ACCOUNTS - Final Accounts
ACCOUNTS - Final Accounts
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Company Registration Number
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LANDFERN LIMITED
COMPANY INFORMATION
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LANDFERN LIMITED
CONTENTS
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LANDFERN LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
The Directors present their Strategic Report of the Company and the Group for the period ended 31 December 2019. The principal activity of the company in the period under review was that of a multiple leisure venue operator.
Total turnover for the period was £10,533k (2018: £12,902k), the Group achieved a gross profit margin of 62% (2018: 59%).
The drop in turnover of 18.4% reflects 2 businesses ceasing to trade in Q1 of 2019. The performance continued to be impacted by the economic environment in 2019 being extremely competitive therefore impacting on market conditions for the leisure sector as a whole, particularly in the city centre of Glasgow. This led to margins being squeezed and the businesses comprising the trading entities of the group requiring to drive business through various voucher promotions. In addition, the development of the investment proposal to increase the rental income from and construct the area of the estate which has the potential to be built into a new significant landmark building did not progress as quickly as expected. This led to a refinancing of the business in August 2019 which was completed by Ediston (RES) Limited who acquired the share capital of the Group with the previous shareholders maintaining an active involvement as Directors of the business. This allowed an opportunity to assess the existing market place for the trading entities and where these businesses would be able to maximise value within the hospitality sector and concurrently assess the estate as a whole. The conclusions of this assessment were being implemented, and giving positive results, in Q1 of 2020 some 5 months after the transaction when the COVID-19 virus impacted the hospitality and property sectors. In common with all hospitality groups of Landfern’s and its subsidiaries nature, the Scottish Government required the business activities to close on 20th March 2020. The businesses have remained closed since that date due to the continuing significant uncertainty for trading conditions arising from the COVID-19 restrictions. As at the date of this report and opinion, there continues to be significant and extensive constraints and restrictions imposed by the Scottish Government which mean that the trading businesses within the Landfern Group continue to be closed for the foreseeable future. The perspective of the Board of Directors as at the date of issue of these financial statements is that this is likely to continue until at least the summer of 2021. Looking to the future, the business contains significant high quality real estate assets with trading businesses that, as a group, generated turnover of more than £10m in 2018 and 2019. A further and more fundamental strategic review of the businesses and the underlying real estate assets is being undertaken to assess the most economically efficient and profitable way forward for the Landfern Group. The review thus far has given the Directors confidence that, once a vaccine is widely available to address COVID-19, the fundamental elements of the business may allow certain elements of the Group to recommence trading. The Directors' expectation is that the Group will develop into a profitable trading group in due course. The Directors will continue to monitor KPI’s within the Group which are primarily sales, margin and staff cost ratios at the appropriate time.
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LANDFERN LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
Two fully owned subsidiaries of the Group Kwik Keg Limited and LL (Group) Limited were liquidated in Q1 of 2019. Kwik Keg facilitated the majority of the Group's alcohol wholesale within the Group and to third parties. The write back of liabilities to the Group with regard to Kwik Keg Limited was £589,446. In addition, prior to but as part of the refinancing of Landfern Limited, certain subsidiary businesses were sold to the previous shareholders in Q1 and Q3 of 2019. The businesses involved were Mountvale Limited, Forthwell Pub Group Limited, Rosecove Limited, Lynnet Leisure (Hamilton Palace) Limited, Dellbay Limited, Braidmanor Limited, Fury Murrys (Paisley) Limited and Levenridge Limited. The companies are now owned and operated by the previous shareholder. They were sold at an overall loss of £702,020. The aforementioned write back of Kwik Keg liabilities and the disposal of subsidiary entities being £112,574 are recognised as part of amounts written off investments within the Consolidated Profit and Loss Account. Discontinued operations have been displayed on the face of the Consolidated Profit and Loss Account.
The Group operates within a sector of perceived high risk currently due to COVID-19 and its impact on the hospitality sector. These risks will diminish once a vaccine is widely available. It is envisaged if the progress on a vaccine as at the date of this report continues, the Group will review it's ability to recommence trading from Summer of 2021.
If trading recommences, positive action will be taken on the key risks to manage, diversify and mitigate such risks. Competition from existing and new operators is best managed by maintaining the Group’s reputation for excellence in choice, service and value. Liquidity risk Following a restructure of the majority of the external debt during 2019, the liquidity risk to the business has substantially reduced. The operations should be cash generative with repayment structures manageable for the business. Credit risk Sales are predominantly in cash and therefore the Group is exposed to minimal credit risk.
