Company registration number SC267931 (Scotland)
CITY HOTELS (DUNFERMLINE) LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
CITY HOTELS (DUNFERMLINE) LIMITED
COMPANY INFORMATION
Directors
Mr Scott Adamson
Mr Stuart Adamson
Mrs Mary Adamson
Mr Craig Adamson
Company number
SC267931
Registered office
27 Main Street
Crossford
Dunfermline
Fife
United Kingdom
KY12 8NJ
Auditor
Azets Audit Services
5 Whitefriars Crescent
Perth
United Kingdom
PH2 0PA
CITY HOTELS (DUNFERMLINE) LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2
Directors' responsibilities statement
3
Independent auditor's report
4 - 6
Statement of comprehensive income
7
Balance sheet
8
Statement of changes in equity
9
Statement of cash flows
10
Notes to the financial statements
11 - 24
CITY HOTELS (DUNFERMLINE) LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2022
- 1 -
The directors present the strategic report for the year ended 30 June 2022.
Fair review of the business
Turnover was up on last year by 195% to £6.3 million. This was largely due to the fact that the venues and facilities were almost fully operational in the year compared with various closures experienced last year due to Covid.
During the year the company continued to invest in its property and licenced trade portfolio, with investments in fixed assets and investment properties amounting to £585k.
Principal risks and uncertainties
The principal risks facing the company include:
Market performance
- the licenced trade faces many challenges, including legislation changes affecting drinking and driving and society's attitude to alcohol in general. There has, however, been a growth in demand for the provision of food and well run catering establishments providing a varied snack menu, and this has helped offset the decline in sales of alcohol.
Competitive risk
- the company operates in competitive markets and continues to review the offering made to its customers to ensure that they remain competitive and meet the changing needs of customers.
Major disruption/disaster
- the company regularly reviews its business continuity plans to minimise the impact of major disruption or disasters.
Financial risk management
Liquidity risk
- the company maintains a mixture of working capital finance facilities to ensure it has sufficient funds to meet its operational requirements.
Key performance indicators
2022 2021
£ £
Turnover 6,311,299 2,141,261
Gross profit/(loss) 1,917,702 (30.4%) (175,091) (6.1%)
Operating profit 813,289 95,883
Net assets 5,814,004 5,141,610
Going concern
The company believes that it has sufficient reserves and resources to be able to prepare the accounts on a going concern basis.
Mr Scott Adamson
Director
31 March 2023
CITY HOTELS (DUNFERMLINE) LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2022
- 2 -
The directors present their annual report and financial statements for the year ended 30 June 2022.
Principal activities
The principal activity of the company continued to be that of the operation of hotels and licenced trade premises.
Results and dividends
The results for the year are set out on page 7.
Ordinary dividends were paid amounting to £4,000. The directors do not recommend payment of a further dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr Scott Adamson
Mr Stuart Adamson
Mrs Mary Adamson
Mr Craig Adamson
Auditor
Azets Audit Services were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s
auditor
is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s
auditor
is aware of that information.
On behalf of the board
Mr Scott Adamson
Director
31 March 2023
CITY HOTELS (DUNFERMLINE) LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 30 JUNE 2022
- 3 -
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and accounting estimates that are reasonable and prudent;
-
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
CITY HOTELS (DUNFERMLINE) LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF CITY HOTELS (DUNFERMLINE) LIMITED
- 4 -
Opinion
We have audited the financial statements of City Hotels (Dunfermline) Limited (the 'company') for the year ended 30 June 2022 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102
The Financial Reporting Standard applicable in the UK and Republic of Ireland
(United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
-
give a true and fair view of the state of the company's affairs as at 30 June 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.
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 directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit
:
-
the information given in the strategic report and the directors'
r
eport for the financial year for which the financial statements are prepared is consistent with the financial statements
; and
-
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
CITY HOTELS (DUNFERMLINE) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF CITY HOTELS (DUNFERMLINE) LIMITED
- 5 -
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 identifie
d
material misstatements in the strategic report or the directors'
r
eport
. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
-
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
-
the financial statements are not in agreement with the accounting records and returns; or
-
certain disclosures of
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 directors'
r
esponsibilities
s
tatement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of
financial statements
that are free from material misstatement, whether due to fraud or error. In preparing the
financial statements
, the
directors are
responsible for assessing the company
'
s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have
no realistic alternative but to do so.
