The director presents the strategic report for the year ended 31 December 2022.
Post-covid
After a tough year in 2021, 2022 saw a return to a sense of normality. After almost two years of lockdowns, we were very pleased to welcome our members back, and to re-build our community.
DeskLodge (“DL”) were able to implement price increases to existing contracts during the year. During this period, costs were monitored carefully, and restricted where possible to protect working capital. Once the government lockdowns were finally over, we undertook a round of new staff to increase the number of excellent people that we employ. DL has also looked after its staff during the economic crisis by increasing salaries quarterly in line with inflation. This was done to give them one less thing to worry about, so they could focus on helping us look after our members and because it was the right thing to do.
DL was also able to recommence the socials that are held twice per month, and other activities. These opportunities to build community are really helpful to many, but particularly to those one-person businesses as they provide some “work” colleagues to interact with, and thereby often improve mental health.
Innovation
DL continued to find companies very interested in our “part-time offices” and “day offices” as a solution to staff wanting to continue working in a hybrid manner. A “part-time office” is a private office, complete with screens and power on each desk. These let a company book an office for a certain number of regular days each week, and then the staff have the option to use the hotdesking areas the rest of the week or work from home.
This innovation led to DL being one of three finalists nationwide in the FlexSA industry awards for Service Innovation (Alongside being a national finalist for Workspace Design with Reading and the winner of Excellence in Customer Service for South West England). Our experience is that it really helps companies to be in a space for brief periods to start with to see the benefits, and clients often progress from day-offices to a regular part-time office to a normal, full-time office.
These products are more intensive on staff time, but more profitable when full. More importantly, they allow us to have a (currently unique in Bristol) offering, which attracts companies who are likely to grow with us. Having the option of a part-time office also serves as a “holding pattern” for companies waiting for a full-time office with us, giving fewer voids and fewer client losses when we cannot help them immediately.
Desklodge also held its first family fun day, with stalls, entertainment and food in the parking area at Desklodge House, Bristol. This was a great opportunity for children / families to see where the work happens – and great fun was had by all. This is another way to help grow the community at Desklodge House, to reinforce that where you work matters and will be repeated!
Existing locations
Desklodge House continued to be our flagship location, alongside a smaller area at One Castle Park in Bristol.
Due to changes within the Landlord at Basingstoke, we were offered five year’s profit as a lump sum to exit the site – whilst passing on the offices and companies who were with us. Basingstoke proved to be too car dependent as it was further from the station than our usual model, and had very limited parking. This also gave us the opportunity to move and open a location in Reading, which is on the Paddington main line from London, the same line as Bristol, offering better connections between our locations.
New Locations
In Reading, we have taken two floors in a building very close to the railway station on the Caversham side. The fitout took longer than usual due to availability of suppliers, but very worthwhile as the comment from one well known viewer was that “it’s the best one yet”. As a new town for us, the take up has been slower than hoped, but we are working on this and on creating a template for future towns.
In March 2022, we also signed a lease for a wonderful building in the heart of Bristol, now known as Beacon Tower. The agreement with the landlord included a complete refurbishment of the building by them before we move in. Initially this progressed well, but due to a number of unforeseen issues, the Landlord has been delayed in handing over the keys, and from a target date of July 2022 we only got the keys in April 2023! Our build team have been hard at work in advance, and have in store many props, and set pieces ready to install. This is a new strategy which should make our fitout quicker and smoother.
Future locations
The delays to the new location Beacon Tower have impacted profit for the year – as well as having a knock-on effect in delaying future growth. However, DL has used this time to develop our leadership team to be in a good position to catch up when conditions permit. DL are always on the lookout for good locations to expand into, so watch our website for where we will pop up next! DL seeks locations that are near to railway stations, promoting the use of public transport, and also provides bike storage and showers to encourage walking or cycling to work.
