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Registered number: 06531995
ST. DAVID'S (CARDIFF RESIDENTIAL) LIMITED
FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2021
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ST. DAVID'S (CARDIFF RESIDENTIAL) LIMITED
DIRECTORS' REPORT
FOR THE PERIOD ENDED 31 MARCH 2021
The directors of St. David's (Cardiff Residential) Limited ('the Company') present their report with the audited financial statements for the period ended 31 March 2021.
Directors' responsibilities statement
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The directors are responsible for preparing the Directors' Report and the audited financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial period. Under that law the directors have prepared the financial statements in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006. 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 Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the audited 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 to enable them to ensure that the audited 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.
During the current period, the Company changed its period end from 31 December to 31 March.
The Company has continued its business of property investment in the United Kingdom. No changes to the Company’s principal activity are anticipated in the foreseeable future.
The directors have determined that preparing the financial statements on the going concern basis is appropriate due to the financial support of St. David’s Limited Partnership (a related party which is also jointly controlled by Land Securities Group PLC and Intu Properties plc). The directors’ going concern assessment covers the period to 31 December 2022 and confirmation has been received that St. David’s Limited Partnership will support the Company until at least this date. It is understood that this support will remain in place until revoked and there is no expectation this will occur in the foreseeable future. The Company’s ability to meet its future liabilities is therefore dependent on the financial performance, position and liquidity of St. David’s Limited Partnership. The General Partner of St. David’s Limited Partnership has carried out a review, including consideration of appropriate forecasts, which indicate that St. David’s Limited Partnership will have adequate resources to continue to trade for the foreseeable future. Following the deterioration in cash collections over the year ended 31 March 2021 as a result of Covid-19, and taking into consideration the significant impact of Covid-19 on the macro-economic conditions in which St. David’s Limited Partnership is operating, further stress testing has been carried out to ensure there are sufficient cash resources to continue in operation for the period to 31 December 2022.
As part of their assessment, the directors have also taken into consideration the financial and liquidity positions for the ultimate parent companies of the joint owners of the Company and St. David’s Limited Partnership. Intu Properties plc jointly controls the Company with Land Securities Group PLC. The directors have considered the implications of Intu properties plc going into administration in June 2020 and the shares of Intu The Hayes Limited being placed in receivership by its secured creditors in November 2020, and given the operating models of both the Company and St. David’s Limited Partnership and the legal structure of St. David’s Limited Partnership, have concluded that this does not impact the ability of the Company to continue as a going concern.
In addition, the directors have received confirmation that the amounts due to related parties at year end will not be recalled at least until 31 December 2022.
Based on this, together with available market information and the directors’ knowledge and experience of the Company, the Directors continue to adopt the going concern basis in preparing the financial statements for the period ended 31 March 2021.
Results for the period and dividend
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The results are set out in the Statement of Comprehensive Income on page 6.
The directors do not recommend the payment of a dividend for the period ended 31 March 2021 (31 December 2019: £Nil).
Page 1
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ST. DAVID'S (CARDIFF RESIDENTIAL) LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2021
The directors who held office during the period and up to the date of this report unless otherwise stated were:
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J Wade (appointed 7 July 2021)
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R L Allen (resigned 25 August 2020)
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J Gillard (appointed 7 July 2021)
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R J Jewell (appointed 3 March 2021, resigned 18 June 2021)
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A P G Dixon (appointed 9 December 2020)
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N de Mestre (resigned 3 March 2021)
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C Flinn (appointed 1 February 2020, resigned 3 December 2020)
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R C Futter (resigned 7 July 2021)
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G P Prior (appointed 1 February 2020, resigned 3 December 2020)
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D Jain (resigned 3 December 2020)
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K A Grant (resigned 1 February 2020)
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J N Wilkinson (resigned 1 February 2020)
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A M Christian-West (resigned 7 februrary 2020)
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Certain directors of the Company are covered by their ultimate parent company's indemnity insurance which was in place throughout the period and which remains in place at the date of this report.
