Castle_Square_Development - Accounts

The directors of the company have elected not to include a copy of the income statement within the financial statements.true

These financial statements have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies regime.

Castle Square Developments Limited is a private company limited by shares incorporated in England and Wales. The registered office is Scampton House, Scampton, Lincoln, LN1 2SF.

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, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.

The company has taken advantage of the exemption under section 399 of the Companies Act 2006 not to prepare consolidated accounts, on the basis that the group of which this is the parent qualifies as a small group. The financial statements present information about the company as an individual entity and not about its group.

Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. The directors have had due regard to the impact of the COVID-19 pandemic on the financial performance and position of the company and concluded that they are not experiencing COVID-19 related issues and continue to have the ability to meet its liabilities as they fall due for the foreseeable future Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Rental income is recognised on an accruals basis over the term of the lease. Rent deposits received from tenants under the terms of a rent deposit deed are held in a separate restricted bank account. The deposit is included within other creditors falling due after more than one year.

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation 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 gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently it is measured at fair value at the reporting end date. Changes in fair value are recognised in profit or loss.

Investment properties are included in the balance sheet at their open market value. Depreciation is provided only on those investment properties which are leasehold and where the unexpired term is less than 20 years.

No depreciation is provided on freehold investment properties. The requirement of the Companies Act 2006 is to depreciate all fixed assets which have a useful economic life but that requirement conflicts with FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland, for the financial statements to give a true and fair view.

Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

Entities in which the company has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.

At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

Basic financial assets, which include debtors, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities, including trade and other creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as 'creditors: amounts falling due within one year' if payment is due within one year or less. If not, they are presented as 'creditors: amounts falling due after more than one year'. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

The tax expense represents the sum of the tax currently payable and deferred 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 liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing 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. Where items recognised in other comprehensive income or equity are chargeable to or deductible for tax purposes, the resulting current or deferred tax expense or income is presented in the same component of comprehensive income or equity as the transaction or other event that resulted in the tax expense or income. 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.

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 stock or fixed 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.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

The average monthly number of persons (including directors) employed by the company during the year was 8 (2019 - 9).

The fair value of the investment property has been arrived at on an open market value basis, by the directors, by reference to market evidence of transaction prices for similar properties.

Fixed asset investments are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

On 12 December 2019 the company acquired the entire share capital of Castle Hill Holdings Limited, a company incorporated in England and Wales for total consideration and related costs of £3,241,705. The principal activity of Castle Hill Holdings Limited was property investment. On 28 February 2020 the trade and assets of Castle Hill Holdings Limited were hived up into the company.

Security has been given in respect of the bank loans in the form of a first legal charge over certain freehold and leasehold property, and over the assets of other related companies.

Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

By a special resolution passed on 28 September 2018 adopting new Articles of Association, the company's share capital was amended to £290,284 divided into 50 A shares of £1 each, 2,628 B shares of £1 each, 50 C shares of £1 each, 2,628 D shares of £1 each, 50 E shares of £1 each, 2,628 F shares of £1 each and 282,250 of G shares of £1 each. At the date of adoption the 282,250 cumulative preference shares of £1 each were redesignated as G shares. On the same day the company allotted by bonus issue 50 E shares of £1 each to the holders of C shares and 2,628 F shares to the holders of D shares.

The A and B shares rank equally in all respects, except that the holders of B shares have no rights to receive notice of or to attend and vote at, either in person or by proxy, any general meeting of the company. The maximum sum payable to the holders of the A shares and B shares together whether by one payment or as a cumulative total of payments and whether by way of dividend, capital or distribution (including on a winding up) shall be limited to the net asset value of the company as at 28 February 2010, the "2010 Value".

The C shares rank pari passu with the A shares as regards rights to vote at general meetings and payments of dividends save that the holders of the C shares shall only be entitled to a distribution of profit or capital from the company either by way of dividend or on a winding up if the net asset value of the company after taking into account all assets of the company and all liabilities save sums due in respect of shares held is in excess of the 2010 Value. If the net asset value of the company is in excess of the 2010 Value the holders of the C shares shall be entitled to participate in that excess proportionately to the number of shares in issue entitled to participate in a distribution of profit or capital, as appropriate by way of dividend or on a winding up. The maximum sum payable to the holders of the C shares together whether by one payment or as a cumulative total of payments and whether by way of dividend, capital or distribution (including on a winding up) shall be limited to the net asset value of the company as at 30 September 2018 minus the 2010 Value, the “2018 Value”.

