SUNBORN (GIBRALTAR) LIMITED
FINANCIAL STATEMENTS
31 DECEMBER 2021
SUNBORN (GIBRALTAR) LIMITED
CONTENTS
Pages
Company information
1
Directors’ report
2-3
Independent auditors’ report
4-8
Statement of comprehensive income
9
Statement of financial position
10
Statement of changes in shareholders’ equity
11
Statement of cash flow
12
Notes to the financial statements
13 - 31
SUNBORN (GIBRALTAR) LIMITED
1
COMPANY INFORMATION
FOR THE YEAR ENDED 31 DECEMBER 2021
DIRECTORS: Hans Niemi
Xavier Valero (Appointed 1 November 2021)
Karen Thomson (Appointed 1 November 2021)
SECRETARY: Line Secretaries Limited
REGISTERED OFFICE: 57/63 Line Wall Road
Gibraltar
REGISTERED NUMBER: 109414
AUDITORS: AMS Limited
Suite 16
Water Gardens 5
Gibraltar
2
SUNBORN (GIBRALTAR) LIMITED
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
The directors present their annual report and audited accounts for the year to 31 December 2021.
Activities and review of business
The Company's principal activity is rental of the luxury yacht hotel docked at Ocean Village in
Gibraltar to its sister company Sunborn (Gibraltar) Resort Limited, which runs the operations in
accordance with a lease contract. The Yacht hotel is equipped with 189 cabins, including 22 suites.
There are also conference facilities for up to 400 delegates, restaurants, bars fitness center, spa and
lounges inside the Yacht hotel.
The Directors consider that the level of business during the year was satisfactory. It is expected that
this level of activity will be continued in the ensuing year.
The Company’s current 5-year bond is maturing for repayment on 5th September 2022 (see note
13) and management expects and plans to repay the bond at or prior to its original maturity date.
Repayment is planned via a new bond issue or private placement debt for a new term of 3 to 5 years.
Management views the current high yield market conditions to enable launch of a new bond with
similar terms and conditions and pricing.
Results and dividends
The Company has made a profit of £ 474,213 for the year (2020 loss: £ 1,940,908).
The directors do not recommend the payment of a dividend.
Directors
The director who served office during the whole of the period 1 January 2021 to the date of this
report were as shown on page 1.
Financial risk management
The Company’s activities expose it to a variety of financial risks. In particular, the exposure to market
risk (including interest rate risk and foreign currency risk), credit risk, liquidity risk and refinancing
risk, which has been disclosed in note 3 to the financial statements.
Going concern
Matters in relation to going concern are addressed in note 2.1 to the financial statements.
Corporate governance
The directors have opted to apply the provisions of Section 251(8) of the Companies Act 2014, and
not disclose the corporate governance requirements.
Statement of directors’ responsibilities
The directors are responsible for preparing the Directors’ Report and the financial statements in
accordance with applicable law and regulations.
3
SUNBORN (GIBRALTAR) LIMITED
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021 (Continued)
Statement of director’s responsibilities - Continued
Company law requires the directors to prepare financial statements for each financial year which
meet the requirements of the Gibraltar Companies Act 2014. In addition, the Directors have elected
to prepare the financial statements in accordance with the International Financial Reporting
Standards as adopted for use in the European Union.
The financial statements are required by law to give a true and fair view of the state of affairs of the
company and the profit and loss of the company 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 estimates that are reasonable and prudent;
State whether applicable 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 company will continue in business.
The directors are responsible for keeping proper accounting records that disclose with reasonable
accuracy at any time the financial position of the company and enable them to ensure that the
financial statements comply with the Companies Act and other applicable legislation. They are also
responsible for safeguarding the assets of the company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
Statement of disclosure to auditors
So far as the directors are aware, there is no relevant audit information of which the company's
auditors are unaware. Additionally, the directors have taken all the necessary steps that they ought
to have taken as directors in order to make themselves aware of all relevant audit information and
to establish that the company's auditors are aware of that information.
Auditors
AMS Limited are willing to stand for reappointment at the next Annual General Meeting.
Hans Niemi
Director
30
th
April 2022
4
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF
SUNBORN (GIBRALTAR) LIMITED
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Sunborn (Gibraltar) Limited (the Company), for the
year ended 31 December 2021, which comprise the statement of financial position, the statement
of comprehensive income, statement of cash flows, the statement of changes in shareholders’
equity, and notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying financial statements:
give a true and fair view of the state of the company’s affairs as at 31 December 2021 and
of the profit and cashflows for the year then ended;
have been properly prepared in accordance with the International Financial Reporting
Standards as adopted for use in the European Union; and
have been prepared in accordance with the Companies Act 2014.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Financial Statements section of our report. We are independent of the Company in
accordance with the International Ethics Standards Board for Accountants Code of Ethics for
Professional Accountants (IESBA Code), 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.
Material uncertainty relating to going concern
In forming our opinion on the financial statements, which is not qualified, we have considered the
adequacy of the disclosure made in Note 2 to the accounts concerning the Company’s ability to
continue as going concern. As explained in Note 2 to the accounts, indicate the existence of a
possible uncertainty which may cast doubt about the Company’s ability to continue as going
concern. The financial statements do not include the adjustments that would result if the Company
was unable to continue as going concern.
Audit approach
Materiality
Overall materiality: £833,095 which represents 1 % of total assets of the Company.
