Company registration number 03207571 (England and Wales)
BREEDON HOUSE NURSERIES LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2023
BREEDON HOUSE NURSERIES LIMITED
COMPANY INFORMATION
Directors
Margaret Mason OBE
Catherine Griffin
Alan Mason
Neil Leitch
Lisa Wills
(Appointed 12 March 2024)
Company number
03207571
Registered office
Mayfield House
1 Nottingham Road
Long Eaton
Nottingham
Nottinghamshire
NG10 1HQ
Auditor
Mercer & Hole LLP
The Pinnacle
170 Midsummer Boulevard
Milton Keynes
Bucks
MK9 1BP
BREEDON HOUSE NURSERIES LIMITED
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4 - 6
Independent auditor's report
7 - 9
Statement of comprehensive income
10
Balance sheet
11
Statement of changes in equity
12
Statement of cash flows
13
Notes to the financial statements
14 - 27
BREEDON HOUSE NURSERIES LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 JULY 2023
- 1 -

The directors present the strategic report for the year ended 31 July 2023.

Fair review of the business

This year builds upon the improvements seen last year. The focus has been on improving staff recruitment to strengthen the business. This has had a positive impact on all of our settings in terms of the staff well-being and has been reflected back in financial terms.

 

We believe passionately that the first years of a child's life are crucial to their development and to this end Children 1st continues to invest in their settings and staff in order to ensure the best possible outcomes for the children in our care.

 

Our greatest asset is our dedicated staff team and we would like to thank them all for their support and diligence throughout the year.

Principal risks and uncertainties

The principal risks facing the company can broadly be grouped as competitive, legislative and financial.

 

Competitive

The main competitive risk relates to the ability of the company's nurseries to continue to meet and exceed the needs of parents and therefore continue to attract customers in their area and gain an advantage over their competitors. To this end, all the company's nurseries are committed to provide a warm, homely environment where skilled experienced staff provide exciting learning experiences and opportunities that promote the all round development of children both educationally and socially.

 

Legislative

The quality of service provided in the education sector continues to be under public scrutiny. The company has an excellent reputation within the marketplace however and continues to meet the requirements of the Office for Standards in Education, Children's Services and Skills (Ofsted). The company has a high proportion of nurseries with an Ofsted rating of "Outstanding".

 

Financial

The company's main financial instruments comprised of cash and trade creditors. The main purpose of these instruments is to provide funding for the company's operations. There are limited risks arising to the company as a result of these instruments and the directors agree policies for the management of these instruments which are detailed below:

 

a) Credit risk -the company's contract terms to customers stipulate that fees must be paid in advance and therefore any credit risk is considered to be minimal. Where fees are not paid as per the contract, the company has procedures in place to ensure any issues are addressed in a timely manner.

 

b) Liquidity risk - the group seeks to manage and minimise financial risk by ensuring that sufficient liquidity is available at all times to meet foreseeable needs and by investing cash assets safely and profitably.

BREEDON HOUSE NURSERIES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 2 -
Promoting the success of the company

The directors of the company, as those of all UK companies, must act in accordance with a set of general duties, as detailed in section 172 of the UK Companies Act 2006.

 

A director of a company must act in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its shareholders as a whole and, in doing so have regard (amongst other matters) to:

 

•The likely consequences of any decisions in the long term;

•The interests of the company's employees;

•The need to foster the company's business relationships with suppliers, customers and others;

•The impact of the company's operations on the community and environment;

•The desirability of the company maintaining a reputation for high standards of business conduct; and

•The need to act fairly as between shareholders of the company.

 

In common with most large businesses, the directors fulfil their duties partly through a governance framework that delegates day to day decision making to employees of the company. An authority matrix has been introduced to support and formalise this process and will be regularly reviewed and amended to reflect any changes to perceived risks or the environment in which the group operates.

 

Other details of how the directors fulfil their duties in each of the areas set out above are:

 

Consequences of decisions in the long term

Each year, the board undertakes a review of the company's long-term strategy, including the business plan for the following year. Once approved by the board, the plan and strategy form the basis for financial budgets, resource plans and investment decisions. In making decisions concerning the business plan and future strategy, the board has regard to a variety of matters including the interests of various stakeholders, the consequences of its decisions in the long term and its long-term reputation.

