REGISTERED NUMBER: 13964657 (England and Wales)

GROUP STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

AUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 NOVEMBER 2025

FOR

CHARLES STREET BUILDINGS PROPERTIES

LIMITED

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

5

Consolidated Statement of Comprehensive Income

8

Consolidated Statement of Financial Position

9

Company Statement of Financial Position

10

Consolidated Statement of Changes in Equity

11

Company Statement of Changes in Equity

12

Consolidated Statement of Cash Flows

13

Notes to the Consolidated Statement of Cash Flows

14

Notes to the Consolidated Financial Statements

15

DIRECTORS:

Mr H P Murphy (Chairman)

Mrs M A Murphy

Mr P H Murphy

Mr J J Murphy

Mrs M A Middleton

Mrs W M Linnett

SECRETARY:

Mr R H Smith FCA

REGISTERED OFFICE:

1 Westmoreland Avenue

Thurmaston

Leicester

LE4 8PH

REGISTERED NUMBER:

13964657 (England and Wales)

AUDITORS:

Magma Audit LLP

16 Davy Court

Castle Mound Way

Rugby, CV23 0UZ

Magma Audit LLP is part

Of the Dains Group

BANKERS:

Barclays Bank PLC

1-3 Haymarket Towers

Humberstone Gate

Leicester

LE1 1WA

SOLICITORS:

Crane & Walton

24 De Montfort Street

Leicester, LE1 7GB

The directors present their strategic report of the company and the group for the year ended 30 November 2025.

The Charles Street Buildings Properties group holds freehold properties for trading and investment purposes and its income is principally derived from trading receipts at two hotels, Novotel Leicester and Adagio Leicester. Additional income is received from investment property.

The group actively adopts a proactive management of the portfolio to mitigate against the risks and uncertainties to the business caused by hotel trading conditions, tenancy voids and fluctuations in values.

Property value is stated at directors' valuation of market value as at 30 November 2025. The valuation is guided by independent advice from Chartered Surveyors. The value of the group's trading and investment property portfolio has decreased from last year's figure of £57,282,826 to £51,798,726. The main reduction is in the fair value of the hotels to reflect the loss of a longer term source of occupancy in 2026 and planned changes to the Adagio property.

Hotel turnover decreased slightly from £7,810,470 in 2024 to £7,662,862 in 2025. Rents and insurance relating to rental income from investment properties added £2,039,825 to income. Operating profit before fair value adjustments and loss on sale of assets increased from £651,045 to £1,995,566 reflecting lower property and administration costs.

Returns for commercial property during the year followed the pattern of last year of slow growth and an atmosphere of flat lining. This was despite heightened expectation of lower interest rates to assist borrowing and inflation getting closer to Bank of England's target levels. The effects of the economy and the cost of living crisis were not assuaged by the Chancellor's fiscal policies but affected more so by the global economy and in particular the USA where trade tariffs became an important relevance. The various property sectors did not indicate large movement concerning investment and returns but remain a worthy asset class. High end offices continued to prosper due to a shortage of stock and demand from technology companies including Artificial Intelligence groups. Industrial property performed well in capital value growth terms, while out of town retail shopping centres continued to prosper. The High Street continued to suffer with the demise or lack of profit from several household brands. The lack of parking provision and costs for shoppers going into town centres does not help. The outlook for the future and a sense of direction depends so much on stability in the world with all eyes on events in the Middle East and Ukraine.

The performance of Novotel Leicester for the year was strong in terms of occupancy and the hotel continues to win local awards as well as maintaining its status as one of Accor's top rated guest experience hotels. A Green Key Award recognising commitment to environmental responsibility and sustainable operations in tourism has also been achieved. The early part of 2026 is proving challenging reflecting general economic pressures. The Adagio Leicester will be undergoing changes in 2026 to refresh the offering to the market.

