The directors present the strategic report for the year ended 31 March 2024.
The financial results for the year ended 31 March 2024 are contained in the statement of comprehensive income of these accounts.
The turnover for the year ended 31 March 2024 showed a significant increase to £11,617,410 from £9,379,065 in 2023. This growth was largely driven by an increase in rooms revenue made up of a 9.2% increase in occupancy and 5.9% increase on room rate. The London luxury market stabilised after the influx of new inventory, with an average growth in occupancy of 4.9% and rate growth of 3.9% across the London luxury market. Leisure was the primary market segment for the hotel at 79% of rooms revenue, primarily driven by U.S. travellers. The Corporate segment grew by 16% through a 10% increase in rate and 6% increase in occupancy.
In addition to growth in room revenue, food and beverage revenues increased by 26% through a 7% increase in covers and a 17% increase in spend per person.
The directors consider the following to be the principal risks and uncertainties facing the group:
Competitors
Some of the hotel’s direct competitors are continuing their strategy of attempting to drive occupancy through reductions in their room rates. This could result in ongoing downward pressure on room rates for the hotel.
October 2024 budget
The measures announced in the October 2024 UK Government budget will impact the hotel’s operating costs, particularly payroll. It is possible that the government budget may have a wider economic impact.
Hotel refurbishment
The Hotel temporarily closed for refurbishment in January 2025. The Dukes Bar will continue to trade throughout the refurbishment. There is a phased approach to reopening with some food and beverage outlets reopening in April 2025 and 55% of bedrooms from September 2025, in addition to all remaining food and beverage operations. The remaining 45% of bedroom stock will reopen in December 2025.
During the refurbishment robust cashflow management will be in place to mitigate any risks relating to the servicing of hotel liabilities. Due to the temporary hotel closure operational positions will be made redundant, and a phased approach to recruitment will ensure that payroll costs are only incurred in line with the reopening schedules.
The loan facility is repayable in November 2025, however management are working on closing and refinancing the facility with a new lender by no later than Q2 of 2025. Along with the refinancing of the existing loan, management are seeking additional financing to fund the refurbishment works.
Future developments
Other than the refurbishment plans specified above, no other developments are currently planned.
Financial risk management
The group cash flow is reviewed on a weekly basis by senior management and its parent company to ensure that all business commitments are achieved on a timely basis.
Environmental
The business has created a Sustainability Strategy with an associated action plan. Implementation is ongoing using an ESG framework to achieve the applicable deliverables. Silver accreditation has been achieved and independently audited by EarthCheck. Initiatives will continue to be implemented to ensure that the business will remain compliant with best practice environmental guidelines. The refurbishment scope of works includes measures designed to increase the EPC rating from E to B.
Personnel
The closure of the hotel for an extended period of time for refurbishment will necessitate making the majority of operational roles redundant. The group will seek to do the very best possible for the team members whilst remaining aligned with legal requirements. The group will take legal advice at every stage of the process and will balance legal compliance with the objective of being fair, transparent and empathetic as much as possible for the team members. A core team will be retained to continue the operation of Dukes Bar throughout the refurbishment in addition to team members being retained to undertake commercial, financial and HR functions and prepare the hotel for its re-launch.
The acquisition and retention of high performing employees remains a focus in all areas of the business. Employee wellbeing remains a priority. During the post-refurbishment reopening, the group will continue to implement measures to attract talented team members and maintain high levels of employee engagement. Proactive recruitment will bring a diverse range of new employees into the business and training programmes will be introduced to develop the skills and abilities of the team.
Employees with disabilities
The group gives full consideration to applications for employment from persons with disabilities. Where existing employees become disabled, it is the group's policy wherever practicable to provide continuing employment under normal terms and conditions to provide training, career development and promotion opportunities to employees with disabilities where appropriate.
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 8.
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:
We have audited the financial statements of Seven Tides UK Holding Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 March 2024 which comprise 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 FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for 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 group's and parent 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
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.
