Company registration number 08305658 (England and Wales)
FLEMINGS HOTEL MAYFAIR LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
FLEMINGS HOTEL MAYFAIR LIMITED
COMPANY INFORMATION
Directors
Mr S K Gulhati
Mr S Gulhati
Secretary
Mrs S Gulhati
Company number
08305658
Registered office
7-12 Half Moon Street
Mayfair
London
W1J 7BH
Auditor
PK Audit LLP
1 Parkshot
Richmond
Surrey
TW9 2RD
FLEMINGS HOTEL MAYFAIR LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 8
Profit and loss account
9
Statement of comprehensive income
10
Balance sheet
11
Statement of changes in equity
12
Notes to the financial statements
13 - 25
FLEMINGS HOTEL MAYFAIR LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 1 -

The directors present the strategic report for the year ended 31 December 2021.

Fair review of the business

The company owns Flemings Hotel Mayfair, a prestigious boutique hotel located in Mayfair, Central London.

 

In common with other UK hotels, Flemings Hotel Mayfair was forced to close during certain times of the year due to the COVID-19 pandemic and this severely impacted turnover and profitability for the year although the damage was mitigated by taking advantage of appropriate government support and payment schemes. While revenue has increased from the previous year it is still below pre-pandemic levels. Revenue is, however, expected to increase further eventually returning to and even surpassing pre-pandemic levels.

 

The company made a net loss after taxation of £5,933,436 for the year ended 31 December 2021 (2020: net loss after taxation of £5,206,409). A significant component of the current year loss is attributable to increased deferred tax charges which are largely the result of changes in the underlying tax rate from 19% to 25%.

 

Net current liabilities at 31 December 2021 were £43,910,967 (2020: £43,350,920) and net liabilities at 31 December 2021 were £8,354,927 compared to net liabilities of £2,421,491 as at 31 December 2020. Such amounts include loans from the parent company, which has pledged its continuing support, and bank loans.

 

The directors consider the financial position and future prospects at 31 December 2021 to be in line with expectations. The directors consider COVID-19 will continue to impact the company’s trading activities and future profitability.

 

Principal risks and uncertainties

The principal risks and uncertainties affecting the company are considered to relate to the fact that the company operates in a very competitive market.

As the company has significant borrowings, credit and liquidity risks are particularly important. The directors have sufficient expertise to manage these risks. All financial covenants have been complied with and existing borrowing facilities remain available to the company until February 2023.

The directors maintain strong internal policies and procedures to ensure that liquidity risk is suitably managed. Monthly performance reports, forecasts and cash flows are reviewed and action taken where appropriate.

Having reviewed the company’s exposure to credit risk, liquidity risk and cash flow risk, the directors are of the view that these are manageable notwithstanding adverse market conditions.

Other performance indicators

The directors receive monthly divisional updates in order to track and assess key performance indicators (“KPIs”) against targets set every year. The KPIs monitored include gross profit and operating profit.

 

Gross profit - £1,377,443 (2020: £362,354)

Gross profit percentage - 34.83% (2020: 10.22%)

Operating (loss)/profit - (£1,588,030) (2020: (£2,209,064))

Operating (loss)/profit percentage - (40.16%) (2020: (62.32%))

Going concern

The global COVID-19 pandemic has severely impacted the company’s revenue and cash flows and the directors have taken a number of steps to mitigate the effects of the downturn including taking advantage of appropriate government support and payment schemes. The war in Ukraine and its resulting energy crisis, cost of living crisis and inflation will have an impact on operations in the short term. However, the directors will continue to review its impact on the business to implement a range of support measures, tailored to the current situation, to continue to operate the business as a going concern.

On the basis of the parent company’s support and the anticipated ongoing availability of bank loan facilities, the directors are of the opinion that the company will continue to possess the ability to meet its financial obligations as they fall due and therefore consider it appropriate to adopt the going concern basis when preparing the financial statements.

FLEMINGS HOTEL MAYFAIR LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 2 -

On behalf of the board

Mr S K Gulhati
Director
27 July 2022
FLEMINGS HOTEL MAYFAIR LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 3 -

The directors present their annual report and financial statements for the year ended 31 December 2021.

Principal activities

The principal activity of the company is that of hoteliers.

Results and dividends

The results for the year are set out on page 9.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

Directors

The directors who held office during the year up to the date of the signature of the financial statements were as follows:

Mr S K Gulhati
Mr S Gulhati
Financial instruments

The directors manage the credit, liquidity, interest and foreign currency risks associated with the company’s activities.

