Company Registration No. 01590762 (England and Wales)
PALMGLEN LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2018
PALMGLEN LIMITED
COMPANY INFORMATION
Directors
S Greene
S Cooke
Secretary
A Davies
Company number
01590762
Registered office
1238 High Road
Whetstone
London
N20 0LH
Auditor
Gerald Edelman
73 Cornhill
London
EC3V 3QQ
Bankers
HSBC Bank plc
West End Area Commercial Centre
5th Floor
70 Pall Mall
London
SW1Y 5EZ
PALMGLEN LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 6
Profit and loss account
7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 22
PALMGLEN LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2018
- 1 -
The directors present the strategic report for the year ended 31 March 2018.
Fair review of the business
The company has reported a further rise in turnover
and
profit
s
during the year under review.
This is the result of
the continued successful implementation of a variety of initiatives over the past year ensuring full utilisation of the club's space and continuing to improve the club's offering in terms of events, music and food.
The directors have considered the year ahead and have put in place short and medium term plans to continue to enhance the club's branding and offering. The directors had anticipated a sustained level of profit in 201
7
/1
8
. The forecasts ahead show that profits should be maintained at these levels.
Principal risks and uncertainties
The principal risks and uncertainties that could affect the company's business are summarised below:
Economic
climate
The company is competing for a share of the disposable income of its target consumers
and is exposed to the risks of the current economic climate; hence
this could lower the company's revenues and operating results in the future. It has been well documented that the decision of the UK to leave the European Union in June 2016 has given rise to further uncertainty. There may be pressures regarding the ability of the company to recruit suitable staff.
Planning has addressed the
issues and the
current economic
climate
by
a continued review of
cost controls and improving the club's margins and general music and food offering.
Regulatory changes
The consequence of changes in legislation on licensing is clear and the business model is consistent with the requirements.
Seasonality and weather
The number of admissions in the company's venue is considerably increased during holiday periods and over bank holiday periods. The company's revenues can also be adversely impacted by extremes of weather conditions which could deter consumers from visiting the venue. Current planning assumes average seasonal weather conditions.
High proportion of fixed overheads and variable revenues
A significant proportion of the company's cost base remains constant notwithstanding changes to the level of revenues. Therefore any significant changes in the level of the company's revenues could significantly affect the level of profits and cash flows. Progress has been made in simplifying and reducing the head office fixed cost base and this remains an area of focus going forward.
Health and safety
Health and safety is taken very seriously by the company. The risk of non-compliance with health and safety legislation
is minimised through comprehensive training, review and development of policies and procedures to maintain standards.
Taxation
The company is exposed to financial risks from increases in tax rates and changes to the basis of taxation including corporation tax and VAT. Controls include regular monitoring of legislative proposals, engagement of experienced executives and the use of experienced sector-specific professional advisers to mitigate the impact of changes.
Financing
See Financial instruments.
Key performance indicators
The key performance indicators for the company are admission and income levels, gross profit margins and EBITDA.
The directors consider that the company operates acceptable key performance indicators relevant to the nature of the business.
PALMGLEN LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2018
- 2 -
Financial instruments
The company's principal financial instruments comprise bank balances, trade creditors and treasury movements with its parent undertaking. The main purpose of these instruments is to manage funds for the company's operations and to finance the company's operations, The company's approach to managing risks applicable to the financial instruments concerned is shown below.
Price risk
Price risk is managed by regularly negotiating prices with suppliers.
Interest rate risk
The company now finances its operations through its own profitability and reserves. The parent undertaking has entered into an interest rate protection agreement in respect of its bank borrowing, using an interest rate swap to generate the desired interest profile and thereby manage its exposure to interest rate fluctuations. The parent company recharges this interest at cost to Palmglen Limited, being the trading entity.
Liquidity risk
The company seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. This is achieved through improved profitability which is recognised in the form of cash. The company policy throughout the year has been to ensure continuity of funding.
S Greene
Director
14 December 2018
PALMGLEN LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2018
- 3 -
The directors present their annual report and financial statements for the year ended 31 March 2018.
Principal activities
The principal activity of the company in the year under review was that of a jazz club, bar and restaurant.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
S Greene
S Cooke
Results and dividends
The results for the year are set out on page 7.
Ordinary dividends were declared and paid amounting to £1,200,000. The directors do not recommend payment of a final dividend.
Auditor
The auditor, Gerald Edelman, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of directors' responsibilities
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.
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.
PALMGLEN LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2018
- 4 -
Going Concern
Having reviewed the company's financial forecasts and expected future cash flows, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the going concern basis has been adopted in preparing the financial statements for the year ended 31 March 201
8
.
