Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2022
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STEPHENSON QUARTER DEVELOPMENTS LIMITED
COMPANY INFORMATION
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STEPHENSON QUARTER DEVELOPMENTS LIMITED
CONTENTS
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STEPHENSON QUARTER DEVELOPMENTS LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
The director presents his report and the financial statements for the year ended 31 December 2022.
The director is responsible for preparing the Director's Report and the financial statements in accordance with applicable law and regulations.
In preparing these financial statements, the director is required to:
∙select suitable accounting policies for the Company's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The director is 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 to enable him to ensure that the financial statements comply with the Companies Act 2006. He is 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.
The company's main activity is to oversee the successful redevelopment of the Stephenson Quarter area in Newcastle by the Clouston Group, the group headed by Clouston Group Limited.
In 2017 the company started construction on the North East Futures University Technical College ("UTC") on behalf of the Education and Skills Funding Agency, which was completed in the autumn of 2018. The company also worked on the design and refurbishment of the Boiler Shop which commenced in 2016 and the scheme achieved the Lord Mayors Design Award Conservation Prize in 2018. Since its restoration, the company has operated the Boiler Shop as a cultural events venue and intends to expand the range and volume of events held there over the coming years. The business suffered a significant reduction in revenue during the prior year as the Boiler Shop was closed in March 2020 due to government restrictions on mass gatherings as a consequence of the COVID-19 global pandemic, which continued into the current year. The venue reopened for socially distanced events when lockdown restrictions were relaxed in May 2021 and operated with a reduced capacity until restrictions were lifted on 19 July 2021, with the Boiler Shop having been fully open since that date. Trading performance to the end of the year was encouraging although inflationary pressures have arisen since the year end which persist at the date of approval of these financial statements and which present further potential challenges for the business as the Boiler Shop relies: for part of its income on bar sales, which could be impacted by the current cost of living crisis. However, because this is an arts and meetings venue it does not appear to be adversely
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STEPHENSON QUARTER DEVELOPMENTS LIMITED
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
affected to the extent that bars and pubs are reporting. The venue operates ticketed events and to date the directors have not seen a fall off in sales. In addition to the arts, it will now start to build the daytime meetings and events business working with its sister company, Stephenson Hotel Limited, to add value to both businesses.
To assist with funding refurbishment of the Boiler Shop, the company secured a loan from NELEP Investment Fund Regional Growth Fund ("LEP") which was renegotiated and extended during 2021 following a deferment of interest charges and capital repayments in 2020 to provide support during the pandemic. Additional loan funding of £268,945 was provided in 2021 to support the company’s recovery from the pandemic and the loan maturity date was extended to 31 March 2025. At the year end the company had net current liabilities of £11,365,916 (2021: £11,051,837) and net liabilities of £10,230,135 (2021: £9,819,234) which included £9,411,346 (2021: £9,390,152) owing to group undertakings and £1,915,821 (2021: £1,958,440) in respect of the RGF loan that has been extended.
The loss for the year, after taxation, amounted to £410,901 (2021 - loss £128,031).
The director can not recommend the payment of a final dividend.
The director who served during the year was:
The company’s financial statements for the year ended 31 December 2022 have been prepared on a going concern basis with a material uncertainty, which assumes it can continue to meet its liabilities as they fall due in the normal course of business for at least the twelve months following their approval subject to some material uncertainties which are discussed below.
The Directors recognise that the Boiler Shop relies on bar sales for its income, which could be impacted by the current cost of living crisis. However, because this is an arts and meetings venue it does not appear to be adversely affected to the extent that bars and pubs have reported. The venue operates for ticketed events and the Directors have not seen a fall off on sales. In addition to the arts, it is continuing to build the daytime meetings and events business. The Directors have prepared cashflow forecasts for a period of at least 12 months from the approval of these financial statements which demonstrate that the company has sufficient cash reserves to meet its liabilities as they fall due, however they acknowledge that if there were to be a significant drop off in sales this would not be the case. The Directors also recognise that the Company has net liabilities of £10,230,135 including amounts owed to group undertakings of £9,411,346. These entities are all controlled by the Directors and therefore the intention is not to call in these liabilities, however the Directors are in ongoing negotiations with Newcastle City Council ("NCC") regarding the debt owed within Stephenson Hotel Limited, a fellow subsidiary. If negotiations are not favourable then the Directors may be required to settle this intercompany which would call into question the going concern of the Company. The Directors consider this highly unlikely and have a number of mitigation strategies to ensure the Company has sufficient cash reserves to continue trading as detailed below. Stephenson Quarter Developments Ltd expected a workshop in early 2023 with the landowner to consider a range of complimentary ‘meanwhile uses’ to the current derelict land on the Stephenson Quarter, which has the
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STEPHENSON QUARTER DEVELOPMENTS LIMITED
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
potential to increase sales and thereby add value to the Boiler Shop. The Company continues to request this workshop and for measures to be taken by the landowner on the dereliction that is impacting on the businesses ability to achieve its potential.
