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Registered number: 12293956










SAUK OWNER LTD










ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2020

 
SAUK OWNER LTD
 
 
COMPANY INFORMATION


Directors
Eric Donald Hassberger (appointed 17 May 2021)
Justin David Petersen (appointed 17 May 2021)
Andrew Jay Weprin (appointed 1 November 2019)
Benjamin Jason Weprin (appointed 1 November 2019)
Patrick James Stephens (appointed 1 November 2019, resigned 14 May 2021)




Company secretary
Broughton Secretaries Limited



Registered number
12293956



Registered office
54 Portland Place

London, England

W1B 1DY




Independent auditors
MHA
Statutory Auditor
2 London Wall Place
London, England
EC2Y 5AU





 
SAUK OWNER LTD
 

CONTENTS



Page
Group Strategic Report
1 - 3
Directors' Report
4 - 5
Independent Auditors' Report
6 - 9
Consolidated Profit and Loss Account
10
Consolidated Balance Sheet
11
Company Balance Sheet
12
Consolidated Statement of Changes in Equity
13
Company Statement of Changes in Equity
14
Consolidated Statement of Cash Flows
15 - 16
Consolidated Analysis of Net Debt
17
Notes to the Financial Statements
18 - 34


 
SAUK OWNER LTD
 
 
GROUP STRATEGIC REPORT
FOR THE PERIOD ENDED 31 DECEMBER 2020

Introduction
 
The directors present their strategic report of the Group and Company for the period 1 November 2019 to 31 December 2020.

Business review
 
The Group’s principal activity is the operation of the Rusacks Hotel in St. Andrews, Scotland. The Company’s principal activity is the holding of debt and other financial instruments for the Group.
There was an acquisition of a subsidiary, SAUK Operator Limited (formerly Macdonald Rusacks Limited), in November 2019. In conjunction with the ownership change, the prior ownership group repaid its intercompany loans.
Due to public health measures and restrictions imposed by the UK government in response to the COVID-19 pandemic, the hotel closed between March 2020 and July 2020. The hotel also closed in November 2020 for refurbishment and reopened in July 2021. The closures had a significant negative impact on the number of available and occupied rooms.
The loss for the Period after taxation amounted to £5,569,231.

Principal risks and uncertainties

Some risks are excluded because management considers them not to be material to the Group. Additionally, there may be risks and uncertainties not presently known to the management team or which are deemed immaterial to the Group.

Market and hotel industry risks

The Group’s operations and its results are subject to a number of factors which could affect the business, many of which are common to the hotel industry and beyond the Group’s control, such as a potential global economic downturn; changes in travel patterns in the structure of the travel industry; and the potential increase in acts of terrorism. The impact of any of these factors (or a combination of them) may adversely affect sustained levels of occupancy, room rates and/or hotel values.
Management recognises that Brexit and COVID-19 add an element of uncertainty to the outlook of both the U.K. hospitality industry and the greater U.K. economy which could impact future trade.
Although management seeks to identify risks at the earliest opportunity, many of these risks are beyond the control of the Group. The Group has recovery plans in place to enable it to respond to major incidents or crises and takes steps to minimise these exposures to the greatest extent possible.

Borrowings

As with all loan financing, there is a risk that the Group may be at risk of default under the financing arrangements.
To mitigate against this risk, the management team meet regularly to review the performance of the hotel. The covenant ratios within the financing agreement are applied to the hotel and monitored on an ongoing basis.

Page 1

 
SAUK OWNER LTD
 

GROUP STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2020

Fixed operating expenses

The Group incurs operating expenses such as personnel costs, operating leases, information technology and telecommunications which are to a large extent fixed. As such, operating results may be vulnerable to short-term changes in revenues.
The Group has appropriate management systems in place such as staff outsourcing designed to create flexibility in operating cost base so as to optimise operating profits in volatile trading conditions.

Key senior personnel and management

The success of the Group is partially attributable to the efforts and abilities of its senior managers. Failure to retain its senior management teams or other key personnel may threaten the success of the Group’s operations. The Group has appropriate systems in place for recruitment, reward and compensation, and performance management. Development and maintenance of the Group’s culture also plays a leading role in minimising risk.
The key senior management in the hotels is provided by Schulte Hospitality Group UK Ltd and therefore there is a pool of staff available should key personnel leave.

