|
Registered number: 06487778
HESTOK LIMITED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
|
|
HESTOK LIMITED
COMPANY INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chartered Accountants & Statutory Auditors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HESTOK LIMITED
CONTENTS
|
|
|
|
|
|
|
|
|
Independent Auditors' Report
|
|
Consolidated Statement of Profit or Loss and Other Comprehensive Income
|
|
Consolidated Statement of Financial Position
|
|
Company Statement of Financial Position
|
|
Consolidated Statement of Changes in Equity
|
|
Company Statement of Changes in Equity
|
|
Consolidated Statement of Cash Flows
|
|
Company Statement of Cash Flows
|
|
Notes to the Consolidated Financial Statements
|
|
|
|
HESTOK LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
The director presents his strategic report for the year ended 31 December 2024.
Hestok Limited is holding company with Georgian subsidiary, Tourinvest Limited, and the ultimate holding company Stapilay limited incorporated in Cyprus. Our goal is to be the leader in hospitality business, building awareness of Batumi as an international tourist destination as well as comfortable place to live and work, creating additional workplaces for local people.
The group has been continuing operating its real estate assets in Batumi, Georgia. The real estate assets represent a mixed-use development complex consisting of Hilton Batumi Hotel managed by Hilton Worldwide, Belle Vue Residences apartments with an option to get serviced from Hilton hotel, commercial areas of retail space and the two-store underground parking.
The group operates Hilton Batumi hotel based on the management agreement with Hilton. On Belle Vue Residences it organizes sale of the apartments and parking lots. On the commercial areas it organizes rent of the areas as well as provides service and maintenance to the commercial tenants. All these activities are targeted on generating sufficient revenue for return on investments made.
Results of the group for the year, as set out on page 10 show an operation profit of € 5,375,289 (2023: €6,908,568).
Balance sheet for the issued date shows that the group's net liabilities amount to €36,257,707 (2023: €36,357,936).
The net liability position arises because of the group having loan creditors of €77,748,369. €74,725,097 of these loans are not repayable until 2031 at the earliest, so there is a strong belief that the investment made will generate sufficient funds to repay them.
Valuation Report issued in February 2025 for the property in operation by the company subsidiary in Georgia, shows the value of the real estate project in Georgia as €121,376,000 without VAT as at 31 December 2024.
Principal risks and uncertainties
|
The group’s activities expose it to a variety of financial risks: market risk, including currency risk, fair value, interest rate risk, cash flow risk and price risk, as well as credit risk and liquidity risk. The management of the company assesses these risks regularly and takes appropriate steps to limit these risks. For more details, please refer to notes to these financial statements.
Euro is the functional currency of the Group, as the most significant assets and liabilities are nominated in Euro. The Group is exposed to the foreign currency exchange rates fluctuations with regard to the payables and receivables, which are nominated in currencies other than Euro. In 2024, ongoing conflicts in Ukraine and the Middle East continued to impact tourism from key markets, while economic uncertainty in Europe affected guest spending.
Business model and strategy
|
Hestok Limited is holding company with Georgian subsidiary, Tourinvest Limited, and the ultimate holding company Stapilay limited incorporated in Cyprus. Stapilay Limited has secured funding from Finstella (former RCB Bank Limited), a financing organisation under the laws of Cyprus, to develop and fund the operation of the Hilton Hotel Batumi. The strategy of the group is to continue to operate mixed-used development consisting of Hilton Hotel Batumi, Belle View residence complex with commercial areas thus developing it into successful resort complex. We intend to make it the best project in the area.
|
|
HESTOK LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
In 2024, Georgia's economy experienced robust growth, with TBC Capital revising its forecast to 9.4% for the year, driven by strong tourism and real credit expansion. Inflation remained moderate, averaging around 4.1%, while the Georgian lari stabilized at approximately 2.75 GEL per USD. The National Bank of Georgia continued a cautious easing of its monetary policy.
However, political developments posed challenges to Georgia's European integration aspirations. Despite being granted EU candidate status in December 2023, the government's decision to suspend accession talks until 2028, coupled with the introduction of controversial legislation perceived as undermining democratic values, led to widespread domestic protests and criticism from international partners. These actions have strained relations with the European Union, casting uncertainty over Georgia's future alignment with Western institutions.
Looking ahead, while Georgia's economic indicators remain strong, the interplay between its domestic political trajectory and foreign policy orientation will be crucial in determining the country's long-term development and integration prospects.
Residential Real Estate
In 2024, Georgia's residential real estate market exhibited signs of stabilization, with moderate growth in home prices and increased inventory levels. The median home price reached $374,500, reflecting a 4.8% year-over-year increase, while the average home value stood at $330,342, up by 3.3% from the previous year. Despite these price increases, the number of homes sold experienced a slight decline, with a 4.7% decrease reported in April 2024 compared to the same month in 2023.
Inventory levels improved, with the number of homes for sale rising by 14.5% year-over-year, providing buyers with more options in the market. However, the market remained competitive, as homes spent an average of 60 days on the market, indicating sustained demand.
Mortgage rates fluctuated throughout the year, starting at 6.6% in early 2024, peaking at 7.2% in May, and settling at 6.85% by year-end. These rate changes influenced buyer activity, with a noticeable slowdown during the spring season when rates were highest.
Looking ahead, the Georgia housing market is expected to maintain its stability, with moderate price increases and a balanced supply-demand dynamic. Factors such as improved inventory levels and fluctuating mortgage rates will continue to shape the market's trajectory in 2025.
Tourism industry
In 2024, Georgia's tourism sector demonstrated a strong recovery, with international visitor trips reaching approximately 6.5 million—a 4.6% increase compared to the previous year. This growth was primarily driven by a 9.0% rise in overnight stays, while same-day visits declined by 9.2%. By the end of the year, tourist arrivals had fully recovered to 100.2% of 2019 levels, marking a significant milestone in the post-pandemic rebound.
