The directors present the strategic report for the year ended 30 June 2025.
The Group experienced a challenging financial year. Revenue increased by 37% to £22.7m (2024: £16.5m), reflecting the inclusion of CSG Glasgow Limited into the Group in December 2024, which contributed £4.6m of revenue during the year. Despite this growth, operating profit decreased by 28% to £4.0m (2024: £5.5m).
The reduction in operating profit was primarily attributable to cost inflation across the business, increased expenditure on marketing and commission costs, and a one‑off head office recharge. In addition, the Group incurred expenditure to upgrade two properties in preparation for a change of brand to Marriott. These works were undertaken to enhance the quality and positioning of the properties and to support their long‑term performance.
Cheval Collection Limited continued to manage Old Town Chambers and The Edinburgh Grand under the Cheval brand throughout the year. With effect from 1 July 2025, both properties were successfully rebranded as part of the Marriott Autograph and Luxury Collections.
Financing
During the year, the Group RBS loan facility was amended to include additional companies within the CSG Hotels and Apartments group. As part of this amendment, the total Group facility was increased from £53.0m to £84.55m, incorporating a £18.5m revolving credit facility and £1.5m overdraft. The facility provides ongoing flexibility to repay and redraw borrowings, supporting efficient cash management and minimisation of interest costs. Further details in respect of the facility are outlined at notes 18 and 28.
The principal risks and uncertainties affecting the group include the following:
Competition: new entrants into the market within close proximity to the Group’s properties. The Group continues to focus upon guest services and brand standards allowing its product to be differentiated from competitors.
Political risk: Instability and changes in geopolitical relationships may impact the ease of accessibility to the UK for overseas visitors. Increases in domestic taxes such as VAT being higher than the European average, increases in National Insurance and Air Passenger Duty may deter overseas visitors.
Economic risk: increases in costs due to supplier price increases, budgetary changes to payroll costs, labour shortages, and continued increases in energy costs pose significant challenges to the group. The introduction of the Edinburgh Visitor Levy, being a charge of 5% on overnight accommodation in the city also poses a further challenge.
Key areas of strategic development and performance of the Group include:
Sales and marketing: the targeting of higher rate business through all sales channels, specifically focusing on improving direct business to reduce commission costs.
Competitive advantage: the Group focuses on areas where it has a competitive advantage in the four- and five-star markets which places it well in terms of long term income/cash flow growth potential.
Brand awareness and reputation: we continue to work hard at building brand awareness and ensuring our reputation for quality, value and commitment to excellence in customer service is maintained.
Expansion: the Group will continue to evaluate further expansion plans as opportunities arise.
The Group monitors key financial performance indicators across all sites in order to maximise performance, room rate and occupancy. The group’s performance is benchmarked regularly against hotels of a similar standard in the city.
The Group also monitors key non-financial indicators such as feedback from guests, ratings on guest online surveys and third-party internet feedback sites such as Google, TripAdvisor and Booking.com.
| 2025 | 2024 |
Rooms sold | 74,452 | 38,126 |
Average room rate | £233.93 | £327.53 |
Occupancy | 76.2% | 78.3% |
RevPar (Revenue per available room) | £178.23 | £256.53 |
Note, the above figures include 6.5 months of trading of the AC by Marriott in Glasgow, a 240-bedroom hotel that was transferred into the Group during the year.
Food and Beverage
The Group uses a range of financial and non-financial key performance indicators to monitor and manage the business. These include:
Sales: daily, weekly and period sales measured against budget and prior period. The conversion of sales to EBITDA ratios for each unit and Cost of Sale % and Wage %.
Management accounts: these are produced monthly for each operating unit with variances to budget and prior period analysed.
Customer feedback: a variety of measures are used to capture feedback and learn from suggestions for improvement, both at point of sale and via internet and social media sites online.
Employee Turnover and Engagement: this is reviewed monthly, and training and engagement modules are completed online and reviewed regularly by management.
On behalf of the board
The directors present their annual report and financial statements for the year ended 30 June 2025.
The company's accounting reference date is 24 June 2025 however the company has taken advantage of the option available under s390(3) of the Companies Act 2006 to prepare its group financial statements for the period to 30 June 2025.
The results for the year are set out on page 10.
No ordinary dividends were paid. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The group does not use derivatives for either financial risk management or for speculative purposes. The group's financial risk management objectives, policies and exposure to financial risks are not considered material for the assessment of the group's assets, liabilities, financial position or result for the year and as such, no further disclosure is considered necessary.
