213800Z6WDE14TNLVS18-2024-12-31-T01

1 BOS (SHARED APPRECIATION MORTGAGES) NO. 3 PLC (REGISTERED NUMBER: 03331871)

Strategic report

For the year ended 31 December 2024

The Directors present their Strategic report for BOS (Shared Appreciation Mortgages) No. 3 plc (''the Company'') for the year ended

31 December 2024.

Principal activities

The principal activity of the Company was to originate and finance mortgage lending. In 1998 the Company issued £46,560,000 fixed rate

notes on the London Stock Exchange (the ''Notes''). The interest payable on the Notes is set at 4.50% per annum until February 2028.

Thereafter, the interest rate applicable to the Notes will be 5.50% per annum until 2073 when the Notes become due. The Notes are

secured on the mortgage portfolio. The capital appreciation arising on the sale of a mortgage holder's property is shared between the

mortgage holder and the Company as set out in the original loan agreements.

The activities of the Company are conducted primarily by reference to a series of transaction documents under the offering circular for

BOS (Shared Appreciation Mortgages) No. 3 plc (the ''Programme Documentation''). The Company is required to pay its entire share of the

capital appreciation received from the borrowers to the Note holders in line with the priority of payments set out in the Programme

Documentation.

Business structure

The Company is a subsidiary undertaking of Bank of Scotland plc (incorporated in Scotland) within Lloyds Banking Group (“the Group”).

Business review

No new mortgage loans have been originated and no new loan notes have been issued by the Company since 1998.

The profit for the financial year amounted to £118,242 (2023: £97,866). Total equity at 31 December 2024 amounted to £3,173,061 (2023:

£3,054,819).

The Company has recognised a higher profit during the year than in the prior year. This can principally be attributed to reduced net fair

value losses of £31,300 (2023: losses of £95,508).

The Company has recognised net fair value losses during the year mainly due to a change in the fair valuation of its mortgage portfolio

and the Notes, which has been driven by updated model assumptions. These updated assumptions included indexed movements in the

Halifax House Price Index ("HPI") and its forecast updates, the discount rate was also updated based on Bank of England base rate

forecasts and the average age of customers was updated based on mortality table rates, amongst other adjustments.

The mortgage portfolio is subject to the economic factors relating to the housing market (see ''Credit risk'' below). These factors did not

have any significant bearing on the Company's arrears levels (see note 14.1). The net interest income is determined by a margin earned

between the interest received on the mortgage portfolio and the interest paid to the Note holders.

Litigation

In January 2021, a litigation claim was brought by, or on behalf of, a number of customers against Bank of Scotland plc and some of its

subsidiary undertakings which had issued shared appreciation mortgages, including the Company. The claim was issued in the County

Court and was brought under the unfair relationship provisions of the Consumer Credit Act 1974. On 23 January 2024, the Claimants and

Bank of Scotland plc (and the other Defendants, including the Company) agreed a commercial settlement of this litigation, without any

admission of liability. The terms of the settlement agreement are confidential. There are no changes to the mortgages, or their terms and

conditions. Following the settlement in January 2024, the Directors have concluded that no provision is required against this claim in the

Company’s financial statements as Bank of Scotland plc has borne the costs of this settlement. Should further claims arise, the directors

have considered the contractual arrangements between the Bank of Scotland and the Company and that Bank of Scotland plc can meet

any associated costs or liabilities (if any) which may become due. No reimbursement will be made to the Bank of Scotland for such costs

or liabilities. Since the settlement on 23 January 2024, the Company has received a number of new pre-action claims.

Key performance indicators

There is a board meeting held quarterly that is responsible for assessing the risk of irregularities, whether caused by fraud or error in

financial reporting, and ensuring that processes are in place for the timely identification of internal and external matters with a potential

effect on financial reporting. This meeting analyses and discusses the trends for the quarter and identifies any issues or required

changes. Any such issues are then reported, further discussed, and collectively agreed. There were no significant issues impacting the

Company in the current or previous year.

The key performance indicators used by management in assessing the performance of the Company are the monitoring of the fair value

movement and the mortgage redemptions during the year, together with the trigger event around the credit rating of the Company’s

bank account provider. These have been identified by management as key drivers in the performance of the Company. More details for

the fair value movement is in note 5 and details for the redemptions are in note 9.

