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Registered number: SC522583









MACHRIE GOLF LINKS AND HOTEL LIMITED









DIRECTORS' REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 JANUARY 2023

 
MACHRIE GOLF LINKS AND HOTEL LIMITED
 
 
COMPANY INFORMATION


Directors
G Davies 
S J Nye 




Registered number
SC522583



Registered office
The Machrie
Port Ellen

Isle Of Islay

Scotland

PA42 7AN




Independent auditors
CLA Evelyn Partners Limited
Chartered Accountants & Statutory Auditors

14th Floor

103 Colmore Row

Birmingham

B3 3AG





 
MACHRIE GOLF LINKS AND HOTEL LIMITED
 

CONTENTS



Page
Strategic Report
1 - 3
Directors' Report
4 - 5
Independent Auditor's Report
6 - 9
Statement of Comprehensive Income
10
Balance Sheet
11
Statement of Changes in Equity
12
Notes to the Financial Statements
13 - 24


 
MACHRIE GOLF LINKS AND HOTEL LIMITED
 
 
STRATEGIC REPORT
FOR THE YEAR ENDED 31 JANUARY 2023

Introduction
 
The Directors present the Strategic Report for Machrie Golf Links and Hotel Limited for the year ended 31 January 2023. 
Principal activity
The principal activities of the company are the provision of hotel, restaurant and golf related services.

Business review
 
Year to January 2023
The year to 31st January 2023 was another challenging operational year that continued to be adversely impacted predominately by external factors outside the company’s control.  Initially there were residual challenges resulting from the easing out of the COVID-19 restrictions.  Intermittent problems with ferry transportation on & off the island coupled with ongoing challenges around the recruitment and retention of staff has also had an impact on the business. A new General Manager started in February of 2022 with a new Executive Chef starting in April of 2022. The Board is again very grateful as to the commitment shown by the staff during the past financial year.
During the year, the following strategic initiatives were adopted:
 
Applying a more forward thinking and assertive recruitment strategy, including internships, lifestyle advertising and connection to educational institutions
Continued investment in staff accommodation to enhance the lifestyle for our live-in staff
Incentives more geared to individual performance and the introduction of the Islay Living Allowance to encourage more local people to work for the business
Ongoing enhancement of the golf course as it maintains an international recognition

The operating business model is geared around a high percentage of international golf travellers visiting during the summer months with a focus on a higher rate and lower occupancy. The property was also able to capitalise on a strong domestic demand for rural and remote properties with golf courses during this summer period resulting in positive trading months over the summer. 
Hotel & restaurant
Albeit less so than previous years, the hotel and restaurant continued to be negatively impacted by labour shortages especially during peak operational periods. This is an issue impacting the entire industry, especially properties located on remote Scottish islands.  A sales strategy change of limiting occupancy and maximising rate required less operational staff however housekeeping remained difficult requiring more expensive agency staff.  Staff turnover in F&B continued to be an issue impacting on consistency and standards with the recruitment of an F&B specialist supporting this. The kitchen under the new chef, produced a consistently high-quality food offering with excellent feedback from golfers and hotel residents.  Kitchen staffing has stabilised, and we go in to 2023 with additional confidence to further establish the brigade of Chefs.
 
