Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2022
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
COMPANY INFORMATION
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
CONTENTS
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
The Directors present their annual report on the affairs of Clouston Group Limited (the "Company") and its subsidiaries (the "Group") for the year ended 31 December 2022.
Clouston Group Limited (the “Company”) is the parent company for a group whose main activity is the successful redevelopment of the Stephenson Quarter area of Newcastle upon Tyne. The Company acts as a holding company and its three trading subsidiaries are Stephenson Hotel Limited, Stephenson Quarter Developments Limited and Stephenson Rocket Limited. To date the Group has completed construction of a Crowne Plaza branded hotel, refurbished the Boiler Shop events venue and has constructed a 357 space multi-storey car park adjoining the Stephenson Quarter, all of which are now operated by the Group through its trading subsidiaries. Further development proposals for this area, which are yet to come into fruition, include residential apartments, commercial offices, exhibition and event space, retail and restaurant facilities.
The Group's EBITDA in the current year was £1.4m (2021 as restated: £4.7m EBITDA loss) with a net loss of £1.2m (2021 as restated: £7.2m loss). The development, performance and position of the Group's trading subsidiaries during the year are summarised below, with further detail provided in each entity's own annual report. Stephenson Hotel Limited (“SHL”) The construction of the 251 bed Crowne Plaza hotel within the Stephenson Quarter area of Newcastle upon Tyne was completed in August 2015. This hotel forms part of a wider proposed development by the Clouston Group (the group headed by Clouston Group Limited, ‘the group’) of which the company is part. The group has also developed a multi storey car park and office block, an exhibition and event venue and the UniversityTechnical College building in the area. Further development proposals for this area include residential apartments, commercial offices, exhibition and event space, retail and restaurant facilities. In March 2019 the company terminated the IHG Hotel Management Agreement and appointed a new management company, Interstate, under a franchise agreement, to improve trading performance and hotel value whilst retaining the Crowne Plaza brand. Over the following 12 months the directors and Interstate achieved a strong performance trajectory, with increasing revenue and Revenue Generation Index ('RGI'), as detailed in the 2019 annual report, which should have led to a stabilisation by 2024. Unfortunately, that progress was arrested in March 2020 by the COVID-19 pandemic and the introduction of government restrictions which, understandably, had a major detrimental impact on the business. Faced with lockdown measures, travel restrictions and reduced demand the directors acted swiftly to mitigate operational losses insofar as possible by implementing furlough, redundancies, salary reductions, termination of non-necessary services and other similar measures. The directors also agreed a deferral of ground lease payments in respect of the hotel. Whilst not yet back to previously achieved levels, the business also saw significant gross margin improvement, from £2.9m in 2021 to £5.6m in the current year and the company generated an operating profit, before financing costs, of £1.7m (2021: £0.6m). After finance charges of £2.2m (2021: £2.2m), the company reported a net loss of £0.3m (2021: £1.4m). At the balance sheet date the company had net current liabilities of £44.2m (2021: £42.9m) and net liabilities of £29.8m (2021: £29.6m) which includes £38.7m (2021: £38.0m) due to Newcastle City Council (‘NCC’) in respect of term loan facilities and £2.1m (2021: £2.3m) in respect of a deferred hotel funding contribution, further details of which are provided in note 15 to the financial statements.
