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Registered number: 02892920










CLOUSTON GROUP LIMITED










ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 
CLOUSTON GROUP LIMITED
 
 
COMPANY INFORMATION


Directors
P F Clouston 
R D Clouston 
W D Clouston 




Company secretary
W D Clouston



Registered number
02892920



Registered office
20 South Street
Stephenson Quarter

Newcastle Upon Tyne

NE1 3PE




Independent auditors
Haysmac LLP

10 Queen Street Place

London

EC4R 1AG





 
CLOUSTON GROUP LIMITED
 

CONTENTS



Page
Group Strategic Report
 
1 - 5
Directors' Report
 
6 - 8
Independent Auditors' Report
 
9 - 12
Consolidated Statement of Comprehensive Income
 
13
Consolidated Statement of Financial Position
 
14
Company Statement of Financial Position
 
15
Consolidated Statement of Changes in Equity
 
16
Company Statement of Changes in Equity
 
17
Consolidated Statement of Cash Flows
 
18
Consolidated Analysis of Net Debt
 
19
Notes to the Financial Statements
 
20 - 39


 
CLOUSTON GROUP LIMITED
 
 
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023

Introduction
 
The Directors present their annual report on the affairs of Clouston Group Limited (the "Company") and its subsidiaries (the "Group") for the year ended 31 December 2023.

Business review
 
Clouston Group Limited (the “Company”) is the parent company for a group whose main activity is the successful redevelopment of the Stephenson Quarter area of Newcastle upon Tyne. The Company acts as a holding company and its three trading subsidiaries are Stephenson Hotel Limited, Stephenson Quarter Developments Limited and Stephenson Rocket Limited. To date the Group has completed construction of a Crowne Plaza branded hotel, refurbished the Boiler Shop events venue and has constructed a 357 space multi-storey car park adjoining the Stephenson Quarter, all of which are now operated by the Group through its trading subsidiaries. Further development proposals for this area, which are yet to come into fruition, include residential apartments, commercial offices, exhibition and event space, retail and restaurant facilities.
The Group's EBITDA in the current year was a loss of £2.2m (2022: £1.4m EBITDA loss) with a net loss of £5.0m (2022: £1.2m loss). Of the £4.0m loss, £2.36m relates to an impairment charge on the land and buildings of Stephenson Hotel Limited. Other additional costs contributing to the increased loss are legal and professional fees paid in relation to a court case as well as general inflationary rises impacting payroll and other costs. The development, performance and position of the Group's trading subsidiaries during the year are summarised below, with further detail provided in each entity's own annual report.
Stephenson Hotel Limited (“SHL”)
The construction of the 251 bed Crowne Plaza hotel within the Stephenson Quarter area of Newcastle upon Tyne was completed in August 2015. This hotel forms part of a wider proposed development by the Clouston Group (the group headed by Clouston Group Limited, ‘the group’) of which the company is part. The group has also developed a multi storey car park and office block, an exhibition and event venue and the UniversityTechnical College building in the area. Further development proposals for this area include residential apartments, commercial offices, exhibition and event space, retail and restaurant facilities. 
In March 2019 the company terminated the IHG Hotel Management Agreement and appointed a new management company, Interstate, under a franchise agreement, to improve trading performance and hotel value whilst retaining the Crowne Plaza brand.
Over the following 12 months the directors and Interstate achieved a strong performance trajectory, with increasing revenue and Revenue Generation Index ('RGI'), as detailed in the 2019 annual report, which should have led to a stabilisation by 2024. Unfortunately, that progress was arrested in March 2020 by the COVID-19  pandemic and the introduction of government restrictions which, understandably, had a major detrimental impact on the business. Faced with lockdown measures, travel restrictions and reduced demand the directors acted swiftly to mitigate operational losses insofar as possible by implementing furlough, redundancies, salary reductions, termination of non-necessary services and other similar measures. The directors also agreed a deferral of ground lease payments in respect of the hotel.
Whilst not yet back to previously achieved levels, the business also saw gross margin improvement, from £5.6m in 2022 to £6.3m in the current year and the company generated an operating loss, before financing costs, of £0.2m (2022: £1.8m). After finance charges of £2.2m (2022: £2.2m), the company reported a net loss of £4.0m (2022: £0.3m). Of the £4.0m loss, £2.36m relates to an impairment charge on the land and buildings. Other additional costs contributing to the increased loss are the addition of a land charge from Stephenson Quarter Developments Limited (a fellow subsidiary) to Stephenson Hotel for the use of Hawthorn Sq and the land to the rear of the hotel; legal and professional fees paid in relation to a court case as well as general inflationary rises impacting payroll and other costs. At the balance sheet date the company had net current liabilities of £45.9m (2022: £44.2m) and net liabilities of £33.9m (2022: £29.8m) which includes £39.0m (2022: £38.7m) due to Newcastle City Council (‘NCC’) in respect of term loan facilities and £2.0m (2022: £2.1m) in respect of a deferred
Page 1

 
CLOUSTON GROUP LIMITED
 

GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

hotel funding contribution, further details of which are provided in note 15 to the financial statements.
To provide additional support over the period of lockdown restrictions, the Term Facilities Agreement with NCC was amended in 2020 and additional funding of £1m (Facility D) was agreed, with the final £0.4m drawn down in 2022 the year. Due to UK lockdowns lasting far longer than was first anticipated, the directors sought to reschedule repayment terms under the Facilities Agreement which were not accepted.
Throughout 2023 the hotel has remained open, allowing the hotel to operate normally. Occupancy rates rose to 85.7% in 2023 (2022: 79.5%) and the hotel maintained strong RGI and Average Daily Rate (‘ADR’).
Stephenson Quarter Development Limited (“SQDL”)
The company's main activity is to oversee the successful redevelopment of the Stephenson Quarter area in Newcastle by the Clouston Group, the group headed by Clouston Group Limited. 
In 2017 the company started construction on the North East Futures University Technical College ("UTC") on behalf of the Education and Skills Funding Agency, which was completed in the autumn of 2018. The company also worked on the design and refurbishment of the Boiler Shop which commenced in 2016 and the scheme achieved the Lord Mayors Design Award Conservation Prize in 2018. Since its restoration, the company has operated the Boiler Shop as a cultural events venue and intends to expand the range and volume of events held there over the coming years. 
Trading performance to the end of the year was encouraging although inflationary pressures have arisen since the year end which persist at the date of approval of these financial statements and which present further potential challenges for the business as the Boiler Shop relies: for part of its income on bar sales, which could be impacted by the current cost of living crisis. However, because this is an arts and meetings venue it does not appear to be adversely affected to the extent that bars and pubs are reporting. The venue operates ticketed events and to date the directors have not seen a fall off in sales. In addition to the arts, it will now start to build the daytime meetings and events business working with its sister company, Stephenson Hotel Limited, to add value to both businesses. 
To assist with funding refurbishment of the Boiler Shop, the company secured a loan from NELEP Investment Fund Regional Growth Fund ('LEP") which was renegotiated and extended during 2021 following a deferment of interest charges and capital repayments in 2020 to provide support during the pandemic. Additional loan funding of 268,945 was provided in 2021 to support the company's recovery from the pandemic and the loan maturity date was extended to 31 March 2025.
 