Details of events after the reporting date are included with note 28 of the financial statements.
The company 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 future developments (where applicable).
The auditor, Johnston Carmichael LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
The financial statements have been prepared on the going concern basis, notwithstanding the net current liabilities of £95,618,579 (2024: £685,925) which the directors believe to be appropriate for the following reasons.
The directors have prepared forecasts for a period in excess of 12 months from the date of signing the financial statements. They are based on management’s latest assumptions including occupancy rates, average daily rate and staff costs. The forecasts have been prepared with reference to latest actual trading results as well as seeking to model the impact of severe but plausible downside risks.
At the balance sheet date, the group was in breach of the gross leverage covenant relating to its bank facility. Accordingly, the bank loans and overdrafts under the RBS facility have been classified as falling due within one year. Subsequent to the year end, RBS formally waived the covenant breach and confirmed that the facility remains available in accordance with its original maturity profile, with no requirement for repayment within 12 months of the reporting date.
The forecasts for the group assume that its creditors under common control of the ultimate controlling party, Christopher Stewart, will not withdraw amounts forwarded to it.
Based on the group’s forecast and projections, access to finance and support from related parties, the directors have a reasonable expectation that the group will have adequate resources to meet its liabilities as they fall due for at least 12 months from the date of approval of the financial statements. Thus, they continue to adopt the going concern basis of accounting in preparing the annual financial statements.
We have audited the financial statements of CSG Hotels and Apartments Limited ('the parent company') and its subsidiaries (the 'group') for the year ended 30 June 2025 which comprise the Consolidated Statement of 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, and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
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 or parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
The information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
The Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
We assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations by considering their experience, past performance and support available.
All engagement team members were briefed on relevant identified laws and regulations and potential fraud risks at the planning stage of the audit. Engagement team members were reminded to remain alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Extent to which the audit was considered capable of detecting irregularities, including fraud (continued)
We obtained an understanding of the legal and regulatory frameworks that are applicable to the group and the parent company and the sector in which they operate, focusing on those provisions that had a direct effect on the determination of material amounts and disclosures in the financial statements. The most relevant frameworks we identified include:
Companies Act 2006;
UK Tax legislation;
VAT legislation; and
UK Generally Accepted Accounting Practice.
We gained an understanding of how the group and the parent company are complying with these laws and regulations by making enquiries of management and those charged with governance. We corroborated these enquiries through our review of submitted returns, external inspections and relevant correspondence with regulatory bodies.
We assessed the susceptibility of the group’s and parent company’s financial statements to material misstatement, including how fraud might occur, by meeting with management and those charged with governance to understand where it was considered there was susceptibility to fraud. This evaluation also considered how management and those charged with governance were remunerated and whether this provided an incentive for fraudulent activity. We considered the overall control environment and how management and those charged with governance oversee the implementation and operation of controls. In areas of the financial statements where the risks were considered to be higher, we performed procedures to address each identified risk. We identified a heightened fraud risk in relation to:
Management override of controls; and
Revenue recognition.
In addition to the above, the following procedures were performed to provide reasonable assurance that the financial statements were free of material fraud or error:
Reviewing the level of and reasoning behind the group’s and parent company's procurement of legal and professional services
Performing audit procedures over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and assessing judgements made by management in their calculation of accounting estimates for potential management bias;
Performing audit procedures over the risk of revenue recognition, including detailed substantive testing over the completeness of revenue recorded through selecting a sample of reports from the respective booking system and tracing the transactions through to the accounting system and bank;
Completion of appropriate checklists and use of our experience to assess the Company’s compliance with the Companies Act 2006; and
Agreement of the financial statement disclosures to supporting documentation.
Our audit procedures were designed to respond to the risk of material misstatements in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve intentional concealment, forgery, collusion, omission or misrepresentation. There are inherent limitations in the audit procedures performed and 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.
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.
The notes on pages 17 to 39 form an integral part of the financial statements.
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 £381,326 (2024: £311,931 loss).
CSG Hotels and Apartments Limited ("the company") is a limited company domiciled and incorporated in Scotland. The registered office is 12 Hope Street, EDINBURGH, EH2 4DB.
The group consists of CSG Hotels and Apartments 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 land and buildings as well as investment property carried at fair value. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements where these are applicable:
Section 4 ‘Statement of Financial Position’: Reconciliation of the opening and closing number of shares;
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’: Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated financial statements incorporate those of CSG Hotels and Apartments Limited and all of its subsidiaries (i.e. entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits).
