The directors present the strategic report for the year ended 31 March 2018.
The Signature Living Group (comprising Signature Living Hotel Limited, the “Company” and its subsidiaries, together the “Group”) continued to improve the performance of its core operations in the year ended 31st March 2018, as well as exploiting further development opportunities and growing its forward pipeline of projects as the strength of the brand continues to be enhanced. During the year, continued refinements to the Group Structure has enabled management to more closely monitor and control financial and operational performance. There has been a strong focus on accessing cheaper and longer-term commercial funding streams based on its rapidly maturing operations and improved trading perfomance across the Group. This has strengthened the asset base of the Group balance sheet, improved operational cash flow and positioned the Group to improve underlying profitability in the short to medium term.
As part of these preparations and following professional advice, the Group has separated property holding and trading activities and sought to ringfence its residential projects. In due course the Group may seek to simplify its corporate structure through the combination of its operating companies but in the short term the Directors are of the opinion that individual asset based lending is facilitated by having separate trading entities for each operational site. In December 2016 the original investors in the Stanley Street Hotel had their capital returned with the Group replacing these funds with longer term, more commercial, finance. This approach is to be replicated with other Group venues such as 30 James Street and Shankly Hotel as it transitions from its original fractional sales model to more mainstream lending.
During the period the Arthouse Hotel project was delivered, and phase II of the Shankly Hotel was nearly completed adding further bedrooms to the trading capacity of the Group. In late May 2017 the Group opened its first venue outside of the city with phase 1 of the Exchange Hotel, Cardiff coming online, adding 57 rooms alongside the Grand Hall and associated reception bar and restaurant space. The popular Alma De Cuba bar and restaurant has also been refurbished and reinvigorated with a view to providing guests with a first class location for food and drink outside of the Group’s hotels within Liverpool. Planning consent is being sought to facilitate the creation of a mezzanine level space within this venue to allow for further covers and function space, which the Directors are confident will create additional revenue opportunities for this operation.
During the period, a residential scheme was started and completed at West Africa House with all units forward sold and funded.
Other acquisitions took place including the centrally located former Post Office in Preston which will become another Shankly themed venue, building on the strength of that growing brand and also the purchase of the former Scottish Mutual Building on Donegal Square in Belfast which will become a George Best themed hotel.
Two distinct brands have now emerged from our operations. There is the core Signature Living Hotel brand, a fast paced, funky and trendy brand which taps into the younger market. There is also the bespoke heritage “one off’” (often semi themed) hotels which utilise historic buildings (such as the Exchange Hotel Cardiff) or legendary brands (i.e. George Best, Bill Shankly and Dixie Dean) to allow the Group to effectively promote and fill the venues in a viral, online manner.
The Signature team has also been in the process of building out in excess of 500 residential units in line with the growing population and ongoing regeneration of Liverpool and Manchester City Centres, although these are delivered increasingly outside of the Signature Living Hotel Ltd Group.
During the year to 31 March 2018 Signature has established itself as one of the largest operators in Liverpool across it’s different offering and this has created multiple opportunities to harness economies of scale for the Group and there has been ongoing investment in enhanced procurement strategies across the Group to further drive value including Group wide insurance and energy arrangements allowing better forward planning.
During the period to March 2018 equity in the Group has grown to £24.2 million. Further to this, there is additional underlying equity that will be unlocked in the Group as the larger venues such as 30 James Street and Shankly Hotel are refinanced.
The Group’s operations, being based upon property development and hotel management, are subject to both macro and micro economic risks with growth in the hotel sector being driven primarily by the UK economy together with increasing demands for both domestic and international travel. In the short term the principal economic risk continues to be the potential impact posed by Brexit to that part of the UK hospitality and leisure activity derived from EU member states. Management remains confident that the strength of the Signature Living brand, together with that of Liverpool as a city, will mitigate against these risks.
Following the Brexit decision we are seeing opportunities, as due to the weaker pound, international tourism has increased as have “staycations” in the UK market generally. Visitor numbers have increased in our primary market, Liverpool. The Group remains dependent on external sources of finance to take advantage of their strategic property development opportunities. The availability of this finance, given the nature of the UK and broader geographical economies is an area of uncertainty although Signature are increasingly well positioned to partner with mainstream lenders that are slowly returning to the property, leisure and hospitality market alongside a range of challenger banks. Signature can consistently create occupancy levels in excess of 90% through their unique offering that taps into the experience, bucket list niche that customers are increasingly looking for and becoming further well documented as a shifting pattern in the marketplace.
