The failure by the K Club to write down the value of its assets has resulted in its auditors issuing an adverse opinion on its latest accounts.
Bishopscourt Investments Ltd and its subsidiaries, which operate the five-star Co Kildare resort, recorded a pretax loss of €7 million in 2010 that followed pretax losses of €6.5 million in 2009, according to the accounts. The 2010 loss followed revenues at the group, which staged the 2006 Ryder Cup at the resort, decreasing by 12 per cent to €9.8 million, from €11.1 million the previous year.
Further losses
The directors state that subsequent to December 2010, “the group has incurred further losses on ordinary activities after interest”.
In its report, auditors KPMG state that the group’s fixed assets are valued at €90.4 million and that no provision has been made for impairment. The auditors state that the effect of the omission to impair the assets “is likely to materially overstate the carrying value of the group’s fixed assets, understate its loss for the year and overstate retained earnings at December 31st, 2010”. They state that “published information concerning comparable properties indicates very significant reductions in value have been experienced”.
In their report dated December 14th, 2012, KPMG state that in view of the failure to provide for the impairment, the financial statements do not give a true and fair view of the state of the group’s affairs.
However, in a separate note attached to the accounts, it states that it is the opinion of the directors, who include Dr Michael Smurfit, that “the current market conditions are not relevant to the value of the fixed assets as they do not intend to dispose of them in the short term, but retain them for a future date when market sentiment is more favourable”.
Purchased stake
Last year, Dr Smurfit purchased developer Gerry Gannon’s 49 per cent stake in the K Club for a reported €40 million. A note attached to the accounts states that in April 2012, the company successfully concluded discussions with Nama in relation to the debt facilities included in the company’s balance sheet.
The business had bank loans totalling €55 million at the end of December 2010. However, the directors’ report, dated December 14th, 2012, states that the group no longer has external bank debt arising from a loan “from certain of the shareholders”.
The figures show the group had accumulated losses of €27 million at the end of December 2010.
