The Directors present the strategic report for the year ended 31 December 2024.

Harbour International Limited is the parent company of the Harbour Hotels Group, a collection of UK-based luxury coastal and city hotels. The Group’s purpose is to deliver exceptional guest experiences underpinned by distinctive design, quality hospitality, and a commitment to community and sustainability.

Despite continued macroeconomic challenges, 2024 was a year of progress and resilience. Like for like group turnover was £79.6m (2023: £80.0m), with the minor decrease reflecting broader market volatility and selective price realignment, partially offset by strong like-for-like room revenues and a return to pre-pandemic event volumes. Operating profit rose to £18.0m (2023: £15.1m), buoyed by disciplined cost controls, improved margin performance.

Occupancy increased to 76% (2023: 75%), and average daily rate (ADR) remained robust, affirming strong brand equity and consistent customer loyalty. However, high interest expenses continued to suppress bottom-line results, with a loss before tax of £5.1m (2023: £8.2m loss).

Notably, labour cost management and operational flexibility were improved in response to wage inflation and staffing volatility. Investment in technology and systems helped drive guest satisfaction and improved booking and revenue management efficiency.

The Group continues to navigate a hospitality environment characterised by changing consumer behaviours, inflationary pressure, and heightened guest expectations. In response, the Group is focusing on four core strategic priorities for 2025:

1. Enhancing the Luxury Experience: Expanding bespoke and high-value packages tailored to leisure and event guests, and elevating service delivery standards.

2. Accelerating Digital Innovation: Further investment in digital infrastructure to support mobile-first engagement and more effective revenue management.

3. Talent and Culture: Strengthening our people strategy to support retention, engagement, and development, with a focus on leadership capabilities and front-line excellence.

4. Disciplined Growth: Assessing opportunities for expansion through selective acquisition, asset repositioning and ongoing capital investment in flagship properties.

These actions reflect our ambition to be the most admired luxury lifestyle hotel group in the UK, both as an employer and as a hospitality brand.

The directors are confident that the company is well positioned to build on its strong 2024 operational base, navigating external headwinds while pursuing sustainable value creation for stakeholders.

The Group’s risk environment remains shaped by external pressures, including:

• Economic Volatility: Inflation and interest rates continue to affect cost structures and consumer discretionary spending.

• Labour Availability: Tightness in the hospitality labour market challenges recruitment and retention, particularly in regional locations.

• Regulatory Risk: Evolving regulations on energy use, health and safety, and employment conditions require continuous monitoring.

• Reputational Risk: Social media amplification and sustainability scrutiny mean brand perception must be proactively managed.

To mitigate these, the Group maintains strong governance processes, operational contingency plans, and financial flexibility through a combination of cost controls and responsive pricing strategies.

The Group uses a wide range of performance measures to manage and monitor the business. The most significant of these are the key performance indicators, which for the Group are turnover, operating profit and occupancy, as they are the most effective measure of performance against the Group’s objectives.

2024          2023

Turnover                    £79.5m            £82.6m

Operating profit                    £17.7m            £15.1m

Occupancy %                    76%             72%

In accordance with the requirements of the Companies Act 2006, this strategic report aims to provide a comprehensive overview of the Group's performance, financial position, and prospects. As part of this report, we consider the concept of going concern, which is fundamental to assessing the Group's ability to continue operating in the foreseeable future.

The Directors have carried out a thorough assessment of the Group’s financial position and performance, taking into account various factors, including current and projected cash flows, financial obligations, and available resources. Based on this assessment, the Directors have formed the opinion that the Group has adequate financial resources to meet its obligations and continue operating for the foreseeable future, at least for the next 12 months from the date of this report.

In making this assessment, the Directors have considered both internal and external factors that may impact the Group's ability to continue as a going concern. These factors include market conditions, competitive landscape, regulatory changes, and potential risks and uncertainties. The Directors have also considered the Group's current and future liquidity position, including its ability to generate sufficient cash flows, access additional funding if required, and manage its working capital requirements.

It is important to note that the assessment of going concern is based on various assumptions, estimates, and judgments, which are inherently uncertain and subject to change. The Directors will continue to monitor the Group's financial performance and position, regularly reviewing its ability to operate as a going concern and taking appropriate actions if circumstances change.

In conclusion, based on the Directors' assessment, the Group is considered to be a going concern, as it has adequate financial resources, liquidity, and operational plans in place to support its ongoing operations for the foreseeable future. The strategic report provides a transparent and balanced view of the Group's prospects, highlighting any significant risks and uncertainties that may impact its ability to operate as a going concern in the future.