Page 1

 
MACHRIE GOLF LINKS AND HOTEL LIMITED
 

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2023


Golf
The company continues to cement itself as a must visit golfing destination and is currently ranked in the top 100 best courses in the world (Golf World). 
Golf revenue increased by 10% over prior year. Golf rounds for the year ended 31 January 2023 were 9,132 against Golf rounds during the year ended 31 January 2022 of 8,843. This reflects a marginal rise in year on year golf rounds.  Our 2023 intern recruitment programme went well and we look forward to adding some new young and enthusiastic talent to the golf team.
Focus going forward will be on establishing closer relationships with the golf tour operator market, particularly in the US, Northern Europe and Scandinavia.  
Year to January 2024
The return of the international traveller over the summer months of 2023 increased occupancy and average room rates, however the second half of 2023 had its challenges with travel to the island affected by both weather, inconsistency on ferry travel and airport restrictions.  Ferries were running with one less vessel as the year went on and mechanical problems also affected those ferries in service.
Awareness of The Machrie’s pedigree and the quality of overall product needs to be reinforced along with its very marketable location, a Scottish Island with many world famous distilleries.   
Culture
The GM departed in July of 2023 with a new GM starting at the end of August 2023. The reporting structure changed to have all managers report to the GM including golf.  This new, more streamlined approach to the organisational structure will bring the team closer together over time. An externally facilitated management training day was organised in December and was very well received by all attending and of great value. 
Future developments 
The focus for 2024 will be to build upon marketing momentum, notably digital marketing, and social media. Staff training and retention strategies will be another area of focus. 
Refurbishment of key hotel areas will be undertaken as will be the development of new improved staff accommodation. 
Sustainability across the business will be a key focus for 2024, from lessening our impact on the environment to fostering nature on site and conserving resources. All departments will have a part to play in this long-term commitment with a lot more food now sourced locally.

Page 2

 
MACHRIE GOLF LINKS AND HOTEL LIMITED
 

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2023

Principal risks and uncertainties
 
As with the prior year, external macro environments continue to pose the greatest risks to the business with multiple negative factors potentially impacting the year ahead.  
This includes:
 
Severe economic uncertainly and geo political instability, with rising living costs impacting adversely on potential customers willingness to commit to breaks.
Rising supplier costs across the board especially food, beverage and energy costs with the hotel having a large floor space to heat.
As a company committed to being a good employer and to be a Living Wage Employer, staff costs have risen substantially. This is a location where there is a severe shortage of available labour as previously mentioned.
Recruitment of experienced hospitality staff continue to be a challenge and is unlikely to be substantially improved in 2024.

On the positive side, The Machrie as a hotel and golf brand continues to gain momentum as marketing activities and PR exposure have been significantly enhanced.  Emerging as an aspirational destination and not as an ‘under the radar’ operation should yield market interest both UK-wide and internationally. 
A strong operating strategy has been proposed with a streamlined workforce, lower base of overhead spends, lower occupancy model with higher yields to combat the above threats to the business. This continues to be a focus and build business to higher levels throughout the calendar year.

Key Financial Performance Indicators
 
Revenue for the year increased by 50% to £3,327,000 (2022 - £2,404,000).
Gross Profit for the year subsequently increased by 50% to £2,896,000 (2022 - £2,116,000).
Occupancy level has have improved from 33% in 2022 to 56.0% in 2023 with the average room rate increasing marginally from £185 to £187, when the Hotel was only mainly open during the summer peaks due to COVID-19 Limitations.
Food and Beverage revenues increased from £634,000 to £939,000.
Golf revenues increased from £472k to £639k. 
However, despite the efforts of management locally, a significant loss of £1,391,231 was registered in 2023.  Steps have been taken to reduce such a quantum of loss in the current financial year and with further improvements expected running into 2024.

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


G Davies
Director

Date: 12 February 2024
Page 3

 
MACHRIE GOLF LINKS AND HOTEL LIMITED
 
 
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 JANUARY 2023

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

Results and dividends

The loss for the year, after taxation, amounted to £1,391,231 (2022 - loss £1,150,268).

No dividends were paid or proposed during the year (2022 - £Nil).

Directors' responsibilities statement

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

make judgements and accounting estimates that are reasonable and prudent;

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the 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 to enable them to ensure that the financial statements comply with the Companies Act 2006They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Directors

The directors who served during the year were:

G Davies 
S J Nye 

Future developments

The focus for 2024 will be to build upon marketing momentum, notably digital marketing, and social media. Staff training and retention strategies will be another area of focus. 
Refurbishment of key hotel areas will be undertaken as will be the development of new improved staff accommodation. 
Sustainability across the business will be a key focus for 2024, from lessening our impact on the environment to fostering nature on site and conserving resources. All departments will have a part to play in this long-term commitment.          

