ACCOUNTS - Final Accounts preparation
ACCOUNTS - Final Accounts preparation
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Registered number:
FOR THE PERIOD ENDED 26 JUNE 2022
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CIRRUS INNS HOLDINGS LIMITED
COMPANY INFORMATION
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CIRRUS INNS HOLDINGS LIMITED
CONTENTS
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CIRRUS INNS HOLDINGS LIMITED
GROUP STRATEGIC REPORT
FOR THE PERIOD ENDED 26 JUNE 2022
The principal activity of the Group is the purchase and management of freehold and leasehold pubs in London together with freehold and leasehold pubs with rooms in the Countryside.
As at 26 June 2022, in addition to 17 freehold sites, the Group also holds five long term leasehold properties as well as its 50% interest in the Jack Russell pub. The core focus of the Group remains on the countryside, but with 5 London sites the Group’s estate is diversified for seasonality. Two sites were disposed during the period for proceeds of £1.85 million. The current financial period saw a return to broadly pre-COVID levels of turnover and profitability, albeit helped by government support measures including lower rates of VAT on food and room revenue, business rates relief and government grants. The Group has continued to face disruption during the period due to Covid-19. In December 2021 the Omicron variant of Covid-19 caused more disruption to trade over the important 2021 festive season and continued in the early part of 2022. Despite these challenges, the rollout of the vaccination programme to control Covid-19 has helped to ensure the return to normality allowing the pubs to trade without any restrictions at the end of the period. In April 2022, Cirrus Inns Holdings Limited agreed a new £8.5m loan with Metrobank. This loan had a term of 6 years, taking the facility out to April 2028. In March 2022, shares that were previously classified as debt as preference shares within the Group were converted into A ordinary and deferred shares. At the period end date the Group had a shareholder loan in the amount of £3m that was due for repayment in August 2022. As a result of the post balance sheets events explained below, on 26 June 2022 the company changed its accounting policy for fixed assets. Fixed assets are now held under the revaluation model, rather than historic cost less depreciation. This change in model means that goodwill has been impaired in full as any remaining goodwill is inherent in the tangible fixed asset valuation which is based on future trading potential. Post year end On 16 December 2022 the Group announced that it had merged with The Liberation Group (TLG), the Channel Islands and West Country brewer and retailer. The merger gives the combined entity an enterprise value of circa £200m. The merger was structured as an acquisition of 100% of the shares in Cirrus Inns Holdings Limited by Liberation’s subsidiary Butcombe Brewery Limited. As part of the merger, the combined group received new investment from existing shareholders. The Cirrus Inns shareholders injected £6,200,000 of new equity into new preference shares issued by Liberation Group’s parent entity. These new funds (via an intercompany loan from TLG) allowed Cirrus Inns Holdings to fully repay both the £8.5m loan that it had with Metrobank and the £50k bounce back loan facility also through Metrobank. Additionally, the shareholder loans totalling some £3m were converted into equity in Cirrus Inns Holdings at the time of the merger. With the bank debt repaid to Metrobank and the shareholder loans converted to equity, Cirrus Inns Holdings and its subsidiaries entered the merger with The Liberation Group in a position of free from external debt.
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CIRRUS INNS HOLDINGS LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 26 JUNE 2022
In December 2022, The Liberation Group agreed new credit facilities with its existing lenders. The new facilities consisted of a £44.15m loan over a period of 4 years and is repayable in January 2027. This is a reduction from the previous debt of £50.5m prior to the merger. There is also a new £10m revolving credit facility (RCF) which can be used for working capital or capital expenditure and acquisitions. This RCF is undrawn and fully available as at the date of signing these financial statements. The merger has enabled the combined business to reduce its debt and as a result has significantly strengthened the Group’s balance sheet. On 26 February 2023, the trade and assets of the Company's two subsidiary companies Cirrus Inns Limited and Farm Street Inns Limited were "hived up" by transferring them to Butcombe Brewery Limited at market value. From this date onwards these subsidiaries ceased to trade and therefore the Directors have concluded that the Company has also ceased to be a going concern and these financial statements have been prepared on this basis. Management have opted to change the fixed asset accounting policy from the historical cost model to the revaluation model, so that the fixed assets in the financial statements reflect the market value, being the value transferred on hive up. Immediately prior to the hive up the Company released the two subsidiaries from the intercompany loans owed to the company as disclosed in note 18.
As a result of the hive up of the trade and assets of the subsidiaries after the balance sheet date and the Group
ceasing to trade the directors consider it is not necessary to provide a statement of risks and uncertainties.