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:
We enquired of management the systems and controls the company has in place, the areas of the financial statements that are most susceptible to the risk of irregularities and fraud, and whether there was any known, suspected or alleged fraud; The group and company did not inform us of any known, suspected or alleged fraud.
We obtained an understanding of the legal and regulatory frameworks applicable to the company. We determined that the following were most relevant: FRS 102, Companies Act 2006;
We considered the incentives and opportunities that exist in the company, including the extent of management bias, which presents a potential for irregularities and fraud to be perpetuated, and tailored our risk assessment accordingly;
Using our knowledge of the company, together with the discussions held with the company at the planning stage, we formed a conclusion on the risk of misstatement due to irregularities including fraud and tailored our procedures according to this risk assessment.
The key procedures we undertook to detect irregularities including fraud during the course of the audit included:
Identifying and testing journal entries and the overall accounting records, in particular those that were significant and unusual;
Reviewing the financial statement disclosures and determining whether accounting policies have been appropriately applied;
Reviewing and challenging the assumptions and judgements used by management in their significant accounting estimates in determining if there are any indicators for impairment of the subsidiary, and consideration of the residual value of tangible fixed assets;
Assessing the extent of compliance, or lack of, with the relevant laws and regulations;
Performing a physical verification of key assets and stock items (including testing of the stock system);
Testing key revenue lines, in particular cut-off, for evidence of management bias;
Obtaining third-party confirmation of material bank and loan balances;
Documenting and verifying all significant related party balances and transactions;
Reviewing documentation such as the company board minutes, for discussions of irregularities including fraud;
Testing all material consolidation adjustments.
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 property 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 of the group and company.
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.
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 £1,161,491 (2023 - £563,898 profit).
Seven Tides UK Holding Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 35 36 37 & 38 St. James's Place, London, England, SW1A 1NY.
The group consists of Seven Tides UK Holding Limited 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. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: Interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated group financial statements consist of the financial statements of the parent company Seven Tides UK Holding Limited 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.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
The group has seen improvement in its operations in the year to 31 March 2024 being the second year the business has been fully operational since the COVID-19 pandemic began. Occupancy close to pre-pandemic levels, as well as boost in average room rate has seen the group improve its results in the year with a profit after taxation of £619,875 (2023: loss of £2,004,269). However, the group is in a net liability position of £2,081,229 (2023: £2,701,104) and net current liability position of £29,482,291 (2023: £17,421,794) as at 31 March 2024.
Post year end from January 2025, the hotel is closing to allow for an extensive refurbishment project, with anticipated re-opening date for Autumn 2025. The shareholders are providing support to the company for the refurbishment works.
From January 2025, the hotel has temporarily closed to allow for an extensive refurbishment project, with anticipated re-opening date for Autumn 2025. The shareholders are providing support to the company for the refurbishment works.
The group has bank loans due for repayment in November 2025, which management are in the process of refinancing the existing bank loan, and obtaining an additional facility in order to fund the refurbishment.
Having obtained satisfactory assurances from the ultimate shareholder of their ongoing support, the directors have a reasonable expectation that the company has adequate available resources to continue in operation for the foreseeable future. Thus, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover is derived from hotel operations, and arose wholly in the United Kingdom. Turnover is recognised when services have been rendered. The turnover of the hotel is derived primarily from the rental of rooms and food and beverage sales. Turnover is all rendering of goods and services.
Turnover is measured at the fair value of the consideration received, excluding discounts, rebates, value added tax and other
sales taxes.
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.
In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. Loans to subsidiaries are measured in accordance with the basic financial assets policy below.
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 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 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 #tErm6, cash and bank balances and loans to subsidiaries within fixed asset investments, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in 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 and loans from fellow group companies, 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.
Transactions in currencies other than pounds sterling 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 in the period are included in profit or loss.
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 estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Tangible fixed assets are depreciated over their useful economic lives, taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values.
