Company registration number 00963982 (England and Wales)
INNS & LEISURE LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2023
INNS & LEISURE LIMITED
COMPANY INFORMATION
Directors
Mr G D Clark
Mr P S Clark
Mr S C Clark
Company number
00963982
Registered office
20-24 Leicester Road
Preston
PR1 1PP
Auditor
MHA Moore and Smalley
Richard House
9 Winckley Square
Preston
PR1 3HP
INNS & LEISURE LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 23
INNS & LEISURE LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 1 -
The directors present the strategic report for the year ended 28 February 2023.
Review of the business
The company continues to be principally involved in the business of running and managing hotels and public houses, with many years of industry experience. The company has premises in numerous cities and towns across the North West of England. The portfolio held by the company has built up over a number of years, with continued targeted investment being made in both refurbishing and renovating existing premises as well as investing in new premises when the appropriate opportunities arise. A secondary activity for the company is the provision of gaming machines for the use in public houses.
Principal risks and uncertainties
There are two main industry risks facing the company. The first being the continued price competition driven by supermarket chains offering large promotions on alcoholic beverages, which management look to mitigate by reviewing the pricing of goods in each site. The second risk is the continued growth from large pub chains and microbreweries, providing strong competition to the company. Management look to mitigate this risk by reviewing promotions and potential new ideas with landlords and tenants to try and maintain and improve the number of customers in each site.
The risk of another pandemic, similar to Covid-19, which results in lockdowns being enforced on the hospitality industry by the UK government is seen as a business risk given that the hospitality industry saw restrictions enforced early and lifted last. Even if there were to be prolonged periods of premises being closed and no financial assistance available, the directors are confident that cash would be available to fund operations for a significant period of time. At the time of signing the financial statements, the prospects of sustained Covid-19 related disruption appear to be minimal and therefore the directors do not currently see Covid-19 as an immediate significant risk.
Throughout the year, there have been disruptions to the supply chain, but the company has been able to mitigate this by having a variety of suppliers that it can call on to provide the stock required to sell in each premises. At the time of approving the financial statements, the company continues to be able to source the stock it requires to ensure that customers have a full range of products to purchase in each premises.
The single greatest concern surrounds the UK's economic prospects, with cost of living inflation eroding consumers' purchasing power and the prospect of a sustained hike in interest rates. This will likely have a natural impact on the appetite for visiting public houses. At the time of approving the financial statements, sales levels continue to be good and there does not appear to have been a significant impact on reported results from the general economic climate.
The company's operations expose it to a variety of financial risks that include credit risk, liquidity risk, cash flow risk and interest rate risk. The company has in place a risk management programme that seeks to limit the adverse effect of these risks on the performance of the company. The company does not use derivative financial instruments and as such no hedge accounting is applied. The company monitors bank interest rates to ensure the company is earning maximum interest whilst maintaining liquidity, with credit control procedures in place to mitigate credit risk.
Given the size of the company, the directors have not delegated the responsibility of monitoring financial risk management to a sub-committee of the board. The policies set by the board of directors are implemented by the company's finance department.
INNS & LEISURE LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 2 -
Development and performance
Going forwards, the company aims to continue seeking suitable expansion opportunities to develop further. New premises are continually sought to enhance the offerings and services of the company, with money continually reinvested in both improving and developing existing premises. The strong financial position of the company will allow the company to be able to capitalise on any relevant market opportunities that arise in the future.
The company was impacted by Covid-19 during the early part of the previous financial year, with government restrictions resulting in premises being shut for periods of the prior year. As the premises were fully open in the current financial year, there has been a natural increase in turnover and gross profit levels. The company remains in a strong financial position, with net assets of £7.1m and cash balances of £3.0m, an increase from £2.8m at the prior balance sheet date.
The directors remain confident that the strong cash reserves and balance sheet built up through a number of years of successful trading will allow the company to continue to trade profit, with it being hoped that another post-tax profit can be generated to 28 February 2024 and that the company can further improve on its balance sheet position.
Key performance indicators
Turnover has increased in the year to £5.7m from £4.4m as the early part of the prior year was impacted due to Covid-19 restrictions. Gross profit has increased from £3.0m to £4.1m, with gross profit levels at a healthy 72%. The company believes that the good levels of gross profit margins achieved are as a direct result of continued targeted investments in both good quality landlords and tenants and in the public houses and hotels. The offerings in place at the public houses and hotels continue to be demanded by the company's customer base.
Other information and explanations
Finally, the directors would like to place on record their sincere thanks to the dedicated and talented staff employed throughout the group, without whose efforts the group would not continue to thrive.
