The Ritz Hotel (London) Limited (registered number: 00064203) Report of the directors and consolidated financial statements for the year ended 31 December 2019 nat co ASHP 7QVES za1ow2021 COMPANIES HOUSE | #66The Ritz Hotel (London) Limited Contents Page Strategic Report 3-5 Report of the Directors 6-10 Independent Auditors’ Report 1-12 Consolidated statement of comprehensive income 28 Consolidated balance sheet 4 Consolidated statement of changes in equity 4 ‘Company balance sheet 5 Company statement of changes in equity 15 Consolidated statement of cash flows 16 Notes to the consolidated financial statements 17-31The Ritz Hotel (London) Limited Strategic report For the year ended 31 December 2019 (rogistered number: 00064203) Review of business and future developments The level of business and financial position of the company for the year ended 31 December 2019 isin line with expectations. It's the company's intention to continue to increase is revenues by expanding its existing cont base. However, as is the case globally the hotel has been adversely Impacted by COVID-19. The hotel Inially went into lockdown on 23° March 2020 and re-opened on the 18% July 2020. It was a phased opening of al the outlets ‘allowing management to focus on providing the service inline withthe government guidelines on COVIO-19. ‘The hotel went into second lockdown as per the Chancellor's announcement on 5* November 2020 and re-opened ‘on the 3 December 2020. As per the recent announcement by the government, 32 London boroughs and the City of London moved into ter 3 from the beginning of 16 December and as a result the hotel went into thid lockdown. The hotel is awaiting further instructions from the goverment and will reapen in lite with the guidance provided. Management is assessing the impact on a daily basis and focusing on controling costs as well as ullising the ‘ongoing goverment support announced for the hospitality business nationwide. Hote! management will continue to monitor trends and business fundamentals to ensure that the hotel strategy optimises performance and results. Details are included in the subsequent notes (Refer to note 24). ‘Another significant development was that the hotel has been subsequently sold by BUK Limited to Green Park (No.1) Limited on 25% March 2020 (Refer to Note 24). The new owners intend to continue to operate the Hotel for the foreseeable future. Key performance indicators ‘The company's directors use a number of key performance Indicators (KPI's) to assoss the position ofthe business, in particular the following: 2019 2018(As restated) Gross profit margin 53.3% 54.0% ‘Operating profit margin 32.3% 31.8% Net current assets, £238.1m £233.6m In addition tothe financial KPis, the drectors measure a range of non-financial KPIs such as: Room occupancy, average dally rates and revenue per available room Food & beverage covers and average spend Employee satisfaction and turnover Leading Quality Assurance scores ‘A proforma consolidated, unaudited, statement of not assets incorporating the valuation referred to above is ‘summarised below: 2019 Fixed assets Current assets (excluding fellow subsidiary loans) ~ Bank loan ‘Other abilities (excluding group company loans) Proforma net assetsThe Ritz Hotel (London) Limited Strategic report(continued) For the year ended 31 December 2019 (registered number: 00064203) Principal risks and uncertaintles “The management ofthe business and the execution of the company’s strategy are subject fo a number of risks. Risks are formally reviewed by the board and appropriate processes put in place to monitor and milgate them. If ‘more than one event occurs, it is possible thatthe overall effect of such events may compound the possible effects ‘on the company. ‘The key business risks affecting the company are set out below: Eoonamie and financial risk ‘The company’s business is exposed to the risk of negative developments in the global and regional economies and financial markets, through the impact ofthe banks, suppliers, customers or labour market. These developments can result in recession, inflaton, deflation, currency fluctuations and restrictions in the availabilty of credit, business. failures or increases in fnance costs. Such developments may Increase operating costs and reduce proftabilty. Commercial and market risk Risks are an integral part of normal commercial practices, and where practicable steps are taken to miigate such risks. ‘The company operates within the luxury hotel industry and feilure to compete effectively in terms of qually of product and levels of service can have an adverse effect on eamings. Pandemic Risk ‘The company is exposed to fu or other pandemic risks that could have an adverse impact on domestic and/or inemational travel. The company will ake appropriate measures In accordance with government guidelines to mitigate the impact of this. .172(1) Governance report ‘This section describes how the directors have had regard tothe matters set out in section 172(1)() to (0) Companies ‘Act 2006 in exercising their duty to promot the success of the company for the benefit of its members as a whole. Purpose, Strategy and consideration ofthe consequences of decisions in the long term The company's directors are mindiul of