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Registration number: 13685563

Holmes Group Management Services Limited

Annual Report and Consolidated Financial Statements

for the Year Ended 31 August 2023

 

Holmes Group Management Services Limited

Contents

Company Information

1

Strategic Report

2 to 3

Directors' Report

4 to 5

Statement of Directors' Responsibilities

6

Independent Auditor's Report

7 to 9

Consolidated Profit and Loss Account

10

Consolidated Balance Sheet

11

Balance Sheet

12

Consolidated Statement of Changes in Equity

13

Statement of Changes in Equity

14

Consolidated Statement of Cash Flows

15

Notes to the Financial Statements

16 to 30

 

Holmes Group Management Services Limited

Company Information

Directors

Sharifa Lakhani

Shiraz Lakhani

Registered office

228 St Mary's Lane
Upminster
Essex
RM14 3DH

Auditors

Hazlewoods LLP
Windsor House
Bayshill Road
Cheltenham
GL50 3AT

 

Holmes Group Management Services Limited

Strategic Report for the Year Ended 31 August 2023

The directors present their strategic report for the year ended 31 August 2023. The comparative period is from 18 October 2021 to 31 August 2022.

Principal activity

The principal activity of the group is as a holding company. The principal activity of the group is the operation of residential homes for the elderly.

Fair review of the business

The results for the year, which are set out in the profit and loss account, show turnover of £52,005,754 (2022 - £38,735,233) and an operating loss of £3,158,045 (2022 - £1,233,871). At 31 August 2023, the group had net assets of £10,073,975 (2022 - £13,426,291). The directors consider the performance for the year and the financial position at the year end to be satisfactory.

The group's key financial and other performance indicators during the year were as follows:

Financial KPIs

Unit

2023

2022

Turnover

£

52,005,754

38,735,233

Average number of employees

Number

1,504

1,519

Staff costs

£

31,652,712

23,488,956

EBITDA*

£

(1,751,817)

380,866

Net assets

£

10,073,975

13,426,291

*EBITDA is calculated as operating profit plus depreciation, amortisation and impairment adjusted for profit or loss on asset disposal.

The 2022 comparative figures are for the period from 18 October 2021 to 31 August 2022.

Principal risks and uncertainties

The management of the business and the execution of the group's strategy are subject to a number of risks. The key business risks and uncertainties affecting the group are considered to relate to ongoing compliance with current and future legislation affecting the sector and the continuing level of demand for elderly residential care homes.

Section 172(1) statement

In making decisions on behalf of the Group, the Directors understand the environment the business operates which is critical in understanding the longer term impacts of decisions made. The Directors regularly monitor and assess the Group’s strategic direction.

Notable long-term decisions made in the period were how best to integrate the Kingdom Group, its systems, processes and people, into the wider Holmes Care Group.

Of vital importance to the success of the Group’s performance and strategic delivery is its employees. The Directors fully recognise and cherish the positive impact the employees make to the Group and to its care home residents. Employee welfare and wellbeing is hugely important as is ensuring they operate in a healthy and safe environment.

The Directors acknowledge and understand delivering business success is dependent upon a variety of factors. As a people-focused business delivering personalised care, business relationships with key internal and external stakeholders are of strategic importance. This extends to working ethically with suppliers, to understand the importance of strategic sourcing and ensuring the business minimises its impact upon the environment where possible.

The Group holds its brand reputation very seriously and acknowledges it can be damaged through negative impact on the environment. The business therefore holds environmental responsibility with high regard. Similarly as a business providing high quality care to communities in Scotland, the business understands the importance of strong community relationships. The Group works with local meat and dairy suppliers where possible and engages with local support staff (hairdressers, entertainers, etc).

The Group is currently assessing ways in which to undertake green initiatives as its locations and within its operational models.

Operating with sincerity and honesty and in a professional manner is important to the business and is expected from all employees. Practises such as Whistleblowing operate in the business and are taken seriously and confidentially.

The Group has a relatively simple legal entity structure. When making decisions the Directors and the Board consider the impact upon any interested parties.

 

Holmes Group Management Services Limited

Strategic Report for the Year Ended 31 August 2023

Under Section 172 of the Companies Act 2006, the Directors hereby confirm they comply with the requirements of Section 172. The Directors consider they have acted in good faith to promote the Group and deliver success for all stakeholders (employees, residents, clients, suppliers and shareholders) of the Group as stipulated in s172 of the Companies Act 2006.