The company is exposed to fair value interest rate risk on fixed rate borrowings and cash flow interest rate risk on floating rate deposits, bank overdrafts and loans. No derivative instruments were used during the year.

The company manages its cash and borrowings in order to minimise net interest costs whilst ensuring that it has sufficient liquid resources.

Foreign currency risk is considered to be low as the as the principal currency is sterling.

Customers wishing to trade on credit terms are subject to credit verification checks, trade debtors are monitored and provisions for doubtful debts are made where appropriate.

Having reviewed the company’s exposure to credit, liquidity, interest and foreign currency risks, the directors are of the view that these are manageable notwithstanding adverse market conditions.

Research and development

The company continues to develop new processes and services to improve and enhance its customer service and customer experience.

Post reporting date events

The company is closely monitoring the impact of COVID-19 and events in Ukraine on the business and continues to implement a range of business support measures, tailored to the current situation, to continue to operate the business as a going concern.

Auditor

The auditor, PK Audit LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

FLEMINGS HOTEL MAYFAIR LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 4 -
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:

 

 

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.

On behalf of the board
Mr S K Gulhati
Director
27 July 2022
FLEMINGS HOTEL MAYFAIR LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF FLEMINGS HOTEL MAYFAIR LIMITED
- 5 -
Opinion

We have audited the financial statements of Flemings Hotel Mayfair Limited (the 'company') for the year ended 31 December 2021 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

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.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

 

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

 

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

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 directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

FLEMINGS HOTEL MAYFAIR LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF FLEMINGS HOTEL MAYFAIR 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 identified material misstatements in the strategic report or the directors' 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:

 

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, 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.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

FLEMINGS HOTEL MAYFAIR LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF FLEMINGS HOTEL MAYFAIR LIMITED
- 7 -
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:

 

Based on our understanding of the company and industry, and through discussion with the directors and other management, we identified that the principal risks were in relation to:

 

 

FLEMINGS HOTEL MAYFAIR LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF FLEMINGS HOTEL MAYFAIR LIMITED
- 8 -

In response to the risk of irregularities, including fraud and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

 

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 or collusion.

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.

David Truscott (Senior Statutory Auditor)
For and on behalf of PK Audit LLP
27 July 2022
Chartered Accountants
Statutory Auditors
1 Parkshot
Richmond
Surrey
TW9 2RD
FLEMINGS HOTEL MAYFAIR LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 9 -
2021
2020
Notes
£
£
Turnover
3
3,953,774
3,544,753
Cost of sales
(2,576,331)
(3,182,399)
Gross profit
1,377,443
362,354
Administrative expenses
(3,384,827)
(3,314,227)
Other operating income
419,354
742,809
Operating loss
4
(1,588,030)
(2,209,064)
Interest receivable and similar income
7
849
6,194
Interest payable and similar expenses
8
(1,502,848)
(1,566,317)
Loss before taxation
(3,090,029)
(3,769,187)
Tax on loss
9
(2,843,407)
(1,437,222)
Loss for the financial year
(5,933,436)
(5,206,409)

The profit and loss account has been prepared on the basis that all operations are continuing operations.

FLEMINGS HOTEL MAYFAIR LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
- 10 -
2021
2020
£
£
Loss for the year
(5,933,436)
(5,206,409)
Other comprehensive income
-
-
Total comprehensive income for the year
(5,933,436)
(5,206,409)
FLEMINGS HOTEL MAYFAIR LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2021
31 December 2021
- 11 -
2021
2020
Notes
£
£
£
£
Fixed assets
Intangible assets
10
19,968
24,976
Tangible assets
11
114,566,106
115,670,421
114,586,074
115,695,397
Current assets
Stocks
12
94,562
88,356
Debtors
13
4,005,913
2,349,017
Cash at bank and in hand
2,724,267
4,221,615
6,824,742
6,658,988
Creditors: amounts falling due within one year
14
(50,735,709)
(50,009,908)
Net current liabilities
(43,910,967)
(43,350,920)
Total assets less current liabilities
70,675,107
72,344,477
Creditors: amounts falling due after more than one year
15
(62,300,000)
(62,300,000)
Provisions for liabilities
Deferred tax liability
17
16,730,034
12,465,968
(16,730,034)
(12,465,968)
Net liabilities
(8,354,927)
(2,421,491)
Capital and reserves
Called up share capital
19
100
100
Profit and loss reserves
(8,355,027)
(2,421,591)
Total equity
(8,354,927)
(2,421,491)
The financial statements were approved by the board of directors and authorised for issue on 27 July 2022 and are signed on its behalf by:
Mr S K Gulhati
Director
Company Registration No. 08305658
FLEMINGS HOTEL MAYFAIR LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
- 12 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 January 2020
100
2,784,818
2,784,918
Year ended 31 December 2020:
Loss and total comprehensive income for the year
-
(5,206,409)
(5,206,409)
Balance at 31 December 2020
100
(2,421,591)
(2,421,491)
Year ended 31 December 2021:
Loss and total comprehensive income for the year
-
(5,933,436)
(5,933,436)
Balance at 31 December 2021
100
(8,355,027)
(8,354,927)
FLEMINGS HOTEL MAYFAIR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
- 13 -
1
Accounting policies
Company information

