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Registered number: 08179783










STEPHENSON HOTEL LIMITED










ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

 
STEPHENSON HOTEL LIMITED
 
 
COMPANY INFORMATION


Directors
P F Clouston 
R D C Clouston 
W D Clouston 




Registered number
08179783



Registered office
Boiler Shop
20 South Street

 Newcastle Upon Tyne

NE1 3PE




Independent auditors
Haysmacintyre LLP

10 Queen Street Place

London

EC4R 1AG




Solicitors
Muckle LLP
Time Central

32 Gallowgate

Newcastle upon Tyne

NE1 4BF





 
STEPHENSON HOTEL LIMITED
 

CONTENTS



Page
Strategic Report
 
1 - 3
Directors' Report
 
4 - 6
Independent Auditors' Report
 
7 - 10
Statement of Comprehensive Income
 
11
Statement of Financial Position
 
12
Statement of Changes in Equity
 
13
Notes to the Financial Statements
 
14 - 29


 
STEPHENSON HOTEL LIMITED
 
 
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022

Introduction
 
The directors present their annual report on the affairs of Stephenson Hotel Limited (the "company") together with the audited financial statements and independent auditor's report for the year ended 31 December 2022.

Business review, including Key Performance Indicators (‘KPI's’)
 
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: £38.04m) 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.
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.

Page 1

 
STEPHENSON HOTEL LIMITED
 

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022

Financial risk management objectives and policies

The company's activities expose it to a number of financial risks including cash flow risk, credit risk and liquidity tisk.
Cash flow risk
In addition to the risks associated with trading performance, as highlighted in this report, the company's activities expose it to the financial risks associated with fluctuations in interest rates. The company 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 company has refinanced 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 company's principal financial assets are its cash and bank balances together with trade and other debtors. The company'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 where there is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of the cash flows. The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies. The company 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 company uses a mixture of long term and short term finance. Further details regarding liquidity risk and the impact on going concern can be found in the directors’ report.

Principal risks and uncertainties
 
The company's other principal risks and uncertainties are in relation to property values and property yields. The Crowne Plaza Hotel is, as expected, yet to reach a stabilised basis of trading. Should trading fall below managements current forecasts, the carrying value of the development in the balance sheet may be reduced. 
Delays in the regeneration of the Stephenson Quarter, and their ultimate design and content, as has been noted previously, has created some uncertainty over the hotel's ability to achieve its full potential. These risks are heightened by the current economic environment, with an inflation driven cost of living crisis following closely behind the impact of COVID-19 on the company's ability to operate the hotel to achieve its full potential.

Future developments
 
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.

Page 2

 
STEPHENSON HOTEL LIMITED
 

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022


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



W D Clouston
Director

Date: 15 August 2024

Page 3

 
STEPHENSON HOTEL 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.

Directors' responsibilities statement

The directors are responsible for preparing the Strategic Report, the Directors' 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and 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 for the Company'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 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 to enable them to ensure that the financial statements comply with the Companies Act 2006They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Principal activity

The principal activity of the company is hotel owner and operator. The hotel is situated in Stephenson Quarter, adjacent to Newcastle Central Station.

Results and dividends

The loss for the year, after taxation, amounted to £252,611 (2021 - loss £1,387,365).

The directors can not recommend the payment of a dividend (2021: £nil).

Directors

The directors who served during the year were:

P F Clouston 
R D C Clouston 
W D Clouston 

Page 4

 
STEPHENSON HOTEL LIMITED
 
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022

Matters covered in the Strategic Report

The following information, which would otherwise be 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 

