Company registration number 13775608 (England and Wales)
CREF3 UKI HOLDINGS I LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
CREF3 UKI HOLDINGS I LTD
COMPANY INFORMATION
Directors
N Fegan
C Courbage
Company number
13775608
Registered office
4th Floor
7 Clarges Street
London
United Kingdom
W1J 8AE
Auditor
Kingswood LLP
3 Coldbath Square
London
EC1R 5HL
CREF3 UKI HOLDINGS I LTD
CONTENTS
Page
Directors' report
1
Directors' responsibilities statement
2
Independent auditor's report
3 - 5
Profit and loss account
6
Group balance sheet
7
Company balance sheet
8
Group statement of changes in equity
9
Company statement of changes in equity
10
Notes to the financial statements
11 - 22
CREF3 UKI HOLDINGS I LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -

The directors present their annual report and financial statements for the year ended 31 December 2023.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

N Fegan
C Courbage
Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the company is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the company is aware of that information.

Small companies exemption

This report has been prepared in accordance with the provisions applicable to companies entitled to the small companies exemption.

On behalf of the board
N Fegan
Director
17 September 2024
CREF3 UKI HOLDINGS I LTD
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -

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 elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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 group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

 

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

CREF3 UKI HOLDINGS I LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF CREF3 UKI HOLDINGS I LTD
- 3 -
Opinion

We have audited the financial statements of CREF3 UKI Holdings I Ltd (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2023 which comprise the group profit and loss account, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

 

We draw attention to Note 1.5 in the financial statements, which highlights that at 31 December 2023 the group’s total liabilities exceeded its total assets. As detailed in note 1.5, the parent company has provided written confirmation that it will not call in the intercompany loans made to its subsidiary, or require payment of interest on that intercompany loan beyond the available cash flow of the group for a period of at least twelve months from the date of signing of these financial statements. The group remains dependent on the ongoing banking facilities, which at the approval of these financial statements remained due for renewal before 18 February 2025. These conditions indicate that a material uncertainty exists that may cast significant doubt on the group's and parent company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

 

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

CREF3 UKI HOLDINGS I LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF CREF3 UKI HOLDINGS I LTD
- 4 -

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the directors' report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

 

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

 

CREF3 UKI HOLDINGS I LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF CREF3 UKI HOLDINGS I LTD
- 5 -

We assessed the susceptibility of the group’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

 

To address the risk of fraud through management bias and override of controls, we:

 

In response to the risk of irregularities and non compliance with laws and regulations, we designed procedures which included, but were not limited to:

 

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non compliance. Auditing standards also limit the audit procedures required to identify non compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.

 

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Richard Behan FCA (Senior Statutory Auditor)
For and on behalf of Kingswood LLP
17 September 2024
Chartered Accountants
Statutory Auditor
3 Coldbath Square
London
EC1R 5HL
CREF3 UKI HOLDINGS I LTD
GROUP PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 6 -
Year
Period
ended
ended
31 December
31 December
2023
2022
Notes
£
£
Turnover
4,505,661
3,827,319
Cost of sales
(61,031)
(276,478)
Gross profit
4,444,630
3,550,841
Administrative expenses
(4,315,060)
(1,322,801)
Operating profit
129,570
2,228,040
Interest receivable and similar income
5
1,746,315
71,594
Interest payable and similar expenses
6
(6,216,810)
(3,637,977)
Fair value movement on investment property
7
(9,392,876)
(4,358,817)
Other fair value movements
7
(1,342,297)
2,046,439
Loss before taxation
(15,076,098)
(3,650,721)
Tax on loss
(171,101)
45,270
Loss for the financial year
(15,247,199)
(3,605,451)
Loss for the financial year is all attributable to the owner of the parent company.

There are no items of other comprehensive income for either the year or the prior period other than the loss for the year/period. Accordingly, no statement of other comprehensive income has been presented.

