Badger BC Investments Ltd
Badger BC Investments Ltd 3
Contents
Corporate Information 4
Strategic Report 5
Directors’ Report 7
Statement of Directors’ Responsibilities 9
Statement of Changes in Equity 10
Statement of Comprehensive Income 11
Balance Sheet 12
Notes to the Financial Statements 13
Report of the Auditors 25
Badger BC Investments Ltd
Badger BC Investments Ltd 4
Corporate Information
Badger BC Investments Ltd is a limited liability company domiciled in the United
Kingdom. Badger BC Investments Ltd is a wholly owned subsidiary of Broxbourne
Borough Council.
Directors
Jeff Stack (Chairman)
Ken Ayling
Sandra Beck
Gavin Miles
Mark Mills-Bishop
Company Secretary
Gavin Miles
Registered Address
Borough Offices
Bishop’s College
Churchgate
Cheshunt
Hertfordshire
EN8 9XJ
Auditors
Ernst & Young LLP
One Cambridge Business Park
Cowley Road
Cambridge
CB4 0DZ
Bankers
Lloyds Bank plc
Badger BC Investments Ltd
Badger BC Investments Ltd 5
Strategic Report
The Directors present the Strategic Report for the year ended 31 March 2016 as
approved at the board meeting held at the Borough Offices, Churchgate, Cheshunt,
on 27 June 2016.
Principal Activity
The principal activity during the year was to acquire, develop and refurbish homes to
provide rental properties to tenants wishing to live in the private sector, but with the
assurance that the accommodation is managed by a responsible landlord.
Business Review
During the year the Company completed further property acquisitions in addition to
the two properties purchased in the previous financial year.
The third property at 341-343 Green Lanes, Palmers Green was acquired in April
2015. This is a mixed use property comprising a shop, three long lease hold owner-
occupied flats and a studio flat let on an assured short hold tenancy. This property
will generate an annual income of £90,000 for the Company.
A fourth property at 33 Northbrook Street, Newbury, was acquired in July 2015. This
is another mixed use property comprising a shop and three residential flats, which
are currently let under assured short hold tenancy agreements. The property will
generate an annual income of £102,580.
Two further residential properties were purchased in August 2015, 151 High Road,
Broxbourne and 9 Rosedale Avenue, Cheshunt. 151 High Road is a 3 bedroom
semi-detached house and 9 Rosedale is a four bedroom semi-detached house. At
the time of the purchase both properties required refurbishment before they could be
let. The refurbishment work at both properties is now complete, 151 High Road has
been let under an assured short hold tenancy agreement from May 2016 and 9
Rosedale is currently being marketed. It is expected that both properties will
generate an annual income of £18,600 each.
A seventh property, 3 Picardy Close, Dobbs Weir, was purchased in September
2015. This is a new build, semi-detached four bedroom house, which is let under an
assured short hold tenancy agreement will generate an annual income of £25,800.
Two properties were purchased in November 2015 and December 2015, 46
Winnipeg Way, Turnford, a two bedroom maisonette and 10 Gilpin Crescent,
Edmonton, a two bedroom flat. Both properties are let on assured short hold tenancy
agreements and will generate annual income of £13,200 and £15,600 respectively.
The Company is also leasing a residential flat at Cheshunt Park Golf Centre, from
Broxbourne Borough Council. This is being let on an assured short hold tenancy
agreement and will generate an annual income of £10,800.
Badger BC Investments Ltd
Badger BC Investments Ltd 6
During the year the Company received rental income on its nine properties totalling
£199,927, generating a gross profit, after deducting management fees, of £189,125.
Trading expenses as identified in the Statement of Comprehensive Income were
£238,896, which included administrative and other expenses of £70,305,
amortisation of intangible assets of £2,400 and interest on the loan from Broxbourne
Borough Council of £166,191.
After charging all other associated costs the Company made a profit for its second
period of trading of £5,696.
The value of the Company’s investment properties at the balance sheet date was
£5,478,420 and the Company held £158,565 in its bank account.
