ABQ_INVESTMENT_UK_LTD - Accounts

The director presents the strategic report for the year ended 31 December 2018.

Fair Review of the Business

The principal activity of the group is the operation and management of the Oceana Hotels resort complex in Bournemouth that consists of three hotels; The Cumberland, The Suncliff, and Ocean Beach (formerly Cliffeside) providing a total contribution of 285 bedrooms. All hotels and outlets are on one site. The complex offers several food and beverage outlets encompassing The Ventana, The Overcliff Pub and The Italian Café, serving residents and the local community with the addition of Yoga Club and part of the squash court turned into gym. Locally the business has corporate, food and beverage and function and events business.

The business mix is diverse with all properties attracting leisure, corporate and group accommodation business. Each of the hotels has a unique style, and although all are resort hotels, each hotel appeals to slightly different market sectors. The business model is to operate full service hotels that offer different facilities, appeal to different market segments and remain diverse and able to expand or contract to achieve success during different seasons and industry changes. An emphasis on good facilities and food and beverage options to drive growth are also key.

As an established resort business, the business strategy is set out as follows:

• Diversify the guest profile within the business to ensure risks are minimised.

• Maintain and improve a local reputation in all outlets and events to ensure this additional revenue stream remains robust.

• Develop our facilities and up selling to maximise the guest spend per head and improve the guest experience.

• Operate as a modern company that respects and rewards staff of all diversities and cultures, to ensure we are all part of a winning team.

• Foresee and predict changes to the industry and remain ahead of the competition in terms of marketing and technology.

• Maintain and improve the properties to ensure we remain competitive in the seasonal resort market for years to come.

• Constantly training and motivating the team to focus on the best customer service to promote loyalty with our return and local business guests and ensure we go the extra mile to stay ahead of our competitors.

• Expand the company gradually with value for money acquisitions that fit with our business model.

Principal Risks and Uncertainties

The principal risks to the business during the year 2018 have been the following:

• Impact of Brexit on travel and staff resources, in particular chefs, due to a reduction in available EU nationals. This is anticipated to impact payroll costs in the future as a result of increased competition for key staff within the industry.

• Poor weather, which has a definitive impact on occupancy and Average Daily Rate (ADR) throughout the year.

• New Hotel openings in Bournemouth, specifically upmarket hotel chain openings in the area, and the improvement and upgrade of the competition set.

• Recent shifts in pricing strategy by close competitors choosing to reduce their ADR to increase occupancy.

• Budget hotel chains which drive down the average ADR in Bournemouth, with almost 700 rooms in town.

• Decline of Group Tour business as a market segment, although providing we continue to improve our product and guest experience this could be an opportunity.

Principal risks going forward into 2019 are similar to the ones highlighted for 2018 with additional risks including the rise of online accommodation booking agents, the rental of student lets outside of term time as guest accommodation thus creating more cheap room inventory in the town and the increase in prices on imported goods as a result of the weakened pound

In spite of the risks which are highlighted, many of which the business faces each year, the group considers that Oceana hotels has performed well in 2018, financially improving on top line revenues, and maintaining a robust GP%. ADR has improved or remained constant 2 of the hotels and occupancy has increased across the group.

For the year ended 31 December 2018:

• Cumberland average ADR finished at £77.91 with average occupancy of 85%

• Suncliff average ADR finished at £49.78 with average occupancy of 90%

• Ocean Beach (formerly Cliffeside) average ADR finished at £54.16 with average occupancy of 76.7%

The structured refurbishment programme that began in mid-2015 continued throughout 2018 improved Food and Beverage revenue source for the new outlets at Ocean Beach and Suncliff but diluted the Ventana Food and Beverage (F&B) revenue at Cumberland in 2017 which saw considerable recovery in 2018. Nevertheless, Cumberland still performs well and remains the engine of the group. Future improvements to bedrooms at Cumberland and Suncliff have proved that the company remains strong through challenges in 2019.

The rebranding and refurbishment of Cliffeside Hotel to Ocean Beach in late 2016 with ongoing refurbishment works in Cumberland and Suncliff to improve the quality and standards of inventory has provided further strength to the business, and the continued development of the two new outlets Overcliff Pub and Italian Café along with introduction of gym and Yoga Club will also enhance this strength and diversify the revenue with a focus at Ocean Beach on the younger demographic.

There has also been measured development in the senior team structure, and the responsibilities they have in maintaining and developing the business.

The business has also provided and funded training opportunities to staff at all levels including in-house customer service training, NVQ’s, National Coastal Tourism Academy training and Master Classes and systems training which has encouraged personal development of the team.

