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Registered number: 11397444
ARCOLA DEVELOPMENT LIMITED
UNAUDITED
FINANCIAL STATEMENTS
INFORMATION FOR FILING WITH THE REGISTRAR
FOR THE YEAR ENDED 30 JUNE 2023
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ARCOLA DEVELOPMENT LIMITED
REGISTERED NUMBER: 11397444
BALANCE SHEET
AS AT 30 JUNE 2023
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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Provisions for liabilities
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ARCOLA DEVELOPMENT LIMITED
REGISTERED NUMBER: 11397444
BALANCE SHEET (CONTINUED)
AS AT 30 JUNE 2023
The directors consider that the Company is entitled to exemption from audit under section 477 of the Companies Act 2006 and members have not required the Company to obtain an audit for the year in question in accordance with section 476 of the Companies Act 2006.
The directors acknowledge their responsibilities for complying with the requirements of the Companies Act 2006 with respect to accounting records and the preparation of financial statements.
The financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime and in accordance with the provisions of FRS 102 Section 1A - small entities.
The financial statements have been delivered in accordance with the provisions applicable to companies subject to the small companies regime.
The Company has opted not to file the statement of comprehensive income in accordance with provisions applicable to companies subject to the small companies' regime.
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 3 to 10 form part of these financial statements.
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ARCOLA DEVELOPMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Arcola Development Limited (the "Company") is a private company limited by share capital, incorporated under the Companies Act 2006 and domiciled in England. The address of the Company's registered office is 2a Fortis Green, London, England, N2 9EL.
2.Accounting policies
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Summary of significant accounting policies
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The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all reporting periods presented, unless otherwise stated.
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Basis of preparation of financial statements
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The financial statements of the Company have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Section 1A of Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland, and Companies Act 2006.
The preparation of financial statements in conformity with Financial Reporting Standard 102 requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company's accounting policies.
Details of those estimates and/or judgments made in applying the Company's accounting policies towards the preparation of these financial statements that may be considered as yielding a significant risk of a material adjustment being made to the carrying amounts of assets and/or liabilities reported in the balance sheet during the next financial reporting period are disclosed in note 3 to the financial statements.
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Functional and presentational currency
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Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (the "functional currency").
The functional currency of the Company, and the currency in which the financial statements are presented (the "presentational currency"), is 'Pounds Sterling' (£) rounded to the nearest single unit of currency.
In assessing whether the going concern basis remains appropriate for the preparation of the financial statements, the directors have reviewed the Company’s principal and emerging risks, recent levels of rent collection, existing loan facilities, access to funding and liquidity position and the Company's performance up to the date these financial statements were approved and expected performance over the 18 months following the balance sheet date.
Based on their assessment, the directors at the time of approving the financial statements have a reasonable expectation that the Company has, available at its disposal, adequate resources to continue in operational existence for the foreseeable future.
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ARCOLA DEVELOPMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
2.Accounting policies (continued)
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Going concern (continued)
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While there will always remain an inherent uncertainty, the directors have no reason to believe that a material uncertainty exists that may cast significant doubt about the ability of the Company to continue as a going concern and therefore consider it both appropriate to continue to adopt the going concern basis in preparing the Company's financial statements and to not recognise any adjustments in the financial statements that would arise if the going concern basis were to become no longer appropriate.
Revenue comprises rental income recognised in the period to which it relates on an accruals basis and measured at the fair value of consideration receivable.
Interest payable is charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount.
All borrowing costs are recognised in profit or loss in the year in which they are incurred unless where considered, in the opinion of the directors, to be material with respect to the value of the associated capital instrument upon which the respective borrowing costs on issue are initially recognised as a reduction against the proceeds of the associated capital instrument.
Taxation for the Company comprises of current (i.e. corporation) and deferred taxation with respect to operations undertaken solely in the UK and is recognised in profit or loss.
Current taxation is calculated using tax rates and on the basis of tax laws enacted or substantively enacted at the balance sheet date. The directors of the Company will periodically evaluate positions taken in tax returns with respect to situations in which tax regulation is subject to interpretation and in turn will establish a provision, where appropriate, on the basis of amounts expected to be payable.
Deferred taxation is recognised on temporary differences arising between the tax bases of assets and liabilities and their respective carrying amounts in the financial statements. Deferred taxation is calculated using tax rates and on the basis of tax laws enacted or substantively enacted at the balance sheet date expected to apply when the related deferred tax asset/liability is realised/settled.
Deferred tax assets are recognised only to the extent that it is sufficiently probable that future taxable profits will be available against which the temporary differences can be utilised.
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ARCOLA DEVELOPMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
2.Accounting policies (continued)
Investment property comprises of property held by the Company to earn income or for capital appreciation, or both.
Investment property is initially recognised at purchase cost plus directly attributable acquisition expenses and subsequently measured at fair value.
Investment properties are not depreciated
Gains and losses arising from changes in fair value are recognised in profit or loss during the period in which they arise.
Purchases and sales of investment property are recognised when contracts have been unconditionally exchanged and the significant risks and rewards of ownership have been transferred. An investment property is derecognised for accounting purposes upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying value) is recognised in profit or loss in the period the asset is derecognised.
