Company Registration No. 06886064 (England and Wales)
AVIVA INVESTORS GR SPV2 LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
AVIVA INVESTORS GR SPV2 LIMITED
CONTENTS
Page(s)
Directors, Officers and Other Information
1
Directors' Report
2 - 5
Independent Auditors' Report
6 - 7
Statement of Comprehensive Income
8
Statement of Financial Position
9
Statement of Changes in Equity
10
Notes to the Financial Statements
12 - 20
AVIVA INVESTORS GR SPV2 LIMITED
DIRECTORS, OFFICERS AND OTHER INFORMATION
- 1 -
Directors
Mr M Monkhouse
Mr A M Coles
Mr M Borello
Secretary
Mainstay (Secretaries) Limited
Company number
06886064
Registered office
Mainstay
Whittington Hall
Whittington Road
Worcester
WR5 2ZX
Independent Auditors
PricewaterhouseCoopers LLP
7 More London Riverside
London
SE1 2RT
Other information
The company is a member of the Aviva plc
group of companies (the "Group")
AVIVA INVESTORS GR SPV2 LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
- 2 -
The directors present their annual report and audited financial statements for the year ended 31 December 2020.
Principal activities and review of business
The principal activity of the Company was formerly that of investment in ground rent properties. The company disposed of all its investment properties during the previous year and has ceased to trade. The directors intend to liquidate the company. Accordingly, the financial statements have been prepared on a basis other than going concern. The effect of this is explained in note 3.2 to the financial statements.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr M Monkhouse
Mr G P Mills (resigned 15 December 2020)
Mr A M Coles
Mr M Borello (appointed 27 May 2020)
Qualifying third party indemnity provisions
The directors have the benefit of an indemnity provision contained in the Company's Articles of Association, subject to the conditions set out in the Companies Act 2006. This is a 'qualifying third party indemnity' provision as defined in section 234 of the Companies Act 2006.
Aviva plc granted in 2004 an indemnity to the directors against liability in respect of proceedings brought by third parties, subject to the conditions set out in the Companies Act 1985 (which continue to apply in relation to any provision made before 1st October 2007). The indemnity is a 'qualifying third party indemnity' for the purposes of sections 309A to 309C of the Companies Act 1985. These qualifying third party indemnity provisions remain in force as at the date of approving the Directors' Report by virtue of paragraph 15, Schedule 3 of The Companies Act 2006 (Commencement No. 3, Consequential Amendments, Transitional Provisions and Savings) Order 2007.
AVIVA INVESTORS GR SPV2 LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 3 -
Principal risks and uncertainties
The key risks arising in the Company are interest rate, operational, credit and COVID-19 risks which are discussed in more detail below.
Risk management policies
Approach to risk and capital management
The Company operates within the governance structure and priority framework of the Aviva Group ('Aviva').
Management of financial and non-financial risks
The Company's exposure to different types of risk is limited by the nature of its business as follows:
(i) Interest rate risk
Interest rate risk arises as a result of the Company borrowing from its parent undertaking. Interest rate risk is managed by the Company borrowing at a fixed rate of interest.
(ii) Operational risk
Operational risk arises as a result of inadequate or failed internal processes, people or systems; or from external events. Details of the Aviva Group approach to operational risk are set out in the financial statements of Aviva Investors Global Services Limited, which manages and administers the Company's investments.
(iii) Credit risk
The Company does not have a significant exposure to credit risk as receivables are mainly short-term trading items and related party receivables. The Company's investments are managed by agents who have responsibility for the prompt collection of amounts due.
(iv) COVID-19
On January 30, 2020, the World Health Organisation (‘WHO’) declared the coronavirus (COVID-19) a public health emergency, shortly followed by declaring a Global Pandemic on 11 March 2020. This had an unprecedented impact on economies and real estate markets globally. The UK Government response to this being to initiate various emergency measures to protect occupiers and support businesses, such as the introduction of a furlough scheme and the government moratorium. In addition, the UK Government imposed various lockdowns throughout the year with the introduction of social distancing requirements and a ban on foreign travel, all of which added further stresses/demands to the economy.
