The Directors present their annual report and financial statements of ISG Renewables Limited ('the Company') for the year ended 31 December 2024.
Review of business
The Company’s investments comprise an investment portfolio of subsidiary holdings measured at fair value with movements in fair value recognised in the Statement of Comprehensive Income in the period in which they arise.
During 2024, the Company entered into an agreement to acquire a solar farm, Newbold Pacey Solar Limited on 5 April 24 for £7.4m (including deferred consideration). The name of the SPV was subsequently changed to Elms ISG Solar Limited and it began generating in December 2024.
Carn Nicholas generated 9.5 GWh of power in the period, which was slightly under budget, however, expenses were favourable. This resulted in the site performing slightly adversely for the year.
Construction was delayed on Bicker Fen and it also suffered some issues with inverters in 2024 which resulted in the site generating 11.8 GWh against a budget of 21.4 GWh. This resulted in adverse revenue of £0.9m and a favourable overall position of £0.5m.
Employees and Officers of the Company
The Company does not have any employees and therefore employee policies are not required. The Directors of the Company are listed on page 1.
The Directors who held office during the year and up to the date of signature of the financial statements were as follows:
The Company is exposed to financial risks such as market risk, credit risk and liquidity risk, and the monitoring of these risks are detailed in note 18 to the financial statements.
The principal risks and uncertainties facing the Company and its investee companies, and an explanation of how they are managed are set out below. The Board does not consider the likelihood or impact of these risks to have changed in the year.
The availability and operating performance of the equipment used by the solar farms may be impacted by accidents, mechanical failure, grid availability, theft or damage which will directly impact the revenues and profitability of the renewable infrastructure asset. The Company does not have any control over these risks, and accordingly, no provisions have been made for them. Failures may be the result of a short-term issue or a long-term fundamental failure of one piece of equipment, for example, which could impact returns.
All investments undergo significant due diligence prior to acquisition. Operations and maintenance agreements and asset management agreements are put in place to monitor the investment portfolio. Insurance coverage is put in place for theft, damage and business interruption.
If a change in Government renewable energy policy was applied retrospectively to current operating projects, this could adversely impact the market price for renewable energy, or the value of the green benefits earned from generating renewable energy. The Government has evolved the regulatory framework for new projects being developed but has consistently stood behind the framework that supports operating projects as it understands the need to ensure investors can trust regulation.
Financing risk
The Company has financed its investments through the issuance of loan notes of £43,096,759 (2023: £24,257,785). The Company will finance new investments by issuing further loan notes or allotting additional shares to the shareholders. The Company has received confirmation from the shareholders that they will not demand redemption of the loan notes for at least 12 months from the date of approval of this report unless the Company has sufficient cash to finance its ongoing obligations.
The investee companies have low to no leverage, and can therefore withstand short-term variability in power prices, production and operating performance.
Solar resource
The investee companies' revenues are dependent upon levels of irradiance, which will vary across seasons and years within statistical parameters. Before investment, extensive due diligence is carried out to ensure the assumptions in the financial model are accurate by carrying out a detailed energy yield assessment to assess the long-term performance of the plant.
In the event that the solar farms do not operate for the period of time assumed or require higher than expected maintenance expenditure to do so, it could have a material adverse effect on the financial performance and position of the investee company.
Management performs regular reviews and ensures that maintenance is performed at its assets. Regular maintenance ensures that equipment is in good working order to meet its expected life span.
Health and safety and the environment
The operations of Company’s assets are subject to health and safety and environmental regulation. A breach of these or an accident could lead to damages or compensation to the extent such loss is not covered by insurance policies, adverse publicity or reputational damage.
The Company engages an independent health and safety consultant to ensure the ongoing appropriateness of its health and safety policies and procedures. The investee companies have reporting lines ensuring that Management is informed of events as soon as possible after they occur.
All material subsequent events are disclosed in note 15.
The Directors expect the activity and performance of the Company’s investee company to be satisfactory in the forthcoming year and are not aware of any potential circumstance that would adversely affect operations.
