Company registration number 14404929 (England and Wales)
BHCF3 LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2023
BHCF3 LIMITED
COMPANY INFORMATION
Directors
Margaret Mason OBE
(Appointed 7 October 2022)
Hugh Mason
(Appointed 7 October 2022)
Alan Mason
(Appointed 7 October 2022)
Timothy Smith
(Appointed 7 October 2022)
Company number
14404929
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
BHCF3 LIMITED
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4 - 5
Directors' responsibilities statement
6
Independent auditor's report
7 - 9
Profit and loss account
10
Group statement of comprehensive income
11
Group balance sheet
12
Company balance sheet
13
Group statement of changes in equity
14
Company statement of changes in equity
15
Group statement of cash flows
16
Notes to the financial statements
17 - 32
BHCF3 LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 JULY 2023
- 1 -

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

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 group can broadly be grouped as competitive, legislative and financial.

 

Competitive

The main competitive risk relates to the ability of the group'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 group'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 group 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 group has a high proportion of nurseries with an Ofsted rating of "Outstanding".

 

Financial

The group's main financial instruments comprised of cash and trade creditors. The main purpose of these instruments is to provide funding for the group's operations. There are limited risks arising to the group 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 group'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 group 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.

 

BHCF3 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 group's employees;

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

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

•The desirability of the group 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 group. 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 group'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 group's forecast cash flows, funding requirements and financing options.

 

Interests of the group's employees

The directors understand the importance of the group'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 group.

 

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 group 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 group 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.

BHCF3 LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 3 -

High standards of business conduct

The directors take the reputation of the group seriously which is not limited to operational and financial performance. For example, the board has approved the group'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
BHCF3 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 group during the year continued to be that of owning and running children's nurseries. The group 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 £166,460. 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
(Appointed 7 October 2022)
Hugh Mason
(Appointed 7 October 2022)
Alan Mason
(Appointed 7 October 2022)
Timothy Smith
(Appointed 7 October 2022)
Adrian Mason
(Appointed 7 October 2022 and resigned 17 February 2023)
Jacqueline Mason
(Appointed 7 October 2022 and resigned 17 February 2023)
Disabled persons

The group'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 group's performance.

Auditor

During the preiod, Mercer & Hole LLP were appointed as auditor to the group and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.

Energy and carbon report

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

 

All of the group's emissions and energy use relates to UK activities, there being no overseas activities. The largest element of the emissions generated by the group 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
2,434,087
BHCF3 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 CO2e per employee
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 group 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 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 auditor of the company 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 auditor of the company is aware of that information.

On behalf of the board
Margaret Mason OBE
Director
8 April 2024
BHCF3 LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 JULY 2023
- 6 -

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 group and company, and of the profit or loss of the group 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 group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

BHCF3 LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF BHCF3 LIMITED
- 7 -
Opinion

We have audited the financial statements of BHCF3 Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 July 2023 which comprise the group profit and loss account, the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group 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 group and parent 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 group's and parent 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:

BHCF3 LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF BHCF3 LIMITED
- 8 -
Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and their 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 parent 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 parent 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 group and the industry in which it operates and considered the risk of acts by the group 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:

BHCF3 LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF BHCF3 LIMITED
- 9 -

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.

