Registered number: SC114360
DIRECTORS' REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
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BALBIRNIE HOUSE HOTEL LIMITED
COMPANY INFORMATION
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BALBIRNIE HOUSE HOTEL LIMITED
CONTENTS
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BALBIRNIE HOUSE HOTEL LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 APRIL 2024
The directors have the pleasure in presenting their strategic report for the year ended 30 April 2024.
The principal activity of the company during the year was the operation of a country house hotel, a destination for private and corporate special events.
Bottom line financial results within this year have finalised as we have previously hoped, with a marginal return to profit and the directors continue to be satisfied with the present and future operations of the company. In context and with regards to the future, the directors have an ongoing perspective of wishing to keep maintaining, improving and safeguarding the Category A Listed 1777 assets of Balbirnie House, as premises within which we are able to keep delivering the remits of heading £75M of successful trading over the next decade. Over the last few years, significant re-investment into the fabric of the assets has been successfully enabled to a level which, in percentage terms, is above industry norms. The ability to maintain such reinvestment has been beneficial to the company, and as a result, the property is presented and equipped to an exceptionally high standard. The directors acknowledge these latest accounts show a profit, which was created despite the continuing financial implications once again, of having government-enforced national hospitality severely restricted with previous operational restrictions due to Covid pandemic. We are of course carrying new debts which arose due to those previous government-enforced lockdowns. Additionally, the hospitality sector is contending with very significant increases in the cost of electricity and gas supplies. Over the trading year we also saw very significant inflationary increases across the entire span of food and energy supplies. Today, we are also contending with very significant rises in interest rates as well. The profits of £122,957 are significantly improved upon the previous year financial year losses of £186,886. Writing this report as at October 2024 (six months after the end of the financial year in question) we are very optimistic as regards the trading future. We have recently commissioned a formal and updated Valuation Report. This project was actioned by Colliers International in August 2024, and delivered an uplift in company valuation, by a figure of £1.4M – this has now transferred into these new annual accounts. Cash flow remains to be managed on a very efficient basis ahead, somewhat heightened by seasonal fluctuations with core trade client deposits. Having traded through the many challenges of the pandemic, we saw the 2022/23 financial year become our busiest trading year in company history. In that previous year however, and despite all ongoing focus and efforts, our very significant fixed and operating costs were marginally more, than our net of VAT revenue. Given the many challenges across the span of the UK hospitality industry, progressing onwards through 2023/24 and as a necessity, we streamlined food and beverage services by amalgamating two dining operations into one, thereby delivery very significant savings with labour costs. The results therefore show a marginal reduction in 2023/24 turnover, but a shift from loss to profit. Our ongoing focus remains on doing everything possible with efficient purchasing and procurement, together with necessary ongoing adjustments to our pricing.
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BALBIRNIE HOUSE HOTEL LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2024
The directors are optimistic based on current projections, and with management accounts now showing a record-breaking first third of the 2024/25 financial year, that financial results to the end of April 2025 are also on track to show continuing profit.