For more information regarding the basis of preparation see note 1 to the financial statements.

The Board is fully committed to acting in a manner most likely to promote the success of the company for the benefit of its members as a whole, while considering wider stakeholder impacts. Key activities in 2024 included:

• Supporting employee wellbeing, remuneration, and professional development initiatives across all hotels.

• Engaging with suppliers and local communities through sustainability partnerships and responsible sourcing.

• Prioritising guest feedback in investment decisions to ensure continued brand relevance and satisfaction.

• Evaluating decisions through a long-term lens, balancing immediate needs with strategic sustainability.

On behalf of the board

The Directors present their annual report and financial statements for the year ended 31 December 2024.

The principal activity of the Company and Group continued to be that of owning and operating a group of hotels.

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:

The business's principal financial instruments comprise bank balances, bank overdrafts, trade debtors, trade creditors and loans to the business from shareholders. The main purpose of these instruments is to finance the business's operations.

Trade debtors are managed in respect of credit and cash flow risk by policies concerning the credit offered to customers and the regular monitoring of amounts outstanding for both time and credit limits. The amounts presented in the balance sheet are net of allowances for doubtful debtors.

Trade creditors liquidity is managed by ensuring sufficient funds are available to meet amounts due.

Loans comprise loans from both shareholders and third party institutions. Budgets are being used to ensure that sufficient funds continue to be available in the future and repayments can be met in the long term. Cash flow risk is reviewed and the loans are repaid on dates as set out in the facility documents, with support continuing when required to meet liquidity needs as they arise.

During the year, the policy of providing employees with information about the Group has been continued through internal media methods in which employees have also been encouraged to present their suggestions and views on the Group's performance. Regular meetings are held between local management and employees to allow a free flow of information and ideas.

The Directors propose to continue their strategy of investing in the physical resources of the Group through maintaining and upgrading the facilities, and investing in the human resources of the Group by ensuring the business remains a workplace our teams are proud to be associated with. Doing this will ensure the standards delivered meet the expectations of our guests.    

The auditor, Fiander Tovell Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

The 2018 Regulations introduced requirements under Part 15 of the Companies Act 2006 for large unquoted companies to disclose their annual energy use and greenhouse gas emissions, and related information. However, the Group has applied the option permitted to exclude any energy and carbon information relating to its subsidiaries as they qualify as medium or small sized entities and this applies to all subsidiaries within the Group. Therefore, it is not required to make the detailed disclosures of energy and carbon information.

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

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company, and of the profit or loss of the Group for that period. In preparing these financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and accounting estimates that are reasonable and prudent;

• state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The trueGroup has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the Group's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of the business review and the principal risks and uncertainties.

So far as each person who was a Director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the Company is unaware. Additionally, the Directors individually have taken all the necessary steps that they ought to have taken as Directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the Company is aware of that information.

We have audited the financial statements of Harbour International Limited (the 'Parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2024 which comprise the group statement of comprehensive income, the group statement of financial position, the company statement of financial position, 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).

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 loss for the year then ended;

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

• have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the 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

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The Directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

• 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.

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 strategic report and the directors' report.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

• 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 directors' remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

As explained more fully in the directors' responsibilities statement, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Directors are responsible for assessing the 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 Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Extent to which the audit was capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:

• the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations.

• we identified the laws and regulations applicable to the Company through discussions with Directors and other management, and from our commercial knowledge and experience.

• we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the Company, including the Companies Act 2006, taxation legislation, data protection, employment, environmental and health and safety legislation.

• we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management.

We assessed the susceptibility of the Company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

• making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud.

• considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.

To address the risk of fraud through management bias and override of controls, we:

• performed analytical procedures to identify any unusual or unexpected relationships.

• tested journal entries to identify unusual transactions.

• tested a sample of BACS payments to identify payments being made to unexpected bank accounts.

• performed testing on payroll costs in respect of those employees with responsibility or authority in connection with the payroll function.

• assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias.

• investigated the rationale behind significant or unusual transactions.

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

• agreeing financial statement disclosures to underlying supporting documentation.

• enquiring of management as to actual and potential litigation and claims.

• reading the minutes of meetings of those charged with governance.

There are inherent limitations in our audit procedures described above. The more removed those laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the Directors and other management and the inspection of regulatory and legal correspondence, if any.

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.