2 BOS (SHARED APPRECIATION MORTGAGES) NO. 3 PLC (REGISTERED NUMBER: 03331871)

Strategic report (continued)

For the year ended 31 December 2024

Key performance indicators (continued)

The Company has made all necessary payments on the Notes in accordance with the scheduled repayment dates for the years ended

31 December 2024 and 31 December 2023.


KPI	2024	2023	Analysis
Mortgage fair value movement (£)	508,639	881,587	The fair value gains for both years are predominantly from increases in the indexed valuation of the properties the mortgage loans are secured upon during the year. The current year fair value gains are lower from a combination of factors around the assumptions used in the model valuation, with the most significant being that the average age mix of the customers has remained relatively static year on year due to more older customers passing on in the current year.
Mortgage redemptions (£)	(1,385,931)	(1,242,941)	Increase in redemptions from 2023 is in line with expectations as the average age of the customer increases year on year, which in turn increases mortality rates of customers and redemption activity. However, movements on redemptions are erratic, and can depend on other factors than just mortality rates, in turn influencing when a customer sell their home.
Bank of Scotland plc - credit rating	A-1	A-1	The Programme Documentation stipulates that the bank account provider must have a minimum S&P credit rating of A-1. Bank of Scotland plc, the bank account provider, has held a short- term rating at the minimum level throughout the current year and previous year.

Future outlook

The Company’s balance sheet will continue to reduce over the life of the mortgages issued as the Company has not issued any further

advances since 1998 and there is no intention to issue new business in the future.

Cash will continue to be received from mortgages redemptions and interest income generated from the mortgage portfolio. The

mortgage loans are lifetime mortgages and will remain on balance sheet until the last customer has redeemed its loan advance.

However, as appreciation depends on housing prices, there is an element of uncertainty about how much appreciation share will be

received.

Economic environment

The current financial year continues to have economic uncertainty arising from geopolitical tensions in Ukraine and the Middle East,,

together with the ongoing climate emergency.

The Directors’ assessment suggests that the performance of the mortgage portfolio should continue to be satisfactory. Whilst inflationary

pressures have eased compared to the previous year, sustained high interest rates and higher prices caused by sterling weakness

continue to put pressure on household incomes.

Despite this, it is expected that there will be limited impact on mortgage holders’ ability to service their loans as the mortgage loans bear

a zero-rate of interest. There has been no material impact on the Company as of the Strategic report date. The situation will continue to

be monitored and the Servicer, Bank of Scotland plc, will continue to adopt appropriate forbearance measures on behalf of the

Company.

Principal risks and uncertainties

The majority of the Company's assets and liabilities have been classified as financial instruments in accordance with International

Financial Reporting Standards (“IFRS”) 9 ''Financial Instruments''. The Company's financial instruments comprise a mortgage portfolio with

an embedded derivative (Financial assets held at fair value through profit or loss (''Financial assets at FVTPL'')), cash liquid resources,

interest-bearing loan notes with an embedded derivative (Financial liabilities designated at fair value through profit or loss (''Financial

liabilities at FVTPL'')) and various other receivables and payables that arise directly from its operations.

The Company's policy is that no trading in financial instruments is undertaken.

The principal risks arising from the Company's financial instruments are credit risk, market risk, including other price risk and interest rate

risk, and, liquidity risk. These and other risks which may affect the Company's performance are detailed below. Further analysis of the risks

facing the Company on its financial instruments is provided in note 14.

3 BOS (SHARED APPRECIATION MORTGAGES) NO. 3 PLC (REGISTERED NUMBER: 03331871)

Strategic report (continued)

For the year ended 31 December 2024

Principal risks and uncertainties (continued)

Credit risk

Credit risk arises on the individual loans within the mortgage loan portfolio which are in turn secured on the underlying UK residential

properties. The performance of these loans is therefore influenced by the economic background and the UK housing market; however,

with a maximum loan-to-value of the original advances being 75.00% and with the mortgage portfolio having a weighted average

current loan-to-value of 15.95% at 31 December 2024 (2023: 16.11%), the credit exposure is considered to be low as the value is payable on

the earlier of death of the customer or the sale of the property. The monthly interest is considered a low credit risk as it is a short term

receivable.

The terms of the mortgage portfolio agreement given by Bank of Scotland plc in respect of the mortgages require Bank of Scotland plc to

repurchase any mortgage which is found to be in breach of warranty; however, there is a clause in the agreement that allows the

trustees to retain ownership if they choose. Bank of Scotland plc will repurchase any mortgages that are found or held not to be valid,

binding and enforceable. There have been no such repurchases in the current year or the previous year. In such an event the total value

of the outstanding loan and any accrued interest will be covered by Bank of Scotland plc, the Note holders will not receive the benefit of

any future payments of appreciation amounts or partial repayment of appreciation amounts in respect of the mortgages repurchased.

Market risk

Market risk is the risk of financial losses to the Company from factors related to the market in which it operates. The Company's market is

the UK residential housing market. The key risks related to this market are other price risk and interest rate risk.

