Registration number:
for the Year Ended 31 March 2024
Cambridge City Housing Company Limited
Contents
Company Information |
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Strategic Report |
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Directors' Report |
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Statement of Directors' Responsibilities |
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Independent Auditor's Report |
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Income Statement |
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Statement of Comprehensive Income |
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Statement of Financial Position |
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Statement of Changes in Equity |
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Statement of Cash Flows |
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Notes to the Financial Statements |
Cambridge City Housing Company Limited
Company Information
Directors |
Mr J L Elms Mrs J C Hovells |
Company secretary |
Ms C Buckle |
Registered office |
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Auditors |
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Business address |
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Cambridge City Housing Company Limited
Strategic Report for the Year Ended 31 March 2024
The directors present their strategic report for the year ended 31 March 2024.
Fair review of the business
Cambridge City Housing Company Limited was established to alleviate some of the pressures on the intermediate housing market in Cambridge. The company is an independent property company, wholly owned by Cambridge City Council.
The primary objectives of the company are to provide and manage housing that is affordable for those in housing need and to undertake any other property related activity in Cambridge and neighbouring districts, whilst also generating a financial return for the Council.
During 2022/23, the Council, as shareholder and the Company, concluded exploration of options for the potential expansion of the portfolio, both in terms of isolated acquisitions and in respect of a strategic expansion plan that would see up to 250 further homes acquired over a 5 year period. The resulting recommendation made to the Council, as shareholder, was that expansion was not viable in the current economic climate, where inflation and interest rates are high and property prices have continued to rise. It was agreed that the Company would keep the expansion metrics under regular review, returning to the Council, as shareholder, if expansion were deemed possible at any point in the future. This review was undertaken quarterly during 2023/24, but at no point was the Company in a position to revert to the Council to recommend business expansion.
During the period ended 31 March 2024, the company fulfilled its principal activities and generated a post-tax trading profit of £68,387, compared to a profit in the previous year of £154,045. The value of property increased by approximately 0.14% (2023: increase of 1.8%) over the year to £8,281,400 (2023: £8,269,600), whilst revenue from the property portfolio decreased by 4.9% to £323,200 (2023: £339,805).The decrease in revenue is attributed to the surrender of the remaining leased portfolio, with some income still recorded in 2022/23.
There were minimal void properties at 31 March 2024, with the Company generating income with low arrears levels, as in previous years, despite the current economic climate.
Principal risks and uncertainties
The principal risks remain those relating to market conditions with respect to letting, voids and rental levels and labour and materials prices in respect of both management and maintenance. There is an additional risk in respect of the quality of the homes let, with requirements to improve the energy efficiency of homes anticipated to have an impact in coming years. There was a small increase in void activity during 2023/24, with void periods in 6 of the 23 homes during the year and it taking marginally longer to re-let these homes than in previous years. Rent levels continue to be reviewed regularly to ensure that they reflect market conditions and remain competitive.
Approved by the
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Cambridge City Housing Company Limited
Directors' Report for the Year Ended 31 March 2024
The directors present their report and the financial statements for the year ended 31 March 2024.
Directors' of the company
The directors, who held office during the year, were as follows:
Principal activity
The principal activity of the company is that of property letting at sub-market rental rates.
Information included in the Strategic Report
The Company has chosen, in accordance with Companies Act 2006, s.141C (11), to set out in the Company's Strategic Report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2006, Sch.7 to be contained in the Directors' Report.
Results and dividends
No ordinary dividends were paid. The directors do not receive payment of a final dividend.
No preference dividends were paid. The directors do not recommend payment of a final dividend.
Financial instruments
Objectives and policies
The company is exposed to a moderate level of price risk, credit risk, liquidity risk and cash flow risk. Specifically in respect of fluctuations in interest rates on the company's borrowings and maintaining liquid funds to meet day-to-day operation costs and pay liabilities as they fall due.
The company manages these risks by financing its operations through retained profits, supplemented by long-term bank borrowings where necessary to fund expansion or capital expenditure programmes.
The management objectives are to retain sufficient liquid funds to enable it to meet its day to day requirements, minimise the company's exposure to fluctuating interest rates, and match the repayment schedule of any external borrowings or overdrafts with the future cash flows expected to arise from the company's trading activities.
Disclosure of information to the auditor
Each director has taken steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditor is aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditor is unaware.
Reappointment of auditors
In accordance with section 485 of the Companies Act 2006, a resolution proposing that Williamson and Croft Audit Ltd be re-appointed as auditor of the company for the year ended 31 March 2024 was considered as part of approving the annual business plan and agreed by the board subsequent to the Annual General Meeting on 14 March 2024.
Cambridge City Housing Company Limited
Directors' Report for the Year Ended 31 March 2024
Approved by the
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Cambridge City Housing Company Limited
Statement of Directors' Responsibilities
The directors acknowledge their responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with UK adopted International Financial Reporting Standards (IFRSs). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
• | select suitable accounting policies and apply them consistently; |
• | make judgements and accounting estimates that are reasonable and prudent; |
• | state whether applicable UK adopted International Financial Reporting Standards (IFRSs) have been followed, subject to any material departures disclosed and explained in the financial statements; and |
• | prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. |
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Cambridge City Housing Company Limited
Independent Auditor's Report to the Members of Cambridge City Housing Company Limited
Opinion
We have audited the financial statements of Cambridge City Housing Company Limited (the 'company') for the year ended 31 March 2024, which comprise the Income Statement, Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows, and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK adopted International Financial Reporting Standards (IFRSs).
