REGISTERED NUMBER: SC520342 (Scotland)

GROUP STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

AUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2026

FOR

LDV HARBURNHEAD HOLDINGS LIMITED

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

6

Consolidated Statement of Comprehensive Income

9

Consolidated Statement of Financial Position

10

Company Statement of Financial Position

11

Consolidated Statement of Changes in Equity

12

Company Statement of Changes in Equity

13

Consolidated Statement of Cash Flows

14

Notes to the Consolidated Statement of Cash Flows

15

Notes to the Consolidated Financial Statements

16

DIRECTORS:

W Cranstone

K Khevenhueller-Metsch

G Khevenhueller-Metsch

C A Harris

SECRETARY:

Pinsent Masons Secretarial Limited

REGISTERED OFFICE:

13 Queen's Road

Aberdeen

AB15 4YL

REGISTERED NUMBER:

SC520342 (Scotland)

AUDITORS:

Magma Audit LLP

16 Davy Court

Castle Mound Way

Rugby, CV23 0UZ

Magma Audit LLP is part

Of the Dains Group

REVIEW OF BUSINESS

Principal activity

The principal activity of the Group in the year under review was that of operation of a UK onshore wind farm for the production and sale of renewable energy.

Performance in the year

Turnover for the year has decreased from £16,865,966 to £14,901,143. Around 33% of income was received from wholesale power prices. Turnover has decreased mainly due to a substation fault on 10 January 2026 that brought the site offline through the year end until April 26th. As a result generation in the year was 33GWh less compared to the year ended 31 March 2025. The decrease in generation income and income from renewables certificates was partially offset by insurance income of £3,959,499 net of excess because of the claim we are processing related to this outage.

The Group has met all banking facility covenants and has made bank facility repayments due under this facility. The Group has also used excess cash to make dividend payments in the year. The Group has accrued retained earnings in the year and will continue to make payments of excess cash in the form of dividends.

Position at the year-end

At the year end the Group has net current assets of £13,557,963 (2025: £14,594,850) and net assets of £19,728,255 (2025: £18,898,490). The increase in the net asset position being primarily due to paydown of the debt £3,456,198 (2025: £3,822,893) offset by depreciation of the tangible assets £1,518,909 (2025: £1,518,868).

Key performance indicators

- Volume of electricity produced by the wind farm

- Price achieved for the electricity produced

PRINCIPAL RISKS AND UNCERTAINTIES

Strategic

The principal risks facing the Group are the volume of electricity produced and the prices achieved when this electricity is sold on wholesale power markets. The availability of the windfarm remains in line with expectations, however generation was below average for the year with the windfarm generating 87,028 MWh of electricity in the year. This was below the budget of 130,400 MWh and caused primarily by the substation fault. Prior to the substation fault, MWh generation was 4% adverse to budget and the average price was £56.09/MWh vs. a budgeted average price of £73.89/MWh.

Financial

The Group is partially exposed to movements in wholesale power prices. Due to conflicts in the Middle East, energy prices at year end were experiencing higher than normal volatility which is likely to continue as long as those conflicts continue. The Group continues to consider if wholesale power prices should be fixed on a periodic basis to reduce this risk. Due to commercial sensitivity, further detail is not provided in this Strategic Report.

The Group continues to manage its exposure to interest rate risk in respect of its bank loan by hedging this risk with an interest rate swap, which fixes its interest rate and mitigates the risk of changes in the interest rates.

The Group applied to amend its planning consent and extend the life of the windfarm by a further 25 years. This was approved by Scottish Ministers in January 2024. The Group has the option to increase the various leases in line with extended planning consent.

The Group has put in place a decommissioning letter of credit with BLB for £2,413,327, to cover any future potential decommissioning liability costs. This replaces the decommissioning bond that was in place with the council.

The Group is exposed to financing risk through our debt and our need to make principal and interest payments as planned. We are comfortably meeting all cover ratios and revenue would need to fall considerably and stay at those levels before it becomes a problem.

Operational

The volume of electricity produced is dependent on wind speeds and the availability of turbines. The turbine manufacturer is now much more appropriately resourced and is responding to faults and ongoing maintenance in a timely manner as is demonstrated with availability for the year of 98% up to the January 10th substation fault (2025: 98%).

