Kesgrave Hall Limited - Limited company accounts 20.1

REGISTERED NUMBER: 06353884 (England and Wales)

KESGRAVE HALL LIMITED

STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE PERIOD

1 JANUARY 2019 TO 30 JUNE 2020

Page

Company Information

1

Strategic Report

2

to

3

Report of the Directors

4

to

5

Report of the Independent Auditors

6

to

8

Statement of Comprehensive Income

9

Balance Sheet

10

Statement of Changes in Equity

11

Cash Flow Statement

12

Notes to the Cash Flow Statement

13

to

14

Notes to the Financial Statements

15

to

24

DIRECTORS:

Mr P J Milsom

Mr J A Hills

SECRETARY:

Mr J A Hills

REGISTERED OFFICE:

400 Dashwood Lang Road

Weybridge

Surrey

KT15 2HJ

BUSINESS ADDRESS:

Hall Road

Kesgrave

Ipswich

Suffolk

IP5 2PU

REGISTERED NUMBER:

06353884 (England and Wales)

AUDITORS:

Haines Watts

Statutory Auditors

Town Wall House

Balkerne Hill

Colchester

Essex

CO3 3AD

The directors present their strategic report with the audited financial statements for the period ended 30 June 2020.

PRINCIPAL ACTIVITY

The principal activity of the company during the period continued to be the operation of a hotel, restaurant and event venue.

KEY PERFORMANCE INDICATORS

The key performance indicators for the year, together with comparatives were as follows:

Period

1.1.19

to

Year Ended

30.06.20

31.12.18

£

£

Turnover

4,194,030

3,659,337

Gross profit

3,024,541

2,687,632

Gross profit %

72.1%

73.4%

Operating profit

319,550

533,387

BUSINESS REVIEW

The directors are pleased to report another profitable period despite the Government enforced closure of the whole of the business on 21 March 2020 resulting in no trading income for over three months. After the period end when restrictions were partially lifted on 4 July 2020, the restaurant and hotel enjoyed exceptional trade following reopening. Whilst the Hangar was unable to operate at its full capacity, the launch of the Spa in late July made a significant contribution to trading, especially enhancing the hotel and restaurant activities.

POST BALANCE SHEET

The directors are particularly pleased with the level of trading at the Spa which has outperformed expectation. In spite of further restrictions and closure, the business has now returned to pre-COVID levels in the restaurant and hotel and the directors look forward to reopening fully.

FUTURE DEVELOPMENTS

The company continues with its ongoing commitment to improvement of the site and has a number of exciting projects under consideration to enhance and complement the existing facilities.

PRINCIPAL RISKS AND UNCERTAINTIES

-

UK Economy and competition risks

A downturn in the economy and competition from other Hotel and Restaurant providers represents a risk to the business which is considered to be mitigated by offering an uncompromised level of product and service at various levels alongside diverse income streams. The directors believe that a loyal customer base is the key to the recovery from the pandemic.

-

Legislative risks

In providing its first class service, the directors believe it is important that the highest level of Health and Safety standards are met. A continual and extensive risk review programme is in place together with intensive training of staff, including allergen awareness. This has ensured that the highest Health and Safety standards are maintained along with the five star food hygiene rating.

-

Financial risk management

The company's principal financial instruments are comprised of bank loans and amounts due to related undertakings which are used to raise and provide finance for the company's operations. In addition the company has other financial assets and liabilities, the main ones being trade debtors and trade creditors which arise directly from operations.

The company's approach to financial risk management is shown below:

Price risk

The risk arises due to increases in commodity prices such as dairy products. The company constantly monitors suppliers for changes in price and the quality of goods received is closely inspected before use by the company. The pricing and makeup of the menus is regularly reviewed to take into account where possible the pricing fluctuations.

Liquidity and cash flow risks

Liquidity risk arises where the company might encounter difficulty in meeting its obligations associated with financial liabilities. The company manages this risk by ensuring adequate credit facilities are in place and also by the use of long term debt.

