ACCOUNTS - Final Accounts preparation

2015-01-01 false true 2015-12-312015-12-312015-12-31The director at the time when this Director's report is approved has confirmed that: so far as he is aware, there is no relevant audit information of which the company's auditors are unaware, and he has 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 auditors are aware of that information. 05494795 d:EntityAccountantsOrAuditors 2015-12-31 05494795 2015-01-01 2015-12-31 05494795 2014-01-01 2014-12-31 05494795 2015-12-31 05494795 2014-12-31 05494795 2014-01-01 05494795 d:OrdinaryShareClass1 2015-12-31 05494795 d:OrdinaryShareClass1 2014-12-31 05494795 d:OrdinaryShareClass1 2015-01-01 2015-12-31 05494795 d:Director1 2015-01-01 2015-12-31 05494795 c:LandBuildings c:OwnedOrFreeholdTangibleFixedAssets 2014-12-31 05494795 c:LandBuildings c:OwnedOrFreeholdTangibleFixedAssets 2015-12-31 05494795 d:RegisteredOffice 2015-01-01 2015-12-31 05494795 c:ProvisionsForDeferredTaxation 2014-01-01 05494795 c:ProvisionsForDeferredTaxation 2014-12-31 05494795 c:ProvisionsForDeferredTaxation 2015-01-01 2015-12-31 05494795 c:ProvisionsForDeferredTaxation 2014-01-01 2014-12-31 05494795 d:EntityAccountantsOrAuditors 2014-01-01 2014-12-31 05494795 d:EntityAccountantsOrAuditors 2015-01-01 2015-12-31 iso4217:GBP xbrli:shares xbrli:pure

Registered number: 05494795

LEAFRANGE LIMITED

DIRECTOR'S REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2015

LEAFRANGE LIMITED

COMPANY INFORMATION

DIRECTOR	Mark Tagliaferri


REGISTERED NUMBER	05494795


REGISTERED OFFICE	Leytonstone House
	3 Hanbury Drive
	Leytonstone
	London
	United Kingdom
	E11 1GA


AUDITOR	Barnes Roffe LLP
	Chartered Accountants Statutory Auditor
	Leytonstone House
	Leytonstone
	London
	E11 1GA

LEAFRANGE LIMITED

CONTENTS

	Page
Director's report	1
Independent auditors' report	2 - 3
Profit and loss account	4
Balance sheet	5
Notes to the financial statements	6 - 12

LEAFRANGE LIMITED

DIRECTOR'S REPORT

FOR THE YEAR ENDED 31 DECEMBER 2015

The director presents his report and the audited financial statements for the year ended 31 December 2015.

DIRECTOR'S RESPONSIBILITIES STATEMENT

The director is responsible for preparing the Director's report and the financial statements in accordance with applicable law and regulations.

Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the director must not approve the financial statements unless he is 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 director is required to:

·select suitable accounting policies and then apply them consistently;

·make judgments and accounting estimates that are reasonable and prudent;

·prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The director is 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 him to ensure that the financial statements comply with the Companies Act 2006. He is 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.

DIRECTOR

The director who served during the year was:

Mark Tagliaferri

DISCLOSURE OF INFORMATION TO AUDITORS

The director at the time when this Director's report is approved has confirmed that:

·so far as he is aware, there is no relevant audit information of which the company's auditors are unaware, and

·he has 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 auditors are aware of that information.

This report has been prepared in accordance with the provisions applicable to companies subject to the small companies regime.

This report was approved by the board and signed on its behalf.

Mark Tagliaferri

Director

Date: 22 December 2016

Page 1

LEAFRANGE LIMITED

INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS OF LEAFRANGE LIMITED

We have audited the financial statements of Leafrange Limited for the year ended 31 December 2015, set out on pages 4 to 12. The financial reporting framework that has been applied in their preparation is applicable law and the Financial Reporting Standard for Smaller Entities (effective January 2015) (United Kingdom Generally Accepted Accounting Practice applicable to Smaller Entities).