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 £10,003,160 (2023 - £6,995,848 loss).

Harbour International Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Harbour House, 60 Purewell, Christchurch, England, BH23 1ES.

The group consists of Harbour International 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, modified to include the revaluation of freehold and leasehold properties at fair value. The principal accounting policies adopted are set out below.

This 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:

• 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: The disclosure requirements of paragraphs 11.42, 11.44, 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b), 11.48(c), 12.26, 12.27, 12.29(a), 12.29(b), and 12.29A; and

• section 33 ‘Related Party Disclosures’: The disclosure requirements of paragraphs 33.1A and 33.7.

The financial statements of the company are consolidated in the financial statements of Global Reach UK Holdings Limited. These consolidated financial statements may be obtained from Companies House, Crown Way, Cardiff, CF14 3UZ.

The consolidated group financial statements consist of the financial statements of the parent company Harbour International Limited together with all entities controlled by the parent company (its subsidiaries).

All financial statements are made up to 31 December 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.

Notwithstanding the net current liabilities at 31 December 2024, the financial statements have been prepared on the going concern basis which the directors consider to be appropriate.

The directors of the company and the wider group have prepared cash flow forecasts for a period of at least 12 months from the date of approval of these financial statements. These demonstrate the group has sufficient cash reserves to enable the group to meet its obligations as they fall due for a period of at least 12 months from the date of approval of the financial statements.

As such, the directors are satisfied that the company has adequate resources to continue to operate for the foreseeable future. For this reason the company continues to adopt the going concern basis in preparing these financial statements.

Turnover represents amounts receivable from the provision of hotel services, recognised net of VAT at the point of service to the customer.

Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is ten years.

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Assets in the course of construction are not depreciated.

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 income statement.

In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost or valuation, net of any impairment losses.

A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis.

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, cash in transit, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

The prior period has been restated to reflect cash in transit classified as cash, rather than trade debtors. The restatement has no effect upon equity.

The group only enters into basic financial instruments transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, and loans from related parties.

Financial liabilities and equity are classified according to the substance of the financial instrument's contractual obligations, rather than its legal form.

Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. lf objective evidence of impairment is found, an impairment loss is recognised in the statement of comprehensive income.

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 income statement 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 income statement, 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.

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the statement of financial position as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

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 following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Determine whether leases entered into by the group either as a lessor or a lessee are operating leases or finance leases. These decisions depend on an assessment of whether the risks and rewards of ownership have been transferred from the lessor to the lessee on a lease by lease basis.

Determine whether there are indicators of impairment of the group's tangible and intangible assets, including goodwill. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset and where it is a component of a larger cash-generating unit, the viability and expected future performance of that unit.

The calculation of the group's tax charge involves a degree of estimation and judgement in respect of certain items, including the differences between the accounting and tax base; which assets qualify for capital allowances; the level of disallowable expenditure; the extent of rollover gains; indexation thereon and the tax base into which they are rolled; the amount of deferred tax assets which can be recognised, based upon the likely timing and level of future taxable profits together with an assessment of future tax planning.

Where an asset is replaced and historic cost information pertaining to the original asset is not readily available, then the value is assigned to the year seen as most appropiate, and an RPI adjustment is made to determine the original purchase price.

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 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 such as future economic viability, utilisation and continued relevance of the asset.

Leasehold property is revalued by an independent valuation expert on a regular basis such that the carrying value is in line with the prevailing market rates. The valuation uses the profit method which is based on the group's estimates and assumptions concerning its future revenue growth, trading and cash flows.

Turnover is attributable to the principal activity of the group wholly undertaken in the United Kingdom.

During the year, the group brokered the transfer of freehold interest of the group's leasehold properties held under finance lease.

The average monthly number of persons (including directors) employed by the group and Company during the year was:

Their aggregate remuneration comprised:

The group disposed of subsidiary Kings Harbour Hotel Limited. Further details are provided in note 26.

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

In addition to the amount charged to the income statement, the following amounts relating to tax have been recognised directly in other comprehensive income:

The group has tax losses of approximately £47m (2023 - £22m) available to carry forward against future taxable profits.

Freehold and leasehold properties, along with associated fixtures, fittings and equipment, were last professionally revalued as at 31 January 2022 by Cushman & Wakefield, independent valuers not connected with the group. The valuation was prepared on the basis of market value under the profits method and in accordance with the RICS Valuation – Global Standards.

