| Keeping Inn Limited |
| Strategic Report |
|
| Review of business |
| In the financial year to 31 January 2020, while revenues remained consistent with the previous year there were increases in wage costs and other fixed costs which could not be fully recovered due to the level of competition in the bar, leisure and wedding venue markets. As a result, operating profit before depreciation, administration and management charges fell 21.6% to £305,116 (2019: £388,837) and EBITDA fell 18% to £217,185 (2019: £264,755). |
|
| Finance |
| The company has a HSBC (15 year capital and repayment) loan facility, which will be reviewed in 2021. The company has met all agreed repayments and there are no matters of which the directors are aware which would lead to the withdrawal of the facility. |
|
| Capital expenditure |
| £38,609 was spent in the year on a major refit at the Centurion Bar and on new Greenkeeping equipment at Centurion Park. In addition to the capital expenditure, a further £126,664 (2019: £134,532) was spent on repairs and renewals which ensures that we continue to improve the quality of our product. |
|
| Future and Covid-19 |
In common with all businesses in the hospitality and leisure sector, the company has been impacted by the Covid-19 pandemic and the government restrictions imposed to control the spread of the virus. The directors have taken all financial assistance provided by both local and national government as well as constantly reviewing activity levels at each unit to ensure the cost base is as low as possible. We remain in close contact with all suppliers and providers of finance with a view to preserving not only the current position of the company but also safeguarding working relationships to ensure all our businesses can continue strongly into the future.
The company continues to invest significant sums in upgrading and improving its trading properties. The directors are currently working on future schemes to develop our strategically placed businesses. |
|
| Principal risks and uncertainties |
The Directors have set in place a thorough risk management process that identifies the key risks faced by the Company and ensures that processes are adopted to monitor and mitigate such risks.
The principal non-financial risk affecting the business relates to the fact that the market in which the company operates is highly competitive, with constant pressure on rates in the Provincial marketplace. The company seeks to mitigate this by ensuring its product offering is maintained to a high standard, via a programme of on-going refurbishment to maintain competitiveness.
The principal financial risks affecting the business are currency risk, credit risk, interest rate risk and liquidity risk.
All the company's sales and purchases are made in sterling; therefore, the Company is not exposed to any significant currency risks.
The Directors are satisfied that the credit risk is adequately managed and the level of bad debt is consistent with the nature of the industry.
Following the refinance to HSBC and given the current market expectations as to the movement in bank base rate in the short to medium term, it is not the company's intention to enter into any financial instruments to manage its interest risk. This policy will be kept under regular review.
Liquidity needs are managed by regular review of the timing of expected receivables and payments (including capital payments required on the bank and other loans) and the availability of facilities and levels of cash on deposit via the preparation of cash flow forecasts. |
|
|
| This report was approved by the board on 30 October 2020 and signed on its behalf. |
|
|
|
| J T Sanderson |
| Director |
|
|
| Basis of opinion |
| We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. |
|
| Conclusions relating to going concern |