Page 1
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
To provide additional support over the period of lockdown restrictions, the Term Facilities Agreement with NCC was amended in 2020 and additional funding of £1m (Facility D) was agreed, with £0.4m drawn down in the year (2021: £0.6m). Due to UK lockdowns lasting far longer than was first anticipated, the directors have since sought to reschedule repayment terms under the Facilities Agreement and, having had constructive discussions with NCC in this regard, anticipate a viable repayment schedule will be agreed which will defer the recommencement of interest then capital repayments, as well as extend the term of the loan facilities, thereby enabling the company to re-establish a positive trading performance and meet its liabilities as they fall due for the foreseeable future. Throughout 2022 the hotel has remained open and COVID-19 restrictions have significantly reduced, allowing the hotel to operate normally again toward the end of the year. Occupancy rates rose to 79.5% in 2022 (2021: 45.9%) and with strong RGI and Average Daily Rate (‘ADR’) the directors anticipate a net profit in the coming year. Given the quality of the operational management, the outstanding support of our hotel consultants, Hamilton Hotel Partners, the strength of the brand and the support of Newcastle City Council, we are confident that the hotel can continue to recover from the impact of COVID-19 and that performance will continue to improve over the next five years as the economy stabilises. Stephenson Quarter Development Limited (“SQDL”) The company's main activity is to oversee the successful redevelopment of the Stephenson Quarter area in Newcastle by the Clouston Group, the group headed by Clouston Group Limited. In 2017 the company started construction on the North East Futures University Technical College ("UTC") on behalf of the Education and Skills Funding Agency, which was completed in the autumn of 2018. The company also worked on the design and refurbishment of the Boiler Shop which commenced in 2016 and the scheme achieved the Lord Mayors Design Award Conservation Prize in 2018. Since its restoration, the company has operated the Boiler Shop as a cultural events venue and intends to expand the range and volume of events held there over the coming years. The business suffered a significant reduction in revenue during the prior year as the Boiler Shop was closed in March 2020 due to government restrictions on mass gatherings as a consequence of the COVID-19 global pandemic, which continued into the current year. The venue reopened for socially distanced events when lockdown restrictions were relaxed in May 2021 and operated with a reduced capacity until restrictions were lifted on 19 July 2021, with the Boiler Shop having been fully open since that date. Trading performance to the end of the year was encouraging although inflationary pressures have arisen since the year end which persist at the date of approval of these financial statements and which present further potential challenges for the business as the Boiler Shop relies: for part of its income on bar sales, which could be impacted by the current cost of living crisis. However, because this is an arts and meetings venue it does not appear to be adversely affected to the extent that bars and pubs are reporting. The venue operates ticketed events and to date the directors have not seen a fall off in sales. In addition to the arts, it will now start to build the daytime meetings and events business working with its sister company, Stephenson Hotel Limited, to add value to both businesses. To assist with funding refurbishment of the Boiler Shop, the company secured a loan from NELEP Investment Fund Regional Growth Fund ("LEP") which was renegotiated and extended during 2021 following a deferment of interest charges and capital repayments in 2020 to provide support during the pandemic. Additional loan funding of £268,945 was provided in 2021 to support the company’s recovery from the pandemic and the loan maturity date was extended to 31 March 2025. At the year end the company had net current liabilities of £11,365,916 (2021: £11,051,837) and net liabilities of £10,230,135 (2021: £9,819,234) which included £9,411,346 (2021: £9,390,152) owing to group undertakings and £1,915,821 (2021: £1,958,440) in respect of the RGF loan that has been extended.
Page 2
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
Stephenson Rocket Limited (“SRL”) The construction of a 357 space multi-story car park (‘MSCP’) with offices above was completed in August 2015 during the initial phase of the redevelopment of the Stephenson Quarter area of Newcastle upon Tyne. The company operates the car park with rent payable to Newcastle City Council (‘NCC’). The car park was designed as a facility to service the fully developed Stephenson Quarter, as well as to meet parking demand for the nearby train station. The as yet incomplete development on the adjoining Stephenson Square site and a lack of the previously expected access improvements from the train station have contributed to the car park failing to achieve the anticipated utilisation levels and, as such, not being able to generate revenue at the levels initially predicted. Financial performance has been further impeded since March 2020 due to the impact of the COVID-19 global pandemic, ensuing lockdowns and reduced demand having a significant adverse impact on revenue. As a consequence, the company has incurred successive losses and has not been able to meet its rental and other obligations to NCC. In order to secure a sustainable future, the directors sought to introduce a specialist operator to take over management of the car park through which they were confident sufficient revenues would be generated to meet all other operating costs. However, NCC have entered into an agreement to develop the remaining areas of the Stephenson Quarter and require full control of the car park to support the development of offices and reduce building costs. Therefore, the company’s sub lease of the car park was terminated in November 2022. The directors welcome this and agreed to continue operating the MSCP until 28 June 2023 to allow for a smooth handover to NCC. Trading has now ceased, and the directors expect to complete a consensual agreement with NCC to clear arrears within the next 6 months. As the directors do not intend for the company to acquire or commence a replacement trade they no longer consider the company to be a going concern therefore, once this has been completed, the company will be wound up.
