Hope Street Hotel Limited - Limited company accounts 20.1

REGISTERED NUMBER: 04554566 (England and Wales)

Strategic Report, Report of the Directors and

Financial Statements for the Year Ended 31 December 2019

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 2019.

REVIEW OF BUSINESS

Over the past couple of years, the business has invested significant capital in a large expansion project to provide 62 additional rooms, a swimming pool, spa, private cinema and extended rooftop events space. The first phases of the expansion completed in the summer of 2019, which resulted in the number of rooms sold increasing towards the end of 2019. This has allowed the business to grow revenue year on year by 12.90%. The 2019 turnover increased to £5,482,296 (2018 - £4,855,775). Revenue from room sales have increased by 16.35% selling an additional 2863 room nights compared to 2018, with revenue from food and drink sales also recording a notable increase of 9.76%.

Gross profit margins have remained consistent with the 2019 GPM being 86.27% (2018 - 86.07%). The business has maintained consistent net profit margins over a number of years, the 2019 net profit margin, after removing the effects of depreciation, has come in at 26.50% (2018 - 26.19%) which demonstrates the effectiveness of the controls enforced by management. Increases in net profit margins are expected over the next few years due to economies of scale as the capacity of the hotel and services offered increase.. Hotel occupancy remained strong at over 75%, which was 2.5% over budget.

The business continues to generate cash surpluses from trading activities, which has enabled the company to largely self-finance the current expansion work being undertaken. As detailed on page 9 the cash position of the business at 31/12/19 remains very strong. £465,563 of cash was still available at 31/12/19, cash generated from trading activities enabled the business to continue with the hotel expansion works.

The results in the 2019 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, after removing the effects of the expansion works, 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 2019 financial statements show continued strong business development.

PRINCIPAL RISKS AND UNCERTAINTIES

The business continues to operate well within the bank covenant compliance tests. 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 and the evolving impacts of the Covid-19 pandemic.Managing the funds needed to complete the expansion project as well as maintaining the service levels currently provided by the hotel and restaurant is well within the capabilities of the business and the management team.

COVID-19 IMPACT

Although the Covid-19 pandemic first impacted the business after the reporting year, it is considered to be a non-adjusting post balance sheet event. As with most businesses in the UK and around the world - particularly those in the hospitality industry - our business has been impacted by Covid-19. We have had to delay the submission of these accounts due to the pandemic, to allow our auditors time to be able to complete their work.

Due to the government enforced lockdown, the hotel was closed for four months from mid March to mid July. Since then we have been operating within rapidly changing market conditions and legislative conditions. Revenue streams throughout 2020 have been affected, as with all hospitality industry businesses . The team have put in place strict cost controls to ensure that operations and cash flows are managed in line with the changing environment.

We have made use of the Government's Job Retention Scheme and Coronavirus Business Interruption Loan Scheme (CBILS) to help reduce the effect of the pandemic on our business.

ON BEHALF OF THE BOARD:

D C Brewitt - Director

12 November 2020

The directors present their report with the financial statements of the company for the year ended 31 December 2019.

PRINCIPAL ACTIVITIES

The principal activities of the company in the year under review were those of hoteliers and restaurant.

DIVIDENDS

No dividends will be distributed for the year ended 31 December 2019.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2019 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

12 November 2020

Opinion

We have audited the financial statements of Hope Street Hotel Limited (the 'company') for the year ended 31 December 2019 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 2019 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

12 November 2020

TURNOVER

3

5,482,296

4,855,775

Cost of sales

752,843

676,524

GROSS PROFIT

4,729,453

4,179,251

Administrative expenses

3,388,954

2,942,412

1,340,499

1,236,839

Other operating income

5,250

-

OPERATING PROFIT

6

1,345,749

1,236,839

Interest receivable and similar income

2,724

4,095

1,348,473

1,240,934

Interest payable and similar expenses

7

144,290

147,409

PROFIT BEFORE TAXATION

1,204,183

1,093,525

Tax on profit

8

245,629

225,149

PROFIT FOR THE FINANCIAL YEAR

958,554

868,376

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

958,554

868,376

FIXED ASSETS

Intangible assets

9

16,166

19,908

Tangible assets

10

16,959,746

12,359,267

Investments

11

1,083

1,083

16,976,995

12,380,258

CURRENT ASSETS

Stocks

12

44,168

39,941

Debtors

13

531,297

633,951

Cash at bank and in hand

465,759

1,018,440

1,041,224

1,692,332

CREDITORS

Amounts falling due within one year

14

4,846,016

1,605,806

NET CURRENT (LIABILITIES)/ASSETS

(3,804,792

)

86,526

TOTAL ASSETS LESS CURRENT LIABILITIES

13,172,203

12,466,784

CREDITORS

Amounts falling due after more than one year

15

(4,605,205

)

(5,055,205

)

PROVISIONS FOR LIABILITIES

19

(288,099

)

