The Building Safety (Responsible Actors Scheme and Prohibitions) Regulations 2023

Profit condition E+W

11.—(1) The condition in this regulation is satisfied if—

(a) where P does not file consolidated accounts, the average adjusted operating profits for the specified period, as derived from P’s accounts are greater or equal to £10 million; or

(b) where P files consolidated accounts, the average adjusted operating profits for the specified period, as derived from the consolidated accounts for P are greater or equal to £10 million.

(2) The average adjusted operating profits referred to in paragraph (1) are to be calculated as the sum of the adjusted operating profits derived from P’s accounts (or where paragraph (1)(b) applies, the adjusted operating profits derived from P’s consolidated accounts) in each of the three financial years in the specified period divided by three.

(3) If P satisfies the criteria at regulation 7 or 8 including the condition in paragraph 11(1), P does not cease to be eligible to be a member of the scheme because P’s adjusted operating profits fall below £10 million in any financial year after the specified period has ended.

(4) In this regulation—

“accounts” means—

(a)

financial statements delivered to the registrar of companies in accordance with section 441 of the Companies Act 2006(1); or

(b)

where P is not subject to section 441 of the Companies Act 2006, such other available financial information about P which enables P’s adjusted operating profits to be determined;

“adjusted operating profits” means operating profits adjusted, if necessary, so as to—

(a)

include the share of any profit or loss from joint ventures or associates, where consolidated accounts are prepared;

(b)

include any investment income recognised from subsidiaries, joint ventures or associates, where unconsolidated accounts are prepared;

(c)

exclude items that are non-recurring in nature, such exclusions to include—

(i)

items described in the accounts as “exceptional”, which are material individually or in aggregate, and are non-recurring in nature;

(ii)

gains or losses on the disposal of businesses and investments;

(iii)

non-recurring costs of restructuring or the reorganisation of existing businesses;

(iv)

costs of integrating newly acquired businesses;

(v)

acquisition or disposal costs incurred on the acquisition or disposal of control of a business; and

(vi)

costs associated with remediating or mitigating defects in buildings relating to fire safety, including any provision made for such costs;

(d)

exclude unrealised valuation adjustments, other than normal depreciation charges, such exclusions to include—

(i)

fair value adjustments;

(ii)

revaluation gains or losses;

(iii)

impairment losses.

“associate” has the same meaning as in IAS 28;

“IAS 28” means International Accounting Standard 28 Investments in Associates and Joint Ventures, as published in October 2017 by the International Accounting Standards Board;

“joint venture” has the same meaning as in IAS 28;

“operating profits” means the profits derived from operating activities, so far as their disclosure in the accounts (whether consolidated or unconsolidated) complies with paragraph 5.9B of Financial Reporting Standard 102 as published by the Financial Reporting Council in March 2013 and revised in March 2018.

(5) For the purposes of paragraph (4), where operating profits are not disclosed in the accounts (whether consolidated or unconsolidated) then operating profit should be determined from profit before tax adjusted to exclude interest, investment income and finance costs.

Commencement Information

I1 Reg. 11 in force at 4.7.2023, see reg. 1(1)

(1)

2006 c. 46.