BGAM Hotels (MK) Ltd - Limited company accounts 20.1

REGISTERED NUMBER: 11821713 (England and Wales)

GROUP STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

FOR

BGAM HOTELS (MK) LTD

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

5

Consolidated Income Statement

8

Consolidated Other Comprehensive Income

9

Consolidated Balance Sheet

10

Company Balance Sheet

11

Consolidated Statement of Changes in Equity

12

Company Statement of Changes in Equity

13

Consolidated Cash Flow Statement

14

Notes to the Consolidated Cash Flow Statement

15

Notes to the Consolidated Financial Statements

16

DIRECTORS:

L M Becker

J D Levy

J P Levy

M D Rubin

N S Rubin

REGISTERED OFFICE:

Greenhill House

90/93 Cowcross Street

London

EC1M 6BF

REGISTERED NUMBER:

11821713 (England and Wales)

AUDITORS:

Goldwyns Limited

Statutory Auditors and Chartered Accountants

Rutland House

90-92 Baxter Avenue

Southend on Sea

Essex

SS2 6HZ

The directors present their strategic report of the company and the group for the year ended 31 December 2021.

REVIEW OF BUSINESS

The results for the year show revenues generated of £2,688,305 (2020 - £1,146,027) and a loss before tax of £686,919 (2020 - £1,960,723). Full details of the group's financial performance can be found in the annexed financial statements.

During March 2020 the spread of Covid-19 (Coronavirus) led to a period of national and local lockdowns, restrictions on the free movement of individuals and enforced closures of premises such as the group's. Many of these restrictions continued into the year ended 31 December 2021 (and to a lesser extent beyond), hampering the group's ability to trade normally in both the current and preceding year. The initial effects on the group's business were, of course, severe.

The directors acted quickly to mitigate the damage but of course the group (and the country) faced unprecedented difficulties. Enforced closures, severe restrictions on the travel industry and a loss of consumer confidence obviously hampered revenue, profitability and hence net reserves.

Government support was utilised and helped the group maintain some of its workforce in the interim, through the Coronavirus Job Retention Scheme. Reliefs from rates, one of the group's biggest single expenses, was also invaluable. However, the directors are also appreciative for the plentiful support they received from their staff, suppliers and financiers without whom navigating the pandemic would have been impossible.

Conversely, the pandemic offered some opportunities too. The group successfully bid for and delivered a number of quarantine and similar contracts, supplementing the loss of ordinary trade with alternative (whole hotel) deliveries instead. This has further helped the business overcome the operational challenges arising and bolstered trading at an otherwise difficult time.

The advancement of the UK's vaccination programme, the progression through the Governments "Roadmap out of lockdown" and ultimately the "end" of the UK pandemic in April 2022 have allowed a gradual return to ordinary trading. However, consumer confidence, wider barriers to international travel and other economic factors (including the war in Ukraine and rising costs of living) have remained factors into early 2022. Nonetheless, recent bookings have been encouraging and consistently exceeding forecasts.

Indeed, although a number of liabilities were deferred and payment plans taken up during the preceding year, through 2021's improving activity the group has managed to mostly pay down or eradicate those deferrals. That puts the business onto much stronger foundations, as it advances into 2022 and beyond.

Since the year end, demand in Milton Keynes has picked up substantially. In the 7 months prior to the signing of this report the group has already taken as much turnover as it achieved during the 12 months ended 31 December 2021.

PRINCIPAL RISKS AND UNCERTAINTIES

The principal risk to the business in inadequate occupancy of its available rooms and therefore an inability to generate sufficient revenues to service operations. The directors closely monitor the group's performance against similar businesses operating in comparable markets and respond accordingly.

The group is also susceptible to any loss in key members of operational staff and therefore operates a number of performance reward and incentive programmes to mitigate these risks.

SECTION 172(1) STATEMENT

Stakeholder engagement

The board of directors have a legal responsibility under section 172 of the Companies Act 2006 to act in the way we consider, in good faith, would be most likely to promote the group's success for the benefit of its members as a whole, and to have regard to the long-term effect of our decisions on the group and its stakeholders. This statement addresses the ways in which we as a board handle this responsibility.

