Company registration number 10814415 (England and Wales)
CIFCO CAPITAL LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
CIFCO CAPITAL LIMITED
COMPANY INFORMATION
Directors
Mr H W Cooke
Sir C Haworth
Mr M Sargeantson
Mrs E Brightman
Mr J Ward
(Appointed 14 June 2023)
Mr D C Bradbury
(Appointed 1 August 2024)
Ms T Davis
(Appointed 31 July 2024)
Mr J Whyman
(Appointed 5 August 2024)
Company number
10814415
Registered office
C/O B&Msdc Endeavour House
8 Russell Road
Ipswich
IP1 2BX
Accountants
Ensors Accountants LLP
Connexions
159 Princes Street
Ipswich
IP1 1QJ
CIFCO CAPITAL LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Directors' responsibilities statement
5
Independent auditor's report
6 - 8
Income statement
9
Statement of financial position
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 25
CIFCO CAPITAL LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2024
- 1 -

The directors present their strategic report and the financial statements for the year ended 31 March 2024.

Review of the business

The incorporation of CIFCO Capital Limited and its associated structure were borne out of a necessity to supplement, and ultimately replace, central Government financial support to Babergh and Mid Suffolk District Councils (“the Shareholders”). In order to deliver this, CIFCO Capital Limited was incorporated as a Special Purpose Vehicle (SPV) to invest in commercial assets to generate income. The rationale for commercial assets being targeted is:

 

In carrying out the investment, the board's role has been: -

 

 

CIFCO Capital Limited completed its drawdown of approved funds from the Councils in 2020/21.

 

The structure is based upon each Council’s wholly owned holding company which has a 50% equal shareholding in the jointly owned investment company limited by shares. Each of the Councils' own companies are a holding/ parent company.

Principal risks and uncertainties

The principal risks and uncertainties impacting the entity are: the portfolio fails to realise returns due to its nature, structure or management; asset obsolescence over time; void periods resulting in the fund making a net loss or falling short of Business plan targets.

Development and performance

This period marks the continuation of trading following completion of the acquisition phase of the portfolio in 2021. The construction of one asset, a small Coop store in Stanton, completed in August 2023.

 

The Portfolio, with a value of £81.77m, is currently comprised of 22 assets. This value has decreased by 3.23% since 31st March 2023 due to market conditions. The portfolio has however out performed the market benchmark of 5.3% reduction in value across portfolios. The current contracted rental income is 4.1% higher than last year at £5,758,035 per annum with an estimated full rental value of £6,769,484 per annum. Refurbishment projects have been carried out, when units have become vacant, and significant efforts have been made in improving the sustainability credentials of these assets, as well as substantial increases in rental values.

 

Shareholder Councils have benefitted from net income after borrowing costs of £1,260,000 in 2023/24.

CIFCO CAPITAL LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 2 -
Key performance indicators

Management use a range of measures to monitor and manage the business. The Key Performance Indicators for 2023/24 were met or are on track to be met within the timeframes set out:

 

KPI

Description

Target

Target

CIFCO KPI Q1 2024

1

Increase contracted rent from £5,530,981 pa by 01 April 2024

£5,586,290

1%

£5,758,035(+4.1%)

2

Equivalent Yield (EY)

MSCI All property 6.6%

Target at or above market Equivalent Yield

7.50%

3

Improve EPC Portfolio Rating

100%

All Properties have an EPC rating of C or above by 2027

50%

4

Quarterly Rent Arrears of less than 5.00% (Data as at 20 March 2024)

Current Arrears (£):

£53,686

Measured by the amount of rent outstanding at the end of the quarter as a percentage of the total rent due that quarter

Current Arrears (%):

3.19%

Q1   1.46%

5% Target:

£84,102

Q2   2.02%

Target:

-£30,416

Q3   0.10%

Total Income for Quarter:

£1,682,040

Q4  3.19% 

 

On behalf of the board

Sir C Haworth
Director
4 September 2024
CIFCO CAPITAL LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2024
- 3 -

The directors present their annual report and financial statements for the year ended 31 March 2024.

Principal activities

The principal activity of the company is to purchase and manage commercial properties with a view to earning rental income.