Impact of COVID-19
In common with all hospitality groups of Landfern’s and its subsidiaries nature, the Scottish Government required the business activities to close on 20 March 2020. The businesses have remained closed since that date due to the continuing significant uncertainty for trading conditions arising from the COVID-19 restrictions. As at the date of this report and opinion, there continues to be significant and extensive constraints and restrictions imposed by the Scottish Government which mean that the trading businesses within the Landfern Group continue to be closed for the foreseeable future. The perspective of the Board of Directors as at the date of this report are that this is likely to continue until at least the summer of 2021. Looking to the future, the business contains significant high quality real estate assets with trading businesses that, as a group, generated turnover of more than £10m in 2018 and 2019. A strategic review of the businesses and the underlying real estate assets is being undertaken to assess the most economically efficient and profitable way forward for the Landfern Group. The review thus far has given the Directors confidence that, once a vaccine is widely available to address COVID-19, that the fundamental elements of the business may allow certain elements of the Group to recommence trading. The Directors' expectation is that the group will develop into a profitable trading group in due course. COVID-19 is treated as a non-adjusting post balance sheet event as disclosed in note 30.
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LANDFERN LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
The Directors acknowledge and understand their duties and responsibilities, including that of section 172, of the Companies Act 2006. A Director of a company must act in the way he or she considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to:
•the likely consequences of any decision in the long term,
• the interest of the company’s employees, • the need to foster the company’s business relationships with suppliers, customers and others, • the impact of the company’s operations on the community and the environment, • the desirability of the company maintaining a reputation for high standards of business conduct, and • the need to act fairly as between members of the company
The board recognises that the long term success of the business is dependent on the way we interact with a large number of important stakeholders including our Colleagues, Clients and Shareholders. The Directors have had regard to the interest of our stakeholders while complying with their obligations to promote the ongoing success of the business in line with the section 172 of the Companies Act.
Ahead of all board meetings the Directors are supplied with board papers that highlight relevant stakeholder considerations along with performance metrics and ongoing forecasts. The board’s decision making considers both risk and reward in the pursuit of delivering long term value to our stakeholders and acknowledging and understanding the current and potential risks to the business, both financial and non-financial, are fundamental to how we manage the business. The Directors, both individually and collectively as a board consider the decisions taken during the year ended 31st December 2019 were in conformance to their duty under section 172 of the Companies Act.
This report was approved by the board and signed on its behalf.
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LANDFERN LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
The Directors present their report and the financial statements for the year ended 31 December 2019.
The Directors are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), 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 the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the Directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgments 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 Group and Parent 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 the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The loss for the year, after taxation, amounted to £7,209,605 (2018 - loss £4,600,313).
No dividends will be distributed for the period ended 31 December 2019 (2018: Nil).
The Directors who served during the year were:
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LANDFERN LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
Each of the persons who are Directors at the time when this Directors' Report is approved has confirmed that:
Going Concern
The Directors have given careful consideration to the current and anticipated future solvency of the company and have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements, as detailed in note 2.3. However, the circumstances described in note 2.3 represent a material uncertainty that may cast doubt upon the Company's ability to continue as a going concern and, therefore to continue realising its assets and discharging its liabilities in the normal course of business. The financial statements do not include any adjustments that would result from the basis of preparation being inappropriate. The Directors draw attention to the material uncertainty related to going concern in the Auditors report on page 6.
The auditors, Armstrong Watson Audit Limited, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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LANDFERN LIMITED
INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS, AS A BODY, OF LANDFERN LIMITED
We have audited the financial statements of Landfern Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2019, which comprise the Group Statement of Comprehensive Income, the Group and Company Statements of Financial Position, the Group and Company Statement of Changes in Equity, the Group Statement of Cash Flows and the related notes, 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:
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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.
We draw attention to note 2.3 in the financial statements, which indicates that the Group is reliant on the financial support of its parent to meet its liabilities as they fall due. These conditions, along with other matters explained in note 2.3, indicate that a material uncertainty exists that may cast significant doubt on the Group's or the parent Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
The Directors are responsible for the other information. The other information comprises the information included in the Annual Report, other than the financial statements and our Auditors' 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.
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LANDFERN LIMITED
INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS, AS A BODY, OF LANDFERN LIMITED (CONTINUED)
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Group Strategic Report and the Directors' 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 Group Strategic Report or the Directors' Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
As explained more fully in the Directors' Responsibilities Statement on page 4, 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 is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group's and the parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.