In our opinion the financial statements:
• | give a true and fair view of the state of the company's affairs as at 31 March 2024 and of its profit for the year then ended; |
• | have been properly prepared in accordance with UK adopted IFRSs; and |
• | have been prepared in accordance with the requirements of the Companies Act 2006. |
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's 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 original financial statements were authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Cambridge City Housing Company Limited
Independent Auditor's Report to the Members of Cambridge City Housing Company Limited
Opinion on other matter prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
• |
the information given in the Strategic Report and Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
• |
the Strategic Report and Directors' Report have been prepared in accordance with applicable legal requirements. |
Matters on which we are required to report by exception
In the light of our knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Directors' Report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
• | adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or |
• | the financial statements are not in agreement with the accounting records and returns; or |
• | certain disclosures of directors’ remuneration specified by law are not made; or |
• | we have not received all the information and explanations we require for our audit. |
Responsibilities of directors
As explained more fully in the Statement of Directors' Responsibilities, set out on page 5, 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.
Auditor Responsibilities for the audit of the financial statements
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.
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Cambridge City Housing Company Limited
Independent Auditor's Report to the Members of Cambridge City Housing Company Limited
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we have given consideration to the control environment (including management's own process for identifying and assessing risks) as well as the nature of the entity, the industry in which it operates and the underlying performance. Consideration was also given to the attitudes and incentives of management to commit fraud. We determined that the greatest potential for fraud existed in the following areas: timing of recognition of income; value of investment properties; and posting of unusual journals and complex transactions. In line with all audits performed under International Standards on Auditing (UK), we planned and performed specific procedures to respond to the risk of management override of controls. |
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We also obtained an understanding of the applicable laws and regulations that the company has to abide by, through discussions with management and those charged with governance, as well as commercial knowledge of the sector and statutory legislation. We paid particular focus to those laws and regulations that had the potential to materially impact the amounts and disclosures within the financial statements. The key laws and regulations we identified were the UK Companies Act, health and safety, tax legislation and landlord regulations. |
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After our initial risk assessment, we performed the following procedures to detect material misstatements in respect of irregularities arising due to fraud or error: |
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• |
Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness, and evaluating the business rationale of significant transactions outside the normal course of business; |
• |
Reviewing financial statement disclosures and testing these against supporting documentation to assess compliance with applicable laws and regulations; |
• |
Assessing key accounting estimates within the financial statements in order to assess their reasonableness and determine whether there were any indications of management bias in the estimates; |
• |
Reviewing minutes of meetings of those charged with governance; |
• |
Making enquiries of management as to whether they are aware of any alleged, suspected or actual fraud during the year; and |
• |
Reviewing information provided by managements' experts against available market data. |
We also performed procedures to satisfy ourselves regarding compliance with applicable laws and regulations, including: |
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• |
Making enquiries of management and those charged with governance if there were any actual and potential litigation and claims; |
• |
Reviewing legal and professional fees incurred in the year for indicators of any litigation or claims against the company; |
• |
Reviewing minutes of meetings of those charged with governance; and |
• |
Reviewing correspondence with relevant legal authorities. |
All audit team members were made aware of the applicable laws and regulations, as well as potential fraud risks during the planning stage of the audit and this was discussed at the audit team planning meeting. It was therefore determined that team members all had the relevant awareness and competence to identify any instances of non-compliance with relevant laws and regulations or fraud. |
A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Cambridge City Housing Company Limited
Independent Auditor's Report to the Members of Cambridge City Housing Company Limited
Use of our report
This report is made solely to the company’s members, as a body, 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 members those matters we are required to state to them 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 members as a body, for our audit work, for this report, or for the opinions we have formed.
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For and on behalf of
York House
20 York Street
M2 3BB
Cambridge City Housing Company Limited
Income Statement for the Year Ended 31 March 2024
Note |
2024 |
2023 |
|
Revenue |
|
|
|
Administrative expenses |
( |
( |
|
Increase / (Decrease) in fair value of investment property |
11,800 |
146,900 |
|
Operating profit |
|
|
|
Finance income |
|
|
|
Finance costs |
( |
( |
|
Net finance cost |
( |
( |
|
Profit before tax |
|
|
|
Income tax expense |
( |
( |
|
Profit for the year |
|
|
The above results were derived from continuing operations.
