Mid-Hants Railway Limited |
Registered number: 01117090 |
Directors' Report |
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The directors present their report and accounts for the year ended 31 March 2023. |
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Principal activities |
The company's principal activity during the period continued to be the operation of a steam railway. |
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Directors |
The following persons served as directors during the year: |
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A J Houghton (resigned 14 August 2023) |
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S N Evans (resigned 7 April 2022) |
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M R Rossiter (resigned 3 November 2022) |
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R H Lacey (resigned 7 April 2022) |
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J F G Russell |
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J M Dunwoody |
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R A Hawkins (resigned 9 January 2023) |
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D Jones (resigned 9 January 2023) |
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P Smith (resigned 9 January 2023) |
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A J Squires (appointed 17 August 2022, resigned 28 March 2023) |
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G Watson (appointed 14 September 2023) |
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Disclosure of information to auditors |
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have been prepared in accordance with the requirements of the Companies Act 2006. |
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Basis for qualified opinion |
We are unable to conclude if the income reflected in the accounts is correct. Significant problems arose in the year from the new online booking system and it appears that it is possible some income is double counted. The net amount due to the group at the year end has been written off as it cannot be tied up to after date receipts. An amount is in creditors which may represent the double counted income, it is unknown at this point if this is the correct figure, our report is, therefore, qualified in relation to the income, debtor and creditor balances as all are material. A specialist has been employed to resolve this issue in the current year. We have also been unable to agree the valuation method for stock and so our report is qualified in relation to the stock balance. A provision has been made against this balance by the group and the issues will be addressed in the current year. 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 accounts section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the accounts 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. Except for the matter described in the basis for qualified opinion section, we have determined that there are no key audit matters to be communicated in our report. In accordance with the exemption provided by FRC's Ethical standard-Provisions Available for Audits of smaller entities, we have prepared and submitted the company's return to the tax authority and assisted with the preparation of the accounts. |
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Material uncertainty relating to going concern |
We draw your attention to note 1 in the financial statements, which sets out the directors’ assessment of going concern. The matters outlined in note 1, indicate that a material uncertainty exists that may cast doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in this respect. |
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Other information |
The other information comprises the information included in the report and accounts, other than the accounts and our auditor’s report thereon. The directors are responsible for the other information. Our opinion on the accounts 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 accounts, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the accounts 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 accounts 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. |
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Opinions on other matters prescribed by the Companies Act 2006 |
In our opinion, based on the work undertaken in the course of the audit: |
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the information given in the directors’ report for the financial year for which the accounts are prepared is consistent with the accounts; and |
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the directors’ report has been prepared in accordance with applicable legal requirements. |
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Matters on which we are required to report by exception |
Mid-Hants Railway Limited |
Notes to the Accounts |
for the year ended 31 March 2023 |
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1 |
Accounting policies |
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Basis of preparation |
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The accounts have been prepared under the historical cost convention and in accordance with FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland (as applied to small entities by section 1A of the standard). |
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Turnover and other income |
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Turnover represents sales, excluding value added tax, in respect of tickets for steam train experiences and rides, retail and catering goods supplied during the year and external engineering work undertaken. Payments received in advance are not included in turnover until the service is rendered or obligation fulfilled. Other Operating income includes management and administration charges received, grants received, miscellaneous land sales and sundry donations received. Income received relating to future costs, has been deferred until the expenditure is incurred. |
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Tangible fixed assets |
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Tangible fixed assets are measured at cost less accumulative depreciation and any accumulative impairment losses. Depreciation is provided on all tangible fixed assets, other than freehold land, at rates calculated to write off the cost, less estimated residual value, of each asset evenly over its expected useful life, as follows: |
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Freehold land and property |
Nil-2% |
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Plant and machinery |
Nil-25% |
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Assets under construction |
Nil |
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Locomotives are depreciated over the length of their boiler certificate (usually 10 years) down to their residual value. Where a locomotive, owned by independent group, is overhauled by the company and a long term hire agreement is in place, the costs incurred are capitalised. Costs are depreciated on a straight line basis over the expected useful life (usually 10 years). Other than the engineering workshops at Ropley, which are depreciated at 2% per annum, freehold land and buildings, track and certain coaches are not depreciated below their residual values. In the opinion of the directors it is the company's purpose to restore, preserve and keep these assets in good repair for the future. Freehold property consists mainly of historic buildings which have long economic lives and high residual values. Therefore any depreciation charge would be immaterial. The directors are of the opinion that no circumstances causing an impairment have ocurred. The company has taken advantage of the transitional provisions to retain revalued assets at book values, no revaluation was carried out at transition. |
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Plant and equipment includes locomotives, rolling stock and track |
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Assets under construction are not depreciated until they are brought into use. The company capitalises direct wages and employers national insurance in respect of internal capital projects. |