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
.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
CITY HOTELS (DUNFERMLINE) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF CITY HOTELS (DUNFERMLINE) LIMITED
- 6 -
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we 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. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
-
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
-
Reviewing minutes of meetings of those charged with governance;
-
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection;
-
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
-
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. 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.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Alan Taylor (Senior Statutory Auditor)
For and on behalf of Azets Audit Services
31 March 2023
Chartered Accountants
Statutory Auditor
5 Whitefriars Crescent
Perth
United Kingdom
PH2 0PA
CITY HOTELS (DUNFERMLINE) LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2022
- 7 -
2022
2021
Notes
£
£
Turnover
3
6,311,299
2,141,261
Cost of sales
(4,393,597)
(2,316,352)
Gross profit/(loss)
1,917,702
(175,091)
Administrative expenses
(1,733,643)
(1,439,110)
Other operating income
629,230
1,710,084
Operating profit
4
813,289
95,883
Interest payable and similar expenses
7
(153,800)
(124,213)
Fair value gains and losses on investment properties
12
-
239,303
Profit before taxation
659,489
210,973
Tax on profit
8
60,622
(200,673)
Profit for the financial year
720,111
10,300
The profit and loss account has been prepared on the basis that all operations are continuing operations.
CITY HOTELS (DUNFERMLINE) LIMITED
BALANCE SHEET
AS AT 30 JUNE 2022
30 June 2022
- 8 -
2022
2021
Notes
£
£
£
£
Fixed assets
Goodwill
10
73,013
116,813
Tangible assets
11
3,301,644
3,537,540
Investment properties
12
6,152,040
5,874,637
9,526,697
9,528,990
Current assets
Stocks
13
85,500
47,209
Debtors
14
1,108,832
1,386,217
Cash at bank and in hand
1,018,123
517,020
2,212,455
1,950,446
Creditors: amounts falling due within one year
15
(2,041,460)
(1,704,559)
Net current assets
170,995
245,887
Total assets less current liabilities
9,697,692
9,774,877
Creditors: amounts falling due after more than one year
16
(3,348,456)
(3,945,065)
Provisions for liabilities
Deferred tax liability
19
535,232
688,202
(535,232)
(688,202)
Net assets
5,814,004
5,141,610
Capital and reserves
Called up share capital
21
100
100
Profit and loss reserves
22
5,813,904
5,141,510
Total equity
5,814,004
5,141,610
The financial statements were approved by the board of directors and authorised for issue on 31 March 2023 and are signed on its behalf by:
Mr Scott Adamson
Director
Company Registration No. SC267931
CITY HOTELS (DUNFERMLINE) LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2022
- 9 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 July 2020
100
5,135,210
5,135,310
Year ended 30 June 2021:
Profit and total comprehensive income for the year
-
10,300
10,300
Dividends
9
-
(4,000)
(4,000)
Balance at 30 June 2021
100
5,141,510
5,141,610
Year ended 30 June 2022:
Profit and total comprehensive income for the year
-
720,111
720,111
Dividends
9
-
(4,000)
(4,000)
Transfers
-
(43,717)
(43,717)
Balance at 30 June 2022
100
5,813,904
5,814,004
CITY HOTELS (DUNFERMLINE) LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2022
- 10 -
2022
2021
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
26
1,369,379
518,159
Interest paid
(153,800)
(124,213)
Income taxes refunded/(paid)
39,065
(74,615)
Net cash inflow from operating activities
1,254,644
319,331
Investing activities
Purchase of tangible fixed assets
(151,722)
(85,906)
Purchase of investment property
(328,029)
(519,458)
Proceeds on disposal of investment property
462,936
Net cash used in investing activities
(16,815)
(605,364)
Financing activities
Repayment of bank loans
(698,328)
(214,960)
Payment of finance leases obligations
(34,398)
(10,921)
Dividends paid
(4,000)
(4,000)
Net cash used in financing activities
(736,726)
(229,881)
Net increase/(decrease) in cash and cash equivalents
501,103
(515,914)
Cash and cash equivalents at beginning of year
517,020
1,032,934
Cash and cash equivalents at end of year
1,018,123
517,020
CITY HOTELS (DUNFERMLINE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
- 11 -
1
Accounting policies
Company information
City Hotels (Dunfermline) Limited is a
private
company
limited by shares
incorporated in
Scotland
.