Other price risk

Under the terms of the Notes the Company is obligated to pay the Note holders the return on the shared appreciation that has accrued

during the life of the mortgage loan at the rate implicit in the specific mortgage loan agreement as and when repaid by the mortgage

loan customer. Shared appreciation is subject to the movement in the market value of the property which is dependent upon house price

inflation, as measured by the Halifax House Price Index (''HPI'').

However, the Company itself is not impacted by price risk as the risk of returns on the Notes being below initial expectations lies with the

Note holder and there are no guarantees within the terms of the Notes for expected increases in value.

Interest rate risk

Interest rate risk exists where assets and liabilities have interest rates set under a different basis or which reset at a different time. The

Company minimises its exposure to interest rate risk by ensuring that the interest rate characteristics of assets and liabilities are similar.

Liquidity risk

All liabilities of the Company with the exception of the Notes are paid from receipts of funds earned on its bank deposits.

The Company holds a reserve account of £1,402,465 to assist the Company should it not be able to meet its obligations. The reliance on

this facility is therefore dependent upon the creditworthiness of Bank of Scotland plc. The rating requirement under the Programme

Documentation for the Reserve Account to remain with Bank of Scotland plc is a short term rating with Standard and Poor's (S&P) of A-1

(2023: S&P short-term rating: A-1). The Company has not drawn on this facility since inception.

The extent to which the Company can meet its obligations to pay interest and ultimately repay the Notes will be dependent upon the

receipt of funds earned on the mortgage portfolio and the letter of credit issued by Bank of Scotland plc. To the extent that this income

does not provide sufficient funds to cover the interest due on the Notes or the repayment of the Notes principal, the Note holders have no

claim on the assets of Bank of Scotland plc.

In accordance with the Programme Documentation the Company is obligated to make payments to meet third party expenses. To

mitigate this risk the Directors hold quarterly board meetings to review the performance of the Company and ensure that the Company

is in a position to meet all necessary payments.

Operational risk

Bank of Scotland plc has been appointed to act as account bank and servicer of the mortgage book on behalf of the Company. The

Company uses Bank of New York Mellon to provide all corporate services in respect of the Notes in issue.

The Company is exposed to the risk of failure to comply with changes to applicable statutory and regulatory requirements. To mitigate

such risks the Company undertakes systematic horizon scanning to identify and ensure compliance with any future changes.

Section 172(1) of the Companies Act 2006

In accordance with the Companies Act 2006 (the "Act"), for the year ended 31 December 2024, the Directors provide the following

statement to confirm that they have had regard to the matters set out in Section 172(1) of the Act, when performing their duty to promote

the success of the Company under Section 172(1).

4 BOS (SHARED APPRECIATION MORTGAGES) NO. 3 PLC (REGISTERED NUMBER: 03331871)

Strategic report (continued)

For the year ended 31 December 2024

Section 172(1) of the Companies Act 2006 (continued)

The Company is a wholly owned subsidiary of Bank of Scotland plc, within the Group . Consequently the Directors further acknowledge

that the activities taken with regard to the Company's strategy have been closely aligned to that of the Group, which is to achieve both

long-term and sustainable returns, central to which is ensuring engagement with stakeholders, and considering in all instances the long-

term implications of decisions made, acting at all times to maintain the highest possible standards of conduct. Further information on the

Group's strategy around Section 172(1) can be found in the Lloyds Banking Group plc’s annual report and financial statements for 2024 on

pages 40 to 41. Further details of how to obtain access to the Lloyds Banking Group plc annual report and financial statements for 2024

can be found in note 19.

Further, in accordance with the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, the Directors

also confirm that they have both engaged with and had regard to the interest of key stakeholders, in their duties as Directors of the

Company.

Key stakeholders

The Directors confirm that there has been regular engagement with all key stakeholders of the Company, as well as confirm that they

have treated all key stakeholders fairly in their activities, to ensure that there has been appropriate use of knowledge and expertise when

making business decisions around the long-term strategy of the Company and its activities during the year. For example key the Group

business and functional service providers are represented and provide expert advice at Board meetings of the Company; holders of the

Company’s notes receive regular information in relation to cash flows due; and customers of the Company receive contact, engagement

and support consistent with that provided to other customers of the wider Group.

Customers and clients

The Directors have ensured that the Company, as part of the Group, continues to work towards the Group's strategy for treating all

customers fairly. To ensure the Directors truly understand the needs of their customers, every opportunity has been taken to consider

direct customer feedback and related management information as part of the Directors' strategic decision-making process. The

Directors have worked to ensure the business of the Company is undertaken in line with the objectives of the Group, with the Directors

regularly reviewing customer complaints to understand areas where improvements can be made. The Group regularly benchmarks

amongst its customers the performance of itself and its subsidiaries, including the Company, and uses this insight along with a range of

internal and external research to ensure ongoing improvement in customer experience.

