The directors present the strategic report for the year ended 31 March 2024.
With Z Hotels’ trading having recovered from the impact of Covid19 sooner than the market in 2022/23, it was always going to be challenging to maintain an above-market growth in the year 2023/24. That said, the Group’s London year-on-year ADR growth in calendar year 2023 was ahead at 4.8% compared with the London market segment’s 4.2%. The first three months of calendar year 2024, however, showed a softening in room rates across the capital, the impact of which our hotels also felt, making the full financial year's performance in line with the prior year.
Occupancy remained exceptionally high at 99% (prior year 99%) demonstrating resilience and showing sustained guest demand for the Z Hotels product, amidst challenging market conditions and whilst competitors still moved back to pre-covid levels of occupancy.
The result of the trading above was an increase in room revenue of £1 million (2.3%).
Room Commissions began to show reductions from their post-covid levels, with further reductions targeted as a result of strategic changes made around the year-end, as part of our cost management actions.
The group was not immune to the industry’s inflationary pressures on payroll and costs. Payroll expenses for the trading hotels increased by 14% as a result of shortages in the labour market, which have made attracting and retaining staff more competitive as well as the UK's cost of living crisis. Overall costs increased by 1%, reflecting higher input expenses. Within these, utility costs, an area of significant cost increases across the country, remained controlled showing a modest rise of 5%.
Rising interest rates, following increases in the Bank of England’s base rate, significantly impacted the interest expenses.
The affordable luxury hotel market continues to exhibit resilience during periods of economic stagnation, with demand remaining robust as guests seek value-focused alternatives. Z Hotels has proactively launched a series of cost-efficiency programmes aimed at mitigating inflationary pressures and enhancing operational performance. While the full benefits of these initiatives are anticipated to materialise in the 2024/25 financial year, the Group remains committed to delivering exceptional guest experiences and strengthening its market position. This proactive approach ensures Z Hotels is well-prepared to navigate ongoing economic challenges while maintaining its competitive edge.
A robust risk management framework is crucial for Z Hotels to achieve its strategic goals. Proactively identifying, addressing, and mitigating risks is fundamental to ensuring the resilience and long-term success of our business. Although eliminating risk entirely is impossible, we are committed to managing it proactively and effectively.
Governance and Oversight
The Board actively oversees risk management and defining the company's risk appetite. Operational and strategic risks are routinely assessed by relevant functional teams and communicated to the Executive Team for thorough oversight. Annually, the Executive Team conducts a top-down risk evaluation, with findings presented to the Board of Directors for review.
Industry exposure
The hospitality and travel industries and inherently vulnerable to factors affecting domestic and global travel, such as economic changes and geopolitical events. Our streamlined operational approach is structured to endure demand variations that could pose challenges for other industry players.
Economic uncertainty
Economic instability remains a significant challenge. Factor such as inflationary pressures, geopolitical tensions, and macroeconomic volatility may erode consumer confidence, reduce international travel, and strain financial performance. To counter these risks, Z Hotels has the ability to leverage its freehold property assets, implement cost-saving measures, and enhance its commercial strategies to boost financial returns and sustain market resilience.
Competitive landscape
The competitive environment presents notable risks, particularly in periods of economic stagnation or downturns. New entrants and disruptors adapt to shifting consumer preferences could impact market share and profitability. Z Hotels addresses these challenges by closely monitoring market trends, customer satisfaction, and competitor activities, enabling data-driven decisions and flexible strategies.
Cybersecurity threats
Cybersecurity risks, including advanced cyber-attacks and data breaches, remain critical concerns. Such incidents could disrupt operations, harm brand reputation, and result in regulatory fines. We are mitigating cybersecurity risks by outsourcing IT operations to specialised providers with advanced security capabilities, conducting regular security assessments, and integrating information security into all projects. Compliance with data protection laws remains a priority.
Supply chain dependencies
Reliance on supply chains introduces vulnerabilities. The loss of key suppliers or subpar performance could disrupt operations. Z Hotels mitigates these risks by maintaining business continuity plans for critical suppliers, rigorously vetting new partners, and monitoring supplier performance to ensure standards are met.
Health and safety
Health and safety risks, such as food safety lapses, fire hazards, or security threats, could damage reputation and disrupt operations. Z Hotels enforces stringent health & safety, food safety and fire safety policies, conducts regular audits, and provides comprehensive staff training to strengthen risk management in this area.
