ARK_ESTATES_ENFIELD_LIMIT - Accounts

The directors present their annual report and audited financial statements for the year ended 30 June 2020.

The principal activity of the company is the ownership, development and leasing of data centres.

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

The results for the year are set out on page 7.

The results for the year and the financial position at the year end were considered satisfactory by the directors.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend (2019: nil).

The company has made qualifying third party indemnity provisions for the benefit of its directors during the year. These provisions remain in force at the reporting date.

Despite the challenges presented by the pandemic, all of Ark’s facilities have remained open for business and will continue to do so due to its long-standing business continuity plans. The Company and its partners have pro-actively and intelligently planned our reaction to the various scenarios that it may present. Those plans are the outcome of tireless work by the Company with all of our partners and clients and we are grateful for the effort and positive engagement. We will continue to execute against those plans and adapt as needed but remain confident that we can meet the challenges before us.

The directors are satisfied that the Company can call on sufficient group financial facilities and support from their shareholders to meet working capital requirements and enable them to meet debts as they fall due. At 30 June 2020 the Company had net current liabilities of £115,209,485. This position included current liabilities owed to group and related undertakings of £111,494,666 (see Note 11). The amounts owed to group undertakings (£24,610,399) are amounts owed to the parent undertaking, Ark Estates Holdings Limited, and will not be called within 12 months of the date of this report. The amount owed to related undertakings (£86,884,267) relates to a long term working capital facility provided by the ultimate parent undertaking. Subsequent to the year end, the repayment date of this facility was extended to 30 September 2024. Under this facility, the Company has access to liquidity and sufficient undrawn capital to be able to continue to finance the company's liabilities as they fall due. It is therefore the directors' view that it is appropriate to prepare the financial statements on the going concern basis.

PricewaterhouseCoopers CI LLP were appointed as auditors 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.

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" Section 1A, 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 the financial statements, the directors are required to:

•     select suitable accounting policies and then apply them consistently;

•     state whether applicable United Kingdom Accounting Standards, comprising FRS 102 Section 1A, have been followed, subject to any material departures disclosed and explained in the financial statements;

•     make judgements and accounting estimates that are reasonable and prudent; 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.

The directors 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.

In the case of each director in office at the date the Directors’ Report is approved:

•     so far as the director is aware, there is no relevant audit information of which the company’s auditors are unaware; and

•     they have taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company’s auditors are aware of that information.

This report has been prepared in accordance with the provisions applicable to companies entitled to the small companies exemption.

The notes on pages 9 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 and in accordance with the provisions of FRS 102 1A - small entities. The notes on pages 9 to 18 form an integral part of these financial statements.

Ark Estates Enfield Limited is a private company limited by shares incorporated in England and Wales. The registered office is Spring Park, Westwells Road, Hawthorn, Corsham, Wiltshire, SN13 9GB.

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 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.

The directors are satisfied that the trueCompany can call on sufficient group financial facilities and support from their shareholders to meet working capital requirements and enable them to meet debts as they fall due. At 30 June 2020 the Company had net current liabilities of £115,209,485. This position included current liabilities owed to group and related undertakings of £111,494,666 (see Note 11). The amounts owed to group undertakings (£24,610,399) are amounts owed to the parent undertaking, Ark Estates Holdings Limited, and will not be called within 12 months of the date of this report. The amount owed to related undertakings (£86,884,267) relates to a long term working capital facility provided by the ultimate parent undertaking. Subsequent to the year end, the repayment date of this facility was extended to 30 September 2024. Under this facility, the Company has access to liquidity and sufficient undrawn capital to be able to continue to finance the company's liabilities as they fall due. It is therefore the directors' view that it is appropriate to prepare the financial statements on the going concern basis.

Property income is the total amount receivable by the company from the rental of its data centre buildings during the period, excluding VAT.

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. The surplus or deficit on revaluation is recognised in the profit and loss account.

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.

A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

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 balance sheet 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.

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

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

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

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

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

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

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

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.

