Property Recycling Group plc - Limited company accounts 23.1

REGISTERED NUMBER: 05409619 (England and Wales)

Strategic Report, Directors' Report and

Financial Statements

for the Year Ended 31 December 2022

for

Property Recycling Group plc

Page

Company Information

1

Chairman's Report

2

Strategic Report

3

Directors' Report

5

Statement of Directors' Responsibilities

7

Report of the Independent Auditors

8

Statement of Comprehensive Income

12

Balance Sheet

13

Statement of Changes in Equity

14

Cash Flow Statement

15

Notes to the Cash Flow Statement

16

Notes to the Financial Statements

17

DIRECTORS:

P A Rackham

P A Rackham Jnr

S R Stuteley

Mrs J Williams

REGISTERED OFFICE:

Manor Farm

Bridgham

Norwich

Norfolk

NR16 2RX

REGISTERED NUMBER:

05409619 (England and Wales)

INDEPENDENT AUDITORS:

Knights Lowe Limited

Chartered Accountants

and Statutory Auditors

Eldo House, Kempson Way

Suffolk Business Park

Bury St Edmunds

Suffolk

IP32 7AR

BANKERS:

Lloyds Banking Group Plc

35 King Street

Thetford

Norfolk

IP24 2AX

SOLICITORS:

Ashtons Legal

Trafalgar House

Meridian Way

Norwich

Norfolk

NR7 0TA

INTRODUCTION

Results are in line with expectations.

FINANCIAL RESULTS

In the year ended 31 December 2022 the Company achieved revenue of £3.91 million (2021: £10.66 million) comprising income from the sale of two trading properties totalling £3.3 million (2021: one for £10.21 million) and income from trading assets of £0.61 million (2021: £0.45 million).

Cost of sales of £3.20 million (2021: £2.51 million) comprise the value of opening stocks plus purchases less closing stocks. Administrative costs were £0.46 million (2020: £0.50 million).

Profit before tax was £0.9 million (2021: £7.90 million). At 31 December 2022 the Company had net assets of £24.55 million (2021: £24.18 million).

PROSPECTS

Will remain difficult in 2023.

Any shareholder with queries or seeking further information should contact the acting company secretary Stephen Stuteley at the Company's registered office.

The directors present their strategic report for the year ended 31 December 2022.

PRINCIPAL ACTIVITIES AND REVIEW OF BUSINESS

ACTIVITIES

The principal activities of the company continue to be to identify and acquire previously developed land where there is an opportunity to improve the valuation significantly through remediation and planning gain. Once improved, such land is sold to developers or end users.

A review of the Company's financial performance is shown under the heading Financial Results in the Executive Chairman's Report. The Directors confirm that progress on planning matters and site remediation within the portfolio is reviewed on a monthly basis and will be reflected in future sales.

KEY PERFORMANCE INDICATORS

The key short-term financial performance indicator is the comparison of short term letting and other income to operating costs in years where there were no sales. The Board considers this indicator was met during the year.

The key non-financial performance indicator is the area of land and buildings held by the Company. The Company owned 172 hectares (2021: 174 hectares) of land and buildings with varying planning consents at the year end.

FINANCIAL RISK MANAGEMENT

The financial instruments of the Company principally comprise short-term debtors and creditors, short-term bank deposits and cash. All of the Company's assets and liabilities are denominated in sterling. The main risks arising from the Company's financial instruments are interest rate risk and liquidity.

Financial assets comprise short term bank deposits and cash,

INTEREST RATE RISK AND LIQUIDITY RISK MANAGEMENT

The Company's policy has been to minimise risk by having a drawdown facility and only drawing down what the Directors consider necessary to maintain an operational cash balance.

CAPITAL RISK MANAGEMENT

The Company manages its capital to ensure that the Company will be able to continue as a going concern while maximising the return to shareholders through optimisation of the debt and equity balance.

The capital structure of the Company consists of debt, which includes borrowings disclosed in note 18, cash at bank and in hand and equity attributable to equity holders, comprising issued capital, reserves and retained earnings.