The substation fault was fixed on April 20, 2026, and the turbines entered a phased reactivation over the following month.

ON BEHALF OF THE BOARD:

W Cranstone - Director

30 June 2026

The directors present their report with the financial statements of the company and the group for the year ended 31 March 2026.

PRINCIPAL ACTIVITY

The principal activity of the group in the year under review was that of operation of a UK onshore wind farm for the production and sale of renewable energy.

DIVIDENDS

Total interim dividends of £3,800,000 (2025: £5,650,000) have been declared and paid in the year ended 31 March 2026.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 April 2025 to the date of this report.

W Cranstone

K Khevenhueller-Metsch

G Khevenhueller-Metsch

C A Harris

FINANCIAL INSTRUMENTS

The principal financial instruments of the group comprise bank balances and borrowings, trade creditors and trade

debtors. The main purpose of these instruments is to raise funds for the group's operations and to finance its continuing operations. Liquidity risk is managed by the use of bank balances along with efficient monitoring and forecasting of cash flow to ensure there are sufficient funds to meet liabilities. Trade debtors are managed in respect of credit and cash flow risk by policies monitoring the credit offered to customer and regular monitoring of amounts outstanding for both time and credit limits.

DISCLOSURE IN THE STRATEGIC REPORT

The Group has chosen in accordance with section 414C(11) of the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 to set out in the Group Strategic Report information required by the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 Schedule 7 to be contained in the directors' report.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Group Strategic Report, the Report of the Directors 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 company and the group and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	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 company's and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group 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 company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the group's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the group's auditors are aware of that information.

AUDITORS

The auditors, Magma Audit LLP, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

W Cranstone - Director

30 June 2026

Opinion

We have audited the financial statements of LDV Harburnhead Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 March 2026 which comprise the Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial Position, Company Statement of Financial Position, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Statement of Cash Flows and Notes to the Consolidated Statement of Cash Flows, 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 of the parent company affairs as at 31 March 2026 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 Auditors' 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 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 group's and the parent 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

The directors are responsible for the other information. The other information comprises the information in the Group Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors 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 this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

-	the information given in the Group Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Group Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Report of the Directors.

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 four, 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 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.

Auditors' 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 a Report of the Auditors 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.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Based on our understanding of the company and the industry, we have identified the principal risks of non-compliance with laws and regulations, and considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006. 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 posting inappropriate journal entries, and management bias in accounting estimates.

Audit procedures performed by the engagement team included:

-

Discussions with management including consideration of known or suspected instances of non-compliance with laws and regulations, and fraud;

-

Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations, journal entries crediting revenue, journal entries crediting cash and entries with unusual descriptions; and

-

Challenging assumptions made by management in their significant accounting estimates, such as those in relation to the fair value of derivatives, impairment of tangible fixed assets, deferred tax, accrued income and decommissioning provision.

There are inherent limitations in the audit procedures described above 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 would become aware of it. Also the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting in error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentation, or through 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 Report of the Auditors.

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 a Report of the Auditors 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.

Ryan Parkin (Senior Statutory Auditor)

for and on behalf of Magma Audit LLP

16 Davy Court

Castle Mound Way

Rugby, CV23 0UZ

Magma Audit LLP is part

Of the Dains Group

15 July 2026

TURNOVER

3

14,901,143

16,865,966

Administrative expenses

(6,571,982

)

(6,529,431

)

OPERATING PROFIT

5

8,329,161

10,336,535

Interest receivable and similar income

6

201,119

254,375

8,530,280

10,590,910

Interest payable and similar expenses

7

(1,416,804

)

(1,516,229

)

PROFIT BEFORE TAXATION

7,113,476

9,074,681

Tax on profit

8

(1,896,851

)

(2,385,344

)

PROFIT FOR THE FINANCIAL YEAR

5,216,625

6,689,337

OTHER COMPREHENSIVE INCOME

Change in value of hedging instrument

(782,480

)

(60,741

)

Income tax relating to other comprehensive income

195,620

15,185

OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX

(586,860

)

(45,556

)

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

4,629,765

6,643,781

Profit attributable to:

Owners of the parent

5,216,625

6,689,337

Total comprehensive income attributable to:

