Company registration number 13982658 (England and Wales)
CILS BELVEDERE LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
CILS BELVEDERE LIMITED
COMPANY INFORMATION
Directors
Mr C N Saverino
Mr J S Goldstein
(Appointed 27 March 2024)
Mr T Brazier
(Appointed 16 September 2024)
Company number
13982658
Registered office
72 Welbeck Street
London
England
W1G 0AY
Auditor
Ernst & Young LLP
144 Morrison Street
Edinburgh
United Kingdom
EH3 8EX
Bankers
Barclays Bank PLC
1 Churchill Place
London
E14 5HP
Solicitors
Taylor Wessing LLP
5 New Street Square
London
EC4A 3TW
CILS BELVEDERE LIMITED
CONTENTS
Page
Directors' report
1 - 3
Independent auditor's report
4 - 6
Income statement
7
Statement of financial position
8
Statement of changes in equity
9
Notes to the financial statements
10 - 19
CILS BELVEDERE LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The Directors present their annual report and audited financial statements for CILS Belvedere Limited (the "Company") for the year ended 31 December 2023.
In preparing this report, the Company has taken the advantage of the exemption provided by section 414B of the Companies Act 2006 in not preparing a Strategic Report under the small company exemption.
Principal activities
The principal activity of the Company is the leasing of commercial logistics property. During the year the Company continued to develop a site in Kent. The site achieved practical completion in 2023.
Results and dividends
The results for the period are set out on page 7. The Company made an operating loss of £2,035,110 (2022: £10,776,206) of which £1,739,356 (2022: £10,702,346) relates to fair value loss on investment properties.
No ordinary dividends were paid. The Directors do not recommend payment of a final dividend.
Business performance
The results and the financial position of the Company are considered to be satisfactory by the Directors. Turnover is driven by the leasing of commercial units, revenue for the year from lease income was £192,104 (2022 : £nil). The Company has had a successful year completing the development of its investment property and achieving 33% occupancy. The Company is now moving focus to leasing the rest of the asset and maximising occupancy.
Directors
The Directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr R M Pilkington
(Resigned 27 March 2024)
Mr D S Harris
(Resigned 17 September 2024)
Mr C N Saverino
Mr J S Goldstein
(Appointed 27 March 2024)
Mr T Brazier
(Appointed 16 September 2024)
Qualifying third party indemnity provisions
The Company has made qualifying third party indemnity provisions for the benefit of its directors during the year. These provisions remain in force at the reporting date.
Donations
During the year the Company made no charitable donations.
Future developments
The Directors are confident the Company will achieve stable revenue now the site is complete and once it is fully leased. Focus is now on leasing the asset in order to maximise the revenue for the leased commercial units over the next financial year as tenants look to secure attractive logistics premises from which to operate.
The Directors are satisfied that the location will offer a continuing appeal in the logistics sector and to businesses seeking a location with good links for distribution. These factors along with continued careful management of development costs, which are fixed with the developer, are expected to drive profitability in the future.
CILS BELVEDERE LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Going concern
The directors have conducted a robust assessment of the Company's ability to continue as a going concern for the financial year ended 31 December 2023, considering the available resources and expected obligations up until 31 October 2025, being the going concern period. The Company is part of a Group which also includes CI Logistics Strat 1 LP, CI Logistics Strat 1 GP Limited, CILS1 UK Holdings Limited and its subsidiaries (collectively referred to as the ‘Group’). The directors have assessed that the going concern of the Company is dependent upon the going concern of the Group. At the Group level, the directors have prepared a detailed forecast of the anticipated operational outgoings, incorporating severe but plausible downside risks, and have considered the operational income, expenses, and financing costs up until 31 October 2025. As at 31 December 2023, the Company has net current liabilities of £1,586,756 (2022: £1,576,769) and net assets of £1,132,999 (2022: £1,490,308 net liabilities). The Company’s activities are funded by capital from its shareholder CILS1 UK Holdings Limited, which in turn is funded by capital from CI Logistics Strat 1 LP.
