Registered number: 07782108
City Brewery Limited
Financial statements
For the year ended 31 January 2023
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City Brewery Limited
Company Information
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C R Arthurs (appointed 6 June 2023)
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B4 Parkside Knowledge Gateway
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Chartered Accountants & Statutory Auditor
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168 Shoreditch High Street
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City Brewery Limited
Contents
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Independent auditors' report
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Consolidated statement of profit or loss and other comprehensive income
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Consolidated statement of financial position
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Company statement of financial position
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Consolidated statement of changes in equity
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Company statement of changes in equity
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Consolidated statement of cash flows
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Company statement of cash flows
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Notes to the consolidated financial statements
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City Brewery Limited
Group strategic report
For the year ended 31 January 2023
The directors present their Group Strategic report, Director's report and the audited financial statements for the year ended 31 January 2023.
The Group had record sales in the first full year of operations following lockdown as sales were boosted by strong first half with events postponed due to the pandemic being rescheduled in the year.
The Group generated revenues of £21.6m (2022: £7.5m) which was 16.% ahead of FY20 (the last full year of operations before lockdown). The gross margin was 56.7% (2022: 55.6%) which decreased from 61.3% (FY20) due to cost inflation and pricing lag. Indirect costs were better leveraged as they dropped to 40.1% (2022: 42%) from 43.8% (FY20).
EBITDA rose 121% from £3.3m (FY20) to £7.2m. EBITDA in 2022 was £(473,331).
Financial key performance indicators
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The key performance indicators of the Group are turnover, gross profit and margin. This information allows management to monitor activity and cost levels. Gross profit for the year ended 31 January 2023 was £12,254,554 (2022: £4,163,855) achieving a margin on sales of 57% (2022: 56%). Restoring gross margins to pre-pandemic levels has been a key focus in the year just finished, given inflationary pressures that affected direct labour and materials costs.
Page 1
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City Brewery Limited
Group strategic report (continued)
For the year ended 31 January 2023
Principal risks and uncertainties
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Currency risk
All of the Group's revenues and costs are denominated in Sterling. Therefore the directors consider that the Group has no material exposure to currency risk.
Credit risk
The Group's principal financial assets are cash and trade debtors. There is minimal credit risk associated with the Group's cash balances as these are all held with recognised financial institutions. The Group's principal credit risk is the recovery of trade debtor amounts. This risk is managed by the setting of credit limits for customers based on a combination of third party credit reference agency limits or trading experience and payment history. There is a credit control function to actively chase outstanding debts.
Interest and liquidity risk
The Group seeks to manage its financial risk to ensure that sufficient liquidity is available to meet foreseeable needs in both the short and the long term.
This report was approved by the board and signed on its behalf.
Page 2
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City Brewery Limited
Directors' report
For the year ended 31 January 2023
The directors present their report and the financial statements for the year ended 31 January 2023.
The principal activities during the year were marketing and operating its subsidary, The Brewery on Chiswell Street Limited.
The director who served during the year was:
The profit for the year, after taxation, amounted to £2,214,276 (2022: loss £3,388,049).
An interim dividend was paid during the year of £Nil (2022: £Nil). The directors do not recommend the payment of final dividend.
Directors' responsibilities statement
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The directors are responsible for preparing the Group strategic report, Directors' report and the consolidated financial statements, in accordance with applicable law.
Company law requires the directors to prepare consolidated financial statements for each financial year. Under that law they have elected to prepare the consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the UK.
Under company law the directors must not approve the consolidated financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. In preparing the consolidated financial statements, the directors are required to:
∙select suitable accounting policies and then apply them consistently;
∙make judgments and estimates that are reasonable and prudent;
∙state whether they have been prepared in accordance with IFRS as adopted by the UK, subject to any material departures disclosed and explained in the financial statements;
∙assess the Group and Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
∙use the going concern basis of accounting unless they either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the parent Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements and other information included in Directors' reports may differ from legislation in other jurisdictions.
Page 3
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City Brewery Limited
Directors' report (continued)
For the year ended 31 January 2023
As we complete the third quarter of FY24, contractually committed business for the year exceeds £21m and the level of enquiries suggest a further record year.
The rapid and consistent recovery from the pandemic has encouraged the management team to revisit its plans to expand the business and negotiations are at an advanced stage to open another major venue in the City of London.