Flemings Hotel Mayfair Limited is a private company limited by shares incorporated in England and Wales. The registered office address is at 7-12 Half Moon Street, Mayfair, London, W1J 7BH.

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 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.

This 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:

 

 

The financial statements of the company are consolidated in the financial statements of Veladail Hotel Limited. These consolidated financial statements are available from its registered office.

FLEMINGS HOTEL MAYFAIR LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 14 -
1.2
Going concern

The company has net liabilities of £8,354,927 (2020: £2,421,591) as at 31 December 2021 and net current liabilities of £43,910,927 (2020: 43,350,920). true

 

The company's parent undertaking, Veladail Hotels Limited, has pledged its continuing support to the company. As at the balance sheet date, the company owed its parent £46,954,657 (2020: £46,915,310).

 

The company's bank loan facility amounting to £62,300,000 (2020: £62,300,000) continues until February 2023. The bank covenants were waived during the period 1 January 2021 to and including 31 December 2021, and there are ongoing discussions to waive the bank covenants for the year ending 31 December 2022.

 

The directors continue to monitor the current economic environment which is contributing to market uncertainty and have taken steps to mitigate the adverse effects of the severe recession caused by the COVID-19 pandemic.

 

The directors have carried out a detailed review of the company’s financial position including a review of cash flows and forecasts. Within this review, the directors have considered the increasingly broad effects of COVID-19 and events in Ukraine and their impact on the global economy and the company's trading position. At the time of approving the financial statements, the directors are of the opinion that the company will continue to be able to meet its financial obligations as they fall due and to continue in operational existence for at least the next twelve months from the date of approval of the financial statements.

 

Therefore the directors consider it is appropriate to prepare the financial statements on the going concern basis.

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.

 

Revenue from the sale of goods and services is recognised when it is probable that the economic benefits associated with the transaction will flow to the entity and the revenue can be measured reliably.

 

The company supplies hotel rooms, conference and event facilities to businesses and private customers. Sales of rooms, conference and events facilities are recognised on the date of the stay or event. Deposits received in advance are not recognised as revenue until the day of the stay or event.

 

The hotel operates a restaurant and bar. Sales of goods are recognised when the hotel restaurant or bar sells a product to a customer.

 

Interest income is recognised when it is probable that the economic benefits will flow to the company and the amount of revenue can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and the effective interest rate applicable.

1.4
Intangible fixed assets other than goodwill

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

 

Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.

Amortisation 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:

Trade mark
5 years straight line
FLEMINGS HOTEL MAYFAIR LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 15 -
1.5
Tangible fixed assets

Tangible fixed assets are measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Freehold property
over 15-50 years (land is not depreciated)
Plant, machinery, fixtures & fittings, computer equipment
over 5-30 years straight line
Motor vehicles
over 5 years straight line

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

Freehold property includes developmental expenditure in respect of certain building projects. Such costs include planning fees, planning permission and structural works. Once the developmental stage is completed and construction begins, the assets will be transferred to fixed assets under construction.

 

Management monitors the assets during the development phase and consider whether changes indicate that impairment is required.

 

Fixed assets under construction represent construction in progress after the developmental phase. Relevant fixed assets continue to be categorised as such until the assets are put in to service, at which time the aggregate costs of the assets are transferred into property and plant and equipment. Assets under construction are not depreciated until they are brought into use.

1.6
Impairment of fixed assets

At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment losses 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.

FLEMINGS HOTEL MAYFAIR LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 16 -
1.7
Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Stock is calculated using the weighted average method.

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 profit or loss. Reversals of impairment losses are also recognised in profit or loss.

1.8
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.9
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.

Basic financial assets

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.