Regulators and government

The Company and its directors are satisfied that there is a strong, open and transparent relationship with relevant regulators and other

authorities and liaise regularly as part of the Group to ensure the business is aligned to the evolving regulatory framework. Key areas of

focus have included ensuring robust prudential standards and supervision arrangements are in place, ensuring the fair treatment of

customers, adapting to changes in regulatory requirements, recovery, and resolution for the UK’s withdrawal from the European Union.

The approach of the Group, including that of the Company, to managing regulatory change is discussed further on page 14 to 15, plus

page 154 of the Lloyds Banking Group plc annual report and financial statements for 2024.

Society and the environment

The Directors acknowledge that they have performed all of their duties as Directors in accordance with the strategy of the Group around

the Company's impact on its society and the environment, through engagement with representatives of the wider Group’s mortgages

business. Further details can be found within the Lloyds Banking Group plc annual report and financial statements for 2024.

As approved by the board of Directors and signed on behalf of the board:

Tanya Marie Foxe

Director

DATE: 25 April 2025

5 BOS (SHARED APPRECIATION MORTGAGES) NO. 3 PLC (REGISTERED NUMBER: 03331871)

Directors' report

For the year ended 31 December 2024

The Directors present their report for the year ended 31 December 2024.

General information

The Company is a public limited company, limited by shares, incorporated, registered and domiciled in England and Wales (registered

number: 03331871).

Registered office

The Company’s registered office is Trinity Road, Halifax, HX1 2RG.

Company Secretary

The Company secretary is Alyson Elizabeth Mulholland.

Employees

The Company had no employees during the year ended 31 December 2024 (2023: nil). None of the Directors received any emoluments

from the Company in the current or previous year.

Dividends

No dividends were paid or proposed during the year ended 31 December 2024 (2023: £nil).

Events after the reporting date

There are no events after the Balance sheet date requiring disclosure in these financial statements.

Going concern

The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for at least

12 months from the date of approval of the accounts. Thus they continue to adopt the going concern basis of accounting in preparing the

annual financial statements. Further details regarding the adoption of the going concern basis can be found in the note 1 to the financial

statements.

Corporate governance

The Directors have been charged with governance in accordance with the Programme Documentation describing the structure and

operation of the transaction. The governance structure of the Company is such that the key policies have been predetermined at the

time of issuance and the operational roles have been assigned with their roles strictly governed by the Programme Documentation.

The Programme Documentation provides for procedures that have been designed for safeguarding assets against unauthorised use or

disposition; for maintaining proper accounting records; and for the reliability and usefulness of financial information used within the

business or for publication. Such procedures are designed to manage rather than eliminate the risk of failure to achieve business

objectives whilst enabling them to comply with the regulatory obligations.

Due to the nature of the securities which have been issued, the Company is largely exempt from the requirements of the Financial

Conduct Authority pertaining to the Disclosure and Transparency Rules (DTR) as detailed in DTR 7.1 Audit Committees and 7.2 Corporate

Governance statements (save for the rule DTR 7.2.5 requiring a description of the features of the internal control and risk management

systems), which would otherwise require the Company respectively, to have an audit committee in place and include a corporate

governance statement in the report of the Directors. The Directors are therefore satisfied that there is no requirement for an audit

committee or a supervisory body entrusted to carry out the functions of an audit committee or to publish a corporate governance

statement.

From the perspective of the Company, the daily operational internal controls and risk management systems are integrated with those of

Lloyds Banking Group plc, the Company’s ultimate controlling party. Therefore additional information may be found in section ''Internal

Control'' of the 2024 Annual Report of Lloyds Banking Group plc, which does not form part of this report. Details of where to get access to

the 2024 Annual Report of Lloyds Banking Group plc can be found in note 19.

Information included in the Strategic report

The disclosures for Future outlook, Principal risks and uncertainties and Key performance indicators can be found in the Strategic report

on pages 1 to 4.

6 BOS (SHARED APPRECIATION MORTGAGES) NO. 3 PLC (REGISTERED NUMBER: 03331871)

Directors' report (continued)

For the year ended 31 December 2024

Streamlined energy and carbon reporting (“SECR”)

The Company has taken an exemption from SECR, in its own Directors’ Report as it is included within the Group SECR report given in the

Lloyds Banking Group plc annual report and accounts for 2024, available on the Lloyds Banking Group plc website, details of which can be

found in note 19.

Due to the nature of the Company the Directors are of the opinion that climate change has a negligible impact.