Visitor demographics shifted notably. Russia remained the leading source of tourists, accounting for 22% of total visits, despite only a 0.2% year-over-year increase. Turkey followed, comprising 20.7% of visitors, although its numbers declined by 4.3%. Armenia ranked third, with a 14.7% share and a 1.5% decrease in visits. Conversely, visits from the EU and the UK totaled 438,414, marking a 3.8% year-over-year increase, though these numbers declined each quarter after Q1 2024.
The closure of land borders with Azerbaijan continued to impact same-day trips, contributing to a slower recovery in that segment. Additionally, large-scale social unrest and demonstrations in April and May 2024 contributed to a deceleration in tourism growth during the second quarter.
|
|
HESTOK LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
Georgia's prominence in the global tourism arena was further solidified by hosting significant events such as the World Tourism Day and the M&I Forum in 2024, enhancing its profile as a key destination for international travelers.
In conclusion, on behalf of the Board, I would like to thank all of our staff for their continued dedication and support during 2024.
This report was approved by the board on 28 May 2025 and signed on its behalf.
................................................
Klimenti Qasradze
Director
|
|
|
HESTOK LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
The director presents his report and the financial statements for the year ended 31 December 2024.
Director's responsibilities statement
|
The director is responsible for preparing the Group Strategic Report, Director's Report and the consolidated financial statements, in accordance with applicable law.
Company law requires the director to prepare consolidated financial statements for each financial year. Under that law he has elected to prepare the consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the UK.
Under company law the director must not approve the consolidated financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. In preparing the consolidated financial statements, the director is required to:
∙select suitable accounting policies and then apply them consistently;
∙make judgments and estimates that are reasonable and prudent;
∙state whether they have been prepared in accordance with IFRS as adopted by the UK, subject to any material departures disclosed and explained in the financial statements;
∙assess the Group and Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
∙use the going concern basis of accounting unless he either intends to liquidate the Group or the Company or to cease operations, or has no realistic alternative but to do so.
The director is responsible for keeping adequate accounting records that are sufficient to show and explain the Parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the Parent Company and enable them to ensure that the financial statements comply with the Companies Act 2006. He is responsible for such internal control as he determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and has general responsibility for taking such steps as are reasonably open to him to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
The principal activity of the company in the year under review was that of a holding and financing company.
The principal activity of the group was that of hoteliers.
The profit for the year, after taxation, amounted to €4,311,008 (2023 - €5,857,041).
No dividends will be distributed for the year ended 31 December 2024.
The director who served during the year was:
|
|
HESTOK LIMITED
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
Disclosure of information to auditors
|
The director at the time when this Director's Report is approved has confirmed that:
∙so far as he is aware, there is no relevant audit information of which the Company and the Group's auditors are unaware, and
∙he has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company and the Group's auditors are aware of that information.
The auditors, Zenith Audit Ltd, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board on 28 May 2025 and signed on its behalf.
Klimenti Qasradze
Director
|
|
|
HESTOK LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF HESTOK LIMITED
We have audited the financial statements of HESTOK LIMITED (the 'Parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2024 which comprise the Consolidated Statement of Profit or Loss and Other Comprehensive Income, the Consolidated Statement of Financial Position, the Company Statement of Financial Position, the Consolidated Statement of Cash Flows, the Company Statement of Cash Flows, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in the preparation of the financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the United Kingdom.
In our opinion:
∙the financial statements give a true and fair view of the state of the Group's and the Parent Company's affairs as at 31 December 2024 and of the Group's profit for the year then ended;
∙the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the United Kingdom; and
∙the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
|
In auditing the financial statements, we have concluded that the director's 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 or the 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 director with respect to going concern are described in the relevant sections of this report.
|
|
HESTOK LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF HESTOK LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report, other than the financial statements and our auditors' report thereon. The directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinion on other matters prescribed by the Companies Act 2006
|
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group Strategic Report and the Director's Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Group Strategic Report and the Director's Report has been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Director's Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
∙adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
∙the Parent Company financial statements are not in agreement with the accounting records and returns; or
∙certain disclosures of director's remuneration specified by law are not made; or
∙we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the director's responsibilities statement on page 4, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the director determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the director is responsible for assessing the Group's and the Parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.
|
|
HESTOK LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF HESTOK LIMITED (CONTINUED)
Auditors' responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
We performed risk assessment procedures and obtained an understanding of the company and its environment, the applicable financial reporting framework, the applicable laws and regulations, the company's system of internal control and the fraud risk factors relevant to the company that affect the susceptibility of assertions to material misstatement due to fraud. We made enquiries with management regarding actual or suspected fraud, non compliance with laws and regulations, potential litigation and claims. The engagement partner led a discussion among the audit team with particular emphasis on how and where the company's financial statements may be susceptible to material misstatement due to fraud, including how fraud might occur. The engagement partner assessed that the engagement team collectively had the appropriate competence and capability to identify or recognise non compliance with laws and regulations.
We considered compliance with UK Companies Act 2006, and the applicable tax legislation as the key laws and regulations which non compliance could directly lead to material misstatement due to fraud at the financial statement level. We evaluated whether the selection and application of accounting policies by the company may be indicative of fraudulent financial reporting. Audit procedures performed by the audit engagement team responsive to assessed risks of material misstatement due to fraud at the assertion level included but were not limited to:
- Testing the appropriateness of manual journal entries recorded in the general ledger and other adjustments made in the preparation of the financial statements;
- Making inquiries of individuals involved in the financial reporting process about inappropriate or unusual activity relating to the processing of journal entries;
- Selecting and testing journal entries and other adjustments made at the end of a reporting period and throughout the period;
- Reviewing accounting estimates for biases that could represent a risk of material misstatement due to fraud.
Owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements of the financial statements due to irregularities, including fraud, may not be detected, even though we have properly planned and performed our audit in accordance with the auditing standards. For example, the further removed non compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. In addition, as with any audit, there remains a higher risk of non detection of irregularities, as they may involve collusion, forgery, intentional omissions, override of internal controls, or collusion
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors' report.
|
|
HESTOK LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF HESTOK LIMITED (CONTINUED)
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 auditors' 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.
Milena Mitova (Senior Statutory Auditor)
for and on behalf of
Zenith Audit Ltd
Chartered Accountants
Statutory Auditors
1st Floor
18 Devonshire Row
London
EC2M 4RH
28 May 2025
|
|
HESTOK LIMITED
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2024
Other comprehensive income:
|
|
|
Items that will or may be reclassified to profit or loss:
|
|
|
|
Exchange gains arising on translation on foreign operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income for the year, net of tax
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
The notes on pages 19 to 46 form part of these financial statements.
|
|
|
HESTOK LIMITED
REGISTERED NUMBER: 06487778
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2024
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other receivables
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued capital and reserves attributable to owners of the parent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The financial statements on pages 10 to 47 were approved and authorised for issue by the board of director on 28 May 2025 and were signed on its behalf by:
................................................
Klimenti Qasradze - Director
|
The notes on pages 19 to 46 form part of these financial statements.
|
|
|
HESTOK LIMITED
REGISTERED NUMBER: 06487778
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2024
|
|
|
|
|
|
|
|
|
Other non-current investments
|
|
|
|
Trade and other receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other receivables
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued capital and reserves attributable to owners of the parent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company's loss for the year was €503,842 (2023 - €461,085).
The financial statements on pages 10 to 47 were approved and authorised for issue by the board of director on 28 May 2025 and were signed on its behalf by:
................................................
Klimenti Qasradze - Director
|
The notes on pages 19 to 46 form part of these financial statements.
|
|
|
HESTOK LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2024
|
|
|
|
|
|
Total attributable to equity holders of parent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income for the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
Total comprehensive income for the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The notes on pages 19 to 46 form part of these financial statements.
|
|
|
HESTOK LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
|
|
|
|
|
|
Total attributable to equity holders of parent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income for the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
Total comprehensive income for the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The notes on pages 19 to 46 form part of these financial statements.
|
|
|
HESTOK LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income for the year
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the year
|
|
|
|
|
|
|
|
|
|
|
The notes on pages 19 to 46 form part of these financial statements.
|
|
|
HESTOK LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income for the year
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the year
|
|
|
|
|
|
|
|
|
|
|
The notes on pages 19 to 46 form part of these financial statements.
|
|
|
HESTOK LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2024
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation of property, plant and equipment
|
|
|
|
Change in value of investment property
|
|
|
|
|
|
|
|
|
Net foreign exchange gain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Movements in working capital:
|
|
|
|
Decrease in trade and other receivables
|
|
|
|
Decrease/(increase) in inventories
|
|
|
|
Increase in trade and other payables
|
|
|
|
|
|
|
|
|
Net cash from operating activities
|
|
|
|
Cash flows from investing activities
|
|
|
|
Purchases of property, plant and equipment
|
|
|
|
Proceeds from disposal of property, plant and equipment
|
|
|
|
Net cash used in investing activities
|
|
|
|
Cash flows from financing activities
|
|
|
|
Proceeds from other borrowings
|
|
|
|
Repayment of other borrowings
|
|
|
|
Interest paid on other borrowings
|
|
|
|
Net cash used in financing activities
|
|
|
|
Net increase/(decrease) in cash and cash equivalents
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the beginning of year
|
|
|
|
Exchange (loss)/gains on cash and cash equivalents
|
|
|
|
Cash and cash equivalents at the end of the year
|
|
|
|
The notes on pages 19 to 46 form part of these financial statements.
|
|
|
HESTOK LIMITED
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2024
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Movements in working capital:
|
|
|
|
Increase in other liabilities
|
|
|
|
Cash generated from operations
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
|
Cash flows from investing activities
|
|
|
|
Repayments by related parties
|
|
|
|
|
|
|
|
|
Net cash from investing activities
|
|
|
|
Cash flows from financing activities
|
|
|
|
Repayment of other borrowings
|
|
|
|
Interest paid on other borrowings
|
|
|
|
Net cash used in financing activities
|
|
|
|
Net increase/(decrease) in cash and cash equivalents
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the beginning of year
|
|
|
|
Cash and cash equivalents at the end of the year
|
|
|
|
The notes on pages 19 to 46 form part of these financial statements.
|
|
|
HESTOK LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
1.Accounting policies
Hestok Limited is a private company, limited by shares, registered in England and Wales. The company's registered number and registered office address can be found on the General Information page.
These financial statements have been prepared in accordance with International Financial Reporting Standards and IFRIC interpretations as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention, as modified by fair value measurement of certain items as disclosed in the accounting policies below.
The financial statements are presented in Euros, which is the Group's presentational currency.
The financial statements have been prepared on a going concern basis. The net Net assets position arises despite the company having loan creditors of €77,748,369, as €74,725,097 of these are not repayable until 2031 at the earliest, by which time the director anticipates that its investments will generate sufficient funds to repay them.
The group revenue for the year under review is €13,144,975 (2023: €8,731,814), profit before tax is €4,311,008 (2023: €5,857,041). Net current assets €3,801,107 (2023: €5,714,148) and net shareholders’ funds (€36,257,707) (2023: (€36,357,936)).
The director has reviewed the short term position, taking into account the 12 months from the approval of the financial statements, and has concluded that, based on current levels of cash and given that the ultimate controlling party has expressed a willingness to provide financial support to the company, the company will be able to meet its liabilities as they fall due.
|
|
HESTOK LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
|
|
|
Functional and presentation currency
|
The Group's consolidated financial statements and those of the Company are presented in Euros. The functional currency of the subsidiary which operates in Georgia is Georgian Lari.