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
BHCF3 LIMITED
GROUP PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 JULY 2023
- 10 -
2023
2022
Notes
£
£
Turnover
3
25,471,233
23,213,246
Cost of sales
(14,191,955)
(12,087,280)
Gross profit
11,279,278
11,125,966
Administrative expenses
(6,948,384)
(6,384,515)
Other operating income
67,000
104,532
Operating profit
4
4,397,894
4,845,983
Profit on disposal of tangible fixed assets
6,569,523
-
Interest receivable and similar income
8
267,625
12,880
Interest payable and similar expenses
9
(5,029)
(290,121)
Change in market value of investments
10
1,828
(435,869)
Profit before taxation
11,231,841
4,132,873
Tax on profit
11
(182,625)
(1,215,137)
Profit for the financial year
25
11,049,216
2,917,736
Profit for the financial year is all attributable to the owners of the parent company.
BHCF3 LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 JULY 2023
- 11 -
2023
2022
£
£
Profit for the year
11,049,216
2,917,736
Other comprehensive income
Tax relating to other comprehensive income
-
0
(9,693)
Total comprehensive income for the year
11,049,216
2,908,043
Total comprehensive income for the year is all attributable to the owners of the parent company.
BHCF3 LIMITED
GROUP BALANCE SHEET
AS AT 31 JULY 2023
- 12 -
2023
2022
Notes
£
£
£
£
Fixed assets
Goodwill
13
4,802,492
5,329,863
Tangible assets
14
7,433,154
20,602,141
12,235,646
25,932,004
Current assets
Debtors
17
561,976
1,225,913
Cash at bank and in hand
5,143,302
4,092,168
5,705,278
5,318,081
Creditors: amounts falling due within one year
18
(3,976,358)
(4,910,481)
Net current assets
1,728,920
407,600
Total assets less current liabilities
13,964,566
26,339,604
Creditors: amounts falling due after more than one year
19
(6,123)
(4,452,489)
Provisions for liabilities
Deferred tax liability
22
379,711
1,383,640
(379,711)
(1,383,640)
Net assets
13,578,732
20,503,475
Capital and reserves
Called up share capital
24
420
600
Revaluation reserve
25
-
0
4,040,059
Other reserves
25
6,389,903
6,389,903
Profit and loss reserves
25
7,188,409
10,072,913
Total equity
13,578,732
20,503,475
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:
08 April 2024
Margaret Mason OBE
Director
Company registration number 14404929 (England and Wales)
BHCF3 LIMITED
COMPANY BALANCE SHEET
AS AT 31 JULY 2023
31 July 2023
- 13 -
2023
Notes
£
Fixed assets
Investments
15
2,362,027
Capital and reserves
Called up share capital
24
420
Profit and loss reserves
25
2,361,607
Total equity
2,362,027

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £19,845,387.

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:
08 April 2024
Margaret Mason OBE
Director
Company registration number 14404929 (England and Wales)
BHCF3 LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JULY 2023
- 14 -
Share capital
Revaluation reserve
Merger reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 August 2021
600
4,061,581
6,389,903
7,993,348
18,445,432
Year ended 31 July 2022:
Profit for the year
-
-
-
2,917,736
2,917,736
Other comprehensive income:
Tax relating to other comprehensive income
-
(9,693)
-
-
0
(9,693)
Total comprehensive income
-
(9,693)
-
2,917,736
2,908,043
Dividends
12
-
-
-
(850,000)
(850,000)
Transfers
-
(11,829)
-
11,829
-
Balance at 31 July 2022
600
4,040,059
6,389,903
10,072,913
20,503,475
Year ended 31 July 2023:
Profit and total comprehensive income
-
-
-
11,049,216
11,049,216
Dividends
12
-
-
-
(656,459)
(656,459)
Transfers
-
(4,040,059)
-
4,040,059
-
Demerger
(180)
-
-
(17,317,320)
(17,317,500)
Balance at 31 July 2023
420
-
0
6,389,903
7,188,409
13,578,732
BHCF3 LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JULY 2023
- 15 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Year ended 31 July 2023:
Profit and total comprehensive income
-
19,845,387
19,845,387
Issue of share capital
24
600
-
600
Dividends
12
-
(166,460)
(166,460)
Demerger
(180)
(17,317,320)
(17,317,500)
Balance at 31 July 2023
420
2,361,607
2,362,027
BHCF3 LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 JULY 2023
- 16 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
30
6,017,033
6,644,441
Interest paid
(5,029)
(290,121)
Income taxes paid
(1,620,714)
(850,806)
Net cash inflow from operating activities
4,391,290
5,503,514
Investing activities
Purchase of tangible fixed assets
(787,016)
(955,401)
Proceeds from disposal of tangible fixed assets
2,364,653
199
Purchase of investments
-
(1,000,000)
Proceeds from disposal of investments
1,828
3,787,639
Loans repaid/(advanced)
155,152
(111,394)
Interest received
267,625
12,880
Net cash generated from investing activities
2,002,242
1,733,923
Financing activities
Repayment of bank loans
(4,654,433)
(4,964,337)
Payment of finance leases obligations
(31,506)
(29,652)
Dividends paid to equity shareholders
(656,459)
(850,000)
Net cash used in financing activities
(5,342,398)
(5,843,989)
Net increase in cash and cash equivalents
1,051,134
1,393,448
Cash and cash equivalents at beginning of year
4,092,168
2,698,720
Cash and cash equivalents at end of year
5,143,302
4,092,168
BHCF3 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2023
- 17 -
1
Accounting policies
Company information

BHCF3 Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is .

 

The group consists of BHCF3 Limited and all of its subsidiaries.

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 freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.