Engagement with employees

Engagement with employees is high and maintained through regular company briefings, newsletters and visiting each site the business operates. When making decisions the impact upon the employees and their interests I considered.

Engagement with suppliers, customers and other relationships

The Group placed a strong emphasis on fostering robust engagement with suppliers, customers, and other key stakeholders. Our approach focused on building sustainable and mutually beneficial relationships to enhance overall business performance. Regular communication channels were established to ensure transparency, trust, and alignment with our strategic objectives. Customer engagement was prioritised through feedback mechanisms, personalised service offerings, and responsive support to meet and exceed their expectations. These efforts underscore our commitment to operating responsibly and sustainably, ensuring the long-term success and resilience of the Group.

Approved by the Board on 23 August 2024 and signed on its behalf by:


Sharifa Lakhani
Director

 

Holmes Group Management Services Limited

Directors' Report for the Year Ended 31 August 2023

The directors present their report and the for the year ended 31 August 2023.

Directors of the company

The directors who held office during the year were as follows:

Sharifa Lakhani

Shiraz Lakhani


Dividends
Dividends of £nil (2022 - £171,509) have been paid out during the period.

Employment of disabled persons

The group’s policy is to consider the recruitment of 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

The company encourages the involvement of employees in its management through regular departmental meetings.

Future developments

The Group will continue to drive performance based on the performance seen in the period and is committed to ensuring best practice is shared to the benefit of all care homes operated within the Group.

The Directors and Board are satisfied with the results for the period and remain confident of further growth through organic means and synergy opportunities.

Financial instruments

Objectives and policies

The board constantly monitors the group's trading results and revise projections as appropriate to ensure that the group can meet its future obligations as they fall due.

Price risk, credit risk, liquidity risk and cash flow risk

The group is exposed to the usual credit and cash flow risks associated with selling on credit and manages this through credit control procedures. The group's bank loans are subject to price and liquidity risk as disclosed in note 18 to the financial statements.

The group has sufficient resources available and the directors have prepared forecasts for the next 12 months that indicate that this will continue to be the case and that these cash flows will be sufficient for the group to meet its financing commitments as they fall due. The directors therefore have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future and have continued to adopt the going concern basis in preparing the financial statements.

 

Holmes Group Management Services Limited

Directors' Report for the Year Ended 31 August 2023

Disclosure of information to the auditor

Each director has taken the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditor is aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditor is unaware.

Appointment of auditors

Hazlewoods LLP were appointed as auditors to the company during the period, following the resignation of Grant Thornton UK LLP, and have expressed their willingness to continue in office.

Approved by the Board on 23 August 2024 and signed on its behalf by:


Sharifa Lakhani
Director

 

Holmes Group Management Services Limited

Statement of Directors' Responsibilities

The directors are responsible for preparing the Strategic Report, Directors' 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:

select suitable accounting policies and apply them consistently;

make judgements and accounting estimates that are reasonable and prudent;

state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group's and the company's transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

Holmes Group Management Services Limited

Independent Auditor's Report to the Members of Holmes Group Management Services Limited

Opinion

We have audited the financial statements of Holmes Group Management Services Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 August 2023, which comprise the Consolidated Profit and Loss Account, Consolidated Balance Sheet, Balance Sheet, Consolidated Statement of Changes in Equity, Statement of Changes in Equity, Consolidated Statement of Cash Flows, and Notes to the Financial Statements, including a summary of 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:

give a true and fair view of the state of the group's and the parent company's affairs as at 31 August 2023 and of the group's loss for the year then ended;

have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

have been prepared in accordance with the requirements of the Companies Act 2006.

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 responsibilities for the audit of the financial statements section of our report. We are independent of the group 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 ability to continue as a going concern for a period of at least twelve months from when the original financial statements were 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 directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. 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.

In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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.

 

Holmes Group Management Services Limited

Independent Auditor's Report to the Members of Holmes Group Management Services Limited

Opinion on other matter prescribed by the Companies Act 2006

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

the information given in the Strategic Report and Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

the Strategic Report and Directors' Report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of our 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 and the Directors' Report.

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

adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

the parent company financial statements are not in agreement with the accounting records and returns; or

certain disclosures of directors' remuneration specified by law are not made; or

we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page 6, 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 group’s and 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 group or 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.