Pricing

Pricing is established using a bottom-up segmentation analysis of occupancy rates and average daily rates (“ADR”). Baseline assumptions are derived from a variety of third-party sources including Smith Travel Research (“STR”) reports, operating budgets provided by the Group’s third-party management platform, and historical performance. The Group utilizes this information in conjunction with trends observed at other properties with similar market dynamics.

Cash Flow

The ability to generate cash flow to pay staff, vendors, debt service and all other third parties is crucial for the longevity of the Group. The Group closely monitors all available sources of capital via hotel revenue and reserves to ensure the ability to make payments when due.

Financial key performance indicators
 
Gross profit is the primary financial key performance indicator (“KPI”) utilized by the Group to monitor the operations of the hotel being defined as revenue less cost of sales. The Group views this metric as its most significant financial KPI as it reflects how effectively it is able to generate profit from hotel operations. This is noted as being a profit of £122,172 for the Period. Due to the effects of COVID-19 resulting in the closure of the hotel, the Group did not meet its expectations for the Period.

Other key performance indicators
 
The three other KPIs relevant to the Group and overall hospitality industry are average daily rate (“ADR”), occupancy, and revenue per available room (“RevPAR”). ADR measures the average rental revenue per occupied room and is calculated as total room revenue divided by the number of rooms sold. Occupancy rate is measured by dividing the number of occupied rooms by the number of available rooms. RevPAR measures the amount of revenue generated by a single room and is calculated as room revenue divided by the total number of available rooms. These KPIs are used to monitor success in that the figures reflect the ability to generate guest stays and maximize the amount of associated revenue. As noted above, the Group did not meet its expectations for the year with respect to these performance measures.

Page 2

 
SAUK OWNER LTD
 

GROUP STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2020

Future developments

The directors expect the business to continue operating for the foreseeable future. The property has since reopened under the Marine and Lawn Hotels and Resorts brand, and the gradual withdrawal of lockdown restrictions has led to improved trade on the results for this reporting period.


This report was approved by the board and signed on its behalf.



Justin David Petersen
Director

Date: 20 December 2023

Page 3

 
SAUK OWNER LTD
 
 
 
DIRECTORS' REPORT
FOR THE PERIOD ENDED 31 DECEMBER 2020

The directors present their report and the financial statements for the Period ended 31 December 2020.

Directors' responsibilities statement

The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 the Group and of the profit or loss of the Group for that period.

 In preparing these financial statements, the directors are required to:


select suitable accounting policies for the Group's financial statements and then apply them consistently;

make judgments and accounting estimates that are reasonable and prudent;

state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group 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 the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Results and dividends

The loss for the Period, after taxation, amounted to £5,569,231.

The dividends voted for the Period amounted to £NIL.

Directors

The directors who served during the Period were:

Andrew Jay Weprin (appointed 1 November 2019)
Benjamin Jason Weprin (appointed 1 November 2019)
Patrick James Stephens (appointed 1 November 2019, resigned 14 May 2021)

Future developments

Future developments of the Group are discussed in the strategic report.

Qualifying third party indemnity provisions

Qualifying third party indemnity provision subsists for the benefit of the Directors and was in place throughout the financial period.

Page 4

 
SAUK OWNER LTD
 
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2020

Disclosure of information to auditors

Each of the persons who are 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 a director 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.

Post balance sheet events

Post balance sheet events of the Group have been discussed in the notes to the financial statements.

Auditors

Following a rebranding exercise on 15 May 2023 the trading name of the company’s independent auditor changed from MHA MacIntyre Hudson to MHA. A resolution to reappoint MHA as independent auditor will be proposed at the next Annual General Meeting.

This report was approved by the board and signed on its behalf.
 





Justin David Petersen
Director

Date: 20 December 2023

Page 5

 
SAUK OWNER LTD
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SAUK OWNER LTD
 

Opinion


We have audited the financial statements of SAUK Owner Ltd (the 'parent Company') and its subsidiaries (the 'Group') for the Period ended 31 December 2020, which comprise the Group Profit and Loss Account, the Group and Company Balance Sheets, the Group Statement of Cash Flows, the Group and Company Statement of Changes in Equity and the related notes, including a summary of significant accounting policiesThe financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 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 Group's and of the parent Company's affairs as at 31 December 2020 and of the Group's loss for the Period 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.