| We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where: |
| ● |
the 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 other information comprises the information included in the report and financial statements, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information. 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 directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
| ● |
the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements. |
|
| Matters on which we are required to report by exception |
|
|
The directors perform annual impairment reviews in accordance with FRS102 to ensure the carrying value is not higher than the recoverable amount. |
|
|
Investments |
|
Investments in subsidiaries, associates and joint ventures are measured at cost less any accumulated impairment losses. Listed investments are measured at fair value. Unlisted investments are measured at fair value unless the value cannot be measured reliably, in which case they are measured at cost less any accumulated impairment losses. Changes in fair value are included in the profit and loss account. |
|
|
Stocks |
|
Stocks are measured at the lower of cost and estimated selling price less costs to complete and sell. Cost is determined using the first in first out method. The carrying amount of stock sold is recognised as an expense in the period in which the related revenue is recognised. |
|
|
Debtors |
|
Short term debtors are measured at transaction price (which is usually the invoice price), less any impairment losses for bad and doubtful debts. Loans and other financial assets are initially recognised at transaction price including any transaction costs and subsequently measured at amortised cost determined using the effective interest method, less any impairment losses for bad and doubtful debts. |
|
|
Creditors |
|
Short term creditors are measured at transaction price (which is usually the invoice price). Loans and other financial liabilities are initially recognised at transaction price net of any transaction costs and subsequently measured at amortised cost determined using the effective interest method. |
|
|
Taxation |
|
A current tax liability is recognised for the tax payable on the taxable profit of the current and past periods. A current tax asset is recognised in respect of a tax loss that can be carried back to recover tax paid in a previous period. Deferred tax is recognised in respect of all timing differences between the recognition of income and expenses in the financial statements and their inclusion in tax assessments. 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. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date and that are expected to apply to the reversal of the timing difference, except for revalued land and investment property where the tax rate that applies to the sale of the asset is used. Current and deferred tax assets and liabilities are not discounted. |
|
|
Provisions |
|
Provisions (ie liabilities of uncertain timing or amount) are recognised when there is an obligation at the reporting date as a result of a past event, it is probable that economic benefit will be transferred to settle the obligation and the amount of the obligation can be estimated reliably. |
|
|
Pensions |
|
Contributions to defined contribution plans are expensed in the period to which they relate. |
|
|
| 2 |
Critical accounting estimates and judgements |
|
|
In the application of the company's accounting policies, which are described in note 1, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. |
|
|
| 3 |
Analysis of turnover |
2020 |
|
2019 |
| £ |
£ |
|
|
Bar sales |
1,424,020 |
|
1,408,144 |
|
Food sales |
434,652 |
|
469,075 |
|
Golf sales |
209,098 |
|
203,472 |
|
Other sales |
133,626 |
|
102,896 |
|
|
|
|
|
|
2,201,396 |
|
2,183,587 |
|
|
|
|
|
|
|
|
|
|
