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 3.
Ordinary dividends were paid amounting to £40,000. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
This report has been prepared in accordance with the provisions applicable to companies entitled to the small companies exemption.
In order to assist you to fulfil your duties under the Companies Act 2006, we have prepared for your approval the financial statements of The Hogarth Property Group Ltd for the year ended 31 December 2022 which comprise the group profit and loss account, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity and the related notes from the accounting records and from information and explanations you have given us.
As a practising member firm of the Institute of Chartered Accountants in England and Wales (ICAEW), we are subject to its ethical and other professional requirements which are detailed at https://www.icaew.com/regulation.
This report is made solely to the board of directors of The Hogarth Property Group Ltd, as a body, in accordance with the terms of our engagement letter. Our work has been undertaken solely to prepare for your approval the financial statements of The Hogarth Property Group Ltd and state those matters that we have agreed to state to the board of directors of The Hogarth Property Group Ltd, as a body, in this report in accordance with ICAEW Technical Release 07/16 AAF. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than The Hogarth Property Group Ltd and its board of directors as a body, for our work or for this report.
It is your duty to ensure that The Hogarth Property Group Ltd has kept adequate accounting records and to prepare statutory financial statements that give a true and fair view of the assets, liabilities, financial position and loss of The Hogarth Property Group Ltd. You consider that The Hogarth Property Group Ltd is exempt from the statutory audit requirement for the year.
We have not been instructed to carry out an audit or a review of the financial statements of The Hogarth Property Group Ltd. For this reason, we have not verified the accuracy or completeness of the accounting records or information and explanations you have given to us and we do not, therefore, express any opinion on the statutory financial statements.
For the financial year ended 31 December 2022 the group was entitled to exemption from audit under section 477 of the Companies Act 2006.
Directors' responsibilities under the Companies Act 2006:
The members have not required the company to obtain an audit of its financial statements for the year in question in accordance with section 476;
The directors acknowledge their responsibilities for complying with the requirements of the Act with respect to accounting records and the preparation of financial statements.
These financial statements have been prepared in accordance with the provisions applicable to groups and companies subject to the small companies regime.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £127,066 (2021 - £32,611 loss).
The Hogarth Property Group Ltd (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is .
The group consists of The Hogarth Property Group Ltd and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.
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 £.
The financial statements have been prepared under the historical cost convention, [modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value]. The principal accounting policies adopted are set out below.
The consolidated group financial statements consist of the financial statements of the parent company The Hogarth Property Group Ltd together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 December 2022. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes.
Turnover is the amount derived from ordinary activities, being mainly rents, licence fees and related income, and revenues derived from the sale of properties.
Disposals of properties are accounted for at the date of exchange where there is a legally binding, unconditional contract and where completion takes place by the date of approval of the financial statements.
Rental income from property leased out under an operating lease is recognised in the profit and loss account on a straight line basis over the term of the lease.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Equity instruments issued by the group 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 group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
In the application of the group’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 following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Management regularly review the current market value, rental market and rental yields of the investment properties.
Management regularly review the current market value of the property under development held within stock to ensure its carrying value is at the lower of cost and net realisable value.
Management regularly review intercompany balances for recoverability.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Investment property comprises
- Two freehold properties where development has been completed. The fair value of the investment property has been arrived at on the basis of a valuation carried out at by the directors. The valuation was made on an open market value basis by reference to market evidence of transaction prices for similar properties.
- One freehold property under development, The fair value of the investment property has been arrived at on the basis of a valuation carried out at by the directors. The valuation was made on an open market value basis by reference to market evidence of transaction prices for similar properties.
The directors have opted to account for the company's investment in subsidiaries at cost less impairment as set out in the above accounting policies and in accordance with the FRS 102. The reason for choosing this method is that the subsidiaries have always been privately owned and their shares have never been publicly traded.
Details of the company's subsidiaries at 31 December 2022 are as follows:
The registered office address for all subsidary companies is Chelsey House, Jordans Lane, Jordans, Buckinghamshire, HP9 2SW.
The amounts owed by group undertakings are unsecured, interest-free and repayable on demand with no fixed repayment terms.
Included in other creditors falling due within one year is
- An unsecured loan facility from a director amounting to £1.9m. The loan is interest-free, unsecured and repayable on demand - see Note 18.
The amounts owed to group undertakings are unsecured, interest-free and repayable on demand with no fixed repayment terms.
Included in other creditors falling due after more than one year is
- An unsecured loan facility from the directors amounting to £1.33m. Interest is chargeable at the rate of 15.3% per annum - see Note 18.
Of the creditors falling due within and after more than one year, bank loans and overdrafts totalling £10,585,881 (2021: £7,458,534), were secured.
The long-term loans are secured as follows:
During the year a subsidiary company obtained a new 27 month Development Mortgage facility to finance development of the investment property at a fixed annual interest rate of 6.5%. The loan is due for repayment in August 2024.
At 31 December 2022, the following charges had been lodged to secure borrowings of that subsidiary company:
- A Legal Charge dated 21 January 2022 was created in favour of Aldermore Bank Plc, to secure loan facilities. This comprises a fixed charge over the company's current and future freehold properties, and a floating charge over all the property or undertaking of the company, and contains a negative pledge.
- A Legal Charge dated 21 January 2022 was created in favour of Aldermore Bank Plc, to secure loan facilities. This comprises a fixed charge over the company's freehold property, and contains a negative pledge.
During 2021 a subsidiary company refinanced its borrowings taking out a new 25-year interest-only loan with Shawbrook Bank Limited to finance development of one of its investment properties.
At 31 December 2022, the following charges had been lodged to secure borrowings of that subsidiary company:
- A Legal Charge dated 27 October 2020 was created in favour of Shawbrook Bank Limited, to secure loan facilities. This comprises a fixed charge over the company's freehold properties, and contains a negative pledge.
- A Legal Charge dated 8 April 2019 was created in favour of Aldermore Bank Plc, to secure loan facilities. This comprises a fixed charge over the company's freehold property, and contains a negative pledge.
- A Debenture dated 8 April 2019 was created, in favour of Aldermore Bank Plc, to secure loan facilities. This comprises fixed and floating charges over all property or undertakings of the company. The Debenture contains a negative pledge.
- A Legal Charge dated 17 November 2021 was created in favour of Shawbrook Bank Limited, to secure loan facilities. This comprises a fixed charge over the company's freehold property, and contains a negative pledge.
A net deferred tax liability of £3,172,260 (2021: £1,223,981) has been provided representing the potential tax liability that would arise if the revalued properties held were disposed of at the balance sheet date.
At the reporting end date the group had contracted with tenants for the following minimum lease payments:
The following amounts were outstanding at the reporting end date:
The following amounts were outstanding at the reporting end date:
Loans have been granted by the company and group to its directors as follows:
The maximum amounts outstanding during the year on the loans were £27,729 and £22,171 respectively. The loans are unsecured and repayable on demand, Interest totalling £481 has been charged at 2.5% on the above loans.
The smallest and largest group financial statements that consolidate this company is The Hogarth Property Group Limited. Copies of the group accounts are available to the public from the parent company's registered office at Chelsey House, Jordans Lane, Jordans, Beaconsfield HP9 2SW.