Company Registration No. 11306245 (England and Wales)
SEVEN ARCHES INVESTMENTS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
SEVEN ARCHES INVESTMENTS LIMITED
COMPANY INFORMATION
Director
Mr G Campbell
Company number
11306245
Registered office
Town Hall
Ingrave Road
Brentwood
Essex
CM15 8AY
Auditor
M J Bushell Audit LLP
8 High Street
Brentwood
Essex
CM14 4AB
SEVEN ARCHES INVESTMENTS LIMITED
CONTENTS
Page
Director's report
1 - 2
Director's responsibilities statement
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 - 21
SEVEN ARCHES INVESTMENTS LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 MARCH 2024
- 1 -
The director presents his annual report and financial statements for the year ended 31 March 2024.
Principal activities
The principal activity of the company was that of purchasing investment properties to provide additional funding for the council, together with managing properties owned by the council as and when requested.
Results and dividends
The results for the year are set out on the income statement.
No ordinary dividends were paid. The director does not recommend payment of a final dividend.
Director
The director who held office during the year and up to the date of signature of the financial statements was as follows:
Mr S Summers
(Resigned 28 June 2024)
Mr G Campbell
Supplier payment policy
The company's current policy concerning the payment of trade creditors is to follow the CBI's Prompt Payers Code (copies are available from the CBI, Centre Point, 103 New Oxford Street, London WC1A 1DU).
The company's current policy concerning the payment of trade creditors is to:
settle the terms of payment with suppliers when agreeing the terms of each transaction;
ensure that suppliers are made aware of the terms of payment by inclusion of the relevant terms in contracts; and
pay in accordance with the company's contractual and other legal obligations.
Trade creditors of the company at the year end were equivalent to 3 day's purchases, based on the average daily amount invoiced by suppliers during the year.
Financial instruments
Liquidity Risk
In order to maintain liquidity to ensure that sufficient funds are available for ongoing operations and future developments, the company uses a mixture of long-term and short-term debt finance.
Credit Risk
The Company's principal financial assets are bank balances, trade and other receivables and investments.
The Company's credit risk is primarily attributable to its trade receivables. The amounts presented in the balance sheet are net of allowances for doubtful receivables. An allowance for impairment is made where there is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of cash flows.
The Company has no significant concentration of credit risk, with exposure spread over a large number of counterparties and customers.
SEVEN ARCHES INVESTMENTS LIMITED
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 2 -
Future developments
As set out in its Business Plan, Seven Arches Investments Limited now intends to diversify its portfolio and business by undertaking the following proposals:
In borough residential acquisitions
In borough redevelopments and regeneration projects
Managing the assets of the Council
Continuation of delivering projects through the Joint Venture
Continuing to manage its current asset portfolio.
Auditor
The auditor, M J Bushell Audit LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
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.
On behalf of the board
Mr G Campbell
Director
18 September 2024
SEVEN ARCHES INVESTMENTS LIMITED
DIRECTOR'S RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MARCH 2024
- 3 -
The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the director must not approve the financial statements unless he is 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 director is 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; and
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 enable them 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.
SEVEN ARCHES INVESTMENTS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF SEVEN ARCHES INVESTMENTS LIMITED
- 4 -
Opinion
We have audited the financial statements of Seven Arches Investments Limited (the 'company') for the year ended 31 March 2024 which comprise the income statement, the statement of financial position, the statement of changes in equity and notes to the financial statements, including significant accounting policies. 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 state of the company's affairs as at 31 March 2024 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.
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 financial statements are authorised for issue.
Our responsibilities and the responsibilities of the director with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's 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.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our 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.
SEVEN ARCHES INVESTMENTS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SEVEN ARCHES INVESTMENTS LIMITED
- 5 -
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 director's 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 remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of director
As explained more fully in the director's responsibilities statement, the director is 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 director determines 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 director is 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 director either intends to liquidate the company or to cease operations, or has 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.
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.
Management of controls
The auditor’s explanation of its audit response will depend on the risks identified but may include:
- 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.
Non - compliance laws and regulations
The auditor’s explanation of its audit response will depend on the risks identified but may include:
- Enquiry of management, those charged with governance around actual and potential litigation and claims.
- Enquiry of entity staff in tax and compliance functions to identify any instances of non-compliance with laws and regulations.
- Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.
A further description of our responsibilities is available on the Financial Reporting Council's website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
SEVEN ARCHES INVESTMENTS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SEVEN ARCHES INVESTMENTS LIMITED
- 6 -
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.