The directors monitor the Group's performance through a number of financial indicators the main measurementsare like for like turnover, EBITDA and net cash flow from operating activity.
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CIRRUS INNS HOLDINGS LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 26 JUNE 2022
The Directors are aware of their duties under s172 of the Companies Act 2006 to act in a way they consider, in good faith, would be most likely to promote success of the Group for the benefit of its members as a whole and in doing so have regard (amongst other matters) to:
• the likely consequences of any decision in the long-term • the interests of the group's employees, • the need to foster the group's business relationships with suppliers, customers, and others, • the impact of the group's operations on the community and the environment, • the desirability of the group maintaining a reputation for high standards of business conduct, and • the need to act fairly between members of the group. In respect of these matters, the Directors regularly consider and discuss the following: Long term impact The Group and its Leadership Team regularly reviews medium to long range business forecasts and the impact that strategic and tactical decisions can have on those plans as well as measure key performance indicators. These are debated, challenged and approval is subsequently sought from the Board. Employees Regular employee communication from the leadership team is carried out through in-person team briefings as well as emails and online Teams calls. Communication to and from all employees is encouraged and regular independent feedback questionnaires are issued. Employees can nominate and vote on monthly “Above & Beyond” and annual employee awards and are also encouraged to show respect and gratitude through the HR online “notice board”. The Group actively provides training and promotional opportunities to employees who demonstrate their aptitude and alignment with the Group values. Customers The Group seeks to promote premium and seamless service delivery at every stage of the customer journey, right from creating market awareness, through the booking process, every area of operation, to the departure and follow up, whilst celebrating the British Countryside. In London, the pubs aim to give the Countryside feel. All our services, right from the arrival experience, the quality and generosity of the bedroom amenities, the food sourcing, menu design and presentation (to name but a few) are thoroughly thought through to make sure every possible touch point with the customer is as good as it can be. We actively engage with all online review platforms and track our performance – not just of the reviewers score, but how we handle each review. During the pandemic, we adjusted our policies so that our customers would not be disappointed and ought to communicate that with them via direct and indirect media. Suppliers We always seek long term partnerships with our suppliers (local if possible), maintaining regular communication and adhering to agreed payment terms so as to ensure regularity of supply and quality. Small, local suppliers were supported through the pandemic, making sure payments were made on time and suppliers were prepared for reopening demands. Some of our trade suppliers were able to redirect their product to our local communities during the first lockdown (when high street retailers were struggling and our wholesale suppliers had no customers) via local collection.
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CIRRUS INNS HOLDINGS LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 26 JUNE 2022
Community & Environment
We look to recruit locally or provide housing for those from further afield to be able reside locally and reduce commuting time and cost. We are reviewing long term sustainability and waste and made positive changes through training our employees. Standards & Quality Standard Operating Procedures and Risk Assessments are written and regularly updated to make sure operations are both best practice and safe for our employees and customers. We regularly benchmark our financial and customer review performance against our competitors. Acting fairly between stakeholders The Directors seek to ensure that employees, customers & suppliers are all communicated with and treated fairly as they acknowledge that engagement from all parties means a better result for all stakeholders in the end.
This report was approved by the board and signed on its behalf.
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CIRRUS INNS HOLDINGS LIMITED
DIRECTORS' REPORT
FOR THE PERIOD ENDED 26 JUNE 2022
The directors present their report and the financial statements for the period ended 26 June 2022.
The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group 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 the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The group is principally engaged in the freehold ownership, operation and expansion of pubs.
The loss for the period, after taxation, amounted to £6,225,516 (2021 - loss £4,088,540).
The directors who served during the period were:
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CIRRUS INNS HOLDINGS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 26 JUNE 2022
Cirrus Inns Holdings Limited values the contribution of its employees at all levels, encourages, and facilitates all employees to have meaningful learning and development plans with appropriate development opportunities identified at all levels to help reinforce this focus on employee engagement. The company provides regular and up-to-date information about its products, services and operations to employees in a variety of ways. Regular meetings are held with employees to consult, explain and discuss matters affecting employee's interests.
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CIRRUS INNS HOLDINGS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 26 JUNE 2022
The emissions have been calculated and reported in line with GHG Protocol Corporate Accounting and Reporting Standard (revised edition) and emission factors from the UK Government’s GHG Conversion Factors for Company Reporting 2022.
The reporting period is the fiscal year of 28 June 2021 to 30 June 2022.