Post entering into the third lockdown in late December 2020 the Government has put in place a roadmap to ease restrictions which included the roll out of the vaccination plan.
Whilst it is still not possible to fully assess the longer-term impact on specific industries or their constituents at this stage, the Directors/General Partner believe the entity/partnership has a strong balance sheet and the right strategy in place to mitigate against the worst consequences of the outbreak. The Directors/General Partner will continue to monitor the COVID-19 situation closely and act accordingly to protect the interests of investors.
AVIVA INVESTORS GR SPV2 LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 4 -
Employees
The Company
has no employees (2019: none).
Post balance sheet events
There have been no post balance sheet events.
Future developments
The Company is expected to be placed into liquidation within 12 months of the signing of these financial statements and therefore, as mentioned in the going concern section below, they have been prepared on a basis other than a going concern.
Going concern
During 2019, the Company sold
the interest in the various freeholds in Castle Quay Close, Nottingham
. As a result
the Directors
intend
to place the Company into liquidation within 12 months of the signing of these financial statements. Accordingly, the going concern basis of preparation is no longer appropriate and the financial statements have been prepared on a basis other than going concern. A provision has not been made for all expected costs associated with the liquidation of the Company as these are to be borne by Aviva Investors Ground Rent Holdco Limited.
No further adjustments were necessary in these financial statements to reduce assets to their realisable values, to provide for liabilities arising from the decision or to reclassify fixed assets and long-term liabilities as current assets and liabilities.
Independent Auditors
PricewaterhouseCoopers LLP (“PwC”) have indicated their willingness to continue in office and a resolution to consider their appointment will be proposed at the board meeting of the General Partner
.
Statement as to disclosure of information to auditors
Each person who was a director of the Company on the date that this report was approved, confirms that:
(a)
.
so far as the director is aware, there is no relevant audit information, being information needed by the auditors in connection with preparing their report, of this the auditors unaware; and
(b)
.
each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the auditors are aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of Section 418 of the Companies Act 2006.
AVIVA INVESTORS GR SPV2 LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 5 -
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 regulation.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland", 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 company and of the profit or loss of the company for that period. In preparing the financial statements, the directors are required to:
-
select suitable accounting policies and then apply them consistently;
-
state whether applicable United Kingdom Accounting Standards, comprising FRS102, have been followed, subject to any material departures disclosed and explained in the financial statements;
-
make judgements and accounting estimates that are reasonable and prudent; and
-
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
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.
The directors 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.
This report has been prepared in accordance with the provisions applicable to companies entitled to the small companies exemption in section 415A of the Companies Act 2006. A strategic report has not been included in these audited financial statements as the Company qualifies for exemption as a small entity under Section 414B of the Companies Act 2006 relating to small entities.
On behalf of the board
Mr A M Coles
Director
20 April 2021
AVIVA INVESTORS GR SPV2 LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF AVIVA INVESTORS GR SPV2 LIMITED
For the year ended 31 December 2020
- 6 -
Report on the audit of the financial statements
Opinion
In our opinion, Aviva Investors GR SPV2 Limited’s financial statements:
-
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, and applicable law); and
We have audited the financial statements, included within the Annual Report and Financial Statements (the “Annual Report”), which comprise: the statement of financial position as at 31 December 2020; the Statement of Comprehensive Income, and the Statement of Changes in Equity for the year then ended; and the notes to the financial statements, which include a description of the significant accounting policies.
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
Emphasis of matter - financial statements prepared on a basis other than going concern
In forming our opinion on the financial statements, which is not modified, we draw attention to note 3.2 to the financial statements which describes the directors’ reasons why the financial statements have been prepared on a basis other than going concern.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, 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 audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. 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 based on these responsibilities.
With respect to the Directors' Report, we also considered whether the disclosures required by the UK Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as described below.
Directors' Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Directors’ Report for the year
ended 31 December 20
20
is consistent with the financial statements and has been prepared in accordance with applicable legal
requirements.
