Registered number: SC114360
DIRECTORS' REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
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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 2021
The directors have the pleasure in presenting their strategic report for the year ended 30 April 2021.
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. The directors acknowledge these latest accounts show a significant loss, which was created in the main, from the financial implications of having government-enforced national hospitality lockdown and subsequent ongoing operational restrictions due to Covid pandemic. This firstly occurred in March 2020, prior to the company’s financial year end at the end of April 2020. The loss for that previous year, after taxation, given financial momentum stalled due to the implications of the Covid pandemic amounted to £179,407 (2019 - profit £124,007). There is therefore a significant further new year-to-year differential, in now delivering the much greater loss to the end of April 2021, of £816,841. The directors are optimistic (writing as at January 2022) that financial results to the end of April 2022 may show a return to profit, and this is despite trading with very severe restrictions especially through the first quarter of the financial year beginning May 2021. Since re-opening July 6th 2020 after 3 full months of closure in that financial year, we applied extreme levels of innovation to enable us to somehow continue to trade during enforced restrictions. Otherwise the new loss amounts would potentially have been very significantly worse. Our directors pay tribute to our entire hotel brigade for embracing all such ongoing innovation, and we thank our local community for truly incredible support during the unprecedented pandemic circumstances. 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 future confirmed and diarised trade, in tandem with the company having been able to successfully access grant funding and additional CBILs lending. The company’s key performance indicators are that of turnover, gross profit, earnings before interest and tax and occupancy levels and each of these have been severely impacted upon by the Covid pandemic and resultant operational restrictions. The directors also acknowledge the continuing timeline of an element of great uncertainty in the hospitality marketplace, caused by the UK Brexit.
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BALBIRNIE HOUSE HOTEL LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2021
Notwithstanding what does lie ahead due to the intended UK Brexit, the directors and management team have still nevertheless successfully managed to re-increase confirmed 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 this equilibrium and status quo is successfully maintained. Writing this narrative as at January 2022, if we consider forecasted diarised business with effect from May 2022, the company is holding diarised business to a level which is now unprecedented in our company history. Based upon diarised trade, the directors anticipate an ongoing and continued return to historic trade levels. We note the intended scale of national Covid vaccine rollout, and we very much look forward to a return to normal trading. In 2020 the hotel achieved recognition via The Scottish Hotel of the Year awards scheme, as Scotland’s Wedding Hotel of the Year, for the fourteenth time in sixteen years. In late 2018, the hotel achieved recognition via Haute Grandeur, as ‘Best Destination Wedding Retreat’, on a global level. As at November 2019, the hotel achieved further recognition via Haute Grandeur, as ‘Best Destination Wedding Hotel’, on a global level. In 2020 two further global awards were received from Haute Grandeur, ‘Best Country House Hotel’, and ‘Best Function Venue’. In 2021 a further definitive award was received, ‘Best Wedding Hotel’, on a global level. The directors anticipate that these combined accolades may be productive for future trade. The directors feel that this unprecedented recognition with five accumulated global awards will assist with current and future marketing. These additionally bode extremely well for future trade. 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 numerous years. As at 2007, the company made very significant investments in the region of £750,000, into achieving full planning consents for significant extensions, to comprise of additional bedrooms, and a state-of-the-art 550+ member 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 investment 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 Scottish Enterprise £60,000 grant funding, during the financial year we have successfully actioned an extremely comprehensive Feasibility Study via specialised spa consultancy, designer and architect services, in a complete internal re-design and modernisation of the buildings for which we have planning permission consent in 2007, but have not yet built. This was a 4 month project inclusive of all modernised business planning. 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.
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BALBIRNIE HOUSE HOTEL LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2021
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 risk 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 Covid-19 pandemic is unprecedented and Balbirnie House Hotel Limited and the wider hospitality sector have suffered significant levels of disruption and cost. Despite this we have adapted to the circumstances with the introduction of the aforementioned diversified trading initiatives and sourced additional finance and support. The directors continue to monitor the developing situation and place the upmost emphasis on providing a safe environment for the Hotel staff and guests. The directors acknowledge that Covid-19 is likely to have an uncertain impact for a prolonged period but consider that the company will rise to the challenges, utilising further support measures appropriate to the level of restrictions. 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. Having successfully structured new financing, the company is now in progress with a new £120,000 investment, with installation of two new main boiler systems, anticipated to bring eventual efficiencies within utility costs. The directors mitigate risks by focussing on cutting edge marketing using organically-grown in-house digitalised platforms, and modern era automated efficiencies. Additionally, 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 the directors and 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. The loans from the directors are repayable on demand. The directors are aware of the company's required finance and have determined that these will only be repaid, when finance is available. In respect of hire purchase/finance lease assets, the liquidity risk in respect of these is managed to ensure sufficient funds are available to meet repayments.
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.
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BALBIRNIE HOUSE HOTEL LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2021
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 2021
The directors present their report and the financial statements for the year ended 30 April 2021.
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 £
816,841
(2020 -
loss
£
179,407
)
.
There are no proposed dividends for the year ended 30 April 2021.
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 2021
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 2021, 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.
We draw attention to the disclosure made in note 2.2 to the financial statements which highlights that although the directors have prepared the financial statements on a going concern basis, material uncertainty exists in this respect due to the indeterminate impact of Covid-19 on the company’s trading levels and consequently the effect on the company’s ability manage funding requirements for a period of at least 12 months.
Our opinion is not modified in respect of this matter.
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.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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BALBIRNIE HOUSE HOTEL LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF BALBIRNIE HOUSE HOTEL LIMITED (CONTINUED)
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.
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 2021
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BALBIRNIE HOUSE HOTEL LIMITED
REGISTERED NUMBER:
SC114360
STATEMENT OF FINANCIAL POSITION
AS AT
30 APRIL 2021
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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STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
30 APRIL 2021
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STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
30 APRIL 2020
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BALBIRNIE HOUSE HOTEL LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 APRIL 2021
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BALBIRNIE HOUSE HOTEL LIMITED
ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 30 APRIL 2021
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
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:
The directors have considered the impact of the Covid-19 pandemic including the consequences of government imposed restrictions impacting directly upon the company.
Since March 2020 the company has suffered from the government imposed restrictions in response to the Covid-19 pandemic. After the initial period of full lockdown until June 2020 a reduced level of trade has been possible although limits placed on social gatherings has significantly impacted upon the company’s ability to host weddings and special events. The directors have taken various measures to alleviate the impact on cash flow including securing additional finance and grant funding, diversifying trading activities and the control of costs. Despite this the directors acknowledge that the future impact of Covid-19 on the hotel sector and the wider economy remains uncertain. Although recognising that Covid-19 continues to give rise to potential uncertainty over the company’s trading levels in the foreseeable future the directors have considered a range of possible outcomes and having also taken account of cash and working capital availability remain confident that with further easing of the restrictions the company will continue to have access to sufficient resources to meet liabilities as they fall due for a period of at least 12 months from the date of approval of these financial statements. In view of the above, although material uncertainty exists, the directors consider it is appropriate to prepare the financial statements on a going concern basis.
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
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 2021
2.
Accounting policies (continued)
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
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 2021
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 Statement of financial position 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 2021
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
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 2021
12.
Tangible fixed assets (continued)
Cost or valuation at 30 April 2021 is as follows:
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
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BALBIRNIE HOUSE HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
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 £23,737 (2020 - £22,006). Contributions totaling £nil (2020 - £nil) were payable to the fund at the balance sheet date.
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