Registered number: 12158210
RED LION PROPERTIES 3 LIMITED
FINANCIAL STATEMENTS
INFORMATION FOR FILING WITH THE REGISTRAR
FOR THE PERIOD ENDED 26 DECEMBER 2021
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RED LION PROPERTIES 3 LIMITED
REGISTERED NUMBER: 12158210
STATEMENT OF FINANCIAL POSITION
AS AT 26 DECEMBER 2021
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Net current (liabilities)/assets
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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Page 1
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RED LION PROPERTIES 3 LIMITED
REGISTERED NUMBER: 12158210
STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 26 DECEMBER 2021
The financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime and in accordance with the provisions of FRS 102 Section 1A - small entities.
The financial statements have been delivered in accordance with the provisions applicable to companies subject to the small companies regime.
The Company has opted not to file the statement of comprehensive income in accordance with provisions applicable to companies subject to the small companies' regime.
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 4 to 11 form part of these financial statements.
Page 2
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RED LION PROPERTIES 3 LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 26 DECEMBER 2021
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At 28 December 2020 (as previously stated)
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Prior year adjustment - correction of error (see Note 9)
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At 28 December 2020 (as restated)
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Comprehensive income for the period
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Contributions by and distributions to owners
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Reverse balance treated as capital contribution in previous year
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The notes on pages 4 to 11 form part of these financial statements.
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STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 27 DECEMBER 2020
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Comprehensive income for the year
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Loss for the year - as restated (see Note 9)
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Contributions by and distributions to owners
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The notes on pages 4 to 11 form part of these financial statements.
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Page 3
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RED LION PROPERTIES 3 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 DECEMBER 2021
Red Lion Properties 3 Limited is a private company limited by shares incorporated in England and Wales. The registered office address is The Wool Barn, Peper Harow, Godalming, England, GU8 6BQ. Its principal trading address is The Crown of Crucis, Ampney Crucis, Cirencester, Gl7 5RS.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Section 1A of Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The following principal accounting policies have been applied:
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Exemption from preparing consolidated financial statements
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The Company, and the Group headed by it, qualify as small as set out in section 383 of the Companies Act 2006 and the parent and Group are considered eligible for the exemption to prepare consolidated accounts.
At the balance sheet date the Company had net current liabilities of £2,451,576. Included within creditors due in less than one year are amounts owed to group undertakings totalling £3,184,558. The directors have confirmed that repayment of amounts owed will not be required until the Company has the resources to do so.
The directors have prepared cash flow forecasts for the group covering a period extending beyond 12 months from the date of approval of these financial statements that demonstrate the sufficient availability of funds to continue on in business and meeting its liabilities as they fall due. For these reasons, the directors believe it is appropriate to prepare the financial statements on a going concern basis.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. Revenue is the total amount received by the company as rental charges raised in respect of the leasing of the pub, excluding value added tax and other sales taxes.
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
All borrowing costs are recognised in profit or loss in the period in which they are incurred.
Page 4
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RED LION PROPERTIES 3 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 DECEMBER 2021
2.Accounting policies (continued)
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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Revaluation of tangible fixed assets
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Individual freehold and leasehold properties are carried at current year value at fair value at the date of the revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations are undertaken with sufficient regularity to ensure the carrying amount does not differ materially from that which would be determined using fair value at the reporting date.
Fair values are determined from market based evidence normally undertaken by professionally qualified valuers.
Revaluation gains and losses are recognised in other comprehensive income unless losses exceed the previously recognised gains or reflect a clear consumption of economic benefits, in which case the excess losses are recognised in profit or loss.
Investments in subsidiaries are measured at cost less accumulated impairment.
Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
Page 5
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RED LION PROPERTIES 3 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 DECEMBER 2021
2.Accounting policies (continued)
Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
The Company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the Company's Statement of Financial Position 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 trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.
Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting date.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Company after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other payables, bank loans and other loans are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is
Page 6
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RED LION PROPERTIES 3 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 DECEMBER 2021
2.Accounting policies (continued)
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Financial instruments (continued)
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immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
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At 28 December 2020 (as previously stated)
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At 28 December 2020 (as restated)
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Charge for the period on owned assets
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At 27 December 2020 (as restated)
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Page 7
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RED LION PROPERTIES 3 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 DECEMBER 2021
3.Tangible fixed assets (continued)
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The Company's freehold property has been valued as a fully equipped operational site on the basis of its trading potential as at 31 December 2021 by CBRE at £4,350,000. As the revaluation deficit has been recognised within profit or loss there is no difference between the carrying value of tangible fixed assets on a historic cost basis compared to the revaluation model.
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The following was a subsidiary undertaking of the Company:
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Red Lion Operations 3 Limited
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The Wool Barn, Peper Harow, Godalming, England, GU8 6BQ
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Amounts owed by group undertakings
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Page 8
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RED LION PROPERTIES 3 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 DECEMBER 2021
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Creditors: Amounts falling due within one year
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Amounts owed to group undertakings
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Other taxation and social security
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Accruals and deferred income
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Creditors: Amounts falling due after more than one year
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Amounts owed to group undertakings
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There is a loan agreement in place between this company and its parent. An amount of £921,662 was drawn down on 16 January 2020 and is repayable on 16 January 2025. The loan is interest free and therefore has been adjusted ro present value to reflect that it is at a below market rate.
Bank loans are secured by fixed and floating charge over the assets of the company.
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Allotted, called up and fully paid
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1 (2020 - 1) Ordinary share of £0.01
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Page 9
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RED LION PROPERTIES 3 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 DECEMBER 2021
There are two prior year adjustments as follows:
Correction to prior year rent expense
The Company is party to a lease agreement with its subsidiary undertaking, Red Lion Operations 3 Limited. The rents chargeable under this lease agreement are variable and determined on the basis of a profit based measure. In the prior year no rent was due under the terms of the lease, however £201,667 was recognised in error. This has been corrected by way of prior period adjustment in these financial statements.
The impact on the comparatives within the financial statements has been as follows:
- A decrease in prior year turnover of £201,667 and a reduction in the operating result and increase in the loss before tax reported of the same amount.
- A decrease in amounts owed by group undertakings included in debtors of £201,667 and a decrease in net assets and the profit and loss reserve carried forward of the same amount.
Correction of ownership of freehold property improvements
In the previous year, the freehold property additions totalling £52,940 were recognised in error in the Company's subsidiary undertaking, Red Lion Operations 3 Limited. This has been corrected by way of prior period adjustment in these financial statements.
The impact on the comparatives within the financial statements has been as follows:
- An increase in tangible fixed assets of £52,940 (as set out in Note 3 to the accounts) and a reduction in amounts owed by group undertakings of the same amount.
- There has been no impact on the result for the year.
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Related party transactions
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The company has taken advantage of the exemption available under FRS 102 not to disclose transactions with wholly owned group members
KH V Lending 302 Limited
KH V Lending 302 Limited is a company who's ultimate parent entity is Kitty Hawk Capital Partners V LP, a limited partnership registered in Jersey, and which has a controlling interest in Red Lion Holdings LLP, the smallest and largest undertaking which produces consolidated accounts that include the Company.
At the balance sheet date amounts borrowed under the agreed loan facility totalled £2,243,141. Amounts lent under the agreement accrue interest at 10% per annum. Total interest recognised in the year totals £124,852 (2020: £87,621).
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The Company’s immediate parent is Red Lion Holdings 1 Limited and the ultimate parent entity is Red Lion Holdings LLP. The registered office address of both entities is The Wool Barn, Peper Harow, Godalming, England, GU8 6BQ. The smallest and largest group of which the Company is a member and for which group accounts are prepared is Red Lion Holdings LLP. Copies of these accounts are available from Companies House.
In the opinion of the directors there is no one ultimate controlling party.
Page 10
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RED LION PROPERTIES 3 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 DECEMBER 2021
The auditor's report on the financial statements for the period ended 26 December 2021 was unqualified.
The audit report was signed on 16 October 2023 by Emma Bernardez (Senior Statutory Auditor) on behalf of Haysmacintyre LLP.
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