In light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we did not
identify any material misstatements in the Directors’ Report.
AVIVA INVESTORS GR SPV2 LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF AVIVA INVESTORS GR SPV2 LIMITED
For the year ended 31 December 2020
- 7 -
Responsibilities for the financial statements and the audit
R
esponsibilities of the directors for the financial statements
As explained more fully in the Statement of directors' responsibilities in respect of the financial statements, the directors are responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are also responsible for such internal control as they 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 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 company or to cease operations, or have no realistic alternative but to do so.
Auditors’ 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 auditors’ 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.
Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with laws and regulations including those that have a direct impact on the preparation of the financial statements such as the Companies Act 2006, and the extent to which non-compliance might have a material effect on the financial statements. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries. Audit procedures performed included:
-
Discussions with management, including consideration of known or suspected instances of non compliance with laws and regulation and fraud;
-
Reviewing relevant Board meeting minutes;
-
Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations, entries posted containing unusual account descriptions, and entries posted with unusual amounts; and
-
Designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
AVIVA INVESTORS GR SPV2 LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF AVIVA INVESTORS GR SPV2 LIMITED
For the year ended 31 December 2020
- 8 -
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
-
we have not obtained all the information and explanations we require for our audit; or
-
adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us; or
-
certain disclosures of directors’ remuneration specified by law are not made; or
-
the financial statements are not in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Entitlement to exemptions
Under the Companies Act 2006 we are required to report to you if, in our opinion, the directors were not entitled to: take advantage of the small companies exemption in preparing the Directors' Report; and take advantage of the small companies exemption from preparing a strategic report. We have no exceptions to report arising from this responsibility.
Thomas Norrie (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
20 April 2021
AVIVA INVESTORS GR SPV2 LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2020
- 9 -
2020
2019
as restated
Note
£
£
Turnover
165
14,627
Administrative expenses
(19,597)
(14,512)
Gain on disposal of investment properties
97,384
Change in fair value of investment properties
5
(6,000)
Operating (loss)/profit
6
(19,432)
91,499
Finance costs
7
(7,932)
(7,932)
(Loss)/profit before taxation
(27,364)
83,567
Tax on (loss)/profit
8
3,873
(2,102)
(Loss)/profit for the financial year
(23,491)
81,465
Other comprehensive income
-
-
Total comprehensive (expense)/income for the year
(23,491)
81,465
Discontinued Operations
All amounts reported in the Statement of Comprehensive Income for the year ended 31 December 2020 and 31 December 2019 relate to discontinued operations.
The notes on pages 12 to 20 form part of these financial statements
AVIVA INVESTORS GR SPV2 LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2020
31 December 2020
- 10 -
2020
2019
as restated
Note
£
£
£
£
Current assets
Debtors
9
186,860
213,729
Creditors: amounts falling due within one year
Intercompany borrowings
10
(132,192)
(132,192)
Other creditors
11
(18,674)
(22,052)
(150,866)
(154,244)
Net current assets
35,994
59,485
Capital and reserves
Called up share capital
12
80,891
80,891
Accumulated losses
(44,897)
(21,406)
Total shareholders' funds
35,994
59,485
The financial statements were approved by the board of directors and authorised for issue on 20 April 2021 and are signed on its behalf by:
Mr A M Coles
Director
Company Registration No. 06886064
The notes on pages 12 to 20 form part of these financial statements
AVIVA INVESTORS GR SPV2 LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
- 11 -
(Restated)
Called up share capital
Accumulated losses
Total shareholders' funds
£
£
£
Balance as at 1 January 2019
80,891
(102,871)
(21,980)
Total comprehensive income for the financial year (as restated)
-
81,465
81,465
Balance as at 31 December 2019
80,891
(21,406)
59,485
Balance as at 1 January 2020
80,891
(21,406)
59,485
Total comprehensive expense for the financial year
-
(23,491)
(23,491)
Balance as at 31 December 2020
80,891
(44,897)
35,994
The notes on pages 12 to 20 form part of these financial statements
AVIVA INVESTORS GR SPV2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
- 12 -
1
Company information
Aviva Investors GR SPV
2
Limited ("The Company") maintain
ed
a portfolio of investment in ground rent properties in the UK.