The functional currency of individual companies is determined by the primary economic environment in which the entity operates, normally the one in which it primarily generates and expends cash. In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency ("foreign currencies") are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Income Statement. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items which are measured in terms of historical cost in a foreign currency are not retranslated. Gains and losses arising on retranslation are included in net profit or loss for the period, except for exchange differences arising on balances which are considered long term investments where the changes in fair value are recognised directly in other comprehensive income.
On consolidation, the assets and liabilities of the Group's subsidiaries which do not use Euros as their functional currency are translated into Euros as follows:
(a) assets and liabilities for each Balance Sheet presented are translated at the closing rate at the date of that Balance Sheet;
(b) income and expenses for each Income Statement are translated at average monthly exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and
(c) all resulting exchange differences are recognised in other comprehensive income.
None of the Group's operations are considered to use the currency of a hyperinflationary economy, however this is kept under review.
|
|
HESTOK LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
The consolidated financial statements incorporate the results of Hestok Limited and its subsidiary undertaking as at 31 December 2024 using the acquisition method of accounting. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are de consolidated from the date that control ceases.
The cost of an acquisition is measured as the fair value of the assets plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The excess of the cost of acquisition over the fair value of the group's share of the net fair value of the identifiable assets, liabilities and contingent liabilities is recorded as Goodwill. If the cost of acquisition is less than the fair value of the group's share of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.
Non-controlling interests
Non-controlling interests are measured at their proportionate share of the acquiree's identifiable net assets at the acquisition date.
Changes in the Group's interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.
Acquisitions from entities under common control
Business combinations arising from transfers of interests in entities that are under the control of the shareholder that controls the Group are accounted for at the date of transfer of shares to the Group. The assets and liabilities acquired are recognised at their carrying amounts in the IFRS financial statements of the entities transferred. If the acquired entity has previously not prepared IFRS financial statements, the acquired entity prepares an opening balance sheet as part of the transition to IFRS at the beginning of the year the acquisition occurs. The assets acquired and liabilities assumed are then recognised at their book values determined in accordance with IFRSs on the date of acquisition. Any difference between the book value of net assets acquired and consideration paid at acquisition date is recognised as a contribution from, or distribution to, the shareholders.
Loss of control
Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated. Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group's interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
|
|
HESTOK LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
|
|
|
Critical accounting judgements and key sources of estimation uncertainty
|
The group makes certain estimates and assumptions regarding the future. Estimates and judgments are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period, in which the estimate is revised, if the revision affects only that period or in the period of the revision and future periods, if the revision affects both current and future periods.
The most significant areas requiring the use of management estimates and assumptions relate to useful lives of property, plant and equipment, legal dispute, financial and non-financial assets impairment.
Useful lives of property, plant and equipment
The estimation of the useful life of an item of property, plant and equipment is a matter of management judgment based upon experience with similar assets. In determining the useful life of an asset, management considers the expected usage, estimated technical obsolescence, physical wear and tear and the physical environment, in which the asset is operated. Changes in any of these conditions or estimates may result in adjustments for future depreciation rates.
Legal disputes
The group reviews outstanding legal cases following developments in the legal proceedings at each reporting date, in order to assess the need for provisions and disclosures in its financial statements. Among the factors considered in making decisions on provisions are the nature of litigation, claim or assessment, the legal process and potential level of damages in the jurisdiction in which the litigation, claim or assessment has been brought, the progress of the case (including the progress after the date of the financial statements but before those statements are issued), the opinions or views of legal advisers, experience on similar cases and any decision of the group's management as to how it will respond to the litigation, claim or assessment. Significant and unanticipated changes to these assumptions and estimates could result in significantly different results than those recorded in the financial statements.
Impairment of non-financial assets
The group periodically evaluates the recoverability of the carrying amount of its assets. Whenever events or changes in circumstances indicate that the carrying amounts of those assets may not be recoverable, the group estimates the recoverable amount of the asset. This requires the group to make judgments regarding long-term forecasts of future revenues and costs related to the assets subject to review. In turn, these forecasts are uncertain in that they require assumptions about demand for products and future market conditions. Significant and unanticipated changes to these assumptions and estimates included within the impairment reviews could result in significantly different results than those recorded in the financial statements.
Impairment of financial assets
The group assesses the probability of the non-payment of the trade receivables. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. Significant and unanticipated changes to these assumptions and estimates included within the impairment of financial assets could result in significantly different results than those recorded in the financial statement.
|
|
HESTOK LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
The group recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the group expects to be entitled in exchange for those goods and services. The group use five-step model for all contracts with customers.
The five steps in the model are as follows:
1. Identify the contract with the customer;
2. Identify the performance obligations in the contract;
3. Determine the transaction price;
4. Allocate the transaction price to the performance obligations in the contracts;
5. Recognize revenue when (or as) the entity satisfies a performance obligation.
The group recognizes revenue when (or as) a performance obligation is satisfied, i.e. when 'control' of goods or services underlying the performance obligation is transferred to the customer.
The most of the group's revenue is derived from selling hospitality services and selling of residential properties. Detail accounting policies for significant revenue generative activities are presented below:
Revenue from hospitality services:
The Group provides accommodation service, food and beverage, access to the spa center, fitness center, pool facilities and other related services to the customers. Revenue from providing regular services: accommodation, access to the spa, fitness center, pool facilities and other related services are recognized over time in the accounting period during that the services are rendered. Revenue from accommodation and other regular services is recognized on daily basis at the daily transaction price agreed under the contract.
Revenue from sale of food and beverages and other one-time services is recognized when control over the goods and services has been transferred to the customer. Payment of the transaction price is due immediately when the customer purchases the goods and services. Therefore, revenue is recognized at a point in time when the physical possession was transferred to the customer or access is provided for one-time services.