At the year end the company had net current liabilities of £11,729,759 (2022: £11,365,916) and net liabilities of £10,450,883 (2022: £10,230,135) which included £9,495,605 (2022: £9,411,346) owing to group undertakings and £1,789,094 (2022: £1,915,821) in respect of the RGF loan that has been extended.
Stephenson Rocket Limited (“SRL”)
The construction of a 357 space multi-story car park (‘MSCP’) with offices above was completed in August 2015 during the initial phase of the redevelopment of the Stephenson Quarter area of Newcastle upon Tyne.
The company operates the car park with rent payable to Newcastle City Council (‘NCC’).
The car park was designed as a facility to service the fully developed Stephenson Quarter, as well as to meet parking demand for the nearby train station. The as yet incomplete development on the adjoining Stephenson Square site and a lack of the previously expected access improvements from the train station have contributed to the car park failing to achieve the anticipated utilisation levels and, as such, not being able to generate revenue at the levels initially predicted. Financial performance has been further impeded since March 2020 due to the impact of the COVID-19 global pandemic, ensuing lockdowns and reduced demand having a significant adverse impact on revenue. As a consequence, the company has incurred successive losses and has not been able to meet its rental and other obligations to NCC.
 
Page 2

 
CLOUSTON GROUP LIMITED
 

GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023


In order to secure a sustainable future, the directors sought to introduce a specialist operator to take over management of the car park through which they were confident sufficient revenues would be generated to meet all other operating costs. However, NCC have entered into an agreement to develop the remaining areas of the Stephenson Quarter and require full control of the car park to support the development of offices and reduce building costs.
Therefore, the company’s sub lease of the car park was terminated in November 2022. The directors welcome this and agreed to continue operating the MSCP until 28 June 2023 to allow for a smooth handover to NCC.
Trading has now ceased, and the directors expect to complete a consensual agreement with NCC to clear arrears within the next 6 months. As the directors do not intend for the company to acquire or commence a replacement trade they no longer consider the company to be a going concern therefore, once this has been completed, the company will be wound up.

Principal risks and uncertainties
 
The delays in the regeneration of the Stephenson Quarter, and their ultimate design and content, as noted in the “business review" section above has created some uncertainty over the Group’s ability to optimise trading performance of its operating assets. As noted in this report, these risks were exacerbated by the impact of COVID-19 on the group's ability to operate each of the businesses and achieve their potential.
The Group's other principal risks and uncertainties include property values and property yields. The Crowne Plaza Hotel and the Boiler Shop are, as expected, yet to reach a stabilised basis of trading. Should trading fall below managements current forecasts, the carrying value of these assets in the balance sheet may be further impaired.
As detailed in note 2.2 in the financial statements, the Group is reliant on the performance of it's subsidiaries in order to continue as a going concern and indicates that there is risk as going concern is dependent on negotiations with its principal lender in respect of its loan which is due for repayment as well as the the quantum and timing of future cashflows that may be insufficient to permit the Group to meet its obligations as and when they fall due.

Page 3

 
CLOUSTON GROUP LIMITED
 

GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

Financial risk management objectives and policies
 
The Group’s activities expose it to a number of financial risks including cash flow risk, credit risk and liquidity risk.
Cash flow risk
In addition to the risks associated with trading performance, as highlighted in this report, the Group's activities expose it to the financial risks associated with fluctuations in interest rates. The Group monitors changes in interest rates and the likely interest payments. Despite recent increases, interest rates remain at historically low levels and, as noted above, the group has refinanced a large proportion of its loan facilities in such a way as to significantly reduce the cash cost of its annual finance charges during the term of the facilities.
Credit risk
The Group's principal financial assets are cash and bank balances together with trade and other debtors. The group's credit risk is primarily attributable to its trade debtors. The amounts presented in the balance sheet are net of allowances for doubtful debtors. An allowance for impairment is made when there is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of the cashflows. The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.
The Group has no significant concentration of credit risk, with exposure spread over a large number of counterparties and customers.
Liquidity risk
In order to maintain liquidity to ensure that sufficient funds are available for ongoing operations and future developments, the group uses a mixture of long-term and short-term debt finance.
Further details regarding liquidity risk and the impact on going concern can be found in the directors’ report.

Other key performance indicators
 
The Crowne Plaza hotel continues to grow with occupancy in July 2024 at 93%.

Future developments

Given the quality of our management, the strength of the Crowne Plaza brand , and the outstanding support of
our hotel consultants, Hamilton Pyramid we agreed to renew the Management Agreement with Aimbridge
(previously Interstate) for a further five years.
As detailed in note 2.2, the Group is in negotiations with its principal lender, NCC, which started in early 2023 and continue to be ongoing to agree appropriate repayment terms, as the loan has expired. This will form part of a consensual agreement to resolve the other liabilities in all Group companies which relate to this lender in return of NCC obtaining ownership of the hotel building and land held by Stephenson Quarter Developments Limited.

Page 4

 
CLOUSTON GROUP LIMITED
 

GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023


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



W D Clouston
Director

Date: 24 March 2025

Page 5

 
CLOUSTON GROUP LIMITED
 
 
 
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023

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

Directors' responsibilities statement

The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated financial statements in accordance with applicable law and regulations.
 
