnership
The directors have assessed whether the group has control over the operations of the Limited Partnership by reviewing the Limited Partnership agreement and considering the application of section 1162 of the Companies Act 2006. In the directors’ view, the Limited Partnership is deemed to be under the control of the Limited Partner by virtue of its contractual rights, including operational guidelines, as stipulated in the Limited Partnership agreement. Consequently, the results of the Limited Partnership have not been included in the consolidated accounts.
Staff numbers |
The average number of persons employed by the company (including directors) during the year, was
South West Investment Group Limited
Notes to the Financial Statements
Year Ended 31 March 2024
Operating profit |
Arrived at after charging/(crediting)
2024 |
2023 |
|
Depreciation expense |
|
|
Amortisation expense |
|
|
Operating lease expense - other |
|
|
Auditor's remuneration |
Amounts recognised in relation to auditors remuneration in the year totalled £29,620 (2023: £23,680) which consisted of £17,070 (2023: £14,050) for the audit of financial statements and £12,550 (2023: £9,630) in relation to non-audit services.
Intangible assets |
Group
Project costs |
Software costs |
Total |
|
Cost or valuation |
|||
At 1 April 2023 |
|
|
|
Additions |
|
- |
|
At 31 March 2024 |
|
|
|
Amortisation |
|||
At 1 April 2023 |
|
|
|
Amortisation charge |
|
|
|
At 31 March 2024 |
|
|
|
Carrying amount |
|||
At 31 March 2024 |
- |
|
|
At 31 March 2023 |
|
|
|
South West Investment Group Limited
Notes to the Financial Statements
Year Ended 31 March 2024
Tangible assets |
Group
Fixtures and fittings |
Total |
|
Cost or valuation |
||
At 1 April 2023 |
|
|
Additions |
|
|
Disposals |
( |
( |
At 31 March 2024 |
|
|
Depreciation |
||
At 1 April 2023 |
|
|
Charge for the year |
|
|
Eliminated on disposal |
( |
( |
At 31 March 2024 |
|
|
Carrying amount |
||
At 31 March 2024 |
|
|
At 31 March 2023 |
|
|
South West Investment Group Limited
Notes to the Financial Statements
Year Ended 31 March 2024
Investments |
Company
2024 |
2023 |
|
Investments in subsidiaries |
|
|
Subsidiaries |
£ |
Cost or valuation |
|
At 1 April 2023 |
|
Additions |
|
At 31 March 2024 |
|
Carrying amount |
|
At 31 March 2024 |
|
At 31 March 2023 |
|
Details of undertakings
The principal activity of South West Investment Group (Capital) Limited is providing an investment fund holding function.
The principal activity of SWIG Finance Limited is providing small business loans to SMEs and start-ups as well as fund management.
The principal activity of SWIG CIP Limited is providing an investment fund holding function.
The principal activity of SWIG SWIF Smaller loans GP Limited is that of General Partner for SWIF Smaller Loans Limited Partnership.
The principal activity of SWIF Smaller Loans Limited Partnership is providing small business loans to SMEs and start-ups as well as fund management.
The registered office of each of these entities is the same as the parent undertaking of the group, being Lowena House, Glenthorne Court, Truro Business Park, Threemilestone, Truro, Cornwall, TR4 9NY.
South West Investment Group Limited owns 100% of the share capital of SWIG Finance Limited, South West Investment Group (Capital) Limited, SWIG CIP Limited, and SWIG SWIF Smaller Loans GP Limited.
SWIG SWIF Smaller Loans GP Limited is the general partner of SWIF Smaller Loans Limited Partnership however is not deemed to have control.
Each of these companies are incorporated in England and Wales.
South West Investment Group Limited
Notes to the Financial Statements
Year Ended 31 March 2024
Other financial assets |
Group
Investments in subsidiaries |
Other investments |
Total |
|
Non-current financial assets |
|||
Cost or valuation |
|||
At 1 April 2023 |
- |
14,000 |
14,000 |
Fair value adjustments |
5 |
- |
5 |
Disposals |
- |
(14,000) |
(14,000) |
At 31 March 2024 |
5 |
- |
5 |
Carrying amount |
|||
At 31 March 2024 |
|
- |
5 |
At 31 March 2023 |
- |
14,000 |
14,000 |
The investment in subsidiaries is the capital introduced to SWIF Smaller Loans Limited Partnership.