Revenue from selling fitted and non-fitted residential properties and related services:
The group sells apartments either fitted out or not. According to the contract terms, the residential properties have no alternative use to the group and the group has an enforceable right to payment for performance completed to date in the event of the customer cancelling the contract prior to completion for any reason other than the group's failure to perform its obligations under the contract. Revenue is recognized by the group when control over the goods or services is transferred to the customer.
Revenue from cleaning and maintenance of common areas and elevators of residential properties is recognized over time, because the customer simultaneously receives and consumes the benefits provided by the group's performance as the group performs. For that services revenue is recognized on monthly basis.
Determining the transaction price:
Most of the group's revenue is derived from fixed price contracts and therefore the amount of revenue to be earned from each contract is determined by reference to those fixed prices.
Allocating amounts to performance obligations:
For most contracts, there is a fixed unit price for each product sold, with reductions given for bulk orders placed at a specific time. Therefore, there is no judgment involved in allocating the contract price to each unit ordered in such contracts (it is the total contract price divided by the number of units ordered). Where a customer orders more than one product line, the group is able to determine the split of the total contract price between each product line by reference to each product's standalone selling prices (all product lines are capable of being, and are, sold separately).
|
|
HESTOK LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Practical Exemptions:
The group has taken advantage of the practical exemptions:
1. Not to account for significant financing components where the time difference between receiving consideration and transferring control of goods (or services) to its customer is one year or less; and
2. Expense the incremental costs of obtaining a contract when the amortization period of the asset otherwise recognized would have been one year or less.
Expenses are recognized in the income statement if there arises any decrease of future economic profit related to the decrease of an asset or increase of a liability that can be reliably measured.
Expenses are recognized in the income statement immediately, if the expenses do not result in future economic profit any more, or if future economic profit do not meet or stop to meet the requirements of recognition as an asset in the balance sheet.
Wages, salaries, bonuses, and non-monetary benefits are accrued in the year in which the associated services are rendered by the employees of the group.
Finance income comprises interest income on funds invested, and foreign currency gain. Interest income is recognised as it accrues in profit or loss, using the effective interest method.
Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions, share in profit/ (loss) for the period of minority shareholders in limited liability registered companies, and impairment losses recognised on financial assets (other than trade receivables).
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.
Foreign currency gains and losses are reported on a net basis as either finance income or finance cost depending on whether foreign currency
Taxation on profits and losses for the year comprises current and deferred tax. Taxation is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using rates enacted at the balance sheet date and any adjustment to tax payable in respect of previous years.
Deferred tax assets and liabilities are calculated in respect of temporary differences using the balance sheet liability method. Deferred income taxes are provided for all temporary differences arising between the tax basis of assets and liabilities and their carrying values for financial reporting purposes. A deferred tax asset is recorded only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilised. Deferred tax assets and liabilities are measured at tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax assets and liabilities are not discounted.
|
|
HESTOK LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
|
|
|
Property, plant and equipment
|
All property, plant and equipment are carried at its historical cost less than any accumulated depreciation and accumulated impairment losses. The historical cost of an item of property, plant and equipment comprises:
1. Its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates;
2. any costs directly attributable to bringing the item to the location and condition necessary for it to be capable of operating in the manner intended by the management of the group;
3. the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.
Subsequently capitalized costs include major expenditures for improvements and replacements that extend the useful lives of the assets or increase their revenue generating capacity. Repairs and maintenance expenditures that do not meet the foregoing criteria for capitalization are charged to the statement of profit or loss and other comprehensive income as incurred.
Charging depreciation on the property, plant and equipment or particular items starts when such Property, plant and equipment are ready to use in the manner intended by the management of the group. Depreciation of property, plant and equipment is charged so as to write off the depreciable amount over the useful life of an asset and is calculated using a straight-line method.
Useful lives of property, plant and equipment are as follows:
Freehold Property 50
Plant and Machinery 5 - 15
Fixtures and Fittings 2 - 5
Motor Vehicles 5 - 15
|
|
|
Impairment of property, plant and equipment
|
At each reporting 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 group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
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 recognized immediately in statement of profit or loss and other comprehensive income.
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 recognized for the asset, or cash-generating unit, in prior years.
A reversal of an impairment loss is recognized immediately in statement of profit or loss and other comprehensive income
|
|
HESTOK LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Intangible assets, are initially recognized at their historical cost and carried at cost less accumulated amortization and accumulated impairment losses. The company's policy is that intangible assets should be amortized over the following estimated useful lives:
Licences and Software over 10 - 15 years.
Investment property is measured by the group at cost which includes purchase price and any other directly chargeable expenses less impairment.
The group recognizes investment property as assets, when:
1. it is expected that entity will gain some economic benefit related to this property;
2. investment property cost may be reliably measured.
|
|
|
Cash and cash equivalents
|
Cash represents cash in hand and deposits held on demand with financial institutions. Cash equivalents are short-term, highly-liquid investments with original maturities of three months or less (as at their date of acquisition). Cash equivalents are readily convertible to known amounts of cash and subject to an insignificant risk of change in that cash value.
Inventories comprise of residential property for resale, parking spaces and hotel supplies.
Inventories are stated at the lower of cost and net realizable value. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. The cost of inventories comprises all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. The costs of purchase of inventories comprise the purchase price, import duties and other taxes (other than those subsequently recoverable by the group from the taxing authorities), and transport, handling and other costs directly attributable to the acquisition of finished goods, materials and services. Trade discounts, rebates and other similar items are deducted in determining the costs of purchase. Movements in residential properties are accounted for using the actual cost method. The weighted average cost method is used for other inventories.
|
|
HESTOK LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Initial recognition and subsequent measurement of financial assets and liabilities
The company recognises a financial asset or a financial liability only when the entity becomes a party to the contractual provisions of the instrument. Financial asset and financial liability are initially measured at the transaction price (including transaction costs except in the initial measurement of financial assets and liabilities that are measured at fair value through profit or loss) unless the arrangement constitutes, in effect, a financing transaction. Financial assets and financial liabilities that have no stated interest rate and are classified as current assets or current liabilities are initially measured at an undiscounted amount.