These were sold and no investment property is now held.
The company is a private company limited by shares and is incorporated and domiciled in England. The address of its registered office is
Mainstay,
Whittington Hall, Whittington Road, Worcester, WR5 2ZX.
2
Statement of compliance
The financial statements of the Company have been prepared in compliance with United Kingdom Accounting Standards, including Financial Reporting Standard 102, The Financial Reporting Standards applicable in the United Kingdom and the Republic of Ireland ("FRS 102") and the Companies Act 2006.
3
Accounting policies
The principal accounting policies are summarised below. They have all been applied consistently throughout the year and the preceding year.
3.1
Basis of preparation
The financial statements have been prepared in compliance with UK accounting standards including Financial Reporting Standard 102 ("FRS 102"), the Financial Reporting Standards applicable in the United Kingdom and Republic of Ireland, and the Companies Act 2006.
The financial statements are prepared in
sterling
, which is the functional currency of the company.
Monetary a
mounts
in these financial statements are
rounded to the nearest
pound
.
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company's accounting policies. Changes in assumptions may have a significant impact on the financial statements in the period the assumptions changed. Management believes the underlying assumptions are appropriate. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 4.
3.2
Going concern basis
During 2019, the Company sold
true
the interest in the various freeholds in Castle Quay Close, Nottingham
. As a result
the Directors
intend
to place the Company into liquidation within 12 months of the signing of these financial statements. Accordingly, the going concern basis of preparation is no longer appropriate and the financial statements have been prepared on a basis other than going concern. A provision has not been made for all expected costs associated with the liquidation of the Company as these are to be borne by Aviva Investors Ground Rent Holdco Limited.
No further adjustments were necessary in these financial statements to reduce assets to their realisable values, to provide for liabilities arising from the decision or to reclassify fixed assets and long-term liabilities as current assets and liabilities.
3.3
Turnover
Turnover
comprises
ancillary income
relating to the period prior to the company's assets being sold.
Ground rent and other receivables are recognised on an accruals basis in the Statement of Comprehensive Income, over the period to which the income relates.
AVIVA INVESTORS GR SPV2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
3
Accounting policies
(Continued)
- 13 -
3.4
Financial instruments
The Company has chosen to adopt Sections 11 and 12 of FRS 102 in respect of financial instruments
.
i. Financial assets
Financial assets are recognised when the Company becomes a party to the contractual provisions of the instrument.
Basic
f
inancial
a
ssets, including trade and other receivables, are initially recognised at transaction price, 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.
At the end of each reporting period financial assets measured at amortised cost are assessed for objective evidence of impairment. 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 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 have been had the impairment not previously been recognised. The impairment reversal is recognised in the statement of comprehensive income.
Other financial assets are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in the statement of comprehensive income.
Financial assets that are classified as receivable within one year are measured at the undiscounted amount of the cash or other consideration expected to be received, net of impairment.
Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled, or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party or (c) despite having retained some significant risks and rewards of ownership, control of the asset has been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions.
ii. Financial liabilities
Financial liabilities are recognised when the Company becomes a party to the contractual provision of the instrument.
Basic financial liabilities,
including loans and borrowings
and trade payables
, are recognised initially at their issue proceeds less transaction costs incurred. Subsequently, borrowings are stated at amortised cost with interest being accrued cyclically as defined in the facility agreements. Borrowing costs have been capitalised and are being amortised using the effective interest rate method over the life of the loan. Interest expense associated with loans and borrowings is accounted for on an accruals basis.
Commitments to make which meet the conditions above are measured at cost (which may be nil) less impairment.
Financial liabilities are derecognised only when the obligation specified in the contract is discharged, cancelled or expires.
iii. Offsetting
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.