Cashflow risk is mitigated via measures used by the directors including the preparation of profit and cash flow forecasts, regular monitoring of actual performance against these forecasts and ensuring adequate financial facilities are in place to meet the requirements of the business.

-

COVID-19 risk (Going concern)

The emergence of the COVID-19 pandemic and the associated impact on the wider UK economy represented a new risk for the company. The Government confirmed that hospitality as a sector should close and the company has taken a number of steps to mitigate the impact of COVID-19, including utilisation of the Job Retention Scheme and the utilisation of a CBILS loan. These measures, alongside the detailed review and control of working capital have enabled the company to continue as a going concern through the pandemic.

ON BEHALF OF THE BOARD:

Mr P J Milsom - Director

29 June 2021

The directors present their report with the financial statements of the company for the period 1 January 2019 to 30 June 2020.

DIVIDENDS

No dividends will be distributed for the period ended 30 June 2020.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2019 to the date of this report.

Mr P J Milsom

Mr J A Hills

POST BALANCE SHEET EVENTS

Information relating to events occurring since the end of the year is given in the notes to the financial statements.

GOING CONCERN

The directors have every expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

DISCLOSURE IN THE STRATEGIC REPORT

The business review and principal risks and uncertainties are located in the strategic 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, Haines Watts, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

Mr P J Milsom - Director

29 June 2021

Opinion

We have audited the financial statements of Kesgrave Hall Limited (the 'company') for the period ended 30 June 2020 which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity, 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 June 2020 and of its profit for the period 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

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

-	the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

However, not all future events or conditions can be predicted. The COVID-19 viral pandemic is one of the most significant economic events for the UK with unprecedented levels of uncertainty of outcomes. It is therefore difficult to evaluate all of the potential implications on the company's trade, customers, suppliers and wider economy. The Directors' view on the impact of COVID-19 is disclosed within the accounting policies note.

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.

Melinda J Simpson (Senior Statutory Auditor)

for and on behalf of Haines Watts

Statutory Auditors

Town Wall House

Balkerne Hill

Colchester

Essex

CO3 3AD

29 June 2021

TURNOVER

3

4,194,030

3,659,337

Cost of sales

(1,169,489

)

(971,705

)

GROSS PROFIT

3,024,541

2,687,632

Administrative expenses

(2,933,323

)

(2,154,245

)

91,218

533,387

Other operating income

4

228,332

-

OPERATING PROFIT

7

319,550

533,387

Interest payable and similar expenses

8

(251,911

)

(165,032

)

PROFIT BEFORE TAXATION

67,639

368,355

Tax on profit

9

(31,338

)

(60,729

)

PROFIT FOR THE FINANCIAL PERIOD

36,301

307,626

OTHER COMPREHENSIVE INCOME

Revaluation of freehold property

-

376,210

Income tax relating to other comprehensive income

-

-

OTHER COMPREHENSIVE INCOME FOR THE PERIOD, NET OF INCOME TAX

-

376,210

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

36,301

683,836

FIXED ASSETS

Property, plant and equipment

10

9,149,256

7,415,565

CURRENT ASSETS

Stocks

11

55,704

55,446

Debtors

12

390,427

231,950

Cash at bank and in hand

165,229

379,093

611,360

666,489

CREDITORS

Amounts falling due within one year

13

(626,598

)

(904,730

)

NET CURRENT LIABILITIES

(15,238

)

(238,241

)

TOTAL ASSETS LESS CURRENT LIABILITIES

9,134,018

7,177,324

CREDITORS

Amounts falling due after more than one year

14

(6,273,563

)

(4,439,463

)

PROVISIONS FOR LIABILITIES

19

(403,947

)

(317,654

)

NET ASSETS

2,456,508

2,420,207

CAPITAL AND RESERVES

Called up share capital

20

200

200

Revaluation reserve

21

521,758

521,758

Retained earnings

21

1,934,550

1,898,249

SHAREHOLDERS' FUNDS

2,456,508

2,420,207

The financial statements were approved by the Board of Directors and authorised for issue on 29 June 2021 and were signed on its behalf by:

