Company registration number 05162823 (England and Wales)
AVON CAPITAL ESTATES 2 LIMITED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
PAGES FOR FILING WITH REGISTRAR
AVON CAPITAL ESTATES 2 LIMITED
CONTENTS
Page
Balance sheet
1
Notes to the financial statements
2 - 7
AVON CAPITAL ESTATES 2 LIMITED
BALANCE SHEET
AS AT
30 JUNE 2023
30 June 2023
- 1 -
2023
2023
2022
2022
Notes
£
£
£
£
Fixed assets
Investment property
4
34,855,000
39,809,000
Current assets
Debtors
5
654,642
664,923
Cash at bank and in hand
690,433
814,687
1,345,075
1,479,610
Creditors: amounts falling due within one year
6
(2,484,755)
(2,579,353)
Net current liabilities
(1,139,680)
(1,099,743)
Total assets less current liabilities
33,715,320
38,709,257
Creditors: amounts falling due after more than one year
7
(20,099,266)
(20,099,266)
Provisions for liabilities
(1,198,109)
(1,725,942)
Net assets
12,417,945
16,884,049
Capital and reserves
Called up share capital
8
264,541
264,541
Share premium account
45,693
45,693
Non distributable reserve
9
10,829,508
15,289,530
Profit and loss reserves
1,278,203
1,284,285
Total equity
12,417,945
16,884,049

The directors of the company have elected not to include a copy of the profit and loss account within the financial statements.true

These financial statements have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies regime.

The financial statements were approved by the board of directors and authorised for issue on 13 November 2023 and are signed on its behalf by:
Mr A A Whittome
Director
Company registration number 05162823 (England and Wales)
AVON CAPITAL ESTATES 2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
- 2 -
1
Accounting policies
Company information

Avon Capital Estates 2 Limited is a private company limited by shares incorporated in England and Wales. The registered office is Lower Wield House, Lower Wield, Alresford, Hampshire, United Kingdom, SO24 9RX.

1.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.

1.2
Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents the amount receivable for services rendered, net of value added tax.

 

Rental income represents the amounts (excluding value added tax) derived from gross rental income, service charge and insurance charges to tenants of the investment properties.

Lease incentives

Incentives provided to tenants to enter into an operating lease are credited to revenue in the profit and loss account, on a straight-line basis over the period of the lease.

1.3
Investment property

Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently it is measured at fair value at the reporting end date. Changes in fair value are recognised in profit or loss.

1.4
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand.

1.5
Financial instruments

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

 

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

AVON CAPITAL ESTATES 2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 3 -
Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including creditors, bank loans and loans from fellow group companies, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

1.6
Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

AVON CAPITAL ESTATES 2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 4 -
1.7
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end 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. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.8
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

 

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

 

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

2
Judgements and key sources of estimation uncertainty

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

AVON CAPITAL ESTATES 2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 5 -
3
Employees

The average monthly number of persons (including directors) employed by the company during the year was:

2023
2022
Number
Number
Total
-
0
-
0
4
Investment property
2023
£
Fair value
At 1 July 2022
39,809,000
Additions through external acquisition
40,000
Net gains or losses through fair value adjustments
(4,994,000)
At 30 June 2023
34,855,000

The company's investment properties were valued by the Directors as advised by Knight Frank LLP on the basis of their open market values. Each property has been valued individually and not as part of a portfolio. Knight Frank LLP is an independent firm qualified to provide valuations of assets of the type of which the group’s portfolio is comprised. In the view of the management committee the overall property market value to be incorporated in the company accounts at 30 June 2023 is £34,855,000 (2022: £39,809,000).

 

The methods and significant assumptions used to ascertain the fair value of £34,855,000 and fair value decrease of £4,994,000 included in the profit for the year are as follows:

 

- Equivalent rental value by tenant

- Assessment of equivalent yield per site based on local market conditions

- Adjustment for void units and transaction costs

 

On an historical cost basis the investment properties that have been revalued would be included at £22,877,580 (2022 - £22,837,580).