Cambridge City Housing Company Limited
Statement of Comprehensive Income for the Year Ended 31 March 2024
2024 |
2023 |
|
Profit for the year |
|
|
Total comprehensive income for the year |
|
|
Cambridge City Housing Company Limited
(Registration number: 10003883)
Statement of Financial Position as at 31 March 2024
Note |
31 March |
31 March |
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Assets |
|||
Non-current assets |
|||
Investment properties |
|
|
|
Current assets |
|||
Trade and other receivables |
|
|
|
Cash and cash equivalents |
|
|
|
|
|
||
Total assets |
|
|
|
Equity and liabilities |
|||
Equity |
|||
Share capital |
1 |
1 |
|
Retained earnings |
1,053,036 |
984,649 |
|
Total equity |
1,053,037 |
984,650 |
|
Non-current liabilities |
|||
Loans and borrowings |
|
|
|
Deferred tax liabilities |
163,627 |
160,677 |
|
|
|
||
Current liabilities |
|||
Trade and other payables |
17,796 |
18,944 |
|
Income tax liability |
|
|
|
|
|
||
Total liabilities |
|
|
|
Total equity and liabilities |
|
|
Cambridge City Housing Company Limited
(Registration number: 10003883)
Statement of Financial Position as at 31 March 2024
Approved by the
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Cambridge City Housing Company Limited
Statement of Changes in Equity for the Year Ended 31 March 2024
Share capital |
Retained earnings |
Total |
|
At 1 April 2023 |
|
|
|
Profit for the year |
- |
|
|
Total comprehensive income |
- |
|
|
At 31 March 2024 |
|
|
|
Share capital |
Retained earnings |
Total |
|
At 1 April 2022 |
|
|
|
Profit for the year |
- |
|
|
Total comprehensive income |
- |
|
|
At 31 March 2023 |
1 |
984,649 |
984,650 |
Cambridge City Housing Company Limited
Statement of Cash Flows for the Year Ended 31 March 2024
Note |
2024 |
2023 |
|
Cash flows from operating activities |
|||
Profit for the year |
|
|
|
Adjustments to cash flows from non-cash items |
|||
Depreciation on right of use assets |
- |
10,245 |
|
Changes in fair value of investment property |
( |
( |
|
Profit on disposal of property plant and equipment |
- |
( |
|
Finance income |
( |
( |
|
Finance costs |
|
|
|
Income tax expense |
|
|
|
|
|
||
Working capital adjustments |
|||
(Increase)/decrease in trade and other receivables |
( |
|
|
(Decrease)/increase in trade and other payables |
( |
|
|
Cash generated from operations |
|
|
|
Interest paid |
(151,500) |
(151,500) |
|
Payments made on leased assets during the year |
- |
(10,636) |
|
Income taxes paid |
( |
( |
|
Net cash flow from operating activities |
|
|
|
Cash flows from investing activities |
|||
Interest received |
|
|
|
Net increase in cash and cash equivalents |
|
|
|
Cash and cash equivalents at 1 April |
411,224 |
305,983 |
|
Cash and cash equivalents at 31 March |
467,832 |
411,224 |
Cambridge City Housing Company Limited
Notes to the Financial Statements for the Year Ended 31 March 2024
General information |
The company is a private company limited by share capital, incorporated and domiciled in England and Wales.
The address of its registered office is:
The company rents out properties in the Cambridge area at 80% of the market value to people who meet specific criteria.
These financial statements were authorised for issue by the
Accounting policies |
Statement of compliance
The company financial statements have been prepared in accordance with International Financial Reporting Standards and its interpretations adopted by the UK ("UK adopted IFRSs").
Summary of material accounting policies and key accounting estimates
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Basis of preparation
The financial statements have been prepared in accordance with adopted IFRSs and under historical cost accounting rules.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company's accounting policies.
Going concern
The directors have, at the time of approving the financial statements, a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future.
The parent undertaking, Cambridge City Council, has confirmed that it intends to continue to support the company for a period of at least 12 months from the approval of the financial statements.
As a result, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Changes in accounting policy
None of the standards, interpretations and amendments effective for the first time from 1 April 2023 have had a material effect on the financial statements.
Cambridge City Housing Company Limited
Notes to the Financial Statements for the Year Ended 31 March 2024
None of the standards, interpretations and amendments which are effective for periods beginning after 1 April 2023 and which have not been adopted early, are expected to have a material effect on the financial statements.
Revenue recognition
Recognition
The company earns revenue
The principles in IFRS are applied to revenue recognition criteria, in accordance with IFRS 15 ‘Revenue from Contracts with Customers', using the following 5 step model:
1. Identify the contracts with the customer
2. Identify the performance obligations in the contract
3. Determine the transaction price
4. Allocate the transaction price to the performance obligations in the contract
5. Recognise revenue when or as the entity satisfies its performance obligations
Revenue comprises income from the rental of the investment properties and right-of-use property assets of the company as well as associated service charge income and income from recharged services such as property maintenance and represents amounts received or receivable in accordance with the company's principal activity.
Revenue is measured at the fair value of the consideration received or receivable as per contractual lease agreements with tenants of each property.
Revenue is recognised in the financial statements during the period to which each lease payment relates and not simply when cash payments are made or received from tenants.
Tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except that a change attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the company operates and generates taxable income.
Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements and on unused tax losses or tax credits in the company. Deferred income tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
The carrying amount of deferred tax assets are reviewed at each reporting date and a valuation allowance is set up against deferred tax assets so that the net carrying amount equals the highest amount that is more likely than not to be recovered based on current or future taxable profit.
Depreciation
Asset class |
Depreciation method and rate |
Short leasehold land and buildings |
straight line over the term of the lease |
Cambridge City Housing Company Limited
Notes to the Financial Statements for the Year Ended 31 March 2024
Investment property
Investment property is carried at fair value, derived from the current market prices for comparable real estate determined annually by external valuers. The valuers use observable market prices, adjusted if necessary for any difference in the nature, location or condition of the specific asset. Changes in fair value are recognised in profit or loss.
