Morgans Hotels Ltd - Limited company accounts 20.1

REGISTERED NUMBER: 04201688 (England and Wales)

MORGANS HOTELS LTD

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2020

Page

Company Information

1

Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

5

Statement of Income and Retained Earnings

7

Balance Sheet

8

Cash Flow Statement

9

Notes to the Cash Flow Statement

10

Notes to the Financial Statements

11

DIRECTORS:

M W Morgan

C E Morgan

J D Hughes

L Morgan

REGISTERED OFFICE:

Morgans Hotel Limited

Somerset Place

Swansea

SA1 1RR

REGISTERED NUMBER:

04201688 (England and Wales)

AUDITORS:

Bevan Buckland LLP

Chartered Accountants

And Statutory Auditors

Langdon House

Langdon Road

SA1 Swansea Waterfront

Swansea

SA1 8QY

The directors present their strategic report for the year ended 30 September 2020.

REVIEW OF BUSINESS

Strategy and Objectives

Founded in April 2001, Morgans Hotel Limited owns and operates a number of boutique hotels, bars and restaurant in Wales. It caters for the needs of the business and public, offering dining, bar, meeting facilities, weddings, functions and accommodation.

The hotel prides itself on being one of the leading independent hotel operators in the city of Swansea, offering a unique experience to its guests.

Business Model

he hotel is managed by a team of senior management who report into a board of directors at a business level, enabling a fluid and agile management structure, which delivers the quality of product, value and service by our patrons.

Business Review & KPI's

The results of 19/20 reflect the impact of the current climate in relation to Covid-19 restrictions. The business has been forced to cease trading to the public for a majority of the financial year which is portrayed in the year end results. The hotel did remain open to key workers for a large part of the financial year, albeit not at the level to remain profitable.

It saw a big drop in Gross Profit year on year, but a majority of the loss was offset by the grants received & financial instruments from group businesses.

- Turnover 47% decrease on last year

- Operating Profit/Loss Loss of £232k (profit of £514k last year)

- Return on Capital Employed -1.6% (against 3.5% last year)

- Staff 15 Full Time Staff (against 60 last year)

During the year the Company has continued with the refurbishment of its building projects working toward its expansion of the business in key areas in the city of Swansea.

'The Georgian' which is a separate offering of an independent 12-bedroom hotel was unable to open as planned in April 2020 due to Covid-19 restrictions. It is planned to open in the autumn of 2021 to the public.

Morgans Hotel has enough pipeline building projects in place allowing the business to grow from what will be 54 bedrooms once 'The Georgian' has opened to over 110 bedrooms within the next 5 years. This expansion will mirror the investment made my local & central government, and will only amplify our position in the city.

Parc Teifi is a site of 12 holiday homes in West Wales. These have been mothballed for a number of years following the restructuring of the businesses within the group in 2016. With the COVID-19 restrictions stopping foreign travel during 2020, the business has take the decision to open the site to guests taking advantage of staycation travel.

Sales

Sales are down 47% year on year, with revenue of £1.049m. With the business only being operational for the months of October 2019-March 2020 a number of events and key dates were cancelled / postponed reducing the revenue in the year due to pandemic.

Costs

The business has had a number of reliefs during the year, the most notable is business rates relief of 100% reduction which has been a fantastic help to the business from the local authority.

Future Plans

Although this year has been the toughest the company has faced, the management team are optimistic about the future. The business is well placed to capitalise on the growing demand for hotel rooms in the city.

The business has good liquidity and is able to withstand any future lockdowns.

PRINCIPAL RISKS AND UNCERTAINTIES

The management of the company's business and execution of strategy are subject to a number of risks. Key business risks principally relate to the economic conditions, market competition and the retention of suitably qualified employees. Business risks are reviewed regularly by the director and appropriate processes are put in place to monitor and mitigate their impact.

The biggest risk to the business at present is a third wave of the COVID-19 pandemic. The UK is at risk of an increased infection rate as we move into the winter months of 2021.

The hotel is lean enough to be able to adapt to the changes with the climate as we are able to open to key workers. We have low staff numbers, keeping costs to a minimum.

Financial risk management

The business is well placed to react to any changes in the marketplace due to the strong reserves of the company.

