iso4217:GBP213800Z6WDE14TNLVS182024-01-012024-12-31213800Z6WDE14TNLVS182023-01-012023-12-31213800Z6WDE14TNLVS182024-12-31213800Z6WDE14TNLVS182023-12-31213800Z6WDE14TNLVS182023-12-31ifrs-full:IssuedCapitalMember213800Z6WDE14TNLVS182023-12-31ifrs-full:RetainedEarningsMember213800Z6WDE14TNLVS182024-01-012024-12-31ifrs-full:RetainedEarningsMember213800Z6WDE14TNLVS182024-12-31ifrs-full:IssuedCapitalMember213800Z6WDE14TNLVS182024-12-31ifrs-full:RetainedEarningsMember213800Z6WDE14TNLVS182022-12-31ifrs-full:IssuedCapitalMember213800Z6WDE14TNLVS182022-12-31ifrs-full:RetainedEarningsMember213800Z6WDE14TNLVS182022-12-31213800Z6WDE14TNLVS182023-01-012023-12-31ifrs-full:RetainedEarningsMember BOS (SHARED APPRECIATION MORTGAGES) NO. 3 PLC Annual report and accounts 2024 Member of Lloyds Banking Group 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 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. Taking this into account the Directors have used their judgement and considered any implication of the last settled claim by assessing the likelihood of various legal outcomes and the impact such would have on the Company’s assets and liabilities, the outcome of which are discussed in more detail per note 3.2 below. Note 3.2  Key sources of estimation uncertainty Fair value of financial assets and financial liabilities Fair value is defined as the value at which assets, liabilities or positions could be closed out or sold in a transaction with a willing and knowledgeable counterparty. 15  BOS (SHARED APPRECIATION MORTGAGES) NO. 3 PLC (REGISTERED NUMBER: 03331871) Notes to the financial statements (continued) For the year ended 31 December 2024 Note 3  Critical accounting judgements and key sources of estimation uncertainty (continued) Note 3.2  Key sources of estimation uncertainty (continued) Fair value of financial assets and financial liabilities (continued) The fair values of the embedded derivative and the host contract have been calculated by discounting expected cash flows at an appropriate market rate for a regular standard variable mortgage product. In addition, the fair value includes an estimate of future HPI growth using the Group's own economic growth assumptions, together with an estimated dilapidation rate which has been determined based upon actual impact to date from previous redemption activity. The fair value calculation also factors in mortality rates which are used by the Group's insurance division and sourced from industry-wide metrics. The embedded derivative and the host contract are therefore reported within Financial assets at FVTPL and Financial liabilities at FVTPL, respectively, for the mortgage assets and the Note liabilities. Further information on the accounting policies are discussed in notes 2.3.2 and 2.3.3. The shared appreciation clauses within the lifetime mortgage portfolio and the Notes have not been valued because they are not separated from the host contract. There are no other derivative financial instruments. The table below shows the impact on the Company's financial instruments carried at fair value from a decrease ('favourable') or increase ('unfavourable') of 1% in the dilapidation rate of 20.85% (2023: 21%): | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | Favourable | | Unfavourable | | Favourable | | Unfavourable | | | 2024 | | 2024 | | 2023 | | 2023 | | | £ | | £ | | £ | | £ | | | | | | | | | | | Financial assets held at fair value through profit or loss | 248,853 | | (248,853) | | 258,474 | | (258,474) | | Financial liabilities designated at fair value through profit or loss | (248,853) | | 248,853 | | (258,474) | | 258,474 | The Company uses forecasts produced by the Group for the projected HPI growth when estimating the discounted cash flows expected over the life of the mortgage loans and the Notes, for the appreciation rights in the embedded derivative of the mortgage assets and the Note liabilities.  At 31 December 2024, the HPI forecast estimated an increase of 2.1% in house prices in the first 12 months to 31 December 2025, followed by increases in house prices of between 1.0% and 2.9% over the estimated life of the mortgage loans and the Notes after 2025. The table below shows the impact on the Company's financial instruments carried at fair value from an increase ('favourable') or decrease ('unfavourable') in the HPI forecast rates by 1% (2023: 1%): | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | Favourable | | Unfavourable | | Favourable | | Unfavourable | | | 2024 | | 2024 | | 2023 | | 2023 | | | £ | | £ | | £ | | £ | | | | | | | | | | | Financial assets held at fair value through profit or loss | 1,327,062 | | (1,222,555) | | 1,401,952 | | (1,291,291) | | Financial liabilities designated at fair value through profit or loss | (1,327,062) | | 1,222,555 | | (1,401,952) | | 1,291,291 | The Company discounts the expected cash flows by using the Group’s economic forecast for the Bank of England base rate, and applies the standard variable rate margin that Halifax branded mortgages add to any variable rate mortgage.  