Company Registration No. 09861071 (England and Wales)
HOLNE INVESTMENTS LIMITED
(FORMERLY KNOWN AS HOLNE INVESTMENTS PLC)
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
HOLNE INVESTMENTS LIMITED
(FORMERLY KNOWN AS HOLNE INVESTMENTS PLC)
COMPANY INFORMATION
Directors
J Goldstein
S Goldstein
Secretary
J Goldstein
Company number
09861071
Registered office
Acre House
11-15 William Road
London
NW1 3ER
United Kingdom
Auditor
HW Fisher LLP
Acre House
11-15 William Road
London
NW1 3ER
United Kingdom
HOLNE INVESTMENTS LIMITED
(FORMERLY KNOWN AS HOLNE INVESTMENTS PLC)
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 23
HOLNE INVESTMENTS LIMITED
(FORMERLY KNOWN AS HOLNE INVESTMENTS PLC)
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 1 -

The directors present the strategic report for the year ended 31 December 2022.

Fair review of the business with management

The company’s main activity is that of an investment company. At 31 December 2022, the company holds investments in Cain International LP, Cain International II LP and ACZ Investments LP. All are Delaware Limited Partnerships.

 

The principal activity of Cain International LP is to acquire and dispose of global real estate investments. In 2022 Cain International LP’s underlying investment portfolio faced a number of challenges principally driven by rising interest rates and slow downs in office lease take up. In addition the inflationary environment, challenging margin-driven private equity assets, resulted in the total fair value of the investments decreasing by 15.3%. The portfolio has the potential to generate strong returns if it maximises the opportunities available on assets such as Competitive Socialising Limited, St James, One Beverly Hills, 830 Brickell, and Prezzo.

 

The principal activity of Cain International II LP is to capitalise and/or otherwise fund its subsidiaries as required in order to enable the group to create a regulated investment and asset management business managing capital for both affiliated entities and independent third parties. In 2022 the Cain International II LP group closed a joint venture with a sovereign wealth fund to create a UK focused logistics platform. This has underpinned continued growth in its assets under management and revenues which have supported further investments in personnel to support future growth.

 

The principal activity of ACZ Investments LP is to acquire and dispose of global real estate investments. 2022 was its first year of activity, during which it made a number of investments.

 

At 31 December 2022, the company also held a minority interest in Oasis BH LLC. The Oasis structure holds two hotels and land entitlements. During the year work was undertaken to enable commencement of construction work in late 2023 early 2024.

 

The directors do not expect any changes in the main activity of the company for the foreseeable future.

Principal risks and uncertainties

The directors consider the principal risks relating to the activities of the company concerning the performance of its investments for which underlying risk factors include: economic uncertainty as a result of geopolitical events, planning, construction, competition, leasing and financial. The directors seek to mitigate such risks where possible and appropriate through influencing the activities, policies, and procedures of the company’s underlying investments.

Development and performance

The results of the company for the year, as set out on page 8, show a loss on ordinary activities before tax of $8,020,086. The shareholders’ funds of the company show a deficit of $55,869,345.

 

The performance of the company during the year is in line with the directors' expectations. The underlying investments held by Cain International and Cain International II US partnerships are shown in those partnerships' accounts at cost rather than fair value. Holne Investments Limited’s investment in Cain International LP has been written down to nil as at 31 December 2022, under the current accounting policy. Cain International LP obtained a valuation report of its investments as at 31 December 2022, indicating that Holne Investment Limited's share of the investment is calculated to be significantly above the nil carrying value. The underlying fair value of the partnerships' investments will only be realised upon exit from these investments. It is the directors’ expectation that this will facilitate the repayment of debt and return shareholders’ funds to a positive position.

 

Key performance indicators

In the opinion of the directors there are no key performance indicators whose disclosure is necessary for an understanding of the development, performance or position of the business.

