Company Registration No. 08901522 (England and Wales)
FAIRCHILD PLACE LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
FAIRCHILD PLACE LIMITED
COMPANY INFORMATION
Directors
Mr J S Goldstein
Mr S S Conway
Mr G Conway
(Appointed 4 January 2023)
Mr J Cole
(Appointed 27 March 2024)
Secretary
Mr A Porter
Company number
08901522
Registered office
72 Welbeck Street
London
W1G 0AY
United Kingdom
Auditor
Ernst & Young LLP
Liberation House
Castle Street
St Helier
Jersey
JE1 1EY
Channel Islands
FAIRCHILD PLACE LIMITED
CONTENTS
Page
Directors' report
1 - 3
Independent auditor's report
4 - 6
Statement of comprehensive income
7
Statement of financial position
8
Statement of changes in equity
9
Notes to the financial statements
10 - 18
FAIRCHILD PLACE LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The directors present their report of Fairchild Place Limited for the year ended 31 December 2023.
Principal activities
The principal activity of the Company is to develop a site in Shoreditch, London for commercial use.
Results and dividends
The loss for the year, after taxation, amounted to £13,738,177 (2022: £3,302,161). The directors do not recommend payment of a 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 S Goldstein
Mr S S Conway
Mr R M Pilkington
(Resigned 27 March 2024)
Mr G Conway
(Appointed 4 January 2023)
Mr J M Morgan
(Resigned 4 January 2023)
Mr J Cole
(Appointed 27 March 2024)
Qualifying third party indemnity provisions
The Company has granted an indemnity to its directors against liability in respect of proceedings brought by third parties, subject to the conditions set out in section 234 of the Companies Act 2006. Such qualifying third party indemnity provision remains in force as at the date of approving the Directors' Report.
Future developments
The directors anticipate that the activity of the Company will continue for the foreseeable future.
Going concern
The financial statements have been prepared on a going concern basis, which assumes the Company will be able to meet its liabilities as and when they fall due from the date of approval of the financial statements through to 31 December 2025 (the ‘going concern period’). At 31 December 2023, the Company has net current liabilities of £23,155,245 (2022: £10,697,090) and net liabilities of £20,150,246 (2022: £6,412,069).
The directors have assessed the going concern period under assessment to be the period from the date of approval of the financial statements through the going concern period.
The directors of the Company have prepared a robust forecast of the anticipated operational outgoings of the Company over its going concern period which considers severe but plausible downside risks. In preparing the cash flow forecast for The Stage Shoreditch LLP and its subsidiaries (“Group”) over the going concern period, the directors have considered all known operational expenses.
The directors have received written confirmation from the parent of the Group, The Stage Shoreditch LLP (“LLP”) , that it does not intend to call upon the Company to repay any intra-group debts unless the company has the cash available to settle the debts. The LLP has provided a letter to provide financial support to the Company to meet their liabilities as they fall due during the going concern period. Furthermore, the cash flow forecast demonstrates that the Company will be able to meet the liabilities as they fall due during the going concern period.
The letter of support is not a guarantee or formal financial commitment, however, the directors believe that the risks that the shareholders will not provide support are remote. The directors therefore consider it appropriate to prepare the Company’s accounts on a going concern basis for the going concern review period to 31 December 2025.
FAIRCHILD PLACE LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Auditor
Ernst & Young 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 and Directors' report disclosures
The Company has taken the exemption under section 414B of the Companies Act 2006 from the requirement to prepare a Strategic Report for the financial period. In preparing this report, the directors have taken advantage of the exemptions under the small companies provided by section 415A of the Companies Act 2006 from certain Directors' Report disclosures.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
Subsequent events
Details of any subsequent events are set out in note 16.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with 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;
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.
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 being information needed by the auditor in connection with preparing its report, of which the Company’s auditor is unaware. Having made enquiries of fellow directors and the Company's auditor, each director has taken all the steps that they are obliged 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.