Basis for opinion


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 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


We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:


the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Group's or the parent Company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.


Page 6

 
SAUK OWNER LTD
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SAUK OWNER LTD (CONTINUED)


Other information


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 statementsour 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
 

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 Period 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 Directors' 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.


Page 7

 
SAUK OWNER LTD
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SAUK OWNER LTD (CONTINUED)


Responsibilities of directors
 

As explained more fully in the Directors' Responsibilities Statement set out on page 4, 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.


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 Group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. we desgin 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:
• enquiry of management, those charged with governance around actual and potential litigation and claims;
• performing audit work over the risk and management override of controls, including testing of journal
entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions
outside the normal course of business and reviewing accounting estimates for bias;
• reviewing minutes and meetings of those charged with governance;
• reviewing financial statement disclosures and testing to supporting documentation to assess compliance
with applicable laws and regulations.


A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report.


Use of our 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 2006Our 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.


Page 8

 
SAUK OWNER LTD
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SAUK OWNER LTD (CONTINUED)





Rajeev Shaunak FCA (Senior Statutory Auditor)
  
for and on behalf of
MHA
 
Statutory Auditor
2 London Wall Place
London, England
EC2Y 5AU
  

Date: 21 December 2023
MHA is the trading name of MacIntyre Hudson LLP, a limited liability partnership in England and Wales (registered number OC312313).
Page 9

 
SAUK OWNER LTD
 
 
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE PERIOD ENDED 31 DECEMBER 2020

For the period 1 November 2019 to 31 December 2020
Note
£

  

Turnover
 4 
1,369,359

Cost of sales
  
(1,247,187)

Gross profit
  
122,172

Administrative expenses
  
(4,667,000)

Other operating income
 5 
289,338

Operating loss
  
(4,255,490)

Interest receivable and similar income
 8 
16

Interest payable and similar expenses
 9 
(1,745,228)

Loss before tax
  
(6,000,702)

Tax on loss
 10 
431,471

Loss for the financial Period
  
(5,569,231)

Loss for the Period attributable to:
  

Owners of the parent
  
(5,569,231)

  
(5,569,231)

There were no recognised gains and losses for 2020 other than those included in the consolidated statement of comprehensive income.
There was no other comprehensive income for 2020.

The notes on pages 18 to 34 form part of these financial statements.

Page 10

 
SAUK OWNER LTD
REGISTERED NUMBER: 12293956

CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2020

2020
Note
£

Fixed assets
  

Intangible assets
 11 
11,707,960

Tangible assets
 12 
46,985,434

  
58,693,394

Current assets
  

Debtors: amounts falling due within one year
 14 
806,156

Cash at bank and in hand
 15 
3,160,809

  
3,966,965

Creditors: amounts falling due within one year
 16 
(13,396,595)

Net current liabilities
  
 
 
(9,429,630)

Total assets less current liabilities
  
49,263,764

Creditors: amounts falling due after more than one year
 17 
(26,479,894)

Provisions for liabilities
  

Deferred taxation
 18 
(4,353,100)

  
 
 
(4,353,100)

Net assets
  
18,430,770


Capital and reserves
  

Called up share capital 
 19 
240,001

Share premium account
  
23,760,000

Profit and loss account
  
(5,569,231)

Equity attributable to owners of the parent Company
  
18,430,770


The financial statements were approved and authorised for issue by the board and were signed on its behalf by: 



Justin David Petersen
Director

Date: 20 December 2023

The notes on pages 18 to 34 form part of these financial statements.

Page 11

 
SAUK OWNER LTD
REGISTERED NUMBER: 12293956

COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2020

2020
Note
£

Fixed assets
  

Investments
 13 
50,222,638

  
50,222,638

Current assets
  

Debtors: amounts falling due within one year
 14 
8,139,926

  
8,139,926

Creditors: amounts falling due within one year
 16 
(10,335,228)

Net current liabilities
  
 
 
(2,195,302)

Total assets less current liabilities
  
48,027,336

  

Creditors: amounts falling due after more than one year
 17 
(26,479,894)

  

Net assets
  
21,547,442


Capital and reserves
  

Called up share capital 
 19 
240,001

Share premium account
  
23,760,000

Profit and loss account
  
(2,452,559)

  
21,547,442


The financial statements were approved and authorised for issue by the board and were signed on its behalf by: 


Justin David Petersen
Director

Date: 20 December 2023

The notes on pages 18 to 34 form part of these financial statements.