CREF3 UKI HOLDINGS I LTD
GROUP BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 7 -
2023
2022
Notes
£
£
£
£
Fixed assets
Intangible assets
8
-
3,520,983
Investment properties
9
84,330,000
93,450,000
84,330,000
96,970,983
Current assets
Debtors falling due after more than one year
13
2,019,143
3,361,439
Debtors falling due within one year
13
1,401,634
2,357,773
Cash at bank and in hand
3,444,412
3,782,238
6,865,189
9,501,450
Creditors: amounts falling due within one year
14
(42,805,838)
(42,835,883)
Net current liabilities
(35,940,649)
(33,334,433)
Total assets less current liabilities
48,389,351
63,636,550
Creditors: amounts falling due after more than one year
15
(67,242,000)
(67,242,000)
Net liabilities
(18,852,649)
(3,605,450)
Capital and reserves
Called up share capital
16
1
1
Profit and loss reserves
(18,852,650)
(3,605,451)
Total equity
(18,852,649)
(3,605,450)

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

The financial statements were approved by the board of directors and authorised for issue on 17 September 2024 and are signed on its behalf by:
17 September 2024
N Fegan
Director
Company registration number 13775608 (England and Wales)
CREF3 UKI HOLDINGS I LTD
COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2023
31 December 2023
- 8 -
2023
2022
Notes
£
£
£
£
Fixed assets
Investments
10
1
1
Current assets
Debtors
13
40,934,973
40,948,783
Cash at bank and in hand
9,006
214
40,943,979
40,948,997
Creditors: amounts falling due within one year
14
(40,959,949)
(40,951,863)
Net current liabilities
(15,970)
(2,866)
Net liabilities
(15,969)
(2,865)
Capital and reserves
Called up share capital
16
1
1
Profit and loss reserves
(15,970)
(2,866)
Total equity
(15,969)
(2,865)

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £13,104 (2022: £2,866).

These financial statements have been prepared 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 17 September 2024 and are signed on its behalf by:
17 September 2024
N Fegan
Director
Company registration number 13775608 (England and Wales)
CREF3 UKI HOLDINGS I LTD
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 December 2021
-
0
-
0
-
Period ended 31 December 2022:
Issue of share capital
16
1
-
1
Loss for the period
-
(3,605,451)
(3,605,451)
Balance at 31 December 2022
1
(3,605,451)
(3,605,450)
Year ended 31 December 2023:
Loss for the year
-
(15,247,199)
(15,247,199)
Balance at 31 December 2023
1
(18,852,650)
(18,852,649)
CREF3 UKI HOLDINGS I LTD
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 December 2021
-
0
-
0
-
Period ended 31 December 2022:
Issue of share capital
16
1
-
1
Loss for the period
-
(2,866)
(2,866)
Balance at 31 December 2022
1
(2,866)
(2,865)
Year ended 31 December 2023:
Loss for the year
-
(13,104)
(13,104)
Balance at 31 December 2023
1
(15,970)
(15,969)
CREF3 UKI HOLDINGS I LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
1
Accounting policies
Company information

CREF3 UKI Holdings I Ltd (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 4th Floor, 7 Clarges Street, London, United Kingdom, W1J 8AE.

 

The group consists of CREF3 UKI Holdings I Ltd and all of its subsidiaries.

1.1
Reporting period

The company was incorporated on 1 December 2021. As such, the prior period was that of more than one year from the date of incorporation to 31 December 2022. The comparatives are therefore not directly comparable.

 

The company's subsidiaries were incorporated on various dates. The results of the subsidiaries from their respective dates of incorporation to 31 December 2022 were therefore included in the prior period consolidated group financial statements.

1.2
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 pound.

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

The company and group have taken advantage of the exemption under section 1A of FRS 102 not to prepare a statement of cash flows.

1.3
Business combinations

In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries are accounted for at cost less impairment.

 

During the year, the trade and assets of two subsidiaries, HEVF Cribbs Causeway Sarl and CREF3 UKI PW L Ltd, were hived across to fellow group subsidiaries CREF3 UKI Cribbs Causeway Ltd and CREF3 UKI Peterwood F Ltd respectively. The hive across activities have been accounted for under the principles of hybrid accounting, such that, for group consolidation purposes, there are no implications on the group financial reporting.

CREF3 UKI HOLDINGS I LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 12 -
1.4
Basis of consolidation

The consolidated group financial statements consist of the financial statements of the parent company CREF3 UKI Holdings I Ltd together with all entities controlled by the parent company (its subsidiaries).

 

All financial statements are made up to 31 December 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

 

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.

1.5
Going concern

These financial statements have been prepared on a going concern basis. At the balance sheet date, current liabilities exceeded current assets by £35,940,649 and the group had net liabilities of £18,852,649.