Results and dividends

The results for the year are set out on page 9.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

Mr H W Cooke
Sir C Haworth
Mr M Sargeantson
Mrs E Brightman
Mr R Meyer
(Resigned 19 May 2023)
Ms E Malvisi
(Resigned 27 May 2023)
Mr J Ward
(Appointed 14 June 2023)
Mr A Davies
(Appointed 14 June 2023 and resigned 31 July 2024)
Mr D C Bradbury
(Appointed 1 August 2024)
Ms T Davis
(Appointed 31 July 2024)
Mr J Whyman
(Appointed 5 August 2024)
Financial instruments
Liquidity risk

The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.

Interest rate risk

The company is exposed to fair value interest rate risk on its fixed rate borrowings. The directors believe the exposure to interest rate risk is minimal given the availability of flexible funding and support from the ultimate shareholders of the business.

Credit risk

Investments of cash surpluses, borrowings and derivative instruments are made through banks and companies which must fulfil credit rating criteria approved by the Board.

 

Customers are tenants of the company's investment properties and signed lease agreements are in place for all tenants. Trade receivables are monitored on an ongoing basis and provision is made for doubtful debts where necessary.

Future developments

The company aims to manage the invested portfolio to maximise the income from the assets and their long term value. The company has completed the drawdown of investment funds from the Councils comprising a total of £99.25m.

Auditor

In accordance with the company's articles, a resolution proposing that Ensors Accountants LLP be reappointed as auditor of the company will be put at a General Meeting.

CIFCO CAPITAL LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 4 -
Statement of disclosure to auditor

Each director in office at the date of approval of this annual report confirms that:

 

This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.

Medium-sized companies exemption

This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.

On behalf of the board
Sir C Haworth
Director
4 September 2024
CIFCO CAPITAL LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MARCH 2024
- 5 -

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 International Financial Reporting Standards (IFRSs) as adopted by the United Kingdom. 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, International Accounting Standard 1 requires that directors:

 

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.

CIFCO CAPITAL LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF CIFCO CAPITAL LIMITED
- 6 -
Opinion

We have audited the financial statements of CIFCO Capital 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, the statement of cash flows 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 UK adopted international accounting standards.

In our opinion the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor'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 directors' 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 directors with respect to going concern are described in the relevant sections of this report.

Other information

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 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:

CIFCO CAPITAL LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF CIFCO CAPITAL LIMITED (CONTINUED)
- 7 -
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 strategic report or 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:

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, 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.

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.

Our audit was designed to include tests of detail together with an assessment of the control environment to enable us to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement due to fraud. Through discussion with directors and management, and from our own knowledge of and experience of the sector in which the company operates we identified the following areas where we consider there is a higher risk of fraud: transactions with related parties, revenue recognition, investment property valuation, and management override of systems and control. We note that the use of external advisors and service organisations has helped to reduce the susceptibility of the company to material misstatement due to fraud.

We performed audit procedures to address the risks noted above, which included the following:

 

CIFCO CAPITAL LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF CIFCO CAPITAL LIMITED (CONTINUED)
- 8 -

Auditor's responsibilities for the audit of the financial statements (continued)

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is we would become aware of non-compliance.

 

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.

 

It is the primary responsibility of management, with the oversight of those charged with governance, to ensure that the entity's operations are conducted in accordance with the provisions of laws and regulations and for the prevention and detection of fraud.

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.

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Helen Rumsey (Senior Statutory Auditor)
For and on behalf of Ensors Accountants LLP
16 October 2024
Chartered Accountants
Statutory Auditor
Connexions
159 Princes Street
Ipswich
IP1 1QJ
CIFCO CAPITAL LIMITED
INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2024
- 9 -
2024
2023
Notes
£
£
Revenue
4
6,342,444
5,805,169
Gross profit
6,342,444
5,805,169
Administrative expenses
(1,264,637)
(1,236,661)
Operating profit
5
5,077,807
4,568,508
Investment revenues
9
99,600
50,751
Finance costs
10
(4,411,051)
(4,395,385)
Other gains and losses
11
(2,730,188)
(11,651,935)
Loss before taxation
(1,963,832)
(11,428,061)
Income tax (expense)/income
12
(1,106,755)
1,211,833
Loss and total comprehensive income for the year
(3,070,587)
(10,216,228)

The income statement has been prepared on the basis that all operations are continuing operations.