Page 12

 
SAUK OWNER LTD
 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 DECEMBER 2020


Called up share capital
Share premium account
Profit and loss account
Equity attributable to owners of parent Company
Total equity

£
£
£
£
£

At 1 November 2019
-
-
-
-
-


Comprehensive income for the Period

Loss for the Period

-
-
(5,569,231)
(5,569,231)
(5,569,231)

Shares issued during the Period
240,001
23,760,000
-
24,000,001
24,000,001


At 31 December 2020
240,001
23,760,000
(5,569,231)
18,430,770
18,430,770

The notes on pages 18 to 34 form part of these financial statements.

Page 13

 
SAUK OWNER LTD
 

COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 DECEMBER 2020


Called up share capital
Share premium account
Profit and loss account
Total equity

£
£
£
£

At 1 November 2019
-
-
-
-


Comprehensive income for the period

Loss for the Period

-
-
(2,452,559)
(2,452,559)

Shares issued during the Period
240,001
23,760,000
-
24,000,001


At 31 December 2020
240,001
23,760,000
(2,452,559)
21,547,442

The notes on pages 18 to 34 form part of these financial statements.

Page 14

 
SAUK OWNER LTD
 

CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 31 DECEMBER 2020

2020
£

Cash flows from operating activities

Loss for the financial Period
(5,569,231)

Adjustments for:

Amortisation of intangible assets
1,480,192

Depreciation of tangible assets
878,977

Government grants
(289,338)

Interest paid
1,745,228

Interest received
(16)

Taxation charge
109,511

Decrease in stocks
27,858

Increase in debtors
(301,034)

Increase in creditors
1,983,156

Net cash generated from operating activities

65,303


Cash flows from investing activities

Purchase of tangible fixed assets
(10,864,411)

Government grants received
289,338

Purchase of subsidiary
(45,139,353)

Interest received
16

Net cash from investing activities

(55,714,410)

Cash flows from financing activities

Issue of ordinary shares
24,000,001

Other new loans
26,479,894

New loans from group companies
10,075,249

Interest paid
(1,745,228)

Net cash used in financing activities
58,809,916

Net increase in cash and cash equivalents
3,160,809

Cash and cash equivalents at the end of Period
3,160,809


Cash and cash equivalents at the end of Period comprise:

Cash at bank and in hand
3,160,809

3,160,809


Page 15

 
SAUK OWNER LTD
 
The notes on pages 18 to 34 form part of these financial statements.

Page 16

 
SAUK OWNER LTD
 

CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE PERIOD ENDED 31 DECEMBER 2020



Cash flows
At 31 December 2020
£

£

Cash at bank and in hand

3,160,809

3,160,809

Debt due after 1 year

(26,479,894)

(26,479,894)


(23,319,085)
(23,319,085)

The notes on pages 18 to 34 form part of these financial statements.

Page 17

 
SAUK OWNER LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2020

1.


General information

SAUK Owner Limited, company number 12293956, is a private company limited by shares, registered and incorporated in the United Kingdom. The registered office address is 54 Portland Place, London, England, W1B 1DY. The principal activity of the Company is to act as a holding entity for a hotel and hospitality company.
The Group's functional and presentational currency is GBP rounded to the nearest £1.

2.Accounting policies

 
2.1

Basis of preparation of financial statements

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies (see note 3).

The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Profit and Loss Account in these financial statements.

The following principal accounting policies have been applied:

 
2.2

Basis of consolidation

The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance Sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Profit and Loss Account from the date on which control is obtained. They are deconsolidated from the date control ceases.

 
2.3

Going concern

The directors confirm that, having reviewed the Group’s and Company’s cash requirements for the next 12 months from the date of signing the financial statements, they have formed a judgement that the Group and Company have reasonable expectations that adequate resources will be available to continue operations for the foreseeable future. The Group has also received confirmation of support from its parent, for at least 12 months after the signing of the audit report, which provides additional security on the resources available to continue as a going concern. Therefore, these financial statements have been prepared on the going concern basis. In forming this judgement, the directors have reviewed forecasts for 2023-24, cash flow projections from the date of the approval of these financial statements, contingency planning and the sufficiency of banking facilities. The directors are comfortable that the Group will generate sufficient value to continue to settle liabilities as they fall due.