Abi Wilson (Senior Statutory Auditor)
For and on behalf of M J Bushell Audit LLP
4 October 2024
Chartered Accountants
Statutory Auditor
8 High Street
Brentwood
Essex
CM14 4AB
SEVEN ARCHES INVESTMENTS LIMITED
INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2024
- 7 -
2024
2023
Notes
£
£
Revenue
2
9,848,776
9,924,140
Cost of sales
(5,028,238)
(5,361,989)
Gross profit
4,820,538
4,562,151
Administrative expenses
(1,933,628)
(1,828,974)
Operating profit
2,886,910
2,733,177
Investment income
5
2,888
37
Finance costs
6
(2,400,000)
(2,400,000)
Fair value gains and losses on investment properties
8
(576,400)
521,200
(Loss)/profit before taxation
(86,602)
854,414
Tax on (loss)/profit
7
19,646
(286,855)
(Loss)/profit and total comprehensive income for the financial year
18
(66,956)
567,559
The income statement has been prepared on the basis that all operations are continuing operations.
SEVEN ARCHES INVESTMENTS LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT
31 MARCH 2024
31 March 2024
- 8 -
2024
2023
Notes
£
£
£
£
Non-current assets
Investment property
8
60,074,700
60,651,100
Investments
9
100
100
60,074,800
60,651,200
Current assets
Trade and other receivables
11
4,418,418
3,607,796
Cash and cash equivalents
2,597,526
2,356,838
7,015,944
5,964,634
Current liabilities
13
(4,790,628)
(4,067,161)
Net current assets
2,225,316
1,897,473
Total assets less current liabilities
62,300,116
62,548,673
Non-current liabilities
13
(60,000,000)
(60,037,501)
Provisions for liabilities
Deferred tax liabilities
15
(638,511)
(782,611)
Net assets
1,661,605
1,728,561
Equity
Called up share capital
17
100
100
Retained earnings
18
1,661,505
1,728,461
Total equity
1,661,605
1,728,561
The financial statements were approved by the board of directors and authorised for issue on 18 September 2024 and are signed on its behalf by:
Mr G Campbell
Director
Company Registration No. 11306245
SEVEN ARCHES INVESTMENTS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2024
- 9 -
Share capital
Retained earnings
Total
£
£
£
Balance at 1 April 2022
100
1,160,902
1,161,002
Year ended 31 March 2023:
Profit and total comprehensive income for the year
-
567,559
567,559
Balance at 31 March 2023
100
1,728,461
1,728,561
Year ended 31 March 2024:
Loss and total comprehensive income for the year
-
(66,956)
(66,956)
Balance at 31 March 2024
100
1,661,505
1,661,605
SEVEN ARCHES INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
- 10 -
1
Accounting policies
Company information
Seven Arches Investments Limited is a private company limited by shares incorporated in England and Wales. The registered office is Town Hall, Ingrave Road, Brentwood, Essex, CM15 8AY. The company's principal activities and nature of its operations are disclosed in the director's report.
1.1
Accounting convention
The financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) and in accordance with applicable accounting standards.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £1.
The financial statements have been prepared under the historical cost convention, except for the revaluation of Investment property. The principal accounting policies adopted are set out below.
The company has taken advantage of the following disclosure exemptions under FRS 101:
the requirements of paragraphs 45(b) and 46-52 of IFRS 2 Share based Payment;
the requirements of paragraphs 62, B64(d), B64(e), B64(g), B64(h), B64(j) to B64(m), B64(n)(ii), B64 (o)(ii), B64(p), B64(q)(ii), B66 and B67of IFRS 3 Business Combinations. Equivalent disclosures are included in the consolidated financial statements of Brentwood Borough Council in which the entity is consolidated;
the requirements of paragraph 33 (c) of IFRS 5 Non current Assets Held for Sale and Discontinued Operations;
the requirements of IFRS 7 Financial Instruments: Disclosures;
the requirements of paragraphs 91-99 of IFRS 13 Fair Value Measurement;
the requirement in paragraph 38 of IAS 1 ‘Presentation of Financial Statements’ to present comparative information in respect of: (i) paragraph 79(a) (iv) of IAS 1, (ii) paragraph 73(e) of IAS 16 Property Plant and Equipment (iii) paragraph 118 (e) of IAS 38 Intangibles Assets, (iv) paragraphs 76 and 79(d) of IAS 40 Investment Property and (v) paragraph 50 of IAS 41 Agriculture;
the requirements of paragraphs 10(d), 10(f), 16, 38A to 38D, 39 to 40 ,111 and 134-136 of IAS 1 Presentation of Financial Statements;
the requirements of IAS 7 Statement of Cash Flows;
the requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors;
the requirements of paragraph 17 of IAS 24 Related Party Disclosures;
the requirements in IAS 24 Related Party Disclosures to disclose related party transactions entered into between two or more members of a group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member ; and
the requirements of paragraphs 134(d)-134(f) and 135(c)-135(e) of IAS 36 Impairment of Assets.
