Company Registration No. SC596631 (Scotland)
LETHENDY ELSTREE LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
LB GROUP
1 Vicarage Lane
Stratford
London
England
E15 4HF
LETHENDY ELSTREE LIMITED
COMPANY INFORMATION
Directors
Mr P G Hales
V Nazarov
(Appointed 1 August 2023)
Secretary
Infinity Secretaries Limited
Company number
SC596631
Registered office
5 Carden Place
Aberdeen
Scotland
AB10 1UT
Auditor
LB Group Limited (Stratford)
1 Vicarage Lane
Stratford
London
England
E15 4HF
LETHENDY ELSTREE LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 8
Profit and loss account
9
Balance sheet
10
Statement of changes in equity
11
Notes to the financial statements
12 - 19
LETHENDY ELSTREE LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 1 -

The directors present the strategic report for the year ended 31 December 2022.

Review of the business
Principal risks and uncertainties

Competitive risk: The company operates in a competitive market and to some extent the level of trading is affected by the local economy which has been steadily improving over the last ten years. The risks associated with this are mitigated by ensuring the company offers a high quality of service across all areas of the business in line with the expectations of the widely recognised brand name and by targeting the tourism sector as well as business customers

 

Credit risk: The key credit risk is in relation to debtors. The directors consider there be sufficient controls in place to mitigate this risk, with a regular review of outstanding balances.

 

The company's financial instruments comprise cash at bank, borrowings, trade debtors and trade creditors that arise directly from its operations. The main purpose of these financial instruments is to raise finance for the company's operations and the main risk arising from them is interest rate fluctuations.

 

Liquidity risk: The company continues to enjoy a good relationship with the bank and borrowing facilities have been renewed until 2024. The company aims to maintain an adequate working capital position, and forecasts to ensure that there are adequate facilities in place to meet liabilities as they fall due.

 

The management of the company was challenged by COVlD-19 pandemic. As a result of this the company has taken numerous proactive steps to mitigate the negative financial and operational impacts of COVlD-19. Business contingency plans have been implemented and will continue to be adjusted in response to the global situation. At the property level, contingency plans included measures such as: 1) adding value to existing packages, 2) flexible room cancellation so the company can attract business and customers have the confidence to book, 3) closing food and beverage outlets, 4) reducing staff and 5) closing floors. The company is also working with vendors and its lenders in order to preserve working capital and liquidity.

 

Also the company took an advantage of UK and local government COVlD-19 support measures offering support to the hospitality sector. These measures include: the coronavirus job retention scheme, March 2020 quarter VAT payment deferral, local council grants, coronavirus restart grant, and eat out to help out scheme.

 

Following on from the end of the COVID-19 period the hotel has undertaken all reasonable and active steps to increase its income whilst controlling its cost base. To date the hotel has performed well and has benefited from the increased UK staycation activity. It has further set up robust and continued steps, vis a vis those of COVID-19 to manage the hotel and its business during the ongoing energy and cost of living crisis. The former has been in part set up by ensuring manageable and suitable energy contracts at the hotel.

 

Therefore, whilst the hospitality and retail sector has operated in an environment of transition during the year and post year period, the directors are confident that the hotel and it’s trade has been restructured to a suitable level to meet these issues head on.

 

Effective 1 February 2022 the company signed a new HMA with Michels & Taylor which further expands the HR Services, which includes the provision of the operational workforce, delivered by Michels & Taylor. This is part of the directors strategic positioning of the company, with an increased reliance on the services of Michels & Taylor (London) Limited and its related entities, to provide further support services to the company and ensure operations are maintained going forward in the most efficient and effective manner.

LETHENDY ELSTREE LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 2 -
Key Performance Indicators

Financial key performance indicators include the monitoring of the management of profitability and working capital.

 

Total revenue - represents growth of the business

Gross profit - represents residual profit after selling a product or service before deducting any associated overhead costs

Gross margin - shows production efficiency of the business

EBITDA - serves as an indicator of a company's overall financial position

EBITDA margin - shows company's operating profitability

 

2022      2021

Revenue (£000's)         5,590         3,522

Gross profit (£000's)         5,124         3,298

Gross margin (%)         92        94

EBITDA* (£000's)         910        1,123

EBITDA margin (%)         16         32

 

*Excluding exceptional items

 

 

On behalf of the board

V Nazarov
Director
13 November 2024
LETHENDY ELSTREE LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 3 -

The directors present their annual report and financial statements for the year ended 31 December 2022.