Mr P J Milsom - Director

Mr J A Hills - Director

Called up

share

Retained

Revaluation

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 January 2018

200

1,590,623

145,548

1,736,371

Changes in equity

Total comprehensive income

-

307,626

376,210

683,836

Balance at 31 December 2018

200

1,898,249

521,758

2,420,207

Changes in equity

Total comprehensive income

-

36,301

-

36,301

Balance at 30 June 2020

200

1,934,550

521,758

2,456,508

Cash flows from operating activities

Cash generated from operations

1

44,818

474,276

Interest paid

(250,885

)

(159,876

)

Interest element of hire purchase payments paid

(1,026

)

(5,156

)

Tax paid

(65,446

)

(61,824

)

Net cash from operating activities

(272,539

)

247,420

Cash flows from investing activities

Purchase of tangible fixed assets

(1,772,515

)

(24,615

)

Net cash from investing activities

(1,772,515

)

(24,615

)

Cash flows from financing activities

New loans

2,000,000

-

Loan repayment

(190,702

)

(146,890

)

Assets financed on HP contracts

32,795

-

Capital repayments on HP contracts

(10,903

)

(24,972

)

Net cash from financing activities

1,831,190

(171,862

)

(Decrease)/increase in cash and cash equivalents

(213,864

)

50,943

Cash and cash equivalents at beginning of period

2

379,093

328,150

Cash and cash equivalents at end of period

2

165,229

379,093

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

Period

1.1.19

to

Year Ended

30.6.20

31.12.18

£

£

Profit before taxation

67,639

368,355

Depreciation charges

34,815

23,869

Loss on disposal of fixed assets

4,009

-

Finance costs

251,911

165,032

358,374

557,256

Increase in stocks

(258

)

(6,269

)

Increase in trade and other debtors

(103,522

)

(36,076

)

Decrease in trade and other creditors

(209,776

)

(40,635

)

Cash generated from operations

44,818

474,276

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:

Period ended 30 June 2020

30.6.20

1.1.19

£

£

Cash and cash equivalents

165,229

379,093

Year ended 31 December 2018

31.12.18

1.1.18

£

£

Cash and cash equivalents

379,093

328,150

3.	ANALYSIS OF CHANGES IN NET DEBT

At 1.1.19

Cash flow

At 30.6.20

£

£

£

Net cash

Cash at bank and in hand

379,093

(213,864

)

165,229

379,093

(213,864

)

165,229

Debt

Finance leases

(10,392

)

(21,892

)

(32,284

)

Debts falling due within 1 year

(146,432

)

9,485

(136,947

)

Debts falling due after 1 year

(2,934,587

)

(1,818,783

)

(4,753,370

)

(3,091,411

)

(1,831,190

)

(4,922,601

)

Total

(2,712,318

)

(2,045,054

)

(4,757,372

)

1.	STATUTORY INFORMATION

Kesgrave Hall 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.

The company is not part of a group and hence these financial statements present information about this company only.

The presentational and functional currency of these financial statements is sterling. Values are rounded to the nearest pound.

Going concern

The financial statements have been prepared on a going concern basis. The Directors have reviewed and considered relevant information, including the annual budget and future cash flows in making their assessment. In particular, in response to the COVID-19 pandemic, the Directors have tested their cash flow analysis to take into account the impact on their business of possible scenarios brought on by the impact of COVID-19, alongside the measures that they can take to mitigate the impact including the potential to furlough staff should they become underutilised. Based on these assessments, cash, and the current resources available, the Directors have concluded that they can continue to adopt the going concern basis in preparing the annual report and accounts.

Due to the aforementioned pandemic the financial year end was changed to 30 June 2020 covering an 18 month period. Due to this the comparative figures are not entirely comparable.

Significant judgements and estimates

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities at the balance sheet date and the amounts reported as revenue and expenses during the year. However, the nature of estimations means that the actual outcomes could differ from these estimates. The following item is highlighted as a judgement that has had the most significant effect on amounts recognised in the financial statements and the key source of estimation uncertainty.