HOLNE INVESTMENTS LIMITED
(FORMERLY KNOWN AS HOLNE INVESTMENTS PLC)
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 2 -
Section 172(1) statement

Section 414CZA(1) of the Companies Act 2006 requires the directors to explain how they considered the matters set out in section 172(1) (a) to (f) of the Companies Act 2006 (‘S172 (1)’) when performing their duty to promote the success of the company. When making decisions, each director ensures that they act in the way that would most likely promote the company’s success for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to its members as a whole.

 

The company is an investment company with no employees. The strategy set by the board of directors is intended to provide ongoing returns from the company’s investments to its shareholders. Business relationships are maintained through the company’s investments and in the directors’ capacity. The company has historically held investment interests in two US based partnerships, with the recent acquisition of a third and also holds a minority interest in Oasis BH LLC.

 

The US partnerships operate in the field of real estate and asset management. The main activities of the US based partnerships are acquiring and disposing of global real estate investments, and investing in the partnerships’ subsidiaries as required, enabling the group to create a regulated investment and asset management business managing capital for both affiliated entities and independent third parties. The directors consider the impact of the investment activities of the US partnerships do have an impact on the communities and environments in which they operate. The US Partnerships seek to manage and mitigate negative impacts through active engagement during the planning and development phase; development of green buildings with LEED Platinum certification; with the ultimate aim to create places where people wish to live and work.

 

The main activity of Oasis BH LLC is a redevelopment project consisting of two hotels and land entitlements associated with the Beverley Hilton. The project plans to create over 300 residential apartments, a new luxury hotel and over 8 acres of public botanical and sculpture gardens. The master plan design has been led by "a green approach" across One Beverly Hills, which is designed to reach LEED Platinum and WELL certifications in recognition due to environmentally friendly design details and promotion of wellbeing. To achieve this, buildings will feature low-embodied carbon materials, as well as "smart luxury" technologies, like circadian dimming, LED lighting and silent HVAC systems.

 

The directors aim to act fairly as between the company’s members when delivering the company’s strategy. Our shareholders want the company and directors to maximise returns in a sustainable and responsible way and to work with the underlying investments to support the company’s strategic aims. Jonathan Goldstein is actively involved in each of the investments in associates and as a result the company has significant influence over each of the investments.

 

On behalf of the board

J Goldstein
Director
14 November 2023
HOLNE INVESTMENTS LIMITED
(FORMERLY KNOWN AS HOLNE INVESTMENTS PLC)
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 3 -

The directors present their annual report and financial statements for the year ended 31 December 2022.

Results and dividends

The results for the year end are set out on page 8.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

Directors

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

J Goldstein
S Goldstein
Financial instruments
Financial risk management

The directors have considered the impact of adverse changes in financial risks including market, currency, interest rate, credit and liquidity risks. The directors have determined that adverse changes in the financial risks may negatively impact the fair value of the associate investments and the other investment. The associate investments are held in the financial statements at cost and subsequently measured at cost as adjusted for the company's share of results from Cain International LP, Cain International II LP and ACZ Investments LP and the underlying unincorporated partnerships. Therefore, any negative movement is unlikely to reduce the carrying value of the associate investments. The other investment is initially measured at transaction price excluding transaction costs and subsequently measured at fair value at each reporting date. A negative movement on the financial risks may impact the return realised on exit from the investments which could reduce the return to shareholders.

Auditor

In accordance with the company's articles, a resolution proposing that HW Fisher LLP be reappointed as auditor of the company will be put at a General Meeting.

Energy and carbon report

As the company has not consumed more than 40,000 kWh of energy in this reporting period, it qualifies as a low energy user under these regulations and is not required to report on its emissions, energy consumption or energy efficiency activities.

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 company’s auditor 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 company’s auditor is aware of that information.

On behalf of the board
J Goldstein
Director
14 November 2023
HOLNE INVESTMENTS LIMITED
(FORMERLY KNOWN AS HOLNE INVESTMENTS PLC)
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 4 -

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 company and of the profit or loss of the company 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 company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

HOLNE INVESTMENTS LIMITED
(FORMERLY KNOWN AS HOLNE INVESTMENTS PLC)
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF HOLNE INVESTMENTS LIMITED
- 5 -
Opinion

We have audited the financial statements of Holne Investments Limited (the 'company') for the year ended 31 December 2022 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows 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 FRS 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 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.

