The directors present the strategic report for the year ended 31 December 2022.
Principal activities
The principal activity of the group continued to be that of operating health and fitness, golf and leisure facilities. The strategy of the business is to achieve continued membership and turnover growth through:
· reinvestment into and improvement of facilities and infrastructure
· ensuring that capacity in key areas keeps pace with demand
· promoting the highest standards of customer service
· innovation and the use of technology
· competitive and flexible pricing
· maintaining cost control
The group operates two leisure facilities:
Slinfold Golf and Country Club
Rookwood Golf Course
As reported last year, between April and December 2021, following the end of COVID-19 restrictions, membership numbers grew significantly, by 31%, which provided a solid platform for income growth during 2022.
Membership income during 2022 grew by 74% to £1,887,009, and total income grew by 41% to £3,704,243. Gross profit grew during 2022 by 68% to £1,963,904.
The resurgence in interest in golf which followed the pandemic has left a lasting legacy, with both facilities enjoying strong golf revenues.
The profit before tax and revaluations, amounting to £479,620 (2021 - £448,624), has been applied principally towards improvements to the infrastructure of the club, and to a reduction in borrowings necessitated by the pandemic.
Membership numbers continued to grow during 2022, with an overall increase of 8%, with further increases in 2023, showing resilience in the face of cost of living increases. Despite those pressures the results for 2023 are very strong, and the group has continued to be able to invest as well as servicing increased costs of borrowing.
Principal risks and uncertainties
The directors have identified the following principal risks and uncertainties affecting the group:
Economic risk:
Increasing energy costs have been impacting on businesses both in the UK and globally. The group is currently reviewing its energy usage with a view to making as many improvements to efficiencies as are viable. The Government’s recent announcement of a support package for business is welcomed. Presently both our electricity and gas costs are fixed which will help to protect the business during this time.
The impact of increases in the cost of living upon disposable income is significant to our strategy for the period ahead. Passing on increased costs is not always avoidable, but we are making every effort to offer good value for money.
Interest rates remain high, and despite the first signs that they may have peaked, the group will continue to retain higher levels of cash and reserves during the period ahead. The group is currently exploring fixed rate options on its loan finance, as well as looking at other funding alternatives to protect short to medium term cash flows.
Spending on leisure activities continues to be affected by consumer confidence, in what remains an unusual set of economic circumstances. The physical and mental health benefits of taking regular exercise, and the positive social impact on well-being enjoyed by our members, are key to our ongoing success. The resurgence in golf participation which arose during the pandemic continues, and helps to mitigate risks elsewhere. The directors will continue to take a conservative view on pricing in order to promote membership growth and protect revenue streams.
Actions of competitors:
The increasing public interest in fitness and leisure continues to open the market up to competition, and the group is constantly monitoring competition in the local area. The directors welcome this and believe that it is creating additional demand as has been demonstrated by national gym membership growth in recent years, which the group is well placed to service. The golf offering of the club and its rural, open outdoor setting also makes the specific environment and combination of health & fitness and golf difficult/costly to replicate by competitors, with the number of local golf courses having declined in recent years.
The directors use a range of financial key performance indicators in addition to those mentioned above, to monitor performance. A number of non-financial measures are continually appraised, the most important of these being changes in membership numbers, usage/capacity in key areas along with a number of other key financial indicators based on budgeted expectations. The introduction of improved technology and accounting processes have allowed the senior management a more transparent view of progress of the KPI’s on a weekly and even daily basis, and in turn allowed a more accurate and responsive approach to performance and forecasting.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2022.
The results for the year are set out on page 9.
Ordinary dividends were paid amounting to £120,000. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The group operates a treasury function which is responsible for managing the liquidity, interest and credit risks associated with the group’s activities. The group operates the following management policies designed to minimise its exposure to financial risk:
The group manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the group has sufficient liquid resources to meet the operating needs of the businesses.
The group operates a number of policies to ensure there is sufficient liquidity and cash. Regular cash flow forecasts are prepared to ensure the company is able to cover its interest payments and continually monitors the market rate of interest.
All customers who wish to trade on credit terms are subject to credit verification purposes. Trade receivables are monitored on an ongoing basis and provision is made for doubtful debts where necessary.
The directors believe that there are currently no major developments requiring disclosure.
The auditor, Carpenter Box, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
We have audited the financial statements of British Ensign Golf Ltd t/a Country Club Group (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2022 which comprise the group statement of total comprehensive income, the group statement of financial position, the company statement of financial position, 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 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).
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 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 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.
