Company registration number 08767464 (England and Wales)
BADGER BC INVESTMENTS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
BADGER BC INVESTMENTS LIMITED
COMPANY INFORMATION
Directors
Mr J T Stack
Mrs S L Beck
Secretary
Mrs S L Beck
Company number
08767464
Registered office
Borough Offices
Bishops' College
Churchgate, Cheshunt
Waltham Cross
EN8 9XJ
Auditor
Ensors Accountants LLP
Saxon House
Moseley's Farm Business Centre
Fornham All Saints
Bury St Edmunds
IP28 6JY
BADGER BC INVESTMENTS LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Income statement
8
Statement of financial position
9
Statement of changes in equity
10
Notes to the financial statements
11 - 21
BADGER BC INVESTMENTS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2024
- 1 -
The directors present the strategic report for the year ended 31 March 2024.
Principal activities
The principal activity of the Company is to acquire, develop and refurbish homes to provide rental properties to tenants wishing to live in the private sector, but with the assurance that the accommodation is managed by a responsible landlord.
Review of the business
During the year the Company did not purchase any additional property. In terms of its trading position for the year the Company received rental income on its properties totalling £1,066,701 (2023: £1,063,927), generating a gross profit of £989,159 (2023: £1,004,448), after deducting management fees. This generated a loss of £225,175 (2023: profit of £4,437) on ordinary activities before including decreases in valuation of investment property.
Trading expenses as identified in the Statement of Comprehensive Income were £1,239,698 (2023: £1,017,262), which included administrative and other expenses and bad debt provision of £462,725 (2023: £322,524). Interest on the loan from Broxbourne Borough Council of £776,973 (2023: £694,738). For its tenth period of trading, after property valuation and charging all other associated costs, the Company made a loss of trading of £390,175 before tax (2023: loss £304,437).
The value of the Company’s investment properties at the balance sheet date was £19,861,400 compared with £20,010,273 at 31 March 2023. The Company held £305,132 in its bank account (2023: £441,636).
All investment properties were revalued on 31 March 2024 when the fair value was considered to be, £19,861,400, which is a decrease in value of £148,873 from the previous fair value at 31 March 2023.
Principal risks and uncertainties
The Company’s activities expose it to a variety of financial risks:
Credit risk – the possibility that other parties might fail to pay amounts due to the Company;
Liquidity risk – the possibility that the Company might not have funds available to meet its commitments to make payments;Market risk – the possibility that financial loss might arise for the Company as a result of changes in interest rates.
Liquidity risk - The Company has a comprehensive cash flow management system that seeks to ensure that cash is available as needed. There is no significant risk that the Company will be unable to raise finance to meet its commitments under financial instruments.
Interest rate risk - The Company is not exposed to risk in terms of its exposure to interest rate movements on its loan as the loan agreement is fixed at 4% for the length of the loan.
Price risk - The Company does not generally invest in equity shares.
Foreign exchange risk - The Company has no financial assets or liabilities denominated in foreign currencies and therefore has no exposure to loss arising from movements in exchange rates.
The Company does not extend credit to its customers, rent is payable on demand, therefore the Company’s assessment of its potential maximum exposure to credit risk in relation to customer debt is nil.
Mrs S L Beck
Director
14 November 2024
BADGER BC INVESTMENTS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2024
- 2 -
The directors present their annual report and financial statements for the year ended 31 March 2024.
Results and dividends
The results for the year are set out on page 8.
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 J T Stack
Mrs S L Beck
Mrs N L Boateng
(Resigned 13 November 2024)
Political donations
No political or charitable donations were made during the period and the Company did not acquire any of its own shares nor did it acquire shares in another organisation.
Future developments
The Company will continue to invest in open market acquisitions where the benefits of these acquisitions meet the needs of the Company. In addition the Company will seek opportunities to develop new build properties.
Auditor
Ensors Accountants LLP were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
Strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of the review of the business and principal risks and uncertainties.
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.
Going Concern
The Company’s business activities, together with the factors likely to affect its future development, performance and position are set out in the strategic report and directors’ report. The financial position of the Company is set out in these financial statements.