Decision making

Regular operational and strategic meetings are held by the directors and general managers. This ensures the board has access to the key factors affecting all areas of the business' decision making, shorter term or longer.

Furthermore, the group is in constant communication with Marriott and various industry specific news sources. This enables the directors to keep abreast of, and address, all longer-term shifts in the group's operating markets.

Employee engagement

The subsidiary maintains a diverse workforce of local employees spanning all aspects of the hotel delivery, supplemented by outsourced staff and suppliers where necessary. Staff are rewarded in line with comparable local markets, provided with specific training relevant to their needs and have access to wider industry opportunities as a result of the same.

Business relationships

The group actively maintains strong relationships with its key suppliers and support functions, to ensure it has access to the resources it needs to operate effectively.

Community and environmental impact

The directors remain ever conscious of the impact their business has on the local community and environment.

Business conduct

The directors closely monitor the group's service delivery to ensure at all times the business is honest, fair and professional in its conduct with all stakeholders.

Shareholder engagement

The group is actively managed by its ultimate shareholders, who are all represented on the board of directors.

ON BEHALF OF THE BOARD:

J D Levy - Director

30 August 2022

The directors present their report with the financial statements of the company and the group for the year ended 31 December 2021.

DIVIDENDS

No dividends will be distributed for the year ended 31 December 2021.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2021 to the date of this report.

L M Becker

J D Levy

J P Levy

M D Rubin

N S Rubin

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Group 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). 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 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 and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group 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 the group 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 group's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the group's auditors are aware of that information.

AUDITORS

The auditors, Goldwyns Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

J D Levy - Director

30 August 2022

Opinion

We have audited the financial statements of BGAM Hotels (MK) Ltd (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2021 which comprise the Consolidated Income Statement, Consolidated Other Comprehensive Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Cash Flow Statement and Notes to the Consolidated 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 group's and of the parent company affairs as at 31 December 2021 and of the group's loss for the year then ended;

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

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

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the 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 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

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and the parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The directors are responsible for the other information. The other information comprises the information in the Group 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 this gives rise to a material misstatement in the financial statements themselves. 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 Group 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 Group 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 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 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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

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

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

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

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page four, 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 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.

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.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. In order to address the risks of misstatements in respect of irregularities, including fraud, we have:

-

obtained an understanding of the key laws and regulations applicable to the group, including the Companies Act 2006, and applicable taxation legislation;

-

assessed the group's own internal controls and systems for the prevention and detection of irregularities and particularly the control environment within which they operate;

-

determined a materiality level and audit approach sufficient to identify most irregularities, including fraud, that may occur;

-

considered our own involvement in the preparation of the group's statutory financial statements and taxation returns;

-

conducted audit verification work, on a sample basis, on the key audit areas and risks we have identified; and

-

reflected on the outcome of our work, and the likelihood that conclusions drawn may be indicative of other areas of potential irregularity.

We therefore consider our audit approach has been sufficient to detect material irregularities, including fraud.

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.

S T Blundell FCA (Senior Statutory Auditor)

for and on behalf of Goldwyns Limited

Statutory Auditors and Chartered Accountants

Rutland House

90-92 Baxter Avenue

Southend on Sea

Essex

SS2 6HZ

30 August 2022

TURNOVER

3

2,688,305

1,146,027

Cost of sales

1,299,896

1,131,282

GROSS PROFIT

1,388,409

14,745

Administrative expenses

1,223,580

1,281,396

164,829

(1,266,651

)

Other operating income

57,299

258,100

OPERATING PROFIT/(LOSS)

5

222,128

(1,008,551

)

Interest payable and similar expenses

7

909,047

952,172

LOSS BEFORE TAXATION

(686,919

)

(1,960,723

)

Tax on loss

8

18,030

(275,700

)