Disclosure of information to auditors

Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:
 
so far as the director is aware, there is no relevant audit information of which the Company's auditors are unaware, and

the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

Going concern

The financial statements of Stephenson Hotel Limited for the year ended 31 December 2022 have been prepared on a going concern basis, which assumes it can continue to meet its liabilities as they fall due in the normal course of business for at least the twelve months following their approval.  However, as the repayment date of its loan has expired, the directors believe there to be a material uncertainty that casts significant doubt upon the company's ability to continue as a going concern.
At 31 December the Company had net liabilities of £30,696,904 with amounts totalling £30,730,817 owing to Newcastle City Council. At the year end, the Company was in breach of its covenants and the loan expired in full on 25 October 2023, prior to approval of these financial statements. 
The Crowne Plaza Newcastle is a great North East success story.  It is one of the highest-performing hotels in the UK four-star market, sharing joint first place in its comparative set, with exceptional guest satisfaction scores and occupancy levels. It is multi award winning and every year it attracts tens of thousands of delegates and guests from across the globe.
Indeed, results in Nov 2022 show its best trading since opening in 2015 with strong RGI, ADR and occupancy. The meetings and events business has performed well.  Moreover, a recent hotel industry report by PWC, demonstrates that the CPH is predicted to outperform its competitors nationally.  In levels of occupancy, CPH continues to grow in a declining market.
Stephenson Hotel Ltd expected a workshop in early 2023 with the landowner to consider a range of complimentary ‘meanwhile uses’ to the current derelict land on the Stephenson Quarter, which has the potential to increase sales and thereby add value to the Crowne Plaza hotel.  The Company continues to request this workshop and for measures to be taken on the dereliction that is impacting the property value and the business’s ability to achieve its potential.
Stephenson Hotel Limited is continuing to repay NCC, its lender, on a monthly basis. Negotiations with them started in early 2023 and continue to be on-going to agree appropriate repayment terms, as they require adjustment. Because of the impact on the property’s value noted within the principle risks and uncertainties section, the Company is unable to look at other funding options and is therefore reliant on a favourable conclusion to these negotiations, which Stephenson Hotel Limited expects to resolve in the next 6 months.  The Directors will continue to operate the hotel and build on the positive trading performance until such time as a revised repayment schedule can be formalised.
Whilst the directors acknowledge that the hotel industry is volatile in the current economic climate, they believe it will achieve improved financial performance and have prepared forecasts which indicate that with the
Page 5

 
STEPHENSON HOTEL LIMITED
 
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022

continuing support of its lender, it will be able to meet its liabilities as they fall due. 
On this basis the directors consider it appropriate to prepare these financial statements on a going concern basis, however, the directors of Stephenson Hotel Limited acknowledge that should either trading performance not reach the requisite levels on a timely basis or should suitable terms in respect of its funding facilities not be agreed or lenders withdraw their support, the quantum and timing of future cash flows may be insufficient to enable it to meet its 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 to continue as a going concern for the foreseeable future.

Post balance sheet events

There have been no significant events affecting the Company since the year end.

Auditors

The auditorsHaysmacintyre LLPwill be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

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





W D Clouston
Director

Date: 15 August 2024

Page 6

 
STEPHENSON HOTEL LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF STEPHENSON HOTEL LIMITED
 

Opinion


We have audited the financial statements of Stephenson Hotel Limited (the 'Company') for the year ended 31 December 2022, which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity and the related notes, including a summary of significant accounting policiesThe financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).


In our opinion the financial statements:


give a true and fair view of the state of the Company's affairs as at 31 December 2022 and of its loss for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.


Basis for opinion


We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Company 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.


Material uncertainty related to going concern


We draw attention to note 2.2 in the financial statements, which sets out that the Company's ability to continue as going concern is dependent on negotiations with its principal lender in respect of its loan which is due for repayment. 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 Company'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 7

 
STEPHENSON HOTEL LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF STEPHENSON HOTEL LIMITED (CONTINUED)


Other information


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 ReportOur 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.


Opinion on other matters prescribed by the Companies Act 2006
 

In our opinion, based on the work undertaken in the course of the audit:


the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.


Matters on which we are required to report by exception
 

In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.


We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:


adequate accounting records have not been kept, 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 directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.


Responsibilities of directors
 

As explained more fully in the Directors' Responsibilities Statement set out on page 4, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.


In preparing the financial statements, the directors are responsible for assessing the 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.