By geographical market: |
|
|
UK |
2,201,396 |
|
2,183,587 |
|
|
|
|
|
|
|
|
|
|
| 4 |
Operating profit |
2020 |
|
2019 |
| £ |
£ |
|
This is stated after charging: |
|
|
Depreciation of owned fixed assets |
140,145 |
|
140,435 |
|
Auditors' remuneration for audit services |
3,950 |
|
4,250 |
|
Auditors' remuneration for other services |
1,000 |
|
1,000 |
|
Carrying amount of stock sold |
569,314 |
|
588,959 |
|
|
|
|
|
|
|
|
|
|
| 5 |
Directors' emoluments |
2020 |
|
2019 |
| £ |
£ |
|
|
Number of directors to whom retirement benefits accrued: |
2020 |
|
2019 |
| Number |
Number |
|
|
Defined contribution plans |
5 |
|
4 |
|
|
|
|
|
|
|
|
|
|
| 6 |
Staff costs |
2020 |
|
2019 |
| £ |
£ |
|
|
Wages and salaries |
693,594 |
|
657,488 |
|
|
|
|
|
|
693,594 |
|
657,488 |
|
|
|
|
|
|
|
|
|
|
|
Average number of employees during the year |
Number |
Number |
|
|
Sales |
71 |
|
71 |
|
|
|
|
|
|
71 |
|
71 |
|
|
|
|
|
|
|
|
|
|
| 7 |
Interest payable |
2020 |
|
2019 |
| £ |
£ |
|
|
Bank loans and overdrafts |
52,012 |
|
51,858 |
|
|
|
|
|
|
|
|
|
|
| 8 |
Taxation |
2020 |
|
2019 |
| £ |
£ |
|
Analysis of charge in period |
|
Current tax: |
|
UK corporation tax on profits of the period |
22,819 |
|
31,160 |
|
|
|
|
|
|
|
|
|
|
Deferred tax: |
|
Origination and reversal of timing differences |
(3,429) |
|
(3,429) |
|
|
|
|
|
|
|
|
|
|
|
Tax on profit on ordinary activities |
19,390 |
|
27,731 |
|
|
|
|
|
|
|
|
|
|
|
Factors affecting tax charge for period |
|
The differences between the tax assessed for the period and the standard rate of corporation tax are explained as follows: |
|
|
|
|
|
|
|
2020 |
|
2019 |
| £ |
£ |
|
Profit on ordinary activities before tax |
25,028 |
|
72,462 |
|
|
|
|
|
|
|
|
|
|
Standard rate of corporation tax in the UK |
19% |
|
19% |
|
| £ |
£ |
|
Profit on ordinary activities multiplied by the standard rate of corporation tax |
|
4,755 |
|
13,768 |
|
|
Effects of: |
|
Expenses not deductible for tax purposes |
- |
|
(199) |
|
Capital allowances for period in excess of depreciation |
18,064 |
|
17,591 |
|
|
Current tax charge for period |
22,819 |
|
31,160 |
|
|
|
|
|
|
|
|
|
|
| 9 |
Tangible fixed assets |
|
|
Long leasehold properties |
|
Plant and machinery |
|
Soft furnishings |
|
Total |
|
|
At valuation |
|
At valuation |
|
At valuation |
| £ |
£ |
£ |
£ |
|
Cost or valuation |
|
At 1 February 2019 |
5,486,035 |
|
453,845 |
|
17,682 |
|
5,957,562 |
|
Additions |
- |
|
38,609 |
|
- |
|
38,609 |
|
Disposals |
- |
|
- |
|
(1,349) |
|
(1,349) |
|
At 31 January 2020 |
5,486,035 |
|
492,454 |
|
16,333 |
|
5,994,822 |
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
At 1 February 2019 |
285,124 |
|
167,663 |
|
11,535 |
|
464,322 |
|
Charge for the year |
94,370 |
|
42,509 |
|
3,266 |
|
140,145 |
|
On disposals |
- |
|
- |
|
(1,349) |
|
(1,349) |
|
At 31 January 2020 |
379,494 |
|
210,172 |
|
13,452 |
|
603,118 |
|
|
|
|
|
|
|
|
|
|
Carrying amount |
|
At 31 January 2020 |
5,106,541 |
|
282,282 |
|
2,881 |
|
5,391,704 |
|
At 31 January 2019 |
5,200,911 |
|
286,182 |
|
6,147 |
|
5,493,240 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 |
|
2019 |
| £ |
£ |
|
Carrying amount of land and buildings on cost basis |
2,798,728 |
|
2,850,134 |
|
|
|
|
|
|
|
|
|
|
|
On 13 April 2016 a valuation of the long leasehold properties together with their fixtures, fittings and equipment was carried out by Brownhill Vickers, independent valuers and members of the Royal Institute of Chartered Surveyors. The directors carried out an impairment review of the freehold properties together with their fixtures, fittings and equipment as at 31 January 2020 and are satisfied that the valuations undertaken by Brownhill Vickers remain unchanged. The valuations amounted to £3,000,000 for the Centurion Bar, £850,000 for the Quayside Exchange and £1,500,000 for the Centurion Park Golf Course.