CREDIT RISK MANAGEMENT

Management monitors the amount of the Company's net funds in assessing the level of credit risk. The Directors do not believe the level of credit risk to be material.

CASH FLOW RISK MANAGEMENT

Management believes that the Company has obtained sufficient access to cash to continue its business activities for the foreseeable future. The Directors do not believe the level of cash flow risk to be material.

PRINCIPAL RISKS AND UNCERTAINTIES

There are a number of potential risks and uncertainties which have been identified within the business which could have a material impact on the Company's long term performance.

- Competitive pressure on property purchase in times of buoyant market conditions has to be kept under review and strategy adjusted according to the long term view.

- During a less buoyant market, property sales may be more difficult. The Company seeks to generate income from tenants to cover site overheads and offset holding costs.

- Environmental risks are assessed on property acquisition; it is unlikely that warranties will be given by a vendor. Consultants are engaged where necessary and offers reflect their findings.

- Planning risk is offset in part as previously developed land will already have a value related to its existing planning consent. Care is taken at acquisition that enquiries are made into the possibility of enhancing the planning status with a view to future sale.

- The Company is dependent upon a small management team.

SECTION 172(1) STATEMENT

The Directors remain conscious of the impact their decisions can have on employees, communities and the environment. Proactive engagement remains a central focus for the Board, which ensures the Directors have regard to the matters set out in S.172(1) (a) to (f) of the Company Act.

ENVIRONMENT

The Company recognises the importance of its environmental responsibilities, and designs and implements policies to reduce any damage that might be caused by its activities. It specifically encourages reuse or recycling of materials or, if this is not possible, safe disposal using licenced contractors. Much of the Company's work involves improving the environmental status of its sites.

FUTURE DEVELOPMENTS

A review of the Company's operations during the year and its plans for the future is given in the Executive Chairman's Report. The Company continues to enhance the value of its properties through planning improvements and remediation.

The directors have reviewed cash flow requirements for the Company for the immediate future and are satisfied that adequate funding is available to the Company to meet its current requirements. Consequently, the financial statements are prepared on the going concern basis.

ON BEHALF OF THE BOARD:

S R Stuteley - Director

23 March 2023

The directors present their report with the financial statements of the company for the year ended 31 December 2022.

DIVIDENDS

Dividends totalling £362,000 have been declared or paid in the year ended 31 December 2022 (2021 £nil).

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2022 to the date of this report.

P A Rackham

P A Rackham Jnr

S R Stuteley

Mrs J Williams

The appointment and replacement of directors is governed by the Company's Articles of Association, the Companies Act 2006 and related legislation. The Articles themselves may be amended by special resolution of the shareholders.

POLITICAL DONATIONS AND EXPENDITURE

There were no political or charitable contributions during the year (2021: £nil).

DIRECTORS AND OFFICERS LIABILITY INSURANCE

The Company has purchased and maintained Directors and officers liability insurance under the terms of section 232 Companies Act 2006.

CAPITAL STRUCTURE

Details of the issued share capital are shown in note 22. The company has one class of ordinary shares which carries no right to fixed income. Each share carries the right to one vote at general meetings of the Company. All shares are issued fully paid. No person has special rights of control over the Company's share capital.

There are no specific restrictions on the size of a holding nor on the transfer of shares which are both governed by the general provisions of the Articles of Association and prevailing legislation. The directors are not aware of any agreements between holders of the Company's shares that may result in restrictions on the transfer of securities or on voting rights.

At the date of this report, 36,200,000 ordinary shares were in issue.

ENGAGEMENT WITH SUPPLIERS, CUSTOMERS AND OTHERS

The company directors have had regard to the need to foster the company's business relationships with suppliers, customers and others and hold their reputation in the highest regard. Property Recycling Group Plc is a family-run company dealing with a small amount of suppliers and customers in a specialised industry of developing land to be sold to developers or end users. Creditor days at the year end average 9 days (2021: 34 days).

STREAMLINED ENERGY AND CARBON REPORTING

The company consumed less than 40,000 kWh of energy in the financial year and therefore the disclosures required by The Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 have not been made.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies Act 2006.