Arts and antiques are owned by the hotel to provide ambience and improve the guest experience. During the year to 31 March 2021, a formal valuation was completed on these assets estimating a residual value in excess of the cost and as such the impairment was reversed. Management's best estimate as at 31 March 2024 considers the valuation report to be materially correct, and therefore no impairment has been recognised against this balance.
The value of the investment the company holds in its subsidiary is initially recognised at the total consideration paid. Subsequently the value of the investment is measured at cost less impairment. The subsidiary holds the long leasehold for the property for which the company operates its hotel services. The fair value of the property was determined on the basis of a valuation carried out by an independent firm of Chartered Surveyors, taking into consideration the current and projected trading of the hotel and through looking and comparable properties and current market conditions. Based on the valuation of the property, there appears to be no further impairment to the carrying value of the investment in its subsidiary as at 31 March 2024.
There is planned future expenditure for compliance work like Fire Safety and Maintenance. The expected costs for planned works were estimated at £293,000 and have been accrued in the accounts for the year ended 31 March 2024. The basis for these costs are on past refurbishment works for similar areas within the hotel and the quotes received from service providers.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
There is a wages and salaries expense for the company Seven Tides UK Holding Limited but no employee numbers. This is due to wages and salaries expenses being recharged from the parent company, Seven Tides International LLC.
The actual charge for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:
Details of the company's subsidiaries at 31 March 2024 are as follows:
The loans are secured by a fixed and floating charge over the assets of Dukes Hotel Limited and guaranteed by Seven Tides International LLC and a personal guarantee by Sultan Ahmad Bin Sulayem.
On 22 November 2022, bank facilities were agreed for the group of £27,000,000 and £8,000,000, relating to a term loan and capex facility respectively. The maturity date is 3 years from the utilisation date of the loan. The facilities offered are a loan facility and a capital expenditure loan with interest on the respective portions being 4.23% + reference rate. The first drawdown on the term loan was carried out on 22 November 2022, totalling £23,500,000 (including the arrangement fee). The group has not drawdown any amounts on the capex facility.
The bank loan is repayable in full in November 2025. Interest is payable at 4.23% + higher of reference rate and Bank of England base rate. An arrangement fee of £300,000 is being amortised over the life of the loan with an amount of £164,658 outstanding as at 31 March 2024 (2023 - £264,658).
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 Capital contribution reserve arose on the provision of interest-free loans from the parent company to the group, being the excess of the amount contributed by the parent company over the fair value of the loan at the date of issue. The capital contribution reserve does not form part of the distributable reserves.
The Profit and loss account represents cumulative profits or losses, net of dividend paid and other adjustments.
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 balance sheet date the group was owed £55,614 (2023: £55,614) from Seven Tides Limited, a company under common control. There were transactions in the year of £nil (2023 - £nil) relating to invoices paid by the group on behalf of Seven Tides Limited.
At the balance sheet date the group owed £8,107,819 (2023: £7,937,393) to its parent undertaking, Seven Tides International LLC. Transactions in the year of £170,426 (2023: £nil) relates to amounts remitted to the group to pay liabilities relating to the extension of the long leasehold property.
At the balance sheet date, included within other creditors are amounts of £1,920,000 (2023: £1,920,000) which were due to the directors. Total transactions with the directors were £nil (2023: £nil). This balance relates to the directors remuneration not paid. As well as the amounts above, at the balance sheet date, included within other creditors, are amounts owed to a director, who is also the ultimate shareholder, of £21,331,302 (2023: £6,446,959). Transactions in the year relate to amounts remitted to the group to fund the lease extension of the lease leasehold property.
In the prior period, amounts owed to the director of £6,446,959 were recognised within creditors due in greater than one year. However, these amounts are repayable on demand and therefore have been restated to be recognised within creditors due in less than one year. The restatement does not impact the statement of comprehensive income, nor the statement of changes in equity.
The immediate parent undertaking is Seven Tides International LLC, a company incorporated in the United Arab Emirates.
The ultimate controlling party is Sultan Ahmad Bin Sulayem.