Page 4

 
MACHRIE GOLF LINKS AND HOTEL LIMITED
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2023

Going concern

The directors have carefully reviewed the future prospects of the company and its future cash flows, including an assessment of highly volatile economic conditions now impacting directly on the hospitality sector as set out in within the section on principal risks and uncertainties within the Strategic Report. Details of this assessment have been included in note 2.3 of these financial statements.
Despite ongoing and material uncertainties, the Directors believe that existing cash and facilities currently in place would allow them to continue as a going concern. For this reason, they continue to adopt the going concern basis of accounting in preparing the Company’s financial statements.

Disclosure of information to auditors

This information is given and should be interpreted in accordance with the provision of s418 of the Companies Act 2006. 

Post balance sheet events

After year-end, intercompany loans owed to the Parent Company up to £2,223,000 were capitalised into share capital.

Auditors

The auditorsCLA Evelyn Partners Limitedwill be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

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





G Davies
Director

Date: 12 February 2024

Page 5

 
img6412.png 
 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MACHRIE GOLF LINKS AND HOTEL LIMITED
 


Opinion

We have audited the financial statements of Machrie Golf Links and Hotel Limited (the 'company') for the year ended 31 January 2023 which comprise the Statement of comprehensive income, Balance sheet, Statement of changes in equity and the notes to the financial statements, including a summary of 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).

In our opinion, the financial statements:
give a true and fair view of the state of the company's affairs as at 31 January 2023 and of its loss for the year then ended;  
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report.  We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.  We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our  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.
Emphasis of matter – Going Concern
We draw attention to note 2.3 of the financial statements, which describes the company’s reliance on its ultimate majority shareholder for financial support. Our opinion is not modified in respect of this matter.
Page 6

 
MACHRIE GOLF LINKS AND HOTEL LIMITED
 
 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MACHRIE GOLF LINKS AND HOTEL LIMITED


Other information
The other information comprises the information included in the Directors' Report and Financial Statements, other than the Financial Statements and our auditor’s report thereon. The directors are responsible for the other information contained within the Directors' Report and Financial Statements. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinion on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:
the information given in the 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 has been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report and in the Directors’ Report.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or 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; or
we have not received all the information and explanations we require for our audit.
the directors were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies' exemption in preparing the directors' report and from the requirement to prepare a strategic report.

Responsibilities of directors

As explained more fully in the Directors’ Responsibilities Statement set out on page 5, 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.
 
Page 7

 
MACHRIE GOLF LINKS AND HOTEL LIMITED
 
 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MACHRIE GOLF LINKS AND HOTEL LIMITED


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.

We obtained a general understanding of the Company's legal and regulatory framework through enquiry of management concerning: their understanding of relevant laws and regulations; the entity's policies and  procedures regarding compliance; and how they identify, evaluate and account for litigation claims. We also drew on our existing understanding of the Company's industry and regulation.
We understand the Company complies with requirements of the framework through:

Outsourcing payroll, accounts preparation and tax compliance to external experts

Subscribing to relevant updates from external experts, and making changes to internal procedures and controls as necessary.

In the context of the audit, we have considered those laws and regulations which determine the form and content of the financial statements, which are central to the Company’s ability to conduct business and where failure to comply could result in material penalties.

We have identified the following laws and regulations as being of significance in the context of the Company:

The Companies Act 2006 and FRS 102 in respect of the preparation and presentation of the financial statements.

The senior statutory auditor led a discussion with senior members of the engagement team regarding the susceptibility of the entity’s financial statements to material misstatement, including how fraud might occur. The key areas identified as part of the discussion were with regard to the manipulation of the financial statements through manual journals and incorrect recognition of revenue. This was communicated to the other members of the engagement team who were not present at the discussion.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Page 8

 
MACHRIE GOLF LINKS AND HOTEL LIMITED
 
 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MACHRIE GOLF LINKS AND HOTEL LIMITED

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.