Activity in the rest of the portfolio included obtaining planning consent for developments at Great Central Street. Property at Biddulph Moor was sold in the year with Mansfield Street following after the year end. It is hoped that a letting at Welford House will be finalised in 2026.

ON BEHALF OF THE BOARD:

Mr H P Murphy (Chairman) - Director

5 May 2026

The directors present their report with the financial statements of the company and the group for the year ended 30 November 2025.

PRINCIPAL ACTIVITY

The principal activity of the group in the year under review was that of the operation of hotels. In addition the group holds property for investment purposes.

DIVIDENDS

The total distribution of dividends for the year end 30 November 2025 amounted to £585,410 (2024: £585,410).

DIRECTORS

The directors shown below have held office during the whole of the period from 1 December 2024 to the date of this report.

Mr H P Murphy (Chairman)

Mrs M A Murphy

Mr P H Murphy

Mr J J Murphy

Mrs M A Middleton

Mrs W M Linnett

FINANCIAL INSTRUMENTS

The group uses various financial instruments, comprising equity investments, cash and other liquid resources and various items, such as trade debtors and trade creditors, that arise directly from its operations. The main purpose of these financial instruments is to raise finance for the group’s operations. The main risks arising from the group’s financial instruments are credit risk and liquidity risk. The directors review and agree policies for managing these risks and these are summarised below.

CREDIT RISK

The group reviews the credit risk relating to its hotel customers and tenants by carrying out credit checks as appropriate and by regular reviews of amounts due from trade debtors.

LIQUIDITY RISK

The group seeks to manage liquidity risk by ensuring sufficient liquidity is available to meet foreseeable needs and by investing cash assets safely and profitably.

MATTERS COVERED IN THE GROUP STRATEGIC REPORT

Future developments are covered in the group Strategic Report.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Group Strategic Report, the Report of the Directors 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 company and the group 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;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group 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 company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the group's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the group's auditors are aware of that information.

AUDITORS

Under section 487(2) of the Companies Act 2006, Magma Audit LLP will be deemed to have been reappointed as auditor 28 days after these financial statements were sent to members or 28 days after the latest date prescribed for filing the accounts with the registrar, whichever is earlier.

ON BEHALF OF THE BOARD:

Mr R H Smith FCA - Secretary

5 May 2026

Opinion

We have audited the financial statements of Charles Street Buildings Properties Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 November 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 Consolidated Statement of Cash Flows, Notes to the Financial Statements, including a summary of 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).

In our opinion the financial statements:

-	give a true and fair view of the state of the group's and of the parent company affairs as at 30 November 2025 and of the group's profit 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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the group 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 the parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The directors are responsible for the other information. The other information comprises the information in the Group Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon.

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.

In connection with our audit of the financial statements, 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 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 the audit:

-	the information given in the Group Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Group Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Report of the Directors.

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.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page three, 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 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 group's and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors 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.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Based on our understanding of the group and industry, we identified the principal risks of non-compliance with laws and regulations, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the financial statements such as the Companies Act 2006. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries and management bias in accounting estimates.

Audit procedures performed included:

-

discussions with management including consideration of known or suspected instances of non-compliance with laws and regulation and fraud;

-

the valuation of investment property was reviewed with an understanding obtained for the nature of the assets in the portfolio. The valuation approach and assumptions made by the directors was assessed against the market and ensured that this was appropriate and in line with our expectations;

-

where third party data was used to support a valuation, we have reviewed the extent of their input, their independence and ability to provide such assessments;

-

assessed the carrying value of freehold property, ensuring any internal or external indications of impairment were appropriately reflected;

-

challenging assumptions made by management in other significant accounting estimates and judgements formed; and

-

identifying and testing journal entries, in particular any journal entries posted with unusual account combinations, journal entries crediting cash and journal entries with specific defined descriptions.

There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, 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 deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

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 a Report of the Auditors 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.

