DocuSign Envelope ID: 7015F1CB-4FBE-488C-B82A-1A06ADDF3644 **Registered number: 12063279 Charity number: 1185976** # **COVENT GARDEN IP LTD** **(A company limited by shares and registered charity)** **TRUSTEES' REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021** DocuSign Envelope ID: 7015F1CB-4FBE-488C-B82A-1A06ADDF3644 ## **COVENT GARDEN IP LTD** ## **(A company limited by shares and registered charity)** ## **CONTENTS** ||Page| |---|---| |**Reference and administrative details of the Charitable Company, its Trustees and**|1| |**advisers**|| |**Trustees' report**|2 - 7| |**Trustees' responsibilities statement**|8| |**Independent auditor's report on the financial statements**|9 - 13| |**Statement of financial activities**|14| |**Balance sheet**|15 - 16| |**Statement of cash flows**|17| |**Notes to the financial statements**|18 - 27| DocuSign Envelope ID: 7015F1CB-4FBE-488C-B82A-1A06ADDF3644 ## **COVENT GARDEN IP LTD** ## **(A company limited by shares and registered charity)** ## **REFERENCE AND ADMINISTRATIVE DETAILS OF THE CHARITABLE COMPANY, ITS TRUSTEES AND ADVISERS FOR THE YEAR ENDED 31 DECEMBER 2021** |**Trustees**|Ashley John Powell, Managing Director| |---|---| ||Juan Roberto Hernandez, Director of Temporal Affairs| ||Michael Kurt Dehner, Director| |**Company registered**
**number**
12063279
**Charity registered**
**number**
1185976
**Principal office and**
**registered office**
187 Penns Lane
Sutton Coldfield
West Midlands
B76 1JU
**Independent auditor**
Grant Thornton UK LLP
Chartered Accountants
17th Floor
103 Colmore Row
Birmingham
West Midlands
B3 3AG
**Bankers**
HSBC
34 Poplar Road
Solihull
West Midlands
B91 3AF
Citibank
CitiGroup Centre
33 Canada Square
London
E14 5LB
**Solicitors**
Daniel Clifford Law LLP
76 Caledonian Road
London
N1 9DN|| Page 1 DocuSign Envelope ID: 7015F1CB-4FBE-488C-B82A-1A06ADDF3644 ## **COVENT GARDEN IP LTD** ## **(A company limited by shares and registered charity)** ## **TRUSTEES' REPORT FOR THE YEAR ENDED 31 DECEMBER 2021** The Trustees present their annual report together with the audited financial statements of Covent Garden IP Limited ("the Charitable Company") for the year to 31 December 2021. The Annual report serves the purposes of both a Trustees' report and a directors' report under company law. The Trustees confirm that the Trustees' report and financial statements of the Charitable Company comply with the current statutory requirements, the requirements of the Charitable Company's governing documents and the provisions of the Statement of Recommended Practice (SORP) applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS102) (effective 1 January 2019). Since the Charitable Company qualifies as small under section 382 of the Companies Act 2006, the Strategic report required of medium and large companies under the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 has been omitted. ## **Structure, governance and management** ## **Governing document** The Charitable Company is a company limited by shares and a registered charity. The Charitable Company is governed by its Memorandum and Articles of Association which have not been amended since incorporation. In setting objectives and planning for activities, the Trustees have given due consideration to general guidance published by the Charity Commission relating to public benefit, including the guidance 'Public benefit: running a charity (PB2)'. ## **Appointment of Trustees** The directors of the Charitable Company are its Trustees for the purpose of charity law and throughout this report and collectively referred to as the Trustees. As set out in the Articles of Association, new or additional directors are to be appointed by the sole shareholder Property Reserve Inc ("PRI"), a Utah non-profit corporation, providing such persons are willing so to act, either to fill a vacancy or as an additional Trustee. Terms and procedures for appointments are set out in the articles. The board of Trustees meets at least once a year, sometimes remotely. ## **Trustee induction and training** New Trustees undergo orientation training to brief them on their legal obligations under charity and company law, the content of the Memorandum and Articles of Association, the committee and decision-making processes, the business plan and recent financial performance of the Charitable Company. During the year updates are sent to the Trustees on topical issues of which they need to be aware. Further briefings and training are provided at the Annual board meeting. Trustees are updated and advised on legal issues by Daniel Clifford Law LLP solicitors. Page 2 DocuSign Envelope ID: 7015F1CB-4FBE-488C-B82A-1A06ADDF3644 ## **COVENT GARDEN IP LTD** ## **(A company limited by shares and registered charity)** **TRUSTEES' REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021** ## **Structure, governance and management (continued)** ## **Organisation** The Charitable Company exists to support The Church of Jesus Christ of Latter-day Saints ("the Church" ). The Trustees are members of the Church. The Church is directed by the First Presidency supported by The Quorum of the Twelve Apostles and various quorums of the Seventy. Members of these quorums are called General or Area Authorities, three of whom will be assigned to serve as an Area Presidency within a specific geographic area. Accordingly, advice as to the interests of the Church is given to the Charitable Company via the shareholder and is reflected in the Trustees' decisions. ## **Employees** The Charitable Company has no employees, and does not envisage having any. ## **Related parties** The Charitable Company is owned solely by PRI. One of the Trustees and officers of PRI is also an authorised agent of the Utah corporation known as the Church of Jesus Christ of Latter-day Saints ("CHC") (formerly known as the Corporation of the Presiding Bishop of the Church of Jesus Christ of Latter-day Saints). The Church of Jesus Christ of Latter-day Saints (Great Britain) ("GB"), the Church's primary organ in the UK, is also owned by CHC, and consequently is treated as a related party in this report and financial statements. The Charitable Company has a close relationship with its sister charity, GB, and the wider Church. There is regular