the implications that strategic decisions can have on the business and its stakeholders. The board believe in 2 collaborative approach and work closely with the management, making Continuous and consistent efforts to become one of the finest hotels inthe word. Cutture We have created a positive culture of kindness and generosity in the Hotel, to ensure all stakeholders are treated correctly and with the upmost respect, empowering staff to provide unparalleled service. The Company takes active ‘steps 10 ensure that the suggestions, views and interests of the workdorce are captured and considered in our decision-making. Employee Engagement ‘The directors are commited to the welfare and expectations of our staf members, customers, community and society ‘25 a whole. We understand the importance of the wellbeing and development of our staf members who are {fundamental in achieving the values aspired by the company. Career development through management trainingThe Ritz Hotel (London) Limited Strategic report(continued) For the year ended 31 December 2019 (registered number: 00064203) 8.172(1) Governance report(continued) ‘schemes and apprenticeships at the hotel reflect our Investment in our people who are considered as assets. ‘The group operates a non-iiscretionary employment policy which are designed to attrac, retain and motivate the very best people recognising that ths can only be achieved by practising equal opportunity regardless of age, gender, race and religion. Directors engage with employees directly and indirectly through the Hotel management team and Executive committees, The engagement is necessary to enable two-way communication where employees can share their ideas and express their feeling on issues affecting their wotk environment and provides an opportunity for the ‘company to provide diréct feedback to employees. As an example, to aid communication a ‘We are Ritz’ ‘Communication Committee fs set up. This is chaired by a nominated member of the Executive Committee and ‘attended by representatives from selected department groups. Meetings take place on a quartety basis and the [purpose of this committe Is to provide a means for communication, information sharing and consultation with the employees. ‘Other ways of employee engagement include monthly meetings such “Keeping in Touch” where news relating to the ‘company including financials are discussed and shared with employees. ‘Stekeholder Engagement “The Directors ensure thatthe Ritz is committed to engaging with our people, our stakeholders and the communities in ‘which we operate, and focus on creating a healthy and sustainable culture, ensuring regular updates are provided to the stakeholders. The Key stakeholders are cur employees, customers, suppliers, our local community and the local ‘shareholders. The Company seeks to balance the benefits of maintaining strong partnering relationships with key ‘suppliers alongside the need to obtain value for money for our investors and the desired qualiy and service levels for ‘our customers. The interests of customers are considered in key decisions including pricing and longterm strategy. Particular attention is given to how we will respond to changing customer proriies over @ longer time horizon. Essential to these interests isthe effective engagement and communication. We engage with our key stakeholders, using a variety of engagement mechanism including company website, socal media, emails and meetings. Keeping the interests of our stakeholders is highly Important and activites undertaken are in accordance with the s172 requirements. Environment and Community ‘The company’s approach is to use our position of stronath to create a positive change for the people and communities with which we interact, Our aim is to reduce our energy use by 3% every year forthe foreseeable future. ‘Additional measures for pollution contol are taken and all energy procured is Green energy. The company also aims to minimise its carbon footprint and has employed an organisation to help monitor is impact on the environment. Code of Conducl Business standards ‘The company has a comprehensive code of conduct, which all members of staff are regulary trained, also we uphold business standards and commercial best practice to the highest standard. By ord of the David Potts Director 17° December 2020The Ritz Hotel (London) Limited Report of the directors For the year ended 31 December 2019 (registered number: 00064203) ‘The directors present their report and the audited consolidated financial statements ofthe company and its subsidiary (the group) forthe year ended 31 December 2019, Principal activities ‘The company's principal activity isthe ownership and operation of The Ritz Hotel in London. The company leases the casino, Results and lend ‘The directors are pleased to report thatthe company increased revenue to the highest level in its histry from £47.4 rion to £50.3 milion and achieved an increased operating profit of £16.2 rion (2018: £16.0 millon) No dividends Were declared (2018: nil). Directors ‘The directors of the company who were in office during the year and upto the date of signing the financial statements DsPotis ‘appointed 25 March 2020 FEARobyns appointed 25 March 2020 ASBarciay appointed 27 October 