Results and dividends

The results for the year are set out on page 9.

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 P G Hales
Mr R F Power
(Resigned 23 June 2023)
V Nazarov
(Appointed 1 August 2023)
Auditor

LB Group Limited (Stratford) were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.

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
V Nazarov
Director
13 November 2024
LETHENDY ELSTREE LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 4 -

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.

LETHENDY ELSTREE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF LETHENDY ELSTREE LIMITED
- 5 -
Disclaimer of opinion on financial statements

We were engaged to audit the financial statements of Lethendy Elstree Limited for the year ended 31 December 2022 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).

 

We do not express an opinion on the financial statements of the company. Because of the significance of the matters described in the Basis for disclaimer of opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.

Basis for disclaimer of opinion

The financial statements for the period to 31 December 2022 include a disclaimer of opinion.

 

The basis of disclaimer of opinion is due to the issues and difficulty in obtaining sufficient audit evidence in relation to assets, liabilities, revenue and expenditure in the financial statements for the period. This issue has arisen due to the issues of COVID in the period, the aging of the financial statements under review and the impact of the HMA (Hotel Management Agreement) in relation to the financial operation of the hotel in the period.

 

To this extent, as the auditor, we cannot confirm whether the financial statements are free of material misstatement.

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

Because of the significance of the matter described in the basis for disclaimer of opinion section of our report, we have been unable to form an opinion, whether based on the work undertaken in the course of the audit:

 

LETHENDY ELSTREE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF LETHENDY ELSTREE LIMITED
- 6 -
Matters on which we are required to report by exception

Notwithstanding our disclaimer of an opinion on the financial statements, in the light of the knowledge and understanding of the company and its environment obtained in the course of the audit performed subject to the pervasive limitation described above, we have not identified material misstatements in the strategic report or the directors' report.

 

Arising from the limitation of our work referred to above:

 

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.

Detecting irregularities involving fraud

 

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:

 

 

 

 

LETHENDY ELSTREE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF LETHENDY ELSTREE LIMITED
- 7 -

We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

 

 

To address the risk of fraud through management bias and override of controls, we:

 

 

 

 

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

 

 

 

 

 

Auditor's responsibilities for the audit of the financial statements

Our responsibility is to conduct an audit of the company’s financial statements in accordance with International Standards on Auditing (UK) and to issue an auditor’s report. However, because of the matter described in the basis for disclaimer of opinion section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements. 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.

LETHENDY ELSTREE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF LETHENDY ELSTREE LIMITED
- 8 -

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.

Richard Lane
Senior Statutory Auditor
For and on behalf of LB Group Limited (Stratford)
13 November 2024
Chartered Accountants
Statutory Auditor
1 Vicarage Lane
Stratford
London
England
E15 4HF
LETHENDY ELSTREE LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 9 -
2022
2021
Notes
£
£
Turnover
5,590,502
3,522,317
Cost of sales
(466,405)
(223,819)
Gross profit
5,124,097
3,298,498
Administrative expenses
(5,737,342)
(3,602,654)
Government grant
-
0
68,495
Exceptional item
3
(572,249)
-
0
Operating loss
(1,185,494)
(235,661)
Interest payable and similar expenses
(620,302)
(430,768)
Loss before taxation
(1,805,796)
(666,429)
Tax on loss
-
0
-
0
Loss for the financial year
(1,805,796)
(666,429)

The profit and loss account has been prepared on the basis that all operations are continuing operations.