cooperation between the charities when necessary. ## **Public benefit** The Trustees receive training on the guidance on public benefit published by the Charitable Company Commission in exercising their powers and duties, including the supplementary public benefit guidance for charities whose aims include advancing religion. The next training day will take place at the Annual General Meeting. The Charitable Company achieves a public benefit by financially supporting the Church and its charitable endeavours. ## **Policies** Full policies are available from the Charitable Company's offices. Page 3 DocuSign Envelope ID: 7015F1CB-4FBE-488C-B82A-1A06ADDF3644 ## **COVENT GARDEN IP LTD** ## **(A company limited by shares and registered charity)** ## **TRUSTEES' REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021** ## **Structure, governance and management (continued)** ## **Investment powers and policy** Under the Memorandum and Articles of Association, the Charitable Company has the power to invest in any way the Trustees deem to be in the best interests of the Charitable Company. The Charitable Company's objective is to broaden the asset base of the Church and provide reliable income and increased financial security for Church organisations in the UK and elsewhere. Its current aim is to do this by investing in UK commercial property The Charitable Company expects to make relatively few individual investments, but they would be expected to be relatively large. Each investment will be carefully and extensively considered by the Trustees and their advisors. The appetite for risk is low. ## **Fundraising** Although the Charitable Company has sufficient income to fund day to day costs, such that fundraising is not normally necessary, it anticipates that it may need to raise funds in the near future, in order to procure certain capital improvements to its investment property (see below). Any such funds will be secured from PRI and or the wider Church. Should other significant investment opportunities present themselves in the future that would require further funds which cannot be provided out of income, the Charitable Company and its shareholder will consider injecting more capital into the Charitable Company. ## **Strategic report** ## **Objectives and achievements** - The object of the Charitable Company is: - To promote and further the religious and other charitable work of The Church in the United Kingdom and elsewhere. The Charitable Company does this by investing in and holding commercial property for the benefit of the Church. The policy is to broaden the asset base of the Church and provide reliable income and increased financial security for Church organisations in the UK and elsewhere. Success is to be measured in commercial terms, and over the long term. The current activities involve the leasing of a tenanted commercial office property valued at circa £100m in central London, the collecting of rents, and the making of the first grants to GB. The short-term aim is the establishment of this investment business and the making of the first Grants to GB. The Charitable Company has achieved its aims for the period: Page 4 DocuSign Envelope ID: 7015F1CB-4FBE-488C-B82A-1A06ADDF3644 ## **COVENT GARDEN IP LTD** ## **(A company limited by shares and registered charity)** **TRUSTEES' REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021** ## **Strategic report (continued)** ## **Investments** The Charitable Company currently achieves this aim by investing in UK commercial property, and donating the profits to relevant Church entities, as per the Charitable Company's Investment Policy. The Charitable Company holds just one investment, being Alder Castle, 10 Noble Street, London, EC2V 7J, which it acquired on 31 December 2019. Alder Castle is a commercial property subject to existing leases to commercial clients. This investment falls within the objects of the Charitable Company as it promotes and furthers the religious and other charitable work of The Church of Jesus Christ of Latter-day Saints in the UK in 3 ways: - It is a grade A investment property situated in the heart of the City of London. - It is fully tenanted (subject to the below) and so provides rental income which will be further used to support the charitable work of the Church. - - It will provide a space for a chapel for a congregation of the Church to meet in the centre of London. Management of the leases was delegated to CBRE under a property management agreement. Funds received from the leases are paid to Covent Garden IP Ltd's CBRE account. ## **Donations** The Trustees made a donation to GB of £2,300,000 within the period, in furtherance of its objects. ## **Financial review** ## **Significant events** One of the tenants of Alder Castle, Lloyds Bank PLC, has given notice to terminate its tenancy in August 2022. Although not relevant to the period to which this report relates, this will impact on the plans and income for the following period. ## **Income and profits** The Charitable Company's total income for the period was £5,582,528 (2020: £110,200,304). Total losses for the period were £2,945,278 (2020: profit of £107,452,233). Total surplus for the period excluding losses on revaluation of fixed assets was £1,804,722 (2020: £108,821,174). Page 5 DocuSign Envelope ID: 7015F1CB-4FBE-488C-B82A-1A06ADDF3644 ## **COVENT GARDEN IP LTD** ## **(A company limited by shares and registered charity)** ## **TRUSTEES' REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021** ## **Reserves and donation policy** The Charitable Company will retain sufficient reserves to cover its operating costs. Its reserves at the end of the period were £104,507,055 (2020: £107,452,333), which include investment property to be held for the foreseeable future with a value of £97,750,000. Free reserves excluding the investment property were £6,757,055 (2020: £4,952,333) at the period end. Its existing commitments were £2,064,545 (2020: £1,669,615), being deferred income and other creditors. Beyond this, the Charitable Company will retain profits sufficient to investigate and enter into further investments should worthwhile opportunities arise. All remaining income will be donated to a Church entity. In most cases this will