The directors present the strategic report for the year ended 31 March 2024.
The purpose of this legal entity within the ultimate parent group structure (Aquavista Watersides Topco Ltd) is for holding the bank debt (as detailed in note 13 to these financial statements) to support the 100% ownership of the shares of Aquavista Watersides Ltd and indirectly Castle Marinas Limited, both of which are engaged in marina operations.
The Company’s results for the year show a loss of £9,597,000 (2023: £5,849,000).
Due to the nature of this holding company, management do not consider there to be any Key Performance Indicators that would provide a further understanding of the development, performance or position of the Company.
In order to form an assessment of the continued applicability of the going concern basis of preparation, the Directors have prepared trading and cash flow forecasts for the Group (Aquavista Watersides Topco Ltd and its subsidiaries) for a period of at least 12 months from the date of approval of the financial statements. At 31 March 2024, the company had net current liabilities of £4,762,000 (2023: £2,932,000) and it has the support of the group companies to enable it to meet its liabilities as they fall due. The Directors have also reviewed the associated credit facilities of the Group, including assessment of the recent and forecast future compliance with covenants. These trading and cash flow forecasts indicate the Group will be able to operate within the committed facilities, without recourse to the equity commitment, and in full compliance with all associated covenants.
Given the ongoing economic and political uncertainty, particularly around inflation and interest rates, the Directors have also applied various sensitivities to the trading and cash flow forecasts. These scenarios confirm that the Group will be able to continue to operate and settle their liabilities as they fall due under all reasonably foreseeable scenarios. Should the potential future impacts be greater than the Directors predict, they would look to implement cost management and cash flow initiatives.
Based on the above the Directors are satisfied that the Group and the Company will be able to continue as a going concern.
The Group’s operations are managed according to policies and procedures approved by the board of directors. As a holding company the principal risks relate to the recovery of its investment. The risks associated with the trade of Aquavista Watersides Ltd are disclosed in that company’s financial statements and are summarised below.
Macro economy
The current year has seen interest rates being held at a high level to combat inflation, which is now falling. Anticipated reductions in interest rates are yet to occur. Whilst there appears to be no end to the war in Ukraine, the energy markets have started to settle, albeit at a much higher level than before and this still contributes to further pressure on the cost of living and cost to the business. Stability and reductions in inflation towards the Bank of England target rate will improve the outlook for the business and its customers.
Environment
The impact and trajectory of climate change remains uncertain and remains a potential threat to the business in the future.
Competition
The Company and its trading subsidiary operate in a competitive environment with other Marinas in similar geographical locations. The actions and performance of a competitor can have an impact on each Company and the Group. Competitors’ pricing and strategies are kept under review and each Company and the Group strive to mitigate this risk by maintaining and improving customer service and investing in essential infrastructure to remain competitive.
Information systems
The Company’s trading subsidiaries’ activities are dependent upon the performance of a variety of software packages and the stability of the platforms upon which they are hosted. The Company’s trading subsidiaries have utilised off site hosting and have partnered with a specialist IT support company to provide comprehensive support and continues to invest internally and externally where necessary. This includes the Company’s trading subsidiaries systems continually carrying out penetration testing, and colleagues have annual mandatory cyber security training, which has resulted in the Group obtaining Cyber Essential Plus accreditation during the year.
Retention of key personnel
The retention of key personnel is a significant factor in the Company’s ability to meet its growth expectations. The Company’s employment policies, remuneration and benefits packages are regularly reviewed and are designed to be competitive.
The Company's activities expose it to financial risks including interest rate risk, and liquidity risk.
Price risk
The Company's trading subsidiaries are exposed to fluctuations in pricing of supplies and seeks to mitigate this wherever appropriate by making use of fixed-price contracts.
Credit Risk
The company has access to pre-agreed credit facilities from lenders which are not fully drawn and remain available. These facilities are sufficient for the Company to meet its current business plans.
Interest rate risk
The Company finances its operations through three long term loan facilities (Loan Facility B and C and a PIK Facility). The facilities attract interest based on SONIA plus a margin as described in note 13 to the financial statements. The levels of debt and associated interest costs are carefully monitored, and cash generation of the Group is modelled to ensure that all interest payments can be paid when they fall due. Aquavista Watersides 2 Ltd had an interest rate cap in place to reduce its exposure to the intertest rate risk which ended in April 2024.
Liquidity risk
The Company measures its liquidity risk by the performance of its trading subsidiaries. It seeks to manage the financial risk by ensuring sufficient liquidity is available in these subsidiaries to meet foreseeable needs assessed through careful monitoring of the long-term cash requirements of the business. The objective is to ensure a mix of funding methods offering flexibility and costs effectiveness to match the needs of the Company.
As described in note 13 to the financial statements, the Company has drawn down on three long-term facilities totalling £72.9m (2023: £70.3m) and the following undrawn facilities to ensure its liquidity requirement are met as required:
Loan facility C - £18,750,000 (2023: £18,750,000). This loan facility is available on the same variable terms and conditions as for Loan B as detailed in note 13 to the financial statements, and
RCF facility - £4,400,000 (2023: £4,400,000).
Future cashflows arising in the trading subsidiaries are closely monitored to manage cashflow and liquidity risk.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 March 2024.
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.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
There have been no significant events affecting the Company since the year end.
The directors do not anticipate any significant future changes to the activity of the Company.