All financial statements are made up to 30 June 2025. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
The financial statements have been prepared on the going concern basis, notwithstanding the net current liabilities of £95,618,579 (2024: £685,925) which the directors believe to be appropriate for the following reasons.
The directors have prepared forecasts for a period in excess of 12 months from the date of signing the financial statements. They are based on management’s latest assumptions including occupancy rates, average daily rate and staff costs. The forecasts have been prepared with reference to latest actual trading results as well as seeking to model the impact of severe but plausible downside risks.
At the balance sheet date, the group was in breach of the gross leverage covenant relating to its bank facility. Accordingly, the bank loans and overdrafts under the RBS facility have been classified as falling due within one year. Subsequent to the year end, RBS formally waived the covenant breach and confirmed that the facility remains available in accordance with its original maturity profile, with no requirement for repayment within 12 months of the reporting date.
The forecasts for the group assume that its creditors under common control of the ultimate controlling party, Christopher Stewart, will not withdraw amounts forwarded to it.
Based on the group’s forecast and projections, access to finance and support from related parties, the directors have a reasonable expectation that the group will have adequate resources to meet its liabilities as they fall due for at least 12 months from the date of approval of the financial statements. Thus, they continue to adopt the going concern basis of accounting in preparing the annual financial statements.
Turnover represents the total invoice value of sales made during the year and is shown net of VAT and other sales related taxes.
Turnover comprises the following streams:
- Sale of goods: Turnover from the sale of food and beverages is recognised at the point of sale.
- Rendering of services: Revenue from room sales and other guest services is recognised when rooms are occupied and as services are provided.
- Rental income and service charges: Turnover from rental income and service charges receivable is recognised on a straight line basis.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
Properties whose fair value can be measured reliably are held under the revaluation model and are carried at a revalued amount, being their fair value at the date of valuation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. The fair value of the land and buildings is usually considered to be their market value.
Revaluation gains and losses are recognised in other comprehensive income and accumulated in equity, except to the extent that a revaluation gain reverses a revaluation loss previously recognised in profit or loss or a revaluation loss exceeds the accumulated revaluation gains recognised in equity; such gains and loss are recognised in the profit and loss account.
In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
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.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in the profit and loss account in the period in which they are incurred.
At each reporting period end date, the group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
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 the profit and loss account, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease in other comprehensive income to the extent of any previously recognised revaluation increase accumulated in equity, in respect of that asset. Any excess is recognised in the profit and loss account.
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 the profit and loss account, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include certain 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.
Financial assets 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 the profit and loss account.
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 the profit and loss account.
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 certain creditors, bank and other loans and amounts owed to fellow group companies and related parties, 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 receipts discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
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 balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to the profit and loss account 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 the profit and loss account on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
The group’s freehold land and buildings and investment property are carried at valuation. The directors are therefore required to consider the valuations each year to ensure that this remains appropriately stated. In performing this review, the directors consider a number of factors including recent valuations of the land and buildings performed by Chartered Surveyors in accordance with RICS appraisal and valuation standards.
The carrying value of fixed assets at the reporting date is outlined at notes 12 and 13.
An analysis of the group's turnover is as follows:
The average monthly number of persons employed by the group and company during the year was:
Their aggregate remuneration comprised:
No remuneration was paid to the directors of the company by the group in the current or prior year, due to remuneration being paid to directors by other related entities within the wider group and not being recharged.
The actual (credit)/charge for the year can be reconciled to the expected (credit)/charge 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 profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:
Goodwill additions in the current year are in respect of the group's acquisition of CSG Glasgow Limited and Love Loan Limited. Further details are outlined at note 26.
Business combination additions in the current year are in respect of the group's acquisition of CSG Glasgow Limited and Love Loan Limited. Further details are outlined at note 26.
Included in freehold land and buildings are assets in the course of construction with a carrying value of £9,408,068 (2024 - £Nil).
Also included within freehold land and buildings is borrowing costs of £9,396,921 (2024 - £3,690,144) directly attributable to the acquisition and development of the assets.
The transfer from investment property relates to certain property which no longer meets the definition of investment property. In accordance with FRS 102 Section 16.9A, the transfer has been reflected at the fair value of the property at the date of change in use.
Sale and Leaseback
During the year ended 30 June 2020, CSG Glasgow Limited, a subsidiary undertaking acquired during the current year, entered into a sale and leaseback agreement, secured on its land. Under this agreement, the land is subject to ongoing rental obligations over a period of 150 years, with the option to repurchase the site for £1 at the end of the lease agreement. The total proceeds received by the company under this sale and lease back agreement total £19.3m.