All borrowing costs are recognised as an expense in the income statement in the period to which they relate.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Trade receivables
Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.
Trade receivables are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for the impairment of trade receivables is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables.
Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.
Trade payables are recognised initially at the transaction price and subsequently measured at amortised cost using the effective interest method.
Borrowings
All borrowings are initially recorded at the amount of proceeds received, net of transaction costs. Borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the income statement over the period of the relevant borrowing.
Interest expense is recognised on the basis of the effective interest method and is included in finance costs.
Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
Cambridge City Housing Company Limited
Notes to the Financial Statements for the Year Ended 31 March 2024
Leases
Definition
A lease is a contract, or a part of a contract, that conveys the right to use an asset or a physically distinct part of an asset (“the underlying asset”) for a period of time in exchange for consideration. Further, the contract must convey the right to the company to control the asset or a physically distinct portion thereof. A contract is deemed to convey the right to control the underlying asset if, throughout the period of use, the company has the right to:
· Obtain substantially all the economic benefits from the use of the underlying asset, and;
· Direct the use of the underlying asset (e.g. direct how and for what purpose the asset is used)
Initial recognition and measurement
The company initially recognises a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term.
The lease liability is measured at the present value of the lease payments to be made over the lease term. The lease payments include fixed payments, purchase options at exercise price (where payment is reasonably certain), expected amount of residual value guarantees, termination option penalties (where payment is considered reasonably certain) and variable lease payments that depend on an index or rate.
The right-of-use asset is initially measured at the amount of the lease liability, adjusted for lease prepayments, lease incentives received, the company’s initial direct costs (e.g., commissions) and an estimate of restoration, removal and dismantling costs.
Subsequent measurement
After the commencement date, the company measures the lease liability by:
(a) Increasing the carrying amount to reflect interest on the lease liability;
(b) Reducing the carrying amount to reflect the lease payments made; and
(c) Re-measuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in substance fixed lease payments or on the occurrence of other specific events.
Interest on the lease liability in each period during the lease term is the amount that produces a constant periodic rate of interest on the remaining balance of the lease liability. Interest charges are [presented separately as non-operating /included in finance cost] in the income statement, unless the costs are included in the carrying amount of another asset applying other applicable standards. Variable lease payments not included in the measurement of the lease liability, are included in operating expenses in the period in which the event or condition that triggers them arises.
The related right-of-use asset is accounted for using the Cost model in IAS 16 and depreciated and charged in accordance with the depreciation requirements of IAS 16 Property, Plant and Equipment as disclosed in the accounting policy for Property, plant and equipment. Adjustments are made to the carrying value of the right of use asset where the lease liability is re-measured in accordance with the above. Right of use assets are tested for impairment in accordance with IAS 36 Impairment of assets as disclosed in the accounting policy in impairment.
Cambridge City Housing Company Limited
Notes to the Financial Statements for the Year Ended 31 March 2024
Short term and low value leases
The company has made an accounting policy election, by class of underlying asset, not to recognise lease assets and lease liabilities for leases with a lease term of 12 months or less (i.e., short-term leases).
The company has made an accounting policy election on a lease-by-lease basis, not to recognise lease assets on leases for which the underlying asset is of low value.
Lease payments on short term and low value leases are accounted for on a straight line bases over the term of the lease or other systematic basis if considered more appropriate. Short term and low value lease payments are included in operating expenses in the income statement.
Sub leases
If an underlying asset is re-leased by the company to a third party and the company retains the primary obligation under the original lease, the transaction is deemed to be a sublease. The company continues to account for the original lease (the head lease) as a lessee and accounts for the sublease as a lessor (intermediate lessor). When the head lease is a short term lease, the sublease is classified as an operating lease. Otherwise, the sublease is classified using the classification criteria applicable to Lessor Accounting in IFRS 16 by reference to the right-of-use asset in the head lease (and not the underlying asset of the head lease).
After classification lessor accounting is applied to the sublease.
Share capital
Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.
Cambridge City Housing Company Limited
Notes to the Financial Statements for the Year Ended 31 March 2024
Financial instruments
Initial recognition
Financial assets and financial liabilities comprise all assets and liabilities reflected in the statement of financial position, although excluding property, plant and equipment, investment properties, intangible assets, deferred tax assets, prepayments, deferred tax liabilities and employee benefits plan.
The company recognises financial assets and financial liabilities in the statement of financial position when, and only when, the company becomes party to the contractual provisions of the financial instrument.
Financial assets are initially recognised at fair value. Financial liabilities are initially recognised at fair value, representing the proceeds received net of premiums, discounts and transaction costs that are directly attributable to the financial liability.
All regular way purchases and sales of financial assets and financial liabilities classified as fair value through profit or loss (“FVTPL”) are recognised on the trade date, i.e. the date on which the company commits to purchase or sell the financial assets or financial liabilities. All regular way purchases and sales of other financial assets and financial liabilities are recognised on the settlement date, i.e. the date on which the asset or liability is received from or delivered to the counterparty. Regular way purchases or sales are purchases or sales of financial assets that require delivery within the time frame generally established by regulation or convention in the market place.