Extent to which the audit was capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

We considered the nature of the group’s industry and its control environment and reviewed the groups’s documentation of their policies and procedures relating to fraud and compliance with laws and regulations. We also enquired of management about their own identification and assessment of the risks of irregularities.

We obtained an understanding of the legal and regulatory framework that the group operates in and identified the key laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements, including the UK Companies Act and tax legislation, and, those that do not have a direct effect on the financial statements but compliance with which may be fundamental to the group’s ability to operate or to avoid a material penalty.

We discussed among the audit engagement team regarding the opportunities and incentives that may exist within the organisation for fraud and how and where fraud might occur in the financial statements.

 

Holmes Group Management Services Limited

Independent Auditor's Report to the Members of Holmes Group Management Services Limited

In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override of controls. In addressing the risk of fraud through management override of controls, we tested the appropriateness of journal entries and other adjustments; assessed whether the judgments made in accounting estimates are indicative of a potential bias; and evaluated the business rationale of any significant transactions that are unusual or outside the normal course of business.

In addition to the above, our procedures to respond to the risks identified included the following:

reviewing financial statement disclosures by testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;

performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatements due to fraud;

enquiring of management concerning actual and potential litigation and claims and instances of non-compliance with laws and regulations; and

reading minutes of meetings of those charged with governance.

Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.

A further description of our responsibilities is available on the Financial Reporting Council's website at 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.





Simon Worsley (Senior Statutory Auditor)
For and on behalf of Hazlewoods LLP, Statutory Auditor

Windsor House
Bayshill Road
Cheltenham
GL50 3AT

23 August 2024

 

Holmes Group Management Services Limited

Consolidated Profit and Loss Account for the Year Ended 31 August 2023

Note

Year ended 31 August 2023
 £

18 October 2021 to 31 August 2022
 £

Turnover

3

52,005,754

38,735,233

Cost of sales

 

(2,929,433)

(2,216,874)

Gross profit

 

49,076,321

36,518,359

Administrative expenses

 

(52,234,366)

(37,752,230)

Operating loss

4

(3,158,045)

(1,233,871)

Other interest receivable and similar income

5

14,074

-

Interest payable and similar charges

6

(2,473,655)

(2,137,249)

Profit on disposal of subsidiaries

14

1,337,826

-

Loss before tax

 

(4,279,800)

(3,371,120)

Taxation

10

927,484

54,869

Loss for the financial year

 

(3,352,316)

(3,316,251)

Profit/(loss) attributable to:

 

Owners of the company

 

(3,352,316)

(3,316,251)

The above results were derived from continuing operations.

The group has no other comprehensive income for the year.

 

Holmes Group Management Services Limited

(Registration number: 13685563)
Consolidated Balance Sheet as at 31 August 2023

Note

31 August 2023
 £

31 August 2022
 £

Fixed assets

 

Intangible assets

11

3,396,915

3,523,546

Tangible assets

12

8,012,037

45,659,352

 

11,408,952

49,182,898

Current assets

 

Stocks

15

24,000

24,000

Debtors

16

4,857,971

4,404,303

Cash at bank and in hand

 

1,659,266

5,331,325

 

6,541,237

9,759,628

Creditors: Amounts falling due within one year

17

(7,876,214)

(8,016,235)

Net current (liabilities)/assets

 

(1,334,977)

1,743,393

Total assets less current liabilities

 

10,073,975

50,926,291

Creditors: Amounts falling due after more than one year

17

-

(37,500,000)

Net assets

 

10,073,975

13,426,291

Capital and reserves

 

Called up share capital

20

150,000

150,000

Share premium reserve

16,764,051

16,764,051

Profit and loss account

(6,840,076)

(3,487,760)

Equity attributable to owners of the company

 

10,073,975

13,426,291

Total equity

 

10,073,975

13,426,291

Approved and authorised by the Board on 23 August 2024 and signed on its behalf by:
 

Sharifa Lakhani
Director

 

Holmes Group Management Services Limited

(Registration number: 13685563)
Balance Sheet as at 31 August 2023

Note

31 August 2023
 £

31 August 2022
 £

Fixed assets

 

Investments

13

31,685,494

31,685,494

Current assets

 

Debtors: Amounts falling due within one year

16

1

1

Creditors: Amounts falling due within one year

17

(14,771,444)

(14,771,444)

Net current liabilities

 

(14,771,443)

(14,771,443)

Net assets

 

16,914,051

16,914,051

Capital and reserves

 

Called up share capital

20

150,000

150,000

Share premium reserve

16,764,051

16,764,051

Total equity

 

16,914,051

16,914,051

The company made a profit after tax for the financial year of £nil (2022 - £171,509).