 

The estimated amounts of corporation tax which would arise if the assets held as long term investments were sold at the values at which they appear in the Balance Sheet would be £1,146,914 (2022 - £1,680,891).

 

Fair value at 30 June 2023 is represented by:

 

Valuation in 2023 £34,855,000

5
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
230,941
265,995
Other debtors
423,701
398,928
654,642
664,923
AVON CAPITAL ESTATES 2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 6 -
6
Creditors: amounts falling due within one year
2023
2022
£
£
Trade creditors
20,068
32,285
Corporation tax
21,435
54,277
Other taxation and social security
120,448
176,963
Other creditors
2,322,804
2,315,828
2,484,755
2,579,353
7
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Interest bearing shareholders' loans
20,099,266
20,099,266

In November 2017 Avon Capital Estates 1 LLP agreed a £34.5m, 10-year term bank loan facility with Scottish Widows Limited. The existing Avon Capital Estates 2 Limited loan facility of £8m with Avon Capital Estates 1 LLP was repaid and the new loan recognised as an interest bearing shareholders' loan. Interest is charged on a proportional basis based on the bank loan terms. The facility was extended by six years during the year and now has a maturity date of 28 November 2033 and a fixed interest rate of 3.08%. The capital advanced is due for repayment in full on the maturity date.

 

The majority of the investment properties of Avon Capital Estates 2 Limited are pledged as security for the £34.5m bank facility in Avon Capital Estates 1 LLP.

 

The company is also party to an Omnibus Guarantee and Set off Agreement dated 30 May 2014 and a Debenture dated 26 March 2005 in favour of Lloyds Bank plc.

8
Called up share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of £1 each
264,541
264,541
264,541
264,541
9
Non distributable reserve
2023
2022
£
£
At the beginning of the year
15,289,530
2,529,908
Fair value adjustment in year on investment properties
(4,994,000)
14,135,198
Tax on fair value adjustment
533,978
(1,375,576)
At the end of the year
10,829,508
15,289,530
AVON CAPITAL ESTATES 2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 7 -
10
Audit report information

As the income statement has been omitted from the filing copy of the financial statements, the following information in relation to the audit report on the statutory financial statements is provided in accordance with s444(5B) of the Companies Act 2006:

The auditor's report was unqualified.

Senior Statutory Auditor:
Christopher Hession C.A.
Statutory Auditor:
BK Plus Audit Limited
Date of audit report:
13 November 2023
11
Related party transactions
Transactions with related parties

During the year the company entered into the following transactions with related parties:

Avon Capital Estates Management Limited
2023
2022
£
£
Rent collection, asset management, tenant negotiations and insurance
492,770
380,830

Avon Capital Estates 2 Limited is wholly owned by Avon Capital Estates 1 LLP.

Mr A A Whittome and Mrs L P Whittome are members of the management committee of Avon Capital Estates 1 LLP, directors of Avon Capital Estates 2 Limited, and shareholders and directors of Avon Capital Estates Management Limited.

 

Avon Capital Estates Management Limited is wholly owned by Mr A A Whittome, Mrs L P Whittome and Bolivia Mount Limited, a company owned and controlled by D J Saville.

Other information

The company has taken advantage of the exemption available under section 33.1A of FRS102 from disclosing related party transactions and balances with other companies that are wholly owned as part of the group.

12
Parent company

Avon Capital Estates 1 LLP, an entity registered in England and Wales, is the ultimate controlling party due to it's 100% shareholding in the company. The registered office and principal place of business of Avon Capital Estates 1 LLP is the same as Avon Capital Estates 2 Limited.

The largest and smallest group in which the results of Avon Capital Estates 2 Limited are consolidated are prepared by Avon Capital Estates 1 LLP and are available from the Registrar of Companies, Companies House, Crown Way, Cardiff, CF14 3UZ.

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