The members present their annual report and financial statements for the year ended 31 December 2024.
HGPE ASG2 Assetco LLP ("the LLP") leases fixed assets to A Shade Greener (F8) LLP ("ASG (F8) LLP") and Empower Community Solar LLP ("ECS LLP"), and receives fixed lease payments. Collectively with HGPE Steel Limited and HGPE Steel Nominee Limited, these entities form the "Group".
Going Concern
The LLP's loss for the year was £15,561 (2023: £19,559) and it has net liabilities of £2,049,980 (2023: £2,034,419). The LLP will continue to be supported by both the Group and its investor Atrato Onsite Energy Holdco Limited, from whom a letter of support has been obtained to corroborate the investor's intentions in this regard. The Group remains profitable, generating a significant cash surplus each year above its group liabilities. Noting this, the members believe that the Group and the investor both have the financial resources to support the LLP as a going concern. Accordingly, the members continue to adopt the going concern basis in preparing the financial statements.
Future developments
Other than continuing operations there are presently no plans to expand the operations of the LLP nor are there undertakings of research and development. There have been no significant events since the balance sheet date to the date of signing of the Annual Report and Financial Statements.
The members' drawing policy allows each member to draw a proportion of their profit share, subject to the cash requirements of the business.
Profit will be allocated to each members current account in proportion to their capital commitment upon the annual audited accounts being approved. Members may take drawings from the Partnership provided that this does not cause their current account to become negative. Any such amounts causing the member's current accounts to become negative would be due back to the LLP. The members have no entitlement to interest on capital contributions and have no entitlement to receive back any part of this contribution.
The designated members who held office during the year and up to the date of signature of the financial statements were as follows:
Albert Goodman was appointed as auditor to the limited liability partnership and in accordance with section 485 of the Companies Act 2006 (as applied by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008), a resolution proposing that they be re-appointed will be put at a general meeting.
This report has been prepared in accordance with the special provisions relating to small limited liability partnerships within Part 15 of the Companies Act 2006.
The members are responsible for preparing the Members’ Report and the financial statements in accordance with applicable law and regulations.
The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008 requires the members to prepare financial statements for each financial year. Under that law the members have elected to prepare the financial statements in accordance with applicable law and Section 1A of FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland.
Under Regulation 8 of the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008 the members 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 LLP and of the profit or loss of the LLP for that period. In preparing these financial statements, the members are required to:
select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
assess the LLP’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
use the going concern basis of accounting unless they either intend to liquidate the LLP or to cease operations, or have no realistic alternative but to do so.
Under Regulation 6 of the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008 the members are responsible for keeping adequate accounting records that are sufficient to show and explain the LLP’s transactions and disclose with reasonable accuracy at any time the financial position of the LLP and enable them to ensure that the financial statements comply with those regulations. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the LLP and to prevent and detect fraud and other irregularities.
We have audited the financial statements of HGPE ASG2 AssetCo LLP (the 'LLP') for the year ended 31 December 2023, which comprise Statement of comprehensive income, Balance Sheet, 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 Section 1A 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the member'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 LLP'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 members with respect to going concern are described in the relevant sections of this report.
Other information
The extent to which the audit was considered capable 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 LLP through discussions with members and other management, and from our commercial knowledge and experience of the renewable energy 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 LLP, including the Companies Act 2006, taxation legislation, health and safety legislation; |
• | we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and examining legal expenditure; 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 LLP’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. |
To address the risk of fraud through management bias and override of controls, we:
• | performed analytical procedures to identify any unusual or unexpected relationships; |
• | tested journal entries to identify unusual transactions; |
• | 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:
agreeing financial statement disclosures to underlying supporting documentation;
enquiring of management as to actual and potential litigation and claims.
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 members 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 for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
HGPE ASG2 AssetCo LLP is an LLP incorporated in England and Wales. The registered office is Sixth Floor, Capital Tower, 91 Waterloo Road, London, SE1 8RT.
The LLP's principal activities are disclosed in the Members' Report.
These financial statements have been prepared in accordance with the Statement of Recommended Practice "Accounting by Limited Liability Partnerships" issued in December 2018, together with Section 1A of FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime.
The financial statements are prepared in sterling, which is the functional currency of HGPE ASG2 AssetCo LLP. Monetary amounts in these financial statements are rounded to the nearest GBP.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The LLP leases fixed assets to ASG (F8) LLP and ECS LLP and receives fixed lease payments. The Company’s cash flows are therefore dependent on the continuation of those operations. Notwithstanding net current liabilities of £7,045,668 as at 31 December 2024 and loss for the year ended 31 December 2024 of £15,561, the financial statements have been prepared on a going concern basis which the Members consider to be appropriate for the following reasons.
The Members have prepared a going concern assessment for a period of 12 months from the date of approval of these financial statements which indicate that, taking account of plausible downsides, HGPE ASG2 AssetCo LLP will have sufficient funds to meet its liabilities as they fall due during that period.