On 13 April 2016 a valuation of the land adjacent to the Quayside Exchange was carried out by Brownhill Vickers, independant valuers and members of the Royal Institute of Chartered Surveyors. This valuation amounted to £750,000, of which the company owns 54.55%. The company's share of this land totalling £409,125 has been incorporated into the accounts as the directors are of the opinion that there was no material change in the value of the land between the date of valuation and the balance sheet date. |
|
| 10 |
Investments |
|
| Other |
| investments |
| £ |
|
Cost |
|
At 1 February 2019 |
100,000 |
|
|
At 31 January 2020 |
100,000 |
|
| 11 |
Stocks |
2020 |
|
2019 |
| £ |
£ |
|
|
Raw materials and consumables |
44,066 |
|
48,986 |
|
|
|
|
|
|
|
|
|
|
| 12 |
Debtors |
2020 |
|
2019 |
| £ |
£ |
|
|
Trade debtors |
205 |
|
5,178 |
|
Amounts owed by group undertakings and undertakings in which the company has a participating interest |
|
466,101 |
|
401,215 |
|
Prepayments and accrued income |
199,154 |
|
187,151 |
|
|
|
|
|
|
665,460 |
|
593,544 |
|
|
|
|
|
|
|
|
|
|
| 13 |
Creditors: amounts falling due within one year |
2020 |
|
2019 |
| £ |
£ |
|
|
Bank loans |
43,577 |
|
79,200 |
|
Trade creditors |
116,388 |
|
122,876 |
|
Corporation tax |
53,973 |
|
35,537 |
|
Other taxes and social security costs |
111,366 |
|
99,857 |
|
Directors' accounts |
47,895 |
|
23,457 |
|
Accruals and deferred income |
95,769 |
|
133,275 |
|
|
|
|
|
|
468,968 |
|
494,202 |
|
|
|
|
|
|
|
|
|
|
| 14 |
Creditors: amounts falling due after one year |
2020 |
|
2019 |
| £ |
£ |
|
|
Bank loans |
1,718,884 |
|
1,762,461 |
|
|
|
|
|
|
|
|
|
|
| 15 |
Loans |
2020 |
|
2019 |
| £ |
£ |
|
Loans not wholly repayable within five years: |
|
Repayable over 15 years, Interest charged at 1.98% over base |
1,192,461 |
|
1,271,661 |
|
Interest only, charged at 1.98% over base |
570,000 |
|
570,000 |
|
|
|
|
|
|
1,762,461 |
|
1,841,661 |
|
|
|
|
|
|
|
|
|
|
Analysis of maturity of debt: |
|
Within one year or on demand |
43,577 |
|
79,200 |
|
Between one and two years |
89,660 |
|
81,299 |
|
Between two and five years |
280,383 |
|
257,914 |
|
After five years |
1,348,841 |
|
1,423,248 |
|
|
|
|
|
|
1,762,461 |
|
1,841,661 |
|
|
|
|
|
|
|
|
|
|
Security has been given by the company to secure £1,762,461 of the amount shown under creditors.
The bank loans are secured by a debenture creating a fixed and floating charge over the assets of the company, First Legal charges over The Centurion Bar & Brasserie, The Quayside Exchange, Centurion Park Golf Course and land adjacent to The Quayside Exchange. There is also a Cross Guarantee given by STR Enterprises Limited supported by First Legal Charges over the freehold interests in The Victoria Hotel, Bamburgh, The Manor House Hotel and Country Club in West Auckland and The Honest Lawyer Hotel in Croxdale. |
|
|
| 16 |
Deferred taxation |
2020 |
|
2019 |
| £ |
£ |
|
|
Revaluation of land and buildings |
331,851 |
|
331,851 |
|
Accelerated capital allowances |
21,079 |
|
24,508 |
|
|
|
|
|
|
352,930 |
|
356,359 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 |
|
2019 |
| £ |
£ |
|
|
At 1 February 2019 |
356,359 |
|
359,788 |
|
Credited to the profit and loss account |
(3,429) |
