Ara Energy Limited |
Notes to the Accounts |
for the period from 20 May 2022 to 31 December 2022 |
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Summary of significant accounting policies |
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Company information |
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Ara Energy Limited is a private company limited by shares incorporated in England and Wales. The registered office is Milton Gate, 60 Chiswell Street, London, EC1Y 4AG, United Kingdom. |
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Basis of preparation |
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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" including the provisions of Section 1A "Small Entities" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention |
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The financial statements have been prepared under the historical cost basis as modified by the revaluation of certain financial assets and liabilities and investment properties measured at fair value through profit or loss. |
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The financial statements are prepared in GBP£ (Great Britain pound sterling), which is the functional currency of the entity. |
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The principal accounting policies adopted are set out below. |
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Turnover |
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Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must be met before revenue is recognised: |
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Rendering of services |
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the stage of completion of the contract at the end of the reporting period can be measured reliably, |
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the costs incurred and the costs to complete the contract can be measured reliably. |
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Tangible fixed assets |
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Tangible fixed assets are measured at cost less accumulative depreciation and any accumulative impairment losses. Depreciation is provided on all tangible fixed assets, other than freehold land, at rates calculated to write off the cost, less estimated residual value, of each asset evenly over its expected useful life, as follows: |
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Fixtures, fittings, tools and equipment |
15% reducing balance basis |
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Debtors |
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Short term debtors are measured at transaction price (which is usually the invoice price), less any impairment losses for bad and doubtful debts. Loans and other financial assets are initially recognised at transaction price including any transaction costs and subsequently measured at amortised cost determined using the effective interest method, less any impairment losses for bad and doubtful debts. |
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Creditors |
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Short term creditors are measured at transaction price (which is usually the invoice price). Loans and other financial liabilities are initially recognised at transaction price net of any transaction costs and subsequently measured at amortised cost determined using the effective interest method. |
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Taxation |
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A current tax liability is recognised for the tax payable on the taxable profit of the current and past periods. A current tax asset is recognised in respect of a tax loss that can be carried back to recover tax paid in a previous period. Deferred tax is recognised in respect of all timing differences between the recognition of income and expenses in the financial statements and their inclusion in tax assessments. Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date and that are expected to apply to the reversal of the timing difference, except for revalued land and investment property where the tax rate that applies to the sale of the asset is used. Current and deferred tax assets and liabilities are not discounted. |
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Foreign currency translation |
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Transactions in foreign currencies are initially recognised at the rate of exchange ruling at the date of the transaction. At the end of each reporting period foreign currency monetary items are translated at the closing rate of exchange. Non-monetary items that are measured at historical cost are translated at the rate ruling at the date of the transaction. All differences are charged to profit or loss. |
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Leased assets |
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A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. All other leases are classified as operating leases. The rights of use and obligations under finance leases are initially recognised as assets and liabilities at amounts equal to the fair value of the leased assets or, if lower, the present value of the minimum lease payments. Minimum lease payments are apportioned between the finance charge and the reduction in the outstanding liability using the effective interest rate method. The finance charge is allocated to each period during the lease so as to produce a constant periodic rate of interest on the remaining balance of the liability. Leased assets are depreciated in accordance with the company's policy for tangible fixed assets. If there is no reasonable certainty that ownership will be obtained at the end of the lease term, the asset is depreciated over the lower of the lease term and its useful life. Operating lease payments are recognised as an expense on a straight line basis over the lease term. |
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Cash and cash equivalents |
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Cash at bank and in hand are basic financial assets and include cash in hand, deposit held at call with banks, short-term liquid investments with original maturities of three months or less, and bank overdrafts are shown within borrowings in current liabilities. |
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Equity instruments |
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Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company. |
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Provisions |
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Provisions (ie liabilities of uncertain timing or amount) are recognised when there is an obligation at the reporting date as a result of a past event, it is probable that economic benefit will be transferred to settle the obligation and the amount of the obligation can be estimated reliably. |
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Going concern |
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At the time approving the financial statements,the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future.The going concern basis of accounting in preparing the financial statements of the company is therefore considered appropriate by the directors. |
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Going concern consideration |
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The Company's management does not see a severe impact of COVID-19 outbreak to its activity. The Company tested the financial impact on the following areas of financial statements that can be affected: |
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Breach of trade contracts, |
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Revenue, |
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Administrative expenses, |
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Current and non-current assets fair value measurements, |
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Trade and other receivables and payables. |
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2 |
Operating profit |
2022 |
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£ |
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This is stated after charging: |
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Depreciation of owned fixed assets |