The 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 for parent company information presented within the consolidated financial statements:

 

1.2
Business combinations

On 14 February 2023 the company acquired the entire share capital of BHCF2 Limited in a share for share exchange. The business combination has been accounted for using merger accounting which treats the merged group as if it had been combined throughout the current and comparative periods. Merger accounting principles for this combination gave rise to a merger reserve in the consolidated balance sheet, being the difference between the nominal value of new shares issued by the parent company for the acquisition of the shares of the subsidiary and the nominal value of the shares acquired.

1.3
Basis of consolidation

The consolidated group financial statements consist of the financial statements of the parent company BHCF3 Limited together with all entities controlled by the parent company (its subsidiaries).

 

All financial statements are made up to 31 July 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

 

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

BHCF3 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
1
Accounting policies
(Continued)
- 18 -

Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.

1.4
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 group can continue to meet its obligations as they fall due and that it is therefore appropriate to prepare the financial statements on a going concern basis.

1.5
Turnover

Revenue is recognised to the extent that the group 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.

1.6
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.

 

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

1.7
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:

Freehold buildings
15% straight line
Leasehold improvements
Over the term of the lease
Plant and equipment
15% and 33% reducing balance
Fixtures and fittings
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 recognised in the profit and loss account.

1.8
Fixed asset investments

Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.

 

In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

BHCF3 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
1
Accounting policies
(Continued)
- 19 -

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

1.9
Impairment of fixed assets

At each reporting period end date, the group 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.

 

The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.

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.

1.10
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.

1.11
Financial instruments

The group 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 group's balance sheet when the group 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

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.

BHCF3 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
1
Accounting policies
(Continued)
- 20 -
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 group 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 group after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including creditors, bank loans and loans from fellow group, 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 group's contractual obligations expire or are discharged or cancelled.

1.12
Equity instruments

Equity instruments issued by the group 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 group.

BHCF3 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
1
Accounting policies
(Continued)
- 21 -
1.13
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 group’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 if, and only if, there is 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.

1.14
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 fixed 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.

1.15
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.16
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 leased asset are consumed.

BHCF3 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 22 -
2
Judgements and key sources of estimation uncertainty

In the application of the group’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.

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 group's investments and associated goodwill arising on consolidation together with the associated impairment provision that may be required annually using discounted future cash flows.

3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Provision of nursery care
25,471,233
23,213,246
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
25,471,233
23,213,246
2023
2022
£
£
Other revenue
Interest income
267,625
12,880
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
843,373
812,736
(Profit)/loss on disposal of tangible fixed assets
-
5,955
Amortisation of intangible assets
527,371
527,371
Operating lease charges
905,440
295,624
BHCF3 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 23 -
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 group and company
9,000
8,500
Audit of the financial statements of the company's subsidiaries
35,000
33,500
44,000
42,000
For other services
Taxation compliance services
17,000
16,000
All other non-audit services
90,000
89,720
107,000
105,720
6
Employees

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

Group
Company
2023
2022
2023
2022
Number
Number
Number
Number
Administration
53
51
5
-
Nursery
680
663
-
-
Total
733
714
5
-
0

Their aggregate remuneration comprised:

Group
Company
2023
2022
2023
2022
£
£
£
£
Wages and salaries
12,664,242
10,976,301
-
0
-
0
Social security costs
871,444
688,669
-
-
Pension costs
199,107
154,966
-
0
-
0
13,734,793
11,819,936
-
0
-
0
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
130,833
222,437
BHCF3 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
7
Directors' remuneration
(Continued)
- 24 -
Remuneration disclosed above includes the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
n/a
119,600

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

8
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
267,625
12,880
9
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
-
205,396
Interest on finance leases and hire purchase contracts
2,871
4,725
Other interest
2,158
80,000
Total finance costs
5,029
290,121
10
Amounts written off investments
2023
2022
£
£
Fair value gains/(losses) on financial instruments
Gain/(loss) on financial assets held at fair value through profit or loss
1,828
(435,869)
11
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
1,211,128
1,050,562
Adjustments in respect of prior periods
(24,574)
276,337
Total current tax
1,186,554
1,326,899
Deferred tax
Origination and reversal of timing differences
(1,003,929)
(111,762)
Total tax charge
182,625
1,215,137
BHCF3 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
11
Taxation
(Continued)
- 25 -