AUDITORS

A resolution to re-appoint Knights Lowe Limited as the Company's auditors and to authorise the Directors to determine the auditors' remuneration will be proposed at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

S R Stuteley - Director

23 March 2023

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

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Opinion

We have audited the financial statements of Property Recycling Group plc (the 'company') for the year ended 31 December 2022 which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and Notes to the Cash Flow Statement, Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 December 2022 and of its profit for the year then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

-	have been prepared in accordance with the requirements of the Companies Act 2006.

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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The directors are responsible for the other information. The other information comprises the information in the Annual Report, but does not include the financial statements and our Report of the Auditors thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our 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 this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this 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 Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.

We have nothing to report in respect of the following matters where 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.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page seven, 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 necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditors' 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 a Report of the Auditors 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.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:

-

the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;

-

we identified the laws and regulations applicable to the company through discussions with the director and other management, and from our commercial knowledge and experience of the companies operating sector;

-

we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation, data protection, anti-bribery, employment, environmental and health and safety legislation;

-

we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and

-

identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.

We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

-

making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud;tor;

-

considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations;

To address the risk of fraud through management bias and override of controls, we:

-

performed analytical procedures to identify any unusual or unexpected relationships;

-

tested journal entries to identify unusual transactions;

-

assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias;

-

investigated the rationale behind significant or unusual transactions;

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

-

agreeing financial statement disclosures to underlying supporting documentation;

-

reading the minutes of meetings of those charged with governance;

-

enquiring of management as to actual and potential litigation and claims;

-

reviewing correspondence with HMRC, relevant regulators including the Environment Agency and the company's legal advisors;

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

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 a Report of the Auditors 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.

J Knights BSc ACA (Senior Statutory Auditor)

for and on behalf of Knights Lowe Limited

Chartered Accountants

and Statutory Auditors

Eldo House, Kempson Way

Suffolk Business Park

Bury St Edmunds

Suffolk

IP32 7AR

24 March 2023

TURNOVER

5

3,910,078

10,657,950

Cost of sales

3,200,383

2,509,040

GROSS PROFIT

709,695

8,148,910

Administrative expenses

459,688

501,303

OPERATING PROFIT

250,007

7,647,607

Interest receivable and similar income

8

658,361

271,377

908,368

7,918,984

Interest payable and similar expenses

9

8,591

16,510

PROFIT BEFORE TAXATION

10

899,777

7,902,474

Tax on profit

11

174,545

1,503,343

PROFIT FOR THE FINANCIAL YEAR

725,232

6,399,131

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

725,232

6,399,131

FIXED ASSETS

Tangible assets

13

2,107

4,215

CURRENT ASSETS

Stocks

14

6,307,927

8,446,321

Debtors

15

18,318,651

17,159,982

Cash at bank

521,853

218,644

25,148,431

25,824,947

CREDITORS

Amounts falling due within one year

16

602,239

1,643,861

NET CURRENT ASSETS

24,546,192

24,181,086

TOTAL ASSETS LESS CURRENT LIABILITIES

24,548,299

24,185,301

PROVISIONS FOR LIABILITIES

19

527

801

NET ASSETS

24,547,772

24,184,500

CAPITAL AND RESERVES

Called up share capital

20

1,810,000

1,810,000

Share premium

21

6,428,529

6,428,529

Retained earnings

21

16,309,243

15,945,971

SHAREHOLDERS' FUNDS

24,547,772

24,184,500

The financial statements were approved by the Board of Directors and authorised for issue on 23 March 2023 and were signed on its behalf by:

S R Stuteley - Director

Called up

share

Retained

Share

Total

capital

earnings

premium

equity

£

£

£

£

Balance at 1 January 2021

1,810,000

9,546,701

6,428,529

17,785,230

Changes in equity

Dividends

-

139

-

139

Total comprehensive income

-

6,399,131

-

6,399,131

Balance at 31 December 2021

1,810,000

15,945,971

6,428,529

24,184,500

Changes in equity

Dividends

-

(361,960

)

-

(361,960

)