Debt instruments that are classified as current assets or current liabilities are measured at the undiscounted amount of the cash or other consideration expected to be paid or received unless the arrangement constitutes, in effect, a financing transaction. If the arrangement constitutes a financing transaction, the Company measures the debt instrument at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.
The amortised cost of a financial asset or financial liability at each reporting date is the net of the following amounts: the amount at which the financial asset or financial liability is measured at initial recognition minus any repayments of the principal plus or minus the cumulative amortisation using the effective interest method of any difference between the amount at initial recognition and the maturity amount and minus, in the case of a financial asset, any reduction for impairment.
Derecognition of financial assets and financial liabilities
The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount and the sum of the consideration received, and receivable is recognised in statement of profit or loss and other comprehensive income.
The Company derecognises financial liabilities when, and only when, the Company's obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in statement of profit or loss and other comprehensive income.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when 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 of the investment have been affected. For certain categories of financial assets, such as trade accounts receivable, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Company's past experience of collecting payments.
The carrying amount of the financial asset is reduced through the use of an allowance account. When a trade accounts receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in statement of profit or loss and other comprehensive income.
For financial assets measured at amortised cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through statement of profit or loss and other comprehensive income to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.
|
|
HESTOK LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Provisions are recognized when the group has a present obligation, legal or constructive, as a result of a past event, it is probable that the group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cashflows.
|
|
|
Contingent asset and liabilities
|
Contingent liabilities are not recognized in the financial statements. They are disclosed in the notes to the financial statements unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are recognized only when the contingency is resolved.
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects.
|
|
|
New standards and amended standards
|
The following new standards or amendments to existing standards were adopted as endorsed by the UK Endorsement Board (UKEB) with effective date 1 January 2024 for the first time but had no material impact on the financial statements.
1. Lease liability in a sale and leaseback transaction (Amendments to IFRS 16)
2. International Tax Reform – Pillar Two Rules (Amendments to IAS 12)
3. Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants (Amendments to IAS 1)
4. Disclosures: Supplier Finance Arrangements –(Amendments to IAS 7 and IFRS 7)
Future accounting developments:
The following accounting standards have been issued by the IASB and endorsed by the UKEB but are not yet effective.
1. Lack of exchangeability (Amendments to IAS1)
2. Classification and Measurement of Financial Instruments (Amendments to IFRS9 and IFRS7
3. Annual Improvements to IFRS Accounting Standards- Volume 11
4. Power Purchase Agreements (Amendments to IFRS 9 and IFRS 7)
IFRS 18 - Presentation and Disclosure in Financial Statements and IFRS 19 - Subsidiaries without Public Accountability: Disclosures are not yet endorsed by UKEB.
The Company is currently assessing the impact of these amendments, however the impact to the Group financial reporting is not expected to be material.
|
|
HESTOK LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
|
|
|
|
|
The following is an analysis of the Group's revenue for the year from continuing operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from hotel activities
|
|
|
|
|
Sale of hotel residential accommodation
|
|
|
|
|
|
|
|
|
|
Rents received comrpise of rent received from lease of commercial space.
|
|
|
Fees payable to the Company's auditors for the audit of the consolidated and parent Company's financial statements
|
|
|
|
|
HESTOK LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
|
|
Employee benefit expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee benefit expenses (including director) comprise:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key management personnel compensation
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group. Key management personnel remuneration for the year totalled to Euro 328,437 (2023: Euro 294,149).
|
|
|
Finance income and expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other loan interest payable
|
|
|
|
|
|
|
|
|
|
Net finance expense recognised in profit or loss
|
|
|
|
|
HESTOK LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
|
|
|
|
|
9.1 Income tax recognised in profit or loss
|
|
|
The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in the United Kingdom applied to profits for the year are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before income taxes
|
|
|
|
|
|
|
|
|
|
Tax using the Company's domestic tax rate of 25% (2023:25%)
|
|
|
|
|
Profits taxed in foreign jurisdictions
|
|
|
|
|
|
|
|
|
|
The Company has unused tax losss for which no deferred tax asset hass been recognised €1,914,453 (2023: €1,712,183).
|
|
|
Property, plant and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange movements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange movements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HESTOK LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
10.Property, plant and equipment (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation and impairment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge owned for the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge owned for the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enter Text here - user input
|
|
|
10.1 Assets pledged as security
|
Property, plant and equipment is held as collateral against borrowing €74,725,097 from Stapilay Limited, a parent company.
Group management believes the fair value of property plant and equipment is similar to its cost.
|
|
HESTOK LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
|
|
|
|
|
|
|
|
|
|
(i) Non-current assets at cost
|
|
|
Investment property is held by the Group in Georgia and as of 31 December 2024 can be presented as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreing exchange rate movements on cost
|
|
|
|
|
|
|
|
|
|
Depreciation for the year
|
|
|
|
|
Foreign exchange rate movements on depreciation
|
|
|
|
|
|
|
|
|
|
Investment property includes commercial leasing space that are held to earn the long term income. Group management believes the fair value of property plant and equipment is similar to its cost.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange movement
|
|
|
|
|
|
Foreign exchange movement
|
|
|
|
|
|
|
HESTOK LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
12.Intangible assets (continued)
|
|
|
|
|
|
|
Accumulated amortisation and impairment
|
|
|
|
|
|
Foreign exchange movement
|
|
|
|
|
|
Foreign exchange movement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other non-current investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments in subsidiary companies
|
|
|
|
|
|
|
|
|
|
The company's investments at the Balance Sheet date in the share capital of companies include the following:
Tourinvest Limited
Registered office: Georgia
Nature of business: Leisure Development
Class of shares - Ordinary
Holding - 100%
The shares of the subsidiary company Tourinvest Limited are pledged as collateral under the loan agreement with Finstella (former RCB Bank Limited), a financial institution under the laws of Cyprus.