Data has been collected and analysed from the following sources:
• Electricity: EAQ (estimated annual consumption) data • Gas: EAQ (estimated annual consumption) data • Propane: total litres per site • Business travel via personal cars used for business purposes (mileage details) Electricity & gas consumption data is via estimated annual consumption per site. Propane is via recorded litres and transport via recorded mileage.
Total Energy Consumption for the reporting year amounted to 5,958,679.28 kWh (5,958.68 MWh).
Scope 1 emissions in metric tonnes tCO2e Gas & propane - 658.01 Scope 2 emissions in metric tonnes tCO2e Purchased electricity - 488.59 Scope 3 emissions in metric tonnes tCO2e Electricity T&D & transport - 112.29 Emissions have increased by 82.94% compared to financial year 2021, which is due to our business returning to usual operating hours following the covid lockdowns. The emissions intensity metric ratio has been based on the (GHG) emissions produced by CIR measured in tonnes of carbon dioxide equivalent (tCO2e) against £/turnover during the fiscal year. A total of 1,258.88 (tCO2e) / 20,927,950 = 0.0000602 tCO2e (0.0602 kg CO2e), which is a 9% reduction compared to FY 21. Improvements and Plans Cirrus Inns Holdings continues to review energy saving measures and maintains an accurate record of improvements that have been made to reduce energy, emissions, and cost. Over the past twelve months the following physical changes have been implemented along with the introduction of behavioural change measures for staff to inform energy users on how to cut costs have also been released. • Continue to install ECO boilers across our estate when required • Continue to install LED lighting within our estate • Staff are being encouraged to turn off appliances when not in use • Turning external lighting off during daytime hours Cirrus Inns Holdings Ltd is dedicated to reducing the amount of GHG produced each year and reducing its carbon footprint and continues to look at our operations and challenge ourselves to improve.
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CIRRUS INNS HOLDINGS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 26 JUNE 2022
Objectives for FY 2022 / 2023 1) Reduce our baseline electricity consumption by 2%. 2) Lighting: Continue to evolve and install low energy lighting across our building portfolio. 3) Continual review of existing policies. 4) Prepare for the energy savings opportunity scheme (ESOS) phase 3 compliance process.
The directors consider the Group is not a going concern as at the date of signing these financial statements
and have therefore prepared the financial statements on a basis other than going concern. See note 2.3 for details on the going concern status of the Group.
The auditors, Haysmacintyre LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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CIRRUS INNS HOLDINGS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CIRRUS INNS HOLDINGS LIMITED
We have audited the financial statements of Cirrus Inns Holdings Limited (the 'parent Company') and its subsidiaries (the 'Group') for the period ended 26 June 2022, which comprise the Group Statement of Comprehensive Income, the Group and Company Statements of Financial Position, the Group Statement of Cash Flows, the Group and Company Statement of Changes in Equity and the related notes, 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).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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.
We draw attention to note 2.3 of the financial statements which explains that post year end the group has
ceased to trade and therefore the Directors do not consider it to be appropriate to adopt the going concern basis of accounting in preparing the financial statements. Accordingly, the financial statements have been prepared on a basis other than going concern as described in note 2.3. Our opinion is not modified in respect of this matter.
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CIRRUS INNS HOLDINGS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CIRRUS INNS HOLDINGS LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' 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.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group Strategic Report and the Directors' Report for the financial period for which the financial statements are prepared is consistent with the financial statements; and
∙the Group 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 Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Directors' Report.
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CIRRUS INNS HOLDINGS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CIRRUS INNS HOLDINGS LIMITED (CONTINUED)
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 Auditors' 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 Group 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:
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 Auditors' 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 Auditors' 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.
for and on behalf of
Statutory Auditors
10 Queen Street Place
EC4R 1AG
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CIRRUS INNS HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 26 JUNE 2022
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CIRRUS INNS HOLDINGS LIMITED
REGISTERED NUMBER: 07680490
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 26 JUNE 2022
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CIRRUS INNS HOLDINGS LIMITED
REGISTERED NUMBER: 07680490
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 26 JUNE 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 22 to 44 form part of these financial statements.
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CIRRUS INNS HOLDINGS LIMITED
REGISTERED NUMBER: 07680490
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 26 JUNE 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 22 to 44 form part of these financial statements.
