The directors present the strategic report for the year ended 31 December 2025.
The company owns Down Hall Hotel, one of England’s most established and distinguished country house hotels, located in Hatfield Heath near Bishop’s Stortford on the Hertfordshire and Essex border.
During the year ended 31 December 2025, the hotel continued to perform strongly despite a challenging economic environment shaped by domestic and global social, economic and political factors. The business successfully managed increases in operating costs, interest charges, supply chain pressures and ongoing labour market constraints affecting the hospitality sector. Throughout the year, the hotel demonstrated resilience and adaptability, continuing to deliver a high-quality guest experience while responding effectively to changing market conditions and customer expectations. Management remained focused on operational efficiency, service excellence and maintaining the hotel’s strong reputation within the market.
The hotel’s established brand, loyal customer base and commitment to continuous improvement enabled the business to achieve a solid performance during the year. Ongoing investment in the property, guest facilities and overall customer experience, together with the dedication, professionalism and flexibility of the management team and staff, continued to strengthen the company’s market position and support future opportunities for growth.
The Directors are encouraged by the company’s performance during the year and remain confident in the long-term prospects of the business. The hotel is well positioned to build on its many strengths, continue attracting guests across its key markets and deliver sustained value in the years ahead.
The company’s activities mean it is exposed to various risks, principal amongst which are the competitive landscape; economic environment; operational; health and safety; and financial risk.
The company’s Board of Directors and senior management review these risks on a regular basis to ensure the processes and controls it has adopted remain robust. These policies and procedures are delegated to the relevant areas of the company’s business who assume the responsibility for ongoing implementation.
The company’s Board of Directors believe that the company’s strong governance, experienced management team and proactive approach to risk management provide a solid foundation for sustainable performance, compliance, risk mitigation and long-term success.
Competitive landscape risk
The company operates in the expanding luxury hotel industry sector, where competition remains healthy. The company’s management address the impact of this competitive environment by closely monitoring its ongoing performance and addressing issues and challenges as they arise.
The emergence of alternative accommodation options and continually evolving customer preferences make it imperative that the company evolves and continues to develop its product offering. As part of this, the company undertakes an ongoing investment program that ensures the hotel provides the best environment for its guests.
Management have developed controls and risk mitigation procedures to ensure risks arising from the competitive landscape, and their potential impacts on profitability, customer experience and customer satisfaction, are identified and mitigated at the earliest opportunity.
Economic environment risk
UK and international social, political and economic conditions do represent a risk to the company, especially as global events affect the level of international travel and general levels of consumer confidence amongst corporate and private customers.
The company maintains robust controls to actively monitor, assess and react to the impact of such factors.
Operational risks
Operational risks include staff, supply chain disruptions and data. One of the keys to ensuring the highest levels of customer service is the professionalism of our staff. Ensuring that we engage with those able to deliver this standard of service is a risk, as is the company’s ongoing compliance with employment regulation.
The company has a robust recruitment process that ensures it engages with those individuals best able to represent the hotel’s brand values. Thorough initial and ongoing training is provided to staff to ensure they deliver exemplary customer service.
Employment regulation remains complex and, as a luxury hotel, the company employs a high number of staff from a variety of different backgrounds. Ensuring ongoing compliance with employment regulation is an operational risk that the company has addressed by maintaining robust controls that ensure its processes comply with applicable regulations.
The company recognises the risk of disruption to its supply chain. Management have developed processes and controls that ensure the procurement process affords sufficient lead times, and which identify key suppliers who are critical in that process. The company believes that the processes and controls it has adopted mitigate the risk of disruption to the supply chain.
The company recognises the importance of maintaining the security of personal data and has adopted processes and controls sufficient to ensure this.
Health and safety risk
The hotel industry is subject to health and safety regulations that affect many areas of its day-to-day operations. The company recognises the risks associated with non-compliance and has developed controls and processes that satisfactorily address this.
Financial risk
The hotel faces financial risks and uncertainties related to the use of financial instruments. The directors' report aims to provide a comprehensive understanding of how the company utilise financial instruments to support its operations and manage financial risks effectively.
During the year ended 31 December 2025, revenue increased to £9,092,195 (2024: £8,620,508), resulting in an operating profit of £567,475 (2024: £465,998). The company made a small profit before taxation of £52,905 (2024: a loss of £20,585). Net current liabilities at 31 December 2025 were £13,065,728 (2024: £13,273,904) and net liabilities at 31 December 2025 were £809,990 (2024: £779,824). Such amounts include loans from the parent company, amounting to £12,523,000 (2024: £12,523,000). The parent company has pledged its continuing support. The directors consider the company's financial position and future prospects at 31 December 2025 to be in line with expectations.
The directors receive monthly divisional updates in order to track and assess key performance indicators (“KPIs”) against targets set every year. The KPIs monitored include gross profit and operating profit.