Page 8

 
STEPHENSON HOTEL LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF STEPHENSON HOTEL LIMITED (CONTINUED)


Auditors' responsibilities for the audit of the financial statements
 

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these 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 Company and industry, we identified that the principal risks of non-compliance with laws and regulations related to compliance with the company law, licensing, health and safety and minimum wage 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 and sales tax.
We evaluated management's incentives and opportunities or 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 judgements 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 9

 
STEPHENSON HOTEL LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF STEPHENSON HOTEL LIMITED (CONTINUED)


Use of our report
 

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditors' Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.





Emma Bernardez (Senior Statutory Auditor)
for and on behalf of
Haysmacintyre LLP
Statutory Auditors
10 Queen Street Place
London
EC4R 1AG

15 August 2024
Page 10

 
STEPHENSON HOTEL LIMITED
 
 
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022

As restated
2022
2021
Note
£
£

  

Turnover
 4 
10,881,588
6,162,927

Cost of sales
  
(5,299,646)
(3,213,868)

Gross profit
  
5,581,942
2,949,059

Administrative expenses
  
(3,979,408)
(2,781,160)

Other operating income
  
193,750
440,101

Operating profit
 6 
1,796,284
608,000

Interest receivable and similar income
  
162,162
162,162

Interest payable and similar expenses
 10 
(2,211,057)
(2,157,527)

Loss before tax
  
(252,611)
(1,387,365)

Tax on loss
 11 
-
-

Loss for the financial year
  
(252,611)
(1,387,365)

There was no other comprehensive income for 2022 (2021:£NIL).

The notes on pages 14 to 29 form part of these financial statements.

Page 11

 
STEPHENSON HOTEL LIMITED
REGISTERED NUMBER: 08179783

STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022

As restated
2022
2021
Note
£
£

Fixed assets
  

Tangible assets
 12 
31,801,841
31,536,748

  
31,801,841
31,536,748

Current assets
  

Stocks
 13 
45,720
49,464

Debtors: amounts falling due within one year
 14 
1,068,012
831,622

Cash at bank and in hand
  
1,628,855
1,592,191

  
2,742,587
2,473,277

Creditors: amounts falling due within one year
 15 
(46,973,114)
(45,343,363)

Net current liabilities
  
 
 
(44,230,527)
 
 
(42,870,086)

Total assets less current liabilities
  
(12,428,686)
(11,333,338)

Creditors: amounts falling due after more than one year
 16 
(17,401,844)
(18,244,581)

  

Net liabilities
  
(29,830,530)
(29,577,919)


Capital and reserves
  

Called up share capital 
 18 
100
100

Profit and loss account
 19 
(29,830,630)
(29,578,019)

  
(29,830,530)
(29,577,919)


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




W D Clouston
Director

Date: 15 August 2024

The notes on pages 14 to 29 form part of these financial statements.

Page 12

 
STEPHENSON HOTEL LIMITED
 

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022


Called up share capital
Profit and loss account
Total equity

£
£
£


At 1 January 2021 (as previously stated)
100
(27,705,534)
(27,705,434)

Prior year adjustment - correction of error (Note 20)
-
(485,120)
(485,120)


At 1 January 2021 (as restated)
100
(28,190,654)
(28,190,554)



Loss for the year
-
(1,387,365)
(1,387,365)



At 1 January 2022 (as previously stated)
100
(29,053,752)
(29,053,652)

Prior year adjustment - correction of error (Note 20)
-
(524,267)
(524,267)


At 1 January 2022 (as restated)
100
(29,578,019)
(29,577,919)



Loss for the year
-
(252,611)
(252,611)


At 31 December 2022
100
(29,830,630)
(29,830,530)


The notes on pages 14 to 29 form part of these financial statements.

Page 13

 
STEPHENSON HOTEL LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

1.


General information

Stephenson Hotel Limited (‘the company’) is a private company, limited by shares, incorporated in the United Kingdom and registered in England and Wales. The address of the registered office is given in the company information page appended to this annual report. The nature of the company's operations and its principal activities are set out in the director's report.