Pursuant to section 487 of the Companies Act 2006, the auditor will be deemed to be reappointed and BDO LLP (the ‘Auditor’) will therefore continue in office.
Financial statements
The Board is of the opinion that the financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for the shareholders to assess the performance, strategy and business model of the Company.
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 the auditor’s report thereon.
Results and dividends
The results for the year are set out in the Statement of Comprehensive Income on page 10. Turnover, including interest receivable, in the year ended 31 December 2024 was £651,137 (2023: £480,975), and the profit after tax was £5,712 (2023: £721,188 loss).
Dividend payments made during the year amounted to £nil (2023: £nil). The Directors do not recommend the payment of any dividends for the year ended 31 December 2024.
At the 31 December 2024, the Company had net current liabilities of £46,004,053 (2023: £25,246,835), net assets of £1,209,899 (2023: £997,135) and cash balances of £5,369 (2023: £17,965). The Company continues to meet its day-to-day liquidity requirements through its cash resources and the ongoing financial support provided by the shareholders. One of the key cash outflows of the Company is the payment of distributions, which is discretionary.
As at 31 December 2024, the Company owed the shareholders £43,096,759 in the form of loan notes (2023: £24,257,785). The Company has received confirmation from the shareholders that they will not demand redemption of the loan notes or seek repayment of interest on these loan notes for a period of at least 12 months from the date of approval of this report unless the Company has sufficient cash to finance its ongoing obligations.
The Company will fund any commitments to new investments in the next 12 months from the date of this report through additional loans or equity from the shareholders.
Management have reviewed the Company’s forecasts and projections taking into account foreseeable changes in investment and trading performance, as well as consideration to worst case outcomes, which show that the Company has sufficient financial resources to meet its current obligations as they fall due for a period of at least 12 months from the date of approval of this report.
On the basis of this review, and after making due enquiries, the directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for at least 12 months from the date of approval of this report. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.
Basis for opinion
Independence
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
Other Companies Act 2006 Reporting
In our opinion, based on the work undertaken in the course of our audit:
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
the directors' report has been prepared in accordance with applicable legal requirements.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
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.
Extent to which the audit was capable of detecting irregularities, including fraud.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, 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:
Non-compliance with laws and regulations
We gained an understanding of the legal and regulatory framework applicable to the Company, the policies and procedures regarding compliance with laws and regulations and the industry in which it operates and considered the risk of acts by the Company which were contrary to applicable laws and regulations, including fraud.
Our tests included, but were not limited to:
Obtaining an understanding of the control environment in monitoring compliance with laws and regulations;
Review of financial statement disclosures and agreeing to supporting documentation;
Enquiries of management and those charged with governance regarding any instances of non-compliance with laws and regulations; and
Review of minutes of the board meetings throughout the period regarding any instances of non-compliance with laws and regulations.
Fraud
We assessed the susceptibility of the financial statements to material misstatement including fraud.
Our risk assessment procedures included:
Enquiry with management and those charged with governance regarding any known or suspected instances of fraud;
Obtaining an understanding of the Company’s policies and procedures relating to:
Detecting and responding to the risks of fraud; and
Internal controls established to mitigate risks related to fraud.
Review of minutes of meeting of those charged with governance for any known or suspected instances of fraud;
Discussion amongst the engagement team as to how and where fraud might occur in the financial statements; and
Considering remuneration incentive schemes and performance targets and the related financial statement areas impacted by these.
Based on our risk assessment, we considered the areas most susceptible to fraud to be the valuation of investments and management override of controls.
Our procedures in response to the above included:
Assessing significant estimates made by management in the valuation of Investments for bias; and
Testing journals, based on risk assessment criteria as well as an unpredictable sample, and evaluating whether there was evidence of bias by the Investment Manager and Directors that represented a risk of material misstatement due to fraud.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members who were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that 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 by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.
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.
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.
The income statement has been prepared on the basis that all operations are continuing operations.
The notes on pages 13 to 24 form part of these financial statements.