All investment properties were revalued on 31 March 2016 when the fair value was
considered to be £5,478,420 which is £55,245 over the net book value (NBV) of
£5,423,175.
During the year the Company made a capital loan repayment of £60,000, in addition
to the annual payment which fell due, to its parent Broxbourne Borough Council, of
£7,453.
No political or charitable donations were made during the period and the Company
did not acquire any of its own shares nor did it acquire shares in another
organisation.
By order of the board
Sandra Beck FCCA
Director
18 July 2016
Badger BC Investments Ltd
Badger BC Investments Ltd 7
Directors’ Report
Registered No. 8767464
The directors present their report and financial statements for the year ended 31
March 2016.
Directors of the Company
The current directors are shown on page 4.
J Stack, G Miles and M Mills-Bishop were appointed on 8 November 2013.
S Beck was appointed on 7 April 2014 and K Ayling was appointed on 2 July 2014.
Dividends
The directors do not recommend the payment of any dividend.
Future Developments
The Company’s business plan which was published in April 2014 outlined the trading
objectives for the first four years of existence. In line with this plan, it is intended that
over this period the Company acquires or develops properties totalling £10 million in
acquisition cost.
In addition the Company is seeking to develop homes on three plots of land it is
acquiring from Broxbourne Borough Council. These works have been tendered and
negotiations are underway with the Council to secure the land. Work has started on
one of the sites, under a licence agreement, with an expected completion date of
December 2016. The anticipated build time for the other two developments is likely
to be in the region of 12 months.
Going Concern
The Company’s business activities, together with the factors likely to affect its future
development, performance and position are set out in the strategic report and
directors’ report on pages 5 to 8. The financial position of the Company is set out in
these financial statements. The Company has access to funding to meet its working
capital requirements by way of mortgages issued by Broxbourne Borough Council
and secured against the Company’s properties. As a consequence, the directors
believe that the Company is well placed to manage its business risks successfully.
The directors have a reasonable expectation that the Company has adequate
resources to continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis of accounting in
preparing the annual financial statements.
Badger BC Investments Ltd
Badger BC Investments Ltd 8
Auditors
The directors will recommend the reappointment of Ernst & Young LLP as auditors at
the next board meeting.
Risk
The main risks facing the Company are as follows:
Risk Controls
Risk that interest rate rises affect the viability of the business model.
Broxbourne Borough Council is obliged to lend to the Company at a commercial rate. The company must maintain sufficient margin on its returns to discharge its obligation to repay at a commercial rate.
Risk that yield does not achieve the required rate of return.
The business case for each proposal is considered in depth prior to committing.
Directors’ Statement as to Disclosure of Information to Auditors
The directors who were members of the board at the time of approving the directors’
report are listed on page 4. Having made enquiries of fellow directors and of the
Company’s auditors, each of these directors confirms that:
To the best of each director’s knowledge and belief, there is no information
(that is, information needed by the Company’s auditors in connection with
preparing their report) of which the Company’s auditors are unaware; and
Each director has taken all the steps a director might reasonably be expected
to have taken to be aware of relevant audit information and to establish that
the Company’s auditors are aware of that information.
The Company has prepared the financial statements in accordance with Financial
Reporting Standard 101 “Reduced Disclosure Framework” (FRS101).
By order of the board
Sandra Beck FCCA
Director
18 July 2016
Badger BC Investments Ltd
Badger BC Investments Ltd 9
Statement of Directors’ Responsibilities
The directors are responsible for preparing the Strategic Report, Directors’ Report
and the financial statements in accordance with applicable UK 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 Practice (United Kingdom
Accounting Standards and applicable law) and in accordance with Financial
Reporting Standard 101 “Reduced Disclosure Framework” (FRS101). 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 for the period.
In preparing those financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards, including FRS 101, have
been followed, subject to any material departures disclosed and explained in
the financial statements; and
prepare financial statements on a going concern basis, unless they consider
that to be inappropriate.
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.