The company has a strong cash balance, in addition to a large intercompany balance from related parties, which can be recalled at any point. The business has no borrowings and all assets are unencumbered leaving it in a very strong position.

Price risk

As Morgans Hotel is an independent hotel chain, we are able to adapt to trends within the city, when compared with the larger operators. This allows us to mitigate against any pricing competition. The city is seeing a significant amount of investment from local authority in creating Swansea as a destination. Although this comes with its challenges, this should lead to an increase in prices as the demand is sure to increase over the next 3-5 years coming out of the pandemic.

ON BEHALF OF THE BOARD:

J D Hughes - Director

30 June 2021

The directors present their report with the financial statements of the company for the year ended 30 September 2020.

DIVIDENDS

No dividends will be distributed for the year ended 30 September 2020.

DIRECTOR

M W Morgan held office during the whole of the period from 1 October 2019 to the date of this report.

Other changes in directors holding office are as follows:

C E Morgan , J D Hughes and L Morgan were appointed as directors after 30 September 2020 but prior to the date of this report.

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;

-	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 ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

AUDITORS

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

ON BEHALF OF THE BOARD:

J D Hughes - Director

30 June 2021

Opinion

We have audited the financial statements of Morgans Hotels Ltd (the 'company') for the year ended 30 September 2020 which comprise the Statement of Income and Retained Earnings, Balance Sheet, Cash Flow Statement and Notes to the Cash Flow Statement, Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 30 September 2020 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.

Material uncertainty relating to going concern

We draw attention to note 2 in the financial statements, which indicates that the company incurred a operating loss of £231,824 during the year ended 30 September 2020 and also notes the effect of the pandemic and travel ban on the Company. As stated in note 2, these events or conditions, along with other matters as set forth in note 2, indicate that a material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern.

Our opinion is not modified in respect of this matter.

Other information

The directors are responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

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

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

Matters on which we are required to report by exception

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

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

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

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

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

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

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page 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 company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

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

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

Use of our report

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

Alison Vickers (Senior Statutory Auditor)

for and on behalf of Bevan Buckland LLP

Chartered Accountants

And Statutory Auditors

Langdon House

Langdon Road

SA1 Swansea Waterfront

Swansea

SA1 8QY

30 June 2021

TURNOVER

1,049,826

1,967,293

Cost of sales

(1,050,680

)

(1,227,822

)

GROSS (LOSS)/PROFIT

(854

)

739,471

Administrative expenses

(551,947

)

(697,742

)

(552,801

)

41,729

Other operating income

320,977

472,703

OPERATING (LOSS)/PROFIT

4

(231,824

)

514,432

Interest receivable and similar income

400,112

16,955

PROFIT BEFORE TAXATION

168,288

531,387

Tax on profit

5

(22,496

)

(32,759

)

PROFIT FOR THE FINANCIAL YEAR

145,792

498,628

Retained earnings at beginning of year

3,281,563

2,782,935

RETAINED EARNINGS AT END OF YEAR

3,427,355

3,281,563

FIXED ASSETS

Tangible assets

6

6,105,119

5,875,452

CURRENT ASSETS

Stocks

7

30,682

42,079

Debtors

8

9,471,652

9,573,167

Cash at bank and in hand

109,400

133,225

9,611,734

9,748,471

CREDITORS

Amounts falling due within one year

9

375,664

428,781

NET CURRENT ASSETS

9,236,070

9,319,690

TOTAL ASSETS LESS CURRENT LIABILITIES

15,341,189

15,195,142

CREDITORS

Amounts falling due after more than one year

10

(286,831

)

(309,072

)

PROVISIONS FOR LIABILITIES

12

(267,636

)

(245,140

)

NET ASSETS

14,786,722

14,640,930

CAPITAL AND RESERVES

Called up share capital

13

10,001

10,001

Share premium

14

11,349,366

11,349,366

Retained earnings

14

3,427,355

3,281,563

SHAREHOLDERS' FUNDS

14,786,722

14,640,930

The financial statements were approved by the Board of Directors and authorised for issue on 30 June 2021 and were signed on its behalf by:

J D Hughes - Director

Cash flows from operating activities

Cash generated from operations

1

(17,896

)

341,216

Tax paid

(37,156

)

(14,644

)

Net cash from operating activities

(55,052

)

326,572

Cash flows from investing activities

Purchase of tangible fixed assets

(334,173

)

(349,392

)

Interest received

112

16,955

Net cash from investing activities

(334,061

)

(332,437

)

Cash flows from financing activities

Government grants received

365,288

-

Net cash from financing activities

365,288

-

Decrease in cash and cash equivalents

(23,825

)

(5,865

)

Cash and cash equivalents at beginning of year

2

133,225

139,090

Cash and cash equivalents at end of year

2

109,400

133,225

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

2020

2019

£

£

Profit before taxation

168,288

531,387

Depreciation charges

104,502

104,291

Government grants

(320,977

)

(46,358

)

Finance income

(400,112

)

(16,955

)

(448,299

)

572,365

Decrease/(increase) in stocks

11,397

(5,354

)

Decrease in trade and other debtors

555,006

278,224

Decrease in trade and other creditors

(136,000

)

(504,019

)

Cash generated from operations

(17,896

)

341,216

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 30 September 2020

30.9.20

1.10.19

£

£

Cash and cash equivalents

109,400

133,225

Year ended 30 September 2019

30.9.19

1.10.18

£

£

Cash and cash equivalents

133,225

139,090

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1.10.19

Cash flow

At 30.9.20

£

£

£

Net cash

Cash at bank and in hand

133,225

(23,825

)

109,400

133,225

(23,825

)

109,400

Total

133,225

(23,825

)

109,400

1.	STATUTORY INFORMATION

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

The presentation currency of the financial statements is the Pound Sterling (£).

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

Going concern

The company has established procedures for the generation of income and implemented controls over costs, commensurate with what the Directors perceive to be the business needs for the period through to the end of 2022. The Directors are aware of the threats posed to the business by the current coronavirus pandemic, which to date, has resulted in an enforced closure of the business on two separate occasions. The cashflow impact of such closures has been offset by relevant government and local authority support to fund the ongoing costs of the business throughout the period of closure. The directors do however recognise the uncertainty surrounding the length of the pandemic and its ongoing impact on the hospitality industry coupled with uncertainty surrounding the length of time and value of government support.

As a result of the presence of these uncertainties and the operating loss in the financial statements to 30/09/2020, the Directors continue to monitor the cashflow of the company on a regular basis, and considers whether sufficient cashflow exists from operations, which is supported, as appropriate by other companies under similar ownership, to enable the company to continue as a going concern.

Consequently the Directors consider the company to be a going concern and have drawn up these financial statements on that basis.

Significant judgements and estimates

Preparation of the financial statements requires management to make significant judgements and estimates. The items in the financial statements where these judgments and estimates have been made include:

Fixed asset impairment:

At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

Turnover

Turnover generated by the Hotels comprises revenue recognised by the company in respect of goods and services supplied during the year, exclusive of VAT and trade discounts. Turnover is recognised in the period to which the supply of goods or services relate. Revenue is recognised on the Hotels primary operation when rooms are occupied and foods and beverages are sold.

Other income

Interest is recognised on loans provided at the rate agreed by the directors and is recognised in the period in which the interest relates too.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Freehold property

-

2% on cost

Long leasehold

-

2% on cost

Improvements to property

-

2% on cost

Fixtures and fittings

-

at varying rates on cost

Assets in the course of construction are stated at cost. These assets are not depreciated until they are available for use.

Government grants

Grants that relate to specific capital expenditure for projects are treated as deferred income, which is released to the profit and loss account over the useful life of the related asset or duration of the project. Other grants are credited to the profit and loss account when receivable.

During the year the following government support was included in income during the year:

Grant received

£

Jobs Retention Scheme

274,714

Stocks

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

Financial instruments

The company has elected to apply the provisions of Section 11 'Basic Financial Instruments' and Section 12 'Other Financial Instruments Issues' of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally 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.

Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Derecognition of financial liabilities

Financial liabilities are derecognised when the company's contractual obligations expire or are discharged or cancelled.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, 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.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result.

Hire purchase and leasing commitments

Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the lease.