|
(3,429) |
|
|
At 31 January 2020 |
352,930 |
|
356,359 |
|
|
|
|
|
|
|
|
|
|
|
| 17 |
Share capital |
Nominal |
|
2020 |
|
2020 |
|
2019 |
| value |
Number |
£ |
£ |
|
Allotted, called up and fully paid: |
|
Ordinary shares |
£0.01 each |
|
11,036 |
|
110 |
|
110 |
|
|
|
|
|
|
|
|
|
|
| 18 |
Share premium |
2020 |
|
2019 |
| £ |
£ |
|
|
At 1 February 2019 |
314,581 |
|
314,581 |
|
|
At 31 January 2020 |
314,581 |
|
314,581 |
|
|
|
|
|
|
|
|
|
|
| 19 |
Other reserves |
2020 |
|
2019 |
|
Revaluation reserve |
£ |
£ |
|
|
At 1 February 2019 |
2,036,769 |
|
2,097,576 |
|
Transfer of realised profit |
|
|
|
|
(60,807) |
|
(60,807) |
|
|
At 31 January 2020 |
1,975,962 |
|
2,036,769 |
|
|
|
|
|
|
|
|
|
|
| 20 |
Profit and loss account |
2020 |
|
2019 |
| £ |
£ |
|
|
At 1 February 2019 |
1,342,958 |
|
1,294,561 |
|
Profit for the financial year |
5,638 |
|
44,731 |
|
Dividends |
(9,023) |
|
(57,141) |
|
Transfer of realised profit |
60,807 |
|
60,807 |
|
|
At 31 January 2020 |
1,400,380 |
|
1,342,958 |
|
|
|
|
|
|
|
|
|
|
| 21 |
Dividends |
2020 |
|
2019 |
| £ |
£ |
|
|
Dividends on ordinary shares (note 20) |
9,023 |
|
57,141 |
|
|
|
|
|
|
|
|
|
|
|
| 22 |
Reconciliation of movement in net debt |
|
|
|
1 February 2019 |
Cash flows |
|
Non-cash changes |
|
31 January 2020 |
| £ |
£ |
£ |
£ |
|
|
Cash at bank and in hand |
71,670 |
|
(41,085) |
|
|
|
30,585 |
|
|
|
|
(41,085) |
|
|
|
|
|
|
Debt due within 1 year |
(79,200) |
|
79,200 |
|
(43,577) |
|
(43,577) |
|
Debt due after 1 year |
(1,762,461) |
|
- |
|
43,577 |
|
(1,718,884) |
|
|
|
|
79,200 |
|
|
|
|
|
|
Total |
(1,769,991) |
|
38,115 |
|
- |
|
(1,731,876) |
|
|
|
|
|
|
|
|
|
|
| 23 |
Contingent liabilities |
|
|
At the balance sheet date there existed a cross guarantee with STR Enterprises Limited, the parent company, in respect of its bank borrowing. The contingent liability in this respect was £3,369,314. |
|
|
| 24 |
Related party transactions |
2020 |
|
2019 |
| £ |
£ |
|
STR Enterprises Limited |
|
Parent company |
|
Management fees charged during the period of £Nil (2019 - £42,500) |
|
Due from STR Enterprises Limited at the year end |
351,776 |
|
374,599 |
|
|
H G & L Newcastle Limited |
|
Associate company |
|
Management fees received during the period of £40,000 (2019 - £Nil) |
|
Due from H G & L Newcastle Limited at the year end |
114,325 |
|
26,616 |
|
|
JT & EA Sanderson |
|
Directors |
|
Interest free loan made to company with no fixed date for repayment |
|
Due to J T and E A Sanderson at the year end |
23,457 |
|
23,457 |
|
|
C S Sanderson |
|
Director |
|
Interest free loan made to company with no fixed date for repayment |
|
Due to C S Sanderson at the year end |
24,438 |
|
- |
|
|
| 25 |
Controlling party |
|
|
The company is controlled by its directors. |
|
|
| 26 |
Presentation currency |
|
|
The financial statements are presented in Sterling. |
|
|
| 27 |
Legal form of entity and country of incorporation |
|
|
Keeping Inn Limited is a private company limited by shares and incorporated in England. |
|
|
| 28 |
Principal place of business |
|
|
The address of the company's principal place of business and registered office is: |
|
|
30 The Oval |
|
Forest Hall |
|
Newcastle upon Tyne |
|
Tyne and Wear |
|
NE12 9PP |