The Parent entity, Broxbourne Borough Council is in a strong financial position to navigate the economic impact of the current situation and will continue to provide financial support of the Company, for a period to 31 March 2025. As a consequence, the Company does not envisage that a material change will be required to any expected credit loss provisions on amounts due from customers based on recent trading updates and related recoverability or other provisions; and any expected impairment provision on the fair value of the investment properties.
Therefore, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future and is able to meet its liabilities as and when they fall due. Accordingly, they continue to adopt the going concern basis of accounting in preparing the annual financial statements.
BADGER BC INVESTMENTS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 3 -
Risks
The main risks facing the Company are as follows:
| |
Risk that interest rate rises affect the viability of the business model. | Broxbourne Borough Council is obliged to lend to the Company at a commercial rate. The Company must therefore maintain sufficient margin on its returns to discharge its obligation to repay at a commercial rate. |
Risk that yield does not achieve the required rate of return. | The business case for each proposal is considered in depth prior to making any commitment. |
Risk that property values will decrease as well as increase. | This investment is long term and property prices tend to increase over the long-term. |
Risk that demand for rental properties falls. | Demand for property rentals remains high, however, if demand were to reduce rental income would be reduced to make the property more marketable. |
Small companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the small companies exemption.
On behalf of the board
Mrs S L Beck
Director
14 November 2024
BADGER BC INVESTMENTS LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MARCH 2024
- 4 -
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 United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
BADGER BC INVESTMENTS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF BADGER BC INVESTMENTS LIMITED
- 5 -
Opinion
We have audited the financial statements of Badger BC 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 Financial Reporting Standard 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 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.
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:
the information given in the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the directors' report has been prepared in accordance with applicable legal requirements.
BADGER BC INVESTMENTS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF BADGER BC INVESTMENTS LIMITED (CONTINUED)
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
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. This included work on areas where we consider there is a higher risk of fraud including revenue recognition, management override of systems and control, transactions with related parties, commitments and contingencies and accounting estimates.
We also obtained an understanding of the legal and regulatory framework that the company operates in, through discussions with the directors and other management, and from our own knowledge and experience of the sector.
BADGER BC INVESTMENTS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF BADGER BC INVESTMENTS LIMITED (CONTINUED)
- 7 -
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud, the audit engagement team:
obtained an understanding of the nature of the industry and sector, including the legal and regulatory framework that the company operates in and how the company is complying with the legal and regulatory framework both at the planning stage and reminded to remain alert throughout the audit;
inquired of management, and those charged with governance, about their own identification and assessment of the risks of irregularities, including any known actual, suspected or alleged instances of fraud;
audited 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;
discussed matters about non-compliance with laws and regulations and how fraud might occur including assessment of how and where the financial statements may be susceptible to fraud;
challenged accounting estimates to ensure no indication of management bias.
reviewing minutes of those charged with governance.
However, 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.
This report is made solely to the company’s member 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 member, those matters we are required to state to the member 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 member, for our audit work, for this report, or for the opinions we have formed.
Barry Gostling (Senior Statutory Auditor)
For and on behalf of Ensors Accountants LLP
14 November 2024
Chartered Accountants
Statutory Auditor
Saxon House
Moseley's Farm Business Centre
Fornham All Saints
Bury St Edmunds
IP28 6JY
BADGER BC INVESTMENTS LIMITED
INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2024
- 8 -
2024
2023
Notes
£
£
Revenue
3
1,066,701
1,063,927
Cost of sales
(77,542)
(59,479)
Gross profit
989,159
1,004,448
Administrative expenses
(462,725)
(322,524)
Operating profit
4
526,434
681,924
Investment income
7
25,364
8,377
Finance costs
8
(776,973)
(694,738)
Other gains and losses
9
(165,000)
(300,000)
Loss before taxation
(390,175)
(304,437)
Tax on loss
10
(7,500)
(279,515)
Loss and total comprehensive income for the financial year
(397,675)
(583,952)
BADGER BC INVESTMENTS LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT
31 MARCH 2024
31 March 2024
- 9 -
2024
2023
Notes
£
£
£
£
Non-current assets
Investment property
12
19,861,400
20,010,273
Current assets
Trade and other receivables
13
46,831
110,104
Cash and cash equivalents
305,132
441,636
351,963
551,740
Current liabilities
14
(1,313,308)
(1,128,134)
Net current liabilities
(961,345)
(576,394)
Total assets less current liabilities
18,900,055
19,433,879
Non-current liabilities
14
(16,977,453)
(17,121,102)
Provisions for liabilities
Deferred tax liabilities
18
(861,665)
(854,165)
Net assets
1,060,937
1,458,612
Equity
Called up share capital
19
1
1
Retained earnings
1,060,936
1,458,611
Total equity
1,060,937
1,458,612
These financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.