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Coaches are deemed to have a residual value of £5,000 and once items reach that value no further depreciation is charged. Coaches that had a lower book value than this at the start of the year were continued to be held at that value. |
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Impairment reviews are carried out annually with adjustments recorded via the profit and loss account. |
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Stocks |
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Stocks are measured at the lower of cost and estimated selling price less costs to complete and sell. The carrying amount of stock sold is recognised as an expense in the period in which the related revenue is recognised. |
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Debtors |
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Short term debtors are measured at transaction price (which is usually the invoice price), less any impairment losses for bad and doubtful debts. |
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Creditors |
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Short term creditors are measured at transaction price (which is usually the invoice price). Loans and other financial liabilities are initially recognised at transaction price net of any transaction costs and subsequently measured at amortised cost determined using the effective interest method. |
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Taxation |
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A current tax liability is recognised for the tax payable on the taxable profit of the current and past periods. A current tax asset is recognised in respect of a tax loss that can be carried back to recover tax paid in a previous period. Deferred tax is recognised in respect of all timing differences between the recognition of income and expenses in the financial statements and their inclusion in tax assessments. Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date and that are expected to apply to the reversal of the timing difference, except for revalued land and investment property where the tax rate that applies to the sale of the asset is used. Current and deferred tax assets and liabilities are not discounted. |
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Leased assets |
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A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. All other leases are classified as operating leases. The rights of use and obligations under finance leases are initially recognised as assets and liabilities at amounts equal to the fair value of the leased assets or, if lower, the present value of the minimum lease payments. Minimum lease payments are apportioned between the finance charge and the reduction in the outstanding liability using the effective interest rate method. The finance charge is allocated to each period during the lease so as to produce a constant periodic rate of interest on the remaining balance of the liability. Leased assets are depreciated in accordance with the company's policy for tangible fixed assets. If there is no reasonable certainty that ownership will be obtained at the end of the lease term, the asset is depreciated over the lower of the lease term and its useful life. Operating lease payments are recognised as an expense on a straight line basis over the lease term. |
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Pensions |
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Contributions to defined contribution plans are expensed in the period to which they relate. |
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Going concern |
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The Directors report a loss of £686,696 in the year ended 31 March 2023. MHR derives revenue for the Watercress Line from: • Travel on and around heritage assets and events • Trading activities to support visitors and events. • Rents and revenue from the railway estate and infrastructure. • Earned income from specialist engineering activities. The Watercress Line has not experienced considered trading conditions since Covid-19. Visitor numbers have not increased back to pre-Covid levels and almost all cost areas have increased either because of inflation or specific supply issues such as coal. The Directors recognise that there is much uncertainty and the economic climate is very challenging. Constant work is ongoing to seek new operating income opportunities and other funding options, but these take time and are often by their nature reactive. The Directors continually review the strategies necessary to achieve its objectives and meets regularly with the Trustees of Watercress Line Heritage Railway Trust to consider strategic priorities. MHR plans to deliver its objectives through a Strategic Next Steps Plan which aspires fo the Watercress Line to be: · Situated: recognised and valued as a backdrop to Hampshire and the South Downs · Salient: clear about its identity, purpose and relevance. · Excellent: known for excellence. · Accessible: easy for everyone to use. The Directors recognise that significant uncertainty exists in respect of the anticipated funding sources and the timing of these. Present forecasts for the year to 31 March 2024 give very reasonable expectations that any resulting cash shortfall will be manageable, although more work is required to secure the position. At the time of approving the financial statements, based on cashflows and best estimates of future income and expenditure, the Directors have a reasonable expectation that the company has adequate resources to continue in operational existence for 12 months from authorising these financial statements , and the Directors continue to adopt the going concern basis of accounting in preparing the financial statements. |
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2 |
Audit information |
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The audit report is qualified. |
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Senior statutory auditor: |
Joanne Cochrane BSc FCA |
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Firm: |
Cochrane & Co Accountants Ltd |
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Date of audit report: |
22/12/2023 |
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3 |
Employees |
2023 |
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2022 |
Number |
Number |
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Average number of persons employed by the company |
45 |
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45 |
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4 |
Tangible fixed assets |
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Land and buildings |
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Plant and machinery etc |
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Assets under construction |
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Total |
£ |
£ |
£ |
£ |
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Cost |
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At 1 April 2022 |
2,826,367 |
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5,383,560 |
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344,014 |
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8,553,941 |
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Additions |
17,672 |
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92,980 |
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243,961 |
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354,613 |
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Transfers |
- |
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(837,476) |
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525,146 |
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(312,330) |
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Disposals |
- |
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(502,363) |
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(302,918) |
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(805,281) |
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At 31 March 2023 |
