Q.N._HOTELS_LIMITED - Accounts

The directors present the strategic report for the year ended 31 December 2020.

Due to the impact of Covid, 2020 was a difficult year for the hospitality industry. The company had a significant impact due to this and due to the lockdowns mandated by the government.

The gross profit margin for the year was 13.7% (2019: 48.6%). Direct costs and expenses were well controlled with costs slightly lower than 2019.

The company utilised the Coronavirus Job Retention Scheme and also received grants from the Welsh Government.

Taking advantage of the lockdown the company completely refurbished its public areas at the Holiday Inn Newport. This investment ensures that the company is well positioned to attract new customers when travel resumes.

The Company is not planning any significant capital expenditure in the next 12 months.

In the opinion of the directors the key performance indicators are occupancy, average room rate and revenue per available room. The company aims for occupancy of 70% and average room rate of £60 a night.

The principal risks and uncertainties facing the business (apart from those associated with a general economic downturn) relate to the management of cash and borrowing requirements.

There also continues some uncertainty in the economy due to the Brexit vote. The unprecedented increase in Gas and Electric prices has had an impact on costs being incurred by the hotels.  As a result of these transport costs generally have gone up and suppliers are increasing prices.  

The impact of Covid-19 has been substantial as the business has had to suffer complete closure for several weeks. Since reopening the company has seen a steady increase in revenue. The company is utilising the UK Government’s Coronavirus Job Retention Scheme and has also been supported by way of grants by the Welsh Government’s Economic Resilience Fund.

Corporate travel is extremely restricted as a result of Covid-19 which presents with a challenge and uncertainties with regards to forecasting.  The  company has contracts in place with the NHS and other key workers.  

On behalf of the board

The directors present their annual report and financial statements for the year ended 31 December 2020.

The principal activity of the company continues to be that of hoteliers.

The results for the year are set out on page 7.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

A Ahmed had previously resigned on 1 February 2020 and 1 July 2020 and had been reappointed on 15 May 2020 and 1 December 2020 respectively.

The auditor, HW Fisher LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

The directors are responsible for preparing the annual report 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.

Qualified opinion on financial statements

We have audited the financial statements of Q.N. Hotels Limited (the 'company') for the year ended 31 December 2020 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion section of our report, the financial statements:

•     give a true and fair view of the state of the company's affairs as at 31 December 2020 and of its loss for the year then ended;

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

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

Basis for qualified opinion

The company’s long leasehold property is stated at directors’ valuation using a multiple of turnover. The directors did not provide an updated assessment which takes into account the impact of the Covid-19 outbreak on the turnover multiple. We were unable to satisfy ourselves by alternative means concerning the value of the long leasehold property, which is included in the balance sheet at £9 million, by using other audit procedures. Consequently we were unable to determine whether any adjustment to this amount was necessary.

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified 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 other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. 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. 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 course of 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 our audit:

• the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

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 and the directors' report.

Arising solely from the limitation on the scope of our work relating to long leasehold property, referred to above:

•     we have not obtained all the information and explanations that we considered necessary for the purpose of our audit; and

•     we were unable to determine whether adequate accounting records have been kept.

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:

•     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 remuneration specified by law are not made.

As explained more fully in the directors' responsibilities statement, 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 is 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.

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 an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

As part of our planning process:

• We enquired of management the systems and controls the company has in place, the areas of the financial statements that are most susceptible to the risk of irregularities and fraud, and whether there was any known, suspected or alleged fraud. The company did not inform us of any known, suspected or alleged fraud effecting the audit period.

• We obtained an understanding of the legal and regulatory frameworks applicable to the company. We determined that the following were most relevant: FRS 102, Companies Act 2006, GDPR, employment law, certificate of alcohol licenses and compliance with health and safety and hygiene requirements.

• We considered the incentives and opportunities that exist in the company, including the extent of management bias, which present a potential for irregularities and fraud to be perpetuated, and tailored our risk assessment accordingly.

• Using our knowledge of the company, together with the discussions held with the company at the planning stage, we formed a conclusion on the risk of misstatement due to irregularities including fraud and tailored our procedures according to this risk assessment.

The key procedures we undertook to detect irregularities including fraud during the course of the audit included:

• Identifying and testing journal entries and the overall accounting records, in particular those that were significant and unusual.

• Review of internal control procedures to ensure expenses were approved prior to paying suppliers, as well as ensuring hotel receipts were accounted for and banked in a timely manner.