The Group has a lending facility of £422,200,000 of which £379,422,476 is drawn as at 31 December 2023. The facility expires in April 2025 at which point the Group has two options, firstly to extend the current loan agreement for 12 months up to April 2026 or to refinance the loan with a new lender. Both options are outside of the Group’s control. The directors have considered both options, along with their associated covenants and indicative terms received from two lenders and have determined that in both cases the Group is able to meet the required criteria, subject to an amount of equity which will be required to pay down the loan which will likely lead to cash shortfall during the going concern period.
The directors have determined that there are material uncertainties in relation to (i) the Group’s ability to extend the loan or refinance, since both options depend on meeting certain covenants, as well as future valuation and occupancy levels of the assets over which management does not have absolute control or discretion and (ii) whether the Group will be able to secure additional capital from the Limited Partners of CI Logistics Strat 1 LP to cover the identified cash shortfall, resulting from requirements to extend the current loan or refinance with a new lender by 2025. These material uncertainties may cast significant doubt over the ability of the Company to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business.
Notwithstanding the material uncertainties described above, the Company has a reasonable expectation that given the quality and location of the assets, that the Group will be able to lease all assets during the going concern period which will in turn increase rental income received and the fair value of the assets held. Since the year end the Group has signed an additional lease representing 20% of the entire property portfolio. The directors also have a reasonable expectation that the Company will receive additional capital from its direct and indirect shareholders to fund the cash shortfall. This expectation is based on the financial outlook of the Limited Partners of CI Logistics Strat 1 LP, past experience of the Limited Partners providing financial support, and their willingness to support the Group to protect their invested economic interest. In addition, since the year-end the Limited Partners have continued to support the Partnership with the signing of an upsized LPA in April 2024 taking the Limited Partners commitment up to £262,200,000 plus an optional commitment of £46,139,893. For these reasons the directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for a period up until 31 October 2025 being the going concern period, and therefore considers it appropriate to prepare the financial statements on a going concern basis.
Auditor
Ernst & Young LLP were re-appointed as auditor to the Company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
CILS BELVEDERE LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
Statement of directors' responsibilities
The Directors are responsible 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 applicable law and United Kingdom Accounting Standards including FRS 101 “Reduced Disclosure Framework" (United Kingdom Generally Accepted Accounting Practice). 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 then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
comply with the requirements of the Companies Act 2006 with respect to accounting records and of the preparation of financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the ompany 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.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the Company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the Company’s auditor is aware of that information.
Subsequent events
Details of subsequent events are set out in note 19.
On behalf of the board
Mr J S Goldstein
Director
21 October 2024
CILS BELVEDERE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF CILS BELVEDERE LIMITED
- 4 -
Opinion
We have audited the financial statements of CILS Belvedere Limited (the ‘Company’) for the year ended 31 December 2023 which comprise of the Income Statement, the Statement of Financial Position, the Statement of Changes in Equity and the related notes 1 to 19, including material accounting policy information. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards including FRS 101 “Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).
In our opinion, the financial statements:
give a true and fair view of the Company’s affairs as at 31 December 2023 and of its loss for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
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’s 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.
Material uncertainties relating to going concern
We draw attention to Note 1.2 in the financial statements, which states that the Company, along with CI Logistics Strat 1 LP, CI Logistics Strat 1 GP Limited, CILS1 UK Holdings Limited, and its subsidiaries (collectively the 'Group'), has material uncertainties regarding its ability to continue as a going concern. The material uncertainties relate to (i) the Group's ability to extend the loan or refinance, since both options depend on meeting certain covenants, as well as on the future valuation and occupancy levels of the asset over which management of the Group does not have absolute control or discretion and (ii) whether the Group will be able to secure additional capital from the Limited Partners of CI Logistics Strat 1 LP to cover the identified cash shortfall, resulting from requirements to extend the current loan or refinance with a new lender by 2025.