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 Auditors' 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.

RESPECTIVE RESPONSIBILITIES OF DIRECTOR AND AUDITORS

As explained more fully in the Director's responsibilities statement, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENTS

A description of the scope of an audit of financial statements is provided on the Financial Reporting Council's website at www.frc.org.uk/auditscopeukprivate.

BASIS FOR QUALIFIED OPINION ON FINANCIAL STATEMENTS
With respect to investment property having a carrying value of £17,000,000 the evidence available to us was limited because a formal valuation of the property was not undertaken at the year end. Owing to the uncertainty in the commercial property market we were unable to obtain sufficient appropriate audit evidence regarding the valuation of investment property by using other audit procedures.

QUALIFIED OPINION ON FINANCIAL STATEMENTS

In our opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, the financial statements:

·give a true and fair view of the state of the company's affairs as at 31 December 2015 and of its loss for the year then ended;

·have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice applicable to Smaller Entities; and

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

Page 2

LEAFRANGE LIMITED

INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS OF LEAFRANGE LIMITED

EMPHASIS OF MATTER - GOING CONCERN

In forming our opinion on the financial statements, which is modified, we have considered the adequacy of the disclosures made in note 1.2 to the financial statements in relation to the going concern assumption.
The company recorded a loss after tax of £165,028 for the year ended 31 December 2015 and as at that date had a net deficit of £3,661,142. Also, as disclosed in note 1.2 to the financial statements, the company is dependent on support from one of its parent undertakings, Leafrange (Jersey) Limited, which is in breach of a vacant possession valuation covenant. Negotiations for refinancing are ongoing with the bank. In addition, the company also requires a further capital injection which is dependent on negotiation with the bank. These conditions indicate the existence of a material uncertainty which may cast significant doubt about the company's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the company was unable to continue as a going concern.

OPINION ON OTHER MATTER PRESCRIBED BY THE COMPANIES ACT 2006

In our opinion the information given in the Director's report for the financial year for which the financial statements are prepared is consistent with the financial statements.

MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION

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 director's remuneration specified by law are not made; or

·we have not received all the information and explanations we require for our audit; or

·the director was not entitled to prepare the financial statements in accordance with the small companies regime and to take advantage of the small companies' exemption from the requirement to prepare a Strategic report or in preparing the Director's report.

Andrew May (Senior statutory auditor)

for and on behalf of

Barnes Roffe LLP

Chartered Accountants

Statutory Auditor

Leytonstone House

Leytonstone

London

E11 1GA

22 December 2016

Page 3

LEAFRANGE LIMITED

PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED 31 DECEMBER 2015

		2015	2014
	Note	£	£
TURNOVER	1	1,487,742	1,491,550
Administrative expenses		(306,073)	(306,161)
OPERATING PROFIT		1,181,669	1,185,389
Interest payable and similar charges	3	(1,056,099)	(1,059,932)
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION		125,570	125,457
Tax on profit on ordinary activities	4	(290,598)	(229,112)
LOSS FOR THE FINANCIAL YEAR	10	(165,028)	(103,655)

The notes on pages 6 to 12 form part of these financial statements.

Page 4

LEAFRANGE LIMITED

REGISTERED NUMBER: 05494795

BALANCE SHEET

AS AT 31 DECEMBER 2015

2015

2014

	Note	£	£	£	£
FIXED ASSETS
Tangible assets	5		17,000,000		17,000,000

CURRENT ASSETS
Debtors	6	9,205		6,594
Cash at bank		355,962		414,240

		365,167		420,834
CREDITORS: amounts falling due within one year	7	(21,026,309)		(20,764,540)
NET CURRENT LIABILITIES			(20,661,142)		(20,343,706)

TOTAL ASSETS LESS CURRENT LIABILITIES

(3,661,142)

(3,343,706)