Small companies exemption
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The Directors’ Report has been prepared in accordance with the special provisions relating to small companies within Part 15 of the Companies Act 2006.
The Company has taken advantage of the exemption under s414B of the Companies Act 2006 not to prepare a Strategic Report.
Statement of disclosure of information to auditor
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In the case of each director in office at the date the Directors' Report is approved, the following applies:
∙so far as the directors are aware, there is no relevant audit information of which the Company's auditor is unaware, and
∙the directors have taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
Registered and domiciled in England and Wales
Registered number: 06531995
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ST. DAVID'S (CARDIFF RESIDENTIAL) LIMITED
Opinion
We have audited the financial statements of St. David's (Cardiff Residential) Limited (the "Company") for the period ended 31 March 2021 which comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Equity, Statement of Cash Flows and the related notes 1 to 17, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Accounting Standards in conformity with the requirements of the Companies Act 2006.
In our opinion, the financial statements:
∙give a true and fair view of the state of the Company's affairs as at 31 March 2021 and of its loss for the period then ended;
∙have been properly prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006; and
∙have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
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 below. 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 members’ 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 through the period to 31 December 2022.
Our responsibilities and the responsibilities of the members 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.
Other information
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.
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.
In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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.
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 period 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.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ST. DAVID'S (CARDIFF RESIDENTIAL) LIMITED (CONTINUED)
Matters on which we are required to report by exception
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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; or
∙the directors were not entitled to take advantage of the small companies exemptions in preparing the directors’ report and from the requirement to prepare a strategic report.
Responsibilities of members
As explained more fully in the director's report set out on page 1, 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 members 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.
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 which are directly relevant to specific assertions in the financial statements are those that relate to the reporting framework ( International Accounting Standards in conformity with the requirements of the Companies Act 2006) and the relevant tax regulations in the United Kingdom.
∙We understood how the Company is complying with those frameworks through enquiry with the Company and by identifying the Company’s policies and procedures regarding compliance with laws and regulations. We also identified those members of the Company who have the primary responsibility for ensuring compliance with laws and regulations, and for reporting any known instances of non-compliance to those charged with governance.
∙We assessed the susceptibility of the Company’s financial statements to material misstatement, including how fraud might occur through enquiry with the Company’s Management during the planning and execution phases of the audit. Where the risk was considered to be higher we performed audit procedures to address each identified fraud risk, specifically the risk over valuation of investment properties and revenue recognition, including the timing of the revenue recognition.
∙Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Our procedures involved:
°Enquiry of Management, and when appropriate, those charged with governance of the Company, regarding their knowledge of any non-compliance or potential non-compliance with laws and regulations that could affect the financial statements;
°Reading minutes of the meetings of those charged with governance;
°Obtaining direct bank confirmations to vouch the existence of cash balances;
°Obtaining and reading correspondence from legal and regulatory bodies, including HMRC; and
°Journal entry testing, with a focus on manual journals and journals indicating large or unusual transactions based on our understanding the business.
∙In addition, we completed procedures to conclude on the compliance of the disclosures in the financial statements with all applicable reporting requirements.
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/auditorsresponsibilities. This description forms part of our auditor’s report.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ST. DAVID'S (CARDIFF RESIDENTIAL) LIMITED (CONTINUED)
Use of our 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.
Claire Johnson (Senior statutory auditor)
For and on behalf of
Ernst & Young LLP, Statutory Auditor
London
Date: 17 December 2021
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ST. DAVID'S (CARDIFF RESIDENTIAL) LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 31 MARCH 2021
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1 January
2020 -
31 March
2021
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1 January
2019 -
31 December
2019
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Property management and administrative expenses
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Net deficit on revaluation of investment properties
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Impairment of other receivables
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Total comprehensive loss for the financial period
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There were no recognised gains and losses for the period from 1 January 2020 to 31 March 2021 or the period from 1 January 2019 to 31 December 2019 other than those included in the statement of comprehensive income.