Small companies exemption
This report has been approved by the board on 29 November 2024 and has been prepared in accordance with the small companies regime of the Companies Act 2006.
FAIRCHILD PLACE LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
On behalf of the board
Mr J S Goldstein
Director
29 November 2024
FAIRCHILD PLACE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF FAIRCHILD PLACE LIMITED
- 4 -
Opinion
We have audited the financial statements of Fairchild Place Limited (the ‘Company’) for the year ended 31 December 2023 which comprise the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity and the related notes 1 to 16, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards including FRS 102 “The Financial Reporting standard applicable in the UK and Republic of Ireland” (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 December 2023 and of its loss for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard and the provisions available for small entities, in the circumstances set out in note 1 to the financial statements, 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. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Company’s ability to continue as a going concern.
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact.
We have nothing to report in this regard.
FAIRCHILD PLACE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF FAIRCHILD PLACE LIMITED
- 5 -
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
the information given in the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the directors’ report has been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit
the directors were not entitled to prepare the financial statements in accordance with the small companies’ regime and take advantage of the small companies’ exemptions in preparing the directors’ report and from the requirement to prepare a strategic report.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 2, 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.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management.
FAIRCHILD PLACE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF FAIRCHILD PLACE LIMITED
- 6 -
Our approach was as follows:
We obtained an understanding of the legal and regulatory frameworks that are applicable to the Company and determined that the most significant are the Companies Act 2006, those relating to its reporting framework being United Kingdom Generally Accepted Accounting Practice, and any relevant direct and indirect tax compliance regulation in the United Kingdom. In addition, the Company has to comply with laws and regulations relating to its operations, including health and safety, data protection, anti-bribery and corruption.
We assessed the susceptibility of the Company’s financial statements to material misstatement, including how fraud might occur in the capitalisation of costs to construction-in-progress, incorrect valuation of investment property and management override of controls. We also considered management’s incentives around improving the performance of the Company, the opportunities available to execute any such actions through management override as well as the controls that the Company has established to address any such risks identified, including to prevent, deter and detect fraud and the monitoring of such controls by management.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at https://www.frc.org.uk/auditors responsibilities. This description forms part of our auditor’s report.
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Christopher James Matthews, FCA (Senior statutory auditor)
For and on behalf of Ernst & Young LLP
Chartered Accountants
Statutory Auditor
Liberation House
Castle Street
St Helier
Jersey
JE1 1EY
Channel Islands
29 November 2024
FAIRCHILD PLACE LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 7 -
2023
2022
Notes
£
£
Administrative expenses
(74,404)
(30,007)
Fair value losses on investment properties
(13,516,511)
(3,272,154)
Operating loss
(13,590,915)
(3,302,161)
Interest payable and similar expenses
(147,262)
Loss before taxation
(13,738,177)
(3,302,161)
Tax on loss
6
Loss after taxation
(13,738,177)
(3,302,161)
Other comprehensive income/(loss)
Total comprehensive (loss)/income for the year
(13,738,177)
(3,302,161)
The notes on pages 10 to 18 form part of these financial statements.
All amounts relate to continuing activities.
FAIRCHILD PLACE LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2023
31 December 2023
- 8 -
2023
2022
Notes
£
£
£
£
Fixed assets
Investment property
7
4,800,916
6,080,920
Current assets
Debtors: amounts falling due within one year
8
2,254,302
40,854
Cash at bank and in hand
2,056
7,656
2,256,358
48,510
Creditors: amounts falling due within one year
9
(25,411,603)
(10,745,580)
Net current liabilities
(23,155,245)
(10,697,070)
Total assets less current liabilities
(18,354,329)
(4,616,150)
Creditors: amounts falling due after more than one year
10
(1,795,917)
(1,795,919)
Net liabilities
(20,150,246)
(6,412,069)
Capital and reserves
Called up share capital
12
280,000
280,000
Profit and loss reserves
(20,430,246)
(6,692,069)
Total equity
(20,150,246)
(6,412,069)
The notes on pages 10 to 18 form part of these financial statements.
These financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.
The financial statements on page 7 to 18 were approved by the board of directors and authorised for issue on 29 November 2024 and are signed on its behalf by:
Mr J S Goldstein
Director
Company Registration No. 08901522
FAIRCHILD PLACE LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 January 2022
280,000
(3,389,908)
(3,109,908)
Year ended 31 December 2022:
Total comprehensive loss for the year
-
(3,302,161)
(3,302,161)
Balance at 31 December 2022
280,000
(6,692,069)
(6,412,069)
Year ended 31 December 2023:
Total comprehensive loss for the year
-
(13,738,177)
(13,738,177)
Balance at 31 December 2023
280,000
(20,430,246)
(20,150,246)
FAIRCHILD PLACE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
1
Accounting policies
Company information
Fairchild Place Limited is a private company limited by shares incorporated in England and Wales. The registered office was changed to 72 Welbeck Street, London, W1G 0AY on 23 April 2024 (previously 116 Upper Street, London, N1 1QP). The Company number is 09557978.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.
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 with the exception of investment property, which is measured at fair value through the statement of comprehensive income. The principal accounting policies adopted are set out below.
The Company has taken the exemption under section 1A.7 of FRS 102 from the requirement to prepare a statement of cash flows and related disclosures for the financial period.
1.2
Going concern
The financial statements have been prepared on a going concern basis, which assumes the Company will be able to meet itstrue liabilities as and when they fall due from the date of approval of the financial statements through to 31 December 2025 (the ‘going concern period’). At 31 December 2023, the Company has net current liabilities of £23,155,245 (2022: £10,697,070) and net liabilities of £20,150,246 (2022: £6,412,069).
The directors have assessed the going concern period under assessment to be the period from the date of approval of the financial statements through the going concern period.
The directors of the Company have prepared a robust forecast of the anticipated operational outgoings of the Company over its going concern period which considers severe but plausible downside risks. In preparing the cash flow forecast for the Company as part of the group of companies (“Commercial Group”) party to the new Mizuho facility over the going concern period, the directors have considered all known operational expenses.
The directors haves received written confirmation from the parent of the Commercial Group, The Stage Shoreditch LLP (“LLP”), that it does not intend to call upon the Company to repay any intra-group debts unless the Company has the cash available to settle the debts. Furthermore, the cash flow forecast demonstrates that the Company will be able to meet the liabilities as they fall due during the going concern period. The directors therefore consider it appropriate to prepare the Company’s accounts on a going concern basis for the going concern review period to 31 December 2025.
FAIRCHILD PLACE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 11 -
1.3
Investment property
Investment property is property held either to earn rental income or for long-term capital appreciation, or both. Investment property is measured initially at cost including related transaction costs and subsequently at fair value.
The Company's investment property comprises of commercial units for rental as well as the asset arising from the ground rent revenue stream on the commercial development. The investment property is covered by Section 16 of FRS 102 and are eligible to be measured at fair value. For properties measured at fair value, the market value adopted by the Company is determined on the basis of appraisals by independent third party experts.
Independent valuations are conducted in accordance with RICS Appraisal and Valuation Standards which is mandatory for Chartered Surveyors for the United Kingdom properties. The investment property in the Company as at 31 December 2023 is held at fair value.
Under FRS 102, the Company can elect to capitalise borrowing costs that are directly attributable to the development of a qualifying asset. As a result, investment property under development include borrowing costs of £224,887 (2022: £257,596) relating to development which have been capitalised in the year. See Note 7 for details on the capitalisation rate applicable to borrowing costs.
Gains and losses arising from the changes in the fair value of the investment property are included in the Statement of Comprehensive income in the year in which they arise.
The Company’s development site has been pledged as security for a bank development loan held by the Group of which the Company is a member, the parent undertaking being The Stage Shoreditch LLP.
