The failure by the K Club to write down the value of its assets has resulted in its auditors issuing an adverse opinion on the company’s latest accounts.
Accounts just filed with the Companies Office show Bishopscourt Investments Ltd and subsidiaries, which operates the five-star Co Kildare resort, recorded a pre-tax loss of €7m in 2010 that followed pre-tax losses of €6.5m in 2009.
The 2010 loss followed revenues at the group, which staged the 2006 Ryder Cup, decreasing by 12% from €11.1m to €9.8m in 2010.
The directors state subsequent to Dec 2010, “the group has incurred further losses on ordinary activities after interest”.
In its audit report, KPMG state that the group’s fixed assets are valued at €90.4m and no provision has been made for impairment. The €90.4m valuation includes a €56m value on land and buildings and €10.2m on golf course construction.
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 Dec 31, 2010”.
In their report dated Dec 14, 2012, KPMG state that in view of the failure to provide for the impairment, in their opinion, 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, which includes Michael Smurfit “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.”
Last year, Mr Smurfit purchased developer, Gerry Gannon’s 49% stake in the K Club for a reported €40m to give him full control of the business.
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