Company Registration No. 04509842 (England and Wales)
Sal Hotels Limited
Annual report and financial statements
for the year ended 31 December 2023
Sal Hotels Limited
Company information
Directors
Mr A K Basnet
(Appointed 21 March 2024)
Mr V S Bhandari
(Appointed 21 March 2024)
Company number
04509842
Registered office
27/28 Winsor & Newton
Whitefriars Avenue
Harrow and Wealdstone
HA3 5RN
Independent auditor
Saffery LLP
71 Queen Victoria Street
London
EC4V 4BE
Bankers
Coutts & Co
440 Strand
London
WC2R 0QS
Sal Hotels Limited
Contents
Page
Strategic report
1
Directors' report
2
Directors' responsibilities statement
3
Independent auditor's report
4 - 7
Statement of comprehensive income
8
Statement of financial position
9
Statement of changes in equity
10
Notes to the financial statements
11 - 23
Sal Hotels Limited
Strategic report
For the year ended 31 December 2023
1

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

 

Principal activity

The company operates the Mercure Hotel near Heathrow airport. The hotel is well established and caters for business and leisure clients. The hotel has 184 bedrooms with fully equipped conference rooms and restaurant facilities. It has attracted both corporate and leisure clientele and has benefitted from its proximity to London Heathrow airport.

Trading results

The company's turnover for the year was £4,528,235 (2022: £4,020,642) which showed an increase of 7% over the previous year. It has posted an operating profit, before tax of £1,620,883 (2022: £218,687).

Principal risks and uncertainties

The company possesses the necessary management expertise to monitor and manage its business risks. The risks faced by the company are economic risks, price risks, financial risks and credit risks. The hotel's brand is a world recognised premier brand and therefore commands premier price. In addition, the company has an efficient marketing department which constantly monitors price fluctuations in the market to remain competitive. The company's credit risk is minimised by ensuring that credit terms are only granted to customers who meet the company's stringent credit checks and have an established business track record with the company.

Future developments

The directors will continue their efforts to integrate additional revenue streams and cost saving measures in its operations to maximise profitability.

Post balance events

On 21 March 2024 the company was sold outside of the KAS No.2 Limited group to Waay Assets Limited.

On behalf of the board

Mr A K Basnet
Director
25 October 2024
Sal Hotels Limited
Directors' report
For the year ended 31 December 2023
2

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

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 and up to the date of signature of the financial statements were as follows:

Mr Alykhan Kassam
(Resigned 21 March 2024)
Mr Karim Kassam
(Appointed 2 January 2023 and resigned 21 March 2024)
Mr Navroz Bandali
(Resigned 21 March 2024)
Mr Azaan Kassam
(Appointed 2 January 2023 and resigned 21 March 2024)
Mr A K Basnet
(Appointed 21 March 2024)
Mr V S Bhandari
(Appointed 21 March 2024)
Post balance sheet events

Subsequent to the year-end, the company obtained a bank loan of £12 m. The loan is repayable in March 2025, which is less than 12 months from the date of approval of these financial statements. As of the date of signing, the directors are actively engaged in discussions to refinance this loan. However, no formal refinancing agreement has been secured at the time of approving the financial statements.

The directors have considered the uncertainty relating to the refinancing of this loan. They are confident that appropriate refinancing will be secured, or alternative financing arrangements will be put in place, allowing the company to meet its obligations as they fall due.

Auditor

Saffery LLP have expressed their willingness to continue in office.

Statement of disclosure to auditor

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

On behalf of the board
Mr A K Basnet
Director
25 October 2024
Sal Hotels Limited
Directors' responsibilities statement
For the year ended 31 December 2023
3

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.

Sal Hotels Limited
Independent auditor's report
To the members of Sal Hotels Limited
4
Opinion

We have audited the financial statements of Sal Hotels Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of comprehensive income, the statement of financial position, 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.