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period.

 In preparing these financial statements, the directors are required to:


select suitable accounting policies for the Group's financial statements and then apply them consistently;

make judgments and accounting estimates that are reasonable and prudent;

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.

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

Principal activity

The Group's principal activity is the successful redevelopment of the Stephenson Quarter area of Newcastle upon Tyne.

Results and dividends

The loss for the year, after taxation, amounted to £5,031,152 (2022 - loss £1,149,868).

The directors do not recommend the payment of a final dividend (2022: £nil)

Directors

The directors who served during the year were:

P F Clouston 
R D Clouston 
W D Clouston 

Matters covered in the Group Strategic Report

The following information, which would otherwise have been disclosed in the directors' report, is instead disclosed in the strategic report, as permitted by section 414c(11) of the Companies Act 2006:
- financial risk management objectives and policies
- future developments

Page 6

 
CLOUSTON GROUP LIMITED
 
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

Disclosure of information to auditors

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

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

Going concern

Clouston Group Limited is the parent company for a group whose recent activity included the successful redevelopment of the Stephenson Quarter area of Newcastle upon Tyne. The company acts as a holding company and its two trading subsidiaries are Stephenson Hotel Limited, Stephenson Quarter Developments Limited, including the Boiler Shop and non-trading subsidiary Stephenson Rocket Limited. The company is reliant on the performance of the subsidiaries of the group in order to continue to operate as a going concern. 
The Group’s trading performance has been encouraging with financial performance and initial projections with a positive trajectory continuing through 2024. The Directors are changing the mix of events in one subsidiary and is continuing to build on the daytime meetings and events business to help support other areas of the event calendar, such as, grassroots music. However, as there is a cost of living crisis that could impact income, the directors acknowledge that there is a risk that the quantum and timing of future cash flows may be insufficient to permit the company to meet its obligations as they fall due in the normal course of business. 
The Group's principal risks and uncertainties include property values and property yields caused primarily by the delays in the regeneration of the Stephenson Quarter, which is owned by its lender, and its ultimate design and content. This has also created uncertainty over the Group's ability to optimise trading performance of its operating assets. Following the effects of COVID-19 these risks were heightened by the continued impact of the energy and cost of living crises on the group's ability to operate each of the businesses and achieve their potential.
At 31 December the Group had net liabilities of £42,509,183 with amounts totalling £38.9m within Stephenson Hotel Limited owing to Newcastle City Council (“NCC”). At the year end, Stephenson Hotel Limited was in breach of its covenants and the loan expired in full on 25 October 2023.
The Group is in negotiations with its principal lender, NCC, which started in early 2023 and continue to be ongoing to agree appropriate repayment terms, as the loan has expired. This will form part of a consensual agreement to resolve the other liabilities in all Group companies which relate to this lender in return of NCC obtaining ownership of the hotel building and land held by Stephenson Quarter Developments Limited.
Stephenson Quarter Developments Limited also holds a £1.9m loan due to NELEP. This loan is due to expire in March 2025. The Directors are actively exploring various options, including refinancing or a sale and leaseback of the building. However, initial discussions with NELEP have given the Directors a reasonable expectation that they will remain supportive and wish to see the business thrive following their investment. They understand the inter-connection of the NCC consensual agreement around the freehold of the land and how this may impact the timeline for re-finance of their loan. The Directors therefore expect extended terms to be negotiated.
Other creditors includes a significant historical balance which relates to amounts owed to two former members of the group as further explained in note 19. The Directors are satisfied that they are taking suitable steps in order to rectify the position and that this liability will no longer exist moving forwards.
The Directors consider it appropriate to prepare these financial statements on the going concern basis, however they acknowledge that should the trading performances of the subsidiaries not reach the requisite levels and should the aforementioned agreement with NCC not be finalised, the quantum and timing of future cash flows
Page 7

 
CLOUSTON GROUP LIMITED
 
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

may be insufficient to enable it to meets it obligations in the normal course of business and therefore such material uncertainties may cast doubt on the ability of the company to continue as a going concern.

Post balance sheet events

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

Auditors

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

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





W D Clouston
Director

Date: 24 March 2025

Page 8

 
CLOUSTON GROUP LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CLOUSTON GROUP LIMITED
 

Opinion


We have audited the financial statements of Clouston Group Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2023, which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Company Statement of Financial Position, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity and the related notes, including a summary of significant accounting policiesThe financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).


In our opinion the financial statements:


give a true and fair view of the state of the Group's and of the parent Company's affairs as at 31 December 2023 and of the Group's loss for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.


Basis for opinion


We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.


Material uncertainty related to going concern


We draw attention to note 2.2 in the financial statements, which explains that should the trading performances of the subsidiaries not reach the requisite levels and should the agreement with NCC not be finalised, the quantum and timing of future cash flows may be insufficient to enable it to meets it obligations in the normal course of business and therefore such material uncertainties may cast doubt on the ability of the company to continue as a going concern. Our opinion is not modified in respect of this matter.


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


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


Page 9

 
CLOUSTON GROUP LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CLOUSTON GROUP LIMITED (CONTINUED)


Other information


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


We have nothing to report in this regard.


Opinion on other matters prescribed by the Companies Act 2006
 

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


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


Matters on which we are required to report by exception
 

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


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


adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent Company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.


Responsibilities of directors
 

As explained more fully in the Directors' Responsibilities Statement set out on page 6, 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 Group's and the parent 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 Group or the parent Company or to cease operations, or have no realistic alternative but to do so.


Page 10

 
CLOUSTON GROUP LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CLOUSTON GROUP LIMITED (CONTINUED)


Auditors' responsibilities for the audit of the financial statements
 

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


Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud.
Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws and regulations related to regulatory requirements and trade regulations, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006, income tax, payroll tax and sales tax.
We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related to posting inappropriate journal entries to revenue and management bias in accounting estimates. Audit procedures performed by the engagement team included:
 
inspecting correspondence with regulators and tax authorities; 
discussions with management including consideration of known or suspected instances of non-compliance with laws and regulation and fraud; 
evaluating management's controls designed to prevent and detect irregularities; 
identifying and testing journals, in particular journal entries posted with unusual account combinations, postings by unusual users or with unusual descriptions; and 
challenging assumptions and judgments made by management in their critical accounting estimates.