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All amounts are derived from continuing activities.
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ST. DAVID'S (CARDIFF RESIDENTIAL) LIMITED
REGISTERED NUMBER: 06531995
BALANCE SHEET
AS AT 31 MARCH 2021
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Trade and other receivables
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Trade and other receivables
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Cash and cash equivalents
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Amounts owed to related parties
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The financial statements on pages 6 to 20 were approved by the Board of Directors on 15 December 2021 and were signed on its behalf by:
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ST. DAVID'S (CARDIFF RESIDENTIAL) LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 MARCH 2021
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Total comprehensive loss for the financial year
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Total comprehensive loss for the financial period
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Page 8
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ST. DAVID'S (CARDIFF RESIDENTIAL) LIMITED
STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 31 MARCH 2021
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1 January
2020 -
31 March
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1 January
2019 -
30 December
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Cash flows from operating activities
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Net deficit on revaluation of investment properties
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Impairment of trade receivables
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Changes in working capital:
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Decrease/(increase) in receivables
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Net cash generated from operations
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Net cash inflow from operating activities
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Cash flows from investing activities
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Development expenditure on investment property
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Net cash outflow from investing activities
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Increase/(decrease) in cash and cash equivalents for the period
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Cash and cash equivalents at the beginning of the period
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Cash and cash equivalents at the end of the period
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Page 9
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ST. DAVID'S (CARDIFF RESIDENTIAL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2021
1.Accounting policies
The financial statements have been prepared on a going concern basis and in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006. The financial statements are prepared under the historical cost convention modified to include the revaluation of investment properties.
St. David’s (Cardiff Residential) Limited (‘the Company’) is a private company limited by shares and is incorporated, domiciled and registered in England and Wales (Registered number: 06531995). The nature of the Company’s operations is set out in the Directors’ Report on page 1.
The accounting policies which follow set out those policies which apply in preparing the financial statements for the period ended 31 March 2021. The financial statements are prepared in Pounds Sterling (£).
During the current period, the Company changed its period end from 31 December to 31 March.
Investment properties are properties, either owned or leased by the Company, that are held either to earn rental income or for capital appreciation, or both. Investment properties are measured initially at cost including related transaction costs, and subsequently at fair value. Fair value is based on market value, as determined by a professional external valuer at each reporting date. The difference between the fair value of an investment property at the reporting date and its carrying amount prior to re-measurement is included in the Statement of Comprehensive Income as a valuation surplus or deficit. Investment properties are presented on the Balance Sheet within non-current assets.
Properties are treated as acquired when the Company assumes control of the property. Capital expenditure on properties consists of costs of a capital nature, including costs associated with developments and refurbishments. Where a property is being developed or undergoing major refurbishment, interest costs associated with direct expenditure on the property are capitalised. The interest capitalised is calculated using the Company’s weighted average cost of borrowings. Interest is capitalised from the commencement of the development work until the date of practical completion. Certain internal staff and associated costs directly attributable to the management of major schemes are also capitalised. The total staff and associated costs are capitalised based on the proportion of time spent on the relevant scheme. Internal staff costs are capitalised from the date it is determined to be probable that the development will progress until the date of practical completion.
When the Company begins to redevelop an existing investment property for continued future use as an investment property, the property continues to be held as an investment property. When the Company begins to redevelop an existing investment property with a view to sell, the property is transferred to trading properties and held as a current asset. The property is re-measured to fair value as at the date of the transfer with any gain or loss being taken to the Statement of Comprehensive Income. The re-measured amount becomes the deemed cost at which the property is then carried in trading properties.
Properties are treated as disposed when control of the property is transferred to the buyer. Typically, this will either occur on unconditional exchange or on completion. Where completion is expected to occur significantly after exchange, or where the Company continues to have significant outstanding obligations after exchange, the control will not usually transfer to the buyer until completion.