Mr G D Clark
Director
12 October 2023
INNS & LEISURE LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 3 -
The directors present their annual report and financial statements for the year ended 28 February 2023.
Principal activities
The principal activity of the company continued to be that of hotel and public house proprietors.
Results and dividends
The results for the year are set out on page 8.
Ordinary dividends were paid amounting to £600,000. The directors do not recommend payment of a further dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr G D Clark
Mr P S Clark
Mr S C Clark
Auditor
The auditor, MHA Moore and Smalley, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
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.
Strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of the business review, financial risk management and future developments.
On behalf of the board
Mr G D Clark
Director
12 October 2023
INNS & LEISURE LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 4 -
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
INNS & LEISURE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF INNS & LEISURE LIMITED
- 5 -
Opinion
We have audited the financial statements of Inns & Leisure Limited (the 'company') for the year ended 28 February 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including 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:
give a true and fair view of the state of the company's affairs as at 28 February 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
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.
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.
INNS & LEISURE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF INNS & LEISURE LIMITED
- 6 -
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.
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:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' 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.
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 specific procedures for this engagement and the extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below:
Enquiries with management about any known or suspected instances of non-compliance with laws and regulations;
Enquires with management about any known or suspected instances of fraud;
Examination of journal entries and other adjustments to test for appropriateness and identify any instances of management override of controls;
Review of legal and professional expenditure to identify any evidence of ongoing litigation or enquiries; and
Auditing the risk of fraud in revenue by performing testing from source documentation to ensure revenue is being appropriately accounted for in the correct accounting period to which it relates.
Because of the field in which the client operates we identified that employment law, health and safety legislation and compliance with the UK Companies Act are the areas most likely to have a material impact on the financial statements.
INNS & LEISURE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF INNS & LEISURE LIMITED
- 7 -
Owing 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.
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.
Virginia Cooper
Senior Statutory Auditor
For and on behalf of MHA Moore and Smalley
Chartered Accountants
Statutory Auditor
Richard House
9 Winckley Square
Preston
PR1 3HP
20 October 2023
INNS & LEISURE LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
5,653,504
4,378,435
Cost of sales
(1,562,975)
(1,334,645)
Gross profit
4,090,529
3,043,790
Administrative expenses
(3,483,669)
(2,875,070)
Other operating income
118,885
583,567
Operating profit
4
725,745
752,287
Interest receivable and similar income
7
25,403
22,074
Profit before taxation
751,148
774,361
Tax on profit
8
(158,755)
(211,746)
Profit for the financial year
592,393
562,615
The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
INNS & LEISURE LIMITED
BALANCE SHEET
AS AT
28 FEBRUARY 2023
28 February 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
10
4,629,708
4,757,356
Investments
11
19,283
19,283
4,648,991
4,776,639
Current assets
Stocks
12
213,065
107,519
Debtors
13
403,177
902,653
Cash at bank and in hand
2,965,016
2,787,106
3,581,258
3,797,278
Creditors: amounts falling due within one year
14
(829,968)
(1,171,095)
Net current assets
2,751,290
2,626,183
Total assets less current liabilities
7,400,281
7,402,822
Provisions for liabilities
Deferred tax liability
15
273,767
268,701
(273,767)
(268,701)
Net assets
7,126,514
7,134,121
Capital and reserves
Called up share capital
17
10
10
Share premium account
18
6,210
6,210
Profit and loss reserves
7,120,294
7,127,901
Total equity
7,126,514
7,134,121
The financial statements were approved by the board of directors and authorised for issue on 12 October 2023 and are signed on its behalf by:
Mr G D Clark
Mr P S Clark
Director
Director
Company Registration No. 00963982
INNS & LEISURE LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 10 -
Share capital
Share premium account
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 March 2021
10
6,210
6,765,286
6,771,506
Year ended 28 February 2022:
Profit and total comprehensive income for the year
-
-
562,615
562,615
Dividends
9
-
-
(200,000)
(200,000)
Balance at 28 February 2022
10
6,210
7,127,901
7,134,121
Year ended 28 February 2023:
Profit and total comprehensive income for the year
-
-
592,393
592,393
Dividends
9
-
-
(600,000)
(600,000)
Balance at 28 February 2023
10
6,210
7,120,294
7,126,514
INNS & LEISURE LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 11 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
21
935,464
975,843
Income taxes paid
(100,601)
Net cash inflow from operating activities
834,863
975,843
Investing activities
Purchase of tangible fixed assets
(87,998)
(211,931)
Proceeds from disposal of tangible fixed assets
5,642
188,837
Interest received
20,403
2,074
Dividends received
5,000
20,000
Net cash used in investing activities
(56,953)
(1,020)
Financing activities
Dividends paid
(600,000)
(200,000)
Net cash used in financing activities
(600,000)
(200,000)
Net increase in cash and cash equivalents
177,910
774,823
Cash and cash equivalents at beginning of year
2,787,106
2,012,283
Cash and cash equivalents at end of year
2,965,016
2,787,106
INNS & LEISURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 12 -
1
Accounting policies
Company information
Inns & Leisure Limited is a private company limited by shares incorporated in England and Wales. The registered office is 20-24 Leicester Road, Preston, PR1 1PP.
