HILTON_OF_ROSYTH_NHT_2014 - Accounts

In order to assist you to fulfil your duties under the Companies Act 2006, we have prepared for your approval the financial statements of Hilton of Rosyth NHT 2014 LLP for the year ended 31 March 2020 set out on pages 2 to 9 from the limited liability partnership’s accounting records and from information and explanations you have given us.

As a practising member firm of the ICAS we are subject to its ethical and other professional requirements which are detailed at https://www.icas.com/FrameworkforthePreparationofAccounts.

This report is made solely to the members of Hilton of Rosyth NHT 2014 LLP, as a body, in accordance with the terms of our engagement. Our work has been undertaken to enable us to prepare the financial statements on your behalf and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than Hilton of Rosyth NHT 2014 LLP and its members as a body, for our work or for this report

It is your duty to ensure that Hilton of Rosyth NHT 2014 LLP has kept adequate accounting records and to prepare statutory financial statements that give a true and fair view of the assets, liabilities, financial position and profit of Hilton of Rosyth NHT 2014 LLP. You consider that Hilton of Rosyth NHT 2014 LLP is exempt from the statutory audit requirement for the year.

The members of the limited liability partnership have elected not to include a copy of the profit and loss account within the financial statements.

For the financial year ended 31 March 2020 the limited liability partnership was entitled to exemption from audit under section 477 of the Companies Act 2006 (as applied by the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008) relating to small limited liability partnerships.

The members acknowledge their responsibilities for complying with the requirements of the Act (as applied to limited liability partnerships) with respect to accounting records and the preparation of accounts.

These financial statements have been prepared and delivered in accordance with the provisions applicable to limited liability partnerships subject to the small limited liability partnerships regime.

Hilton of Rosyth NHT 2014 LLP is a limited liability partnership incorporated in Scotland. The registered office is Kiloran Hall, Middle Balado, KINROSS, KY13 0NH.

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 2018, 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 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.

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 investment properties at fair value. The principal accounting policies adopted are set out below.

The COVID-19 pandemic developed rapidly in 2020, with a significant number of cases. Measures taken by various governments to contain the virus have affected economic activity. We have taken a number of measures to monitor and mitigate the effects of COVID-19, such as increased risk of arrears and voids due to potential impacts on earnings. Increased monitoring and support for tenants throughout the pandemic has resulted in the members making an informed judgement that there is a reasonable expectation that the entity will continue in operational existence for the foreseeable future.

Members' participation rights are the rights of a member against the LLP that arise under the members' agreement (for example, in respect of amounts subscribed or otherwise contributed remuneration and profits).

Members' participation rights in the earnings or assets of the LLP are analysed between those that are, from the LLP's perspective, either a financial liability or equity, in accordance with section 22 of FRS 102. A member's participation rights including amounts subscribed or otherwise contributed by members, for example members' capital, are classed as liabilities unless the LLP has an unconditional right to refuse payment to members, in which case they are classified as equity.

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.

Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently it is measured at fair value at the reporting end date. Changes in fair value are recognised in profit or loss.

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, 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.

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

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 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, bank loans, loans from fellow group companies and preference shares that are classified as debt, 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.

Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.

The investment properties are shown at cost which the members believe represents current open market value.

In the event of a winding up the amounts included in "Loans and other debts due to members" (see Note Members' Transactions) will rank equally with other unsecured creditors, in accordance with the Member's Agreement.

At the year end the balance of the loan note in favour of The Fife Council, a member of the LLP, was £10,143,689 (2019: £10,143,689). The loan is included within loans and other debts due to members after one year. This debt is secured by way of first ranking bond and floating charge in favour of The Fife Council. The loan note is further guaranteed by the Scottish Ministers. The loan has interest charged at 4% per annum and the charge during the year was £396,556 (2019: £382,266). At the year end £0 (2019: £212,065) remains outstanding and is included within loans and other debts due to members after one year.

At the year end the balance of the loan note in favour of Kapital Residential Limited, a member of the LLP, was £714,089 (2019: £714,089). The loan is included within loans and other debts due to members after one year. This loan note is secured by way of a second ranking bond and floating charge in favour of Kapital Residential Limited. Interest is charged at 6% per annum and the charge during the year was £42,845 (2019: £40,449).

During the year the entity paid expenses amounting to £1,177 (2019: £1,438) on behalf Kapital Residential Limited. During the year £85,000 (2019: £436,291) was repaid to Kapital Residential Limited. Retentions released during the year to Kapital Residential Limited amounted to £55,978 (2019: £129,660). At the year end balance due from Kapital Residential Limited to the LLP in respect of amounts drawn in excess of loan note interest, retentions, management charges, insurances charges and monitoring fees amounted to £169,517 (2019: £182,163) and is included within loans and other debts due to members after one year.

Management charges, insurance charges and monitoring fees have been paid to Kapital Residential Limited amounting to £130,428 (2019: £122,267), £19,492 (2019: £18,267) and £0 (2019: £18,386) respectively.

At the year end, Retentions due to Kapital Residential Limited amounted to £28,589 (2019; £84,567) and is included within loans and other debts due to members after one year.

A capital contribution of £0 (2019: £520,557) in favour of Kapital Residential Limited is included within loans and other debts due to members after more than one year. At the year end a balance of capital contributions due to Kapital Residential Limited amounted to £3,702,671 (2019: £3,702,671).