The profit on disposal is determined as the difference between the sales proceeds and the carrying amount of the asset at the beginning of the accounting period plus capital expenditure to the date of disposal. The profit on disposal of investment properties is presented separately on the face of the Statement of Comprehensive Income.
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Trade and other receivables
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Trade and other receivables are recognised initially at fair value, subsequently at amortised cost and, where relevant, adjusted for the time value of money, and are presented in the balance sheet net of allowances for doubtful receivables. The Company assesses on a forward-looking basis, the expected credit losses associated with its trade receivables. A provision for impairment is made for the lifetime expected credit losses on initial recognition of the receivable. If collection is expected in more than one year, the balance is presented within non-current assets.
In determining the expected credit losses, the Company takes into account any recent payment behaviours and future expectations of likely default events (i.e. not making payment on the due date) based on individual customer credit ratings, actual or expected insolvency filings or company voluntary arrangements, likely deferrals of payments due, rent concessions and market expectations and trends in the wider macro-economic environment in which our customers operate. These assessments are made on a customer by customer basis.
Trade and other receivables are written off once all avenues to recover the balances are exhausted and the lease has ended. Receivables written off are no longer subject to any enforcement activity.
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Cash and cash equivalents
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Cash and cash equivalents comprise cash balances, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or fewer.
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ST. DAVID'S (CARDIFF RESIDENTIAL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2021
1.Accounting policies (continued)
A provision is recognised in the Balance Sheet when the Company has a constructive or legal obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation. Where relevant, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
The directors have determined that preparing the financial statements on the going concern basis is appropriate due to the financial support of St. David’s Limited Partnership (a related party which is also jointly controlled by Land Securities Group PLC and Intu Properties plc). The directors’ going concern assessment covers the period to 31 December 2022 and confirmation has been received that St. David’s Limited Partnership will support the Company until at least this date. It is understood that this support will remain in place until revoked and there is no expectation this will occur in the foreseeable future. The Company’s ability to meet its future liabilities is therefore dependent on the financial performance, position and liquidity of St. David’s Limited Partnership. The General Partner of St. David’s Limited Partnership has carried out a review, including consideration of appropriate forecasts, which indicate that St. David’s Limited Partnership will have adequate resources to continue to trade for the foreseeable future. Following the deterioration in cash collections over the year ended 31 March 2021 as a result of Covid-19, and taking into consideration the significant impact of Covid-19 on the macro-economic conditions in which St. David’s Limited Partnership is operating, further stress testing has been carried out to ensure there are sufficient cash resources to continue in operation for the period to 31 December 2022.
As part of their assessment, the directors have also taken into consideration the financial and liquidity positions for the ultimate parent companies of the joint owners of the Company and St. David’s Limited Partnership. Intu Properties plc jointly controls the Company with Land Securities Group PLC. The directors have considered the implications of Intu properties plc going into administration in June 2020 and the shares of Intu The Hayes Limited being placed in receivership by its secured creditors in November 2020, and given the operating models of both the Company and St. David’s Limited Partnership and the legal structure of St. David’s Limited Partnership, have concluded that this does not impact the ability of the Company to continue as a going concern.
In addition, the directors have received confirmation that the amounts due to related parties at year end will not be recalled at least until 31 December 2022.
Based on this, together with available market information and the directors’ knowledge and experience of the Company, the Directors continue to adopt the going concern basis in preparing the financial statements for the period ended 31 March 2021.
Rental income, including fixed rental uplifts, is recognised in the Statement of Comprehensive Income on a straight-line basis over the term of the lease. Lease incentives being offered to occupiers to enter into a lease, such as an initial rent-free period or a cash contribution to fit out or similar costs, are an integral part of the net consideration for the use of the property and are therefore recognised on the same straight-line basis. Contingent rents, being lease payments that are not fixed at the inception of a lease, for example turnover rents, are variable consideration and are recorded as income in the period in which they are earned. Where a single payment is received from a tenant to cover both rent and service charge, the service charge component is separated and reported as service charge income.