CIFCO CAPITAL LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT
31 MARCH 2024
31 March 2024
- 10 -
2024
2023
Notes
£
£
Non-current assets
Investment property
13
81,775,000
82,500,000
Current assets
Trade and other receivables
15
1,111,687
1,168,855
Cash and cash equivalents
1,511,635
2,953,611
2,623,322
4,122,466
Current liabilities
Trade and other payables
20
1,495,200
1,344,849
Current tax liabilities
659,678
463,671
Borrowings
17
2,540,992
1,699,138
Deferred revenue
22
1,267,639
1,216,863
5,963,509
4,724,521
Net current liabilities
(3,340,187)
(602,055)
Non-current liabilities
Borrowings
17
86,620,675
87,271,218
Deferred tax liabilities
21
1,331,629
1,073,631
87,952,304
88,344,849
Net liabilities
(9,517,491)
(6,446,904)
Equity
Called up share capital
23
9,917,494
9,917,494
Share premium account
24
1,192
1,192
Retained earnings
(19,436,177)
(16,365,590)
Total equity
(9,517,491)
(6,446,904)

These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.

The financial statements were approved by the board of directors and authorised for issue on 4 September 2024 and are signed on its behalf by:
Sir C Haworth
Director
Company registration number 10814415 (England and Wales)
CIFCO CAPITAL LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2024
- 11 -
Share capital
Share premium account
Retained earnings
Total
£
£
£
£
Balance at 1 April 2022
9,917,494
1,192
(6,149,362)
3,769,324
Year ended 31 March 2023:
Loss and total comprehensive income
-
-
(10,216,228)
(10,216,228)
Balance at 31 March 2023
9,917,494
1,192
(16,365,590)
(6,446,904)
Year ended 31 March 2024:
Loss and total comprehensive income
-
-
(3,070,587)
(3,070,587)
Balance at 31 March 2024
9,917,494
1,192
(19,436,177)
(9,517,491)
CIFCO CAPITAL LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2024
- 12 -
2024
2023
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
28
5,336,102
4,613,764
Interest paid
(3,767,715)
(4,262,442)
Income taxes paid
(652,750)
(306,701)
Net cash inflow from operating activities
915,637
44,621
Investing activities
Purchase of investment property
(2,005,188)
(41,935)
Interest received
99,600
50,751
Net cash (used in)/generated from investing activities
(1,905,588)
8,816
Financing activities
Repayment of borrowings
(452,025)
(459,063)
Net cash used in financing activities
(452,025)
(459,063)
Net decrease in cash and cash equivalents
(1,441,976)
(405,626)
Cash and cash equivalents at beginning of year
2,953,611
3,359,237
Cash and cash equivalents at end of year
1,511,635
2,953,611
CIFCO CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
- 13 -
1
Accounting policies
Company information

CIFCO Capital Limited is a private company limited by shares incorporated in England and Wales. The registered office is C/O B&Msdc Endeavour House, 8 Russell Road, Ipswich, IP1 2BX.

 

The financial statements of CIFCO Capital Limited for the year ended 31 March 2024 were authorised for issue by the board of directors on 4 September 2024 and the Statement of Financial Position was signed on the board's behalf by Sir C Haworth.

1.1
Accounting convention

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the United Kingdom and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, except as otherwise stated.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared on the historical cost basis, except for the revaluation of investment property. The principal accounting policies adopted are set out below.

1.2
Going concern

The directors have 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. The directors acknowledge that currently the company has net liabilities but the company has the support of its owners. The directors expect that in the long term the value of the properties held by the company will increase, in the meantime the properties continue to provide robust income for the company. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

1.3
Revenue

The company's financial statements are prepared on an accruals basis. Income is recognised in the accounts in the accounting period in which the effect of the relevant transaction takes place and not in the period in which the cash is received.

 

This means that rental income and other receipts are accounted for as income at the date the company provides the relevant service. Where income has been recognised but cash has not yet been received, a debtor for the relevant amount is recorded in the Statement of Financial Position.

1.4
Investment property

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. The surplus or deficit on revaluation is recognised in profit or loss.