1.4
Borrowing costs related to fixed assets
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. The commercial retail building under development was completed in July 2023. Borrowing costs incurred after the completion date of the retail building in July 2023 has been expensed.
1.5
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and are subject to insignificant risk of changes in fair value.
1.6
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price and are subsequently carried at amortized 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.
1.7
Basic financial liabilities
Basic financial liabilities, including creditors, bank loan and loans from fellow group entities are initially recognised at transaction price including transaction costs 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 and are subsequently measured at amortised cost using the effective interest method.
1.8
Taxation
The tax expense represents a provision for the sum of the tax currently payable and deferred tax movements.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the Statement of Comprehensive Income 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.
FAIRCHILD PLACE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 12 -
Deferred tax
Deferred taxation is provided in full in respect of taxation deferred by timing differences between the treatment of certain items for taxation and accounting purposes. Unrelieved tax losses and other deferred tax assets are recognised only to the extent it is more likely than not that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.
1.9
Company as a lessee
The Company’s commercial investment property is owned through long-leasehold arrangements. Where the Company is a lessee and the lease transfers substantially all the risks and rewards of ownership of the asset to the Company, the lease is accounted for as a finance lease.
Assets held under finance leases are recognised as investment property under development at the commencement of the lease at the lower of the asset's fair value at the date of inception and the present value of the minimum lease payments. The corresponding liability is included in the Statement of Financial Position as a finance lease obligation. Each lease payment is allocated between repayment of the lease liability and a finance charge to reflect the total outstanding lease liability. The investment property held under finance leases is subsequently carried at its fair value. The fair value of the investment property is illustrated in note 7. The cash premium paid in advance, plus legal fees which are initial direct costs of the lease are added to the amount recognised as an asset. Lease payments are treated as consisting of capital and interest elements. The cumulative interest totalling to £745,030 (2022: £701,448) has been capitalised during the period of development.
The finance lease obligation is amortised using the effective interest rate method.
2
Judgements and key sources of estimation uncertainty
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 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 are the Company's key sources of estimation uncertainty and areas requiring significant judgement:
Critical Judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Impairment of debtors
The Company makes a judgement of the recoverable value of trade and other debtors. When assessing impairment of trade and other debtors, management consider factors including the ageing profile and historical experience. The debtor balance at the reporting date is expected to be recovered, therefore, there is no impairment provision on the debtor balances at the reporting date, see note 8 for the carrying amount of debtors.
FAIRCHILD PLACE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
2
Judgements and key sources of estimation uncertainty
(Continued)
- 13 -
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Valuation of investment property
Investment property is property held either to earn rental income or for capital appreciation, or both. Investment property is measured initially at cost including related transaction costs, and subsequently at fair value. Fair value is based on market value, as determined by an independent professional external valuer at each reporting date. The determined fair value of the investment property is most sensitive to the assumptions in the estimated costs to complete, including outstanding capital expenditure, capital contributions, equivalent yield and all development related costs. The difference between the fair value of an investment property at the reporting date and its carrying amount prior to re-measurement is recognised in ·the Statement of Comprehensive Income. The investment property held under finance leases is subsequently carried at its fair value. The fair value of the investment property is illustrated in note 7.
Taxation
The Company establishes provisions based on reasonable estimates based on various factors, such as experience with previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Management estimation is required to determine the amount of deferred tax assets that can be recognised, based upon likely timing and level of future taxable profits together with an assessment of the effect of future tax planning strategies.
Accrued expenses
The Company recognises estimates in relation to accrued expenses recorded at the year end based on past experience of similar outgoings incurred or their knowledge of the expected outgoings to be incurred depending on the nature of goods or services rendered that are yet to be billed.
3
Loss before taxation
The Company’s audit fees are borne by another member of the Group, The Stage Shoreditch Development Limited. The proportion of the audit fees that relates to this Company amounts to £7,360 (2022: £7,000). No non-audit services were provided during the year (2022: £nil).