 


Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.


A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report.


Page 11

 
CLOUSTON GROUP LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CLOUSTON GROUP LIMITED (CONTINUED)


Use of our report
 

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





Gareth Ogden (Senior Statutory Auditor)
for and on behalf of
Haysmac LLP
Statutory Auditors
10 Queen Street Place
London
EC4R 1AG

25 March 2025
Page 12

 
CLOUSTON GROUP LIMITED
 
 
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023

2023
2022
Note
£
£

  

Turnover
 4 
14,471,633
13,284,403

Cost of sales
  
(7,645,653)
(7,304,832)

Gross profit
  
6,825,980
5,979,571

Exceptional costs
  
(338,509)
-

Administrative expenses
  
(9,299,767)
(5,036,426)

Other operating income
 5 
10,001
193,750

Operating (loss)/profit
 6 
(2,802,295)
1,136,895

Interest receivable and similar income
 10 
162,162
162,162

Interest payable and similar expenses
 11 
(2,391,019)
(2,448,925)

Loss before taxation
  
(5,031,152)
(1,149,868)

Loss for the financial year
  
(5,031,152)
(1,149,868)

  

Total comprehensive income for the year
  
(5,031,152)
(1,149,868)

(Loss) for the year attributable to:
  

Owners of the parent Company
  
(5,031,152)
(1,149,868)

  
(5,031,152)
(1,149,868)

Total comprehensive income for the year attributable to:
  

Owners of the parent Company
  
(5,031,152)
(1,149,868)

  
(5,031,152)
(1,149,868)

The notes on pages 20 to 39 form part of these financial statements.

Page 13

 
CLOUSTON GROUP LIMITED
REGISTERED NUMBER: 02892920

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023

2023
2022
Note
£
£

Fixed assets
  

Tangible assets
 14 
32,253,702
34,667,604

  
32,253,702
34,667,604

Current assets
  

Stocks
 16 
68,769
70,855

Debtors: amounts falling due within one year
 17 
1,312,733
1,348,164

Cash at bank and in hand
  
1,956,638
2,179,901

  
3,338,140
3,598,920

Creditors: amounts falling due within one year
 19 
(59,202,785)
(56,612,731)

Net current liabilities
  
 
 
(55,864,645)
 
 
(53,013,811)

Total assets less current liabilities
  
(23,610,943)
(18,346,207)

Creditors: amounts falling due after more than one year
 20 
(18,898,240)
(19,131,824)

Provisions for liabilities
  

Net liabilities
  
(42,509,183)
(37,478,031)


Capital and reserves
  

Called up share capital 
 23 
102
102

Capital redemption reserve
 24 
18
18

Profit and loss account
 24 
(42,509,303)
(37,478,151)

  
(42,509,183)
(37,478,031)


The financial statements were approved and authorised for issue by the board and were signed on its behalf on 24 March 2025.




W D Clouston
Director

The notes on pages 20 to 39 form part of these financial statements.

Page 14

 
CLOUSTON GROUP LIMITED
REGISTERED NUMBER: 02892920

COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023

2023
2022
Note
£
£

Fixed assets
  

Investments
 15 
2
2

  
2
2

Current assets
  

Debtors: amounts falling due within one year
 17 
110,019
138,000

Cash And Cash Equivalents
  
(1,813)
30,180

  
108,206
168,180

Creditors: amounts falling due within one year
 19 
(8,403,723)
(8,264,810)

Net current liabilities
  
 
 
(8,295,517)
 
 
(8,096,630)

Total assets less current liabilities
  
(8,295,515)
(8,096,628)

  

  

Net liabilities
  
(8,295,515)
(8,096,628)


Capital and reserves
  

Called up share capital 
 23 
102
102

Capital redemption reserve
 24 
18
18

Profit and loss account brought forward
  
(8,096,748)
(8,125,115)

Loss/(profit) for the year
  
(198,887)
28,367

Profit and loss account carried forward
  
(8,295,635)
(8,096,748)

  
(8,295,515)
(8,096,628)


The financial statements were approved and authorised for issue by the board and were signed on its behalf on 24 March 2025.


W D Clouston
Director

The notes on pages 20 to 39 form part of these financial statements.

Page 15

 
CLOUSTON GROUP LIMITED
 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023


Called up share capital
Capital redemption reserve
Profit and loss account
Equity attributable to owners of parent Company
Total equity

£
£
£
£
£

At 1 January 2023
102
18
(37,478,151)
(37,478,031)
(37,478,031)



Loss for the year
-
-
(5,031,152)
(5,031,152)
(5,031,152)


At 31 December 2023
102
18
(42,509,303)
(42,509,183)
(42,509,183)


The notes on pages 20 to 39 form part of these financial statements.


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


Called up share capital
Capital redemption reserve
Profit and loss account
Total equity

£
£
£
£

At 1 January 2022 (as previously stated)
102
18
(30,359,875)
(30,359,755)

Prior year adjustment - correction of error (note 26)
-
-
(5,968,408)
(5,968,408)

At 1 January 2022 (as restated)
102
18
(36,328,283)
(36,328,163)



Loss for the year (as restated)
-
-
(1,149,868)
(1,149,868)


At 31 December 2022
102
18
(37,478,151)
(37,478,031)


The notes on pages 20 to 39 form part of these financial statements.

Page 16

 
CLOUSTON GROUP LIMITED
 

COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023


Called up share capital
Capital redemption reserve
Profit and loss account
Total equity

£
£
£
£

At 1 January 2023
102
18
(8,096,748)
(8,096,628)


Comprehensive income for the year

Loss for the year
-
-
(198,887)
(198,887)


At 31 December 2023
102
18
(8,295,635)
(8,295,515)


The notes on pages 20 to 39 form part of these financial statements.


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


Called up share capital
Capital redemption reserve
Profit and loss account
Total equity

£
£
£
£

At 1 January 2022
102
18
(8,125,115)
(8,124,995)


Comprehensive income for the year

Profit for the year
-
-
28,367
28,367


At 31 December 2022
102
18
(8,096,748)
(8,096,628)


The notes on pages 20 to 39 form part of these financial statements.