Total comprehensive income

-

725,232

-

725,232

Balance at 31 December 2022

1,810,000

16,309,243

6,428,529

24,547,772

Cash flows from operating activities

Cash generated from operations

1

3,733,159

(3,257,699

)

Interest paid

(8,591

)

(16,510

)

Tax paid

(1,265,237

)

(78,250

)

Net cash from operating activities

2,459,331

(3,352,459

)

Cash flows from investing activities

Loan to group company

(3,300,000

)

(53,871

)

Repayment of loan to group company

847,477

3,245,399

Interest received

658,361

271,377

Net cash from investing activities

(1,794,162

)

3,462,905

Cash flows from financing activities

Dividends (paid)/written off

(361,960

)

139

Net cash from financing activities

(361,960

)

139

Increase in cash and cash equivalents

303,209

110,585

Cash and cash equivalents at beginning of year

2

218,644

108,059

Cash and cash equivalents at end of year

2

521,853

218,644

1.	RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2022

2021

£

£

Profit before taxation

899,777

7,902,474

Depreciation charges

2,108

2,810

Finance costs

8,591

16,510

Finance income

(658,361

)

(271,377

)

252,115

7,650,417

Decrease/(increase) in stocks

2,138,394

(1,378,605

)

Decrease/(increase) in trade and other debtors

1,294,486

(9,577,573

)

Increase in trade and other creditors

48,164

48,062

Cash generated from operations

3,733,159

(3,257,699

)

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts:

Year ended 31 December 2022

31.12.22

1.1.22

£

£

Cash and cash equivalents

521,853

218,644

Year ended 31 December 2021

31.12.21

1.1.21

£

£

Cash and cash equivalents

218,644

108,059

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1.1.22

Cash flow

At 31.12.22

£

£

£

Net cash

Cash at bank

218,644

303,209

521,853

218,644

303,209

521,853

Total

218,644

303,209

521,853

1.	STATUTORY INFORMATION

Property Recycling Group plc is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the Company Information page.

The presentation currency of the financial statements is the Pound Sterling (£).

The nature of the group's operations and its principal activities are set out in the strategic report on pages 3 to 4.

Level of rounding

The accounts are rounded to the nearest pound.

2.	STATEMENT OF COMPLIANCE

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006.

3.	ACCOUNTING POLICIES

Basis of preparing the financial statements

The financial statements have been prepared under the historical cost convention, modified to include certain items at fair value, and in accordance with the Financial Reporting Standard 102 (FRS 102) issued by the Financial Reporting Council.

Turnover

Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

Income from the sale of land and buildings is recognised at the date of unconditional exchange of contract. Option fees are recognised in the period to which the Company is unconditionally entitled to that income.

Rental income and other income are accrued on a time basis in the period to which they relate.

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off the cost less estimated residual value of each asset over its estimated useful life.

Plant and machinery - 15% to 20% straight line

The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sale proceeds and carrying amount of the asset and is recognised in the profit and loss account.

Stocks

Stock is stated at the lower of cost and estimated selling price less costs to sell, which is equivalent to the net realisable value. Cost comprises the cost of acquisition of property, professional and planning fees and construction and infrastructure costs, but excludes overheads. Net realisable value represents the estimate selling price less all estimated costs of completion and costs to be incurred in marketing and selling the properties.

Financial instruments

Financial assets and financial liabilities are recognised when the company becomes a party to the contractual provisions of the instrument.

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.

(i) Financial assets and liabilities

All financial assets and liabilities are initially measured at transactions price (including transaction costs), except for those financial assets classified at fair value through profit or loss, which are initially measured at fair value (which is normally the transaction price excluding transaction costs), unless the arrangement constitutes a financing transaction. If an arrangement constitutes a financing transaction, the financial asset or financial liability is measured at the present value of future payments discounted at a market rate of interest for a similar debt instrument.

Financial assets and liabilities are only offset in the statement of financial position when, and only when there exists a legally enforceable right to set off the recognised amounts and the company intends to either settle on a net basis, or to realise the asset and settle the liability simultaneously.

