The directors present the strategic report for the year ended 31 December 2022.
Soho Data Holdings Ltd acquired a one-acre Prime Central London site at 101 Cleveland Street and developed it into a modern building containing 88 luxury apartments built in a high-quality boutique style, 15 affordable homes and 35,000 sqft commercial space.
As at 31 December 2022, 81 apartments had been sold with 7 being under offer, the affordable homes were sold to Octavia Housing in the prior year and the commercial space has been let as Ted Bakers global headquarters. Hence, the directors are pleased with the overall performance of the business for the year which saw gross profit margins increase to 28.7% from 19.3%.
The company repaid all debts owed to group undertakings during the year.
The directors consider the principal risks and uncertainties affecting the company's business to be:
Suppliers
The quality and efficient delivery of a first class, modern, residential development is key to the ongoing success of the business.
Competitors
The residential sector in London is highly competitive and apartments have been priced in accordance with independently valuations with comparison to the market.
Liquidity Risk
The company manages its cash and borrowing requirements centrally in order to maximise interest income and minimise interest expense. Regular cashflow forecasts are performed for the company in order to ensure there are sufficient liquid resources to meet the operating needs of the business.
Credit Risk
Due diligence and credit worthiness checks are performed on all potential buyers. Processes are in place to ensure cash is collected within reasonable time frames and regular reporting and monitoring occurs.
Interest Rate Risk
The company is exposed to interest rate risk on its bank loans. The company enters into fixed interest bearing loans where possible, otherwise the interest rate is variable according to Bank of England base rate but the repayments are fixed.
Legal Obligations
The company has in place policies and procedures to ensure compliance with its legal obligations in relation to planning and construction.
Commercial and General Risks
Standard form contracts are provided for commercial use and to assist the commercial function to negotiate within approved parameters.
The company has been built on solid relationships with its investors and professional advisers. We are reliant on external suppliers for a number of key specialist services such as legal, public relations and advisory. The company believes in the fair treatment of suppliers who are all paid within standard terms.
The company has been built on its impeccable conduct and high business standards. The board recognises the importance in maintaining these values and the reputation which has been built on them.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2022.
The results for the year are set out on page 8.
Interim dividends were paid amounting to £12,819,138. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Risks are directly managed by the company. See discussion of the strategies and assessed risks in the Strategic report.
Information about business relationships are discussed in the Strategic Report.
These have been disclosed in the notes attached to these financial statements.
The directors aim to continue the principal activity of the company which is that of property development if viable opportunities present themselves.
There was a change in auditor during the year with Gravita II LLP being appointed as auditor following the resignation of Gravita Audit Limited. In accordance with section 485 of the Companies Act 2006, a resolution proposing that Gravita II LLP be re-appointed will be put at a General Meeting.
As the company has not consumed more than 40,000 kWh of energy in this reporting period, it qualifies as a low energy user under these regulations and is not required to report on its emissions, energy consumption or energy efficiency activities.
Basis for 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 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. However, because not all future events or conditions can be predicted this statement is not a guarantee as to the company's ability to continue as a going concern.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have 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.
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.
The extent to which the audit was considered capable of detecting irregularities, including fraud
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
the senior statutory auditor ensured the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the property industry.
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including Companies Act 2006, taxation legislation, data protection, anti-bribery, employment, environmental, health and safety legislation and anti-money laundering regulations.
The extent to which the audit was considered capable of detecting irregularities, including fraud (cont'd)
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
we assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud;
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates set out in Note 2 of the financial statements were indicative of potential bias;
investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
agreeing financial statement disclosures to underlying supporting documentation;
reading the minutes of meetings of those charged with governance;
enquiring of management as to actual and potential litigation and claims;
reviewing correspondence with the company’s legal advisor.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of noncompliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
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 member 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 member those matters we are required to state to the member 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 member, for our audit work, for this report, or for the opinions we have formed.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
The notes on pages 11 to 19 form part of these financial statements.
The notes on pages 11 to 19 form part of these financial statements.
The notes on pages 11 to 19 form part of these financial statements.