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 Auditors' 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: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report.
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LANDFERN LIMITED
INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS, AS A BODY, OF LANDFERN LIMITED (CONTINUED)
This report is made solely to the Company's shareholders, 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 shareholders those matters we are required to state to them in an Auditors' 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 shareholders, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Chartered Accountants
24 Blythswood Square
G2 4BG
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LANDFERN LIMITED
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2019
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LANDFERN LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2019
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LANDFERN LIMITED
REGISTERED NUMBER: SC454427
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2019
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 19 to 44 form part of these financial statements.
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LANDFERN LIMITED
REGISTERED NUMBER: SC454427
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2019
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 19 to 44 form part of these financial statements.
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LANDFERN LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2019
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LANDFERN LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 DECEMBER 2018
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LANDFERN LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2019
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LANDFERN LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2019
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LANDFERN LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
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LANDFERN LIMITED
CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 DECEMBER 2019
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LANDFERN LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Landfern Limited is a private company, limited by shares, incorporated in the UK, registered in Scotland. The company's registration number and registered office can be found on the company information page.
The principal activity of the company in the period under review was that of a multiple leisure venue operator. These financial statements have been prepared in pound sterling as this is the currency of the primary economic environment in which the company operates. All amounts disclosed in the financial statements and notes have been rounded to the nearest £1 unless otherwise stated.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The Group has elected to apply all amendments to FRS 102, as set out in the triennial review published in December 2017, prior to the mandatory adoption for accounting periods beginning on or after 1 January 2019.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies.
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Profit and Loss Account in these financial statements.
The following principal accounting policies have been applied:
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of Financial Position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Profit and Loss Account from the date on which control is obtained. They are deconsolidated from the date control ceases. In accordance with the transitional exemption available in FRS 102, the group has chosen not to retrospectively apply the standard to business combinations that occurred before the date of transition to FRS 102, being 01 January 2016.
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LANDFERN LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2.Accounting policies (continued)
In common with all hospitality groups of Landfern’s and its subsidiaries nature, the Scottish Government required the business activities to close on 20 March 2020. The businesses have remained closed since that date due to the continuing significant uncertainty for trading conditions arising from the COVID-19 restrictions. As at the date of this report and opinion, there continues to be significant and extensive constraints and restrictions imposed by the Scottish Government which mean that the trading businesses within the Landfern Group continue to be closed for the foreseeable future. The perspective of the Board of Directors as at the date of this report are that this is likely to continue until at least the summer of 2021. Looking to the future, the business contains significant high quality real estate assets with trading businesses that, as a group, generated turnover of more than £10m in 2018 and 2019. A strategic review of the businesses and the underlying real estate assets is being undertaken to assess the most economically efficient and profitable way forward for the Landfern Group. The review thus far has given the Directors confidence that, once a vaccine is widely available to address COVID-19, the fundamental elements of the business may allow certain elements of the Group to recommence trading. The Directors' expectation is that the Group will develop into a profitable trading group in due course. As part of the review, the Directors have prepared cash flow forecasts for a period beyond 12 months from the date of approval of these financial statements that, taking account of reasonably possible downturns (zero revenue has been assumed), the company will have sufficient funds, through its cash reserves and funding from its parent to meet its liabilities as they fall due for that period. As with any company placing reliance on other group entities for financial support, the Directors acknowledge that there can be no certainty that this support will continue although, at the date of approval of these financial statements, they have no reason to believe that it will not do so. Whilst the Directors cannot envisage all possible circumstances that may impact the Group in the future, they believe that taking account of the forecasts, available cash resources and including the financial support from Ediston (RES) Limited, the Group will have sufficient resources to meet all ongoing working capital and committed capital expenditure requirements as they fall due. Based on the above, the Directors believe that at the date of signing these financial statements that it remains appropriate to prepare the financial statements on a going concern basis. However, these circumstances represent a material uncertainty that may cast significant doubt upon the Group's ability to continue as a going concern and, therefore to continue realising its assets and discharging its liabilities in the normal course of business. The financial statements do not include any adjustments that would result from the basis of preparation being inappropriate.
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LANDFERN LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2.Accounting policies (continued)
Turnover represents the amount derived from the receipts, excluding discounts and value added tax associated with the continuing principal activity of development and operation of entertainment and leisure facilities. Turnover for food and beverage sales is recognised at the point of sale and payment is received on the same day. Rental income Rental Income is recognised to the extent that it is probable that the economic benefits will flow to the company and the income can be reliably measured over the period of the lease. Income is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. Income is recognised in the period in which the rental service is provided, when the income and the associated costs can be measured reliably and it is probable that consideration will be received in respect of the rental service provided.