Disclosure of information to auditors
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The directors at the time when this Directors' report is approved has confirmed that:
∙so far as the directors are aware, there is no relevant audit information of which the Company and the Group's auditors are unaware, and
∙the directors have taken all the steps that ought to have been taken as directors in order to be aware of any relevant audit information and to establish that the Company and the Group's auditors are aware of that information.
Matters covered in the Strategic report
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Items required under Schedule 7 to be disclosed in the directors' report are set out in the group strategic report in accordance with s414C(11) Companies Act 2006.
The auditors, Kreston Reeves LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
Page 4
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City Brewery Limited
Independent auditors' report to the members of City Brewery Limited
We have audited the financial statements of City Brewery Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 January 2023 which comprise the Consolidated statement of profit or loss and other comprehensive income, the Consolidated statement of financial position, the Company Statement of financial position, the Consolidated statement of cash flows, the Company Statement of cash flows, the Consolidated statement of changes in equity, the Company Statement of changes in equity and the related notes, including a summary of significant accounting policies set out on pages 18 - 26. The financial reporting framework that has been applied in the preparation of the financial statements is applicable law and International Financial Reporting Standards (IFRSs) in conformity with the requirements of the Companies Act 2006
In our opinion, the financial statements:
∙the financial statements give a true and fair view of the state of the Group's and the parent Company's affairs as at 31 January 2023 and of the Group's profit for the year then ended;
∙the Group financial statements have been properly prepared in accordance with IFRSs in conformity with the requirements of the Companies Act 2006; and
∙the financial statements 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 auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group and the parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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
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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. Our evaluation of the directors' assessment of the Group's and the parent Company's ability to continue to adopt the going concern basis of accounting included:
∙Examining the post year end performance of the Group, using management accounts which show it has returned to making profits.
∙Examining forecasts prepared up to 31 January 2025 which detail the Group's continued strong results and high levels of bookings.
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 or the 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.
Page 5
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City Brewery Limited
Independent auditors' report to the members of City Brewery Limited (continued)
The directors are responsible for the other information. The other information comprises the information included in the Annual Report, other than the financial statements and our Auditors' report thereon. 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.
In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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.
Opinion on other matters prescribed by the Companies Act 2006
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In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group 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 Group 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 Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group strategic report or the Director's 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.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement on page 3, 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 Group's and 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 Group or the parent Company or to cease operations, or have no realistic alternative but to do so.
Page 6
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City Brewery Limited
Independent auditors' report to the members of City Brewery Limited (continued)
Auditors' 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 auditors' 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:
Capability of the audit in detecting irregularities, including fraud
Based on our understanding of the group and industry, and through discussion with the directors and other management (as required by auditing standards), we identified that the principal risks of non-compliance with laws and regulations related to The Food Safety Act 1990, The Food Safety and Hygiene (England) Regulations 2018, health and safety, anti-bribery and employment law. We considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006, taxation and pension legislation. We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit. We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to increase revenue or reduce expenditure, management bias in accounting estimates and judgemental areas of the financial statements. Audit procedures performed by the engagement team included:
∙Discussions with management and assessment of known or suspected instances of non-compliance with laws and regulations (including health and safety) and fraud; and
∙Assessment of identified fraud risk factors; and
∙Identifying and assessing the design effectiveness of controls that management has in place to prevent and detect fraud; and
∙Testing of internal controls procedures relating to expenditure potentially more susceptible to fraud and other irregularities including cash and payroll expenditure; and
∙Challenging assumptions and judgements made by management in its significant accounting estimates; and
∙Confirmation of related parties with management, and review of transactions throughout the period to identify any previously undisclosed transactions with related parties outside the normal course of business; and
∙Performing analytical procedures with automated data analytics tools to identify any unusual or unexpected relationships, including related party transactions, that may indicate risks of material misstatement due to fraud; and
∙Reading minutes of meetings of those charged with governance and reviewing correspondence with relevant tax and regulatory authorities; and
∙Review of internal controls and physical inspection of tangible assets susceptible to fraud or irregularity; and
∙Review of significant and unusual transactions and evaluation of the underlying financial rationale supporting the transactions; and
∙Identifying and testing journal entries, in particular any manual entries made at the year end for financial statement preparation.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance.
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City Brewery Limited
Independent auditors' report to the members of City Brewery Limited (continued)
The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
∙Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
∙Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion of the effectiveness of the Group's and the parent Company's internal control.
∙Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
∙Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group and the parent Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Group or the parent Company to cease to continue as a going concern.
∙Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
∙Obtains sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for the audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
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 auditors' 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.