Soho Data Holdings Ltd is a private company limited by shares incorporated in England and Wales. The registered office is 1 Red Place, London, England, W1K 6PL.
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 £.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 4 ‘Statement of Financial Position’: Reconciliation of the opening and closing number of shares;
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of 101 Cleveland Street JV Company Limited. These consolidated financial statements are available from its registered office, 1 Red Place, London, England, W1K 6PL.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method 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. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, 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. Financial liabilities classified as payable within one year are not amortised.
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. Amounts payable 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.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. 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 profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
Cost of sales
The costs recognised on the sales of properties are accounted for at the relative proportion of the total cost of the development for each unit sold. The total costs of the development have been allocated among the apartments (units), common areas and shared amenities, and additional facilities such as car parks and roof terraces.
The total costs of the development assigned to the units for sale are recognised based on the net area of each unit.
The costs allocated to common areas and shared amenities of the development are allocated equally among each of the units sold.
Costs associated with additional facilities are allocated to the units to which they relate.
Finance costs
Finance costs in relation to the property development are capitalised as part of work in progress, over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount 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 where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and expenses during the year. However, the nature of estimation means that actual outcomes could differ from those estimates. The key judgements and sources of estimation and uncertainty are:
Work in progress:
a) The nature of the costs incurred in the property development requires management judgement to capture directly identifiable costs that should be added as part of work in progress and identify which costs should be charged to the Statement of Comprehensive Income.
b) The recoverable value of work in progress requires the selling price, costs to complete and costs to sell to be identified by management. Forecast costs to complete and to sell are maintained in standard appraisal models and are regularly reconciled with agreements entered into with third parties. Controls are in place to ensure that regular reviews are undertaken by management. Estimated selling prices are reviewed by management with reference to independent external valuations where appropriate.
An analysis of the company's turnover is as follows:
The average monthly number of persons (including directors) employed by the company during the year was:
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
Amounts owed to group undertakings, consist of:
a) Loans of £nil (2021: £29.3m) relating to unsecured, interest free loans which was repaid during the year.
b) A £nil (2021: £6m) interest bearing facility at 8% p.a. from its parent, 101 Cleveland Street Midco 2, which was repaid during the year.
At 31 December 2022, the company had future minimum lease payments under non-cancellable operating leases as follows:
Soho Data Holdings Limited had a rental guarantee obligation with the Lord Mayor and Citizens of the City of the Westminster (WCC) of £1.4m per year until the date on which the Commercial Development is fully let. On the 22nd July 2021, Soho Data Holdings Limited entered into an agreement to lease the commercial space, comprising the Ground and Lower Ground floor. Completion of the lease was conditional on the grant of planning permission and practical completion, both of which have taken place. Hence, Soho Data Holdings Limited is released from the obligations of the rental guarantee.
The company was a party to a £20m mezzanine facility agreement between its parent, 101 Cleveland Street Midco 1 Limited, and SOF-9 Soho Data Holdings LUX S.A.R.L dated 11 April 2019 and repayable on 10 October 2022. As at the year end, this loan had been repaid in full thereby releasing the fixed and floating charges over the company's assets during the year.
The directors are of the opinion that there are no significant adjusting or non-adjusting events occurring after the reporting date.
The company has taken advantage of the exemption available in accordance with FRS 102 Section 33 'Related Party Disclosures' not to disclose transactions entered into between two or more members of a group, as the company is a wholly owned subsidiary undertaking of the Group to which it is party to the transactions.
The immediate parent undertaking is 101 Cleveland Street Midco 2 Limited.
The ultimate parent undertaking and controlling party is Kommanditgesellschaft CURA Vermögensverwaltung G.m.b.H. & Co., a company registered in Germany.
The smallest group is 101 Cleveland Street JV Company Ltd and the largest group into which the entity is consolidated is Kommanditgesellschaft CURA Vermögensverwaltung G.m.b.H. & Co. The registered office is Saseler Damm 39 a, 22395 Hamburg, Germany from which copies of the group financial statements can be obtained.