The financial statements were approved by the board of directors and authorised for issue on 14 November 2024 and are signed on its behalf by:
Mrs S L Beck
Director
Company registration number 08767464 (England and Wales)
BADGER BC INVESTMENTS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2024
- 10 -
Share capital
Retained earnings
Total
£
£
£
Balance at 1 April 2022
1
2,042,563
2,042,564
Year ended 31 March 2023:
Loss and total comprehensive income
-
(583,952)
(583,952)
Balance at 31 March 2023
1
1,458,611
1,458,612
Year ended 31 March 2024:
Loss and total comprehensive income
-
(397,675)
(397,675)
Balance at 31 March 2024
1
1,060,936
1,060,937
BADGER BC INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
- 11 -
1
Accounting policies
Company information
Badger BC Investments Limited is a private company limited by shares incorporated in England and Wales. The registered office is Borough Offices, Bishops' College, Churchgate, Cheshunt, Waltham Cross, EN8 9XJ. The company's principal activities and nature of its operations are disclosed in the directors' 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 £.
The financial statements have been prepared under the historical cost convention, except for the revaluation of investment properties. The principal accounting policies adopted are set out below.
As permitted by FRS 101, the company has taken advantage of the following disclosure exemptions from the requirements of IFRS:
inclusion of an explicit and unreserved statement of compliance with IFRS;
presentation of a statement of cash flows and related notes;
disclosure of the objectives, policies and processes for managing capital;
disclosure of the categories of financial instrument and the nature and extent of risks arising on these financial instruments;
the effect of financial instruments on the statement of comprehensive income;
comparative period reconciliations for the number of shares outstanding and the carrying amounts of property, plant and equipment, intangible assets, investment property and biological assets;
disclosure of the future impact of new International Financial Reporting Standards in issue but not yet effective at the reporting date;
comparative narrative information;
for financial instruments, investment property and biological assets measured at fair value and within the scope of IFRS 13, the valuation techniques and inputs used to measure fair value, the effect of fair value measurements with significant unobservable inputs on the result for the period and the impact of credit risk on the fair value; and
related party disclosures for transactions with the parent or wholly owned members of the group.
Where required, equivalent disclosures are given in the ultimate parent group accounts of Broxbourne Borough Council. The group accounts are available to the public and can be found at the following location https://www.broxbourne.gov.uk/finance
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. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Revenue
Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The company recognises revenue when it transfers control of a product or service to a customer.
The company has one revenue stream, being the rental of residential and commercial properties. The rental of these properties has been identified as a single performance obligation and rental income is recognised over-time on a straight-line basis over the lease term. The transaction price is set out within the rental agreements between the company and the tenant, and there is no variable consideration in these agreements.
BADGER BC INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 12 -
1.4
Intangible assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases. The useful life assigned to the accounting software suite used by the Company is five years.
1.5
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. Changes in fair value are recognised in the profit or loss.
1.6
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, and other short-term liquid investments with original maturities of three months or less. Bank overdrafts are shown within borrowings in current liabilities.
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.
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.
Impairment of financial assets
Financial assets carried at amortised cost are assessed for indicators of impairment at each reporting end date.
The expected credit losses associated with these assets are estimated on a forward-looking basis. A broad range of information is considered when assessing credit risk and measuring expected credit losses, including past events, current conditions, and reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.
