Michels Ventures 3 Limited 31/12/2022 iXBRL

Michels Ventures 3 Limited 31/12/2022 iXBRL

MICHELS VENTURES 3 LIMITED - Company Information

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Company registration number: 11165736
Michels Ventures 3 Limited
Financial statements
31 December 2022
Michels Ventures 3 Limited
Contents
Directors and other information
Strategic report
Director's report
Independent auditor's report to the members
Statement of comprehensive income
Statement of financial position
Statement of changes in equity
Notes to the financial statements
Michels Ventures 3 Limited
Directors and other information
Director Sir D Michels
Secretary Ian Noble
Company number 11165736
Registered office 2nd Floor
32-33 Gosfield Street
London
W1W 6HL
Auditor Baker Friend Audit Limited
2nd Floor
32-33 Gosfield Street
London
W1W 6HL
Michels Ventures 3 Limited
Strategic report
Year ended 31 December 2022
PRINCIPAL ACTIVITIES AND BUSINESS REVIEW
The principal activity of the company during the year was the ownership and operation of the Manchester Airport Hilton hotel.
As a result of the COVID-19 pandemic, the hotel was temporarily closed during the following periods:
- full lockdown from 6 January to 12 April 2021, open to key workers only
- from the end of the third lockdown on 17 May 2021, hotel services fully opened within Government restrictions.
The hotel fully reopened in May 2021 and no further lockdown or disruption occurred during 2022.
RESULTS AND DIVIDENDS
The profit for the period, after taxation, amounted to £231,161 (2021: loss of 1,207,484).
The director has not recommended a dividend.
PRINCIPAL RISKS AND UNCERTAINTIES
The third lockdown ended on 17/5/2021 and hotel services fully opened albeit within government guidelines. COVID measures and lockdowns did affect the performance of the hotel during 2021.
The hotel did benefit from the fact that UK residents decided on staycation holiday during 2021, by remaining in the UK leisure destination rather than flying abroad, where COVID restrictions still existed. The 2021 summer period helped mitigating the various months that were impacted by the pandemic.
2022 seen a recovery in the business but also some major increase in costs, especially business rates with the end of the COVID discount, energy costs and payroll.
This report was approved by the board of directors on 30 June 2023 and signed on behalf of the board by:
Sir D Michels
Director
Michels Ventures 3 Limited
Director's report
Year ended 31 December 2022
The director presents his report and the financial statements of the company for the year ended 31 December 2022.
Director
The director who served the company during the year was as follows:
Sir D Michels
Dividends
The director did not recommend the payment of a dividend.
Future developments
The hotel continues to perform well and in line with the projections. There is no major refurbishment planned apart from the normal repairs and renewals.
Financial instruments
The company uses various financial instruments. These include loans from shareholders, bank loans and various items, such as trade debtors and trade creditors, which arise directly from its operations. The main purpose of these financial instruments is to raise finance for the company's operations and to fund extensive refurbishments to the hotel. The existence of these financial instruments exposes the company to a number of financial risks, the principal ones of which are liquidity risk and credit risk.
Director's responsibilities statement
The director is responsible for preparing the strategic report, director's report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has 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 director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the company and the profit or loss of the company for that period.
In preparing these financial statements, the director is required to:
- select suitable accounting policies and then apply them consistently;
- make judgments and accounting estimates that are reasonable and prudent; and
- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The director is 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 him 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.
Auditor
Each of the persons who is a director at the date of approval of this report confirms that:
- so far as they are aware, there is no relevant audit information of which the company's auditor is unaware; and - they have taken all steps that they ought to have taken as a director to make themselves aware of any relevant audit information and to establish that the company's auditor is aware of that information.
The auditor is deemed to have been re-appointed in accordance with section 487 of the Companies Act 2006.
This report was approved by the board of directors on 30 June 2023 and signed on behalf of the board by:
Sir D Michels
Director
Michels Ventures 3 Limited
Independent auditor's report to the members of
Michels Ventures 3 Limited
Year ended 31 December 2022
Opinion
We have audited the financial statements of Michels Ventures 3 Limited (the 'company') for the year ended 31 December 2022 which comprise the statement of comprehensive income, statement of financial position, statement of changes in equity and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice). In our opinion, the financial statements: - give a true and fair view of the state of the company's affairs as at 31 December 2022 and of its profit for the year then ended; - have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and - have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the 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 opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Our evaluation of the directors' assessment of the entity's ability to continue to adopt the going concern basis of accounting included the review of the forecast for the next 5 years and the capacity of the company to secure the renewal of the bank loan with Citibank.