 

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

 

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.

Opinions on other matters prescribed by the Companies Act 2006

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

HOLNE INVESTMENTS LIMITED
(FORMERLY KNOWN AS HOLNE INVESTMENTS PLC)
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HOLNE INVESTMENTS LIMITED
- 6 -
Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and the directors' report.

 

We have nothing to report in respect of the following matters where 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 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.

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.

As part of our planning process:

The key procedures we undertook to detect irregularities including fraud during the course of the audit included:

HOLNE INVESTMENTS LIMITED
(FORMERLY KNOWN AS HOLNE INVESTMENTS PLC)
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HOLNE INVESTMENTS LIMITED
- 7 -

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements even though we have properly planned and performed our audit in accordance with auditing standards. The primary responsibility for the prevention and detection of irregularities and fraud rests with the directors and management.

 

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.

Carolyn Hazard (Senior Statutory Auditor)
For and on behalf of HW Fisher LLP
Chartered Accountants
Statutory Auditor
Acre House
11-15 William Road
London
NW1 3ER
United Kingdom
14 November 2023
HOLNE INVESTMENTS LIMITED
(FORMERLY KNOWN AS HOLNE INVESTMENTS PLC)
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
- 8 -
2022
2021
Notes
$
$
Administrative expenses
(87,633)
(145,091)
Share of partnership results
8
(12,127,931)
651,595
Interest payable and similar expenses
6
(6,091,404)
(3,666,064)
Fair value gains and losses on investments
10,286,882
3,632,199
(Loss)/profit before taxation
3
(8,020,086)
472,639
Taxation
7
(1,208,950)
-
0
(Loss)/profit for the financial year
(9,229,036)
472,639

The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.

HOLNE INVESTMENTS LIMITED
(FORMERLY KNOWN AS HOLNE INVESTMENTS PLC)
BALANCE SHEET
AS AT
31 DECEMBER 2022
31 December 2022
- 9 -
2022
2021
Notes
$
$
$
$
Fixed assets
Investments
8
61,601,211
32,192,260
Current assets
Cash at bank and in hand
2,521
1,131
Creditors: amounts falling due within one year
11
(116,264,127)
(78,833,700)
Net current liabilities
(116,261,606)
(78,832,569)
Total assets less current liabilities
(54,660,395)
(46,640,309)
Provisions for liabilities
Deferred tax liability
13
1,208,950
-
0
(1,208,950)
-
Net liabilities
(55,869,345)
(46,640,309)
Capital and reserves
Called up share capital
14
75,336
75,336
Profit and loss reserves
(55,944,681)
(46,715,645)
Total equity
(55,869,345)
(46,640,309)
The financial statements were approved by the board of directors and authorised for issue on 14 November 2023 and are signed on its behalf by:
J Goldstein
Director
Company Registration No. 09861071
HOLNE INVESTMENTS LIMITED
(FORMERLY KNOWN AS HOLNE INVESTMENTS PLC)
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
- 10 -
Share capital
Profit and loss reserves
Total
$
$
$
Balance at 1 January 2021
75,336
(47,188,284)
(47,112,948)
Year ended 31 December 2021:
Profit and total comprehensive income for the year
-
472,639
472,639
Balance at 31 December 2021
75,336
(46,715,645)
(46,640,309)
Year ended 31 December 2022:
Loss and total comprehensive income for the year
-
(9,229,036)
(9,229,036)
Balance at 31 December 2022
75,336
(55,944,681)
(55,869,345)
HOLNE INVESTMENTS LIMITED
(FORMERLY KNOWN AS HOLNE INVESTMENTS PLC)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 11 -
2022
2021
Notes
$
$
$
$
Cash flows from operating activities
Cash generated from/(absorbed by) operations
17
1,074
(58,723)
Interest paid
(1,680,218)
-
0
Net cash outflow from operating activities
(1,679,144)
(58,723)
Investing activities
Investments in associates
(31,250,000)
812,500
Net cash (used in)/generated from investing activities
(31,250,000)
812,500
Financing activities
Proceeds from borrowings
106,030,718
-
0
Repayment of borrowings
(73,476,194)
(740,458)
Net cash generated from/(used in) financing activities
32,554,524
(740,458)
Net (decrease)/increase in cash and cash equivalents
(374,620)
13,319
Cash and cash equivalents at beginning of year
968
7,394
Effect of foreign exchange rates
376,173
(19,745)
Cash and cash equivalents at end of year
2,521
968
Relating to:
Cash at bank and in hand
2,521
1,131
Bank overdrafts included in creditors payable within one year
-
0
(163)
HOLNE INVESTMENTS LIMITED
(FORMERLY KNOWN AS HOLNE INVESTMENTS PLC)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 12 -
1
Accounting policies
Company information