For trade receivables, the simplified approach permitted by IFRS 9 is applied, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
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.
BADGER BC INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 13 -
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'.
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.
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.
BADGER BC INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 14 -
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
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 right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs and an estimate of the cost of obligations to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of other property, plant and equipment. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the company's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the company is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments in an optional renewal period, or penalties for early termination of a lease.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in: future lease payments arising from a change in an index or rate; the company's estimate of the amount expected to be payable under a residual value guarantee; or the company's assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
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.
BADGER BC INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 15 -
2
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
Revaluation of investment properties
The company carries its investment properties at fair value, with changes in fair values recognised in the Statement of Profit or Loss and other Comprehensive Income. The company engaged independent valuation specialists to determine fair value as at 31 March 2024. Further detail of the fair value of investment properties per note 12.
3
Revenue
2024
2023
£
£
Revenue analysed by class of business
Rental Income from Investment Properties
1,066,701
1,063,927
4
Operating profit
2024
2023
Operating profit for the year is stated after charging/(crediting):
£
£
Depreciation of investment property
8,105
9,610
5
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
18,850
27,000
6
Employees
Badger BC Investments Ltd does not directly employ any staff (2023: nil).
BADGER BC INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 16 -
7
Investment income
2024
2023
£
£
Interest income
Interest on bank deposits
25,364
8,377
8
Finance costs
2024
2023
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
775,859
693,575
Interest on lease liabilities
1,114
1,163
776,973
694,738
9
Other gains and losses
2024
2023
£
£
Changes in the fair value of investment properties
(165,000)
(300,000)
10
Taxation
2024
2023
£
£
Current tax
UK corporation tax on profits for the current period
-
3,947
Deferred tax
Origination and reversal of temporary differences
7,500
275,568
Total tax charge
7,500
279,515
As of 1 April 2023, in accordance with the Finance Act 2021, the corporate tax rate increased to 25% for companies with profits exceeding £250,000. A small profits rate of 19% applies to companies with profits of £50,000 or less, and a graduated rate applies to companies with profits between £50,000 and £250,000.
Deferred tax on the Statement of Financial Position has been calculated at 25%, reflecting the future corporation tax rate that was enacted at the balance sheet date.
BADGER BC INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
10
Taxation
(Continued)
- 17 -
The charge for the year can be reconciled to the loss per the income statement as follows:
2024
2023
£
£
Loss before taxation
(390,175)
(304,437)
Expected tax credit based on a corporation tax rate of 25.00% (2023: 19.00%)
(97,544)
(57,843)
Effect of expenses not deductible in determining taxable profit
71,043
62,867
Change in unrecognised deferred tax assets
(1,077)
Adjustments in respect of financial assets
-
(3,218)
Group relief surrendered
-
(3,947)
Payment for group relief
-
3,947
Remeasurement of deferred tax charge for previous periods
(48,255)
(18,032)
Temporary differences not recognised
82,256
296,818
Taxation charge for the year
7,500
279,515
11
Intangible fixed assets
Software
£
Cost
At 31 March 2023
12,000
At 31 March 2024
12,000
Amortisation and impairment
At 31 March 2023
12,000
At 31 March 2024
12,000
Carrying amount
At 31 March 2024
-
At 31 March 2023
-
12
Investment property
2024
£
Fair value
At 1 April 2023
20,050,464
Additions through acquisition
24,232
Fair value adjustment
(165,000)
At 31 March 2024
19,909,696
BADGER BC INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
12
Investment property
(Continued)
- 18 -
Accumulated depreciation
At 1 April 2023
40,191
Charge for the year
8,105
At 31 March 2024
48,296
Carrying value
At 31 March 2024
19,861,400
At 31 March 2023
20,010,273
The fair value of the properties has been arrived at based on a valuation carried out by Mr Stephen Oakey, MRICS, BSc (Hons), a RICS registered Valuer of Brasier Freeth LLP, who are not connected with the company.
The historic cost equivalent for revalued properties totals £17,661,231 (2023: £17,661,231).