(ii) Derivative financial instruments

The company uses derivative financial instruments to reduce exposure to interest rate movements. The company does not hold or issue derivative financial instruments for speculative purposes.

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The resulting gain or loss is recognised in the profit and loss immediately unless the derivative is designated and effective as the hedging instrument, in which event the timing of the recognition in the profit or loss depends on the nature of the hedge relationship.

(iii) Fair value measurement

The best evidence of fair value is quoted price for an identical asset in an active market. When quoted prices are unavailable, the price of a recent transaction for an identical asset provides evidence of fair value as long as there has not been a significant change in economic circumstances or a significant lapse of time since the transaction took place. If the market is not active and recent transactions of an identical asset on their own are not a good estimate of fair value, the fair value is estimated by using a valuation technique.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Statement of Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

The company as a lessor

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Amounts due from lessees under finance leases are recorded as debtors at the company's net investment in the lease. Finance lease income is allocated to the profit and loss account so as to produce a constant periodic rate of return on the remaining balance of the debtor.

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are usually immaterial and are recognised in the profit and loss account in the period incurred.

Provisions

A provision is recognised when the Company has a present obligation as a result of a past event and it is probable the company will be required to settle that obligation and amounts can be estimated reliably. Provisions are measured at the Directors best estimate of the expenditure required to settle the respective obligations at the balance sheet date and are discounted to present value where the effect is material.

4.	CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Company's accounting policies, which are described below, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimated and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Assessment of net realisable value of stock properties

Stocks are valued at the lower of cost and net realisable value. The cost of stock comprises net prices paid for land plus any work in progress to improve the site. Net realisable value (NRV) represents the estimated selling price less all costs to be incurred in marketing and selling. The NRV of properties are assessed by the directors based on all available information including formal and informal valuations provided by land agents, current negotiations and other interest expressed in the sites by third parties and generic information such as average values of farm land and indications of commercial and residential property values.

5.

TURNOVER

The turnover and profit before taxation are attributable to the principal activities of the company.

An analysis of turnover by class of business is given below:

2022

2021

£

£

Sale of properties

3,330,000

10,211,105

Rent receivable

508,382

328,320

Other income

71,696

118,525

3,910,078

10,657,950

The company's primary activities are the remediation, development and sale of previously developed land and property and its net assets are principally applied to those purposes. Letting of stock properties is a secondary activity.

6.	EMPLOYEES AND DIRECTORS

2022

2021

£

£

Wages and salaries

135,275

135,746

The average number of employees during the year was as follows:

2022

2021

Administration

4

4

7.	DIRECTORS' EMOLUMENTS

2022

2021

£

£

Directors' remuneration

145,451

142,686

8.

INTEREST RECEIVABLE AND SIMILAR INCOME

2022

2021

£

£

Other interest receivable

658,361

271,377

9.

INTEREST PAYABLE AND SIMILAR EXPENSES

2022

2021

£

£

Bank interest

8,591

16,510

10.	PROFIT BEFORE TAXATION

The profit is stated after charging/(crediting):

2022

2021

£

£

Operating lease income

(508,382

)

(328,320

)

Depreciation - owned assets

2,108

2,810

Auditors' remuneration

11,592

11,077

11.

TAXATION

Analysis of the tax charge

The tax charge on the profit for the year was as follows:

2022

2021

£

£

Current tax:

UK corporation tax

174,819

1,503,877

Deferred tax

(274

)

(534

)

Tax on profit

174,545

1,503,343

UK corporation tax has been charged at 19% (2021 - 19%).

Reconciliation of total tax charge included in profit and loss

The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below:

2022

2021

£

£

Profit before tax

899,777

7,902,474

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2021 - 19%)

170,958

1,501,470

Effects of:

Expenses not deductible for tax purposes

3,460

1,873

Depreciation in excess of capital allowances

527

534

Deferred taxation - timing differences

(400

)

(534

)

Total tax charge

174,545

1,503,343

12.

DIVIDENDS

2022

2021

£

£

Ordinary shares of 0.05 each

Interim

361,960

(139

)

The directors are recommending to the members at the Annual General Meeting that no final dividend is paid (2021: £nil).