Ryan Parkin (Senior Statutory Auditor)

for and on behalf of Magma Audit LLP

16 Davy Court

Castle Mound Way

Rugby, CV23 0UZ

Magma Audit LLP is part

Of the Dains Group

5 May 2026

TURNOVER

4

10,418,723

12,041,430

Cost of sales and property

outgoings

(4,992,363

)

(7,162,934

)

GROSS PROFIT

5,426,360

4,878,496

Loss on sale of fixed asset,

investment property and

disposal of subsidiary

(13,459

)

(14,060

)

Other operating charges

(4,257,906

)

(4,678,435

)

1,154,995

186,001

Other operating income

5

827,112

451,802

Fair value movements on

investment property

(490,361

)

8,578

OPERATING PROFIT

7

1,491,746

646,381

Interest receivable

9

157,336

97,559

PROFIT BEFORE TAXATION

1,649,082

743,940

Tax on profit

10

(710,926

)

(420,720

)

PROFIT FOR THE FINANCIAL YEAR

938,156

323,220

OTHER COMPREHENSIVE INCOME

Fair value movement on freehold property

(3,404,946

)

1,659,835

Income tax relating to other comprehensive income

-

-

OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX

(3,404,946

)

1,659,835

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

(2,466,790

)

1,983,055

Profit attributable to:

Owners of the parent

938,156

323,220

Total comprehensive income attributable to:

Owners of the parent

(2,466,790

)

1,983,055

FIXED ASSETS

Tangible assets

13

30,961,928

36,028,306

Investments

14

-

-

Investment property

15

20,939,750

22,054,250

51,901,678

58,082,556

CURRENT ASSETS

Stocks

16

27,049

611,167

Debtors: amounts falling due within one year

17

589,325

2,844,303

Debtors: amounts falling due after more than one year

17

256,267

246,842

Cash at bank

18

4,920,720

6,142,992

5,793,361

9,845,304

CREDITORS

Amounts falling due within one year

19

(1,914,200

)

(9,139,868

)

NET CURRENT ASSETS

3,879,161

705,436

TOTAL ASSETS LESS CURRENT LIABILITIES

55,780,839

58,787,992

PROVISIONS FOR LIABILITIES

20

(1,801,716

)

(1,756,669

)

NET ASSETS

53,979,123

57,031,323

CAPITAL AND RESERVES

Called up share capital

21

585,410

585,410

Fair value reserve

22

(1,882,278

)

2,047,055

Merger reserve

22

28,125,719

28,125,719

Retained earnings

22

27,150,272

26,273,139

SHAREHOLDERS' FUNDS

53,979,123

57,031,323

The financial statements were approved by the Board of Directors and authorised for issue on 5 May 2026 and were signed on its behalf by:

Mr H P Murphy (Chairman) - Director

FIXED ASSETS

Tangible assets

13

-

-

Investments

14

585,409

585,409

Investment property

15

-

-

585,409

585,409

CURRENT ASSETS

Cash at bank

18

1

1

TOTAL ASSETS LESS CURRENT LIABILITIES

585,410

585,410

CAPITAL AND RESERVES

Called up share capital

21

585,410

585,410

SHAREHOLDERS' FUNDS

585,410

585,410

Company's profit for the financial year

585,410

585,410

The financial statements were approved by the Board of Directors and authorised for issue on 5 May 2026 and were signed on its behalf by:

Mr H P Murphy (Chairman) - Director

Called up

Fair

share

Retained

value

Merger

Total

capital

earnings

reserve

reserve

equity

£

£

£

£

£

Balance at 1 December 2023

585,410

25,925,938

996,611

28,125,719

55,633,678

Changes in equity

Profit for the year

-

323,220

-

-

323,220

Fair value movement on freehold property

-

-

1,659,835

-

1,659,835

Total comprehensive income

-

323,220

1,659,835

-

1,983,055

Transfer to/from profit and

loss account

-

609,391

(609,391

)

-

-

Dividends

-

(585,410

)

