Registered number:
03542942
HEATHLAND HOTELS LIMITED
DIRECTORS' REPORT AND FINANCIAL STATEMENTS
INFORMATION FOR FILING WITH THE REGISTRAR
FOR THE YEAR ENDED 31 OCTOBER 2020
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COMPANY INFORMATION
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Griffin Stone Moscrop & Co
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Chartered Accountants
&
Statutory Auditors
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21-27 Lamb's Conduit Street
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CONTENTS
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Notes to the financial statements
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HEATHLAND HOTELS LIMITED
REGISTERED NUMBER:
03542942
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BALANCE SHEET
AS AT
31 OCTOBER 2020
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Creditors: amounts falling due within one year
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Net current assets/(liabilities)
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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Provisions for liabilities
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The
financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime and in accordance with the provisions of FRS 102 Section 1A - small entities.
The financial statements have been delivered in accordance with the provisions applicable to companies subject to the small companies regime.
The company has opted not to file the statement of comprehensive income in accordance with provisions applicable to companies subject to the small companies' regime.
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HEATHLAND HOTELS LIMITED
REGISTERED NUMBER:
03542942
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BALANCE SHEET
(CONTINUED)
AS AT
31 OCTOBER 2020
The financial statements were approved and authorised for issue by the board and were signed on its behalf by
:
................................................
Mr R A Frenkel
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The notes on pages 3 to 12 form part of these financial statements.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2020
Heathland Hotels Limited is a private company limited by shares, and is incorporated in the United Kingdom and registered in England and Wales under company registration number 03542942. The registered office address is The Birch Hotel, Lewes Road, Haywards Heath, West Sussex, RH17 7SF.
2.
Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Section 1A of
Financial Reporting Standard 102, the Financial Reporting Standard applicable in
the UK and Republic of Ireland, and the Companies Act 2006
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The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the company's accounting policies (see note 3).
The following principal accounting policies have been applied:
As part of their assessment of going concern, the directors have considered the funding and liquidity position of the company to determine the appropriateness of preparing the financial statements on the going concern basis.
The comprehensive measures governments across the world have taken to limit the spread of the coronavirus pandemic have had a dramatic effect on hospitality businesses worldwide since March 2020. At The Birch Hotel, demand was adversely affected from early February 2020 onwards, and turnover fell year on year by 63.7% thereafter as a result of the national lockdown from 24 March to 6 July and reduced demand - largely from the corporate sector - for the remainder of the year. An operating profit of £74,366 in 2018/19 became an operating loss of £207,261 in 2019/20, a deterioration of £281,627, despite the payroll reduction measures put in place and the financial assistance received from government schemes.
The company had support for paying wages from the government's Coronavirus Job Retention Scheme having furloughed a proportion of workers and this scheme continues in some measure until 30 April 2021. The company also benefited through the Coronavirus Business Interruption Loan Scheme having received a loan of £360,000 during the period. Other benefits received included the temporary reduced VAT rating on supplies and a business rates holiday for the year to March 2021. The company continues to make every effort to contain costs to a minimum during this uncertain period.
It is however difficult to estimate to what extent, and for how long, the ever-changing government measures to control the COVID-19 pandemic will continue to have an impact on the hospitality sector trading environment. The company relies on the support of one of its directors in order to meet its liabilities as they fall due. The director concerned has confirmed that he will not demand repayment of the amounts owed to him by the company until such time as the company has sufficient resources in order for it to do so. On this basis the directors believe it is appropriate to prepare the financial statements on the going concern basis.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2020
2.
Accounting policies (continued)
Turnover is recognised to the extent that it is probable that the economic benefits will flow to the company and the turnover can be reliably measured. Turnover is measured as the fair value of the consideration received or receivable by the company in respect of goods supplied and services rendered during the year, excluding discounts, rebates, value added tax and other sales taxes, and consists of room rentals, food and beverage sales and other guest services. Turnover is recognised when rooms are occupied or goods and services have been supplied or rendered.
Customer deposits are not recognised until services are rendered and are deferred as liabilities.
The following criteria must also be met before turnover is recognised:
Rendering of services
Turnover from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
∙
the amount of turnover can be measured reliably;
∙
it is probable that the company will receive the consideration due under the contract;
∙
the stage of completion of the contract at the end of the reporting period can be measured reliably; and
∙
the costs incurred and the costs to complete the contract can be measured reliably.
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, on the following bases:
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2% to 10% on a straight line basis
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Fixtures, fittings and equipment
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10% to 25% on a straight line basis
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20% to 50% on a straight line basis
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The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first-in, first-out basis.
At each balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price. The impairment loss is recognised immediately in profit or loss.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2020
2.
Accounting policies (continued)
Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
The company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the statement of comprehensive income.
Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
Grants are accounted under the accruals model as permitted by FRS 102. The deferred element of grants is included in creditors as deferred income.
Grants of a revenue nature are recognised in the statement of comprehensive income in the same period as the related expenditure.
Defined contribution pension plan
The company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the company pays fixed contributions into a separate entity. Once the contributions have been paid the company has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the balance sheet. The assets of the plan are held separately from the company in independently administered funds.
Interest income is recognised in profit or loss using the effective interest method.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2020
2.