Environmental, Social and Governance (ESG)
ESG challenges, including climate change and resource scarcity, are increasingly significant. Z Hotels’ ESG Committee spearheads initiatives to reduce emissions, manage waste, and promote sustainability. The company also prioritises inclusivity and diversity to align with stakeholder expectations and ensure long-term business sustainability.
Liquidity Risk
Z Hotels takes an active approach to managing financial risks, ensuring sufficient liquidity is available to meet foreseeable needs while adopting a cautious strategy for cash investments. The Group maintain short-term financial flexibility through a combination of related party facilities and bank loans. Liquidity is further strengthened through disciplined cash flow management and ensuring ample headroom within the Group’s financing arrangements. Loan maturity profiles are carefully monitored to ensure obligations are met seamlessly. This proactive management of liquidity risk enhances the Group's ability to adapt to market fluctuations and sustain effective operations.
Interest Rate Risk
The Group finances its operations through a mix of retained earnings and bank borrowings. Fixed-rate facilities for certain borrowings mitigate exposure to interest rate fluctuations, ensuring predictability in financial planning. However, the continued restrictive monetary policy prolongs the interest rate risks, which the Board monitors regularly to evaluate mitigation strategies.
The Group monitors its performance using a suite of financial key indicators, including hotel occupancy rates, revenue generated, and gross margin. Regular loan covenant monitoring to ensure compliance with lender requirements and safeguard financial stability. The Group also considers non-financial KPIs including customer feedback, mystery guest surveys and team retention data.
Continuing signs of macroeconomic stabilisation, declining inflation and interest rates, create a supportive environment for the Group's strategic initiatives and a positive backdrop for the future opening of additional hotels.
As a pioneer and leader in the UK affordable luxury segment, Z Hotels is confident in its prospects and remains committed to strengthening its market position through targeted initiatives and continuous innovation.
Compliance with Section 172 of the Companies Act 2006
The directors of Z Hotels are dedicated to upholding their responsibilities under Section 172 of the Companies Act 2006 by considering the long-term implications of their decisions, fostering sustainable and collaborative relationships with stakeholders, and ensuring fairness among all members. These principles are deeply ingrained in Z Hotels’ governance framework and operational practices, guiding the Board's commitment to transparency, ethical conduct, and sustainable value creation for the benefit of all stakeholders.
Section 172(1) Statement – Engaging with Our Stakeholders
The directors of Z Hotels are committed to promoting the long-term success of the company. This commitment is grounded in a thorough and ongoing engagement with all relevant stakeholders, including guests, team members, shareholders, suppliers, business partners, local communities, and the environment. Stakeholder engagement is central to the formulation and execution of Z Hotels’ strategy, ensuring that the views and interests of these groups are carefully considered and reflected in the company’s priorities.
As the Board and the Executive Committee develop and implement the company strategy, they actively assess its impact on stakeholders and the communities in which the company operates. Decisions are made with a focus on transparency, fairness, and sustainability, guided by the principles of good faith and ethical governance. By regularly reviewing Key Performance Indicators (KPIs), including customer feedback, mystery guest surveys, team retention data, and shareholder insights, the Board ensures decisions are well-informed and aligned with Z Hotels’ commitment to creating long-term value.
The directors are mindful of their Section 172 duty to act in good faith, considering the long-term consequences of decisions on the company and its stakeholders. By prioritising sustainable relationships and protecting Z Hotels’ reputation, the company strives to foster growth, resilience, and a fair approach to conducting business.
Guests
Guests are at the heart of Z Hotels’ operations, shaping both our daily practices and strategic decisions. In 2024, Z Hotels expanded its guest programmes, focusing on personalised services (“Surprise & Delight”), sustainability awareness, and delivering consistent, high-quality experiences at excellent value.
The Board prioritises guest satisfaction, leveraging data from guest satisfaction surveys, the Mystery Guest programme, and monthly reports on commercial, pricing, and operational performance.
Enhancements in digital booking systems, in-room technology, and marketing strategies are tailored to guest preferences, ensuring a seamless, modern experience. Additionally, the Board periodically reviews room innovations, such as introducing new amenities (planned for FY26), to continually elevate the Z Hotels offering. These efforts aim to foster guest loyalty and maintain Z Hotels’ reputation for exceptional service.
