Clarges Mayfair Properties Limited is a private company limited by shares incorporated in England and Wales. The registered office is 7-12 Half Moon Street, Mayfair, London, W1J 7BH.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The company has net assets of £819,144 (2022: £151,350) as at 31 December 2023. The company's parent undertaking, Veladail Hotels Limited, has pledged its continuing support to the company. As at the balance sheet date, the company owed its parent £3,910,000 (2022: £4,050,000).
In July 2020, the company entered into a tenancy agreement attached to which was an option held by the tenant to buy the company’s investment property. The option needed to be extended annually during the period up to 31 January 2025. At the same time, in July 2020, the parent company, Veladail Hotels Limited, entered into an option agreement with the tenant to buy the shares in the company during a specific period up to 31 January 2025.
During the year to 31 December 2023, the tenant did not extend their option to 31 January 2025 and vacated the property at the end of the tenancy in 2024. As a result, the option provided by the company to the tenant lapsed on 30 November 2023. The aggregate value of option payments received has been released to the profit and loss account during the year to 31 December 2023.
The property has been re-let on a commercial basis.
Management continue to consider the options available to them. One of these options is to retain ownership of the property at the end of the current tenancy and continue to generate rental income by leasing it to tenants. This would continue to provide a source of revenue for the company while maintaining the property as an income-generating asset. Having regard to continued rental income, together with the ongoing support pledged by the parent company, the directors are of the opinion that the company has the ability to continue to meet its obligations as they fall due. As a result, the directors consider it appropriate to prepare the financial statements on the going concern basis.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
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, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
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.
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.
Property valuation is a key accounting estimate, as it involves the determination of the fair value or carrying value of a property for financial reporting purposes. Property value represents a significant portion of a company's assets and has a significant impact on the financial statements. The value assigned to a property can affect key financial metrics such as the company's net worth, equity, and ratios. Property valuation is a complex process that involves numerous factors, such as location, condition, rental income, market trends, and legal considerations. These factors require professional expertise and judgment to arrive at a reasonable estimate of the property's value. Furthermore, the property value can change over time due to various factors such as market fluctuations, economic conditions, and property-specific factors, which introduce additional estimation uncertainties and require the use of professional judgment.
The investment property has been stated at a directors' valuation of £9,200,000 (2022: £9,200,000) as at 31 December 2023.
The average monthly number of persons (including directors) employed by the company during the year was:
In July 2020, the company entered into a tenancy agreement attached to which was an option held by the tenant to buy the company’s investment property. The option needed be extended annually during the period up to 31 January 2025 and was divided into five option periods. The contractual amount of the property was £10,300,000, plus £200,000 for chattels. In order to maintain the option throughout the period to 31 January 2025, the tenant was required to pay a purchase deposit before the beginning of each option period.
During the year to 31 December 2023, the tenant did not extend their option to 31 January 2025 and vacated the property at the end of the tenancy in 2024. The aggregate value of option payments received have been released to the profit and loss account during the year to 31 December 2023 on the basis the options had lapsed by that date. Total purchase options received and released to the profit and loss account amounted to £750,000. Payments received to 31 December 2022, amounting to £550,000 were presented as part of other creditors.
The property has been re-let on a commercial basis.
In accordance with the terms of the tenancy agreement, the property continues to be recognised as an investment property and presented at its fair value, as the risks and rewards of ownership remain with the company.
As at 31 December 2023, the investment property has been stated at the directors' estimate of its fair value at that date. To arrive at this value, the directors considered numerous factors, such as location, condition, rental income, market trends, legal considerations, similar transactions on the active market at the year-end and the current tenancy agreement. The directors also considered post-year-end events that could impact property valuation and provide new information on circumstances that affect the fair value of the property. As such the directors have valued the property as at 31 December 2023 at £9,200,000 (2022: £9,200,000).
On a historical cost basis the investment property would have been included at an original cost of £8,855,990 (2022: £8,855,990) and aggregate depreciation of £Nil (2022: Nil).
Other creditors include the aggregate option payments received by the company in accordance with the tenancy and option agreements referred to in notes 1.2 and 5 of these financial statements. During the year to 31 December 2023, the aggregate option payments received to 31 December 2022, amounting to £550,000, were released to the profit and loss account, along with the £200,000 received in respect of the option period ended 31 January 2024. As at 31 December 2023, £nil (2022: £550,000) is included as part of other creditors in respect of the lapsed purchase option.
Bank loans are secured by a fixed and floating charge over the company's assets and by a corporate guarantee given by Veladail Hotels Limited. The facility is available to the company until 30 November 2027.
As the income statement has been omitted from the filing copy of the financial statements, the following information in relation to the audit report on the statutory financial statements is provided in accordance with s444(5B) of the Companies Act 2006:
The auditor's report was unqualified.