Material uncertainty related to Going Concern

We draw attention to Note 1.2 in the financial statements, which describes that subsequent to the year-end, the company obtained a bank loan of £12m, which is repayable in March 2025. As of the date of approval of these financial statements, the directors are in discussions to refinance this loan. However, no formal agreement has been reached as of the date these financial statements were signed.

The directors believe that suitable refinancing arrangements will be made, but the uncertainty surrounding these efforts indicates the existence of a material uncertainty 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.

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.

Sal Hotels Limited
Independent auditor's report (continued)
To the members of Sal Hotels Limited
5

Opinions on other matters prescribed by the Companies Act 2006

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

 

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.

Sal Hotels Limited
Independent auditor's report (continued)
To the members of Sal Hotels Limited
6
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.

 

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 specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud are detailed below.

 

Identifying and assessing risks related to irregularities:

We assessed the susceptibility of the company’s financial statements to material misstatement and how fraud might occur, including through discussions with the directors, discussions within our audit team planning meeting, updating our record of internal controls and ensuring these controls operated as intended. We evaluated possible incentives and opportunities for fraudulent manipulation of the financial statements. We identified laws and regulations that are of significance in the context of the company by discussions with directors and updating our understanding of the sector in which the company operates.

 

Laws and regulations of direct significance in the context of the company include The Companies Act 2006, and UK Tax legislation, health and safety, employee related and licensing laws.

 

Audit response to risks identified:

We considered the extent of compliance with these laws and regulations as part of our audit procedures on the related financial statement items including a review of financial statement disclosures. We reviewed the company’s records of breaches of laws and regulations, minutes of meetings and correspondence with relevant authorities to identify potential material misstatements arising. We discussed the company’s policies and procedures for compliance with laws and regulations with members of management responsible for compliance.

 

During the planning meeting with the audit team, the engagement partner drew attention to the key areas which might involve non-compliance with laws and regulations or fraud. We enquired of management whether they were aware of any instances of non-compliance with laws and regulations or knowledge of any actual, suspected or alleged fraud. We addressed the risk of fraud through management override of controls by testing the appropriateness of journal entries and identifying any significant transactions that were unusual or outside the normal course of business. We assessed whether judgements made in making accounting estimates gave rise to a possible indication of management bias. At the completion stage of the audit, the engagement partner’s review included ensuring that the team had approached their work with appropriate professional scepticism and thus the capacity to identify non-compliance with laws and regulations and fraud.

There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

 

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.

Sal Hotels Limited
Independent auditor's report (continued)
To the members of Sal Hotels Limited
7
Roger Wareham
Senior Statutory Auditor
For and on behalf of Saffery LLP
25 October 2024
Statutory Auditors
71 Queen Victoria Street
London
EC4V 4BE
Sal Hotels Limited
Statement of comprehensive income
For the year ended 31 December 2023
8
2023
2022
Notes
£
£
Turnover
3
4,528,235
4,020,642
Cost of sales
(1,970,033)
(2,260,113)
Gross profit
2,558,202
1,760,529
Administrative expenses
(928,482)
(1,008,007)
Operating profit
4
1,629,720
752,522
Interest receivable and similar income
7
11,009
-
0
Interest payable and similar expenses
8
(19,846)
(533,835)
Profit before taxation
1,620,883
218,687
Tax on profit
9
(333,641)
(27,328)
Profit for the financial year
1,287,242
191,359
Other comprehensive income
Revaluation of tangible fixed assets
(1,737,509)
1,255,417
Tax relating to other comprehensive income
460,339
(287,975)
Total comprehensive income for the year
10,072
1,158,801

The income statement has been prepared on the basis that all operations are continuing operations.