Stephen Drew (Senior Statutory Auditor)
  
for and on behalf of
CLA Evelyn Partners Limited
 
Chartered Accountants
Statutory Auditors
  
14th Floor
103 Colmore Row
Birmingham
B3 3AG

12 February 2024
Page 9

 
MACHRIE GOLF LINKS AND HOTEL LIMITED
 
 
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 JANUARY 2023

2023
*As restated 2022
Note
£
£

  

Turnover
 5 
3,326,574
2,403,620

Cost of sales
  
(430,998)
(287,974)

Gross profit
  
2,895,576
2,115,646

Administrative expenses
  
(5,881,599)
(3,804,956)

Other operating income
 6 
389,917
539,042

Fair value movements
  
1,204,875
-

Operating loss
 7 
(1,391,231)
(1,150,268)

Tax on loss
 9 
-
-

Loss for the financial year
  
(1,391,231)
(1,150,268)

There was no other comprehensive income for 2023 (2022:£NIL).

The notes on pages 13 to 24 form part of these financial statements.

(*See note 4)

Page 10

 
MACHRIE GOLF LINKS AND HOTEL LIMITED
REGISTERED NUMBER:SC522583

BALANCE SHEET
AS AT 31 JANUARY 2023

*As restated
2023
2022
Note
£
£

Fixed assets
  

Tangible assets
 10 
13,639,056
12,438,686

  
13,639,056
12,438,686

Current assets
  

Stocks
 11 
171,314
143,986

Debtors: amounts falling due within one year
 12 
248,761
110,832

Cash at bank and in hand
  
240,747
181,158

  
660,822
435,976

Creditors: amounts falling due within one year
 13 
(4,306,216)
(1,489,769)

Net current liabilities
  
 
 
(3,645,394)
 
 
(1,053,793)

Total assets less current liabilities
  
9,993,662
11,384,893

  

Net assets
  
9,993,662
11,384,893


Capital and reserves
  

Called up share capital 
 14 
34,921,076
34,921,076

Profit and loss account
 15 
(24,927,414)
(23,536,183)

  
9,993,662
11,384,893


The financial statements were approved and authorised for issue by the board and were signed on its behalf on 12 February 2024.




G Davies
Director

The notes on pages 13 to 24 form part of these financial statements.
(*See note 4)

Page 11

 
MACHRIE GOLF LINKS AND HOTEL LIMITED
 

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JANUARY 2023


Called up share capital
Profit and loss account
Total equity

£
£
£


At 1 February 2021 (as previously stated)
34,921,076
(22,825,665)
12,095,411

Prior year adjustment - correction of error
-
439,750
439,750


At 1 February 2021 (as restated)
34,921,076
(22,385,915)
12,535,161



Loss for the year
-
(1,150,268)
(1,150,268)



At 1 February 2022
34,921,076
(23,536,183)
11,384,893



Loss for the year
-
(1,391,231)
(1,391,231)


At 31 January 2023
34,921,076
(24,927,414)
9,993,662


The notes on pages 13 to 24 form part of these financial statements.

(*See note 4)

Page 12

 
MACHRIE GOLF LINKS AND HOTEL LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023

1.


General information

Machrie Golf Links and Hotel Limited is a private company, limited by shares, domiciled and incorporated in Scotland (registered number: SC522583). The registered office address is The Machrie, Port Ellen, Isle Of Islay, Scotland, PA42 7AN.
The Company's functional and presentational currency is GBP.

2.Accounting policies

 
2.1

Basis of preparation of financial statements

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

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

The following principal accounting policies have been applied:

 
2.2

Financial Reporting Standard 102 - reduced disclosure exemptions

The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
the requirements of Section 7 Statement of Cash Flows;
the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d); and 
the requirements of Section 33 Related Party Disclosures paragraph 33.7.

This information is included in the consolidated financial statements of Actev II Limited as at 31 January 2022 and these financial statements may be obtained from Companies House.

