Sandbanks Hotel Limited - Limited company accounts 22.3

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2022

FOR

SANDBANKS HOTEL LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

6

Report of the Independent Auditors

8

Statement of Comprehensive Income

10

Balance Sheet

11

Statement of Changes in Equity

12

Notes to the Financial Statements

13

DIRECTORS:

J G J Butterworth

J W E Barcellos

E J Adlem

SECRETARY:

J W E Barcellos

REGISTERED OFFICE:

5th Floor

Waverley House

115 - 119 Holdenhurst Road

Bournemouth

Dorset

BH8 8DY

BUSINESS ADDRESS:

Studland Suite

19-25 Boscombe Spa Road

Bournemouth

Dorset

BH5 1AX

REGISTERED NUMBER:

00556842 (England and Wales)

AUDITORS:

Schofields

Chartered Accountants and Statutory Auditors

5th Floor

Waverley House

115 - 119 Holdenhurst Road

Bournemouth

Dorset

BH8 8DY

The directors present their strategic report for the year ended 31 March 2022.

REVIEW OF BUSINESS

The company is managed on a unified basis with Arnewood Estates Limited trading as FJB Hotels, together owning and operating four very unique and different award winning hotels located in Bournemouth and Sandbanks, Poole.

The two companies have arrangements to provide intra group finance facilities to benefit the trading operation.

The results for the company are as follows:

2022

2021

2020

£'000

£'000

£'000

Turnover

12,746

5,084

12,135

Gross profit

6,600

732

5,177

Gross profit margin

51.8%

14.4%

42.7%

Gross profit margin (net of furlough claims)

53.9%

46.6%

-

The primary driver behind the significant increase in turnover and gross profit is due to the upward trend in travel and tourism with the easing of many restrictions related to the Covid-19 pandemic. Government support was received to help fund wage costs during periods of closures and when restrictions were in place.

The occupancy and room rates remained strong, reflecting high demand for the company's hotel offerings especially during the summer months as 'staycations' boomed. The company also benefitted from government support targeted at hospitality through local authority grants and business rates relief.

In measuring the performance of the hotels, the directors undertake a thorough and regular review of the following key performance indicators and comparisons to industry norms:

- RevPAR (Revenue achieved per available room);

- Accommodation, food and beverage sales and gross profit achieved;

- Staff and other costs compared to total turnover.

The directors continue to react quickly in all areas of the business to any changes in prevailing trading conditions through their years of knowledge and experience in running prestige hotels. The Board's policy is one of continual investment into facilities and staff to ensure an excellent customer offering and satisfactory operating margins.

PRINCIPAL RISKS AND UNCERTAINTIES

The Board consider risk assessment, identification of mitigating actions and internal control to be fundamental to the operation of the company. These are summarised as follows:

Reputational risk - The company prides itself on providing a first class customer service by delivering exceptional service and quality of surroundings. The company continuously monitors and responds to guest feedback on online platforms such as Trip Advisor.

Staffing risk - The company must both attract and retain high quality staff to deliver excellent customer service.

Property deterioration - The hotels are constantly being maintained and refreshed to a high standard to provide excellent guest facilities and service. Changes and adaptations to the building and rooms are made in response to market/guest feedback.

Health and Safety, Fire and Environmental Health - The company has a separate Health and Safety officer and engages external consultants to ensure that its premises and practices comply with its statutory obligations and provides a safe environment for both guests and staff.

UK economic conditions - The level of guest demand is dictated by business sector confidence and consumer spending power. Operations and pricing are adjusted accordingly.

Financial risks - These principally reflect liquidity, credit and interest rate risks.

Liquidity risk- The company manages and monitors cashflow on a day to day basis against a rolling twelve month cashflow forecast to ensure that debts and obligations are met as they fall due.

Credit risk - Credit risk on cash balances are minimised by the Board adopting a policy of depositing funds with regulated institutions. Trade debtors are monitored closely and strict credit control procedures adopted to reduce the risk of bad debts arising.

SECTION 172(1) STATEMENT

Accountability and transparency with stakeholders is key to the long term success of the company. We consider our key stakeholders to be: customers, employees, shareholders, key operational suppliers, local authorities and the community.

All company directors have a duty to act in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole. In doing so they have regard for:

- the likely consequences of any decision in the long term

- the interests 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

- the need to act fairly as between members of the company

The new reporting legislation around stakeholder engagement is welcomed by the Board. The following statements for each key stakeholder set out the engagement undertaken by the Board during the year and how this helps the Board to factor potential impacts on stakeholders in the decision making process.

Customers

The company aims to engage extensively with its customers to understand their needs and trends, and to get feedback on their stay. A variety of customer feedback tools are used including asking customers to complete inhouse feedback forms and compiling TripAdvisor reviews. The findings of these are used to improve customer experience and engagement, with knowledge being shared across the business. The provision of a high level of customer service enables the business to add value to customers, encouraging a high level of repeat business.