Key audit matters
Going concern
Revenue recognition
Investment property valuation
As part of designing our audit, we determined materiality and assessed the risks of material
misstatement in the financial statements. In particular, we considered where management made
subjective judgements; for example, in respect of significant accounting estimates that involved
making assumptions and considering future events that are inherently uncertain.
5
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF
SUNBORN (GIBRALTAR) LIMITED – continued
Our application of materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to
obtain reasonable assurance whether the financial statements are free from material misstatement.
Misstatements may arise due to fraud or error. They are considered material if individually or in
aggregate, they could reasonably be expected to influence the economic decisions of users taken
on the basis of the financial statements. Based on our professional judgement, we determined
certain quantitative thresholds for materiality, including the overall materiality for the financial
statements as set out in the table below. These, together with qualitative considerations, helped us
to determine the scope of our audit and the nature, timing and extent of our audit procedures and
to evaluate the effect of misstatements on the financial statements as a whole.
Overall materiality £833,095
How we determined it 1 % of the Total assets of the Company.
Rationale for the materiality benchmark
applied
We have applied the Total assets benchmark
as, in our view, it is the key driver for the
principal users of the financial statements. We
also believe this will provide an appropriate
and consistent year-on year basis for our
audit.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance
in our audit of the financial statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to fraud) we identified, including those
which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit;
and directing the efforts of the engagement team. These matters were addressed in the context of
our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Key audit matter in the audit of the company
How our audit addressed the key audit
matter
Going Concern
Refer to Accounting policies and note 2.1.
As noted by the director on note 2.1, the financial
statements are prepared on a going concern
basis. This basis is supported by several
assumptions and continued financial support
from its parent company.
Our audit procedures covered discussion
with management about his assessment of
the company's ability to continue as a going
concern and management's future plans. We
considered management going concern
assessment and assumptions.
6
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF
SUNBORN (GIBRALTAR) LIMITED – continued
Key audit matters - continued
Key audit matter in the audit of the company
How our audit addressed the key audit
matter
Revenue recognition
Refer to Accounting policies and note 5.
Revenue consists of rental income from lease
contract. Rental income is booked as a revenue as
straight-line basis based on the lease contract.
There is a risk that the rental income is booked to
a wrong period.
We reviewed the appropriateness of the
company´s accounting policies regarding
revenue recognition. We assessed
compliance with policies in terms of
applicable accounting standards. In audit of
revenue recognition, we focused on lease
agreement. We tested the booked revenue
by comparing it to the lease agreement.
Valuation of investment property
Refer to Accounting policies and note 8.
Company´s investment property consists of a
Yacht hotel. The company’s investment property
is exposed to impairment risk. The possible need
for impairment on property investment is
evaluated at least once a year. If an asset item is
recognized on the balance sheet at a value higher
than the recoverable amount, an impairment loss
is recorded. The valuation of investment property
is a key audit matter due to the size of the balance
sheet item and as the accounting for investment
property requires management’s judgment over
timing of recognition of impairment and
especially over fair valuation of the investment
property.
We reviewed the company´s process and
control environment for investment
property. We assessed the management´s
ability to make assumptions and estimations
when assessing the recoverable amount of
investment property. In our assessment, we
focused on cash flow forecast, useful lifetime
of investment property and to the discount
rate.
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report other than the financial statements and our auditor’s
report 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 there is a material misstatement in the
financial statements or a material misstatement of the other information. 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.
7
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF
SUNBORN (GIBRALTAR) LIMITED – continued
Responsibilities of the directors for the financial statements
The directors are responsible for the preparation of financial statements that give a true and fair
view in accordance with applicable law in Gibraltar and International Financial Reporting Standards
as adopted for use in the European Union, and for such internal control as the directors determine
is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the directors either intend to liquidate the
Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs 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.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Company’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions
are based on the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the Company to cease to continue as a going concern.
8
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF
SUNBORN (GIBRALTAR) LIMITED – continued
Auditor’s Responsibilities for the Audit of the Financial Statements – continued
Evaluate the overall presentation, structure and content of the financial statements,
including the disclosures, and whether the financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
We communicate with the director regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
Report on Other Legal and Regulatory Requirements
Opinion on other matter prescribed by the Companies Act 2014
In our opinion, based on the work undertaken in the course of the audit:
the information given in the Director’s Report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
the Directors’ Report has been prepared in accordance with the requirements of the
Companies Act 2014.
In the light of the knowledge and understanding of the company and its environment obtained in
the course of the audit, we have not identified any material misstatements in the Directors’ Report.
Matters on which we are required to report by exception
We have nothing to report in respect of the matter where the Companies Act 2014 requires us to
report to you if, in our opinion, we have not received all the information and explanations we require
for our audit.
Use of our report
This report, including the opinion, has been prepared for and only for the company’s members as a
body in accordance with Section 257 of the Companies Act 2014 and for no other purpose. We do
not, in giving these opinions, accept or assume responsibility for any other purpose or to any other
person to whom this report is shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
Adrian Stevenson
Statutory auditor
For and on behalf of
AMS Limited
Suite 16
Water Gardens 5
Gibraltar
SUNBORN (GIBRALTAR) LIMITED
9
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2021
2021
2020
Note
£
£
Rental income from group company
5, 16
Depreciation
8, 9
(2,489,890 )
(2,521,739 )
Administrative expenses
6
(249,556 )
(223,784 )
Operating profit/(loss)
(341,523 )
Waiver of intercompany loan
12
Foreign exchange gain/(loss)
(2,847,443 )
Finance costs
7
(3,366,433 )
(3,751,942 )
Profit/(loss) before income tax
(1,940,908 )
Income tax expense
Profit/(loss) for the year
(1,940,908 )
Other comprehensive income
Total comprehensive profit/(loss)
for the year
(1,940,908 )
Attributable to:
Equity holder of the Company
(1,940,908 )
The notes on pages 13 to 31 form part of these financial statements.