Subsequent to initial measurement, financial assets and financial liabilities are measured at either amortised cost or fair value.
Classification and measurement
Financial instruments are classified at inception into one of the following categories, which then determine the subsequent measurement methodology:-
Financial assets are classified into one of the following three categories:-
· financial assets at amortised cost;
· financial assets at fair value through other comprehensive income (FVTOCI); or
· financial assets at fair value through the profit or loss (FVTPL).
Financial liabilities are classified into one of the following two categories:-
· financial liabilities at amortised cost; or
· financial liabilities at fair value through the profit or loss (FVTPL).
The classification and the basis for measurement are subject to the company’s business model for managing the financial assets and the contractual cash flow characteristics of the financial assets, as detailed below:-
Cambridge City Housing Company Limited
Notes to the Financial Statements for the Year Ended 31 March 2024
Financial assets at amortised cost
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:-
· the assets are held within a business model whose objective is to hold assets in order to collect contractual cash flows; and
· the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
If either of the above two criteria is not met, the financial assets are classified and measured at fair value through the profit or loss (FVTPL).
If a financial asset meets the amortised cost criteria, the company may choose to designate the financial asset at FVTPL. Such an election is irrevocable and applicable only if the FVTPL classification significantly reduces a measurement or recognition inconsistency.
Financial assets at fair value through other comprehensive income (FVTOCI)
A financial asset is measured at FVTOCI only if it meets both of the following conditions and is not designated as at FVTPL:-
· the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
· the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
On initial recognition of an equity investments that is not held for trading, the company may irrevocably elect to present subsequent changes in fair value in OCI. This election is made on an investment-by-investment basis.
If an equity investment is designated as FVTOCI, all gains and losses, except for dividend income, are recognised in other comprehensive income and are not subsequently included in the statement of income.
Financial assets at fair value through the profit or loss (FVTPL)
Financial assets not otherwise classified above are classified and measured as FVTPL.
Financial liabilities at amortised cost
All financial liabilities, other than those classified as financial liabilities at FVTPL, are measured at amortised cost using the effective interest rate method.
Financial liabilities at fair value through the profit or loss
Financial liabilities not measured at amortised cost are classified and measured at FVTPL. This classification includes derivative liabilities.
Cambridge City Housing Company Limited
Notes to the Financial Statements for the Year Ended 31 March 2024
Derecognition
Financial assets
The company derecognises a financial asset when;
- the contractual rights to the cash flows from the financial asset expire,
- it transfers the right to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred; or
- the company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.
On derecognition of a financial asset, the difference between the carrying amount of the asset and the sum of the consideration received is recognised as a gain or loss in the profit or loss.
Any cumulative gain or loss recognised in OCI in respect of equity investment securities designated as FVTOCI is not recognised in profit or loss on derecognition of such securities. Any interest in transferred financial assets that qualify for derecognition that is created or retained by the company is recognised as a separate asset or liability.
The company enters into transactions whereby it transfers assets recognised on its statement of financial position, but retains either all or substantially all of risks and rewards of the transferred assets or a portion of them. In such cases, the transferred assets are not derecognised.
When the company derecognises transferred financial assets in their entirety, but has continuing involvement in them then the entity should disclose for each type of continuing involvement at the reporting date:
(a) The carrying amount of the assets and liabilities that are recognised in the entity’s statement of financial position and represent the entity’s continuing involvement in the derecognised financial assets, and the line items in which those assets and liabilities are recognised.
(b) The fair value of the assets and liabilities that represent the entity’s continuing involvement in the derecognised financial assets;
(c) The amount that best represents the entity’s maximum exposure to loss from its continuing involvement in the derecognised financial assets, and how the maximum exposure to loss is determined
(d) The undiscounted cash outflows that would or may be required to repurchase the derecognised financial assets or other amounts payable to the transferee for the transferred assets
Financial liabilities
The company derecognises a financial liability when its contractual obligations are discharged, cancelled, or expire.
Cambridge City Housing Company Limited
Notes to the Financial Statements for the Year Ended 31 March 2024
Modification of financial assets and financial liabilities
Financial assets
If the terms of a financial asset are modified, the company evaluates whether the cash flows of the modified asset are substantially different. If the cash flows are substantially different, then the contractual rights to the cash flows from the original financial asset are deemed to expire. In this case the original financial asset is derecognised and a new financial asset is recognised at either amortised cost or fair value.
If the cash flows are not substantially different, then the modification does not result in derecognition of the financial asset. In this case, the company recalculates the gross carrying amount of the financial asset and recognises the amount arising from adjusting the gross carrying amount as a modification gain or loss in the statement of income.
Financial liabilities
If the terms of a financial liabilities are modified, the company evaluates whether the cash flows of the modified asset are substantially different. If the cash flows are substantially different, then the contractual obligations from the cash flows from the original financial liabilities are deemed to expire. In this case the original financial liabilities are derecognised and new financial liabilities are recognised at either amortised cost or fair value.
If the cash flows are not substantially different, then the modification does not result in derecognition of the financial liabilities. In this case, the company recalculates the gross carrying amount of the financial liabilities and recognises the amount arising from adjusting the gross carrying amount as a modification gain or loss in the statement of income.