Page 18

 
SAUK OWNER LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2020

2.Accounting policies (continued)

 
2.4

Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:

Sale of goods

Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
the Group has transferred the significant risks and rewards of ownership to the buyer;
the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
the amount of revenue can be measured reliably;
it is probable that the Group will receive the consideration due under the transaction; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Rendering of services

Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
the amount of revenue can be measured reliably;
it is probable that the Group will receive the consideration due under the contract;
the stage of completion of the contract at the end of the reporting period can be measured reliably; and
the costs incurred and the costs to complete the contract can be measured reliably.

 
2.5

Operating leases: the Group as lessee

Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.

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.

 
2.6

Government grants

Grants are accounted under the accruals model as permitted by FRS 102. Grants relating to expenditure on tangible fixed assets are credited to profit or loss at the same rate as the depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income.
Grants of a revenue nature are recognised in the Consolidated Profit and Loss Account in the same period as the related expenditure.

Page 19

 
SAUK OWNER LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2020

2.Accounting policies (continued)

 
2.7

Interest income

Interest income is recognised in profit or loss using the effective interest method.

 
2.8

Finance costs

Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

 
2.9

Borrowing costs

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

 
2.10

Pensions

Defined contribution pension plan

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

Page 20

 
SAUK OWNER LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2020

2.Accounting policies (continued)

 
2.11

Current and deferred taxation

The tax expense for the Period comprises deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company and the Group operate and generate income.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:
The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits;
Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and
Where they relate to timing differences in respect of interests in subsidiaries, associates, branches and joint ventures and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future.

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

 
2.12

Intangible assets

Goodwill

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

Other intangible assets

Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.

 The estimated useful lives range as follows:

Goodwill
-
over 10 years, 10%

Page 21

 
SAUK OWNER LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2020

2.Accounting policies (continued)

 
2.13

Tangible fixed assets

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

At each reporting date the Group assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.

Depreciation is provided on the following basis:

Freehold property
-
over period of 50 years, 2%

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.

 
2.14

Valuation of investments

Investments in subsidiaries are measured at cost less accumulated impairment.

Investments in unlisted Group shares, whose market value can be reliably determined, are remeasured to market value at each balance sheet date. Gains and losses on remeasurement are recognised in the Consolidated Profit and Loss Account for the period. Where market value cannot be reliably determined, such investments are stated at historic cost less impairment.

 
2.15

Stocks

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

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

 
2.16

Debtors

Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

Page 22

 
SAUK OWNER LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2020

2.Accounting policies (continued)

 
2.17

Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.


 
2.18

Creditors

Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

 
2.19

Financial instruments

The Group have elected to apply to provisions of Section 11 'Basic Financial Instruments' and Section 12 'Other Financial Instrument Issues' of FRS 102 to all of its financial instruments. The Group only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.

Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan.

Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Consolidated Profit and Loss Account.

Financial assets and liabilities are offset and the net amount reported in the Balance Sheet when there is an 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.

Page 23

 
SAUK OWNER LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2020

3.


Judgments in applying accounting policies and key sources of estimation uncertainty

In preparing these financial statements, the directors have applied their judgement in the use of certain critical accounting policies. 
The property is held at fair value based on the directors' conclusions having assessed the valuations completed by independent valuers who hold recognised and relevant professional qualifications. Where an external valuation cannot be obtained, a director's valuation will be used instead. The exception to this is when purchases are part of a recognised refurbishment period; these are held at cost until they reach a stage of operation.


4.


Turnover

An analysis of turnover by class of business is as follows:


For the period 1 November 2019 to 31 December 2020
£

Room sales
950,722

Food and beverage sales
359,674

Retail sales
58,963

1,369,359


All turnover arose within the United Kingdom.


5.


Other operating income

For the period 1 November 2019 to 31 December 2020
£

Government grants receivable
289,338


Page 24

 
SAUK OWNER LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2020

6.


Auditors' remuneration

During the Period, the Group obtained the following services from the Company's auditors:


For the period 1 November 2019 to 31 December 2020
£

Fees payable to the Company's auditors for the audit of the consolidated and parent Company's financial statements
100,000

Fees payable to the Group's auditors in respect of bookkeeping services
52,000

Fees payable to the Group's auditors in respect of tax compliance services
18,000


7.


