The members present their annual report and financial statements for the year ended 31 December 2024.
The principal activity of the limited liability partnership (the "LLP") was, and continues to be that of the issuance of commercial loans to prospective borrowers for the purpose of funding residential and mixed use development projects to generate returns for its members.
In assessing which counterparties to issue commercial loans to, the LLP benefits from its relationship with Ingenious Capital Management Holdings Limited and its subsidiaries ("the Ingenious Group") to facilitate the sourcing of suitable opportunities.
The members' drawing policy allows each member to draw a proportion of their profit share, subject to the cash requirements of the business.
A member's capital requirement is linked to their share of profit and the financing requirement of the limited liability partnership. There is no opportunity for appreciation of the capital subscribed. Just as incoming members introduce their capital at "par", so the retiring members are repaid their capital at "par".
The designated members who held office during the year and up to the date of signature of the financial statements were as follows:
Moore Kingston Smith LLP, formerly Shipleys LLP were appointed as auditor to the partnership and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
The members are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law (as applied by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008) requires the members to prepare financial statements for each financial year. Under that law the members have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice. Under company law (as applied by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008) the members 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 limited liability partnership and of the profit or loss of the limited liability partnership for that period. In preparing these financial statements, the members are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the limited liability partnership will continue in business.
The members are responsible for keeping adequate accounting records that are sufficient to show and explain the limited liability partnership’s transactions and disclose with reasonable accuracy at any time the financial position of the limited liability partnership and enable them to ensure that the financial statements comply with the Companies Act 2006 (as applied by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008). They are also responsible for safeguarding the assets of the limited liability partnership and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
This report has been prepared in accordance with the special provisions relating to small LLPs within Part 15 of the Companies Act 2006.
Ingenious Real Estate Finance 2 LLP is a limited liability partnership incorporated in England and Wales. The registered office is Parcels Building, 14 Bird Street, London, United Kingdom, W1U 1BU.
The limited liability partnership's principal activities are disclosed in the Members' Report.
These financial statements have been prepared in accordance with the Statement of Recommended Practice "Accounting by Limited Liability Partnerships" issued in December 2021, together 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 limited liability partnership. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The LLP's business activities, together with the factors likely to affect its future development, performance and position have been reviewed by the members. Having assessed its financial position and profit and cashflow forecasts, the members believe that the LLP is well placed to manage its business successfully and will be able to maintain positive cashflows for the foreseeable future. The LLP has generated a profit of £0.9m (2023: £3.3m) for the period. At 31 December 2024, the LLP had net assets of £46.9m (2023: £56.3m).
The members have considered the economic outlook over the next 12 months. At the moment, there is no business interruption for the LLP’s borrowers. A material slow-down in the UK residential market may lead to a delay in borrowers’ ability to repay their debts to the LLP. Whilst there is uncertainty in forecasting the overall impact of the economy on the real estate industry, there are currently not considered to be any indicators of a going concern threat to the LLP. Therefore, the members have cautiously concluded that the impact on the LLP is limited for the year, and have reasonable expectation that the LLP has adequate resources to continue in operational existence for the foreseeable future.
Accordingly, the LLP continues to adopt the going concern basis in preparing the Members’ Report and Financial Statements.
Turnover is generated through interest income and fees from the provision of loans.
Interest income is recognised in the Statement of Comprehensive Income using the effective interest method.
Where payments are received from customers in advance of services provided, the amounts are recorded as deferred income and included as part of creditors due within one year.
Members' participation rights are the rights of a member against the LLP that arise under the members' agreement (for example, in respect of amounts subscribed or otherwise contributed remuneration and profits).
Members' participation rights in the earnings or assets of the LLP are analysed between those that are, from the LLP's perspective, either a financial liability or equity, in accordance with section 22 of FRS 102. A member's participation rights including amounts subscribed or otherwise contributed by members, for example members' capital, are classed as liabilities unless the LLP has an unconditional right to refuse payment to members, in which case they are classified as equity.
All amounts due to members that are classified as liabilities are presented within 'Loans and other debts due to members' and, where such an amount relates to current period profits, they are recognised within ‘Members' remuneration charged as an expense’ in arriving at the relevant period’s result. Undivided amounts that are classified as equity are shown within ‘Members' other interests’. Amounts recoverable from members are presented as debtors and shown as amounts due from members within members’ interests.
Where there exists an asset and liability component in respect of an individual member’s participation rights, they are presented on a gross basis unless the LLP has both a legally enforceable right to set off the recognised amounts, and it intends either to settle on a net basis or to settle and realise these amounts simultaneously, in which case they are presented net.
Once an unavoidable obligation has been created in favour of members through allocation of profits or other means, any undrawn profits remaining at the reporting date are shown as ‘Loans and other debts due to members’ to the extent they exceed debts due from a specific member.
Members profits are allocated based on carried forward profits reinvested as well as members capital contributed to the LLP, profits are withdrawn as required by the Members given there is sufficient cash in the Partnership to continue its operating activities.