Stephen Tanner BSc (Econ) FCA (Senior Statutory Auditor)
for and on behalf of
Kreston Reeves LLP
Chartered Accountants
Statutory Auditor
London
1 November 2023
Page 8
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City Brewery Limited
Consolidated statement of profit or loss and other comprehensive income
For the year ended 31 January 2023
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Profit/(loss) from operations
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Profit/(loss) for the year
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Total comprehensive income
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The notes on pages 18 to 44 form part of these financial statements.
The results for the year reflect trading from continuing operations.
Total comprehensive income is allocated in full to the owners of the Company.
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Page 9
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City Brewery Limited
Registered number: 07782108
Consolidated statement of financial position
As at 31 January 2023
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Property, plant and equipment
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Trade and other receivables
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Trade and other receivables
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Cash and cash equivalents
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Trade and other liabilities
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Issued capital and reserves attributable to owners of the parent
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The financial statements on pages 17 to 44 were approved and authorised for issue by the board of directors and were signed on its behalf by:
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City Brewery Limited
Registered number: 07782108
Company statement of financial position
As at 31 January 2023
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Other non-current investments
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Trade and other receivables
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Cash and cash equivalents
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Trade and other liabilities
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Issued capital and reserves attributable to owners of the parent
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The Company's loss for the year was £121,699 (2022: loss of £102,985).
The financial statements on pages 17 to 44 were approved and authorised for issue by the board of directors and were signed on its behalf by:
Page 11
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City Brewery Limited
Consolidated statement of changes in equity
For the year ended 31 January 2023
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Total attributable to equity holders of parent
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Prior year adjustment - change in accounting policy
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At 1 February 2021 (as restated)
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Comprehensive income for the year
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Total comprehensive income for the year
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Contributions by and distributions to owners
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Comprehensive income for the year
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Total comprehensive income for the year
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Contributions by and distributions to owners
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Page 12
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City Brewery Limited
Company statement of changes in equity
For the year ended 31 January 2023
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Total comprehensive income for the year
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Total comprehensive income for the year
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Page 13
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City Brewery Limited
Consolidated statement of cash flows
For the year ended 31 January 2023
Cash flows from operating activities
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Profit/(loss) for the year
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Depreciation of property, plant and equipment
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Amortisation of intangible fixed assets
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Adjustment to amortisation on reclassifcation of website costs to intangible assets
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Movements in working capital:
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Decrease in trade and other receivables
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(Decrease)/increase in trade and other payables
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Cash generated from operations
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Net cash from operating activities
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Cash flows from investing activities
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Purchases of property, plant and equipment
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Net cash used in investing activities
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Cash flows from financing activities
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Repayment of bank borrowings
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Payments of finance lease creditors
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Net cash used in financing activities
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Net increase/(decrease) in cash and cash equivalents
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Cash and cash equivalents at the beginning of year
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Cash and cash equivalents at the end of the year
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The notes on pages 18 to 44 form part of these financial statements.
Page 14
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City Brewery Limited
Consolidated statement of cash flows (continued)
For the year ended 31 January 2023
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Consolidated net debt reconciliation
As at 31 January 2023
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Borrowings repayable within one year
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Borrowings repayable greater than one year
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Page 15
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City Brewery Limited
Company statement of cash flows
For the year ended 31 January 2023
Cash flows from operating activities
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Movements in working capital:
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Increase in trade and other receivables
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(Decrease)/increase in trade and other payables
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Increase in amounts owed to related parties
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Cash generated from operations
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Net cash from operating activities
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Cash flows from investing activities
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Cash flows from financing activities
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Repayment of bank borrowings
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Interest paid on convertible loan notes
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Net cash used in financing activities
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Net increase in cash and cash equivalents
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Cash and cash equivalents at the beginning of year
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Cash and cash equivalents at the end of the year
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The notes on pages 18 to 44 form part of these financial statements.
Page 16
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City Brewery Limited
Company statement of cash flows (continued)
For the year ended 31 January 2023
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Net debt reconciliation
As at 31 January 2023
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Borrowings repayable within one year
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Borrowings repayable greater than one year
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Page 17
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City Brewery Limited
Notes to the consolidated financial statements
For the year ended 31 January 2023
City Brewery Limited (the 'Company') is a private company, limited by shares, incorporated in England. The Company's registered office is at B4 Parkside Knowledge Gateway, Nesfield Road, Colchester, CO34 3ZL. These consolidated financial statements comprise the Company and its subsidiaries (collectively the 'Group' and individually 'Group companies'). The Group is primarily involved in the provision of conferencing and banqueting services. The Group's principal place of business is The Brewery, 52 Chiswell Street, London, EC1Y 4SD.
