Company Registration No. 02850880 (England and Wales)
Q.N. HOTELS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Q.N. HOTELS LIMITED
COMPANY INFORMATION
Directors
A Ahmed
(Appointed 15 January 2023)
Q Ahmed
N Ahmed
(Appointed 6 July 2022)
Secretary
Q Ahmed
Company number
02850880
Registered office
QN House Unit 4
Loughton Business Centre
5 Langston Road
Loughton
Essex
IG10 3FL
Auditor
HW Fisher LLP
Acre House
11-15 William Road
London
NW1 3ER
United Kingdom
Bankers
Coutts & Co
440 Strand
London
WC2R 0QS
United Kingdom
Q.N. HOTELS LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2
Directors' responsibilities statement
3
Independent auditor's report
4 - 6
Statement of comprehensive income
7
Balance sheet
8
Statement of changes in equity
9
Notes to the financial statements
10 - 23
Q.N. HOTELS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 1 -
The directors present the strategic report for the year ended 31 December 2022.
Fair review of the business
The first half of 2022 continued to be have impact of Covid in the first 2 months of the year. Business recovered well from March once all restrictions had been lifted. Revenue for the year increased by more than 62% from the year before and closed the year at pre covid levels.
Despite increases in utility costs the EBITDA increased.
The company made a pre-tax loss of £678,956 (2021 - £377,248 profit) for the year ended 31 December 2022, on turnover of £3,353,415 (2021 - £2,060,217), as a result of the property devaluation.
At 31 December 2022 the company had net assets of £9,082,399 (2021 - £13,896,110).
Future Developments
The principal risks and uncertainties facing the company (apart from those associated with a general economic downturn) relate to the management of cash and borrowing requirements.
Since the lifting of Covid restrictions the company has seen a steady increase in revenue. The Company is currently trading at near pre-Covid levels and is trading profitably.
The impact of energy prices has also been substantial with a significant increase in utility process since December 2021. This has resulted in substantially increased utility costs. The Company is utilising specialists to advise on energy savings and using flexible purchasing contracts so as to not fix prices for a longer period. The company has therefore benefitted from the fall in wholesale rates.
Future Developments
The Company is not planning any significant capital expenditure in the next 12 months.
Key performance indicators
In the opinion of the directors the key performance indicators are occupancy, average room rate and revenue per available room. The company aims for occupancy of 66% and average room rate of £70 a night.
Principal Risks and Uncertainties
The principal risks and uncertainties facing the company (apart from those associated with a general economic downturn) relate to the management of cash and borrowing requirements.
Since the lifting of Covid restrictions the company has seen a steady increase in revenue. The Company is currently trading at near pre-Covid levels and is trading profitably.
The impact of energy prices has also been substantial with a significant increase in utility process since December 2021. This has resulted in substantially increased utility costs. The Company is utilising specialists to advise on energy savings and using flexible purchasing contracts so as to not fix prices for a longer period. The company has therefore benefitted from the fall in wholesale rates.
..............................
Q Ahmed
Director
.........................
Q.N. HOTELS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 2 -
The directors present their annual report and financial statements for the year ended 31 December 2022.
Principal activities
The principal activity of the company continues to be that of hoteliers.
Results and dividends
The results for the year are set out on page 7.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
A Ahmed
(Appointed 15 January 2023)
Q Ahmed
N Ahmed
(Appointed 6 July 2022)
Auditor
The auditor, HW Fisher LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
Q Ahmed
Director
17 November 2023
Q.N. HOTELS LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 3 -
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Q.N. HOTELS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF Q.N. HOTELS LIMITED
- 4 -
Opinion
We have audited the financial statements of Q.N. Hotels Limited (the 'company') for the year ended 31 December 2022 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 December 2022 and of its loss for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and the directors' report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Q.N. HOTELS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF Q.N. HOTELS LIMITED
- 5 -
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
As part of our planning process:
We enquired of management the systems and controls the company has in place, the areas of the financial statements that are most susceptible to the risk of irregularities and fraud, and whether there was any known, suspected or alleged fraud. The company did not inform us of any known, suspected or alleged fraud effecting the audit period.
