Registered number: SC114360
DIRECTORS' REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
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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 2022
The directors have the pleasure in presenting their strategic report for the year ended 30 April 2022.
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.
The directors continue to be satisfied with the operations of the company. 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 well 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. During 2022 the directors commissioned a formalised updated valuation for Balbirnie House Hotel. This was conducted by Colliers International, and defined current valuation at £6.6M. The directors acknowledge these latest accounts show a loss, which was created in the main, from the financial implications once again, of having government-enforced national hospitality severely restricted ongoing operational restrictions due to Covid pandemic. Whilst the losses of £7,363 are massively less than the previous financial year losses of £816,841 - in spring 2021 we had budgeted the financial year ahead to be in profit. However, government trading restrictions were placed on hospitality during our peak annual trading through May, June, July and the first third of August 2021. Arriving then at December 2021 government advised the general public not to have hospitality setting festive celebrations, and such advice then also had further continuing negative implications into the next calendar year. All aspects combined have therefore led once again to a further annual loss. Upon reflection over the last 3 years, I take this opportunity to reiterate a consistently highlighted aspect from our social media. Specifically, that in contrast to the UK and Scotland governments, Sweden’s government did not enforce any pandemic lockdown. The accumulated science and statistics now appears to confirm that Sweden was correct in its approach. It has to be questioned therefore, if the UK and Scotland governments took lockdown and restriction decisions based on science, or based on personal opinions. If it is the latter, our company alone needlessly suffered a circa £1M loss. We are thankful however that we were subsequently in a position to be able to re-construct financials, to enable us to remain operational. We have traded through the many challenges of the pandemic, and then gone on to see the 2022 calendar year become our busiest in company history. The directors are optimistic (writing as at January 2023) based on current projections that financial results to the end of April 2023 may show a return to profit. 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 tandem with the company having been able to successfully access additional CBILs lending in the previous year. Through late autumn 2022 our directors also invested significant sums in engaging the specialised services of two accounting firms, so as to work on comprehensive and detailed financial forecasting through to the end of April 2025. This has underlined and confirmed the anticipation of continuing future financial viability for the company.
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BALBIRNIE HOUSE HOTEL LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2022
In early 2022 our company thankfully and successfully negotiated and capped energy contracts for gas and electricity, for a full 5 years ahead. Revised pricing has been fully incorporated into future financial projections. In facilitating 5 year contracts, this is in contrast to many industry competitors who found themselves in extremely challenging contemplation as 2022 progressed, experiencing massive and unexpected energy pricing increases. Our many future clients are aware that we have been successful with five years of stability ahead, and this has assisted us with confirmed future diarised bookings. We have also invested circa £150,000 in installing two brand new boiler systems, and for the first time since opening as a hotel in the 1980’s we are able to segment hot water, and central heating. The new boiler systems are also much more efficient than the old ones. The company’s key performance indicators during the year were as follows: 2022 2021 £ £ Turnover 3,565,806 1,159,618 Gross profit 2,768,321 731,420 Profit/(Loss) before interest and tax 78,624 (750,776) 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. Additionally, and with a view to fully resolving the many recruitment challenges arising due to the UK Brexit and across the entire span of hospitality, in spring 2022 we increased all company wage levels above the national minimum wage, and also actioned this regardless of age. This has certainly resolved our challenges, so much so that we now have very significant waiting lists of many individuals who wish to join our hotel brigade. In 2022 we also introduced a discretionary service charge on food and beverage, which is also phasing into main special events as well – this is further boosting employee remuneration. Over recent years we have also seen very significant rises with the generalities of food and beverage costs, and we have very carefully considered and successfully actioned revised pricing to allow for this. Over the last four years the hospitality sector has experienced a massive hike in insurance costs. Our company insurance costs have basically tripled, and we have needed to invest in and introduce fire suppression systems in all four of our production kitchens. Subsequently, and in contrast to the routine of previous annual re-negotiation and renewal, in 2022 we have been able to initiate multiple year insurance cover via Ecclesiastical, a company which specialises in historic and important properties. Notwithstanding what does lie ahead due to the UK Brexit, the directors and management team have still nevertheless successfully managed to re-increase future diarised core trade bookings as well, with confidence therefore in all trading sustainability. Looking ahead, core trade diaries continue to be excellent, and the directors remain fully committed to ensuring the equilibrium and status quo is successfully maintained. In 2022 a further definitive award has been received from Haute Grandeur global hotel awards, ‘Best Wedding Hotel’, on a global level. This is the third time this award has been received, and is the sixth best-in-world global award received. The hotel has seen significant 2022 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.