Page 17

 
CLOUSTON GROUP LIMITED
 

CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023

2023
2022
£
£

Cash flows from operating activities

Loss for the financial year
(5,031,152)
(1,149,868)

Adjustments for:

Depreciation of tangible assets
613,993
483,237

Impairment of fixed assets
2,363,338
-

Loss on disposal of tangible assets
18,603
-

Interest paid
2,391,019
2,448,925

Interest received
(162,162)
(162,162)

Decrease in stocks
2,086
3,665

Decrease/(increase) in debtors
35,340
(289,784)

Increase in creditors
1,903,625
529,316

Impairment reversal of fixed assets
-
(193,750)

Net cash generated from operating activities

2,134,690
1,669,579


Cash flows from investing activities

Purchase of tangible fixed assets
(582,032)
(379,171)

Net cash from investing activities

(582,032)
(379,171)

Cash flows from financing activities

New secured loans
-
23,652

Repayment of loans
(485,961)
(76,340)

Repayment of finance leases
(1,026,347)
(399,324)

Interest paid
(263,613)
(770,010)

Net cash used in financing activities
(1,775,921)
(1,222,022)

Net (decrease)/increase in cash and cash equivalents
(223,263)
68,386

Cash and cash equivalents at beginning of year
2,179,901
2,111,515

Cash and cash equivalents at the end of year
1,956,638
2,179,901


Cash and cash equivalents at the end of year comprise:

Cash at bank and in hand
1,956,638
2,179,901

1,956,638
2,179,901


The notes on pages 20 to 39 form part of these financial statements.

Page 18

 
CLOUSTON GROUP LIMITED
 

CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 DECEMBER 2023





At 1 January 2023
Cash flows
Other non-cash changes
At 31 December 2023
£

£

£

£

Cash at bank and in hand

2,179,901

(223,263)

-

1,956,638

Debt due after 1 year

(1,729,980)

-

302,622

(1,427,358)

Debt due within 1 year

(41,076,595)

749,574

(1,051,759)

(41,378,780)

Finance leases

(18,578,219)

1,026,347

(628,234)

(18,180,106)


(59,204,893)
1,552,658
(1,377,371)
(59,029,606)

The notes on pages 20 to 39 form part of these financial statements.

Page 19

 
CLOUSTON GROUP LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

1.


General information

Clouston Group Limited (‘the Company’) and its subsidiaries (together ‘the Group’) remain focused on the successful redevelopment of the Stephenson Quarter area of Newcastle upon Tyne.
The Company is a private company, limited by shares, incorporated and domiciled in the United Kingdom and registered in England and Wales. The address of the registered office is given in the company information page of this annual report.

2.Accounting policies

 
2.1

Basis of preparation of financial statements

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

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

The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.

The following principal accounting policies have been applied:

  
2.2

Going concern

Clouston Group Limited is the parent company for a group whose recent activity included the successful redevelopment of the Stephenson Quarter area of Newcastle upon Tyne. The company acts as a holding company and its two trading subsidiaries are Stephenson Hotel Limited, Stephenson Quarter Developments Limited, including the Boiler Shop and non-trading subsidiary Stephenson Rocket Limited. The company is reliant on the performance of the subsidiaries of the group in order to continue to operate as a going concern. 
The Group’s trading performance has been encouraging with financial performance and initial projections with a positive trajectory continuing through 2024. The Directors are changing the mix of events in one subsidiary and is continuing to build on the daytime meetings and events business to help support other areas of the event calendar, such as, grassroots music. However, as there is a cost of living crisis that could impact income, the directors acknowledge that there is a risk that the quantum and timing of future cash flows may be insufficient to permit the company to meet its obligations as they fall due in the normal course of business. 
The Group's principal risks and uncertainties include property values and property yields caused primarily by the delays in the regeneration of the Stephenson Quarter, which is owned by its lender, and its ultimate design and content. This has also created uncertainty over the Group's ability to optimise trading performance of its operating assets. Following the effects of COVID-19 these risks were heightened by the continued impact of the energy and cost of living crises on the group's ability to operate each of the businesses and achieve their potential.
At 31 December the Group had net liabilities of £42,509,183 with amounts totalling £38.9m within Stephenson Hotel Limited owing to Newcastle City Council (“NCC”). At the year end, Stephenson Hotel Limited was in breach of its covenants and the loan expired in full on 25 October 2023.
 
Page 20

 
CLOUSTON GROUP LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

The Group is in negotiations with its principal lender, NCC, which started in early 2023 and continue to be ongoing to agree appropriate repayment terms, as the loan has expired. This will form part of a consensual agreement to resolve the other liabilities in all Group companies which relate to this lender in return of NCC obtaining ownership of the hotel building and land held by Stephenson Quarter Developments Limited.
Stephenson Quarter Developments Limited also holds a £1.9m loan due to NELEP. The NELEP loan is due to expire in March 2025. The Directors are actively exploring various options, including refinancing or a sale and leaseback of the building. However, initial discussions with NELEP have given the Directors a reasonable expectation that they will remain supportive and wish to see the business thrive following their investment. They understand the inter-connection of the NCC consensual agreement around the freehold of the land and how this may impact the timeline for re-finance of their loan. The Directors therefore expect extended terms to be negotiated.
Other creditors includes a significant historical balance which relates to amounts owed to two former members of the group as further explained in note 19. The Directors are satisfied that they are taking suitable steps in order to rectify the position and that this liability will no longer exist moving forwards.
The Directors consider it appropriate to prepare these financial statements on the going concern basis, however they acknowledge that should the trading performances of the subsidiaries not reach the requisite levels and should the aforementioned agreement with NCC not be finalised, the quantum and timing of future cash flows may be insufficient to enable it to meets it obligations in the normal course of business and therefore such material uncertainties may cast doubt on the ability of the company to continue as a going concern.

  
2.3

Turnover

Turnover consists of the income received for the provision of services and sale of goods at the hotel, car park and Boiler Shop, net of VAT and other sales related taxes. Turnover for services is recognised at the point in time the services are delivered and sale of goods is recognised on transfer of legal title to the customer. All turnover originated in the United Kingdom.

