The members present their annual report and financial statements for the year ended 31 May 2023.
The principal activity of Thorntons Law LLP is the conduct of a solicitors’ practice in Scotland.
Despite an unsettled political period at UK and Scottish Government leadership level, a sluggish economy, higher inflation and rising interest rates, trading across most of our business areas remained strong and our Turnover increased by 8.2% to £37.8m. Our commercial real estate, corporate, immigration, employment, intellectual property, privacy and dispute resolution teams along with our private client and family divisions demonstrated significant growth as practice areas continued to implement their strategic plans.
Activity in the period involved sizeable investment in our Glasgow operation including three lateral hires at partner level in the areas of commercial real estate and commercial litigation. We also commenced the design and planning of our new office on George Square which opened in our current financial year. We had three internal promotions to partner in dispute resolution and private client and an external partner hire in residential conveyancing. We also saw a number of newsworthy deals and client wins in areas such as agri-tech, carbon capture and green tourism.
Following an extensive salary benchmarking exercise, we invested significantly in salaries and developing career pathways in the period, further enhancing our benefits proposition. The period also saw us planning for the seven-figure replacement of our practice management system. These significant investments for the benefit of all colleagues and the long-term prosperity of the business resulted in a planned small reduction in operating profit for the period.
With a continued focus on our people and culture development, we created 10 new job roles. We continued to expand our trainee solicitor programme reinforcing our commitment and responsibility to deliver the highest quality legal training for the profession as a whole. In this period we supported 26 trainee solicitors and 9 placements/internships. Placements have come from a range of sources, such as our involvement with the Career Ready scheme, Developing the Young Workforce and with clients in the higher and further education sector, and through our support of Black Professionals Scotland.
In this financial year, we have introduced additional employee advocacy groups. A group has been established from colleagues from across the business to challenge, measure and improve our carbon footprint. Our Equality and Diversity group was also created and tackles all aspects of ED&I. These groups offer our colleagues an active role in shaping our strategy and policy on environmental and equality issues.
For the current financial year, we are planning to continue on our sustained growth trajectory. We remain completely focused on our strategy to remain a full-service, independent Scottish firm and our mission to help our clients, colleagues and communities succeed. The current financial year will also see more new colleagues join us in locations including Dundee, Edinburgh and Glasgow. It will also herald the opening of our newest location - Inverness. Merger and acquisition opportunities continue to present themselves for consideration and we will consider progressing some of those which present a strong cultural and client focused fit.
The firm’s drawings policy allows each member to draw a proportion of their profit share in twelve monthly instalments with the balance of their profits, net of a tax retention, paid in instalments in the subsequent year. All payments are made subject to the cash requirements of the business. Tax retentions are paid to HM Revenue & Customs on behalf of members with any excess being released to members as appropriate.
Each member is required to subscribe to a capital proportion linked to his or her share of profit and the financing requirements of the firm. Capital is repaid to members on retirement.
The designated members who held office during the year and up to the date of signature of the financial statements were as follows:
Henderson Loggie LLP have expressed their willingness to continue in office and a resolution will be proposed to reappoint them at the next members’ meeting.
This report is provided to summarise the limited liability partnership's environmental reporting in accordance with the UK government's policy on Streamlined Energy and Carbon Reporting (SECR).
We have calculated the carbon emissions and kWh figures using the UK Government's 2022 and 2023 Conversion Factors for Company Reporting.
The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per employee (including members).
We established our Environmental Steering Group – The Climate Crew – approximately 12 months ago and since then we have been working tirelessly on a range of initiatives.
Within our offices we continue to review our use of space and optimise use of our offices through collaborative working arrangements (departments working more closely together) which, in addition to improving team working, assists us in enabling us to reduce our footprint and energy usage. Whilst we have many long-term office lease arrangements in place we are committed to making best use of the available space (and reduce that as appropriate) whilst continuing to support hybrid working.
Other office-based initiatives include our introduction of environmentally friendly cleaning products currently being rolled out across our offices. A full suite of waste recycling facilities are in place across our offices and we also have specialist recycling facilities for items such as batteries, toner cartridges etc.
On a weekly basis we highlight environmentally friendly hints and tips to our colleagues Firm wide in our online internal communication news sheet, from reducing your energy usage at home by switching off electrical goods not currently in use rather than leaving them on standby to promoting green travel through the Cycle to Work scheme.
We monitor our energy usage very closely (for both office heating/cooling and for business travel) and will shortly be undertaking the Energy Savings Opportunity Scheme 3 report wherein further specific energy saving options will be highlighted to us. Completion of ESOS 3 was rescheduled from December 2023 to June 24.