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:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and their 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:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the directors' 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 parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
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.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our procedures included the following:
Obtaining an understanding of the legal and regulatory framework that the company operates in, focusing on those laws and regulations that had a direct effect on the financial statements and operations;
Obtaining an understanding of the company’s policies and procedures on fraud risks, including knowledge of any actual, suspected or alleged fraud; and
Discussing among the engagement team how and where fraud might occur in the financial
statements and any potential indicators of fraud through our knowledge and understanding of the company and our sector-specific experience.
As a result of these procedures, we considered the opportunities and incentives that may exist within the company for fraud. We are also required to perform specific procedures to respond to the risk of management override. As a result of performing the above, we identified the following areas as those most likely to have an impact on the financial statements: the valuation of land and buildings and compliance with the UK Companies Act.
In addition to the above, our procedures to respond to risks identified included the following:
Making enquiries of management about any known or suspected instances of non-compliance with laws and regulations and fraud;
Challenging assumptions and judgements made by management in their significant accounting estimates; and
Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness.
Due to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). For instance, the further removed non-compliance is from the events and transactions reflected in the financial statements, the less likely the auditor is to become aware of it or to recognise the non-compliance.
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.
The Group Statement of Total Comprehensive Income has been prepared on the basis that all operations are continuing operations.
As permitted by s408 Companies Act 2006, the company has not presented its own income statement and related notes. The company’s profit for the year was £
British Ensign Golf Limited t/a Country Club Group (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Slinfold Golf & Country Club, Stane Street, Slinfold, Horsham, West Sussex, RH13 0RE.
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 £1.
The financial statements have been prepared on the historical cost convention, modified to include the revaluation of freehold properties at fair value. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
• Section 7 ‘Statement of Cash Flows’ – Presentation of a statement of cash flow and related notes and disclosures;
• Section 33 ‘Related Party Disclosures’ – Compensation for key management personnel.
The consolidated financial statements include the financial statements of the company and all of its subsidiaries that are trading and material to the group. All financial statements are made up to 31 December 2022. A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
The trading results of all subsidiaries included in note 13, which are all wholly owned subsidiary throughout the year, have been included in the group financial statements. All intra-group transactions, balances, income and expenses are eliminated on consolidation.
In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill.
At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements. The directors have considered relevant information, including the annual budget, forecast future cash flows and the impact of subsequent events in making their assessment.
Based on these assessments and having regard to the resources available to the entity, the directors have concluded that there is no material uncertainty in relation to the appropriateness of continuing to adopt the going concern basis in preparing the annual report and accounts.
Revenue represents the total amounts receivable by the group derived from its ordinary activities for the provision of goods and services net of VAT.
The following criteria must also be met before revenue is recognised:
Membership income is accounted for on a time basis. Such income relating to future accounting periods is treated as a creditor and recorded as turnover in the period to which it relates.
Green fees, bar and restaurant income, and other income is recognised at the time the goods are sold or the service is delivered.
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 income statement.
Revaluation gains and losses are recognised in other comprehensive income and accumulated in equity, except to the extent that a revaluation gain reverses a revaluation loss previously recognised in or or a revaluation loss exceeds the accumulated revaluation gains recognised in equity; such gains and losses are recognised in profit or loss.
Property and course improvements are maintained to such a standard that any depreciation charge on the freehold buildings or course improvements would not be material to the financial statements.
Properties whose fair value can be measured reliably are held under the revaluation model and are carried at a revalued amount, being their fair value at the date of valuation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. The fair value of the land and buildings is usually considered to be their market value. A full valuation is obtained from a qualified valuer with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the end of the reporting period.
At each reporting 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.
The group 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 group's statement of financial position when the group 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.
The group enters into basic financial instruments transactions that result in the recognition of financial assets and liabilities like trade and other accounts receivable and payable, loans from banks and loans from related parties.
Debt instruments like loans and other accounts receivable and payable are initially measured at present value of the future payments and subsequently at amortised cost using the effective interest method; Debt instruments that are payable or receivable within one year are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity. Financial liabilities are derecognised when, and only when, the group’s obligations are discharged, cancelled, or they expire.
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.
Deferred taxation is provided in full in respect of taxation deferred by timing differences between the treatment of certain items for taxation and accounting purposes.
The costs of short-term employee benefits are recognised as a liability and an expense.
The group operates a defined contribution pension scheme for the benefit of its employees. Contributions payable are charged to the profit and loss account in the year they are payable.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the statement of financial position as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
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.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The 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 judgement relating to the fair value of property, plant and equipment is based on the directors' use of the professional valuation carried out on behalf of the group's lenders on 4 July 2023 at £8.0 million, taking into account any additions and depreciation to this date. The valuation was carried out in accordance with the 31 January 2022 edition of RICS Valuation – Global Standards (Incorporating the IVSC International Valuation Standards) by Colliers, an independent firm of Chartered Surveyors with a recognised and relevant professional qualification and with recent experience in the location and category of the property, plant and equipment being valued. The valuation was made on the basis of existing use as a fully-equipped operational entity having regard to trading potential in line with Section 27 of FRS 102.
