Company Registration No. 05048229 (England and Wales)
Q.N. HOTELS (WREXHAM) LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Q.N. HOTELS (WREXHAM) LIMITED
COMPANY INFORMATION
Directors
Q Ahmed
N Ahmed
(Appointed 6 July 2022)
Secretary
Q Ahmed
Company number
05048229
Registered office
QN House
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 (WREXHAM) 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 - 19
Q.N. HOTELS (WREXHAM) 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 challenging due to the continuing impact of Covid. Business recovered in the second half with revenues increasing. The utility costs continued to increase especially as the gas cost contract came to the end of the fixed term. This impacted costs substantially.
The company made a pre-tax loss of £1,754,713 (2021 - £664,588 profit) for the year ended 31 December 2022, on turnover of £2,455,640 (2021 - £2,156,028), as a result of the property devaluation.
At 31 December 2022 the company had net assets of £454,965 (2021 - £2,183,825).
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 67% and average room rate of £72 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
17 November 2023
Q.N. HOTELS (WREXHAM) 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 operating a hotel and restaurant.
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
(Resigned 10 March 2022)
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 (WREXHAM) 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 (WREXHAM) LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF Q.N. HOTELS (WREXHAM) LIMITED
- 4 -
Opinion
We have audited the financial statements of Q.N. Hotels (Wrexham) 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.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
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.
Q.N. HOTELS (WREXHAM) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF Q.N. HOTELS (WREXHAM) LIMITED
- 5 -
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.
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 mostly 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. The company did not inform us of any known, suspected or alleged breaches effecting the audit period.
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 (WREXHAM) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF Q.N. HOTELS (WREXHAM) 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.
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.
Performing a physical verification of key assets.
Obtaining third-party confirmation of material bank 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 (WREXHAM) LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
- 7 -
2022
2021
£
£
Turnover
3
2,455,640
2,156,028
Cost of sales
(1,465,913)
(1,136,790)
Gross profit
989,727
1,019,238
Administrative expenses
(2,688,002)
(777,620)
Other operating income
486,784
Operating (loss)/profit
4
(1,698,275)
728,402
Interest payable and similar expenses
6
(56,438)
(63,814)
(Loss)/profit before taxation
(1,754,713)
664,588
Tax on (loss)/profit
7
25,853
(112,262)
(Loss)/profit for the financial year
(1,728,860)
552,326
Total comprehensive income for the year
(1,728,860)
552,326
The profit and loss account has been prepared on the basis that all operations are continuing operations.
Q.N. HOTELS (WREXHAM) LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2022
31 December 2022
- 8 -
2022
2021
Notes
£
£
£
£
Fixed assets
Tangible assets
8
4,709,590
6,347,480
Current assets
Stocks
9
20,503
15,762
Debtors
10
79,633
42,050
Cash at bank and in hand
54,866
80,190
155,002
138,002
Creditors: amounts falling due within one year
11
(4,392,827)
(4,276,457)
Net current liabilities
(4,237,825)
(4,138,455)
Total assets less current liabilities
471,765
2,209,025
Creditors: amounts falling due after more than one year
12
(16,800)
(25,200)
Net assets
454,965
2,183,825
Capital and reserves
Called up share capital
15
1
1
Profit and loss reserves
454,964
2,183,824
Total equity
454,965
2,183,825
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. 05048229
Q.N. HOTELS (WREXHAM) LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
- 9 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 January 2021
1
1,631,498
1,631,499
Year ended 31 December 2021:
Profit and total comprehensive income for the year
-
552,326
552,326
Balance at 31 December 2021
1
2,183,824
2,183,825
Year ended 31 December 2022:
Loss and total comprehensive income for the year
-
(1,728,860)
(1,728,860)
Balance at 31 December 2022
1
454,964
454,965
Q.N. HOTELS (WREXHAM) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 10 -
1
Accounting policies
Company information
Q.N. Hotels (Wrexham) Limited is a private company limited by shares incorporated in England and Wales. The registered office is QN House, 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 leasehold 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 financial statements of the company are consolidated in the financial statements of Q.N Holdings Limited. These consolidated financial statements are available from its registered office, QN House, Unit 4, Loughton Business Centre, 5 Langston Road, Loughton, Essex, IG10 3FL, or from Companies House.
1.3
Going concern
The company has benefited from hosting a greater number of social events and gatherings at the hotel following the end to the Covid-19 restrictions that were in place in the prior year, which ultimately hampered turnover. Post year end results have been positive, the business is profitable and revenue has increased. The directors note that overall footfall has increased and expect profitability to continue for a period of more than 12 months. trueTherefore the directors have continued to adopt the going concern basis in these 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.
1.5
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.
Q.N. HOTELS (WREXHAM) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 11 -
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:
Long leasehold property
See below
Fixtures, fittings & equipment
15% straight line
The residual value of the buildings is considered to be 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.
1.6
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
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.
1.7
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.
1.8
Cash and cash equivalents
Cash at bank and in hand are basic financial assets and include cash in hand and deposits held at call with banks.
1.9
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs 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.
Q.N. HOTELS (WREXHAM) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 12 -
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, 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 payments 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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.10
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.11
Taxation
The tax expense represents the sum of the tax currently payable.