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 director 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 director is responsible for the other information. 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 director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
- the strategic report and the director's report has 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 director's report. 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 the returns; or - certain disclosures of director's 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 director's responsibilities statement, the director is 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 director determines 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 director is 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 director either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.
Auditor's 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 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: Owing to the inherent limitations of an audit, there is an unavoidable risk that material misstatements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK)Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws and regulations related to pensions legislation, UK and other relevant tax legislation, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the financial statements such as the Companies Act 2006.We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to manipulate financial results and management bias in accounting estimates. Audit procedures performed by the Audit team and / or component auditors included:o Discussions with management, legal counsel and the internal audit function, including consideration of unknown or suspected instances of non-compliance with laws and regulations and fraud:o Challenging assumptions made by management in its significant accounting estimates in particular in relation to estimation of the cashflow projections used to value the fixed assets and uncertain tax provisions; ando Identifying and testing higher risk journal entries, in particular any journal entries posted with unusual account combinations, journals posted by senior managementThere are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting on resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collision. As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. we also: - Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. - Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control. - Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the director. - Conclude on the appropriateness of the director's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern. - Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
A further description of our responsibilities is located on the Financial Reporting Council's webste 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 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.
Jeffrey Baker (Senior Statutory Auditor)
For and on behalf of
Baker Friend Audit Limited
Chartered Accountants and Statutory Auditors
2nd Floor
32-33 Gosfield Street
London
W1W 6HL
30 June 2023
Michels Ventures 3 Limited
Statement of comprehensive income
Year ended 31 December 2022
2022 2021
Note £ £
Turnover 4 10,058,016 3,908,906
Cost of sales ( 574,057) ( 241,925)
_______ _______
Gross profit 9,483,959 3,666,981
Administrative expenses ( 7,965,804) ( 4,432,475)
Other operating income 5 6,000 255,246
_______ _______
Operating profit/(loss) 6 1,524,155 ( 510,248)
Interest payable and similar expenses 8 ( 1,241,759) ( 934,593)
Profit/(loss) before taxation 282,396 ( 1,444,841)
Tax on profit/(loss) 9 ( 51,235) 237,357
_______ _______
Profit/(loss) for the financial year and total comprehensive income 231,161 ( 1,207,484)
_______ _______
All the activities of the company are from continuing operations.
Michels Ventures 3 Limited
Statement of financial position
31 December 2022
2022 2021
Note £ £ £ £
Fixed assets
Tangible assets 10 31,333,108 32,195,392
_______ _______
31,333,108 32,195,392
Current assets
Stocks 11 27,233 16,571
Debtors 12 4,820,044 3,921,798
Cash at bank and in hand 2,924,921 2,626,391
_______ _______
7,772,198 6,564,760
Creditors: amounts falling due
within one year 13 ( 3,544,785) ( 2,850,420)
_______ _______
Net current assets 4,227,413 3,714,340
_______ _______
Total assets less current liabilities 35,560,521 35,909,732
Creditors: amounts falling due
after more than one year 14 ( 32,650,746) ( 33,137,533)
Provisions for liabilities 15 402,330 308,745
_______ _______
Net assets 3,312,105 3,080,944
_______ _______
Capital and reserves
Called up share capital 19 100 100
Profit and loss account 3,312,005 3,080,844
_______ _______
Shareholders funds 3,312,105 3,080,944
_______ _______
These financial statements were approved by the board of directors and authorised for issue on 30 June 2023 , and are signed on behalf of the board by:
Sir D Michels
Director
Company registration number: 11165736
Michels Ventures 3 Limited
Statement of changes in equity
Year ended 31 December 2022
Called up share capital Profit and loss account Total
£ £ £
At 1 January 2021 100 4,288,328 4,288,428
Profit/(loss) for the year ( 1,207,484) ( 1,207,484)
_______ _______ _______
Total comprehensive income for the year - ( 1,207,484) ( 1,207,484)
_______ _______ _______
At 31 December 2021 and 1 January 2022 100 3,080,844 3,080,944
Profit/(loss) for the year 231,161 231,161
_______ _______ _______
Total comprehensive income for the year - 231,161 231,161
_______ _______ _______
At 31 December 2022 100 3,312,005 3,312,105
_______ _______ _______
Michels Ventures 3 Limited
Notes to the financial statements
Year ended 31 December 2022
1. General information
The company is a private company limited by shares registered in England. The address of the registered office is 32-33 Gosfield Street, London W1W 6HL.