 

In approving the business plan, the directors also consider external factors such as child welfare, parental challenges, Ofsted requirements and both local and national government policy, as well as the evolving economic and market conditions. Where these factors are deemed to be significant, additional forecasting activities are undertaken to understand the impact in a timely manner and enable informed decision making. The board has agreed a set of targets for an acceptable level of financial resilience and liquidity and regularly reviews the company's forecast cash flows, funding requirements and financing options.

 

Interests of the company's employees

The directors understand the importance of the company's employees to the long-term success of the business. For our business to succeed we need to manage our people's performance and help their personal development whilst ensuring we operate as efficiently and safely as possible. The directors review performance in this area on a regular basis as well as ensuring our offering is competitive to retain our staff.

 

The business benefits from a hugely experienced team, many of whom have been with us for 15 years or more. We continually communicate with the employees to help optimise their experience of working within the company.

 

We support careers in childcare by providing apprenticeships at levels 2 and 3 in Nursery Nursing, Play work and Business Administration. We operate a process of continuous improvement for all our nurseries to ensure that they are providing high quality care and a great working environment.

 

Business relationships

The board regularly reviews how the company maintains positive relationships with all its stakeholders. It recognises that the focus of the business is on the care, education, welfare and development of the children and its relationships with parents, Ofsted and the local authority are key to this impact on the community and environment

 

The company supports a number of local charities and engages with the local communities in which it operates on key local issues, reacting promptly to any concerns.

BREEDON HOUSE NURSERIES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 3 -

High standards of business conduct

The directors take the reputation of the company seriously which is not limited to operational and financial performance. For example, the board has approved the company's policies on data protection and gender pay reporting seeking to go above and beyond that which is legislated.

On behalf of the board

Margaret Mason OBE
Director
8 April 2024
BREEDON HOUSE NURSERIES LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 JULY 2023
- 4 -

The directors present their annual report and financial statements for the year ended 31 July 2023.

Principal activities

The principal activity of the company during the year under review continued to be the provision of nursery care. The company had 24 nurseries in operation at 31 July 2023.

Results and dividends

The results for the year are set out on page 10.

Ordinary dividends were paid amounting to £3,000,000. The directors do not recommend payment of a further dividend.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

Margaret Mason OBE
Catherine Griffin
Alan Mason
Neil Leitch
Lisa Wills
(Appointed 12 March 2024)
Disabled persons

The company's policy is to recruit disabled workers for those vacancies that they are able to fill. All necessary assistance with initial training courses is given. Once employed, a career plan is developed so as to ensure suitable opportunities for each disabled person. Arrangements are made, wherever possible, for retraining employees who become disabled, to enable them to perform work identified as appropriate to their aptitudes and abilities.

Employee involvement

Information on matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the company's performance.

Auditor

The company’s auditor, Mercer & Hole, incorporated on 1 October 2022 to become Mercer & Hole LLP.  The directors have consented to treating the incorporation of Mercer & Hole LLP as a continuation of the existing audit arrangement and in accordance with the company's articles, a resolution proposing that Mercer & Hole LLP be reappointed as auditor of the company will be put at a General Meeting.

Energy and carbon report

The company's Greenhouse Gas emissions and energy use for the year are reported below.

 

All of the company's emissions and energy use relates to UK activities, there being no overseas activities. The largest element of the emissions generated by the company are electricity and gas usage by its estate of children's day care nurseries.

2023
2022
Energy consumption
kWh
kWh
Aggregate of energy consumption in the year
2,404,159
2,634,087
BREEDON HOUSE NURSERIES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 5 -
2023
2022
Emissions of CO2 equivalent
metric tonnes
metric tonnes
Scope 1 - direct emissions
- Gas combustion
299.50
332.00
Scope 2 - indirect emissions
- Electricity purchased
156.51
153.00
Total gross emissions
456.01
485.00
Intensity ratio
Tonnes CO2 per turnover £m
17.9
21.1
Quantification and reporting methodology

We have used the 2023 UK Government’s Conversion Factors for Company Reporting.

Intensity measurement

The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per £1 million of revenue.

Measures taken to improve energy efficiency

Whenever a nursey is refurbished, the company looks to put in energy saving lighting and energy efficient appliances. Building systems are maintained and serviced on a regular basis to ensure that they operate efficiently. This is supported by further activities including the development of guides to help manage equipment pro-actively and efficiently.