LOSS FOR THE FINANCIAL YEAR

(704,949

)

(1,685,023

)

Loss attributable to:

Owners of the parent

(704,949

)

(1,685,023

)

LOSS FOR THE YEAR

(704,949

)

(1,685,023

)

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

(704,949

)

(1,685,023

)

Total comprehensive income attributable to:

Owners of the parent

(704,949

)

(1,685,023

)

FIXED ASSETS

Intangible assets

11

4,354,892

4,867,574

Tangible assets

12

10,968,154

11,206,828

Investments

13

-

-

15,323,046

16,074,402

CURRENT ASSETS

Stocks

14

3,250

3,442

Debtors

15

963,344

735,809

Cash at bank and in hand

403

418

966,997

739,669

CREDITORS

Amounts falling due within one year

16

7,892,735

7,878,654

NET CURRENT LIABILITIES

(6,925,738

)

(7,138,985

)

TOTAL ASSETS LESS CURRENT LIABILITIES

8,397,308

8,935,417

CREDITORS

Amounts falling due after more than one year

17

(11,235,836

)

(11,087,026

)

PROVISIONS FOR LIABILITIES

21

(18,030

)

-

NET LIABILITIES

(2,856,558

)

(2,151,609

)

CAPITAL AND RESERVES

Called up share capital

22

10

10

Retained earnings

23

(2,856,568

)

(2,151,619

)

SHAREHOLDERS' FUNDS

(2,856,558

)

(2,151,609

)

The financial statements were approved by the Board of Directors and authorised for issue on 30 August 2022 and were signed on its behalf by:

J D Levy - Director

FIXED ASSETS

Intangible assets

11

-

-

Tangible assets

12

-

-

Investments

13

6,731,299

6,731,299

6,731,299

6,731,299

CURRENT ASSETS

Debtors

15

598,327

598,327

Cash in hand

10

10

598,337

598,337

CREDITORS

Amounts falling due within one year

16

9,175,554

8,532,621

NET CURRENT LIABILITIES

(8,577,217

)

(7,934,284

)

TOTAL ASSETS LESS CURRENT LIABILITIES

(1,845,918

)

(1,202,985

)

CAPITAL AND RESERVES

Called up share capital

22

10

10

Retained earnings

23

(1,845,928

)

(1,202,995

)

SHAREHOLDERS' FUNDS

(1,845,918

)

(1,202,985

)

Company's loss for the financial year

(642,933

)

(694,516

)

The financial statements were approved by the Board of Directors and authorised for issue on 30 August 2022 and were signed on its behalf by:

J D Levy - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2020

10

(466,596

)

(466,586

)

Changes in equity

Total comprehensive income

-

(1,685,023

)

(1,685,023

)

Balance at 31 December 2020

10

(2,151,619

)

(2,151,609

)

Changes in equity

Total comprehensive income

-

(704,949

)

(704,949

)

Balance at 31 December 2021

10

(2,856,568

)

(2,856,558

)

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2020

10

(508,479

)

(508,469

)

Changes in equity

Total comprehensive income

-

(694,516

)

(694,516

)

Balance at 31 December 2020

10

(1,202,995

)

(1,202,985

)

Changes in equity

Total comprehensive income

-

(642,933

)

(642,933

)

Balance at 31 December 2021

10

(1,845,928

)

(1,845,918

)

Cash flows from operating activities

Cash generated from operations

1

392,788

161,617

Interest paid

(909,047

)

(952,172

)

Net cash from operating activities

(516,259

)

(790,555

)

Cash flows from investing activities

Purchase of tangible fixed assets

-

(70,215

)

Net cash from investing activities

-

(70,215

)

Cash flows from financing activities

Other loan advances

453,685

711,843

Government grants

57,299

-

Net cash from financing activities

510,984

711,843

Decrease in cash and cash equivalents

(5,275

)

(148,927

)

Cash and cash equivalents at beginning of year

2

(67,760

)

81,167

Cash and cash equivalents at end of year

2

(73,035

)

(67,760

)