Badger BC Investments Ltd
Badger BC Investments Ltd 10
Statement of Changes in Equity for the year ended 31 March 2016
Equity Share
Capital
Retained Earnings
Total Equity
£ £ £
Shares issued 1 - 1
Changes in Equity during 2014/15 - - -
Loss for the period - (35,292) (35,292)
Total Comprehensive Expenditure for the period
- (35,292) (35,292)
Decrease in the period - (35,292) (35,292)
Balance at 31 March 2015 carried forward
1
(35,292)
(35,291)
Changes in Equity during 2015/16 -
-
-
Profit for the period -
5,696
5,696
Total Comprehensive Income for the period
-
5,696
5,696
Increase in the period - 5,696
5,696
Balance at 31 March 2016 1 (29,596) (29,595)
Badger BC Investments Ltd
Badger BC Investments Ltd 11
Statement of Comprehensive Income for the Year Ended
31 March 2016
2015/16 2014/15
Notes £ £
Turnover
3 199,927 4,584
Cost of sales
(10,802) (275)
Gross Profit
189,125 4,309
Administrative expenses
(27,019) -
Other expenses
(43,286) (32,411)
Other operating income 220 -
Amortisation of intangible assets 7 (2,400) -
Increase in fair value of investment properties 6 55,245 -
Operating profit/(loss)
171,885 (28,102)
Interest receivable 2 -
Interest payable
5 (166,191) (7,190)
Profit/(Loss) on ordinary activities before taxation 5,696 (35,292)
Taxation 16 - -
Profit/(Loss) on ordinary activities after taxation 5,696 (35,292)
Other comprehensive income - -
Total comprehensive income 5,696 (35,292)
Badger BC Investments Ltd
Badger BC Investments Ltd 12
Balance Sheet as at 31 March 2016
31 March 2016
31 March 2015
Notes £ £
ASSETS
Fixed Assets
Investment properties
6 5,478,420 493,526 Intangible assets
7 9,600 12,000
Total Fixed Assets
5,488,020 505,526
Current Assets
Trade debtors
8,12 5,556 145
Cash and cash equivalents
9,12 158,566 1,478,538
Total Current Assets
164,122 1,478,683 TOTAL ASSETS
5,652,142 1,984,209
LIABILITIES
Creditors: amounts falling due within one year
Trade creditors 10,12 160,848 14,198
Amounts owed to group undertakings 12, 13 211,932 48,452
Total Current Liabilities 372,780 62,650
Loans and mortgages 11,12 5,308,957 1,956,850
Total Long Term Liabilities 5,308,957 1,956,850
TOTAL LIABILITIES 5,681,737 2,019,500
NET LIABILITIES (29,595) (35,291)
Capital and Reserves
Called up share capital 1 1
Profit and loss account page 10 (29,596) (35,292)
TOTAL EQUITY (29,595) (35,291)
These statements were approved and authorised for issue by the board and signed
on its behalf on 18 July 2016.
Sandra Beck FCCA
Director
Notes to the Financial Statements
Badger BC Investments Ltd 13
Note 1 – Authorisation of Financial Statements and Statement of
Compliance with FRS 101
The financial statements of Badger BC Investments Ltd for the year ended 31 March
2016 were authorised for issue by the Board of Directors on 18 July 2016 and the
Balance Sheet was signed on the Board’s behalf by Sandra Beck, Director. Badger
BC Investments Ltd is incorporated and domiciled in the United Kingdom.
These financial statements were prepared in accordance with Financial Reporting
Standard 101 Reduced Disclosure Framework (FRS 101) and in accordance with
applicable accounting standards.
The Company has taken advantage of the following disclosure exemptions under
FRS 101:
Paragraph 8(g): The Company is exempt from the requirements of the following
paragraphs of IAS 1 Presentation of Financial Statements:
Paragraph 10(d) and (f): The Company is exempt from preparing a Statement
of Cash Flows.
Paragraph 16: The Company shall not present a statement of compliance with
IFRS.
Paragraph 40(a), (b), (c) and (d): The Company is exempt from restating prior
period disclosure notes where they relate to the current period.
Paragraph 111: The Company is exempt from the presentation requirements
relating to the Statement of Cash Flows.