On behalf of the board
S Greene
Director
14 December 2018
PALMGLEN LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PALMGLEN LIMITED
- 5 -
Opinion
We have audited the financial statements of Palmglen Limited (the 'company') for the year ended 31 March 2018 which comprise the profit and loss account, 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 a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102
The Financial Reporting Standard applicable in the UK and Republic of Ireland
(United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
-
give a true and fair view of the state of the company's affairs as at 31 March 2018 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
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 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
.
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.
PALMGLEN LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF PALMGLEN LIMITED
- 6 -
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 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, 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 directors' 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 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.
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.
Howard Woolf FCA (Senior Statutory Auditor)
for and on behalf of Gerald Edelman
18 December 2018
Chartered Accountants
Statutory Auditor
73 Cornhill
London
EC3V 3QQ
PALMGLEN LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MARCH 2018
- 7 -
2018
2017
Notes
£
£
Turnover
3
11,431,770
10,828,089
Cost of sales
(7,186,590)
(6,925,310)
Gross profit
4,245,180
3,902,779
Administrative expenses
(2,664,123)
(2,429,080)
Operating profit
4
1,581,057
1,473,699
Interest payable and similar expenses
7
(50,086)
(60,927)
Profit before taxation
1,530,971
1,412,772
Tax on profit
8
(325,396)
(324,201)
Profit for the financial year
1,205,575
1,088,571
The profit and loss account has been prepared on the basis that all operations are continuing operations.
PALMGLEN LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2018
- 8 -
2018
2017
£
£
Profit for the year
1,205,575
1,088,571
Other comprehensive income
-
-
Total comprehensive income for the year
1,205,575
1,088,571
PALMGLEN LIMITED
BALANCE SHEET
AS AT
31 MARCH 2018
31 March 2018
- 9 -
2018
2017
Notes
£
£
£
£
Fixed assets
Tangible assets
10
2,951,441
3,250,714
Current assets
Stocks
12
73,967
56,005
Debtors
13
1,115,410
816,433
Cash at bank and in hand
1,896,131
2,103,530
3,085,508
2,975,968
Creditors: amounts falling due within one year
14
(2,599,303)
(2,778,343)
Net current assets
486,205
197,625
Total assets less current liabilities
3,437,646
3,448,339
Provisions for liabilities
15
(69,521)
(85,789)
Net assets
3,368,125
3,362,550
Capital and reserves
Called up share capital
18
548,024
548,024
Revaluation reserve
2,114,033
2,276,651
Profit and loss reserves
706,068
537,875
Total equity
3,368,125
3,362,550
The financial statements were approved by the board of directors and authorised for issue on 14 December 2018 and are signed on its behalf by:
S Greene
Director
Company Registration No. 01590762
PALMGLEN LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2018
- 10 -
Share capital
Revaluation reserve
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 April 2016
548,024
2,439,269
486,686
3,473,979
Year ended 31 March 2017:
Profit and total comprehensive income for the year
-
-
1,088,571
1,088,571
Dividends
9
-
-
(1,200,000)
(1,200,000)
Transfers
-
(162,618)
162,618
-
Balance at 31 March 2017
548,024
2,276,651
537,875
3,362,550
Year ended 31 March 2018:
Profit and total comprehensive income for the year
-
-
1,205,575
1,205,575
Dividends
9
-
-
(1,200,000)
(1,200,000)
Transfers
-
(162,618)
162,618
-
Balance at 31 March 2018
548,024
2,114,033
706,068
3,368,125
PALMGLEN LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2018
- 11 -
2018
2017
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
23
1,350,152
1,798,952
Interest paid
(50,086)
(60,927)
Income taxes paid
(265,051)
(461,705)
Net cash inflow from operating activities
1,035,015
1,276,320
Investing activities
Purchase of tangible fixed assets
(42,414)
(28,992)
Net cash used in investing activities
(42,414)
(28,992)
Financing activities
Dividends paid
(1,200,000)
(1,200,000)
Net cash used in financing activities
(1,200,000)
(1,200,000)
Net (decrease)/increase in cash and cash equivalents
(207,399)
47,328
Cash and cash equivalents at beginning of year
2,103,530
2,056,202
Cash and cash equivalents at end of year
1,896,131
2,103,530
PALMGLEN LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2018
- 12 -
1
Accounting policies
Company information
Palmglen Limited is a
private
company
limited by shares
incorporated in England and Wales.
The registered office is
1238 High Road, Whetstone, London, N20 0LH. The trading address is 47 Frith Street, Soho, London, W1D 4HT.
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 its leasehold property reflected as deemed cost in accordance with FRS 102. The principal accounting policies adopted are set out below.
1.2
Going concern
A
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.