SUNBORN (GIBRALTAR) LIMITED
10
STATEMENT OF FINANCIAL POSITION
As at 31 December 2021
2021
2020
Note
£
£
ASSETS
Non-current assets
Investment property
8
Property plant and equipment
9
Current assets
Receivables from group companies
10
Other receivables
Cash and cash equivalents
Total current assets
TOTAL ASSETS
EQUITY
Capital and reserves attributable to the Company’s equity holders
Share capital
11
Share premium
11
Capital reserve
Retained loss
(24,351,651 )
(24,825,864 )
Total equity
LIABILITIES
Non-current liabilities
Borrowings from group companies
12
Borrowings
13
Total non-current liabilities
Current liabilities
Borrowings
13
Payables to group companies
14
Other payables
15
Total current liabilities
Total liabilities
TOTAL EQUITY AND LIABILITIES
Approved by the Board on the 30
th
April 2022
Hans Niemi Xavier Valero
Director Director
The notes on pages 13 to 31 form part of these financial statements.
SUNBORN (GIBRALTAR) LIMITED
11
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
For the year ended 31 December 2021
Share
capital
Share
premium
Capital
reserve
Retained
earnings
Total
Equity
£
£
£
£
£
Balance at 1
January 2020
(17,884,956 )
Total
comprehensive
loss for the year
(1,940,908 )
(1,940,908 )
Capital
contribution by
parent company
(note 12)
(5,000,000 )
Balance at 31
December 2020
(24,825,864 )
Total
comprehensive
profit for the
year
Balance at 31
December 2021
(24,351,651 )
The notes on pages 13 to 31 form part of these financial statements.
SUNBORN (GIBRALTAR) LIMITED
12
STATEMENT OF CASHFLOWS
For the year ended 31 December 2021
2021
2020
£
£
Operating activities
Operating profit/(loss)
(341,523 )
Adjustment for:
Depreciation
Change in working capital:
Change in receivables from group companies
(276,155 )
Change in other receivables
(2,775 )
Change in payables to group companies
(2,576 )
Change in other payables
(70,055 )
Net cash flows generated from operations before interest
payments
Interest paid
(2,549,625 )
(2,707,525 )
Transaction costs paid
(58,351 )
Net cash flows used in operations
(768,109 )
Cash used in investing activities
Additions in investment property
(9,349 )
(9,349 )
Net increase/(decrease) in cash and cash equivalents
(768,109 )
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
The notes on pages 11 to 31 form part of these financial statements.
SUNBORN (GIBRALTAR) LIMITED
13
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2021
1. General information
and registered in Gibraltar . The registered address of Sunborn (Gibraltar) L imited is 57/63 Line Wall
Sunborn (Gibraltar) Limited owns a luxury yacht h otel docked at Ocean Village in Gibraltar , which it
has leased to its sister company Sunborn (Gibraltar) Resort Limited, who runs the operations in
accordance with a lease contract. The Yacht hotel is equipped with 189 cabins, including 22 suites.
There are also conference facilities for up to 400 delegates, restaurants, bars fitness center, spa and
lounges inside the Yacht hotel. The Company had no employees in 2020 and 2021. The Company is
wholly owned by Sunborn (Gibraltar) Holdings Limited and its ultimate parent is Sunborn Oy , a
company registered in Finland and owned by the Niemi family who are also based in Finland.
Sunborn Oy focuses on the development of luxury spa and yacht hotels, restaurants and other high-
quality property, and has more than 40 years of experience in the hospitality sector.
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out
below. All amounts in the notes are shown in Pounds Sterling (£), unless otherwise stated.
2.1 Basis of preparation
These financial statements have been prepared in accordance with the International Financial
Reporting Standards of the International Accounting Standards Board (IASB) and as adopted by the
European Union (IFRS) and the interpretations of the International Financial Reporting Standards
Interpretations Committee (IFRS IC). The financial statements have been prepared on a historical
cost basis, unless otherwise stated.
Gibraltar legislation applied in the preparation of these financial statements is the Companies Act
2014.
The preparation of financial statements in conformity with IFRS requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement in the process of
applying the Company’s accounting policies. The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are significant to the financial statements
are disclosed in note 4.
The financial statements are presented in Sterling Pounds (£), which is also the Company’s
functional currency and economic environment in which its trades.
SUNBORN (GIBRALTAR) LIMITED
14
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2021 - continued
2. Summary of significant accounting policies – continued
2.1 Basis of preparation – continued
Going concern
The Company has incurred net losses consisting mainly of depreciation and unrealised foreign
exchange rate differences arising from the borrowings. The Company’s sole purpose is to own the
vessel “Sunborn Gibraltar Yacht” and lease the vessel out to Sunborn Gibraltar Resort Limited
through an internal bareboat agreement. The Company has primarily relied upon financing raised
through the borrowings from the group companies and bonds from external parties as well as from
shares issued to the parent company Sunborn (Gibraltar) Holdings Limited.