As permitted by FRS 101, the company has taken advantage of the disclosure exemptions available under that standard in relation to share based payments, financial instruments, capital management, presentation of a cash flow statement, presentation of comparative information in respect of certain assets, standards not yet effective, impairment of assets, business combinations, discontinued operations and related party transactions.
Where required, equivalent disclosures are given in the group accounts of Brentwood Borough Council. The group accounts of Brentwood Borough Council are available to the public and can be obtained as set out in note 21.
1.2
Going concern
The director has at the time of approving the financial statements, a reasonable expectation that the truecompany has adequate resources to continue in operational existence for the foreseeable future. Thus the director continues to adopt the going concern basis of accounting in preparing the financial statements.
SEVEN ARCHES INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 11 -
1.3
Revenue
Revenue is recognised at the fair value of the consideration received or receivable for services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable.
The company recognises revenue from the following major sources:
Rental income
Other income
The nature, timing of satisfaction of performance obligations and significant payment terms of the company's major sources of revenue are as follows:
Rental income
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease.
Other income
Other income relates to costs recharged to related parties and this is recognised on a straight line basis over the cost period.
1.4
Investment properties
Investment property, which is property held to earn rentals and/or for capital appreciation, is initially measured at cost and subsequently measured using the fair value model and stated at its fair value at the reporting end date. Changes in fair value are recognised in profit or loss.
IFRS 13 establishes a single source of guidance for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. The resulting calculations under IFRS 13 affected the principles that the company uses to assess the fair value, but the assessment of fair value under IFRS 13 has not materially changed the fair values recognised or disclosed. IFRS 13 mainly impacts the disclosures of the company. It requires specific disclosures about fair value measurements and disclosures of fair values, some of which replace existing disclosure requirements in other standards.
1.5
Non-current investments
Investments in joint ventures are all held at cost in the financial statements.
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.
SEVEN ARCHES INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 12 -
1.7
Financial assets
Financial assets are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of the financial assets.
At initial recognition, financial assets classified as fair value through profit and loss are measured at fair value and any transaction costs are recognised in profit or loss. Financial assets not classified as fair value through profit and loss are initially measured at fair value plus transaction costs.
Financial assets at fair value through profit or loss
When any of the above-mentioned conditions for classification of financial assets is not met, a financial asset is classified as measured at fair value through profit or loss. Financial assets measured at fair value through profit or loss are recognized initially at fair value and any transaction costs are recognised in profit or loss when incurred. A gain or loss on a financial asset measured at fair value through profit or loss is recognised in profit or loss, and is included within finance income or finance costs in the statement of income for the reporting period in which it arises.
Financial assets held at amortised cost
Financial instruments are classified as financial assets measured at amortised cost where the objective is to hold these assets in order to collect contractual cash flows, and the contractual cash flows are solely payments of principal and interest. They arise principally from the provision of goods and services to customers (eg trade receivables). They are initially recognised at fair value plus transaction costs directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment where necessary.
Financial assets at fair value through other comprehensive income
Debt instruments are classified as financial assets measured at fair value through other comprehensive income where the financial assets are held within the company’s business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A debt instrument measured at fair value through other comprehensive income is recognised initially at fair value plus transaction costs directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognised through other comprehensive income are directly transferred to profit or loss when the debt instrument is derecognised.
The company has made an irrevocable election to recognize changes in fair value of investments in equity instruments through other comprehensive income, not through profit or loss. A gain or loss from fair value changes will be shown in other comprehensive income and will not be reclassified subsequently to profit or loss. Equity instruments measured at fair value through other comprehensive income are recognized initially at fair value plus transaction cost directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognized through other comprehensive income are directly transferred to retained earnings when the equity instrument is derecognized or its fair value substantially decreased. Dividends are recognized as finance income in profit or loss.
