The directors present the strategic report for the year ended 31 December 2024.
During the year the group sold two units of the development resulting in turnover of £6.1m. This has represented an increase of £450K versus 2023 where three units were sold for a total of £5.6m.
Distribution and administrative costs have remained constant £530K,primarily comprised of void costs.
Interest costs for the year amounted to £10.1m compared with £10.1m in the prior year. This results in an overall net loss of £10.5m compared to £10.2m a year earlier.
At the year end the group has a net liability position of £78m (£68m - 2023)
The group is susceptible to the volatility of the high-end London property market. The directors are limited in their ability to mitigate this risk, but they monitor the market closely.
The key performance indicators used by management to measure the performance of the group are turnover and net profit as reported in the business review above.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2024.
The results for the year are set out on page 7.
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 directors are trying to market the remaining properties with a view to sell all of them in the near future.
In order to mitigate any potential negative effects, the directors discuss matters including market volatility and cost control on a regular basis. Whilst the full impact of the current macro economic uncertainty on the London property market remains unclear the directors will continue to consider further impairment provisions against stock if required.
The group had loan with the bank DB UK Bank Limited which at the year end had a balance of £9.4m. This loan has subsequently been fully repaid post year end.
United Kingdom company law requires the directors to prepare financial statements for each financial year. Under that law, the directors have elected to prepare the group and parent company 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 parent 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 United Kingdom 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 parent 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 parent company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and parent 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 parent company, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Disclaimer of opinion on financial statements
We were engaged to audit the financial statements of PLJ Mezz Holdco UK 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 balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for Disclaimer of Opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
Notwithstanding our disclaimer of an opinion on the financial statements, 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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Our responsibility is to conduct an audit of the group's financial statements in accordance with the United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice) and to issue an auditor's report. However, because of the matter described in the Basis for Disclaimer of Opinion section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.
We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
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.
Other matters which we are required to address
The previous year's figures have not been audited.
Use of our report
This report is made solely to the parent 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 parent 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 parent company and the parent company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by section 408 of the Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £34,949 (2023 - £0 profit).
PLJ Mezz Holdco UK Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 843 Finchley Road, London, NW11 8NA.
The group consists of PLJ Mezz Holdco UK 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 properties and to include investment properties and certain financial instruments at fair value]. The principal accounting policies adopted are set out below.
The consolidated group financial statements consist of the financial statements of the parent company PLJ Mezz Holdco UK Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
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.
Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.
Investments in joint ventures and associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.
If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.
Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.
The group's balance sheet has net liabilities of £78m which is supported by shareholder loans of £119m. See creditors note.
It is not expected that these loans will be repayable in full due to the extent of the net liabilities referred to above. The shareholders are aware of this fact but consider that the extent of repayments can be maximised by continuing to trade as a going concern while the remaining united are sold.
The process is expected to take at lest 12 months from the date of approval of these financial statements. Accordingly the shareholders do not intent to call for repayment of those on demand loans in the event that the bank loans are repaid, except to the extent surplus funds are available for partial repayment.
Consequently, the financial statements are prepared on a going concern basis despite the balance sheet position.
Revenue comprises sales of goods or services provided to customers net of value added tax and other sales taxes, less an appropriate deduction for actual and expected returns and discounts. Revenue is recognised when performance obligations are satisfied and the control of goods or services is transferred to the buyer. Where the performance obligation is satisfied over time, revenue is recognised in accordance with its progress towards complete satisfaction of that performance obligation.
When cash inflows are deferred and represent a financing arrangement, the promised consideration is adjusted for the effects of the time value of money, which is recognised as interest income.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue from the sale of completed units is recognised at the point the contract for sale unconditionally complete. Any reservation of exchange deposits are recognised in other creditors until that point.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.
Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.
In the parent company financial statements, investments in associates are accounted for at cost less impairment.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The 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.
When the group acts as a lessor, a lease is classified as a finance lease whenever it transfers substantially all the risks and rewards of ownership of the underlying asset to the lessee, either at the end of the lease term or for the major part of the economic life of the asset. All other leases are classified as operating leases. If an arrangement contains both lease and non-lease components, the group allocates the consideration in the contract to the two elements.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
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 average monthly number of persons (including directors) employed by the group and company during the year was:
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:
Details of the company's subsidiaries at 31 December 2024 are as follows:
* denotes investments held indirectly by the parent company.
Included in amounts owed by group undertaking is a loan which attracts interest of 12% per annum. Accrued interest is rolled up into the principal amount of 1 January each year. The loan is repayable on demand, subject to the condition that the borrower must first repay the bank loan. The balance at the year end also includes accrued interest for the year of £10,100,177 (2023 - £9,018,015).