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

2021

2020

£

£

Loss before taxation

(686,919

)

(1,960,723

)

Depreciation charges

751,355

751,357

Government grants

(57,299

)

-

Finance costs

909,047

952,172

916,184

(257,194

)

Decrease in stocks

192

7,172

(Increase)/decrease in trade and other debtors

(227,535

)

93,700

(Decrease)/increase in trade and other creditors

(296,053

)

317,939

Cash generated from operations

392,788

161,617

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 2021

31/12/21

1/1/21

£

£

Cash and cash equivalents

403

418

Bank overdrafts

(73,438

)

(68,178

)

(73,035

)

(67,760

)

Year ended 31 December 2020

31/12/20

1/1/20

£

£

Cash and cash equivalents

418

81,167

Bank overdrafts

(68,178

)

-

(67,760

)

81,167

3.	ANALYSIS OF CHANGES IN NET DEBT

At 1/1/21

Cash flow

At 31/12/21

£

£

£

Net cash

Cash at bank and in hand

418

(15

)

403

Bank overdrafts

(68,178

)

(5,260

)

(73,438

)

(67,760

)

(5,275

)

(73,035

)

Debt

Finance leases

(11,087,026

)

(148,810

)

(11,235,836

)

Debts falling due within 1 year

(6,360,103

)

(304,874

)

(6,664,977

)

(17,447,129

)

(453,684

)

(17,900,813

)

Total

(17,514,889

)

(458,959

)

(17,973,848

)

1.	STATUTORY INFORMATION

BGAM Hotels (MK) 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 group trades from its property in Milton Keynes, Buckinghamshire.

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.

Basis of consolidation

The group accounts consolidated the affairs of BGAM Hotels (MK) Limited and all its subsidiary undertakings drawn to 31 December. The subsidiary accounts have been included in the group figures under the acquisition method of accounting.

Turnover

Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

Turnover represents the income receivable by the group from its trading activities as a hotel. Sales encompass room hire, food and beverage income and all other associated ancillary hotel and guest services. Turnover is recognised in the period in which physical goods are sold, as services are performed or otherwise as entitlement accrues to the group.

Goodwill

Goodwill, being the amount paid in connection with the acquisition of a business in 2019, is being amortised evenly over its estimated useful life of five years.

Intangible assets

Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at coss less any accumulated amortisation and any accumulated impairment losses.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life or, if held under a finance lease, over the lease term, whichever is the shorter.

Long leasehold

-

over a period of 75 years

Fixtures and fittings

-

33% on cost and 20% on cost

3.

TURNOVER

The turnover and loss before taxation are attributable to the one principal activity of the group.

4.	EMPLOYEES AND DIRECTORS

2021

2020

£

£

Wages and salaries

572,962

779,535

Social security costs

45,874

50,446

Other pension costs

28,070

10,233

646,906

840,214

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

2021

2020

Hotel staff

34

52

Directors

5

5

39

57

2021

2020

£

£

Directors' remuneration

-

-

5.	OPERATING PROFIT/(LOSS)

The operating profit (2020 - operating loss) is stated after charging:

2021

2020

£

£

Hire of plant and machinery

28,325

14,087

Depreciation - owned assets

176,960

176,960

Depreciation - assets on finance leases

61,714

61,714

Goodwill amortisation

493,918

493,918

Other intangibles amortisation

18,764

18,765

6.	AUDITORS' REMUNERATION

2021

2020

£

£

Fees payable to the company's auditors for the audit of the company's financial statements

13,000

12,500

Auditors' remuneration for non audit work

1,078

15,646

7.

INTEREST PAYABLE AND SIMILAR EXPENSES

2021

2020

£

£

Loan interest payable

640,433

691,968

Leasing interest

265,058

259,119

Other interest

3,556

1,085

909,047

952,172

8.

TAXATION

Analysis of the tax charge/(credit)

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

2021

2020

£

£

Deferred tax

18,030

(275,700

)

Tax on loss

18,030

(275,700

)