2.Accounting policies
The consolidated financial statements incorporate the financial statements of the Company and entities (including structured entities) controlled by the Company and its subsidiaries. Control is achieved when the Company:
∙has power over the investee;
∙is exposed, or has rights, to variable returns from its involvement with the investee; and
∙has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.
When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the Company's voting rights in an investee are sufficient to give it power, including:
∙the size of the Company's holding of voting rights relative to the size and dispersion of holdings of the other vote holders;
∙potential voting rights held by the Company, other vote holders or other parties;
∙rights arising from other contractual arrangements; and
∙any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at this time that decisions need to be made, including voting patterns at previous shareholders' meetings.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group's accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
Page 18
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City Brewery Limited
Notes to the consolidated financial statements
For the year ended 31 January 2023
2.Accounting policies (continued)
On 31 December 2020, IFRS as adopted by the European Union at that date was brought into UK law and became UK-adopted International Accounting Standards, with future changes being subject to endorsement by the UK Endorsement Board. The financial statements of the Company have been prepared in accordance with UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards.
The financial statements have been prepared on a going concern basis under the historical cost basis except for derivative financial instruments which are stated at fair value. The directors believe that preparing the accounts on the going concern is appropriate.
The Company has taken advantage of the exemption available under section 408 of the Companies Act 2006 and elected not to present its own Statement of comprehensive income in these financial statements.
The financial statements of the Group are for the year ended 31 January 2022. The financial statements were authorised for issue by the directors on the date specified on the Statement of financial position.
Details of the accounting policies applied, including changes in the year, are as follows:
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Adoption of new and revised standards
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a)New standards, interpretations and amendments adopted from 1 January 2023
New standards that have been adopted in the annual financial statements for the year ended 31 January 2023, but have not had a significant effect on the Group are:
∙Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS37);Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);
∙Annual Improvments to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41) and;
∙References to Conceptual Framework (Amendments to IFRS 3).
These amendments to various IFRS standards are mandatorily effective for reporting periods beginning on or after 1 January 2022.
The Group does not expect any other standards issued by the IASB, but not yet effective, to have a material impact on the Group.
The financial statements have been prepared on a going concern basis the Group is reporting profit after tax in the year to 31 January 2023 of £2,214,276 (2022 loss: £3,388,049). As at the Statement of Financial Position date, the Group is also in a net liability position of £22,530,544 (2022: £24,744,820). However removing the right of use asset and its associated liability as mandated by IFRS 16, the Group is in a net liability position at the balance sheet date of £8,488,096 (2022: £10,239,119).
In 2021, the Group's leasehold interest was valued at £32.5m post pandemic by independent hospitality real estate experts, engaged by the Company's bankers. This asset, which has not been recognised for accounting purposes due to the historical cost convention, comfortably exceeds the Group's net liability position referred to above.
Page 19
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City Brewery Limited
Notes to the consolidated financial statements
For the year ended 31 January 2023
2.Accounting policies (continued)
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Going concern (continued)
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The directors have, at the time of approving the financial statements, a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Since re-opening in August 2021, revenues have exceeded 2019 levels, before the UK lockdown took place. The Group's current order book is ahead of the order book at this stage for FY20, which was the last completed year before lockdown. Management accounts show the Group made a substantial profit for the year ended 31 January 2023 and contractually committed business for the current year exceeds £17m.
Thus, the directors believe that preparing the accounts on the going concern basis is appropriate.
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Foreign currency transactions
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In preparing the financial statements of each individual group entity, transactions in currencies other than the entity's functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment losses, if any.
For the purposes of impairment testing, goodwill is allocated to each of the Group's cash-generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combination.
A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in profit or loss. An impairment loss recognised for goodwill is not reversed in subsequent periods.
On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
Page 20
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City Brewery Limited
Notes to the consolidated financial statements
For the year ended 31 January 2023
2.Accounting policies (continued)
The Group recognises revenue from room hire and associated services on the day the event takes place.
Revenue from the sale of food and drink is recognised in the statement of comprehensive income when the significant risk and rewards have been transferred to the buyer, which is on the day of the relevant event that the food and drink was sold.
Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received.
Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate. Specifically, government grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets are recognised as deferred revenue in the consolidated statement of financial position and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.
Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in profit or loss in the period in which they become receivable.
The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates.