Paragraphs 134, 135 and 136: The Company is exempt from disclosing
information regarding its objectives, policies and processes for the
management of Capital.
Paragraph 8(h): The Company is exempt from the requirements of IAS 7 Statement
of Cash Flows. The Company is not required to present a Statement of Cash Flows
along with the related notes.
Paragraph 8(j): The Company is exempt from the requirements of paragraph 17 of
IAS Related Party Transactions. The Company is not required to provide information
about transactions with related parties, other than between two or more members of
the group.
The Company’s financial statements are presented in sterling and all values are
rounded to the nearest pound (£) except where otherwise indicated.
Notes to the Financial Statements
Badger BC Investments Ltd 14
Note 2 – Accounting Policies
1 General Principles
The Statement of Accounts summarises the Company’s transactions for the year
from 1 April 2015 and its position at the year end of 31 March 2016.
The accounting policies, which follow, set out those policies which apply in preparing
the financial statements for the year ended 31 March 2016.There have been no
changes in accounting policies or disclosures.
2 Going Concern
The Company’s financial statements are prepared on a going concern basis, that is,
the financial statements have been prepared on the assumption that the Company
will continue in operational existence for the foreseeable future. This means in
particular that the Statement of Comprehensive Income and Balance Sheet assume
no intention to curtail significantly the scale of the operation.
3 Accounting Standards that have been issued but not yet adopted
The International Accounting Standards Board and the IFRS interpretations
committee have amended several accounting standards which will apply from 1 April
2016.
These minor changes relating to Annual Improvement to IFRSs cycles, IFRS11 Joint
arrangements, IAS 16 Property, Plant, Equipment and IAS 38 Intangible Assets and
IAS 19 Employee Benefits are not expected to have a material effect on the
Company’s Statement of Accounts.
4 Accruals of Income and Expenditure
Activity is accounted for in the year that it takes place, not simply when cash
payments are made or received. In particular:
Supplies are recorded as expenditure when they are consumed – where there
is a gap between the date supplies are received and their consumption they
are carried as inventories on the Balance Sheet.
Expenditure in relation to services received is recorded as expenditure when
the services are received rather than when payments are made.
Interest receivable on investments and payable on borrowings is accounted
for respectively as income and expenditure on the basis of the effective
interest rate of the relevant financial instrument rather than the cash flows
fixed or determined by the contract.
Notes to the Financial Statements
Badger BC Investments Ltd 15
Where income and expenditure have been recognised but cash has not been
received or paid, a debtor or creditor for the relevant amount is recorded in
the Balance Sheet. Where it is doubtful that debts will be settled, the balance
of debtors is written down and a charge made to revenue for the income that
may not be collected.
5 Revenue Recognition
Rental income arising from operating leases on investment properties is accounted
for on a straight line basis over the lease term.
6 Cash and Cash Equivalents
Cash is represented by cash in hand and ‘callable’ deposits with financial institutions
repayable without penalty on notice of not more than 24 hours. Cash equivalents are
investments that mature on demand and are therefore readily convertible to known
amounts of cash with insignificant risk of change in value.
7 Events after the Balance Sheet Date
Events after the Balance Sheet date are those events, both favourable and
unfavourable, that occur between the end of the reporting period and the date when
the Statement of Accounts is authorised for issue. Two types of events can be
identified:
Those that provide evidence of conditions that existed at the end of the
reporting period – the Statement of Accounts is adjusted to reflect such
events.
Those that are indicative of conditions that arose after the reporting period –
the Statement of Accounts is not adjusted to reflect such events, but where a
category of events would have a material effect, disclosure is made in the
notes of the nature of the events and their estimated financial effect.
Events taking place after the date of authorisation for issue are not reflected in the
Statement of Accounts.
8 Intangible Assets
Expenditure on non cash assets that do not have physical substance but are
identifiable and controlled by the Company (e.g. software licences) are capitalised
when they will bring benefits to the Company for more than one financial year.