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
The limited liability partnership 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 limited liability partnership's statement of financial position when the limited liability partnership 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, which include debtors, amounts owed by group undertakings 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.
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 the Statement of Comprehensive Income.
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 the Statement of Comprehensive Income.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the limited liability partnership 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.
Basic financial liabilities, including creditors, amounts owed to group undertakings and bank loans, 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.
Financial liabilities are derecognised when the limited liability partnership’s obligations expire or are discharged or cancelled.
No current or deferred taxation is provided in these financial statements as the liability for taxation falls on the members.
Cost of sales
Cost of sales represents direct costs attributable to turnover. This is comprised of transaction fees, recognised in the Statement of Comprehensive Income using the effective interest method, and loan interest income provisions.
In the application of the limited liability partnership’s accounting policies, the members 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.
The following are critical judgements that the members have made in the process of applying the accounting policies and that have the most significant effect on the amounts recognised in the Financial Statements:
For financial assets measured at amortised cost, where a full recovery is estimated as being unlikely to be received, an impairment loss is measured as the difference between its carrying amount and the adjusted present value of estimated future cash flows received over the life of the project discounted at the asset’s original effective interest rate.
The average number of persons (excluding members) employed by the partnership during the year was:
The LLP profit of £0.9m (2023: £3.3m) has been allocated to loans and other debts due to members' in accordance with the partnership agreement. As at the balance sheet date, the cumulative distribution of profit was £430,490 (2023: £nil).
Included within other debtors falling due within one year is deferred consideration of £3,087,202 (2023: £Nil).
Amounts owed by group undertakings are unsecured, repayable on demand and bear no interest.
Amounts owed to group undertakings are unsecured, repayable on demand and bear no interest.
Bank loans at 31 December 2023 consisted of secured debts which have been repaid in full during the year. The corresponding charge and security was satisfied on 18 October 2024.
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
After the year ended 31 December 2024, the LLP received the following net capital contributions:
£1,514,074 to Ingenious Real Estate Enterprises 1 Limited
£10,766,566 to Ingenious Real Estate Enterprises 2 Limited
£402,143 to Ingenious Real Estate Enterprises 3 Limited
£304,939 to IEP Corporate LLP
£793,504 to Ingenious Apex Sub Co Limited
Transactions with related parties
Golden Square Services 1 Limited and Golden Square Services 2 Limited were appointed as the designated members of the LLP on 28 September 2020.
N A Foster and D M Reid are the former and current directors of both designated members as well as Ingenious Real Estate Enterprises 2 Limited. D M Reid is also a director of Ingenious Real Estate Enterprises 1 Limited. Prior to resignation, N A Forster was also a director of Ingenious Real Estate Enterprises 3 Limited, Ingenious Real Estate Enterprises 4 Limited, IEP Corporate LLP and Ingenious Apex Subco Limited.
During the year, Ingenious Real Estate Enterprises 1 Limited made capital contributions to the LLP amounting to £120,748 (2023: £234,585). Ingenious Real Estate Enterprises 2 Limited made capital contributions to the LLP amounting to £1,763,306 (2023: £11,000,00). Ingenious Apex Subco Ltd made capital contributions to the LLP amounting to £457,392 (2023: £3,203,887). IEP Corporate Growth LLP made capital contributions to the LLP amounting to £Nil (2023: £6,474,588).
During the year, Ingenious Real Estate Enterprises 1 Limited made capital withdrawals from the LLP amounting to £276,503 (2023: £68,246). Ingenious Real Estate Enterprises 2 made capital withdrawals from the LLP amounting to £4,248,991 (2023: £4,643,167). Ingenious Real Estate Enterprises 3 Limited made capital withdrawals from the LLP amounting to £214,216 (2023: £81,803). Ingenious Apex Subco Ltd made capital withdrawals from the LLP amounting to £1,736,306 (2023: £Nil). IEP Corporate Growth LLP made capital withdrawals from the LLP amounting to £101,832 (2023: £175,347).
During the year, Ingenious Real Estate Finance 2 LLP novated loans to Ingenious Real Estate Finance LLP as follows:
Ingenious Real Estate Enterprises 1 Limited made net transfers amounting to £574,315 (2023: £1,897,762). Ingenious Real Estate Enterprises 2 Limited made net transfers amounting to £4,379,511 (2023: £12,472,058). Ingenious Real Estate Enterprises 3 Limited made net transfers amounting to £177,810 (2023: £609,331). Ingenious Real Estate Enterprises 4 Ltd made net transfers amounting to £Nil (2023: £594,390). IEP Corporate LLP made net transfers amounting to £129,094 (2023: £2,828,790). Ingenious Apex Subco Limited made net transfers amounting to £309,197 (2023: £594,390).
N A Forster and D M Reid are also the former and current directors of Ingenious Capital Management Limited. During the year, Ingenious Capital Management Limited charged transaction fees of £909,611 (2023: £686,273) to the LLP. As at year end, £Nil (2023: £76,200) of transaction fees remain unpaid.