Company registration number 02419013 (England and Wales)
DOWN HALL HOTEL LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
DOWN HALL HOTEL LIMITED
COMPANY INFORMATION
Directors
Mr S K Gulhati
Mr S Gulhati
Secretary
Mrs S Gulhati
Company number
02419013
Registered office
7-12 Half Moon Street
Mayfair
London
W1J 7BH
Auditor
PK Audit LLP
1 Parkshot
Richmond
Surrey
TW9 2RD
DOWN HALL HOTEL LIMITED
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4 - 5
Independent auditor's report
6 - 8
Profit and loss account
9
Statement of comprehensive income
10
Balance sheet
11
Statement of changes in equity
12
Notes to the financial statements
13 - 24
DOWN HALL HOTEL LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -

The directors present the strategic report for the year ended 31 December 2023.

Fair Review of the Business

The company owns Down Hall Hotel, one of England’s most established country house hotels located in Hatfield Heath, near Bishop’s Stortford on the Hertfordshire and Essex border.

During the year ended 31 December 2023, the hotel has faced new challenges following the Covid pandemic reflecting domestic and global social, economic and political issues. Those challenges are reflected by increased costs of operation, supply shortages and a tight labour market. However, the hotel has adapted effectively to these challenges and continues to navigate through these difficulties. Despite the obstacles, the hotel has shown resilience and has successfully adjusted its operations to meet the evolving demands of the current domestic and global environment.

Principal Risks and Uncertainties

There are several principal risks and uncertainties that impact operations and financial performance of the company:

Economic conditions: Fluctuations in the overall economic environment, such as recessions or downturns, can have a significant impact on the demand for hotel services. Reduced consumer spending, decreased business travel, and lower discretionary income can lead to decreased occupancy rates and revenue.

Competitive landscape: The hotel industry is highly competitive. Increased competition, emergence of alternative accommodation options, and changing customer preferences can pose risks to hotel profitability.

Market demand and seasonality: Demand for hotel accommodation can vary significantly based on factors such as travel trends, local events and seasonality.

Operational risks: The hotel can face operational risks such as maintenance issues, supply chain disruptions, technology failures, and regulatory compliance. These risks can result in reputational damage, guest dissatisfaction, increased costs, or even legal consequences.

Health and safety concerns: The hotel industry is particularly sensitive to health and safety concerns, including outbreaks of diseases, natural disasters, or other unforeseen events. Such incidents can lead to reduced travel, cancellations, or changes in travel patterns, negatively impacting hotel performance.

Environmental factors: The hotel must contend with environmental risks such as climate change, natural disasters, and sustainability expectations. These factors can affect infrastructure, property damage, insurance costs, and operational efficiencies.

Financial risks: The hotel faces financial risks and uncertainties related to the use of financial instruments. The directors' report aims to provide a comprehensive understanding of how the company utilise financial instruments to support its operations and manage financial risks effectively.

The directors monitor and manage these risks effectively through comprehensive risk assessment, contingency planning, strategic pricing, brand differentiation, investment in technology, and continuous adaptation to changing market dynamics. Throughout the year, the company remained committed to investing in its infrastructure to ensure ongoing sustainability. Significant investments were made in renovation projects aimed at enhancing the overall hospitality experience and ensuring that the hotel can meet the demands and expectations of its guests. These renovations have positively contributed to the hotel's ability to deliver exceptional service, improve guest satisfaction, and maintain a competitive edge in the market. By continually investing in the property, the company strives to provide a welcoming and comfortable environment that exceeds guest expectations and fosters long-term loyalty.

 

DOWN HALL HOTEL LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Development and Performance

During the year ended 31 December 2023, revenue increased from £6,139,994 to £7,705,370, resulting in an operating profit of £198,837 (2022: £1,362,218). The company made a loss after taxation of £176,791 during the year ended 31 December 2023 (2022: profit of £975,636).