Page 13

 
MACHRIE GOLF LINKS AND HOTEL LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023

2.Accounting policies (continued)

 
2.3

Going concern

The Company made a loss of £1,391,231 (2022 - £1,150,268) but has net current liabilities of £3,645,394 (2022 - £1,053,793) and an overall net asset position of £9,993,662 (2022 - £11,384,893).
The directors have carefully reviewed the future prospects of the Company and its future cash flows, including an assessment of the expectations for the future impact in the hospitality sector.
An updated budget for at least 12 months post the signing of these financial statements has been prepared, together with associated cash flows now that the business is now fully open again and with occupancy levels expected to exceed pre pandemic levels during 2022. Sensitivities have also been carried out to highlight potential variances through changes in occupancy and average room rates. The forecasting demonstrates that further funding is expected to be required should the Hotel perform in line with forecast. 
The directors recognise that uncertainties exist, as the cash generative operations of the business are reliant on the rebuilding  of the hotel‘s income levels. However, if the Company were to require further funding, the ultimate shareholders have committed to continue to support the Company for the foreseeable future, being at least 12 months from the date of signing these financial statements and this has been evidenced in writing. 
With the above in mind and despite ongoing and material uncertainties, the directors believe that existing cash and facilities currently in place will allow the Company  to continue as a going concern. For this reason, they continue to adopt the going concern basis of accounting in preparing the Company’s financial statements.

 
2.4

Turnover

Turnover comprises the fair value of the consideration received or receivable for the sale of goods and provision of services in the ordinary course of the Company's activities. Turnover is shown net of value added tax, returns, rebates and discounts.
The Company recognises turnover evenly during the period of a guest stay. Deposits received in advance of customer stays are treated as deferred income and recognised within creditors less than one year.
The Company recognises turnover at the point of sale for golf related turnover. Deposits received in advance of golf lessons and green fees are treated as deferred income and recognised within creditors less than one year.
Food and drink income is recognised at the point of sale to customers.
 
Page 14

 
MACHRIE GOLF LINKS AND HOTEL LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023

2.Accounting policies (continued)

 
2.5

Government grants

Government grants are recognised using the performance model. A grant which does not impose specific future performance conditions is recognised as revenue when the grant proceeds are received. A grant that imposes specific performance related conditions is recognised when the conditions are met.  A grant received before the revenue recognition criteria are satisfied is shown as a liability in the Balance Sheet. 
Grants of a revenue nature are recognised in profit or loss in the same period as the related expenditure.

 
2.6

Tangible fixed assets

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

At each reporting date the Company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.

The Company adds to the carrying amount of an item of fixed assets the cost of replacing part of such an item when that cost is incurred, if the replacement part is expected to provide incremental future benefits to the Company. The carrying amount of the replaced part is derecognised. Repairs and maintenance are charged to profit or loss during the period in which they are incurred.

Land and assets under construction are not depreciated. Depreciation on other assets is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.

Depreciation is provided on the following basis:

Freehold building
-
25-50 years
Plant and machinery
-
4 years
Motor vehicles
-
5 years
Fixtures and fittings
-
4 years
Office equipment
-
4 years

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.

Page 15

 
MACHRIE GOLF LINKS AND HOTEL LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023

2.Accounting policies (continued)

 
2.7

Stocks

Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out or average method basis. 
At each balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.

 
2.8

Pensions

Defined contribution pension plan

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

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

 
2.9

Financial instruments

Financial assets and financial liabilities are recognised in the Balance Sheet when the Company becomes a party to the contractual provisions of the instrument.
Trade and other debtors and creditors are classified as basic financial instruments and measured at initial recognition at transaction price. Debtors and creditors are subsequently measured at amortised cost using the effective interest rate method. A provision is established when there is objective evidence that the Company will not be able to collect all amounts due.
Cash and cash equivalents are classified as basic financial instruments and comprise cash in hand and at bank.
Financial liabilities and equity instruments issued by the Company are classified in accordance with the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. 

Page 16

 
MACHRIE GOLF LINKS AND HOTEL LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023

2.Accounting policies (continued)

 
2.10

Taxation

Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company operates and generates income.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:
The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

 
2.11

Dividends

Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.


3.