2.Accounting policies

 
2.1

Basis of preparation of financial statements

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

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

The following principal accounting policies have been applied:

  
2.2

Going concern

The financial statements of Stephenson Hotel Limited for the year ended 31 December 2022 have been prepared on a going concern basis, which assumes it can continue to meet its liabilities as they fall due in the normal course of business for at least the twelve months following their approval.  However, as the repayment date of its loan has expired, the directors believe there to be a material uncertainty that casts significant doubt upon the company's ability to continue as a going concern.
At 31 December the Company had net liabilities of £30,696,904 with amounts totalling £30,730,817 owing to Newcastle City Council. At the year end, the Company was in breach of its covenants and the loan expired in full on 25 October 2023, prior to approval of these financial statements. 
The Crowne Plaza Newcastle is a great North East success story.  It is one of the highest-performing hotels in the UK four-star market, sharing joint first place in its comparative set, with exceptional guest satisfaction scores and occupancy levels. It is multi award winning and every year it attracts tens of thousands of delegates and guests from across the globe.
Indeed, results in Nov 2022 show its best trading since opening in 2015 with strong RGI, ADR and occupancy. The meetings and events business has performed well.  Moreover, a recent hotel industry report by PWC, demonstrates that the CPH is predicted to outperform its competitors nationally.  In levels of occupancy, CPH continues to grow in a declining market.
Stephenson Hotel Ltd expected a workshop in early 2023 with the landowner to consider a range of complimentary ‘meanwhile uses’ to the current derelict land on the Stephenson Quarter, which has the potential to increase sales and thereby add value to the Crowne Plaza hotel.  The Company continues to request this workshop and for measures to be taken on the dereliction that is impacting the property value and the business’s ability to achieve its potential.
Stephenson Hotel Limited is continuing to repay NCC, its lender, on a monthly basis. Negotiations with them started in early 2023 and continue to be on-going to agree appropriate repayment terms, as they require adjustment. Because of the impact on the property’s value noted within the principle risks and uncertainties section, the Company is unable to look at other funding options and is therefore reliant on a favourable conclusion to these negotiations, which Stephenson Hotel Limited expects to resolve in the next 6 months.  The Directors will continue to operate the hotel and build on
Page 14

 
STEPHENSON HOTEL LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

the positive trading performance until such time as a revised repayment schedule can be formalised.
Whilst the directors acknowledge that the hotel industry is volatile in the current economic climate, they believe it will achieve improved financial performance and have prepared forecasts which indicate that with the continuing support of its lender, it will be able to meet its liabilities as they fall due. 
On this basis the directors consider it appropriate to prepare these financial statements on a going concern basis, however, the directors of Stephenson Hotel Limited acknowledge that should either trading performance not reach the requisite levels on a timely basis or should suitable terms in respect of its funding facilities not be agreed or lenders withdraw their support, the quantum and timing of future cash flows may be insufficient to enable it to meet its 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 to continue as a going concern for the foreseeable future.

 
2.3

Financial Reporting Standard 102 - reduced disclosure exemptions

The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
the requirements of Section 7 Statement of Cash Flows;
the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A;
the requirements of Section 33 Related Party Disclosures paragraph 33.7.

This information is included in the consolidated financial statements of Clouston Group Limited as at 31 December 2022 and these financial statements may be obtained from Companies House.

 
2.4

Revenue

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

Rendering of services

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

Page 15

 
STEPHENSON HOTEL LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

 
2.5

Operating leases: the Company as lessee

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

Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.

 
2.6

Government grants

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

 
2.7

Interest income

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

 
2.8

Finance costs

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

 
2.9

Borrowing costs

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

 
2.10

Pensions

Defined contribution pension plan

The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.

The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Company in independently administered funds.

 
2.11

Tangible fixed assets

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

Page 16

 
STEPHENSON HOTEL LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)


2.11
Tangible fixed assets (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:

Long leasehold property
-
Over life of the lease
Plant and machinery
-
15%
straight line
Fixtures and fittings
-
15%
straight line
Computer equipment
-
33%
straight line

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

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

 
2.12

Stocks

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

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

 
2.13

Debtors

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

 
2.14

Cash and cash equivalents

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

 
2.15

Creditors

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

 
2.16

Financial instruments

The Company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.