As at 31 December 2024, the directors have undertaken a review of current market conditions and relevant performance metrics for the properties. Based on this assessment, they are satisfied that there has been no material change in value since the last valuation and that the carrying values continue to reflect a fair approximation of market value. Accordingly, the directors have concluded that there is no requirement to update the valuation at this time.

The following assets are carried at valuation. If the assets were measured using the cost model, the carrying amounts would be as follows:

Shares in subsidiaries are valued based on the net assets of those subsidiaries. If the shares had not been revalued they would be held at their historic cost of £18,389,394 (2023: £18,389,394).

Details of the company's subsidiaries at 31 December 2024 are as follows:

Registered office addresses (all UK unless otherwise indicated):

The companies shown above that are not 100% directly owned are 100% indirectly owned.

On 14 August 2024 the company sold its entire interest in subsidiary Kings Harbour Hotel Limited.

All of the group's financial instruments are measured at amortised cost.

Amounts owed by group undertakings are interest free and repayable on demand.

Amounts owed to group undertakings are interest free and repayable on demand.

Bank loans

Harbour Hotels Group Limited

The bank loans of Harbour Hotels Group Limited are secured by a cross guarantee and a fixed and floating charge debenture over the group’s assets and by fixed and floating charge debentures and cross guarantees provided by the company’s subsidiaries. The bank loan will expire in March 2027. Interest is charged at 2.75% over the daily SONIA rate in respect of the issued loans. The scheduled amortisation payments are £4m per annum. Included within the above balance are debt issue costs of £0.9m (2023 - £1.8m) that are amortised over the duration of the facility.

Shareholder loans

The shareholder loan is subordinated to the bank loan. The shareholder loan agreements restrict the Company from undertaking certain actions and pledging or selling assets not secured under the bank facility which might impede the Company's ability to meet the bank loan commitments. Interest is charged at 10% per annum compounded annually with interest rolled up and payable on final repayment.

Other loans

The other loans reflect unsecured loan notes of £4.15m, subject to interest at 15% per annum, compounded monthly in arrears and payable on final repayment in 2027.

Historically the group's subsidiary undertakings entered into sale and leaseback arrangements with third parties in respect of an interest in their hotels' freehold land. The leases are mostly for a term of 999 years, with annual payments of £2.9m (2023: £2.8m) per annum increasing with movements in RPI. Where the lease term is 999 years, measuring the liability at amortised cost using the effective interest method results in no reduction of the liability for the foreseeable future. The land subject to the finance lease arrangement has been shown within fixed assets as a separate class of asset which is not subject to depreciation at a cost equivalent to the proceeds received.

During the year, the group brokered the transfer of interest in several of the hotels' freehold land from one third party to another. The transfer of interest resulted in a lease modification for which there is no change to the lease liability or adjustment to the right-of-use asset.

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 shares have attached to them full voting, dividend and capital distribution (including on a winding up) rights. They do not confer any rights of redemption.

The revaluation reserve records the value of asset revaluations and fair value movements on assets recognised in other comprehensive income.

Merger reserve arose on a business combination that was accounted for as a merger in accordance with UK GAAP.

The profit and loss account represents cumulative profits and losses, net of any dividends and other adjustments.

On 14 August 2024 the group disposed of its entire holding in Kings Harbour Hotel Ltd. Included in these financial statements are losses of £92,058 arising from the company's interests in Kings Harbour Hotel Ltd up to the date of its disposal

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:

The aggregate remuneration of key management personnel is £1.3m (2023: £1.2m).

During the year the group entered into the following transactions with related parties:

The following amounts were outstanding at the reporting end date:

The following amounts were outstanding at the reporting end date:

The company has taken advantage of the exemption available in Section 33.1A of FRS 102 whereby it has not disclosed transactions between group companies who are wholly owned within the group.

The company is a subsidiary of Global Reach Hotels Limited. The ultimate parent company is Global Reach UK Holdings Limited, a company in which Turnstone (Isle of Man) Limited, Isle of Man, is considered the ultimate controlling party.

The smallest group in which the results of the company are consolidated is that headed by Global Reach UK Holdings Limited. The registered office of Global Reach Hotels Limited is Harbour House, 60 Purewell, Christchurch, BH23 1ES. The registered office of Global Reach UK Holdings Limited is c/o Zedra, Booths Hall, Booths Park 3, Chelford Road, Knutsford, Cheshire, England, WA16 8GS. Financial statements are publicly available from Companies House, Crown Way, Cardiff, CF14 3UZ.