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 26 JUNE 2022
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
FOR THE PERIOD ENDED 26 JUNE 2022
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CIRRUS INNS HOLDINGS LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 26 JUNE 2022
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CIRRUS INNS HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 26 JUNE 2022
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CIRRUS INNS HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE PERIOD ENDED 26 JUNE 2022
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CIRRUS INNS HOLDINGS LIMITED
CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE PERIOD ENDED 26 JUNE 2022
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CIRRUS INNS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 JUNE 2022
Cirrus Inns Holdings Limited is a private limited company, limited by shares incorporated in England. the registered office is Cox's Green, Havyatt Road, Wrington, Bristol, England, BS40 5PA.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.
The Company has adopted the following disclosure exemptions.
- the requirement of Section 7 Statement of Cash Flows; - the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d); - the requirements of Section 33 Related Party Disclosures paragraph 33.7.
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases.
In preparing the financial statements, the Directors have made an assessment of the entity's ability to
continue as a going concern. On 26 February 2023, the trade and assets of the Company's two subsidiary companies Cirrus Inns Limited and Farm Street Inns Limited were "hived up by transferring them to Butcombe Brewery Limited at market value. From this date onwards these subsidiaries ceased to trade and therefore the Directors have concluded that the Company has also ceased to be a going concern and these financial statements have been prepared on this basis. See note 27 for further details on post balance sheet events.
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CIRRUS INNS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 JUNE 2022
2.Accounting policies (continued)
Food and beverage revenue is recognised at the point of sale and the below criteria must be met before revenue is recognised: • the Company has transferred the significant risks and rewards of ownership to the buyer; • the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; • the amount of revenue can be measured reliably; • it is probable that the Company will receive the consideration due under the transaction; and • the costs incurred or to be incurred in respect of the transaction can be measured reliably. Accomodation revenue is recognised in the period in which the services are provided when all of the following conditions are satisfied: • the amount of revenue can be measured reliably; • it is probable that the Company will receive the consideration due under; • the accomodation has been provided to the customer. • the costs incurred can be measured reliably. Other revenue is generated through sponsorship income and commission charged on voucher and accommodation bookings. Sponsorship income is recognised in the period to which the sponsor intends for it to cover. Commission income is recognised when earned, being the date of the accommodation booking. Grants of a revenue nature are recognised in the Consolidated Statement of Comprehensive Income in the same period as the related expenditure.
Page 23
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CIRRUS INNS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 JUNE 2022
2.Accounting policies (continued)
Goodwill
During the period goodwill was written off as on 26 June 2022 the company changed its accounting
policy for fixed assets. Fixed assets are now held under the revaluation model, rather than historic cost less depreciation. This change in model means that goodwill has been impaired in full as any remaining goodwill is inherent in the tangible fixed asset valuation which is based on future trading potential.
Page 24
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CIRRUS INNS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 JUNE 2022
2.Accounting policies (continued)
Depreciation was charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
On 26 June 2022 the company changed its accounting policy for fixed assets to follow the revaluation
model. Fair values are determined from market based evidence normally undertaken by professionally qualified valuers. Revaluation gains are recognised in other comprehensive income and any losses recognised are accounted for within the profit or loss. is applicable, the cost of the investment in a subsidiary undertaking is measured at the nominal value of the shares issued together with the fair value of any additional consideration paid.
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CIRRUS INNS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 JUNE 2022
2.Accounting policies (continued)
In the consolidated accounts, interests in associated undertakings are accounted for using the equity method of accounting. Under this method an equity investment is initially recognised at the transaction price (including transaction costs) and is subsequently adjusted to reflect the investors share of the profit or loss, other comprehensive income and equity of the associate. The Consolidated Statement of Comprehensive Income includes the Group's share of the operating results, interest, pre-tax results and attributable taxation of such undertakings applying accounting policies consistent with those of the Group. In the Consolidated Statement of Financial Position, the interests in associated undertakings are shown as the Group's share of the identifiable net assets, including any unamortised premium paid on acquisition. Any premium on acquisition is dealt with in accordance with the goodwill policy.
Page 26
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CIRRUS INNS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 JUNE 2022
2.Accounting policies (continued)
Page 27
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CIRRUS INNS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 JUNE 2022
2.Accounting policies (continued)
Provisions are charged as an expense to profit or loss in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the reporting date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Statement of Financial Position.