Team Members
At Z Hotels, our success is deeply rooted in the dedication and well-being of our team. In 2024, we strengthened our commitment to employees by enhancing our apprenticeship and leadership programs, fostering professional growth, and creating opportunities for team members to acquire new skills, advance their careers, and build a future within Z Hotels.
The Board remains deeply engaged in matters affecting our workforce. Over the years, discussions have focused on team member pay, with particular attention to the current cost of living. Diversity and inclusion have also been central to our people strategy, ensuring that our workforce reflects the communities in which we operate. Additionally, the Board reviews monthly KPI data on team retention and receives regular reports on health and safety management, with immediate escalation of any serious incidents to the Executive Team.
Recognising the importance of mental health, we expanded our network of trained "Mental Health First Aiders" and introduced flexible working arrangements where feasible. Insights from our annual “Happiness Index” employee survey further guided targeted initiatives to enhance workplace satisfaction.
These combined efforts have earned Z Hotels several prestigious industry accolades, including the Excellence in Talent Attraction Award, Outstanding Leader of the Year Award, and Excellence in Career Development Award.
Business Partners
Suppliers: The Board places significant emphasis on fostering collaborative partnerships with suppliers, focusing on quality, reliability, and shared sustainability goals. Through consistent and meaningful engagement, the company aims to strengthen relationships within the supply chain to ensure continuity of supply and the long-term sustainable success of the Company. The Board actively considers the impact of inflation on the supply chain, approves material supplier contracts, and reviews the annual Modern Slavery Act statement, published on the company website, to ensure human rights are respected across the business and supply chain. As part of its commitment to sustainability, the Board has also received presentations on the Z Hotels sustainability programme, which emphasises responsible sourcing and alignment with the company’s values.
Landlords: Open and proactive communication with landlords facilitated mutually beneficial arrangements, particularly in supporting the development of new properties.
Lenders: Maintaining strong relationships with our lenders remains a cornerstone of our financial strategy, enabling the successful financing of new developments and hotel conversions and supporting our long-term operational goals. The Board and Executive Team regularly engage with key lenders to discuss performance and opportunities.
Local Communities
Z Hotels is committed to doing right by the communities in which we operate and the environment. In 2024, we strengthened our community connections by actively engaging in local forums and championing charitable initiatives, in particular the industry’s leading charity, Hospitality Action. Through dynamic fundraising events and impactful sponsorships, our hotels contributed to causes close to the hearts of the communities we serve. At the same time, we continued to embrace our responsibility as corporate citizens, fostering deeper bonds, driving positive change, and ensuring our efforts are aligned with the broader goal of environmental stewardship.
Environmental Sustainability
At Z Hotels, the environment is a top priority, deeply embedded in our operations and long-term vision. Our commitment is driven by our internal ESG Programme, “A Drop in the Ocean,” which is built around four pillars: Review, Reduce, Renew, Rebalance. These pillars guide our efforts to minimise our environmental footprint, with a focus on reducing energy, water, and waste consumption.
Central to our sustainability strategy is our partnership with British Gas, a forward-thinking energy supplier. In 2023/24, British Gas demonstrated leadership in transitioning away from fossil fuels, using only 21% fossil fuel energy compared to the UK average of 42%, and achieving lower CO2 emissions at 117g/kWh versus the UK average of 222g/kWh.
We also implement practical initiatives to conserve resources. Guests are encouraged to participate in reducing unnecessary energy and water usage through simple yet impactful measures such as reusing towels, supported by room cards, and limiting bed linen changes to guest requests.
All new hotel developments consistently achieve a minimum BREEAM rating of “Very Good”, ensuring environmentally responsible growth. These initiatives and our ESG framework reaffirm Z Hotels’ dedication to sustainability and our role in contributing to a greener future.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 March 2024.
The results for the year are set out on page 16.
No ordinary dividends were paid. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The group's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.
Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance.
There is no employee share scheme at present, but the directors are considering the introduction of such a scheme as a means of further encouraging the involvement of employees in the company's performance.
At Z Hotels, we are dedicated to minimising our environmental footprint and actively supporting global sustainability initiatives. In alignment with our commitment, we present this Carbon Emissions Report in accordance with the Companies Act 2006 (Strategic Report and Directors’ Report) and the Streamlined Energy and Carbon Reporting (SECR) framework. This report provides a comprehensive overview of our greenhouse gas (GHG) emissions, energy consumption, and the measures implemented to enhance energy efficiency during the financial year ending 31 March 2024.