AVIVA INVESTORS GR SPV2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
3
Accounting policies
(Continued)
- 14 -
3.4
Financial instruments (continued)
Financial instruments disclosure exemption
The Company has taken advantage of the exemption, under FRS 102, from disclosure of its financial instruments, on the basis that it is a qualifying entity and the Company's financial instruments are disclosed within the consolidated financial statements of its parent entity, Aviva Investors REaLM Ground Rent Limited Partnership.
3.5
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.
3.6
Taxation
Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date. Management periodically evaluates positions taken in tax returns with respect to situations in which the applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax
Deferred tax is provided in full, using the liability method on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax assets are recognised only to the extent that it is probable that taxable profit will be available against which deductible temporary differences, carried forward tax credits or tax losses can be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date.
Deferred tax relating to items recognised directly in changes in equity is recognised in the Statement of Changes in Equity and not in the Statement of Comprehensive Income.
3.7
Related party transactions
The Company discloses transactions with related parties which are not wholly owned within the same Group. Where appropriate, transactions of a similar nature are aggregated unless, in the opinion of the directors, separate disclosure is necessary to understand the effect of the transactions on the Company financial statements.
The Company has taken advantage of the exemption, under FRS 102, from disclosure of transactions with related parties who are wholly owned within the same Group. The Group includes the Company, its parent undertakings and its fellow subsidiary undertakings.
3.8
Cash flow statement
The Company has taken advantage of the exemption, under FRS 102 1.12(b), from preparing a statement of cash flows, on the basis that it is a qualifying entity and the Company's cash flows are included within the consolidated statement of cash flows of its parent entity, Aviva Investors REaLM Ground Rent Limited Partnership.
AVIVA INVESTORS GR SPV2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
3
Accounting policies
(Continued)
- 15 -
3.9
Strategic report and Directors' report
A strategic report has not been included in these audited financial statements as the Company qualifies for exemption as a small entity under Section
414B
of the Companies Act 2006 relating to small entities.
The Directors' report has been prepared with reduced disclosures in accordance with the provisions applicable to companies entitled to the small companies exemption in section 415A of the Companies Act 2006.
3.10
Administrative expenses include all costs not directly incurred in the operation of the Company's
p
ortfolio. This includes administration, finance and management expenses
which are recognised on an accruals basis.
3.11
Finance income and cost
Finance income receivable and finance cost
payable are recognised on an accruals basis
.
4
Critical accounting estimates and judgements
The preparation of the Company's financial statements requires the directors to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the reporting date. The estimates and associated assumptions are based on historical experience, expectations of future events and other factors that are considered to be relevant. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the assets or liabilities affected.
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 if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
There are no critical accounting estimates in the current year.
AVIVA INVESTORS GR SPV2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 16 -
5
Change in fair value of investment properties
2020
2019
£
£
Change in fair value of investment properties
-
6,000
6
Operating (loss)/profit
2020
2019
Operating (loss)/profit for the year is stated after charging:
£
£
Fees payable to the company's auditors for the audit of the company's financial statements
15,610
10,722
During the year no non-audit fees were paid to statutory auditors (2019: £Nil).
The Company did not have any employees during the current year or previous year.
The directors received no emoluments for services to the Company for the year (2019: £Nil).