The Company’s revenue from contracts with customers, as defined in IFRS 15 includes service charge income, other property related income, trading property sales proceeds and long-term development contract income.
Service charge income and management fees are recorded as income over time in the period in which the services are rendered. Revenue is recognised over time because the tenants benefit from the services as soon as they are rendered by the Company. The actual service provided during each reporting period is determined using cost incurred as the input method.
Other property related income includes development and asset management fees. These fees are recognised over time, using time elapsed as the input method which measures the benefit simultaneously received and consumed by the customer, over the period the development or asset management services are provided.
Proceeds received on the sale of trading properties are recognised within Revenue, and the carrying value at the date of disposal is recognised within Costs. Proceeds received on the sale of trading properties are recognised when control of the property transfers to the buyer, i.e. the buyer has the ability to direct the use of the property and the right to the cash inflows and outflows generated by it.
When property is let under a finance lease, the Company recognises a receivable equal to the net investment in the lease at inception of the lease. Rentals received are accounted for as repayments of principal and finance income as appropriate. Finance income is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining net investment in the finance lease and is recognised within revenue.
Revenue on long-term development contracts is recognised over time over the period of the contract as the Company creates or enhances an asset that the customer controls. Progress towards completion of the development, by reference to the value of work completed using the costs incurred to date as a proportion of total costs expected to be incurred over the term of the contract is used as the input method.
Page 11
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ST. DAVID'S (CARDIFF RESIDENTIAL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2021
1.Accounting policies (continued)
Property and contract expenditure is expensed as incurred with the exception of expenditure on long-term development contracts (see above).
Minimum lease payments payable on finance leases and operating leases accounted for as finance leases under IFRS 16 are apportioned between finance expense and reduction of the outstanding liability. Finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining liability. Contingent rents (as defined in 1.7 above) are charged as an expense in the periods in which they are incurred.
The carrying amounts of the Company’s non-financial assets, other than investment properties, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated (see below). An impairment loss is recognised in the Statement of Comprehensive Income whenever the carrying amount of an asset exceeds its recoverable amount.
The recoverable amount of an asset is the greater of its fair value less costs to sell and its value in use. The value in use is determined as the net present value of the future cash flows expected to be derived from the asset, discounted using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount after the reversal does not exceed the amount that would have been determined, net of applicable depreciation, if no impairment loss had been recognised.
Income tax on the profit or loss for the period comprises current and deferred tax. Current tax is the tax payable on the taxable income for the period and any adjustment in respect of previous periods. Deferred tax is provided in full using the Balance Sheet liability method on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the asset is realised, or the liability is settled.
No provision is made for temporary differences (i) arising on the initial recognition of assets or liabilities, other than on a business combination, that affect neither accounting nor taxable profit and (ii) relating to investments in subsidiaries to the extent that they will not reverse in the foreseeable future.
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception date. The arrangement is assessed for whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
Company is lessor
i) Operating lease – properties leased out to tenants under operating leases are included in investment properties in the Balance Sheet.
Lease income is recognised over the term of the lease using the net investment method before tax, which reflects a constant periodic rate of return. Where only the buildings element of a property lease is classified as a finance lease, the land element is shown within operating leases.
Amounts owed to related parties
Amounts owed to related parties are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, amounts owed to related parties are stated at amortised cost with any difference between the amount initially recognised and redemption value being recognised in the Statement of Comprehensive Income over the period of the loan, using the effective interest method.
In determining the expected credit losses, the Company takes into account any future expectations of likely default events based on the level of capitalisation of the counterparty.
Trade and other payables with no stated interest rate and payable within one year are recorded at transaction price. Trade and other payables after one year are discounted based on the amortised cost method using the effective interest rate.
Final dividend distributions to the Company’s shareholders are recognised as a liability in the Company’s financial statements in the period in which the dividends are approved by the Company’s shareholders. Interim dividends are recognised when paid.