2,844,039 |
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4,136,701 |
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810,203 |
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7,790,943 |
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Depreciation |
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At 1 April 2022 |
368,148 |
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2,064,965 |
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- |
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2,433,113 |
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Charge for the year |
52,972 |
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410,837 |
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- |
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463,809 |
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Tranfers AUC |
- |
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(312,331) |
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- |
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(312,331) |
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On disposals |
- |
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(329,377) |
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- |
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(329,377) |
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At 31 March 2023 |
421,120 |
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1,834,094 |
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- |
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2,255,214 |
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Net book value |
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At 31 March 2023 |
2,422,919 |
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2,302,607 |
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810,203 |
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5,535,729 |
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At 31 March 2022 |
2,458,219 |
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3,318,595 |
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344,014 |
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6,120,828 |
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Freehold land and buildings: |
2023 |
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2022 |
£ |
£ |
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Historical cost |
2,329,274 |
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2,311,602 |
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Cumulative depreciation based on historical cost |
421,120 |
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368,148 |
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1,908,154 |
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1,943,454 |
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5 |
Debtors |
2023 |
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2022 |
£ |
£ |
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Trade debtors |
3,645 |
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7,194 |
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Amounts owed by group undertakings and undertakings in which the company has a participating interest |
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119,253 |
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209,410 |
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Other debtors |
31,055 |
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26,080 |
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153,953 |
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242,684 |
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6 |
Creditors: amounts falling due within one year |
2023 |
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2022 |
£ |
£ |
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Bank loans and overdrafts |
266,500 |
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234,526 |
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Trade creditors |
233,634 |
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244,239 |
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Payments received on account |
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- |
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61,204 |
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Taxation and social security costs |
89,194 |
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40,627 |
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Other creditors |
462,960 |
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365,165 |
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1,052,288 |
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945,761 |
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7 |
Creditors: amounts falling due after one year |
2023 |
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2022 |
£ |
£ |
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Bank loans |
564,061 |
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838,873 |
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Trade creditors |
- |
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100,000 |
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564,061 |
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938,873 |
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8 |
Loans (analysis of note 7) |
2023 |
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2022 |
£ |
£ |
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Creditors include: |
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Instalments falling due for payment after more than five years |
- |
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201,850 |
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Secured bank loans |
281,603 |
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311,940 |
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The bank loans are secured by a fixed and floating charge over the freehold railway property and other assets. |
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9 |
Revaluation reserve |
2023 |
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2022 |
£ |
£ |
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At 1 April 2022 |
514,765 |
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514,765 |
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At 31 March 2023 |
514,765 |
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514,765 |
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10 |
Provision for liabilities |
2023 |
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2022 |
£ |
£ |
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Deferred taxation |
300,683 |
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300,683 |
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11 |
Other financial commitments |
2023 |
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2022 |
£ |
£ |
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Total future minimum payments under non-cancellable operating leases |
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309,443 |
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435,043 |
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12 |
Controlling party |
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The ultimate parent company is Watercress Line Heritage Railway Trust Limited, a registered charity and company registered in England and Wales, which holds 100% of the equity dividend shares and 53.75% of the non-equity shares. The charity is controlled by its Board of Trustees. Copies of the consolidated financial statements can be obtained from the registered office: Alresford Station, Alresford, Hampshire, SO24 9JG. |
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13 |
Other information |
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Mid-Hants Railway Limited is a private company limited by shares and incorporated in England. Its registered office is: |
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Alresford Station |
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Alresford |
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Hampshire |
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SO24 9JG |