The delays in the regeneration of the Stephenson Quarter, and their ultimate design and content, as noted in the “business review" section above has created some uncertainty over the Group’s ability to optimise trading performance of its operating assets. As noted in this report, these risks have been exacerbated by the impact of COVID-19 on the group's ability to operate each of the businesses and achieve their potential.
The Group's other principal risks and uncertainties include property values and property yields. The Crowne Plaza Hotel and the Boiler Shop are, as expected, yet to reach a stabilised basis of trading. Should trading fall below managements current forecasts, the carrying value of these assets in the balance sheet may be further impaired.
Page 3
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
The Group’s activities expose it to a number of financial risks including cash flow risk, credit risk and liquidity risk.
Cash flow risk In addition to the risks associated with trading performance, as highlighted in this report, the Group's activities expose it to the financial risks associated with fluctuations in interest rates. The Group monitors changes in interest rates and the likely interest payments. Despite recent increases, interest rates remain at historically low levels and, as noted above, the group has refinanced a large proportion of its loan facilities in such a way as to significantly reduce the cash cost of its annual finance charges during the term of the facilities. Credit risk The Group's principal financial assets are cash and bank balances together with trade and other debtors. The group's credit risk is primarily attributable to its trade debtors. The amounts presented in the balance sheet are net of allowances for doubtful debtors. An allowance for impairment is made when there is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of the cashflows. The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. The Group has no significant concentration of credit risk, with exposure spread over a large number of counterparties and customers. Liquidity risk In order to maintain liquidity to ensure that sufficient funds are available for ongoing operations and future developments, the group uses a mixture of long-term and short-term debt finance. Further details regarding liquidity risk and the impact on going concern can be found in the directors’ report.
The Crowne Plaza hotel continues to grow with occupancy in July 2024 at 93%.
Given the quality of our management, the strength of the Crowne Plaza brand , and the outstanding support of
our hotel consultants, Hamilton Pyramid we agreed to renew the Management Agreement with Aimbridge (previously Interstate) for a further five years. The Directors will continue to work with its lender to agree suitable and sustainable repayment terms for its loan.
This report was approved by the board and signed on its behalf.
Page 4
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
The directors present their report and the financial statements for the year ended 31 December 2022.
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.
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;
∙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 2006. They 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.
The loss for the year, after taxation, amounted to £1,149,868 (2021 - loss (as restated) £7,189,163).
The directors do not recommend the payment of a final dividend (2021: £nil)
The directors who served during the year were:
Page 5
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
The following information, which would otherwise have been disclosed in the directors' report, is instead disclosed in the strategic report, as permitted by section 414c(11) of the Companies Act 2006:
- financial risk management objectives and policies - future developments
Clouston Group Limited is the parent company for a group whose recent activity included the successful redevelopment of the Stephenson Quarter area of Newcastle upon Tyne. The company acts as a holding company and its two trading subsidiaries are Stephenson Hotel Limited, Stephenson Quarter Developments Limited, including the Boiler Shop and non-trading subsidiary Stephenson Rocket Limited. The company is reliant on the performance of the subsidiaries of the group in order to continue to operate as a going concern.