 
2.4

Basis of consolidation

The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of Financial Position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases.

 
2.5

Operating leases: the Group as lessee

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

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

Page 21

 
CLOUSTON GROUP LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.6

Interest income

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

 
2.7

Finance costs

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

 
2.8

Borrowing costs

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

 
2.9

Pensions

Defined contribution pension plan

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

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

 
2.10

Exceptional items

Exceptional items are transactions that fall within the ordinary activities of the Group but are presented separately due to their size or incidence.

 
2.11

Tangible fixed assets

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

Page 22

 
CLOUSTON GROUP LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)


2.11
Tangible fixed assets (continued)

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.

Depreciation is provided on the following basis:

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

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

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

 
2.12

Impairment of fixed assets and goodwill

Assets that are subject to depreciation or amortisation are assessed at each reporting date to determine whether there is any indication that the assets are impaired. Where there is any indication that an asset may be impaired, the carrying value of the asset (or cash-generating unit to which the asset has been allocated) is tested for impairment. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's (or CGU's) fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Non-financial assets that have been previously impaired are reviewed at each reporting date to assess whether there is any indication that the impairment losses recognised in prior periods may no longer exist or may have decreased.

 
2.13

Valuation of investments

Investments in subsidiaries are measured at cost less accumulated impairment.

 
2.14

Stocks

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

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

 
2.15

Debtors

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

Page 23

 
CLOUSTON GROUP LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.16

Cash and cash equivalents

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

In the Consolidated Statement of Cash Flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Group's cash management.

 
2.17

Creditors

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

 
2.18

Financial instruments

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

Financial instruments are recognised in the Group's Statement of Financial Position when the Group becomes party to the contractual provisions of the instrument.

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

Basic financial assets

Basic financial assets, which include trade and other debtors, cash and bank balances, are initially measured at their transaction price (adjusted for transaction costs except in the initial measurement of financial assets that are subsequently measured at fair value through profit and loss) and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.

Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other debtors due with the operating cycle fall into this category of financial instruments.

Impairment of financial assets

At the end of each reporting period financial assets measured at amortised cost are assessed for objective evidence of impairment. 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. 

Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.

Page 24

 
CLOUSTON GROUP LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)


2.18
Financial instruments (continued)

If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.

Financial liabilities

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

Basic financial liabilities, which include trade and other creditors, bank loans, other loans and loans due to fellow group companies are initially measured at their transaction price (adjusting for transaction costs except in the initial measurement of financial liabilities that are subsequently measured at fair value through profit and loss). When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future payments discounted at a market rate of interest, discounting is omitted where the effect of discounting is immaterial.

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

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

Derecognition of financial instruments

Derecognition of financial assets

Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Group transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Group will continue to recognise the value of the portion of the risks and rewards retained.

Derecognition of financial liabilities

Financial liabilities are derecognised when the Group's contractual obligations expire or are discharged or cancelled.


3.


Judgments in applying accounting policies and key sources of estimation uncertainty

In the application of the Group's accounting policies, which are described in Note 2, the Directors are required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
 
Page 25

 
CLOUSTON GROUP LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

3.Judgments in applying accounting policies (continued)

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both the current and future periods.
Significant judgments in applying the Group's accounting policies and key sources of estimation uncertainty.
Useful lives of tangible assets
Tangible fixed assets are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on the number of factors. In re-assessing asset lives, factors, such as technological innovation and maintenance are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values.
Impairment of tangible assets
The Group is required to evaluate the carrying values of tangible fixed assets for impairment whenever circumstances indicate, in management's judgment, that the carrying value of such assets may not be recoverable. An impairment review requires management to make subjective judgments concerning the cash flows, growth rates and discount rates of the cash generating units under review. Management have reviewed the tangible fixed assets and reversed a historic impairment in the current year. 
Recoverability of intercompany debtors
Management evaluate intercompany debtors for impairment whenever circumstances indicate, in management’s judgment, that the carrying value may not be recoverable. An impairment review requires management to make subjective judgments concerning the future trading prospects and cash flows of the group companies under review. Where actual cash flows in subsequent years differs to those forecast as part of the management’s impairment review this may result in additional impairments or conversely reversals of existing impairments recognised in future years. Historic impairments exist within intercompany debtors for the company and management concluded that these impairments should continue to exist in the current year. 

4.


Turnover

The whole of the turnover is attributable to the Group's principal activities.

All turnover arose within the United Kingdom.


5.


Other operating income

2023
2022
£
£

Other operating income
10,001
-

Reversal of impairment of tangible assets
-
193,750

10,001
193,750


Page 26

 
CLOUSTON GROUP LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

6.


Operating (loss)/profit

The operating (loss)/profit is stated after charging:

2023
2022
£
£

Other operating lease rentals
4,518
643,695

Depreciation
613,993
483,237


7.


Auditors' remuneration

During the year, the Group obtained the following services from their auditors:


2023
2022
£
£

Fees payable to the 's auditors for the audit of the consolidated and parent Company's financial statements
19,000
17,000

Fees payable to the 's auditors in respect of:

Audit of the subsidiaries annual financial statements
63,000
57,000

Taxation compliance services
23,600
21,750

All assurance services not included above
6,900
6,150

Page 27

 
CLOUSTON GROUP LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

8.


Employees

Staff costs, including directors' remuneration, were as follows:


Group
Group
Company
Company
2023
2022
2023
2022
£
£
£
£


Wages and salaries
4,489,918
4,017,713
235,052
256,103

Social security costs
273,023
218,127
38,006
11,098

Cost of defined contribution scheme
73,202
65,193
6,115
6,036

4,836,143
4,301,033
279,173
273,237


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



Group
Group
Company
Company
        2023
        2022
        2023
        2022
            No.
            No.
            No.
            No.









Hotel
155
153
-
-



Head office and administration
4
2
4
2



Boiler shop
8
7
8
7

167
162
12
9


9.


Directors' remuneration

2023
2022
£
£

Directors' emoluments
217,793
208,640

217,793
208,640


The highest paid director received remuneration of £NIL (2022 - £NIL).

The value of the Group's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £NIL (2022 - £NIL).

Page 28

 
CLOUSTON GROUP LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

10.


