Registered number: 07458396
SF P101 LIMITED
FINANCIAL STATEMENTS
INFORMATION FOR FILING WITH THE REGISTRAR
FOR THE YEAR ENDED 31 MARCH 2023
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SF P101 LIMITED
REGISTERED NUMBER: 07458396
BALANCE SHEET
AS AT 31 MARCH 2023
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Provisions for liabilities
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Page 1
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SF P101 LIMITED
REGISTERED NUMBER: 07458396
BALANCE SHEET (CONTINUED)
AS AT 31 MARCH 2023
The Company's financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.
The financial statements have been delivered in accordance with the provisions applicable to companies subject to the small companies regime.
The Company has opted not to file the statement of comprehensive income in accordance with provisions applicable to companies subject to the small companies' regime.
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 29 September 2023.
The notes on pages 3 to 11 form part of these financial statements.
Page 2
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SF P101 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
SF P101 Limited is a private company, limited by shares, incorporated in the United Kingdom and registered in England and Wales (registered number: 07458396). The Company's registered office address and the principal place of business is Prospect Place, Moorside Road, Winchester, SO23 7RX.
The financial statements are presented in Sterling, which is the functional currency of the Company. The principal activity of the Company during the year was that of property investment.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies.
The following principal accounting policies have been applied:
These accounts have been prepared on the going concern basis on the understanding that the intermediate parent company, SF Funding Limited, will continue to financially support the Company.
At the period end, creditors total £7,314,606 (2022: £9,980,783), of which £6.380,279 (2022: £8,903,283) relates to group undertakings.
The Director has considered the legislative changes disclosed in note 3 and is of the opinion that taking into account the group support referred to above the Company is expected to have adequate financial resources to continue as a going concern for the forthcoming year. The group of which the company is part has sufficient liquidity in its structure to meet liabilities as they fall due.
When arriving at this conclusion the Director has considered the impact of Building Safety legislation and Leasehold Reform:
Building Safety Legislation
The Building Safety Act 2022 received Royal Assent in April 2022. It is intended to improve safety standards in buildings within its scope (broadly, multi-dwelling units greater than 11 meters in height) and to protect homeowners in full or in part from the costs of remediating historical building safety defects.
On buildings over 18 meters in height it is expected that either Government or developer funding will be available to ensure necessary remediation of these properties can be undertaken. For buildings between 11 meters and 18 meters in height the developer is expected to be primarily responsible for funding the necessary remediation. Homeowners are only liable to contribute in limited, prescribed circumstances. Where funding gaps remain, freeholders may incur a responsibility to provide funding. However, government has made available a number of new routes to freeholders to recover any outlay from parties such as developers, product manufacturers, warranty insurers and others involved in the original development, design or construction of buildings.
Page 3
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SF P101 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
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Going concern (continued)
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Building Safety Legislation (continued)
The new remediation funding regime is in its early days and considerable uncertainty remains on its operation and effect and on how tribunals and the courts will interpret relevant provisions. Knowledge gaps remain around the full extent and cost of building remediation, particularly in medium rise (11-18 meter) buildings, where analysis is generally at a less advanced stage.
However, should this new requirement to fund the remediation of building defects create financial hardship to the freeholder it will prevent the achievement of the Government's policy objectives to resolve the building safety crisis.
In July 2023 applications to the Cladding Safety Scheme (CCS) were opened. This is a new initiative launched by government to fund the remediation of building safety defects associated with unsafe external wall systems on buildings 11 meters and over in height which do not qualify for current government funding schemes. However, the CCS is aimed at external wall systems defects only, potentially leaving other fire safety defects unfunded. The group of which the Company is a member has made several applications to the scheme. Further clarification on timing and application of funds is awaited from government.
The Director, having considered the provisions of the Act, the uncertainty over how and when these provisions will be implemented and their impact on the group of which the Company is a member does not believe that the Act has a material effect on the Company's ability to meet its liabilities as they fall due for a reasonably foreseeable period.
Leasehold Reform
Parliament has enacted legislation, the Leasehold Reform (Ground Rent) Act 2022, which prevents the inclusion of a ground rent in excess of a peppercorn on new residential long leases. The Act came into force on 30 June 2022 and for retirement properties on 1 April 2023. The legislation does not apply retrospectively although does create restrictions on the ability of the Company to generate rental income beyond the existing term of current leases. As such the impact of preventing the creation of future ground rents under the Act is not expected to have a material effect on the ability of the Company to meet its liabilities as they fall due for a reasonably foreseeable period.