The Group's principal risks and uncertainties include property values and property yields caused primarily by the delays in the regeneration of the Stephenson Quarter, which is owned by its lender, and its ultimate design and content. This has also created uncertainty over the Group's ability to optimise trading performance of its operating assets. Following the effects of COVID-19 these risks were heightened by the impact of the energy and cost of living crises on the group's ability to operate each of the businesses and achieve their potential. The board remain confident there are simple inexpensive landscaping ‘meanwhile uses’ which could be affected immediately to improve the environment, trading performance and capital values of Group companies. The director’s hotel consultants, Hamilton Pyramid and its operational managers opine that the construction of a 100-bedroom annexe on freehold land the Group owns next to the hotel could increase its gross operating profit substantially and they are in the process of completing a proposal. As a preferred alternative, the directors advocate they facilitate the development of the site owned by the Council next to the hotel with an office block the Group has designed, costed and programmed, which would incorporate the 100-bedroom annexe and additional convention space, which would add still further value. The Group is in negotiations with its principle lender, NCC, which started in early 2023 and continue to be on-going to agree appropriate repayment terms, as the loan has expired. This will form part of a consensual agreement to resolve the liabilities in all Group companies which relate to this lender. The Directors are pleased they and their advisors are in active discussions with NCC’s advisors PWC to resolve the dereliction of the surrounding land by the Council’s Joint Venture Company to regenerate the rest of Stephenson Quarter. The Council and JVC expect the regeneration to complete in the next four years. The Group’s trading performance has been encouraging with financial performance at initial projections and a positive trajectory continuing through 2023. The Directors are looking at the current mix of events in one subsidiary and is continuing to build on the daytime meetings and events business to help support other areas
Page 6
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
of the event calendar, such as, grassroots music. However, as there is a cost of living crisis that could impact income, the directors acknowledge that there is a risk that the quantum and timing of future cash flows may be insufficient to permit the company to meet its obligations as they fall due in the normal course of business.
As part of negotiations, The Group may pass ownership of freehold land it owns to enable NCC to marry it with their land and enable their proposals for Stephenson Quarter. The true value can be assessed when the ‘meanwhile uses’ have been established and/or the economy stabilises. The Directors believe it will provide sufficient working capital for the Group’s needs. Within other creditors, includes a significant historical balance held which relates to amounts owed to two former members of the group as further explained in note 25. The Directors are satisfied that they are taking suitable steps in order to rectify the position and that this liability will no longer exist moving forwards. Nevertheless, after making enquiries and considering the uncertainties described above, the directors have a reasonable expectation that the company and its group will have adequate resources to continue in operational existence for the foreseeable future. This is supported by the expected improvement in financial performance of the trading subsidiaries and the continuing support of the group’s lenders, which the directors believe will continue to be provided. For these reasons the financial statements continue to be prepared on a going concern basis.
There have been no significant events affecting the Group since the year end.
Under section 487(2) of the Companies Act 2006, Haysmacintyre LLP will be deemed to have been reappointed as auditors 28 days after these financial statements were sent to members or 28 days after the latest date prescribed for filing the accounts with the registrar, whichever is earlier.
This report was approved by the board and signed on its behalf.
Page 7
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CLOUSTON GROUP LIMITED
We have audited the financial statements of Clouston Group Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2022, which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Company Statement of Financial Position, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity and the related notes, including a summary of significant accounting policies. 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).
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.
We draw attention to note 2.2 in the financial statements, which explains that the Group is reliant on the performance of it's subsidiaries in order to continue as a going concern and indicates that there is risk as going concern is dependent on negotiations with its principal lender in respect of its loan which is due for repayment as well as the the quantum and timing of future cashflows that may be insufficient to permit the Group to meet its obligations as and when they fall due. As stated in note 2.2, these events or conditions, along with the other matters as set forth in note 2.2, indicate that a material uncertainty exists that may cast significant doubt on the Group's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Page 8
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CLOUSTON GROUP LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' Report thereon. The directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Group Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
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.
