Company registration number 03163638 (England and Wales)
LONDON BRIDGE HOTELS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
LONDON BRIDGE HOTELS LIMITED
COMPANY INFORMATION
Directors
Y. Ella
S. Elias
Company number
03163638
Registered office
8 - 18 London Bridge Street
London
SE1 9SG
Auditor
Gravita Audit Limited
Aldgate Tower
2 Leman Street
London
E1 8FA
LONDON BRIDGE HOTELS LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Independent auditor's report
4 - 6
Statement of comprehensive income
7
Balance sheet
8
Statement of changes in equity
9
Statement of cash flows
10
Notes to the financial statements
11 - 32
LONDON BRIDGE HOTELS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
Review of the business
Although industry forecast reports that 2023 would stall in growth after the stronger than expected demand of 2022, we were bullish with our budget as London always seems to be resilient when it comes to the hospitality sector.
Factored in our budget was the loss of 15 rooms every 3 weeks due to the soft refurbishment of our bedrooms which was funded by our cash flow. This commenced in December 2022 and was pegged to finish by March of 2024. Knowing historically that cash flow will be soft in July and August due to softer demand/low occupancy we opted to halt the refurbishment project during these months until September 2023 when we know we are able to come up with the funds. As we started selling the newly refurbished rooms, we immediately received good feedback especially from our regular guests that the lighter and airier rooms were a lot better than the old décor. We were only too pleased to hear this.
The major challenge we had in 2023 was the soaring energy prices coupled with the substantial wage increases in the sector. In our case, an independent hotel who continued to struggle with employing the right candidates we have had no choice but to jump on the bandwagon of increasing our wages to the level the industry has taken us. Not to mention the abrupt increase in National Insurance contributions which added to the burden of costs.
Had it not been for the above-mentioned difficulties encountered this year, we would have finished 2023 closer to our target.
Principal risks and uncertainties
The directors believe that risk assessment is a vital part of running the business. However, due to the nature of the hospitality industry there is always exposure to financial risk. We have in place working capital forecasts for purpose of cash requirements to manage liquidity risk. We also aim to manage capital in order to provide returns to shareholders and optimise capital structure to reduce cost to capital. Market risks are managed by having a broad customer base and credit risk is managed by quarterly and annual credit checks and reviewing credits offered to accounts that are not in regular use.
Development and performance
The profit for the year before corporation tax amounted to £266,149 (2022: £1,630,343). Included within expenses was interest payable of £1,536,708 (2022: £1,280,793). Cost of sales amounted to £3,185,055 (2022: £2,785,102). General administrative expenses amounted to £2,933,002 (2022: £2,642,304). Other income comprised rental income on investment property for the year which amounted to £1,150,556 (2022: £1,042,270). The company's working capital and capital expenditure has been financed through bank loans amounting to £26,512,686 as of year end (2022: £27,536,778). The company reported net assets of £34,809,178 (2022: £34,626,709). Certain transactions and balances in the comparative period were restated as set out in Note 31.
S. Elias
Director
15 April 2025
LONDON BRIDGE HOTELS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
The directors present their annual report and financial statements for the year ended 31 December 2023.
Principal activities
The principal activity of the company continued to be that of hoteliers.
Results and dividends
The results for the year are set out on page 7.
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:
Y. Ella
S. Elias
Financial instruments
Liquidity risk
The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.
Interest rate risk
The company is exposed to fair value interest rate risk on its fixed rate borrowings and cash flow interest rate risk on floating rate deposits, bank overdrafts and loans. The company uses interest rate derivatives to manage the mix of fixed and variable rate debt so as to reduce its exposure to changes in interest rates.
Credit risk
Investments of cash surpluses, borrowings and derivative instruments are made through banks and companies which must fulfil credit rating criteria approved by the Board.
All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary.
Future developments
With the soft refurbishment behind us, we are only too eager to start selling our new rooms. With a new product, we will increase our room rates as well for the coming year. Having said that, we will not be bullish with our budget for 2024 but rather be cautious this time around especially with losing the tenancy of Fitness First and Telephone Exchange in 2023 which accumulates to an annual loss of 363k in rent.