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.
1.2
Going concern
At the time of approving the financial statements, the truedirectors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statement. The company has sufficient cash resources to continue to meet its liabilities as they fall due, as well as allowing the company to take advantage of opportunities in the market as they arise. Even if there were to be prolonged periods of premises being closed and no financial assistance available, the directors are confident that cash would be available to fund operations for a period of at least 12 months from the date of signing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Turnover in respect of bar sales, tenancy sales and machine takings is recognised on the date the transaction takes place, being the sale of food and drink or the use of the gaming machines. Turnover in respect of rent and room accommodation is recognised based on the period that the rent relates to.
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.
Tangible fixed assets are stated at cost less depreciation. Depreciation is provided at rates calculated to write off the cost less estimated residual value of each asset over its expected useful life, as follows:
Freehold land and buildings
2% straight line
Plant and machinery
50% straight line
Fixtures, fittings & equipment
10% reducing balance
Motor vehicles
25% reducing balance
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.
INNS & LEISURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
1
Accounting policies
(Continued)
- 13 -
1.5
Fixed asset investments
Interests in non-listed entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
1.6
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
1.7
Stocks
Stocks are stated at the lower of cost and estimated selling price. Cost is calculated using the first in first out method.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price 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 include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less.
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. Financial assets classified as receivable within one year are not amortised.
Other financial assets
All of the company's financial assets are basic financial instruments.
INNS & LEISURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
1
Accounting policies
(Continued)
- 14 -
Impairment of financial assets
Financial assets 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.
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 and loans from related companies, are initially recognised at transaction price. 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. Trade creditors are recognised initially at transaction price.
Other financial liabilities
All of the company's financial liabilities are basic financial instruments.
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.
INNS & LEISURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
1
Accounting policies
(Continued)
- 15 -
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. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.12
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.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.13
Retirement benefits
The company operates defined contribution schemes for the benefit of its employees. Contributions payable are charged to the profit and loss account in the year they are payable.
1.14
Leases
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 leases asset are consumed.
1.15
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.
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.
INNS & LEISURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 16 -
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.
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Valuation and life of tangible fixed assets
Determining both the useful economic life and the residual value of tangible fixed assets requires an estimation of both the length of time that the company expects to use the asset for and the future selling price that the company expects to be achieved for the asset at the end of the useful economic life. These are reviewed annually on an asset by asset basis. There is not expected to be a material difference in the value of the assets given the estimations used.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2023
2022
£
£
Turnover analysed by class of business
Attributable to the company's continuing principal activities
5,653,504
4,378,435
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
5,653,504
4,378,435
2023
2022
£
£
Other revenue
Interest income
20,403
2,074
Dividends received
5,000
20,000
Grants received
14,000
333,567
INNS & LEISURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 17 -
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants
(14,000)
(333,567)
Fees payable to the company's auditor for the audit of the company's financial statements
10,900
8,775
Depreciation of owned tangible fixed assets
201,684
239,635
Loss/(profit) on disposal of tangible fixed assets
8,320
(77,008)
Operating lease charges
45,000
48,750
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Public house staff
50
59
Head office
12
13
Managers
6
6
Total
68
78
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
1,623,919
1,505,738
Social security costs
115,655
107,335
Pension costs
71,667
23,706
1,811,241
1,636,779
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
154,465
152,179
Company pension contributions to defined contribution schemes
47,521
2,521
201,986
154,700
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2022 - 2).
INNS & LEISURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 18 -
7
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
13,753
2,074
Other interest income
6,650
Total interest revenue
20,403
2,074
Income from fixed asset investments
Income from shares in group undertakings
5,000
20,000
Total income
25,403
22,074
2023
2022
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
13,753
2,074
8
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
153,689
158,138
Deferred tax
Origination and reversal of timing differences
3,850
(10,880)
Changes in tax rates
1,216
64,488
Total deferred tax
5,066
53,608
Total tax charge
158,755
211,746
INNS & LEISURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
8
Taxation
(Continued)
- 19 -
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:
2023
2022
£
£
Profit before taxation
751,148
774,361
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2022: 19.00%)
142,718
147,129
Tax effect of expenses that are not deductible in determining taxable profit
547
2,789
Tax effect of income not taxable in determining taxable profit
(950)
(14,076)
Effect of change in corporation tax rate
1,216
64,488
Permanent capital allowances in excess of depreciation
(2,637)
(2,791)
Depreciation on assets not qualifying for tax allowances
17,861
18,007
Dividend income
(3,800)
Taxation charge for the year
158,755
211,746
The Chancellor announced his intention to increase the headline rate of corporation tax to 25% from 1 April 2023. This policy was substantively enacted on 25 May 2021.
