Company Registration No. 06787108 (England and Wales)
MAGNOLIA HOUSE CARE HOME LIMITED
UNAUDITED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
PAGES FOR FILING WITH REGISTRAR
MAGNOLIA HOUSE CARE HOME LIMITED
CONTENTS
Page
Statement of financial position
1 - 2
Notes to the financial statements
3 - 11
MAGNOLIA HOUSE CARE HOME LIMITED
STATEMENT OF FINANCIAL POSITION
- 1 -
2023
2022
Notes
£
£
£
£
Non-current assets
Property, plant and equipment
4
1,180,673
1,198,872
Current assets
Inventories
1,400
1,400
Trade and other receivables
5
194,866
199,476
Cash and cash equivalents
68,944
83,270
265,210
284,146
Current liabilities
6
(119,377)
(176,918)
Net current assets
145,833
107,228
Total assets less current liabilities
1,326,506
1,306,100
Non-current liabilities
7
(592,189)
(628,190)
Provisions for liabilities
Deferred tax liability
9
15,214
12,748
(15,214)
(12,748)
Net assets
719,103
665,162
Equity
Called up share capital
10
200
200
Retained earnings
11
718,903
664,962
Total equity
719,103
665,162
The directors of the company have elected not to include a copy of the income statement within the financial statements.true
For the financial year ended 30 June 2023 the company was entitled to exemption from audit under section 477 of the Companies Act 2006 relating to small companies.
The directors acknowledge their responsibilities for complying with the requirements of the Companies Act 2006 with respect to accounting records and the preparation of financial statements.
The members have not required the company to obtain an audit of its financial statements for the year in question in accordance with section 476.
These financial statements have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies regime.
MAGNOLIA HOUSE CARE HOME LIMITED
STATEMENT OF FINANCIAL POSITION (CONTINUED)
- 2 -
The financial statements were approved by the board of directors and authorised for issue on 23 February 2024 and are signed on its behalf by:
Mr T Lewis
Director
Company Registration No. 06787108
MAGNOLIA HOUSE CARE HOME LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
- 3 -
1
Accounting policies
Company information
Magnolia House Care Home Limited is a private company limited by shares incorporated in England and Wales. The registered office is 31/33 Commercial Road, Poole, Dorset, BH14 0HU. The principal place of business is Lyme Road, Axminster, EX13 5BH.
1.1
Accounting convention
These financial statements have been prepared in accordance 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 company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
1.2
Business combinations
The cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill.
The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date.
Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date.
1.3
Revenue
Revenue is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
Revenue from the supply of care services represents the value of services provided under contracts to the extent that there is a right to consideration and is recorded at the fair value of the consideration received or receivable. Where payments are received from customers in advance of services provided the amounts are recorded as deferred income and included as part of payables due within one year.
Interest income is recognised when it is probable that the economic benefits will flow to the company and the amount of revenue can be measured reliability. Interest income is accrued on a time basis, by reference to the principal outstanding and the effective interest rate applicable.
1.4
Property, plant and equipment
Property, plant and equipment are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.
MAGNOLIA HOUSE CARE HOME LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 4 -
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
Freehold land and buildings
2% straight line
Fixtures, fittings and equipment
25% straight line
Motor vehicles
25% reducing balance
Freehold land is not depreciated.
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 credited or charged to profit or loss.
1.5
Impairment of non-current assets
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.6
Inventories
Inventories are stated at the lower of cost and estimated selling price less costs to complete and sell.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of inventories over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.7
Cash and cash equivalents
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.
MAGNOLIA HOUSE CARE HOME LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 5 -
1.8
Financial instruments
The company 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 company's statement of financial position when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with 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
Basic financial assets, which include trade and other receivables 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.
Classification of financial liabilities
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 company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including trade and other payables, 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 payables 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 payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
1.9
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
MAGNOLIA HOUSE CARE HOME LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 6 -
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.11
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or non-current assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the statement of financial position as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
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 leases asset are consumed.
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.
MAGNOLIA HOUSE CARE HOME LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 7 -
1.14
Government grants
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.
Government grants relating to turnover are recognised as income over the periods when the related costs are incurred. Grants relating to an asset are recognised in income systematically over the asset's expected useful life. If part of such a grant is deferred it is recognised as deferred income rather than being deducted from the asset's carrying amount.