Page 9
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CLOUSTON GROUP LIMITED (CONTINUED)
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 design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud. Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws and regulations related to regulatory requirements and trade regulations, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006, income tax, payroll tax and sales tax. We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related to posting inappropriate journal entries to revenue and management bias in accounting estimates. Audit procedures performed by the engagement team included:
∙inspecting correspondence with regulators and tax authorities;
∙discussions with management including consideration of known or suspected instances of non-compliance with laws and regulation and fraud;
∙evaluating management's controls designed to prevent and detect irregularities;
∙identifying and testing journals, in particular journal entries posted with unusual account combinations, postings by unusual users or with unusual descriptions; and
∙challenging assumptions and judgments made by management in their critical accounting estimates.
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 is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
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.
Page 10
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CLOUSTON GROUP LIMITED (CONTINUED)
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditors' Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Statutory Auditors
10 Queen Street Place
EC4R 1AG
Page 11
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 12
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
REGISTERED NUMBER: 02892920
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 15 August 2024.
The notes on pages 19 to 40 form part of these financial statements.
Page 13
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
REGISTERED NUMBER: 02892920
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 19 to 40 form part of these financial statements.
Page 14
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
Page 15
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
Page 16
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 17
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 18
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Clouston Group Limited (‘the Company’) and its subsidiaries (together ‘the Group’) remain focused on the successful redevelopment of the Stephenson Quarter area of Newcastle upon Tyne.
The Company is a private company, limited by shares, incorporated and domiciled in the United Kingdom and registered in England and Wales. The address of the registered office is given in the company information page of this annual report.
2.Accounting policies
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 Statement of Comprehensive Income in these financial statements.
The following principal accounting policies have been applied:
Clouston Group Limited is the parent company for a group whose recent activity included the successful redevelopment of the Stephenson Quarter area of Newcastle upon Tyne. The company acts as a holding company and its two trading subsidiaries are Stephenson Hotel Limited, Stephenson Quarter Developments Limited, including the Boiler Shop and non-trading subsidiary Stephenson Rocket Limited. The company is reliant on the performance of the subsidiaries of the group in order to continue to operate as a going concern.
The Group's principal risks and uncertainties include property values and property yields caused primarily by the delays in the regeneration of the Stephenson Quarter, which is owned by its lender, and its ultimate design and content. This has also created uncertainty over the Group's ability to optimise trading performance of its operating assets. Following the effects of COVID-19 these risks were heightened by the impact of the energy and cost of living crises on the group's ability to operate each of the businesses and achieve their potential. The board remain confident there are simple inexpensive landscaping ‘meanwhile uses’ which could be affected immediately to improve the environment, trading performance and capital values of Group companies. The director’s hotel consultants, Hamilton Pyramid and its operational managers opine that the construction of a 100-bedroom annexe on freehold land the Group owns next to the hotel could increase its gross operating profit substantially and they are in the process of completing a proposal. As a preferred alternative, the directors advocate they facilitate the development of the site owned by the Council next to the hotel with an office block the Group has designed, costed and programmed, which would incorporate the 100-bedroom annexe and additional convention space, which would add still further value.