be GB. ## **Risks** Although it is not clear yet what long-term effect the COVID-19 pandemic is likely to have on working patterns in central London, this may affect the income of the Charitable Company in the medium to long term. These changes do not pose a material risk, as its investments are unencumbered and there is no significant prospect of the Charitable Company's income falling below its costs. The Trustees will maintain this low risk profile by refraining from entering into new arrangements in the foreseeable future, and by taking professional advice on all aspects of management. ## **Plans for future periods** GB has also indicated that it would like to establish a meeting house in central London, and considers that Alder Castle would be a suitable site. The Trustees agree that this would be a suitable use of Alder Castle, and in accordance with the Company’s purpose; they have therefore decided to, after Lloyd’s have vacated the building, renovate part of Alder Castle to make it suitable for use as a meeting house; designs are underway. Permission for this change of use has been obtained. We are confident that the Charitable entity has met its objectives this financial year and that it will continue to do so. The costs of renovating Alder Castle to make it suitable for GB will prohibit the Charitable Company from making a donation to the Church within the period following the one to which this report relates. It may, in addition, be necessary to seek a further cash injection from the wider Church to find the renovation, but the Church has indicated to the Trustees that such funds are available if so needed. Page 6 DocuSign Envelope ID: 7015F1CB-4FBE-488C-B82A-1A06ADDF3644 ## **COVENT GARDEN IP LTD** ## **(A company limited by shares and registered charity)** ## **TRUSTEES' REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021** ## **Going concern, risks and uncertainties** The main risk the Charitable Company faces is that the income from its investments reduces. Given the COVID19 pandemic and the potential for it to change the desirability of central London commercial space, this is a possibility. However, - the Charitable Company's rental income is highly unlikely to reduce below the Charitable Company's expenses; - although expenditure in the following period may exceed income on account of an exceptional one off investment, that investment will be funded from further donations to the Charitable company from the wider Church, with such funding agreed before liabilities are accrued; - the Charitable Company has no debt; and - the shareholder has guaranteed the Charitable Company future financial support, where necessary. So there are no material uncertainties about the Charitable Company's ability to continue as a going concern. ## **Disclosure of information to auditor** Each of the persons who are Trustees at the time when this Trustees' report is approved has confirmed that: - so far as that Trustee is aware, there is no relevant audit information of which the charity's auditor is unaware, and - that Trustee has taken all the steps that ought to have been taken as a Trustee in order to be aware of any relevant audit information and to establish that the charity's auditor is aware of that information. ## **Auditor** The auditor, Grant Thornton UK LLP, has indicated his willingness to continue in office. The designated Trustees will propose a motion reappointing the auditor at a meeting of the Trustees. Approved by order of the members of the board of Trustees and signed on their behalf by: **Ashley John Powell** Trustee Date: 14/9/2022 Page 7 DocuSign Envelope ID: 7015F1CB-4FBE-488C-B82A-1A06ADDF3644 ## **COVENT GARDEN IP LTD** ## **(A company limited by shares and registered charity)** ## **TRUSTEES' RESPONSIBILITIES STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2021** The Trustees (who are also the directors of Covent Garden IP Limited for the purposes of company law) are responsible for preparing the Trustees' Annual Report and the financial statements in accordance with applicable law and regulations. Company law requires the Trustees to prepare financial statements for each financial year. Under that law the Trustees have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland. Under company law the Trustees 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 Charitable Company and of its incoming resources and application of resources, including the income and expenditure, of the charitable company for that period. In preparing these financial statements, the Trustees are required to: - select suitable accounting policies and then apply them consistently; - observe the methods and principles set out in the Charities SORP (FRS 102); - make judgements and accounting estimates that are reasonable and prudent; - state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; - prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Charitable Company will continue in business. The Trustees are responsible for keeping adequate accounting records that are sufficient to show and explain the Charitable Company's transactions and disclose with reasonable accuracy at any time the financial position of the Charitable 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 Charitable Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The trustees confirm that: - so far as each trustee is aware, there is no relevant audit information of which the charitable company’s auditor is unaware; and - the trustees have taken all the steps that they ought to have taken as trustees in order to make themselves aware of any relevant audit information and to establish that the charitable company's auditor is aware of that information. The trustees are responsible for the maintenance and integrity of the corporate and financial information included on the charitable company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Approved by order of the members of the board of Trustees and signed on its behalf by: ## **Ashley John Powell** Trustee Date: 14/9/2022 Page 8 DocuSign Envelope ID: 7015F1CB-4FBE-488C-B82A-1A06ADDF3644 ## **COVENT GARDEN IP LTD** ## **(A company limited by shares and registered charity)** ## **INDEPENDENT AUDITOR'S REPORT TO THE TRUSTEES