Holne Investments Limited is a private company limited by shares incorporated in England and Wales. The registered office is Acre House, 11-15 William Road, London, United Kingdom, NW1 3ER. The company re-registered from a public to a private limited company during the year, on 7 October 2022.

1.1
Accounting convention

These financial statements have been prepared in accordance with applicable United Kingdom Accounting Standards, including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in United States dollars ($), which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest $.

The financial statements have been prepared under the historical cost convention, modified to include other investments at fair value. The principal accounting policies adopted are set out below.

1.2
Going concern

There are considerable complexities in the control, ownership and financing of the underlying investment structure along with inherent uncertainties attaching to its business operations. As such, the nature, timing and quantum of any future returns, profits, losses and distributions flowing to the company are not guaranteed.

 

The company made a loss in the year of $9,229,036, which includes an unrealised gain of $10,286,882, has significant net liabilities of $55,869,345 as a result of the accumulation of losses borne by certain of the US Partnerships within the Cain International LP, Cain International II LP investments and ACZ Investments LP investments, in which it has participating interests. The negative position is predominantly the result of the significant underlying borrowing costs, borne by these partnerships along with unrealised losses on underlying investments. The measurement in the financial statements of these associate investments is at initial investment cost less accumulated profits and losses from certain of the US partnerships and impairment losses. The directors believe that the company’s investments will generate returns significantly in excess of the initial investment and of their carrying value as at 31 December 2022.

 

Notwithstanding this view, significant financial and economic market uncertainty has arisen from geo-political events, adverse inflationary pressures and rising interest rates. The directors consider that those events are likely to continue to cause material uncertainty over the short term. Equally the long-term impact on the underlying value of the investments of the company, its ability to recover its original investment and to repay the loans will depend upon market conditions nearer the time of maturity. The loans are due for repayment in June 2027. The Directors are of the opinion that the management of the associate investments has the necessary skills and resources to effectively address the financing and operational challenges being faced and are taking all necessary steps to ensure that the investment strategies and financial commitments can be met, through re-financing and re-structuring opportunities where appropriate.

 

At the time of approving the financial statements the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the next 12 months, based on the continuing support of J Goldstein, who has confirmed that he intends to provide financial support to meet ongoing operational costs, namely administrative expenses, for the next 12 months and during that period will not seek repayment of the amounts owing to him or his related company until the company has sufficient funds.

HOLNE INVESTMENTS LIMITED
(FORMERLY KNOWN AS HOLNE INVESTMENTS PLC)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 13 -
1.3
Fixed asset investments

The company has investments in three US partnerships being Cain International LP, Cain International II LP and ACZ Investments LP, and an investment in Oasis BH LLC. The three US partnerships in turn have a substantial number of subsidiaries (companies and unincorporated partnerships). Cain International LP, Cain International II LP and ACZ Investments LP are all considered associates of the company.

 

Interests in the three US partnerships Cain International LP, Cain International II LP and ACZ Investments LP are initially measured at cost and subsequently measured at cost as adjusted for the company's share of the results of Cain International LP, Cain International II LP and ACZ Investments LP and the underlying unincorporated partnerships that these three partnerships control either directly or indirectly. The share of partnership losses are restricted to the value of the investment. The investments in Cain International LP, Cain International II LP and ACZ Investments LP are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

 

An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The company considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.