The report has been prepared in reference to the GHG Protocol Corporate Standard. An ‘operational control’ approach has been used to define the GHG emissions boundary. This approach captures emissions associated with the operation of all buildings. Emissions have been calculated using the conversion factors published by the UK Government in 2024. There are no material omissions from the mandatory reporting scope.
The chosen intensity measurement ratio is total emissions in kWh per occupied room average for the year.
Z Hotels reaffirms its commitment to sustainability and transparency in accordance with the Streamlined Energy and Carbon Reporting (SECR) regulations. For the financial year 2023/24, the company has disclosed its energy consumption and carbon emissions in compliance with the guidelines established by the Department for Business, Energy & Industrial Strategy (BEIS).
Z Hotels actively monitors energy usage across all its properties and has implemented targeted energy-saving initiatives, including:
LED Lighting Upgrades: Transitioning to energy-efficient lighting systems across the Z Hotels portfolio.
Optimised HVAC Systems: Enhancing heating, ventilation, and air conditioning performance to minimise energy waste.
Organisational Culture: Fostering sustainability through staff education and embedding environmentally responsible practices across operations.
Guest Participation in Sustainability: Encouraging guests to actively participate in sustainability initiatives, such as reusing towels and linens, reducing water usage, and turning off lights and appliances when not in use, through in-room signage, and digital communications.
Z Hotels is dedicated to achieving net-zero carbon operations by 2040. To meet this goal, we are pursuing the following initiatives:
Review: Conduct regular sustainability audits to uncover further opportunities to reduce energy consumption.
Reduce: Identify and implement strategies to minimise energy consumption and optimise energy efficiency.
Renew: Expand renewable energy usage to cover 75% of electricity needs by 2028 and embrace circular economy practices.
Rebalance: As a last resort, offset unavoidable carbon emissions through verified and responsible carbon offsetting schemes.
Risks and Challenges to Achieving Net-Zero Emissions
Z Hotels recognises that achieving net-zero carbon operations by 2040 presents certain challenges, including:
Dependence on Renewable Energy Infrastructure: The availability and scalability of renewable energy sources may impact progress. Z Hotels plans to mitigate this risk by securing long-term renewable energy contracts and investing in on-site renewable energy generation where feasible.
Technology Adoption: Transitioning to advanced energy-efficient technologies and systems may involve high upfront costs and operational disruptions. To address this, Z Hotels will prioritise phased implementation, leveraging government incentives and partnerships to reduce financial impact.
Operational Challenges: Managing energy consumption in a hospitality setting with varying operational demands can complicate efficiency efforts. Z Hotels will use smart energy management systems to adapt to fluctuating needs while maintaining sustainability goals.
Supply Chain Emissions: Reducing Scope 3 emissions, which include supplier and customer-related activities, requires collaboration with external stakeholders. Z Hotels will engage with suppliers to adopt sustainable practices and offer guests eco-friendly options to reduce their environmental impact.
We have audited the financial statements of Z Group Topco Ltd (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 March 2024 which comprise the Group Profit And Loss Account, the Group Statement of Comprehensive Income, the Group Balance Sheet, the Company Balance Sheet, the Group Statement of Changes in Equity, the Company Statement of Changes in Equity, the Group 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 Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Material uncertainty related to going concern
We draw attention to note 1.4 in the financial statements, which indicates that the availability of financing may impact the group’s ability to continue as a going concern. As stated in note 1.4 these events or conditions, along with the other matters as set forth in note 1.4 indicate that a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
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.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
As part of an audit in accordance with ISAs (UK) we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group's or the parent company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the group or the parent company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Explanation as to what extent the audit was considered capable of detecting irregularities, including
fraud
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.
The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the company.
Our approach was as follows:
We obtained an understanding of the legal and regulatory requirements applicable to the company and considered that the most significant are the Companies Act 2006, UK financial reporting standards as issued by the Financial Reporting Council, and UK taxation legislation.
We obtained an understanding of how the company complies with these requirements by discussions with management and those charged with governance.
We assessed the risk of material misstatement of the financial statements, including the risk of material misstatement due to fraud and how it might occur, by holding discussions with management and those charged with governance.
We inquired of management and those charged with governance as to any known instances of noncompliance or suspected non-compliance with laws and regulations.