Page 21
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City Brewery Limited
Notes to the consolidated financial statements
For the year ended 31 January 2023
2.Accounting policies (continued)
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
The Group assesses whether a contract is or contains a lease, at inception of a contract. The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease agreements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low-value assets (defined as leases valued at less than £5,000). For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate. The Group has assessed its incremental borrowing rate using a series of inputs including: government gilt rates between now and the end of the lease term and considering other borrowing rates within the market for similar companies.
Lease payments included in the measurement of the lease liability comprise:
∙fixed lease payments (including in-substance fixed payments), less any lease incentives;
The lease liability is included in the 'Loans and borrowings' line in the Consolidated statement of financial position.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated on a straight line basis over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease.
The right-of-use assets are included in the 'Property, Plant and Equipment' line in the Consolidated statement of financial position.
The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as described in note 2.13.
As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components, and instead account for any lease and associated non-lease components as a single arrangement. The Group has not used this practical expedient.
Page 22
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City Brewery Limited
Notes to the consolidated financial statements
For the year ended 31 January 2023
2.Accounting policies (continued)
Income 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. Taxable profit differs from ‘profit before tax’ as reported in the consolidated Consolidated statement of profit or loss and other comprehensive income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Group's current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Page 23
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City Brewery Limited
Notes to the consolidated financial statements
For the year ended 31 January 2023
2.Accounting policies (continued)
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(ii) Deferred tax (continued)
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For the purposes of measuring deferred tax liabilities and deferred tax assets for investment properties that are measured using the fair value model, the carrying amounts of such properties are presumed to be recovered entirely through sale, unless the presumption is rebutted. The presumption is rebutted when the investment property is depreciable and is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale. The directors of the Group reviewed the Group's investment property portfolios and concluded that none of the Group's investment properties are held under a business model whose objective is to consume substantially all of the economic benefits embodied in the investment properties over time, rather than through sale. Therefore, the directors have determined that the ‘sale’ presumption set out in the amendments to IAS 12 is not rebutted. As a result, the Group has not recognised any deferred taxes on changes in fair value of the investment properties as the Group is not subject to any income taxes on the fair value changes of the investment properties on disposal.
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Intangible assets acquired separately
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Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.
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Cash and cash equivalents
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Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments maturing within 90 days from the date of acquisition that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.
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Property, plant and equipment
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Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment. Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss. Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Group.
Depreciation is provided on all other items of property, plant and equipment so as to write off their carrying value over their expected useful economic lives. It is provided at the following rates:
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straight line basis over life of the lease
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Page 24
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City Brewery Limited
Notes to the consolidated financial statements
For the year ended 31 January 2023
2.Accounting policies (continued)
Inventories are stated at the lower of cost and net realisable value. Costs of inventories are determined on a first in, first out basis. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.
Financial assets and financial liabilities are recognised when a Group entity becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
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(i) Classification of financial assets
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Debt instruments that meet the following conditions are subsequently measured at amortised cost:
∙the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
∙the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Debt instruments that meet the following conditions are subsequently measured at fair value through other comprehensive income (FVOCI):
∙the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling the financial assets; and
∙the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
By default, all other financial assets are subsequently measured at fair value through profit or loss (FVTPL).
Despite the aforegoing, the Group may make the following irrevocable election/designation at initial recognition of a financial asset:
∙the Group may irrevocably elect to present subsequent changes in fair value of an equity instrument in other comprehensive income if certain criteria are met; and
∙the Group may irrevocably designate a debt investment that meets the amortised cost or FVOCI criteria as measured at FVTPL if doing so eliminates or significantly reduces an accounting mismatch.
Page 25
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City Brewery Limited
Notes to the consolidated financial statements
For the year ended 31 January 2023
2.Accounting policies (continued)
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Financial liabilities and equity instruments
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All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL.
However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies, financial guarantee contracts issued by the Group, and commitments issued by the Group to provide a loan at below-market interest rate are measured in accordance with the specific accounting policies set out below.
Financial liabilities subsequently measured at amortised cost
Financial liabilities that are not (i) contingent consideration of an acquirer in a business combination, (ii) held for trading, or (iii) designated as at FVTPL, are subsequently measured at amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the amortised cost of a financial liability.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.
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Defined contribution schemes
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Contributions to defined contribution pension schemes are charged to the consolidated statement of comprehensive income in the year to which they relate.
Dividends are recognised when they become legally payable. In the case of interim dividends to equity shareholders, this is when declared by the directors. In the case of final dividends, this is when approved by the shareholders at the AGM.