As stated in note 1.2, these events or conditions, indicate that material uncertainties exist that may cast significant doubt over the ability of the Company to continue as a going concern. Our opinion is not modified in respect of these matters.
In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Company's ability to continue as a going concern.
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The Directors are 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 this 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 the other information, we are required to report that fact.
We have nothing to report in this regard.
CILS BELVEDERE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF CILS BELVEDERE LIMITED
- 5 -
Opinions on other matters 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 Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Directors’ report has been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
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 Directors’ report.
We have nothing to report in respect of the following matters in relation to which 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
the Directors were not entitled to prepare the financial statements in accordance with the small companies’ regime and take advantage of the small companies’ exemptions in preparing the directors’ report and from the requirement to prepare a strategic report.
Responsibilities of directors
As explained more fully in the Directors’ responsibilities statement set out on page 3, 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's 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.
CILS BELVEDERE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF CILS BELVEDERE LIMITED
- 6 -
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management.
Our approach was as follows:
We obtained an understanding of the legal and regulatory frameworks that are applicable to the Company and determined that the most significant are the Companies Act 2006, those relating to its reporting framework being the United Kingdom Generally Accepted Accounting Practice and any relevant direct and indirect tax compliance regulation in the United Kingdom.
We assessed the susceptibility of the Company’s financial statements to material misstatement, including how fraud might occur by making enquiries of management and those charged with governance. Where the risk was considered to be higher, we performed audit procedures in response to the identified fraud risks. These procedures included testing of specific accounting journal entries and focussed testing on the Company’s investment. These procedures were designed to provide reasonable assurance that the financial statements were free from fraud and error. We also considered management’s incentives around improving the performance of the Company, the opportunities available to execute any such actions through management override as well as the controls that the Company has established to address any such risks identified, including to prevent, deter and detect fraud and the monitoring of such controls by management..
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s 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.
Caroline Mercer (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
Edinburgh
21 October 2024
CILS BELVEDERE LIMITED
INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 7 -
For the period
Year
17 March 2022
ended
to
31 December
31 December
2023
2022
Notes
£
£
Revenue
3
192,104
-
Administrative expenses
(487,858)
(73,860)
Fair value loss on investment properties
(1,739,356)
(10,702,346)
Operating loss
5
(2,035,110)
(10,776,206)
Finance income
7
1,204
2,345
Finance costs
8
(1,475,120)
-
Loss before taxation
(3,509,026)
(10,773,861)
Tax on loss
9
Total loss for the year/period
16
(3,509,026)
(10,773,861)
The Income Statement has been prepared on the basis that all operations are continuing operations.
The Company has no other comprehensive income for the current financial year other than the results above and, therefore, no statement of other comprehensive income is presented.
The financial statements include the notes presented in pages 10 - 19.
CILS BELVEDERE LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2023
31 December 2023
- 8 -
2023
2022
Notes
£
£
£
£
Non-current assets
Investment property
10
28,700,000
21,089,281
Current assets
Trade and other receivables
11
63,877
227,628
Cash and cash equivalents
52,408
1,805
116,285
229,433
Current liabilities
Trade and other payables
12
1,703,041
1,806,202
Net current liabilities
(1,586,756)
(1,576,769)
Total assets less current liabilities
27,113,244
19,512,512
Non-current liabilities
Borrowings
13
25,980,245
21,002,820
(25,980,245)
(21,002,820)
Net assets/(liabilities)
1,132,999
(1,490,308)
Equity
Called up share capital
14
7
4
Share premium account
15
15,415,879
9,283,549
Retained earnings
16
(14,282,887)
(10,773,861)
Total equity
1,132,999
(1,490,308)
The financial statements include the Notes presented on pages 10 to 19.