2. Statement of compliance
These financial statements have been prepared in compliance with FRS 102, 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'.
3. Accounting policies
Basis of preparation
The financial statements have been prepared on the historical cost basis, as modified by the revaluation of certain financial assets and liabilities and investment properties measured at fair value through profit or loss.
The financial statements are prepared in sterling, which is the functional currency of the entity.
Going concern
The hotel continues to perform well and in line with the projections. There is no major refurbishment planned apart from the normal repairs and renewals.Despite the long period of disruption due to Covid since March 2020 and the lockdown, the hotel has managed to operate successfully within the government guidelines. During 2020 and 2021, the company benefited from some support from the government such as the Coronavirus Job Retention Scheme, and postponement of VAT and PAYE payments and discount of the business rate.Since May 2021 and throughout 2022, the hotel managed to operate as usual. The hotel saw its revenue increased in 2022 at a level closed to 2019, unfortunately the margin has been negatively impacted by strong increase in costs, especially energy costs and business rate. Despite these negative effects, we considered implications for the company's going concern assessment and appropriate disclosure in the Financial Statement, by developing stress test scenarios to model potential impacts.In addition, negotiations with Citibank on the renewal of the bank loan are still ongoing but should be finalised in the coming months.Based on the above and the current cash reserve, the director believes that will be able to continue trading in the next 12 months.
Disclosure exemptions
The entity satisfies the criteria of being a qualifying entity as defined in FRS 102. Its financial statements are consolidated into the financial statements of London and Regional Group Property Holdings Ltd is which can be obtained from the Registered Office. As such, advantage has been taken of the following disclosure exemptions available under paragraph 1.12 of FRS 102:(a) Disclosures in respect of each class of share capital have not been presented.(b) No cash flow statement has been presented for the company.(c) Disclosures in respect of financial instruments have not been presented.(d) Disclosures in respect of share-based payments have not been presented.(e) No disclosure has been given for the aggregate remuneration of key management personnel.
Judgements and key sources of estimation uncertainty
In the application of the Company's accounting policies, the Directors are required to make judgements, estimates and assumptions about the carrying amounts 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 if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.Estimated useful lives and residual values of fixed assetsDepreciation of tangible and intangible fixed assets has been based on estimated useful lives and residual values deemed appropriate by the Directors. Estimated useful lives and residual values are reviewed annually and will be revised as appropriate.The Directors also paid a particular attention to the value of the fixed assets in the accounts and believe, based on their projections that there is no need for any impairment as of 31 December 2022.
Turnover
Turnover is measured at the fair value of the consideration received or receivable for goods supplied and services rendered, net of discounts and Value Added Tax.Revenue from the sale of goods is recognised when the significant risks and rewards of ownership have transferred to the buyer (usually on despatch of the goods); the amount of revenue can be measured reliably; it is probable that the associated economic benefits will flow to the entity; and the costs incurred or to be incurred in respect of the transactions can be measured reliably. Hotel Accommodation Revenue is recognised on customer departure on the basis it is probable the company will receive the consideration, and costs incurred in respect of the transactions can be measure reliably.
Taxation
The taxation expense represents the aggregate amount of current and deferred tax recognised in the reporting period. 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 capital and reserves. In this case, tax is recognised in other comprehensive income or directly in capital and reserves, respectively. Current tax is recognised on taxable profit for the current and past periods. Current tax is measured at the amounts of tax expected to pay or recover using the tax rates and laws that have been enacted or substantively enacted at the reporting date.
Deferred tax is recognised in respect of all timing differences at the reporting date. Unrelieved tax losses and other deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date that are expected to apply to the reversal of the timing difference.