Page 17

 
STEPHENSON HOTEL LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)


2.16
Financial instruments (continued)

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 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 Company's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.

Other financial assets

Other financial assets, which includes investments in equity instruments which are not classified as subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in fair value being recognised in the profit or loss. Where other financial assets are not publicly traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.

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 Company after the deduction of all its liabilities.

Basic financial liabilities, which include trade and other payables, bank loans and other loans 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
Page 18

 
STEPHENSON HOTEL LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)


2.16
Financial instruments (continued)

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.

Other financial instruments

Derivatives, including forward exchange contracts, futures contracts and interest rate swaps, are not classified as basic financial instruments. These are initially recognised at fair value on the date the derivative contract is entered into, with costs being charged to the profit or loss. They are subsequently measured at fair value with changes in the profit or loss.

Debt instruments that do not meet the conditions as set out in FRS 102 paragraph 11.9 are subsequently measured at fair value through the profit or loss. This recognition and measurement would also apply to financial instruments where the performance is evaluated on a fair value basis as with a documented risk management or investment strategy.

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 Company 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 Company 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 Company's contractual obligations expire or are discharged or cancelled.

Page 19

 
STEPHENSON HOTEL LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

3.


Judgments in applying accounting policies and key sources of estimation uncertainty

In the application of the company's accounting policies, which are described in note 2, the directors are required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historic 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 if the revisions affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Critical accounting judgments and key sources of estimation uncertainty are set out below:
Tangible fixed 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.
The company 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.

Recoverability of intercompany debtors 

Management evaluates intercompany debtors for impairment whenever circumstances indicate, in management’s judgement, that the carrying value may not be recoverable. An impairment review requires management to make subjective judgements 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.


4.


Turnover

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


2022
2021
£
£

Hotel operations
10,881,588
6,162,927


All turnover arose within the United Kingdom.

Page 20

 
STEPHENSON HOTEL LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

5.


Other operating income

2022
2021
£
£

Government grants receivable
-
440,101

Reversal of impairment of tangible fixed assets
193,750
-

193,750
440,101



6.


Operating profit

The operating profit is stated after charging:

2022
2021
£
£

Other operating lease rentals
100,439
107,030

Other operating income - Coronavirus Job Retention Scheme grants
-
(440,101)

Impairment reversal on tangible fixed assets
(193,750)
-

Depreciation
307,828
94,088


7.


Auditors' remuneration

2022
2021
£
£

Fees payable to the Company's auditors for the audit of the Company's annual financial statements
32,000
33,000


The company has taken advantage of the exemption not to disclose amounts payable for non audit services as these are disclosed in the group accounts of the parent company.




Page 21

 
STEPHENSON HOTEL LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

8.


Employees

Staff costs were as follows:


2022
2021
£
£

Wages and salaries
3,425,635
2,268,008

Social security costs
207,029
115,658

Cost of defined contribution scheme
47,082
26,621

3,679,746
2,410,287


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


        2022
        2021
            No.
            No.







153
118


9.


Interest receivable

2022
2021
£
£


Other interest receivable
162,162
162,162

162,162
162,162


10.


Interest payable and similar expenses

2022
2021
£
£


Finance lease interest
1,372,557
1,319,027

Other finance costs
838,500
838,500

2,211,057
2,157,527

Page 22

 
STEPHENSON HOTEL LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

11.


Taxation


2022
2021
£
£



Total current tax
-
-

Deferred tax

Total deferred tax
-
-


Tax on loss
-
-

Factors affecting tax charge for the year

The tax assessed for the year is higher than (2021 - higher than) the standard rate of corporation tax in the UK of 19% (2021 - 19%). The differences are explained below:

2022
2021
£
£


Loss on ordinary activities before tax
(252,611)
(1,387,365)


Loss on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2021 - 19%)
(47,996)
(263,599)

Effects of:


Short-term timing difference leading to an increase (decrease) in taxation
(49,648)
-

Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
240
9,388

Remeasurement of deferred tax for changes in tax rates
(82,741)
-

Movement in unrecognised deferred tax
180,145
254,211

Total tax charge for the year
-
-


Factors that may affect future tax charges

At the balance sheet date the company had unrecognised deferred tax assets totalling approximately £4,600,122 (2021: £5,274,217) principally in respect of unrelieved trading losses. The directors have not recognised these assets until such time as their recovery can be assessed with reasonable certainty.