The interest in Oasis BH LLC is for a minority holding of shares and as such is held as an other investment. The company does not consider that in its individual capacity it has significant influence over the economic activity of the Oasis group as such it does not meet the criteria for the investment to be recognised as an associate.

 

Other investments are initially measured at transaction price excluding transaction costs and are subsequently measured at fair value at each reporting date. Changes in fair value are recognised through the profit and loss.

1.4
Cash at bank and in hand

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.5
Financial instruments

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

 

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

 

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

Basic financial assets

Basic financial assets, which include 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.

Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, 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 profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

HOLNE INVESTMENTS LIMITED
(FORMERLY KNOWN AS HOLNE INVESTMENTS PLC)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 14 -
Impairment of financial assets

Financial assets are assessed for indicators of impairment at each reporting 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 have been affected.

Derecognition of financial assets

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

Classification of financial liabilities

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

Basic financial liabilities

Basic financial liabilities, including creditors and 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.

Other financial liabilities

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Derecognition of financial liabilities

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

1.6
Equity instruments

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

 

Share capital represents the nominal value of equity shares that have been issued.

 

Profit and loss reserves represent all current and prior period retained profit and losses.

1.7
Taxation
Current tax

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

HOLNE INVESTMENTS LIMITED
(FORMERLY KNOWN AS HOLNE INVESTMENTS PLC)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
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 when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority. Where the timing of the realisation of the gains and losses to which the deferred tax assets and liabilities relate, are uncertain, it is assumed that the timing will allow for an offset.

 

 

1.8
Foreign exchange

Transactions in currencies other than United States dollars 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 are included in the profit and loss account for the period.

2
Judgements and key sources of estimation uncertainty

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

 

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

Critical judgements in applying the company's accounting policies
Accounting policy for investments held at cost

The accounting policy for the company's investments in Cain International LP, Cain International II LP and ACZ Investments LP are all unincorporated US partnerships, is set out in note 1.3.

 

FRS 102 provides limited guidance as to how a company should recognise and measure investments in unincorporated entities and thus the directors have applied judgement in determining the accounting policy for these investments.

Accounting Policy for investments carried at fair value

Other investments relates to a minority holding in shares in Oasis BH LLC. Under FRS 102, if an investment can be measured reliably then measurement at fair value through profit and loss account can be adopted as the accounting policy.

 

There is no quoted price in an active market to measure the other investment. The directors have relied upon a third party valuation expert which they consider to be a reliable measurement, and so have applied judgment in determining the accounting policy for the other investment.

HOLNE INVESTMENTS LIMITED
(FORMERLY KNOWN AS HOLNE INVESTMENTS PLC)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
2
Judgements and key sources of estimation uncertainty
(Continued)
- 16 -
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:

Impairment of investments held at cost

Fixed asset investments in associates are held at cost adjusted for the company's share of the results of underlying unincorporated partnerships.

 

Fixed asset investments are assessed for impairment at the reporting date.

 

The recoverable amount of the investment is estimated in order to determine the extent of the impairment loss. In considering the impairment, the carrying value is reviewed against other impairment indicators such as partner share of capital as presented in the investment entities' accounts and external expert valuation reports. Where there is an indicator present of impairment, impairment is considered with reference to third party valuations of the investments held or considered against the underlying trading value, Trading value is determined by utilising a market based approach. AUM's and net profit are the key metric drivers under this approach. The total impairment of the investments are restricted to the cost of the investments.

Fair value of other investments

The fair value of other investments has been determined by a third party valuation expert and reflects the market value of the other investments.

 

The fair value of the other investment as at 31 December 2022 was £34,069,605 (2021: £23,782,723). This is a Level 3 estimate.

 

The fair value of other investments was calculated in two stages; an asset valuation and equity valuation.

 

The asset valuation is calculated by reference to two valuation techniques; a land residual value analysis and a DCF analysis.

 

Significant observable inputs: The discount rates applied in the DCF analysis were 7.75% and 6.00% with terminal rates of 5.25% and 4.50% for the property assets and 10.75% for the development land.