LETHENDY ELSTREE LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2022
31 December 2022
- 10 -
2022
2021
Notes
£
£
£
£
Fixed assets
Tangible assets
5
16,000,873
17,481,231
Current assets
Stocks
6
27,821
17,727
Debtors
7
1,708,028
417,755
Cash at bank and in hand
1,161,462
1,027,752
2,897,311
1,463,234
Creditors: amounts falling due within one year
8
(1,397,425)
(985,650)
Net current assets
1,499,886
477,584
Total assets less current liabilities
17,500,759
17,958,815
Creditors: amounts falling due after more than one year
9
(23,401,813)
(22,054,073)
Net liabilities
(5,901,054)
(4,095,258)
Capital and reserves
Called up share capital
1
1
Profit and loss reserves
(5,901,055)
(4,095,259)
Total equity
(5,901,054)
(4,095,258)
The financial statements were approved by the board of directors and authorised for issue on 13 November 2024 and are signed on its behalf by:
V Nazarov
Director
Company Registration No. SC596631
LETHENDY ELSTREE LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
- 11 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 January 2021
1
(3,428,830)
(3,428,829)
Year ended 31 December 2021:
Loss and total comprehensive income for the year
-
(666,429)
(666,429)
Balance at 31 December 2021
1
(4,095,259)
(4,095,258)
Year ended 31 December 2022:
Loss and total comprehensive income for the year
-
(1,805,796)
(1,805,796)
Balance at 31 December 2022
1
(5,901,055)
(5,901,054)
LETHENDY ELSTREE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 12 -
1
Accounting policies
Company information

Lethendy Elstree Limited is a private company limited by shares incorporated in Scotland. The registered office is 5 Carden Place, Aberdeen, Scotland, AB10 1UT.

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. The principal accounting policies adopted are set out below.
1.2
Going concern

At the time of approving the financial statements, the director’s current intention is to repay the loan facility true

due by way of selling its freehold land and building or the company itself or be potential refinancing arrangements. Whilst management have at this stage not entered into formal negotiations with a potential seller, management have made us aware that they are actively seeking to identify a potential buyer. Financial statements have been prepared on the going concern basis of preparation as the sale is not currently fixed.

 

Clearly there is uncertainty in relation to the period which management believe the operations of the company

to extend to.

 

As is also the case for many businesses in the hospitality sector in the United Kingdom, the company suffered a significant interruption to trade since March 2020. This has led to the directors taking all necessary steps to

ensure the survival of the company.

 


1.3
Turnover

Turnover represents income from food and beverage sales, hotel services, room hire and related services, excluding value added tax. Turnover is stated at the fair value of the consideration receivable. net of value added tax, rebates and discounts.

 

Revenue from services provided is recognised when the company has performed its obligations and inexchange obtained the right to consideration.

 

Turnover consists of sales at the company's hotel and excludes value added tax. Turnover is recognised when goods and services are supplied to the guests.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.

LETHENDY ELSTREE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 13 -
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.

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
2% Straight line
Plant and equipment
25% Straight line
Fixtures and fittings
20% 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.

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 bringing the stocks to their present location and condition.

 

Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.

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.

LETHENDY ELSTREE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 14 -
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.

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.

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.

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.

LETHENDY ELSTREE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 15 -
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.

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
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.

1.11
Retirement benefits

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

1.12
Government grants

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

 

A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.

LETHENDY ELSTREE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 16 -
2
Judgements and key sources of estimation uncertainty

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

 

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

Critical judgements

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

Bad Debt Provision

Provision is made for bad debts. This requires management’s best estimate of the value of payments expected to be received in future. In addition, the timing of the cash flows require management’s judgement.

Property Valuation

The company's property is recorded at cost less accumulated depreciation and impairment. Given the losses generated to date, there is risk and associated judgement in relation to considering whether the property is at risk of impairment. Management obtain an annual valuation of this property by an independent party and assess impairment on an annual basis by reference to the indicative market value included within the valuation report.

3
Exceptional item
2022
2021
£
£
Income
Exceptional item
-
52,295
Expenditure
Exceptional item
572,249

The prior year exceptional item relates to the write off of historical items.

 

 

The current year exceptional item relates to the revaluation of intercompany balances to align the accounts to the parent company position as well as corrections made to external debt and amounts owed by Michels & Taylor Op-Co E Limited at the reporting date and the write off of historical items.

LETHENDY ELSTREE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 17 -
4
Employees
In the financial year as part of the HMA with Michels & Taylor Op-Co E Limited, all previous company employees transferred across to Michels & Taylor Op-Co E Limited and hence the average monthly number of persons is limited only to statutory directors. Aggregate remuneration disclosed below was recharged back to Lethendy Elstree Limited under the HMA with Michels & Taylor Op-Co E Limited.