The current Bank of England base rate was 4.75% at 31 December 2024 and the forecast used had rates ranging from between 4.75% to 3.50%.  The discount rate used, including the margin, ranges from 8.24% to 6.99% over the estimated life of the mortgage loans and Notes. The table below shows the impact on the Company's financial instruments carried at fair value from an decrease ('favourable') or increase ('unfavourable') in the discount factor forecast rates by 1% (2023: 1%): | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | Favourable | | Unfavourable | | Favourable | | Unfavourable | | | 2024 | | 2024 | | 2023 | | 2023 | | | £ | | £ | | £ | | £ | | | | | | | | | | | Financial assets held at fair value through profit or loss | 1,466,707 | | (1,336,991) | | 1,546,584 | | (1,408,786) | | Financial liabilities designated at fair value through profit or loss | (1,423,461) | | 1,296,942 | | (1,502,723) | | 1,368,065 | 16  BOS (SHARED APPRECIATION MORTGAGES) NO. 3 PLC (REGISTERED NUMBER: 03331871) Notes to the financial statements (continued) For the year ended 31 December 2024 Note 3  Critical accounting judgements and key sources of estimation uncertainty (continued) Note 3.2  Key sources of estimation uncertainty (continued) Fair value of financial assets and financial liabilities (continued) The average age of the customers at 31 December 2024 was 87 years (2023: 86 years). The table below shows the impact on the Company's financial instruments carried at fair value from an increase ('favourable') or decrease ('unfavourable') in the mortality rate by changing the average age by 1 year (2023: 1 year): | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | Favourable | | Unfavourable | | Favourable | | Unfavourable | | | 2024 | | 2024 | | 2023 | | 2023 | | | £ | | £ | | £ | | £ | | | | | | | | | | | Financial assets held at fair value through profit or loss | 261,152 | | (272,137) | | 131,763 | | (137,312) | | Financial liabilities designated at fair value through profit or loss | (268,252) | | 279,121 | | (145,813) | | 151,308 | As discussed in note 3.1, the Directors have used their judgement and considered the wider implication of the last litigation claim by assessing the likelihood of various legal outcomes and the impact such would have on the Company’s assets and liabilities valued at fair value through profit or loss. The table below shows the impact on the Company’s financial instruments carried at fair value from a decrease (‘favourable’) or increase (‘unfavourable) of 1% (2023: 1%) in the probability of there being a litigation claim in the future: | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | Favourable | | Unfavourable | | Favourable | | Unfavourable | | | 2024 | | 2024 | | 2023 | | 2023 | | | £ | | £ | | £ | | £ | | | | | | | | | | | Financial assets held at fair value through profit or loss | 65,892 | | (65,892) | | 65,553 | | (65,553) | | Financial liabilities designated at fair value through profit or loss | (65,892) | | 65,892 | | (65,553) | | 65,553 | Fair value assessment of litigation The Directors have considered the impact of the recent legal action which the Company was subject to, as discussed in note 3.1 above, on the carrying amounts of the Company’s mortgage assets which are classified as financial assets measured at FVTPL. The Company has carried out a probability-based assessment for a variety of potential legal outcomes and determined, as part of this assessment, that the fair value of these mortgage assets has a carrying amount of £21,296,144 at 31 December 2024 (2023: £22,173,436). The Company has loan notes in issue that are classified as financial liabilities measured at FVTPL. The fair value of these loan notes in issue is intrinsically linked to the fair value of the mortgage assets. Accordingly, based on this assessment, the Company has determined that the fair value of the loan notes in issue has a carrying amount of £20,434,408 at 31 December 2024 (2023: £21,280,400). This assessment has had £nil impact on the Company’s result for either the current year or the previous year. Note 4  Net interest income on financial assets and liabilities at fair value through profit or loss | | | | | | --- | --- | --- | --- | | | | | | | | 2024 | | 2023 | | | £ | | £ | | | | | | | Interest receivable on Financial assets at FVTPL | 485,568 | | 527,577 | | Interest payable on Financial liabilities FVTPL | (347,979) | | (371,498) | | | 137,589 | | 156,079 | Note 5  Net fair value movements on financial assets and liabilities at fair value through profit or loss | | | | | | --- | --- | --- | --- | | | | | | | | 