Interest receivable

2023
2022
£
£


Other interest receivable
162,162
162,162

162,162
162,162

Other interest receivable 2022: £162,162 (2021: £162,162) relates to the amortisation of key monies received from IHG. On entering into the hotel operating agreement, the group received funding from the hotel operator. As part of the transfer to a franchise agreement with another party in 2019, an unsecured interest free loan of £2.5m from the operator, put in place as part of the original finance to build the hotel, is being amortised on a straight-line basis from 30 August 2020 over the life of the franchise agreement. See Note 19 for further details.


11.


Interest payable and similar expenses

2023
2022
£
£


Bank interest payable
227,771
237,868

Other loan interest payable
1,535,014
1,594,611

Finance leases and hire purchase contracts
628,234
616,446

2,391,019
2,448,925


12.


Exceptional items

2023
2022
£
£


Professional costs relating to NCC negotiations
283,172
-

Costs to HMRC relating to COVID retention scheme (CJRS)
28,451
-

Other exceptional costs
26,886
-

338,509
-

As noted in Note 26 (Prior year adjustment) One Trinity Gardens Limited and Maudon Ltd were both dissolved in 2021 with amounts owed by Clouston Group Limited and Stephenson Quarter Developments Limited which were previously eliminated on consolidation. As the Companies were struck off without waiving the debt owed, these amounts became owed to the Crown and are no longer eliminated on consolidation. 

Page 29

 
CLOUSTON GROUP LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

13.


Parent company profit for the year

The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements. The loss after tax of the parent Company for the year was £198,887 (2022 - profit £28,367).


14.


Tangible fixed assets

Group






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

£
£
£
£
£



Cost or valuation


At 1 January 2023
43,640,505
346,633
1,384,669
94,934
45,466,741


Additions
-
96,524
389,338
96,170
582,032


Disposals
-
(15,194)
(183,565)
-
(198,759)



At 31 December 2023

43,640,505
427,963
1,590,442
191,104
45,850,014



Depreciation


At 1 January 2023
9,892,990
31,224
814,558
60,365
10,799,137


Charge for the year on owned assets
272,924
59,350
235,934
45,785
613,993


Disposals
-
(15,194)
(164,962)
-
(180,156)


Impairment charge
2,363,338
-
-
-
2,363,338



At 31 December 2023

12,529,252
75,380
885,530
106,150
13,596,312



Net book value



At 31 December 2023
31,111,253
352,583
704,912
84,954
32,253,702



At 31 December 2022
33,747,515
315,409
570,111
34,569
34,667,604

The hotel development asset comprises the company's long leasehold interest in the Crowne Plaza branded hotel, of £22,372,909 (2022: £13,600,000), together with an asset of £18,565,000 (2022: £17,687,104) recognised in respect of the sale and finance leaseback of the freehold land on which the hotel is situated.

Page 30

 
CLOUSTON GROUP LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

           14.Tangible fixed assets (continued)


Company






Fixtures and fittings

£

Cost or valuation


At 1 January 2023
122,735



At 31 December 2023

122,735



Depreciation


At 1 January 2023
122,735



At 31 December 2023

122,735



Net book value



At 31 December 2023
-



At 31 December 2022
-






Page 31

 
CLOUSTON GROUP LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

15.


Fixed asset investments

Company





Investments in subsidiary companies

£



Cost or valuation


At 1 January 2023
50,002



At 31 December 2023

50,002



Impairment


At 1 January 2023
50,000



At 31 December 2023

50,000



Net book value



At 31 December 2023
2



At 31 December 2022
2

Page 32

 
CLOUSTON GROUP LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

Subsidiary undertakings


The following were subsidiary undertakings of the Company:

Name

Registered office

Principal activity

Class of shares

Holding

Silverlink Properties Limited
20 South Street,
 Stephenson Quarter,
Newcastle Upon Tyne,
England, NE1 3PE
Dormant
Ordinary
100%
Stephenson Quarter
    Developments Limited*
20 South Street, Stephenson Quarter,
Newcastle Upon Tyne,
England, NE1 3PE
Property development and hospitality
Ordinary
100%
Silverlink Stephenson Limited
20 South Street, Stephenson Quarter,
Newcastle Upon Tyne,
England, NE1 3PE
Intermediate holding company
Ordinary
100%
Stephenson Hotel Enterprise Limited*
20 South Street,
Stephenson Quarter,
Newcastle Upon Tyne,
England, NE1 3PE
Intermediate holding company
Ordinary
100%
Stephenson Hotel Limited*
20 South Street,
Stephenson Quarter,
Newcastle Upon Tyne,
England, NE1 3PE
Hotel operator
Ordinary
100%
Stephenson Rocket Limited*
20 South Street,
Stephenson Quarter,
Newcastle Upon Tyne,
England, NE1 3PE
Car park operator
Ordinary
100%
Trinity Gardens Developments pic
20 South Street,
Stephenson Quarter,
Newcastle Upon Tyne,
England, NE1 3PE
Dormant
Ordinary
100%

*Held indirectly


16.


Stocks

Group

Group
2023
2022
£
£

Food and beverage
68,769
70,855

68,769
70,855



17.


Debtors

Group
Group
Company
Company
2023
2022
2023
2022
Page 33

 
CLOUSTON GROUP LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

17.Debtors (continued)

£
£
£
£


Trade debtors
315,039
365,216
3,475
5,220

Amounts owed by group undertakings
-
-
100
99

Other debtors
622,350
617,056
106,444
132,681

Prepayments and accrued income
369,274
359,822
-
-

Tax recoverable
6,070
6,070
-
-

1,312,733
1,348,164
110,019
138,000



18.


Cash and cash equivalents

Group
Group
Company
Company
2023
2022
2023
2022
£
£
£
£


Bank and cash balances
1,956,638
2,179,901
(1,813)
30,180

1,956,638
2,179,901
(1,813)
30,180


19.