The directors anticipate a period of sustained profitability going forward. Post year end management accounts to date have continued to show monthly profits.
Thus
t
he directors continue to adopt the going concern basis of accounting in preparing the financial statements.
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
and
settlement
discounts
.
Income received prior to the year end for events after the financial year are deferred and recognised in the future period.
1.4
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:
Leasehold land and buildings
Over the unexpired term of the lease of 13 years
Leasehold improvements
on cost between 5 and 20 years
Fixtures and fittings
on cost over 5 years
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 the profit and loss account
.
Depreciation methods, useful lives and residual values are reviewed if there is an indication of a significant change since the last annual reporting date in the pattern by which the company expects to consume an asset's future economic benefits.
Short leasehold properties that had been revalued to fair value on or prior to the date of transition to FRS 102, are measured on the basis of deemed cost, being the revalued amount at the date of that revaluation.
PALMGLEN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2018
1
Accounting policies
(Continued)
- 13 -
1.5
Impairment of fixed assets
At each reporting
period
end date, the
company
reviews the carrying amounts of its tangible
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
the
profit
and
loss account, 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
the profit
and
loss account, 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.
1.6
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.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in
the
profit
and
loss
account
. Reversals of impairment losses are also recognised in
the
profit
and
loss
account
.
1.7
Cash at bank and in hand
Cash at bank and in hand
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.
1.8
Financial instruments
The company 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 company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset
, with
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.
PALMGLEN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2018
1
Accounting policies
(Continued)
- 14 -
Basic financial assets
Basic financial assets, which include
debtors, cash and bank balances and amounts due from its parent company,
are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest
method 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.
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.
Classification of financial liabilities
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 company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors 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. A
m
ounts 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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.9
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.10
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.
PALMGLEN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2018
1
Accounting policies
(Continued)
- 15 -
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.
1.11
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.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
Leases
Rentals payable under operating leases,
including
any lease incentives received, are charged to
the profit and loss account
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 asset are consumed.
1.14
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the profit and loss account for the period.
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.
PALMGLEN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2018
2
Judgements and key sources of estimation uncertainty
(Continued)
- 16 -
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are
as follows:
Amortisation and depreciation, useful lives and residual values of tangible fixed assets
The
directors
estimate the useful lives and residual values of
tangible
assets in order to calculate the depreciation charge. Changes in these estimates could result in changes being required to the annual charges in the
profit and loss account
and the carrying values of these assets in the
balance sheet
.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2018
2017
£
£
Turnover analysed by class of business
Jazz club, bar and restaurant
11,431,770
10,828,089
4
Operating profit
2018
2017
Operating profit for the year is stated after charging:
£
£
Exchange losses
2,649
-
Fees payable to the company's auditor for the audit of the company's financial statements
8,400
8,400
Depreciation of owned tangible fixed assets
341,687
405,810
Cost of stocks recognised as an expense
4,561,753
4,442,725
Operating lease charges
664,589
573,863
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2018
2017
Number
Number
Staff
99
96
PALMGLEN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2018
5
Employees
(Continued)
- 17 -
Their aggregate remuneration comprised:
2018
2017
£
£
Wages and salaries
2,587,215
2,394,245
Pension costs
11,660
50,742
2,598,875
2,444,987
6
Directors' remuneration
2018
2017
£
£
Remuneration for qualifying services
265,000
255,000
Company pension contributions to defined contribution schemes
-
40,000
265,000
295,000
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2017 - 1).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2018
2017
£
£
Remuneration for qualifying services
265,000
255,000
7
Interest payable and similar expenses
2018
2017
£
£
Interest on financial liabilities measured at amortised cost:
Interest payable to group undertakings
50,086
60,883
Other finance costs:
Other interest
-
44
50,086
60,927
8
Taxation
2018
2017
£