We are still awaiting news of opening for the new finished apartment building next to the hotel dubbed as the “mini shard.” They have postponed the opening at least 5 times and we have not seen any marketing of these apartments physically and digitally. We are oblivious to date as to how this will impact our business not to mention our own 3 apartments in No. 8 London Bridge Street.
We are also waiting to hear of the new building project in St. Thomas’ Street as this was supposed to commence in 2022. We forecast that this will increase footfall in the vicinity once finished.
As one does leave the best for last, in December 2024 we received planning permission from Southwark Council to add two additional floors to our buildings in London Bridge Street, expanding the room stock by another 47 decent sized rooms. The permission adds value to our asset along with getting more rooms with a view of London Bridge and catch part of the River Thames and that of South London where tall office buildings are also starting to emerge.
LONDON BRIDGE HOTELS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
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
S. Elias
Director
15 April 2025
LONDON BRIDGE HOTELS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF LONDON BRIDGE HOTELS LIMITED
- 4 -
Disclaimer of opinion
We were engaged to audit the financial statements of London Bridge Hotels Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows 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 accompanying financial statements. Because of the significance of the matter 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
In seeking to obtain sufficient and appropriate audit evidence, we have been unable to obtain sufficient supporting information in respect of the going concern status of the company. In a plausible forecast scenario, the company is reliant on the support of its shareholders to continue to meet liabilities as they fall due. The company has received a support letter from one shareholder however we have not been able to ascertain the ability of that shareholder to provide such support as may be necessary. As a result, we consider that these issues represent a material and pervasive issue and therefore we are unable to form an opinion on the company financial statements.
Opinions on other matters prescribed by the Companies Act 2006
Because of the significance of the matters 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 our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
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 not obtained all the information and explanations that we consider necessary for the purpose of our audit and we were unable to determine whether adequate accounting records have been kept.
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:
returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made.
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.
LONDON BRIDGE HOTELS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF LONDON BRIDGE HOTELS LIMITED (CONTINUED)
- 5 -
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management.
The extent to which the audit was considered capable of detecting irregularities including fraud
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:
the senior statutory auditor ensured the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations.
we identified the laws and regulations applicable to the company through discussions with directors and other management.
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including taxation legislation, data protection, anti-bribery, employment, environmental, health and safety legislation and anti-money laundering regulations.
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence.
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit; and
we assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
There are inherent limitations to address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates set out in note 2 of the financial statements were indicative of potential bias;
investigated the rationale behind significant or unusual transactions; and
in response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
agreeing financial statement disclosures to underlying supporting documentation;
enquiring of management as to actual and potential litigation and claims; and
reviewing correspondence with HMRC and the company’s legal advisors.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment by for example forgery, or intentional misrepresentation or through collusion. Our audit procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
LONDON BRIDGE HOTELS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF LONDON BRIDGE HOTELS LIMITED (CONTINUED)
- 6 -
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.
Joseph Brewer (Senior Statutory Auditor)
For and on behalf of Gravita Audit Limited
Chartered Accountant
Statutory Auditor
Aldgate Tower
2 Leman Street
London
E1 8FA
16 April 2025
LONDON BRIDGE HOTELS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 7 -
2023
2022
as restated
Notes
£
£
Turnover
3
7,311,709
6,342,090
Cost of sales
(3,185,055)
(2,785,102)
Gross profit
4,126,654
3,556,988
Administrative expenses
(2,933,002)
(2,642,304)
Other operating income
3
1,150,556
1,042,270
Operating profit
4
2,344,208
1,956,954
Interest payable and similar expenses
7
(1,536,708)
(1,280,793)
Fair value gains and losses
8
(541,351)
954,182
Profit before taxation
266,149
1,630,343
Tax on profit
9
(83,680)
(113,170)
Profit for the financial year
182,469
1,517,173
Other comprehensive income
Deferred tax movement on freehold property
(22,004)
Total comprehensive income for the year
182,469
1,495,169
The profit and loss account has been prepared on the basis that all operations are continuing operations.