The valuation performed by the valuer was reviewed internally by Senior Management, and other relevant people within the business. This process included discussions of the assumptions used by the valuer, as well as a review of the resulting valuations. The valuation was completed on 31st December 2023.
All the Company’s investment properties have been value assessed as level 2 on the fair value hierarchy for valuation purposes. This takes into account quoted prices for similar assets in active markets, existing lease terms and rentals and market knowledge.
There are no restrictions on the Company’s ability to realise the value of its investment property or on its right to receive income from any proceeds of sale, subject to the outstanding mortgage to the Broxbourne Borough Council being satisfied.
The company is not aware of any events or circumstances which indicate that the amount stated in the Statement of Financial Position for properties may not be realisable as at 31 March 2024.
13
Trade and other receivables
2024
2023
£
£
Trade receivables
346,608
299,526
Provision for bad and doubtful debts
(299,777)
(195,589)
46,831
103,937
Amounts owed by fellow group undertakings
6,167
46,831
110,104
BADGER BC INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 19 -
14
Liabilities
Current
Non-current
2024
2023
2024
2023
Notes
£
£
£
£
Borrowings
15
156,269
134,655
16,950,344
17,106,613
Trade and other payables
16
1,121,228
977,792
Taxation and social security
25,460
8,500
-
-
Lease liabilities
17
10,351
7,187
27,109
14,489
1,313,308
1,128,134
16,977,453
17,121,102
15
Borrowings
Current
Non-current
2024
2023
2024
2023
£
£
£
£
Borrowings held at amortised cost:
Loans from parent undertaking
156,269
134,655
16,950,344
17,106,613
The Company has not received any loans during the year from its parent organisation Broxbourne Borough Council. Loans are secured with fixed and floating security over each and all property owned by the Company. The loans are repayable over 40 years bearing interest of 4.5%.
16
Trade and other payables
2024
2023
£
£
Trade payables
13,901
1,849
Amounts owed to fellow group undertakings
1,009,102
855,240
Accruals and deferred income
98,225
120,703
1,121,228
977,792
17
Lease liabilities
2024
2023
Maturity analysis
£
£
Within one year
12,000
8,000
In two to five years
30,005
15,331
Total undiscounted liabilities
42,005
23,331
Future finance charges and other adjustments
(4,545)
(1,655)
Lease liabilities in the financial statements
37,460
21,676
BADGER BC INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
17
Lease liabilities
(Continued)
- 20 -
Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:
2024
2023
£
£
Current liabilities
10,351
7,187
Non-current liabilities
27,109
14,489
37,460
21,676
2024
2023
Amounts recognised in profit or loss include the following:
£
£
Interest on lease liabilities
1,114
1,163
18
Deferred taxation
Liabilities
2024
2023
£
£
Deferred tax balances
861,665
854,165
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 (ACAs)
£
Liability at 1 April 2022
578,597
Deferred tax movements in prior year
Charge/(credit) to profit or loss
275,568
Liability at 1 April 2023
854,165
Deferred tax movements in current year
Charge/(credit) to profit or loss
7,500
Liability at 31 March 2024
861,665
BADGER BC INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 21 -
19
Share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
of £1 each
1
1
1
1
20
Other leasing information
Lessor
The Company leases property, as a lessee, under an operating lease. The leases, have a duration of seven years and has an option for renewal being exercisable three months before the expiry of the lease term. The lease liabilities are measured at the present value of the lease payments that are not paid, discounted using the Company’s incremental borrowing rate.
The Company leases out property, as a lessor, under operating leases for commercial use.
The minimum lease payments receivable do not include rents that are contingent on events taking place after the lease was entered into, such as adjustments following rent reviews. In 2023/24 no material contingent rents were received by the Company.
At the reporting end date the company had contracted with tenants for the following minimum lease payments:
2024
2023
£
£
Within one year
136,390
206,734
Between two and five years
298,000
125,616
Over five years
463,315
-
Total undiscounted lease payments receivable
897,705
332,350
Information relating to lease liabilities is included in note 17.
21
Events after the reporting date
Since the year end the Company sold an investment property on 31 May 2024, for £1.4 million to its parent company, Broxbourne Borough Council.
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