OF COVENT GARDEN IP LTD** ## **Opinion** We have audited the financial statements of Covent Garden IP Ltd (the 'Charitable Company') for the year ended 31 December 2021, which comprise the Statement of Financial Activities, the Balance Sheet, the Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards including Financial Reporting Standard 102; The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice). In our opinion, the financial statements: - give a true and fair view of the state of the Charitable Company's affairs as at 31 December 2021 and of its incoming resources and application of resources, including its income and expenditure for the year then ended; - have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and - have been prepared in accordance with the requirements of the Companies Act 2006 ## **Basis for opinion** We have been appointed as auditor under the Companies Act 2006 and report in accordance with regulations made under that Act. 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 ‘Auditor’s responsibilities for the audit of the financial statements section’ of our report. We are independent of the charitable company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. ## **Conclusions relating to going concern** We are responsible for concluding on the appropriateness of the trustees' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Charitable Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify the auditor’s opinion. Our conclusions are based on the audit evidence obtained up to the date of our report. However, future events or conditions may cause the Charitable Company to cease to continue as a going concern. In our evaluation of the Trustees' conclusions, we considered the inherent risks associated with the Charitable Company's business model including effects arising from macro-economic uncertainties such as Brexit and Covid-19, we assessed and challenged the reasonableness of estimates made by the Trustees and the related disclosures and analysed how those risks might affect the Charitable Company's financial resources or ability to continue operations over the going concern period. 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 Charitable 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. Page 9 DocuSign Envelope ID: 7015F1CB-4FBE-488C-B82A-1A06ADDF3644 ## **COVENT GARDEN IP LTD (A company limited by shares and registered charity)** ## **INDEPENDENT AUDITOR'S REPORT TO THE OF COVENT GARDEN IP LTD (CONTINUED)** In auditing the financial statements, we have concluded that the trustees' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. The responsibilities of the Trustees with respect to going concern are described in the ‘Responsibilities of trustees for the financial statements’ section of this report. ## **Other information** The trustees are responsible for the other information. The other information comprises the information included in the Trustees’ Report, other than the financial statements and our auditor’s 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. ## **Opinions on other matters prescribed by the Companies Act 2006** In our opinion, based on the work undertaken in the course of the audit: - the information given in the Strategic Report and the Directors’ Report, prepared for the purposes of company law, included in the Trustees’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements - the Strategic Report and the Directors’ Report included in the Trustees’ Report have been prepared in accordance with applicable legal requirements. ## **Matter on which we are required to report under the Companies Act 2006** In the light of the knowledge and understanding of the charitable 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 included in the Trustees’ Report. Page 10 DocuSign Envelope ID: 7015F1CB-4FBE-488C-B82A-1A06ADDF3644 ## **COVENT GARDEN IP LTD** ## **(A company limited by shares and registered charity)** ## **INDEPENDENT AUDITOR'S REPORT TO THE OF COVENT GARDEN IP LTD (CONTINUED)** ## **Matters on which we are required to report by exception** 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: - 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 Trustees' remuneration specified by law are not made; or - we have not received all the information and explanations we require for our audit; or - the trustees were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies exemption from the requirement to prepare a strategic report or in preparing the Trustee's Report. ## **Responsibilities of directors for the financial statements** As explained more fully in the Trustee's Responsibilities Statement as set out on page 8, the Trustees (who are also the directors of the charitable company for the purposes of company law) 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 trustees 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 Trustees are responsible for assessing the Charitable 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 Trustees either intend to liquidate the Charitable Company or to cease operations, or have no realistic alternative but to do so. ## **Auditor's responsibilities for the audit of the financial statements** Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s 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. 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 Auditor's report. ## **Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud** 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. Owing to the inherent limitations of an audit, there is an unavoidable risk that material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). Page 11 DocuSign Envelope ID: 7015F1CB-4FBE-488C-B82A-1A06ADDF3644 ## **COVENT GARDEN IP LTD** ## **(A company limited by shares and registered charity)** ## **INDEPENDENT AUDITOR'S REPORT TO THE OF COVENT GARDEN IP LTD (CONTINUED)** The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: - We obtained an understanding of the legal and regulatory frameworks that are applicable to the charitable company and the sector in which it operates. We determined that the following laws and regulations were most significant: the Charities SORP, the Charities Act 2011, the Companies Act 2006, and The Financial Reporting