Judgements in applying accounting policies and key sources of estimation uncertainty

The preparation of these financial statements requires management to make judgements in applying the Company’s accounting policies that may have a significant impact on the amounts recognised. In the course of preparing the Company financial statements, the judgements that may have the most significant effect on the amounts recognised in the financial statements are these involving estimations as explained below. 
Tangible fixed assets 
The Company performs an annual review to determine indicators of impairment of the Company’s tangible fixed assets (see note 9). Factors taken in to consideration in reaching such a decision include the economic viability and expected future financial performance of the asset. 

Page 17

 
MACHRIE GOLF LINKS AND HOTEL LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023

4.


Restatement of the prior year figures

4.1 Tangible fixed assets
 
     
During the year it was identified that depreciation rates of certain assets impaired in FY 2020 were not updated and therefore those assets have been over depreciated.
Prior year figures have been restated in these financial statements to correctly reflect the accumulated depreciation in relation to prior impairments. As part of this restatement changes were made to the presentation and disclosures in the financial statements to accurately reflect this.
The amount of the correction for each line item of the balance sheet affected was:
 
Increase Tangible Fixed Assets by £439,750 for FY 2021;
Decrease Deficit on P&L Reserve by £439,750 for FY 2021;
Further Increase Tangible Fixed Assets by £502,472 for FY 2022; and
Decrease Depreciation expense by £502,472 for FY 2022.

The result of the above restatements is an increase in the profit and loss account of £942,492.
 
4.2 Grant income
Grant income received in FY 2022 should not have been deferred to a later accounting period but recognised in that year since the qualifying expenditure incurred in that year.
The amount of the correction for each line item of the balance sheet affected was:
 
Decrease Deferred income by £191,472; and 
Increase Other operating income by £191,472.


5.


Turnover

The whole of the turnover is attributable to hospitality.
All turnover arose within the United Kingdom.


6.


Other operating income

2023
*Restated 2022
£
£

CJRS income
8,900
154,450

Government grants receivable
381,002
384,592

Commissions receivable
15
-

389,917
539,042


(*See note 4)

Page 18

 
MACHRIE GOLF LINKS AND HOTEL LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023

7.


Operating loss

The operating loss is stated after charging:

2023
2022
£
£

Audit fee
41,890
27,500

Exchange differences
88
71

The Company has taken advantage of the exemption not to disclose amounts paid for non-audit services as these are disclosed in the group accounts of the parent company.


8.


Employees

Staff costs were as follows:


2023
2022
£
£

Wages and salaries
2,105,200
1,528,735

Social security costs
198,355
148,984

Cost of defined contribution scheme
41,709
26,123

2,345,264
1,703,842


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


        2023
        2022
            No.
            No.







Administrative and services
69
57

Page 19

 
MACHRIE GOLF LINKS AND HOTEL LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023

9.


Taxation


2023
2022
£
£



Total current tax
-
-

Factors affecting tax charge for the year

The tax assessed for the year is higher than (2022 - higher than) the standard rate of corporation tax in the UK of19% (2022 - 19%). The differences are explained below:

2023
2022
£
£


Loss on ordinary activities before tax
(1,391,231)
(1,150,268)


Loss on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2022 - 19%)
(264,334)
(218,551)

Effects of:


Fixed asset differences
(115,299)
-

Expenses not deductible for tax purposes
8,128
-

Capital allowances for year in excess of depreciation
533,328
350,429

Income not taxable for tax purposes
(72,390)
(131,878)

Other permanent differences
33
-

Group relief surrendered/(claimed)
38,532
-

Remeasurement of deferred tax for changes in tax rates
(127,998)
-

Total tax charge for the year
-
-

Factors that may affect future tax charges
Finance Bill 2021 includes legislation to increase the main rate of corporation tax from 19% to 25% from 1 April 2023.
Deferred tax has not been recognised on losses of £3,096,980 (2022 - £3,498,485) and, therefore, losses of £12,387,922 (2022 - £9,921,492) can be carried forward against future taxable income.
Page 20

 

MACHRIE GOLF LINKS AND HOTEL LIMITED
 
 
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023


10.