1.5
Cash and cash equivalents

Cash and cash equivalents are represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

CIFCO CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 14 -
1.6
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 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.

1.7
Financial liabilities

The company recognises financial debt when the company becomes 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'.

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.

1.8
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.

1.9
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.

CIFCO CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 15 -
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.

1.10
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.

2
Adoption of new and revised standards and changes in accounting policies

While there are a number of standards, amendments and interpretations which have been issued and are not yet effective which have not been adopted by the company, the directors have assessed their impact and are satisfied they will not have a material impact on the company.

 

Some accounting pronouncements which have become effective from 1 January 2023 and have therefore been adopted do not have a significant impact on the Company’s financial results or position as follows:

 

 

Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Company:

 

CIFCO CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 16 -
3
Critical accounting estimates and judgements

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

 

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.

Critical judgements
Valuation of investment properties

Investment properties, disclosed in note 13, are valued at open market value by the directors with reference to recent property transactions. The directors obtain third party valuations of investment properties at regular intervals to ensure that the fair value of these properties is kept up to date.

Provision for bad debts

The company has trade debtors owed by tenants. Trade debtors are assessed at each period end and the total recoverable amount is estimated based on the directors and advisors knowledge of the customer and their financial position. Any balances not considered recoverable are provided against. Where recovery is uncertain, a provision is made based on the likelihood that the debt will be recovered. The bad debts provision is disclosed in note 15.

4
Revenue
2024
2023
£
£
Revenue analysed by class of business
Rental income from investment properties
6,342,444
5,805,169
5
Operating profit
2024
2023
Operating profit for the year is stated after charging/(crediting):
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
12,500
9,050
6
Auditor's remuneration
2024
2023
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
12,500
9,050
For other services
Other services
28,330
14,187
CIFCO CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 17 -
7
Employees

The average monthly number of persons (including directors) employed by the company during the year was:

2024
2023
Number
Number
3
3

Their aggregate remuneration comprised:

2024
2023
£
£
Wages and salaries
39,316
37,504
8
Directors' remuneration
2024
2023
£
£
Remuneration for qualifying services
39,316
37,504
CIFCO CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 18 -
9
Investment income
2024
2023
£
£
Interest income
Financial instruments measured at amortised cost:
Bank deposits
99,600
50,751
Income above relates to assets held at amortised cost, unless stated otherwise.
10
Finance costs
2024
2023
£
£
Other interest payable
4,411,051
4,395,385
11
Other gains and losses
2024
2023
£
£
Changes in the fair value of investment properties
(2,730,188)
(11,651,935)
12
Income tax expense
2024
2023
£
£
Current tax
UK corporation tax on profits for the current period
763,818
463,671
Adjustments in respect of prior periods
84,939
(402)
Total UK current tax
848,757
463,269
Deferred tax
Origination and reversal of temporary differences
257,998
(1,675,102)
Total tax charge/(credit)
1,106,755
(1,211,833)
CIFCO CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
12
Income tax expense
(Continued)
- 19 -

The charge for the year can be reconciled to the loss per the income statement as follows:

2024
2023
£
£
Loss before taxation
(1,963,832)
(11,428,061)
Expected tax credit based on a corporation tax rate of 25.00% (2023: 19.00%)
(490,958)
(2,171,332)
Effect of expenses not deductible in determining taxable profit
15,618
-
0
Change in unrecognised deferred tax assets
1,082,806
513,994
Under/(over) provided in prior years
84,939
-
0
Transfer pricing and thin capitalisation adjustments
414,350
445,505
Taxation charge/(credit) for the year
1,106,755
(1,211,833)
13
Investment property
2024
2023
£
£
Fair value
At 1 April 2023
82,500,000
94,110,000
Additions through acquisition
2,005,188
41,935
Fair value adjustment
(2,730,188)
(11,651,935)
At 31 March 2024
81,775,000
82,500,000

The fair values of investment properties are based on valuations performed by Cushman & Wakefield, a firm of valuers independent of CIFCO Capital Limited. The independent valuers hold professional qualifications with the Royal Institute of Chartered Surveyors.

 

Direct operating expenses (including repairs and maintenance) arising from investment property that generated rental income during the period totalled £690,406 (2023: £667,918).