2024 | | 2023 | | | £ | | £ | | | | | | | Fair value movement on Financial assets at FVTPL | (877,292) | | (361,354) | | Fair value movement on Financial liabilities at FVTPL | 845,992 | | 265,846 | | | (31,300) | | (95,508) | 17  BOS (SHARED APPRECIATION MORTGAGES) NO. 3  PLC (REGISTERED NUMBER: 03331871) Notes to the financial statements (continued) For the year ended 31 December 2024 Note 5  Net fair value movements on financial assets and liabilities at fair value through profit or loss (continued) Included in the above fair value movement is an increase of £508,639 (2023: increase of £881,587) towards the financial assets held at fair value through profit or loss and an increase of £541,672 (2023: increase of £978,776) towards the financial liabilities held at fair value through profit or loss is attributable to the change in unrealised gains or losses for those financial assets and financial liabilities held at fair value through profit or loss. These relate to fair value movements impacted by changes in the assumptions during the year. Further details on these underlying assumptions and their sensitivities can be found in note 3.2. During the current year, customers’ average age estimate changed which impacted the mortality rate used in the model. The effect of this change resulted in an increase in fair value of £16,605. The amount of the effect for future periods is impractical to assess. Note 6  Operating expenses | | | | | | --- | --- | --- | --- | | | | | | | | 2024 | | 2023 | | | £ | | £ | | | | | | | Intercompany fees | 15,688 | | 13,753 | | Administration fees | 24,544 | | 27,095 | | Audit fees | 36,688 | | 37,636 | | Release of accrued liabilities | — | | (39,336) | | | 76,920 | | 39,148 | Audit fees relate to the statutory audit. Fees of £30,573 (2023: £31,363), net of VAT, are payable to Deloitte LLP with respect to the current year. There are no fees payable to the auditors and their associates for services other than the statutory audit (2023: none). The release of accrued liabilities during the previous year relates to fees accrued for the statutory audits relating to the financial years ended 31 December 2018, 31 December 2019 and 31 December 2020. The fees were paid on the Company’s behalf by an intermediate parent, Lloyds Bank plc. However, Lloyds Bank plc has since confirmed there was no obligation to repay this balance. The Company has no employees (2023: none). The Directors are employed by other companies within the Group and none of the Directors received any emoluments from the Company in the current or previous year. Note 7  Taxation 7.1  Analysis of tax expense for the year | | | | | | --- | --- | --- | --- | | | | | | | | 2024 | | 2023 | | | £ | | £ | | UK corporation tax | | | | | Current tax on taxable profit for the year | (54,485) | | (44,230) | | Current tax expense for the year | (54,485) | | (44,230) | | | | | | | UK Deferred tax | | | | | Origination and reversal of timing differences | 15,071 | | 14,167 | | Deferred tax credit for the year | 15,071 | | 14,167 | | Total tax expense for the year | (39,414) | | (30,063) | Corporation tax is calculated at a rate of 25% (2023: 23.5%) of the taxable profit for the year. 7.2  Factors affecting the tax expense for the year A reconciliation of the expense that would result from applying the standard UK corporation tax rate to the profit before tax to the actual tax expense for the year is given below: | | | | | | --- | --- | --- | --- | | | | | | | | 2024 | | 2023 | | | £ | | £ | | | | | | | Profit before tax | 157,656 | | 127,929 | | Tax expense thereon at UK corporation tax rate of 25.00% (2023: 23.50%) | (39,414) | | (30,063) | | Tax expense on profit on ordinary activities | (39,414) | | (30,063) | | Effective rate | 25.00 % | | 23.50 % | 18  BOS (SHARED APPRECIATION MORTGAGES) NO. 3 PLC (REGISTERED NUMBER: 03331871) Notes to the financial statements (continued) For the year ended 31 December 2024 Note 7  Taxation (continued) 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. No provision for Pillar 2 current tax is required in respect of this period. Note 8  Cash and cash equivalents | | | | | | --- | --- | --- | --- | | | | | | | | 2024 | | 2023 | | | £ | | £ | | | | | | | Cash at bank | 2,431,201 | | 2,884,873 | | Bank overdraft | (801) | | (2,517) | | Cash and cash equivalents per the Cash flow statement | 2,430,400 | | 2,882,356 | The Company holds bank accounts with Bank of Scotland plc. The use of the accounts is restricted by a detailed priority of payments set out in the Programme Documentation. As the cash can only be used to meet certain specific liabilities and is not available to be used with discretion, it is viewed as restricted cash. The accounts are held in the Company's name and meet the definition of cash and cash equivalents. Included