The directors present their annual report and financial statements for the year ended 31 December 2023.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The auditor, Craufurd Hale Audit Services Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
This report has been prepared in accordance with the provisions applicable to companies entitled to the small companies exemption.
Kirk Hill Wind Farm Limited is a private company limited by shares incorporated in England and Wales. The registered office is Union, Albert Square, Manchester, EC2A 4PS.
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 assets included in plant and machinery are not being depreciated on the basis that the asset is currently being constructed and was not in use as at the balance sheet date.
Basic financial assets, which include debtors and cash and bank balances, are measured at transaction price including transaction costs. Financial assets are classified as receivable within one year and are not amortised.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities, including creditors, and loans from fellow group companies are recognised at transaction. Financial liabilities are classified as payable within one year and are not amortised.
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. Trade creditors are recognised at transaction price.
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
The average monthly number of persons (including directors) employed by the company during the year was:
There are no staff costs included in these financial statements and no director expenses are recharged to the company.
Included in other debtors is a bond deposit of £663,768 which forms part of the security for the cost of restoration and aftercare obligations upon decommissioning the site.
Included in other creditors are A loan notes and B loan notes totalling £16,700,215. Interest is charged on the loan notes at a rate of 5% per annum. The loan notes are unsecured and there is no set date of repayment. Interest totalling £892,661 has been accrued on these loan notes and has been included within other creditors.
The loans included above are secured either by way of a charge against the company's interests in the leases held by the company and via a fixed and floating charge over all property or undertakings of the company.
On 6 May 2022, 145 B ordinary shares of £1 each were re-designated to A ordinary shares of £1 each. The 1,543 A ordinary shares were then subdivided into154,300 A ordinary shares of £0.01 each.
On 6 May 2022, 113,718 B ordinary shares of £0.01 each were issued at a premium of £23.07 each.
The A ordinary shares and B ordinary shares have equal voting rights. and equal rights to dividends as if they were shares of the same class.
All shares are fully paid.
As the income statement has been omitted from the filing copy of the financial statements, the following information in relation to the audit report on the statutory financial statements is provided in accordance with s444(5B) of the Companies Act 2006:
The auditor's report was qualified and the auditor reported as follows:
Qualified opinion
We have audited the financial statements of Kirk Hill Wind Farm Limited (the 'company') for the year ended 31 December 2023 which comprise , the balance sheet 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).
Basis for qualified opinion
Indemnity provisions
Within certain lease agreements, a provision is included which indemnifies the landlord against all legally attributable actions, proceedings, damages and costs incurred by the landlord in consequence of any proven breach by the tenant of any provision of the lease subject to a maximum aggregate liability of £10,000,000.
As part of the lease agreements, the company is also required to insure and maintain public liability insurance for a sum of not less than £10,000,000.
Capital commitments
The company had entered into an uncancellable agreement before the year end with respect to the purchase and delivery of the wind turbines. At the balance sheet date, the amount still payable under this contract was £nil (2022: £6,738,226). Additional costs totalling £453,523 were incurred after the balance sheet date due to delays in the work completed.
At the balance sheet date, in addition to the amount accrued at the balance sheet date and included in other creditors of £158,172, the company was committed to a total of £994,409 (2022: £nil) with respect to the development of the wind farm site.
At the balance sheet date, in addition to the amount accrued at the balance sheet date and included in other creditors of £419,387, the company was committed to a total of £872,840 (2022: £1,964,753) with respect to connection work.
Other commitments
As part of the planning application, the company is required to secure a performance guarantee bond of £1,319,394 which secures the cost of restoration and aftercare obligations upon decommissioning the site. At the date of signing the accounts, the directors are currently in the process of negotiating and agreeing this bond.
Service fee commitment
At the balance sheet date the company was committed to a service base fee for each operational year. This is the greater of the service base fee estimate for 20 years totalling £5,410,704 or the annual output figure which is determined as follows:
Operational year 1 - euros 5.45 per MWh and per turbine
Operational years 2 to 5 - euros 5.45 MWh and per turbine
Operational years 6 to 10 - euros 5.60 MWh and per turbine
Operational years 11 to 15 - euros 6.00 MWh and per turbine
Operational years 16 to 20 - euros 6.80 MWh and per turbine
The lease agreements held by Falck Renewables Wind Limited at the date of the agreement, 2 December 2014, were transferred to Kirk Hill Wind Farm Limited. Rent is payable the earlier of the date occurring 18 months after the date of entry or the commercial operation date, defined as the rent start date. From this date, annual rent for the first rental period (defined as the period from the rent start date to the twelfth or fourteenth anniversary of the commercial operation date) is payable.
For the purposes of calculating the commitment, the directors have used 1 May 2024 as the rent commencement date and the date of commencement of commercial operations, although the date of commercial operations commenced in April 2024.
The end date of the agreement, 31 December 2048, has been determined by the directors as being the date the production of electricity of the wind farm is estimated to cease.
All figures detailed below are indexed linked. The directors have made no allowance for future indexation of the amounts disclosed below due to the uncertainties surrounding the estimation of this.
There are various elements of the contracts as follows:
Access rent
Access rent for the first rental period being 1 January 2024 to 31 December 2035 is estimated to be £159,333. Access rent for the second rental period being 1 January 2036 to 31 December 2048 is estimated to be £201,073. This is based on per megawatt access area installed capacity.
Minimum rent
This is based on the greater of megawatt of actual installed capacity per annum or an amount as stated per the contract. The first rental period, ending either on 31 December 2035 or on 31 December 2037, is estimated to be £1,343,389. The second rental period, commencing either on 1 January 2036 or on 1 January 2038 and ending on 31 December 2048, is estimated to be £1,714,942.
Variable rent
During the first rental period (as defined above), variable rent per annum payable is either the greater of £2 in total per megawatt hour of electricity exported or 4% in total of gross income received in preceding year. During the second rental period (as defined above), variable rent per annum is also payable either the greater of £4 in total per megawatt hour of electricity exported or 6.75% in total of gross income received in preceding year.
At the balance sheet date, the directors are unable to reliably estimate the megawatt hour of electricity exported or total gross income.
Other rents payable
Other rent is payable with respect to the carpark, access and substation, and other land required for the wind farm. The total commitment for these agreements is estimated to be £590,807.
Disturbance payments
At the balance sheet date, the company had a total of £74,000 payable in future years with respect to disturbance payments as outlined within the lease agreements.
In addition to the above, for the first rental period, being 1 January 2024 to 31 December 2035, disturbance payments are estimated to be £216,748. Disturbance payments for the second rental period, being 1 January 2036 to 31 December 2048, are estimated to be £255,453.