Intangible assets with finite lives are amortised over the useful economic life and
assessed for impairment whenever there is an indication that the intangible asset
may be impaired. Amortisation is not charged in the year of acquisition. Amortisation
is charged on a straight line basis, based on an assessment of the period that the
Notes to the Financial Statements
Badger BC Investments Ltd 16
assets are expected to be of use to the Company. The useful life assigned to the
software suite used by the Company is 5 years. The amortisation period and the
amortisation method are reviewed at least at each financial year end. Changes in the
expected useful life or the expected pattern of consumption of future economic
benefits embodied in the asset is accounted for by changing the amortisation period
or method, as appropriate, and are treated as changes in accounting estimates.
Gains or losses arising from derecognition of an intangible asset are measured as
the difference between the net disposal proceeds and the carrying amount of the
asset and are recognised in the statement of comprehensive income when the asset
is derecognised.
9 Investment Property
Investment properties are measured initially at cost, including transaction costs.
Subsequent to initial recognition, investment properties are stated at fair value, which
reflects market conditions at the reporting date. Gains or losses arising from changes
in the fair values of investment properties are included in the statement of
comprehensive income in the period in which they arise.
Investment properties are derecognised when either they have been disposed of or
when the investment property is permanently withdrawn from use and no future
economic benefit is expected from it. Any gains or losses on the retirement or
disposal of investment property are recognised in the statement of comprehensive
income in the period of derecognition.
10 Leases
Company as a lessor
Where the Company grants an operating lease over a property the asset is retained
in the balance sheet. Rental income is credited to the turnover line in the Statement
of Comprehensive Income and is recognised on a straight line basis over the lease
term.
Operating leases are only granted on the Company’s commercial properties.
Residential properties are let on Assured Shorthold Tenancies (AST) and are not
classified as operating leases.
11 Debtors
Trade debtors, which generally have 30 day terms, are recognised at the lower of
their original invoiced value and recoverable amount.
12 VAT
VAT payable is included as an expense only to the extent that it is not recoverable
from Her Majesty’s Revenue and Customs. VAT receivable is excluded from income.
Notes to the Financial Statements
Badger BC Investments Ltd 17
13 Significant Judgements in Applying Accounting Policies
Revaluation of investment properties
The Company carries its investment properties at fair value, with changes in fair
values recognised in profit or loss. The Company engaged independent valuation
specialists to determine fair value as at 31 March 2016.
The key assumptions used to determine the fair value of the investment properties
are explained in Note 6.
Note 3 – Turnover
Turnover recognised in the Statement of Comprehensive Income is analysed as
follows.
2015/16 2014/15
£ £
Rental Income from Investment Properties 199,927 4,584
Total 199,927 4,584
Note 4 – Auditors’ Remuneration
The Company incurred the following fees payable to Ernst and Young LLP relating to
external audit services.
2015/16 2014/15
£ £
Audit of the financial statements 15,300 12,000
Total 15,300 12,000
Note 5 – Interest Payable
The Company has outstanding loans to the value of £5,308,957 secured against its
properties with its parent organisation Broxbourne Borough Council. These loans are
repayable over a period of forty years with an interest rate of 4% with repayments
made annually.
2015/16 2014/15
£ £
Interest on loan 166,191 7,190
Total 166,191 7,190
Notes to the Financial Statements
Badger BC Investments Ltd 18
Note 6 – Investment Properties
The following items of income and expenditure have been accounted for in the gross
profit in the Statement of Comprehensive Income.
2015/16 2014/15
£ £
Rental income from investment property * 199,927 4,584
Direct operating expenses arising from investment property
(10,802) (275)
Gross Profit 189,125 4,309
* included in ‘turnover’ in Note 3
There are no restrictions on the Company’s ability to realise the value of its
investment property or on its right to receive income from any proceeds of sale,
subject to the outstanding mortgage to the Broxbourne Borough Council being
satisfied.
The following table summarises the movement in the fair value of investment
property over the year.
2015/16 2014/15
£ £
Balance at 1 April 493,526 -
Purchases at cost 4,929,649 493,526
Fair value adjustments 55,245 -
Balance at 31 March 5,478,420 493,526
Capital commitments
The Company had contractual obligations to develop or enhance investment
property to the value of £763,621 at 31 March 2016 (31 March 2015 £1,456,000).