14
Credit risk

Cash deposits and financial transactions give rise to credit risk in the event that counter parties fail to perform under the contract. The company regularly monitors the credit ratings of its counter parties and the probability of material loss is considered to be at an acceptable level.

The carrying amount of financial assets recorded in the financial statements, which is net of impairment losses, represents the company's maximum exposure to credit risk.

The company does not hold any collateral or other credit enhancements to cover this credit risk.

CIFCO CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 20 -
15
Trade and other receivables
2024
2023
£
£
Trade receivables
725,082
532,669
Provision for bad and doubtful debts
(77,475)
-
0
647,607
532,669
Other receivables
463,386
357,694
Prepayments
694
278,492
1,111,687
1,168,855

Trade receivables disclosed above are classified as loans and receivables and are therefore measured at amortised cost.

16
Trade receivables - credit risk
Fair value of trade receivables

The directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value.

Impaired trade receivables

Trade receivables have been impaired at the year end where the directors consider it is unlikely that specific tenants will be able to pay their rent arrears.

Movement in the allowances for impairment of trade receivables
2024
2023
£
£
Additional allowance recognised
77,475
-
Balance at 31 March 2024
77,475
-
0
17
Borrowings
Current
Non-current
2024
2023
2024
2023
£
£
£
£
Borrowings held at amortised cost:
Loans from parent undertakings
2,540,992
1,699,138
86,620,675
87,271,218
2024
2023
£
£
Secured borrowings included above:
Loans from parent undertakings
89,161,667
88,970,356

Borrowings are secured on the investment properties of the company.

CIFCO CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 21 -
18
Market risk
Market risk management

Market risk is the risk that changes in market prices, such as interest rates and property prices, will affect the company's income or the value of its assets. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

Interest rate risk

The company pays interest on long term borrowings. CIFCO Capital Limited has no exposure to fluctuations in interest rates as the rates payable by the company have been fixed for the full term of the loan agreements.

Property price risk

The company is exposed to market risks associated with its investment property assets held at fair value.

 

The company mitigates its exposure to fluctuations in the market price of investment property by holding a diverse portfolio of assets. The portfolio includes properties located in different geographical areas of the United Kingdom and a mix of retail and manufacturing properties.

19
Fair value

The fair value of financial assets and liabilities held at fair value has been estimated using the following fair value hierarchy:

 

Level 1: The unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the measurement date.

 

Level 2: Inputs other than quoted prices included within level 1 that are observable (i.e. developed using market data) for the asset or liability, either directly or indirectly.

 

Level 3: Inputs are unobservable (i.e. for which market data is unavailable for the asset or liability).

 

There have been no transfers between categories in the current or preceding period.

 

The company holds investment properties at fair value. These are categorised as Level 3 in the above fair value hierarchy. The effect of the fair value measurement of these assets is shown in note 11 to these financial statements.

20
Trade and other payables
2024
2023
£
£
Trade payables
492
94,839
Amount owed to parent undertakings
559,332
559,332
Accruals
215,300
115,780
Social security and other taxation
248,065
217,125
Other payables
472,011
357,773
1,495,200
1,344,849
CIFCO CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 22 -
21
Deferred taxation
Liabilities
2024
2023
£
£
Deferred tax balances
1,331,629
1,073,631

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
Revaluation of investment properties
Total
£
£
£
Liability at 1 April 2022
392,082
2,356,651
2,748,733
Deferred tax movements in prior year
Charge/(credit) to profit or loss
(381,351)
(1,293,751)
(1,675,102)
Liability at 1 April 2023
10,731
1,062,900
1,073,631
Deferred tax movements in current year
Charge/(credit) to profit or loss
50,735
207,263
257,998
Liability at 31 March 2024
61,466
1,270,163
1,331,629

Deferred tax assets and liabilities are offset in the financial statements only where the company has a legally enforceable right to do so.

22
Deferred revenue
2024
2023
£
£
Arising from rental contracts
1,267,639
1,216,863
All deferred revenues are expected to be settled within 12 months from the reporting date.
CIFCO CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 23 -
23
Share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary A shares of £1 each
4,958,747
4,958,747
4,958,747
4,958,747
Ordinary B shares of £1 each
4,958,747
4,958,747
4,958,747
4,958,747
9,917,494
9,917,494
9,917,494
9,917,494

A and B shares rank pari passu in all respects.