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

FLEMINGS HOTEL MAYFAIR LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 17 -
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, 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.

Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

1.10
Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

1.11
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

FLEMINGS HOTEL MAYFAIR LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 18 -
1.12
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.

1.13
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.14
Government grants

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.

 

Government grants relating to turnover are recognised as income over the periods when the related costs are incurred. Grants relating to an asset are recognised in income systematically over the asset's expected useful life. If part of such a grant is deferred it is recognised as deferred income rather than being deducted from the asset's carrying amount.

1.15
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 in the period are included in profit or loss.

FLEMINGS HOTEL MAYFAIR LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 19 -
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.

Critical judgements and key sources of estimation uncertainty

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Impairment of the assets

Assets are valued at the lower cost and net realisable value. Calculation of net realisable value in use requires judgments to be made, which include estimated future cash flows expected to arise from the cash generating unit and a suitable discount rate in order to calculate the present value of future cash flows. The company used a discounting factor of 6.15% (2020: 6.5%)

Deferred tax assets

The deferred tax assets in respect of unrelieved tax losses are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits in the company or the group. By its very nature, the recognition and measurement of deferred tax requires assumptions to be made about the future. As at 31 December 2021 the company estimated the deferred tax assets in respect of unrelieved tax losses to be £2,301,076 (2020: £941,998).

Residual value of the freehold property

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives. The residual value of the freehold property is calculated as a sum of the value of the land amounting to £50,000,000 (2020: £50,000,000) and 100% of the core building amounting to £51,880,567 (2020: £51,866,250).

3
Turnover and other revenue

An analysis of the company's turnover is as follows:

2021
2020
£
£
Turnover analysed by class of business
Hotelier trade
3,953,774
3,544,753
2021
2020
£
£
Other revenue
Interest income
849
6,194
Grants received
348,818
683,866
FLEMINGS HOTEL MAYFAIR LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 20 -
4
Operating loss
2021
2020
Operating loss for the year is stated after charging/(crediting):
£
£
Government grants
(348,818)
(683,866)
Depreciation of owned tangible fixed assets
1,829,051
1,810,291
Amortisation of intangible assets
5,008
5,008
5
Auditor's remuneration
2021
2020
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
16,268
15,095
6
Employees

The average monthly number of persons (including directors) employed by the company during the year was:

2021
2020
Number
Number
Operating
34
63
Office and management
17
20
Total
51
83

Their aggregate remuneration comprised:

2021
2020
£
£
Wages and salaries
1,505,925
1,966,113
Social security costs
146,790
177,554
Pension costs
20,723
27,786
1,673,438
2,171,453
7
Interest receivable and similar income
2021
2020
£
£
Interest income
Interest on bank deposits
849
6,194
FLEMINGS HOTEL MAYFAIR LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 21 -
8
Interest payable and similar expenses
2021
2020
£
£
Interest on bank overdrafts and loans
1,502,848
1,566,317
9
Taxation
2021
2020
£
£
Deferred tax
Origination and reversal of timing differences
(834,792)
76,065
Changes in tax rates
3,678,199
1,361,157
Total deferred tax
2,843,407
1,437,222

The actual charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:

2021
2020
£
£
Loss before taxation
(3,090,029)
(3,769,187)
Expected tax credit based on the standard rate of corporation tax in the UK of 19.00% (2020: 19.00%)
(587,106)
(716,146)
Tax effect of expenses that are not deductible in determining taxable profit
7,355
3,804
Unutilised tax losses carried forward
688,157
741,347
Change in unrecognised deferred tax assets
(948,746)
-
0
Effect of change in corporation tax rate
3,678,198
1,361,157
Group relief
25,120
119,084
Permanent capital allowances in excess of depreciation
158,857
106,254
Other permanent differences
(178,428)
(178,278)
Taxation charge for the year
2,843,407
1,437,222
FLEMINGS HOTEL MAYFAIR LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 22 -
10
Intangible fixed assets
Trade mark
£
Cost
At 1 January 2021 and 31 December 2021
40,000
Amortisation and impairment
At 1 January 2021
15,024
Amortisation charged for the year
5,008
At 31 December 2021
20,032
Carrying amount
At 31 December 2021
19,968
At 31 December 2020
24,976
11
Tangible fixed assets
Freehold property
Plant, machinery, fixtures & fittings, computer equipment
Motor vehicles
Total
£
£
£
£
Cost
At 1 January 2021
106,368,036
20,080,130
5,230
126,453,396
Additions
252,389
472,347
-
0
724,736
At 31 December 2021
106,620,425
20,552,477
5,230
127,178,132
Depreciation and impairment
At 1 January 2021
1,476,887
9,300,858
5,230
10,782,975
Depreciation charged in the year
209,473
1,619,578
-
0
1,829,051
At 31 December 2021
1,686,360
10,920,436
5,230
12,612,026
Carrying amount
At 31 December 2021
104,934,065
9,632,041
-
0
114,566,106
At 31 December 2020
104,891,149
10,779,272
-
0
115,670,421