We obtained an understanding of the legal and regulatory frameworks applicable to the company. We determined that the following were most relevant: FRS 102, Companies Act 2006, certificate of alcohol licenses and compliance with health and safety and hygiene requirements.
We considered the incentives and opportunities that exist in the company, including the extent of management bias, which present a potential for irregularities and fraud to be perpetuated, and tailored our risk assessment accordingly.
Using our knowledge of the company, together with the discussions held with the company at the planning stage, we formed a conclusion on the risk of misstatement due to irregularities including fraud and tailored our procedures according to this risk assessment.
Q.N. HOTELS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF Q.N. HOTELS LIMITED
- 6 -
The key procedures we undertook to detect irregularities including fraud during the course of the audit included:
Identifying and testing journal entries and the overall accounting records, in particular those that were significant and unusual.
Review of internal control procedures to ensure expenses were approved prior to paying suppliers, as well as ensuring hotel receipts were accounted for and banked in a timely manner.
Reviewing the financial statement disclosures and determining whether accounting policies have been appropriately applied.
Reviewing and challenging the assumptions and judgements used by management in their significant accounting estimates.
Assessing the extent of compliance, or lack of, with the relevant laws and regulations. This included reviewing licenses held, as well as reports from health and safety and hygiene regulatory bodies to confirm compliance.
Testing key revenue lines, in particular cut-off, for evidence of management bias.
Obtaining third-party confirmation of material bank balances and loan balances.
Documenting and verifying all significant related party balances and transactions.
Completing analytical review of key expenditure and revenue items and seeking explanations from management for exceptions.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements even though we have properly planned and performed our audit in accordance with auditing standards. The primary responsibility for the prevention and detection of irregularities and fraud rests with the directors.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
Katherine Montgomery (Senior Statutory Auditor)
For and on behalf of HW Fisher LLP
Chartered Accountants
Statutory Auditor
Acre House
11-15 William Road
London
NW1 3ER
United Kingdom
17 November 2023
Q.N. HOTELS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
- 7 -
2022
2021
Notes
£
£
Turnover
3
3,353,415
2,060,217
Cost of sales
(1,628,687)
(1,213,935)
Gross profit
1,724,728
846,282
Administrative expenses
(2,333,379)
(1,183,109)
Other operating income
35,926
794,247
Operating (loss)/profit
4
(572,725)
457,420
Interest payable and similar expenses
7
(106,231)
(80,172)
(Loss)/profit before taxation
(678,956)
377,248
Tax on (loss)/profit
8
537,172
(128,922)
(Loss)/profit for the financial year
(141,784)
248,326
Other comprehensive income
Revaluation of tangible fixed assets
(4,671,927)
Tax relating to other comprehensive income
537,172
(128,922)
Total comprehensive income for the year
(4,276,539)
119,404
The profit and loss account has been prepared on the basis that all operations are continuing operations.