Fair value
The Company’s investment properties have been valued at 31st March 2016, by
independent valuers in accordance with the methodologies and bases for estimation
set out in the professional standards of the Royal Institute of Chartered Surveyors.
All the Company’s investment properties have been value assessed as level 2 on the
fair value hierarchy for valuation purposes. This takes into account quoted prices for
similar assets in active markets, exiting lease terms and rentals and market
knowledge.
Notes to the Financial Statements
Badger BC Investments Ltd 19
Note 7 – Intangible Assets
The Company accounts for its software as intangible assets, if that software is not an
integral part of a particular IT system and as such accounted for as part of the
hardware item of property, plant and equipment.
2015/16 2014/15
£ £
Gross carrying amounts 12,000 - Accumulated amortisation - -
Net carrying amount at 1 April 12,000 -
Purchases during the period - 12,000
Amortisation for the period (2,400) -
Net carrying amount at 31 March 9,600 12,000
Comprising:
Gross carrying amounts 12,000 12,000
Accumulated amortisation (2,400) -
9,600 12,000
Note 8 – Trade debtors
The trade debtors represent refunds on utility payments and reclaimable VAT.
Note 9 – Cash and Cash Equivalents
The Company does not hold any cash investments. All liquid assets are held in the
Company’s bank account.
31 March 2016
31 March 2015
£ £
Cash at bank 158,565 1478,537
Cash in hand 1 1
Total 158,566 1,478,538
Note 10 – Creditors: amounts falling due within one year
Trade creditors are unsecured, non-interest bearing and are normally settled on 30
day terms. Amounts owed to group undertakings within one year, are non-interest
bearing.
Notes to the Financial Statements
Badger BC Investments Ltd 20
Note 11 - Leases
Operating Leases
The Company leases out property, as a lessor, under operating leases for
commercial use.
The future minimum lease payments receivable under non-cancellable leases in
future years are:
2015/16 2014/15
£ £
Not later than one year 160,000 -
Later than one year and not later than five years
640,000 -
Later than five years 1,406,000 -
Total 2,206,000 -
The minimum lease payments receivable do not include rents that are contingent on
events taking place after the lease was entered into, such as adjustments following
rent reviews. In 2015/16 no material contingent rents were received by the
Company.
Note 12 – Financial Liabilities
The Company has received loans during the year totalling £3.42 million from its
parent organisation Broxbourne Borough Council.
These loans are secured with fixed and floating security over each and all property
owned by the Company.
The loans are repayable over 40 years bearing interest of 4%.
2015/16 2014/15
£ £
Loan Principal Falling Due Within 5 years - -
Loan Principal Falling Due After 5 Years 5,308,957 1,956,850
Total 5,308,957 1,956,850
Notes to the Financial Statements
Badger BC Investments Ltd 21
Note 13 – Financial Instruments
a Categories of Financial Instruments
The following categories of financial instrument are carried in the Balance Sheet:
2015/16 2014/15
£ £
Cash and bank balances Cash at bank 158,565 1,478,537
Cash in hand 1 1
Total cash and bank balances 158,566 1,478,538
2015/16 2014/15
£ £
Creditors Financial liabilities at amortised cost 372,780 62,650
Loans and Mortgages 5,308,957 1,956,850
Total creditors 5,681,737 2,019,500
2015/16 2014/15
£ £
Debtors Loans and receivables 5,556 145
Total debtors 5,556 145
b Income, expense, gains and losses
2015/16 2014/15
£ £
Interest income 2 - Interest expense (166,191) (7,190)
Total interest Expense in Statement of Comprehensive Income
(166,189) (7,190)
c Fair values of assets and liabilities
Financial assets represented by loans and receivables are carried in the Balance
Sheet at amortised cost. Their fair value is assessed by calculating the present value
of the cash flows that will take place over the remaining term of the instruments,
using the following assumptions:
Notes to the Financial Statements
Badger BC Investments Ltd 22
Where an instrument will mature in the next 12 months, carrying amount is
assumed to be approximate to fair value;
The loan from Broxbourne Borough Council is at a fixed rate of 4% for 40
years therefore the fair value is assumed to be the same as the carrying
amount;
The fair value of trade and other receivables and payables is taken to be the
invoiced or billed amount less appropriate provision made against the risk of
less than full payment.
