Year Ended
Registration number:
South West Investment Group (Capital) Limited
Contents
Company Information |
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Balance Sheet |
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Notes to the Financial Statements |
South West Investment Group (Capital) Limited
Company Information
Registered office |
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Auditors |
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Directors |
R G Coombs N L Pooley W R Baker |
South West Investment Group (Capital) Limited
Balance Sheet
31 March 2023
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2023 |
2022 |
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Fixed assets |
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Tangible assets |
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Current assets |
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Debtors |
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Investments |
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Cash at bank and in hand |
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Creditors: Amounts falling due within one year |
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Net current assets |
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Total assets less current liabilities |
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Creditors: Amounts falling due after more than one year |
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Net assets |
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Capital and reserves |
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Called up share capital |
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Other reserves |
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Profit and loss account |
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Shareholders' funds |
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These financial statements have been prepared and delivered in accordance with the special provisions relating to companies subject to the small companies regime within Part 15 of the Companies Act 2006.
Approved and authorised by the
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Company Registration Number: 02360656
South West Investment Group (Capital) Limited
Notes to the Financial Statements
Year Ended 31 March 2023
General information |
The company is a private company limited by share capital, incorporated in England and Wales.
The address of its registered office is:
Accounting policies |
Summary of significant accounting policies and key accounting estimates
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Statement of compliance
These financial statements have been prepared in accordance with Financial Reporting Standard 102 - 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' and the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of Section 1A of FRS102 have been applied other than where additional disclosure is required to show a true and fair view.
The financial statements are prepared in pounds sterling which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest pound.
Basis of preparation
These financial statements have been prepared using the historical cost convention.
The preparation of financial statements in conformity with FRS102 requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company's accounting policies. The areas involving a higher degree of judgement or complexity, or where assumptions and estimates are significant to the financial statements are outlined within this note.
Revenue recognition
Turnover comprises of fees and loan interest receivable on loans advanced by the company, and grants recognised in accordance with its policy as stated below.
Loan interest is recognised on an accruals basis, with monitoring fees in relation to loans advanced under certain funds being recognised on a receipts basis.
South West Investment Group (Capital) Limited
Notes to the Financial Statements
Year Ended 31 March 2023
Government grants
In relation to the South West Loan Fund, the Microcredit Loan Fund, the Cleantech Loan Fund and CDFA RGF Fund all capital grants received in advance of investment are carried forward on the balance sheet as deferred income.
Capital grants relating to loan investments in SMEs are recognised at the point at which loans are made and are released to the income and expenditure account. At the same time provisions for impairment are reflected as an expense.
For other older investments and the Seedbed fund, grants received (and then provided as loans) are accounted for on a 'net' basis whereby the profit and loss on grants received under lending arrangements made are only recognised when repayments are subsequently received from the loanee repaying the grant element of the loan. In the case of these funds, the directors believe this is to be the most appropriate accounting treatment to give a true and fair view given the nature of the investments.
Tax
Tax is recognised in profit or loss, except that a change attributable to an item of income or expense
recognised as other comprehensive income is also recognised directly in other comprehensive
income.
The current corporation tax charge is calculated on the basis of tax rates and laws that have been
enacted or substantively enacted by the reporting date in the countries where the company operates and generates taxable income.
In the current year the company's current tax charge is £Nil due to utilising brought forward losses. As at 31st March 2023 there is a deferred tax asset of £1,946k (2022: £2,039k), in relation to brought forward losses, which management have elected not to recognise in the financial statements.
Tangible assets
Tangible assets are stated in the balance sheet at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.
The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.
Depreciation
Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:
Asset class |
Depreciation method and rate |
Fixtures and fittings |
15% straight line |
Computer equipment |
33% straight line |
Intangible assets
Intangible fixed assets relate to software costs.
Software costs have a finite useful life, and are carried at cost less accumulated amortisation and impairment losses.
South West Investment Group (Capital) Limited
Notes to the Financial Statements
Year Ended 31 March 2023
Amortisation
Amortisation is provided on intangible assets so as to write off the cost, less any estimated residual value, over their useful life as follows:
Asset class |
Amortisation method and rate |
Software costs |
Straight line over three years |
Investments and loan provisioning
Loan balances are reviewed regularly and those that are no longer considered to be recoverable are written off.
Where there is any doubt about the recoverability of a loan, an assessment is made of the amount that is considered to be at risk, and of the probability that a default will occur in order to arrive at a provision for doubtful debts.
Loan receivable provisions are made in the profit and loss account where there is objective evidence of an event giving rise to impairment under an incurred loss model (rather than an expected loss model whereby the basis is that a loss may occur in future) in accordance with FRS 102 11.21 to 23.
Financial instruments
Classification
• Short term trade and other debtors and creditors;
• Current asset investments arising on the issuing of funds to third parties;
• Bank loans; and
• Cash and bank balances.
All financial instruments are classified as basic.
Recognition and measurement
Financial instruments are recognised when the company becomes party to the contractual provisions of the instrument and derecognised when in the case of assets, the contractual rights to cash flows from the assets expire or substantially all the risks and rewards of ownership are transferred to another party, or in the case of liabilities, when the company’s obligations are discharged, expire or are cancelled.
Except for bank loans, such instruments are initially measured at transaction price, including transaction costs, and are subsequently carried at the undiscounted amount of the cash or other consideration expected to be paid or received, after taking account of impairment adjustments.
Bank loans are initially measured at transaction price, including transaction costs, and are subsequently carried at amortised cost using the effective interest method.
South West Investment Group (Capital) Limited
Notes to the Financial Statements
Year Ended 31 March 2023
Accounting estimates and judgements
In applying the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
The areas where management have made significant judgements are as follows:
Provisioning of loan book
Management incorporate specific provisions against certain loan balances, based on the advice provided to them by their fund managers.