Tangible assets
Tangible assets are initially recorded at cost, and subsequently stated at cost less any accumulated depreciation and impairment losses. Any tangible assets carried at revalued amounts are recorded at the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses.An increase in the carrying amount of an asset as a result of a revaluation, is recognised in other comprehensive income and accumulated in equity, except to the extent it reverses a revaluation decrease of the same asset previously recognised in profit or loss. A decrease in the carrying amount of an asset as a result of revaluation, is recognised in other comprehensive income to the extent of any previously recognised revaluation increase accumulated in equity in respect of that asset. Where a revaluation decrease exceeds the accumulated revaluation gains accumulated in equity in respect of that asset, the excess shall be recognised in profit or loss.
Depreciation
Depreciation is calculated so as to write off the cost or valuation of an asset, less its residual value, over the useful economic life of that asset as follows:
Equipment - 10% to 33% reducing balance
If there is an indication that there has been a significant change in depreciation rate, useful life or residual value of tangible assets, the depreciation is revised prospectively to reflect the new estimates.
Impairment
A review for indicators of impairment is carried out at each reporting date, with the recoverable amount being estimated where such indicators exist. Where the carrying value exceeds the recoverable amount, the asset is impaired accordingly. Prior impairments are also reviewed for possible reversal at each reporting date.For the purposes of impairment testing, when it is not possible to estimate the recoverable amount of an individual asset, an estimate is made of the recoverable amount of the cash-generating unit to which the asset belongs. The cash-generating unit is the smallest identifiable group of assets that includes the asset and generates cash inflows that largely independent of the cash inflows from other assets or groups of assets.
Stocks
Stocks are measured at the lower of cost and estimated selling price less costs to complete and sell. Cost includes all costs of purchase, costs of conversion and other costs incurred in bringing the stocks to their present location and condition.
Government grants
Due to the COVID-19 pandemic and the closure of the hotel under UK Government legislation, the company utilised the Government support scheme: the furlough scheme whereby the Government contributed towards the wage costs of the company. The amounts received are reported under other income in the financial statements and the income is reported in the period that the relief relates to.
Provisions
Provisions are recognised when the entity has an obligation at the reporting date as a result of a past event; it is probable that the entity will be required to transfer economic benefits in settlement and the amount of the obligation can be estimated reliably. Provisions are recognised as a liability in the statement of financial position and the amount of the provision as an expense. Provisions are initially measured at the best estimate of the amount required to settle the obligation at the reporting date and subsequently reviewed at each reporting date and adjusted to reflect the current best estimate of the amount that would be required to settle the obligation. Any adjustments to the amounts previously recognised are recognised in profit or loss unless the provision was originally recognised as part of the cost of an asset. When a provision is measured at the present value of the amount expected to be required to settle the obligation, the unwinding of the discount is recognised in finance costs in profit or loss in the period it arises.
Financial instruments
A financial asset or a financial liability is recognised only when the company becomes a party to the contractual provisions of the instrument. Basic financial instruments are initially recognised at the transaction price, unless the arrangement constitutes a financing transaction, where it is recognised at the present value of the future payments discounted at a market rate of interest for a similar debt instrument. Debt instruments are subsequently measured at amortised cost. Where investments in non-convertible preference shares and non-puttable ordinary shares or preference shares are publicly traded or their fair value can otherwise be measured reliably, the investment is subsequently measured at fair value with changes in fair value recognised in profit or loss. All other such investments are subsequently measured at cost less impairment. Other financial instruments, including derivatives, are initially recognised at fair value, unless payment for an asset is deferred beyond normal business terms or financed at a rate of interest that is not a market rate, in which case the asset is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument. Other financial instruments are subsequently measured at fair value, with any changes recognised in profit or loss, with the exception of hedging instruments in a designated hedging relationship.
Financial assets that are measured at cost or amortised cost are reviewed for objective evidence of impairment at the end of each reporting date. If there is objective evidence of impairment, an impairment loss is recognised in profit or loss immediately. For all equity instruments regardless of significance, and other financial assets that are individually significant, these are assessed individually for impairment. Other financial assets or either assessed individually or grouped on the basis of similar credit risk characteristics. Any reversals of impairment are recognised in profit or loss immediately, to the extent that the reversal does not result in a carrying amount of the financial asset that exceeds what the carrying amount would have been had the impairment not previously been recognised.