The financial information in these financial statements has been prepared on a going concern basis,
which assumes that the Company will continue in operational existence for the foreseeable future.
Moreover, the company’s ultimate parent has confirmed its willingness to provide financial support
to allow the company to operate and meet its liabilities as and when required.
2.2 Changes in accounting policy and disclosures
(a) New and amended IFRS standards adopted by the company
There were no new standards effective during the year ended 31 December 2021.
The Company has not early adopted any standards, interpretations or amendments that
have been issued but are not yet effective.
(b) New standards, interpretations and amendments to existing standards in issue but not yet
effective
Several standards and interpretations were in issue and adopted by the EU, but not yet
effective, up to the date of issuance of the Company’s financial statements. The Company
has not early adopted any standards, interpretations or amendments that have been issued
but are not yet effective. None of the new standards, amendments and interpretations to
standards are expected to have a significant impact on the Company’s financial statements.
Amendments to IAS 1
Amendments to the classification of liabilities
current or non-current
Amendments to IAS 1 and IAS 8
Definition of material
Amendments to IAS 12
Measurement techniques for current and
deferred taxes
Amendments to IAS 16
Definition of sales proceeds and related costs
Amendments to IAS 37
Definition of costs to fulfil an onerous contract
Amendments to IAS 41
Measurement techniques to biological assets
Amendments to IFRS 3
Updating a reference to Conceptual Framework
IFRS 17
Insurance Contracts
SUNBORN (GIBRALTAR) LIMITED
15
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2021 - continued
2. Summary of significant accounting policies - continued
2.2 Changes in accounting policy and disclosures - continued
2.3 Foreign currency translation
(a) Functional and presentation currency
Items included in the Company’s financial statements are measured using the currency of
the primary economic environment in which the entity operates (“the functional currency”).
The Company’s financial statements are presented in Pounds Sterling (£), which is the
Company’s functional and presentational currency.
2.3 Foreign currency translation - continued
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange
rates prevailing at the dates of the transactions. Assets and liabilities denominated in foreign
currencies are translated into the functional currency at the rate of exchange ruling on the
balance sheet date. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at the year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in the finance items in the
statements of comprehensive income.
2.4 Investment property
The Company’s vessel (converted to a Yacht Hotel) which is leased out under operating lease is
presented as investment property in the balance sheet because of the vessel’s physical
characteristics resembling that of a building (walls, floors, roof, windows), permanently moored at
Ocean Village, in Gibraltar and that the future rental cash flows to be earned from the vessel depend
largely upon its permanent location.
An investment property is measured initially at its cost. Directly attributable transaction costs are
included in the initial measurement. The Company has measured the investment property at fair
value as at 1 January 2016, as the Company has applied the exemption provided in IFRS 1 to use the
fair value of the investment property as deemed cost at the date of transition to IFRS. Any
improvement costs for the renovation and repair that add value to vessel are capitalized as additions
to the vessel and depreciated over the shorter of the improvements’ estimated useful lives or that
of the Yacht hotel.
SUNBORN (GIBRALTAR) LIMITED
16
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2021 - continued
2. Summary of significant accounting policies - continued
2.4 Investment property - continued
Subsequently, the investment property is carried at cost less any accumulated depreciation and any
accumulated impairment losses. Depreciation is calculated using the straight-line method to
allocate the cost to the residual value over their estimated useful lives. The estimated useful life of
the vessel divided to its significant components is presented in the table below:
Vessel - 40 years
Vessel improvements - shorter of remaining life of the vessel or useful life of the vessel
improvement (3 to 25 years)
Furniture and fittings - 10 years
The useful economic lives, residual values and the depreciation methods adopted are reviewed by
the director annually.
All repairs and maintenance costs are charged to the statement of the comprehensive income
during the financial year in which they are incurred.
Investment property are subject to an impairment review if there are events or changes in
circumstances which indicate that their carrying amount may not be recoverable in full. The
impairment review comprises a comparison of the carrying amount of the assets with their
recoverable amount, which is the higher of net realisable value and value in use. The carrying value
of an asset is written down by the amount of any impairment and this loss is recognised in the
statement of the comprehensive income in the year in which it occurs. If an external event gives
rise to the reversal of an impairment loss, the reversal is recognised in the profit and loss account
by increasing the carrying amount of the asset in the year in which it occurs.
2.5 Property, plant and equipment
Property, plant and equipment are stated at purchase cost less accumulated depreciation and/or
accumulated impairment losses, if any.
The estimated cost and accumulated depreciation of replaced or refurbished components are
written off and any resulting losses are recognised in the Statement of Comprehensive Income.
Depreciation is calculated using the straight-line method to allocate their cost to their estimated
residual values over their estimated useful lives.
The useful economic life of the motor vehicle is 3 years.
The useful economic lives, residual values and the depreciation methods adopted are reviewed by
the management annually.
SUNBORN (GIBRALTAR) LIMITED
17
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2021 - continued
2. Summary of significant accounting policies - continued
2.6 Financial instruments - Financial Instruments: Recognition and Measurement
Loan and receivables are initially recognised when they are originated. Other financial assets and
financial liabilities are initially recognised when the Company becomes a party to the contractual
provisions of the instruments. Financial instruments carried on the statement of financial position
include loan receivables, other receivables, cash and cash equivalents, and borrowings and other
payables. The particular recognition methods are disclosed in the individual policy statements
associated with each item.