Q.N. HOTELS LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2022
31 December 2022
- 8 -
2022
2021
Notes
£
£
£
£
Fixed assets
Intangible assets
9
19,750
21,000
Tangible assets
10
5,355,944
10,029,317
Investments
11
1,394,536
1,394,536
6,770,230
11,444,853
Current assets
Stocks
13
24,191
21,561
Debtors
14
8,845,040
10,074,184
Cash at bank and in hand
555,576
416,052
9,424,807
10,511,797
Creditors: amounts falling due within one year
15
(7,112,638)
(6,615,363)
Net current assets
2,312,169
3,896,434
Total assets less current liabilities
9,082,399
15,341,287
Creditors: amounts falling due after more than one year
16
(908,005)
Provisions for liabilities
Deferred tax liability
19
537,172
-
(537,172)
Net assets
9,082,399
13,896,110
Capital and reserves
Called up share capital
21
1,000,000
1,000,000
Share premium account
17,476,650
17,476,650
Revaluation reserve
308,687
4,443,442
Other reserves
58,302
Profit and loss reserves
(9,702,938)
(9,082,284)
Total equity
9,082,399
13,896,110
The financial statements were approved by the board of directors and authorised for issue on 17 November 2023 and are signed on its behalf by:
Q Ahmed
Director
Company Registration No. 02850880
Q.N. HOTELS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
- 9 -
Share capital
Share premium account
Revaluation reserve
Other reserves
Profit and loss reserves
Total
£
£
£
£
£
£
Balance at 1 January 2021
1,000,000
17,476,650
4,572,364
58,302
(9,459,532)
13,647,784
Year ended 31 December 2021:
Profit for the year
-
-
-
-
248,326
248,326
Other comprehensive income:
Tax relating to other comprehensive income
-
-
(128,922)
-
(128,922)
Total comprehensive income for the year
-
-
(128,922)
-
248,326
119,404
Transfers
-
-
-
128,922
128,922
Balance at 31 December 2021
1,000,000
17,476,650
4,443,442
58,302
(9,082,284)
13,896,110
Year ended 31 December 2022:
Loss for the year
-
-
-
-
(141,784)
(141,784)
Other comprehensive income:
Revaluation of tangible fixed assets
-
-
(4,671,927)
-
-
(4,671,927)
Tax relating to other comprehensive income
-
-
537,172
-
537,172
Total comprehensive income for the year
-
-
(4,134,755)
-
(141,784)
(4,276,539)
Transfers
-
-
-
(478,870)
(478,870)
Other movements
-
-
(58,302)
-
(58,302)
Balance at 31 December 2022
1,000,000
17,476,650
308,687
(9,702,938)
9,082,399
Q.N. HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 10 -
1
Accounting policies
Company information
Q.N. Hotels Limited is a private company limited by shares incorporated in England and Wales. The registered office is QN House Unit 4, Loughton Business Centre, 5 Langston Road, Loughton, Essex, IG10 3FL.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties at fair value.The principal accounting policies adopted are set out below.
1.2
Business combinations
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’ – Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’ – Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’ – Compensation for key management personnel.
The company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.
Q.N. Hotels Limited is a wholly owned subsidiary of Q.N. (Holdings) Limited and the results of Q.N. Hotels Limited are included in the consolidated financial statements of Q.N. (Holdings) Limited which are available from QN House, Unit 4, Loughton Business Centre, 5, Langston Road, Loughton, Essex, IG10 3FL.
1.3
Going concern
The company successfully obtained a refinanced bank loan agreement post year end extending the repayment date to 23 November 2027 from 29 November 2022.
At the time of approving the financial statements, based on the budgets and post year-end results, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.4
Turnover
Turnover is derived from hotel operations, and arose wholly in the United Kingdom. Turnover is recognised when services have been rendered. The turnover of the hotel is derived primarily from the rental of rooms, conference and banqueting, food and beverage sales. Turnover is all rendering of goods and services.
Turnover is measured at the fair value of the consideration received, excluding discounts, rebates, value added tax and other sales taxes.
Q.N. HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 11 -
1.5
Intangible fixed assets other than goodwill
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Franchise fees
over 20 years
1.6
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Land and buildings
See below
Plant and machinery
15% straight line
Fixtures, fittings & equipment
15% straight line
The residual value of the buildings is considered to equal to the carrying value and so no depreciation is charged.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.7
Investment properties
Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently it is measured at fair value at the reporting end date. The surplus or deficit on revaluation is recognised in profit or loss.
Where fair value cannot be achieved without undue cost or effort, investment property is accounted for as tangible fixed assets.
1.8
Fixed asset investments
Interests in subsidiaries are initially measured at cost in the parent company financial statements and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
1.9
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Q.N. HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 12 -
1.10
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.11
Cash at bank and in hand
Cash at bank and in hand are basic financial assets and include cash in hand, deposits held at call with banks and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.12
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method 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. Financial assets classified as receivable within one year are not amortised.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans and loans from fellow group companies, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
1.13
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
Q.N. HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 13 -
1.14
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax is provided in full on timing differences which result in an obligation at the balance sheet date to pay more tax, or a right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law. Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in the accounts. Deferred tax is not provided on timing differences arising from the revaluation of fixed assets where there is no commitment to sell the assets. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered. Deferred tax assets and liabilities are not discounted.