The Group has now scaled up its head office functions with a move to enlarged premises, in particular in finance and development whilst continuing to invest in key infrastructure and technology to support the growth of the business. Key new funding streams are being progressed as the Group continues to move towards longer term funding partners. The Group has changed its accounting policy regarding room sales this year to defer profit on such sale to the point of development completion. This has adversely impacted current year profitability but means that £15m of profits in respect of contracted sales (where legal exchange has taken place) will be recognised in future profits (largely in the financial year ends ended 31 March 2019 and 31 March 2020)when the associated developments are delivered. This moves the accounting to a more prudent position and is in line with industry norms.
As at July 2019 there are £128.7 million of property assets within the Group containing equity of £58.8million. Outside of the Group there are other associated companies delivering residential projects with a current day asset value of £15million and £6.8million of equity. These numbers relate purely to property and do not cover other areas of value for example the rapidly growing underlying value in the brand and IP worth of the Signature Group generally.
Management consider a mix of operational and financial performance metrics to monitor and control the ongoing performance of the company on a rolling monthly basis. Each hotel generates its own monthly management information that are cross referenced in line with annually updated business plans. Key metrics include room occupancy and rev par a well as net profit. All these metrics improved in the current year.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 March 2018.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The results for the year are set out on page 9.
Ordinary dividends were paid amounting to £200,000. The directors do not recommend payment of a further dividend.
The group manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the group has sufficient liquid resources to meet the operating needs of the business.
The group is exposed to fair value interest rate risk on its fixed rate borrowings and cash flow interest rate risk on floating rate deposits, bank overdrafts and loans.
The group's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.
Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance.
There is no employee share scheme at present, but the directors are considering the introduction of such a scheme as a means of further encouraging the involvement of employees in the company's performance.
In accordance with the company's articles, a resolution proposing that DSG be reappointed as auditor of the group will be put at a General Meeting.
In our opinion the financial statements:
give a true and fair view of the state of the group's and the parent company's affairs as at 31 March 2018 and of the group's profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard , and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of matter
The group has net current liabilities at the end of the financial year which is associated with short term debt. Whilst the group as a whole has significant net worth largely driven by the carrying value of its property portfolio its financing arrangements remain almost entirely short term in nature and therefore require re-financing on an annual basis. We note that the directors have a strong historical track record of securing replacement finance as and when required but also highlight that the current climate of financial uncertainty created by Brexit and other macro economic factors may render future re-financing activity more challenging or, at the very least, more expensive.
We therefore draw attention to note 1 .3 and note 35 . Our opinion is not modified in respect of this matter.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group's or the parent company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue .
Other information
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of 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.
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identifie d material misstatements in the strategic report and the directors' r eport .
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
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 group's and the parent 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 group or the parent company or to cease operations, or have no realistic alternative but to do so.
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 for the audit of the financial statements is located on the Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities . This description forms part of our auditor’s report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an 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.
As permitted by s408 Companies Act 2006, the c ompany has not presented its own profit and loss account and related notes. The c ompany’s profit for the year was £3,900,909 (2017 - £1,925,298 loss).
Signature Living Hotel Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is . The principal activities of the company are disclosed in the Directors' Report.
The group consists of Signature Living Hotel Limited and all of its subsidiaries.
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.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
- Section 4 ‘Statement of Financial Position’: Reconciliation of the opening and closing number of shares;
- Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
- Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’ : Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income ;
- Section 26 ‘Share based Payment’ : Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements ;
- Section 33 ‘Related Party Disclosures’ : Compensation for key management personnel .
The consolidated financial statements incorporate those of Signature Living Hotel Limited and all of its subsidiaries (ie entities that the g roup controls through its power to govern the financial and operating policies so as to obtain economic benefits). Subsidiaries acquired during the year are consolidated using the purchase method. Their results are incorporated from the date that control passes.
All financial statements are made up to 31 March 2018 . Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the g roup.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
As at the balance sheet date the group had net current liabilities of £37,093,939 (company: £8,295,036).
The company and group continue to be largely dependent on a mix of operating cash flows, investor financing (from sale of property) and short term loans to fund day to day working capital and property development funding requirements. Management continues to make efforts to secure alternative sources of finance which they anticipate will provide a more structured and long term funding solution. Accessing these funding solutions will be facilitated by continuing to establish a successful trading track record of the group as whole.
Taking into account current funding arrangements and potential alternative funding solutions, and a t the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
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.
Revenue relating to the sale of food and beverage items at hotel operations is recognised at the point of sale. Revenue relating to hotel accommodation charges is spread evenly over the period of the guest's stay at the hotel.
Historically the company recognised revenue (and associated costs) on disposal of property at the point of legal exchange. In the current year this policy has been changed to recognise profit at the point of transaction completion. The Directors consider that this change in accounting policy is appropriate given the usual sale to build completion timetable and is also more in line with industry norms. The change in accounting policy has led to a restatement of the prior year financial statements which is detailed further in note 35.