Standard applicable in the UK and the Republic of Ireland (FRS 102). - We understood how the charitable company is complying with these legal and regulatory frameworks by making inquiries of management and those charged with governance. We enquired of management and those charged with governance whether there were any instances of non-compliance with laws and regulations, or whether they had any knowledge of actual or suspected fraud. We corroborated the results of our enquiries through our review of board minutes, and through our legal and professional expenses review. - We assessed the susceptibility of the company’s financial statements to material misstatement, including how fraud might occur and the risk of material override of controls. Audit procedures performed by the engagement team included: - Identifying and assessing the design effectiveness of certain controls management has in place to prevent and detect fraud - Challenging assumptions and judgments made by management in its significant accounting policies - Identifying and testing journal entries - Identifying and testing related party transactions - Inspecting the board minutes - Assessing the extent of compliance with the relevant laws and regulations as part of our procedures on the related financial statement item - These audit procedures were designed to provide reasonable assurance that the financial statements were free from fraud or error. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error and detecting irregularities that result from fraud is inherently more difficult than detecting those that result from error, as fraud may involve collusion, deliberate concealment, forgery or intentional misrepresentations. Also, the further removed non-compliance with laws and regulations is from events and transactions reflected in the financial statements, the less likely we would become aware of it; - The assessment of the appropriateness of the collective competence and capabilities of the engagement team included consideration of the engagement team’s: - Understanding of, and practical experience with, audit engagements of a similar nature and complexity through appropriate training and participation - Knowledge of the industry in which the charitable company operates, and - Understanding of the legal and regulatory requirements specific to the entity including the provisions of the applicable legislation. - The team communications in respect of potential non-compliance with laws and regulations and fraud included the potential for fraud in revenue recognition through manipulation of income. - We did not identify any matters relating to non-compliance with laws and regulation and fraud. Page 12 DocuSign Envelope ID: 7015F1CB-4FBE-488C-B82A-1A06ADDF3644 ## **COVENT GARDEN IP LTD** ## **(A company limited by shares and registered charity)** ## **INDEPENDENT AUDITOR'S REPORT TO THE OF COVENT GARDEN IP LTD (CONTINUED)** - In assessing the potential risks of material misstatement, we obtained an understanding of: - The charitable company’s operations, including the nature of its revenue sources, to understand the classes of transactions, accounts balances, expected financial statement disclosures and business risks that may result in risks of material misstatement, and - The charitable company’s control environment, including - Management’s knowledge of relevant laws and regulations and how the charitable company is complying with those laws and regulations - The adequacy of procedures for authorisation of transactions and review of management accounts, and - Procedures to ensure that possible breaches of laws and regulations are appropriately resolved ## **Use of our report** This report is made solely to the Charitable 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 Charitable Company's members those matters we are required to state to them in an Auditor's 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 Charitable Company and the Charitable Company's members as a body, for our audit work, for this report, or for the opinions we have formed. William Devitt Senior Statutory Auditor for and on behalf of Grant Thornton UK LLP Senior Statutory Auditor, Chartered Accountants Birmingham Date: 14/9/2022 Page 13 DocuSign Envelope ID: 7015F1CB-4FBE-488C-B82A-1A06ADDF3644 ## **COVENT GARDEN IP LTD** ## **(A company limited by shares and registered charity)** ## **STATEMENT OF FINANCIAL ACTIVITIES (INCORPORATING INCOME AND EXPENDITURE ACCOUNT) FOR THE YEAR ENDED 31 DECEMBER 2021** |**Note**
**Income from:**
Donations and legacies
3
Investments
4
**Total income**
**Expenditure on:**
Investment management costs
5
Charitable activities
7
**Total expenditure**
**Net movement in funds before other recognised**
**gains/(losses)**
**Other recognised gains/(losses):**
Losses on revaluation of fixed assets
9
**Net movement in funds**
**Reconciliation of funds:**
Total funds brought forward
Net movement in funds
**Total funds carried forward**|**Unrestricted**
**funds**
**31 December**
**2021**
**£**
**-**
**5,582,528**
**5,582,528**
**1,457,513**
**2,320,293**
**3,777,806**
**1,804,722**
**(4,750,000)**
**(2,945,278)**
**107,452,233**
**(2,945,278)**
**104,506,955**|**Total**
**funds**
**31 December**
**2021**
**£**
**-**
**5,582,528**
**5,582,528**
**1,457,513**
**2,320,293**
**3,777,806**
**1,804,722**
**(4,750,000)**
**(2,945,278)**
**107,452,233**
**(2,945,278)**
**104,506,955**|_Total_
_funds_
_13 months_
_ended_
_31 December_
_2020_
_£_
_105,086,485_
_5,113,819_
_110,200,304_
_1,360,797_
_18,333_
_1,379,130_
_108,821,174_
_(1,368,941)_
_107,452,233_
_-_
_107,452,233_
_107,452,233_| |---|---|---|---| The Statement of Financial Activities includes all gains and losses recognised in the year. The notes on pages 18 to 27 form part of these financial statements. Page 14 DocuSign Envelope ID: 7015F1CB-4FBE-488C-B82A-1A06ADDF3644 ## **COVENT GARDEN IP LTD (A company limited by shares and registered charity) REGISTERED NUMBER: 12063279** ## **BALANCE SHEET AS AT 31 DECEMBER 2021** |**Note**
**Fixed assets**
Investment property
9
**Current assets**
Debtors
10
Cash at bank and in hand
Creditors: amounts falling due within one
year
11