 

The aggregate of the asset valuation is adjusted for the project debt to determine the equity valuation.

 

The estimated fair value would be impacted as follows if the estimates were adjusted:

If the above rates were sensitised +/- 25bps for the property assets and +/- 50bps for the development land, the resulting valuations would change +/- c $5M.

3
Profit before taxation
2022
2021
Operating loss for the year is stated after charging/(crediting):
$
$
Exchange gains
(20,475)
(300)
Exchange differences apart from those arising on financial instruments measured at fair value through profit or loss
(396,648)
19,445
HOLNE INVESTMENTS LIMITED
(FORMERLY KNOWN AS HOLNE INVESTMENTS PLC)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 17 -
4
Auditor's remuneration
2022
2021
Fees payable to the company's auditor and associates:
$
$
For audit services
Audit of the financial statements of the company
74,196
66,000
For other services
Other taxation services
21,534
38,641
All other non-audit services
8,190
37,409
5
Employees

There were no employees during the year or in the previous year.

 

The directors did not receive any remuneration, from any source, for their services as directors of the company during the current year or preceding financial year.

6
Interest payable and similar expenses
2022
2021
$
$
Interest on financial liabilities measured at amortised cost:
Other interest on financial liabilities
6,467,577
3,646,319
Other finance costs:
Exchange differences arising on borrowings
(376,173)
19,745
6,091,404
3,666,064
7
Taxation
2022
2021
$
$
Deferred tax
Origination and reversal of timing differences
1,208,950
-
0
HOLNE INVESTMENTS LIMITED
(FORMERLY KNOWN AS HOLNE INVESTMENTS PLC)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
7
Taxation
(Continued)
- 18 -

The actual charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:

2022
2021
$
$
(Loss)/profit before taxation
(8,020,086)
472,639
Expected tax (credit)/charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
(1,523,816)
89,801
Tax effect of expenses that are not deductible in determining taxable profit
166,650
(659,645)
Tax effect of income not taxable in determining taxable profit
-
0
(690,118)
Gains not taxable
(1,954,508)
-
0
Unutilised tax losses carried forward
3,461,750
3,920,435
Losses on discontinued operations not recognised
1,058,874
-
0
Remeasurement of deferred tax for changes in tax rates
-
0
(2,660,473)
Taxation charge for the year
1,208,950
-

The company has estimated net unused tax losses of $58,973,718 (2021: $53,165,406) available to carry forward against future taxable profits. resulting in a deferred tax asset (at 25%) of $14,743,429 (2021: $13,291,351 at 19%).

 

The revaluation of the Other Investment of $22,743,270 (2021: $12,456,388), necessitates a provision for a deferred tax liability of $5,685,817 (2021:$2,366,714), however due to the existence of a deferred tax losses and revaluation losses within the associates, a deferred tax asset has been offset against this amount reducing the deferred tax liability to $1,208,950 (2021: $nil) for recognition in the financial statements.

 

The balance of the deferred tax asset after the offset is $11,972,658; this asset has not been recognised in the financial statements as there is uncertainty in connection with their recoverability against profits in future periods. Deferred tax assets and liabilities have been calculated at 25% (2021:19%) aligned to the rate for which the assets and liabilities are expected to be realised at.

8
Fixed asset investments
2022
2021
Notes
$
$
Investment in associates
9
27,531,606
8,409,537
Other investments
34,069,605
23,782,723
61,601,211
32,192,260
HOLNE INVESTMENTS LIMITED
(FORMERLY KNOWN AS HOLNE INVESTMENTS PLC)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
8
Fixed asset investments
(Continued)
- 19 -
Movements in fixed asset investments
Shares in associates
Other investments other than loans
Total
$
$
$
Cost adjusted for share of partnership results
At 1 January 2022
8,409,537
23,782,723
32,192,260
Additions
31,250,000
-
31,250,000
Fair value gain on investment
-
10,286,882
10,286,882
Share of partnership results
(12,127,931)
-
(12,127,931)
At 31 December 2022
27,531,606
34,069,605
61,601,211
Carrying amount
At 31 December 2022
27,531,606
34,069,605
61,601,211
At 31 December 2021
8,409,537
23,782,723
32,192,260