The 2022 results are stated after recognising the reversal of a previous impairment of the hotel, amounting to £1,618,884. The reversal was recognised through the profit and loss account and an additional impairment loss reversal of £263,520, recognised through other comprehensive income. No such transactions occurred in 2023. The decision to reverse the impairment loss was taken by management based on their assessment that the overall valuation of the hotel had increased during the comparative period. The increase in valuation was attributed to the benefits derived from ongoing renovations, which enhanced the hotel's facilities, as well as an improvement in guest satisfaction. These factors played, and continue to play, a significant role in driving improved performance.

Net current liabilities at 31 December 2023 were £18,822,128 (2022: £12,757,386) and net liabilities at 31 December 2023 were £373,903 (2022: £197,112). Such amounts include loans from the parent company, amounting to £12,523,400 (2022: £12,523,400). The parent company has pledged its continuing support.

The directors consider the company's financial position and future prospects at 31 December 2023 to be in line with expectations.

Key Performance Indicators

The directors receive monthly divisional updates in order to track and assess key performance indicators (“KPIs”) against targets set every year. The KPIs monitored include gross profit and operating profit.

Future Developments

The directors are cautiously optimistic about the company’s future prospects and will continue to prioritise investment in its people to enable it to deliver excellent guest service, continue the renovation work and further development of the hotel.

Going Concern

The directors are pleased to report that the company continues to operate as a going concern. Despite the current domestic and global political, social and economic issues, combined with the diminishing effects of the covid pandemic, the hotel has shown resilience and is on a continuing path of financial improvement.

The positive trends observed in the industry are promising. The management team have worked diligently to adapt the hotel's operations to address the new economic challenges and changing conditions in the industry. Ongoing renovations to the hotel continue to attract guests, resulting in reasonable occupancy levels. This has contributed to improved financial performance and stability. With capacity in occupancy levels, the directors are confident that the improvements in financial performance witnessed to date will continue.

The company renewed its bank loan facility in June 2024. Under the terms of the new facility, the loan is repayable in June 2029.

On the basis of the parent company’s support and the renewed availability of bank loan facilities, the directors are of the opinion that the company will continue to possess the ability to meet its financial obligations as they fall due and therefore consider it appropriate to adopt the going concern basis in preparing the financial statements.

DOWN HALL HOTEL LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -

On behalf of the board

Mr S K Gulhati
Director
20 August 2024
DOWN HALL HOTEL LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -

The directors present their annual report and financial statements for the year ended 31 December 2023.

Principal activities

The company's principal activity is that of a hotelier.

 

The business review, future developments, financial risk and going concern are included in the strategic report.

Results and dividends

The results for the year are set out on page 8.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

Directors

The directors who held office during the year up to the date of the signature of the financial statements were as follows:

Mr S K Gulhati
Mr S Gulhati
Financial instruments

The company operates a treasury function which is responsible for managing the liquidity, interest and foreign currency risks associated with the company’s activities. As the company has significant borrowings, credit and liquidity risks are particularly important. The loan facility in place at 31 December 2023 was renewed in June 2024 and is now available to the company until June 2029. The directors have sufficient expertise to manage these risks.

 

The directors maintain strong internal policies and procedures to ensure that liquidity risk is suitably managed. Monthly performance reports, forecasts and cash flows are reviewed and action taken where appropriate.

 

The company’s principal financial instruments could include derivative financial instruments, the purpose of which is to manage currency risks and interest rate risks arising from the company’s activities, and bank overdrafts, loans and corporate bonds, the main purpose of which is to raise finance for the company’s operations. In addition, the company has various other financial assets and liabilities such as trade debtors and trade creditors arising directly from its operations. In accordance with company’s treasury policy, derivative instruments are not entered into for speculative purposes.

Liquidity risk

The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.