Statement of directors' responsibilities

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors 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 company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

 

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

BREEDON HOUSE NURSERIES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 6 -
Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

On behalf of the board
Margaret Mason OBE
Director
8 April 2024
BREEDON HOUSE NURSERIES LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF BREEDON HOUSE NURSERIES LIMITED
- 7 -
Opinion

We have audited the financial statements of Breedon House Nurseries Limited (the 'company') for the year ended 31 July 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, 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).

In our opinion the financial statements:

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 company 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 directors' 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 company'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 directors 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 directors 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.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

BREEDON HOUSE NURSERIES LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF BREEDON HOUSE NURSERIES LIMITED
- 8 -
Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

 

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, the directors 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 directors 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 directors are responsible for assessing the company'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 directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

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.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud

We gained an understanding of the legal and regulatory framework applicable to the company and the industry in which it operates and considered the risk of acts by the company that were contrary to applicable laws and regulations, including fraud. These included, but were not limited to, the requirements of the Office for Standards in Education, Children's Services and Skills, the Companies Act 2006 and tax legislation.

We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements and the financial report (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate entries including journals to overstate revenue or understate expenditure and management bias in accounting estimates.

Audit procedures performed by the engagement team included:

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non- compliance and cannot be expected to detect non-compliance with all laws and regulations.

BREEDON HOUSE NURSERIES LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF BREEDON HOUSE NURSERIES LIMITED
- 9 -

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 company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company'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 company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Paul Maberly FCA
Senior Statutory Auditor
For and on behalf of Mercer & Hole LLP
9 April 2024
Chartered Accountants
Statutory Auditor
The Pinnacle
170 Midsummer Boulevard
Milton Keynes
Bucks
MK9 1BP
BREEDON HOUSE NURSERIES LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 JULY 2023
- 10 -
2023
2022
Notes
£
£
Turnover
3
25,471,233
23,213,245
Cost of sales
(14,191,955)
(12,087,280)
Gross profit
11,279,278
11,125,965
Administrative expenses
(6,879,193)
(6,519,249)
Other operating income
67,000
104,532
Operating profit
4
4,467,085
4,711,248
Waiver of amount due from group undertaking
(4,000,000)
-
Interest receivable and similar income
8
22
3,376
Interest payable and similar expenses
9
(5,029)
(100,311)
Change in market value of investments
10
-
(104,177)
Profit before taxation
462,078
4,510,136
Tax on profit
11
(977,646)
(1,164,137)
(Loss)/profit for the financial year
(515,568)
3,345,999

The profit and loss account has been prepared on the basis that all operations are continuing operations.

BREEDON HOUSE NURSERIES LIMITED
BALANCE SHEET
AS AT
31 JULY 2023
31 July 2023
- 11 -
2023
2022
Notes
£
£
£
£
Fixed assets
Goodwill
13
2,241,781
2,412,130
Tangible assets
14
5,016,315
4,970,480
7,258,096
7,382,610
Current assets
Debtors
16
3,100,296
8,860,241
Cash at bank and in hand
4,498,506
3,155,412
7,598,802
12,015,653
Creditors: amounts falling due within one year
17
(3,507,357)
(4,483,707)
Net current assets
4,091,445
7,531,946
Total assets less current liabilities
11,349,541
14,914,556
Creditors: amounts falling due after more than one year
18
(6,123)
(31,952)
Provisions for liabilities
Deferred tax liability
20
355,408
379,026
(355,408)
(379,026)
Net assets
10,988,010
14,503,578
Capital and reserves
Called up share capital
22
100,000
100,000
Profit and loss reserves
10,888,010
14,403,578
Total equity
10,988,010
14,503,578
The financial statements were approved by the board of directors and authorised for issue on 8 April 2024 and are signed on its behalf by:
Margaret Mason OBE
Director
Company registration number 03207571 (England and Wales)
BREEDON HOUSE NURSERIES LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JULY 2023
- 12 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 August 2021
100,000
12,057,579
12,157,579
Year ended 31 July 2022:
Profit and total comprehensive income
-
3,345,999
3,345,999
Dividends
12
-
(1,000,000)
(1,000,000)
Balance at 31 July 2022
100,000
14,403,578
14,503,578
Year ended 31 July 2023:
Loss and total comprehensive income
-
(515,568)
(515,568)
Dividends
12
-
(3,000,000)
(3,000,000)
Balance at 31 July 2023
100,000
10,888,010
10,988,010
BREEDON HOUSE NURSERIES LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 JULY 2023
- 13 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
27
6,090,866
7,060,815
Interest paid
(5,029)
(100,311)
Income taxes paid
(1,478,012)
(700,019)
Net cash inflow from operating activities
4,607,825
6,260,485
Investing activities
Purchase of tangible fixed assets
(787,016)
(955,401)
Proceeds from disposal of tangible fixed assets
-
0
199
Purchase of investments
-
0
(500,000)
Proceeds from disposal of investments
-
0
1,086,785
Loans repaid/(advanced)
553,769
(1,764,134)
Interest received
22
3,376
Net cash used in investing activities
(233,225)
(2,129,175)
Financing activities
Repayment of bank loans
-
0
(1,402,317)
Payment of finance leases obligations
(31,506)
(29,652)
Dividends paid
(3,000,000)
(1,000,000)
Net cash used in financing activities
(3,031,506)
(2,431,969)
Net increase in cash and cash equivalents
1,343,094
1,699,341
Cash and cash equivalents at beginning of year
3,155,412
1,456,071
Cash and cash equivalents at end of year
4,498,506
3,155,412
BREEDON HOUSE NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2023
- 14 -
1
Accounting policies
Company information