Freehold property includes developmental expenditure amounting to £988,232 (2020: £973,914) in respect of consultancy fees, planning permissions, designs and structural architect fees relating to proposed further development of the hotel.

FLEMINGS HOTEL MAYFAIR LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 23 -
12
Stocks
2021
2020
£
£
Finished goods and goods for resale
94,562
88,356
13
Debtors
2021
2020
Amounts falling due within one year:
£
£
Trade debtors
404,567
242,122
Amounts owed by group undertakings
2,000,000
2,000,297
Other debtors
26,978
12,715
Prepayments and accrued income
153,709
93,883
2,585,254
2,349,017
2021
2020
Amounts falling due after more than one year:
£
£
Deferred tax asset (note 17)
1,420,659
-
0
Total debtors
4,005,913
2,349,017
14
Creditors: amounts falling due within one year
2021
2020
£
£
Trade creditors
620,120
329,185
Amounts owed to group undertakings
48,954,657
48,915,310
Taxation and social security
176,283
202,716
Other creditors
150,714
174,806
Accruals and deferred income
833,935
387,891
50,735,709
50,009,908
15
Creditors: amounts falling due after more than one year
2021
2020
Notes
£
£
Bank loans and overdrafts
16
62,300,000
62,300,000
FLEMINGS HOTEL MAYFAIR LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 24 -
16
Loans and overdrafts
2021
2020
£
£
Bank loans
62,300,000
62,300,000
Payable after one year
62,300,000
62,300,000

The bank loan is secured by a fixed and floating charge over the assets of the company.

Interest is charged on the above loans based upon the lender’s cost of funds rate.

17
Deferred taxation

Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

Liabilities
Liabilities
Assets
Assets
2021
2020
2021
2020
Balances:
£
£
£
£
Accelerated capital allowances
-
693,142
(880,417)
-
Tax losses
-
(941,998)
2,301,076
-
Revaluations
16,117,534
12,249,324
-
-
Rolled over gain
612,500
465,500
-
-
16,730,034
12,465,968
1,420,659
-
2021
Movements in the year:
£
Liability at 1 January 2021
12,465,968
Credit to profit or loss
(834,792)
Effect of change in tax rate - profit or loss
3,678,199
Liability at 31 December 2021
15,309,375

The deferred tax asset set out above is expected to reverse after 12 months and relates to the utilisation of tax losses against future expected profits.

The deferred tax provision is calculated using a corporation tax rate of 25% (2020: 19%). Future changes to corporate tax laws that affect the prevailing rate may in turn affect the deferred tax assets and liabilities. Any movements in the assets and liabilities resulting from such changes will be reflected as part of the tax charge included in financial statements for future periods.

FLEMINGS HOTEL MAYFAIR LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 25 -
18
Retirement benefit schemes
2021
2020
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
20,723
27,786

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.

19
Share capital
2021
2020
£
£
Ordinary share capital
Issued and fully paid
100 ordinary share of £1 each
100
100

The company has one class of ordinary shares which have attached to them full voting, dividend and capital distribution rights. They do not carry any rights of redemption.

20
Events after the reporting date

The company is closely monitoring the impact of COVID-19 and events in Ukraine on the business and continues to implement a range of business support measures, tailored to the current situation, to continue to operate the business as a going concern.

21
Related party transactions
Transactions with related parties

During the year the company entered into the following transactions with related parties:

The company purchased goods amounting to £39,590 (2020: £Nil) from a company controlled by one of the company’s directors and the company secretary; and the outstanding balance as at 31 December 2021, payable to the related party, was £36,422 (2020: £6,237).

22
Ultimate controlling party

The immediate parent company is Veladail Hotels Limited, a company registered in England and Wales.

 

Veladail Hotels Limited Limited prepares group financial statements and copies can be obtained from 7-12 Half Moon Street, London W1J 7BH.

 

The ultimate holding company is Arrow Trading & Investment Est. 1920, a company incorporated in Vaduz.

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