The financial statements were approved by the board of directors and authorised for issue on 21 October 2024 and are signed on its behalf by:
Mr J S Goldstein
Director
Company registration number 13982658
CILS BELVEDERE LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
Share capital
Share premium account
Retained earnings
Total
Notes
£
£
£
£
Balance at 17 March 2022
-
-
Period ended 31 December 2022:
Loss for the period
-
-
(10,773,861)
(10,773,861)
Issue of share capital
14
4
9,283,549
-
9,283,553
Balance at 31 December 2022
4
9,283,549
(10,773,861)
(1,490,308)
Year ended 31 December 2023:
Loss for the year
-
-
(3,509,026)
(3,509,026)
Issue of share capital
14
3
6,132,330
-
6,132,333
Balance at 31 December 2023
7
15,415,879
(14,282,887)
1,132,999
CILS BELVEDERE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
1
Accounting policies
Company information
CILS Belvedere Limited is a private Company limited by shares registered in England and Wales and incorporated in the United Kingdom under the Companies Act 2006. The principal activity of the Company is the leasing of commercial logistics property. The immediate parent company is CILS1 UK Holdings Limited, the ultimate parent company is CI Logistics Strat 1 LP, an entity registered in Jersey.
The registered office of the Company was changed to 72 Welbeck Street, London, England, W1G 0AY on 22 April 2024 (previously 116 Upper Street, London, N1 1QP).
1.1
Accounting convention
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to the period presented, unless otherwise stated.
Basis of accounting
The financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101).
The financial statements are prepared in sterling, which is the functional currency of the Company. The financial statements have been prepared under the historical cost convention, with the exception of investment property, which is measured at fair value through profit and loss. Monetary amounts in these financial statements are rounded to the nearest £.
Comparative period
The comparatives are presented for the period from 17 March 2022, being the date of incorporation, to 31 December 2022.
Summary of disclosure exemptions
The preparation of financial statements in conformity with FRS 101 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. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 2.
The following exemptions from the requirements of UK Adopted International Accounting Standards have been applied in the preparation of these financial statements, in accordance with FRS 101:
• IFRS 7, ‘Financial instruments: Disclosures’.
• Paragraph 38 of IAS 1, ‘Presentation of financial statements’ – comparative information requirements in respect of paragraph 79(a)(iv):
• The following paragraphs of IAS 1, ‘Presentation of financial statements’:
- 10(d) (statement of cash flows)
- 16 (statement of compliance with all IFRS)
- 38A (requirement for minimum of two primary statements, including cash flow statements)
- 38B-D (additional comparative information)
- 111 (cash flow statement information); and
- 134-136 (capital management disclosures)
• IAS 7, ‘Statement of cash flow’.
• Paragraph 17 of IAS 24, ‘Related party disclosures’ (key management compensation).
• The requirements in IAS 24, ‘Related party disclosures’, to disclose related party transactions entered into between two or more members of a group.
• Paragraphs 30 and 31 of IAS 8, " Accounting Policies, changes in Accounting estimates and errors'.
• IFRS 13, 'Fair Value Measurement: Disclosures'
• IAS 40, 'Investment property: comparative disclosures'
Where relevant, these disclosures have been made in the financial statements of CILS1 UK Holdings Limited. which are publicly available and can be obtained as set out in note 17. Details of the parent entity are given in note 17 to the financial statements.
CILS BELVEDERE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 11 -
1.2
Going concern
The directors have conducted a robust assessment of the Company's ability to continue as a going concern for the financial year ended 31 December 2023, considering the available resources and expected obligations up until true31 October 2025, being the going concern period. The Company is part of a Group which also includes CI Logistics Strat 1 LP, CI Logistics Strat 1 GP Limited, CILS1 UK Holdings Limited and its subsidiaries (collectively referred to as the ‘Group’). The directors have assessed that the going concern of the Company is dependent upon the going concern of the Group. At the Group level, the directors have prepared a detailed forecast of the anticipated operational outgoings, incorporating severe but plausible downside risks, and have considered the operational income, expenses, and financing costs up until 31 October 2025. As at 31 December 2023, the Company has net current liabilities of £1,586,756 (2022: £1,576,769) and net assets of £1,132,999 (2022: £1,490,308 net liabilities). The Company’s activities are funded by capital from its shareholder CILS1 UK Holdings Limited, which in turn is funded by capital from CI Logistics Strat 1 LP.