Owners of the parent

4,629,765

6,643,781

FIXED ASSETS

Tangible assets

11

60,324,423

61,804,168

Investments

12

-

-

60,324,423

61,804,168

CURRENT ASSETS

Debtors: amounts falling due within one year

13

12,499,569

14,499,905

Cash at bank

6,841,741

5,746,653

19,341,310

20,246,558

CREDITORS

Amounts falling due within one year

14

(5,783,347

)

(5,651,708

)

NET CURRENT ASSETS

13,557,963

14,594,850

TOTAL ASSETS LESS CURRENT LIABILITIES

73,882,386

76,399,018

CREDITORS

Amounts falling due after more than one year

15

(39,087,230

)

(42,540,182

)

PROVISIONS FOR LIABILITIES

20

(15,066,901

)

(14,960,346

)

NET ASSETS

19,728,255

18,898,490

CAPITAL AND RESERVES

Called up share capital

21

1

1

Cash flow hedge reserve

22

5,709,369

6,296,229

Retained earnings

22

14,018,885

12,602,260

SHAREHOLDERS' FUNDS

19,728,255

18,898,490

The financial statements were approved by the Board of Directors and authorised for issue on 30 June 2026 and were signed on its behalf by:

W Cranstone - Director

FIXED ASSETS

Tangible assets

11

-

-

Investments

12

1

1

1

1

TOTAL ASSETS LESS CURRENT LIABILITIES

1

1

CAPITAL AND RESERVES

Called up share capital

21

1

1

SHAREHOLDERS' FUNDS

1

1

Company's profit for the financial year

3,800,000

5,650,000

The financial statements were approved by the Board of Directors and authorised for issue on 30 June 2026 and were signed on its behalf by:

W Cranstone - Director

Called up

Cash flow

share

Retained

hedge

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 April 2024

1

11,562,923

6,341,785

17,904,709

Changes in equity

Dividends

-

(5,650,000

)

-

(5,650,000

)

Total comprehensive income

-

6,689,337

(45,556

)

6,643,781

Balance at 31 March 2025

1

12,602,260

6,296,229

18,898,490

Changes in equity

Dividends

-

(3,800,000

)

-

(3,800,000

)

Total comprehensive income

-

5,216,625

(586,860

)

4,629,765

Balance at 31 March 2026

1

14,018,885

5,709,369

19,728,255

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 April 2024

1

-

1

Changes in equity

Dividends

-

(5,650,000

)

(5,650,000

)

Total comprehensive income

-

5,650,000

5,650,000

Balance at 31 March 2025

1

-

1

Changes in equity

Dividends

-

(3,800,000

)

(3,800,000

)

Total comprehensive income

-

3,800,000

3,800,000

Balance at 31 March 2026

1

-

1

Cash flows from operating activities

Cash generated from operations

1

11,739,762

13,531,771

Interest paid

(1,416,804

)

(1,516,229

)

Tax paid

(2,133,627

)

(1,586,375

)

Net cash from operating activities

8,189,331

10,429,167

Cash flows from investing activities

Purchase of tangible fixed assets

(39,164

)

-

Interest received

201,119

254,375

Net cash from investing activities

161,955

254,375

Cash flows from financing activities

Bank loan repayments in year

(3,456,198

)

(3,822,893

)

Equity dividends paid

(3,800,000

)

(5,650,000

)

Net cash from financing activities

(7,256,198

)

(9,472,893

)

Increase in cash and cash equivalents

1,095,088

1,210,649

Cash and cash equivalents at beginning of year

2

5,746,653

4,536,004

Cash and cash equivalents at end of year

2

6,841,741

5,746,653

1.	RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2026

2025

£

£

Profit before taxation

7,113,476

9,074,681

Depreciation charges

1,518,909

1,518,868

Increase in provisions

106,557

382,133

Tax charge

(1,896,851

)

(2,385,344

)

Finance costs

1,416,804

1,516,229

Finance income

(201,119

)

(254,375

)

8,057,776

9,852,192

Decrease in trade and other debtors

1,413,474

1,476,408

Increase in trade and other creditors

2,268,512

2,203,171

Cash generated from operations

11,739,762

13,531,771

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of these Statement of Financial Position amounts:

Year ended 31 March 2026

31/3/26

1/4/25

£

£

Cash and cash equivalents

6,841,741

5,746,653

Year ended 31 March 2025

31/3/25

1/4/24

£

£

Cash and cash equivalents

5,746,653

4,536,004

3.	ANALYSIS OF CHANGES IN NET DEBT

At 1/4/25

Cash flow

At 31/3/26

£

£

£

Net cash

Cash at bank

5,746,653

1,095,088

6,841,741

5,746,653

1,095,088

6,841,741

Debt

Debts falling due within 1 year

(3,384,661

)

(68,290

)

(3,452,951

)

Debts falling due after 1 year

(42,540,182

)

3,452,952

(39,087,230

)

(45,924,843

)

3,384,662

(42,540,181

)

Total

(40,178,190

)

4,479,750

(35,698,440

)

1.	STATUTORY INFORMATION

LDV Harburnhead Holdings Limited is a private company, limited by shares, registered in Scotland. The company's registered number is SC520342 and its registered office address is 13 Queen's Road, Aberdeen, AB15 4YL.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

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. The financial statements have been prepared under the historical cost convention, as modified by the recognition of certain financial assets and liabilities measured at fair value.

The financial statements are presented in Sterling (£). The financial statements have been rounded to the nearest £1.

Basis of consolidation

The consolidated financial statements incorporate those of LDV Harburnhead Holdings Limited and its subsidiaries (i.e.entities that the Group controls through its power to govern the financial and operating policies so as to obtain economic benefits). Subsidiaries acquired during the year are consolidated using the acquisition method of accounting. The results are incorporated from the date control passes. All financial statements are made up to 31 March.

All intra-group transactions, balances and unrealised gains on transactions between group companies are

eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting

policies used into line with those used by other members of the Group.

Summary of significant accounting policies

The principal accounting policies applied in the preparation of these financial statements are set out below.

The preparation of financial statements in conformity with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed within the notes to the financial statements.

Critical accounting estimates and assumptions

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

(i) Useful economic lives of tangible assets

The annual depreciation charge for tangible assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets.

(ii) Fair value of derivatives

The directors measure derivatives at fair value, which is determined using valuation techniques that utilise observable inputs. The key assumption used in valuing the swaps at 31 March 2026 is the 6 month SONIA rate (2025: 6 month SONIA rate).

(iii) Provisions

Provision is made for asset decommissioning obligations, dilapidations and contingencies. These provisions require management's best estimate of the costs that will be incurred based on legislative and contractual requirements. In addition, the timing of the cash flows and the discount rates used to establish net present value of the obligations require management's judgement.

(iv) Accrued income

Accrued income is estimated based on the value of unbilled wind revenue at the reporting date. Management estimate accrued income based on output of the wind farms multiplied by the average for the period.

Accrued income includes an insurance claim relating to a business interruption claim, which has been recognised based on management's estimate of losses using on site wind data provided by a third party. This involves significant judgement, particularly in respect of the timing and amount of receivable income.

Turnover

Turnover represents the fair value of the consideration received or receivable for goods rendered during the period, exclusive of Value Added Tax, derived from the generation of electricity.

In the case of 'Brown' energy and revenue on Renewable Obligation Certificates (ROCs), Renewable Energy Guarantees of Origin (REGOs) and Renewables Obligation Certificates Recycle (ROCs Recycle), revenue is recognised in the month that it is generated.

Insurance income

Insurance income arising from business interruption claims is recognised when it is probable that the economic benefits will be received and the amount can be measured reliably in accordance with FRS 102.

Income is measured based on management's best estimate of the recoverable amount, taking into account the terms of the insurance policy, available supporting evidence, and correspondence with insurers. Where estimation uncertainty exists, only the portion of the claim that is considered highly probable of recovery is recognised.

Insurance income is recognised within turnover where it relates to compensation for lost revenue arising from the Group's principal activities.

Tangible fixed assets

Tangible fixed assets are stated at cost less depreciation. Cost represents purchase price together with any incidental costs of acquisition. Expenditure on construction of tangible fixed assets is included in assets under construction within the Statement of Financial Position, at cost, until the asset is brought into use at which point it is transferred to the appropriate fixed asset category. Such costs include all costs directly attributable to bringing the tangible fixed asset into working condition for the intended use.