Defined contribution plans
Contributions to defined contribution plans are recognised as an expense in the period in which the related service is provided. Prepaid contributions are recognised as an asset to the extent that the prepayment will lead to a reduction in future payments or a cash refund.When contributions are not expected to be settled wholly within 12 months of the end of the reporting date in which the employees render the related service, the liability is measured on a discounted present value basis. The unwinding of the discount is recognised in finance costs in profit or loss in the period in which it arises.
4. Turnover
The whole of the turnover is attributable to the principal activity of the company wholly undertaken in the United Kingdom.
5. Other operating income
2022 2021
£ £
Government grant income 6,000 255,246
_______ _______
6. Operating profit/loss
Operating profit/loss is stated after charging/(crediting):
2022 2021
£ £
Depreciation of tangible assets 1,303,250 1,288,419
Impairment of trade debtors 8,463 -
Fees payable for the audit of the financial statements 30,000 25,000
Bank arrangement fees 46,668 46,668
_______ _______
Operating profit includes arrangement fees for the refinancing of the acquisition of the freehold property with Citibank, which are being amortised over the duration of the loan as amended on 16 April 2019.
7. Staff costs
The average number of persons employed by the company during the year, including the director, amounted to:
2022 2021
Hotel staff 118 71
_______ _______
The aggregate payroll costs incurred during the year were:
2022 2021
£ £
Wages and salaries 2,343,700 1,365,517
Social security costs 175,979 101,738
Other pension costs 37,830 24,455
_______ _______
2,557,509 1,491,710
_______ _______
In 2021, the wages and salaries included £255,246 which was covered by grants under the Government's Coronavirus Job Retention Scheme.
8. Interest payable and similar expenses
2022 2021
£ £
Bank loans and overdrafts 742,050 478,837
Other loans made to the company:
Other interest on other loans made to the company 478,163 455,756
Other interest payable and similar expenses 21,546 -
_______ _______
1,241,759 934,593
_______ _______
9. Tax on profit/loss
Major components of tax expense/income
2022 2021
£ £
Current tax:
UK current tax expense/income 145,065 ( 20,635)
_______ _______
Deferred tax:
Origination and reversal of timing differences ( 93,830) ( 216,722)
_______ _______
Tax on profit/loss 51,235 ( 237,357)
_______ _______
Reconciliation of tax expense/income
The tax assessed on the profit/loss for the year is lower than (2021: higher than) the standard rate of corporation tax in the UK of 19.00 % (2021: 19.00%).
2022 2021
£ £
Profit/(loss) before taxation 282,396 ( 1,444,841)
_______ _______
Profit/(loss) multiplied by rate of tax 53,655 ( 274,520)
Effect of expenses not deductible for tax purposes 127,742 140,654
Effect of different UK tax rates on some earnings (22,519) (103,491)
Utilisation of tax losses ( 107,643) -
_______ _______
Tax on profit/loss 51,235 ( 237,357)
_______ _______
10. Tangible assets
Freehold property Fixtures, fittings and equipment Total
£ £ £
Cost
At 1 January 2022 30,496,945 3,994,453 34,491,398
Additions - 440,966 440,966
_______ _______ _______
At 31 December 2022 30,496,945 4,435,419 34,932,364
_______ _______ _______
Depreciation
At 1 January 2022 - 2,296,006 2,296,006
Charge for the year - 1,303,250 1,303,250
_______ _______ _______
At 31 December 2022 - 3,599,256 3,599,256
_______ _______ _______
Carrying amount
At 31 December 2022 30,496,945 836,163 31,333,108
_______ _______ _______
At 31 December 2021 30,496,945 1,698,447 32,195,392
_______ _______ _______
The freehold property is depreciated over 50 years, however as it is maintained to a high standard the residual value is considered to be at least carrying value so no depreciation has been charged in the period.