Page 19
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
The Group is in negotiations with its principle lender, NCC, which started in early 2023 and continue to be on-going to agree appropriate repayment terms, as the loan has expired. This will form part of a consensual agreement to resolve the liabilities in all Group companies which relate to this lender. The Directors are pleased they and their advisors are in active discussions with NCC’s advisors PWC to resolve the dereliction of the surrounding land by the Council’s Joint Venture Company to regenerate the rest of Stephenson Quarter. The Council and JVC expect the regeneration to complete in the next four years. The Group’s trading performance has been encouraging with financial performance at initial projections and a positive trajectory continuing through 2023. The Directors are looking at the current mix of events in one subsidiary and is continuing to build on the daytime meetings and events business to help support other areas of the event calendar, such as, grassroots music. However, as there is a cost of living crisis that could impact income, the directors acknowledge that there is a risk that the quantum and timing of future cash flows may be insufficient to permit the company to meet its obligations as they fall due in the normal course of business. As part of negotiations, The Group may pass ownership of freehold land it owns to enable NCC to marry it with their land and enable their proposals for Stephenson Quarter. The true value can be assessed when the ‘meanwhile uses’ have been established and/or the economy stabilises. The Directors believe it will provide sufficient working capital for the Group’s needs. Within other creditors, includes a significant historical balance held which relates to amounts owed to two former members of the group as further explained in note 25. The Directors are satisfied that they are taking suitable steps in order to rectify the position and that this liability will no longer exist moving forwards. On this basis the directors consider it appropriate to prepare these financial statements on a going concern basis, however, the directors of Clouston Group Limited acknowledge that should either trading performance not reach the requisite levels on a timely basis or should lenders withdraw their support, the quantum and timing of future cash flows may be insufficient to enable the Company and Group to meet their obligations in the normal course of business and therefore such material uncertainties mean that these may cast significant doubt on the ability of the Company and Group to continue as a going concern for the foreseeable future.
Turnover consists of the income received for the provision of services and sale of goods at the hotel, car park and Boiler Shop, net of VAT and other sales related taxes. Turnover for services is recognised at the point in time the services are delivered and sale of goods is recognised on transfer of legal title to the customer. All turnover originated in the United Kingdom.
Page 20
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
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 Statement of Financial Position, 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 Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases. Grants of a revenue nature are recognised in the Consolidated Statement of Comprehensive Income in the same period as the related expenditure.
Page 21
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
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:
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.
Page 22
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the Group's Statement of Financial Position when the Group 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 trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.
Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
Page 23
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting date.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Group after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other payables, bank loans, other loans and loans due to fellow group companies are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Derecognition of financial instruments
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Group transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Group will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Group's contractual obligations expire or are discharged or cancelled.
Page 24
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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 if the revision affects only that period, or in the period of the revision and future periods if the revision affects both the current and future periods. Significant judgments in applying the Group's accounting policies and key sources of estimation uncertainty. Useful lives of tangible assets Tangible fixed assets are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on the number of factors. In re-assessing asset lives, factors, such as technological innovation and maintenance are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values. Impairment of tangible assets The Group is required to evaluate the carrying values of tangible fixed assets for impairment whenever circumstances indicate, in management's judgment, that the carrying value of such assets may not be recoverable. An impairment review requires management to make subjective judgments concerning the cash flows, growth rates and discount rates of the cash generating units under review. Management have reviewed the tangible fixed assets and reversed a historic impairment in the current year. Recoverability of intercompany debtors Management evaluate intercompany debtors for impairment whenever circumstances indicate, in management’s judgment, that the carrying value may not be recoverable. An impairment review requires management to make subjective judgments concerning the future trading prospects and cash flows of the group companies under review. Where actual cash flows in subsequent years differs to those forecast as part of the management’s impairment review this may result in additional impairments or conversely reversals of existing impairments recognised in future years. Historic impairments exist within intercompany debtors for the company and management concluded that these impairments should continue to exist in the current year.
The whole of the turnover is attributable to the Group's principal activities.
Page 25
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 26
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 27
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 28
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
12.Taxation (continued)
At the balance sheet date the Group has unrecognised deferred tax assets totalling £8,622,715 (2021: £9,103,000) principally in respect of unrelieved trading losses. The Directors have not recognised these assets as their recovery cannot be assessed with reasonable certainty.
In March 2021 a change to the future corporation tax was substantively enacted to increase from 19% to 25% from 1 April 2023. Accordingly, the rate used to calculate the deferred tax balances at 31 December 2022 is 25% as the timing of the release of this asset is materially expected to be after this date.