Employees

The company employs approximately 227 colleagues across the four hotels. Employees are engaged in a number of ways primarily through open communication, training and development, promoting healthy work environments and giving feedback on performance via formal appraisal processes. The Board actively encourage inhouse progression and like to promote existing staff where possible.

Community

The company actively seeks to engage with local councils and the community to ensure policies and procedures are appropriate and fit for the current economic and social landscape. The directors are always thinking of new green alternatives and recently installed vehicle electric chargers at their hotels to promote a better future for everyone. The company is actively involved charitable events and annually supports the Cash for Kids scheme.

The directors have identified key decisions made during the year. These have been identified by those which are of strategic importance to the company. The long-term effect of the company's decisions and strategies during the financial year, together with impact on key stakeholders is described below.

Variety of operational improvement initiatives:

Customers - improve guest experience through IT developments to booking processes and website enhancements.

Employees - streamline processes to improve productivity allowing more time to engage with customers.

Shareholders - initiatives to improve profitability.

Continue investing profits into infrastructure:

Customers - improve guest experience through modern surroundings with up to date equipment and facilities.

Employees - better working environment.

Shareholders - maintain the value of assets within the company.

FIXED ASSETS

The changes are reported in notes 9 to 11.

The directors consider that the market value of the company's land and buildings is greater than the net book value, but in the absence of a professional valuation the directors are unable to report upon this further.

ON BEHALF OF THE BOARD:

J G J Butterworth - Director

15 December 2022

The directors present their report with the financial statements of the company for the year ended 31 March 2022.

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of hoteliers.

DIVIDENDS

No dividends will be distributed for the year ended 31 March 2022.

FUTURE DEVELOPMENTS

The directors will continue to maintain and develop the guest offerings, which are at the top end of the market, in unique locations, therefore operations are less affected than other hospitality businesses.

DIRECTORS

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

J G J Butterworth

J W E Barcellos

E J Adlem

ENGAGEMENT WITH SUPPLIERS, CUSTOMERS AND OTHERS

The directors consider any potential impacts and risks to its suppliers and customers before making any final decisions at Board level, whilst also taking into account the best interests of the company and its employees.

The company works closely with its suppliers, choosing, where possible, to trade with local businesses thus helping to support the local community and provide quality and freshness to its customers.

STREAMLINED ENERGY AND CARBON REPORTING

The company's greenhouse gas emissions and energy consumption is as follows:

2022

2021

CO2

CO2

(kilograms

)

(kilograms

)

Gas consumption

947,319

433,169

Fuel for transportation

18,253

8,520

965,572

441,689

Indirect emissions

Purchased electricity

356,825

322,696

Other indirect emissions

Business travel employee-owned vehicles - scope 3

309

77

Total gross emissions in metric kilograms CO2

1,322,706

764,462

Total gross emissions in metric tonnes CO2

1,323

764

Total energy consumption used to calculate emissions for 2022: 7,056,574 kWh (2021: 3,747,498 kWh).

Intensity ratio

Total emissions (CO2e) in tonnes

1,323

764

Turnover (£m)

12.7

5.1

Intensity Ratio (CO2e tonnes/£m)

104.2

149.8

The directors have followed the 2019 HM Government Environmental Reporting guidelines and the GHG Reporting Protocol Corporate Standard.

The directors consider environmental impacts of their decision making to be of great importance. One way they do this is to update lighting across the group by installing LED lights when replacing existing lighting. During the year a new heat recovery system was installed at one of the hotels. The innovative heat recovery system reuses heat from rooms and server rooms for energy efficient hot water production and to heat other areas of the building.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	state whether applicable 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 company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

AUDITORS

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

ON BEHALF OF THE BOARD:

J W E Barcellos - Secretary

15 December 2022

Opinion

We have audited the financial statements of Sandbanks Hotel Limited (the 'company') for the year ended 31 March 2022 which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 March 2022 and of its profit for the year then ended;

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

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

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

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

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

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

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

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

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

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

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page seven, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

An understanding of the legal and regulatory framework the company operates in was obtained through discussions with directors and other management in addition to our general industry and sector experience. The most significant laws and regulations identified, being those that have a direct effect on material amounts and disclosures in the financial statements, are FRS 102, Companies Act 2006 and HM Revenue & Customs (HMRC) Tax Legislation.

We also considered other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental to the company's ability to operate, or to avoid material penalty. These included but were not limited the requirements of the various health and safety regulations, licensing and food hygiene regulations, employment law, money laundering and the company's obligations under Coronavirus legislation.

Audit procedures were performed to obtain sufficient evidence regarding compliance. These procedures include making enquiries to directors and other management in addition to the inspection of applicable regulatory and legal correspondence. Financial statement disclosures were reviewed and tested to supporting documentation.