The notes on pages 13 to 24 form part of these financial statements.
The notes on pages 13 to 24 form part of these financial statements.
ISG Renewables Limited is a private company limited by shares incorporated in England and Wales. The registered office is 3rd Floor, St George's House, 13-14 Ambrose Street, Cheltenham, GL50 3LG.
Functional and presentational currency
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 £.
Financial assets are recognised in the Company’s Statement of Financial Position when the Company becomes a party to the contractual provisions of the instrument.
Financial assets are held at amortised cost or, in the case of investments in subsidiaries, at fair value through profit or loss.
Amortised cost
Non-derivative financial assets with fixed or determinable repayments that are not quoted in an active market are classified as financial assets held at amortised cost. Receivables that are due within one year of the year end are recognised at the undiscounted amount receivable. All receivables balances are held at the undiscounted amount at At 31 December 2024 and 2023.
Fair value through profit or loss
Investments, including shareholder loans, are held at fair value through profit or loss upon initial recognition since they form part of an investment portfolio, the performance of which is measured and evaluated on a fair value basis. Gains or losses resulting from the movement in fair value are recognised in the Statement of Comprehensive Income in the period in which they arise. Fair value is defined as the amount for which an asset could be exchanged between knowledgeable willing parties in an arm’s length transaction. Fair value is calculated on an unlevered, discounted cashflow basis.
A financial asset (in whole or in part) is derecognised either:
• When the Company has transferred substantially all the risks and rewards of ownership; or
• When it has neither transferred nor retained substantially all the risks and rewards and when it no longer has control over the assets or a portion of the asset; or
• When the contractual right to receive cashflows has expired.
Financial liabilities are classified according to the substance of contractual agreements entered into and are recorded on the date on which the Company becomes party to such contractual requirements of the financial liability.
All loans and borrowings are initially recognised at cost, being fair value of consideration received, net of any incurred transaction costs where applicable. After initial recognition, all interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Loan balances as at the year-end have not been discounted to reflect amortised cost, as the amounts are not materially different from the outstanding balances. The Company’s other financial liabilities measured at amortised cost include trade and other payables and other short-term monetary liabilities which are initially recognised at fair value and subsequently measured at amortised cost using the effective interest rate method.
A financial liability (in whole or in part) is derecognised when the Company has extinguished its contractual obligations, it expires, or it is cancelled. Any gain or loss on derecognition is taken to the Statement of Comprehensive Income.
Financial instruments issued by a company are treated as equity if the holder has a residual interest in the net assets of that company. The Company’s ordinary shares are classified as equity instruments.
Finance expenses
Borrowing costs are recognised in the Statement of Comprehensive Income in the period to which they relate on an accruals basis.
Disclosure exemptions
The Company satisfies the criteria of being a qualifying small entity as defined in FRS 102 Section 1A. As such, advantage has been taken of the following disclosure exemptions available under FRS 102 Section 1A:
No cash flow statement has been presented for the Company.
The preparation of financial statements requires the application of estimates and assumptions which may affect the results reported in the financial statements. Estimates, by their nature, are based on both judgement and information available at the time.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
The estimates and assumptions that may have a significant impact on the carrying value of assets and liabilities are those used to determine the fair value of the investment. The fair value of the investments operating assets is based on the discounted values of expected future cash flows, which are subject to certain key assumptions including the useful life of assets, the discount factors, the rate of inflation, the price at which the power and associated benefits can be sold, the level of solar resource and amount of electricity the assets are expected to produce.
Assets in construction, are held at cost subject to an impairment test which reflects their fair value. The Company held no assets at cost and therefore no impairments were identified in the period ended 31 December 2024.
Assumptions about useful lives of operating assets is based on the directors’s estimates of the period over which the asset will generate revenue. These assumptions are periodically reviewed for continued appropriateness. The actual useful life of the asset may be shorter or longer depending on the actual operating conditions experienced by this asset.