The balance of the loan at the year end was £122,711,021 and had been impaired by £60,923,522 leading to a balance of £61,787,499.
In December 2022 the bank debt in current liabilities was refinanced. The new bank facility was for £18.5m attracting interest at 2% plus SONIA. It was repayable on the earlier of 23 November 2023 (it was subsequently extended) or the receipt of a demand from the lender. The covenants attached to the loan dictate that the loan balance must be repaid in line with the sale of the properties in the development, and that the loan to stock value ratio must not exceed 51.80%.
It is secured by the freehold property included in stocks and is also subject to guarantees provided by the ultimate shareholders as disclosed in the related party transactions note to the financial statements.
The balance owing for this loan at the year end was £9.4m. It has been fully repaid post year end.
Shareholder loans
The shareholder loans consists of two loan facilities, one each from the two shareholders in the company.
The first is a loan payable to Golden Line SA amounting to £25,123,875 (2023 - £25,123,875) is unsecured, non interest bearing and repayable on demand, subject to it being subordinated to the bank loan.
The second loan is a loan payable to PLJ Chelsea S.a.r.l. amounting to £94,272,815 (2023 - £84,172,638). Loan interest is charged at 12% per annum, with accrued interest rolled up into the principal balance of 1 January each year. The loan is unsecured and repayable on demand, subject to it being subordinated to the bank loan.
[Where there is unpaid share capital, disclose for each class of share capital the number of shares issued and fully paid, and issued but not fully paid.]
The A ordinary shares carry voting rights such that each A ordinary share carries one vote on any resolution put to shareholders. They shall not be entitled to any distribution or dividend other than the distributions due to them under the liquidation capital distribution defined below. The B ordinary shares carry no voting rights. They shall not be entitled to any distribution or dividend other than the distributions due to them under the liquidation capital distribution defined below.
Liquidation capital distäbution
Upon the final liquidation of the company after disposal of its interests in the property at Chelsea Island included in stocks, the holder of the B ordinary shares shall receive, in priority to any distribution attributable to the A ordinary shares, and out of the surplus after the realisation of the assets and payment of all liabilities, the following liquidation capital distribution:
Liquidation Capital Distribution will be £X, where X = A + B + C + D + E
Ÿ Where A is £1,880,604 multiplied by the number of completed years that have elapsed between 6 June 2014 and the date of the liquidation
Ÿ Where B is £1,280,848 multiplied by the number of completed years that have elapsed between 17 September 2015 (being the date upon which the B ordinary shares were issued) and the date of the liquidation
Ÿ Where C is £451,440 multiplied by the number of completed years that have elapsedbetween 20 June 2016 and the date of the liquidation
Ÿ Where D is £89,100 multiplied by the number of completed years that have elapsed between 20 December 2016 and the date of the liquidation
Ÿ Where E is the nominal value of the B ordinary shares (being £10) together with any premium attributable to the B shares (being £6,015,400)
Any surplus after the payment in accordance with the above calculation shall be allocated to the holders of A ordinary shares in proportion of the number of A ordinary shares they hold.
DB UK Bank Limited hold a fixed and floating charge over the group's assets in respect of the bank borrowings presented in current liabilities. The balance of these borrowings at the year end amounted to £9,400,000.
The company and the group was jointly owned by PLJ Chelsea S.a.r.l. and Golden Line SA throughout the current year. There is no majority shareholder and therefore no ultimate controlling party.
Golden Line SA has historically provided various working capital loans to the company. At the year end, the principal outstanding on these loans was £25,123,875 (2023 - £25,123,875). The loan is interest free, unsecured and repayable on demand (subject to the condition the group must first repay the bank loan).
PLJ Chelsea S.a.r.l. has historically provided various working capital loans to the company. At the year end, the principal outstanding on these loans was £94,272,815 (2023 - £84,172,638). Interest is charged at 12% per annum on the principal, with accrued interest rolled up into the principal on 1 January each year. At the year end, accrued interest amounted to £10,100,177 (2023 - £9,018,015). The loan and interest is unsecured and repayable on demand (subject to the group must first repay the bank loan).
The ultimate shareholders of PLJ Chelsea S.a.r.l. and Golden Line SA have jointly provided a guarantee for the bank borrowings included in current liabilities.
At the year end there was a balance due from Chelsea Island Developments Limited of £976,030 (2023 - £472,306). A significant shareholder in PLJ Chelsea S.a.r.l. has an indirect interest in Chelsea Island Developments Limited.