Breedon House Nurseries Limited is a private company limited by shares incorporated in England and Wales. The registered office is Mayfield House, 1 Nottingham Road, Long Eaton, Nottingham, Nottinghamshire, NG10 1HQ.

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.

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, modified to include the revaluation of the company's investments at fair value. The principal accounting policies adopted are set out below.

This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:

 

Breedon House Nurseries Limited is a wholly owned subsidiary of BHCF3 Limited and the results of Breedon House Nurseries Limited are included in the consolidated financial statements of BHCF3 Limited which are available from its registered office.

1.2
Going concern

These financial statements are prepared on the going concern basis. In making this assessment, the directors have reviewed the trading and cash flow forecasts for the forthcoming year.  Based on these forecasts the directors believe that the company can continue to meet its obligations as thetruey fall due and that it is therefore appropriate to prepare the financial statements on a going concern basis.

1.3
Turnover

Revenue is recognised to the extent that the company obtains the right to consideration in exchange for its performance. Revenue is measured at the fair value of the consideration receivable excluding discounts and rebates. Revenue in respect of the provision of nursery care is recognised as the services are provided.

1.4
Intangible fixed assets - goodwill

Goodwill is the difference between the amount paid on the acquisition of a business and the aggregate fair value of its separable net assets.

 

Where the fair value of the consideration exceeds the fair value of the separable net assets, the difference is treated as purchased goodwill and is capitalised and amortised through the profit and loss account over its estimated economic life of 20 years.

BREEDON HOUSE NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
1
Accounting policies
(Continued)
- 15 -
1.5
Tangible fixed assets

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:

Leasehold improvements
15% reducing balance
Plant and machinery
15% and 33% reducing balance
Fixtures, fittings & equipment
15% and 33% reducing balance
Motor vehicles
25% reducing balance

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.

1.6
Fixed asset investments

Interests in subsidiaries 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.

A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

Other investments are initially measured at transaction price excluding transaction costs, and are subsequently measured at fair value at each reporting date. Changes in fair value are recognised in profit or loss. Transaction costs are expensed to profit or loss as incurred.

1.7
Impairment of fixed 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.

BREEDON HOUSE NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
1
Accounting policies
(Continued)
- 16 -
1.8
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.

1.9
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 balance sheet 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 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.

Impairment of financial assets

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.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company 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.

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.

BREEDON HOUSE NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
1
Accounting policies
(Continued)
- 17 -
Basic financial liabilities

Basic financial liabilities, including creditors and loans from fellow group undertakings, 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.

Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

1.10
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.

1.11
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account 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 profit and loss account, 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.

BREEDON HOUSE NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
1
Accounting policies
(Continued)
- 18 -
1.12
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense.

 

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.