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements. The profit after tax of the parent Company for the year was £
Page 29
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 30
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
14.Tangible fixed assets (continued)
Page 31
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 32
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 33
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
17.Debtors (continued)
Page 34
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
.Creditors: Amounts falling due within one year (continued)
Page 35
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 36
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 37
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Capital redemption reserve
Profit and loss account
Within the group the following prior year adjustments have been made.
Restatement of hotel land and buildings classified as stock in error within the group In 2015 construction of the hotel was completed and within the financial year ended 31 March 2016 the site has traded operationally as a hotel. The groups’s interest in the leasehold land and buildings has historically been classified as stock in the financial statements. This classification was originally adopted on the basis that the long-term aim of the group was to build and operate the hotel until such a time where the value of the hotel increased through regeneration of the area where the hotel operates, at which point, the hotel would be sold. FRS 102 sets out that fixed assets are those assets which are intended for use on a continuing basis in a company's activities. The directors have assessed the classification of the groups's hotel assets and have concluded that, as the group has utilised the hotel in its core operating activities of the provision of services directly to hotel guests, and that the primary source of income from the property is revenue generated from occupancy of hotel rooms and usage of hotel facilities, it did not meet the criteria to be classified as stock and should have been classified and accounted for as tangible fixed assets within the financial statements. This represents a material error in prior financial statements and therefore has been corrected by way of prior period adjustment. The impact on the comparative Statement of Financial Position, brought forward reserves and the Statement of Comprehensive Income is as follows: • Stock has reduced by £31,835,137. • Land and buildings included within tangible fixed assets have increased by £31,310,871. • The profit and loss account as at 1 January 2021 has reduced by £485,120. • Administrative expenses increased by £39,146 which has decreased operating profit and increased the loss before tax reported in the previous period by the same amount. • The profit and loss account carried forward as at 31 December 2021 has decreased by £524,266.
Page 38
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
25.Prior year adjustment (continued)
Recognition of voluntary dissolution of wholly owned subsidiary undertakings in December 2021
One Trinity Gardens Limited and Maudon Limited were private limited companies who were wholly owned subsidiary undertakings of Clouston Group Limited. Both companies were dormant throughout 2021 and their sole assets consisted of intercompany debt due from the parent company of £3,921,576 and from the group of £5,444,142. In December 2021 both companies were dissolved via voluntary strike-off. At such point the sole assets held by the companies were deemed to be bona vacantia and have transferred to the Crown. Therefore at this point, the control over these companies was no longer held by Clouston Group Limited and in effect, this represented a disposal of both companies by the group. No adjustments were made in the 2021 accounts to account for the disposal of One Trinity Gardens or Maudon Limited. This meant that the intercompany balances continued to be eliminated on consolidation in the consolidated financial statements, and the amounts owed to these companies continued to be classified as amounts owed to group undertakings in the parent company financial statements. This represents a material error in the prior year financial statements and therefore this has been corrected by way of prior period adjustment. The following adjustments have been made in the parent company financial statements of Clouston Group Limited: •Amounts owed to group undertakings has been decreased by £3,921,576. •Other Creditors has been increased by £3,921,576. There was no change to the parent company result for the comparative period. The following adjustments have been made in the consolidated financial statements of Clouston Group Limited: •Other Creditors has been increased by £5,444,142. •Loss on disposal of operations has been increased by £5,444,142 which has increased the loss before tax reported in the previous period by the same amount. •As a result, the profit and loss account account carried forward as at 31 December 2021 has decreased by £5,444,142.
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 £65,193 (2021: £33,687). Contributions totalling £17,376 (2021: £6,237) were payable to the fund at the reporting date and are included in creditors.
Page 39
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CLOUSTON GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
The ultimate controlling party is W D Clouston by virtue of his interest in the company.
Page 40
|