Approved and authorised by the Board on 23 August 2024 and signed on its behalf by:
 

Sharifa Lakhani
Director

 

Holmes Group Management Services Limited

Consolidated Statement of Changes in Equity for the Year Ended 31 August 2023
Equity attributable to the parent company

Share capital
£

Share premium
£

Profit and loss account
£

Total
£

At 1 September 2022

150,000

16,764,051

(3,487,760)

13,426,291

Loss for the year

-

-

(3,352,316)

(3,352,316)

At 31 August 2023

150,000

16,764,051

(6,840,076)

10,073,975

Share capital
£

Share premium
£

Profit and loss account
£

Total
£

Loss for the period

-

-

(3,316,251)

(3,316,251)

Dividends

-

-

(171,509)

(171,509)

New share capital subscribed

150,000

16,764,051

-

16,914,051

At 31 August 2022

150,000

16,764,051

(3,487,760)

13,426,291

 

Holmes Group Management Services Limited

Statement of Changes in Equity for the Year Ended 31 August 2023

Share capital
£

Share premium
£

Total
£

At 1 September 2022

150,000

16,764,051

16,914,051

At 31 August 2023

150,000

16,764,051

16,914,051

Share capital
£

Share premium
£

Profit and loss account
£

Total
£

Profit for the period

-

-

171,509

171,509

Dividends

-

-

(171,509)

(171,509)

New share capital subscribed

150,000

16,764,051

-

16,914,051

At 31 August 2022

150,000

16,764,051

-

16,914,051

 

Holmes Group Management Services Limited

Consolidated Statement of Cash Flows for the Year Ended 31 August 2023

Note

Year ended 31 August 2023
 £

18 October 2021 to 31 August 2022
 £

Cash flows from operating activities

Loss for the year

 

(3,352,316)

(3,316,251)

Adjustments to cash flows from non-cash items

 

Depreciation and amortisation

4

2,109,647

1,613,433

(Profit)/loss on disposal of tangible assets

(703,419)

1,304

Profit on disposal of intangible assets

(1,337,826)

-

Decrease in amounts owed by groups

 

-

14,771,160

Finance income

5

(14,074)

-

Finance costs

6

2,473,655

2,137,249

Income tax expense

10

(927,484)

(54,869)

 

(1,751,817)

15,152,026

Working capital adjustments

 

Increase in stocks

15

-

(24,000)

Decrease/(increase) in trade debtors

16

160,909

(4,027,098)

Increase in trade creditors

17

349,090

6,051,077

Cash generated from operations

 

(1,241,818)

17,152,005

Income taxes paid

10

(180,470)

-

Net cash flow from operating activities

 

(1,422,288)

17,152,005

Cash flows from investing activities

 

Interest received

14,074

-

Acquisitions of tangible assets

(1,202,470)

(45,659,352)

Proceeds from sale of tangible assets

 

1,412,280

240,007

Acquisition of intangible assets

11

-

(3,523,546)

Net cash flows from investing activities

 

223,884

(48,942,891)

Cash flows from financing activities

 

Interest paid

 

(2,473,655)

(2,137,249)

Proceeds from bank borrowing draw downs

 

-

37,500,000

Proceeds from other borrowing draw downs

 

-

1,587,951

Dividends paid

-

171,509

Net cash flows from financing activities

 

(2,473,655)

37,122,211

Net (decrease)/increase in cash and cash equivalents

 

(3,672,059)

5,331,325

Cash and cash equivalents at 1 September

 

5,331,325

-

Cash and cash equivalents at 31 August

 

1,659,266

5,331,325

 

Holmes Group Management Services Limited

Notes to the Financial Statements for the Year Ended 31 August 2023

 

1

General information

The company is a private company limited by share capital, incorporated in England and Wales.

The address of its registered office is:
228 St Mary's Lane
Upminster
Essex
RM14 3DH

 

2

Accounting policies

Summary of significant accounting policies and key accounting estimates

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Statement of compliance

These financial statements were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland and the Companies Act 2006'.