• Reviewing the financial statement disclosures and determining whether accounting policies have been appropriately applied.

• Reviewing and challenging the assumptions and judgements used by management in their significant accounting estimates, in particular in relation to the multiple applied for the valuation of land and buildings.

• Assessing the extent of compliance, or lack of, with the relevant laws and regulations. This included reviewing licenses held, as well as reports from health and safety and hygiene regulatory bodies to confirm compliance.

• Testing key revenue lines, in particular cut-off, for evidence of management bias.

• Obtaining third-party confirmation of material bank balances.

• Documenting and verifying all significant related party balances and transactions.

• Following up on conversations held with management at planning for any potential developments regarding potential fraud. The company did not inform us of any developments during the audit for any known, suspected or alleged fraud effecting the audit period.

• Completing analytical review of key expenditure and revenue items and seeking explanations from management for exceptions.

• Review of grant agreements and eligible expenditure incurred in the year to ensure grant income appropriately recognised.

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements even though we have properly planned and performed our audit in accordance with auditing standards. The primary responsibility for the prevention and detection of irregularities and fraud rests with the directors.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

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 an auditor's report 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.

The profit and loss account has been prepared on the basis that all operations are continuing operations.

Q.N. Hotels Limited is a private company limited by shares incorporated in England and Wales. The registered office is QN House Unit 4, Loughton Business Centre, 5 Langston Road, Loughton, Essex, IG10 3FL.

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties at fair value. The principal accounting policies adopted are set out below.

This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:

• Section 7 ‘Statement of Cash Flows’ – Presentation of a statement of cash flow and related notes and disclosures;

• Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’ – Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;

• Section 33 ‘Related Party Disclosures’ – Compensation for key management personnel.

The company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.

Q.N. Hotels Limited is a wholly owned subsidiary of Q.N. (Holdings) Limited and the results of Q.N. Hotels Limited are included in the consolidated financial statements of Q.N. (Holdings) Limited which are available from QN House, Unit 4, Loughton Business Centre, 5, Langston Road, Loughton, Essex, IG10 3FL.

The directors have considered the on going effects of the Covid-19 pandemic. The outbreak has continued to have a significant effect on the business due to the forced closure between 22 March 2020 and early July 2020, the requirement to operate at limited capacity on reopening as a result of social distancing measures, and a further lockdown period imposed from 5 November 2020 with reopening to the public in May 2021.  The directors have taken advantage of government incentives and there has been a restructure of staff to allow activities to continue following the reopening of the hotel. Additionally with the on going support of the bank and the Welsh government, the directors plan for the company’s hotel to stay open as long as government guidelines allow. Post year end results have been positive, the business is profitable and revenue has increased thanks to re-openings and the relaxation of social distancing guidelines. The directors expect profitability to continue into 2022. The directors do not think that any lockdown measures/restrictions, or future lockdowns, will have a material impact on the company. Therefore, not withstanding the uncertainty, the directors have continued to adopt the going concern basis in these financial statements.

Turnover is derived from hotel operations, and arose wholly in the United Kingdom. Turnover is recognised when services have been rendered. The turnover of the hotel is derived primarily from the rental of rooms, conference and banqueting, food and beverage sales. Turnover is all rendering of goods and services.

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

Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

The residual value of the buildings is considered to equal to the carrying value and so no depreciation is charged.

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently it is measured at fair value at the reporting end date. The surplus or deficit on revaluation is recognised in profit or loss.

Where fair value cannot be achieved without undue cost or effort, investment property is accounted for as tangible fixed assets.

Interests in subsidiaries are initially measured at cost in the parent company financial statements and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible 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.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

Cash at bank and in hand are basic financial assets and include cash in hand, deposits held at call with banks and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

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, 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.

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

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.

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, including creditors, bank loans and loans from fellow group companies, 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 receipts 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.

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

Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

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.

The company makes pension contributions to a money purchase scheme in respect of certain directors. Contributions payable are charged to the profit and loss account in the period they are payable.

The company operates a defined contribution pension scheme under the automatic enrolment legislation for the benefit of its employees. Contributions payable are charged to the profit and loss accounts in the period they are payable.

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.

Government grants, which includes those relating to the Coronavirus Job Retention Scheme (CJRS) are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

A grant that specifies performance conditions is recognised in income, over the periods when the related costs are incurred, when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as deferred income.