(91,234

)

NET ASSETS

8,278,899

7,320,345

CAPITAL AND RESERVES

Called up share capital

20

88

88

Share premium

21

73,237

73,237

Capital redemption reserve

21

12

12

Retained earnings

21

8,205,562

7,247,008

SHAREHOLDERS' FUNDS

8,278,899

7,320,345

The financial statements were approved by the Board of Directors and authorised for issue on 12 November 2020 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 2018

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

Changes in equity

Total comprehensive income

-

958,554

-

-

958,554

Balance at 31 December 2019

88

8,205,562

73,237

12

8,278,899

Cash flows from operating activities

Cash generated from operations

1

4,686,271

3,660,564

Interest paid

(144,290

)

(147,409

)

Tax paid

199,202

(1,593

)

Net cash from operating activities

4,741,183

3,511,562

Cash flows from investing activities

Purchase of intangible fixed assets

(2,995

)

(22,950

)

Purchase of tangible fixed assets

(4,843,790

)

(2,833,701

)

Purchase of fixed asset investments

-

(550

)

Interest received

2,724

4,095

Net cash from investing activities

(4,844,061

)

(2,853,106

)

Cash flows from financing activities

Loan repayments in year

(449,999

)

(449,999

)

Net cash from financing activities

(449,999

)

(449,999

)

(Decrease)/increase in cash and cash equivalents

(552,877

)

208,457

Cash and cash equivalents at beginning of year

2

1,018,440

809,983

Cash and cash equivalents at end of year

2

465,563

1,018,440

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

31.12.19

31.12.18

£

£

Profit before taxation

1,204,183

1,093,525

Depreciation charges

248,500

178,222

Loss on disposal of fixed assets

1,548

2,242

Finance costs

144,290

147,409

Finance income

(2,724

)

(4,095

)

1,595,797

1,417,303

Increase in stocks

(4,227

)

(3,903

)

(Increase)/decrease in trade and other debtors

(95,022

)

2,074,450

Increase in trade and other creditors

3,189,723

172,714

Cash generated from operations

4,686,271

3,660,564

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 2019

31.12.19

1.1.19

£

£

Cash and cash equivalents

465,759

1,018,440

Bank overdrafts

(196

)

-

465,563

1,018,440

Year ended 31 December 2018

31.12.18

1.1.18

£

£

Cash and cash equivalents

1,018,440

809,983

3.	ANALYSIS OF CHANGES IN NET DEBT

At 1.1.19

Cash flow

At 31.12.19

£

£

£

Net cash

Cash at bank and in hand

1,018,440

(552,681

)

465,759

Bank overdrafts

-

(196

)

(196

)

1,018,440

(552,877

)

465,563

Debt

Debts falling due within 1 year

(450,000

)

-

(450,000

)

Debts falling due after 1 year

(5,055,205

)

450,000

(4,605,205

)

(5,505,205

)

450,000

(5,055,205

)

Total

(4,486,765

)

(102,877

)

(4,589,642

)

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 principal activities of the company.

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

31.12.19

31.12.18

£

£

Rendering of services

5,482,296

4,855,775

5,482,296

4,855,775

4.	EMPLOYEES AND DIRECTORS

31.12.19

31.12.18

£

£

Wages and salaries

1,627,679

1,445,425

Social security costs

114,968

93,487

Other pension costs

42,879

26,819

1,785,526

1,565,731

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

31.12.19

31.12.18

Management

5

4

Administration

12

10

Marketing

6

6

Other

85

82

108

102

5.	DIRECTORS' EMOLUMENTS

31.12.19

31.12.18

£

£

Directors' remuneration

72,779

67,445

6.	OPERATING PROFIT

The operating profit is stated after charging:

31.12.19

31.12.18

£

£

Hire of plant and machinery

2,926

1,620

Depreciation - owned assets

242,451

172,086

Loss on disposal of fixed assets

1,548

2,242

Development costs amortisation

5,189

6,138

Auditors' remuneration

9,000

9,000

7.

INTEREST PAYABLE AND SIMILAR EXPENSES

31.12.19

31.12.18

£

£

Bank loan interest

144,290

147,409

8.

TAXATION

Analysis of the tax charge

The tax charge on the profit for the year was as follows:

31.12.19

31.12.18

£

£

Current tax:

UK corporation tax

48,764

154,790

Deferred tax

196,865

70,359

Tax on profit

245,629

225,149

Reconciliation of total tax charge 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:

31.12.19

31.12.18

£

£

Profit before tax

1,204,183

1,093,525

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2018 - 19%)

228,795

207,770

Effects of:

Expenses not deductible for tax purposes

1,301

1,412

Capital allowances in excess of depreciation

(181,626

)

(15,697

)

Utilisation of tax losses

-

(39,121

)

Movement in deferred tax

196,865

70,359

Loss on disposal of assets

294

426

Total tax charge

245,629

225,149