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Functional and presentation currency
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These consolidated financial statements are presented in pound sterling, which is the Company's functional currency. All amounts have been rounded to the nearest pound, unless otherwise indicated.
Page 26
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City Brewery Limited
Notes to the consolidated financial statements
For the year ended 31 January 2023
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Accounting estimates and judgments
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The preparation of financial statements in conformity with IFRS requires management to make judgements, estimate and assumptions that affect the application of policies and reported amounts in the financial statements. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.
The principle areas of judgements in preparing these financial statements are set out below. Information about critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in the following notes:
∙Note 2.4: Going concern, the Directors' going concern assessment is based upon future forecasts of the Group's trading. These forecasts are based upon committed bookings to date, the venues capacity, managements' experience of the costs of running these events and there not being any reintroduction of Covid restrictions by the government, that would impact on the Group's ability to continue to trade as normal.
∙Note 12: Property, plant and equipment, as part of the right of use asset and its associated liability, management have considered the length of the lease. There is a revisionary lease however management haven't included this in the lease term, as part of the calculation, as there is no certainty that this will be exercised.
∙Note 18: Lease liabilities have been recognised using an effective interest rate. This has been calculated from the gilt market and other external factors.
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The following is an analysis of the Group's revenue for the year from continuing operations:
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Revenue from core services
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Analysis of revenue by country of destination:
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Page 27
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City Brewery Limited
Notes to the consolidated financial statements
For the year ended 31 January 2023
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During the year, the Group obtained the following services from the Company's auditors:
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Fees payable to the Group's auditors for the audit of the consolidated and parent Company's financial statements
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Audit of the subsidiary's financial statements
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Tax compliance services for the Group and subsidiaries
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Preparation of the financial statements of the Group and subsidiaries
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Employee benefit expenses
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Employee benefit expenses (including directors) comprise:
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Defined benefit scheme cost
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The monthly average number of persons, including the directors, employed by the Group during the year was as follows:
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Management and administration
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Page 28
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City Brewery Limited
Notes to the consolidated financial statements
For the year ended 31 January 2023
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Finance income and expense
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Recognised in profit or loss
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Interest on lease liabilities
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Other loan interest payable
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Net finance expense recognised in profit or loss
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Page 29
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City Brewery Limited
Notes to the consolidated financial statements
For the year ended 31 January 2023
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9.1 Income tax recognised in profit or loss
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Origination and reversal of timing differences
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The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in the United Kingdom applied to losses for the year are as follows:
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Profit/(loss) for the year
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Income tax credit/expense (including income tax on associate, joint venture and discontinued operations)
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Profit/(loss) before income taxes
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Tax using the Company's domestic tax rate of 19% (2022: 19%)
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Expenses not deductible for tax purposes, other than goodwill, amortisation and impairment
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Capital allowances for the year in excess of depreciation
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Capitalised revenue expenditure allowable on accounts basis
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Changes in provisions leading to an increase/(decrease) in the tax charge
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Unutilised tax losses carried forward/(losses utilised)
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Other non taxable adjustments
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Changes in tax rates and factors affecting the future tax changes
Since 1 April 2017 there has been a single rate of corporation tax of 19% in place. From 1 April 2023, the main rate of corporation tax will rise up to 25% for companies with profits over £250,000. For companies with profits of £50,000 or less, they will pay corporation tax at the small profits rate of 19%. Where a Group's profits fall between £50,000 and £250,000 they will pay corporation tax at a marginal rate. The upper and lower limits will be proportionally reduced for short accounting periods and where there are associated companies.