Strategic management
DL now has a strong senior leadership team who meet weekly with daily update calls. They also have quarterly reviews of long-term and short-term goals and to set the strategy for the next quarter.
DL recognises the importance of its staff and their role in the creation of the right atmosphere at each of its locations. Staff are carefully selected, and once established are encouraged to develop their skills and progress within the company. DL offer both internal and external training to help staff develop – which is commented on almost daily in public Google reviews.
DeskLodge is in the process of becoming B-Corp certified, the predicted grading is currently in excess of 100 points. This represents areas across Environmental, Social and Governance (“ESG”) and signifies the accomplishments in our impact.
Examples include an average of 4.5% of our overall waste going to land fill, water conservation processes to minimise water usage. Sovereign House were recognised nationally and accredited “Green Apple Environment Award”. Active EMS with over 90 social and environmental targets are being implemented throughout the business. Discounts of services and free event space offered to non-profit businesses. In addition DeskLodge is a Living Wage employer, as well as all employees having private health care, and £500 to put towards personal growth
In terms of the longer goals, the business plan is to open approx. 17 new locations in the southwest over the next 8 years; being a mixture of larger and smaller venues. DL are aiming to provide the best working experience for the small business community. “It looks like work, feels like fun: this is hybrid working 2023”. This growth is expected to be funded by a mix of revenue and short-term debt. Our balance sheet is in a strong position to support this – but we are open to selling equity if required.
Further lockdowns?
DL learnt a huge amount during the unexpected lockdowns, and would be in a better position should they occur again. DL is geared to allow tenants to increase or decrease office space with relative ease and is always looking for new ideas to suit the market, such as the part time offices mentioned above.
Competitors
There are several other serviced office providers in Bristol, however the style of Desklodge, and the desire to build a community for the residents seems to be popular and to clearly differentiate DeskLodge from competitors.
During the recent quieter periods, a lot of work has been undertaken on the DL branding and reviewing all our communications and publicity to further differentiate ourselves.
Growth
In terms of seeking new locations, care will be taken to examine possible sites considering the experience gained from existing locations. DL will review local communities to assess whether the DL brand and desire for community will be received well.
Finance
Last year Desklodge had hoped to seek a more efficient mortgage for the Desklodge House property (owned by subsidiary Ringstead 201 Ltd). However, with the economic uncertainty, the rise in mortgage interest, and also the delays to the Beacon Tower location, the decision was taken to extend the current facility with Stondon Capital to June 2024. Once Beacon Tower is up and running, replacement finance will be considered.
The loan with Stondon Capital includes covenants for EBITDA and Debt Ratio, and DL have been fully compliant with these for the whole year.
Profit and Loss
Turnover for the year for the group was £3.2m from 2.5 locations. This is up 11.3% from the previous year [2021: £2.9m].
In addition to this turnover, the group also received compensation for the early surrender of the lease at Basing View, Basingstoke, totalling £612k. This compensation was recognised in full during the year. EBITDA figures are £1.6m (inclusive of compensation), and £1.0m without compensation. The figure without compensation is almost the same as last year. [2021: £0.9m; without compensation]
After operating costs for the locations, and all overheads have been allocated, the company has posted pre-tax profits before interest of £1.1m [2021: £2.1m].
The pre-tax operating profit margin for the year is 16% (2021: 9%) (Figures excluding compensation). Although there was a small increase in turnover this has been offset by the increase in costs of leases ended and taking on new locations.
Financial Position
The group is showing £686k in the bank, a decrease of 26% compared to the previous year [2021: £926k].
Current assets are valued at £1m, [2021: £1.2m]. Fixed assets are valued at £6.7m [2021: £6.9m].
There are current liabilities of £4.1m, [2021: £5.1m]; Non-current liabilities of £nil [2021: £nil].
Net assets remain strong at £3.2m, an increase of 26% compared to the previous year [2021: £2.5m].