The going concern assessment is dependent on the ultimate parent, Atrato Onsite Energy Holdco Limited not seeking repayment of the amounts currently due to other group entities that are controlled by Atrato Onsite Energy Holdco Limited, which at 31 December 2024 amounted to £23,776,017 and providing additional financial support during that period. Atrato Onsite Energy Holdco Limited has indicated its intention to continue to make available such funds as are needed by HGPE ASG2 AssetCo LLP, and that it does not intend to seek repayment of the amounts due at 31 December 2024 during the going assessment period.
As with any company placing reliance on other group entities for financial support, the Members acknowledge that there can be no certainty that this support will continue although, at the date of approval of these financial statements, they have no reason to believe that it will not do so.
Consequently, the Members are confident that HGPE ASG2 AssetCo LLP will have sufficient funds to continue to meet its liabilities as they fall due for at least 12 months from the date of approval of the financial statements and therefore have prepared the financial statements on a going concern basis.
Revenue is generated from interest payments on fixed assets that have been leased to ASG (F8) LLP and ECS LLP.
It is recognised net of VAT and accrues on a daily basis at the interest rate specified in the lease agreement.
Members' participation rights are the rights of a member against HGPE ASG2 AssetCo LLP that arise under the members' agreement (for example, in respect of amounts subscribed or otherwise contributed remuneration and profits).
Members' participation rights in the earnings or assets of HGPE ASG2 AssetCo LLP are analysed between those that are, from the LLP's perspective, either a financial liability or equity, in accordance with section 22 of FRS 102. A member's participation rights including amounts subscribed or otherwise contributed by members, for example members' capital, are classed as liabilities unless HGPE ASG2 AssetCo LLP has an unconditional right to refuse payment to members, in which case they are classified as equity.
All amounts due to members that are classified as liabilities are presented within 'Loans and other debts due to members'. Undivided amounts that are classified as equity are shown within ‘Members' other interests’. Amounts recoverable from members are presented as debtors and shown as amounts due from members within members’ interests.
Once an unavoidable obligation has been created in favour of members through allocation of profits or other means, any undrawn profits remaining at the reporting date are shown as ‘Loans and other debts due to members’ to the extent they exceed debts due from a specific member.
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.
The LLP 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 HGPE ASG2 AssetCo LLP's statement of financial position when the LLP becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and 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.
Trade debtors are amounts due from customers for merchandise sold or services performed in the ordinary course of business.
Trade and other debtors are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for the impairment of trade or other debtors is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivables.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade creditors are classified as current liabilities if the Company does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.
Trade and other creditors are recognised initially at the transaction price and subsequently measured at amortised cost using the effective interest method.
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 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.
Interest-bearing borrowings are initially recorded at fair value, net of transaction costs. Interest-bearing borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the Profit and Loss Account over the year of the relevant borrowing.
Interest expense is recognised on the basis of the effective interest method and is included in interest payable and similar charges.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.
Finance costs are recognised in the Profit and Loss Account calculated at a constant periodic rate of interest over the term of the liability.
No provision has been made in the financial statements of HGPE ASG2 AssetCo LLP for taxation. Each Member is liable for any tax liability arising out of their interest in the LLP.
Due to the nature of HGPE ASG2 AssetCo LLP's business and having considered the key sources of income and expenditure, Balance Sheet items and HGPE ASG2 AssetCo LLP's accounting policies, the members do not believe there are any critical accounting judgements or key sources of estimation uncertainty, other than the going concern basis of preparation as set out above.
The average number of persons (excluding members) employed by the partnership during the year was nil (2023: nil).
Included above within 'Amounts owed by group undertakings' is £1,509,208 (2023: £2,093,808) due on finance leases.
Amounts owed by group undertakings are repayable on demand, but the members will only seek repayment if sufficient funds are available to make the repayment. Repayment may therefore take place after more than one year in certain instances.
As a result of two sale and leaseback transactions, capital elements of future lease obligations are recorded as assets. The cost of assets held for the purpose of letting under finance leases totalled £21,167,339 as at 31 December 2024 (2023: £21,167,339). The interest is repayable semi-annually in arrears, and the charge for the year is calculated by applying an effective interest rate of 5.2% and 6.2% to the capital elements of future lease obligations.
Amounts due to group undertakings are repayable on demand, but the members will only seek repayment if sufficient funds are available to make the repayment. Repayment may therefore take place after more than one year in certain instances
There are two loans provided by HGPE Steel Limited, comprising a senior and junior loan agreement payable quarterly in arrears. The interest charged for the period is calculated by applying an effective interest rate of 7% to the loan balances.
As part of the loan note agreement with HGPE Steel Limited, the LLP has entered into a cross group guarantee with HGPE Steel Nominee Limited, A Shade Greener (F8) LLP and Empower Community Solar LLP. At the balance sheet date, the year end liability under the cross group guarantee for the LLP was £19,178,373 (2023 - £20,865,492).
There have been no significant events since the balance sheet date to the date of signing the Annual Report and Financial Statements.
The LLP has taken advantage of the exemption contained within Section 33 of FRS 102 from the requirement to disclose details of transactions entered into between two or more members of a group, where the parties to the transactions are wholly owned subsidiary undertakings of that group.