The Group has a lending facility of £422,200,000 of which £379,422,476 is drawn as at 31 December 2023. The facility expires in April 2025 at which point the Group has two options, firstly to extend the current loan agreement for 12 months up to April 2026 or to refinance the loan with a new lender. Both options are outside of the Group’s control. The directors have considered both options, along with their associated covenants and indicative terms received from two lenders and have determined that in both cases the Group is able to meet the required criteria, subject to an amount of equity which will be required to pay down the loan which will likely lead to cash shortfall during the going concern period.
The directors have determined that there are material uncertainties in relation to (i) the Group’s ability to extend the loan or refinance, since both options depend on meeting certain covenants, as well as future valuation and occupancy levels of the assets over which management does not have absolute control or discretion and (ii) whether the Group will be able to secure additional capital from the Limited Partners of CI Logistics Strat 1 LP to cover the identified cash shortfall, resulting from requirements to extend the current loan or refinance with a new lender by 2025. These material uncertainties may cast significant doubt over the ability of the Company to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business.
Notwithstanding the material uncertainties described above, the Company has a reasonable expectation that given the quality and location of the assets, that the Group will be able to lease all assets during the going concern period which will in turn increase rental income received and the fair value of the assets held. Since the year end the Group has signed an additional lease representing 20% of the entire property portfolio. The directors also have a reasonable expectation that the Company will receive additional capital from its direct and indirect shareholders to fund the cash shortfall. This expectation is based on the financial outlook of the Limited Partners of CI Logistics Strat 1 LP, past experience of the Limited Partners providing financial support, and their willingness to support the Group to protect their invested economic interest. In addition, since the year-end the Limited Partners have continued to support the Partnership with the signing of an upsized LPA in April 2024 taking the Limited Partners commitment up to £262,200,000 plus an optional commitment of £46,139,893. For these reasons the directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for a period up until 31 October 2025 being the going concern period, and therefore considers it appropriate to prepare the financial statements on a going concern basis.
1.3
Revenue
Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The Company recognises revenue when it transfers control of a product or service to a customer.
Revenue from the rental of commercial units is recognised on a straight-line basis over the term of the relevant lease and to the extent that the Company obtains right to consideration in exchange for its performance that can be reliably measured. Revenue is recognised in the period in which it is earned and measured as the fair value of the consideration received or receivable, adjusted for any capital contributions or other lease incentives provided, excluding value added tax.
Tenant lease incentives are recognised as a reduction of rental revenue on a straight-line basis over the term of the lease, or the break clause date. The lease term is the non-cancellable period of the lease together with any further term for which the tenant has the option to continue the lease, where, at the inception of the lease, the Company is reasonably certain that the tenant will exercise that option.
Revenue is stated net of VAT and comprises of commercial rental income.
CILS BELVEDERE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 12 -
1.4
Investment property
Investment properties are properties that are held either to earn rental income or for capital appreciation, or both, and are not occupied by the Company. Investment property is measured initially at cost, including related transaction costs. After initial recognition investment property is held at fair value based on a valuation undertaken by an independent professional valuer.
The Company's investment property is comprised of a logistics asset in Erith. The investment property in the Company is held at fair value during the year ended 31 December 2023.
Moreover, any lease incentives provided by the Company to its retail commercial tenants are netted off against the value of the investment property and correspondingly adjusted against the gains and losses arising from the changes in the fair value of the investment properties included in the income statement.