1.15
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.16
Retirement benefits
The company makes pension contributions to a money purchase scheme in respect of certain directors. Contributions payable are charged to the profit and loss account in the period they are payable.
The company operates a defined contribution pension scheme under the automatic enrolment legislation for the benefit of its employees. Contributions payable are charged to the profit and loss accounts in the period they are payable.
1.17
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
Q.N. HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 14 -
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Valuation of land and buildings
The company has adopted the revaluation model for its land and buildings. At the end of each reporting period, the directors update their assessment of the fair value of each property, taking into account the most recent independent valuations. The directors determine a property’s value within a range of reasonable fair value estimates. As at 31 December 2021 a directors’ valuation had been performed for the land and buildings, and the fair value of the freehold property was determined using a multiple of 2.79 applied to actual and forecast turnover for the year to 31 December 2022. The directors considered this method appropriate to use due to the nature of the company's operations, and the method is widely applied by surveyors. The valuation was subjective due to, among other factors, the individual nature and condition of the buildings and their location. As a result, the valuation was subject to a degree of estimation uncertainty and was made on the basis of assumptions which may not prove to be borne out in practice. The directors did not consider the value of land and buildings to be impaired in the prior year.
During the year to 31 December 2022, a formal valuation was carried out by an independent RICS Chartered Surveyor. The valuation technique used in arriving at the value of the land and buildings in these financial statements was based on discounted future cash flows as valuers considers this approach to the one most likely to be adopted by potential purchasers. The valuation model considers the present value of net cashflows to be generated by the property taking into account expected rental growth and occupancy rate among other things. The expected net cashflows are discounted using a risk-adjusted discount rate. The valuation of property at fair value is a source of significant estimation uncertainty as determining this involves the use of significant assumptions which include the discount rate.
The valuation technique changed during the year therefore the impact of the change has been assessed. A range of possible multiples based on comparable market sales was detailed within the valuation report and should the median multiple have been used as the basis of valuation, the value of the freehold property would be estimated to be £870,000 higher than the current value shown in note 10.
Recoverability of intercompany debtors
At the year end the company has intercompany debtors due of £7,823,402. Recoverability of this balance is dependent upon the subsidiary company's ability to realise the underlying assets. The valuation of the subsidiaries land and buildings is therefore considered to be a significant judgement in the recoverability of intercompany debtors.
Q.N. HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 15 -
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2022
2021
£
£
Turnover analysed by class of business
Turnover
3,353,415
2,060,217
2022
2021
£
£
Other significant revenue
Grants received
750,877
2022
2021
£
£
Turnover analysed by geographical market
United Kingdom
3,353,415
2,060,217
4
Operating (loss)/profit
2022
2021
Operating (loss)/profit for the year is stated after charging/(crediting):
£
£
Government grants
(750,877)
Fees payable to the company's auditor for the audit of the company's financial statements
68,927
56,221
Depreciation of owned tangible fixed assets
254,577
252,281
Amortisation of intangible assets
1,250
1,250
Operating lease charges
98,320
35,866
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
Hotel service staff
65
54
Adminstration and management staff
13
15
Director
2
2
80
71
Q.N. HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
5
Employees
(Continued)
- 16 -
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
1,433,997
1,331,537
Social security costs
115,198
106,066
Pension costs
18,059
16,598
1,567,254
1,454,201
6
Directors' remuneration
2022
2021
£
£
Remuneration for qualifying services
199,600
219,601
Company pension contributions to defined contribution schemes
1,321
1,319
200,921
220,920
Remuneration disclosed above include the following amounts paid to the highest paid director:
2022
2021
£
£
Remuneration for qualifying services
n/a
120,000
As total directors' remuneration was less than £200,000 in the current year, no disclosure is provided for that year.