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.
Q.N. HOTELS (WREXHAM) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 13 -
1.12
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.13
Retirement benefits
The company operates a defined contribution pension scheme under the automatic enrolment legislation for the benefit of its employees. Contribution payable are charged to the profit and loss accounts in the period they are payable.
1.14
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
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.
Q.N. HOTELS (WREXHAM) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
2
Judgements and key sources of estimation uncertainty
(Continued)
- 14 -
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 2.90 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 £255,000 lower than the current value shown in note 8.
3
Turnover and other revenue
2022
2021
£
£
Turnover analysed by class of business
Hotel and restaurant sales
2,455,640
2,156,028
2022
2021
£
£
Other significant revenue
Grants received
486,784
2022
2021
£
£
Turnover analysed by geographical market
UK
2,455,640
2,156,028
Q.N. HOTELS (WREXHAM) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 15 -
4
Operating (loss)/profit
2022
2021
Operating (loss)/profit for the year is stated after charging/(crediting):
£
£
Government grants
(486,784)
Depreciation of owned tangible fixed assets
32,182
23,582
Operating lease charges
3,770
6,775
The audit fee for the year is borne by Q.N Hotels Limited.
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
Service staff
51
50
Adminstration and management staff
12
13
Total
63
63
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
967,015
841,447
Social security costs
62,721
51,210
Pension costs
15,426
13,475
1,045,162
906,132
6
Interest payable and similar expenses
2022
2021
£
£
Interest on bank overdrafts and loans
54,187
61,000
Other interest
2,251
2,814
56,438
63,814
Q.N. HOTELS (WREXHAM) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 16 -
7
Taxation
2022
2021
£
£
Current tax
UK corporation tax on profits for the current period
126,872
Adjustments in respect of prior periods
(25,853)
(14,610)
Total current tax
(25,853)
112,262
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
(1,754,713)
664,588
Expected tax (credit)/charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
(333,395)
126,272
Tax effect of expenses that are not deductible in determining taxable profit
319,605
244
Unutilised tax losses carried forward
25,999
Adjustments in respect of prior years
(25,853)
(14,610)
Permanent capital allowances in excess of depreciation
(12,209)
356
Taxation (credit)/charge for the year
(25,853)
112,262
8
Tangible fixed assets
Long leasehold property
Fixtures, fittings & equipment
Total
£
£
£
Cost or valuation
At 1 January 2022
6,300,000
313,219
6,613,219
Additions
75,260
75,260
Revaluation
(1,680,968)
(1,680,968)
At 31 December 2022
4,619,032
388,479
5,007,511
Depreciation and impairment
At 1 January 2022
265,739
265,739
Depreciation charged in the year
32,182
32,182
At 31 December 2022
297,921
297,921
Carrying amount
At 31 December 2022
4,619,032
90,558
4,709,590
At 31 December 2021
6,300,000
47,480
6,347,480
Q.N. HOTELS (WREXHAM) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
8
Tangible fixed assets
(Continued)
- 17 -
Land and buildings with a carrying amount of £4,619,032 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.
All other tangible fixed assets are stated at historical cost.
9
Stocks
2022
2021
£
£
Raw materials and consumables
20,503
15,762
10
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
28,239
22,553
Corporation tax recoverable
25,853
Other debtors
1,352
6,352
Prepayments and accrued income
24,189
13,145
79,633
42,050
11
Creditors: amounts falling due within one year
2022
2021
Notes
£
£
Other loan
13
8,400
8,400
Trade creditors
162,115
142,951
Amounts due to group undertakings
3,817,902
3,538,728
Corporation tax
162,638
244,859
Other taxation and social security
116,431
186,104
Other creditors
25,734
55,854
Accruals and deferred income
99,607
99,561
4,392,827
4,276,457
12
Creditors: amounts falling due after more than one year
2022
2021
Notes
£
£
Other loans
13
16,800
25,200
Q.N. HOTELS (WREXHAM) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 18 -
13
Loans and overdrafts
2022
2021
£
£
Other loans
25,200
33,600
Payable within one year
8,400
8,400
Payable after one year
16,800
25,200
Other loans are secured by way of fixed and floating legal charges over assets of the company.
14
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 £15,426 (2021 - £13,475).
15
Share capital
2022
2021
£
£
Ordinary share capital
Issued and fully paid
1 Ordinary share of £1
1
1
16
Financial commitments, guarantees and contingent liabilities
The company forms part of a cross company guarantee securing the Coutts' bank borrowings of Q.N. Hotels Limited. At 31 December 2022 these borrowings 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.
17
Related party transactions
Included in other debtors at 31 December 2022 is an amount of £1,352 (2021: £1,352) owed by a connected company whose 100% shareholder is a director of the company.
A director was owed £9,107 (2021: £nil) by the company as at 31 December 2022. The amount owed to the director is unsecured, interest free and repayable on demand.
Q.N. HOTELS (WREXHAM) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 19 -
18
Parent company
The immediate parent company is Q.N. Hotels Limited, a company incorporated in England and Wales.
The results for the year ended 31 December 2022 are included in the consolidated accounts of the ultimate parent company, 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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