Pension costs and other post-retirement benefits

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

Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee's services are received.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

Creditors

Short term trade 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.

Debtors

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.

3.	EMPLOYEES AND DIRECTORS

2020

2019

£

£

Wages and salaries

736,547

737,960

Social security costs

44,005

49,491

Other pension costs

12,054

10,512

792,606

797,963

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

2020

2019

Operations

45

49

Administration

5

7

50

56

2020

2019

£

£

Director's remuneration

-

-

4.	OPERATING (LOSS)/PROFIT

The operating loss (2019 - operating profit) is stated after charging:

2020

2019

£

£

Other operating leases

9,000

9,000

Depreciation - owned assets

104,506

104,291

Auditors' remuneration

14,425

16,995

Auditors' remuneration for non audit work

-

2,055

5.

TAXATION

Analysis of the tax charge

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

2020

2019

£

£

Current tax:

Prior year tax charge adjust

-

(14,644

)

Deferred tax

22,496

47,403

Tax on profit

22,496

32,759

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:

2020

2019

£

£

Profit before tax

168,288

531,387

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2019 - 19%)

31,975

100,964

Effects of:

Expenses not deductible for tax purposes

5,910

(78,536

)

Capital allowances in excess of depreciation

(29,580

)

(41,567

)

Utilisation of tax losses

(8,305

)

19,139

Adjustments to tax charge in respect of previous periods

-

(14,644

)

Deferred tax movement

22,496

47,403

Total tax charge

22,496

32,759

6.	TANGIBLE FIXED ASSETS

Improvements

Fixtures

Freehold

Long

to

and

property

leasehold

property

fittings

Totals

£

£

£

£

£

COST

At 1 October 2019

742,874

1,908,120

4,136,932

1,310,244

8,098,170

Additions

-

-

212,687

121,486

334,173

At 30 September 2020

742,874

1,908,120

4,349,619

1,431,730

8,432,343

DEPRECIATION

At 1 October 2019

42,452

292,265

777,284

1,110,717

2,222,718

Charge for year

8,780

24,379

45,297

26,050

104,506

At 30 September 2020

51,232

316,644

822,581

1,136,767

2,327,224

NET BOOK VALUE

At 30 September 2020

691,642

1,591,476

3,527,038

294,963

6,105,119

At 30 September 2019

700,422

1,615,855

3,359,648

199,527

5,875,452

At 30 September 2020, the freehold property, the leasehold land and buildings and improvements to leasehold buildings are stated at cost which in the opinion of the director, equates to at least their estimated market valuation on the basis of existing value in use for the property.

The company adopts the policy to not depreciate any assets currently under construction.

7.

STOCKS

2020

2019

£

£

Stocks

30,682

42,079

8.

DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2020

2019

£

£

Trade debtors

7,997

13,850

Amounts owed by related party companies

9,330,141

9,444,200

Other debtors

33,897

297

Tax

51,800

14,644

Prepayments and accrued income

47,817

100,176

9,471,652

9,573,167

9.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2020

2019

£

£

Trade creditors

57,337

140,007

Social security and other taxes

5,495

10,851

VAT

10,802

36,698

Other creditors

224,160

160,835

Accruals and deferred income

55,629

34,032

Deferred government grants

22,241

46,358

375,664

428,781

10.

CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

2020

2019

£

£

Deferred government grants

286,831

309,072

11.	SECURED DEBTS

A legal charge was created on 3 April 2003 by The Welsh Development Agency with regard to all the company's liabilities, together with interest at 5% per annum above the base rate of National Westminster Bank plc. This includes all fees and charges in relation to the security.

A legal charge was created on 9 July 2015 by The Council of the City and County of Swansea with regard to the freehold land and Queens buildings, Cambrian Place, Swansea. The charge relates to grant funding received in the year and would be clawed back piecemeal in the event of the property disposal within a five year period. After this period, the Council will discharge the legal charge.

12.	PROVISIONS FOR LIABILITIES

2020

2019

£

£

Deferred tax

267,636

245,140

Deferred

tax

£

Balance at 1 October 2019

245,140

Charge to Income Statement during year

22,496

Balance at 30 September 2020

267,636