PROVISIONS FOR LIABILITIES
Deferred tax	8	-	(50,759)
NET LIABILITIES		(3,661,142)	(3,394,465)

CAPITAL AND RESERVES
Called up share capital	9	1	1
Other reserve	10	(1,664,385)	(1,562,736)
Profit and loss account	10	(1,996,758)	(1,831,730)

SHAREHOLDERS' DEFICIT

(3,661,142)

(3,394,465)

The financial statements have been prepared in accordance with the special provisions applicable to small companies within Part 15 of the Companies Act 2006 and in accordance with the Financial Reporting Standard for Smaller Entities (effective January 2015).

The financial statements were approved and authorised for issue by the board and were signed on its behalf on 22 December 2016.

Mark Tagliaferri

Director

The notes on pages 6 to 12 form part of these financial statements.

Page 5

LEAFRANGE LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2015

1.ACCOUNTING POLICIES

	1.1	Basis of preparation of financial statements
		The financial statements have been prepared under the historical cost convention as modified by the revaluation of investment property and in accordance with the Financial Reporting Standard for Smaller Entities (effective January 2015).

	1.2	Going concern
		The company is ultimately a subsidiary of AAIM Property Fund I Limited (in liquidation) which was placed into liquidation on 31 July 2012. The company will not receive any financial support from its parent company through the process of its liquidation. The company recorded a loss after tax of £165,028 for the year ended 31 December 2015 and as at that date had a net deficit of £3,661,142. The company has a long term lease agreement in place (with no break clauses) in respect of its investment property, with a UK government tenant and therefore has a definite income stream until August 2027. In August 2010, the property was subject to a Vacant Possession Valuation (the "VPV") covenant test, in accordance with the terms of the credit facility agreement between Leafrange (Jersey) Limited and AIB Group (UK) Plc ("AIB"). Following the completion of VPV covenant test, AIB provided notification that the VPV covenant had been breached. It has been considered by the Board of Directors that it would not be in the best interests of AIB to foreclose on the facility given the current level of outstanding debt and the costs associated with breaking the interest rate swap agreements in place. The repayments on the loan facility are currently being met. The property advisor of the company is currently in negotiations with AIB to restructure the loan facility. Negotiations are ongoing; the terms proposed at this stage include loan capital repayment holiday, a waiver fee payable to AIB and the loan facility to have new terms. This is also dependent upon the cash injection by the shareholders of the parent company. The rental income generated by the property currently services the debt facility but is not sufficient to also meet all operational costs and so is creating cash-flow shortfalls. The Board of Directors have negotiated a further capital injection in the region of £350,000 which would allow the company to meet its short term liabilities. The nominated party has indicated it is able to inject the funds once AIB have approved and issued the new facility. Given agreement has not yet been reached with AIB and therefore the further capital injection has not been received there is material uncertainty that may cast significant doubt on the company's ability to continue as a going concern. Notwithstanding this material uncertainty, the Board of Directors believe that the restructure will proceed as described above allowing the company to continue in operational existence for the foreseeable future. For these reasons, the directors have continued to adopt the going concern basis of accounting in preparing financial statements for the year ended 31 December 2015.

	1.3	Cash flow
		The financial statements do not include a Cash flow statement because the company, as a small reporting entity, is exempt from the requirement to prepare such a statement under the Financial Reporting Standard for Smaller Entities (effective January 2015).

Page 6

LEAFRANGE LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2015

1.ACCOUNTING POLICIES (continued)

	1.4	Turnover
		Turnover comprises rents receivables on the lease of investment property on accruals basis, exclusive of value added tax.

	1.5	Investment properties
		Investment properties are included in the Balance sheet at their open market value in accordance with the Financial Reporting Standard for Smaller Entities (effective April 2015) and are not depreciated. This treatment is in accordance with UK GAAP. Surpluses or deficits are transferred to the revaluation reserve, except a deficit which is expected to be permanent and which is in excess of any previously recognised surplus over cost, or the reversal of such a deficit, which is charged (or credited) to the profit and loss account.