Enquiries were also made to the directors and other management to assess the company's internal control environment and their policies and procedures on fraud risk. The company's systems and controls were documented, and audit procedures were designed to test these controls. Further, the risk of management override of controls was addressed through testing journal entries and other adjustments for appropriateness. The judgements made in making accounting estimates were assessed for any indication of potential bias, and the business rationale of significant transactions outside the normal course of the business was evaluated.

We have properly planned and performed the audit in accordance with auditing standards and all members of the engagement team have the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations. However, the inherent nature of the audit, and the limited procedures performed, means there is an unavoidable risk that some irregularities may have gone undetected. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Mr P J Schofield FCA (Senior Statutory Auditor)

for and on behalf of Schofields

Chartered Accountants and Statutory Auditors

5th Floor

Waverley House

115 - 119 Holdenhurst Road

Bournemouth

Dorset

BH8 8DY

15 December 2022

TURNOVER

4

12,746,480

5,084,281

Cost of sales

(6,146,390

)

(4,352,089

)

GROSS PROFIT

6,600,090

732,192

Administrative expenses

(5,801,774

)

(2,348,923

)

798,316

(1,616,731

)

Other operating income

537,121

1,733,942

OPERATING PROFIT

6

1,335,437

117,211

Income from shares in group undertakings

80,000

-

Income from fixed asset investments

28

1,089

1,415,465

118,300

Interest payable and similar expenses

7

(13,386

)

(1,764

)

PROFIT BEFORE TAXATION

1,402,079

116,536

Tax on profit

8

(135,591

)

(18,530

)

PROFIT FOR THE FINANCIAL YEAR

1,266,488

98,006

FIXED ASSETS

Intangible assets

9

10,100

10,100

Tangible assets

10

40,854,906

40,602,048

Investments

11

37,928

37,928

40,902,934

40,650,076

CURRENT ASSETS

Stocks

12

223,383

146,648

Debtors

13

274,475

248,741

Cash at bank and in hand

272,381

100,422

770,239

495,811

CREDITORS

Amounts falling due within one year

14

2,314,774

1,273,726

NET CURRENT LIABILITIES

(1,544,535

)

(777,915

)

TOTAL ASSETS LESS CURRENT LIABILITIES

39,358,399

39,872,161

CREDITORS

Amounts falling due after more than one year

15

(10,815,286

)

(12,640,000

)

PROVISIONS FOR LIABILITIES

17

(368,604

)

(324,140

)

NET ASSETS

28,174,509

26,908,021

CAPITAL AND RESERVES

Called up share capital

18

200

200

Revaluation reserve

19

9,936,545

9,936,545

Retained earnings

19

18,237,764

16,971,276

SHAREHOLDERS' FUNDS

28,174,509

26,908,021

The financial statements were approved by the Board of Directors and authorised for issue on 15 December 2022 and were signed on its behalf by:

J G J Butterworth - Director

J W E Barcellos - Director

Called up

share

Retained

Revaluation

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 April 2020

200

16,873,270

9,936,545

26,810,015

Changes in equity

Profit for the year

-

98,006

-

98,006

Total comprehensive income

-

98,006

-

98,006

Balance at 31 March 2021

200

16,971,276

9,936,545

26,908,021

Changes in equity

Profit for the year

-

1,266,488

-

1,266,488

Total comprehensive income

-

1,266,488

-

1,266,488

Balance at 31 March 2022

200

18,237,764

9,936,545

28,174,509

1.	STATUTORY INFORMATION

Sandbanks Hotel Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the Company Information page.

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 as modified by the revaluation of certain assets.

Financial Reporting Standard 102 - reduced disclosure exemptions

The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":

- the requirements of Section 7, not to prepare a Statement of Cash Flows;

- certain requirements of Section 11 on Financial Instruments measured at amortised cost, or cost less impairment;

- the requirement of Section 33 Related Party Disclosures in respect of key management personnel compensation.

The above exemptions have been adopted on the grounds that it is a wholly owned subsidiary and that it and it's subsidiary undertakings are incorporated within the published consolidated financial statements of the ultimate parent company FJB Hotels Limited, a copy of which can be obtained from its registered office.

Preparation of consolidated financial statements

The financial statements contain information about Sandbanks Hotel Limited as an individual company and do not contain consolidated financial information as the parent of a group. The company is exempt under Section 400 of the Companies Act 2006 from the requirements to prepare consolidated financial statements as it and its subsidiary undertaking are included by full consolidation in the consolidated financial statements of its parent, FJB Hotels Limited, 5th Floor, Waverley House, 115-119 Holdenhurst Road, Bournemouth, BH8 8DY.

Turnover

Turnover represents the provision of hotel and related services, excluding value added tax.