 

At the year end, CREF3 UKI Holdings I Ltd owed its immediate parent, CREF3 Euro Industrial Holdings II L.P, £40,947,173. CREF3 Euro Industrial Holdings II L.P has provided written confirmation that it will not call in the intercompany loans made to its subsidiary, or require payment of interest on that intercompany loan beyond the available cash flow of the group for a period of at least twelve months from the date of signing of these financial statements.

 

At the year end, the group’s bank loans totalled £67,242,000 and these are secured on the investment properties of the group. The facility expires on 18 February 2025 and the directors are confident that the facility will be renewed prior to that date.

 

The directors have assessed the group's ability to meet its debts as they fall due and have a reasonable expectation that the group has adequate resources to continue in operational existence for a period of not less than 12 months from the date of these financial statements. On this basis, the directors continue to adopt the going concern basis of accounting in preparing these financial statements.

1.6
Turnover

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the group and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding value added tax and other sales taxes.

 

Revenue comprises rental income from tenants of the group's investment property. Rental income is recognised on an accruals basis in the period in which it is earned, in accordance with the terms of the lease.

1.7
Intangible fixed assets - goodwill

Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 4 years.

 

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

CREF3 UKI HOLDINGS I LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
1.8
Investment properties

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.

1.9
Fixed asset investments

Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.

 

In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

1.10
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include deposits held at call with banks.

1.11
Financial instruments

The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset and 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.

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.

CREF3 UKI HOLDINGS I LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
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 group 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 group 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 group's contractual obligations expire or are discharged or cancelled.

1.12
Equity instruments

Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs.

1.13
Derivatives

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

 

A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability, to the extent that a future liability exists.

 

Derivatives comprise a rate cap instrument and is valued at year end by way of a reference to an external valuation.

1.14
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 group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

CREF3 UKI HOLDINGS I LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
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 if, and only if, there is 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.

1.15
Leases

Rental income from operating leases, including any lease incentives provided, is recognised on a straight line basis over the term of the relevant lease.

1.16
Borrowing costs

Interest is recognised in profit or loss in the period in which it is incurred.

 

Other finance costs are recognised in profit or loss as finance costs over the term of the associated borrowings.

1.17
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

CREF3 UKI HOLDINGS I LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 16 -
2
Judgements and key sources of estimation uncertainty

In the application of the group’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.

Critical judgements

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Amortisation and impairment of goodwill

The goodwill arising on acquisition of HEVF Cribbs Causeway Sarl relates to the investment property and the associated trade and is amortised over an estimated useful economic life of 4 years, in line with the business plan holding period. During the year, the trade and assets of HEVF Cribbs Causeway Sarl were hived across to fellow group subsidiary CREF3 UKI Cribbs Causeway Ltd. Goodwill is tested for impairment at least annually, or more frequently when there is an indication that it may be impaired.

 

Details of the amortisation charged and impairment recognised are set out in note 8.

Key sources of estimation uncertainty

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

Valuation of investment property

The directors exercise judgement in the valuation of the group's investment properties which are recognised at their fair value at the balance sheet date. The fair values have been assessed by the directors following a review of market data and are all supported by external valuations. The external valuations are made on an open market value for existing use basis by reference to market evidence of rental yields and transaction prices for similar properties, in accordance with the guidance notes of the Royal Institute of Chartered Surveyors.

 

The total carrying amount of the group's investment property at the balance sheet date and fair value movement in the period is detailed in note 9.

Valuation of lease incentives

The directors exercise judgement in the valuation of lease incentives at the balance sheet date, in respect of recognising rental income, including any lease incentives provided, on a straight line basis over the relevant term. The lease incentive asset is included within the value of the group's investment properties.

 

The total carrying amount of the group's lease incentive asset included within the value of the group's investment properties at the balance sheet date is detailed in note 9.

Valuation of derivatives

The directors exercise judgement in the valuation of the group's derivatives which are recognised at their fair value at the balance sheet date. Derivatives comprise a rate cap instrument and is valued at year end by way of a reference to an external valuation. The external valuation reflect the present value of expected future cash flows to which the group is entitled to under the terms of the instrument, which are calculated with reference to forward interest rates.

 

The total carrying amount of the group's derivatives at the balance sheet date is detailed in note 12.