Page 23

 
STEPHENSON HOTEL LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

12.


Tangible fixed assets





Land and Buildings (as restated)
Plant and machinery
Fixtures and fittings
Computer equipment
Total

£
£
£
£
£



Cost or valuation


At 1 January 2022
40,937,909
35,999
278,047
58,685
41,310,640


Additions
-
310,634
52,694
15,843
379,171



At 31 December 2022

40,937,909
346,633
330,741
74,528
41,689,811



Depreciation


At 1 January 2022
9,627,038
6,577
120,508
19,769
9,773,892


Charge for the year on owned assets
217,517
24,647
44,454
21,210
307,828


Impairment losses written back
(193,750)
-
-
-
(193,750)



At 31 December 2022

9,650,805
31,224
164,962
40,979
9,887,970



Net book value



At 31 December 2022
31,287,104
315,409
165,779
33,549
31,801,841



At 31 December 2021
31,310,871
29,422
157,539
38,916
31,536,748

The hotel development asset comprises the company's long leasehold interest in the Crowne Plaza branded hotel, of £13,600,000 (2021: £13,500,000), together with an asset of £17,687,104 (2021 as restated: £17,810,871) recognised in respect of the sale and finance leaseback of the freehold land on which the hotel is situated.
In considering the carrying value of the hotel development asset the directors have had regard for an independent valuation of the company's long leasehold interest which was performed in 2020 by Cushman & Wakefield Debenham Tie Leung Limited, together with an updated valuation undertaken in 2022 by Jones Lang La Salle Limited resulting in impairment losses written back of £193,750.

Page 24

 
STEPHENSON HOTEL LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

13.


Stocks

As restated
2022
2021
£
£

Food and beverages
45,720
49,464

45,720
49,464



14.


Debtors

2022
2021
£
£


Trade debtors
312,469
132,879

Other debtors
445,621
405,787

Prepayments and accrued income
309,922
292,956

1,068,012
831,622


Page 25

 
STEPHENSON HOTEL LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

15.


Creditors: Amounts falling due within one year

2022
2021
£
£

Loans
38,730,817
38,039,878

Hotel funding liability
2,121,622
2,283,784

Trade creditors
494,436
619,440

Amounts owed to group undertakings
197,791
164,418

Other taxation and social security
101,089
321,904

Finance leases
1,176,375
732,962

Other creditors
573,440
448,511

Accruals and deferred income
3,577,544
2,732,466

46,973,114
45,343,363


Hotel funding liability
In 2019 the company transferred the IHG Hotel Management Agreement to a franchise agreement and appointed a new management company, Interstate, to improve trading performance and hotel value. As part of the transfer, the hotel funding liability of £2.5m from IHG, being a capital contribution put in place as part of the original finance to build the hotel, is to be amortised on a straight line basis from 30 August 2020 over the remaining life of the franchise agreement. Amortisation of £162,162 (2021: £162,162) during the year has been classified as finance income in the profit and loss account.
Loans
In October 2019, the company completed the refinancing in full of its bank and other loans with Newcastle City Council (‘NCC’) under a new Term Facilities Agreement with NCC. The new facility is secured against the business and assets of the company and those of its immediate parent undertaking, Stephenson Hotel Enterprise Limited, as well as other group undertakings. The bank loan of £14.8m was replaced by a four-year term loan (Facility A), subject to interest at 4.5% per annum and repayable at £125,000 per quarter commencing 31 December 2019 with a balancing repayment due on termination. 
Facilities B and C, for £12.9m and £8m respectively, were used to refinance the existing NCC loans and accrued interest totalling £20.9m at the date of refinancing and are repayable in full on 25 October 2023, subject to the other terms and conditions contained in the facilities agreement. Facilities B and C do not bear interest although Facility B, which refinanced the capital element of amounts previously due to NCC, is subject to an exit fee which accrues at a rate of 6.5% per annum.
Whilst the initial quarterly repayment of £125,000 was made, a diminished trading performance in 2020 due to COVID-19, which continued to impact trading performance in 2021, has resulted in subsequent repayments not being met. NCC have continued to provide financial support to the company and, in August 2020, amended the 2019 Term Facilities Agreement to defer recommencement of Facility A repayments to March 2024 and provide additional funding (Facility D) of up to £1,000,000, of which £1,000,000 (2021: £1,000,000) had been drawn down at the balance sheet date. Facility D is subject to interest at 4.5% per annum and was repayable monthly between June 2021 and March 2022, although repayments have been deferred. 
The company was in breach of the Term Facilities Agreement at the balance sheet date, consequently these loans were repayable on demand and are classified accordingly. As noted in the strategic report, the directors have held constructive discussions with its lenders and anticipate agreement will be reached to defer recommencement of interest and capital repayments and extend the term of the loan facilities. 