2
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Total
25
24
3
Intangible fixed assets
Goodwill
£
Cost
At 1 July 2022 and 30 June 2023
450,000
Amortisation and impairment
At 1 July 2022 and 30 June 2023
450,000
Carrying amount
At 30 June 2023
At 30 June 2022
MAGNOLIA HOUSE CARE HOME LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 8 -
4
Property, plant and equipment
Freehold land and buildings
Fixtures, fittings and equipment
Motor vehicles
Total
£
£
£
£
Cost
At 1 July 2022
1,244,301
212,848
7,770
1,464,919
Additions
6,933
6,933
At 30 June 2023
1,244,301
219,781
7,770
1,471,852
Depreciation and impairment
At 1 July 2022
74,837
187,137
4,073
266,047
Depreciation charged in the year
12,575
11,633
924
25,132
At 30 June 2023
87,412
198,770
4,997
291,179
Carrying amount
At 30 June 2023
1,156,889
21,011
2,773
1,180,673
At 30 June 2022
1,169,464
25,711
3,697
1,198,872
Property, plant and equipment with a carrying amount of £1,180,673 (2022 - £1,198,872) have been pledged to secure borrowings of the company.
5
Trade and other receivables
2023
2022
Amounts falling due within one year:
£
£
Trade receivables
11,693
18,833
Other receivables
172,712
170,462
Prepayments and accrued income
10,461
10,181
194,866
199,476
The carrying amount of trade and other receivables includes £194,866 (2022 - £199,476) pledged as security for liabilities
6
Current liabilities
2023
2022
£
£
Bank loans
8
40,686
42,556
Trade payables
29,179
21,386
Corporation tax
16,980
68,946
Other taxation and social security
5,785
5,990
Other payables
913
Accruals and deferred income
26,747
37,127
119,377
176,918
MAGNOLIA HOUSE CARE HOME LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 9 -
7
Non-current liabilities
2023
2022
Notes
£
£
Bank loans and overdrafts
8
592,189
628,190
Amounts included above which fall due after five years are as follows:
Payable by instalments
401,009
441,574
8
Borrowings
2023
2022
£
£
Bank loans
632,875
670,746
Payable within one year
40,686
42,556
Payable after one year
592,189
628,190
The bank loan is secured by a fixed and floating charge over the property and all other assets and undertakings of the company. Interest on the bank loan is charged at 2.45% above LIBOR and the loan matures in August 2034.
9
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
15,214
12,748
2023
Movements in the year:
£
Liability at 1 July 2022
12,748
Charge to profit or loss
2,466
Liability at 30 June 2023
15,214
Of the deferred tax asset set out above, an amount of £1,646 relating to accelerated capital allowances is expected to reverse within 12 months.
MAGNOLIA HOUSE CARE HOME LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 10 -
10
Called up share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of 10p each
2,000
2,000
200
200
Ordinary shares carry voting rights but have no right to fixed income or fixed repayment of capital.
11
Retained earnings
Retained earnings represents cumulative profits or losses, including unrealised profit on the remeasurement of investment properties, net of dividends paid and other adjustments.
12
Financial commitments, guarantees and contingent liabilities
As at 30 June 2023, the company had contingent liabilities amounting to £111,964 (2022 - £104,931) in respect of possible additional charge to corporation tax resulting from the initial apportionment on purchase of the values attributable to freehold property and goodwill. The determination of any liability to charge remains under assessment as at the financial year end.
13
Operating lease commitments
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, as follows:
2023
2022
£
£
Within one year
4,277
4,277
Between two and five years
12,342
16,619
16,619
20,896
14
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Services received
2023
2022
£
£
Entities with control, joint control or significant influence over the company
34,824
28,749
Other related parties
17,183
15,349
52,007
44,098
MAGNOLIA HOUSE CARE HOME LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
14
Related party transactions
(Continued)
- 11 -
The following amounts were outstanding at the reporting end date:
2023
2022
Amounts due to related parties
£
£
Entities with control, joint control or significant influence over the company
7,089
7,871
7,089
7,871
The following amounts were outstanding at the reporting end date:
2023
2022
Amounts due from related parties
£
£
Entities with control, joint control or significant influence over the company
63,700
63,700
Key management personnel
41,573
40,734
Other related parties
24,284
23,794
129,557
128,228
Other information
Included within other debtors and the figures above is an amount of £63,700 (2022 - £63,700) owed to the company by a limited liability partnership with related key management personnel.
15
Directors' transactions
As at 30 June 2023, £41,573 (2022 - £40,734) was owed by the directors to the company. The loan is repayable on demand and interest is charged at the official rate.
16
Controlling party
As at 30 June 2023, the company was controlled by a director, both by virtue of their direct shareholding in the company and by the rights attaching to the shares they held in the company by The Adelaide Lodge Care Home Limited Liability Partnership, which may be exercised by JGT Care Homes Limited on behalf of the Limited Liability Partnership.
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