Interest rate risk

The company is exposed to fair value interest rate risk on its fixed rate borrowings and cash flow interest rate risk on floating rate deposits, bank overdrafts and loans. The company permits to use interest rate derivatives to manage the mix of fixed and variable rate debt so as to reduce its exposure to changes in interest rates. No such derivatives were used during the year ended 31 December 2023. The board of directors has the expertise to manage this risk and to structure long term borrowing to enable the company to make sufficient investment returns.

Foreign currency risk

The company’s principal currency is sterling therefore the risk exposure is low.

Credit risk

Investments of cash surpluses, borrowings and derivative instruments are made through banks and companies which must fulfil credit rating criteria approved by the Board. All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary.

 

Having reviewed the company’s exposure to credit risk, liquidity risk and cash flow risk, the directors are of the view that these are manageable notwithstanding adverse market conditions

DOWN HALL HOTEL LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 5 -
Research and development

The company continues to develop new processes and services to improve and enhance its customer service and customer experience.

Post reporting date events

During the post year end period, the company renewed its bank loan facility. The terms of the new facility extend until June 2029.

Auditor

The auditor, PK Audit LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

Energy and carbon report

The company is not required to present an energy and carbon report, as it qualifies for an exemption based on its classification as a medium-sized company.

Statement of directors' responsibilities

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

 

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

On behalf of the board
Mr S K Gulhati
Director
20 August 2024
DOWN HALL HOTEL LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF DOWN HALL HOTEL LIMITED
- 6 -
Opinion

We have audited the financial statements of Down Hall Hotel Limited (the 'company') for the year ended 31 December 2023 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

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 Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

 

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

 

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

DOWN HALL HOTEL LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF DOWN HALL HOTEL LIMITED (CONTINUED)
- 7 -
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:

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:

 

Based on our understanding of the company and industry, and through discussion with the directors and other management, we identified that the principal risks were in relation to:

DOWN HALL HOTEL LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF DOWN HALL HOTEL LIMITED (CONTINUED)
- 8 -

In response to the risk of irregularities, including fraud and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

 

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 is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

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 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

David Truscott
Senior Statutory Auditor
For and on behalf of PK Audit LLP
20 August 2024
Chartered Accountants
Statutory Auditors
1 Parkshot
Richmond
Surrey
TW9 2RD
DOWN HALL HOTEL LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
2023
2022
Notes
£
£
Turnover
3
7,705,370
6,139,994
Cost of sales
(5,950,273)
(4,991,969)
Gross profit
1,755,097
1,148,025
Administrative expenses
(1,567,362)
197,293
Other operating income
11,102
16,900
Operating profit
4
198,837
1,362,218
Interest receivable and similar income
7
17,070
168
Interest payable and similar expenses
8
(513,665)
(391,491)
(Loss)/profit before taxation
(297,758)
970,895
Tax on (loss)/profit
9
120,967
4,741
(Loss)/profit for the financial year
(176,791)
975,636

The Profit And Loss Account has been prepared on the basis that all operations are continuing operations.

DOWN HALL HOTEL LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
2023
2022
£
£
(Loss)/profit for the year
(176,791)
975,636
Other comprehensive income
Revaluation of tangible fixed assets
-
0
263,520
Total comprehensive income for the year
(176,791)
1,239,156
DOWN HALL HOTEL LIMITED
BALANCE SHEET
AS AT 31 DECEMBER 2023
31 December 2023
- 11 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
11
18,448,225
18,440,904
Current assets
Stocks
12
95,578
83,669
Debtors
13
547,247
358,088
Cash at bank and in hand
682,662
888,454
1,325,487
1,330,211
Creditors: amounts falling due within one year
14
(20,147,615)
(14,087,597)
Net current liabilities
(18,822,128)
(12,757,386)
Total assets less current liabilities
(373,903)
5,683,518
Creditors: amounts falling due after more than one year
15
-
0
(5,880,630)
Net liabilities
(373,903)
(197,112)
Capital and reserves
Called up share capital
19
100
100
Revaluation reserve
246,240
248,400
Profit and loss reserves
(620,243)
(445,612)
Total equity
(373,903)
(197,112)

These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.