4
Employees
The number of persons (including directors) employed by the Company during the year was nil (2022: nil).
5
Directors' remuneration
All directors of the Company received no remuneration during the current year (2022: £nil) from the Company or any entities within the Group. The directors believe that their qualifying services provided to the Company are incidental to the qualifying services provided to the members of The Stage Shoreditch LLP.
FAIRCHILD PLACE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 14 -
6
Taxation
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:
2023
2022
£
£
Loss before taxation
(13,738,177)
(3,302,161)
Expected tax credit based on the standard rate of corporation tax in the UK of 25.00% (2022: 19.00%)
(3,434,544)
(627,411)
Unutilised tax losses carried forward
3,434,544
627,411
Taxation charge for the year
-
-
In the March 2021 budget, it was announced that legislation would be introduced in the Finance Bill 2021 to increase the main rate of UK corporation tax from 19% to 25%, effective April 2023. This was substantively enacted in May 2021 therefore, any closing deferred tax balance is calculated at 25%. The forthcoming change in the corporation tax rate in future years is not expected to materially affect the future tax charge.
The Company has cumulative taxable losses arising in the UK of £274,743 (2022: £154,402) that are available indefinitely for offset against future taxable profits.
Deferred tax assets have not been recognised in respect of these losses as it is unlikely they will be recognised against the reversal of deferred tax liabilities or other future taxable profits for the foreseeable future.
7
Investment property
2023
£
Fair value
At 1 January 2023
6,080,920
Net loss on fair value adjustments
(13,516,511)
Depreciation on finance lease asset
(3,657)
Additions
12,240,164
At 31 December 2023
4,800,916
FAIRCHILD PLACE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
7
Investment property
(Continued)
- 15 -
Investment property under development
The finance lease asset includes the present value of the future obligations discounted based on the interest rate of the acquisition loan at date of acquisition. Future lease payments are presented in note 11. The finance lease asset is amortised over the life of the lease on a straight-line basis.
Under FRS 102, the Company capitalises development expenditure and can elect to capitalise borrowing costs that are directly attributable to the development of a qualifying asset. As a result, development costs include:
borrowing costs relating to the development which have been capitalised in the year of £224,887 (2022: £272,558). The total borrowing costs capitalised since the start of the development is £1,084,650 (2022: £859,763).
The finance charge interest relating to the finance lease which have been capitalised in the year is £43,582 (2022: £85,064). The total finance charge interest capitalised since the start of development is £745,030 (2022: £701,448).
The capitalisation rate on the finance lease is based on the Partnership's incremental borrowing rate of 4.57% per annum which was determined at the inception of the lease.
The Company's investment property is a commercial unit located in Shoreditch. The illustrative calculation of a valuation considered to be compliant with principals of RICS Valuation - Professional Standards 2022, were carried out by CBRE. The critical assumptions made relating to the valuations are the equivalent yield (blended) of 6.25% (2022: 5.5-6%).
The Company's development site has been pledged as security for a bank development loan held by the Group.
8
Debtors
2023
2022
Amounts falling due within one year:
£
£
Amounts owed by group undertakings
1,101
5,959
Other debtors
2,236,909
4,250
Prepayments and accrued income
16,292
30,645
2,254,302
40,854
Amounts due from group undertakings are unsecured, interest free and payable on demand without restrictions.
Amounts falling due within one year are based on the contractual term of due on demand, however these amounts are not expect to be realised within one year but are intended to be settled in the foreseeable period.
Included in amounts due from group undertakings is an interest free loan to The Stage Shoreditch LLP, the parent undertaking of the Group of £nil (2022: £4,859) which is payable on demand without restrictions.