9
Dividends
2023
2022
£
£
Final paid
600,000
200,000
INNS & LEISURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 20 -
10
Tangible fixed assets
Freehold land and buildings
Plant and machinery
Fixtures, fittings & equipment
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 March 2022
5,246,568
1,432,732
3,109,733
177,541
9,966,574
Additions
36,308
51,690
87,998
Disposals
(25,387)
(25,387)
At 28 February 2023
5,246,568
1,469,040
3,161,423
152,154
10,029,185
Depreciation and impairment
At 1 March 2022
1,289,730
1,423,986
2,376,332
119,170
5,209,218
Depreciation charged in the year
104,931
14,682
71,967
10,104
201,684
Eliminated in respect of disposals
(11,425)
(11,425)
At 28 February 2023
1,394,661
1,438,668
2,448,299
117,849
5,399,477
Carrying amount
At 28 February 2023
3,851,907
30,372
713,124
34,305
4,629,708
At 28 February 2022
3,956,838
8,746
733,401
58,371
4,757,356
11
Fixed asset investments
2023
2022
£
£
Unlisted investments
19,283
19,283
12
Stocks
2023
2022
£
£
Finished goods and goods for resale
213,065
107,519
13
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
52,002
66,288
Other debtors
266,273
775,930
Prepayments and accrued income
84,902
60,435
403,177
902,653
INNS & LEISURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 21 -
14
Creditors: amounts falling due within one year
2023
2022
£
£
Trade creditors
454,933
324,996
Corporation tax
153,689
100,601
Other taxation and social security
119,575
148,868
Other creditors
81,320
543,905
Accruals and deferred income
20,451
52,725
829,968
1,171,095
15
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
2023
2022
Balances:
£
£
Accelerated capital allowances
275,060
270,824
Short term timing differences
(1,293)
(2,123)
273,767
268,701
2023
Movements in the year:
£
Liability at 1 March 2022
268,701
Charge to profit or loss
3,850
Effect of change in tax rate - profit or loss
1,216
Liability at 28 February 2023
273,767
As the company has not finalised its capital expenditure plans for the next financial year, it is not possible to clarify the unwinding of the net deferred tax liability over the next 12 months.
16
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
71,667
23,706
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.
INNS & LEISURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 22 -
17
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
8
8
8
8
Ordinary A shares of £1 each
1
1
1
1
Ordinary B shares of £1 each
1
1
1
1
10
10
10
10
Each class of shares has full voting rights. The different classes of shares have varied dividend and capital distribution rights.
18
Share premium account
There has been no movement on the share premium account. The share premium account is a non distributable reserve.
19
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Category
Description of
Income
Expenditure
transaction
2023
2022
2023
2022
£
£
£
£
Other related parties
Rent
45,000
45,000
Other related parties
Sales
126,801
108,573
Balances with related parties
The following amounts were outstanding at the reporting end date:
Category
Amounts owed by
Amounts owed to
related parties
related parties
2023
2022
2023
2022
£
£
£
£
Key management personnel
8,251
263,422
Other related parties
257,470
775,216
Other information
Key management personnel and the directors are the same, and therefore the company has taken the exemption under FRS 102 33.7A to not disclose key management personnel remuneration.
20
Directors' transactions
Dividends totalling £300,000 (2022 - £100,000) were paid in the year in respect of shares held by the company's directors.
INNS & LEISURE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 23 -
21
Cash generated from operations
2023
2022
£
£
Profit for the year after tax
592,393
562,615
Adjustments for:
Taxation charged
158,755
211,746
Investment income
(25,403)
(22,074)
Loss/(gain) on disposal of tangible fixed assets
8,320
(77,008)
Depreciation and impairment of tangible fixed assets
201,684
239,635
Movements in working capital:
Increase in stocks
(105,546)
(46,822)
Decrease/(increase) in debtors
499,476
(522,594)
(Decrease)/increase in creditors
(394,215)
630,345
Cash generated from operations
935,464
975,843
22
Analysis of changes in net funds
1 March 2022
Cash flows
28 February 2023
£
£
£
Cash at bank and in hand
2,787,106
177,910
2,965,016
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