Directors

The current Directors of the Company are shown below:

Tanya Marie Foxe(appointed 12 September 2024)

Carolyne Emily Gregory(appointed 13 June 2024)

Johan Robin Charles Von Schmidt Auf Altenstadt(resigned 13 June 2024)

Lavanya Menon(resigned 11 September 2024)

None of the Directors has any beneficial interest in the ordinary share capital of the Company. None of the Directors has any interest in

any material contract or arrangement with the Company either during or at the end of the year (2023: none).

Directors’ Indemnities

Lloyds Banking Group plc has granted to the Directors of the Company a deed of indemnity which constitutes ‘qualifying third party

indemnity provisions’ for the purposes of the Companies Act 2006. The deed was in force during the whole of the financial year and at the

date of approval of the financial statements or from the date of appointment in respect of the directors who joined the board during the

financial year. Directors no longer in office but who served on the board of the Company at any time in the financial year had the benefit

of this deed on indemnity during that period of service. The deed for existing directors is available for inspection at the registered office of

Lloyds Banking Group plc, details of which can be found in note 19. In addition the Group has in place appropriate directors and officers

liability insurance cover which was in place throughout the financial year.

Statement of Directors' responsibilities in respect of the financial statements

The Directors are responsible for preparing the Annual 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 prepared

the Company’s financial statements in accordance with international accounting standards in conformity with the requirements of

Companies Act 2006. 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:

• properly select and apply accounting policies; present information, including accounting policies, in a manner that provides relevant,

reliable, comparable and understandable information;

• provide additional disclosures when compliance with the specific requirements in international accounting standards in conformity

with the requirements of the Companies Act 2006 are insufficient to enable users to understand the impact of particular transactions,

other events and conditions on the entity’s financial position and financial performance; and

• make an assessment of the Company’s ability to continue as a going concern.

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.

The Directors are responsible for the maintenance and integrity of the corporate and financial information of the Company included on

the parent company's website.

Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in

other jurisdictions.

7 BOS (SHARED APPRECIATION MORTGAGES) NO. 3 PLC (REGISTERED NUMBER: 03331871)

Directors' report (continued)

For the year ended 31 December 2024

Directors’ confirmations

Each of the Directors, as listed in the Directors’ report, confirm that, to the best of their knowledge:

• the Company’s financial statements, which have been prepared in accordance with international accounting standards in conformity

with the requirements of the Companies Act 2006, give a true and fair view of the assets, liabilities, financial position and profit of the

Company; and

• the Strategic report includes a fair review of the development and performance of the business and the position of the Company,

together with a description of the principal risks and uncertainties that it faces.

Statement of disclosure of information to auditor

Each of the persons who is a Director at the date of approval of this report confirms that:

• so far as the Directors are aware, there is no relevant audit information of which the Company’s auditors are unaware; and

• they have taken all the steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit

information and to establish that the Company’s auditors are aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of section 418(2) of the Companies Act 2006.

Independent auditor

The auditor, Deloitte LLP, has expressed its willingness to continue in office and pursuant to section 489 of the Companies Act 2006, a

resolution will be proposed at the forthcoming annual general meeting for the re-appointment of Deloitte LLP as the auditor of the

Company.

As approved by the board of Directors and signed on behalf of board by:

Tanya Marie Foxe

Director

DATE: 25 April 2025

8 BOS (SHARED APPRECIATION MORTGAGES) NO. 3 PLC (REGISTERED NUMBER: 03331871)

Statement of comprehensive income

For the year ended 31 December 2024


	Note	2024	2023
		£	£

Interest receivable and similar income		128,137	106,306
Net interest income on financial assets and liabilities at fair value through profit or loss	4	137,589	156,079
Net interest income		265,726	262,385

Net fair value movements on financial assets at fair value through profit or loss	5	(877,292)	(361,354)
Net fair value movements on financial liabilities at fair value through profit or loss	5	845,992	265,846
Other operating income		150	200
Operating expenses	6	(76,920)	(39,148)
Profit before tax		157,656	127,929
Taxation	7	(39,414)	(30,063)
Profit for the financial year, being total comprehensive income		118,242	97,866

The Company operates in a single business segment and all of the Company’s activities are in the UK.

The accompanying notes are an integral part of the financial statements.