24
Share premium account
2024
2023
£
£
At the beginning and end of the year
1,192
1,192
25
Other leasing information
Lessor

Revenue includes income from the lease of investment properties to third parties. Lease terms vary across the property portfolio.

At the reporting end date the company had contracted with tenants for the following minimum lease payments:

2024
2023
£
£
Within one year
5,008,911
5,189,482
One to two years
4,267,431
4,854,433
Two to three years
2,594,625
4,001,006
Three to four years
1,569,241
2,375,592
Four to five years
1,069,153
1,379,697
Over five years
2,555,072
2,510,776
Total undiscounted lease payments receivable
17,064,433
20,310,986

No contingent rental income has been recognised.

26
Capital risk management

The company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance.

 

The capital structure of the company consists of debt, cash and cash equivalents and equity comprising share capital, share premium and retained earnings. The company regularly reviews the capital structure and as part of this review considers the cost of capital and the risks associated with each class of capital.

CIFCO CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
26
Capital risk management
(Continued)
- 24 -

The company has a target gearing ratio of 90% determined as the proportion of debt to equity.

 

The majority of capital introduced to the company is immediately used for the purchase of investment properties and is therefore considered to be low risk.

The company is not subject to any externally imposed capital requirements.

27
Related party transactions
Other transactions with related parties

During the year the company entered into the following transactions with related parties:

Finance costs
Recharged overhead costs
2024
2023
2024
2023
£
£
£
£
Entities with joint control or significant influence over the company
4,411,051
4,395,385
70,000
70,000

The following amounts were outstanding at the reporting end date:

2024
2023
Amounts due to related parties
£
£
Entities with joint control or significant influence over the company
89,720,999
91,298,824

Amounts owed to related parties are secured on the company's investment properties.

 

No guarantees have been given or received.

The company is under the joint ownership of MSDC (Suffolk Holdings) Limited, a 100% subsidiary of Mid Suffolk District Council and BDC (Suffolk Holdings) Limited, a 100% subsidiary of Babergh District Council.

 

During the year ended 31 March 2024, CIFCO Capital Limited incurred finance costs totaling £2,205,526 (2023: £2,197,692) payable to Babergh District Council. At 31 March 2024 it owed £44,860,499 (2023: £45,614,413) to Babergh District Council.

 

During the year ended 31 March 2024, CIFCO Capital Limited incurred finance costs totaling £2,205,526 (2023: £2,197,692) payable to Mid Suffolk District Council. At 31 March 2024 it owed £44,860,499 (2023: £45,614,413) to Mid Suffolk District Council.

 

In addition, CIFCO Capital Limited incurred overhead costs in the year to 31 March 2024 totaling £70,000 (2023: £70,000) payable to Babergh and Mid Suffolk District Councils. £70,000 was payable to the Councils at each year end in respect of these costs.

CIFCO CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 25 -
28
Cash generated from operations
2024
2023
£
£
Loss for the year before income tax
(1,963,832)
(11,428,061)
Adjustments for:
Finance costs
4,411,051
4,395,385
Investment income
(99,600)
(50,751)
Fair value loss on investment properties
2,730,188
11,651,935
Movements in working capital:
Decrease in trade and other receivables
57,168
377,808
Increase/(decrease) in trade and other payables
150,351
(37,268)
Increase/(decrease) in deferred revenue outstanding
50,776
(295,284)
Cash generated from operations
5,336,102
4,613,764
29
Analysis of changes in net debt
1 April 2023
Cash flows
31 March 2024
£
£
£
Cash at bank and in hand
2,953,611
(1,441,976)
1,511,635
Borrowings
(88,970,356)
(191,311)
(89,161,667)
(86,016,745)
(1,633,287)
(87,650,032)
1 April 2022
Cash flows
31 March 2023
Prior year:
£
£
£
Cash at bank and in hand
3,359,237
(405,626)
2,953,611
Borrowings
(89,296,476)
326,120
(88,970,356)
(85,937,239)
(79,506)
(86,016,745)
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