Employees

Staff costs were as follows:


Group
Company
For the period 1 November 2019 to 31 December 2020
For the period 1 November 2019 to 31 December 2020
£
£


Wages and salaries
1,038,858
-


The average monthly number of employees, including the directors, during the Period was as follows:


For the period 1 November 2019 to 31 December 2020
            No.






Employees
61

The Group/Company's directors did not receive any remuneration.
Page 25

 
SAUK OWNER LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2020

8.


Interest receivable

For the period 1 November 2019 to 31 December 2020
£


Other interest receivable
16


9.


Interest payable and similar expenses

For the period 1 November 2019 to 31 December 2020
£


Mortgage interest payable
1,448,506

Other interest payable
296,722

1,745,228

Page 26

 
SAUK OWNER LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2020

10.


Taxation


For the period 1 November 2019 to 31 December 2020
£

Corporation tax


Current tax on profits for the year
(540,982)


Total current tax
(540,982)

Deferred tax


Origination and reversal of timing differences
109,511

Total deferred tax
109,511


Tax on loss
(431,471)

Factors affecting tax charge for the period

The tax assessed for the Period is higher than the standard rate of corporation tax in the UK of 19%. The differences are explained below:

For the period 1 November 2019 to 31 December 2020
£


Loss on ordinary activities before tax
(6,000,702)


Loss on ordinary activities multiplied by standard rate of corporation tax in the UK of 19%
(1,140,133)

Effects of:


Non-tax deductible depreciation and amortisation of goodwill
448,432

Adjustments to tax charge in respect of prior periods
(431,471)

Deferred tax asset on loss not recognised
691,701

Total tax charge for the Period
(431,471)

Page 27

 
SAUK OWNER LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2020
 
10.Taxation (continued)


Factors that may affect future tax charges

The Chancellor confirmed that the main corporation tax rate would increase to 25% as enacted on 11 March in the Finance Act 2021. This has now come into effect from April 2023.


11.


Intangible assets

Group




Goodwill

£



Cost


Additions
13,188,152



At 31 December 2020

13,188,152



Amortisation


Charge for the Period on owned assets
1,480,192



At 31 December 2020

1,480,192



Net book value



At 31 December 2020
11,707,960



Page 28

 
SAUK OWNER LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2020

12.


Tangible fixed assets

Group






Freehold property
Works in progress
Total

£
£
£



Cost or valuation


Additions
3,028,296
7,836,115
10,864,411


Acquisition of subsidiary
37,000,000
-
37,000,000



At 31 December 2020

40,028,296
7,836,115
47,864,411



Depreciation


Charge for the Period on owned assets
878,977
-
878,977



At 31 December 2020

878,977
-
878,977



Net book value



At 31 December 2020
39,149,319
7,836,115
46,985,434


13.


Fixed asset investments

Company





Investments in subsidiary companies

£



Cost or valuation


Additions
50,222,638



At 31 December 2020
50,222,638




Page 29

 
SAUK OWNER LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2020

Subsidiary undertaking


The following was a subsidiary undertaking of the Company:

Name

Registered office

Class of shares

Holding

SAUK Operator Limited
54 Portland Place, London, England, W1B 1DY
Ordinary
100%

The above subsidiary is included in the consolidation. The Company's investment in SAUK Operator Limited is direct ownership.
The Company has provided SAUK Operator Limited, registration number 05903389, with a parental guarantee in accordance with section 479C of the Companies Act 2006. As such, advantage has been taken of the audit exemption available for SAUK Operator Limited conferred by Section 479A of the Companies Act 2006 relating to the audit of their individual statements.


14.


Debtors

Group
Company
2020
2020
£
£


Trade debtors
20,964
-

Amounts owed by group undertakings
-
8,135,046

Other debtors
780,312
-

Called up share capital not paid
1
1

Prepayments and accrued income
4,879
4,879

806,156
8,139,926



15.


Cash and cash equivalents

Group
2020
£

Cash at bank and in hand
3,160,809


Page 30

 
SAUK OWNER LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2020

16.


Creditors: Amounts falling due within one year

Group
Company
2020
2020
£
£

Trade creditors
2,672,414
28,003

Amounts owed to group undertakings
10,075,249
10,075,249

Other creditors
38,198
-

Accruals and deferred income
610,734
231,976

13,396,595
10,335,228


Amounts owed to group undertakings are unsecured, bear no interest, and are repayable on demand.