The business ended the year on a positive note, with a strong personnel structure in place, robust and diverse business, and good profits derived from a team of driven senior managers and an efficient operational structure.

Costs are well managed, and improvements prioritised and structured to ensure minimum impact on revenues and profits.

The key performance indicators of the business are as follows:

• Trip advisor scores have been maintained or improved in relation to the guest experience.

• Staff retention at a senior level of Head of Department and above has remained stable.

• Revenue has improved year on year in 2018.

• Gross Profits have remained robust year on year, however net profit has decreased as a result of substantial refurbishment works undertaken to drive future growth of the group.

• Attention to environmental performance has seen an increase in replacement of lighting to LED in many public areas and bedrooms, continued replacement of old gas appliances and boilers with more efficient models and more efficient waste collection and management. The company has signed with various green energy suppliers for its utilities procurement.

• Food GP% remains at good levels and Bar GP% are above industry average.

• We have had challenges with government minimum wage increases and payroll has seen some increase but still at par with the budget for the year.

• Addition of Gym and Yoga club to enhance revenues.

Resort Hotel trading generally has the same risks year on year as have been highlighted in the principal risks and uncertainties faced by the business. Future risks not evident in 2019 are without doubt Article 50 being invoked to begin the process of the UK exiting the European Union, and the consequences of this which may include recession, shortage of employees and a slowdown in demand resultant of consumer confidence.

A number of new F&B outlets have been set up in 2018 including another 15 national branded restaurants in the new cinema development in the Bournemouth area which will increase competition but may also attract greater trade to the Bournemouth area.

As a company that has weathered previous recession with robust profits, we are primed and ready to strategise accordingly to minimise any effect due to an economic downturn. With an effective sales and marketing team, and operational managers that are experienced in reducing costs due to seasonal trends, the business is in a strong position and prepared to strategise accordingly should it face challenges in relation to any future period of recession or economic downturn.

We are working towards negating any impact with improvements to the properties, mainly through the refurbishment of bedrooms and further development of the outlets to increase local trade and retain guest loyalty. This will of course come at a cost, but a cost that without doubt will provide a return on investment in the coming years. Should the future of hospitality in our location remain strong, we will be primed to further improve on our top line figures and stay ahead of our competitive set.

Providing opportunities for staff and encouraging the team to work as one to achieve Key Performance Objectives (KPO’s) will also strengthen the business, and ensure any impact on the business due to Brexit will be nominal. We have already seen a healthy desire in the senior team to achieve KPO’s set by the business and maintain our success. The diversity and inclusiveness of our staff shows that the business is modern thinking which projects onto our guest demographic. We offer staff support and assistance on a personal level, provide healthy meals on duty to all staff, and ensure our zero tolerance discrimination and bullying policy is encrypted within the staff handbook and contracts.

The business will continue to provide and fund training opportunities to staff at all levels including in-house customer service training, NVQ’s, National Coastal Tourism Academy training and Master Classes and systems training.

As a leading business within the town, we have and are sponsoring the Bournemouth Air Show, Bournemouth Chamber of Commerce, The Bournemouth Food Festival and The Jazz by the Sea Festival. We are also known locally for facilitating non-profit making events with local charities within our venues at low demand periods, which in turn assist the business in promoting its community spirit. We also have a good history of success in local and national Tourism awards, and aim to add to this past success with our improvements in 2019.

On behalf of the board

The director presents his annual report and financial statements for the year ended 31 December 2018.

The principal activity of the company and group is that of operating and managing a group of hotels.

The director who held office during the year and up to the date of signature of the financial statements was as follows:

The results for the year are set out on page 8.

No ordinary dividends were paid. The director does not recommend payment of a further dividend.

Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the group continues and that the appropriate training is arranged. It is the policy of the group that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.

The group's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.

Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance.

The group 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.

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

Company law requires the director to prepare financial statements for each financial year. Under that law the director has 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 director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the director is required to:

•     select suitable accounting policies and then apply them consistently;

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

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

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

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

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

We have audited the financial statements of ABQ Investment UK Ltd (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2018 which comprise the group statement of comprehensive income, the group statement of financial position, the company statement of financial position, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including 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 FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

•     give a true and fair view of the state of the group's and the parent company's affairs as at 31 December 2018 and of its loss for the year then ended;

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

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

Basis for opinion

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

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

• the director's use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

• the director has not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group's or the parent company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The director is 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.

Opinions on other matters prescribed by the Companies Act 2006

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

• the information given in the strategic report and the director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and the director's report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and the director's report.

