Hope Street Hotel Limited - Limited company accounts 18.2

REGISTERED NUMBER: 04554566 (England and Wales)

Strategic Report, Report of the Directors and

Financial Statements for the Year Ended 31 December 2018

for

Hope Street Hotel Limited

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

4

Statement of Comprehensive Income

6

Balance Sheet

7

Statement of Changes in Equity

8

Cash Flow Statement

9

Notes to the Cash Flow Statement

10

Notes to the Financial Statements

11

DIRECTORS:

D C Brewitt

Ms M Colston

Dr A R Harvey

SECRETARY:

Dr A R Harvey

REGISTERED OFFICE:

Seymour Chambers

92 London Road

Liverpool

Merseyside

L3 5NW

REGISTERED NUMBER:

04554566 (England and Wales)

AUDITORS:

Douglas Fairless Partnership

Chartered Certified Accountants

and Statutory Auditors

Seymour Chambers

92 London Road

Liverpool

Merseyside

L3 5NW

The directors present their strategic report for the year ended 31 December 2018.

REVIEW OF BUSINESS

Hope Street Hotel Ltd has continued to maintain its revenue streams in line with previous years. The development of the

Hope Street Hotel and The London Carriage Works brands coupled with a clear strategic direction has been the key

reason for this. Turnover has increased by 3.7% over the turnover from 2017, the 2018 turnover has come in at

£4,855,775 (2017 - £4,686,271). Revenue from the hotel room sales have increased by 7.75% year on year, whilst food

and beverage sales have remained broadly in line .

Gross profit margins have remained consistent with the 2018 GPM being 86.07% (2017 - 85.36%). The business has

maintained consistent net profit margins over a number of years, the 2018 net profit margin, after removing the effects of

depreciation, has come in at 22.57% (2017 - 22.59%) which demonstrates the effectiveness of the controls enforced by

management . Average occupancy rates for 2018 have increased on previous years with 82.8% occupancy compared to

79.1% in 2017, this growth and consistency is very promising with current development work that is taking place on the

hotel that will significantly increase the capacity of the hotel. The business is continuing to show consistently strong

performances.

The business continues to generate cash surpluses from trading activities, which is enabling the company to self finance

the current expansion work being undertaken. As detailed on page 9 the cash position of the business at 31/12/18

remains very strong. Over £1 million of cash was still available at 31/12/18 which has allowed the business to continue

with the hotel expansion works without there being any effect on the day to day finances of the business.Once the hotel

expansion works are completed in 2020, the additional revenue streams generated from this will ensure that the cash

reserves used for the development are very quickly replenished.

The results in the 2018 financial statements show that the business is continuing to grow as evidenced by the balance

sheet on page 7. The liquidity position of the business remains consistently very strong and gearing is reducing

significantly year on year due to the capital repayments being made on the bank loans. Given the markets in which

Hope Street Hotel & The London Carriage Works operate and the current economic climate, it is clear that the results in

the 2018 financial statements show continued strong brand development and ever-increasing brand awareness. The

consistently strong year on year results coupled with the current hotel expansion work is indicating a prosperous future

for Hope Street Hotel Ltd.

PRINCIPAL RISKS AND UNCERTAINTIES

The business is currently well within the bank covenant compliance measurements. The business has continued to

show strong increases in available cash each year generated from trading activities, so cash flows from trading activities

remain very positive, however, there is now added pressure on cash flows due to the hotel expansion project which will

be completed in 2020. The principle risks facing the business will remain meeting the decreasing demands of the bank

loan covenants and maintaining sufficient cash flows to meet the ongoing capital expenditure requirements.The

Directors believe that managing the funds needed to complete the expansion project as well as maintaining the service

currently provided by the hotel and restaurant is well within the capabilities of the business and the management team.

ON BEHALF OF THE BOARD:

D C Brewitt - Director

24 September 2019

The directors present their report with the financial statements of the company for the year ended 31 December 2018.

DIVIDENDS

No dividends will be distributed for the year ended 31 December 2018.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2018 to the date of this report.

D C Brewitt

Ms M Colston

Dr A R Harvey

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors and the financial statements

in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors

have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting

Practice (United Kingdom Accounting Standards and applicable law), including Financial Reporting Standard 102 'The

Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not

approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the

company and of the profit or 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 accounting estimates that are reasonable and prudent;

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

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the

company's transactions and 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 2006. 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 AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act

2006) of which the company's auditors are unaware, and each director has taken all the steps that he or she ought to

have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that

the company's auditors are aware of that information.

ON BEHALF OF THE BOARD:

D C Brewitt - Director

24 September 2019

Opinion

We have audited the financial statements of Hope Street Hotel Limited (the 'company') for the year ended

31 December 2018 which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in

Equity, Cash Flow Statement and Notes to the Cash Flow Statement, Notes to the Financial Statements, including a

summary of significant accounting policies. The financial reporting framework that has been applied in their preparation

is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial

Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting

Practice).

In our opinion the financial statements:

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

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

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

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.

Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the

financial statements section of our report. We are independent of the 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 directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the 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 directors are responsible for the other information. The other information comprises the information in the Strategic

Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors

thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise

explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing

so, consider whether the other information is materially inconsistent with the financial statements or our knowledge

obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or

apparent material misstatements, we are required to determine whether 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 the audit:

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

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

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit,

we have not identified material misstatements in the Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you

if, in our opinion:

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

-	the financial statements are not in agreement with the accounting records and returns; or

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

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

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page three, the directors are

responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and

for such internal control as the directors determine necessary to enable the preparation of financial statements that are

free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the 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.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from

material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with

ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are

considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic

decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting

Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the

Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those

matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent

permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's

members as a body, for our audit work, for this report, or for the opinions we have formed.

Mr Gregory Newton FCCA (Senior Statutory Auditor)

for and on behalf of Douglas Fairless Partnership

Chartered Certified Accountants

and Statutory Auditors

Seymour Chambers

92 London Road

Liverpool

Merseyside

L3 5NW

24 September 2019

TURNOVER

3

4,855,775

4,686,271

Cost of sales

676,524

685,517

GROSS PROFIT

4,179,251

4,000,754

Administrative expenses

2,942,412

3,003,152

OPERATING PROFIT

6

1,236,839

997,602

Interest receivable and similar income

4,095

3,793

1,240,934

1,001,395

Interest payable and similar expenses

7

147,409

141,091

PROFIT BEFORE TAXATION

1,093,525

860,304

Tax on profit

8

225,149

(226,143

)

PROFIT FOR THE FINANCIAL YEAR

868,376

1,086,447

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

868,376

1,086,447

FIXED ASSETS

Intangible assets

10

19,908

4,896

Tangible assets

11

12,359,267

9,698,094

Investments

12

1,083

533

12,380,258

9,703,523

CURRENT ASSETS

Stocks

13

39,941

36,038

Debtors

14

633,951

2,706,808

Cash at bank and in hand

1,018,440

809,983

1,692,332

3,552,829

CREDITORS

Amounts falling due within one year

15

1,605,806

1,278,302

NET CURRENT ASSETS

86,526

2,274,527

TOTAL ASSETS LESS CURRENT LIABILITIES

12,466,784

11,978,050

CREDITORS

Amounts falling due after more than one year

16

(5,055,205

)

(5,505,205

)

PROVISIONS FOR LIABILITIES

20

(91,234

)

(20,876

)

NET ASSETS

7,320,345

6,451,969

CAPITAL AND RESERVES

Called up share capital

21

88

88

Share premium

22

73,237

73,237

Capital redemption reserve

22

12

12

Retained earnings

22

7,247,008

6,378,632

SHAREHOLDERS' FUNDS

7,320,345

6,451,969

The financial statements were approved by the Board of Directors on 24 September 2019 and were signed on its behalf by:

D C Brewitt - Director

Called up

Capital

share

Retained

Share

redemption

Total

capital

earnings

premium

reserve

equity

£

£

£

£

£

Balance at 1 January 2017

88

5,292,185

73,237

12

5,365,522

Changes in equity

Total comprehensive income

-

1,086,447

-

-

1,086,447

Balance at 31 December 2017

88

6,378,632

73,237

12

6,451,969

Changes in equity

Total comprehensive income

-

868,376

-

-

868,376

Balance at 31 December 2018

88

7,247,008

73,237

12

7,320,345

Cash flows from operating activities

Cash generated from operations

1

3,660,564

50,499

Interest paid

(147,409

)

(141,091

)

Tax paid

(1,593

)

(196,215

)

Net cash from operating activities

3,511,562

(286,807

)

Cash flows from investing activities

Purchase of intangible fixed assets

(22,950

)

-

Purchase of tangible fixed assets

(2,833,701

)

(668,350

)

Purchase of fixed asset investments

(550

)

-

Sale of tangible fixed assets

-

(2,501

)

Loan to Associate

-

49,467

Interest received

4,095

3,793

Net cash from investing activities

(2,853,106

)

(617,591

)

Cash flows from financing activities

Loan repayments in year

(449,999

)

(450,001

)

Amount introduced by directors

-

10,994

Amount withdrawn by directors

-

(5,000

)

Net cash from financing activities

(449,999

)

(444,007

)

Increase/(decrease) in cash and cash equivalents

208,457

(1,348,405

)

Cash and cash equivalents at beginning of year

2

809,983

2,158,388

Cash and cash equivalents at end of year

2

1,018,440

809,983

1.	RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

31.12.18

31.12.17

£

£

Profit before taxation

1,093,525

860,304

Depreciation charges

178,222

187,925

Loss on disposal of fixed assets

2,242

10,189

Finance costs

147,409

141,091

Finance income

(4,095

)

(3,793

)

1,417,303

1,195,716

Increase in stocks

(3,903

)

(3,173

)

Decrease/(increase) in trade and other debtors

2,074,450

(1,204,460

)

Increase in trade and other creditors

172,714

62,416

Cash generated from operations

3,660,564

50,499

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of

these Balance Sheet amounts:

Year ended 31 December 2018

31.12.18

1.1.18

£

£

Cash and cash equivalents

1,018,440

809,983

Year ended 31 December 2017

31.12.17

1.1.17

£

£

Cash and cash equivalents

809,983

2,158,388

1.	STATUTORY INFORMATION

Hope Street Hotel Limited is a private company, limited by shares , registered in England and Wales. The

company's registered number and registered office address can be found on the Company Information page.