963 |
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Auditors' remuneration for audit services |
2,500 |
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3 |
Taxation |
2022 |
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£ |
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Analysis of charge in period |
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Current tax: |
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UK corporation tax on profits of the period |
273 |
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Adjustments in respect of previous periods |
- |
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273 |
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Deferred tax: |
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Origination and reversal of timing differences |
- |
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Tax on profit or (loss) on ordinary activities |
273 |
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Factors affecting tax charge for period |
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The differences between the tax assessed for the period and the standard rate of corporation tax are explained as follows: |
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2,022 |
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£ |
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Profit ( loss ) on ordinary before tax |
6,893 |
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Standard rate of corporation tax in the UK |
19% |
£ |
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Profit on ordinary activities multiplied by the standard rate of corporation tax |
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1,310 |
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Effects of: |
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Expenses not deductible for tax purposes |
(1,037) |
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Adjustments to tax charge in respect of previous periods |
- |
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Current tax charge for period |
273 |
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4 |
Audit information |
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As the profit & loss account has been omitted from the filling copy of the financial statements , the following information in relation to the audit report on the statutory financial statements is provided in accordance with s444(5B) of the Companies Act 2006: |
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The audit report was unqualified. |
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Senior statutory auditor: |
Anwar Faruque Chowdhury |
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Firm: |
ACN Accountants |
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Date of audit report: |
29 September 2023 |
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5 |
Employees |
2022 |
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Number |
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Average number of persons employed by the company |
0 |
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6 |
Tangible fixed assets |
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Fixtures, fittings, tools and equipment |
£ |
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Cost |
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Additions |
6,421 |
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At 31 December 2022 |
6,421 |
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Depreciation |
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Charge for the period |
963 |
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At 31 December 2022 |
963 |
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Net book value |
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At 31 December 2022 |
5,458 |
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7 |
Debtors |
2022 |
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£ |
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VAT receivable |
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13,736 |
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Prepaid rent |
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30,000 |
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Other debtors |
101 |
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43,837 |
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8 |
Creditors: amounts falling due within one year |
2022 |
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£ |
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Amounts owed to group undertakings and undertakings in which the company has a participating interest |
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23,012 |
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Taxation and social security costs |
273 |
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Other creditors |
19,290 |
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42,575 |
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9 |
Called up share capital |
2022 |
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Ordinary share capital |
£ |
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Issued and fully paid |
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100 Ordinary shares of £1.00 each |
100 |
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10 |
Capital and other commitments |
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The company had no capital or other financial commitments other than those stated in the financial statements as at 31st December 2022. |
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11 |
Foreign exchange and foreign currencies |
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1. Functional and presentation currency |
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Items included in the Company's financial statements are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The financial statements are presented in Great Britain Pounds ('GBP £'), which is the Company's functional and presentation currency. |
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2. Transactions and balances |
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Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit and loss account. |
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12 |
Related Party Transactions |
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During the year no dividends were paid to the shareholder. |
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During the year, there were transactions between the company and its parent company and at the year the company owed to its parent company amount of £23,012. |
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13 |
Post Balance Sheet Events |
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There have not been any significant events since the balance sheet date. There were no essential either adjusting events or non-adjusting events in the period of time elapsing between the balance sheet date and the date on which these financial statements are prepared. The impact of COVID-19 is described in the Going Concern Consideration Note.The directors have also confirmed that the business will continue to be a going concern for the foreseeable future and they will support the company. |
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The Ongoing Russia – Ukraine conflict |
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This ongoing Russia - Ukraine conflict has resulted in going concern becoming a significant risk. The United States and Europe have avoided direct military conflict with Russia amid its conflict with Ukraine. They have however used a set of financial sanctions to limit Russia's access to financial resources. The impact of the sanctions may result in difficulties for the company to operate.Neither Ara Energy Limited nor the owners are currently on the sanctions list at the time of this report, however this may change as the situation changes. |
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Parent company |
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The parent company is Eclipse Investments LLC a company registered in United Arab Emirates and the registered office address is P.O Box 60808, Office No 705, Plot No.348-465, Bur Dubai- Commercial, Dubai, United Arab Emirates. |