FAIRCHILD PLACE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 16 -
9
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans
4,743,669
Obligations under finance leases
11
85,000
85,000
Trade creditors
12,371
28,020
Amounts owed to group undertakings
25,273,613
5,856,008
Accruals and deferred income
40,619
32,883
25,411,603
10,745,580
On 12 April 2018 the Company, along with other members of the Group, signed a loan facility agreement which was coordinated by lead arranger Lloyds Bank plc. The loan facility provided £390 million financing for the Group to complete the development. In 2023, the Company has total drawn balance including the capitalised interest of £5,112,565 (2022: £4,743,669). During the year, the Company fully repaid the outstanding from proceeds from a fellow member of the Group, The Stage Shoreditch Residential Limited.
At 31 December 2023, the Group had an outstanding debt of £261,139,913 (2022: £369,355,510), as a result, the entity remains a party to the loan. On 5 January 2024, the debt was partially repaid by loan proceeds from Macquarie Principal Finance PTY Limited. Thus reducing the outstanding loan balance to £74,000,000 and extending the facility agreement to 30 June 2024. On 17 July 2024, the remaining Group outstanding loan was repaid by way of a new facility from Mizuho Bank Limited.
Included in amounts due to group undertakings is an interest free loan to The Stage Shoreditch LLP, the parent undertaking of the Group of £13,414,449 (2022: £nil) which is payable on demand without restrictions.
10
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Obligations under finance leases
11
1,795,917
1,795,919
The finance lease obligation is the present value of the minimum lease payments which is calculated using the incremental borrowing rate of 4.57%. The obligation is subsequently amortised using the effective interest method.
The Company's development site has been pledged as security for a bank development loan held by the Group.
As at 31 December 2022, the bank loan has been classified under creditors falling due within one year, for details on the bank loan, see note 9 of the financial statements.
FAIRCHILD PLACE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
11
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
85,000
85,000
In two to five years
340,000
340,000
In over five years
20,145,000
20,145,000
20,570,000
20,570,000
Less: future finance charges
(18,689,083)
(18,689,081)
1,880,917
1,880,919
Finance lease payments represent ground rent payable by the Company on a lease with a term of 250 years from 13 November 2014. The rent commencement date does not begin until the practical completion of the building. There are some general restrictions placed on the use of the leased asset. The lease is on a fixed repayment basis with an element of contingent rental payments.
12
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Authorised, issued and fully paid
of £1 each
280,000
280,000
280,000
280,000
13
Capital commitments
As at 31 December 2023, the Company has provided a guarantee in respect of the Group’s £390 million development loan facility coordinated by lead arranger, Lloyds Bank plc, for the development site held by the Group via a fixed and floating charge on its assets and shares. Subsequent to the reporting date, this guarantee for the loan expired and was replaced with a new guarantee in respect of the new facility as per note 16. The Company does not have any other financial commitments, guarantees and contingencies aside from the disclosed commitments.
14
Related party transactions
Amounts due to the parent undertaking of the Group, The Stage Shoreditch LLP, are noted within note 9. At the reporting date the amounts due from fellow members of the Group was £1,100 (2022: £1,618,640). At 31 December 2022, the amounts due to fellow members of the Group was £11,859,162 (2022: £7,473,548).
15
Parent Undertaking
The Company's immediate parent undertaking is The Stage Shoreditch (Master) Unit Trust, an entity incorporated in Jersey. The parent undertaking of the smallest group in which the results of the Company are consolidated is that prepared by The Stage Shoreditch LLP. Copies of the consolidated financial statements of The Stage Shoreditch LLP are publicly available from 72 Welbeck Street, London, W1G 0AY.
The largest group in which the results of the Company are consolidated is that prepared by Eldridge Industries LLC, of 600 Steamboat Road, Greenwich, CT 06830. The financial statements of this entity are not publicly available.
FAIRCHILD PLACE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
16
Subsequent events
The Company was party to a guarantee in respect of a development loan from Lloyds to The Stage Shoreditch LLP, the Company’s indirect parent undertaking, until the loan was repaid in full during 2024. The Company is now party to a guarantee in respect of a new loan from Mizuho Bank Limited to The Stage Shoreditch LLP in the amount of £124m, which was effective from 17 July 2024.
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