Based on this understanding, we designed specific appropriate audit procedures to identify instances of non-compliance with laws and regulations. This included making enquiries of management and those charged with governance and obtaining additional corroborative evidence as required.
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.
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 for no purpose other than to draw to the attention of the company’s members those matters we are required to include in an auditor's report addressed to them. To the fullest extent permitted by law, we do not accept or assume responsibility to any party 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.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £2,643,759.
Z Group Topco Ltd (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 53-59 Chandos Place, London, WC2N 4HS.
The group consists of Z Group Topco Ltd and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
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 financial statements have been prepared under the historical cost convention modified to include the revaluation of freehold and leasehold properties and to include investment properties at fair value. The principal accounting policies adopted are set out below.
The consolidated group financial statements consist of the financial statements of the parent company Z Group Topco Ltd together with all entities controlled by the parent company (its subsidiaries).
All financial statements are made up to 31 March 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
The Group has continued to trade at exceptionally high levels of occupancy with the annual rate of occupancy running at 99% at the balance sheet date. ARR continues on a growth trajectory and measures to control costs have taken an annualised £2m out of the cost base. Upgrades to core systems and revenue management improvements are contributing towards increases in ARR, whilst discussions over refinancing and asset optimisation are progressing positively.
The Group has loans totalling £104.1m of which £4.3m is repayable on demand at the balance sheet date and £82m is repayable within 12 months of the date of approval of these financial statements. Of the remaining amounts, £14.3m is repayable in May 2028 and £4m repayable in July 2027. The Group has obtained a letter confirming that £4m of the amounts repayable on demand will not be recalled within at least 12 months of the date of approval of these financial statements.
The directors have drawn up cash flow forecasts for the Group which extend to March 2026 to assess its ability to continue as a going concern. Should the Group loans of £86.3m be called for repayment, there is unlikely to be sufficient headroom available without either refinancing the loans or renegotiating the terms and conditions of the loans.
These factors indicate the existence of material uncertainties which may cast significant doubt on the Group's ability to continue as a going concern. While there can be no certainty over the assumptions made in preparing the cash flow forecast, the directors have prepared the financial statements on going concern basis as they have a reasonable expectation that, if required, either refinancing will be available to the group or that the terms of the group’s loans can be renegotiated such that repayments can be managed in a reasonable way.
The financial statements do not contain any adjustments that would arise if the group were unable to continue as a going concern.
Turnover is recognised to the extent that it is probable that the economic benefits will flow to the company and revenue can be reliably measured.
Turnover comprises revenue recognised by the company in respect of goods and services supplied during the year, exclusive of Value Added Tax and trade discounts. Turnover in respect of accommodation is recognised at the point of the customers stay whilst other sales, including food and beverage revenues, are recognised at the point of purchase.
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 recognised in the profit and loss account.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, 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.
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.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, 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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group 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 group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
The carrying value and further information of the tangible fixed assets is detailed in the notes to the accounts further. The valuations consider market conditions and financial projections for the hotels. Deferred tax liabilities are recognised based on revaluation gains.
Depreciation is provided at rates calculated to write off the cost or valuation of fixed assets, less their estimated residual value, over their expected useful lives. Amortisation is calculated to write off the cost in equal annual instalments over their estimated useful lives.
Management review the deferred tax position and its recoverability in light of expected future performance and strategy of the business.
Exceptional income relates to the release of deposits held by the company in respect of reservations not utilised by the customer.
Exceptional costs relate to aborted acquisition costs for a potential new site for the group and the loss on disposal of a subsidiary, G1 Propco Ltd, during the year.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2023 - 0)
The actual charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
Land and buildings were revalued on an open market basis by the directors, guided by external valuation obtained from a third party firm of professional valuers at 31 March 2024.
The following assets are carried at valuation. If the assets were measured using the cost model, the carrying amounts would be as follows:
The freehold investment property was valued on an open market basis by directors, guided by an external valuation obtained from an external firm of professional valuer on 31 March 2019. The directors do not consider that there has been any subsequent change in valuation as at 31 March 2024.
The investment property is subject to a mortgage charge over the borrowings of a connected company.
During the year, £3,600,000 of investment property was disposed of as a part of the disposal of G1 PropCo Ltd.