Rentals paid under operating leases are charged to profit or loss on a straight line basis over the lease term.
Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
All borrowing costs are recognised in profit or loss in the year in which they are incurred.
Defined contribution pension plan
The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Group in independently administered funds.
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LANDFERN LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2.Accounting policies (continued)
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Statement of Financial Position date, except that:
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
Exceptional items are transactions that fall within the ordinary activities of the Group but are presented separately due to their size or incidence.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
Page 22
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LANDFERN LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2.Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Individual freehold and leasehold properties are carried at current year value at fair value at the date of the revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations are undertaken with sufficient regularity to ensure the carrying amount does not differ materially from that which would be determined using fair value at the Statement of Financial Position date.
Fair values are determined from market based evidence normally undertaken by professionally qualified valuers.
Revaluation gains and losses are recognised in other comprehensive income unless losses exceed the previously recognised gains or reflect a clear consumption of economic benefits, in which case the excess losses are recognised in profit or loss.
Assets that are subject to depreciation or amortisation are assessed at each reporting date to determine whether there is any indication that the assets are impaired. Where there is any indication that an asset may be impaired, the carrying value of the asset (or cash-generating unit to which the asset has been allocated) is tested for impairment. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's (or CGU's) fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Non-financial assets that have been previously impaired are reviewed at each reporting date to assess whether there is any indication that the impairment losses recognised in prior periods may no longer exist or may have decreased.
Investment property is carried at fair value determined annually by external valuers and derived from the current market rents and investment property yields for comparable real estate, adjusted if necessary for any difference in the nature, location or condition of the specific asset. No depreciation is provided. Changes in fair value are recognised in profit or loss.
Page 23
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LANDFERN LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2.Accounting policies (continued)
Investments in subsidiaries are measured at cost less accumulated impairment.
Investments in unlisted Group shares, whose market value can be reliably determined, are remeasured to market value at each balance sheet date. Gains and losses on remeasurement are recognised in the Consolidated Profit and Loss Account for the period. Where market value cannot be reliably determined, such investments are stated at historic cost less impairment.
Investments in listed company shares are remeasured to market value at each Statement of Financial Position date. Gains and losses on remeasurement are recognised in profit or loss for the period.
In the consolidated accounts, interests in associated undertakings are accounted for using the equity method of accounting. Under this method an equity investment is initially recognised at the transaction price (including transaction costs) and is subsequently adjusted to reflect the investors share of the profit or loss, other comprehensive income and equity of the associate. The Consolidated Profit and Loss Account includes the Group's share of the operating results, interest, pre-tax results and attributable taxation of such undertakings applying accounting policies consistent with those of the Group. In the Consolidated Statement of Financial Position, the interests in associated undertakings are shown as the Group's share of the identifiable net assets, including any unamortised premium paid on acquisition. Any premium on acquisition is dealt with in accordance with the goodwill policy. At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.
Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
Page 24
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LANDFERN LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2.Accounting policies (continued)
Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
In the Consolidated Statement of Cash Flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Group's cash management.
Short term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Consolidated Profit and Loss Account.
For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Group would receive for the asset if it were to be sold at the reporting date.
Financial assets and liabilities are offset and the net amount reported in the Statement of Financial Position when there is an 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.
Page 25
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LANDFERN LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2.Accounting policies (continued)
Judgements and estimates are continually evaluated and are based on historical experiences and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that present a potential risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below (a) Freehold and Investment properties Freehold and investment property values within the accounts are assessed annually. Valuations are based on external valuations and derived from the current market rents and investment property yields for comparable real estate, adjusted if necessary for any difference in the nature, location or condition of the specific asset. There is an inevitable degree of judgement involved in that each property is unique and value can only ultimately be reliably tested in the market itself. (b) Unlisted investments An unlisted investment has been valued at cost of £65,000 despite being purchased over fifteen years ago. This is due to there being no active market from which to assess its fair value. The Directors believe that cost value is a reasonable estimate of its continued value to the company and the base price at which these options would be considered for sale.
Page 26
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LANDFERN LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Page 27
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LANDFERN LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Page 28
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LANDFERN LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
There were no factors that may affect future tax charges.