in this balance is reserve account of £1,402,465. Note 9  Financial assets held at fair value through profit or loss | | | | | | | --- | --- | --- | --- | --- | | | | | | | | | Note | 2024 | | 2023 | | | | £ | | £ | | | | | | | | At 1 January | | 22,173,436 | | 22,534,790 | | Principal mortgage redemptions during the year | | (434,680) | | (439,750) | | Fair value adjustment | | 508,639 | | 881,587 | | Shared appreciation receivable movements in the year | | (951,251) | | (803,191) | | | 5 | (877,292) | | (361,354) | | At 31 December | | 21,296,144 | | 22,173,436 | The mortgage loans advanced by the Company have no fixed maturity date but would terminate on the earlier of, the date of sale of the property, or the death of the mortgage account holder. All mortgage loans are considered to be due after one year as the maturity cannot be reasonably determined. As the shared appreciation rights receivable are intrinsically linked to the maturity of the mortgage loans which have no fixed maturity, the balance is considered to be due after one year. Note 10  Trade and other payables | | | | | | --- | --- | --- | --- | | | | | | | | 2024 | | 2023 | | | £ | | £ | | | | | | | Shared appreciation payable | — | | 308,946 | | Note redemption payable | — | | 237,228 | | Accruals | 39,049 | | 69,883 | | | 39,049 | | 616,057 | All amounts are due within 12 months of the Balance sheet date. 19  BOS (SHARED APPRECIATION MORTGAGES) NO. 3 PLC (REGISTERED NUMBER: 03331871) Notes to the financial statements (continued) For the year ended 31 December 2024 Note 11  Financial liabilities designated at fair value through profit or loss This note provides information about the contractual terms of the Company's interest bearing loans and borrowings. For more information about the Company's exposure to interest rate risk and the fair value of its financial instruments, see note 14. | | | | | | | --- | --- | --- | --- | --- | | | | | | | | | Note | 2024 | | 2023 | | | | £ | | £ | | At 1 January | | 21,280,400 | | 21,546,246 | | Accrued interest | | (1,733) | | (1,681) | | Principal note repayments during the year | | (434,680) | | (439,750) | | Fair value adjustment | | 541,672 | | 978,776 | | Shared appreciation payable movements in the year | | (951,251) | | (803,191) | | | 5 | (845,992) | | (265,846) | | | | | | | | At 31 December | | 20,434,408 | | 21,280,400 | | | | | | | | --- | --- | --- | --- | --- | | | | | | | | | | 2024 | | 2023 | | | | £ | | £ | | Non-current liabilities | | | | | | Notes | | 6,369,760 | | 6,738,727 | | Shared appreciation payable | | 14,036,342 | | 14,511,634 | | | | 20,406,102 | | 21,250,361 | | Current liabilities | | | | | | Interest payable to Note holders | | 28,306 | | 30,039 | | | | | | | | At 31 December | | 20,434,408 | | 21,280,400 | The mortgage-backed fixed rate Notes are due to redeem in 2073. The interest rate payable on the Notes up to and including the interest period ending in the quarter to 28 February 2028 is 4.50% per annum. Thereafter, the interest rate payable on the Notes will be 5.50% per annum until 2073 when the Notes are due to redeem. At the end of the year the Notes, as rated by S&P, had a rating of  A+ (2023: rating of A+). The Notes carry, in addition to interest, rights to receive certain amounts calculated by reference to the value of shared appreciation proceeds received from redeemed mortgages. The Notes are subject to mandatory part-redemption from time to time based on the level of redeemed mortgages and can be redeemed in full, in certain circumstances, at the option of the Company. The Notes are secured on the mortgage portfolio, the bank accounts and certain other assets of the Company. The Company is contractually obliged to pay to the Note holders any amounts received from mortgage customers for the shared appreciation. As the shared appreciation rights payable are intrinsically linked to the amounts received following maturity of the mortgage loans which have no fixed maturity, the balance is considered to be non-current. Note 12  Deferred tax liability | | | | | | --- | --- | --- | --- | | | | | | | | 2024 | | 2023 | | | £ | | £ | | | | | | | At 1 January | (60,286) | | (74,453) | | Credit for the year | 15,071 | | 14,167 | | At 31 December | (45,215) | | (60,286) | | The deferred tax credit in the year comprises the following temporary differences: | | | | | Other temporary differences | 15,071 | | 14,167 | | Deferred tax liability comprises: | | | | | Other temporary differences | (45,215) | | (60,286) | 20  BOS (SHARED APPRECIATION MORTGAGES) NO. 3 PLC (REGISTERED NUMBER: 03331871) Notes to the financial statements (continued) For the year ended 31 December 2024 Note 13  Share capital | | | | | | --- | --- | --- | --- | | | | | | | | 2024 | | 2023 | | | £ | | £ | | Allotted, authorised and fully paid | | | | | 