We suggest that it is now conceivable that our company will continue to return to profit, two years in a row, five financial years after the profoundly negative financial implications of the pandemic lockdowns. We have therefore delivered a fast-tracking production of these annual accounts, as they will further improve credit ratings beyond previous. The main reason that the directors continue to be satisfied with the operations of the company today, however, is specifically due to the level of confirmed and diarised trade. In early 2023 we invested in new systems and totally new consideration, with regards to how we create future annual budgeting and forecasting, with methodology defined on a day-by-day and departmental basis, also revolving around statistics for core trade. We are optimistic that this can bring more accuracy into planning for, and forecasting the future. This approach has continued for 2024/25. The company’s key performance indicators during the year were as follows: 2024 2023 £ £ Turnover 4,158,975 4,416,390 Gross profit 3,369,509 3,390,258 Profit/(Loss) before interest and tax 353,010 (32,051) In 2022 the directors transitioned from an entirely optional gratuity system, into one of being discretionary yet defined on billing. This has been successfully actioned. The amounts in question are split monthly pro rata between Balbirnie’s brigade, as opposed to previous 6 monthly. The result has been to improve employee retention. The directors also acknowledge the continuing timeline of an element of great uncertainty in the hospitality marketplace, caused by the UK Brexit. Whilst our company lost the ability to recruit EU nationals, we have countered this by successfully being able to recruit mainly and directly from our local population. Thankfully we are surrounded by sufficient population to enable us to do this. In 2024 a further definitive award has been received from Haute Grandeur global hotel awards, ‘Best Wedding Hotel’, on a global level. This is the fifth time this award has been received. In 2024 a further definitive award has been received from Haute Grandeur global hotel awards, ‘Best Romantic Hotel’, on a global level. The hotel has seen very significant 2024 mainstream media coverage because of this. The directors consider that this unprecedented recognition will assist with current and future marketing. As part of the day to day running of the hotel, the directors are always looking at the services on offer and thinking of ways that the hotel can enhance these further, to give them a competitive edge. The directors have strived to build close relationships with all of the suppliers the hotel uses, with many of these relationships going back over numerous years. Potentials for the future. As at 2007, the company made very significant investments in the region of £750,000 into achieving full planning consent for significant extensions circa 2,500 sq m, with a design footprint to comprise of additional bedrooms, and a state-of-the-art 550+ members spa and fitness facility. The planning consent is extant, with that status continuing ongoing. The directors feel that this addition would establish even greater commercial viability for decades to come. The potential of project completion remains on hold however, pending ability to finance. The directors highlight their expectation is that as the original £750,000 was impaired within accounts, the original investment will fully pave its way back into annual accounts, as and when the project finalises.
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BALBIRNIE HOUSE HOTEL LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2024
Via 2020 Scottish Enterprise £60,000 funding, the directors successfully actioned an extremely comprehensive Feasibility Study via specialised spa consultancy, designer and architect services, in a complete internal redesign and modernisation of the buildings for which we have extant planning permission consent for in 2007, but have not yet built. The directors consider that the end result of this project will enable the company to potentially move to actual project consideration at any point over many years to come, subject of course to being able to finance.
We highlight, that as and when decisions are taken to proceed, the project is conceived and designed absolutely, in such a way, that it can be screened off in entirety, and physically created whilst there is no disruption whatsoever to normal trade. In the interim the directors have noted that there have recently been very significant advancements with 3D print construction, whereby there are massive and revolutionary savings on construction costs, elimination of waste during construction, and a faster timeline for construction. Over the last two financial years specifically, the directors have also noted that there has been revolutionary design progress within the specific provincial hotel sector, whereby subject to the necessary consents, possibilities have arisen to very efficiently create external bedrooms in the form of luxury eco-friendly individual bedrooms. We have had dialogue with multiple manufacturers in these regards, and may consider future additions, subject to financing. Fundamentally, it has always been the case that we are regularly providing the backdrop for weddings with over 100 destination guests, but we only have overnight accommodation across 31 current bedrooms. New additional bedrooms would resolve this, and open up new markets, for both private and corporate events. The directors are fully committed to continuing to embrace all director legal and regulatory compliance within Companies Act 2006. The directors have a focus on considering industry trends, innovation, and evolution. The ongoing development is all encompassed within the overview of the interests of our company employees, relationships with suppliers, the company’s impact upon local community and environment, and accelerating the existing high reputation for business conduct.
As with all other companies operating in the hospitality sector, the directors acknowledge that there are many varied risks which the company faces. Other than the implications previously imposed by the Covid-19 pandemic, the directors acknowledge that the main risks include competition from competitors, maintaining a desire from the public for the use of the hotel, and disruption to the supply chain.