LONDON BRIDGE HOTELS LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 8 -
2023
2022
as restated
Notes
£
£
£
£
Fixed assets
Tangible assets
10
66,200,303
59,712,137
Investment property
11
10,195,000
15,895,000
76,395,303
75,607,137
Current assets
Stocks
13
50,235
53,937
Debtors
14
684,012
1,185,827
Cash at bank and in hand
259,367
894,860
993,614
2,134,624
Creditors: amounts falling due within one year
15
(29,639,189)
(30,343,743)
Net current liabilities
(28,645,575)
(28,209,119)
Total assets less current liabilities
47,749,728
47,398,018
Provisions for liabilities
Deferred tax liability
17
12,940,550
12,771,309
(12,940,550)
(12,771,309)
Net assets
34,809,178
34,626,709
Capital and reserves
Called up share capital
19
1,200
1,200
Share premium account
20
499,500
499,500
Revaluation reserve
21
42,164,503
38,447,918
Profit and loss reserves
22
(7,856,025)
(4,321,909)
Total equity
34,809,178
34,626,709
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
The financial statements were approved by the board of directors and authorised for issue on 15 April 2025 and are signed on its behalf by:
S. Elias
Director
Company registration number 03163638 (England and Wales)
LONDON BRIDGE HOTELS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
Share capital
Share premium account
Revaluation reserve
Profit and loss reserves
Total
£
£
£
£
£
Balance at 31 December 2021 (as restated)
1,200
499,500
38,469,922
(5,839,081)
33,131,541
Profit for the year
1,517,173
1,517,173
Deferred tax movement
-
(22,004)
(22,004)
Balance at 31 December 2022 (as restated)
1,200
499,500
38,447,918
(4,321,908)
34,626,710
Year ended 31 December 2023:
Profit for the year
-
-
-
182,469
182,469
Effect of transfer from investment property to Freehold
-
-
3,716,585
(3,716,585)
-
Balance at 31 December 2023
1,200
499,500
42,164,503
(7,856,024)
34,809,179
LONDON BRIDGE HOTELS LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
2023
2022
as restated
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
29
3,100,364
2,683,261
Interest paid
(1,540,782)
(1,280,793)
Taxation
(122,270)
214,316
Net cash inflow from operating activities
1,437,312
1,616,784
Investing activities
Purchase of tangible fixed assets
(1,095,027)
(306,212)
Net cash used in investing activities
(1,095,027)
(306,212)
Financing activities
Issue/(repayment) of bank loans
(977,778)
(722,222)
Net cash used in financing activities
(977,778)
(722,222)
Net (decrease)/increase in cash and cash equivalents
(635,493)
588,350
Cash and cash equivalents at beginning of year
894,860
306,510
Cash and cash equivalents at end of year
259,367
894,860
LONDON BRIDGE HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
1
Accounting policies
Company information
London Bridge Hotels Limited is a private company limited by shares incorporated in England and Wales. The registered office is 8 - 18 London Bridge Street, London, SE1 9SG.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The company's accounting reference date is 28 December 2023. The Directors have elected to prepare financial statements up to 31 December 2023.
1.2
Prior period restatement
Comparatives for the financial statements for the year ended December 2023 have been restated. Further details are given in Note 31.
1.3
Going concern
At the date of approval of these financial statements, the Company holds an outstanding secured facility of £26.034 million with Bank of Scotland plc. The facility expired on 27 February 2025 and a short term extension was agreed to accommodate continuing negotiations. The Company and the Bank have reached informal agreement and at the time of signing these financial statements the parties are working towards a formalisation of the agreed extension terms which is expected to extend the loan maturity by two years.
However as the extension is not certain until formalised, the directors acknowledge the existence of a material uncertainty that may cast significant doubt on the Company’s ability to continue as a going concern. This uncertainty arises because if the loan discussions are ultimately unsuccessful, the Company does not have sufficient funds to repay the loan and so other sources of funding will need to be sourced, which could include the sale of certain of the Company's assets.
The Company has also received a letter of support from a shareholder which the Directors consider sufficient to address any cash shortfall in the period of 12 months from the date of signing of these financial statements. Management's base case forecast shows that sufficient cash will be generated by operations to enable the business to meet all liabilities as they fall due; however in a severe but plausible downside scenario additional cash funding support may be required.
Based on an assumption of achieving a formal loan extension, the directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future and therefore the accounts are prepared on a going concern basis.
Should a renewal of facilities, obtaining other financing or alternative options which the directors could explore not be possible, the financial statements do not include any adjustments that would arise if the Company were unable to continue as a going concern.