50,000 (2023: 50,000) ordinary shares of £1 each | 50,000 | | 50,000 | | 1 (2023: 1) deferred share of £1 | 1 | | 1 | | | | | | | Total Share capital | 50,001 | | 50,001 | The Company is a directly held subsidiary undertaking of Bank of Scotland plc. The £1 deferred share is held by Deutsche Trustee Company Limited. The holder of the ordinary shares is entitled to receive dividends as declared by the Company. The deferred share carries no entitlement to any dividend or to any share in any surplus assets of the Company on a winding-up, other than the right to be repaid the amount of any paid-up share capital thereon. The right to be repaid any paid-up share capital in the deferred share shall be deferred until after all paid-up share capital has been first repaid on all other classes of issued share capital in the Company. The deferred share carries the right to receive notice of all general meetings of the Company but does not carry the right to attend, speak or vote at a general meeting unless a resolution is to be proposed abrogating, varying or modifying any of the rights or privileges of the holder of the deferred share, or for the winding up or administration of the Company under the Insolvency Act 1986, or for the entry by the Company with any other party into a merger, reconstruction, scheme of arrangement or amalgamation of or affecting the Company, in any of which cases such holder shall have the right to attend such general meeting and shall be entitled to speak and vote. Whenever the holder of the deferred share is entitled to vote at a general meeting, such holder shall have one vote and on a poll such number of votes as is equal to 34.00% of the number of votes attached to all other issued shares of the Company. Note 14  Management of risk 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. Considerable resource is given to maintaining effective controls to manage, measure and mitigate these risks. Further detailed analysis of the risks facing the Company in relation to its financial instruments is provided below. The Company's exposure to risk on its financial instruments and the management of such risk is largely determined at the inception of the securitisation transaction. The Company's activities and the role of each party to the transaction are clearly defined and documented. | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | 31 December 2024 | | Carrying value | | | | | | | Note | Financial assets | | | Financial liabilities | | | | | | FVTPL | Amortised cost | | FVTPL | Amortised cost | | | Cash and cash equivalents | 8 | | 2,431,201 | | | | | | Financial assets held at fair value through profit or loss | 9 | 21,296,144 | | | | | | | Bank overdraft | 8 | | | | | 801 | | | Trade and other payables | 10 | | | | | 39,049 | | | Financial liabilities designated at fair value through profit or loss | 11 | | | | 20,434,408 | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | 31 December 2023 | | Carrying value | | | | | | | Note | Financial assets | | | Financial liabilities | | | | | | FVTPL | Amortised cost | | FVTPL | Amortised cost | | | Cash and cash equivalents | 8 | | 2,884,873 | | | | | | Financial assets held at fair value through profit or loss | 9 | 22,173,436 | | | | | | | Bank overdraft | 8 | | | | | 2,517 | | | Trade and other payables | 10 | | | | | 616,057 | | | Financial liabilities designated at fair value through profit or loss | 11 | | | | 21,280,400 | | | 21  BOS (SHARED APPRECIATION MORTGAGES) NO. 3 PLC (REGISTERED NUMBER: 03331871) Notes to the financial statements (continued) For the year ended 31 December 2024 Note 14  Management of risk (continued) Note 14.1  Credit risk Credit risk is the risk of financial loss arising from a customer's failure to settle financial obligations as they fall due. Credit risk arises on the individual loans within the mortgage 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. Mortgage loans are no longer offered by the Company but the maximum loan-to-value of the original advances was 75.00% and the credit risk is considered to be low as the customer is required to pay back principal and share appreciation on sale or death whichever is earlier and also considerations for interest receipts. 