Impairment of financial assets
Financial assets, other than those measured at fair value through profit or loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.
SEVEN ARCHES INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 13 -
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.
1.8
Financial liabilities
The company recognises financial debt when the company becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.
Financial liabilities at fair value through profit or loss
Financial liabilities are classified as measured at fair value through profit or loss when the financial liability is held for trading. A financial liability is classified as held for trading if:
it has been incurred principally for the purpose of repurchasing it in the near term, or
on initial recognition it is part of a portfolio of identified financial instruments that the manages together and has a recent actual pattern of short-term profit taking, or
it is a derivative that is not designated and effective hedging instrument.
Financial liabilities at fair value through profit or loss are stated at fair value with any gains or losses arising on remeasurement recognised in profit or loss.
Other financial liabilities
Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.
Derecognition of financial liabilities
Financial liabilities are derecognised when, and only when, the company’s obligations are discharged, cancelled, or they expire.
1.9
Equity instruments
Equity instruments issued by the company are 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.
1.10
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.
SEVEN ARCHES INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 14 -
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.
1.11
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of inventories or non-current assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
Leases
At inception, the company assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the company recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within property, plant and equipment, apart from those that meet the definition of investment property.
The company has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less, or for leases of low-value assets including IT equipment. The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.
2
Revenue
2024
2023
£
£
Revenue analysed by class of business
Rental income
8,790,467
8,895,418
Other income
1,058,309
1,028,722
9,848,776
9,924,140
SEVEN ARCHES INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 15 -
3
Exceptional items
2024
2023
£
£
Income
Exceptional - fair value gains and losses on investment properties
-
521,200
Expenditure
Exceptional - fair value gains and losses on investment properties
576,400
-
Net exceptional income/(expenditure)
(576,400)
521,200
4
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2024
2023
Number
Number
2
2
Aggregate remuneration comprised of:
2024
2023
£
£
Wages and salaries
12,583
Social security costs
-
1,728
Pension costs
2,546
16,857
5
Investment income
2024
2023
£
£
Interest income
Interest on bank deposits
2,888
37
6
Finance costs
2024
2023
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
2,400,000
2,400,000
SEVEN ARCHES INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 16 -
7
Taxation
2024
2023
£
£
Current tax
UK corporation tax on profits for the current period
124,454
-
Deferred tax
Origination and reversal of temporary differences
(144,100)
286,855
Total tax charge/(credit)
(19,646)
286,855
The charge for the year can be reconciled to the (loss)/profit per the income statement as follows:
2024
2023
£
£
(Loss)/profit before taxation
(86,602)
854,414
Expected tax (credit)/charge based on a corporation tax rate of 25.00% (2023: 19.00%)
(21,651)
162,339
Effect of expenses not deductible in determining taxable profit
10,916
4,854
Gains not taxable
144,100
(99,028)
Utilisation of tax losses not previously recognised
(8,911)
(68,165)
Deferred tax adjustments
(144,100)
286,855
Taxation (credit)/charge for the year
(19,646)
286,855
8
Investment property
2024
£
Fair value
At 1 April 2023
60,651,100
Fair value adjustment
(576,400)
At 31 March 2024
60,074,700
The fair value of the company's investment property at 31 March 2024 has been arrived at on the basis of a valuation carried out at that date by Wilkes Head & Eve, independent valuers, not connected with the company. The valuation which conforms to the International Valuation Standards was arrived at by reference to market evidence of transactions prices for similar properties.
The company has pledged all of its investment property to secure general banking facilities granted to the company.
SEVEN ARCHES INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 17 -
9
Investments
Current
Non-current
2024
2023
2024
2023
£
£
£
£
Investments in joint ventures
-
-
100
100
The company has not designated any financial assets that are not classified as held for trading as financial assets at fair value through profit or loss.
Fair value of financial assets carried at amortised cost
Except as detailed below the directors believe that the carrying amounts of financial assets carried at amortised cost in the financial statements approximate to their fair values.
10
Joint ventures
Separate company financial statements are required to be prepared by law.
Details of the company's joint ventures at 31 March 2024 are as follows:
Name of undertaking
Registered office
Interest
% Held
held
Direct
Voting
Brentwood Development Partnership LLP
England and Wales
50%
50.00
50.00
The investments in joint ventures are all stated at cost.