The Company also owns the service yard behind the Crowne Plaza hotel, Hawthorn Square, and a valuable site to the east of Hawthorn Square. These sites have the potential to add significant value to the Crowne Plaza hotel, the Boiler Shop, the multi storey car park and to the land owned by Newcastle City Council. In order to achieve a consensual agreement with the Council relating to the Crowne Plaza Hotel and Rocket Car Park, the directors may pass ownership of this freehold land to enable them to marry it with their land and enable their proposals for Stephenson Quarter. The true value can be assessed when the ‘meanwhile uses’ have been established and/or the economy stabilises. The Directors believe that a transaction to sell the freehold land will provide sufficient working capital for the company’s needs. In addition, the Directors are also exploring re-financing of the Company's debt. The directors, after making enquiries and considering the uncertainties described above, have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future, however, owing to the uncertainties at the date of approving these financial statements, the directors believe there to be a material uncertainty that casts significant doubt upon the company's ability to continue as a going concern.
The auditors, Haysmacintyre LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
In preparing this report, the director has taken advantage of the small companies exemptions provided by section 415A of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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STEPHENSON QUARTER DEVELOPMENTS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF STEPHENSON QUARTER DEVELOPMENTS LIMITED
We have audited the financial statements of Stephenson Quarter Developments Limited (the 'Company') for the year ended 31 December 2022, which comprise the Statement of Comprehensive Income, the Statement of Financial Position and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
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 Auditors' 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 United Kingdom, including the Financial Reporting Council'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.
We draw attention to note 2.2 in the financial statements, which sets out that the Company's ability to continue as a going concern is dependent on the future trading cash flows and the outcome of negotiations with lenders to fellow group undertakings. As stated in note 2.2, these events or conditions, along with the other matters as set forth in note 2.2, indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
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.
Our responsibilities and the responsibilities of the director with respect to going concern are described in the relevant sections of this report.
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STEPHENSON QUARTER DEVELOPMENTS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF STEPHENSON QUARTER DEVELOPMENTS LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' Report thereon. The director is responsible for the other information contained within the Annual Report. 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. 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 course of 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 this gives rise to a material misstatement in the financial statements themselves. 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.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Director's Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Director's Report has been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Director's Report.
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STEPHENSON QUARTER DEVELOPMENTS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF STEPHENSON QUARTER DEVELOPMENTS LIMITED (CONTINUED)
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 Auditors' Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud. Based on our understanding of the Company and industry, we identified that the principal risks of non-compliance with laws and regulations related to compliance with the company law, licensing, health and safety and minimum wage regulations and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006 and tax regulation. We evaluated management's incentives and opportunities |or fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related to posting inappropriate journal entries to revenue and management bias in accounting estimates. Audit procedures performed by the engagement team included:
∙inspecting correspondence with regulators and tax authorities;
∙discussions with management including consideration of known or suspected instances of non-compliance with laws and regulation and fraud;
∙evaluating management's controls designed to prevent and detect irregularities;
∙identifying and testing journals, in particular journal entries posted with unusual account combinations, postings by unusual users or with unusual descriptions; and
∙challenging assumptions and judgements made by management in their critical accounting estimates.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report.
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STEPHENSON QUARTER DEVELOPMENTS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF STEPHENSON QUARTER DEVELOPMENTS LIMITED (CONTINUED)
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 Auditors' 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.
for and on behalf of
Statutory Auditors
10 Queen Street Place
EC4R 1AG
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STEPHENSON QUARTER DEVELOPMENTS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
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STEPHENSON QUARTER DEVELOPMENTS LIMITED
REGISTERED NUMBER: 05076879
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 10 to 19 form part of these financial statements.
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STEPHENSON QUARTER DEVELOPMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Stephenson Quarter Developments Limited (‘the company’) is involved in land and property development and the operation of an events business called the "Boiler Shop".
The company is a private company limited by shares, incorporated and domiciled in the United Kingdom and registered in England and Wales. The address of the registered office is given in the company information page of the annual report.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with FRS 102 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland' and the requirements of the Companies Act 2006. 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 following principal accounting policies have been applied:
The company’s financial statements for the year ended 31 December 2022 have been prepared on a going concern basis with a material uncertainty, which assumes it can continue to meet its liabilities as they fall due in the normal course of business for at least the twelve months following their approval subject to some material uncertainties which are discussed below.