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. Bank of Scotland plc will repurchase any mortgages that are found or held not to be valid, binding and enforceable. Although in such an event the total value of the outstanding loan will be covered by Bank of Scotland plc, the Note holder will not receive the benefit of any future payments of appreciation amounts or partial repayment of appreciation amounts in respect of the mortgages repurchased. In terms of the shared appreciation in all other circumstances, in accordance with the Programme Documentation, amounts received by the Company from the borrower are required to be paid over to the Note holders in line with the priority of payments. In terms of arrears management, the Company has engaged Bank of Scotland plc as servicer of the loans in the portfolio to help reduce the risk of loss. The servicer is required to monitor repayments on the mortgage loans in accordance with its usual credit policies. The total value of interest arrears at 31 December 2024 was £146,667 (2023: £143,387). All accounts in the mortgage portfolio had a maximum loan-to-value of 75.00% and those accounts in interest arrears had a current loan-to-value ratio of less than 40.00%. Credit risk is considered to be low. There are no properties in possession or bad debts within the Company (2023: none). The current loan-to-value is 15.95% (2023: 16.11%). The maximum exposure to credit risk arising on the Company's financial assets at the reporting date is disclosed in the table below. | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | Note | Carrying amount | | Maximum exposure | | Carrying amount | | Maximum exposure | | | | 2024 | | 2024 | | 2023 | | 2023 | | | | £ | | £ | | £ | | £ | | Assets held at amortised cost: | | | | | | | | | | Cash and cash equivalents | 8 | 2,431,201 | | 2,431,201 | | 2,884,873 | | 2,884,873 | | | | | | | | | | | | Assets held at fair value: | | | | | | | | | | Financial assets held at fair value through profit or loss | 9 | 21,296,144 | | 21,296,144 | | 22,173,436 | | 22,173,436 | | Total Assets | | 23,727,345 | | 23,727,345 | | 25,058,309 | | 25,058,309 | Note 14.2  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. Note 14.2.1  Other price risk Under the terms of the Notes the Company is obliged 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 HPI. Further information on the sensitivity around HPI can be found in note 3.2. 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. Note 14.2.2  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. Both the mortgage portfolio and the Notes issued by the Company are exposed to fair value interest rate risk as they carry fixed interest rates. 22  BOS (SHARED APPRECIATION MORTGAGES) NO. 3 PLC (REGISTERED NUMBER: 03331871) Notes to the financial statements (continued) For the year ended 31 December 2024 Note 14  Management of risk (continued) Note 14.3  Liquidity risk Liquidity risk is the risk that the Company is not able to meet its financial obligations as they fall due or can do so only at an unacceptably high cost. 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 reserve account. The Company holds a reserve account of £1,402,488 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 liquidity tables reflect the undiscounted cash payments which will fall due if the structure continues until the earliest contractual maturity date as set out in the Programme Documentation. However, the actual Note repayment profile mirrors the repayment of the mortgages and based on current modelling assumptions, which use mortality rates sourced from industry wide metrics, it is anticipated that not all of the mortgages will have been settled by the earliest contractual maturity date used for the maturity analysis in these tables. The ability of the Company to meet its obligations to repay the Notes is dependent upon the receipt of funds earned on the mortgage portfolio. 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, the Note holders have no claim on the assets of Bank of Scotland plc. In the event that a mortgage loan redeems earlier than the earliest contractual maturity date used in these tables, the related Notes would be due for payment at the next quarterly waterfall cycle and paid earlier than these tables assume. The Company would also pay less interest than these tables have assumed if the Notes are settled earlier than the contractual maturity date used in these tables. | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | 2024 | Carrying amount | | Contractual repayment value | | Not later than one month | | Later than one month but not later than three months | | Later than three months but not later than one year | | Later than one year and not later than five years | | | £ | | £ | | £ | | £ | | £ | | £ | | Principal | | | | | | | | | | | | | Financial liabilities designated at fair value through profit or loss | 20,406,102 | | 20,406,102 | | – | | – | | – | | 20,406,102 | | Trade and other payables | 39,049 | | 39,049 | | - | | 39,049 | | – | | – | | Bank overdraft | 801 | | 801 | | 801 | | – | | – | | – | | Interest payable | | | | | | | | | | | | | Interest payable to Note holders | 28,306 | | 1,084,957 | | – | | 82,176 | | 251,095 | | 751,686 | | | 20,474,258 | | 21,530,909 | | 801 | | 121,225 | | 251,095 | | 21,157,788 | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | 2023 | Carrying amount | | Contractual repayment value | | Not later than one month | | Later than one month but not later than three months | | Later than three months but not later than one year | | Later than one year and not later than five years | | | £ | | £ | | £ | | £ | | £ | | £ | | Principal | | | | | | | | | | | | | Financial liabilities designated at fair value through profit or loss | 21,250,361 | | 21,250,361 | | – | | – | | – | | 21,250,361 | | Trade and other payables | 616,057 | | 616,057 | | - | | 616,057 | | – | | – | | Bank overdraft | 2,517 | | 2,517 | | 2,517 | | – | | – | | – | | Interest payable | | | | | | | – | | | | | | Interest payable to Note holders | 30,039 | | 1,502,898 | | – | | 87,937 | | 265,743 | | 1,149,218 | | | 21,898,974 | | 23,371,833 | | 2,517 | | 703,994 | | 265,743 | | 22,399,579 | Note – the repayment of principal and associated shared appreciation is contractually due when the mortgage loan becomes due on either the date of sale of the property or on the death of the customer. 23  BOS (SHARED APPRECIATION MORTGAGES) NO. 3 PLC (REGISTERED NUMBER: 03331871) Notes to the financial statements (continued) For the year ended 31 December 2024 Note 14  Management of risk (continued) Note 14.4  Fair values The financial instruments below are analysed by valuation method. The different levels are defined as follows: • Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1). • Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is derived from prices (level 2)). • Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3). Financial assets and liabilities carried at fair value. | | | | | | --- | --- | --- | --- | | | | | | | | 2024 | | 2023 | | | £ | | £ | | | Level 3 | | Level 3 | | | | | | | Financial assets held at fair value through profit or loss | 21,296,144 | | 22,173,436 | | Financial liabilities designated at fair value through profit or loss | (20,434,408) | | (21,280,400) | The management discusses the significant inputs to the valuation model on half-yearly basis with a model governance committee, which review and approves any changes. The shared appreciation rights receivable and mortgage portfolio as a whole (financial assets at FVTPL), plus the shared appreciation rights payable and loan notes as a whole (financial liabilities at FVTPL), are both measured at fair value. The fair value has been calculated by discounting expected cash flows at an appropriate market rate for a regular standard variable mortgage product. In addition, the fair value includes an estimate of future HPI growth using the Group's own economic growth assumptions, together with an estimated dilapidation rate which has been determined based upon actual impact to date from previous redemption activity. The fair value calculation also factors in mortality rates which are used by the Group's insurance division and sourced from industry wide metrics. For this reason, in accordance with IFRS 13 Fair value measurement (''IFRS 13''), the fair value measurement is considered to be Level 3 in the fair value hierarchy. The fair value also includes the adjustment for any future litigation risk. Please refer to note 3 for further details. There has been no change in the valuation technique from last year and there has been no transfer between levels during either the current year or the previous year. Financial assets and liabilities carried at amortised cost Cash and cash equivalents and Trade and other payables are recognised at amortised cost. The fair value of these assets and liabilities is considered to be a close approximation to amortised cost due to the short-term nature of these assets and liabilities. Note 15  Related parties The Company is a subsidiary undertaking of Bank of Scotland plc and ultimately Lloyds Banking Group plc. The Company receives bank interest from Bank of Scotland plc on its bank deposits. Bank of Scotland plc administers the mortgage portfolio on behalf of the Company, for which quarterly service fees are paid. No dividend was paid during the year (2023: £nil). During the year Bank of Scotland plc agreed settlement, on the Company’s behalf, with those customers who had been party to a claim issued in the County Court against Bank of Scotland plc and its subsidiaries, including the Company. Further information on the claim and the settlement can be found in Note 3.1 and Note 16. During the year the Company undertook the following transactions with companies in the Group: | | | | | | --- | --- | --- | --- | | | | | | | | Parent | | Parent | | | 2024 | | 2023 | | Statement of comprehensive income | £ | | £ | | Income | | | | | Interest receivable and similar income | 128,137 | | 106,306 | | | | | | | Expenses | | | | | Operating expenses | (15,688) | | (13,753) | | | | | | 24  BOS (SHARED APPRECIATION MORTGAGES) NO. 3 PLC (REGISTERED NUMBER: 03331871) Notes