Basis of preparation

These financial statements have been prepared using the historical cost convention except for, where disclosed in these accounting policies, certain items that are shown at fair value.

The presentational currency of the financial statements is Pounds Sterling, being the functional currency of the primary economic environment in which the company operates. Monetary amounts in these financial statements are rounded to the nearest Pound.

Basis of consolidation

The consolidated financial statements consolidate the financial statements of the company and its subsidiary undertakings drawn up to 31 August 2023.

No Profit and Loss Account is presented for the company as permitted by section 408 of the Companies Act 2006. The company made a profit after tax for the financial year of £nil (2022 - £171,509).

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

The results of subsidiaries acquired or disposed of during the year are included in the Profit and Loss Account from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the group.

The purchase method of accounting is used to account for business combinations that result in the acquisition of subsidiaries by the group. The cost of a business combination is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the business combination. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Any excess of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised is recorded as goodwill.

Inter-company transactions, balances and unrealised gains on transactions between the company and its subsidiaries, which are related parties, are eliminated in full.

Intra-group losses are also eliminated but may indicate an impairment that requires recognition in the consolidated financial statements.

Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group. Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the group’s equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling shareholder’s share of changes in equity since the date of the combination.

 

Holmes Group Management Services Limited

Notes to the Financial Statements for the Year Ended 31 August 2023

Going concern

After reviewing the company's forecasts and projections, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. The company therefore continues to adopt the going concern basis in preparing its financial statements.

Judgements and estimation uncertainty

These financial statements do not contain any significant judgements or estimation uncertainty.

Revenue recognition

Turnover comprises the fair value of the consideration received or receivable for the provision of services in the ordinary course of the group’s activities. Turnover is shown net of sales/value added tax, returns, rebates and discounts and after eliminating sales within the company. The group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the group's activities.

Tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in the profit and loss account, except that a charge attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.

The current tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the group operates and generates taxable income.

Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements and on unused tax losses or tax credits in the group. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.

The carrying amount of deferred tax assets are reviewed at each reporting date and a valuation allowance is set up against deferred tax assets so that the net carrying amount equals the highest amount that is more likely than not to be recovered based on current or future taxable profit.

Tangible assets

Tangible assets are stated in the balance sheet at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.

Depreciation

Depreciation is charged so as to write off the cost of assets, over their estimated useful lives, as follows:

Asset class

Depreciation method and rate

Freehold property

2% straight line

Short-term leasehold property

4% straight line

Plant and machinery

5% reducing balance

Motor vehicles

20%-22.5% straight line

Furniture and fittings

20%-33% straight line

Business combinations

Business combinations are accounted for using the purchase method. The consideration for each acquisition is measured at the aggregate of the fair values at acquisition date of assets given, liabilities incurred or assumed, and equity instruments issued by the group in exchange for control of the acquired, plus any costs directly attributable to the business combination. When a business combination agreement provides for an adjustment to the cost of the combination contingent on future events, the group includes the estimated amount of that adjustment in the cost of the combination at the acquisition date if the adjustment is probable and can be measured reliably.

 

Holmes Group Management Services Limited

Notes to the Financial Statements for the Year Ended 31 August 2023

Intangible assets

Goodwill arising on the acquisition of an entity represents the excess of the cost of acquisition over the group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the entity recognised at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is held in the currency of the acquired entity and revalued to the closing rate at each reporting period date.

Negative goodwill arising on an acquisition is recognised on the face of the balance sheet on the acquisition date and subsequently the excess up to the fair value of non-monetary assets acquired is recognised in profit or loss in the periods in which the non-monetary assets are recovered.

Amortisation

Amortisation is provided on intangible assets so as to write off the cost, less any estimated residual value, over their useful life as follows:

Asset class

Amortisation method and rate

Goodwill

Straight line over 5 years

Investments

Investments in equity shares which are publicly traded or where the fair value can be measured reliably are initially measured at fair value, with changes in fair value recognised in profit or loss. Investments in equity shares which are not publicly traded and where fair value cannot be measured reliably are measured at cost less impairment.

Interest income on debt securities, where applicable, is recognised in income using the effective interest method. Dividends on equity securities are recognised in income when receivable.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

Trade debtors

Trade debtors are amounts due from customers for services performed in the ordinary course of business.