1.4
Turnover
Turnover from hotel operations is recognised in profit and loss at the point at which room and related services, such as the provision of food and beverages, are provided to guests. All revenue is presented net of any VAT and discounts applied.
LONDON BRIDGE HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 12 -
Other Operating Income
Other operating income includes rental income other than in relation to the operation of hotels. It is recognised as the fair value of the consideration receivable and is recognised over the period in which the tenant occupies the property.
1.5
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
Freehold land is not depreciated. Freehold buildings will be depreciated to their estimated residual values (if lower than carrying value) over periods up to fifty years.
Plant and machinery
12.5% straight line
Fixtures, fittings & equipment
12.5% 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.
Properties whose fair value can be measured reliably are held under the revaluation model and are carried at a revalued amount, being their fair value at the date of valuation less any subsequent accumulated depreciation and subsequent impairment losses. The fair value of the land and buildings is usually considered to be their market value. The directors consider this valuation gives a true and fair view of the properties. Depreciation or amortisation is only one of the many factors reflected in the periodical valuations and the amount which might otherwise have been shown cannot be separately identified or quantified.
Revaluation gains and losses are recognised in other comprehensive income and accumulated in equity, except to the extent that a revaluation gain reverses a revaluation loss previously recognised in profit or loss or a revaluation loss exceeds the accumulated revaluation gains recognised in equity; such gains and losses are recognised in profit or loss.
1.6
Investment properties
Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently it is measured at fair value at the reporting end date where changes in fair value are recognised in profit or loss. Where there is a change in use of investment property such that it becomes Freehold property, the property is transferred to Tangible assets with its existing carrying value as the cost of the property. An associated transfer is made between retained earnings and the revaluation reserve.
1.7
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.
LONDON BRIDGE HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
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.
1.8
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.
1.9
Cash at bank and in hand
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.10
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.
LONDON BRIDGE HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Trade debtors, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment.
Interest is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument to the net carrying amount on initial recognition.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
LONDON BRIDGE HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
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.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
LONDON BRIDGE HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.11
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.
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
1.12
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.13
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.
LONDON BRIDGE HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 17 -
1.14
Retirement benefits
The pension costs charged in the financial statements represents the contributions made during the year to personal pension schemes of one of the employees.
1.15
Leases
Rentals payable under operating leases are charged against income on a straight line basis over the lease term.
LONDON BRIDGE HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
Depreciation and residual values
At each reporting date, the directors review the assessed useful economic life and residual value of the company's material property assets. Where required, these assessments are updated to reflect the economic conditions in which the business operates and by reference to an appraisal of the condition and use of the company's properties. In forming an assessment of the expected residual value of properties, the directors have had regard to existing property valuation reports as well as wider developments in the London property market including investor sentiment and construction costs.
Property valuation
The company holds Freehold land and buildings which it occupies under a revaluation model. Under that model, the property is adjusted to fair value at the time of a valuation. Following this, the property is depreciated to its residual amount over the useful economic life to the extent that there is any projected depreciation. The directors also perform an impairment assessment to determine if there is indication of impairment in the carrying value of the property.
The company also holds Investment property which is used to generate rental income and for capital appreciation. Investment property is held at fair value and adjusted at each reporting date.
In forming all of the above judgements, the directors take account of the current and intended use of the company's properties, the achieved rents and quality of leases, trends in demand for London property, market sentiment and other economic indicators which might impact on the determination of key inputs.
Valuation of interest rate swap
The company held an interest swap in place with Bank of Scotland which matured in the year. The interest rate swap is classed as a derivative financial instrument and carried at fair value at each reporting date. The fair value is assessed by reference to Bank of Scotland's valuation at each reporting date with the resulting fair value movement recognised in profit or loss. The directors consider that the bank have sufficient valuation expertise to determine an appropriate fair value and according made no adjustments when determining the appropriate accounting entries. No derivative positions were open as at 31 December 2023.
3
Turnover
All turnover is derived in relation to the operation of The London Bridge Hotel. 'Other operating income' represents rental and ancillary income derived from the company's investment properties. All revenue and other operating income is derived in the United Kingdom.