Tangible fixed assets






Freehold land
Freehold building
Plant and machinery
Office equipment
Fixtures and fittings
Motor vehicles
Total

£
£
£
£
£
£
£



Cost


At 1 February 2022
780,017
27,387,797
1,191,090
138,584
603,373
65,002
30,165,863


Additions
-
271,331
127,079
56,736
20,851
-
475,997



At 31 January 2023

780,017
27,659,128
1,318,169
195,320
624,224
65,002
30,641,860



Depreciation


At 1 February 2022 (as previously stated)
-
16,808,245
1,088,047
138,584
603,373
31,420
18,669,669


Prior Year Adjustment
-
(673,995)
(188,952)
(8,723)
(70,822)
-
(942,492)


At 1 February 2022 (as restated) (*See Note 4)
-
16,134,250
899,095
129,861
532,551
31,420
17,727,177


Charge for the year on owned assets
-
342,663
100,387
6,871
19,441
11,140
480,502


Impairment losses written back
-
(1,204,875)
-
-
-
-
(1,204,875)



At 31 January 2023

-
15,272,038
999,482
136,732
551,992
42,560
17,002,804



Net book value



At 31 January 2023
780,017
12,387,090
318,687
58,588
72,232
22,442
13,639,056



At 31 January 2022 (as restated) (*See Note 4)
780,017
11,253,547
291,995
8,723
70,822
33,582
12,438,686

Page 21

 
MACHRIE GOLF LINKS AND HOTEL LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023

11.


Stocks

2023
2022
£
£

Finished goods
171,314
143,986



12.


Debtors

2023
2022
£
£


Other debtors
51,994
24,323

Prepayments and accrued income
196,767
86,509

248,761
110,832



13.


Creditors: amounts falling due within one year

2023
*Restated 2022
£
£

Government grants received
-
380,000

Trade creditors
160,008
174,146

Amounts owed to group undertakings
-
337,945

Other taxation and social security
41,151
39,363

Other creditors
2,670,590
50,147

Accruals and deferred income
1,434,467
508,168

4,306,216
1,489,769


(*See note 4)

Page 22

 
MACHRIE GOLF LINKS AND HOTEL LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023

14.


Share capital

2023
2022
£
£
Allotted, called up and fully paid



34,921,076 (2022 - 34,921,076) Ordinary shares of £1 each
34,921,076
34,921,076

At 31 January 2023, intercompany loans to the parent company were £2,223,064. After the year end further funds were invested, and on 30 September 2023, the Machrie issued 3,948,064 Ordinary shares in satisfaction for the loans.



15.


Reserves

Share capital reserve
Called up share capital reserve represents the nominal value of the shares issued.

Profit and loss account

Profit and loss account represents cumulative profits or losses, net of dividends paid and other adjustments.


16.


Pension commitments

The Company operates a defined contributions pension scheme. The pension cost charge represents contributions payable by the Company to the fund and amounted to £44,663 (2022 - £26,123). Contributions totalling £6,971 (2022 - £4,608) were payable to the fund at the balance sheet date and are included in creditors.


17.


Commitments under operating leases

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

2023
2022
£
£


Not later than 1 year
-
5,674

-
5,674


18.


Related party transactions

The Company has taken advantage of the exemption in FRS 102 Section 33.1A to not disclose transactions with wholly owned group entities.

Page 23

 
MACHRIE GOLF LINKS AND HOTEL LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023

19.


Controlling party

The immediate parent undertaking is Actev Limited, a company registered in England and Wales. 
The ultimate parent undertaking is Actev II Limited, a company registered in England and Wales.
The smallest and largest group of undertakings for which group accounts for the year ending 31 January 2023 will be drawn up, is that headed by Actev II Limited. The registered office address of Actev II Limited is 45 Gresham Street, London, EC2V 7BG. Copies of the group accounts are available from Companies House.
The ultimate controlling party is G Davies and S Nye, by virtue of their shareholding and directorship in the ultimate parent undertaking.

Page 24