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
11,231,841
4,132,873
Expected tax charge based on the standard rate of corporation tax in the UK of 21.01% (2022: 19.00%)
2,359,810
785,246
Tax effect of expenses that are not deductible in determining taxable profit
131,358
201,269
Tax effect of income not taxable in determining taxable profit
(1,377,266)
-
0
Effect of change in corporation tax rate
(174,711)
(65,565)
Permanent capital allowances in excess of depreciation
(6,294)
(22,919)
Depreciation on assets not qualifying for tax allowances
95,318
109,590
Under/(over) provided in prior years
(24,574)
276,337
Deferred tax adjustments in respect of prior years
(821,016)
(68,821)
Taxation charge
182,625
1,215,137

In addition to the amount charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:

2023
2022
£
£
Deferred tax arising on:
Revaluation of property
-
9,693
12
Dividends
2023
2022
Recognised as distributions to equity holders:
£
£
Final paid
166,460
-
BHCF3 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 26 -
13
Intangible fixed assets
Group
Goodwill
£
Cost
At 1 August 2022 and 31 July 2023
12,829,189
Amortisation and impairment
At 1 August 2022
7,499,326
Amortisation charged for the year
527,371
At 31 July 2023
8,026,697
Carrying amount
At 31 July 2023
4,802,492
At 31 July 2022
5,329,863
The company had no intangible fixed assets at 31 July 2023 or 31 July 2022.
14
Tangible fixed assets
Group
Freehold buildings
Leasehold improvements
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 August 2022
16,086,850
4,445,492
1,504,532
3,521,074
42,928
25,600,876
Additions
-
0
387,610
139,599
224,827
34,980
787,016
Disposals
(11,941,320)
(1,430,000)
-
0
(186,990)
-
0
(13,558,310)
Transfers
-
0
(62,494)
(240,356)
317,451
(14,601)
-
0
At 31 July 2023
4,145,530
3,340,608
1,403,775
3,876,362
63,307
12,829,582
Depreciation and impairment
At 1 August 2022
541,166
1,862,247
678,658
1,893,028
23,636
4,998,735
Depreciation charged in the year
94,729
334,907
115,317
288,569
9,851
843,373
Eliminated in respect of disposals
(262,069)
(32,175)
-
0
(151,436)
-
0
(445,680)
Transfers
-
0
(17,873)
(89,226)
121,698
(14,599)
-
0
At 31 July 2023
373,826
2,147,106
704,749
2,151,859
18,888
5,396,428
Carrying amount
At 31 July 2023
3,771,704
1,193,502
699,026
1,724,503
44,419
7,433,154
At 31 July 2022
15,545,684
2,583,245
825,874
1,628,046
19,292
20,602,141
The company had no tangible fixed assets at 31 July 2023 or 31 July 2022.
BHCF3 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 27 -
15
Fixed asset investments
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Investments in subsidiaries
16
-
0
-
0
2,362,027
-
0
Movements in fixed asset investments
Group
Investments
£
Cost or valuation
At 1 August 2022 and 31 July 2023
150,000
Impairment
At 1 August 2022 and 31 July 2023
150,000
Carrying amount
At 31 July 2023
-
At 31 July 2022
-
Movements in fixed asset investments
Company
Shares in subsidiaries
£
Cost or valuation
At 1 August 2022
-
Additions
19,679,527
Capital reduction
(17,317,500)
At 31 July 2023
2,362,027
Carrying amount
At 31 July 2023
2,362,027
At 31 July 2022
-
BHCF3 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 28 -
16
Subsidiaries

Details of the company's subsidiaries at 31 July 2023 are as follows:

Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Indirect
BHCF2 Limited
England and Wales
Ordinary shares
100.00
-
Breedon House Nurseries Limited
England and Wales
Ordinary shares
-
100.00
Breedon House Properties Limited
England and Wales
Ordinary shares
100.00
-
Breedon House Holdings Limited
England and Wales
Ordinary shares
-
100.00
Breedon House Group Limited
England and Wales
Ordinary shares
-
100.00
Childrens 1st Limited
England and Wales
Ordinary shares
-
100.00
17
Debtors
Group
Company
2023
2022
2023
2022
Amounts falling due within one year:
£
£
£
£
Trade debtors
31,185
54,921
-
0
-
0
Other debtors
84,670
717,767
-
0
-
0
Prepayments and accrued income
446,121
453,225
-
0
-
0
561,976
1,225,913
-
-
18
Creditors: amounts falling due within one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Bank loans
20
-
0
233,896
-
0
-
0
Obligations under finance leases
21
25,829
31,506
-
0
-
0
Trade creditors
1,198,817
1,132,475
-
0
-
0
Corporation tax payable
440,610
874,770
-
0
-
0
Other taxation and social security
382,977
286,329
-
-
Other creditors
1,416,089
1,645,279
-
0
-
0
Accruals and deferred income
512,036
706,226
-
0
-
0
3,976,358
4,910,481
-
0
-
0
19
Creditors: amounts falling due after more than one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Bank loans and overdrafts
20
-
0
4,420,537
-
0
-
0
Obligations under finance leases
21
6,123
31,952
-
0
-
0
6,123
4,452,489
-
-
BHCF3 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 29 -
20
Loans and overdrafts
Group
Company
2023
2022
2023
2022
£
£
£
£
Bank loans
-
0
4,654,433
-
0
-
0
Payable within one year
-
0
233,896
-
0
-
0
Payable after one year
-
0
4,420,537
-
0
-
0

The bank loans were secured on the group's properties.

