Derril Water Accounts

[cojmh]

I am not sure if this the right place to post this - please move if not.

I see the Derril Water accounts were published this week (on the 11th of March) and despite not being an investor in DW I wanted to have a look to see what was going on.

I have a couple of question regarding the recent filings and wondered if others who know more about these things might have some input.

1. The filings on companies house Derril Water solar limited show that the ltd company - which I believe is a wholly owned subsidiary of the COOP is showing a loss. Is this what would be expected? The directors comments state that this is being covered by a loan which will be available for a year from the parent company - which is the COOP I believe. Whilst showing a loss is not actually that unusual for a company still starting up I was just wondering if this is normal/expected in this instance?

2. The accounts filed with the FCA Derril Water Solar Coop limited (in March 2024) look as if they have been independently audited and has passed the auditing. However there is a statement on page 5 from the auditor (page 26 of the PDF) that has raised a question for me. The statement is as follows:

We also evaluated the risk of fraud through management override including that arising from management’s incentives. We determined that the principal risks were related to the understatement of the deficit through the manipulation of cut-off, in respect of both income and expenditure.

In response to the identified risk, as part of our audit work we:

• performed detailed work on expenditure, including assessing whether expenditure was accounted for in
the correct period;
• performed cut off procedures around the year end to ensure revenue has been accounted for in the
correct period; and
• reviewed in detail the key estimates and judgments made by management in the preparation of the
financial statements.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements. 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 omissions, collusion, forgery, misrepresentations, or the override of internal controls. We are also less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements.

Do we know (or have any links to) what the management's incentives are?

I hasten to add that nothing I have read and understand says that anyone has done anything wrong at DW. I am just trying to figure out how things are being operated and DW has some of the most recent filed documents and I think there should be similarities in governance between the different coops.

Cheers,

[nowty]

DW is not yet operating, therefore there is no income, there is borrowing funding on top of the equity funding therefore there can only be losses for now.

The auditors comments look like general legal speak to me.

Ripple's incentives are from taking a circa 0.5p / kWh cut, therefore they are incentivised to get it operational ASAP.