-

-

(585,410

)

Balance at 30 November 2024

585,410

26,273,139

2,047,055

28,125,719

57,031,323

Changes in equity

Profit for the year

-

938,156

-

-

938,156

Other comprehensive income

-

-

(3,404,946

)

-

(3,404,946

)

Total comprehensive income

-

938,156

(3,404,946

)

-

(2,466,790

)

Transfer to/from profit and

loss account

-

524,387

(524,387

)

-

-

Dividends

-

(585,410

)

-

-

(585,410

)

Balance at 30 November 2025

585,410

27,150,272

(1,882,278

)

28,125,719

53,979,123

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 December 2023

585,410

-

585,410

Changes in equity

Dividends

-

(585,410

)

(585,410

)

Total comprehensive income

-

585,410

585,410

Balance at 30 November 2024

585,410

-

585,410

Changes in equity

Dividends

-

(585,410

)

(585,410

)

Total comprehensive income

-

585,410

585,410

Balance at 30 November 2025

585,410

-

585,410

Cash flows from operating activities

Cash generated from operations

1

(1,767,441

)

5,401,737

Tax paid

(270,971

)

(520,000

)

Net cash from operating activities

(2,038,412

)

4,881,737

Cash flows from investing activities

Purchase of tangible fixed assets

(49,237

)

(3,263,849

)

Purchase of investment property

(125,861

)

(850,672

)

Sale of tangible fixed assets

680,605

-

Sale of investment property

738,707

1,093,820

Purchase of subsidiary undertaking

-

(458,742

)

Sale of subsidiary undertaking

-

1,045,892

Interest received

157,336

97,559

Net cash from investing activities

1,401,550

(2,335,992

)

Cash flows from financing activities

Equity dividends paid

(585,410

)

(585,410

)

Net cash from financing activities

(585,410

)

(585,410

)

(Decrease)/increase in cash and cash equivalents

(1,222,272

)

1,960,335

Cash and cash equivalents at beginning of year

2

6,142,992

4,182,657

Cash and cash equivalents at end of year

2

4,920,720

6,142,992

1.	RECONCILIATION OF PROFIT FOR THE FINANCIAL YEAR TO CASH GENERATED FROM OPERATIONS

2025

2024

£

£

Profit for the financial year

938,156

323,220

Depreciation charges

1,027,898

1,090,107

Loss on disposal of fixed assets

2,166

7,062

Loss on disposal on investment property

11,293

6,180

Net fair value (gains)/losses

490,361

(8,578

)

Goodwill release

-

(22,012

)

Loss on sale of subsidiary

-

818

Finance income

(157,336

)

(97,559

)

Taxation

710,926

420,720

3,023,464

1,719,958

Decrease/(increase) in stocks

584,118

(590,939

)

Decrease/(increase) in trade and other debtors

1,884,985

(2,247,643

)

(Decrease)/increase in trade and other creditors

(7,260,008

)

6,520,361

Cash generated from operations

(1,767,441

)

5,401,737

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of these Statement of Financial Position amounts:

Year ended 30 November 2025

30/11/25

1/12/24

£

£

Cash and cash equivalents

4,920,720

6,142,992

Year ended 30 November 2024

30/11/24

1/12/23

£

£

Cash and cash equivalents

6,142,992

4,182,657

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1/12/24

Cash flow

At 30/11/25

£

£

£

Net cash

Cash at bank

6,142,992

(1,222,272

)

4,920,720

6,142,992

(1,222,272

)

4,920,720

Total

6,142,992

(1,222,272

)

4,920,720

1.	STATUTORY INFORMATION

Charles Street Buildings Properties Limited is a private company limited by shares. It is incorporated in England and its registered office is 1 Westmoreland Avenue, Thurmaston, Leicester, LE4 8PH.