The presentation currency of the financial statements is the Pound Sterling (£).

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

Turnover

The turnover in the profit & loss account represents net invoice value of goods or services provided on cash or

credit basis, excluding value added tax.

Revenue is recognised upon delivery of a service and/or check in of the customer.

Intangible assets

Development costs shown as Intangible assets are initially measured at cost. After initial recognition,

Development costs are measured at cost less accumulated amorrtisation charges and any accumulated

impairment losses.

Development costs are being amortised evenly over their estimated useful live of five years.

Tangible fixed assets

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

Freehold property

-

not provided

Short leasehold

-

in accordance with the property

Plant and machinery

-

15% on reducing balance

Fixtures and fittings

-

15% on reducing balance

Computer equipment

-

25% on cost

Tangible fixed assets are initially measured at cost. After initial recognition, tangible fixed assets are measured

at cost less accumulated depreciation and any accumulated impairment losses.

Depreciation is not provided on freehold property in accordance with FRS 102 section 17 para 17.19. The

balances held in freehold property represent the freehold land and buildings which are part of the hotel from

which the company is trading. The market value of the hotel has increased year on year for a number of years

and is expected to continue on this trend. Depreciating the asset would result in the carrying value of the hotel

being understated and the accounts not giving a true and fair view. Therefore, as per FRS 102 section 17 para

17.9 previous estimates have been reviewed and the residual value has been amended and the depreciation

policy amended to ensure that the financial statements give a true and fair view moving forward.

Investments in subsidiaries and associates

Investments in Associates and Unlisted Investments have been classified as fixed assets and are carried at cost.

Stocks

Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and

slow moving items.

Financial instruments

The company only enters into basic financial instrument transactions that result in the recognition of financial

assets and liabilities like trade and other debtors and creditors, loans from third parties and loans to and from

related parties.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Statement of Comprehensive

Income, except to the extent that it relates to items recognised in other comprehensive income or directly in

equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or

substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the

balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from

those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws

that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal

of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they

will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Hire purchase and leasing commitments

Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the

lease.

Pension costs and other post-retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the company's pension

scheme are charged to profit or loss in the period to which they relate.

3.

TURNOVER

The turnover and profit before taxation are attributable to the one principal activity of the company.

An analysis of turnover by class of business is given below:

31.12.18

31.12.17

£

£

Rendering of services

4,855,775

4,686,271

4,855,775

4,686,271

4.	EMPLOYEES AND DIRECTORS

31.12.18

31.12.17

£

£

Wages and salaries

1,445,425

1,380,412

Social security costs

93,487

99,610

Other pension costs

26,819

22,312

1,565,731

1,502,334

The average number of employees during the year was as follows:

31.12.18

31.12.17

Management

4

4

Administration

10

10

Marketing

6

6

Other

82

81

102

101

5.	DIRECTORS' EMOLUMENTS

31.12.18

31.12.17

£

£

Directors' remuneration

67,445

73,112

6.	OPERATING PROFIT

The operating profit is stated after charging:

31.12.18

31.12.17

£

£

Hire of plant and machinery

1,620

1,233

Depreciation - owned assets

172,086

185,476

Loss on disposal of fixed assets

2,242

10,189

Development costs amortisation

6,138

2,448

Auditors' remuneration

9,000

9,000

7.

INTEREST PAYABLE AND SIMILAR EXPENSES

31.12.18

31.12.17

£

£

Bank loan interest

147,409

141,091

8.

TAXATION

Analysis of the tax charge/(credit)

The tax charge/(credit) on the profit for the year was as follows:

31.12.18

31.12.17

£

£

Current tax:

UK corporation tax

154,790

(196,083

)

Deferred tax

70,359

(30,060

)

Tax on profit

225,149

(226,143

)

Reconciliation of total tax charge/(credit) included in profit and loss

The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is

explained below:

31.12.18

31.12.17

£

£

Profit before tax

1,093,525

860,304

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2017 - 19.246%)

207,770

165,574

Effects of:

Expenses not deductible for tax purposes

1,412

1,111

Capital allowances in excess of depreciation

(15,697

)

-

Depreciation in excess of capital allowances

-

2,454

Utilisation of tax losses

(39,121

)

(664

)

Movement in deferred tax

70,359

(30,060

)

Loss on disposal of assets

426

1,961

BPRA

-

(399,419

)

Current year trading losses

-

228,983

Losses carried back

-

(196,083

)

Total tax charge/(credit)

225,149

(226,143

)