Finance costs are included in the cost of tangible assets when they are directly attributable to the construction of tangible fixed assets. Following the completion of the asset, depreciation is provided to write off the asset over the life of the lease from the date it is brought into use.

Depreciation is provided at the following annual rates in order to write off each asset, net of anticipated disposal proceeds, over its estimated useful economic life. Depreciation is charged at the following rates:

Plant and machinery - over the expected term of the lease.

Decommissioning costs - over expected remaining lease term.

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

Impairment of non-financial assets

At each Statement of Financial Position date non-financial assets not carried at fair value are assessed to determine whether there is an indication that the asset may be impaired. If there is such an indication, the recoverable amount of the asset is compared to the carrying amount of the asset.

The recoverable amount of the asset is the higher of the fair value less costs to sell and value in use. Value in use is defined as the present value of the future cash flows before interest and tax obtainable as a result of the asset’s (or asset’s cash generating unit’s) continued use. These cash flows are discounted using a pre-tax discount rate that represents the current market risk-free rate and the risks inherent in the asset.

If the recoverable amount of the asset is estimated to be lower than the carrying amount, the carrying amount is reduced to its recoverable amount. An impairment loss is recognised in the Statement of Comprehensive Income, unless the asset has been revalued when the amount is recognised in other comprehensive income to the extent of any previously recognised revaluation. Thereafter any excess is recognised in the Statement of Comprehensive Income.

If an impairment loss is subsequently reversed, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the revised carrying amount does not exceed the carrying amount that would have been determined (net of depreciation or amortisation) had no impairment loss been recognised in prior periods. A reversal of an impairment loss is recognised in the Statement of Comprehensive Income.

Financial instruments

The group has chosen to adopt the Sections 11 and 12 of FRS 102 in respect of financial instruments.

(i) Financial assets

Basic financial assets, including trade and other debtors and cash and bank balances are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.

Such assets are subsequently carried at amortised cost using the effective interest method.

(ii) Financial liabilities

Basic financial liabilities, including trade and other creditors and bank loans are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade creditors are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Non-basic financial liabilities, including 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 the income statement in finance costs or finance income as appropriate.

(iii) Hedging arrangements

The group applies hedge accounting for transactions entered into to manage the cash flow exposures of borrowings. Interest rate swaps are held to manage the interest rate exposures and are designated as cash flow hedges of floating rate borrowings.

Changes in the fair values of derivatives designated as cash flow hedges, and which are effective, are recognised directly in equity. Any ineffectiveness in the hedging relationship (being the excess of the cumulative change in fair value of the hedging instrument since inception of the hedge over the cumulative change in the fair value of the hedged item since inception of the hedge) is recognised in the Statement of Comprehensive Income.

The gain or loss recognised in other comprehensive income is reclassified to the Income Statement when the hedge relationship ends. Hedge accounting is discontinued when the hedging instrument expires, no longer meets the hedging criteria, the forecast transaction is no longer highly probable, the hedged debt instrument is derecognised or the hedging instrument is terminated.

Taxation

The tax expense for the year comprises current and deferred tax.

Tax is recognised in the income statement except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Statement of Financial Position date, except that;

- The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and

- Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.

Both current and deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the Statement of Financial Position date.

Operating leasing commitments

Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged against profits on a straight line basis over the period of the lease.

Investments

Investment in the subsidiary company is held at cost less accumulated impairment losses.

Decommissioning provision

Provision is made for the net present value of the estimated future decommissioning costs at the end of the operating life of the wind farm. This provision is made when construction of the wind farms has reached a stage when decommissioning of the constructed plant would incur material costs. The provision is calculated using estimated costs of decommissioning, and these estimates have been arrived at by consideration of the expected costs of contracts to remove the installed plant. The estimates are discounted at a pre-tax rate that reflects current market assessments of the time value of money. A corresponding asset is recognised and included within the wind farm assets and depreciated over the life of the wind farm. The estimated future cost of decommissioning obligations are regularly reviewed and adjusted as appropriate for new circumstances or changes in law or technology.