On 23 March 2022, a restructuring of the underlying investment structure of Oasis BH LLC was agreed with the JV partners. Phase I of this restructure resulted in Holne's interest in Oasis BH LLC reducing from 2.53% to 2.36%. Currently the Oasis BH LLC structure incorporates the development land and both the Beverly Hilton and Waldorf Astoria hotels. Phase II of the restructure will impact the current beneficial and legal holdings of the company’s investment in Oasis BH LLC. Upon completion of Phase II, which has an undetermined completion date (and longstop of 31 December 2023), the company's shareholding in the Oasis BH LLC will increase to 3.84%. In addition, a new JV will be incorporated, Waldorf JV (Delaware LLC), to which the Waldorf Astoria property will be distributed, and in which Holne is anticipated to have a 0.05% shareholding.

 

On 9 June 2022, the company acquired a 25% interest in ACZ Investments LP for $31.25m.

9
Associates

Details of the company's associates at 31 December 2022 are as follows:

Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Cain International LP
See below
Partners' capital
25.00
Cain International II LP
See below
Partners' capital
25.00
ACZ Investments LP
See below
Partners' capital
25.00
HOLNE INVESTMENTS LIMITED
(FORMERLY KNOWN AS HOLNE INVESTMENTS PLC)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
9
Associates
(Continued)
- 20 -

Cain International LP, Cain International II LP and ACZ Investments LP are all Delaware Limited Partnerships. The registered office of these partnerships is: Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware, 19808.

 

The nature of business of Cain International LP is to acquire and dispose of global real estate investments. As at 31 December 2022, Partners' Capital of the entity totalled $1,008,487,000 and total comprehensive losses recognised for the year totalled $221,566,000.

 

The nature of business of Cain International II LP is to capitalise and/or otherwise fund its subsidiaries as required in order to enable the group to create a regulated investment and asset management business managing capital for both affiliated entities and independent third parties. As at 31 December 2022, Partners' Capital of the entity totalled $513,725,000 and total comprehensive loss recognised for the year totalled $1,032,000.

 

The nature of business of ACZ Investments LP is to acquire and dispose of global real estate investments. As at 31 December

2022, Partners' Capital of the entity totalled $63,391,000 and total comprehensive losses recognised for the year totalled

$61,609,000.

 

10
Financial instruments
2022
2021
$
$
Carrying amount of financial assets
Instruments measured at fair value through profit or loss
34,069,605
23,782,723
11
Creditors: amounts falling due within one year
2022
2021
Notes
$
$
Bank loans and overdrafts
12
-
0
163
Other borrowings
12
115,902,947
78,561,064
Trade creditors
29,021
11,064
Other creditors
255,070
167,577
Accruals and deferred income
77,089
93,832
116,264,127
78,833,700
12
Other borrowings and overdrafts
2022
2021
$
$
Bank overdrafts
-
0
163
Loan notes
110,818,078
73,100,021
Other loans
5,084,869
5,461,043
115,902,947
78,561,227
Payable within one year
115,902,947
78,561,227
HOLNE INVESTMENTS LIMITED
(FORMERLY KNOWN AS HOLNE INVESTMENTS PLC)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
12
Other borrowings and overdrafts
(Continued)
- 21 -

As at 31 December 2021, $63,706,916 of loan notes, together with the associated interest of $9,393,106 were secured by fixed and floating charges over all the property or undertaking of the company. These borrowings were from Ellicott Limited, an entity indirectly owned by Cain International LP, a US partnership in which the company has a 25% interest. Interest of 5.25% is charged on the loan notes on an annual basis. The loan notes were due for repayment by 6 January 2024.