Trade debtors are recognised initially at the transaction price. All trade debtors are repayable within one year and hence are included at the undiscounted cost of cash expected to be received. A provision for the impairment of trade debtors is established when there is objective evidence that the group will not be able to collect all amounts due according to the original terms of the debtors.

Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost is determined using the first-in, first-out (FIFO) method.

Trade creditors

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if the group does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.

Trade creditors are recognised initially at the transaction price and all are repayable within one year and hence are included at the undiscounted amount of cash expected to be paid.

 

Holmes Group Management Services Limited

Notes to the Financial Statements for the Year Ended 31 August 2023

Borrowings

Interest-bearing borrowings are initially recorded at fair value, net of transaction costs. Interest-bearing borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the profit and loss account over the period of the relevant borrowing.

Interest expense is recognised on the basis of the effective interest method and is included in interest payable and similar charges.

Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

Leases

Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease.

Share capital

Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.

Dividends

Dividend distribution to the group’s shareholders is recognised as a liability in the financial statements in the reporting period in which the dividends are declared.

Defined contribution pension obligation

A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the group has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.

Financial instruments

Classification
Financial instruments are classified and accounted for according to the substance of the contractual arrangement, as financial assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities. Where shares are issued, any component that creates a financial liability of the company is presented as a liability on the balance sheet. The corresponding dividends relating to the liability component are charged as interest expenses in the profit and loss account.

 Recognition and measurement
All financial assets and liabilities are initially measured at transaction price (including transaction costs), except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value (which is normally the transaction price excluding transaction costs), unless the arrangement constitutes a financing transaction. If an arrangement constitutes a financing transaction, the financial asset or financial liability is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.

 

Holmes Group Management Services Limited

Notes to the Financial Statements for the Year Ended 31 August 2023

Financial instruments (continued)

Impairment
Assets, other than those measured at fair value, are assessed for indicators of impairment at each balance sheet date. If there is objective evidence of impairment, an impairment loss is recognised in profit or loss as described below.

A non financial asset is impaired where there is objective evidence that, as a result of one or more events that occurred after initial recognition, the estimated recoverable value of the asset has been reduced. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use.

The recoverable amount of goodwill is derived from measurement of the present value of the future cash flows of the cash-generating units ('CGUs') of which the goodwill is a part. Any impairment loss in respect of a CGU is allocated first to the goodwill attached to that CGU, and then to other assets within that CGU on a pro-rata basis.

Where indicators exist for a decrease in impairment loss, the prior impairment loss is tested to determine reversal. An impairment loss is reversed on an individual impaired asset to the extent that the revised recoverable value does not lead to a revised carrying amount higher than the carrying value had no impairment been recognised. Where a reversal of impairment occurs in respect of a CGU, the reversal is applied first to the assets (other than goodwill) of the CGU on a pro-rata basis and then to any goodwill allocated to that CGU.

For financial assets carried at amortised cost, the amount of an impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

For financial assets carried at cost less impairment, the impairment loss is the difference between the asset’s carrying amount and the best estimate of the amount that would be received for the asset if it were to be sold at the reporting date.

Where indicators exist for a decrease in impairment loss, and the decrease can be related objectively to an event occurring after the impairment was recognised, the prior impairment loss is tested to determine reversal. An impairment loss is reversed on an individual impaired financial asset to the extent that the revised recoverable value does not lead to a revised carrying amount higher than the carrying value had no impairment been recognised.

 

3

Turnover

The total turnover of the group has been derived from its principal activity wholly undertaken in the United Kingdom.

 

4

Operating profit

Arrived at after charging/(crediting)

Year ended 31 August 2023
£

18 October 2021 to 31 August 2022
£

Depreciation expense

1,216,853

864,449

Amortisation expense

892,794

748,984

Operating lease expense - property

4,486,098

3,823,436

Operating lease expense - plant and machinery

126,786

-

(Profit)/loss on disposal of property, plant and equipment

(703,419)

1,304

 

5

Other interest receivable and similar income

Year ended 31 August 2023
£

18 October 2021 to 31 August 2022
£

Interest income on investments

14,074

-

 

Holmes Group Management Services Limited

Notes to the Financial Statements for the Year Ended 31 August 2023

 