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

2022
2021
Number
Number
2
66
Whilst the company employees were transferred across to Michels & Taylor Op-Co E Limited in the financial year, the company had access to a monthly average of 75 number of persons (excluding directors).


Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
1,826,967
1,021,320
Social security costs
92,250
59,402
Pension costs
16,253
7,728
1,935,470
1,088,450
5
Tangible fixed assets
Freehold land and buildings
Plant and equipment
Fixtures and fittings
Total
£
£
£
£
Cost
At 1 January 2022
13,389,471
100,237
6,033,302
19,523,010
Additions
-
0
-
0
42,732
42,732
At 31 December 2022
13,389,471
100,237
6,076,034
19,565,742
Depreciation and impairment
At 1 January 2022
847,999
24,763
1,169,017
2,041,779
Depreciation charged in the year
267,789
20,047
1,235,254
1,523,090
At 31 December 2022
1,115,788
44,810
2,404,271
3,564,869
Carrying amount
At 31 December 2022
12,273,683
55,427
3,671,763
16,000,873
At 31 December 2021
12,541,472
75,474
4,864,285
17,481,231
LETHENDY ELSTREE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
5
Tangible fixed assets
(Continued)
- 18 -

Freehold land and buildings with a carrying amount of £12,273,683 (2021: £12,541,472) have been pledge to secure borrowings of the company. The company is not allowed to pledge these assets as security for other borrowings or to sell them to another entity.

 

In June 2019, the company had restrictions placed over the sale of the land which the company's primary asset sits on and relates to litigation against the wider group . This restriction requires the company to seek third party consent to any sale of the land and buildings. The directors do not believe the restriction should be applied and have appealed against the restriction.

6
Stocks
2022
2021
£
£
Goods held for resale
27,821
17,727
7
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
756,005
210,890
Other debtors
890,591
126,336
Prepayments and accrued income
61,432
80,529
1,708,028
417,755

Other debtors includes amounts owed by fellow subsidiary undertakings at £890,590 (2021: £126,036).

In both periods, amounts owed are interest free and repayable on demand

 

8
Creditors: amounts falling due within one year
2022
2021
Notes
£
£
Other borrowings
10
5,974
-
0
Trade creditors
841,759
419,888
Taxation and social security
-
0
50,036
Other creditors
92,615
165,733
Accruals and deferred income
457,077
349,993
1,397,425
985,650

Other creditors includes amounts owed to a fellow subsidiary undertaking at £25,411 (2021: £134,000).

In both periods, amounts owed are interest free and repayable on demand.

 

LETHENDY ELSTREE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 19 -
9
Creditors: amounts falling due after more than one year
2022
2021
Notes
£
£
Bank loans and overdrafts
10
10,360,202
10,541,036
Amounts owed to parent undertaking
13,041,611
11,513,037
23,401,813
22,054,073
10
Loans and overdrafts
2022
2021
£
£
Bank loans
10,360,202
10,541,036
Amounts owed to parent undertaking
13,041,611
11,513,037
23,401,813
22,054,073
Payable after one year
23,401,813
22,054,073

The bank loan is due to be repaid on 20 January 2025. The interest rate on the loan is LIBOR +4.5% per annum. There is a fixed and floating charge on land and buildings and the charge also contains a negative pledge.

 

The amount repayable to group undertakings is dependent on a number of internal and external factors. The intention of the company is to repay all debts to the parent undertaking subsequent to repayment of the bank loan. Associated interest accruing at 5% per annum has been waived by the parent undertaking from the date of inception of this loan.

 

 

 

11
Related party transactions

Amounts owed by Michels & Taylor Op-Co E Limited at £442,168 at the reporting date were written off at year end as the balance was not recoverable.

Michels & Taylor Op-Co E Limited operate an enhanced HMA in relation to the company and assist in key operational areas of the hotel, as noted in note 11 and 4 of the financial statements. There is also a common director between the two entities.

 

12
Ultimate controlling party

The parent company is Lethendy Estates Limited. This is the largest group of undertakings for which group accounts are drawn up, these can be obtained from the registered address, 5 Carden Place, Aberdeen , Scotland, AB10 1UT.

 

The ultimate controlling party of Lethendy Elstree Limited are the trustees of the MF Trust, a trust based in the Cayman Islands.

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