Statement of compliance

These financial statements have been prepared in accordance with FRS 102 Section 1A Small Entities, and the requirements of the Companies Act 2006.

Basis of preparation

The financial statements have been prepared under the historical cost convention, modified to include investment properties at fair value. The financial statements are presented in sterling, which is the functional currency of the company.

At the reporting date the company had net liabilities. The director has confirmed that financial support will continue for at least twelve months from the date of approval of these financial statements, and that the loan from the director will not be repaid until the company is able to do so. On this basis the financial statements have been prepared on the going concern basis.

Turnover represents rental income receivable from the letting of investment properties during the year. Rental income is recognised on a straight-line basis over the period of the tenancy.

Tax is recognised in the profit and loss account, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. Current tax is the amount of corporation tax payable on the taxable profit for the year, using tax rates enacted or substantively enacted at the balance sheet date.

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the reporting date. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the reporting date that are expected to apply to the reversal of the timing difference. Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Current and deferred tax assets and liabilities are not discounted.

Investment properties are properties held to earn rentals or for capital appreciation. They are measured at fair value at the reporting date, with changes in fair value recognised in the income statement. Fair value is determined by the director on an open market basis by reference to market evidence of comparable properties and rental yields, and is not determined by an independent valuer. At the reporting date the director consider the fair value of the investment properties to be not materially different from cost. No depreciation is provided on investment properties.

The company only enters into basic financial instruments. Financial assets and liabilities are recognised when the company becomes party to the contractual provisions of the instrument. The mortgage loan and the loan from the director are initially measured at transaction price, including transaction costs, and subsequently at amortised cost. Interest is recognised in the income statement as it accrues.