**Net current assets**
**Total assets less current liabilities**
**Net assets excluding pension asset**
**Total net assets**
**Charity funds**
Restricted funds
Unrestricted funds
General funds
Share capital
12
Total unrestricted funds
**Total funds**|**435,425**
**8,386,175**
**8,821,600**
**(2,064,545)**
**104,506,955**
**100**|**2021**
**£**
**97,750,000**
**97,750,000**
**6,757,055**
**104,507,055**
**104,507,055**
**104,507,055**
**-**
**104,507,055**
**104,507,055**|_605,865_
_6,016,083_
_6,621,948_
_(1,669,615)_
_107,452,233_
_100_|_2020_
_£_
_102,500,000_| |---|---|---|---|---| |||||_102,500,000_
_4,952,333_| |||||_107,452,333_| |||||_107,452,333_| |||||| |||||_107,452,333_| |||||_-_
_107,452,333_| |||||| |||||_107,452,333_| Page 15 DocuSign Envelope ID: 7015F1CB-4FBE-488C-B82A-1A06ADDF3644 ## **COVENT GARDEN IP LTD** ## **(A company limited by shares and registered charity)** ## **BALANCE SHEET (CONTINUED) AS AT 31 DECEMBER 2021** The Trustees acknowledge their responsibilities for complying with the requirements of the Act with respect to accounting records and preparation of financial statements. The financial statements were approved and authorised for issue by the Trustees and signed on their behalf by: ## **Ashley John Powell** Date: 14/9/2022 The notes on pages 18 to 27 form part of these financial statements. Page 16 DocuSign Envelope ID: 7015F1CB-4FBE-488C-B82A-1A06ADDF3644 ## **COVENT GARDEN IP LTD** ## **(A company limited by shares and registered charity)** ## **STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2021** |**Note**
**Cash flows from operating activities**
Net cash used in operating activities
13
**Cash flows from investing activities**
Purchase of tangible fixed assets
**Net cash provided by/(used in) investing activities**
**Cash flows from financing activities**
**Net cash provided by financing activities**
**Change in cash and cash equivalents in the year**
Cash and cash equivalents at the beginning of the year
**Cash and cash equivalents at the end of the year**
14|**31 December**
**2021**
**£**
**2,370,092**
**-**
**-**
**-**
**2,370,092**
**6,016,083**
**8,386,175**|_13 months_
_ended_
_31 December_
_2020_
_£_
_6,115,916_
_(99,833)_
**(99,833)**| |---|---|---| |||**-**| |||**6,016,083**
_-_| |||| |||_6,016,083_| The movement in net debt for the current period is identical to the movements in cash flows set out above. The notes on pages 18 to 27 form part of these financial statements Page 17 DocuSign Envelope ID: 7015F1CB-4FBE-488C-B82A-1A06ADDF3644 ## **COVENT GARDEN IP LTD** ## **(A company limited by shares and registered charity)** ## **NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021** ## **1. General information** Covent Garden IP Ltd is a company and registered charity, limited by shares, incorporated in England and Wales. Its registered office is 187 Penns Lane, Sutton Coldfield, West Midlands, B76 1JU. ## **2. Accounting policies** ## **2.1 Basis of preparation of financial statements** The financial statements have been prepared in accordance with the Charities SORP (FRS 102) - Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) (effective 1 January 2019), and the Companies Act 2006. Covent Garden IP Ltd meets the definition of a public benefit entity under FRS 102. Assets and liabilities are initially recognised at historical cost or transaction value unless otherwise stated in the relevant accounting policy. The prior accounting period was for 13 months from 1 December 2019 to 31 December 2020. ## **2.2 Going concern** The main risk the Charitable Company faces is that the income from its investments reduces. Given the COVID-19 pandemic and the potential for it to change the desirability of central London commercial space, this is a possibility. However, - the Charitable Company's rental income is highly unlikely to reduce below the Charitable Company's expenses; - although expenditure in the following period may exceed income on account of an exceptional one off investment, that investment will be funded from further donations to the Charitable company from the wider Church, with such funding agreed before liabilities are accrued; - the Charitable Company has no debt; and - the shareholder has guaranteed the Charitable Company future financial support, where necessary. So there are no material uncertainties about the Charitable Company's ability to continue as a going concern. Page 18 DocuSign Envelope ID: 7015F1CB-4FBE-488C-B82A-1A06ADDF3644 ## **COVENT GARDEN IP LTD** ## **(A company limited by shares and registered charity)** ## **NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021** ## **2. Accounting policies (continued)** ## **2.3 Income** All income is recognised once the Charitable Company has entitlement to the income, it is probable that the income will be received and the amount of income receivable can be measured reliably. Rentals receivable under operating leases and service charge income are credited to the Statement of Financial Activities on a straight-line basis over the lease term. Where a donation of a fixed asset is received, it is measured at fair value, unless it is impractical to measure this reliably, in which case the cost of the item to the donor should be used. The gain is recognised as income from donations and a corresponding amount is included in the appropriate fixed asset class and depreciated over the useful economic life in accordance with the Charitable Company's accounting policies. On receipt, donated professional services and facilities are recognised on the basis of the value of the gift to the Charitable Company which is the amount it would have been willing to pay to obtain services or facilities of equivalent economic benefit on the open market; a corresponding amount is then recognised in expenditure in the period of receipt. Rentals receivable under operating leases and service charge income are credited to the Statement of Financial Activities on a straight-line basis over the lease term. ## **2.4 Expenditure** Expenditure is recognised once there is a legal or constructive obligation to transfer economic benefit to a third party, it is probable that a transfer of economic benefits will be required in settlement and the amount of the obligation can be measured reliably. Expenditure is classified by activity. The costs