The debt ratio remains strong at 0.59:1. A small improvement on the previous year of 0.69:1. and reflects the continuing strong financial position of DL.
The long-term liabilities from leases for the group are £700k which includes one new lease at Sovereign House, Reading.
Financial forecast
In terms of the budget going forwards DL expect for 2023: Pre-tax Profits of £750k; EBITDA of £1.0m; and approx. £388k in the bank; and net assets of £3.3m. Based on 3.5 locations equivalent, with only a small contribution from Beacon Tower by the end of the year.
On behalf of the board
The director presents his annual report and financial statements for the year ended 31 December 2022.
The results for the year are set out on page 10.
No ordinary dividends were paid. The director does not recommend payment of a further dividend.
The director who held office during the year and up to the date of signature of the financial statements was as follows:
We have audited the financial statements of Desklodge Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2022 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
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 group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. However, because not all future events or conditions can be predicted this statement is not a guarantee as to the group’s and parent company's ability to continue as a going concern.
Our responsibilities and the responsibilities of the director with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The director is responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the director's 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 their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the director's report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept 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 director's responsibilities statement, the director is 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 director determines 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 director is responsible for assessing 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 director either intends to liquidate the parent company or to cease operations, or has 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management.
The extent to which the audit was considered capable of detecting irregularities including fraud:
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
•the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
•we identified the laws and regulations applicable to the group through discussions with directors and other management, and from our commercial knowledge and experience of the sector in which the company operates;
•we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the group, including, but not limited to, laws covering the Companies Act 2006 and relevant taxation legislation;
•we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting relevant documentation; and
•identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the group and company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
•understanding the business model as part of the control and business environment;
•making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
•considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
•performed analytical procedures to identify any unusual or unexpected relationships;
•tested journal entries to identify unusual transactions;
•assessed whether judgements and assumptions made in determining the accounting estimates and judgements identified in note 2 were indicative of potential bias; and
•investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
•agreeing financial statement disclosures to underlying supporting documentation;
•reading the minutes of meetings of those charged with governance;
•enquiring of management as to actual and potential litigation and claims; and
•reviewing documentation and enquiring with the company of actual and potential non-compliance with laws and regulations.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment by for example forgery, or intentional misrepresentation or through collusion. Our audit procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
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 company has not presented its own profit and loss account and related notes. The company’s profit for the year was £655,324 (2021 - £1,397,106 profit).
Desklodge Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Desklodge House, 2 Redcliffe Way, Bristol, United Kingdom, BS1 6NL.
The group consists of Desklodge 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 amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. 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 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’: 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 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated group financial statements consist of the financial statements of the parent company Desklodge Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 December 2022. 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 group.
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.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
At the time of approving the financial statements, the director has a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the director continues to adopt the going concern basis of accounting in preparing the financial statements.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:
Rendering of services
Revenue 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 revenue can be measured reliably;
it is probable that the Group 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
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.
In 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 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.
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 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.
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 payments 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.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
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 leased asset are consumed.
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
In the application of the group’s accounting policies, the director is 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 estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
The Company is engaged in lease arrangements. As part of the lease arrangements, the company is responsible for the cost of replacing, reinstalling or rectifying the assets where there is a present contractual or statutory requirement. The dilapidations provision is based on the future expected repair costs required to restore the leased building to their fair condition at the end of their respective lease term.
Included in other operating income is £612,500 (2021 - £1,920,000) for compensation received for the early surrender of a lease.
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 for the year based on the profit or loss and the standard rate of tax as follows:
Details of the company's subsidiaries at 31 December 2022 are as follows:
As at 31 December 2022, Stondon Capital Limited holds a fixed and floating charge over property assets of group companies. The loan incurs interest at 10% per annum.
After the year end the company extended its current facility with Stondon Capital to June 2024.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
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.
Retained earnings represents accumulated comprehensive income for the year and prior periods less dividends paid.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
The ultimate controlling party is Tom Ball.