Across our estate of offices 85% of our energy requirements – gas and electricity – are provided from renewable sources and we are aiming to increase that to 100% renewables within the next 5 years.
We are also working with an environmental consultant on developing a detailed “roadmap to Net Zero” and will engage with the entire Firm on helping us reach this objective, this being a lynchpin of our environmental strategy over the coming years.
This report has been approved by the members of the LLP. Persons who were members at any time during the financial are listed in the public register held by Companies House.
The members are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law (as applied by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008) requires the members to prepare financial statements for each financial year. Under that law the members have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice. Under company law (as applied by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008) the members 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 limited liability partnership and of the profit or loss of the limited liability partnership for that period. In preparing these financial statements, the members are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the limited liability partnership will continue in business.
The members are responsible for keeping adequate accounting records that are sufficient to show and explain the limited liability partnership’s transactions and disclose with reasonable accuracy at any time the financial position of the limited liability partnership and enable them to ensure that the financial statements comply with the Companies Act 2006 (as applied by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008). They are also responsible for safeguarding the assets of the limited liability partnership and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
We have audited the financial statements of Thorntons Law LLP (the 'limited liability partnership') for the year ended 31 May 2023 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the reconciliation of members' interests, the statement of cash flows and notes to the financial statements, including 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).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the limited liability partnership in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the members' 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 limited liability partnership’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 members with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The members 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.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 as applied to limited liability partnerships requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the members' responsibilities statement, the members are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the members determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the members are responsible for assessing the limited liability partnership's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the members either intend to liquidate the limited liability partnership or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
As part of our planning process:
We enquired of management the systems and controls the limited liability partnership has in place, the areas of the financial statements that are mostly susceptible to the risk of irregularities and fraud, and whether there was any known, suspected or alleged fraud. Management informed us that there were no instances of known, suspected or alleged fraud;
We obtained an understanding of the legal and regulatory frameworks applicable to the limited liability partnership. We determined that the following were most relevant: Law Society of Scotland regulations and Solicitors Accounts Rules; Data Protection Act 2018; employment law (including payroll and pension regulations), and compliance with the UK Companies Act as applied to LLPs;
We considered the incentives and opportunities that exist in the limited liability partnership, including the extent of management bias, which present a potential for irregularities and fraud to be perpetrated, and tailored our risk assessment accordingly; and
Using our knowledge of the limited liability partnership, together with the discussions held with management at the planning stage, we formed a conclusion on the risk of misstatement due to irregularities including fraud and tailored our procedures according to this risk assessment.
The key procedures we undertook to detect irregularities including fraud during the course of the audit included:
Inquiry of members about any known or suspected instances of non-compliance with laws and regulations and fraud;
Reviewing minutes of meetings of members;
Reviewing certificates and correspondence in relation to compliance with the Solicitors Accounts Rules and the Law Society of Scotland regulations;
Challenging assumptions and judgements made by management in their significant accounting estimates, in particular the valuation of fixed assets and work in progress, the application of accruals including potential claims provisions and dilapidations, and the application of potential bad debt provisions; and
Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness.
Owing to the inherent limitations of an audit, there is unavoidable risk that some material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). For instance, the further removed non-compliance is from the events and transactions reflected in the financial statements, the less likely the auditor is to become aware of it or to recognise the non-compliance.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the limited liability partnership's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006 as applied by the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008. Our audit work has been undertaken so that we might state to the limited liability partnership's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the limited liability partnership and the limited liability partnership's members as a body, for our audit work, for this report, or for the opinions we have formed.
The financial statements have been prepared on the basis that all operations are continuing operations.
Thorntons Law LLP profits are divided based on the profit sharing ratio applying for the year to members. For the year ended 31 May 2023, profit sharing ratios were allocated prospectively and profits were divided automatically among the members. As a result, undrawn profits were reflected in loans and other debts due to members as at 31 May 2023.
Members’ capital ranks after unsecured creditors, and loans and other debts due to members rank pari passu with unsecured creditors in the event of a winding up. The amount of capital each member is required to subscribe is determined by the members and under the LLP Agreement of Thorntons Law LLP, a member can only withdraw capital when he or she ceases to be a member.
Loans and other debts due to members includes £1,155,149 (2022 - £1,119,403) which is payable after more than one year.
Thorntons Law LLP is a limited liability partnership incorporated in Scotland. The registered office is Whitehall House, 33 Yeaman Shore, Dundee, DD1 4BJ.
The limited liability partnership's principal activities are disclosed in the Members' Report.
These financial statements have been prepared in accordance with the Statement of Recommended Practice "Accounting by Limited Liability Partnerships" issued in December 2021, together with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the limited liability partnership. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of properties. The principal accounting policies adopted are set out below.