of each activity are made up of the total of direct costs and shared costs, including support costs involved in undertaking each activity. Direct costs attributable to a single activity are allocated directly to that activity. Shared costs which contribute to more than one activity and support costs which are not attributable to a single activity are apportioned between those activities on a basis consistent with the use of resources. Expenditure on raising funds includes all expenditure incurred by the Charitable Company to raise funds for its charitable purposes and predominantly relates to the costs of managing, maintaining and running the investment property. Expenditure on charitable activities is incurred on directly undertaking the activities which further the Charitable Company's objectives, as well as any associated support costs. Grants payable are charged in the year when the offer is made except in those cases where the offer is conditional, such grants being recognised as expenditure when the conditions attaching are fulfilled. All expenditure is inclusive of irrecoverable VAT. Page 19 DocuSign Envelope ID: 7015F1CB-4FBE-488C-B82A-1A06ADDF3644 ## **COVENT GARDEN IP LTD** ## **(A company limited by shares and registered charity)** **NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021** ## **2. Accounting policies (continued)** ## **2.5 Investments** Investment property is carried at fair value determined annually by the trustees, informed by periodic valuations carried out and derived from external valuers and derived from the current market rents and investment property yields for comparable real estate, adjusted if necessary for any difference in the nature, location or condition of the specific asset. No depreciation is provided. Changes in fair value are recognised in the Statement of financial activities. ## **2.6 Debtors** Trade and other debtors are recognised at the settlement amount after any trade discount offered. Prepayments are valued at the amount prepaid net of any trade discounts due. ## **2.7 Cash at bank and in hand** Cash at bank and in hand includes cash and short-term highly liquid investments with a short maturity of three months or less from the date of acquisition or opening of the deposit or similar account. ## **2.8 Liabilities and provisions** Liabilities are recognised when there is an obligation at the Balance sheet date as a result of a past event, it is probable that a transfer of economic benefit will be required in settlement, and the amount of the settlement can be estimated reliably. Liabilities are recognised at the amount that the Charitable Company anticipates it will pay to settle the debt or the amount it has received as advanced payments for the goods or services it must provide. Provisions are measured at the best estimate of the amounts required to settle the obligation. Where the effect of the time value of money is material, the provision is based on the present value of those amounts, discounted at the pre-tax discount rate that reflects the risks specific to the liability. The unwinding of the discount is recognised in the Statement of financial activities as a finance cost. ## **2.9 Financial instruments** The Charitable Company only has financial assets and financial liabilities of a kind that qualify as basic financial instruments. Basic financial instruments are initially recognised at transaction value and subsequently measured at their settlement value with the exception of bank loans which are subsequently measured at amortised cost using the effective interest method. ## **2.10 Judgements and estimates** The charitable company estimated the value of the donated property, as well as the value of investment property at the period end. The estimation uncertainty is low. ## **2.11 Company status** The Charitable Company is limited by share capital, incorporated in England and Wales (No. 12063279) and regulated by its Memorandum and Articles of Association. Page 20 DocuSign Envelope ID: 7015F1CB-4FBE-488C-B82A-1A06ADDF3644 ## **COVENT GARDEN IP LTD** ## **(A company limited by shares and registered charity)** ## **NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021** ## **2. Accounting policies (continued)** ## **2.12 Trustees and employees remuneration** The Charitable Company had no employees during the period and therefore no payments of salary or benefits have been made during the year exceeding £60,000. Trustees did not receive any remuneration or reimbursement of expenses during the period. ## **3. Income from donations and legacies** |**Unrestricted**
**funds**
**31**
**December**
**2021**
**£**
**Donations**
Donation of investment property
-
Donation of pre transfer property income
-
**Total donations received**
-
-|**Total**
**funds**
**31**
**December**
**2021**
**£**
**-**
**-**
**-**
**-**|_Total_
_funds_
_13 months_
_ended_
_31_
_December_
_2020_
_£_
_103,769,108_
_1,317,377_| |---|---|---| |||_105,086,485_| |||| |||_105,086,485_| ## **4. Investment income** |**Unrestricted**
**funds**
**31**
**December**
**2021**
**£**
Rental income
4,723,387
Service charge income
859,141
5,582,528|**Total**
**funds**
**31**
**December**
**2021**
**£**
**4,723,387**
**859,141**
**5,582,528**|_Total_
_funds_
_13 months_
_ended_
_31_
_December_
_2020_
_£_
_4,063,260_
_1,050,559_| |---|---|---| |||_5,113,819_| Page 21 DocuSign Envelope ID: 7015F1CB-4FBE-488C-B82A-1A06ADDF3644 ## **COVENT GARDEN IP LTD** ## **(A company limited by shares and registered charity)** ## **NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021** ## **5. Investment management costs** |**Unrestricted**
**funds**
**31**
**December**
**2021**
**£**
Utilities
324,756
Management fees
101,578
General building supplies
131,422
Legal and professional fees
20,000
Property maintenance
381,038
Security
337,195
Property rates
24,726
Insurances
50,097
Cleaning
85,817
Bank charges
884
**Total 2021**
1,457,513|**Total**
**funds**
**31**
**December**
**2021**
**£**
**324,756**
**101,578**
**131,422**
**20,000**
**381,038**
**337,195**
**24,726**
**50,097**
**85,817**
**884**
**1,457,513**|_Total_
_funds_
_13 months_
_ended_
_31_
_December_
_2020_
_£_
_250,384_
_60,000_
_(1,034)_
_20,750_
_601,627_
_296,962_
_6,394_
_42,721_
_82,993_