The financial statements were approved by the board of directors and authorised for issue on 20 August 2024 and are signed on its behalf by:
Mr S K Gulhati
Director
Company registration number 02419013 (England and Wales)
DOWN HALL HOTEL LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
Share capital
Revaluation reserve
Profit and loss reserves
Total
£
£
£
£
Balance at 1 January 2022
100
-
0
(1,436,368)
(1,436,268)
Year ended 31 December 2022:
Profit
-
-
975,636
975,636
Other comprehensive income:
Revaluation of tangible fixed assets
-
263,520
-
263,520
Total comprehensive income
-
263,520
975,636
1,239,156
Transfers
-
(15,120)
15,120
-
Balance at 31 December 2022
100
248,400
(445,612)
(197,112)
Year ended 31 December 2023:
Loss and total comprehensive income
-
-
(176,791)
(176,791)
Transfers
-
(2,160)
2,160
-
Balance at 31 December 2023
100
246,240
(620,243)
(373,903)
DOWN HALL HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 13 -
1
Accounting policies
Company information

Down Hall Hotel Limited is a company limited by shares incorporated in England and Wales. The registered office address is at 7-12 Half Moon Street, Mayfair, London, W1J 7BH. The company's trading address is Matching Road, Hatfield Heath, Bishop's Stortford, CM22 7AS.

1.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £1.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:

 

 

The financial statements of the company are consolidated in the financial statements of Veladail Hotels Limited. These consolidated financial statements are available from Companies House.

1.2
Going concern

The company has net liabilities of £373,903true (2022: £197,112) as at 31 December 2023. As at 31 December 2023, net current liabilities had increased to £18,822,128 (2022: £12,757,386), principally because of a bank loan now falling due less than one year after the balance sheet date.

 

The company's parent undertaking, Veladail Hotels Limited, has pledged its continuing support to the company. As at the balance sheet date, the company owed its parent £12,523,000 (2022: £12,523,000), all of which is included within current liabilities.

 

The company's bank loan facility amounting to £5,906,210 (2022: £6,052,630) continued until June 2024, at which point is was renewed for a further five years. It now expires in June 2029.

 

The directors have carried out a detailed review of the company’s financial position including a review of cash flows and forecasts. At the time of approving the financial statements, the directors are of the opinion that the company will continue to be able to meet its financial obligations as they fall due and to continue in operational existence for at least the next twelve months from the date of approval of the accounts.

 

Therefore the directors consider it is appropriate to prepare the financial statements on the going concern basis.

DOWN HALL HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
1.3
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes.

 

Revenue from the sale of goods and services is recognised when it is probable that the economic benefits associated with the transaction will flow to the entity and the revenue can be measured reliably.

 

The company supplies hotel rooms, conference and event facilities to businesses and private customers. Sales of rooms, conference and events facilities are recognised on the date of the stay or event. Deposits received in advance are not recognised as revenue until the day of the stay or event.

 

The hotel operates the restaurant, bar and spa. Sales of goods are recognised when the hotel restaurant, spa or bar sells a product to a customer.

Interest income is recognised when it is probable that the economic benefits will flow to the company and the amount of revenue can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and the effective interest rate applicable.

1.4
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Freehold property
over 50 years core building, 15-30 years non core building (land is not depreciated)
Plant, machinery, fixtures & fittings, computer equipment
over 3-30 years straight line

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

1.5
Impairment of fixed assets

At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

DOWN HALL HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

1.6
Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell.

Stock is calculated using the weighted average method.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

1.7
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.8
Financial instruments

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

 

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

DOWN HALL HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Other financial liabilities

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

 

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

DOWN HALL HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 17 -
1.9
Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

1.10
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.11
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

 

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

 

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

1.12
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.13
Government grants

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

 

Government grants relating to turnover are recognised as income over the periods when the related costs are incurred. Grants relating to an asset are recognised in income systematically over the asset's expected useful life. If part of such a grant is deferred it is recognised as deferred income rather than being deducted from the asset's carrying amount.