Freehold land and buildings and course improvements are maintained to such a standard that their estimated residual value is not less than their cost, therefore no depreciation is charged on freehold land and buildings as not material.
An analysis of the group's revenue is as follows:
The total revenue of the group for the year has been derived from its principal activity wholly undertaken in the United Kingdom.
The comparative period has been restated within a subsidiary, Finemoss Limited, to provide a more accurate representation of the split of revenue and cost of sales. This is purely for presentational purposes within the detailed disclosure notes in the group financial statements. The net impact on the prior period reported profit is £nil and there is a £nil impact to revenue or cost of sales on the face of the group statement of comprehensive income.
During the year ended 31 December 2020 a professional valuation of the company’s property, plant and equipment was undertaken and reflected fair value within the context of the ongoing COVID-19 pandemic. The valuation saw a significant impairment, with the revaluation reserve balance reduced to nil and an exceptional impairment loss charged to the profit and loss account. In the directors' opinion, the pandemic was the most significant factor in this impaired valuation. In the current year, as detailed in note 2, an updated valuation was obtained, this resulted in the reversal of the previous impairment and the creation of a new revaluation reserve amount, as detailed in the statement of changes in equity.
The average monthly number of persons employed by the group and company during the year was:
The directors are considered to be the only key management personnel of the group.
The actual charge/(credit) 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:
The group has estimated trading losses totalling £2.67 million (2021 - £3.04 million) available for carry forward against future trading profit.
The group has estimated non-trading tax losses, capital losses and excess management expenses totalling £2.26 million (2021 - £2.28 million) available to carry forward against relevant future income.
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
The following assets, freehold land and buildings and course improvements, are carried at valuation. If the assets were measured using the cost model, the carrying amounts would be as follows:
Details of the company's subsidiaries at 31 December 2022 are as follows:
Note a)
The registered office for all the subsidiaries above is Slinfold Golf & Country Club, Stane Street, Slinfold, Horsham, West Sussex, RH13 0RE.
Including within other payables is an amount of £137,934 (2021 - £252,418) that both directors and the company secretary have individually guaranteed equally.
In a previous period, the group obtained a loan under the UK Government-backed Coronavirus Business Interruption Loan Scheme ("CBILS"). The loan is subject to interest charges at a rate of 3.85% per annum above LIBOR, with the Government providing a Business Interruption payment to cover the first 12 months of interest payments. The Government has also provided a guarantee for £3,920,000 of the loan.
Bank loans have been secured by an unlimited debenture over the group's assets, together with an unlimited all monies guarantee from the parent company and the directors.
The other loans are two separate financing arrangements. The first is repayable by equal instalments over repayment terms which expire by November 2024 and interest is payable at a rate of 5.9% per annum. The second was technically overdue as at the year end but has since been refinanced for a longer term, the interest rate of the agreement in force at the year end was 10.0% per annum.
Finance lease payments represent rentals payable by the company or group for certain items of plant and machinery. No restrictions are placed on the use of the assets. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
Finance leases are secured on the assets to which they relate.
Deferred tax assets and liabilities are offset where the group or company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
The deferred tax asset set out above relates to the utilisation of tax losses against future expected profits of the same period. The deferred tax liability set out above relates to accelerated capital allowances that are expected to mature in a future period.
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.
Ordinary shares have attached to them full voting, dividend and capital distribution (including on winding up) rights.
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:
Group
Included within borrowings is an amount of £nil (2021 - £459,454) due to a connected company with common directorship and shareholding. No interest is payable on these loans and there are no fixed repayment dates. Included within other receivables is an amount due of £142,648 (2021 - £48,564) from this connected company. No interest was payable on the loan and there was no fixed repayment date.
The two directors and the former director have provided an unsupported joint and several personal guarantee of £980,000 (2021 - £980,000) with respect to the bank loan and overdraft facilities of the group.
Group and company
Included within other receivables is an amount due of £1,750,510 (2021 - £1,428,959) from a connected company, in which the directors are shareholders. No interest is payable on the loan and there is no fixed repayment date.
Included with other operating income is management charges of £84,500 (2021 - £126,750) received from a connected company with common ownership.
Company
Included within other payables is an amount due of £142,678 (2021 - £48,564) to a connected company with common directorship and shareholding. No interest was payable on the loan and there was no fixed repayment date.
The company is controlled by its directors and no one party has ultimate control.