11. Stocks
2022 2021
£ £
Finished goods and goods for resale 27,233 16,571
_______ _______
12. Debtors
2022 2021
£ £
Trade debtors 556,322 243,614
Amounts owed by group undertakings 4,124,540 3,617,061
Prepayments and accrued income 139,182 65,612
Other debtors - ( 4,489)
_______ _______
4,820,044 3,921,798
_______ _______
13. Creditors: amounts falling due within one year
2022 2021
£ £
Bank loans and overdrafts 1,261,455 1,186,747
Trade creditors 671,764 361,338
Amounts owed to group undertakings 326,824 326,824
Accruals and deferred income 775,126 403,137
Corporation tax 122,268 392,352
Social security and other taxes 340,523 161,452
Other creditors 46,825 18,570
_______ _______
3,544,785 2,850,420
_______ _______
14. Creditors: amounts falling due after more than one year
2022 2021
£ £
Bank loans and overdrafts 18,539,737 19,503,708
Amounts owed to undertakings in which the company has a participating interest 14,111,009 13,633,825
_______ _______
32,650,746 33,137,533
_______ _______
The company has a loan agreement with CitiBank for a nominal amount of £20,861,687 which is being repaid in quarterly instalments with an initial repayment date in April 2023. The loan bears interest at LIBOR 3 months plus 2% and is secured by way of a charge over the freehold property owned by the company. This loan with CitiBank has been extended since April 2023 and is currently being renegotiated. The new loan agreement should be finalised and agreed in the coming months.
The company also has a loan from its parent company London & Regional Group Property Holdings Limited for an original amount of £30,927,976 which was partially repaid in 2018. This loan bears interest at 3.5% and is repayable in 2024.
15. Provisions
Deferred tax (note 16) Total
£ £
At 1 January 2022 ( 308,745) ( 308,745)
Additions ( 93,585) ( 93,585)
_______ _______
At 31 December 2022 ( 402,330) ( 402,330)
_______ _______
16. Deferred tax
The deferred tax included in the statement of financial position is as follows:
2022 2021
£ £
Included in provisions (note 15) ( 402,330) ( 308,745)
_______ _______
The deferred tax account consists of the tax effect of timing differences in respect of:
2022 2021
£ £
Accelerated capital allowances ( 66,068) ( 91,779)
Timing difference on interest payable ( 336,262) ( 216,966)
_______ _______
(402,330) (308,745)
_______ _______
17. Employee benefits
The amount recognised in profit or loss in relation to defined contribution plans was £ 37,830 (2021: £ 24,455 ).
18. Government grants
2022 2021
£ £
Grants received or receivable 6,000 255,246
Grants repaid (-) (255,246)
_______ _______
At end of period 6,000 -
_______ _______
The amounts recognised in the financial statements for government grants are as follows:
2022 2021
£ £
Recognised in other operating income:
Government grants recognised directly in income 6,000 255,246
_______ _______
19. Called up share capital
Issued, called up and fully paid
2022 2021
No £ No £
Ordinary shares of £ 1.00 each 100 100 100 100
_______ _______ _______ _______
20. Related party transactions
During the year the company entered into the following transactions with related parties:
Transaction value Balance owed by/(owed to)
2022 2021 2022 2021
£ £ £ £
Parent company 478,163 455,756 ( 14,437,833) ( 13,960,649)
Michels & Taylor (London) Limited 315,689 123,806 - -
Other group company - - 4,106,352 3,617,061
_______ _______ _______ _______
As described in note 8 above, the company has an interest bearing loan from its parent company.During the year, the company paid hotel management fees to Michels & Taylor (London) Limited.
21. Controlling party
The immediate parent undertaking is London and Regional Group Property Holdings Ltd, a company incorporated and registered in England and Wales.The ultimate parent undertaking is London and Regional Group Properties Ltd, a company incorporated in England and Wales.London and Regional Group Property Holdings Ltd is the parent undertaking of the smallest group of undertakings to consolidate these financial statement as at 31 December 2022. London and Regional Group Properties Ltd is the parent undertaking of the largest group of undertakings to consolidate these financial statements at 31 December 2022. The consolidated financial statements of London and Regional Group Properties Ltd can be obtained from the company secretary at 8th Floor, South Block, 55 Baker Street, London, United Kingdom, W1U 8EW.The ultimate controlling parties are I.M. Livingstone and R.J. Livingstone through their joint ownership of London and Regional Group Properties Ltd.