Page 26

 
STEPHENSON HOTEL LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

16.


Creditors: Amounts falling due after more than one year

2022
2021
£
£

Finance leases
17,401,844
18,244,581

17,401,844
18,244,581



17.


Hire purchase and finance leases


Minimum lease payments under hire purchase fall due as follows:

2022
2021
£
£


Within one year
1,176,375
1,298,139

Between 1-5 years
2,727,786
2,622,871

Over 5 years
40,243,055
38,915,460

Less: future finance charges
(25,598,309)
(23,858,927)

Present value of lease obligations
18,548,907
18,977,543

In 2016, Stephenson Hotel Limited sold the freehold land beneath the Crowne Plaza hotel to BBC Pension Trust Limited, and entered into a lease back arrangement (sale and lease back) which was recognised as a finance lease. The BBC pension trust own the freehold on the land and all buildings on the land will revert to their control at the end of the 150 year lease.
Future minimum lease payments exclude the effect of future inflationary increases in respect of underlying lease costs, which are index linked subject to a minimum uplift of 1% per annum and a cap of 4% per annum.


18.


Share capital

2022
2021
£
£
Allotted, called up and fully paid



100 (2021 - 100) Ordinary shares of £1.00 each
100
100



19.


Reserves

Profit and loss account

The profit and loss account reserve represents cumulative profits and losses, net of cumulative dividends paid and other adjustments.

Page 27

 
STEPHENSON HOTEL LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

20.


Prior year adjustment

Restatement of hotel land and buildings classified as stock in error
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 company’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 company 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 company's hotel assets and have concluded that, as the company 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 £39,147 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 £524,267.


21.


Pension commitments

The company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the company in an independently administered fund. The pension cost charge represents contributions payable by the company to the fund and amounted to £47,082 (2021 - £26,621). Contributions totalling £17,376 (2021 - £6,237) were payable to the fund at the reporting date and are included in creditors.


22.


Commitments under operating leases

At 31 December 2022 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:

2022
2021
£
£


Not later than 1 year
22,512
22,512

Later than 1 year and not later than 5 years
63,783
86,295

86,295
108,807

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STEPHENSON HOTEL LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

23.


Related party transactions

The company has taken advantage of the exemption available not to disclose transactions with other wholly-owned entities that are part of the same group.


24.


Controlling party

The immediate parent company is Stephenson Hotel Enterprise Limited, a company incorporated in the United Kingdom with registered office of Boiler Shop, 20 South Street, Newcastle upon Tyne, NE1 3PE.
The ultimate parent company is Clouston Group Ltd, a company incorporated in the United Kingdom. Clouston Group Ltd is the parent to the smallest and largest group to which consolidated financial tatements are prepared. Copies of the consolidated financial statements of Clouston Group Ltd are available from Companies House, Crown Way, Cardiff, CF4 3UZ. The registered office of the ultimate parent company is the same as that of the company.
The ultimate controlling party of the group is W D Clouston.

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