9 BOS (SHARED APPRECIATION MORTGAGES) NO. 3 PLC (REGISTERED NUMBER: 03331871)

Balance sheet

As at 31 December 2024


	Note	2024	2023
		£	£
Assets
Cash and cash equivalents	8	2,431,201	2,884,873
Trade and other receivables		19,674	-
Financial assets held at fair value through profit or loss	9	21,296,144	22,173,436
Total assets		23,747,019	25,058,309

Liabilities
Bank overdraft	8	801	2,517
Trade and other payables	10	39,049	616,057
Financial liabilities designated at fair value through profit or loss	11	20,434,408	21,280,400
Deferred tax liability	12	45,215	60,286
Current tax liability		54,485	44,230
Total liabilities		20,573,958	22,003,490

Equity
Share capital	13	50,001	50,001
Retained earnings		3,123,060	3,004,818
Total equity		3,173,061	3,054,819
Total liabilities and equity		23,747,019	25,058,309

The accompanying notes are an integral part of the financial statements.

The financial statements were approved by the board of Directors on 25 April 2025 and were signed on behalf of the board by

Tanya Marie Foxe

Director

DATE: 25 April 2025

10 BOS (SHARED APPRECIATION MORTGAGES) NO. 3 PLC (REGISTERED NUMBER: 03331871)

Statement of changes in equity

For the year ended 31 December 2024


	Share capital	Retained earnings	Total equity
	£	£	£

Balance at 1 January 2024	50,001	3,004,818	3,054,819
Profit for the year, being total comprehensive income	–	118,242	118,242
Balance at 31 December 2024	50,001	3,123,060	3,173,061


Share capital	Retained earnings	Total equity
£	£	£



Balance at 1 January 2023	50,001	2,906,952	2,956,953
Profit for the year, being total comprehensive income	–	97,866	97,866
Balance at 31 December 2023	50,001	3,004,818	3,054,819

The accompanying notes are an integral part of the financial statements.

11 BOS (SHARED APPRECIATION MORTGAGES) NO. 3 PLC (REGISTERED NUMBER: 03331871)

Cash flow statement

For the year ended 31 December 2024


		2024	2023
	Note	£	£

Cash flows from operating activities
Profit before tax		157,656	127,929

Adjustments for:
Interest receivable and similar income		(128,137)	(106,306)
Net interest income on financial assets at fair value through profit or loss	4	(137,589)	(156,079)
Net fair value movements on financial assets at fair value through profit or loss	9	(508,639)	(881,587)
Net fair value movements on financial liabilities at fair value through profit or loss	11	541,672	978,776
		(75,037)	(37,267)
Changes in operating assets and liabilities:
Net increase in Trade and other receivables		(19,674)	-
Net (decrease) / increase in Trade and other payables		(577,008)	199,637
Cash (used in) / generated from operations		(671,719)	162,370
Tax paid		(44,230)	(6,961)
Net cash flows (used in) / generated from operating activities		(715,949)	155,409

Cash flows from investing activities
Repayments on mortgage portfolio	9	434,680	439,750
Income earned on mortgage portfolio	4	485,568	527,577
Shared appreciation rights received	9	951,251	803,191
Bank interest received		126,404	104,626
Net cash flows generated from investing activities		1,997,903	1,875,144

Cash flows from financing activities
Repayment of borrowings	11	(434,680)	(439,750)
Interest paid on borrowings		(347,979)	(371,498)
Shared appreciation rights paid to Note holders	11	(951,251)	(803,191)
Net cash flows used in financing activities		(1,733,910)	(1,614,439)

Net (decrease) / increase in Cash and cash equivalents		(451,956)	416,114
Cash and cash equivalents at start of year		2,882,356	2,466,242
Cash and cash equivalents at end of year		2,430,400	2,882,356

Cash and cash equivalents per the Cash flow statement comprise:
Cash at bank		2,431,201	2,884,873
Bank overdraft		(801)	(2,517)
Cash and cash equivalents	8	2,430,400	2,882,356

The Cash flow statement has been presented using the indirect method.

The accompanying notes are an integral part of the financial statements.

12 BOS (SHARED APPRECIATION MORTGAGES) NO. 3 PLC (REGISTERED NUMBER: 03331871)

Notes to the financial statements

For the year ended 31 December 2024

Note 1 Basis of preparation

The financial statements of the Company have been prepared in accordance with international accounting standards in conformity with

the requirements of the Companies Act 2006.

The financial statements are presented in Sterling which is the Company's functional and presentation currency and have been

prepared on the historical cost basis (except for financial assets and financial liabilities classified and measured at fair value through

profit or loss ("FVTPL") in accordance with IFRS 9).

In preparation of these financial statements the Balance sheet has been arranged in order of liquidity.

The following new IFRS pronouncements are relevant to the Company and have been adopted within these financial statements.

However, the adoption of these pronouncements did not have a material impact.

The IASB has issued a number of minor amendments to IFRS Accounting Standards effective 1 January 2024, including IFRS 16 Lease liability

in a sale and leaseback, IAS 1 Non current liabilities with covenants, and IAS 1 Classification of liabilities as current or non current. These

amendments do not have a significant impact on the Company.