1.13
Retirement benefits

The company operates a defined contribution scheme for the benefits of its employees. Contributions payable are charged to the profit and loss account in the year they are payable.

1.14
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 balance sheet 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.

1.15
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.

 

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.

2
Judgements and key sources of estimation uncertainty

In the application of the company’s accounting policies, the directors 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.

BREEDON HOUSE NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
2
Judgements and key sources of estimation uncertainty
(Continued)
- 19 -
Key sources of estimation uncertainty

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.

Carrying value of goodwill

The directors review the carrying value of the company's goodwill together with the associated impairment provision that may be required annually using discounted future cash flows.

3
Turnover and other revenue

An analysis of the company's turnover is as follows:

2023
2022
£
£
Turnover analysed by class of business
Provision of nursery care
18,948,015
17,147,824
Government and local authority grants
6,523,218
6,065,421
25,471,233
23,213,245
2023
2022
£
£
Other revenue
Interest income
22
3,376
Government grants
67,000
104,532
4
Operating profit
2023
2022
Operating profit for the year is stated after charging:
£
£
Depreciation of owned tangible fixed assets
741,181
738,005
(Profit)/loss on disposal of tangible fixed assets
-
5,955
Amortisation of intangible assets
170,349
170,349
Operating lease charges
1,500,175
1,267,541
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
19,250
17,500
For other services
Taxation compliance services
5,300
5,000
BREEDON HOUSE NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 20 -
6
Employees

The average monthly number of persons (including directors) employed by the company during the year was:

2023
2022
Number
Number
Administration
51
50
Nursery
680
663
Total
731
713

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
12,533,409
10,753,864
Social security costs
856,935
663,675
Pension costs
199,107
154,966
13,992,017
11,572,505
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
114,033
412,687
Company pension contributions to defined contribution schemes
1,824
3,671
115,857
416,358

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2022 - 2).

Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
n/a
333,550
Company pension contributions to defined contribution schemes
n/a
1,671

As total directors' remuneration was less than £200,000 in the current year, no disclosure is provided for that year.

BREEDON HOUSE NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 21 -
8
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
22
3,376
9
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
-
15,586
Interest on finance leases and hire purchase contracts
2,871
4,725
Other interest
2,158
80,000
5,029
100,311
10
Movement in fair value of investments
2023
2022
£
£
Fair value gains/(losses) on financial instruments
Change in value of financial assets held at fair value through profit or loss
-
0
(104,177)
11
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
1,024,537
911,656
Adjustments in respect of prior periods
(23,273)
285,617
Total current tax
1,001,264
1,197,273
Deferred tax
Origination and reversal of timing differences
(23,618)
(33,136)
Total tax charge
977,646
1,164,137
BREEDON HOUSE NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
11
Taxation
(Continued)
- 22 -