21
Finance lease obligations
Group
Company
2023
2022
2023
2022
£
£
£
£
Future minimum lease payments due under finance leases:
Within one year
25,829
31,506
-
0
-
0
In two to five years
6,123
31,952
-
0
-
0
31,952
63,458
-
-

Finance lease payments represent rentals payable by the company or group 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. The average lease term is 3 to 5 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

22
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:

Liabilities
Liabilities
2023
2022
Group
£
£
Accelerated capital allowances
365,970
388,115
Revaluations
-
1,005,147
Other timing differences
13,741
(9,622)
379,711
1,383,640
The company has no deferred tax assets or liabilities.
BHCF3 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
22
Deferred taxation
(Continued)
- 30 -
Group
Company
2023
2023
Movements in the year:
£
£
Liability at 1 August 2022
1,383,640
-
Credit to profit or loss
(1,003,929)
-
Liability at 31 July 2023
379,711
-

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

23
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
199,107
154,966

A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.

24
Share capital
Group and company
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
A shares of 1p each
42,000
-
420
-

During the year the company issued 42,000 ordinary shares of 1p each and 18,000 B shares of 1p each in exchange for the entire share capital of BHCF2 Limited.

 

Subsequent to the acquisition the 18,000 B shares of 1p each were reclassified into 6,000 C shares of 1p each, 6,000 D shares of 1p each and 6,000 E shares of 1p each. These shares were then cancelled as part of a capital demerger.

25
Reserves
Revaluation reserve

This reserve records the amount by which the group's freehold properties have been revalued net of the tax that would be payable if the properties were disposed of at their revalued amounts.

Profit and loss reserves

This reserve includes all current and prior period retained profits and losses.

 

Other reserve

This is a merger reserve that arose on a group reorganisation undertaken in a prior period.

BHCF3 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 31 -
26
Operating lease commitments
Lessee

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

Group
Company
2023
2022
2023
2022
£
£
£
£
Within one year
1,737,331
380,344
-
-
Between two and five years
6,433,547
879,616
-
-
In over five years
30,126,740
3,723,576
-
-
38,297,618
4,983,536
-
-
27
Related party transactions
Remuneration of key management personnel

The remuneration of key management personnel is as follows.

2023
2022
£
£
Aggregate compensation
130,833
222,437
28
Directors' transactions

Dividends totalling £650,000 (2022 - £850,000) were paid in the year in respect of shares held by the company's directors.

29
Controlling party

The ultimate controlling parties are Mrs M Mason and Mr H Mason, directors.

BHCF3 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 32 -
30
Cash generated from group operations
2023
2022
£
£
Profit for the year after tax
11,049,216
2,917,736
Adjustments for:
Taxation charged
182,625
1,215,137
Finance costs
5,029
290,121
Investment income
(267,625)
(12,880)
(Gain)/loss on disposal of tangible fixed assets
(6,569,523)
5,955
Amortisation and impairment of intangible assets
527,371
527,371
Depreciation and impairment of tangible fixed assets
843,373
812,736
Other gains and losses
(1,828)
435,869
Movements in working capital:
Decrease/(increase) in debtors
508,785
(122,086)
(Decrease)/increase in creditors
(260,390)
574,482
Cash generated from operations
6,017,033
6,644,441
31
Analysis of changes in net funds/(debt) - group
1 August 2022
Cash flows
31 July 2023
£
£
£
Cash at bank and in hand
4,092,168
1,051,134
5,143,302
Borrowings excluding overdrafts
(4,654,433)
4,654,433
-
Obligations under finance leases
(63,458)
31,506
(31,952)
(625,723)
5,737,073
5,111,350
2023-07-312022-08-01falseCCH SoftwareCCH Accounts Production 2023.300Margaret Mason OBEHugh MasonAlan MasonTimothy SmithAdrian MasonJacqueline MasonfalsePaul 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