Creditors: Amounts falling due within one year

Group

Group
Company

Company
2023
2022
2023
2022
£
£
£
£

Loans
39,041,751
38,740,817
-
-

Other Loans
2,337,029
2,333,295
-
-

Trade creditors
4,359,756
3,307,111
25,155
1,037

Amounts owed to group undertakings
-
-
4,419,284
4,311,866

Other taxation and social security
259,682
308,143
-
-

Obligations under finance lease and hire purchase contracts
709,224
1,176,375
-
-

Other creditors
6,288,067
6,020,062
3,921,488
3,924,057

Accruals and deferred income
6,207,276
4,726,928
37,796
27,850

59,202,785
56,612,731
8,403,723
8,264,810


Page 34

 
CLOUSTON GROUP LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

.Creditors: Amounts falling due within one year (continued)

Other Loans
In 2019 the company transferred the IHG Hotel Management Agreement to a franchise agreement and appointed a new management company, Interstate, to improve trading performance and hotel value. As part of the transfer, the hotel funding liability of £2.5m from IHG, being a capital contribution put in place as part of the original finance to build the hotel, is to be amortised on a straight line basis from 30 August 2020 over the remaining life of the franchise agreement. Amortisation of £162,162 (2022: £162,162) during the year has been classified as finance income in the profit and loss account.
Other loans due within one year comprise £377,569 (2021: £211,674) in respect of an RGF loan. The RGF loan is detailed within Note 20. 
Loans
In October 2019, the group completed the refinancing in of its bank and other loans with Newcastle City Council (‘NCC’) under a new Term Facilities Agreement with NCC. The new facility is secured against the business and assets of the company and those Stephenson Hotel Enterprise Limited, as well as other group undertakings. The bank loan of £14.8m was replaced by a four-year term loan (Facility A), subject to interest at 4.5% per annum and repayable at £125,000 per quarter commencing 31 December 2019 with a balancing repayment due on termination.
Facilities B and C, for £12.9m and £8m respectively, were used to refinance the existing NCC loans and accrued interest totalling £20.9m at the date of refinancing and were repayable in full on 25 October 2023, subject to the other terms and conditions contained in the facilities agreement. Facilities B and C do not bear interest although Facility B, which refinanced the capital element of amounts previously due to NCC, is subject to an exit fee which accrues at a rate of 6.5% per annum.
Whilst the initial quarterly repayment of £125,000 was made, a diminished trading performance in 2020 due to COVID-19, which continued to impact trading performance in 2021, has resulted in subsequent repayments not being met. NCC have continued to provide financial support to the company and, in August 2020, amended the 2019 Term Facilities Agreement to defer recommencement of Facility A repayments to March 2024 and provide additional funding (Facility D) of up to £1,000,000, of which £1,000,000 (2022: £1,000,000) had been drawn down at the balance sheet date. Facility D is subject to interest at 4.5% per annum and was repayable monthly between June 2021 and March 2022, although repayments had been deferred. There were total capital repayments of £535,711 made in the year for Facility D.
The group was in breach of the Term Facilities Agreement at the balance sheet date, consequently these loans were repayable on demand and are classified accordingly. As noted in the strategic report, the directors have held constructive discussions with its lenders and anticipate agreement will be reached to defer recommencement of interest and capital repayments and extend the term of the loan facilities.

Page 35

 
CLOUSTON GROUP LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

20.


Creditors: Amounts falling due after more than one year

Group
Group
2023
2022
£
£

Bank Loans
15,833
25,833

Other loans
1,411,525
1,704,147

Net obligations under finance leases and hire purchase contracts
17,470,882
17,401,844

18,898,240
19,131,824


Bank Loans
Loans comprise an unsecured bank loan of £50,000 which is repayable in monthly installments over 5 years, commencing August 2021.
Other loans
The RGF loan to Stephenson Quarter Developments Limited was provided by the North East Local Enterprise Partnership and is repayable by 31 March 2025, which capital repayments commencing from July 2022. The loan balance includes accrued interest, which accrues at 4.5% per annum and is secured on the Boiler Shop property included within fixed assets, together with a guarantee provided by Clouston Group Limited. The total balance owed at the year end (across both short and long-term creditors) was £1,789,094 (2022: £1,915,821).



Page 36

 
CLOUSTON GROUP LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

21.


Loans


Analysis of the maturity of loans is given below:


Group
Group
2023
2022
£
£

Amounts falling due within one year

Loans
39,041,751
38,740,817

Other loans
2,337,029
2,333,295


41,378,780
41,074,112

Amounts falling due 1-2 years

Bank Loans
15,833
25,833

Other loans
1,411,525
1,704,147


1,427,358
1,729,980



42,806,138
42,804,092



22.


Hire purchase and finance leases


Minimum lease payments under hire purchase fall due as follows:

Group
Group
2023
2022
£
£

Within one year
709,224
1,176,375

Between 1-5 years
2,836,897
2,727,786

Over 5 years
41,320,531
40,243,055

Less: future finance charges
(26,715,858)
(25,598,309)

18,150,794
18,548,907

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

Page 37

 
CLOUSTON GROUP LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

23.


Share capital

2023
2022
£
£
Allotted, called up and fully paid



102 (2022 - 102) Ordinary shares of £1.00 each
102
102



24.


Reserves

Capital redemption reserve

The capital redemption reserve arose on redemption of the company's own shares in prior years.

Profit and loss account

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


25.


Pension commitments

The Group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Group  in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounted to £73,201 (2022: £65,193). Contributions totalling £9,711 (2022: £17,376) were payable to the fund at the reporting date and are included in creditors.


26.


Commitments under operating leases

At 31 December 2023 the Group and the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:


Group
Group
2023
2022
£
£

Not later than 1 year
22,512
522,312

Later than 1 year and not later than 5 years
41,271
2,062,983

Later than 5 years
-
13,994,400

63,783
16,579,695
Page 38

 
CLOUSTON GROUP LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

27.


Related party transactions

During the year the company received repayments from W D Clouston of £NIL (2022: £NIL). The outstanding balance at the year end was £174,032 (2022: £165,243) with provision against the balance of £174,032 (2022: £165,243). No payments were made by W D Clouston during the year on behalf of the business.
During the year the company made loans to R D Clouston of £76,434 such that the outstanding balance at year end was £81,266 (2022: £4,832).
During the year the company made loans to P F Clouston of £9,806 such that the outstanding balance at year end was £12,342 (2022: £2,536).


28.


Controlling party

The ultimate controlling party is W D Clouston by virtue of his interest in the company.

Page 39