Aggregate capital and reserves for the year ended 31 December 2024 amounted to €23,379,000 (2023:
€30,883,050). Profit for the year €5,075,000 (2023: loss €836,651).
|
|
|
HESTOK LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
|
|
Trade and other receivables
|
|
|
|
|
|
|
|
|
|
|
|
Total non-current trade and other receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables from related parties
|
|
|
|
|
Total financial assets other than cash and cash equivalents classified as loans and receivables
|
|
|
|
|
|
|
|
|
|
Total current trade and other receivables
|
|
|
|
|
HESTOK LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
15.Trade and other receivables (continued)
|
|
|
|
|
|
|
|
|
|
|
|
Total non-current trade and other receivables
|
|
|
|
|
|
|
|
|
|
Receivables from related parties
|
|
|
|
|
Total financial assets other than cash and cash equivalents classified as loans and receivables
|
|
|
|
|
Total current trade and other receivables
|
|
|
|
|
|
|
|
Total non-current trade and other payables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total financial liabilities, excluding loans and borrowings, classified as financial liabilities measured at amortised cost
|
|
|
|
|
Total current trade and other payables
|
|
|
|
|
HESTOK LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
16.Trade and other payables (continued)
|
|
|
|
|
Total non-current trade and other payables
|
|
|
|
|
|
|
|
Payables to related parties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current trade and other payables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans and borrowings
|
|
|
|
|
HESTOK LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
17.Loans and borrowings (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans and borrowings
|
|
|
|
|
The effective and nominal interest rates at the balance sheet date were as follows:
|
All the borrowings are denominated in Euros.
Loans stated above mature on 31 December 2048.
The loan from Stapilay Limited, the parent company, of €60,118,073 is provided under the loan awarded to Stapilay Limited in December 2015 by Finstella (former RCB Bank Limited), a financing organisation under the laws of Cyprus. The subsidiary company, Tourinvest and the Company are guarantors for this loan. All immovable assets (except for office building) and shares of the subsidiary company, shares of Tourinvest Limited are pledged as collateral for this loan. The total loan amounted to €95,000,000. As at 31 December 2024, the undrawn loan facility amounted to €34,881,927. €40,999,000 non-interest bearing loan with maturity 31 December 2048 has been discounted to €14,607,023.
|
|
|
|
|
|
|
|
|
Ordinary shares of €1.00 each
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HESTOK LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
18.Share capital (continued)
|
|
Ordinary shares of £1.00 each
|
|
|
|
|
|
|
At 1 January and 31 December
|
|
|
|
|
|
|
HESTOK LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Foreign exchange reserve
The translation reserve comprises all foreign currency differences arising from the translation of the financial statements to the presentation currency.
Other reserves
Other reserves comprise of additional paid in capital representing gains on initial recognition of related party loans at fair value.
Certain loans granted to and borrowed from related parties are not on arm’s length basis. These loans are interest free or at significantly low rate of interest. This interest - free long-term debt granted by the related parties is initially recognised in accordance with the recognition of the financial instruments policy. The difference between nominal amount of consideration given and the fair value of loans granted and borrowed at other than market terms is recognised in the period the loan is borrowed as initial recognition of loans from related parties at fair value. Loans with fixed maturities are subsequently measured at amortised cost using the effective interest rate method. Those that do not have fixed maturities are carried at cost.
Retained earnings
Retained earning comprises of accmulated losses.
|
|
HESTOK LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
|
|
Analysis of amounts recognised in other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
Items that are or may be reclassified subsequently to profit or loss:
|
|
|
|
|
|
Exchange differences arising on translation of foreign operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that are or may be reclassified subsequently to profit or loss:
|
|
|
|
|
|
Exchange differences arising on translation of foreign operations
|
|
|
|
|
|
|
HESTOK LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
|
|
Notes supporting statement of cash flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at bank available on demand
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents in the statement of financial position
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents in the statement of cash flows
|
|
|
|
|
|
|
|
|
|
Cash at bank available on demand
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents in the statement of financial position
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents in the statement of cash flows
|
|
|
The Group's principal financial instruments comprise of cash and cash equivalents, loans and other receivables, borrowings, trade accounts payable and accruals. The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance.
The capital structure of the Group consists of debt, cash and cash equivalents and equity, comprising capital and retained earnings.
The main risks arising from the Group's financial instruments are credit risk, liquidity risk and market risk.
No active financial risk management is undertaken by the management.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group's receivables from customers and loans given.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was as follows:
|
|
HESTOK LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
22.Financial Instruments (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
Trade and other receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
Trade and other receivables
|
|
|
|
|
|
|
Majority of the loan receivable comprise of loans granted to its subsidiary Tourinvest Limited. The management believes that the subsidiary would be able to generate sufficient cash from its trading business activities, planned proceeds from hotel operations and selling of residential properties. The subsidiary would be able to negotiate favourable repayment schedule in respect of its liabilities and manage to obtain finance through alternative means such as support from the beneficial owners.