Details of the company's subsidiaries at 31 March 2024 are as follows:
Registered office addresses (all UK unless otherwise indicated):
Secured loans
Included in bank loans are facilities granted by Oaknorth amounting to £71,941,482 (2023: £58,999,132). The bank loans are secured by way of a charge over all assets of the companies and its subsidiaries, and are repayable in quarterly instalments at varying rates of interest. At the reporting date, the facilities were due to expire between October 2025 and May 2028.
Also included in bank loans are facilities granted by Cynergy amounting to £1,650,000 (2023: £1,650,000). At the balance sheet date the bank loan was repayable in full in December 2024. Subsequent to the year end the repayment date was extended to June 2025. Interest is charged on the bank loan at 6.07% and is payable monthly. The bank loan is secured by way of a fixed and floating charge over the leasehold premises held in Z Des Ltd.
Other Loans
Included within other loans is a loan of £4,000,000 (2023: £4,000,000) repayable on demand. The balance is unsecured and interest is charged at 9%.
Included within other loans due within one year is a loan of £9,000,000 (2023: £15,000,000, discounted to a balance of £14,251,781) and accrued interest of £1,408,219 (2023: £nil) due to former shareholders. The balance is unsecured and attracts interest at 20%. At the reporting date, the loan was repayable in July 2024 and subsequent to the year end date the loan was extended to April 2025.
Included within other loans due within one year is a loan of £10,000,000 (2023: £10,000,000, discounted to a balance of £9,501,188) and accrued interest of £361,644 (2023: £nil) due to former shareholders. The balance is unsecured and attracts interest at 20%. At the reporting date, the loan was repayable in July 2024 and subsequent to the year end date the loan was extended to April 2025.
Included within other loans due within one year is a loan of £1,000,000 (2023: £nil) and accrued interest of £19,726 (2023: £nil). The balance is unsecured and attracts interest at a rate of 12%. At the reporting date the loan was repayable in July 2024 and subsequent to the year end the loan was extended to July 2027.
Included within other loans after one year is a loan of £4,000,000 (2023: £nil) and accrued interest of £448,877 (2023: £nil). The balance is unsecured and attracts interest at a rate of 16%. At the reporting date the loan is repayable in July 2027.
Included in other loans due within one year is a loan of £25,000 (2023: £Nil) due to a director and shareholder of the company. The balance is unsecured and interest-free. The loan is repayable on demand.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
The A Ordinary shares of £1 each and B Ordinary shares of £1 each rank pari passu in all respects. Both classes of share carry voting rights as well as the right to receive dividends.
The company was incorporated on 18th July 2023. On incorporation, a total of 20 £1 Ordinary shares were issued for cash for a total of £20.
On 21st July 2023, a total of 122,633,658 £1 Ordinary shares were allotted in exchange for cash. On the same day a change in designation of class of shares was filed, splitting the original Ordinary shares into 61,316,840 £1 A Ordinary shares, 58,683,160 £1 B Ordinary shares and 2,633,679 £1 C Ordinary shares.
A Ordinary and B Ordinary shares rank pari passu in all respects, whilst C Ordinary shares have voting and dividend rights only in respect to G1 Propco matters.
Immediately following the re-designation of share capital, the company cancelled 2,633,679 £1 C Ordinary shares and 2,633,680 £1 A Ordinary shares, leaving a total of 58,683,160 £1 A Ordinary shares and 58,683,160 £1 B Ordinary shares for a total of £117,366,320 in share capital at year end.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
At the reporting end date the group had contracted with tenants for the following minimum lease payments:
The following amounts were outstanding at the reporting end date:
The following amounts were outstanding at the reporting end date:
During the period the group received income of £3,670,746 (2023: £3,338,142) from companies under common control. During the period the group purchased assets amounting to £1,887,272 (2023: £297,736) and incurred management fees of £1,116,885 (2023: £1,175,670) from companies under common control.
Included within other debtors is £1,900,000 (2023: £nil) due from shareholders of the parent company.
During the period the group received rental income amounting to £nil (2023: £28,630) from a former director.
Included in other debtors are loans amounting to £6,559 (2023: £511,144 creditor) due from directors. No interest has been incurred by the group in relation to these loans.
The prior period adjustments impacting the group P&L relate to a correction to rent charge and audit fee charge and the corresponding accrual recognised as at 31 March 2023.
There is an additional prior period adjustment that relates to the correct disclosure and allocation of director loan accounts between debtors and creditors which has no impact on net liabilities as at 31 March 2023.