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Registered number: 12157626










RED LION OPERATIONS 2 LIMITED










FINANCIAL STATEMENTS

INFORMATION FOR FILING WITH THE REGISTRAR

FOR THE PERIOD ENDED 26 DECEMBER 2021

 
RED LION OPERATIONS 2 LIMITED
REGISTERED NUMBER: 12157626

STATEMENT OF FINANCIAL POSITION
AS AT 26 DECEMBER 2021

26 December
As restated
27 December
2021
2020
Note
£
£

Fixed assets
  

Intangible assets
 4 
619,910
695,610

Tangible assets
 5 
60,438
55,610

  
680,348
751,220

Current assets
  

Stocks
  
4,436
3,653

Debtors: amounts falling due within one year
 6 
2,274,582
271,014

Cash at bank and in hand
  
531
-

  
2,279,549
274,667

Creditors: amounts falling due within one year
 7 
(3,349,580)
(1,065,856)

Net current liabilities
  
 
 
(1,070,031)
 
 
(791,189)

Total assets less current liabilities
  
(389,683)
(39,969)

  

Net liabilities
  
(389,683)
(39,969)


Capital and reserves
  

Called up share capital 
 8 
-
-

Profit and loss account
  
(389,683)
(39,969)

  
(389,683)
(39,969)


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: 


David Ramsey
Director
Date: 16 October 2023

Page 1

 
RED LION OPERATIONS 2 LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 DECEMBER 2021

1.


General information

Red Lion Operations 2 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 Hare and Hounds Hotel, Bath Road, Speen, Newbury, Berkshire, RG14 1QY.

2.Accounting policies

 
2.1

Basis of preparation of financial statements

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:

 
2.2

Going concern

At the balance sheet date the Company had net current liabilities of £1,070,030.  Included within creditors due in less than one year are amounts owed to group undertakings totalling £2,354,810.  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.

 
2.3

Revenue

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 measured as the fair value of the consideration received or receivable for the sale of food and beverage items as well as accommodation  income, excluding value added tax and other sales taxes. 

 
2.4

Government grants

Government grants are accounted under the accruals model as permitted by FRS 102. Grants received in the year are revenue based grants under the Coronavirus Job Retention Scheme (CJRS) and grants receivable from local government. They have been recognised as Other Income in the Statement of Comprehensive Income.

 
2.5

Borrowing costs

All borrowing costs are recognised in profit or loss in the period in which they are incurred.

Page 2

 
RED LION OPERATIONS 2 LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 DECEMBER 2021

2.Accounting policies (continued)

 
2.6

Defined contribution pension

The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Company in independently administered funds.

Defined contribution pension plan

The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.

The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Company in independently administered funds.

 
2.7

Intangible assets

Goodwill represents the difference between amounts paid on the cost of a business combination and
the acquirer’s interest in the fair value of its identifiable assets and liabilities of the acquiree at the
date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated
amortisation and accumulated impairment losses. Goodwill is amortised on a straight line basis to the
Statement of Comprehensive Income over its useful economic life.

 
2.8

Tangible fixed assets

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:

Leasehold improvements
-
Over the life of the lease
Fixtures and fittings
-
20% straight line
Computer equipment
-
33% straight line
Renovation
-
Not depreciated as assets not yet in use

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.

Page 3

 
RED LION OPERATIONS 2 LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 DECEMBER 2021

2.Accounting policies (continued)

  
2.9

Impairment of fixed assets and goodwill

Assets that are subject to depreciation or amortisation are assessed at each reporting date to determine whether there is any indication that the assets are impaired. Where there is any indication that an asset may be impaired, the carrying value of the asset (or cash-generating unit to which the asset has been allocated) is tested for impairment. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's (or CGU's) fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Non-financial assets that have been previously impaired are reviewed at each reporting date to assess whether there is any indication that the impairment losses recognised in prior periods may no longer exist or may have decreased.

 
2.10

Stocks

Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Work in progress and finished goods include labour and attributable overheads.

At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.

 
2.11

Debtors

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.

 
2.12

Cash and cash equivalents

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.

 
2.13

Creditors

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.

Page 4

 
RED LION OPERATIONS 2 LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 DECEMBER 2021

2.Accounting policies (continued)

 
2.14

Financial instruments

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 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
Page 5

 
RED LION OPERATIONS 2 LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 DECEMBER 2021

2.Accounting policies (continued)


2.14
Financial instruments (continued)

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.


3.


Employees

The average monthly number of employees, including directors, during the period was 16 (2020 - 22).