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

• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

• the parent company financial statements are not in agreement with the accounting records and returns; or

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

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

As explained more fully in the director's responsibilities statement, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the director is 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 director either intends to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

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

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

The Income Statement has been prepared on the basis that all operations are continuing operations.

As permitted by s408 Companies Act 2006, the company has not presented its own income statement and related notes. The company’s loss for the year was £96,825 (2017 - £21,393 loss).

ABQ Investment UK Ltd (“the company”) is a limited company domiciled and incorporated in England and Wales. The registered office is 27 East Overcliff Drive, Bournemouth, Dorset, England, BH1 3AF.

The group consists of ABQ Investment UK Ltd 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 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:

- 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.

As permitted by s408 Companies Act 2006, the company has not presented its own income statement and related notes. The company’s loss for the year was £96,825 (2017 - £21,393 loss).

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.

At the time of approving the financial statements, the director has a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the director continues to adopt the going concern basis of accounting in preparing the financial statements.

The group has net current liabilities of £10,624,144 at the financial reporting date and group loss of £116,027 for the year ended 31 December 2018. The group has the financial support of the ultimate controlling party and his other business interests. The director is confident that the group has adequate resources to continue as a going concern for the foreseeable future and to grow its business.

Revenue represents income from hotel and restaurant operations, excludes value added tax and is recognised on the date of the provision of the related service. Turnover is derived solely from UK operations.

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

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

Property, plant and equipment are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

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

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.

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

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

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

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

Inventories are stated at the lower of cost and estimated selling price. Cost comprises purchase price.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of inventories over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

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

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 statement of financial position 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 trade and other receivables and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publically traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.

Basic financial liabilities, including trade and other payables, bank loans and loans from fellow group companies, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade payables 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 payables 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 income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or non-current 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.

Rentals payable under operating leases, including any lease incentives received, are charged to income 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 lease asset are consumed.

In the application of the group’s accounting policies, the director is required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

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

Revenue is recognised upon the date of the provision of services from hotel and restaurant operations, the principal revenue activity being the supply of hotel rooms.

The director considers that this is when it is probable that the economic benefits associated with the provision of the service will flow to the entity since only upon guest check in to the hotel does the hotel have an obligation to the guest to provide a service.

The group has a deferred tax asset on tax losses which have been recognised in the accounts as there is an expectation of future taxable profits. The director considers it probable that sufficient taxable profits will be available against which the tax losses can be utilised.

The director determines whether there are indicators of impairment on the company's tangible assets. Factors taken into consideration in reaching such a decision include the economic viability, changes in market prices and expected future financial performance of the asset.

The director determines whether there are indicators of impairment on the company's intangible fixed assets. Factors taken into account in reaching such a decision include whether significant changes with an adverse effect on the entity have taken place during the period, or will take place in the near future, economic viability, changes in market prices and the anticipated future financial performance of the asset.

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

Tangible fixed assets are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values.

Goodwill is amortised over its expected useful economic life. The director makes a reliable estimate of the goodwill's useful economic life which he considers to be finite and then amortises the goodwill on a systematic basis over this life.

An analysis of the group's revenue is as follows:

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

Their aggregate remuneration comprised:

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

The carrying value of land and buildings comprises:

Details of the company's subsidiaries at 31 December 2018 are as follows:

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.

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 deferred tax asset set out above is expected to reverse within 12 months and relates to the utilisation of tax losses against future expected profits of the same period.

The deferred tax liability set out above is expected to reverse over a period of time and relates to accelerated capital allowances that are expected to mature within the same period.

The company has one class of ordinary shares which carry one vote per share and full rights to dividends and capital distributions.

Operating lease payments represent rentals payable by the group to the freeholders for leasehold owned properties from which the group conducts its hotel trade.

At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

The following amounts were outstanding at the reporting end date:

The group was provided with unsecured borrowings from ABQ Qatar Limited during the year of which £13,478,829 was owed at the financial reporting date (2017: £13,595,204). A market rate of interest is charged on the borrowings and this is presented within other payables. During the year interest of £630,000 (2017: £630,000) was paid to ABQ Qatar Limited.

ABQ Qatar Limited is related by virtue of Shiekh A Al Thani having significant influence over that entity.

The group incurred management charges during the year from Abdulla Qassim Hospitality Property Management Company totalling £345,343 (2017: £417,902).

Abdulla Qassim Hospitality Property Management Company is related by virtue of a close family member of Shiekh A Al Thani having significant influence over that entity.

No guarantees have been given or received.

The ultimate controlling party is Shiekh A Al Thani, by virtue of his majority shareholding in the company.