7
Finance costs
2020
2019
£
£
Loan interest payable to parent undertaking
7,932
7,932
AVIVA INVESTORS GR SPV2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 17 -
8
Tax on (loss)/profit
2020
2019
£
£
Current tax
UK corporation tax on (loss)/profit for the current year
4,468
Adjustments in respect of prior years
(3,873)
Total UK current tax
(3,873)
4,468
Deferred tax
Origination and reversal of timing differences
(2,366)
Total deferred tax
(2,366)
Total tax (credit)/charge
(3,873)
2,102
Reconciliation of total tax (credit)/charge included in profit and loss
The tax assessed for the year is lower (2019: lower) than the standard rate of corporation tax in the UK. The difference is explained below:
2020
2019
£
£
(Loss)/profit before taxation
(27,364)
83,567
Expected tax (credit)/charge based on the standard rate of corporation tax in the UK of 19.00% (2019: 19.00%)
(5,199)
15,878
Tax effect of expenses that are not deductible in determining taxable profit
1,140
Tax effect of income not taxable in determining taxable profit
(18,503)
Gains not taxable
15,107
Adjustments in respect of prior years
(3,873)
Group relief
5,199
Re-measurement of deferred tax - change in UK tax rate
(901)
Deferred tax not recognised
(10,023)
Other short term timing differences
(596)
Taxation (credit)/charge for the year
(3,873)
2,102
AVIVA INVESTORS GR SPV2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 18 -
9
Debtors
2020
2019
Amounts falling due within one year:
£
£
Trade debtors
75
Amounts owed by group undertakings
186,860
213,579
Other debtors
75
186,860
213,729
The amounts owed by Group undertakings are unsecured, interest free, have no fixed date of repayments and are payable on demand.
10
Intercompany borrowings
2020
2019
£
£
Loan from parent undertaking
132,192
132,192
The loan from parent undertaking is unsecured, bears interest at 6% per annum and is repayable on demand.
11
Other creditors
2020
2019
as restated
£
£
Corporation tax payable
595
4,468
Other creditors
75
Accruals and deferred income
18,079
17,509
18,674
22,052
12
Called up share capital
2020
2019
£
£
Ordinary share capital
Issued and fully paid
808,908 (2019: 808,908) Ordinary shares of 10p each
80,891
80,891
80,891
80,891
13
Contingent liabilities and capital commitments
There were no contingent liabilities or capital commitments at the balance sheet date (201
9
: £nil).
AVIVA INVESTORS GR SPV2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 19 -
14
Events after the reporting financial year
Events after the reporting financial year have been evaluated up to the date the audited financial statements were approved and the authorised for issue by the directors. No events that would have a material impact on the financial statements have been identified
.
15
Ultimate parent company
The General Partner of the Aviva Investors REaLM Ground Rent Limited Partnership is the Aviva Investors Ground Rent GP Limited, a company incorporated in Great Britain and registered in England and Wales.
The Company's immediate parent undertaking is Aviva Investors Ground Rent Holdco Limited and its ultimate parent undertaking is Aviva Investors REaLM Ground Rent Unit Trust, which is registered in Jersey.
The Aviva Investors REaLM Ground Rent Limited Partnership, which indirectly has 100% interest of the Company, is both the largest and the smallest of the group undertakings to consolidate these financial statements at 31 December 20
20
. The consolidated financial statements of Aviva Investors REaLM Ground Rent Limited Partnership are available on application to:
Aviva Company Secretarial Services Limited
St Helen's
1 Undershaft, London
EC3P 3DQ
AVIVA INVESTORS GR SPV2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 20 -
16
Prior period adjustment
In the current financial statements, the prior year balances have been restated to correct the income recorded which was previously understated.
Statement of Comprehensive Income
As previously reported
Adjustment
As restated
Period ended 31 December 2019
£
£
£
Turnover
11,493
3,134
14,627
Profit for the financial period
78,331
3,134
81,465
Statement of Financial Position
As previously reported
Adjustment
As restated at 31 Dec 2019
£
£
£
Creditors due within one year
Other creditors
(25,186)
3,134
(22,052)
Capital and reserves
Profit and loss
(24,540)
3,134
(21,406)
As previously reported
Adjustment
As restated
£
£
£
Statement of changes in Equity
Year ended 31 December 2019
Total comprehensive income for the financial year
78,331
3,134
81,465
Notes to reconciliation
Income recognition adjustment
The Company has restated its prior year Income. In the current year financial statement
s
, the prior year balances have been restated to appropriately reflect the underlying value of the Company's income, which w
as
previously understated. The impact of this change has been to decrease deferred income as at 31 Dec
ember
2019 by £3,135 from
£5,820
to
£2,685
. The net impact on the deferred
i
ncome as at 31 December 2019 is (£3,135) and the impact to the comprehensive expense is (£3,135).
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