1995 resigned 25 March 2020 HMBarclay appointed 1 August 2008 resigned 25 March 2020 PLPeters appointed 1 August 2006 resigned 25 March 2020 AMLove appointed 10 March 2004 resigned 22 March 2020 ARBarclay appointed 7 June 2019 resigned 24 January 2020 F Aghevi ‘appointed 7 June 2013 resigned 24 January 2020 Fahy ‘appointed 26 April 2016 resigned 14 March 2019 MSeat resigned 7 June 2019 Employee involvement “The group has continued to maintain its commitment to employee involvement throughout the business. Directors engage wit employees drecty and indrecty trough the Hotel management team and Executive commitees. The engagement fs necessary to enable two-way commuricaton where employees can share tel ideas and express ther feelings on issues afecing tele work envronment and provides an opportunity forthe company to provide direct feecback to employees. AS an example, to aid communication a We are Rit’ ‘Communication Committee is set up. This is chaired by @ nominated member of the Executive Committee and attended by representatives from selected department groups. Meetings take pace on a quarterly basis and the Purpose ofthis commie is fo provide a means for commmnicaten, information sharing and consutaon with the employees. Employees are kept wel iformed ofthe performance and objectives of the group through personal briefings. regular meetings and ema. Refer to svategic repo for urther details of employee engagement. Stakeholder Engagemont Refer to strategic report for details of stakeholder engagement Equal opportunities ‘The group is committed to an active equal opportunities policy from recruitment and selection, through training and development, appraisal and promotion to retirement.The Ritz Hotel (London) Limited Report of the directors For the year ended 31 December 2019 {registered number: 00064203) Equal opportunities(continued) Its the group's policy to promote an environment free from discrimination, harassment and victimisation, where ‘everyone will receive equal treatment regardless of gender, colour, ethnic or national origin, disability, age, marital status, sexual orientation or religion. All decisions relating to employment practices will be objecive, tree from bias ‘and based solely upon work cfteria and individual merit, The group also continues to train its employees based on the requirements of the market sation ‘The group is responsive tothe needs ofits employees, customers and the community at large and is an org that endeavours to use everyone's talents and abilities tothe ful. Going concer In assessing the company’s ability to continue as @ going concem, the Directors have taken into consideration all ‘available information relating to the period from the date of approval of these financial statements ‘The Directors confirm they have a reasonable expectation that the company has adequate resources to continue in ‘operational existence for atleast 15 months from the signing ofthese financial statements. This confiration is made ‘after reviewing the assumptions about the future trading performance, capital expenditure and confrmation by the Uttimate Beneficiary owner to provide financial support to the company. The Directors have also considered the Potential risks and uncertainties in the business, credit, market, quid risks in particular the Directors have received ‘confirmation from the parent company Green Park (No.1) Limited thatthe amounts due fo the other companies in the ‘group will not be recalled in the event thatthe company has insufcient resources to continue to meets lables as they fall due, ‘Also further stress testing has been carried out to ensure that the company has sufficient cash resources to continue to operate for atleast 15 months ffom the date of signing of the accounts. The stress testing considers the plausible but severe worst-case scenarios with materially reduced cash receipts including another ful lockdown scenario for 3 months and a second scenario of significant reduced occupancy levels with no goverment assistance. In these downside scenarios, addiional funding would be required ftom the Ultimate Beneficiary owner. The Ulimate Beneficiary owner has confirmed his intention to extend support to the company based on the projected funding requirements in these downside scenarios and has agreed to provide financial support for a period of at least 12 ‘months from the approval of these financial statements ‘Based on the above together withthe available market knowledge and experience of the company and markets the Directors continue to adopt the going eoncem basis in preparing the 31 December 2019 accounts. See the note 3 in financial statements for further details. Refer to Note 24 for subsequent events detail. Creditor payment policy For all rade creditors, itis the group's policy to: ‘© agree the terms of payment at the stat of business withthe supplier, ‘© ensure that suppliers are aware of the terms of payment; and * payin accordance with its contractual and other legal obligations. ‘Statement of directors’ responsibilities in respect of the financial statements, ‘The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation ‘Company taw requires the directors to prepare financial statements for each financial year. Under that law the