(a) Loan receivables
Loan receivables are stated at proceeds issued net of transactions costs.
(b) Other receivables
Other receivables are stated at cost.
(c) Cash and cash equivalents
Cash comprises cash at bank. Cash equivalents are short term highly liquid investments that are
readily convertible to known amounts of cash and which are subject to an insignificant risk of change
in value.
(d) Borrowings and other payable
Other payables are recognised at their nominal value.
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are
subsequently carried at amortised cost. Any difference between the proceeds (net of transaction
costs) and the redemption value is recognised in the income statement as interest expense over the
period of the borrowings using the effective interest method.
Fair value measurement principles
‘Fair value’ is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date in the principal or, in its
absence, the most advantageous market to which the Company has access at that date.
The Company measures the fair value of an instrument, using valuation techniques that maximise
the use of relevant observable inputs and minimise the use of unobservable inputs, if there is no
quoted price in an active market. The chosen valuation technique incorporates all of the factors that
market participants would take into account in pricing a transaction.
SUNBORN (GIBRALTAR) LIMITED
18
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2021 – continued
2. Summary of significant accounting policies - continued
2.6 Financial instruments - Financial Instruments: Recognition and Measurement - continued
Amortised cost measurement principles
The amortised cost of a financial asset or liability is the amount at which the financial asset or liability
is measured at initial recognition, minus principal repayments, plus or minus the cumulative
amortisation using the effective interest method of any difference between the initial amount
recognised and the maturity amount, minus any reduction for impairment.
Impairment
Financial assets that are stated at cost or amortised cost are reviewed at each reporting date to
determine whether there is objective evidence of impairment. If any such indication exists, an
impairment loss is recognised in the statement of profit or loss and other comprehensive income as
the difference between the asset’s carrying amount and the present value of estimated future cash
flows discounted at the financial asset’s original effective interest rate.
If, in a subsequent period, the amount of an impairment loss recognised on a financial asset carried
at amortised cost decreases and the decrease can be linked objectively to an event occurring after
the write-down, the write-down is reversed through the statement of profit or loss and other
comprehensive income.
Derecognition
A financial asset is derecognised when the Company no longer has control over the contractual
rights that comprise that asset. This occurs when the rights are realised, expire or are surrendered.
A financial liability is derecognised when it is extinguished or when the obligation specified in the
contract is discharged, cancelled or expires.
Assets held for trading that are sold are derecognised and the corresponding receivables from the
buyer for the payment are recognised as of the date the Company commits to sell the assets. The
Company uses the average cost method to determine the gain or loss on derecognition.
Offsetting
Financial assets and liabilities are offset and the net amount is reported in the statement of financial
position when, and only when, the Company has a legal right to set off the recognised amounts and
it intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
2.7 Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction,
net of tax, from the proceeds.
SUNBORN (GIBRALTAR) LIMITED
19
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2021 - continued
2. Summary of significant accounting policies - continued
2.8 Recognition of rental income
The Company recognises rental income from renting out the Yacht hotel “The Sunborn Gibraltar” to
Sunborn (Gibraltar) Resort Limited based on yearly payments determined by the contracting parties.
The lease of the Yacht hotel is classified as operating lease since the Company retains a significant
share of risks and rewards of ownership. Rental income from operating leases is recognised on a
straight-line basis over the lease term.
2.9 Operating lease
Leases that do not transfer all the risks and rewards of ownership are classified as operating leases.
Income derived under this type of lease is recognised to the statement of comprehensive income
on a straight-line basis over the period of the lease.
2.10 Segment reporting
The Company only has one operation (owning and leasing the Yacht hotel), so it constitutes a single
operating segment. The chief operating decision maker is determined as the Board of Directors of
the Company who monitors the result of the Company after its establishment based on the rental
income generated from the lease agreement less operating expenses.
2.11 Current and deferred income tax
The company had tax losses since its inception therefore has not recorded any tax expense during
these periods to 31 December 2021. Income tax charge is calculated on the basis of the tax laws
enacted or substantively enacted at the balance sheet date in the countries where the Company
operates and generates taxable income.
Deferred income tax is recognised on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the financial statements. Deferred income tax is
determined using tax rates (and laws) that have been enacted or substantively enacted by the
balance sheet date and are expected to apply when the related deferred income tax asset is realised
or the deferred income tax liability is settled. Deferred income tax assets are recognised only to the
extent that it is probable that future taxable profit will be available against which the temporary
differences can be utilised.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset
current tax assets against current tax liabilities and when the deferred income taxes assets and
liabilities relate to income taxes levied by the same taxation authority on either the same taxable
entity or different taxable entities where there is an intention to settle the balances on a net basis.
SUNBORN (GIBRALTAR) LIMITED
20
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2021 - continued
3. Risk management
3.1 Financial risk factors
The Company´s financial risks related to business are market risk (including interest rate risk and
foreign currency risk), credit risk, liquidity risk and refinancing risk. Financial risk management
carried out by the management of the Company aims to protect the Company against unfavourable
developments in the financial markets and ensure the performance. The management review
financial risks on regular basis to manage financial risk position and decide on necessary actions.
(a) Foreign exchange risk
The objective of foreign exchange risk management is to reduce the uncertainty caused by
fluctuations in foreign exchange rates in the Company’s profit and loss, cash flows and balance sheet
to an acceptable level for the Company.