Revaluation of Freehold Property

The company carries its Freehold Property at fair value, with changes in the fair value being recognised in the income statement. The directors engaged independent valuation specialists to determine the fair value of Freehold Property and further details are provided in note 10.

Turnover

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

Property, plant and equipment

Depreciation is provided at the following annual rates in order to write off the cost of each asset over its estimated useful life as follows:

Plant and machinery

-

8%, 12.5% and 25% reducing balance

Freehold property

Freehold property is carried at fair value less any subsequent impairment losses. In accordance with industry guidelines, the core hotel building is not depreciated because any charge would be immaterial based upon the high residual value of the building. This is a departure from the Companies Act 2006 in order to give a true and fair view.

Revaluations are undertaken with sufficient regularity to ensure the carrying amount does not differ materially from that which would be determined using fair value at the balance sheet date.

The fair value of the Freehold Property, inclusive of trade fixtures and fittings is determined from market based evidence undertaken by professionally qualified valuers.

Revaluation gains and losses are recognised in the statement of comprehensive income unless losses exceed the previously recognised gains or reflect a clear consumption of economic benefits, in which case the excess losses are recognised in the income statement. Repairs and maintenance of the core building and the replacement and renewals of the trade fixtures and fittings are charged to profit and loss during the period in which they are incurred.

Government grants

Grants relating to revenue are recognised in profit and loss on a systematic basis over the periods in which the entity recognises the related costs for which the grant is intended to compensate.

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 period 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.

Deferred tax

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

Hire purchase agreements

Assets held under hire purchase agreements are capitalised and disclosed under tangible fixed assets at their fair value. The capital element of the future payments is treated as a liability and the interest is charged to the profit and loss account on a straight line basis.

Operating lease agreements

Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged against profits on a straight line basis over the period of the lease.

Pension costs

The company operates a defined contribution scheme. The assets of the scheme are held separately from those of the company. The annual contributions payable are charged to the income statement.

Financial instruments

Basic financial instruments are recognised at amortised cost with changes in value recognised in the income statement.

3.

TURNOVER

All turnover arose within the United Kingdom from the Company's principal activity.

4.	OTHER OPERATING INCOME

Period

1.1.19

to

Year Ended

30.6.20

31.12.18

£

£

Job retention scheme grants

228,332

-

During the year the company received furlough claims from the government totalling £228,332 (2018: £Nil) under the Coronavirus Job Retention Scheme.

5.	EMPLOYEES AND DIRECTORS

Period

1.1.19

to

Year Ended

30.6.20

31.12.18

£

£

Wages and salaries

1,640,309

1,116,198

Social security costs

89,805

65,994

1,730,114

1,182,192

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

Period

1.1.19

to

Year Ended

30.6.20

31.12.18

Administration

83

83

Directors

2

2

85

85

6.	DIRECTORS' EMOLUMENTS

The directors' received remuneration of £Nil for the current and preceding period.

7.	OPERATING PROFIT

The operating profit is stated after charging:

Period

1.1.19

to

Year Ended

30.6.20

31.12.18

£

£

Depreciation - owned assets

34,816

23,869

Loss on disposal of fixed assets

4,009

-

Auditors' remuneration

8,975

8,750

Defined contribution pension cost

21,276

9,467

8.

INTEREST PAYABLE AND SIMILAR EXPENSES

Period

1.1.19

to

Year Ended

30.6.20

31.12.18

£

£

Bank loans

138,385

84,876

Other loans

112,500

75,000

Hire purchase

1,026

5,156

251,911

165,032

9.

TAXATION

Analysis of the tax charge

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

Period

1.1.19

to

Year Ended

30.6.20

31.12.18

£

£

Current tax:

UK corporation tax

(54,955

)

65,446

Deferred tax

86,293

(4,717

)

Tax on profit

31,338

60,729

UK corporation tax has been charged at 19% (2018 - 19%).