Page 12
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ST. DAVID'S (CARDIFF RESIDENTIAL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2021
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Changes in accounting policies and standards
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The accounting policies used in these financial statements are consistent with those applied in the last annual financial statements, as amended where relevant to reflect the adoption of new standards, amendments and interpretations which became effective in the period, the impact of which is outlined below.
Amendments to accounting standards
A number of new standards, amendments to standards and interpretations have been issued but are not yet effective for the Company none of which are expected to have a material impact on the financial statements of the Company.
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Significant accounting judgements and estimates
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The Company’s significant accounting policies are stated in note 1 above. Not all of these significant accounting policies require management to make difficult, subjective or complex judgements or estimates. The following is intended to provide an understanding of the policies that management consider critical because of the level of complexity, judgement or estimation involved in their application and their impact on the financial statements. These estimates involve assumptions or judgements in respect of future events. Actual results may differ from these estimates.
Estimates
(a) Investment property valuation
The Company uses the valuation performed by its external valuer, CBRE Limited, as the fair value of its investment properties.
The valuation of investment properties is inherently subjective due to, among other factors, the individual nature of each property, its location and the expected future rental revenues from that particular property. As a result, the valuations the Company places on its property portfolio are subject to a degree of uncertainty and are made on the basis of assumptions which may not prove to be accurate, particularly in periods of volatility or low transaction flow in the property market. The assumptions upon which CBRE Limited has based its valuation of the Company’s properties as at 31 March 2021 include, but are not limited to, matters such as the tenure and tenancy details for the properties, ground conditions at the properties, the structural condition of the properties, prevailing market yields and comparable market transactions. These assumptions are market standard and accord with the Royal Institution of Chartered Surveyors (RICS) Valuation – Professional Standards. However, if any assumptions made by the external valuer prove to be inaccurate, this may mean that the value of the Company’s properties differs from their valuation, which could have a material effect on the Company’s financial condition.
The Valuer’s report for the year ended 31 March 2020 contained a ‘material uncertainty’ clause due to the disruption to the market at that date caused by Covid-19. The inclusion of this clause indicated that there was substantially more uncertainty than normal and therefore a higher likelihood that the assumptions upon which the external valuer had based its valuations prove to be inaccurate. There was no material uncertainty clause included in the Valuer’s report for the period ended 31 March 2021. Refer to note 8 for further details on the valuation as at period end.
(b) Trade and other receivables
The Company is required to judge when there is sufficient objective evidence to require the impairment of individual trade receivables. It does this by assessing on a forward-looking basis, the expected credit losses associated with its trade receivables. A provision for impairment is made for the lifetime expected credit losses on initial recognition of the receivable. In determining the expected credit losses, the Company takes into account any recent payment behaviours and future expectations of likely default events (i.e. not making payment on the due date) based on individual customer credit ratings, actual or expected insolvency filings or company voluntary arrangements, likely deferrals of payments due, rent concessions and market expectations and trends in the wider macro-economic environment in which our customers operate. These assessments are made on a customer by customer basis.
The Company’s assessment of expected credit losses is inherently subjective due to the forward-looking nature of the assessments, in particular, the assessment of expected insolvency filings or company voluntary arrangements, likely deferrals of payments due and rent concessions. As a result, the value of the provisions for impairment of the Company’s trade receivables are subject to a degree of uncertainty and are made on the basis of assumptions which may not prove to be accurate.
Page 13
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ST. DAVID'S (CARDIFF RESIDENTIAL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2021
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Other direct property or contract expenditure
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Other direct property or contract expenditure are costs incurred in the direct maintenance and upkeep of investment properties. Void costs, which include costs relating to empty properties pending redevelopment and refurbishment, costs of investigating potential development schemes which do not proceed, and costs in respect of housekeepers and outside staff directly responsible for property services, are also included.
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Property management and administrative expenses
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Property management and administrative expenses consist of all costs of managing the property, together with the costs of rent reviews and renewals, re-lettings of the property and management services as explained in note (a) below. No staff costs or overheads are capitalised.