LONDON BRIDGE HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
33,500
31,500
Fees payable to the company's auditor for the preparation of tax returns
3,500
3,500
Depreciation of owned tangible fixed assets
306,861
147,602
Fair value gain/(loss) on derivative instruments
(541,351)
954,182
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Front of House
17
21
Food and Beverage
39
28
Administration
6
5
Maintenance
4
3
Sales and Marketing
3
2
Total
69
59
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
1,881,705
1,727,736
Social security costs
175,446
159,533
Pension costs
46,980
43,357
2,104,131
1,930,626
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
4,000
4,000
LONDON BRIDGE HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
7
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
1,502,991
1,231,467
Other interest on financial liabilities
31,201
47,650
1,534,192
1,279,117
Other finance costs:
Other interest
2,516
1,676
1,536,708
1,280,793
8
Fair value gains and losses
2023
2022
£
£
Fair value gains/(losses) on financial instruments
(Loss)/gain on financial liabilities held at fair value through profit or loss
(541,351)
954,182
9
Taxation
Restated
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
(85,561)
280,043
Adjustments in respect of prior periods
(214,717)
Total current tax
(85,561)
65,326
Deferred tax
Origination and reversal of timing differences
169,241
47,844
Total tax charge
83,680
113,170
LONDON BRIDGE HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
9
Taxation
(Continued)
- 21 -
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
Restated
2023
2022
£
£
Profit before taxation
266,149
1,630,343
Expected tax charge based on the standard rate of corporation tax in the UK of 23.50% (2022: 19.00%)
62,545
309,765
Tax effect of expenses that are not deductible in determining taxable profit
71,149
29,056
Permanent capital allowances in excess of depreciation
(133,695)
(58,778)
Under/(over) provided in prior years
(214,717)
Current year losses carried back
(85,561)
Deferred tax movement
169,242
47,844
Taxation charge for the year
83,680
113,170
In addition to the amount charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:
2023
2022
£
£
Deferred tax arising on:
Revaluation of property
-
22,004
LONDON BRIDGE HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
10
Tangible fixed assets
Freehold land and buildings
Plant and machinery
Fixtures, fittings & equipment
Total
£
£
£
£
Cost or valuation
At 1 January 2023 (as restated)
59,088,018
4,084,699
5,868,867
69,041,584
Additions
140,129
954,898
1,095,027
Disposals
(4,084,699)
(4,084,699)
Transfers
5,700,000
5,700,000
At 31 December 2023
64,928,147
6,823,765
71,751,912
Depreciation and impairment
At 1 January 2023 (as restated)
4,084,699
5,244,748
9,329,447
Depreciation charged in the year
306,861
306,861
Eliminated in respect of disposals
(4,084,699)
(4,084,699)
At 31 December 2023
5,551,609
5,551,609
Carrying amount
At 31 December 2023
64,928,147
1,272,156
66,200,303
At 31 December 2022 (as restated)
59,088,018
624,119
59,712,137
Freehold land and buildings with a carrying amount of £64,928,147 (2022 - £59,088,018) have been pledged in favour of the company's lender. The security is in the form of a fixed and floating legal charge and debenture on the company's property and assets present and future.
The company's Freehold land and buildings are carried under a revaluation model.. The most recent valuation was conducted independently as at December 2021 by Colliers International Property Consultants Limited ("Colliers") and was by reference to the market value of the property. The market value was determined by reference to a discounted cash flow model in which the key assumptions were the future earnings from the property and the discount rate.
Any revaluation movements on Freehold land and buildings are reflected in the revaluation reserve in the statement of changes in equity.
The historic cost of Freehold properties held under the revaluation model at 31 December 2023 was £10,702,843 (2022 restated: £9,639,904).
During the year, certain properties previously held to earn rentals were brought into the use of the London Bridge Hotel and so were transferred to Freehold land and buildings at their existing carrying value of £5,700,000.
LONDON BRIDGE HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
11
Investment property
2023
£
Fair value
At 1 January 2023
15,895,000
Transfers to owner-occupied property
(5,700,000)
At 31 December 2023
10,195,000
Investment property represents certain properties located in London which are held to generate income and for capital appreciation, and are stated at fair value at each reporting date. An independent valuation was conducted as at December 2021 by Colliers and was assessed by reference to the market value of the property based on market yields as applied to achievable rents. The historic cost of the investment properties is £4,935,658 (2022 restated: £5,876,468).