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Page 30
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City Brewery Limited
Notes to the consolidated financial statements
For the year ended 31 January 2023
9.Tax expense (continued)
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9.2 Deferred tax balances
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The following is the analysis of deferred tax assets/(liabilities) presented in the consolidated statement of financial position:
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Recognised in profit or loss
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Fixed asset timing differences
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Short term timing differences
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Tax losses carried forward
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Page 31
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Notes to the consolidated financial statements
For the year ended 31 January 2023
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9.Tax expense (continued)
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9.2 Deferred tax balances (continued)
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Recognised in profit or loss
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Recognised in other comprehensive income
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Recognised directly in equity
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Reclassified from equity to profit or loss
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Fixed asset timing differences
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Tax losses carried forward
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Page 32
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Notes to the consolidated financial statements
For the year ended 31 January 2023
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Property, plant and equipment
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Improvement to leasehold property
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Transferred to intangible assets
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Page 33
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Notes to the consolidated financial statements
For the year ended 31 January 2023
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10.Property, plant and equipment (continued)
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Improvement to leasehold property
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Accumulated depreciation and impairment
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Charge owned for the year
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Charge owned for the year
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Transferred to intangible assets
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Page 34
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City Brewery Limited
Notes to the consolidated financial statements
For the year ended 31 January 2023
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Transferred from tangible assets
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Accumulated amortisation and impairment
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Transferred from tangible assets
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Charge for the year - owned assets
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Details of the Group's material subsidiaries at the end of the reporting period are as follows:
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Place of incorporation and operation
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Proportion of ownership interest and voting power held by the Group (%)
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1) The Brewery On Chiswell Street
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Provision of conferencing
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2) Instant Covid Tests London Limited
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3) Instant London Covid Tests Limited
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Page 35
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City Brewery Limited
Notes to the consolidated financial statements
For the year ended 31 January 2023
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Investments in subsidiary companies
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Trade and other receivables
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Total non-current trade and other receivables
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Prepayments and accrued income
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Total current trade and other receivables
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Amounts receivable from customers are non-interest bearing and are generally on 60 day payment terms before the date of the event. The Group believes the credit quality of these trade receivables to be good. The ageing of the Group's receivables which are over 60 days or more but are not impaired are as follows: £75k (2022: £41k).
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Page 36
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City Brewery Limited
Notes to the consolidated financial statements
For the year ended 31 January 2023
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Prepayments and accrued income
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Total current trade and other receivables
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Amounts receivable from customers are non-interest bearing and are generally on 60 day payment terms before the date of the event. The Group believes the credit quality of these trade receivables to be good. The ageing of the Group's receivables which are over 60 days or more but are not impaired are as follows: £Nil (2022: £Nil).
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Total financial liabilities, excluding loans and borrowings, classified as financial liabilities measured at amortised cost
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Other payables - tax and social security payments
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Total current trade and other payables
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Payables to related parties
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Total current trade and other payables
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Page 37
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City Brewery Limited
Notes to the consolidated financial statements
For the year ended 31 January 2023
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Total loans and borrowings
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The Group's loan with AIB Group (UK) PLC is secured by way of a fixed and floating charge over the property assets of the Group.
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The carrying value of loans and borrowings classified as financial liabilities measured at amortised cost approximates fair value.
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The undiscounted maturity analysis of lease liabilities at 31 January is as follows:
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Minimum lease payments due - Lease liabilities
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The carrying value of loans and borrowings classified as financial liabilities measured at amortised cost approximates fair value.
Page 38
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City Brewery Limited
Notes to the consolidated financial statements
For the year ended 31 January 2023
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Ordinary shares of £1 each
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The holders of the ordinary shares are entitled to dividends as declared from time to time and all shares have equal voting rights at meetings of the Company, and rank equally with regards to the Company's residual assets on winding up.
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The Group operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounted to £100,815 (2022: £71,493). Outstanding contributions totalling £21,897 (2022: £67,143) were payable to the fund at the balance sheet date.
Page 39
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City Brewery Limited
Notes to the consolidated financial statements
For the year ended 31 January 2023
Retained earnings
This reserve comprises all current and prior period retained profits and losses after deducting any distributions made to the company's shareholders.
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At the balance sheet date the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases.
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Lease liabilities are due as follows:
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Contractual undiscounted cash flows due
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Between one year and five years
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Lease liabilities included in the Consolidated statement of financial position at 31 January
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Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.
Operating lease payments are recognised as an expense in the statement of comprehensive income on a straight line basis over the lease term, with any deferred lease payments recorded in the statement of financial position as an asset or liability until released to the profit and loss. The Group leases equipment under operating leases.
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The following amounts in respect of leases have been recognised in profit or loss:
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Interest expense on lease liabilities
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Expenses relating to short-term leases
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Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets
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Page 40
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City Brewery Limited
Notes to the consolidated financial statements
For the year ended 31 January 2023
20.Leases (continued)
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Extension options and termination options
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Future cash outflows in periods after the date on which an extension option or termination option may be exercised are only included in lease liabilities if it is reasonably certain that a lease will be extended or will not be terminated. Lease liabilities recognised and potential future lease payments not included in lease liabilities by type of leased asset are as follows:
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Potential future lease payments not included in lease liabilities (discounted)
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Historical rate of exercise of extension options and termination options
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The Group has the option to extend one of its leases, however as the extension option isn't until 2031, management are unable to confirm currently whether this option will be exercised however as the Group approaches this date, they will reassess this option.