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BALBIRNIE HOUSE HOTEL LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2022
As at 2007, the company made very significant investments in the region of £750,000 into achieving full planning consent for significant extensions, to comprise of additional bedrooms, and a state-of-the-art 550+ members spa and fitness facility. 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.
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. 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 re-design and design modernisation of the buildings for which we have 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 as way, that it can be screened off in entirety, and physically created whilst there is no disruption whatsoever to normal trade.
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 that there is no defined government assistance, 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 importance, which also doubles today as a very significant tourism tax generator. Across the span of systems, the company is now in the process of structuring new financing of £75,000 to invest in two defined projects with numerous future energy-saving capabilities. The directors mitigate risks by focussing on cutting edge marketing using organically-grown in-house digitalised platforms, and modern era automated efficiencies. We retain 25,000 GDPR compliant email addresses for monthly marketing, and we produce our own in-house monthly E:newsletters. Social media 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, loans to the company, and hire purchase/ finance agreements. The main purpose of these instruments is to finance company operations. Due to the nature of the financial instruments used by the company, there is no exposure to price risk. The company’s approach to managing other risks applicable to the financial instruments concerned is detailed below. In respect of bank balances, the liquidity risk is managed by maintaining such flexibility through use of overdrafts at floating rates of interest. In respect of loans, these comprise loans from financial institutions. The interest rate on the loans from financial institutions is both fixed and variable. The company manages the liquidity risk by ensuring there are sufficient funds to meet the payments
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BALBIRNIE HOUSE HOTEL LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2022
During 2022 the company established an internal management team Environmental Taskforce, meeting monthly to discuss and implement all evolution.
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 2022
The directors present their report and the financial statements for the year ended 30 April 2022.
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 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 loss for the year, after taxation, amounted to £
7,363
(2021 -
loss
£
816,841
)
.
There are no proposed dividends for the year ended 30 April 2022.
The directors who served during the year were:
Other than the ongoing impact of Covid-19 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 2022
The auditors, EQ Accountants LLP, 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 2022, 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.
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.
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.
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BALBIRNIE HOUSE HOTEL LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF BALBIRNIE HOUSE HOTEL LIMITED (CONTINUED)
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.
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. We did not identify any key audit matters relating to irregularities, including fraud. 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.
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BALBIRNIE HOUSE HOTEL LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF BALBIRNIE HOUSE HOTEL LIMITED (CONTINUED)
for and on behalf of
Chartered Accountants
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 2022
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BALBIRNIE HOUSE HOTEL LIMITED
REGISTERED NUMBER:
SC114360
STATEMENT OF FINANCIAL POSITION
AS AT
30 APRIL 2022
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 2022
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BALBIRNIE HOUSE HOTEL LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
30 APRIL 2021
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BALBIRNIE HOUSE HOTEL LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 APRIL 2022
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BALBIRNIE HOUSE HOTEL LIMITED
ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 30 APRIL 2022
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
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:
At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. The directors have considered a period of 12 months from the date of approval of the financial statements. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
2.
Accounting policies (continued)
Grants of a revenue nature are recognised in the Statement of comprehensive income in the same period as the related expenditure.
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
2.
Accounting policies (continued)
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
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 2022
2.
Accounting policies (continued)
Provisions are charged as an expense to profit or loss in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the reporting date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Statement of financial position. 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 2022
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
There is an increase in the UK corporation tax rate from 19% to 25% (effective from 1 April 2023) which was enacted on 11 March 2021. The 19% rate will continue to apply for companies with profits up to £50,000.
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
12.
Tangible fixed assets (continued)
Cost or valuation at 30 April 2022 is as follows:
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
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 £25,111 (2021 - £23,737). Contributions totaling £5,935 (2021 - £nil) were payable to the fund at the balance sheet date.
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