CREF3 UKI HOLDINGS I LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
3
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the group and company
19,400
16,500
4
Employees

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

Group
Company
2023
2022
2023
2022
Number
Number
Number
Number
Total
2
2
2
2
5
Interest receivable and similar income
2023
2022
£
£
Other interest receivable and similar income
1,746,315
71,594
6
Interest payable and similar expenses
2023
2022
£
£
Interest payable to group undertakings
-
0
410,626
Interest on bank loans
5,536,972
2,567,622
Finance costs
679,838
659,729
6,216,810
3,637,977
7
Fair value gains/(losses)
2023
2022
£
£
Fair value movement on financial derivatives
(1,342,297)
2,046,439
Fair value movement on investment property
(9,392,876)
(4,358,817)
(10,735,173)
(2,312,378)
CREF3 UKI HOLDINGS I LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
8
Intangible fixed assets
Group
Goodwill
£
Cost
At 1 January 2023 and 31 December 2023
4,506,858
Amortisation and impairment
At 1 January 2023
985,875
Amortisation charged for the year
1,126,715
Impairment losses
2,394,268
At 31 December 2023
4,506,858
Carrying amount
At 31 December 2023
-
0
At 31 December 2022
3,520,983
The company had no intangible fixed assets at 31 December 2023 or 31 December 2022.

During the year, the trade and assets of one subsidiary, for which the goodwill was originally recognised, was transferred to another subsidiary via a hive across. The goodwill was retained at its original cost value less amortisation and was deemed to retain the same useful economic life as before the hive across. However, at the balance sheet date, the goodwill has been fully impaired, since there are no future economic benefits expected from this. The resultant impairment loss has been recognised in administrative expenses.

9
Investment property
Group
Company
2023
2023
£
£
Fair value
At 1 January 2023
93,450,000
-
Additions
485,689
-
Revaluations
(9,392,876)
-
Other changes
(212,813)
-
At 31 December 2023
84,330,000
-

The fair values of the group's freehold investment property at the balance sheet date have been assessed by the directors following a review of market data and are all supported by external valuations conducted shortly after the end of the financial year. The external valuations were made on an open market value for existing use basis by reference to market evidence of rental yields and transaction prices for similar properties, in accordance with the guidance notes of the Royal Institute of Chartered Surveyors.

 

The fair values of the group's freehold investment property at the balance sheet date are inclusive of balances in respect of lease incentives totalling £1,324,519 (2022: £1,537,332).

 

The property is subject to a first legal charge to secure the bank borrowings of the group.

CREF3 UKI HOLDINGS I LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
10
Fixed asset investments
Group
Company
2023
2022
2023
2022
£
£
£
£
Shares in group undertakings
-
-
1
1
Movements in fixed asset investments
Company
Shares in subsidiaries
£
Cost or valuation
At 1 January 2023 and 31 December 2023
1
Carrying amount
At 31 December 2023
1
At 31 December 2022
1
11
Subsidiaries

Details of the company's subsidiaries at 31 December 2023 are as follows:

Name of undertaking
Class of
% Held
shares held
Direct
Indirect
CREF3 UKI Holdings II Ltd
Ordinary
100.00
-
CREF3 UKI Imperial Ltd
Ordinary
0
100.00
CREF3 UKI PW L Ltd
Ordinary
0
100.00
CREF3 UKI Peterwood Way F Ltd
Ordinary
0
100.00
CREF3 UKI 730 LR Ltd
Ordinary
0
100.00
CREF3 UKI Cribbs Causeway Ltd
Ordinary
0
100.00

The registered office address of all the above entities is is 4th Floor, 7 Clarges Street, London, United Kingdom, W1J 8AE.

 

During the financial year, HEVF Cribbs Causeway Sarl, a subsidiary, was liquidated.

 

Following the end of the financial year, CREF3 UKI PW L Ltd has entered liquidation.

12
Financial instruments
Group
Company
2023
2022
2023
2022
£
£
£
£
Carrying amount of financial assets
Instruments measured at fair value through profit or loss
2,019,143
3,361,439
-
-
CREF3 UKI HOLDINGS I LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
12
Financial instruments
(Continued)
- 20 -

Financial instruments comprise of rate cap instruments. The fair value of each rate cap instrument at the balance sheet date is based on an external valuation. The external valuation was prepared by discounting expected future cash flows arising from the rate cap instrument, with the expected future cash flows derived from forward curves, correlation and volatility levels based upon observable market inputs and/or good faith estimates and a discount rate determined with reference to SONIA.