17.


Creditors: Amounts falling due after more than one year

Group
Company
2020
2020
£
£

Other loans
26,479,894
26,479,894


The other loan is provided by Starfin Lux S.a.r.l and is secured on the Rusacks Hotel. This has been split into Facility A (with a drawdown limit of £27,150,000) and Facility B (with a drawdown limit of £15,450,000). Interest is charged at 4.25% per annum plus LIBOR. The loan is due for repayment on 15 November 2024.


18.


Deferred taxation


Group



2020


£






Arising on business combinations
(4,353,100)



At end of year
(4,353,100)

Group
2020
£

Arising on business combinations
(4,353,100)

(4,353,100)

Page 31

 
SAUK OWNER LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2020

19.


Share capital

2020
£
Allotted, called up and fully paid


24,000,100 Ordinary shares of £0.01 each
240,001


On incorporation, the Company issued 2,400,100 Ordinary £0.01 shares. The proceeds were for £240,001, with share capital of the same amount being recognised.
Ordinary shareholders have the right to receive notice of, and to attend, speak and vote at all general meetings of the Company, with the right to cast a vote for each Ordinary share of which he is the holder.


20.
 

Business combinations

Acquisition of 100% of the share capital of SAUK Operator Ltd on 18 November 2019.

Acquisition of SAUK Operator

Recognised amounts of identifiable assets acquired and liabilities assumed

Book value
Fair value adjustments
Fair value
£
£
£

Fixed Assets

Tangible
14,720,629
22,279,371
37,000,000

14,720,629
22,279,371
37,000,000

Current Assets

Stocks
27,858
-
27,858

Debtors
505,122
-
505,122

Cash at bank and in hand
1,050
-
1,050

Total Assets
15,254,659
22,279,371
37,534,030

Creditors

Due within one year
(797,208)
-
(797,208)

Corporation tax
(540,982)
-
(540,982)

Deferred taxation
109,511
(4,353,099)
(4,243,588)

Total Identifiable net assets
14,025,980
17,926,272
31,952,252


Goodwill
13,188,151

Total purchase consideration
45,140,403

Page 32

 
SAUK OWNER LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2020

20.Business combinations (continued)

Consideration

£


Cash
43,924,112

Directly attributable costs
1,216,291

Total purchase consideration
45,140,403

Cash outflow on acquisition

£


Purchase consideration settled in cash, as above
43,924,112

Directly attributable costs
1,216,291

45,140,403

Net cash outflow on acquisition
45,140,403

The goodwill arising on acquisition is attributable to SAUK Owner Limited.

The results of SAUK Operator since acquisition are as follows:

Current period since acquisition
£

Turnover
1,369,359

(Loss) for the period since acquisition
(1,636,481)


21.


Pension commitments

The Group operates a defined contributions 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 £20,190. Contributions totalling £8,532 were payable to the fund at the balance sheet date.


22.


Related party transactions

Refer to notes 14 and 16 for disclosure of the related party transactions. All related party transactions were with wholly owned companies within the Group and are therefore exempt from disclosure under FRS 102 Section 33.1A.

Page 33

 
SAUK OWNER LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2020

23.


Post balance sheet events

Subsequent to the year-end, the global economy has seen high levels of market volatility in connection with the COVID-19 pandemic. The Group is closely monitoring the latest market developments relating to COVID-19 and its potential impact on the Group. The ultimate impact of the COVID-19 pandemic on the global economy is highly uncertain and the full extent of the economic impact on the financial performance of the Group is as yet unknown. The directors continue to review any developments in the COVID-19 pandemic in the context of the risks presented to the Group’s business.
The Group has incurred approximately £18.9m in refurbishment costs since the balance sheet date.
The variable rate of the loan has transitioned from LIBOR to SONIA effective in February 2022. 
The events noted above are considered non-adjusting post-balance sheet events. 


24.


Controlling party

The directors consider that the ultimate controlling party and ultimate parent undertaking of the Company is AJ St. Andrews Fund LLC (Delaware), headquartered in the United States. This is the largest group to draw up consolidated financial statements, which are available at the company’s address: 133 North Jefferson Street, 4th Floor, Chicago, Illinois, 60661.

 
Page 34