The directors are of the opinion that there are no changes in the valuation of the company's investment properties between the date of the Colliers valuation and 31 December 2023.
The key bases underpinning the above opinion are that rent is being charged at the same rate in both the prior current year, that there were no rent waivers issued during the year and tenants were able to pay their rent when it fell due.
Investment property with a carrying amount of £8,785,000 (2022 - £8,785,000) has been pledged to secure borrowings of the company. This forms part of the security detailed in note 11.
During the year, property previously held to earn rentals was used as part of the London Bridge Hotel and so was transferred to Freehold land and buildings at its carrying value of £5,700,000.
12
Financial instruments
2023
2022
£
£
Carrying amount of financial assets include:
Instruments measured at fair value through profit or loss
-
541,351
Other financial assets measured at fair value through profit or loss relate to an interest rate swap with a fair value at the balance sheet date of £nil (2022: £541,351). The swap matured during 2023.
Financial assets consist of trade debtors of £204,526 (2022: £197,855), other debtors of £201,264 (2022: £109,600), and cash and cash equivalents of £259,367 (2022: £894,860).
Other financial liabilities includes the following; trade creditors £615,889 (2022: £397,133), other creditors £1,221,848 (2022: £922,575) and bank loans of £26,512,686 (2022: £27,536,778).
13
Stocks
2023
2022
£
£
Stocks of foods, beverages and similar items
50,235
53,937
LONDON BRIDGE HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 24 -
14
Debtors
Restated
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
204,526
197,855
Derivative financial instruments
-
541,351
Other debtors
201,264
109,600
Prepayments and accrued income
278,222
337,021
684,012
1,185,827
Trade debtors is presented net of a bad debt provision of £98,732 (2022: £nil).
15
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans
16
26,512,686
27,536,778
Trade creditors
615,889
397,133
Corporation tax
147,411
354,930
Other taxation and social security
232,709
246,774
Other creditors
1,221,848
922,575
Accruals and deferred income
908,646
885,553
29,639,189
30,343,743
16
Loans
2023
2022
£
£
Bank loans
26,512,686
27,536,778
Payable within one year
26,512,686
27,536,778
LONDON BRIDGE HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
16
Loans
(Continued)
- 25 -
At year end, the company held a loan facility which was made available to the company in December 2019. The loan was repaid by quarterly instalments and subject to interest at 2.65% + Bank of Scotland Base Rate. As at 31 December 2023, the loan liability was £26,512,686 which comprises outstanding loan capital of £26,559,000 and unamortised loan extension fees of £46,314.
During the year the loan was extended such that the the maturity of the loan as at 31 December 2023 was 27 August 2024. Therefore the loan is presented as a current liability.
The facility carries covenants relating to cash flow cover, interest cover and loan to value metrics which are tested quarterly. During Q4 2023 the company breached the cash flow covenant. Subsequent to year end the company received a Reservation of Rights letter from the lender, and subsequently, on 9 July 2024, an amendment to the loan agreement and a covenant breach waiver was agreed with the bank. That amendment maintained the existing covenants but with revised tests to better reflect the nature of the business plus an additional minimum cash covenant.
A further breach of loan terms occurred in August 2024 such that a further waiver and amendment was agreed in September 2024. The effect of this amendment was to extend the loan's maturity to 27 February 2025 which was later further extended to 30 April 2025 to accommodate loan extension negotiations. At the date of signing these financial statements, a loan maturity extension to February 2027 was informally agreed but not yet formalised. Covenants will also be reset. No further loan or covenant breach has been reported.
The loan is secured by way of a fixed and floating legal charge and debenture over certain of the company's property and assets, present and future. The security is in favour of Bank of Scotland plc.
The company was granted a Coronavirus Business Interruption Loan (CBIL) amounting to £500,000 in April 2021. This was to be repaid in 18 equal monthly instalments and subject to interest at 1.70% + Bank of Scotland Base Rate commencing in May 2022. The loan was repaid in full in the year.
17
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances for financial reporting purposes:
Restated
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
284,791
115,550
Freehold property
12,060,801
11,000,197
Investment property
594,958
1,655,562
12,940,550
12,771,309
LONDON BRIDGE HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 26 -
18
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
46,980
43,357
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
19
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary B of £1 each
480
480
480
480
Ordinary C of £1 each
720
720
720
720
1,200
1,200
1,200
1,200
There are two classes of Ordinary shares; ordinary B shares and ordinary C shares. Both classes are share entitle the holder to full dividend, voting and rights on winding up.