A large portion of the Company’s income is denominated in Sterling Pounds. The Company is
exposed to foreign currency risk, inter alia, through the Bonds, which are denominated in Euro. The
Company’s exchange rate exposures have been partly hedged at Group level and therefore to the
extent that foreign exchange rate exposures are not hedged, any fluctuations in currencies may
adversely affect the Company’s financial results in ways unrelated to its operations. These
developments could have an adverse effect on the Company’s business, financial position, results
of operations and future prospects and thereby, on the Company’s ability to fulfil its obligations
under the Bonds.
The depreciation of the exchange rate should be significant before it would weaken the Company’s
debt service capacity going forward. The management of the Company continuously monitors the
development of the GBP/EUR exchange rate and decides on necessary actions to be taken. The EUR
denominated borrowings and cash balances on the balance sheet in the periods presented are as
follows:
GBP thousand
31 Dec 2021
31 Dec 2020
Senior Bond
(48,980)
(52,381)
Cash and cash equivalents
642
29
At 31 December 2021, if the Sterling Pound (£) strengthened/weakened by 5% against the Euro,
unrealized exchange gain/loss for the year would have been £ 2,493,000 higher/lower. Due to the
risk of Sterling/Euro depreciation and potential impact to the Company’s debt service capacity,
management have arranged the possibility with group's ultimate parent company, Sunborn Oy, to
use an open window forward rate contract and this facility is available if desired.
SUNBORN (GIBRALTAR) LIMITED
21
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2021 - continued
3. Risk management - continued
3.1 Financial risk factors – continued
(b) Interest rate risk
The Company has issued senior secured bonds during year 2021 that carries variable interest rate.
The nominal value of the bonds is EUR 58.29 million in total and they carry interest at rate of 5% as
at 31 December 2021 consisting of margin of 5% plus 3-month Euribor. Cash and cash equivalents
do not carry significant interest. Interest rate risk has not been hedged. The management of the
Company monitors changes in the interest rate level and its possible impact on future cash out
flows. The need for any hedging activity is assessed continuously. Had interest rates been 0,5
percentage points higher, the Company’s profit after tax would have been £ 244,916 less. Decrease
in interest rates would not have any material impact due to the interest rate floor of 0 % in the
bonds and loan receivable in respect to the reference rate.
(c) Credit risk
Credit risk is the risk that the other party to the loans and receivables will cause a financial loss for
the Company by failing to discharge an obligation. Credit risk arises from rental receivables from
Sunborn (Gibraltar) Resort Limited and cash and cash equivalents and the cash deposit held (cash
collateral) at banks.
The Company has leased the Yacht hotel to its sister company, Sunborn (Gibraltar) Resort Limited,
under a long-term lease contract. The lease receivables from Sunborn (Gibraltar) Resort Limited
amounted to approximately £1.8 million on 31 December 2021 (2020: £2.2 million). These
receivables carry normal credit risk related to intra-group receivables. Financial activities of the
group companies are directed by common management.
Cash and cash equivalents and the cash deposit (cash collateral) are held in reputable Gibraltar
banks, whose credit ratings are strong.
There are no past due or impaired receivables on the Company’s balance sheet.
(d) Liquidity risk and refinancing risk
Liquidity risk is the risk that existing funds and borrowing facilities become insufficient to meet the
Company’s business needs or high extra costs are incurred for arranging them. Refinancing risk is
the risk that refinancing of the existing borrowings and/or raising new funding will not be available
or is available at high price.
SUNBORN (GIBRALTAR) LIMITED
22
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2021 - continued
3. Risk management - continued
3.1 Financial risk factors – continued
(d) Liquidity risk and refinancing risk – continued
Prudent liquidity risk management implies maintaining sufficient cash, and the availability of
adequate funding. In the long–run the principal source of liquidity is expected to be the cash flow
generated by the lease agreement. The Company’s liquidity position is monitored by the
management of the Company. The business related to the vessel is estimated to be profitable
without non-cash item depreciation and the lease term in the lease agreement is for approximately
7 years as at 31 December 2021.
The bond terms include an interest cover ratio covenant of EBITDA generated by the lease
agreement to net finance charges of no less than 1.10:1.00 to maintain profitability and the
covenant for maintain liquidity in an amount exceeding the aggregate amount of three months of
interests. The financial covenants are measured quarterly, and the Company has not breached the
covenant.
A summary table with maturity of the financial liabilities is presented below. The amounts disclosed
in the tables below are the contractual undiscounted cash flows including the interest payments.
The interest payments are calculated based on the interest rate level on 31 December 2021.
31 Dec 2021
GBP thousand
< 1 year
1 to 2 years
2 to 3
years
3 to 5
years
Total
Payables to group companies
2,023
-
-
25,997
28,020
Other payables
340
-
-
-
340
Senior secured bond
48,694
-
-
-
48,694
Senior secured bond, interest
payments
1,766
-
-
1,766
Total
52,823
-
-
25,997
78,820
31 Dec 2020
GBP thousand
< 1 year
1 to 2 years
2 to 3
years
3 to 5
years
Total
Payables to group companies
1,555
-
-
25,997
27,552
Other payables
410
-
-
-
410
Senior secured bond
-
51,727
-
-
51,727
Senior secured bond, interest
payments
2,594
1,766
-
-
4,360
Total
4,559
53,493
-
25,997
84,049
The refinancing risk is managed by securing the refinancing early enough. The management of the
Company believes it is able to refinance the bonds at or before maturity due to the long-term lease
contract of the vessel with the long term. The committed lease contract period continues after the
maturity of the bonds for approximately 5 more years.