The directors also acknowledge, in complete contrast to other countries which provide ongoing financial assistance for architectural and cultural heritage, that there is no defined government assistance in Scotland, for contributing towards the maintenance, safeguarding, and improvement of the main asset of the company, Balbirnie House itself. This is despite Balbirnie House being a national treasure, category A Listed 1777 with national and international architectural and design importance, which also doubles today as a very significant tourism tax generator. Balbirnie House Insurance reinstatement value is now above £25M – and Business Interruption insurance is a further £25M. The directors mitigate risks by focusing on cutting edge marketing using organically-grown in-house digitalised platforms, and modern era automated efficiencies. We retain 30,000+ GDPR compliant email addresses for monthly marketing, and we produce our own in-house monthly E:newsletters. Social media presence continues to grow, with more than 50,000 followers. The company provides excellent services to all guests, and has a reputation and awards to back up the completely unique facilities. The company’s principal financial instruments comprise bank balances, and loans to the company. The main purpose of these instruments is to finance company operations.
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BALBIRNIE HOUSE HOTEL LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2024
In respect of bank balances, the liquidity risk is envisaged as being managed via maintained and positive cash flow.
In respect of loans, these comprise loans from financial institutions. The interest rate on the loans from the financial institutions is both fixed and variable. The company manages the liquidity risk by ensuring there are sufficient funds to meet the payments.
The company operates in the hotel industry and aims to provide a first class service to the public. This includes being safety conscious, complying with health and safety regulations and generally demanding high standards. It recognises the importance of, and has policies in place, to ensure its environmental, health and safety requirements are met at all times.
This report was approved by the board and signed on its behalf.
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BALBIRNIE HOUSE HOTEL LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 APRIL 2024
The directors present their report and the financial statements for the year ended 30 April 2024.
The directors are responsible for preparing the Strategic report, the Directors' report and the financial statements in accordance with applicable law and regulations.
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 judgments and accounting estimates that are reasonable and prudent;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the 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 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.
The profit for the year, after taxation, amounted to £122,957 (2023 - loss £186,886).
There are no proposed dividends for the year ended 30 April 2024.
The directors who served during the year were:
There have been no significant events affecting the Company since the year end.
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BALBIRNIE HOUSE HOTEL LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2024
The auditors, Sumer Auditco Limited, will 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.
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BALBIRNIE HOUSE HOTEL LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF BALBIRNIE HOUSE HOTEL LIMITED
We have audited the financial statements of Balbirnie House Hotel Limited (the 'Company') for the year ended 30 April 2024, which comprise the Statement of comprehensive income, the Statement of financial position, the Statement of cash flows, the Statement of changes in equity and the related notes, 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).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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BALBIRNIE HOUSE HOTEL LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF BALBIRNIE HOUSE HOTEL LIMITED (CONTINUED)
The directors have prepared the financial statements on the going concern basis and have concluded that there are no material uncertainties that would cast significant doubt over the company’s ability to continue in operational existence for a period of at least 12 months from the date of approval of the financial statements (‘’the going concern period’’). Further details in relation to their assessment and conclusions are included within the accounting policies in the notes to the financial statements.
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. In making this conclusion we have evaluated the directors’ assessment of the company’s financial operations and cash flow requirements, in conjunction with a review of the inherent risk factors associated with the company’s business model, and analysed how those risks may impact upon the company’s performance and cash flow requirements for it to continue in operation for the going concern period.
In performing our evaluation, we have not identified any material uncertainties related to events or conditions that, individually or collectively, may cast significant doubt on the company’s ability to continue as a going concern for the period of at least 12 months from the date of approval of the financial statements .
However, we recognise that although the assumptions that underpin the financial projections and assessment for the period of at least 12 months from the date of approval of the financial statements appear reasonable, we are not able to predict all future events or conditions that may have a material impact upon those assumptions and projections, in particular those that may impact upon the ability of the company to operate within its current credit facilities. Therefore, our conclusions should not be considered a guarantee as to the company’s ability to continue as a going concern .
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' report thereon. The directors are responsible for the other information contained within the Annual Report. 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.