to the financial statements (continued) For the year ended 31 December 2024 Note 15  Related parties (continued) | | | | | | --- | --- | --- | --- | | | | | | | | Parent | | Parent | | | 2024 | | 2023 | | Balance sheet | £ | | £ | | Assets | | | | | Cash and cash equivalents | 2,431,201 | | 2,884,873 | | | | | | | Liabilities | | | | | Bank overdraft | (801) | | (2,517) | The key management personnel during the year were the Directors, as set out in the Directors’ Report. Note 16  Contingent liabilities Tax matters The Group has an open matter in relation to a claim for group relief of losses incurred in its former Irish banking subsidiary, which ceased trading on 31 December 2010. In 2020, HMRC concluded its enquiry into the matter and issued a closure notice denying the group relief claim. The Group appealed to the First Tier Tax Tribunal. The hearing took place in May 2023. In January 2025, the First Tier Tribunal concluded in favour of HMRC. The Group believes it has applied the rules correctly and that the claim for group relief is correct. Having reviewed the Tribunal's conclusions and having taken appropriate advice the Group intends to appeal the decision and does not consider this to be a case where an additional tax liability will ultimately fall due. If the final determination of the matter by the judicial process is that HMRC's position is correct, management believes that this would result in an increase in the Company's current tax liabilities of approximately £142,000 (including interest).  It is unlikely that any appeal hearing will be held before 2026, and final conclusion of the judicial process may not be for several years. Litigation During the ordinary course of business the Company is subject to complaints and threatened or actual legal proceedings (including class or group action claims) brought by, or on behalf of, customers as well as legal and regulatory reviews, challenges, investigations and enforcement actions. In those instances where it is concluded that it is more likely than not that a payment will be made, a provision is established to management's best estimate of the amount required at the relevant balance sheet date. In some cases it will not be possible to form a view, for example because the facts are unclear or because further time is needed properly to assess the merits of the case, and no provisions are held in relation to such matters. In these circumstances, specific disclosure in relation to a contingent liability will be made where material. Following the agreement reached on the last known claim, as discussed further below, the Company is not aware of any further such matters where it expects the final outcome would have a material adverse effect on its financial position, operations or cash flows. 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. Note 17  Events after the Balance sheet date There are no events after the Balance sheet date requiring disclosure in these financial statements. Note 18  Future accounting pronouncements There are a number of new accounting pronouncements issued by the IASB with an effective date of 1 January 2027. This includes IFRS 18 Presentation and Disclosure in Financial Statements which replaces IAS 1 Presentation of Financial Statements and IFRS 19 Subsidiaries without Public Accountability: Disclosures. The impact of these standards is being assessed and they have not yet been endorsed for use in the UK. The IASB has issued its annual improvements and a number of amendments to the IFRS Accounting Standards effective on or after 1 January 2025, including Amendments to IFRS 9 Financial Instruments (effective 1 January 2026) and Amendments to IFRS 7 Financial Instruments Disclosure (effective 1 January 2026) and IAS 21 The Effects of Changes in Foreign Exchange Rates (effective 1 January 2025). These improvements and amendments are not expected to have a significant impact on the Company. 25  BOS (SHARED APPRECIATION MORTGAGES) NO. 3 PLC (REGISTERED NUMBER: 03331871) Notes to the financial statements (continued) For the year ended 31 December 2024 Note 19  Parent undertaking and controlling party The Company’s immediate parent company is Bank of Scotland plc (incorporated in Scotland). The Company regarded by the Directors as the Ultimate parent company and controlling party is Lloyds Banking Group plc, which is also the parent undertaking of the largest group of undertakings for which group financial statements are drawn up. Bank of Scotland plc is the parent undertaking of the smallest such group of undertakings to consolidate these financial statements. Copies of the consolidated financial statements for both companies may be obtained from Group Secretariat, Lloyds Banking Group plc, 33 Old Broad Street, London EC2N 1HZ or downloaded via www.lloydsbankinggroup.com.