ACCOUNTS - Final Accounts preparation
ACCOUNTS - Final Accounts preparation
Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2020
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OCTANE PROPERTY FINANCE LIMITED
COMPANY INFORMATION
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OCTANE PROPERTY FINANCE LIMITED
CONTENTS
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OCTANE PROPERTY FINANCE LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
The directors present their annual report on the affairs of the company together with the financial statements and auditors' report for the year ended 31 December 2020. This strategic report has been prepared for Octane Property Finance Limited (the "company") and gives greater emphasis to those matters which are significant to the company.
Introduction Octane Capital Limited is the parent company of the Octane Group. At the balance sheet date there were four fully owned subsidiaries; Octane Property Finance Limited, Octane Property Finance 2 Limited, Octane Property Finance 3 Limited and Octane Property Finance 4 Limited.
The company’s principal activity is the origination and administration of short to medium-term bridging finance loans in the property sector. The company looks to differentiate itself from competitors within the market with a productless approach, pricing loans based on the risk of each individual deal and set of circumstances.
With the Coronavirus (COVID-19) pandemic and multiple associated lockdowns throughout the financial year, the UK property market has been subject to uncertainty like many other areas of business. The main risk the group faces is that the property market could fall significantly, which could result in difficulty in recouping the full exposure of loans. The key mitigant to this risk is that average loan to value of loans advanced are maintained at a conservative level to allow for reasonable buffer should property prices fall. This risk is further mitigated by the fact the loans are short term in nature and closely monitored throughout the term of the loan.
The long-term impact of the COVID-19 pandemic on the UK economy will take time to become clear. As lockdown restrictions ease following widespread vaccinations more people will return to work. The removal of the furlough scheme in the latter part of the year could have a large impact on unemployment rates which could in turn negatively impact on UK property prices. Similarly, tax increases and the return of SDLT for properties under £500,000 could also cause property prices to fall. As a productless lender who prices loans based on risk the group will continue to assess pricing and loan to values on a case-by-case basis.
The key performance indicators for the company are turnover, brokers and introducers transacted with and conversion ratios of loan enquiry through to completion. Turnover for the year was £29,663,772 (2019: £25,246,944) and the number of introducers engaged, and the conversion ratios were deemed by directors to be acceptable for this third full year of trading.
This report was approved by the board on 31 March 2021 and signed on its behalf.
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OCTANE PROPERTY FINANCE LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
The directors present their report and the financial statements for the year ended 31 December 2020.
The directors are responsible for preparing the Strategic report, the Directors' 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), 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 for the company's financial statements 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 directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the 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.
The directors who served during the year were:
The profit for the year, after taxation, amounted to £1,094,938 (2019 - £1,121,241).
Dividends amounting to £840,000 (2019: £Nil) were paid during the year.
The company is continually looking to grow the loan book across residential and commercial bridging, refurbishment and buy-to-lets. This is done via enhancements to the lending appetite and loans structuring. This is supported through investigating new financing options and facilities to provide a foundation for growth.
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OCTANE PROPERTY FINANCE LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:
There have been no significant events affecting the company since the year end.
The auditors, Nyman Libson Paul LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board on
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OCTANE PROPERTY FINANCE LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF OCTANE PROPERTY FINANCE LIMITED
We have audited the financial statements of Octane Property Finance Limited (the 'company') for the year ended 31 December 2020, which comprise the Statement of income and retained earnings, the Statement of financial position and the related notes, 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:
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 United Kingdom, including the Financial Reporting Council'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.
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.
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OCTANE PROPERTY FINANCE LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF OCTANE PROPERTY FINANCE LIMITED (CONTINUED)
The directors are responsible for the other information. The other information comprises the information included in the Annual Report, other than the financial statements and our Auditors' report 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 there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
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.
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 in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
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OCTANE PROPERTY FINANCE LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF OCTANE PROPERTY FINANCE LIMITED (CONTINUED)
As explained more fully in the Directors' responsibilities statement set out on page 2, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
We gained an understanding of the legal and regulatory framework applicable to the company and the industry in which it operates, and considered the risk of acts by the company that were contrary to applicable laws and regulations, including fraud. We designed audit procedures to respond to the risk, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. We focused on laws and regulations which could give rise to a material misstatement in the financial statements, including, but not limited to, the Companies Act 2006 and UK tax legislation. Our tests included agreeing the financial statement disclosures to underlying supporting documentation, enquiries with management and enquiries of legal counsel. There are inherent limitations in the audit procedures described above and, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. We did not identify any key audit matters relating to irregularities, including fraud. As in all our audits, we also addressed the risk of management override of internal controls, including testing journals and evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.
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 Auditors' report.