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 also be met before revenue is recognised:
Page 4
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SF P101 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
Rendering of services
Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
∙the amount of revenue can be measured reliably;
∙it is probable that the Company will receive the consideration due under the contract;
∙the stage of completion of the contract at the end of the reporting period can be measured reliably; and
∙the costs incurred and the costs to complete the contract can be measured reliably.
Interest income is recognised in profit or loss using the effective interest method.
Finance costs are charged to profit or loss 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.
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Current and deferred taxation
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The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss 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.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company operates and generates income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet 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.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Page 5
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SF P101 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
The Company’s holding of investment property is comprised of freehold reversionary interests and these are initially measured at cost and subsequently measured at fair value. Changes in fair value are recognised in the Statement of Comprehensive Income.
These assets, as their name implies, represent interests held in the freehold land on which third party developers have built and sold long leasehold properties. As such these assets are more akin to financial investments, as they generate income in the form of annual ground rents along with other ancillary income streams.
Recognising the unusual nature of these investment properties and the lack of a regular market for significant portfolios of such assets, which are in distinct contrast with the more regular “bricks and mortar” investment properties, the director is of the opinion that the best approximation to fair value for these properties is provided by a discounted cashflow valuation of the income streams generated by these assets. The valuation of the entire freehold reversionary interest portfolio is undertaken by independent valuers specialising in this type of asset.
Valuations of this nature are particularly volatile, demonstrated by the increase in valuation of £159K in the current year. The director also recognises, given the unusual nature and lack of a regular market for significant portfolios of such assets, that these carrying values may not be realised should the Company seek to dispose of any or all of the investment properties.
Further details are given in note 6.
Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.
Page 6
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SF P101 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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The average monthly number of employees, including the director, during the year was as follows:
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Page 7
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SF P101 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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Freehold investment property
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The investment properties represent a portfolio of freehold reversionary interests that generate ground rents as the principal income stream.
As at 31 March 2023 the investment properties were valued at £6,209,212.
The valuation has been carried out by independent valuers. The basis of the valuation was to project and discount the income streams generated by the portfolio over a period of 45 years. The principal assumptions used in the valuation were:
• Reference sterling interest rate swaps based on the SONIA (Sterling Overnight Index Average)
benchmark, provided with reference to directly observable data.
• Funding margins, provided with reference to recent comparable transactions.
• No allowance for taxation in projecting the ground rent cash flows.
• Future rental uplifts modelled as and when they are expected to occur in accordance with leases.
• Projected RPI (Retail Price Index) rate, provided with reference to directly observable data.
• HPI (Household Price Index) projected rate, provided with reference to the projected RPI rate
which are found to be acceptable to lenders in this sector.
• PSEI (Private Sector Earnings Index), this has been set at 0% as a conservative assumption.
• Leases with 10-yearly or 15-yearly doubling clauses are modelled based on initial ground rent
amounts stated in each lease with no increases on any future date.
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If the Investment properties had been accounted for under the historic cost accounting rules, the properties would have been measured as follows:
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Page 8
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SF P101 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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Prepayments and accrued income
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Cash and cash equivalents
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Creditors: Amounts falling due within one year
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Amounts owed to group undertakings
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Other taxation and social security
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Accruals and deferred income
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Page 9
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SF P101 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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Charged to profit or loss
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The deferred taxation balance is made up as follows:
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Gain on revalued investment property
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The Director is currently assessing the potential impact of the Building Safety Act 2022 referred to in note 2.2. Given the nature of the legislation, it is not currently clear what the likelihood or amount of any potential liability to fund the remediation of building safety defects may be. Therefore, no provision has been included in these financial statements.
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Related party transactions
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FRS 102 does not require disclosure of transactions entered into between two or more members of a group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member.
During the year the company purchased properties totalling £623,983 from related companies, the purchase price was deemed to be at market value.
Within trade debtors at the year end there was a balance of £37,510 (2022: £100,977) due from a related company.
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The smallest group to consolidate these financial statements is SF Funding Limited. The registered office and principal place of business of SF Funding Limited is Prospect Place, Moorside Road, Winchester, SO23 7RX.
Page 10
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SF P101 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
The auditors' report on the financial statements for the year ended 31 March 2023 was unqualified.
The audit report was signed on 29 September 2023 by Neville Newman (Senior Statutory Auditor) on behalf of Harris & Trotter LLP.
Page 11
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