The registered office is
27 Main Street, Crossford, Dunfermline, Fife, United Kingdom, KY12 8NJ.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in
sterling
, which is the functional currency of the company.
Monetary a
mounts
in these financial statements are
rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
1.2
Going concern
A
true
t the time of approving the financial statements
,
t
he directors have a reasonable expectation that the
company
has adequate resources to continue in operational existence for the foreseeable future. Thus
t
he directors continue to adopt the going concern basis of accounting in preparing the financial statements.
However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the company's ability to continue as a going concern.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business
, and
is shown net of VAT and other sales related taxes
.
The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
1.4
Intangible fixed assets - goodwill
Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated
amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years.
For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.
CITY HOTELS (DUNFERMLINE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2022
1
Accounting policies
(Continued)
- 12 -
1.5
Tangible fixed assets
Tangible fixed assets
are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Freehold land
Not Depreciated
Leasehold improvements
10% Straight line
Plant and equipment
10% to 20% Straight line
Computers
33.33% Straight line
Motor vehicles
25% Straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and
is credited or charged to profit or loss
.
1.6
Investment properties
Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure
. Subsequently it is measured
at fair value a
t
the reporting end date
. The surplus or deficit on revaluation is recognised in profit or loss.
1.7
Impairment of fixed assets
At each reporting
period
end date, the
company
reviews the carrying amounts of its tangible
and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the
company
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in
profit
or
loss
, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit)
in
prior years. A reversal of an impairment loss is recognised immediately in
profit
or
loss
, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.8
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
CITY HOTELS (DUNFERMLINE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2022
1
Accounting policies
(Continued)
- 13 -
1.9
Cash and cash equivalents
Cash and cash equivalents
are basic financial assets
and
include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.10
Financial instruments
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in
profit
or
loss
, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those
held
at
fair value through profit and loss
, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected.
If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when
the company
transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts,
are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
s
ubsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in
profit
or
loss
in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as
being measured at
fair value th
r
ough profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
CITY HOTELS (DUNFERMLINE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2022
1
Accounting policies
(Continued)
- 14 -
1.11
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.12
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the
profit and loss account
because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The
company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and 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. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the
profit and loss account
, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the
company
has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.13
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or
fixed assets
.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.14
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.15
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair
value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
CITY HOTELS (DUNFERMLINE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2022
1
Accounting policies
(Continued)
- 15 -
Rentals payable under operating leases,
including
any lease incentives received, are charged to
income
on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease
s
asset are consumed.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
1.16
Government grants
Government grants are recognised at the fair value of the asset receive
d
or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met
. Where a
grant does not specify performance conditions
it
is recognised in income when the proceeds are received or receivable
. A grant received before the recognition criteria are satisfied is recognised as a liability.
2
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 amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The key judgements made in the preparation of the financial statements are as follows:
-
Assessment of the useful economic life of goodwill and a review of the underlying value of the goodwill for any impairment indicators;
-
A review of the fair value of investment properties at each period end date to ensure these are appropriate and that no impairment is required.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2022
2021
£
£
Turnover analysed by class of business
Income from operating hotels and licenced trade establishments
6,311,299
2,141,261
2022
2021
£
£
Turnover analysed by geographical market