(a) Management services
The Company had no employees during the period (31 December 2019: None). Management services were provided to the Company throughout the period by Land Securities Properties Limited and Intu Shopping Centre plc, both of which are related parties, charges for which amount to £Nil (31 December 2019: £Nil).
(b) Directors’ remuneration
The directors of the Company, who are Key Management Personnel, received no emoluments for their services to the Company (31 December 2019: £Nil).
(c) Auditor remuneration
The auditor’s remuneration amounts to £4,803 (31 December 2019: £2,041). No non-audit services were provided to the Company during the period (31 December 2019: £Nil).
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Interest on short-term deposits
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Page 14
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ST. DAVID'S (CARDIFF RESIDENTIAL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2021
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Income tax for the period
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Adjustment in respect of prior years
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Total income tax charge in the Statement of Comprehensive Income
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Factors affecting tax charge for the period
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The tax assessed for the period/year is higher than (2019 - higher than) the standard rate of corporation tax in the UK of 19% (2019 - 19%) as set out below:
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Loss before tax multiplied by UK corporation tax rate
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Exempt property rental profits in the period
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Expenses not deductible for tax purposes
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Adjustments in respect of prior periods
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Total tax charge in the Statement of Comprehensive Income (as above)
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The Company is a Real Estate Investment Trust (REIT) and therefore income on qualifying rental activities is exempt from corporation tax. Non-qualifying profits and gains of the Company continue to be subject to corporation tax as normal.
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Page 15
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ST. DAVID'S (CARDIFF RESIDENTIAL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2021
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Net book value at the beginning of the period
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Deficit on revaluation of investment properties
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Net book value at period end
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The historical cost of the investment properties is £4,016,974 (31 December 2019: £1,261,994). The difference between the carrying amount and historical cost is a deficit of £2,811,974 (31 December 2019: £111,994). The valuations are prepared by CBRE Limited, independent valuers, in accordance with RICS valuation standards.
The fair value of the Company’s investment properties at 31 March 2021 were determined by the external valuers, CBRE. The valuations are in accordance with RICS standards. The valuations performed by the external valuers are reviewed internally by management. This includes discussions of the assumptions used by the external valuers, as well as a review of the resulting valuations. Discussions of the valuation process and results are held between senior management, the Group audit committee and the external valuers on a half-yearly basis.
The valuers’ opinion of fair value was primarily derived using comparable recent market transactions on arm’s length terms and using appropriate valuation techniques. The fair value of investment properties is determined using the income capitalisation approach. Under this approach, forecast net cash flows, based upon market derived estimated present rental values (market rent), together with estimated costs are discounted at market derived capitalisation rates to produce the valuers’ opinion of fair value. The average discount rate which, if applied to all cash flows would produce the fair value, is described as the equivalent yield.
The Company considers all of its investment properties to fall within ‘Level 3’ as defined by IFRS 13. Accordingly, there has been no transfer of properties within the fair value hierarchy in the financial period. The table below summarises the key unobservable inputs used in the valuation of the investment properties at 31 March 2021.
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Page 16
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ST. DAVID'S (CARDIFF RESIDENTIAL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2021
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Investment properties (continued)
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True Equivalent Yield (%)
Actual
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True Equivalent Yield (%)
Actual
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Definition of terms
Equivalent Yield
Calculated by the external valuers, equivalent yield is the internal rate of return from an investment property, based on the outlays for the purchase of a property (including purchase costs), reflecting reversions to current market rent and such items as voids and non-recoverable expenditure but ignoring future changes in capital value. The calculation assumes rent is received annually in arrears.
Sensitivities
The following table illustrates the impact of changes in key unobservable inputs (in isolation) on the fair value of the Company’s properties:
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Impact on Valuations of 25 bps change in true
equivalent yield
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Impact on Valuations of 25 bps change in true
equivalent yield
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Trade and other receivables
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Total current trade and other receivables
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Total trade and other receivables
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Non-current receivables relate to shared ownership apartments that have been measured at fair value, in line with CBRE valuation reports.