20
Share premium account
Share premium is the amount subscribed for share capital in excess of nominal value.
21
Revaluation reserve
Revaluation reserve relates to the gains on revaluation on property, plant and equipment less deferred tax.
22
Profit and loss reserves
Retained earnings represent accumulated comprehensive income for the year and prior periods less dividends paid.
23
Financial commitments, guarantees and contingent liabilities
During the year, the company held an interest rate swap which stipulated that the company pay fixed interest at 1.8% on a notional amount of £27,500,000. The swap expired in October 2023.
The interest rate swap was classed as a derivative financial instruments and held at fair value within debtors in the balance sheet. Fair value movements were recognised in the profit and loss account. The derivative was valued at each reporting date by the Bank of Scotland. There were no interest rate swaps outstanding as at the year end.
LONDON BRIDGE HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 27 -
24
Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel is as follows.
2023
2022
£
£
Aggregate compensation
114,183
89,007
During the year, the company paid remuneration totaling £99,183 (2022 - £79,708) and paid contributions to a defined contribution pension scheme of £15,000 (2022 - £9,299) in relation to the key management personnel.
Transactions with related parties
Management fees
2023
2022
£
£
Entities with control, joint control or significant influence over the company
424,020
366,829
The following amounts were outstanding at the reporting end date:
2023
2022
Amounts due (to)/from related parties
£
£
Entities with control, joint control or significant influence over the company
(1,195,508)
(895,777)
All transactions made with related party are at arm's length. The balances are unsecured and interest-free. Balances due to related parties are included within 'Other creditors'.
LONDON BRIDGE HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 28 -
25
Operating lease commitments
Lessor
The operating leases represent leases to third parties. The length of each lease is negotiated with the leasing party and there are options in place for either party to extend the lease terms.
There is no commitment arising under the company's operating lease held as lessee.
At the reporting end date the company had contracted with tenants for the following minimum lease payments:
2023
2022
£
£
Within one year
835,224
1,008,425
Between two and five years
3,391,001
3,135,613
In over five years
2,631,865
2,227,933
6,858,090
6,371,971
26
Capital commitments
During the year, the company undertook refurbishments of bedrooms at its premises which were ongoing at year end. The remaining expected costs to be incurred at year end is £151,000 and is expected to be disbursed over the next 5 months following the year end.
27
Events after the reporting date
In December 2024, Southwark Council awarded the company planning permission to add two additional floors to the London Bridge Hotel, providing 47 additional rooms and improved facilities.
Subsequent to the balance sheet date, the company agreed loan breach waivers and amendments in respect of its loan with Bank of Scotland plc. Shortly prior to the issue of these financial statements, Bank of Scotland plc informally agreed a two year extension to the facility and an extension agreement is in the process of being drafted. Further details are given in Note 15.
28
Ultimate controlling party
The ultimate controlling party is the Trustees of the Elias UK 2017 Trust by virtue of its majority ownership of the company's issued share capital.
LONDON BRIDGE HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 29 -
29
Cash generated from operations
2023
2022
£
£
Profit after taxation
182,469
1,517,173
Adjustments for:
Taxation charged
83,680
113,170
Finance costs
1,536,708
1,280,793
Depreciation and impairment of tangible fixed assets
306,861
147,602
Other gains and losses
541,351
(954,182)
Movements in working capital:
Decrease/(increase) in stocks
3,702
(53,937)
Increase in debtors
(39,536)
(112,760)
Increase in creditors
492,533
745,402
Cash generated from operations
3,100,364
2,683,261
30
Analysis of changes in net debt
1 January 2023
Cash flows
31 December 2023
£
£
£
Cash at bank and in hand
894,860
(635,493)
259,367
Borrowings excluding overdrafts
(27,536,778)
1,024,092
(26,512,686)
(26,641,918)
388,599
(26,253,319)
31
Prior period adjustment
The Directors identified certain inconsistencies between the results and balances reported in the prior year's financial statements and the Company's adopted accounting policies, as well as certain inconsistencies and omissions in disclosures. As a result, the affected items in the comparatives presented have been restated in these financial statements. The following matters were identified as requiring restatement:
1) Reallocation between Freehold property and Investment property to reflect the usage of property at 31 December 2021.