Details of those pronouncements which will be relevant to the Company but which were not effective at 31 December 2024 and which

have not been applied in preparing these financial statements are given in note 18.

As at 31 December 2024, the Company is showing a net assets position in the financial statements. The Company has continued to

perform in line with the Programme Documentation. There are certain items included in the Programme Documentation as referred to in

the annual report and financial statements in KPIs (Strategic Report) and explained in the note on Management of risk. In the course of

their regular monitoring of these KPIs and review of risk, the Directors are confident that these will have no issues for the period of at least

twelve months from when the financial statements are authorised for issue, despite the current adverse environment. The Directors have

also considered the credit enhancement features of the transaction, in the terms of the mortgage portfolio agreement (a reserve

account held by the company), together with the limited recourse nature of the issued notes.

The Directors are satisfied that the Company will continue to have access to adequate liquidity and capital resources for the foreseeable

future and, accordingly, the financial statements have been prepared on a going concern basis, taking into account:

• There is a net asset position of £3,173,061 (2023: £3,054,819).

• The Company has continued to perform in line with the Programme Documentation.

• The Company will continue to be able to repay its liabilities as they fall due through its liquid assets and/or its ability to drawdown on

additional funding available.

• The credit enhancement features of the transaction and the limited recourse nature of the issued notes.

• The bank account provider, Bank of Scotland plc, has maintained a minimum S&P credit rating of A-1, which is required per the

Programme Documentation.

• The early redemption threshold of 20% has been reached, however, the Company has no intention of exercising the early redemption

within the next 12 months.

Note 2 Material accounting policies

The material accounting policies applied in the preparation of these financial statements are set out below. These policies have been

consistently applied in both years presented, unless otherwise stated.

Note 2.1Interest receivable and interest payable

Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses recognised in

profit or loss to the extent they are not part of a designated hedging relationship. The net gain or loss recognised in profit or loss includes

interest earned on the financial asset and is included in the ‘Net fair value movements on financial assets and liabilities at fair value

through profit or loss’ line item.

Bank interest income is recognised in the period in which it is earned.

Note 2.2 Fees and commissions

Fees and commissions receivable relate to incremental fees received on redemption for the continuing servicing of the mortgage

portfolio and are recognised when the mortgage loan has been settled.

Note 2.3Financial instruments

The Company's financial instruments comprise a mortgage portfolio with an embedded derivative, cash liquid resources, interest-

bearing loan notes with an embedded derivative and various other receivables and payables that arise directly from its operations.

13 BOS (SHARED APPRECIATION MORTGAGES) NO. 3 PLC (REGISTERED NUMBER: 03331871)

Notes to the financial statements (continued)

For the year ended 31 December 2024

Note 2 Material accounting policies (continued)

Note 2.3Financial instruments (continued)

Note 2.3.1 Cash and cash equivalents

The Company holds bank accounts with Bank of Scotland plc, its parent. These accounts are held in the Company's name and meet the

definition of cash and cash equivalents. The use of certain accounts is restricted by a detailed priority of payments set out in the

Programme Documentation. As the cash and Bank overdrafts can only be used to meet certain specific liabilities and are not available to

be used with discretion, it is viewed as restricted cash.

These bank accounts are classified as financial assets held at amortised cost in accordance with IFRS 9 and income is recognised using

the effective interest method.

For the purposes of the Balance sheet and Cash flow statement, Cash and cash equivalents includes bank balances with an original

maturity of less than three months and Bank overdrafts.

Note 2.3.2 Lifetime Mortgage portfolio

The Company has a lifetime mortgage portfolio. The contract for these loans contains a share appreciation receivable clause where the

customer has to share any appreciation in the property value with the company as per an agreed rate. The shared appreciation

receivable is considered as an embedded derivative, however, the Company has made an accounting policy choice to not un-bundle

the contract and to account for the whole amount of the lifetime mortgage (including both the shared appreciation receivable

(embedded derivative) and the loan (host contract)), as one instrument and to recognise this at fair value on origination and subsequent

measurements.

Note 2.3.3 Embedded derivatives

Certain derivatives are embedded within other non-derivative host financial instruments to create a hybrid instrument. The economic

characteristics and risks of the embedded derivatives are closely related to the economic characteristics and risks of the host

instrument. The hybrid instrument is measured at fair value, and the embedded derivative is not separated from the host instrument with

changes in fair value of the embedded derivative recognised in the Statement of comprehensive income in accordance with IFRS 9.

The capital appreciation arising on the sale of a mortgage holder's property is shared between the mortgage holder and the Company

as set out in the original loan agreement. The Company pays its entire share of the appreciation to the Note holders.