Sal Hotels Limited
Statement of financial position
As at 31 December 2023
9
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
10
19,000,000
21,000,006
Current assets
Stocks
11
27,239
31,533
Debtors
12
210,040
873,224
Cash at bank and in hand
1,110,066
791,440
1,347,345
1,696,197
Creditors: amounts falling due within one year
13
(8,016,054)
(9,903,758)
Net current liabilities
(6,668,709)
(8,207,561)
Total assets less current liabilities
12,331,291
12,792,445
Provisions for liabilities
Deferred tax liability
14
411,184
882,410
(411,184)
(882,410)
Net assets
11,920,107
11,910,035
Capital and reserves
Called up share capital
17
100
100
Revaluation reserve
19
3,138,386
4,415,556
Profit and loss reserves
19
8,781,621
7,494,379
Total equity
11,920,107
11,910,035
The financial statements were approved by the board of directors and authorised for issue on 25 October 2024 and are signed on its behalf by:
Mr A K Basnet
Director
Company Registration No. 04509842
Sal Hotels Limited
Statement of changes in equity
For the year ended 31 December 2023
10
Share capital
Revaluation reserve
Profit and loss reserves
Total
£
£
£
£
Balance at 1 January 2022
100
3,448,114
7,303,020
10,751,234
Year ended 31 December 2022:
Profit
-
-
191,359
191,359
Other comprehensive income:
Revaluation of tangible fixed assets
-
1,255,417
-
1,255,417
Tax relating to other comprehensive income
-
(287,975)
-
0
(287,975)
Total comprehensive income
-
967,442
191,359
1,158,801
Balance at 31 December 2022
100
4,415,556
7,494,379
11,910,035
Year ended 31 December 2023:
Profit
-
-
1,287,242
1,287,242
Other comprehensive income:
Revaluation of tangible fixed assets
-
(1,737,509)
-
(1,737,509)
Tax relating to other comprehensive income
-
460,339
-
0
460,339
Total comprehensive income
-
(1,277,170)
1,287,242
10,072
Balance at 31 December 2023
100
3,138,386
8,781,621
11,920,107
Sal Hotels Limited
Notes to the financial statements
For the year ended 31 December 2023
11
1
Accounting policies
Company information

Sal Hotels Limited is a private company limited by shares incorporated in England and Wales. The registered office is 27/28 Winsor & Newton, Whitefriars Avenue, Harrow and Wealdstone, HA3 5RN.

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 £.

The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include certain financial instruments at fair value. 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 KAS No. 2 Limited, the ultimate parent company. These consolidated financial statements are available from its registered office, 144-146 Kings Cross Road, London, WC1X 9DU.

Sal Hotels Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies (continued)
12
1.2
Going concern

The financial statements have been prepared on a going concern basis. In assessing the company’s ability to continue as a going concern, the directors have considered the company’s financial position, including its available cash resources, current liabilities, and projected cash flows for the foreseeable future.

Subsequent to the year-end, the company obtained a bank loan of £12 m The loan is repayable in March 2025, which is less than 12 months from the date of approval of these financial statements. As of the date of signing, the directors are actively engaged in discussions to refinance this loan. However, no formal refinancing agreement has been secured at the time of approving the financial statements.

The directors have considered the uncertainty relating to the refinancing of this loan. They are confident that appropriate refinancing will be secured, or alternative financing arrangements will be put in place, allowing the company to meet its obligations as they fall due. However, there is a material uncertainty regarding the timing and outcome of these refinancing efforts, which may cast significant doubt on the company’s ability to continue as a going concern.

Despite this uncertainty, the directors believe that the company has adequate resources to continue in operational existence for at least 12 months from the date of approval of these financial statements. As a result, the financial statements have been prepared on a going concern basis. If the company is unable to secure refinancing or alternative financing, it may be unable to meet its obligations when they fall due.

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. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

Hotel and restaurant revenue is recognised when the rooms are occupied and services performed. Deferred revenue consisting of deposits paid in advance are recognised on the day that services are performed.

1.4
Tangible fixed assets

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

 

Tangible assets carried at revalued amounts are recorded at the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent impairment losses. An increase in the carrying value of an asset as a result of a revaluation is recognised in other comprehensive income and accumulated in equity.

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 land and buildings
Over a period of 50 years
Fixtures and fittings
Over a period of 4 to 10 years
Computer equipment
Over a period of 3 years

Freehold land is not depreciated.