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Financial instruments by category
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Assets per Statement of financial position
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Trade and other receivables at amortised cost
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Short term liabilities as per Statement of financial position
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Trade and other payables at amortised cost
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Long term liabilities as per Statement of financial position
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Trade and other payables at amortised cost
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Financial assets measured at amortised cost comprise of trade debtors, other debtors and amounts owing to group undertakings.
Financial liabilities measured at amortised cost comprise of trade creditors, other creditors, loans and accruals.
Page 41
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City Brewery Limited
Notes to the consolidated financial statements
For the year ended 31 January 2023
Treasury risk management policy
The Group's treasury risk management policy are detailed below. City Brewery, as parent company, has responsibility for the identification and management of the Group's financial risks and conducts the Group's treasury activities in accordance with the Group's treasury policy. Group treasury policy sets out the policies with respect to the internal controls (including segregation of duties), organisational relationships, functions, delegated authority levels, interest rate exposures and counterparty credit limits and requires regular reporting to the board of directors of exposures to derivative financial instruments.
The Group's board of directors have an oversight role which involves ratification of Group treasury policy, delegation of authorities and consideration of reports on implementation, effectiveness and compliance.
The Group's treasury policy manages the following financial risks:
- Liquidity risk;
- Interest rate risk:
- Counterparty credit risk.
The Group's policy towards risk management is to take an active approach to identify and manage financial risks and ensure that adequate risk management systems exist within the Group such that risks are identified and appropriately managed. Financial asset and liability transactions are to be structured to enable the achievement of planned outcomes, reduce volatility and provide increased certainty.
The objectives relating to management of financial risks are as follows:
Liquidity risk
Liquidity risk is identified across the entire Group.
The aim of liquidity risk management is to ensure that the Group has an appropriate level of liquidity and access to sufficient cash resources (including reserves, banking facilities and standby borrowing facilities) to maintain normal operations, meet its financial obligations as they fall due, pay dividends, meet capital expenditure commitments and undertake investment strategic opportunities as they arise. To do this, debt maturity profile must be appropriately structured, taking into account the Group's core assets and working capital funding requirements, asset and liability matching and refinancing risks.
Interest rate risk
Interest rate risk is the risk of a reduction in earnings and cashflow as a consequence of adverse movements in interest rates. This includes exposures that may arise if the Group was to fix interest rates in a falling interest rate environment. Interest rate risk is measured by the effect of interest rate movements on the total portfolio of current and forecast debt, interest rate hedging transactions and financial market risks.
The majority of the Group's interest rate risk arises from borrowings. The Group's objective is to ensure that it is not exposed to interest rate movements to the extent that interest expense adversely impacts the Group's ability to meet operating obligations as they arise.
Page 42
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City Brewery Limited
Notes to the consolidated financial statements
For the year ended 31 January 2023
Finance risk management (continued)
Counterparty credit risk
Counterparty credit risk represents the potential loss which the Group could incur if counterparties failed to meet their obligations under their respective contracts or arrangement with the Group. Credit risk for financial assets which have been recognised in the Statement of financial position is generally the carrying amount, net of any provisions for doubtful debts.
Trade receivables consist of a number of customers. If there is no independent rating, management assesses the credit quality of the customer taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal ratings. Management monitors the utilisation of credit limits regularly.
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Related party transactions
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Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below.
Details of transactions between the Company and its related parties are disclosed below.
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23.1 Loans to related parties
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Rupert Lewin Racing Limited
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Rupert Lewin Racing Limited is under common control with City Brewery Limited with P R Lewing owning 100% of the share capital in both companies.
The loan balance owing to Rupert Lewing Racing Limited is non-interest bearing and is repayable on demand.
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23.2 Loans from related parties
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The Brewery on Chiswell Street Limited
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The Brewery on Chiswell Street Limited is a wholly owned subsidiary of City Brewery Limited.
The loan balance owing to the subsidiary company is repayable on demand. During the year, the parent charged a management fee to subsidiary of £Nil (2022: £Nil). During the year the subsidiary paid expenses of £12,882 on behalf of the parent company.
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P R Lewin is the ultimate controlling party as he owns 100% of the Ordinary share capital.
Page 43
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City Brewery Limited
Notes to the consolidated financial statements
For the year ended 31 January 2023
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Notes supporting statement of cash flows
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Cash at bank available on demand
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Page 44
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