Gross profit: £2,311,270 (2024: £2,195,031)
Gross profit percentage: 25.42% (2024: 25.46%)
Operating profit: £567,475 (2024: £465,998)
Operating profit percentage: 6.24% (2024: 5.41%)
The directors are cautiously optimistic about the company’s future prospects and will continue to prioritise investment in its people to enable it to deliver excellent guest service, continue the renovation work and further development of the hotel.
The directors are pleased to report that the company continues to operate as a going concern. Despite the current domestic and global political, social and economic issues, the hotel has shown resilience and is on a continuing path of financial improvement. The positive trends observed in the industry are promising. The management team continue to work diligently to adapt the hotel's operations to address the new economic challenges and changing conditions in the industry. Ongoing renovations to the hotel continue to attract guests, resulting in reasonable occupancy levels. This has contributed to improved financial performance and stability. With available capacity in occupancy levels, the directors are confident that the improvements in financial performance witnessed to date will continue. The company renewed its bank loan facility in June 2024. Under the terms of the new facility, the loan is repayable in June 2029.
On the basis of the parent company’s support, the renewed availability of bank loan facilities and the financial projections prepared, the directors are of the opinion that the company will continue to possess the ability to meet its financial obligations as they fall due and therefore consider it appropriate to adopt the going concern basis in preparing the financial statements.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2025.
The results for the year are set out on page 8.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
The directors who held office during the year up to the date of the signature of the financial statements were as follows:
The company uses a treasury function which is responsible for managing the liquidity, interest and foreign currency risks associated with the company’s activities. As the company has significant borrowings, credit and liquidity risks are particularly important. The loan facility was renewed in June 2024 and is now available to the company until June 2029. The directors have sufficient expertise to manage these risks.
The directors maintain strong internal policies and procedures to ensure that liquidity risk is suitably managed. Monthly performance reports, forecasts and cash flows are reviewed and action taken where appropriate.
The company’s principal financial instruments could include derivative financial instruments, the purpose of which is to manage currency risks and interest rate risks arising from the company’s activities, and bank overdrafts and loans, the main purpose of which is to raise finance for the company’s operations. In addition, the company has various other financial assets and liabilities such as trade debtors and trade creditors arising directly from its operations. In accordance with company’s treasury policy, derivative instruments are not entered into for speculative purposes.
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.
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. It is the company’s policy not to apply hedge accounting to this financial instrument.
Foreign currency risk is considered to be low as the principal currency of the Company is sterling, and the majority of transactions are recorded in the principal currency.
Investments of cash surpluses, borrowings and derivative instruments are made through banks and companies which must fulfil credit rating criteria approved by the Board. All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary.
Having reviewed the company’s exposure to credit risk, liquidity risk and cash flow risk, the directors are of the view that these are manageable notwithstanding adverse market conditions.
The company continues to develop new processes and services to improve and enhance its customer service and customer experience.
The auditor, Affinia Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
The company is not required to present an energy and carbon report, as it qualifies for an exemption based on its classification as a medium-sized company.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law, the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period.
In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company 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 enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
We have audited the financial statements of Down Hall Hotel Limited (the 'company') for the year ended 31 December 2025 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, 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.
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.
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 engagement partner ensured that 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 the directors and from our commercial knowledge and experience of the sector; we focused on those laws and regulations which we considered may have a direct material effect on the financial statements or the company's operations, including the Companies Act 2006, taxation legislation, data protection, employment, environmental and health and safety legislation;
we assessed the extent of compliance with the laws and regulations identified above through enquiries of management;
we enquired of the company's solicitor and insurer as to whether there have been any litigation and claims;
identified laws and regulations were communicated within the audit team who remained alert to instances of non-compliance throughout the audit;
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 and their knowledge of actual, suspected and alleged fraud; and
we considered the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
Based on our understanding of the company and industry, and through discussion with the directors and other management, we identified that the principal risks were in relation to:
management bias in relation to the risk of management override of controls;
management assumptions in the accounting estimates associated with property impairment, the depreciation of assets and deferred tax assets;
not complying with relevant rules and regulations;
not complying with bank covenants and the associated risk of going concern;
revenue recognition;
determining the value of derivative financial instruments measured at fair value;
the accuracy, presentation and disclosure of loan balances and interest charges; and
accuracy, completeness and classification of fixed assets.
In response to the risk of irregularities, including fraud and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
performing analytical procedures to identify any unusual or unexpected relationships and transactions;
auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness, and evaluating the business rationale of significant transactions outside the normal course of business;
assessing whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias;
agreeing disclosures within the financial statements to underlying supporting documentation;
requesting minutes of meetings of those charged with governance;
enquiring of management, those charged with governance and the entity’s solicitors and insurers around actual and potential litigation and claims;
for an appropriate sample of transactions, identifying the revenue recognition point for the provision of services and testing for completeness by ensuring the transactions were properly recorded in the sales nominal ledger account;
for an appropriate sample of transactions checking the assets physical existence and confirming the correct classification;
identifying the terms and conditions of loans and assessing whether their covenants were met;
enquiring of the entity's staff involved in the tax and compliance functions to identify any instances of non-compliance with laws and regulations;
reviewing correspondence with HM Revenue and Customs and bankers and reviewing relevant costs within the financial statements; and
discussing the existence of related parties with management and obtaining confirmation of inter-company balances.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance.