Accounting policies (continued)
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
All borrowing costs are recognised in profit or loss in the year in which they are incurred.
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Provisions for liabilities
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Provisions are made where an event has taken place that gives the company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the company becomes aware of the obligation, and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the balance sheet.
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Current and deferred taxation
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The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the company operates and generates income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:
∙
The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
∙
Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2020
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Judgements in applying accounting policies and key sources of estimation uncertainty
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In preparing these financial statements, the directors are required to make judgements, estimates and assumptions about the carrying amount of the assets and liabilities that are not obtainable from other sources. Judgements, estimates and assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates, but are unlikely to be material.
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The average monthly number of employees, including directors, during the year was
35
(2019 -
38
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Fixtures, fittings and equipment
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Charge for the year on owned assets
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Finished goods and goods for resale
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2020
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Prepayments and accrued income
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Creditors: amounts falling due within one year
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Other taxation and social security
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Accruals and deferred income
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Creditors: amounts falling due after more than one year
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The following liabilities included in aggregate within creditors are secured:
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The above bank loan is secured by a debenture containing first fixed and floating charges over all property, other assets and undertaking of the company.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2020
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The aggregate amount of liabilities repayable wholly or in part more than five years after the balance sheet date is:
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The above liability is repayable by monthly capital instalments of £6,000 and interest will be charged on a floating rate basis under which the interest rate will not be less than 3.35% per annum.
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An analysis of the maturity of loans included in creditors is given below:
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Amounts falling due within one year
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Amounts falling due 1-2 years
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Amounts falling due 2-5 years
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Amounts falling due after more than 5 years
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2020
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Financial assets measured at fair value through profit or loss
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Financial assets measured at fair value through profit or loss comprise cash at bank and in hand.
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Charged to profit or loss
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The provision for deferred taxation is made up as follows:
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Accelerated capital allowances
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Tax losses carried forward
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Allotted, called up and fully paid
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2,000,000
(2019 -
2,000,000
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ordinary
shares of £
1.00
each
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2020
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At 31 October 2020 the company had capital commitments as follows:
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Contracted for but not provided in these financial statements
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The company operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the company in an independently-administered fund. The pension cost charge represents contributions payable by the company to the fund and amounted to £20,616 (2019 - £17,881). Contributions totalling £3,788 (2019 - £3,634) were payable to the fund at the balance sheet date and are included in creditors.
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Related party transactions
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During the year, additional amounts of £120,000 were received from, and repayments of £105,000 were made to, one of the directors of the company. At the balance sheet date, the company owed £150,000 to that director. Interest was charged on this loan at a commercial rate until the end of February 2020, however from that point such interest charges were suspended.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2020
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Post balance sheet events
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Since 31 October 2020, the COVID-19 pandemic has continued to have a severe impact on economies around the globe. In many countries, businesses are being forced to cease or limit operations for long or indefinite periods of time. Measures taken to contain the spread of the virus - including quarantines, social distancing, and closures of non-essential services - have triggered significant disruptions to businesses worldwide, resulting in an economic slowdown. These measures continue to have a direct impact on the hospitality sector with the closure of hotels, restaurants and non-essential shops. Governments and central banks continue to respond with monetary and fiscal interventions to stabilise economic conditions.
The company has determined that these continuing events are non-adjusting subsequent events. Accordingly, the financial position of the company as at 31 October 2020 and the results for the year then ended have not been adjusted to reflect their impact. The duration and impact of the COVID-19 pandemic, as well as the effectiveness of government and central bank responses, still remain unclear at this time, although the vaccination programme in the United Kingdom offers hope for the future. It is not possible to make a reliable estimate of the duration and severity of these consequences, nor of their impact on the financial position and results of the company for future periods.
The background to the decrease in customer demand is that, firstly, corporate demand has reduced to almost nil as businesses adopt new methods of communication and, secondly, leisure travel - which would in any case be low during the winter months - reduced to a very low level with the exception of a few days around Christmas 2020 and disappeared completely once the January 2021 lockdown commenced. In these circumstances two main actions were taken:
(1) The Birch Hotel's offering was aimed at the one sector that remained buoyant - namely the building trades that are working on several major projects in the local area. This is business that would normally go to a Premier Inn but by keeping prices low The Birch has gained a foothold in this sector which it aims to retain once the pandemic is over; and
(2) With the lack of leisure customers, the policy has been to close the hotel completely at strategic times. The initial occasion was immediately after Christmas when the hotel closed from 27 December 2020 to 4 January 2021. Subsequently, once the January lockdown came into effect, the hotel has been open only 3 or 4 days per week (Monday to Wednesday/Thursday). This has allowed maximum furlough benefit to be derived from the dead period over the weekend.
With regard to operational matters, all the necessary COVID measures were put into effect prior to the first lockdown and remain in place to the present day. An efficient routine has now been established which both customers and staff are used to and the disruption associated with COVID-19 has consequently lessened.
The auditors' report on the financial statements for the year ended 31 October 2020 was unqualified.
The audit report was signed on
5 March 2021
by
Reema Mistry ACA
(senior statutory auditor) on behalf of
Griffin Stone Moscrop & Co
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