The D shares rank pari passu with the B shares as regards rights to vote at general meetings and payments of dividends save that the holders of the D shares shall only be entitled to a distribution of profit or capital from the company either by way of dividend or on a winding up if the net asset value of the company after taking into account all assets of the company and all liabilities save sums due in respect of shares held is in excess of the 2010 Value. If the net asset value of the company is in excess of the 2010 Value the holders of the D shares shall be entitled to participate in that excess proportionately to the number of shares in issue entitled to participate in a distribution of capital, as appropriate by way of dividend or on a winding up. The maximum sum payable to the holders of the C shares together whether by one payment or as a cumulative total of payments and whether by way of dividend, capital or distribution (including on a winding up) shall be limited to the net asset value of the company as at 30 September 2018 minus the 2010 Value, the “2018 Value”.

The E shares rank pari passu with the A and C shares as regards rights to vote at general meetings and payments of dividends save that the holders of the E shares shall only be entitled to a distribution of profit or capital from the company either by way of dividend or on a winding up if the net asset value of the company after taking into account all assets of the company and all liabilities save sums due in respect of shares held is in excess of the 2010 Value and the 2018 Value. If the net asset value of the company is in excess of the 2010 Value and 2018 Value the holders of the E shares shall be entitled to participate in that excess proportionately to the number of shares in issue entitled to participate in a distribution of profit or capital, as appropriate by way of dividend or on a winding up.

The F shares rank pari passu with the B and D shares as regards rights to vote at general meetings and payments of dividends save that the holders of the F shares shall only be entitled to a distribution of profit or capital from the company either by way of dividend or on a winding up if the net asset value of the company after taking into account all assets of the company and all liabilities save sums due in respect of shares held is in excess of the 2010 Value and the 2018 Value. If the net asset value of the company is in excess of the 2010 Value and the 2018 Value the holders of the F shares shall be entitled to participate in that excess proportionately to the number of shares in issue entitled to participate in a distribution of capital, as appropriate by way of dividend or on a winding up.

The "2010 Value" means the net asset value of the company as at 28 February 2010 less the cumulative total of all distributions of profit or capital made to the holders of the A shares and the B shares since that date.

The "2018 Value" means the net asset value of the company as at 30 September 2018 minus the 2010 Value less the cumulative total of all distributions of profit or capital made to the holders of the C shares and the D shares since that date.

The holders of the G shares have the right to a fixed cumulative dividend at the rate of 8.75% net per annum. They also have priority over all the other shareholders in the event of a winding up.

They have no right to attend and vote at, either in person or by proxy, any general meeting of the company except;

a) if a resolution for a winding up is proposed and then only on that resolution

b) if the preferential dividend is in arrears for more than six months.

On 12 December 2019 the company issued 272,119 £1 preference G shares at par in partial consideration for the acquisition of the share capital of Castle Hill Holdings Limited.

The company is party to a corporate cross guarantee on the bank borrowings of a related company. The potential liability as at 28 February 2020 amounted to £183,857 (2019 - £194,267).

As the income statement has been omitted from the filing copy of the financial statements, the following information in relation to the audit report on the statutory financial statements is provided in accordance with s444(5B) of the Companies Act 2006:

The auditor's report was unqualified.

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

The following amounts were outstanding at the reporting end date:

The following amounts were outstanding at the reporting end date:

During the year the company acquired the entire share capital of Castle Hill Holdings Limited for market consideration of £3,241,705, a company in which a director and other shareholders had an interest

Dividends totalling £37,508 (2019 - £1,037,508) were paid in the year in respect of shares held by the company's directors.

Interest free loans have been granted by the company to its directors as follows:

The prior year adjustment relates to reallocation of irredeemable preference shares from equity to liabilities in accordance with FRS102.