United Kingdom
6,311,299
2,141,261
CITY HOTELS (DUNFERMLINE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2022
3
Turnover and other revenue
(Continued)
- 16 -
2022
2021
£
£
Other revenue
Grants received
150,849
1,308,465
Rental income
478,381
401,618
4
Operating profit
2022
2021
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants
(150,849)
(1,308,465)
Depreciation of owned tangible fixed assets
188,719
210,580
Depreciation of tangible fixed assets held under finance leases
32,287
13,745
Profit on disposal of investment property
(183,713)
-
Amortisation of intangible assets
43,800
43,800
Operating lease charges
144,000
60,000
5
Auditor's remuneration
2022
2021
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
9,010
7,800
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
Sales and administration
26
19
Guest services
144
129
Total
170
148
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
1,733,707
1,524,045
Social security costs
90,740
65,205
Pension costs
21,079
17,714
1,845,526
1,606,964
CITY HOTELS (DUNFERMLINE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2022
- 17 -
7
Interest payable and similar expenses
2022
2021
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
153,800
124,213
8
Taxation
2022
2021
£
£
Current tax
UK corporation tax on profits for the current period
97,419
4,533
Adjustments in respect of prior periods
(5,071)
Total current tax
92,348
4,533
Deferred tax
Origination and reversal of timing differences
(166,362)
53,269
Other adjustments
13,392
142,871
Total deferred tax
(152,970)
196,140
Total tax (credit)/charge
(60,622)
200,673
The actual (credit)/charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2022
2021
£
£
Profit before taxation
659,489
210,973
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
125,303
40,085
Tax effect of expenses that are not deductible in determining taxable profit
526
226
Tax effect of income not taxable in determining taxable profit
(34,905)
Tax effect of utilisation of tax losses not previously recognised
(26,275)
Adjustments in respect of prior years
(5,071)
Permanent capital allowances in excess of depreciation
(26,306)
62,959
Effect of revaluations of investments
(140,087)
(45,468)
Other non-reversing timing differences
13,392
142,871
Tax in respect of chargeable gains
32,801
Taxation (credit)/charge for the year
(60,622)
200,673
CITY HOTELS (DUNFERMLINE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2022
- 18 -
9
Dividends
2022
2021
£
£
Final paid
4,000
4,000
10
Intangible fixed assets
Goodwill
£
Cost
At 1 July 2021 and 30 June 2022
445,500
Amortisation and impairment
At 1 July 2021
328,687
Amortisation charged for the year
43,800
At 30 June 2022
372,487
Carrying amount
At 30 June 2022
73,013
At 30 June 2021
116,813
CITY HOTELS (DUNFERMLINE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2022
- 19 -
11
Tangible fixed assets
Freehold land
Leasehold improvements
Assets under construction
Plant and equipment
Computers
Motor vehicles
Total
£
£
£
£
£
£
£
Cost
At 1 July 2021
3,081,466
393,179
173,956
1,301,696
48,968
125,743
5,125,008
Additions
189,445
5,277
62,702
257,424
Disposals
(16,200)
(16,200)
Transfers
141,787
141,787
Transfer to investment property
(240,145)
(15,969)
(256,114)
Other changes
(141,787)
(141,787)
At 30 June 2022
2,983,108
393,179
1,491,141
54,245
188,445
5,110,118
Depreciation and impairment
At 1 July 2021
185,294
287,408
979,665
46,806
88,295
1,587,468
Depreciation charged in the year
40,831
20,265
121,465
2,809
35,636
221,006
At 30 June 2022
226,125
307,673
1,101,130
49,615
123,931
1,808,474
Carrying amount
At 30 June 2022
2,756,983
85,506
390,011
4,630
64,514
3,301,644
At 30 June 2021
2,896,172
105,771
173,956
322,031
2,162
37,448
3,537,540
CITY HOTELS (DUNFERMLINE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2022
11
Tangible fixed assets
(Continued)
- 20 -
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2022
2021
£
£
Plant and equipment
40,133
Motor vehicles
57,606
24,324
97,739
24,324
12
Investment property
2022
£
Fair value
At 1 July 2021
5,874,637
Additions through external acquisition
328,029
Transfers from owner-occupied property
256,114
Disposals
(306,740)
At 30 June 2022
6,152,040
Investment property comprises various licenced establishments and residential properties which attract rental income. The directors have valued the properties at their fair value. The valuations were made on an open market value basis by reference to market evidence of transaction prices for similar properties and the directors extensive knowledge of the area.
13
Stocks
2022
2021
£
£
Finished goods and goods for resale
85,500
47,209
14
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
101,537
64,668
Corporation tax recoverable
33,994
Other debtors
787,511
1,215,311
Prepayments and accrued income
219,784
72,244
1,108,832
1,386,217
CITY HOTELS (DUNFERMLINE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2022
- 21 -
15
Creditors: amounts falling due within one year
2022
2021
Notes
£
£
Bank loans
17
444,984
500,655
Obligations under finance leases
18
36,305
11,049
Trade creditors
599,237
422,591
Corporation tax
97,419
Other taxation and social security
193,234
105,616
Other creditors
613,883
602,870
Accruals and deferred income
56,398
61,778
2,041,460
1,704,559
16
Creditors: amounts falling due after more than one year
2022
2021
Notes
£
£
Bank loans and overdrafts
17
3,282,295
3,924,952
Obligations under finance leases
18
66,161
20,113
3,348,456
3,945,065
17
Loans and overdrafts
2022
2021
£
£
Bank loans
3,727,279
4,425,607
Payable within one year
444,984
500,655
Payable after one year
3,282,295
3,924,952
The bank loans and overdrafts are secured by a standard security over the company's land and buildings and by a bond and floating charge over the company's assets.