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 have been prepared in accordance with applicable legal requirements.
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BALBIRNIE HOUSE HOTEL LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF BALBIRNIE HOUSE HOTEL LIMITED (CONTINUED)
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 or the Directors' report.
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BALBIRNIE HOUSE HOTEL LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF BALBIRNIE HOUSE HOTEL LIMITED (CONTINUED)
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these 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 gained an understanding of the legal and regulatory framework applicable to the company and the industry in which it operates, and considered the risk of acts by the company that were contrary to applicable laws and regulations, including fraud. We designed audit procedures to respond to the risk, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. We focused on laws and regulations which could give rise to a material misstatement in the financial statements, including, but not limited to, the Companies Act 2006 and UK tax legislation. Our tests included agreeing the financial statement disclosures to underlying supporting documentation and enquiries with management. There are inherent limitations in the audit procedures described above and, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. As in all our audits, we also addressed the risk of management override of internal controls, including testing journals and evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' report.
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 Auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Chartered Accountants & Statutory Auditors
Pentland House
Saltire Centre
Fife
KY6 2AH
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BALBIRNIE HOUSE HOTEL LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 APRIL 2024
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BALBIRNIE HOUSE HOTEL LIMITED
REGISTERED NUMBER: SC114360
STATEMENT OF FINANCIAL POSITION
AS AT 30 APRIL 2024
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BALBIRNIE HOUSE HOTEL LIMITED
REGISTERED NUMBER: SC114360
STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 30 APRIL 2024
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 17 to 30 form part of these financial statements.
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BALBIRNIE HOUSE HOTEL LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 APRIL 2024
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 APRIL 2023
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BALBIRNIE HOUSE HOTEL LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 APRIL 2024
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BALBIRNIE HOUSE HOTEL LIMITED
STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2024
ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 30 APRIL 2024
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
Balbirnie House Hotel Limited is a limited liability company incorporated in Scotland, registration number SC114360. The registered office address is Balbirnie House, Balbirnie Park, Markinch, Glenrothes, Fife, KY7 6NE.
The principal activity of the company during the year was the operation of a country house hotel. The financial statements are presented in sterling which is the functional currency of the company and rounded to the nearest £.
2.Accounting policies
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 judgment in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
In determining the appropriate basis of preparation of the financial statements, the directors are required to consider whether there is a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future, being a period of at least 12 months from the date of approval of the financial statements.
The directors have prepared a detailed assessment of the company’s financial operations and cash flow requirements to determine the company’s ability to meet its obligations as they fall due for the foreseeable future, taking into account current and anticipated future performance, cash flows and projected liquidity headroom. Profit and loss account forecasts and post year end performance suggest the company returning to profitability, however, cash flow remains challenging with the company fully utilising available resources at certain points. Should additional working capital be required in the short term the directors are confident that this will be secured with their continued support and external sources of finance. Based on the going concern assessment undertaken by the directors, they are of the opinion that the company will have adequate resources available to continue in operational existence over a period of at least 12 months from the date of approval of the financial statements, and so have prepared the financial statements on the going concern basis.
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
2.Accounting policies (continued)
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
2.Accounting policies (continued)
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
2.Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
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.
Fair values are determined from market based evidence normally undertaken by professionally qualified valuers.
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
2.Accounting policies (continued)
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
The Company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the Company's Statement of financial position when the Company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
The directors also require to exercise judgement in assessing recoverability of trade debtors and make appropriate provision where their credit control procedures indicate that trade debtor balances may not be fully recoverable.
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
There were no factors that may affect future tax charges.
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
13.Tangible fixed assets (continued)
Cost or valuation at 30 April 2024 is as follows:
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
The company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the company in an independently administered fund. The pension cost charge represents contributions payable by the company to the fund and amounted to £28,998 (2023 - £27,422). Contributions totaling £4,828 (2023 - £5,434) were payable to the fund at the balance sheet date.
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