Cambridge City Housing Company Limited
Notes to the Financial Statements for the Year Ended 31 March 2024
Impairment of financial assets
Measurement of Expected Credit Losses
The company recognises loss allowances for expected credit losses (ECL) on financial instruments that are not measured at FVTPL, namely:
- Financial assets that are debt instruments
- Accounts and other receivables
- Financial guarantee contracts issued; and
- Loan commitments issued.
The company classifies its financial instruments into stage 1, stage 2 and stage 3, based on the applied impairment methodology, as described below:
Stage 1: for financial instruments where there has not been a significant increase in credit risk since initial recognition and that are not credit-impaired on origination, the company recognises an allowance based on the 12-month ECL.
Stage 2: for financial instruments where there has been a significant increase in credit risk since initial recognition but they are not credit-impaired, the company recognises an allowance for the lifetime ECL.
Stage 3: for credit-impaired financial instruments, the company recognises the lifetime ECL.
The company measures loss allowances at an amount equal to the lifetime ECL, except for the following, for which they are measured as a 12-month ECL:
- debt securities that are determined to have a low credit risk (equivalent to investment grade rating) at the reporting date; and
- other financial instruments on which the credit risk has not increased significantly since their initial recognition.
The company considers a debt security to have low credit risk when their credit risk rating is equivalent to the globally understood definition of ‘investment grade’.
A 12-month ECL is the portion of the ECL that results from default events on a financial instrument that are probable within 12 months from the reporting date.
Provisions for credit-impairment are recognised in the statement of income and are reflected in accumulated provision balances against each relevant financial instruments balance.
Evidence that the financial asset is credit-impaired include the following;
- Significant financial difficulties of the borrower or issuer;
- A breach of contract such as default or past due event;
- The restructuring of the loan or advance by the company on terms that the company would not consider otherwise;
- It is becoming probable that the borrower will enter bankruptcy or other financial reorganisation;
- The disappearance of an active market for the security because of financial difficulties; or
- There is other observable data relating to a group of assets such as adverse changes in the payment status of borrowers or issuers in the company, or economic conditions that correlate with defaults in the company.
Cambridge City Housing Company Limited
Notes to the Financial Statements for the Year Ended 31 March 2024
For trade receivables, the company applies the simplified approach, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk characteristics and the days past due. The contract assets relate to unbilled work in progress and have substantially the same risk characteristics as the trade receivables for the same types of contracts. The company has therefore concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the contract assets.
The expected loss rates are based on the payment profiles of sales over a period of 36 month before 31 March 2024 and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. The company has identified the GDP and the unemployment rate of the countries in which it sells its goods and services to be the most relevant factors, and accordingly adjusts the historical loss rates based on expected changes in these factors.
Accounting estimates and assumptions
The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of certain financial assets, liabilities, income and expenses.
The use of estimates and assumptions is principally limited to the determination of provisions for impairment and the valuation of investment properties as explained in more detail below:-
Provisions for impairment
In determining impairment of financial assets, judgement is required in the estimation of the amount and timing of future cash flows as well as an assessment of whether the credit risk on the financial asset has increased significantly since initial recognition and incorporation of forward-looking information in the measurement of ECL.
Fair value of investment properties
The investment properties held by the company have been revalued to reflect the significant change in their fair value during the financial year, the movement being recognised in the income statement.
The company engaged an independent chartered surveyor to determine the fair value of the investment properties as at 31 March 2024. The carrying amount of investment properties as at 31 March 2024 was £8,281,400 (2023: £8,269,600). As investment properties were few in number, the chartered surveyors valued each property individually in arriving at the fair value on an existing use basis, referring to comparable market data to support the valuation of each property.
Cambridge City Housing Company Limited
Notes to the Financial Statements for the Year Ended 31 March 2024
Revenue |
The analysis of the company's revenue for the year from continuing operations is as follows:
2024 |
2023 |
|
Rent - Dwellings |
|
|
Service charges |
- |
|
Re-imbursements |
- |
|
|
|
The company considers its business activities fall into the following operating segments:
Operating profit |
Arrived at after charging/(crediting)
2024 |
2023 |
|
Depreciation on right of use assets - property |
- |
10,245 |
Profit on disposal of property, plant and equipment |
- |
( |
Cambridge City Housing Company Limited
Notes to the Financial Statements for the Year Ended 31 March 2024
Finance income and costs |
2024 |
2023 |
|
Finance income |
||
Interest income on bank deposits |
|
- |
Other finance income |
- |
|
Total finance income |
|
|
Finance costs |
||
Other interest payable |
( |
( |
Interest expense on leases - Property |
- |
(1,381) |
Total finance costs |
( |
( |
Net finance costs |
( |
( |
Staff costs |
The company had no employees during the current and preceding financial year and therefore had no payroll costs.