18
Finance lease obligations
2022
2021
Future minimum lease payments due under finance leases:
£
£
Within one year
36,305
11,049
In two to five years
66,161
20,113
102,466
31,162
CITY HOTELS (DUNFERMLINE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2022
18
Finance lease obligations
(Continued)
- 22 -
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
19
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
2022
2021
Balances:
£
£
Accelerated capital allowances
90,882
257,245
Fair value adjustments
444,350
430,957
535,232
688,202
2022
Movements in the year:
£
Liability at 1 July 2021
688,202
Credit to profit or loss
(152,970)
Liability at 30 June 2022
535,232
A portion of the deferred tax liability set out above is expected to reverse within 3 years and relates to accelerated capital allowances that are expected to mature within the same period. A further portion relates to fair value adjustments to the value of investment properties, which will reverse as and when the properties are sold.
20
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
21,079
17,714
The company operates a defined contribution pension scheme for all qualifying employees.
The assets of the scheme are held separately from those of the company in an independently administered fund.
CITY HOTELS (DUNFERMLINE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2022
- 23 -
21
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary A Shares of £1 each
26
26
26
26
Ordinary B Shares of £1 each
26
26
26
26
Ordinary C Shares of £1 each
24
24
24
24
Ordinary D Shares of £1 each
24
24
24
24
100
100
100
100
22
Profit and loss reserves
2022
2021
£
£
At the beginning of the year
5,141,510
5,135,210
Profit for the year
720,111
10,300
Dividends declared and paid in the year
(4,000)
(4,000)
Transfer from revaluation reserve
(43,717)
At the end of the year
5,813,904
5,141,510
Included within profit and loss reserves are non-distributable profits, as set out below:
2022
2021
£
£
Non-distributable profits included above
At the beginning of the year
1,581,360
1,484,929
Non distributable profits in the year
(13,392)
96,431
At the end of the year
1,567,968
1,581,360
Distributable profits
4,245,936
3,560,150
23
Operating lease commitments
Lessee
Operating lease payments represent rentals payable by the company for a certain number of its properties. Leases are on a rolling basis with 6 months notice to terminate.
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2022
2021
£
£
Within one year
72,000
72,000
CITY HOTELS (DUNFERMLINE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2022
- 24 -
24
Related party transactions
Included within other debtors is a loan to a partnership, of which the directors are partners, of £787,522 (2021 - £1,208,020). £478,239 of this loan pre dates 20 March 2013 when the HMRC legislation changed.
Included within other creditors are loans from the directors of £507,180 (2021 - £522,045).
During the year the company ran a keg business on behalf of a partnership, of which the directors are partners. The costs incurred in relation to this business were fully recharged out to the partnership resulting in net sales of £688,764 (2021 - £281,719). No profit was recognised in the company in relation to this business.
During the year the company paid rent to a partnership, of which the directors are partners of £144,000 (2021 - £60,000).
25
Ultimate controlling party
The company is controlled by directors Mr Stuart Adamson and Mrs Mary Adamson by virtue of them holding 52% of the issued share capital of the company.
26
Cash generated from operations
2022
2021
£
£
Profit for the year after tax
720,111
10,300
Adjustments for:
Taxation (credited)/charged
(60,622)
200,673
Finance costs
153,800
124,213
Gain on disposal of investment property
(183,713)
-
Fair value gain on investment properties
-
(239,303)
Amortisation and impairment of intangible assets
43,800
43,800
Depreciation and impairment of tangible fixed assets
221,006
224,325
Movements in working capital:
(Increase)/decrease in stocks
(38,291)
15,138
Decrease/(increase) in debtors
243,391
(77,205)
Increase in creditors
269,897
216,218
Cash generated from operations
1,369,379
518,159
27
Analysis of changes in net debt
1 July 2021
Cash flows
New finance leases
30 June 2022
£
£
£
£
Cash at bank and in hand
517,020
501,103
-
1,018,123
Borrowings excluding overdrafts
(4,425,607)
698,328
-
(3,727,279)
Obligations under finance leases
(31,162)
34,398
(105,702)
(102,466)
(3,939,749)
1,233,829
(105,702)
(2,811,622)
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