The financial statements have been prepared on a going concern basis. The Members have considered relevant information, including the annual budget, forecast future cash flows and the impact of subsequent events in making their assessment. In response to the current economic outlook, the Members have performed a robust analysis of forecast future cash flows taking into account the potential impact on the business of possible future scenarios arising from high inflation levels and general economic conditions, and continuation of working capital funding facilities from its bankers in line with previous years. This analysis also considers the effectiveness of available measures to assist in mitigating the impact of these factors.
Based on these assessments and having regard to the resources available to the entity, the Members have concluded that there is no material uncertainty and that they can continue to adopt the going concern basis in preparing the annual report and accounts.
Services provided during the year to clients, which at the balance sheet date have not yet been billed, are recognised as turnover. Turnover is recognised by reference to an assessment of the fair value of the services provided at the balance sheet date as a proportion of the total value of the engagement. No revenue is recognised for unbilled amounts on client engagements where the right to receive consideration is contingent on factors outside the partnership’s control. Work in progress on such client engagements is valued at the lower of cost and net realisable value. Amounts recoverable under contracts represent work done at the year-end where a continuing right to receive income exists and is valued at the estimated amount recoverable in excess of fees already rendered on account.
Members’ capital is classified as a financial liability in the balance sheet. Interest payable on members’ capital is included in ‘Members’ remuneration charged as an expense in the profit and loss account.
Non-discretionary profit allocations are included in ‘Members’ remuneration charged as an expense in the profit and loss account, whilst discretionary profit allocation are classified as a division of profits within members’ interests.
All amounts due to members that are classified as liabilities are presented within 'Loans and other debts due to members' and, where such an amount relates to current year profits, they are recognised within ‘Members' remuneration charged as an expense’ in arriving at the relevant year’s result. Undivided amounts that are classified as equity are shown within ‘Members' other interests’. Amounts recoverable from members are presented as debtors and shown as amounts due from members within members’ interests.
Where there exists an asset and liability component in respect of an individual member’s participation rights, they are presented on a gross basis unless the LLP has both a legally enforceable right to set off the recognised amounts, and it intends either to settle on a net basis or to settle and realise these amounts simultaneously, in which case they are presented net.
The LLPs classifies distributions of profit under financing activities within the cash flow statement.
Goodwill is the difference between amounts paid on the acquisition of a business and the fair value of the identifiable assets and liabilities. It is amortised to the profit and loss account over its estimated economic life, which is estimated to be 5 years.
Negative goodwill is the excess of the fair value of the attributable net identifiable assets at the date of acquisition over the purchase consideration in a business combination.
Negative goodwill that can be attributed to monetary assets is recognised as income when the asset are realised.
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
Entities in which the limited liability partnership has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
At each reporting date non-financial assets not carried at fair value, like goodwill, property and equipment, are reviewed to determine whether there is an indication that an asset may be impaired. If there is an indication of possible impairment, the recoverable amount of any asset or group of related assets, which is the higher of value in use and the fair value less cost to sell, is estimated and compared with its carrying amount. If the recoverable amount is lower, the carrying amount of the asset is reduced to its recoverable amount and an impairment loss is recognised immediately in profit or loss.
If an impairment loss is subsequently reversed, the carrying amount of the asset or group of related assets is increased to the revised estimate of its recoverable amount, but not to exceed the amount that would have been determined had no impairment loss been recognised for the asset or group of related assets in prior periods. A reversal of an impairment loss is recognised immediately in profit or loss.
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
The limited liability partnership has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the limited liability partnership's statement of financial position when the limited liability partnership becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and 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.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the limited liability partnership transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the limited liability partnership after deducting all of its liabilities.
Basic financial liabilities, including creditors and bank loans are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the limited liability partnership’s obligations expire or are discharged or cancelled.
Short-term employee benefits are recognised as an expense in the period in which they are incurred.
Provisions for termination benefits are recognised only when the company is demonstrably committed to terminate the employment of an employee or of a group of employees before their normal retirement date or to provide termination benefits as a result of an offer made in order to encourage voluntary redundancy.
Thorntons Law LLP operates a contributory Group Personal Pension scheme for members of staff. Contributions to the scheme are charged to the profit and loss account when they become due.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
Professional indemnity insurance and claims
The partnership maintains substantial cover through the insurance market. Provision is made on a case-by-case basis for the estimated costs of defending claims or the uninsured excess of such claims if greater, where it is probable that costs will be incurred.
In the application of the limited liability partnership’s accounting policies, the members are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources.
The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Tangible fixed assets are depreciated over a period to reflect their estimated useful lives. The applicability of the assumed lives is reviewed annually, taking into account factors such as physical condition, maintenance and obsolescence. Fixed assets are also assessed as to whether there are indicators of impairment.