1.5
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
1.6
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.7
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the Company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
CILS BELVEDERE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
1.8
Trade and other receivables
Trade and other receivables are initially recognised at fair value, which is the transaction price, and subsequently measured at amortised cost less provision for impairment. Receivables are discounted where the time value of money is material.
The Company applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of the lifetime expected loss provision for all trade receivables and contract assets. These estimates are based on historic credit loss experience, adjusted for forward-looking factors specific to the debtors and macro-economic and specific country-risk considerations with higher default rates applied to older balances.
In addition, if specific circumstances exist which would indicate that the receivable is irrecoverable a specific provision is made. A provision is made against trade receivables and contract assets until such time as the Company believes there to be no reasonable expectation of recovery, after which the trade receivable or contract asset balance is written off.
1.9
These amounts represent liabilities for services provided to the Company prior to the end of the financial year which are unpaid. Trade and other payables are presented as current liabilities. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.
1.10
Share capital and Share Premium issued by the Company is recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the Company.
2
Critical accounting estimates and judgements
The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting period end that may have a significant risk of causing a material misstatement to the carrying amounts of assets and liabilities within the next financial year, are discussed below:
In the application of the Company's accounting policies that are set out in note 1, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The directors have also made judgements about the going concern of the Company as described in note 1.2. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period if the revision and future periods if the revision affects both current and future periods.
The following are the Company's key sources of estimation uncertainty:
Key sources of estimation uncertainty
Fair value of investment property
The Company's investment property held, which is initially measured at cost and subsequently at fair value through profit or loss at the end of the reporting period. Any unrealised gains or losses on this investment is recognised immediately in the income statement.
Fair value is the amount for which an asset could be exchanged, a liability settled, or an equity instrument granted could be exchanged, between knowledgeable, willing parties in an arm's length transaction.
The fair valuation of the property was carried out by an external third-party valuation expert for inclusion in the audited financial statements where a significant period of time had elapsed since its acquisition date as part of quantifying the investment property held by the Company. The significant methods and assumptions used by valuers in estimating fair value of investment property are set out in Note 10.
Investment property is measured based on estimates prepared by independent real estate valuation experts.
CILS BELVEDERE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 14 -
3
Revenue
For the period
Year
17 March 2022
ended
to
31 December
31 December
2023
2022
£
£
Revenue analysed by class of business
Rental income (excluding straight-lining of lease incentives)
208,551
-
Straight-lining of lease incentives (at earlier of lease end date or break clause date)
(16,447)
-
192,104
-
There is only one operating segment. All revenue arose within the United Kingdom.
The Company has granted incentives such as rent-free periods to new tenants. The total unamortised portion of rent-free periods is, as follows:
For the period
Year
17 March 2022
ended
to
31 December
31 December
2023
2022
£
£
Other income
Cumulative amount of unamortised lease incentives
290,776
-
4
Other leasing information
The Company earns rental income from leasing out its completed logistics space to commercial tenants. The future minimum lease payments in relation to non-cancellable operating leases are as follows:
For the period
Year
17 March 2022
ended
to
31 December
31 December
2023
2022
£
£
Within one year
110,838
-
One to two years
532,315
-
Two to three years
532,315
-
Three to four years
532,315
-
Four to five years
532,315
-
Over five years
5,116,058
-
Total
7,356,156
-
CILS BELVEDERE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 15 -
5
Operating loss
For the period
Year
17 March 2022
ended
to
31 December
31 December
2023
2022
Operating loss for the year/period is stated after charging:
£
£
Fee payable in relation to auditor remuneration
31,500
30,000
Fee payable for void service charge costs
195,524
Fee payable for taxation advisory services
12,000
-
Fee payable for marketing costs
48,794
19,780
Asset management
24,806
-
6
Employees
The Company had no employees and incurred no staff costs during the year. There were £nil Directors' emoluments in the year (2022: £nil).