SUNBORN (GIBRALTAR) LIMITED
23
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2021 - continued
3. Risk management - continued
3.2 Capital risk management
Capital of the Company as monitored by the management consists of borrowings and equity as
shown in the balance sheet.
The capital management is based on the evaluation of essential risks concerning the Company. The
management of the Company monitors equity ratio. Capital of the Company is managed through
equity instalments and if required the group company loans may be converted to equity to
strengthen the capital structure of the Company.
The bond terms include an asset cover ratio covenant, which requires the Company, together with
the guarantor, to maintain the asset cover ratio of minimum 140%. The covenant is calculated based
on the market value of the yacht hotel calculated by approved shipbroker appointed by the
Company and approved by the bond trustee, divided by financial indebtedness of the Company. The
Company has during the year not breached the covenant.
4. Critical accounting estimates and judgements
The preparation of financial statements in compliance with IFRS requires making estimates and
assumptions. Application of accounting policies requires making judgements. The estimates and
underlying assumptions are reviewed on an ongoing basis. The estimates and assumptions, and
judgements are based on historical experience and various other factors, including projections of
future events, which are believed to be reasonable under current circumstances.
4.1 Useful life and residual value of the Vessel
The vessel has been built as permanently floating real-estate and hull and structure is designed to
have a technical lifespan of over 70 years, subject to normal maintenance and upkeep over the
lifespan. In addition to the high technical specification of the hull and its protection systems, the
vessel is typically moved only once every 10 to 15 years for refitting and is not normally subjected
to adverse sea conditions, salt water, and friction. As a non-moving vessel, it will not be impacted
by encounters with land or vessels. Management of the Company has made estimates on the
depreciation period and residual value of the vessel. The management had previously estimated
that the useful life of the vessel was 30 years for the hull and structure and 10 years for the interior
and fittings. On transition from previous GAAP to IFRS, management have reassessed this estimate
as supported by external evidence, estimated that the useful life of the vessel to be 40 years.
Should certain factors or circumstances cause the Company to revise its estimates of the vessel’s
useful lives or projected residual values, depreciation expense could be materially higher or lower.
If the estimated average vessel’s useful life had reduced or increased by one year, depreciation
expense for 2021 would have increased/decreased by approximately GBP £70,105.
SUNBORN (GIBRALTAR) LIMITED
24
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2021 - continued
5. Rental income from group company
Rental income comprises income generated from lease of its vessel, which was refurbished into a
Yacht hotel, to its sister company Sunborn (Gibraltar) Resort Limited. The lease term is 10 years with
fixed monthly lease from 1 June 2017 and in force until terminated by the company subject to three
months' prior notice. Due to the Covid-19 crisis the Company provided a lease waiver that was
applied during financial year 2020.
At 31 December 2021, the future minimum lease payments from the lease contract are as follows:
2021 2020
£ £
Within one year 3,000,000 3,000,000
In two to five years 12,000,000 12,000,000
More than five years 10,500,000 10,500,000
6. Administrative expense
2021 2020
£ £
Audit fees 9,000 10,750
Other expenses 240,556 213,034
£ 249,556 £ 223,784
7. Finance cost
2021 2020
£ £
Interest payable to Group 448,305 464,954
Interest payable to others 2,918,128 3,286,988
£ 3,366,433 £ 3,751,442
SUNBORN (GIBRALTAR) LIMITED
25
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2021 - continued
8. Investment property
Vessel
including
Furniture
improvements
& fittings
Total
£
£
£
Cost
At 1 January 2020
101,992,754
487,666
102,445,815
Additions
-
-
-
At 31 December 2020
101,992,754
487,666
102,480,420
Additions
-
9,349
9,349
At 31 December 2021
101,992,754
497,015
102,489,769
Depreciation
At 1 January 2020
16,947,852
404,462
17,352,314
Charge in the year
2,477,048
27,982
2,505,030
At 31 December 2020
19,424,900
432,444
19,857,344
Charge for the year
2,461,908
27,982
2,489,890
At 31 December 2021
21,886,808
460,426
22,350,839
Net book value
At 31 December 2021
£ 80,105,946
£ 36,589
£ 80,142,535
At 31 December 2020
£ 82,567,854
£ 55,222
£ 82,623,076
The vessel is registered in Finland but located in Gibraltar, where it is leased under a lease
agreement to Sunborn (Gibraltar) Resort Limited, which runs the hotel operations of the Yacht hotel.
Sunborn Gibraltar is responsible for the maintenance, the mooring fee, certain insurances,
marketing of the vessel and any other such operational costs for operating the Yacht hotel. The
Company has thus no risk on operating the Yacht hotel, being only responsible for certain insurances
and maintaining the hull. The highest and best use of the investment property does not differ from
its current use.
On 25
th
June 2021, the vessel was valued by an externally qualified surveyor at €107,649,600
(£92,520,525).
SUNBORN (GIBRALTAR) LIMITED
26
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2021 - continued
9. Property, plant and equipment
£
Cost
At 1 January 2020
50,128
Additions
-
At 31 December 2020
50,128
Additions
-
At 31 December2021
50,128
Depreciation
At 1 January 2020
33,418
Charge for the year
16,709
At 31 December 2020
50,127
Charge for the year
-
At 31 December 2021
50,127
Net book value
At 31 December 2021
£ 1
At 31 December 2020
£ 1
10. Receivables from group companies
2021
2020
£
£
Receivable from:
Sunborn (Gibraltar) Resort Limited
1,793,842
2,137,955
Sunborn (Gibraltar) Holdings Limited
2,817
2,817
Casino Sunborn (Gibraltar) Limited
7,949
7,163
£ 1,804,608
£ 2,147,935
Receivables from group companies are unsecured, interest free and payable on demand.
