Company Registration No. 00884883 (England and Wales)
THE SPA HOTEL (TUNBRIDGE WELLS) LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
THE SPA HOTEL (TUNBRIDGE WELLS) LIMITED
COMPANY INFORMATION
Directors
Mr A Scragg
Mr C Scragg
Company number
00884883
Registered office
The Spa Hotel
Langton Road
Tunbridge Wells
Kent
TN4 8XJ
Auditor
Azets Audit Services
Globe House, Eclipse Park
Sittingbourne Road
Maidstone
Kent
ME14 3EN
Business address
The Spa Hotel
Langton Road
Tunbridge Wells
Kent
TN4 8XJ
THE SPA HOTEL (TUNBRIDGE WELLS) LIMITED
CONTENTS
Page
Directors' report
1
Directors' responsibilities statement
2
Independent auditor's report
3 - 5
Statement of comprehensive income
6
Balance sheet
7
Statement of changes in equity
8
Notes to the financial statements
9 - 19
THE SPA HOTEL (TUNBRIDGE WELLS) LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2023
- 1 -
The directors present their annual report and financial statements for the year ended 30 June 2023.
Principal activities
The principal activity of the company is the operation of The Spa Hotel and associated facilities at Tunbridge Wells, Kent.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr A Scragg
Mr C Scragg
Auditor
The auditor, Azets Audit Services, 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
Mr A Scragg
Director
15 March 2024
THE SPA HOTEL (TUNBRIDGE WELLS) LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 30 JUNE 2023
- 2 -
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.
THE SPA HOTEL (TUNBRIDGE WELLS) LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF THE SPA HOTEL (TUNBRIDGE WELLS) LIMITED
- 3 -
Opinion
We have audited the financial statements of The Spa Hotel (Tunbridge Wells) Limited (the 'company') for the year ended 30 June 2023 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 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 company's affairs as at 30 June 2023 and of its profit 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 directors' report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the directors' 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 directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the directors' report has been prepared in accordance with applicable legal requirements.
THE SPA HOTEL (TUNBRIDGE WELLS) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF THE SPA HOTEL (TUNBRIDGE WELLS) LIMITED
- 4 -
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 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, 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; or
the directors were not entitled to take advantage of the small companies exemption from the requirement to prepare a strategic report.
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.
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.
THE SPA HOTEL (TUNBRIDGE WELLS) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF THE SPA HOTEL (TUNBRIDGE WELLS) LIMITED
- 5 -
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and 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 indicators of potential bias.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
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.
Catherine Cooper FCCA (Senior Statutory Auditor)
For and on behalf of Azets Audit Services
18 March 2024
Chartered Accountants
Globe House
Statutory Auditor
Eclipse Park
Sittingbourne Road
Maidstone
Kent
ME14 3EN
THE SPA HOTEL (TUNBRIDGE WELLS) LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
- 6 -
2023
2022
Notes
£
£
Turnover
3
5,040,728
5,125,767
Cost of sales
(2,555,321)
(2,297,643)
Gross profit
2,485,407
2,828,124
Administrative expenses
(1,914,148)
(1,919,507)
Other operating income
25,434
75,837
Operating profit
4
596,693
984,454
Interest receivable and similar income
8
1,690
Interest payable and similar expenses
9
(174,068)
(96,452)
Profit before taxation
424,315
888,002
Tax on profit
10
(129,825)
(158,556)
Profit for the financial year
294,490
729,446
The Statement of Comprehensive Income has been prepared on the basis that all operations are continuing operations.
THE SPA HOTEL (TUNBRIDGE WELLS) LIMITED
BALANCE SHEET
- 7 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
11
2,093,842
1,961,392
Current assets
Stocks
12
72,697
65,391
Debtors
13
828,128
916,459
Cash at bank and in hand
570,260
387,019
1,471,085
1,368,869
Creditors: amounts falling due within one year
14
(1,229,137)
(1,296,055)
Net current assets
241,948
72,814
Total assets less current liabilities
2,335,790
2,034,206
Creditors: amounts falling due after more than one year
15
(1,626)
(11,045)
Provisions for liabilities
Deferred tax liability
17
158,523
142,010
(158,523)
(142,010)
Net assets
2,175,641
1,881,151
Capital and reserves
Called up share capital
18
265,000
265,000
Profit and loss reserves
1,910,641
1,616,151
Total equity
2,175,641
1,881,151
These financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.
The financial statements were approved by the board of directors and authorised for issue on 15 March 2024 and are signed on its behalf by:
Mr A Scragg
Director
Company Registration No. 00884883
THE SPA HOTEL (TUNBRIDGE WELLS) LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
- 8 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 July 2021
265,000
886,705
1,151,705
Year ended 30 June 2022:
Profit and total comprehensive income for the year
-
729,446
729,446
Balance at 30 June 2022
265,000
1,616,151
1,881,151
Year ended 30 June 2023:
Profit and total comprehensive income for the year
-
294,490
294,490
Balance at 30 June 2023
265,000
1,910,641
2,175,641
THE SPA HOTEL (TUNBRIDGE WELLS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
- 9 -
1
Accounting policies
Company information
The Spa Hotel (Tunbridge Wells) Limited (the 'company') is a private company limited by shares incorporated in England and Wales. The registered office is The Spa Hotel, Langton Road, Tunbridge Wells, Kent, United Kingdom, TN4 8XJ.