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 profit and loss account 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. Deferred tax is charged or credited in the profit and loss account, 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.

Finance costs

Finance costs of financial liabilities are recognised in the profit and loss account over the term of such instruments at a constant rate on the carrying amount.

Finance costs which are directly attributable to the construction of tangible fixed assets are capitalised as part of the cost of those assets. The commencement of capitalisation begins when both finance costs and expenditures for the asset are being incurred and activities that are necessary to prepare the asset for use are in progress. Capitalisation ceases when substantially all the activities that are necessary to prepare the asset for use are complete.

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. Judgements, estimates and assumptions have been made in relation to the valuation of the company's investment property (see note 8). 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.

On 30 June 2019 the loan of £753,144 owed to the company by its subsidiary, Ten Ardra Road Limited, was waived.

There were no employees during the year (2019: none) apart from the directors.

No directors' remuneration was paid in either the current year or prior period. The directors are remunerated by other group undertakings for which no allocations are made to the company.

Investment property represents the data centre known as Meridian Park. The investment property has been revalued as at 30 June 2020 at fair value by the directors with reference to market-based evidence and expected future cash flows derived from the assets. An independent professional valuation of Meridian Park was carried out by a RICS qualified valuer as at 30 June 2020 and this was taken into consideration in the directors’ valuation.  The valuation methodology used to establish the value of the investment properties includes a number of key assumptions. These include, but are not limited to; occupancy rates, contracted and uncontracted income forecasts, operational costs, capital replacement costs, discount rates and exit yields.

At 30 June 2020 the company owned 100% of the issued share capital of Ten Ardra Road Limited, a company registered in England and Wales. Ten Adra Road Limited was dissolved on 17 November 2020.

Amounts owed by group undertakings are unsecured, have no fixed date of repayment and are repayable on demand.

Amounts owed to group undertakings are unsecured, have no fixed date of repayment and are repayable on demand.

Amounts owed to related undertakings are owed to subsidiaries of Ark Capital Partners I LP Inc., the ultimate parent of Ark Estates Enfield Limited, and at the balance sheet date were repayable in full on 30 June 2021. Interest is payable at 10% per annum. Interest is compounded and rolled up on a quarterly basis. On 31 July 2020, the repayment date was extended to 30 September 2024.

Amounts owed to related undertakings are owed to subsidiaries of Ark Capital Partners I LP Inc., the ultimate parent of Ark Estates Enfield Limited, and at the balance sheet date were repayable in full on 30 June 2021. Interest is payable at 10% per annum. Interest is compounded and rolled up on a quarterly basis. On 31 July 2020, the repayment date was extended to 30 September 2024.

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:

No deferred tax has been recognised at either 30 June 2020 or 30 June 2019 in relation to carried forward losses or capital allowances. This is due to the uncertainty and judgement associated with both the estimation of the financial value, as well as uncertainty around the timing of when such assets would be utilised.

The assets of the Company have been pledged as security against a bank loan held by Ark Estates Holdings Limited, which is the Company's immediate parent company, also controlled by Ark Capital Partners I LP Inc. For full details of the bank loan, please refer to the financial statements of Ark Estates Holdings Limited.

Amounts contracted for but not provided in the financial statements:

There have been no post balance sheet events requiring disclosure in the notes to the financial statements.

The immediate parent company is Ark Estates Holdings Limited, a company registered in England and Wales, and the ultimate parent undertaking is Ark Capital Partners I LP Inc., a limited partnership registered in the Isle of Man. The limited partnership is controlled by its partners.

Ark Estates Holdings Limited is the parent undertaking of the smallest group of undertakings to consolidate these financial statements at 30 June 2020. The consolidated financial statements of Ark Estates Holdings Limited are available from Companies House.

Ark Capital Partners I LP Inc. is the parent undertaking of the largest group of undertakings to consolidate these financial statements at 30 June 2020. The consolidated financial statements of Ark Capital Partners I LP Inc. are available from its general partner Goshawk GP Limited, First Names House, Victoria Road, Douglas, Isle of Man, IM2 4DF.