The fair values calculated are as follows:
2015/16 2014/15
Carrying Amount
Fair value
Carrying Amount
Fair value
£ £ £ £
Financial liabilities 372,780 372,780 62,650 62,650
Loans and mortgages 5,308,957 5,308,957 1,956,850 1,956,850
Short term debtors 5,556 5,556 145 145
Short term debtors, creditors and loans are carried at cost as this is an
approximation of their fair value.
d Nature and extent of risks arising from financial instruments
The Company’s activities expose it to a variety of financial risks:
Credit risk – the possibility that other parties might fail to pay amounts due to
the Company;
Liquidity risk – the possibility that the Company might not have funds available
to meet its commitments to make payments;
Market risk – the possibility that financial loss might arise for the Company as
a result of changes in interest rates.
The Company does not extend credit to its customers, rent is payable on demand,
therefore the Company’s assessment of its potential maximum exposure to credit
risk in relation to customer debt is nil.
e Market risk
Liquidity risk - The Company has a comprehensive cash flow management
system that seeks to ensure that cash is available as needed. There is no
significant risk that the Company will be unable to raise finance to meet its
commitments under financial instruments.
Notes to the Financial Statements
Badger BC Investments Ltd 23
Interest rate risk - The Company is not exposed to risk in terms of its
exposure to interest rate movements on its loan as the loan agreement is
fixed at 4% for the length of the loan.
Price risk - The Company does not generally invest in equity shares.
Foreign Exchange risk - The Company has no financial assets or liabilities
denominated in foreign currencies and thus has no exposure to loss arising
from movements in exchange rates.
Note 14 – Related Parties
The Company’s directors and secretary are all either senior officers or elected
members of Broxbourne Borough Council – the Company’s parent organisation.
Other than their roles at Broxbourne Borough Council, the directors do not hold any
posts that they are paid for.
As the Company’s sole shareholder, Broxbourne Borough Council exercises full
control of the Company.
2015/16 2015/16
Sales Purchases Amounts
owed to
related
parties
Amounts
owed by
related
parties
£ £ £ £
Parent entity (Broxbourne Borough Council)
- 204,479 5,520,889 -
Total - 204,479 5,520,889 -
Terms and Conditions of transactions with related parties:
Sales and Purchases are made on an arm’s length basis. Balances with entities that
are not subsidiaries are non-interest bearing, unsecured, and are expected to be
settled within 30 days of invoice date. Terms and conditions for transactions with
related parties have the same conditions. During the year ended 31 March 2016, the
Company has made no provision for doubtful debts relating to amounts owed by
related parties. Amounts owed to related parties include payments received in
advance.
Notes to the Financial Statements
Badger BC Investments Ltd 24
Note 15 – Ultimate Group Undertaking
The Company’s immediate and ultimate parent undertaking is Broxbourne Borough
Council.
Note 16 – Taxation
The tax charge on the profit on ordinary activities for the period was as follows:
2015/16 2014/15
£ £
UK Corporation Tax
- -
Deferred Tax
- -
Tax on profit/(loss) on ordinary activities - -
The tax charge for the year can be reconciled to the profit per the income statement
as follows:
2015/16 2014/15 £ £
Profit/(Loss) for the period 5,696 (35,292)
Tax on profit at standard UK tax rate of 20% (21% 2014/15)
1,139 (7,411)
Effects of: Expenses not deductible 87 - Tax losses (recognised) / not recognised (1,226) 7,411
Tax charge for the period - -
Badger BC Investments
Badger BC Investments Ltd 25
Report of the Auditors
Badger BC Investments
Badger BC Investments Ltd 26
Badger BC Investments Ltd
Borough Offices Bishops’ College
Churchgate Cheshunt
Hertfordshire EN8 9XJ
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