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 £1.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
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’: 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 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Scragg Hotels Limited. These consolidated financial statements are available from its registered office, The Spa Hotel, Langton Road, Tunbridge Wells, Kent, TN4 8XJ.
1.2
Going concern
In preparing the financial statements, the directors have considered the principal risks and uncertainties facing the business. In making this assessment the directors have prepared cashflow forecasts for the foreseeable future, being a period of at least twelve months from the date of approval of the financial statements.true
The company is party to a cross-guarantee amounting to £2,414,536 in favour of Allica Bank Limited, alongside its parent company, Scragg Hotels Limited. The loan to which this cross-guarantee relates was due for repayment in January 2024, for which existing cash reserves would be insufficient. Post year end, management have entered into a new loan agreement with the bank, which will see the loan repayment period extended through to 2049. The repayments under the new loan agreement have been factored into the cashflow forecasts, along with all associated covenants.
Having considered numerous different scenarios, the directors consider that the company has adequate resources to continue trading and therefore have a reasonable expectation that the company will continue in operational existence for the foreseeable future. Thus, the Directors continue to adopt the going concern bases in preparing the financial statements.
THE SPA HOTEL (TUNBRIDGE WELLS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 10 -
1.3
Turnover
Turnover represents net invoiced sales of goods and services (being room income, restaurant sales and other usual supplies made by a hotel), excluding value added tax. Turnover is recognised once the performance of the service has been concluded or goods have been delivered.
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Freehold buildings
2% - 4% per annum on cost
Plant and machinery
4% - 33% per annum on cost
Furniture and effects
10% - 33% per annum on cost
Computer equipment
10% - 20% per annum on cost
During the year, management have elected to revise the depreciation policy for certain tangible fixed assets to represent a more realistic expectation of useful economic life. Where applicable, such changes to the accounting policy have been applied prospectively from 1 July 2022, and no adjustment to the brought forward net book value position under the former depreciation policy has been made.
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.
No depreciation is charged on freehold land.
1.5
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
Recoverable amount is the higher of fair value less costs to sell and value in use.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset 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.
1.6
Stocks
Stocks are stated at the lower of cost and estimated selling price, using an average cost technique.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over estimated selling price is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.7
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
THE SPA HOTEL (TUNBRIDGE WELLS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 11 -
1.8
Financial instruments
The company has applied the provisions of Section 11 ‘Basic Financial Instruments’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include 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.
Other financial assets
Other financial assets are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publically traded and whose fair values cannot be measured reliably are measured at cost less impairment.
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.
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, and loans from fellow group companies are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
THE SPA HOTEL (TUNBRIDGE WELLS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 12 -
1.9
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.11
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.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
THE SPA HOTEL (TUNBRIDGE WELLS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 13 -
1.14
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
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.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Assessing indicators of impairment
In assessing whether there have been any indicators of impairment of assets the directors have considered both external and internal sources of information such as market conditions, counterparty credit ratings and experience of recoverability. There have been no material indicators of impairments identified during the current financial year other than in respect of bad and doubtful trade debtor balances recognised in the financial statements.
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.
Determining useful economic lives of tangible fixed assets
The company depreciates tangible fixed assets over their estimated useful lives. The estimation of the useful lives of assets is based on historic performance as well as expectations about future use and therefore requires estimates and assumptions to be applied by management. The actual lives of these assets can vary depending on a variety of factors, including product life cycles and maintenance.
THE SPA HOTEL (TUNBRIDGE WELLS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 14 -
3
Turnover and other revenue
An analysis of the company's revenue and other income is as follows:
2023
2022
£
£
Turnover analysed by class of business
Rooms
2,433,372
2,646,837
Food and beverage
1,934,845
1,984,202
Leisure and beauty
598,171
461,867
Sundry income
74,340
32,861
5,040,728
5,125,767
2023
2022
£
£
Other revenue
Interest income
1,690
-
Grants received
-
14,964
The company's turnover arose wholly within the United Kingdom.
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants
-
(14,964)
Depreciation of owned tangible fixed assets
130,819
172,201
Depreciation of tangible fixed assets held under finance leases
2,118
8,469
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the group and company
13,890
12,750
For other services
All other non-audit services
7,000
5,500
THE SPA HOTEL (TUNBRIDGE WELLS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 15 -
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Directors
2
2
Hotel staff and management
139
147
Total
141
149
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
2,059,675
1,888,912
Social security costs
168,435
158,599
Pension costs
48,493
47,691
2,276,603
2,095,202
In addition to the above costs, the cost of agency workers in the period was £20,150 (2022: £72,670).
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
115,860
120,969
Company pension contributions to defined contribution schemes
4,400
2,688
120,260
123,657
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2022: 1).