Page 28
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CIRRUS INNS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 JUNE 2022
2.Accounting policies (continued)
On 26 June 2022, the Company changed its accounting policy for fixed assets to follow the
revaluation model. The previous model, until 26 June 2022, had been to value tangible fixed assets under the cost model where the value of the assets were stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. group's accounting policies and that have the most significant effect on the amounts recognised in the financial statements: (a) Revaluation of property and equipment and intangibles As of 26 June 2022 the fixed assets are held under the revaluation model and therefore at fair value. The fair value of the properties is based on estimates and judgements, the most significant of these being expected fair maintainable trade of the sites and a multiple of this trade. If actual trading results and achievable sales multiples were to differ from the estimates, there could be a material impact on the carrying value of fixed assets, both positively and negatively. (b) Depreciation and amortisation Depreciation and amortisation are provided so as to write down assets to their residual values over the estimated useful lives. The selection of these residual values and estimated lives requires the exercise of management's judgement. Were the actual useful lives to differ from the estimates, there could be a material impact on the net realisable value of tangible fixed assets and intangible fixed assets. (c) Intercompany debt recovery Intercompany debt recovery has been assessed using forecast future EBITDA. If the forecast EBITDA or multiple was not to be achieved, then there is a risk that the intercompany debt would not be recoverable and a provision would be required.
Page 29
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CIRRUS INNS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 JUNE 2022
Page 30
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CIRRUS INNS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 JUNE 2022
Page 31
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CIRRUS INNS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 JUNE 2022
Page 32
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CIRRUS INNS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 JUNE 2022
12.Taxation (continued)
No provision has been made for deferred tax on losses as it is not sufficiently certain when these losses will be utilised. The net deferred tax asset not recognised is £1,532,297 (2021: £3,134,023).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements. The profit after tax of the parent Company for the period was £
Page 33
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CIRRUS INNS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 JUNE 2022
Page 34
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CIRRUS INNS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 JUNE 2022
Page 35
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CIRRUS INNS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 JUNE 2022
Page 36
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CIRRUS INNS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 JUNE 2022
Page 37
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CIRRUS INNS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 JUNE 2022
Page 38
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CIRRUS INNS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 JUNE 2022
Page 39
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CIRRUS INNS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 JUNE 2022
Page 40
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CIRRUS INNS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 JUNE 2022
Page 41
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CIRRUS INNS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 JUNE 2022
Share premium account
Revaluation reserve
Other reserves
Profit and loss account
Page 42
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CIRRUS INNS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 JUNE 2022
Page 43
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CIRRUS INNS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 JUNE 2022
On 16 December 2022 the Group announced that it had merged with The Liberation Group (TLG), the Channel Islands and West Country brewer and retailer. The merger gives the combined entity an enterprise value of circa £200m. The merger was structured as an acquisition of 100% of the shares in Cirrus Inns Holdings Limited by Liberation’s subsidiary Butcombe Brewery Limited. As part of the merger, the combined group received new investment from existing shareholders. The Cirrus Inns shareholders injected £6,200,000 of new equity into new preference shares issued by Liberation Group’s parent entity. These new funds (via an intercompany loan from TLG) allowed Cirrus Inns Holdings to fully repay both the £8.5m loan that it had with Metrobank and the £50k bounce back loan facility also through Metrobank. Additionally, the shareholder loans totalling some £3m were converted into equity in Cirrus Inns Holdings at the time of the merger. With the bank debt repaid to Metrobank and the shareholder loans converted to equity, Cirrus Inns Holdings and its subsidiaries entered the merger with The Liberation Group in a position of free from external debt. In December 2022, The Liberation Group agreed new credit facilities with its existing lenders. The new facilities consisted of a £44.15m loan over a period of 4 years and is repayable in January 2027. This is a reduction from the previous debt of £50.5m prior to the merger. There is also a new £10m revolving credit facility (RCF) which can be used for working capital or capital expenditure and acquisitions. This RCF is undrawn and fully available as at the date of signing these financial statements. The merger has enabled the combined business to reduce its debt and as a result has significantly strengthened the Group’s balance sheet. On 26 February 2023, the trade and assets of the Company's two subsidiary companies Cirrus Inns Limited and Farm Street Inns Limited were "hived up" by transferring them to Butcombe Brewery Limited at market value. From this date onwards these subsidiaries ceased to trade and therefore the Directors have concluded that the Company has also ceased to be a going concern and these financial statements have been prepared on this basis. Management have opted to change the fixed asset accounting policy from the historical cost model to the revaluation model, so that the fixed assets in the financial statements reflect the market value, being the value transferred on hive up. Immediately prior to the hive up the Company released the two subsidiaries from the intercompany loans owed to the company as disclosed in note 18.
The ultimate controlling party is Caledonia Investments plc, a company incorporated in England and
Wales. Copies of the accounts of Caledonia Investments plc are available at the Registered Office, Cayzer House, 30 Buckingham Gate, London SW1E 6NN.
Page 44
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