Provisions against loan receivables are recognised when management judge there is sufficient objective evidence of an impairment event.
Provisions are reviewed on a regular meeting by management as part of their quarterly board meetings.
Given the economic uncertainty and downturn following the pandemic together with the current cost of living, inflation, supply chain and wage challenges, it is anticipated that this will impact on the recoverability of loans in the future. However, it is not possible to estimate the full impact at this point in time. This is partly due to the government support available to businesses. This has allowed businesses to minimise their losses whilst not defaulting on their loans. As a result there have been no significant changes at the time these accounts are approved that have been observed which would result in a significant loan impairment. However, as government support packages cease, businesses may face financial difficulties.
South West Investment Group (Capital) Limited
Notes to the Financial Statements
Year Ended 31 March 2023
Going concern
The company has performed well in 22/23 and the outlook for operations in 23/24 remains positive. There is strong demand across our sector for affordable loan facilities despite the macro-economic headwinds of inflation and interest rates being higher than we have experienced in recent years. In preparing and approving these financial statements the directors have given due consideration to all economic factors that can impact our business model.
The company has strong net assets, £6,851k (2022 - £7,099k), and trades profitably £374k (2022 - £35k).
The company utilises Government-backed loan guarantee schemes and will ensure a continued focus on our loan portfolios to ensure losses are minimised as far as possible. We recognise the present economic situation is challenging but we remain optimistic that loan-losses will be within anticipated and risk-mitigated criteria.
The Board considers it is appropriate for the accounts to be prepared on a going concern basis for the reasons set out above and especially given the Company’s strong balance sheet and cash reserves outlined which provides sufficient headroom to deal with any potential loan write offs that may occur in the next 12 months from the date of approval of the financial statements.
Staff numbers |
The average number of persons employed by the company (including directors) during the year, was
South West Investment Group (Capital) Limited
Notes to the Financial Statements
Year Ended 31 March 2023
Profit before tax |
Arrived at after charging/(crediting)
2023 |
2022 |
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Exceptional charge |
( |
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In 2018, a full provision in respect of the EU Structural and Investment Funds (ESIF) funds - South West Loans Fund Convergence - was recognised on the understanding that these would be transferred to the Cornwall and Isles of Scilly Investment fund, being the new fund holding organisation for these funds. The provision provided in the accounts for the year ended 31 March 2022 was based on the valuation of the fund as at that date.
During the year the final payments were made to the original fund holders totalling £2.581m (previous years £0.125m).
The movement in the current year reflects the difference between the provisions, adhoc cash receipts received during the year and the final payments made to the various fund holders.
South West Investment Group (Capital) Limited
Notes to the Financial Statements
Year Ended 31 March 2023
Tangible assets |
Furniture, fittings and equipment |
Total |
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Cost or valuation |
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At 1 April 2022 |
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At 31 March 2023 |
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Depreciation |
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At 1 April 2022 |
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Charge for the year |
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At 31 March 2023 |
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Carrying amount |
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At 31 March 2023 |
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At 31 March 2022 |
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Debtors |
2023 |
2022 |
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Amounts due from group undertakings |
- |
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Other debtors |
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South West Investment Group (Capital) Limited
Notes to the Financial Statements
Year Ended 31 March 2023
Investments |
Investments |
Total |
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Cost or valuation |
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At 1 April 2022 |
2,395,399 |
2,395,399 |
Loan book advances |
3,401,620 |
3,401,620 |
Repayments |
(839,593) |
(839,593) |
Written off |
(11) |
(11) |
At 31 March 2023 |
4,957,415 |
4,957,415 |
Provision |
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At 1 April 2022 |
167,274 |
167,274 |
Movement in provision |
64,868 |
64,868 |
At 31 March 2023 |
232,142 |
232,142 |
Carrying amount |
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At 31 March 2023 |
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4,725,273 |
At 31 March 2022 |
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2,228,125 |
Of total investments above £3,605,124 (2022: £1,702,001) is recoverable in more than one year.
South West Investment Group (Capital) Limited
Notes to the Financial Statements
Year Ended 31 March 2023
Creditors |
Creditors: amounts falling due within one year
2023 |
2022 |
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Due within one year |
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Trade creditors |
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Amounts due to group undertakings |
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Social security and other taxes |
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Other creditors |
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Exceptional provision |
- |
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Creditors: amounts falling due after more than one year
2023 |
2022 |
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Due after one year |
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Deferred income |
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Other reserves |
Other reserves are the Business Development Reserve which is a subdivision of the profit and loss reserve.
Whilst it remains a distributable reserve, it should be noted that all of the Business Development Fund is accrued from funds managed by the company where there are conditions established over the future use of the profits from those funds.
The Directors of South West Investment Group (Capital) Limited actively monitor changes in EU regulations, or other requirements, to assess any impact they may have on the amounts held in the Business Development Fund. In the event that there is a known change in the applicable terms and conditions relating to such funds, or if an obligation were to arise either legally or constructively to transfer such funds to another body, then an appropriate transaction in respect of the amount due would be recognised at that time.
A provision has been recognised in respect of certain elements of this reserve of £Nil (2022: £2.59m) for amounts that have or expect to be requested. During the current year, £2.59m (2022: £0.125m) was paid.
South West Investment Group (Capital) Limited
Notes to the Financial Statements
Year Ended 31 March 2023
Financial commitments, guarantees and contingencies |
Amounts not provided for in the balance sheet
The total amount of financial commitments not included in the balance sheet is £
Audit report |
Parent and ultimate parent undertaking |
The company's immediate parent is
Park, Truro, Cornwall, TR4 9NY.
The most senior parent entity producing publicly available financial statements is