7
Finance income
For the period
Year
17 March 2022
ended
to
31 December
31 December
2023
2022
£
£
Interest income
Interest on bank deposits
1,204
2,345
8
Finance costs
For the period
Year
17 March 2022
ended
to
31 December
31 December
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
1,453,004
-
Amortisation of finance costs
22,116
1,475,120
£862,040 (2022: £11,965,882) of borrowing costs are included in the cost of qualifying assets during the year at a capitalisation rate of 3.5% plus the daily compounded SONIA rate. These are not included in the borrowing costs above.
CILS BELVEDERE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 16 -
9
Taxation
2023
2022
£
£
The charge for the year can be reconciled to the loss per the income statement as follows:
2023
2022
£
£
Loss before taxation
(3,509,026)
(10,773,861)
Expected tax credit based on a corporation tax rate of 23.50% (2022: 19.00%)
(824,621)
(2,047,034)
Fair value movements on investment properties not recognised for tax purposes
408,749
2,033,446
Anti hybrid disallowances
187,143
6,115
Loss relief available
206,729
7,473
Corporate interest restriction
341,456
-
Capital allowance relief
(319,456)
-
Taxation charge for the year
-
-
The Company has unutilised carried forward tax losses of £588,934 as at 31 December 2023 (2022: £nil). No deferred tax asset has been recognised on this amount as the Company cannot be certain that there will be taxable profits arising within its residual business from which the future reversal of the deferred tax asset could be deducted.
There was no deferred income tax recognised in the period.
In the March 2021 Budget it was announced that legislation would be introduced in the Finance Bill 2021 to increase the main rate of UK corporation tax from 19% to 25%, effective April 2023. This was substantively enacted in May 2021 therefore, any closing deferred tax balance is calculated at 25%.
10
Investment property
2023
£
Fair value
At 1 January 2023
21,089,281
Addition of Construction costs
8,295,931
Net loss from fair value adjustment
(1,739,356)
Addition of capitalised lease incentive
192,104
Addition of capitalised borrowing costs
862,040
At 31 December 2023
28,700,000
The cost of the Investment Property as at 31 December 2023, based on the historical cost basis is £40,949,958 (2022: £31,791,627).
The illustrative calculations of a valuation considered to be compliant with the principals of RICS Valuation - Professional Standards 2022, were carried out by CBRE Limited as at 31 December 2023 (2022: KPMG LLP). The valuers have prepared the calculations using the basis of fair value as at the valuation date pursuant to IFRS - Fair Value Measurement.
Key assumptions used in the valuation include an estimated rental value of £17.00 per sq ft (2022: £15.12 per sq ft), a capitalisation rate of 4.98% (2022: 4.6%) and adjusting for purchaser costs at 6.8% (2022: 6.8%).
CILS BELVEDERE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
11
Trade and other receivables
2023
2022
£
£
VAT recoverable
20,241
182,300
Amount owed by parent undertaking
4,019
4,019
Unamortised finance costs
39,617
41,309
63,877
227,628
VAT receivable was recovered in full post year end.
All Trade and other receivable amounts are interest-free and unsecured.
Amount owed by parent undertaking is repayable on demand.
The Company always recognises lifetime ECL (expected credit losses) for trade receivables, which are estimated using an analysis of the debtor's current financial position and general economic conditions at the reporting date. The Company did not make any impairment in the year.
12
Trade and other payables
2023
2022
£
£
Trade payables
150,300
1,101,936
Amount owed to parent undertaking
759,977
135,206
Accruals and deferred income
629,959
303,275
Other payables
162,805
265,785
1,703,041
1,806,202
Amounts owed to the parent undertaking are unsecured, interest-free and repayable on demand.
The Loan interest accrual include amounts accrued from 21 October to 31 December of each period in relation to the bank borrowings.