7
Interest payable and similar expenses
2022
2021
£
£
Interest on bank overdrafts and loans
106,231
80,172
8
Taxation
2022
2021
£
£
Deferred tax
Origination and reversal of timing differences
(537,172)
128,922
Q.N. HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
8
Taxation
(Continued)
- 17 -
The actual (credit)/charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:
2022
2021
£
£
(Loss)/profit before taxation
(678,956)
377,248
Expected tax (credit)/charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
(129,002)
71,677
Tax effect of expenses that are not deductible in determining taxable profit
15
838
Tax effect of income not taxable in determining taxable profit
(122,462)
Unutilised tax losses carried forward
89,918
39,064
Permanent capital allowances in excess of depreciation
39,069
10,883
Effect of revaluation of property
(537,172)
128,922
Taxation (credit)/charge for the year
(537,172)
128,922
In addition to the amount (credited)/charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:
2022
2021
£
£
Deferred tax arising on:
Revaluation of property
(537,172)
128,922
The company has estimated losses of £7,366,778 (2021: £6,628,308) available to carry forward against future trading profits.
9
Intangible fixed assets
Franchise fees
£
Cost
At 1 January 2022 and 31 December 2022
25,000
Amortisation and impairment
At 1 January 2022
4,000
Amortisation charged for the year
1,250
At 31 December 2022
5,250
Carrying amount
At 31 December 2022
19,750
At 31 December 2021
21,000
Q.N. HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 18 -
10
Tangible fixed assets
Land and buildings
Investment property
Plant and machinery
Fixtures, fittings & equipment
Total
£
£
£
£
£
Cost or valuation
At 1 January 2022
9,000,000
184,722
1,015,686
3,932,798
14,133,206
Additions
44,203
208,928
253,131
Revaluation
(4,671,927)
(4,671,927)
At 31 December 2022
4,328,073
184,722
1,059,889
4,141,726
9,714,410
Depreciation and impairment
At 1 January 2022
184,722
984,068
2,935,099
4,103,889
Depreciation charged in the year
20,308
234,269
254,577
At 31 December 2022
184,722
1,004,376
3,169,368
4,358,466
Carrying amount
At 31 December 2022
4,328,073
55,513
972,358
5,355,944
At 31 December 2021
9,000,000
31,618
997,699
10,029,317
The carrying value of land and buildings comprises:
2022
2021
£
£
Long leasehold
4,328,073
9,000,000
Land and buildings with a carrying amount of £4,328,073 at the year end, was revalued at 07 November 2022 by Colliers International Property Consultants Limited, independent valuers not connected with the company on the basis of market value. The valuation conforms to International Valuation Standards and was based on recent market transactions on arm's length terms for similar properties. The directors confirm this value is reflective of the market value at the year end.
The investment properties are still under the course of construction. The directors consider the carrying value to reflect the market value at the year end.
All other tangible fixed assets are stated at historical cost.
Land and buildings are carried at valuation. If land and buildings were measured using the cost model, the carrying amounts would have been approximately £3,537,059, being cost £4,019,386 and accumulated depreciation £482,327.
There is a fixed and floating charge over the land and buildings held by the company.
11
Fixed asset investments
2022
2021
Notes
£
£
Investments in subsidiaries
12
1,394,536
1,394,536
Q.N. HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
11
Fixed asset investments
(Continued)
- 19 -
Movements in fixed asset investments
Shares in group undertakings
£
Cost or valuation
At 1 January 2022 & 31 December 2022
1,394,536
Carrying amount
At 31 December 2022
1,394,536
At 31 December 2021
1,394,536
12
Subsidiaries
These financial statements are separate company financial statements for Q. N. Hotels Limited.