South West Investment Group Limited
Notes to the Financial Statements
Year Ended 31 March 2024
Investments |
Group
Investments |
Total |
|
Non-current financial assets |
||
Cost or valuation |
||
At 1 April 2023 |
14,034,913 |
14,034,913 |
Loan book advances |
6,293,909 |
6,293,909 |
Repayments |
(4,747,366) |
(4,747,366) |
Written off |
(27,445) |
(27,445) |
At 31 March 2024 |
15,554,011 |
15,554,011 |
Impairment |
||
At 1 April 2023 |
404,729 |
404,729 |
Movement in provision |
336,372 |
336,372 |
At 31 March 2024 |
741,101 |
741,101 |
Carrying amount |
||
At 31 March 2024 |
|
14,812,910 |
At 31 March 2023 |
|
13,630,184 |
Of total investments above, £10.4m (2023 - £9.7m) is recoverable in more than one year.
South West Investment Group Limited
Notes to the Financial Statements
Year Ended 31 March 2024
Debtors |
Group |
Company |
|||
2024 |
2023 |
2024 |
2023 |
|
Trade debtors |
|
|
- |
- |
Amounts due from group undertakings |
|
- |
- |
- |
Other debtors |
|
|
- |
- |
Prepayments |
|
|
- |
|
Accrued income |
|
- |
- |
- |
Deferred tax assets |
|
|
- |
- |
|
|
- |
|
The Amounts due from group undertakings are amounts due from SWIF Smaller Loans Limited Partnership.
Creditors |
Group |
Company |
||||
Note |
2024 |
2023 |
2024 |
2023 |
|
Due within one year |
|||||
Loans and borrowings |
|
|
- |
- |
|
Trade creditors |
|
|
|
|
|
Amounts due to group undertakings |
- |
- |
- |
|
|
Social security and other taxes |
|
|
- |
- |
|
Outstanding defined contribution pension costs |
- |
|
- |
- |
|
Other creditors |
|
|
|
|
|
|
|
|
|
||
Due after one year |
|||||
Loans and borrowings |
|
|
- |
- |
|
Deferred income |
- |
|
- |
- |
|
7,096,798 |
7,501,093 |
- |
- |
South West Investment Group Limited
Notes to the Financial Statements
Year Ended 31 March 2024
Loans and borrowings |
Group |
Company |
|||
2024 |
2023 |
2024 |
2023 |
|
Current loans and borrowings |
||||
Bank borrowings |
|
|
- |
- |
Group |
Company |
|||
2024 |
2023 |
2024 |
2023 |
|
Non-current loans and borrowings |
||||
Bank borrowings |
|
|
- |
- |
The balance above is made up of seven loans, all denominated in GBP.
Interest rate |
Final installment |
Carrying value 2024 |
Carrying value 2023 |
|
Bank loan 1 |
1% + base rate |
17/08/2023 |
- |
150,000 |
Bank loan 2 |
1% + base rate |
08/08/2024 |
950,000 |
950,000 |
Bank loan 3 |
1% + base rate |
15/09/2025 |
900,000 |
900,000 |
Bank loan 4 |
4.5% + base rate |
28/09/2027 |
3,488,083 |
4,361,202 |
Bank loan 5 |
3.9% + base rate |
16/11/2028 |
2,160,381 |
2,250,000 |
Bank loan 6 |
4% + base rate |
23/06/2029 |
2,250,000 |
- |
9,748,464 |
8,611,202 |
The loans are secured over all assets of SWIG Finance Limited and also include a 'negative pledge' clause preventing the company offering security over any assets to other lenders or creditors.
South West Investment Group Limited
Notes to the Financial Statements
Year Ended 31 March 2024
Pension and other schemes |
Defined contribution pension scheme
The group operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the group to the scheme and amounted to £
Contributions totalling £Nil (2023 - £
Reserves |
Other reserves are the Business Development Reserve which is a subdivision of the profit and loss reserve.
Whilst it remains a distributable reserve, it should be noted that all of the Business Development Fund is accrued from funds managed by the company where there are conditions established over the future use of the profits from those funds.
The Directors of South West Investment Group (Capital) Limited actively monitor changes in EU regulations, or other requirements, to assess any impact they may have on the amounts held in the Business Development Fund. In the event that there is a known change in the applicable terms and conditions relating to such funds, or if an obligation were to arise either legally or constructively to transfer such funds to another body, then an appropriate transaction in respect of the amount due would be recognised at that time.
Financial commitments, guarantees and contingencies |
Group
Amounts not provided for in the balance sheet
The total amount of financial commitments not included in the balance sheet is £258,846 (2023 - £124,087).
Leasing |
The group also has an agreement with a third party under which it is entitled to receive a total of £4,204 (2023 - £15,404) from the balance sheet date to the 16th August 2024. £4,204 (2023 - £11,200) is due within one year of the balance sheet date.