Intangible assets

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

Fixed assets

Depreciation is provided on tangible fixed assets, at rates calculated to write off the cost less estimated residual value of each asset evenly over its expected useful life, as follows:

Fixtures, fittings and equipment - over 10 to 20 years

Motor vehicles - 25% reducing balance

The carrying values of tangible fixed assets are reviewed for impairment if events or changes in circumstances indicate the carrying value may not be recoverable. Any impairment in the value will be charged to profit and loss account.

Government grants

Grants relating to revenue are recognised as income on a systemic basis over the periods in which the related costs are intended to compensate. Grants relating to assets are recognised as income on a systemic basis over the expected useful life of the asset.

Stocks

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

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Statement of Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax

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

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Operating leases

Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged against profit as incurred.

Pension costs and other post-retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate.

Investments

Listed investments are recognised at their market value annually. Any market value surpluses are taken to the revaluation reserve.

Financial instruments

Debtors and creditors with no stated interest rate and receivable or payable within one year are recorded at transaction price. Any losses arising from impairment are recognised in the profit and loss account.

Loans and borrowings are initially recognised at the transaction price including transaction costs. Subsequently, they are measured as amortised cost using the effective interest rate method, less impairment.

Going concern

At the time of approving the financial statements, the directors have not identified material uncertainties related to events or conditions that may cast significant doubt about the ability of the company to continue as a going concern.

The directors in performing their assessment of going concern have considered the availability of intra-group loan and support arrangements for access to cash flows necessary for the day to day running of the company's operations.

Having assessed the principal risks the directors consider it appropriate for the accounts to be prepared on a going concern basis.

3.	CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

The company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, not always equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

Useful economic lives of tangible assets

The annual depreciation charge for tangible assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current estimates, based on technological advancements, future investments, economic utilisation and the physical condition of the assets.

Carrying value of tangible assets

Tangible assets are assessed at each reporting date to determine whether there is any indication of impairment by reference to the fair values of assets held. Where there is an indication that an asset may be impaired, the carrying value is tested for impairment. An impairment loss is recognised for the amount by which the asset's carrying value exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and its value in use.

Freehold property

Freehold land and buildings are carried at historical cost and are not depreciated. The nature of the hotel trade and the company's policy of a high level of maintenance, refurbishment and upgrading ensures the premises are maintained to a very high standard of repair to protect the trade. The directors are of the opinion that the useful lives of these assets are sufficiently long and residual value so high that their value is not diminished by time and that the aggregate residual value is greater than their respective book values.

4.

TURNOVER

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

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

2022

2021

£

£

Hotel and related services

12,746,480

5,084,281

12,746,480

5,084,281

5.	EMPLOYEES AND DIRECTORS

2022

2021

£

£

Wages and salaries

4,514,571

3,649,233

Social security costs

324,691

261,506

Other pension costs

68,322

61,074

4,907,584

3,971,813

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

2022

2021

Hotels

212

183

Management and marketing

15

12

227

195

2022

2021

£

£

Directors' remuneration

132,413

132,084

Directors' pension contributions to money purchase schemes

1,321

1,313

The number of directors to whom retirement benefits were accruing was as follows:

Money purchase schemes

1

1

6.	OPERATING PROFIT

The operating profit is stated after charging:

2022

2021

£

£

Hire of plant and machinery

40,331

29,730

Depreciation - owned assets

68,652

85,812

Auditors' remuneration

17,520

16,925

JRS government grants

271,133

1,639,818

Local government grants

95,025

65,249

Disclosure of remuneration receivable by auditors for other services has been disclosed in the group accounts of the parent company.

7.

INTEREST PAYABLE AND SIMILAR EXPENSES

2022

2021

£

£

Interest on corporation tax

20

1,764

Hire purchase

13,366

-

13,386

1,764

8.

TAXATION

Analysis of the tax charge

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

2022

2021

£

£

Current tax:

UK corporation tax

91,127

4,701

Deferred tax

44,464

13,829

Tax on profit

135,591

18,530

Reconciliation of total tax charge included in profit and loss

The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The difference is explained below:

2022

2021

£

£

Profit before tax

1,402,079

116,536

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2021 - 19%)

266,395

22,142

Effects of:

Expenses not deductible for tax purposes

181

-

Income not taxable for tax purposes

(15,205

)

(207

)

Capital allowances in excess of depreciation

(61,523

)

(13,829

)

Utilisation of tax losses

(98,721

)

(3,405

)

Movement in deferred tax

44,464

13,829

Total tax charge

135,591

18,530

9.	INTANGIBLE FIXED ASSETS

Goodwill

£

COST

At 1 April 2021

and 31 March 2022

10,100

NET BOOK VALUE

At 31 March 2022

10,100

At 31 March 2021

10,100

Goodwill is not amortised because the Directors feel that its fixed goodwill attaching to the freehold property.