4.


Intangible assets






Goodwill

£



Cost


At 28 December 2020
757,000



At 26 December 2021

757,000



Amortisation


At 28 December 2020
61,390


Charge for the period on owned assets
75,700



At 26 December 2021

137,090



Net book value



At 26 December 2021
619,910



At 27 December 2020
695,610



Page 6

 
RED LION OPERATIONS 2 LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 DECEMBER 2021

5.


Tangible fixed assets







Short-term leasehold property
Fixtures and fittings
Computer equipment
Total

£
£
£
£



Cost or valuation


At 28 December 2020 - as restated (see Note 9)
2,474
51,300
11,986
65,760


Additions
-
20,001
-
20,001



At 26 December 2021

2,474
71,301
11,986
85,761



Depreciation


At 28 December 2020
124
8,485
1,541
10,150


Charge for the period on owned assets
247
10,984
3,942
15,173



At 26 December 2021

371
19,469
5,483
25,323



Net book value



At 26 December 2021
2,103
51,832
6,503
60,438



At 27 December 2020
2,350
42,815
10,445
55,610

Page 7

 
RED LION OPERATIONS 2 LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 DECEMBER 2021

6.


Debtors

26 December
As restated
27 December
2021
2020
£
£


Trade debtors
-
73,343

Amounts owed by group undertakings
1,761,882
166,667

Other debtors
488,160
22,330

Prepayments and accrued income
24,540
8,674

2,274,582
271,014



7.


Creditors: Amounts falling due within one year

26 December
As restated
27 December
2021
2020
£
£

Bank overdrafts
-
76,225

Trade creditors
918,836
32,895

Amounts owed to group undertakings
2,354,810
944,830

Other taxation and social security
8,966
4,660

Other creditors
23,289
39

Accruals and deferred income
43,679
7,207

3,349,580
1,065,856


The amounts owed to group undertakings are interest free and repayable on demand.


8.


Share capital

26 December
27 December
2021
2020
£
£
Allotted, called up and fully paid



1 (2020 - 1) Ordinary share of £0.01
-
-


Page 8

 
RED LION OPERATIONS 2 LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 DECEMBER 2021

9.


Prior year adjustment

There are two prior year adjustments as follows:
Correction to prior year rent expense
The Company leases its trading site under a lease agreement entered into with its immediate parent undertaking, Red Lion Properties 2 Limited, which holds the freehold interest. The rents under this lease agreement are variable and determined on the basis of a profit based measure.  In the prior year adjustment no rent was due under the terms of the lease however £166,667 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 administrative expenses of £166,667 and a reduction in the operating loss and loss before tax reported of the same amount.
- A decrease in amounts owed to group undertakings included in creditors due within one year of £166,667 and an increase in net assets and the profit and loss reserve carried forward of the same amount.
Correction of ownership of property improvements
In the previous year, the Company recognised in error, fixed asset additions totalling £60,697 relating to freehold property of the Company's immediate parent undertaking, Red Lion Properties 2 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:
- A reduction in tangible fixed assets of £60,697 (as set out in Note 5 to the accounts) and a reduction in amounts owed to group undertakings included in creditors due within one year of the same amount.
- There has been no impact on the result for the year.


10.


Contingent liabilities

The company is party to a cross-guarantee and fixed and floating charge in respect of borrowings undertaken by fellow group undertakings.


11.


Related party transactions

Spendid Management Services Limited ("SMSL")
SMSL is a private limited company controlled by the directors of the Company. During the year SMSL invoiced the company amounts totalling £41,108. At the balance sheet date £43,329 was due to SMSL from the Company.
The company has taken advantage of the exemption available under FRS 102 not to disclose transactions with wholly owned group members.


12.


Post balance sheet events

Following a period of closure during the year due to restrictions on trade due to the coronavirus pandemic and renovation, the company's sole site reopened in January 2022.
On 29 December 2022 the group entered into further funding arrangements under which the company became party to a fixed and floating charge over its assets in respect of group borrowings. 

Page 9

 
RED LION OPERATIONS 2 LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 26 DECEMBER 2021

13.


Controlling party

The Company’s immediate parent is Red Lion Properties 2 Limited and the the ultimate parent entity is Red Lion Holdings LLP, a limited liability partnership incorporated in England and Wales. The registered office address of Red Lion Holdings LLP is The Wool Barn, Peper Harow, Godalming, Surrey, 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.
It is the opinion of the directors that there is no single controlling party of the company. 


14.


Auditor's information

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.

Page 10