The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

2023
2022
£
£
Profit before taxation
462,078
4,510,136
Expected tax charge based on the standard rate of corporation tax in the UK of 21.01% (2022: 19.00%)
97,061
856,926
Tax effect of expenses that are not deductible in determining taxable profit
885,363
51,393
Adjustments in respect of prior years
(23,273)
285,617
Effect of change in corporation tax rate
(18,474)
(48,038)
Group relief
(30,589)
(47,024)
Permanent capital allowances in excess of depreciation
(6,294)
(22,919)
Depreciation on assets not qualifying for tax allowances
73,852
96,154
Deferred tax adjustments in respect of prior years
-
0
(7,972)
Taxation charge for the year
977,646
1,164,137
12
Dividends
2023
2022
£
£
Final paid
3,000,000
1,000,000
13
Intangible fixed assets
Goodwill
£
Cost
At 1 August 2022 and 31 July 2023
3,754,978
Amortisation and impairment
At 1 August 2022
1,342,848
Amortisation charged for the year
170,349
At 31 July 2023
1,513,197
Carrying amount
At 31 July 2023
2,241,781
At 31 July 2022
2,412,130
BREEDON HOUSE NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 23 -
14
Tangible fixed assets
Leasehold improvements
Plant and machinery
Fixtures, fittings & equipment
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 August 2022
4,461,895
1,637,963
3,862,047
46,752
10,008,657
Additions
387,610
139,599
224,827
34,980
787,016
Transfers
(62,494)
(240,356)
317,451
(14,601)
-
0
At 31 July 2023
4,787,011
1,537,206
4,404,325
67,131
10,795,673
Depreciation and impairment
At 1 August 2022
1,922,498
811,795
2,276,129
27,755
5,038,177
Depreciation charged in the year
333,718
115,317
282,295
9,851
741,181
Transfers
(17,873)
(89,226)
121,698
(14,599)
-
0
At 31 July 2023
2,238,343
837,886
2,680,122
23,007
5,779,358
Carrying amount
At 31 July 2023
2,548,668
699,320
1,724,203
44,124
5,016,315
At 31 July 2022
2,539,397
826,168
1,585,918
18,997
4,970,480
15
Fixed asset investments
2023
2022
£
£
Unlisted investments
-
-
Movements in fixed asset investments
Investments
£
Cost or valuation
At 1 August 2022 & 31 July 2023
150,000
Impairment
At 1 August 2022 & 31 July 2023
150,000
Carrying amount
At 31 July 2023
-
At 31 July 2022
-
BREEDON HOUSE NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 24 -
16
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
31,185
54,921
Amounts owed by group undertakings
2,579,821
8,055,562
Other debtors
84,171
344,614
Prepayments and accrued income
405,119
405,144
3,100,296
8,860,241
17
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Obligations under finance leases
19
25,829
31,506
Trade creditors
1,184,150
1,117,808
Corporation tax
259,117
735,865
Other taxation and social security
378,768
281,342
Other creditors
1,159,589
1,616,279
Accruals and deferred income
499,904
700,907
3,507,357
4,483,707
18
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Obligations under finance leases
19
6,123
31,952
19
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
25,829
31,506
In two to five years
6,123
31,952
31,952
63,458

Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

BREEDON HOUSE NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 25 -
20
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
370,146
388,648
Other timing differences
(14,738)
(9,622)
355,408
379,026
2023
Movements in the year:
£
Liability at 1 August 2022
379,026
Credit to profit or loss
(23,618)
Liability at 31 July 2023
355,408

The deferred tax liability set out above is expected to reverse within 36 months and relates to accelerated capital allowances that are expected to be set against future expected profits.

21
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
199,107
154,966

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

22
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of £1 each
100,000
100,000
100,000
100,000
BREEDON HOUSE NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 26 -
23
Operating lease commitments
Lessee

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

2023
2022
£
£
Within one year
1,859,179
187,482
Between two and five years
6,788,814
316,336
In over five years
34,671,000
1,151,480
43,318,993
1,655,298
24
Related party transactions

The company has taken advantage of the exemption available in the Financial Reporting Standard applicable in the UK and Republic of Ireland ("FRS 102") from the requirements to disclose transactions with the ultimate parent company or any wholly owned subsidiary undertaking of the group.

25
Directors' transactions

At the year end an amount of £nil was due to Mrs M Mason (2022: £328,406).

26
Ultimate controlling party

The company's immediate parent undertaking is BHCF2 Limited, a company incorporated in the England and Wales.

 

Following a group reorganisation the company's ultimate parent undertaking is BHCF3 Limited. Copies of BHCF3 Limited's financial statements, which incorporate the results of this company, are available from its registered office.

 

The ultimate controlling parties are Mr and Mrs Mason.

BREEDON HOUSE NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 27 -
27
Cash generated from operations
2023
2022
£
£
(Loss)/profit for the year after tax
(515,568)
3,345,999
Adjustments for:
Taxation charged
977,646
1,164,137
Finance costs
5,029
100,311
Investment income
(22)
(3,376)
(Gain)/loss on disposal of tangible fixed assets
-
5,955
Amortisation and impairment of intangible assets
170,349
170,349
Depreciation and impairment of tangible fixed assets
741,181
738,005
Waiver of amount due from group undertaking
4,000,000
-
Amounts written off investments
-
104,177
Movements in working capital:
Decrease in debtors
877,770
866,396
(Decrease)/increase in creditors
(165,519)
568,862
Cash generated from operations
6,090,866
7,060,815
28
Analysis of changes in net funds
1 August 2022
Cash flows
31 July 2023
£
£
£
Cash at bank and in hand
3,155,412
1,343,094
4,498,506
Obligations under finance leases
(63,458)
31,506
(31,952)
3,091,954
1,374,600
4,466,554
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