11
Trade and other receivables
Current
Non-current
2024
2023
2024
2023
£
£
£
£
Trade receivables
587,822
602,903
-
-
Amounts owed by joint ventures
2,738
2,738
Other receivables
695,806
304,761
-
450,648
Prepayments and accrued income
3,132,052
2,246,746
-
-
4,418,418
3,157,148
-
450,648
Trade receivables disclosed above are classified as loans and receivables and are therefore measured at amortised cost.
SEVEN ARCHES INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 18 -
12
Borrowings
Non-current
2024
2023
£
£
Borrowings held at amortised cost:
Bank loans
60,000,000
60,000,000
2024
2023
£
£
Secured borrowings included above:
Loans from parent undertaking
60,000,000
60,000,000
Loan values are secured over the property to which they relate. Brentwood Borough Council hold fixed and floating charges over loans, covering all property and undertaking of the company. Charges also contain negative pledges.
The figures in the prior period have been restated by way of presentational adjustment to show the full loan balance as a non current liability, rather than a portion showing as a current liability. This has been done for consistency with the current period and to reflect the actual position of the loan.
Borrowings include the following amounts which fall due after more than five years:
Amounts payable other than by instalments
60,000,000
60,000,000
13
Liabilities
Current
Non-current
2024
2023
2024
2023
Notes
£
£
£
£
Borrowings
12
60,000,000
60,000,000
Trade and other payables
14
4,637,663
3,740,291
37,501
Taxation and social security
152,965
326,870
4,790,628
4,067,161
60,000,000
60,037,501
14
Trade and other payables
Current
Non-current
2024
2023
2024
2023
£
£
£
£
Trade payables
593,662
476,395
Accruals and deferred income
4,025,754
3,169,972
Other payables
18,247
93,924
-
37,501
4,637,663
3,740,291
-
37,501
SEVEN ARCHES INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 19 -
15
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon during the current and prior reporting period.
Accelerated capital allowances
£
Deferred tax liability at 1 April 2022
495,756
Deferred tax movements in prior year
Charge/(credit) to profit or loss
286,855
Deferred tax liability at 1 April 2023
782,611
Deferred tax movements in current year
Charge/(credit) to profit or loss
(144,100)
Deferred tax liability at 31 March 2024
638,511
Deferred tax assets and liabilities are offset in the financial statements only where the company has a legally enforceable right to do so.
16
Retirement benefit schemes
2024
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
-
2,546
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
17
Share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Authorised
Ordinary of £1 each
100
100
100
100
Issued and fully paid
Ordinary of £1 each
100
100
100
100
The company has one class of ordinary shares which carry full rights in the company with respect to voting, dividends and distributions.
18
Retained earnings
As at 31 March 2024 £1,915,533 of retained earnings related to revaluation gains and losses on investment property, therefore are non distributable (2023: £2,347,833).
SEVEN ARCHES INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 20 -
19
Other leasing information
Lessee
Operating lease payments represent rentals payable by the company for certain properties.
Currently the company subleases three residential properties and three commercial properties. The leases are for an average term of 21 years and rentals payable range from 97% to 99% of the rental income less costs of managing and repairs. The current rental annual income for the three residential properties is £327,148 (excluding costs) (2023: £280,089), and for the three commercial properties is £4,998,126 (excluding costs) (2023: £5,132,470). For the residential properties, these are short term leases to tenants, with the maximum period being 12 months.
Lessor
The company owns five and leases seven investments properties for rental purposes. All of the properties have committed tenants. All leases include a provision for five-yearly upward rent reviews according to prevailing market conditions. All operating lease contracts contain market review clauses in the event that the lessee exercises its option to renew. The lessee does not have an option to purchase the property at the expiry of the lease period.
At the reporting end date the company had contracted with tenants for the following minimum lease payments:
2024
2023
£
£
Within one year
7,537,179
7,800,616
Between two and five years
21,280,071
20,511,598
Over five years
18,063,603
17,826,342
Total undiscounted lease payments receivable
46,880,853
46,138,556
The amounts above only include income in relation to the investment properties.
20
Related party transactions
During the year the company entered into the following transactions with related parties:
Cost of sales and overhead costs
2024
2023
£
£
Parent company
7,847,819
8,064,356
The following amounts were outstanding at the reporting end date:
2024
2023
Amounts due to related parties
£
£
Parent company
60,000,000
60,000,000
SEVEN ARCHES INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 21 -
21
Controlling party
The parent company of Seven Arches Investments Limited is Brentwood Borough Council and its registered office is Town Hall, Ingrave Road, Brentwood, CM15 8AY.
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