2) Reallocation from Leasehold property to Investment property to reflect the usage of leasehold property at 31 December 2021.
3) Reallocation of stock out of prepayments.
4) A deferred tax expense of £2,892,805 had been recognised during 2022 due to a change in tax rate from 19% to 25% effective from 1 April 2023. As this tax rate change was substantially enacted on 24 May 2021, the effect should have been recorded in the year to 31 December 2021. The opening balance sheet at 31 December 2021 has been restated to reflect this.
5) Restatement of the revaluation reserve to present the accumulated fair value gains on freehold property, net of recalculated deferred tax.
6) Reclassification of certain additions to Leasehold property into Freehold land and buildings, to which the additions relate.
LONDON BRIDGE HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
31
Prior period adjustment
(Continued)
- 30 -
Changes to the balance sheet at 31 December 2022
As previously reported
Adjustment
As restated at 31 Dec 2022
£
£
£
Fixed assets
Tangible assets
66,822,137
(7,110,000)
59,712,137
Investment properties
8,785,000
7,110,000
15,895,000
75,607,137
-
75,607,137
Current assets
Stocks
-
53,937
53,937
Debtors due within one year
1,239,764
(53,937)
1,185,827
Bank and cash
894,860
-
894,860
2,134,624
-
2,134,624
Creditors due within one year
(30,343,743)
-
(30,343,743)
Provisions for liabilities
Deferred tax
(12,251,662)
(519,647)
(12,771,309)
Net assets
35,146,356
(519,647)
34,626,709
Capital and reserves
Share capital
1,200
-
1,200
Share premium
499,500
-
499,500
Revaluation reserve
25,885,548
12,584,374
38,469,922
Profit and loss reserves
8,760,108
(13,104,021)
(4,343,913)
Total equity
35,146,356
(519,647)
34,626,709
LONDON BRIDGE HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
31
Prior period adjustment
(Continued)
- 31 -
Changes to the profit and loss account for the year ended 31 December 2022
As previously reported
Adjustment
As restated
Period ended 31 December 2022
£
£
£
Continuing operations
Turnover
6,342,090
-
6,342,090
Cost of sales
(2,785,102)
-
(2,785,102)
Gross profit
3,556,988
-
3,556,988
Administrative expenses
(2,642,304)
-
(2,642,304)
Other operating income
1,042,270
-
1,042,270
Operating profit
1,956,954
-
1,956,954
Interest payable and similar expenses
(1,280,793)
-
(1,280,793)
Amounts written off investments
954,182
-
954,182
Profit before taxation
1,630,343
-
1,630,343
Taxation
(3,025,837)
2,912,667
(113,170)
(Loss)/profit after taxation
(1,395,494)
2,912,667
1,517,173
Other comprehensive income
Deferred tax movements on Freehold property
-
(22,004)
(22,004)
Total comprehensive loss for the year
(1,395,494)
2,890,663
1,495,169
LONDON BRIDGE HOTELS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
31
Prior period adjustment
(Continued)
- 32 -
Changes to the balance sheet at 31 December 2021
At 31 December 2021
As previously reported
Adjustment
As restated at 31 December 2021
£
£
£
Fixed assets
Tangible assets
66,663,527
(7,110,000)
59,553,527
Investment properties
8,785,000
7,110,000
15,895,000
75,448,527
75,448,527
Current assets
Stocks
-
48,920
48,920
Debtors
531,716
(48,920)
482,796
Bank and cash
306,510
-
306,510
838,226
-
838,226
Creditors due within one year
(2,607,882)
-
(2,607,882)
Creditors due after one year
(27,845,870)
-
(27,845,870)
Provisions for liabilities
Deferred tax
(9,291,151)
(3,410,310)
(12,701,461)
Net assets
36,541,850
(3,410,310)
33,131,541
Capital and reserves
Share capital
1,200
-
1,200
Share premium
499,500
-
499,500
Revaluation reserve
25,885,548
12,584,374
38,469,922
Profit and loss reserves
10,155,602
(15,994,683)
(5,839,081)
Total equity
36,541,850
(3,410,309)
33,131,541
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