 

The company's subsidiaries receive a return on the cap if the rate exceeds the strike rate of 2.00% + 3m SONIA. The term of the rate cap instruments is conterminous with that of the group’s bank loans.

13
Debtors
Group
Company
2023
2022
2023
2022
Amounts falling due within one year:
£
£
£
£
Trade debtors
178,482
269,500
-
0
-
0
Corporation tax recoverable
142,811
46,315
-
0
-
0
Amounts owed by group undertakings
60,000
-
40,934,973
40,948,783
Other debtors
236,803
446,842
-
0
-
0
Prepayments and accrued income
783,538
1,595,116
-
0
-
0
1,401,634
2,357,773
40,934,973
40,948,783
Amounts falling due after more than one year:
Derivative financial instruments
2,019,143
3,361,439
-
-
Total debtors
3,420,777
5,719,212
40,934,973
40,948,783

Amounts owed by group undertakings are unsecured, interest free and repayable on demand.

14
Creditors: amounts falling due within one year
Group
Company
2023
2022
2023
2022
£
£
£
£
Trade creditors
133,992
67,680
6,386
-
0
Amounts owed to parent undertaking
40,947,173
40,950,283
40,947,173
40,950,283
Corporation tax payable
313,018
-
0
-
0
-
0
Other taxation and social security
180,624
77,557
-
-
Other creditors
217,338
441,017
-
0
-
0
Accruals and deferred income
1,013,693
1,299,346
6,390
1,580
42,805,838
42,835,883
40,959,949
40,951,863

Amounts owed to parent undertaking are unsecured, interest free and repayable on demand.

CREF3 UKI HOLDINGS I LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
15
Creditors: amounts falling due after more than one year
Group
Company
2023
2022
2023
2022
£
£
£
£
Bank loans
67,242,000
67,242,000
-
0
-
0

The bank loan is due for repayment in full on 18 February 2025 and is secured by a first legal charge over the property of the group companies party to the agreement. The charge extends to all assets of the group, both present and future. Interest is charged at 3.6% over SONIA.

16
Share capital
Group and company
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
1
1
1
1
17
Financial commitments, guarantees and contingent liabilities

Under the terms of the bank loan, the company's subsidiaries who are party to the agreement are jointly and severally liable for the bank loan obligations, totalling £108,643,126 (2022: £79,580,384) at the period end date.

18
Operating lease commitments
Lessor

At the reporting end date the group had contracted with tenants for the following minimum lease payments:

Group
Company
2023
2022
2023
2022
£
£
£
£
Within one year
4,281,898
4,288,513
-
-
Between two and five years
13,171,585
13,016,211
-
-
In over five years
7,344,195
8,022,462
-
-
24,797,678
25,327,186
-
-
CREF3 UKI HOLDINGS I LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
19
Subsidiary audit exemption

The following wholly owned subsidiaries have taken advantage of the available exemption from audit under section 479A of the Companies Act 2006:

 

CREF3 UKI Holdings II Ltd (registered number: 13775950, England & Wales)

CREF3 UKI Imperial Ltd (registered number: 13776585, England & Wales)

CREF3 UKI Peterwood Way F Ltd (registered number: 13815321, England & Wales)

CREF3 UKI 730 LR Ltd (registered number: 14010683, England & Wales)

CREF3 UKI Cribbs Causeway Ltd (registered number: 14418290, England & Wales)

 

CREF3 UKI Holdings I Ltd has provided a guarantee under section 479C in respect of these companies.

20
Related party transactions

The company has taken advantage of the exemption contained in FRS 102 Section 33 'Related Party Disclosures' from disclosing transactions with entities which are a wholly owned part of the group.

21
Controlling party

The smallest and largest group for which consolidated financial statements are prepared is CREF3 UKI Holdings I Ltd.

The parent undertaking of CREF3 UKI Holdings I Ltd is CREF3 Euro Industrial Holdings II L.P, a limited partnership registered in the Cayman Islands, which is regarded by the directors as being the ultimate parent undertaking.

 

The directors consider the company’s ultimate controlling party to be FRO Fund III GP LLC, a company registered in the United States of America, by virtue of its status as general partner of the investment fund which owns CREF3 Euro Industrial Holdings II L.P.

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