In accordance with FRS 102 Chapter 20, the land continues to be recognised "on balance sheet" as if the sale and leaseback transactions had not occurred with these transactions accounted for as financing arrangements. Rent payable under the arrangement is subject to annual inflationary increases linked to RPI. The directors have elected to record the land value at sales price, being £19.3m. The land value will be amortised over the lease term of 150 years down to its residual value of £3,200,000.
Revaluation of land and buildings
Freehold land and buildings, other than assets under construction, are carried at valuation.
The group's land was valued by the directors with reference to the group's sale and leaseback arrangement outlined above which was with an unconnected third party, completed on an arm's length basis.
The group's buildings have been subject to recent independent valuations by property agents not connected with the group which conform to International Valuation Standards. These valuations were performed on the basis of market value and where appropriate on a fully equipped operational hotel basis. The directors have considered these valuations in making their assessment that the carrying value at the reporting date is an accurate reflection of the fair value of the group's freehold buildings at this time.
If assets carried at valuation were measured using the historic cost model, the carrying amounts would be as follows:
The fair value of the investment property has been arrived at on the basis of a valuation carried out by the directors at the balance sheet date and informed by a valuation conducted in April 2023 by Savills, independent property agents, who are not connected with the company.
If investment properties were measured using the historic cost model, the carrying amount would be £3,278,845 (2024: £5,062,183).
Investments are valued at historic cost less impairment.
Investment additions in the current year are in respect of the company's acquisition of CSG Glasgow Limited and Love Loan Limited. Further details are outlined at note 26.
Details of the company's subsidiaries at 30 June 2025 are as follows:
The registered office of all subsidiary undertakings is C/O Johnston Carmichael, 7-11 Melville Street, Edinburgh, EH3 7PE.
CSG Baxter's Place Holdings Limited (SC469781) has taken the exemption from the requirement to have their individual financial statements audited. This exemption is available under section 479A of the Companies Act 2006.
Other debtors includes £Nil (2024: £851,620) due in respect of the group's disposal of its investment in BPH Baxter's Place Limited.
Obligations under finance leases are secured against the underlying assets concerned.
Current year bank loans outlined above include amounts drawn down by the group during the year against a group facility agreement held with RBS. Bank borrowings are secured by fixed and floating charges over all of the property or undertaking of the group.
At the balance sheet date, the group was in breach of a gross leverage covenant relating to its bank facility. Accordingly, the bank loans and overdrafts under the RBS facility have been classified as falling due within one year. Subsequent to the year end, RBS formally waived these covenant breaches and confirmed that the facility remains available in accordance with its original maturity profile, with no requirement for repayment within 12 months of the reporting date.
Obligations under finance leases are secured against the underlying assets concerned.
Further details in relation to the disclosure of bank borrowings as falling due within one year is outlined at note 18.
Current year bank loans outlined above include amounts drawn down by the group under a group facility agreement held with RBS. The balance includes £60.6m of term loans and £18.5m of revolving credit facilities and is stated net of arrangement fees. Bank borrowings and overdrafts are secured by fixed and floating charges over all of the property or undertaking of the company.
Further details of the maturity of bank borrowings and accounting classification within the current year financial statements is provided at note 18.
Finance lease obligations above includes £19.3m in respect of obligations associated with the group's sale and leaseback arrangement. The average lease term is 150 years. Finance lease obligations also include £0.1m relating to obligations associated with other fixtures, fittings and equipment.
Deferred tax assets and liabilities are offset where the group or company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
The group had estimated tax losses of £12.0m (2024: £6.1m) available for offset against future trading profits.
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.
Contributions totalling £20,126 (2024 - £9,146) were payable to the fund at the year end and are included within other creditors.
On 3 June 2025, the company re-designated its C Ordinary shares of £1 each to A Ordinary shares of £1 each before all A Ordinary shares were then re-designated as Ordinary shares of £1 each.
The rights of each class of share are detailed in the Articles of Association of the company which are available from Companies House.
Revaluation reserves represent the difference between the fair value and the carrying value on an historic cost basis of assets held at valuation.
Capital redemption reserve represents the amount by which the company's issued share capital has been diminished on the cancellation of repurchased shares.
Profit and loss reserves represent the total comprehensive income for the year and prior periods plus reserve transfers where appropriate and less dividends paid.