The directors do not consider that there are any other key management personnel besides the directors. As such, the aforementioned directors emoluments are equivalent to key management personnel remuneration.
8
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
1,629
Other interest income
61
Total income
1,690
THE SPA HOTEL (TUNBRIDGE WELLS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 16 -
9
Interest payable and similar expenses
2023
2022
£
£
Interest payable to group undertakings
173,113
95,200
Interest on finance leases and hire purchase contracts
955
1,252
174,068
96,452
10
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
55,985
91,178
Adjustments in respect of prior periods
57,327
Total current tax
113,312
91,178
Deferred tax
Origination and reversal of timing differences
16,513
67,378
Total tax charge
129,825
158,556
From 1 April 2023, corporation tax rates increased from 19% to 25% in the United Kingdom. Given the company's financial year straddles two periods where both the former and current rates apply, a hybrid rate of 20.5% is applicable for the current year's tax charge. Deferred tax is calculated by reference to a corporation tax rate of 25% (2022: 25%).
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Profit before taxation
424,315
888,002
Expected tax charge based on the standard rate of corporation tax in the UK of 20.50% (2022: 19.00%)
86,985
168,720
Tax effect of expenses that are not deductible in determining taxable profit
51
Tax effect of income not taxable in determining taxable profit
(11,566)
Tax effect of utilisation of tax losses not previously recognised
(191)
Effect of change in corporation tax rate
16,236
Under/(over) provided in prior years
56,438
(31,380)
Fixed asset timing differences
(14,023)
16,737
Other adjustments
374
Taxation charge for the year
129,825
158,556
THE SPA HOTEL (TUNBRIDGE WELLS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 17 -
11
Tangible fixed assets
Freehold buildings
Plant and machinery
Furniture and effects
Computer equipment
Total
£
£
£
£
£
Cost
At 1 July 2022
1,809,341
1,271,840
628,140
149,271
3,858,592
Additions
34,941
138,383
83,193
8,870
265,387
Disposals
(186,534)
(69,120)
(44,836)
(300,490)
At 30 June 2023
1,844,282
1,223,689
642,213
113,305
3,823,489
Depreciation and impairment
At 1 July 2022
270,311
1,075,282
448,329
103,278
1,897,200
Depreciation charged in the year
26,972
28,085
60,935
16,945
132,937
Eliminated in respect of disposals
(186,534)
(69,120)
(44,836)
(300,490)
At 30 June 2023
297,283
916,833
440,144
75,387
1,729,647
Carrying amount
At 30 June 2023
1,546,999
306,856
202,069
37,918
2,093,842
At 30 June 2022
1,539,030
196,558
179,811
45,993
1,961,392
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2023
2022
£
£
Plant and machinery
16,232
18,350
There is a legal charge over The Spa Hotel, included within freehold buildings, in favour of the group's finance provider.
12
Stocks
2023
2022
£
£
Raw materials and consumables
72,697
65,391
13
Debtors: amounts falling due within one year
2023
2022
£
£
Trade debtors
31,049
51,265
Amounts owed by parent undertaking
661,608
654,098
Other debtors
135,471
211,096
828,128
916,459
THE SPA HOTEL (TUNBRIDGE WELLS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 18 -
14
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Obligations under finance leases
16
9,419
8,872
Trade creditors
206,408
261,339
Corporation tax
55,924
91,010
Other taxation and social security
146,729
188,813
Other creditors
810,657
746,021
1,229,137
1,296,055
15
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Obligations under finance leases
16
1,626
11,045
16
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
9,419
8,872
In two to five years
1,626
11,045
11,045
19,917
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 5 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
17
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
158,523
142,010
THE SPA HOTEL (TUNBRIDGE WELLS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
17
Deferred taxation
(Continued)
- 19 -
2023
Movements in the year:
£
Liability at 1 July 2022
142,010
Charge to profit or loss
16,513
Liability at 30 June 2023
158,523
18
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
265,000
265,000
265,000
265,000
19
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
48,493
47,691
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.
At the balance sheet date, the company owed £10,548 (2022: £10,048) to the fund. This amount is included within creditors due within one year.
20
Financial commitments, guarantees and contingent liabilities
The company is party to a cross guarantee in favour of Allica Bank Limited (formerly in favour of AIB Group (UK) Plc), together with Scragg Hotels Limited. The total group borrowings covered by this guarantee amount to £2,414,536 (2022: £2,567,840), which all relate to Scragg Hotels Limited.
In addition, with effect of 22 September 2021, the company is subject to a fixed charge in favour of National Westminster Bank Plc, amounting to £7,500, in respect of a change order arrangement.
21
Related party transactions
In accordance with paragraph 33.1A of FRS 102, the company has taken exemption from disclosing transactions entered into with its parent company.
22
Ultimate controlling party
The immediate parent company is Scragg Hotels Limited, a company registered in England and Wales.
Scragg Hotels Limited prepares group financial statements and copies can be obtained from The Spa Hotel, Langton Road, Tunbridge Wells, Kent, TN4 8XJ.
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