13
Borrowings
2023
2022
£
£
Borrowings held at amortised cost:
Bank borrowings
25,990,637
21,055,107
Unamortised finance costs
(50,009)
(93,596)
Unamortised finance costs released in less than 1 year
39,617
41,309
25,980,245
21,002,820
CILS BELVEDERE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
13
Borrowings
(Continued)
- 18 -
The Company has a finance facility provided by Blackstone (via Claus Investments S.a.r.l) for a 5-year loan facility, commencing 2 April 2022, and guaranteed by its parent CILS1 UK Holdings Limited. The initial facility terms is for 3 years with the option to extend annually for the remaining two years. The facility is secured against the development asset.
The bank finance is subject to a 82.5% loan-to-value and 4.5% debt yield, which is applicable to April 2025. The Company was compliant with this requirement as at the year end.
As at the year end there is £499,758 (2022: £273,275) of accrued loan interest shown as a current liability. Interest is repayable quarterly and capital repayable at the end of the term.
CILS1 UK Holdings Limited, the parent entity, purchased a two year interest rate cap in March 2022, for the group facility, to hedge the interest rate risk, capping the total interest payable at 2.50%.
CILS1 UK Holdings Limited, the parent entity, purchased a one year interest rate cap in April 2024, for the group facility, to hedge the interest rate risk, capping the total interest payable at 6%.
14
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Authorised
Ordinary share of £1 each
7
4
7
4
Issued and fully paid
Ordinary share of £1 each
7
4
7
4
On 4 April 2023, the Company issued 1 Ordinary Share of £1 at a price of £994,672, creating share premium of £994,671.
On 20 June 2023, the Company issued 1 Ordinary Share of £1 at a price of £3,091,000, creating share premium of £3,090,999.
On 22 December 2023, the Company issued 1 Ordinary Share of £1 at a price of £2,046,661, creating share premium of £2,046,660.
15
Share premium account
2023
2022
£
£
At the beginning of the year
9,283,549
On conversion of inter-company loan
-
9,283,549
Issued during the year
6,132,330
At the end of the year
15,415,879
9,283,549
During the year ended 31 December 2023, CILS1 UK Holdings Limited provided the Company with funding amounts totalling £6,132,333 which were unsecured, interest free and repayable on demand. During 2023 the amounts were converted to equity consisting of a total of three equity shares of £1 each issued at a total premium of £6,132,330 (2022: £9,283,553 of loan under an ICL agreement was converted to 4 shares at a premium of £9,283,549).
CILS BELVEDERE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
16
Retained earnings
2023
2022
£
£
At the beginning of the year
(10,773,861)
-
Loss for the year
(3,509,026)
(10,773,861)
At the end of the year
(14,282,887)
(10,773,861)
The accumulated losses reserve represents cumulative profits and losses net of dividends paid and other adjustments. These are shown in the statement of changes in equity (page 9).
17
Controlling party
As at 31 December 2023, the only parent undertaking that consolidates the results of the Company and whose financial statements are publicly available is CILS1 UK Holdings Limited, an entity incorporated in the United Kingdom.
CILS1 UK Holdings Limited is 100% owned by CI Logistics Strat 1 LP, a partnership incorporated in Jersey. The general partner of CI Logistics Strat 1 LP is CI Logistics Strat 1 GP Limited, an entity incorporated in Jersey. The financial statements of these entities are not publicly available.
ACZ Investments LP and UKLP Holding LP, the two shareholders of CI Logistics Strat 1 GP Limited, equally share control of the Company and the directors consider there to be no ultimate controlling party.
18
Related party transactions
In accordance with FRS 101 under IAS 24, the Company has taken advantage of the exemption from disclosing related party transactions with entities owned wholly by the group.
19
Post balance sheet events
On 28 March 2024, £265,000 of temporary funding was converted to 1 ordinary £1 share at a premium of £264,999.
On 1 July 2024, £260,000 of temporary funding was converted to 1 ordinary £1 share at a premium of £259,999.
On 26 September 2024, £110,000 of temporary funding was converted to 1 ordinary £1 share at a premium of £109,999.
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