Page 29
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LANDFERN LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Page 30
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LANDFERN LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Freehold properties were revalued in the year by the Directors. The Directors have made reference to valuation reports carried out by CBRE in September 2019 when forming their valuation of the Group's freehold properties for 2019. The Directors do not believe that the fair values have changed materially since the the date the valuation reports were carried out.
Page 31
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LANDFERN LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Page 32
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LANDFERN LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Page 33
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LANDFERN LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Page 34
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LANDFERN LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Subsidiary undertakings (continued)
Page 35
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LANDFERN LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Subsidiary undertakings (continued)
Page 36
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LANDFERN LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
The 2019 investment property valuations were carried out unless otherwise stated by CBRE in September 2019 on an open market value for existing use basis. CBRE are qualified in providing property valuations.
The Directors do not believe that the fair values have changed materially since the 2019 valuation reports were carried out. Land held as an investment property with a fair value of £412,700 (2018: £412,700) is valued by the Directors at its original cost. The directors believe this to be a fair representation of its value at the balance sheet date. Land and property pertaining to a potential development site are held within the group accounts at a director's valuation of £750,000 (2018: £300,000). In making their valuation the Directors have considered a project appraisal carried out in 2019 by Ediston (RES) Limited who have recognised experience and knowledge of the commercial property sector.
Page 37
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LANDFERN LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Page 38
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LANDFERN LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Page 39
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LANDFERN LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Outstanding bank and other loans are secured by personal guarantees from Directors L Mortimer and A Hunter.
Loan balances due to LDF finance of £25,524 are secured by way of an intercompany guarantee from Landfern Limited and personal guarantees from directors L Mortimer and A Hunter. Interest on outstanding loans is charged at a monthly rate ranging from 1% to 3%. Outstanding hire purchase contracts are secured by personal guarantees from Directors L Mortimer and A Mortimer. Interest on loans is charged at an annual rate ranging from 7% to 9%. Other loans totalling £2,312 were not secured by any charge against the business. A loan due to Property Finance Nominees (No.3) Limited in the prior year was secured by way of a standard and floating charge over a number of properties held by the group. This loan has been repaid in the current year and the charge has now been satisfied. Assetz Capital Trust Company Limited held a standard and floating charges over a number of properties held by the group. This loan has been repaid in the current year and the charge has now been satisfied. Henslow Trading Limited held a standard and floating charge over a property held by the group in respect of a loan due in the prior year. This loan has been repaid in the current year and the charge has now been satisfied. Moneything (Security Trustee) Limited held a standard and floating charge over a property held by the group. The subsidiary that held this loan has been sold in the current year. A loan due to Fleximise Limited in the prior year was secured by way of an intercompany guarantee from Landfern and a personal guarantee from Directors L Mortimer and A Hunter.
Page 40
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LANDFERN LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Page 41
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LANDFERN LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Page 42
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LANDFERN LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Revaluation reserve
Investment property revaluation reserve
Profit and loss account
Kwik Keg Limited has been liquidated in the current year. No proceeds were received as a result of the company's liquidation. As this represented the Group's division of wholesale sales of alcohol the results have been posted as discontinued operations.
In the prior year, an investment property valued at £46,034 was transferred between Group companies and revalued upwards to £100,000 in light of its subsequent sale in 2019. The subsidiary company the property was transferred to was disposed of before the transfer of the property and the subsequent sale took place. Therefore, a prior year adjustment has been recognised to reverse the revaluation and transfer of this property between group entities. As a result, the investment property value brought forward has decreased by £53,966 , the impact on reserves was £53,966.
Page 43
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LANDFERN LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
The Group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounted to £48,289 (2018 - £60,473). Contributions totalling £9,432 (2018 - £3,664) were payable to the fund at the reporting date and are included in creditors.
Commercial property values have been subject to volatility as a result of the COVID-19 pandemic and therefore it is highly likely that the property values at the time of signing would be different to the valuations presented in the accounts as at 31 December 2019. The Director’s believe that any changes in valuation at the time of signing would be temporary and therefore have not assessed the value of the properties at this time. The Directors will carry out updated valuations in due course to consider the impact COVID-19 has had on the fair values of properties held by the Group. The results of this exercise will be recognised within the year ended 31 December 2020 financial statements. Moreover in September 2020, as a result of COVID-19 and the trading units of the Group remaining closed. The decision was taken to restructure the business and a large-scale redundancy process is now underway. This process is ongoing and the related costs will be recognised within the year ended 31 December 2020 financial statements.
The Company's parent undertaking at the balance sheet date was
The ultimate controlling party at the date the accounts were issued was
Page 44
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