Details of the company's subsidiaries at 31 December 2022 are as follows:
Name of undertaking
Address
Nature of business
Class of
% Held
shares held
Direct
Q.N. Hotels (Aylesbury) Limited
1
Hotelier
Ordinary shares
100.00
Q.N. Hotels (Wrexham) Limited
1
Hotelier
Ordinary shares
100.00
Swanfield Limited
1
Hotelier
Ordinary shares
100.00
Registered office addresses (all UK unless otherwise indicated):
1
QN House Loughton Business Centre, 5 Langston Road, Loughton, Essex IG10 3FL
13
Stocks
2022
2021
£
£
Raw materials and consumables
24,191
21,561
14
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
128,683
49,799
Amounts owed by group undertakings
7,823,402
9,120,195
Other debtors
853,754
884,359
Prepayments and accrued income
39,201
19,831
8,845,040
10,074,184
Q.N. HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 20 -
15
Creditors: amounts falling due within one year
2022
2021
Notes
£
£
Bank loans
17
5,762,305
5,466,303
Obligations under finance leases
18
38,326
59,400
Trade creditors
306,383
277,111
Corporation tax
218,296
200,461
Other taxation and social security
399,716
318,835
Other creditors
130,697
104,568
Accruals and deferred income
256,915
188,685
7,112,638
6,615,363
16
Creditors: amounts falling due after more than one year
2022
2021
Notes
£
£
Bank loans and overdrafts
17
853,555
Obligations under finance leases
18
54,450
908,005
17
Loans and overdrafts
2022
2021
£
£
Bank loans
5,762,305
6,319,858
Payable within one year
5,762,305
5,466,303
Payable after one year
853,555
The bank loans are secured by way of a fixed and floating charge over the assets of the company.
Cross guarantees for the bank loans have been provided by the company's parent company Q.N. (Holdings) Limited, and the company's subsidiaries Q.N. Hotels (Wrexham) Limited and Swanfield Limited. The borrowings under this cross guarantee amounted to £5,762,305 (2021: £6,319,858). The bank has a charge over the leasehold property and other assets of the company in respect of these borrowings.
There is a financial guarantee of a customer obligation of £50,000 provided by the company in favour of Intercontinental Hotels Group.
Q.N. HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 21 -
18
Finance lease obligations
2022
2021
Future minimum lease payments due under finance leases:
£
£
Within one year
38,326
59,400
In two to five years
54,450
38,326
113,850
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 5 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
The leased asset is used by another company within the group. The carrying amount of the asset held in another group company is £9,900 (2021: £69,300).
19
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
2022
2021
Balances:
£
£
Revaluations
-
537,172
2022
Movements in the year:
£
Liability at 1 January 2022
537,172
Credit to profit or loss
(537,172)
Liability at 31 December 2022
-
20
Retirement benefit schemes
Defined contribution schemes
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
The charge to profit or loss in respect of defined contribution schemes was £18,059 (2021 - £16,598).
Q.N. HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 22 -
21
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
1,000,000
1,000,000
1,000,000
1,000,000
22
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2022
2021
£
£
Within one year
150,789
57,373
Between two and five years
512,779
63,927
In over five years
942,083
1,605,651
121,300
Lessor
2022
2021
£
£
Within one year
30,000
23
Related party transactions
A director owed £302,176 to the company on 1 January 2022. During the year, net advances of £109,926 were taken by the director and net repayments of £46,123 were made. At the year end, the director owed £365,979 to the company. The transactions mainly relate to personal expenses paid by the company on the director’s behalf and cash withdrawals by the director. The amount owed by the director is unsecured, interest free and repayable on demand.
A director was owed £39,229 by the company on 1 January 2022. During the year, no further advances were made. At the year end, the director was owed £39,229 by the company. The amount owed to the director is unsecured, interest free and repayable on demand.
During the year, the company was charged rent of £85,321 (2021: £41,073) for the use of a property owned by a company under common control which was repaid during the year. At year end, an amount of £448,152 (2021: £448,151) was due from this company.
At year end, an amount of £35,333 (2021: £130,341) was due from another company under common control.
Q.N. HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 23 -
24
Parent company
The parent company is Q.N. (Holdings) Limited, a company incorporated in England and Wales.
The results for the year ended 31 December 2021 are included in the consolidated accounts of Q.N. (Holdings) Limited.
The address of Q.N. (Holdings) Limited's registered office is QN House, Unit 4 Loughton Business Centre, 5 Langston Road, Loughton, Essex, IG10 3FL.
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