Remuneration of the company's directors and other personnel was not borne directly by the company but by the parent undertaking, Cambridge City Council. The company has been recharged its share of directors' costs and administrative salaries which totalled £2
Auditors' remuneration |
2024 |
2023 |
|
Audit of the financial statements |
|
|
Other fees to auditors |
||
Taxation compliance services |
|
|
All other non-audit services |
|
|
|
|
Cambridge City Housing Company Limited
Notes to the Financial Statements for the Year Ended 31 March 2024
Income tax |
Tax charged/(credited) in the income statement
2024 |
2023 |
|
Current taxation |
||
UK corporation tax |
|
|
UK corporation tax adjustment to prior periods |
|
- |
|
|
|
Deferred taxation |
||
Arising from origination and reversal of temporary differences |
|
|
Arising from changes in tax rates and laws |
- |
|
Total deferred taxation |
|
|
Tax expense in the income statement |
|
|
The tax on profit before tax for the year is lower than the standard rate of corporation tax in the UK (2023 - higher than the standard rate of corporation tax in the UK) of 25% (2023 - 19%).
The differences are reconciled below:
2024 |
2023 |
|
Profit before tax |
|
|
Corporation tax at standard rate |
|
|
Increase/(decrease) in current tax from adjustment for prior periods |
|
( |
(Decrease)/increase from effect of different UK tax rates on some earnings |
( |
|
Deferred tax expense relating to changes in tax rates or laws |
- |
|
Total tax charge |
|
|
Cambridge City Housing Company Limited
Notes to the Financial Statements for the Year Ended 31 March 2024
Deferred tax
Deferred tax assets and liabilities
2024 |
Asset |
Liability |
Net deferred tax |
Revaluation of investment property |
- |
|
|
- |
|
|
2023 |
Asset |
Liability |
Net deferred tax |
Revaluation of investment property |
- |
|
|
- |
|
|
Deferred tax movement during the year:
At 1 April 2023 |
Recognised in income |
At |
|
Revaluation of investment property |
|
|
|
|
|
|
Deferred tax movement during the prior year:
At 1 April 2022 |
Recognised in income |
At |
|
Revaluation of investment property |
|
|
|
|
|
|
Cambridge City Housing Company Limited
Notes to the Financial Statements for the Year Ended 31 March 2024
Right of use assets |
Property |
Total |
||
Cost or valuation |
|||
At 1 April 2022 |
128,386 |
128,386 |
|
Disposals |
(128,386) |
(128,386) |
|
At 31 March 2023 |
- |
- |
|
At 31 March 2024 |
- |
- |
|
Depreciation |
|||
At 1 April 2022 |
28,488 |
28,488 |
|
Charge for year |
10,245 |
10,245 |
|
Eliminated on disposal |
(38,733) |
(38,733) |
|
At 31 March 2023 |
- |
- |
|
At 31 March 2024 |
- |
- |
|
Carrying amount |
|||
At 31 March 2024 |
- |
- |
|
At 31 March 2023 |
- |
- |
The company has been party to five individual leases in respect of residential dwellings in Cambridgeshire which were then let to tenants to generate income for the business. The company was responsible for all repairs and improvements required to the properties under a certain limit during the term of each lease and the leases were due to expire in 2027. Each party had the right to break the lease at any time by giving 6 months notice and two leases were surrendered by mutual agreement during the period to 31 March 2022, whilst the remaining three leases were surrendered by mutual consent in the period ended 31 March 2023 such that as at 31 March 2023 the company was not party to any property leases as a lessee.
Income of £Nil (2023: £17,954) was generated from the right-of-use assets in the year and has been recognised in the income statement.
Investment properties |
31 March |
31 March |
31 March |
31 March |
|
At 1 April |
|
- |
|
- |
Fair value adjustments |
|
- |
|
- |
At 31 March |
|
- |
|
- |
Cambridge City Housing Company Limited
Notes to the Financial Statements for the Year Ended 31 March 2024
The fair value of the investment properties has been arrived at on the basis of a valuation carried our by a RICS registered chartered surveyor of Wilks Head and Eve LLP, an independent firm of chartered surveyors.
The valuation was undertaken on an open market value basis and in accordance with RICS standards. The properties have been included at their existing use values by reference to recent comparable market transactions and given the assumption that the buyer is granted vacant possession. This is carried out is carried out by reference to the market value of the property and the yield of rental income from the notice given by the tenant. The valuation performed by the external valuer was reviewed internally by Senior Management and other relevant personnel within the business. This process included discussions of the assumptions used by the valuer, as well as a review of the resulting valuations.
During the year £323,200 (2023 - £317,428) was recognised in income in relation to rental income from investment properties. Direct operating expenses, including repairs and maintenance, arising from investment property amounted to £
Trade and other receivables |
Current |
31 March |
31 March |
Trade receivables |
|
|
Provision for impairment of trade receivables |
( |
( |
Net trade receivables |
|
|
Prepayments |
|
|
|
|
The directors consider that the carrying value of trade and other receivables is approximately equal to their fair value.
The company's exposure to credit and market risks, including maturity analysis, relating to trade and other receivables is disclosed in note 17 "Financial risk review".
Cash and cash equivalents |
31 March |
31 March |
|
Cash at bank |
|
|
Cambridge City Housing Company Limited
Notes to the Financial Statements for the Year Ended 31 March 2024
Share capital |
Allotted, called up and fully paid shares
31 March |
31 March |
|||
No. |
£ |
No. |
£ |
|
|
|
1 |
|
1 |
Loans and borrowings |
31 March |
31 March |
|
Non-current loans and borrowings |
||
Loans from fellow group undertakings |
|
|
Loans from fellow group undertakings
The above loan is from the company's parent undertaking, Cambridge City Council. Interest is payable at 2.02% on the balance. The loan is secured against the properties held by the company.