£
Current tax
UK corporation tax on profits for the current period
341,664
344,245
PALMGLEN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2018
8
Taxation
(Continued)
- 18 -
Deferred tax
Origination and reversal of timing differences
(16,268)
(20,044)
Total tax charge
325,396
324,201
The actual 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:
2018
2017
£
£
Profit before taxation
1,530,971
1,412,772
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2017: 20.00%)
290,884
282,554
Tax effect of expenses that are not deductible in determining taxable profit
9,914
7,850
Group relief
-
(989)
Depreciation in excess of capital allowances
40,866
54,830
Deferred taxation
(16,268)
(20,044)
Taxation charge for the year
325,396
324,201
9
Dividends
2018
2017
£
£
Interim paid
1,200,000
1,200,000
PALMGLEN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2018
- 19 -
10
Tangible fixed assets
Leasehold land and buildings
Leasehold improvements
Fixtures and fittings
Total
£
£
£
£
Cost
At 1 April 2017
3,653,402
2,522,128
1,016,018
7,191,548
Additions
-
7,073
35,341
42,414
At 31 March 2018
3,653,402
2,529,201
1,051,359
7,233,962
Depreciation and impairment
At 1 April 2017
1,411,027
1,588,061
941,746
3,940,834
Depreciation charged in the year
160,170
134,203
47,314
341,687
At 31 March 2018
1,571,197
1,722,264
989,060
4,282,521
Carrying amount
At 31 March 2018
2,082,205
806,937
62,299
2,951,441
At 31 March 2017
2,242,375
934,067
74,272
3,250,714
11
Financial instruments
2018
2017
£
£
Carrying amount of financial assets
Debt instruments measured at amortised cost
867,890
574,584
Carrying amount of financial liabilities
Measured at amortised cost
732,444
744,915
12
Stocks
2018
2017
£
£
Finished goods and goods for resale
73,967
56,005
13
Debtors
2018
2017
Amounts falling due within one year:
£
£
Trade debtors
99,470
84,744
Amounts owed by group undertakings
762,955
486,540
Other debtors
5,465
3,300
Prepayments and accrued income
247,520
241,849
1,115,410
816,433
PALMGLEN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2018
- 20 -
14
Creditors: amounts falling due within one year
2018
2017
£
£
Trade creditors
480,298
422,833
Corporation tax
256,005
179,392
Other taxation and social security
414,419
438,507
Other creditors
8,192
498
Accruals and deferred income
1,440,389
1,737,113
2,599,303
2,778,343
15
Provisions for liabilities
2018
2017
Notes
£
£
Deferred tax liabilities
16
69,521
85,789
16
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2018
2017
Balances:
£
£
Accelerated capital allowances
69,521
85,789
2018
Movements in the year:
£
Liability at 1 April 2017
85,789
Credit to the profit and loss account
(16,268)
Liability at 31 March 2018
69,521
The deferred tax liability set out above is expected to reverse and relates to accelerated capital allowances that are expected to mature within the same period.
PALMGLEN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2018
- 21 -
17
Retirement benefit schemes
2018
2017
Defined contribution schemes
£
£
Charge to the profit and loss account in respect of defined contribution schemes
11,660
50,742
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.
18
Share capital
2018
2017
£
£
Ordinary share capital
Issued and fully paid
548,024 Ordinary of £1 each
548,024
548,024
548,024
548,024
19
Financial commitments, guarantees and contingent liabilities
The company has provided a cross-guarantee in favour of a bank facility provided by HSBC Bank plc to this company's parent undertaking. At the year end, the amount owed by The Ronnie Scott's Jazz Club Limited was £1,004,177 (2017: £1,256,435). There is a fixed and floating charge over the assets of the company in favour of the company's bankers.
20
Operating lease commitments
Lessee
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:
2018
2017
£
£
Within one year
655,001
655,001
Between two and five years
2,620,004
2,620,004
In over five years
5,622,092
6,277,093
8,897,097
9,552,098
PALMGLEN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2018
- 22 -
21
Related party transactions
The company has taken advantage of the exemption in FRS 102 from the requirement to disclose transactions and balances with wholly-owned group companies on the grounds that consolidated financial statements are prepared by the parent company.
During the year, the company was charged amounts aggregating £nil (2017: £34,135) for services received from companies in which one of the directors of the parent undertaking, either has an interest in or is related to. Similarly, the company charged £5,475 (2017: £18,077) and £35,788 to The Old Vic Theatre Trust 2000 and Greene Light Stage plc respectively for services provided. At the year end, a net amount of £8,094 (2017: £7,231) was due to these entities.
During the year, the company made charitable donations aggregating £16,760 (2017: £17,725) to Ronnie Scott's Charitable Foundation. Certain trustees of the foundation are directors of this company. At the year end, an amount of £2,165 (2017: £nil) was due from this charity.
22
Controlling party
The immediate and ultimate parent company is The Ronnie Scott's Jazz Club Limited, a company registered in England and Wales. Copies of the group financial statements can be obtained from Companies House.
In the opinion of the directors, there is no single controlling party.
23
Cash generated from operations
2018
2017
£
£
Profit for the year after tax
1,205,575
1,088,571
Adjustments for:
Taxation charged
325,396
324,201
Finance costs
50,086
60,927
Depreciation and impairment of tangible fixed assets
341,687
405,810
Movements in working capital:
(Increase) in stocks
(17,962)
(2,925)
(Increase) in debtors
(298,977)
(286,790)
(Decrease)/increase in creditors
(255,653)
209,158
Cash generated from operations
1,350,152
1,798,952
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