_-_| |---|---|---| |||_1,360,797_| ## **6. Analysis of grants** ||||_Total_| |---|---|---|---| ||**Grants to**|**Total**|_funds_| ||**Institutions**|**funds**|_13 months_| ||||_ended_| ||**31**|**31**|_31_| ||**December**|**December**|_December_| ||**2021**|**2021**|_2020_| ||**£**|**£**|_£_| |Grants|2,300,000|**2,300,000**|_-_| During the year, a grant of £2,300,000 was made to The Church of Jesus Christ of Latter-day Saints (Great Britain). Page 22 DocuSign Envelope ID: 7015F1CB-4FBE-488C-B82A-1A06ADDF3644 ## **COVENT GARDEN IP LTD** ## **(A company limited by shares and registered charity)** ## **NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021** ## **7. Analysis of expenditure on charitable activities** ## **Summary by fund type** |**Unrestricted**
**funds**
**31**
**December**
**2021**
**£**
Grants
2,300,000
Accountancy
(7,920)
Bank charges
213
Audit fees
28,000
2,320,293|**Total**
**funds**
**31**
**December**
**2021**
**£**
**2,300,000**
**(7,920)**
**213**
**28,000**
**2,320,293**|_Total_
_funds_
_13 months_
_ended_
_31_
_December_
_2020_
_£_
_-_
_6,202_
_131_
_12,000_| |---|---|---| |||_18,333_| ## **8. Auditor's remuneration** |||_13 months_| |---|---|---| |||_ended_| ||**31**|_31_| ||**December**|_December_| ||**2021**|_2020_| ||**£**|_£_| |Fees payable to the Charitable Company's auditor for the audit of the||| |Charitable Company's annual accounts|**28,000**|_12,000_| |Fees payable to the Charitable Company's auditor in respect of:||| |All non-audit services not included above|**6,400**|_3,000_| Page 23 DocuSign Envelope ID: 7015F1CB-4FBE-488C-B82A-1A06ADDF3644 ## **COVENT GARDEN IP LTD** ## **(A company limited by shares and registered charity)** ## **NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021** ## **9. Investment property** |**Valuation**
At 1 January 2021
Deficit on revaluation
At 31 December 2021|**Freehold**
**investment**
**property**
**£**
**102,500,000**
**(4,750,000)**| |---|---| ||**97,750,000**| The investment property was valued by independent valuers, Colliers International, as at 31 December 2021. The fair value when donated was £103,769,108. ## **10. Debtors** |Trade debtors
Other debtors
Prepayments and accrued income|**2021**
**£**
**74,939**
**339,209**
**21,277**
**435,425**|_2020_
_£_
_584,917_
_100_
_20,848_| |---|---|---| |||| |||_605,865_| Page 24 DocuSign Envelope ID: 7015F1CB-4FBE-488C-B82A-1A06ADDF3644 ## **COVENT GARDEN IP LTD** ## **(A company limited by shares and registered charity)** ## **NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021** ## **11. Creditors: Amounts falling due within one year** |Trade creditors
Other taxation and social security
Other creditors
Accruals and deferred income
Deferred income amounts to £1,251,186 (2020: £1,176,539).
Deferred income at 1 January 2021
Resources deferred during the year
Amounts released from previous periods|**2021**
**£**
**133,279**
**173,918**
**470,106**
**1,287,242**
**2,064,545**
**2021**
**£**
**1,176,539**
**1,251,185**
**(1,176,538)**
**1,251,186**|_2020_
_£_
_-_
_179,470_
_305,550_
_1,184,595_| |---|---|---| |||| |||_1,669,615_| |||_2020_
_£_
_-_
_1,176,539_
_-_| |||| |||_1,176,539_| Deferred income is in relation to rental income received in advance. ## **12. Share capital** |100 Ordinary shares at £1.00 each
100 Ordinary shares were issued at par on incorporation.|**2021**
**£**
**100**|_2020_
_£_
_100_| |---|---|---| |||| Page 25 DocuSign Envelope ID: 7015F1CB-4FBE-488C-B82A-1A06ADDF3644 ## **COVENT GARDEN IP LTD** ## **(A company limited by shares and registered charity)** ## **NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021** ## **13. Reconciliation of net movement in funds to net cash flow from operating activities** |Net income for the year (as per Statement of Financial Activities)
**Adjustments for:**
Decrease/(increase) in debtors
Increase in creditors
Donation of investment property
**Net cash provided by operating activities**
**14.**
**Analysis of cash and cash equivalents**
Cash in hand
**Total cash and cash equivalents**
**15.**
**Analysis of changes in net debt**
**At 1**
**January**
**2021**
**£**
Cash at bank and in hand
**6,016,083**
**6,016,083**|Net income for the year (as per Statement of Financial Activities)
**Adjustments for:**
Decrease/(increase) in debtors
Increase in creditors
Donation of investment property
**Net cash provided by operating activities**
**14.**
**Analysis of cash and cash equivalents**
Cash in hand
**Total cash and cash equivalents**
**15.**
**Analysis of changes in net debt**
**At 1**
**January**
**2021**
**£**
Cash at bank and in hand
**6,016,083**
**6,016,083**||**2021**
**£**
**1,804,722**||_13 months_
_ended_
_2020_
_£_
_108,821,174_
_(605,765)_
_1,669,615_
_(103,769,108)_
_6,115,916_
_2020_
_£_
_6,016,083_
_6,016,083_
**At 31**
**December**
**2021**
**£**
**8,386,175**
**8,386,175**| |---|---|---|---|---|---| ||||**170,440**
**394,930**
**-**||| ||||||| ||||**2,370,092**||| ||||**2021**
**£**
**8,386,175**
**8,386,175**
**Cash flows**
**£**
**2,370,092**
**2,370,092**||| ||||||| ||||||| ||||||| ||**6,016,083**||||| Page 26 DocuSign Envelope ID: 7015F1CB-4FBE-488C-B82A-1A06ADDF3644 ## **COVENT GARDEN IP LTD** ## **(A company limited by shares and registered charity)** ## **NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021** ## **16. Related party transactions** During the prior year, Covent Garden IP Ltd acquired investment property at fair value of £103,769,108 by way of donation from The Church of Jesus Christ of Latter-day Saints (Great Britain). The Church of Jesus Christ of the Latter-day Saints (Great Britain) also gave with the investment property the property income pre transfer of £1,317,377. This property is shown within investment property. Covent Garden IP Ltd made a grant of £2,300,000 to The Church of Jesus Christ of Latter-day Saints (Great Britain) during the year. ## **17. Controlling party** The Board considers that the immediate parent undertaking of the Charitable Company is Property Reserve Inc, a non-profit corporation based in Utah, USA by virtue of the fact that it is the sole shareholder of the Charitable Company. The ultimate parent undertaking is considered to be The Church of Jesus Christ of Latter-day Saints, also based in Utah, USA. Page 27