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.

Sal Hotels Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies (continued)
13
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.

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. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in brining the stocks to their present location and condition.

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
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 statement of financial position when the company becomes party to the contractual provisions of the instrument.

 

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

Basic financial assets

Basic financial assets, which include debtors, 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.

Sal Hotels Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies (continued)
14
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.

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.

Sal Hotels Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies (continued)
15
Other financial liabilities

Other financial liabilities, including debt instruments that do not meet the definition of a basic financial instrument, are measured at fair value through profit or loss.

 

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments (see 1.9).

Derecognition of financial liabilities

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

1.8
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.

1.9
Derivatives

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

 

A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability.

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 income statement 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. Where items recognised in other comprehensive income or equity are chargeable to or deductible for tax purposes, the resulting current or deferred tax expense or income is presented in the same component of comprehensive income or equity as the transaction or other event that resulted in the tax expense or income. 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.

Sal Hotels Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies (continued)
16
1.11
Employee benefits

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

 

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

 

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

1.12
Retirement benefits

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

1.13
Leases

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

2
Critical accounting judgements and key sources of estimation uncertainty

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

 

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

Critical judgements

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

Fair value, residual value and depreciation of freehold property

Freehold property represents the company's most significant asset and is assessed to have a useful life of 50 years and is carried at a revalued amount, being its fair value at the date of revaluation less any subsequent depreciation and impairment losses.

 

Freehold property has been valued by the directors having regard to factors such as current and future projected income levels, location and recent market transactions in the sector. Carrying value is then calculated on the basis of estimates of the useful life and residual value of the company's property which are determined by management and reviewed annually for appropriateness.

Sal Hotels Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
17
3
Turnover and other revenue

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

2023
2022
£
£
Turnover analysed by class of business
Accommodation and room hire
3,722,097
3,148,993
Food and beverages
560,497
710,351
Other
245,641
161,298
4,528,235
4,020,642

The whole of the turnover is attributable to the principal activity of the company wholly undertaken in the United Kingdom.

4
Operating profit
2023
2022
Operating profit for the year is stated after charging:
£
£
Depreciation of owned tangible fixed assets
327,001
318,185
Operating lease charges
513
844
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
10,500
9,550
For other services
Taxation compliance services
7,150
6,700
6
Employees

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

2023
2022
Number
Number
Administrative staff
3
3
Service and other staff
26
31
29
34
Sal Hotels Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
6
Employees (continued)
18

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
642,249
738,161
Social security costs
51,987
67,692
Pension costs
12,697
7,543
706,933
813,396

Employees on the company's payroll may perform services for other connected hotels. These services are recharged on a cost basis. Employee costs may also be recharged to the company from related parties under a reciprocal arrangement. All such recharges are excluded for disclosure purposes.

7
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
11,009
-
0
8
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
19,846
533,835
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
337,219
49,510
Adjustments in respect of prior periods
7,309
-
0
Total current tax
344,528
49,510
Deferred tax
Origination and reversal of timing differences
(10,887)
(22,182)
Total tax charge
333,641
27,328
Sal Hotels Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
9
Taxation (continued)
19

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

2023
2022
£
£
Profit before taxation
1,620,883
218,687
Expected tax charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
381,232
41,551
Depreciation in excess of capital allowances
45,305
(34,440)
Depreciation on assets not qualifying for tax allowances
-
0
60,455
Transfer pricing adjustment
(88,889)
(17,681)
Under/(over) provided in prior years
7,309
-
0
Other tax adjustments
(429)
(376)
Origination and reversal of timing differences
(10,887)
(22,181)
Taxation charge for the year
333,641
27,328

In addition to the amount charged to the income statement, the following amounts relating to tax have been recognised directly in other comprehensive income:

2023
2022
£
£
Deferred tax arising on:
Revaluation of property
(460,339)
287,975
Sal Hotels Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
20
10
Tangible fixed assets
Freehold land and buildings
Fixtures and fittings
Computer equipment
Total
£
£
£
£
Cost or valuation
At 1 January 2023
20,769,101
818,264
14,942
21,602,307
Additions
8,000
53,149
3,355
64,504
Disposals
-
0
-
0
(2,989)
(2,989)
Revaluation
(1,841,355)
-
0
-
0
(1,841,355)
At 31 December 2023
18,935,746
871,413
15,308
19,822,467
Depreciation and impairment
At 1 January 2023
-
0
595,974
6,327
602,301
Depreciation charged in the year
103,846
218,053
5,102
327,001
Eliminated in respect of disposals
-
0
-
0
(2,989)
(2,989)
Revaluation
(103,846)
-
0
-
0
(103,846)
At 31 December 2023
-
0
814,027
8,440
822,467
Carrying amount
At 31 December 2023
18,935,746
57,386
6,868
19,000,000
At 31 December 2022
20,769,101
222,290
8,615
21,000,006

The value of freehold land and buildings was determined based on a valuation performed on 6 October 2022 by Cushman and Wakefield, an independent valuers not connected with the company, on the basis of market value. The valuation conforms to the RICS Valuation - Global Standards and is based on an income approach having regard to the property's trading potential.

Tangible fixed assets with a carrying value of £19m (2022: £21m) are pledged as security for the immediate parent company's bank loan.

11
Stocks
2023
2022
£
£
Finished goods and goods for resale
27,239
31,533
12
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
190,577
616,611
Prepayments and accrued income
19,463
256,613
210,040
873,224
Sal Hotels Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
21
13
Creditors: amounts falling due within one year
2023
2022
£
£
Trade creditors
202,334
755,276
Amounts owed to group undertakings
6,515,033
7,894,470
Corporation tax
306,569
212,871
Other taxation and social security
199,827
69,496
Other creditors
323,155
233,626
Accruals and deferred income
469,136
738,019
8,016,054
9,903,758
14
Deferred taxation

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

Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
237,748
248,635
Revaluations
173,436
633,775
411,184
882,410
2023
Movements in the year:
£
Liability at 1 January 2023
882,410
Credit to profit or loss
(10,887)
Credit to other comprehensive income
(460,339)
Liability at 31 December 2023
411,184
15
Provisions for liabilities
2023
2022
Notes
£
£
Deferred tax liabilities
14
411,184
882,410
Sal Hotels Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
22
16
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
12,697
7,543

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.

17
Share capital
2023
2022
£
£
Ordinary share capital
Issued and fully paid
100 Ordinary shares of £1 each
100
100

There is a single class of ordinary shares. There are no restrictions on the distributions of dividends and the repayment of capital.

18
Financial commitments, guarantees and contingent liabilities

The company's immediate parent undertaking's bank loan is secured by a fixed and floating charge over the assets of its subsidiaries, which include SAL Hotels Limited. The bank loan due by the immediate parent company at the year end was £47,500,000 (2022: £47,500,000 ).

19
Reserves
Revaluation reserve

This includes all prior period fixed asset revaluation.

Profit and loss reserves

This includes all current and prior period retained profit and losses.

Sal Hotels Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
23
20
Related party transactions

Under section 33.11 of FRS 102, the company has taken exemption from disclosure of transactions with wholly-owned subsidiaries.

 

During the year cross charges and management charges totalling £216,624 (2022: £264,161) were payable to companies controlled by the same controlling parties.

 

At the reporting date included in other creditors are amounts totalling £320,464 (2022: £231,739) due to companies controlled by the same controlling parties.

21
Ultimate controlling party

At the balance sheet date, the immediate parent company was KAS Holdings Limited, a company registered in England and Wales.

 

At the balance sheet date, the ultimate parent company, for which group accounts are prepared is KAS No.2 Limited, a company whose registered office is 144-146 Kings Cross Road, London WC1X 9DU.

 

On the 21 March 2024, the company was sold outside of KAS No.2 Limited to Waay Assets Limited.

 

Mr Amit Kumar Basnet is the ultimate controlling party.

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