 

On 9 June 2022, the company entered into a new loan agreement with Eldridge HI Funding LLCs, for a total of $106,030,718 for the purpose of repaying the Ellicott loan notes in the sum of $74,780,718 and investing in ACZ Investments LP, in the sum of $31,250,000. Interest of 8% is charged on the loan notes on an annual basis and rolled up into the liability. The loan notes are due for repayment by 6 June 2027 and are secured by fixed and floating charges over all the property or undertaking of the company. Eldridge HI Funding LLC is a related entity of Eldridge Industries LLC, which indirectly, owns a controlling interest in the company’s investment entities.

 

Repayment of the loan notes can be triggered by events outside the control of the company; if prior to the maturity date of 6 June 2027 the company receives either (i) an Applicable Distribution as determined by the loan agreement from Cain International LP, Cain International II LP, ACZ Investments LP or Oasis BH LLC or (ii) any proceeds upon the sale of any of those investments, the company shall immediately apply such relevant amounts received to repaying the loan notes. The loan notes are therefore shown as due in less than one year.

 

Other loans of $5,084,869 (2021: $5,461,043) comprise $2,087,660 (2021: $2,087,600) from J Goldstein, a director and majority shareholder, and $2,997,209 (2021: $3,373,383) from JSG Investments Limited, a company controlled by J Goldstein. These are unsecured, interest free and repayable on demand.

 

Other loans are subordinated to the loan notes.

 

13
Deferred taxation

Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

Liabilities
Liabilities
2022
2021
Balances:
$
$
Fair value gains on investments
1,208,950
-
2022
Movements in the year:
$
Liability at 1 January 2022
-
Charge to profit or loss
1,208,950
Liability at 31 December 2022
1,208,950

The deferred tax liability set out above relates to an unrealised gain on other investments which is expected to mature in the mid to long term.

HOLNE INVESTMENTS LIMITED
(FORMERLY KNOWN AS HOLNE INVESTMENTS PLC)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 22 -
14
Share capital
2022
2021
$
$
Ordinary share capital
Issued and fully paid
40,000 Ordinary shares of £1 each
60,269
60,269
10,000 Ordinary A shares of £1 each
15,067
15,067
75,336
75,336

The Ordinary shares and Ordinary A shares both have full voting, dividend and capital distribution (including on winding up) rights. They do not confer any rights of redemption.

 

The rights of the Ordinary shares and Ordinary A shares are equal in all respects.

15
Directors' transactions

Included within other creditors is $255,070 (2021: $167,577) due to J Goldstein, a director of the company. The movement in the director’s current account relates mainly to amounts paid by the director to the company and on behalf of the company to pay on-going costs. This balance is unsecured, interest free and repayable on demand.

 

Other loans of $5,084,869 (2021: $5,461,043) comprise $2,087,660 (2021: $2,087,600) from J Goldstein, a director and majority shareholder, and $2,997,209 (2021: $3,373,383) from JSG Investments Limited, a company controlled by J Goldstein. These are unsecured, interest free and repayable on demand.

16
Ultimate controlling party

The directors consider J Goldstein to be the ultimate controlling party of the company.

17
Cash generated from/(absorbed by) operations
2022
2021
$
$
(Loss)/profit for the year after tax
(9,229,036)
472,639
Adjustments for:
Share of results of associates and joint ventures
12,127,931
(651,595)
Taxation charged
1,208,950
-
0
Finance costs
6,091,404
3,666,064
Fair value gain on investment
(10,286,882)
(3,632,199)
Movements in working capital:
Increase in creditors
88,707
86,368
Cash generated from/(absorbed by) operations
1,074
(58,723)
HOLNE INVESTMENTS LIMITED
(FORMERLY KNOWN AS HOLNE INVESTMENTS PLC)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 23 -
18
Analysis of changes in net debt
1 January 2022
Cash flows
Other non-cash changes
Exchange rate movements
31 December 2022
$
$
$
$
$
Cash at bank and in hand
1,131
(374,783)
-
376,173
2,521
Bank overdrafts
(163)
163
-
-
-
0
968
(374,620)
-
376,173
2,521
Borrowings excluding overdrafts
(78,561,064)
(32,554,524)
(4,787,359)
-
(115,902,947)
(78,560,096)
(32,929,144)
(4,787,359)
376,173
(115,900,426)
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