	1.6	Operating leases
		The company holds assets for use in operating leases. Rentals under operating leases are charged to the Profit and loss account on a straight line basis over the lease term, with any difference between the total revenue over the term of the lease apportioned on an annual basis and cash received being recognised within the investment property asset. Benefits received and receivable as an incentive to sign an operating lease are similarly spread on a straight line basis over the lease term, except where the period to the review date on a which the rent is first expected to be adjusted to the prevailing market rate is shorter than the full lease term, in which case the shorter period is used.

	1.7	Deferred taxation
		Full provision is made for deferred tax assets and liabilities arising from all timing differences between the recognition of gains and losses in the financial statements and recognition in the tax computation.
		Deferred tax is not provided on timing differences arising from the revaluation of fixed assets in the financial statements.
		A net deferred tax asset is recognised only if it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. Deferred tax assets and liabilities are calculated at the tax rates expected to be effective at the time the timing differences are expected to reverse. Deferred tax assets and liabilities are not discounted.

	1.8	Taxation
		Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

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LEAFRANGE LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2015

1.ACCOUNTING POLICIES (continued)

	1.9	Interest income and expense
		All interest earned and expensed during the year is credited/debited to the profit and loss account on an accruals basis.

2.AUDITORS' REMUNERATION

	2015	2014
	£	£
Fees payable to the company's auditor and its associates for the audit of the company's annual accounts	3,500	3,500

3.INTEREST PAYABLE

	2015	2014
	£	£
On loans from group undertakings	1,056,099	1,059,932

4.TAXATION

			2015	2014
			£	£

Analysis of tax charge/(credit) in the year
Current tax
UK corporation tax charge on profit for the year	341,357	324,216

Deferred tax (see note 8)
Origination and reversal of timing differences	(50,759)	(95,104)

Tax on profit on ordinary activities	290,598	229,112

Factors affecting tax charge for the year

There were no factors that affected the tax charge for the year which has been calculated on the profits on ordinary activities before tax at the standard rate of corporation tax in the UK of 20% (2014 - 21%).

Factors that may affect future tax charges

Deferred tax asset of £213,020 (2014 - £Nil) in respect of interest allowable when paid has not been recognised in the accounts.

Page 8

LEAFRANGE LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2015

5.TANGIBLE FIXED ASSETS

		Freehold property
		£
	Cost or valuation
	At 1 January 2015 and 31 December 2015	17,000,000

	Depreciation
	At 1 January 2015 and 31 December 2015	-

	Net book value
	At 31 December 2015	17,000,000
	At 31 December 2014	17,000,000

The investment property has been valued with a director's valuation as at 31 December 2015 based on a professional valuation carried out by DTZ, chartered surveyors, in September 2014.
The investment property is held for use in an operating lease and the company has aggregate rentals receivable in relation to the operating leases of £1,487,742 (2014 - £1,491,550) on the above investment property. The historical cost of the investment property is £18,723,402 (2012 - £18,723,402).
In the prior year, there was a negative revaluation of the property as the asset is now held at a loss for tax purposes. The current estimate of allowable loss would be £1.8 million if the property were to be sold for its revalued amount.

Cost or valuation at 31 December 2015 is as follows:

			Land and buildings
			£

		At cost	18,723,402
		At valuation:
		Previous revaluations	1,076,598
		31 December 2011	(2,800,000)

			17,000,000

If the land and buildings had not been included at valuation they would have been included under the historical cost convention as follows:

	2015	2014
	£	£
Cost	18,723,402	18,723,402
Accumulated depreciation	-	-


Net book value	18,723,402	18,723,402

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LEAFRANGE LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2015