The principal activity of the company is the holding of investments in its subsidiaries. The principal activity of the group is the operation of hotels. In addition the group holds property for investment purposes.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

The financial statements have been prepared on a going concern basis and under the historical cost convention as modified by the revaluation of certain fixed assets and investment properties and in accordance with Financial Reporting Standard 102, 'The Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland' and the Companies Act 2006. The going concern basis is considered appropriate by the directors based on forecast cashflows and the substantial assets of the group.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires group management to exercise judgement in applying the group's accounting policies (see note 3).

The following principal accounting policies have been applied:

Basis of consolidation

The consolidated financial statements present the results of group and its own subsidiaries ("the group") as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.

The company acquired all equity interests in Davenport Developments (Leicester) Limited in return for the issue of shares in the company. The directors have determined that the merger accounting provisions of FRS102 are applicable. To the extent that the carrying value of the assets and liabilities acquired under merger accounting is different to the cost of investment, the difference is recorded in group equity within the merger reserve. Under merger accounting the results of the group entities are combined from the beginning of the comparative period before the merger occurred. Subsidiaries are deconsolidated from the date control ceases.

Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the group and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

Revenue relating to hotel operations is recognised when the relevant services are provided. Revenue relating to rental income from investment properties is recognised on a straight line basis over the period of the lease. Where lease incentives are given they are recognised over the lease term on a straight-line basis.

Dilapidation receipts are included in other operating income and recognised on receipt.

Revenue in respect of building projects represents work done and certified at the period end.

Contracts in progress

The policy used to determine the contract revenue recognised in the period is the percentage of completion method. The method used to determine the percentage of completion is to obtain third party surveys of the work performed.

Attributable profit is taken when the outcome of long-term contracts can be assessed with reasonable certainty and is included within amounts recoverable on contracts. Profit is then attributed on the basis of the percentage of work completed. Provisions are made in full for any foreseeable losses on contracts. Advance payments received from customers are shown as payments received on account and are included in creditors until there is a right to set off against the value of work undertaken.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Tangible fixed assets under the cost model, other than investment properties and land and buildings under the revaluation model, are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

The group adds to the carrying amount of an item of fixed assets the cost of replacing part of such an item when that cost is incurred, if the replacement part is expected to provide incremental future benefits to the group. The carrying amount of the replaced part is de-recognised. Repairs and maintenance are charged to the statement of comprehensive income during the period in which they are incurred.

Land and buildings are initially measured at cost and subsequently carried at fair value in the Statement of Financial Position. Fair value is determined annually by the directors, based on guidance from professional valuers and is based on market evidence.

An increase in fair value is recognised in other comprehensive income, except to the extent that it is the reversal of a previous revaluation decrease which was recognised in the profit or loss for the year. A decrease in fair value is recognised immediately in the profit or loss for the year, except to the extent that it reverses a previous revaluation surplus recognised in other comprehensive income.

Land is not depreciated as it does not have a finite life. Depreciation on other assets is charged so as to allocate the cost of assets less their residual value over their estimated useful lives as follows:

Freehold property - buildings

- 50 years straight line

Hotel plant and equipment

- 10 to 25 years straight line

Hotel operating equipment

- 2 to 10 years straight line

Solar power equipment

- 15 years straight line

Fixtures and fittings

- 5 years straight line

Motor vehicles

- 4 years reducing balance

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in arriving at operating profit in the Consolidated statement of comprehensive income.

Operating leases: Lessee

Rentals paid under operating leases are charged to the Consolidated statement of comprehensive income on a straight line basis over the period of the lease.

Valuation of investments

Investments in subsidiaries are measured at cost less accumulated impairment.

Investment property

Investment property is carried at fair value determined annually by the directors based on guidance from professional valuers and derived from the current market rents and investment property yields for comparable real estate, adjusted if necessary for any difference in the nature, location or condition of the specific asset. No depreciation is provided. Changes in fair value are recognised in the Consolidated statement of comprehensive income.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the Consolidated statement of comprehensive income.