Liquidity risk
The following tables show the Group's remaining contractual maturity for its non-derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the company can be required to pay. The table includes both interest and principal cash flows.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings - Stapilay Limited (subordinated loan)
|
|
|
|
|
|
Borrowings - Stapilay Limited, unsecured loan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings - Stapilay Limited (subordinated loan)
|
|
|
|
|
|
Borrowings - Stapilay Limited, unsecured loan
|
|
|
|
|
|
|
|
|
|
|
|
|
HESTOK LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
22.Financial Instruments (continued)
The repayment of interest for this loan is critical for the liquidity of the Group in 2025. The management believes that the subsidiary would be able to generate sufficient cash from its retail business, planned proceeds from hotel operations and selling of residential properties. The management negotiated extension of the repayment of loan principal to 16 December 2031. This may still be difficult based on current structure and potential of the business, but management believes that the Group would be able to obtain finance through alternative means such as support from the ultimate beneficial owners, if needed.
One of the measures, to support the cashflow of the Group during the Covid 19 pandemic, was the agreement with the ultimate issuer of the borrowing to capitalise the interest for 2020.
Based on the above, the management believes that the Group will be able to overcome these liquidity problems and the use of going concern assumption in preparation of financial statements is appropriate.
The fair value of financial assets and financial liabilities is as below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities at amortised cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities at amortised cost
|
|
|
|
|
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities is calculated by discounting the future contractual cashflows at the current market interest rate that is available to the Group for similar financial instruments.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.
Currency risk
The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currency of Group entities, which is the Georgian Lari (Gel). The currencies in which these transactions primarily are denominated are euro (EUR) and US dollars (USD). Interest on borrowings is denominated in the currency of the borrowing.
In respect of other monetary assets and liabilities denominated in foreign currencies, the Group's policy is to ensure that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances.
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
|
22.Financial Instruments (continued)
The Group's exposure to foreign currency risk was as follows based on notional amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
Trade and other receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A strengthening (weakening) of the Euro, as indicated above, against the following currencies at 31 December would have increased (decreased) pre-tax profit or loss by the amounts shown. There would be no direct impact on equity. This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the end of the reporting period. The analysis assumes that all other variables, in particular interest rates, remain constant.
The following significant exchange rates applied during the year:
Interest rate risk
Changes in interest rates impact primarily loans and borrowings by changing either their fair value (fixed rate debt) or their future cash flows (variable rate debt). The Group's policy is only to borrow at a fixed rate of interest.
At the reporting date the interest rate profile of the Group's interest-bearing financial instruments was:
|
|
HESTOK LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
22.Financial Instruments (continued)
Capital management
The Group has no formal policy for capital management but management seeks to maintain a sufficient capital base for meeting the Group's operational and strategic needs, and to maintain confidence of market participants. Total comprehensive loss for the year ended 31 December 2024 was principally generated by the businesses. The management concentrates on efficient production and cash management, constant monitoring of Group's revenues and long-term investment plans to be mainly financed by the Group's operating cash flows. With these measures the Group aims for steady profit growth.
The immediate and ultimate parent company is Stapilay Limited, a company incorporated in Cyprus.
At 31 December 2024 the group was involved in the following legal disputes:
During the year 2018 the subsidiary company has started litigation against the contractor to reimburse construction defects and related material losses. At the same time the contractor has started litigation against the company for unpaid liabilities equal to construction contract retention amount. Total amount of compensation, that litigant requests is EUR570 thousand. Requested amount is fully included within trade payables. Management is of opinion that no material losses will be incurred and accordingly no additional provision has been made in these financial statements.
Taxes
Georgian tax legislation in particular may give rise to varying interpretations and amendments. In addition, as management's interpretation of tax legislation may differ from that of the tax authorities, transactions may be challenged by the tax authority, and as a result the subsidiary company may be liable for additional taxes, penalties and interest. The group believes that it has already made all tax provisions, and therefore no additional allowance have been made in the financial statements. Tax years remain open to review by the tax authorities for three years.
At 31 December 2024 the group had contractual obligations related to the contract of hotel management services:
According to the Management Agreement the Hilton as operator shall operate and manage the Hotel for twenty years from opening without prejudice to the right of termination contained in the agreement. From the day of commencement of the operative activities the operator will be paid the management remuneration fee that will be calculated according to the contract. Management Agreement expires in 2034.
|
|
HESTOK LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
|
|
Related party disclosures
|
Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions as defined by IAS 24 "Related Party Disclosures".
In considering each possible related party relationship, attention is directed to the substance of the relationship, not merely the legal form.
Related parties may enter into transactions which unrelated parties might not, and transactions between related parties may not be effected on the same terms, conditions and amounts as transactions between unrelated parties.
The nature of the related party relationships for those related parties with whom the Group entered into significant transactions or had significant balances outstanding at 31 December 2024 and 31 December 2023 are detailed below. In accordance with IAS 24 disclosure is not required of transactions and balances between Group companies where such transactions are eliminated upon consolidation.
Loan payable to parent company at the end of the year amounted to €74,725,097 (2023: €80,700,510) with interest charged to profit and loss €950,042 (2023: €949,720). Loan payable to companies under the same control €3,023,272 (2023: €3,026,277), interest charged on this loan €114,239 (2023: €101,807). There is also €16,898 (2023: €16,898) in other debtors that is due to the parent company.
Trade receivables have €171,296 (2023: €256,847) due from related parties under common control. Trade payables have €232,034 (2023: €577,350) due to related parties under common control.
|
|
Auditor liability limitation agreement
|
An auditors' limitation of liability agreement has been approved by the members for the financial years ended 31 December 2023 and 31 December 2024. The principal terms and conditions are as below:
- The agreement limit's the amount of any liability owed to the Company by the auditors in respect of any negligence default, breach of duty or breach of trust, occurring in the course of audit of the Company's accounts and pursuant to this agreement the auditor may be guilty in relation to the Company.
- The agreement also stipulates the maximum aggregated amount payable in event of any of the circumstances stated above.
|
|
Ultimate controlling party
|
The ultimate controlling party is Mr Nikolai Kasradze.
|
|
|