Borrowings are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows: payable later than one year and no later than five years.
The company's exposure to market and liquidity risks, including maturity analysis, relating to loans and borrowings is disclosed in note 17 "Financial risk review".
Trade and other payables |
31 March |
31 March |
|
Accrued expenses |
|
|
Amounts due to related parties |
- |
|
Other payables |
|
|
|
|
The company's exposure to market and liquidity risks, including maturity analysis, relating to trade and other payables is disclosed in note 17 "Financial risk review".
Cambridge City Housing Company Limited
Notes to the Financial Statements for the Year Ended 31 March 2024
Fair value measurement |
The following tables provide the fair value measurement hierarchy of the company's assets and liabilities.
Assets measured at fair value
2024
Date of valuation |
Level 2 |
Total |
|
Investment properties |
31/03/2024 00:00:00 |
8,281,400 |
8,281,400 |
Assets measured at fair value
2023
Date of valuation |
Level 2 |
Total |
|
Investment properties |
31/03/2023 00:00:00 |
8,269,600 |
8,269,600 |
There were no transfers between levels during the current or previous period.
Details of the determination of the fair value of investment properties is disclosed in note 10 "Investment properties".
Financial risk review |
This note presents information about the company’s exposure to financial risks and the company’s management of capital.
Credit risk
During the period, the company’s credit risk was primarily attributable to its cash balances and its trade receivables. Credit risk is the risk that the counterparty fails to discharge its obligation in respect of the instrument. The credit risk on liquid funds is limited as the funds are held at banks with high credit ratings. The risk to the company of trade receivables going bad is regarded as very low based on payments in respect of lease agreements being receivable from tenants quarterly in advance.
No significant receivable balances are impaired at the reporting date.
Liquidity risk
Liquidity risk is the risk that the company fails to have sufficient funds to meet its debts as they become due. The liquidity risk of the company is managed centrally by the Board and the company holds funds in short-term bank deposits so that they are available when required.
The Board believes the current level of financial liabilities to be in line with expectations. The level of cash balances and trade and other receivables is deemed to be sufficient to discharge the company’s financial liabilities as they fall due.
Cambridge City Housing Company Limited
Notes to the Financial Statements for the Year Ended 31 March 2024
Maturity analysis for financial liabilities
The following tables set out the remaining contractual maturities of the company’s financial liabilities by type.
2024 |
Carrying amount |
3 months - 1 year |
1-5 years |
Trade and other payables and current tax liabilities |
26,864 |
|
- |
Amounts owed to group undertakings |
7,500,000 |
- |
|
|
2023 |
Carrying amount |
3 months - 1 year |
1-5 years |
Trade and other payables and current tax liabilities |
29,645 |
|
- |
Amounts owed to group undertakings |
7,500,000 |
- |
|
|
Market risk
Market risk is the risk that the fair value or future cash flows from a financial instrument will fluctuate because of changes in market prices. The principle ways in which the company is exposed to such fluctuations is through interest rate risk.
Interest rate risk |
The company has an exposure to interest rate risk arising principally on borrowings from the parent undertaking, Cambridge City Council.
To manage this risk, the loan interest has been agreed at a fixed rate of 2.02% for the foreseeable future to guarantee the cash flow of the business. This enables the company to budget and ensure that the interest payments are met. The interest rate of 2.02% applies to the amount owed to group undertakings classified within loans and borrowings due in more than one year of £7,500,000.
Sensitivity analysis
A sensitivity analysis has not been performed on the basis that the interest rate is fixed for the foreseeable future.
Cambridge City Housing Company Limited
Notes to the Financial Statements for the Year Ended 31 March 2024
Capital risk management |
Capital management
The company's objectives when managing capital are to safeguard the company's ability to continue as a going concern in order to provide returns for shareholders, benefits for other stakeholders and to maintain an optimal capital structure to reduce the costs of capital.
The capital employed by the company is composed of the total equity disclosed in the statement of financial position.
Related party transactions |
Summary of transactions with parent entities
During the year the company paid recharges of £81,949 (2023: £71,957), lease payments of £Nil (2023: £10,636) and paid interest of £151,500 (2023: £151,500) to its parent undertaking, Cambridge City Council.
During the year the company also received recharges and re-imbursements of £Nil (2023: £39,784) from Cambridge City Council and had an amount due from the Council at the end of the period of £1,460 (2023: £Nil), this is included within prepayments this year.
As at 31 March 2024, the amounts owed to Cambridge City Council by the company was £Nil (2023: £1,225) in terms of short-term trading balances. In addition to this there was a long-term intercompany loan due in more than one year of £7,500,000 (2023: £7,500,000).
Transactions with key management personnel |
As per note 6, key management personnel were remunerated by Cambridge City Council within the total recharges outlined above.
The amounts or recharges in respect of key management personnel totalled £12,976 (2023: £18,526) in the year.
Parent and ultimate parent undertaking |
The company's immediate parent is
The most senior parent entity producing publicly available financial statements is