The discount factors are subjective. It is feasible that a reasonable alternative assumption could be used that would result in a different value. Discount rates are periodically reviewed taking into account any recent market transactions of a similar nature.
The revenues and expenditure of the investee companies are frequently partly or wholly subject to indexation, typically with reference to the Consumer Price Index (CPI) or Retail Price Index (RPI). From a financial modelling perspective, an assumption is usually made that the inflation index will increase at a long-term rate.
The price at which the output from the generating asset is sold is dictated by existing contracts and future wholesale electricity. Future power prices are estimated using external third-party forecasts which take the form of specialist consultancy reports, which reflect various factors including gas prices, carbon prices and renewables deployment, each of which reflect the UK and global response to climate change. The future power price assumptions are reviewed as and when these forecasts are updated. There is an inherent uncertainty in future wholesale electricity price projection.
Specifically commissioned external reports are used to estimate both the level of solar resource available at any solar farm and also the expected energy production from any solar farm. The actual energy production in any year may differ considerably from any long-term estimate in such a report, mainly due to inter year variability of solar resource. Assumptions around energy production will be reviewed only if there is good reason to suggest there has been a material change of natural resource or operating conditions.
Estimates and judgements are continually evaluated and are based on historical experience of management and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Although management uses its best judgement in estimating the fair value of investments, there are inherent limitations in any estimation techniques. Future events could also affect the estimates of fair value. The effect of such events on the estimates of fair value, including the ultimate liquidation of investments, could be material to the financial statements. The financial risk management objectives and policies of the Company, including exposure to price risk, interest rate risk, credit risk and liquidity risk are discussed in note 18 to the financial statements.
The actual charge for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:
The UK Government announced that the corporation tax rate will increase from 19% to 25% (for companies with profits over £250,000), from 1 April 2023.
The Company has loans receivable, due from its subsidiaries, totalling £36,703,867 (2023: £23,591,016). The loans bear interest at a rate of 8% per annum (unless otherwise agreed in accordance with the Shareholders' agreement) and unpaid interest at 1 February and 1 August is capitalised.
In accordance with the ISG Renewables Limited Shareholders' Agreement, £207,052 of the loan balance held by the Company was converted to equity with 207,052 new shares allotted to the Company in respect to the second PAC conversion of Carn Nicholas Solar Limited.
Total interest receivable during the period was £572,954 (2023: £449,478) of which £nil was capitalised (2023: £198,505). The interest outstanding at 31 December 2024 was £84,373 (2023: £96,614).
Details of the company's subsidiaries at 31 December 2024 are as follows:
The directors consider the above investee companies to be subsidiaries of the Company. The directors have concluded that these subsidiaries should be excluded from consolidation as these interests in subsidiaries are held as part of an investment portfolio. All subsidiaries are registered in England and Wales.
*These accounts add to Other receivables for the year ended 31 December 2023.
The company issued loan notes to the Shareholders which are redeemable on demand or on the termination date of 31 March 2063, whichever is earlier, and bear interest at a rate of 8% per annum (unless otherwise agreed in accordance with the Shareholders' Agreement). Interest accrues daily and is paid quarterly. Unpaid interest on 1 February and 1 August is capitalised. Total interest payable during the period was £570,677 (2023: £449,270) of which £nil (2023: £198,620) was capitalised. The interest outstanding at 31 December 2024 was £82,548 (2023: £96,612).
The loan notes were issued to Greencoat Solar Assets II Limited and Innova Renewables Holdings Limited. At 31 December Greencoat Solar Assets II held £42,584,903 (2023: £23,700,212) and Innova Renewables Holdings Limited held £511,856 (2023: £557,573).
In accordance with the ISG Renewables Limited Shareholders' Agreement, £207,052 of loan notes held by the Shareholders were converted to equity with 207,052 new shares allotted to the Shareholders in respect to the second PAC conversion of Carn Nicholas Solar Limited.
On 12 August 2024 the Company issued 193,492 A1 ordinary shares to Greencoat Solar Assets II Limited at an issue price of £1 per share. This generated a share premium of £191,557.