The Directors recognise that the Boiler Shop relies on bar sales for its income, which could be impacted by the current cost of living crisis. However, because this is an arts and meetings venue it does not appear to be adversely affected to the extent that bars and pubs have reported. The venue operates for ticketed events and the Directors have not seen a fall off on sales. In addition to the arts, it is continuing to build the daytime meetings and events business. The Directors have prepared cashflow forecasts for a period of at least 12 months from the approval of these financial statements which demonstrate that the company has sufficient cash reserves to meet its liabilities as they fall due, however they acknowledge that if there were to be a significant drop off in sales this would not be the case. The Directors also recognise that the Company has net liabilities of £10,230,135 including amounts owed to group undertakings of £9,411,346. These entities are all controlled by the Directors and therefore the intention is not to call in these liabilities, however the Directors are in ongoing negotiations with Newcastle City Council ("NCC") regarding the debt owed within Stephenson Hotel Limited, a fellow subsidiary. If negotiations are not favourable then the Directors may be required to settle this intercompany which would call into question the going concern of the Company. The Directors consider this highly unlikely and have a number of mitigation strategies to ensure the Company has sufficient cash reserves to continue trading as detailed below. Stephenson Quarter Developments Ltd expected a workshop in early 2023 with the landowner to consider a range of complimentary ‘meanwhile uses’ to the current derelict land on the Stephenson Quarter, which has the potential to increase sales and thereby add value to the Boiler Shop. The Company continues to request this workshop and for measures to be taken by the landowner on the dereliction that is impacting on the businesses ability to achieve its potential.
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STEPHENSON QUARTER DEVELOPMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
The Company also owns the service yard behind the Crowne Plaza hotel, Hawthorn Square, and a valuable site to the east of Hawthorn Square. These sites have the potential to add significant value to the Crowne Plaza hotel, the Boiler Shop, the multi storey car park and to the land owned by Newcastle City Council.
In order to achieve a consensual agreement with the Council relating to the Crowne Plaza Hotel and Rocket Car Park, the directors may pass ownership of this freehold land to enable them to marry it with their land and enable their proposals for Stephenson Quarter. The true value can be assessed when the ‘meanwhile uses’ have been established and/or the economy stabilises. The Directors believe that a transaction to sell the freehold land will provide sufficient working capital for the company’s needs. In addition, the Directors are also exploring re-financing of the Company's debt. The directors, after making enquiries and considering the uncertainties described above, have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future, and therefore, the directors consider it appropriate to prepare these financial statements on a going concern basis. However, given the dependence on future trading cash flows and the outcome of ongoing negotiations with lenders relating to the wider group, the directors consider that there is a materiality uncertainty that may cast significant doubt on the ability of the Company to continue as a going concern for the foreseeable future and, therefore, that this may mean that the company is unable to realise its assets and discharge its liabilities in the normal course of business.
Turnover consists of charges for project management services, sales of food and beverages at the Boiler Shop, hire of the Boiler Shop and amounts derived from the sale of completed property development stock, net of VAT and other sales related taxes. Turnover for services is recognised at the point in time the services are delivered and sale of goods is recognised on transfer of legal title to the customer.
All turnover originated in the United Kingdom.
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STEPHENSON QUARTER DEVELOPMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Assets held under finance leases and hire purchase contracts are capitalised at their fair value on the inception of the leases and depreciated over the shorter of their lease term or their estimated useful lives. The finance charges are allocated over the period of the lease in proportion to the capital amount outstanding. Rentals under operating leases are charged to the profit and loss account on a straight line basis over the lease term.
Grants of a revenue nature are recognised in the Statement of Comprehensive Income in the same period as the related expenditure.
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STEPHENSON QUARTER DEVELOPMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
The Company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the Company's Statement of Financial Position when the Company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with 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.
Basic financial assets
Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting date.
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STEPHENSON QUARTER DEVELOPMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Company after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other payables, bank loans and other loans are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Company transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Company will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Company's contractual obligations expire or are discharged or cancelled.
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STEPHENSON QUARTER DEVELOPMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
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STEPHENSON QUARTER DEVELOPMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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STEPHENSON QUARTER DEVELOPMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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STEPHENSON QUARTER DEVELOPMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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STEPHENSON QUARTER DEVELOPMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
The company is included in the consolidated financial statements of Clouston Group Ltd, whose registered office is 20 South Street, Newcastle upon Tyne, NE1 3PE. Clouston Group Ltd is the parent to the smallest and largest group for which consolidated financial statements are prepared that include the company.
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