6.DEBTORS

	2015	2014
	£	£

Other debtors	9,205	6,594

7.CREDITORS:
Amounts falling due within one year

	2015	2014
	£	£
Amounts owed to group undertakings	19,906,209	19,950,109
Corporation tax	665,573	324,216
Other taxation and social security	71,330	139,398
Other creditors	383,197	350,817


	21,026,309	20,764,540

Pursuant to a facility agreement, dated 25 July 2006 (as amended from time to time) made between AIB Group (UK) plc ("AIB") and Leafrange (Jersey) Limited, AIB made available to Leafrange (Jersey) Limited a facility up to a sum of £21,506,044 (the "AIB Facility"). Interest on this loan is fixed throughout the period of the loan at rates of 4.85% and 5.45%.
Leafrange (Jersey) Limited agreed to on-lend the AIB Facility to Leafrange Limited (ultimately to enable Leafrange Limited to acquire the investment property). The amount outstanding under the loan provided to Leafrange Limited is interest bearing at a rate of 5.4% per annum and is repayable on demand.
In January 2008, Leafrange Limited made funds available to Leafrange (Jersey) Limited whereby the total amount available for drawdown will not exceed the total amount of rental income received by Leafrange Limited from the investment property in clear funds since January 2008 on a quarterly basis. The amount outstanding under the loan provided to Leafrange (Jersey) Limited is interest bearing at a rate of 5.4% per annum.

Page 10

LEAFRANGE LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2015

8.DEFERRED TAXATION

	2015	2014
	£	£

At beginning of year	50,759	145,863
(Released during)/charge for year	(50,759)	(95,104)


At end of year	-	50,759

The provision for deferred taxation is made up as follows:

	2015	2014
	£	£

Accelerated capital allowances	1,480,462	1,619,835
Interest allowable when paid	(1,480,462)	(1,569,076)


	-	50,759

9.SHARE CAPITAL

	2015	2014
	£	£
Allotted and called up

1 Allotted and called up share share of £1	1	1

10.RESERVES

	Other reserve	Profit and loss account
	£	£

At 1 January 2015	(1,562,736)	(1,831,730)
Loss for the financial year		(165,028)
Lease income adjustment	(101,649)


At 31 December 2015	(1,664,385)	(1,996,758)

11.RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' DEFICIT

	2015	2014
	£	£
Opening shareholders' deficit	(3,394,465)	(3,189,161)
Loss for the financial year	(165,028)	(103,655)
Lease income adjustment	(101,649)	(101,649)
Closing shareholders' deficit	(3,661,142)	(3,394,465)

Page 11

LEAFRANGE LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2015

12.RELATED PARTY TRANSACTIONS

Included within creditors are amounts due to Leafrange (Jersey) Limited, the company's intermediate parent undertaking. The amount due to Leafrange (Jersey) Limited at 31 December 2015 was £19,906,209 (2014 - £19,950,109). During the year, interest of £1,645,343 (2014 - £1,546,848) was charged by Leafrange (Jersey) Limited to Leafrange Limited and interest of £569,468 (2014 - £486,916) was charged by Leafrange Limited to Leafrange (Jersey) Limited.
During the year, Leafrange (Jersey) Limited also recharged expenses of £274,634 (2014 - £274,634) to the company.
During the year, Affinity Commercial LLP, a limited liability partnership controlled by R D Whitton, a previous director of the company; charged management fees of £18,000 (2014 - £19,000) to the company. Affinity Commercial LLP acts as a managing agent for the property.

13.IMMEDIATE AND ULTIMATE CONTROLLING PARTY

The company considers Peakrain Limited to be its immediate parent undertaking and AAIM Property Fund 1 Limited to be its ultimate parent undertaking. AAIM Property Fund 1 Limited is incorporated in Jersey and was placed into liquidation on 31 July 2012. The largest group in which the results of the company are consolidated is the AAlM Property Fund 1 Limited group whose accounts can be obtained from Ogier House, The Esplanade, St Helier, Jersey, JE4 9WG.

Page 12