The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
The Profit And Loss Account has been prepared on the basis that all operations are continuing operations.
Down Hall Hotel Limited is a company limited by shares incorporated in England and Wales. The registered office address is at 7-12 Half Moon Street, Mayfair, London, W1J 7BH. The company's trading address is Matching Road, Hatfield Heath, Bishop's Stortford, CM22 7AS.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £1.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 4 ‘Statement of Financial Position’ – Reconciliation of the opening and closing number of shares;
Section 7 ‘Statement of Cash Flows’ – Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’ – Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’ – Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’ – Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Veladail Hotels Limited. These consolidated financial statements are available from Companies House.
Interest income is recognised when it is probable that the economic benefits will flow to the company and the amount of revenue can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and the effective interest rate applicable.
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.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, 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.
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.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities, 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.
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. The company has not applied hedge accounting.
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.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
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.
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately. A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability.
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.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Assets are valued at the lower of cost and net realisable value. Calculation of net realisable value in use requires judgements to be made, which include estimated future cash flows expected to arise from the cash generating unit and the application of a suitable discount rate in order to calculate the present value of future cash flows.
The deferred tax asset in respect of unrelieved tax losses is recognised only to the extent that it is probable that it will be recovered against the reversal of deferred tax liabilities or other future taxable profits in the company or the group. The company's ability to generate future taxable profits is dependent on many factors, amongst which is its ability to continue to build occupancy rates and to consolidate on the hotel's improvements and developments made to date. The recovery of the deferred tax asset may also be influenced by the tax policy decisions made by the group of which the company forms a part.
By its very nature, the recognition and measurement of deferred tax requires assumptions to be made about the future. The company estimates that, as at 31 December 2025, the deferred tax asset in respect of unrelieved tax losses amounted to £309,160 (2024: £387,735). The directors, whilst confident as to the recoverability of the deferred tax asset, feel it inappropriate to provide an estimate of the time period over which this asset may be recovered.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives. The residual value of the freehold property is calculated as a sum of the value of the land and 60% of the core building. As at 31 December 2025 the estimated residual value of the freehold amounted to £10.6 million (2024: £10.6 million).
An analysis of the company's turnover is as follows:
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
The actual charge for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:
Company's assets have been pledged to secure borrowings of the company.
The value of freehold property as at 31 December 2025 is split as follows: freehold land £5,959,190 (2024: £5,959,190); and freehold buildings £10,712,713 (2024: £10,236,303).
The bank loan is secured by a fixed and floating charge over the assets of the company, and is due for repayment in June 2029. The average effective rate of interest on the new loan facility during the year was 7.20%.
The company has entered in to an interest rate swap contract (the ‘contract’) in order to mitigate the interest rate risks attached to its bank loan. As at 31 December 2025, the contract amounted to £4,113,200 (2024: £4,113,200), carries a fixed interest rate of 4.036% per annum and has a termination date of 12 June 2029.
The contract is measured at fair value, and changes in the fair value are reflected through the profit and loss account. The contract’s fair value is determined using valuation techniques that apply observable inputs. The key input is the discount rate applied to calculate the present value of the future fixed and floating cashflows. The discount rate is calculated by taking account of expected future sterling interest rates, as determined by the lender.
As at 31 December 2025, the fair value of the contract was a loss of £69,814 (2024: £5,504) and is presented as part of creditors due within one year. Notes 11 and 14 refer.
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
The tax losses deferred tax asset set out above is expected to reverse in a timeframe exceeding one year, and is influenced by various factors including the company's future profits, those of the group of which it forms a part and the broader group tax planning policy.
The deferred tax provision is calculated using a corporation tax rate of 25% (2024: 25%). Future changes to corporate tax laws that affect the prevailing rate may in turn affect the deferred tax assets and liabilities. Any movements in the assets and liabilities resulting from such changes will be reflected as part of the tax charge included in the financial statements for future periods.
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.
The company has one class of ordinary shares which carry full voting rights.
No events have occurred during the period after the balance sheet date and up to the date these financial statements were approved by the company's Board of Directors.
During the year the company entered into the following transactions with related parties:
The following amounts are due from the company to the related parties at the reporting end date. These balances are repayable on demand:
- Veladail Hotels Limited: £12,523,000 (2024: £12,523,000).
- Fleming Hotel Mayfair Limited: £3,676 (2024: £2,249)
The company has taken advantage of the exemption available under FRS 102 Section 33, which permits wholly owned subsidiaries within a group to be exempt from disclosing transactions with other entities that are part of the same group.