MHA were appointed as auditor to the company and in accordance with section 485 of Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
Basis for 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
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 strategic report and directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
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.
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 specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud, is detailed below:
Enquiry of management, including directors, about any known or suspected instances of non-compliance with laws and regulations and fraud;
Challenging assumptions made by management in respect of accounting estimates and key judgements, in particular in relation to fixed asset impairment reviews, classification of loans to subsidiaries and valuation of financial instruments;
Reviewing minutes of meetings of those charged with governance; and
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.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities 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.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
The notes on pages 12 to 21 are an integral part of the financial statements.
Aquavista Watersides 2 Ltd is a company incorporated and registered in England and Wales under the Companies Act 2006 and domiciled in the United Kingdom. The registered office is Sawley Marina, Long Eaton, Nottingham, Nottinghamshire, NG10 3AE.
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 £'000.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Aquavista Watersides Topco Ltd. These consolidated financial statements are available from its registered office, Sawley Marina, Long Eaton, Nottingham, NG10 3AE.
The company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and other borrowings, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Interest income is recognised in the Statement of Comprehensive Income using the effective interest method.
Finance costs are charged to the Statement of Comprehensive Income over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognsied as a reduction in the proceeds of the associated capital instrument.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
Equity instruments, including ordinary shares, issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
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 stimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
The Board has considered whether there are indicators of impairment of the company's investments in subsidiary undertakings. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset and where it is a component of a larger cash-generating unit, the viability and expected future performance of that unit.
The Company holds an interest cap derivative that has been valued on a market to market basis to give a fair value at the balance sheet date.
The Board consider the loans to subsidiaries to be a long term arrangement, despite the legal form being repayable on demand. Hence, it is considered appropriate to classify these loans as fixed asset investments.
The average monthly number of persons (including directors) employed by the company during the year was:
The directors of the company are remunerated by another group company for their services to the group as a whole. It is not practical or possible to accurately apportion these costs to each entity in the group and the effect of apportioning these costs is not considered to be material.
Other interest on financial liabilities includes amortisation of deal fees in respect of the bank loans (2023: amortisation of deal fees in respect of bank loans and additional interest rate cap and capital commitment fees).
The actual charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
The company has trading losses carried forward of £1.6m (2023: £1.6m), therefore the company has an unrecognised deferred tax asset of £0.4m, which has not been recognised as it is not probable that taxable profit will be available against which the trading losses can be offset.
A UK corporation tax rate of 25% was announced in the Chancellor's Budget of 3 March 2021 and applied from 1 April 2023. Deferred tax has been calculated at this rate.
Details of the company's subsidiaries at 31 March 2024 are as follows:
Registered office addresses (all UK unless otherwise indicated):
The above balance relates to an interest rate swap arrangement. The instrument has a termination date of April 2024 and is subject to an interest rate cap of 1.75%.This instrument has been recognised at the Mark to Market year-end valuation, as provided by a third party.
The reduction in the valuation year on year of £1,107,000 (2023: increase of £1,521,000) has been recognised in the profit and loss account.
Amounts owed to group undertakings are unsecured, interest-free and payable on demand.
Accruals include interest of £2,054,000 (2023 - £1,325,000) on other loans (see note 13).
The prior year accruals figure has been restated from £2,014,000 to £1,380,000 to reflect a corrected treatment on the rolled up interest payable on the PIK facility that is due after more than one year. This has increased the bank loans noted in note 12 below. There has been no impact on the company's net liabilities.
The prior year numbers have been restated on bank loans as per note 11 from £64,899,000 to £65,523,000.
Bank loans are secured by a fixed and floating charge over property and undertakings of the company's subsidiaries.
Bank loans comprise:
Loan facility B - £48.0m (2023: £48.0m)
Loan facility C - £6.3m (2023: £6.3m)
PIK facility - £16.4m (2023: £14.1m as restated per note 11)
Revolving credit facility (RCF) - £0.6m (2023: £0.6m)
The loans are recognised net of debt issue costs of £2.8m (2023: £3.5m).
Loan facilities B and C attract interest based on Sterling Overnight Index Average (SONIA) plus a variable percentage, depending on the net debt leverage. The agreed percentages for the respective net debt leverages are set out below.
Net debt leverage (interest rate applied):
5.5% (SONIA + 6.0%)
5.0-5.5% (SONIA +5.75%)
4.5-5.0% (SONIA +5.5%)
<4.5% (SONIA +5.25%)
The interest charged on the PIK facility is based on SONIA plus 10.5%, and interest on the RCF is accrued at SONIA +6% and is included in accruals and deferred income.
All loans are repayable in 2028.
Group reconstruction relief reserve
The Group reconstruction relief reserve arose on the share exchange with Project Belize Limited for control of Aquavista Watersides 2 Ltd.
Profit and loss account
The profit and loss account includes all current and prior period profits and losses, net of dividends and historic gift aid payments.
As at 31 March 2024, there were guarantees with group companies in respect of group borrowings which are secured by a fixed and floating charge over the properties of Aquavista Watersides Ltd, Castle Marinas Limited and its subsidiaries. At the year end date, the total drawn bank facilities over which a guarantee has been given were £72.9 m (2023: £70.3m).
The company has taken advantage of the exemption conferred by Section 33 FRS102, namely from disclosing any transactions entered into between two or more members of the group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member.