For CJRS grants, as this scheme involves a transfer of resources from government to the company, it meets the definition of a government grant. The scheme is designed to compensate for staff costs, so amounts received or receivable are recognised in the income statement as part of other operating income over the same period as the costs to which they relate. Government grants are accounted for under the accrual model.

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

The company has adopted the revaluation model in respect of land and buildings. The fair value of the leasehold property has been determined using a multiple of 2.7 applied to turnover, which the directors consider the appropriate method to use due to the nature of the company's operations. The method is based on a widely applied method by surveyors. The valuation is subjective due to, among other factors, the individual nature and condition of the buildings and their location. As a result the valuation is subject to a degree of uncertainty and is made on the basis of assumptions which may not prove to be accurate. Nevertheless, despite the impact of the Covid-19 outbreak on the performance of the business during the year,  the business has traded profitably post year-end and the directors do not consider the value of land and buildings to be impaired.

At the year end the company has intercompany debtors due of £10,222,767. Recoverability of this balance is dependent upon the subsidiary company's ability to realise the underlying assets. The valuation of the subsidiaries land and buildings is therefore considered to be a significant judgement in the recoverability of intercompany debtors.

An analysis of the company's turnover is as follows:

The total turnover of the company for the year has been derived from its principal activity wholly undertaken in the United Kingdom.

The average monthly number of persons (including directors) employed by the company during the year was:

Their aggregate remuneration comprised:

The actual charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:

In addition to the amount charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:

The company has estimated losses of £6,473,889 (2019: £5,118,663) available to carry forward against future trading profits.

Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:

The impairment losses in respect of financial assets are recognised in other gains and losses in the profit and loss account.

Reversals of previous impairment losses have been recognised in profit or loss as follows:

The carrying value of land and buildings comprises:

The company's long leasehold building was revalued by the directors using a multiple of turnover, which the directors believe to be appropriate. This basis is consistent with an open market valuation for a similar asset held by a group undertaking, carried out in May 2017 by a firm of Chartered Surveyors.

The investment properties are still under the course of construction. The directors consider the carrying value to reflect the market value at the year end.

All other tangible assets are stated at historical cost.

Land and buildings are carried at valuation. If land and buildings were measured using the cost model, the carrying amounts would have been approximately £3,633,524, being cost £4,019,386 and accumulated depreciation £385,862.

These financial statements are separate company financial statements for Q. N. Hotels Limited.

Details of the company's subsidiaries at 31 December 2020 are as follows:

Registered office addresses (all UK unless otherwise indicated):

The bank loans are secured by way of a fixed and floating charge over the assets of the company.

Cross guarantees for the bank loans have been provided by the company's parent company Q.N. (Holdings) Limited, and the company's subsidiaries Q.N. Hotels (Wrexham) Limited and Swanfield Limited.

Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 5 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

The leased asset is used by another company within the group.

Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

The charge to profit or loss in respect of defined contribution schemes was £15,993 (2019 - £21,310).

One of the directors has provided a personal limited guarantee to the bank.

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

The operating leases represent leases to third parties. The leases are negotiated over terms of 70 months and rentals are fixed for the period. There is no break clause and there are no options in place for either party to extend the lease terms. There are no contingent rent or escalation clauses. There are no significant restrictions imposed by lease arrangements.

At the reporting end date the company had contracted with tenants for the following minimum lease payments:

A director owed £185,743 to the company on 1 January 2020. During the year, net advances of £62,424 were taken by the director. At the year end, the director owed £248,167 to the company. The transactions mainly relate to personal expenses paid by the company on the director’s behalf and cash withdrawals by the director. The amount owed by the director is unsecured, interest free and repayable on demand.

A director was owed £39,229 by the company on 1 January 2020. During the year, no further advances were made. At the year end, the director was owed £39,229 by the company. The amount owed to the director is unsecured, interest free and repayable on demand.

During the year, the company was charged rent of £34,743 (2019: £55,000) for the use of a property owned by a company under common control. At year end, an amount of £404,091 (2019: £441,544) was due from this company.

At year end, an amount of £125,303 (2019: £121,887) was due from another company under common control.

The parent company is Q.N. (Holdings) Limited, a company incorporated in England and Wales.

The results for the year ended 31 December 2020 are included in the consolidated accounts of Q.N. (Holdings) Limited.

The address of Q.N. (Holdings) Limited's registered office is QN House, Unit 4 Loughton Business Centre, 5 Langston Road, Loughton, Essex, IG10 3FL.