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 recognised in the profit and loss account.
Equity in vest ments are measured at fair value through profit or loss , except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably , which are recognised at cost less impairment until a reliable measure of fair value becomes available.
I n the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group 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.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
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.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest m ethod unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
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.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group 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.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future paymen ts discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
The tax expense represents the sum of the tax currently payable and deferred 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 group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
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 if, and only if, there is 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.
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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss 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 d 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.
In the application of the group’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 following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Management exercise judgement in determining the carrying value of freehold assets and period over which leasehold assets are depreciated. Valuation decisions are determined by consultation with independent property experts and depreciation periods are based upon management's best estimate of useful economic life which is initially set at 50 years but which is reviewed each year for appropriateness.
Management apply judgement when considering the recoverability, and hence carrying value, of trade and other debtors. In forming a judgement in this area management consider both the historical track record of cash settlement together with the expected financial performance of the debtor (where this information is available). This latter consideration represents an area of estimation uncertainty.
An analysis of the group's turnover is as follows:
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual charge for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:
In addition to the amount charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:
Details of the company's subsidiaries at 31 March 2018 are as follows:
As permitted by the reduced disclosure framework within FRS 102, the company has taken advantage of the exemption from disclosing the carrying amount of certain classes of financial instruments , denoted by ' n/a ' above .
Bank loans and overdrafts relating to the Company and the Group are secured by a fixed and floating charge over the Company and Group assets respectively.
Deferred tax assets and liabilities are offset where the group or 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:
The deferred tax liability detailed above is not expected to reverse within twelve months of the balance sheet date.
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
On 21 August 2017 the group acquired the business of Bedford Hotel Limited. This business is a well established hotel in Belast which management intends to further invest in and expand operations.
Contingent liabilities
During a previous year management became aware that development costs relating to a previously completed hotel project had not been billed on to Signature Living Hotel Limited by the legal entity that incurred these costs. This company had subsequently entered an insolvent liquidation process and was removed from the Companies House register. Management has recently been instructed of an intention to reinstate the company which in turn may lead to outstanding costs being charged to Signature Living Hotel Limited. As at the balance sheet date management are of the view that this liability will not exceed circa £430,000.
Certain properties held by the group were initially bought/developed (either in whole or in part) via the crowdfunded, fractional sales model. Subsequent to the year end, the d irectors have taken the decision to exercise their right to re-acquire those long lease assets from individual investors which will crystallise a maximum liability of £27.5 million upon the group between July and December 2019. This is an approach consistent with other property operations in the G roup 's where investors have had their initial capital successfully returned. The d irectors are in advanced negotiations with several Pan European funders (the “Funders”) to provide the funding to execute th ese transaction s and investors have been notified of the groups intention to return their capital, with associated rentals being suspended until such funds are returned , to allow lawyers to finalise completion statements and apportionments accordingly. The directors are certain that the more favorable financial terms offered by the Funder s will place the group on a n enhanced financial footing, improving both liquidity and reducing ongoing financing charges.
The remuneration of key management personnel is as follows.
Included within other debtors is an amount of £22,939,841 (2017: £17,300,082) owed by Signature Contractors Limited. Included within trade creditors is an amount of £18,794,323 (2017: £14,042,793) owed to this same company. Supplies made by Signature Living Contractors Limited to the company totalled £4,277,055 (2017: £8,525,426) for the year ended 31 March 2018. Signature Living Contractors Limited is a company jointly owned and controlled by Lawrence and Katie Kenwright.
Included in other creditors is an amount of £6,178,068 (2017: £2,839,235) owed to Signature Works Gold Limited, a company controlled by Lawrence Kenwright.
Included in other debtors is an amount of £1,343,000 (2017: £1,068,047) owed by Silkhouse Court Limited, a company in which Lawrence Kenwright is a shareholder.
Dividends totalling £200,000 (2017 - £610,000) were paid in the year in respect of shares held by the company's directors.
The ultimate controlling party is Mr L Kenwright.
Profit and loss reserves as at 31 March 2017 have been restated down wards by £ 12,935,509 in the group and downwards by £2,307,106 in the company to correct changes in the accounting policy used for revenue recognition by the group .
The change in the accounting policy impacts on the following items:
Historically the group recognised revenue (and associated costs) on disposal of property at the point of legal exchange. In the current year this policy has been changed to recognise profit at the point of transaction completion. The directors consider that this change in accounting policy is appropriate given the usual sale to build completion timetable and is also more in line with industry norms.
Historically the company recognised revenue (and associated costs) on disposal of property at the point of legal exchange. In the current year this policy has been changed to recognise profit at the point of transaction completion. The directors consider that this change in accounting policy is appropriate given the usual sale to build completion timetable and is also more in line with industry norms.