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Page 17
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ST. DAVID'S (CARDIFF RESIDENTIAL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2021
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Cash and cash equivalents
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Total cash and cash equivalents
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Total trade and other payables
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Deferred income principally relates to rents received in advance.
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Amounts owed to related parties
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Amounts owed to Land Securities Properties Limited
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Amounts owed to St David's Limited Partnership
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Total amounts owed to related parties
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The unsecured amounts owed to related parties are interest free and repayable on demand with no fixed repayment date.
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Page 18
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ST. DAVID'S (CARDIFF RESIDENTIAL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2021
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Financial risk management
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Financial risk management objectives and policies
The Company is exposed to minimal credit risk and liquidity risk due to the nature of the receivables and payables as detailed below. The Company’s overall risk management strategy seeks to minimise the potential adverse effects of these on the Company’s financial performance through established policies and procedures for managing each of these risks, which are summarised below.
The Company has trade and other receivables and trade and other payables that arise directly from its operations. The carrying value equals the fair value of the trade receivables and trade payables due to their short-term nature.
Credit risk
The Company’s principal financial assets are trade receivables and cash. The credit risk it faces is primarily attributable to its trade receivables, as cash has negligible credit risk. Trade receivables are presented in the balance sheet net of allowances for doubtful receivables. Impairment is made where there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivables concerned. The balance is low relative to the scale of the balance sheet and, owing to the long-term nature and diversity of the Company’s tenancy arrangements, the credit risk of trade receivables is considered to be low. Furthermore, a credit report is obtained from an independent rating agency prior to the inception of a lease with a new counterparty. This report is used to determine the size of the deposit that is required from the tenant at inception. In general these deposits represent between three and six months’ rent. The carrying amounts of the financial assets represent the best estimate of the maximum credit risk.
Liquidity risk
The Company is exposed to liquidity risk and need to ensure that the cash balances and cash flows from operations are sufficient to enable it to pay its trade and other payables. The Company carefully monitors actual cash flows against forecasts and budgets in order to manage this risk. Please also see the Directors' Report regarding going concern.
Capital management
The Company considers its capital to constitute Shareholders’ capital. The primary objective of the Company’s capital management is to ensure that the Company’s property portfolio is appropriately supported by capital that is efficient and that seeks to reduce fluctuations in interest payments due to changes in external interest rates.
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Ordinary shares of £1.00 each
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Related party transactions
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Included within amounts owed to related parties is £59,548 (31 December 2019: £55,812) due to Land Securities Properties Limited. The movement in the period relates to Land Securities Properties Limited paying invoices on behalf of the Company.
Also included in amounts owed to related parties is £144,862 (31 December 2019: £87,589) due to St David’s Limited Partnership. The movement in the period relates to St David’s Limited Partnership paying invoices on behalf of the Company.
Page 19
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ST. DAVID'S (CARDIFF RESIDENTIAL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2021
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Operating lease arrangements
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The Company earns rental income by leasing its investment and operating properties to tenants under non-cancellable operating leases.
At the Balance Sheet date, the Company had contracted with tenants to receive the following future minimum lease payments:
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Later than one year but not more than two years
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Later than two years but not more than three years
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Later than three years but not more than four years
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Later than four year but not more than five years
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St. David's (Cardiff Residential) Limited is jointly controlled by Land Securities Group Plc and Intu The Hayes Limited, both of which are registered in the England and Wales. Therefore, there is no ultimate controlling party.
Consolidated financial statements for the year ended 31 March 2021, including the Company, for Land Securities Group PLC can be obtained from the Company Secretary at the registered office of the ultimate parent company, 100 Victoria Street, London, SW1E 5JL, and from the Group’s website at www.landsec.com.
On 26 June 2020 Intu Properties plc, the ultimate parent company of Intu The Hayes Limited, entered into administration. Consolidated financial statements for the year ended 31 December 2019, including the Company, for Intu Properties plc can be obtained from Companies House.
Page 20
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