The Company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities; with said financial assets and liabilities classified in accordance with the substance of the underlying contractual obligations rather than its legal form.
Financial assets and liabilities are recognised upon becoming party to the contractual provisions of the instrument. Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or the financial asset is transferred along with substantially all the risks and rewards of ownership of the asset to another party. Financial liabilities are derecognised only when the underlying obligations are discharged, cancelled or expired.
The measurement of specific financial assets, financial liabilities and equity held by the Company is as outlined in notes 2.10 to 2.13 of the financial statements.
Debtors excluding deferred tax assets (see note 2.7) are initially measured at transaction price (i.e. fair value) and subsequently held, at transaction price less provision for impairment.
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Cash and cash equivalents
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Cash balances are reported as being financial instruments classified as short term receivables and are represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours and subject to an insignificant risk of changes in value. Cash balances are held at floating interest rates linked to UK bank rates.
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ARCOLA DEVELOPMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
2.Accounting policies (continued)
Creditors are initially measured and subsequently held at transaction price.
Bank loans issued at commercial market rates are initially measured at transaction price net of transaction costs, where relevant (see note 2.6), and subsequently measured at amortised cost using the effective interest method with interest recognised on an effective yield basis.
Ordinary share capital, shown in equity, is initially measured and subsequently held at its nominal value. Where the transaction price for issued shares exceeds their nominal value, the difference is shown under equity in a share premium account with any directly attributable transaction costs associated with the issuing of said shares deducted from said share premium account.
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Judgments in applying accounting policies and key sources of estimation uncertainty
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In the application of the Company's accounting policies, the directors are required to make judgments, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. Although the expected outcome of said estimates and assumptions will, by definition, seldom equal the related actual results; estimates and judgments made are continually re-evaluated and are based on historical experience as well as other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Critical judgments in applying the entity’s accounting policies
The valuation of investment properties involves the application, and therefore significant judgment, of unobservable inputs.
Critical accounting estimates and assumptions
The estimates and assumptions that are considered as having a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period are addressed below:
Investment properties
∙The fair value of investment properties is determined annually by the directors on an open market value basis by reference to specific advice from third party experts and available market evidence. In determining the fair value, a number of estimates and assumptions are required based on the property market as a whole and rental yields, nature, location and condition of the specific investment property.
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The average monthly number of employees, including directors, during the year was 0 (2022 - 0).
In accordance with UK legislation, office holders (i.e. registered company directors or secretaries) of the Company are not employees of the Company on the grounds that they are not party to a contract with the Company that meets the criteria for status of an employee.
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ARCOLA DEVELOPMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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Freehold investment property
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The 2023 valuations were made by the directors, on an open market value for existing use basis.
Based on the valuation exercise performed, the directors are of the opinion that the movement in fair value as at 30 June 2023 from that brought forward as at 1 July 2022 is immaterial and does not warrant an adjustment for re-valuation to be recognised as at the balance sheet date.
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Falling due within one year
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Cash and cash equivalents
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ARCOLA DEVELOPMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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Creditors: Amounts falling due within one year
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Accruals and deferred income
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Creditors: Amounts falling due after more than one year
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Analysis of the maturity of loans is given below:
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Amounts falling due within one year
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Amounts falling due 1-2 years
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Amounts falling due 2-5 years
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Bank loans amounting to £1,095,000 (2022: £1,105,000) are secured by a fixed and floating charge over all present and future assets of the Company including a first legal charge with negative pledge over the freehold investment property held by the Company and a guarantee limited to £221,000 given by the directors on a joint and several basis to the bank.
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ARCOLA DEVELOPMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
The Company held no financial instruments that would require specific disclosure under sections 11 or 12 of Financial Reporting Standard 102 and paragraph 36 of Schedule 1 to the Companies Act 2006.
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The provision for deferred taxation is made up as follows:
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Fair value movements on investment properties
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In the opinion of the directors, net deferred taxation liabilities of £nil are expected to reverse in the following financial reporting period.
Deferred tax assets of approximately £55,000 in respect of losses incurred in the United Kingdom have not been recognised by the Company as part of these financial statements on the grounds that there is currently insufficient certainty as to whether the Company will generate adequate trading profits in the short term against which said deferred tax assets may be offset.
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Other reserves
Other reserves comprise of all current and prior period non-distributable gains and losses net of deferred taxation in respect of fair value movements on revaluation of investment properties held by the Company originally recognised through profit or loss.
Profit and loss account
The profit and loss account includes all current and prior period retained profits and (losses) net of amounts distributed to the Company's equity shareholders.
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ARCOLA DEVELOPMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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Related party transactions
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At the balance sheet date, the Company owed £669,143 (2022: £549,574) in respect of unsecured and non-interest bearing sums to companies connected by virtue of common control. Amounts owed are repayable on demand with no fixed date for repayment.
During the year, the Company was charged £10,793 (2022: £10,377) by companies under common control for the provision of accountancy and bookkeeping services.
There were no other related party transactions and/or period end balances to report in accordance with Financial Reporting Standard 102 or the Companies Act 2006 as part of these financial statements.
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The Company was under the control of its directors.
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