1.14
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

DOWN HALL HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
2
Judgements and key sources of estimation uncertainty

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

Critical judgements and estimates

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Impairment of the asstes

Assets are valued at the lower of cost and net realisable value. Calculation of net realisable value in use requires judgements to be made, which include estimated future cash flows expected to arise from the cash generating unit and a suitable discount rate in order to calculate the present value of future cash flows.

 

The carrying amount of fixed assets at 31 December 2023 was £18,448,225 (2022: £18,440,904) after an impairment loss reversal of £ NIL (2022: £1,618,884), recognised through the profit and loss account, and an additional impairment loss reversal of £ NIL (2022: £263,520), recognised through the other comprehensive income statement. In determining the impairment reversal, the company used a discounting factor of 9.50%, being the weighted average cost of capital for the travel and leisure sector.

Deferred tax assets

The deferred tax asset in respect of unrelieved tax losses is recognised only to the extent that it is probable that it will be recovered against the reversal of deferred tax liabilities or other future taxable profits in the company or the group. The company's ability to generate future taxable profits is dependent on many factors, amongst which is its ability to continue to build occupancy rates and to consolidate on the hotel's improvements and developments made to date. The recovery of the deferred tax asset may also be influenced by the tax policy decisions made by the group of which the company forms a part.

 

By its very nature, the recognition and measurement of deferred tax requires assumptions to be made about the future. The company estimates that, as at 31 December 2023, the deferred tax asset in respect of unrelieved tax losses amounted to £772,486 (2022: £632,686). The directors, whilst confident as to the recoverability of the deferred tax asset, feel it inappropriate to provide an estimate of the time period over which this asset may be recovered.

Depreciation

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives. The residual value of the freehold property is calculated as a sum of the value of the land and 60% of the core building. As at 31 December 2023 the estimated residual value of the freehold amounted to £10.6 million (2022: £10.6 million).

3
Turnover and other revenue

An analysis of the company's turnover is as follows:

2023
2022
£
£
Turnover analysed by class of business
Hotelier trade
7,705,370
6,139,994
DOWN HALL HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
3
Turnover and other revenue
(Continued)
- 19 -
2023
2022
£
£
Other revenue
Interest income
17,070
168
Grants received
-
6,000
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants
-
(6,000)
Depreciation of owned tangible fixed assets
715,443
681,712
Reversal of past impairment of tangible fixed assets
-
0
(1,882,404)
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
18,760
17,030
6
Employees

The average monthly number of persons (including directors) employed by the company during the year was:

2023
2022
Number
Number
Hotel
183
175

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
3,080,184
2,521,400
Social security costs
242,118
194,453
Pension costs
52,415
41,664
3,374,717
2,757,517
DOWN HALL HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
7
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
17,070
168
8
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
513,665
391,491
9
Taxation
2023
2022
£
£
Deferred tax
Origination and reversal of timing differences
(120,967)
(4,741)

The actual credit for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:

2023
2022
£
£
(Loss)/profit before taxation
(297,758)
970,895
Expected tax (credit)/charge based on the standard rate of corporation tax in the UK of 25.00% (2022: 19.00%)
(74,440)
184,470
Tax effect of expenses that are not deductible in determining taxable profit
6,461
2,732
Gains not taxable
-
0
(307,588)
Group relief
-
0
179,640
Permanent capital allowances in excess of depreciation
34,590
2,592
Other permanent differences
(87,578)
(66,587)
Taxation credit for the year
(120,967)
(4,741)
10
Impairments

Reversals of previous impairment losses have been recognised in profit or loss as follows:

2023
2022
Notes
£
£
In respect of:
Property, plant and equipment
11
-
1,618,884
Recognised in:
Administrative expenses
-
1,618,884
DOWN HALL HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
10
Impairments
(Continued)
- 21 -
11
Tangible fixed assets
Freehold property
Plant, machinery, fixtures & fittings, computer equipment
Total
£
£
£
Cost or valuation
At 1 January 2023
15,601,668
7,418,581
23,020,249
Additions
280,872
441,892
722,764
At 31 December 2023
15,882,540
7,860,473
23,743,013
Depreciation and impairment
At 1 January 2023
787,215
3,792,130
4,579,345
Depreciation charged in the year
141,131
574,312
715,443
At 31 December 2023
928,346
4,366,442
5,294,788
Carrying amount
At 31 December 2023
14,954,194
3,494,031
18,448,225
At 31 December 2022
14,814,453
3,626,451
18,440,904

More information on impairment movements in the year is given in note 10.

The freehold property is held at deemed cost following transition to FRS 102 in 2015. The historical cost, had the asset not been revalued, is £14,684,194 and depreciation £904,586.

12
Stocks
2023
2022
£
£
Finished goods and goods for resale
95,578
83,669
13
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
147,563
100,278
Other debtors
117,764
78,056
Prepayments and accrued income
78,302
97,103
343,629
275,437
DOWN HALL HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
13
Debtors
(Continued)
- 22 -
2023
2022
Amounts falling due after more than one year:
£
£
Deferred tax asset (note 17)
203,618
82,651
Total debtors
547,247
358,088
14
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans
16
5,906,210
172,000
Trade creditors
423,601
392,474
Amounts owed to group undertakings
12,524,027
12,523,400
Taxation and social security
321,904
310,812
Other creditors
222,800
138,574
Accruals and deferred income
749,073
550,337
20,147,615
14,087,597
15
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans and overdrafts
16
-
0
5,880,630
16
Loans and overdrafts
2023
2022
£
£
Bank loans
5,906,210
6,052,630
Payable within one year
5,906,210
172,000
Payable after one year
-
0
5,880,630

The bank loan is secured by a fixed and floating charge over the assets of the company. The loan is subject to an average interest rate of 7.83%, while the effective interest rate, taking into account any additional fees or charges, is 8.31%.

 

 

DOWN HALL HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
17
Deferred taxation

Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

Assets
Assets
2023
2022
Balances:
£
£
Accelerated Capital Allowance
(568,868)
(550,035)
Tax losses
772,486
632,686
203,618
82,651
2023
Movements in the year:
£
Asset at 1 January 2023
(82,651)
Credit to profit or loss
(120,967)
Asset at 31 December 2023
(203,618)

The deferred tax asset set out above is expected to reverse in a timeframe exceeding one year, and is influenced by various factors including the company's future profits, those of the group if which it forms a part and the broader group tax planning policy.

The deferred tax provision is calculated using a corporation tax rate of 25% (2022: 25%). Future changes to corporate tax laws that affect the prevailing rate may in turn affect the deferred tax assets and liabilities. Any movements in the assets and liabilities resulting from such changes will be reflected as part of the tax charge included in the financial statements for future periods.

18
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
52,415
41,664

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

19
Share capital
2023
2022
£
£
Ordinary share capital
Issued and fully paid
100 Ordinary shares of £1 each
100
100

The company has one class of ordinary shares which carry full voting rights.

DOWN HALL HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 24 -
20
Events after the reporting date

The company's bank loan, totalling £5,906,210, is classified within creditors due withing one year as at 31 December 2023. The bank loan was disclosed as a short-term creditor of £172,000 and a long-term creditor of £5,880,630 in 2022. Subsequent to the year end, in June 2024, the bank loan was renewed for the next five years.

21
Ultimate controlling party

The immediate parent company is Veladail Hotels Limited, a company registered in England and Wales.

 

Veladail Hotels Limited prepares group financial statements and copies can be obtained from 7-12 Half Moon Street, London W1J 7BH.

 

The ultimate holding company is Arrow Trading & Investment Est. 1920, a company incorporated in Vaduz.

The ultimate controlling party is Arrow Trust.

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