The economic characteristics and risks of the shared appreciation rights receivable and payable are viewed as being closely related to

those arising on the mortgages and Notes, respectively. There is uncertainty regarding the timing of any future shared appreciation, and

therefore the shared appreciation rights receivable and payable have been valued with the mortgages and Notes at fair value through

profit or loss using discounted cash flow valuation techniques. Further details can be found in note 3.2 below.

Note 2.3.4 Interest-bearing loan notes

The Company’s interest-bearing loan notes comprise mortgage-backed fixed rate notes (the “Notes”) that have been issued in the UK

market.

The Notes are considered a lifetime liability with a legal maturity of 2073, and the terms of the Notes closely aligned to the terms of the

mortgage portfolio which have the same maturity date and on which the Notes are secured upon. The Notes contain a share

appreciation payable clause whereby the Note holders receive all the share appreciation receivable that the Company receives from the

customers on its mortgage portfolio. The share appreciation payable in the contract of the Notes is considered as an embedded

derivative and the Company has elected to not un-bundle the contract and embedded derivative of the Notes, but to treat them as one

instrument and to recognise this at fair value on origination and subsequent measurements.

Note 2.4Taxation

Tax expense comprises current and deferred tax. Current and deferred tax are charged or credited in the Statement of Comprehensive

Income except to the extent that the tax arises from a transaction or event which is recognised, in the same or a different period, outside

the Statement of Comprehensive Income (either in other comprehensive income, directly in equity, or through a business combination),

in which case the tax appears in the same statement as the transaction that gave rise to it.

Current tax is the amount of corporate income taxes expected to be payable or recoverable based on the profit for the period as

adjusted for items that are not taxable or not deductible, and is calculated using tax rates and laws that were enacted or substantively

enacted at the balance sheet date.

Current tax includes amounts provided in respect of uncertain tax positions when management expects that, upon examination of the

uncertainty by His Majesty's Revenue and Customs (HMRC) or other relevant tax authority, it is more likely than not that an economic

outflow will occur. Provisions reflect management's best estimate of the ultimate liability based on their interpretation of tax law,

precedent and guidance, informed by external tax advice as necessary. Changes in facts and circumstances underlying these

provisions are reassessed at each balance sheet date, and the provisions are re-measured as required to reflect current information.

14 BOS (SHARED APPRECIATION MORTGAGES) NO. 3 PLC (REGISTERED NUMBER: 03331871)

Notes to the financial statements (continued)

For the year ended 31 December 2024

Note 2 Material accounting policies (continued)

Note 2.4Taxation (continued)

Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in

the balance sheet. Deferred tax is calculated using tax rates and laws that have been enacted or substantively enacted at the balance

sheet date, and which are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

Deferred tax liabilities are generally recognised for all taxable temporary differences but not recognised for taxable temporary

differences arising on investments in subsidiaries where the reversal of the temporary difference can be controlled and it is probable that

the difference will not reverse in the foreseeable future. Deferred tax liabilities are not recognised on temporary differences that arise

from goodwill which is not deductible for tax purposes.

Deferred tax assets are recognised to the extent it is probable that taxable profits will be available against which the deductible

temporary differences can be utilised, and are reviewed at each balance sheet date and reduced to the extent that it is no longer

probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. In certain cases where forecast

profits are not expected to be sufficient to support the recognition of a deferred tax asset on a standalone entity basis, further

consideration has been given to the availability of UK group relief with connected companies to support the recognition.

Deferred tax assets and liabilities are not recognised in respect of temporary differences that arise on initial recognition of assets and

liabilities acquired other than in a business combination. Deferred tax is not discounted.

The Company has applied the exception to recognising and disclosing information about deferred tax assets and liabilities related to

Pillar 2 income taxes currently required by IAS12 Income Taxes.

Note 2.5 Capital management

The Company is not subject to externally imposed capital requirements in the current and prior year, except for the minimum

requirement under Companies Act 2006. The Company manages its ordinary share capital in order that there is sufficient capital, in the

opinion of the Directors, to support the transactions and level of business undertaken by the Company.

Note 3 Critical accounting judgements and key sources of estimation uncertainty

The preparation of the financial statements necessarily requires the exercise of judgement both in the application of accounting policies

and in the selection of assumptions used in the calculation of estimates. These judgements and estimates are reviewed on an ongoing

basis and are continually evaluated based on historical experience and other factors.

The following are considered the most critical judgements and estimates made by the directors in the process of applying the

Company's accounting policies and that have the most significant effect on the amounts recognised in the financial statements.

Note 3.1 Critical accounting judgements