On the same day the Company issued 13,560 A2 ordinary shares to Innova renewables Holdings Limited at an issue price of £1 per share. This generated a share premium of £13,424.
On 04 April 2025 the Company took 100% control of Tolldish ISG Solar Limited for £5.1m. This transaction was funded by debt provided by Greencoat Solar Assets II Limited.
Elms ISG Solar Limited achieved Provisional Acceptance Certificate ('PAC') on 03 February 2025. As a result, deferred consideration of £1.6m due on the sale was settled 26 June 2025.
The Company has a Management Service Agreement with its fully owned assets, for which it receives £20,000 per annum rising with RPI for each underlying investment (2024 nominal of £28,379 per annum), in relation to management services. During the period, an amount of £77,771 (2023: £31,497) was earned by the Company in respect of these agreements. During the period, dividend income of £130,000 (2023: £nil) was received from investee companies. As at 31 December 2024 there was £81,973 including VAT outstanding from the investee companies.
The Company receives management services from its Shareholders, for which it pays £19,000 per annum rising with RPI for each underlying investment (2024 nominal of £26,960 per annum), in relation to management services. During the period, an amount of £73,882 (2023: £29,922) was charged to the Company in respect of these services. As at 31 December 2024 there was £73,882 (2023: £29,922) outstanding.
As at 31 December 2024, the company has loan receivables from its subsidiaries, detailed in Note 8. Additionally, loan notes have been issued to Shareholders, with details in Note 13.
The Company’s activities expose it to a variety of financial risks: market risk (including price risk, interest rate risk and foreign currency risk), credit risk and liquidity risk. An explanation of those risks is set out below.
Price risk
Price risk is defined as the risk that the fair value of a financial instrument held by the Company will fluctuate. Investments in operating solar farms are measured at fair value through the profit and loss and are valued on an unlevered, discounted cashflow basis. Therefore, the value of these investments will be a function of the discounted value of their expected cashflows and, as such, will vary with movements in interest rates and competition for such assets. Sensitivity analysis indicated that a discount rate increase of 50bp yields a downward adjustment to the fair value to £2.31 million. Conversely, a discount rate decrease of 50bp yields an upward adjustment to the far value to £2.52 million. As disclosed earlier in the report, the key assumptions determining fair value of investments are subjective and therefore it is feasible that a reasonable alternative assumption may be used resulting in a different valuation for these investments.
Interest rate risk
Interest rate risk is the risk that the fair value or future cashflows of a financial instrument will fluctuate because of changes in market interest rates. The Directors consider that the shareholder loan investments and shareholder loan payable do not carry any interest rate risk as they bear interest at a fixed rate, thereby mitigating the risks associated with the variability of cash flows arising from interest rate fluctuations.
Foreign currency risk
Foreign currency risk is defined as the risk that the fair values of future cashflows will fluctuate because of changes in foreign exchange rates. All financial assets and liabilities of the Company are denominated in GBP and therefore there is no exposure to foreign currency risk.
Credit risk
Credit risk is the risk of loss due to the failure of a borrower or counterparty to fulfil its contractual obligations. The Company is exposed to credit risk in respect of shareholder loan investments, accrued shareholder loan interest, cash at bank and other receivables. The Company credit risk exposure is minimised by dealing with financial institutions with investment grade credit ratings.
The Company has advanced loans to its investee companies. The Directors regularly review the future cashflows and valuations of the investee companies to gain comfort as to the recoverability of the loans. These loans are intra-group. No balances are past due or impaired. The exposure as at 31 December 2024 was £36,703,867 (2023: £23,591,016).
Liquidity risk
Liquidity risk is the risk that the Company may not be able to meet a demand for cash or fund an obligation when due. The Directors continuously monitor forecast and actual cash flows from operating , financing and investing activities. The Company has loan liabilities from the Shareholders that are repayable on demand, however, it has received a letter of support from the Shareholders confirming that this will not be recalled for at least 12 months from the date of approval of this report.