SUNBORN (GIBRALTAR) LIMITED
27
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2021 - continued
11. Share capital
2021
2020
Authorised:
3,000 ordinary shares of £1 each
£ 3,000
£ 3,000
Issued, called up and fully paid:
3,000 ordinary shares of £1 each
£ 3,000
£ 3,000
The number of ordinary shares outstanding since the company’s inception was 2000 shares. In 2016,
borrowings from the group company were converted into equity thereby increasing the authorised
ordinary share capital by 1,000 at a premium of £15,604 per share resulting to a share premium of
£15,604,000. The Company has not distributed any dividend and the bond agreement set some
restrictions for distribution of dividend.
12. Borrowings from group company- non-current liabilities
2021
2020
Payables to:
Sunborn International Oy
£ 25,996,911
£25,996,911
Borrowings from Sunborn International Oy are secured by the by a second lien mortgage in the
company’s vessel and repayable on at the request of the lender. Interest accrues at the rate of 1.5%
per annum.
The lender has confirmed that they will not seek repayment of the loan within the next twelve
months.
SUNBORN (GIBRALTAR) LIMITED
28
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2021 - continued
13. Borrowings – non-current liabilities
Borrowings are analysed as follows:
2021
2020
Wholly repayable within one year
£ 48,694,475
-
Wholly repayable in more than one
year
-
£ 51,727,431
Details of loans wholly repayable within
five years are as follows:
5% senior secured bond repayable
on 5 September 2022
48,979,921
52,381,380
Less: transaction costs
(285,446)
(653,949)
£ 48,694,475
£ 51,727,431
On 31 August 2017, the Company issued a € Senior Secured Bonds with nominal value of EUR 58
million repayable in 2022. The contractual interest is 5% plus Euribor and the effective interest is
5.83%.
In 2020, an Amended and Restated Terms and Conditions of the Senior Secured Bond was agreed
upon. This has resulted in an amendment fee of 50 basis-points, and as a consequent a modification
loss adjustment in interest expenses of €290,000 in the reporting period. The level of borrowings as
at the year-end now stands at EUR 58.29 million.
Fair value of the bond equals the carrying amount.
The bond is maturing for repayment on 5th September 2022 and management expects and plans to
repay the bond at or prior to its original maturity date. Repayment is planned via a new bond issue
or private placement debt for a new term of 3 to 5 years. Management views the current high yield
market conditions to enable launch of a new bond with similar terms and conditions and pricing.
Collaterals and guarantee given
The bonds are secured by a 1st lien mortgage in the vessel and the cash held at bank. The bonds are
also secured by a floating charge agreement over the assets, rights, intellectual property and
revenues including relevant insurances. The bank accounts have been pledged to secure the bond
repayments; however, they can be used by the Company in the ordinary course of business.
Moreover, Sunborn International Oy has pledged its shares in the Company and Sunborn Gibraltar
Holdings Limited and Sunborn (Gibraltar) Resort Limited to secure the repayment of the bonds.
As a result of the new Amended and Restated Terms and Conditions Sunborn International Holding
Oy has entered into an Additional Guarantee Agreement, as principal obligor, guarantee to the
Agent and Bondholders the punctual performance of the Company’s obligations under the Bond’s
Finance Documents.
SUNBORN (GIBRALTAR) LIMITED
29
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2021 - continued
14. Payables to group companies – current liabilities
2021
2020
£
£
Payables to:
Sunborn Oy
111,657
94,850
Sunborn UK
3,315
-
Sunborn (Gibraltar) Resorts Limited
85,570
-
Sunborn Finance Oy
58,351
-
Sunborn International Oy
1,764,999
1,375,045
£ 2,023,892
£ 1,469,895
Payables to group companies are unsecured, interest free and repayable on demand.
15. Other payables – current liabilities
2021
2020
£
£
Other payables
130,710
200,766
Accruals
209,141
209,140
£ 339,851
£ 409,906
16. Related party transactions
The Company’s related parties are its ultimate parent company Sunborn Oy, other Sunborn Group
entities, the board of directors and key management of the Company and the Board of Directors
and management of the ultimate parent company, together with their close family members, and
companies controlled by these individuals.
The following transactions were carried out with related parties:
2021
2020
£
£
Rental income from Sunborn (Gibraltar) Resort Limited
3,180,000
2,404,000
Administration fees paid to Sunborn International Holdings Oy
(34,197)
-
Interest paid to Sunborn International Oy
(389,954)
(464,954)
The transactions were entered into on bases determined between the director of the Company and
the related parties in the ordinary course of business.
SUNBORN (GIBRALTAR) LIMITED
30
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2021 - continued
16. Related party transactions - continued
Year end balances arising from receivables and payables to and from Group companies are noted in
notes 10, 12 and 14.
Sunborn International Oy, Sunborn (Gibraltar) Holdings Limited and Sunborn (Gibraltar) Resort
Limited are guarantors of the Company’s borrowings.
17. Subsequent events
To the Director’s knowledge, no other material events occurred since the reporting date.