Credit control is an important function which requires assessment, on an ongoing basis, of the recoverability of amounts due from trade debtors. Where recovery is in doubt, the management will adequately provide against this specific debt and will arrive at such conclusions based on the knowledge of the debtor and their “ability to pay”. The management adopt a prudent approach to credit control.
As part of the year end process management are required to assess the ongoing performance of work in progress. This assessment results in the recognition of income and provisions against ongoing recovery depending on the degree of completion and the likelihood of a fee being raised. These judgements are made using the management's experience as well as a detailed working knowledge of the work being provided to clients.
In particular the LLP undertakes a number of engagements on a speculative “no win no fee” basis. FRS 102 requires that when the outcome of such a case can be estimated reliably, the revenue associated with the transaction should be recognised by reference to the stage of completion as at the year end. In addition, the costs incurred on these engagements can only be classified as an asset if they are both recoverable and can be measured reliably. As such, management are required to estimate the outcome of speculative engagements in terms of likely success and determine to what extent costs incurred at the year-end are recoverable and can therefore be recognised in amounts to be billed to clients within debtors. Management’s basis of measurement considers the nature of the cases, historic recovery rates and any specific issues identified in the post balance sheet period.
Management estimate the requirements for accruals using post year end information and information available from detailed budgets. This includes provisions for dilapidations and claims. This identifies costs and income that are expected to be incurred or received for services provided by and to other parties. This includes the estimation of potential claims provisions which are based upon post year end information and management knowledge of the current status of live claims. Accruals are only released when there is a reasonable expectation that these costs will not be invoiced in the future.
An analysis of the limited liability partnership's turnover is as follows:
The average number of persons (excluding members) employed by the partnership during the year was:
Their aggregate remuneration comprised:
Property is comprised of freehold property with a net book value as at 31 May 2023 of £315,000 (2022 - £320,000) and short leasehold property improvements with a net book value as at 31 May 2023 of £663,756 (2022 - £792,350).
The freehold property is held in the name of nominated companies, in which members of the LLP are directors, with signed Declaration of Trusts in place passing the beneficial interest in the assets to Thorntons Law LLP.
On 31 May 2023 a valuation was carried out over the the freehold land and buildings by J&E Shepherd, Chartered Surveyors, a professional surveying firm not connected with Thorntons Law LLP. The value of £315,000 was made on an open market value basis by reference to market evidence of transaction prices for similar properties.
The historical cost of the freehold land and buildings included in the financial statements at valuation is £300,440 (2022 - £300,440).
The LLP owns 1,200 ordinary shares in Palea Systems Limited. The registered office of the company is Kinburn Castle, Doubledykes Road, St. Andrews, Scotland. The year end of the company is 31 May 2023.
Included in other debtors is £200,000 (2022 - £200,000) which is due in more than one year.
The bank borrowings are secured by a bond and floating charge.
At the 31 May 2023 the outstanding bank loan relates to a £2,500,000 loan - repayable monthly over 5 years at a fixed rate of interest at 3.24% over base rate beginning from the start of the second year.
In addition to this, three £1,000,000 loans were taken out during the year. The first loan was repayable monthly over 6 months at a fixed interest rate of 4.12% and was repaid in full during the year. The second loan is repayable monthly over 12 months at a fixed rate of 5.70%. The third loan is repayable monthly over 6 months at a fixed rate of 3.50%.
Thorntons Law LLP operates a contributory Group Personal Pension scheme for members of staff.
In the normal course of business, Thorntons Law LLP may receive claims for alleged negligence. Substantial insurance cover is carried in respect of professional negligence, and cover is written through the commercial market. Where appropriate, provision is made for the costs arising from such claims. Taking account of expected insurance recoveries, claims notified are not expected to give rise to any material unprovided liability.
At the reporting end date the limited liability partnership had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
At 31 May 2023 the limited liability partnership had capital commitments as follows:
The total remuneration of employees and members who are considered key management personnel was £3,512,258 (2022 - £4,015,536).
During the year the LLP charged Thorntons Investment Management Limited, a company in which members of the LLP, SC Milne and CS MacPherson, are directors, management fees and other charges of £255,228 (2022 - £236,616), and the LLP was billed £2,000 (2022 - £683) from Thorntons Investment Management Limited for investment services. The amounts due to the LLP at the year end were £240,069 (2022 - £207,067). Included within this balance is a loan of £200,000 at an agreed interest rate of 2.5% over the Bank of Scotland base rate. There have been no repayments made during the year in respect of this loan and the amounts are included in other debtors due after more than one year.
In the opinion of the members there is no ultimate controlling party.