On 18 December 2024 the group acquired 100 percent of the issued capital of CSG Glasgow Limited from CSG Commercial Limited, an entity under common control. The acquisition was part of a wider group reorganisation.
On 18 December 2024 the group acquired 100 percent of the issued capital of Love Loan Limited from CSG Commercial Limited, an entity under common control. The acquisition was part of a wider group reorganisation.
At the reporting end date the group had contracted with tenants for the following minimum lease payments:
Subsequent to the reporting date, the Group agreed amendments to its existing financing arrangements with its lenders.
The principal changes to the facilities are as follows:
The maturity date of the term loan, previously June 2028, has been amended to include an option to extend for up to a further two years.
The margin has been reduced to 1.8%, subject to a leverage-based ratchet mechanism, with a maximum margin of 2.25%.
The leverage covenant ceiling has been increased, and the existing cash flow cover covenant has been replaced with an interest cover covenant, simplifying the covenant structure and improving covenant headroom.
The repayment profile of the loan has been amended from amortising to interest-only, increasing short-term cash availability within the Group.
The £5.0 million revolving credit facility, previously due to expire in June 2026, has been extended to align with the revised term loan maturity date.
These amendments were agreed on 22 May 2026.
The amendments are treated as a non-adjusting event after the reporting date in accordance with FRS 102 Section 32, as they relate to changes in conditions arising after the reporting date. Accordingly, no adjustment has been made to the carrying value of borrowings at the reporting date.
The amendments strengthen the Group’s financial flexibility through extended maturities, an improved covenant structure and enhanced cash flow availability.
As a result of these amendments, the Group expects that the borrowings, which are classified as current liabilities at the reporting date, will be classified as non-current in future reporting periods.
The Directors have considered the impact of these changes in the context of the Group’s going concern assessment and are satisfied that the revised facilities provide improved liquidity and covenant headroom for a period of at least 12 months from the date of approval of the financial statements.
Group
The company's immediate and ultimate parent undertaking is CSG H&A Holdings Limited, a company registered in Scotland whose registered address C/O Johnston Carmichael, 7-11 Melville Street, Edinburgh, City Of Edinburgh, Scotland, EH3 7PE. The ultimate controlling party is Christopher Stewart.
During the year, services of £118,193 (2024: £40,928) were provided by CSG Projects Limited to Lateral City Limited. Amounts totalling £444,747 (2024: £613,617 received from) were repaid to CSG Projects Limited. At 30 June 2025 an amount of £155,677 (2024: £600,424) was due to CSG Projects Limited from Lateral City Limited.
During the year, a charge of £799,548 (2024: £507,183) was made to Lateral City Limited by FMLY Limited in respect of facilities management and property improvement services. As at 30 June 2025 £23,134 (2024: £139,662) remained outstanding.
During the year goods of £33,692 (2024: £93,300) were purchased by Lateral City Limited from Bacchus & Liber Limited. As at 30 June 2025 £nil (2024: £4,213) remained outstanding.
At 30 June 2025 an amount of £1,045,458 (2024: £1,045,458) was due to Lateral City Limited from CSG Hamilton Place Limited.
Devil’s Advocate Limited recharged costs of £35,133 (2024: £30,845) to Lateral City Limited. As at 30 June 2025 £2,912 (2024: £55,248 due from) remained outstanding to Devil’s Advocate Limited.
During the year, Lateral City Limited charged rent to Crisp Investment Limited of £nil (2024: £59,794) and was recharged £1,275 by Crisp Investment Limited. As at 30 June 2025 £1,275 (2024: £26,753 due from) was due to Crisp Investment Limited.
At 30 June 2025, £2,891,664 (2024: £1,101,131) was due to CSG Hotels and Apartments Limited from CSG Projects Limited.
At 30 June 2025, £1,544,230 (2024: £1,519,414 due to) was due from CSG Hotels and Apartments Limited to CSG Commercial Limited.
At 30 June 2025, £3,731,405 (2024: £3,732,019) was due to CSG Projects Limited from Love Loan Limited.
At 30 June 2025, £9,703,290 (2024: £9,703,189) was due to CSG Commercial Limited from CSG Glasgow Limited.
At 30 June 2025, £384,257 (2024: £780,171) was due to CSG Projects Limited from CSG Glasgow Limited.
Company
The company has taken advantage of the exemption available in FRS 102 Section 33 whereby it has not disclosed transactions with any wholly owned subsidiary undertaking of the group.