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OCTANE PROPERTY FINANCE LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF OCTANE PROPERTY FINANCE LIMITED (CONTINUED)
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.
for and on behalf of
Chartered Accountants
Statutory Auditors
124 Finchley Road
NW3 5JS
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OCTANE PROPERTY FINANCE LIMITED
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 31 DECEMBER 2020
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OCTANE PROPERTY FINANCE LIMITED
REGISTERED NUMBER: 10483453
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2020
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 10 to 18 form part of these financial statements.
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OCTANE PROPERTY FINANCE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Octane Property Finance Limited is a private company limited by shares and incorporated in England. The address of its registered office 3 Angel Square, London, EC1V 1NY.
The company's principal activity is to offer short-term bridging finance to customers purchasing residential or commercial property.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The company's functional and presentational currency is GBP, rounded to the nearest £1.
The following principal accounting policies have been applied:
The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
∙the requirements of Section 7 Statement of Cash Flows;
∙the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
∙the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of Octane Capital Limited as at 31 December 2020 and these financial statements may be obtained from https://beta.companieshouse.gov.uk/.
The company meets its day to day working capital requirements through the utilisation of its own funds, banking and loan facilities and a loan from its ultimate controlling party.
Existing funding facilities, forecasts and projections indicate that the company has adequate resources to continue with some level of activity from a minimal to full levels. Although the continuing effects of the global coronavirus outbreak from January 2020 can be modelled, it is very difficult to determine the assumptions that will prove to be most appropriate and therefore there is an element of doubt existing that cannot be quantified. After reviewing the company's forecasts and projections, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. The company therefore continues to adopt the going concern basis in preparing its financial statements, but with the proviso that some uncertainly exists over the company’s future.
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OCTANE PROPERTY FINANCE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.Accounting policies (continued)
Revenue consists of interest on loans issued and other set-up fees. Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts and rebates, using the effective interest method which allocates interest and direct and incremental fees over the the expected useful lives of the loans.
All borrowing costs are recognised in profit or loss in the period in which they are incurred. Costs are charged 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.
Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours.
Short term creditors are measured at the transaction price. Other financial liabilities, including group loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
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OCTANE PROPERTY FINANCE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.Accounting policies (continued)
The company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties and loans to or from related parties.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received.
Customer loans
Included within trade debtors are loans to customers that have been sold to a third party during the year but fail the derecognition criteria of FRS 102 section 11.33. As the company substantially retains the risks and rewards of ownership of these loans they continue to recognise these transferred assets in their entirety and recognise a financial liability for the consideration received or deferred. De-recognition The company will derecognise these financial assets when: (a) the contractual rights to the cash flows from the financial asset expire or are settled; or (b) the entity transfers to another party substantially all of the risks and rewards of ownership of the financial asset; or (c) the entity, despite having retained some significant risks and rewards of ownership, has transferred control of the asset to another party and the other party has the practical ability to sell the asset in its entirety to an unrelated third party and is able to exercise that ability unilaterally and without needing to impose additional restrictions on the transfer. In this case, the entity shall: (i) derecognise the asset; and (ii) recognise separately any rights and obligations retained or created in the transfer. The carrying amount of the transferred asset shall be allocated between the rights or obligations retained and those transferred on the basis of their relative fair values at the transfer date. Newly created rights and obligations shall be measured at their fair values at that date. Any difference between the consideration received and the amounts recognised and derecognised in accordance with this paragraph shall be recognised in profit or loss in the period of the transfer.
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.
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OCTANE PROPERTY FINANCE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the reporting date and the amount reported for revenue and expenditure during the period. However, the nature of estimations means that actual outcomes could differ from those estimates.
The following are the company's key sources of estimation uncertainty: Impairment of debtors Trade debtors are recorded in the accounts at cost. Some debtors may not pay part or all of the balance due, and thus the debtor balance in the financial statements will need to be amortised to reflect the lower of cost and market value. The company records a provision for bad debts to estimate the total impact of non-payments, considering factors such as the value of the outstanding amount in excess of the security, the recoverable amount ascertained by an independent valuer, the credit rating of customers, the ageing profile of debtors and historical experience. Accruals The company makes an estimate of interest, commissions and other costs that relate to the current financial reporting period but have not yet been invoiced.
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OCTANE PROPERTY FINANCE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
There were no factors that may affect future tax charges.
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OCTANE PROPERTY FINANCE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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OCTANE PROPERTY FINANCE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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OCTANE PROPERTY FINANCE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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OCTANE PROPERTY FINANCE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
The immediate parent company is Octane Capital Limited.
The ultimate controlling party is the ultimate parent company PCO HoldCo II Sarl.
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