6

Interest payable and similar expenses

Year ended 31 August 2023
£

18 October 2021 to 31 August 2022
£

Interest on bank overdrafts and borrowings

2,469,819

2,137,049

Interest expense on other finance liabilities

3,836

200

2,473,655

2,137,249

 

7

Staff costs

Group
The aggregate payroll costs (including directors' remuneration) were as follows:

Year ended 31 August 2023
 £

18 October 2021 to 31 August 2022
 £

Wages and salaries

28,952,662

21,511,548

Social security costs

2,234,915

1,624,488

Pension costs, defined contribution scheme

465,135

352,920

31,652,712

23,488,956

The average number of persons employed by the group (including directors) during the year, analysed by category was as follows:

Year ended 31 August 2023
 No.

18 October 2021 to 31 August 2022
 No.

Management

38

47

Administration

55

65

Carers

1,411

1,407

1,504

1,519

Company
The company incurred no staff costs and had no employees other than the directors.

 

Holmes Group Management Services Limited

Notes to the Financial Statements for the Year Ended 31 August 2023

 

8

Directors' remuneration

The directors' remuneration for the year was as follows:

Year ended 31 August 2023
£

18 October 2021 to 31 August 2022
£

Remuneration

296,000

181,188

Contributions paid to money purchase schemes

1,321

1,321

297,321

182,509

In respect of the highest paid director:

Year ended 31 August 2023
£

18 October 2021 to 31 August 2022
£

Remuneration

156,000

156,000

Company contributions to money purchase pension schemes

1,321

1,321

 

9

Auditors' remuneration

Year ended 31 August 2023
£

18 October 2021 to 31 August 2022
£

Audit of these financial statements

62,400

206,455

Other fees to auditors

Taxation compliance services

-

26,831

All other tax advisory services

-

28,840

Accounts preparation

24,300

17,500

All other non-audit services

-

1,751

24,300

74,922

 

Holmes Group Management Services Limited

Notes to the Financial Statements for the Year Ended 31 August 2023

 

10

Taxation

Tax charged/(credited) in the consolidated profit and loss account

Year ended 31 August 2023
£

18 October 2021 to 31 August 2022
£

Current taxation

UK corporation tax

(94,430)

(59,646)

UK corporation tax adjustment to prior periods

(350,676)

-

(445,106)

(59,646)

Deferred taxation

Arising from origination and reversal of timing differences

(253,259)

2,719

Arising from changes in tax rates and laws

(62,434)

2,058

Arising from previously unrecognised tax loss, tax credit or temporary difference of prior periods

(166,685)

-

Total deferred taxation

(482,378)

4,777

Tax receipt in the income statement

(927,484)

(54,869)

The tax on profit before tax for the year is higher than the standard rate of corporation tax in the UK (2022 - higher than the standard rate of corporation tax in the UK) of 21.52% (2022 - 19%).

The differences are reconciled below:

Year ended 31 August 2023
£

18 October 2021 to 31 August 2022
£

Loss before tax

(4,279,800)

(3,371,120)

Corporation tax at standard rate

(920,799)

(640,513)

Increase from effect of different UK tax rates on some earnings

-

17,004

Effect of revenues exempt from taxation

(1,242,377)

(214,892)

Effect of expense not deductible in determining taxable profit (tax loss)

1,852,805

427,765

Effect of tax losses

-

123,467

Deferred tax (credit)/expense relating to changes in tax rates or laws

(62,434)

2,058

(Decrease)/increase from tax losses for which no deferred tax asset was recognised

(144,018)

230,242

Deferred tax credit from unrecognised temporary difference from a prior period

(166,685)

-

Decrease in UK and foreign current tax from adjustment for prior periods

(350,676)

-

Tax increase from effect of capital allowances and depreciation

58,640

-

Tax increase from effect of gains on profit on disposal of fixed assets

142,490

-

Other tax effects for reconciliation between accounting profit and tax expense (income)

(94,430)

-

Total tax credit

(927,484)

(54,869)

 

Holmes Group Management Services Limited

Notes to the Financial Statements for the Year Ended 31 August 2023

Deferred tax

Group

Deferred tax assets and liabilities

2023

Asset
£

Fixed asset timing differences

184,497

Losses

806,159

Short-term timing differences

1,126

991,782

2022

Asset
£

Fixed asset timing differences

359,169

Short-term timing differences

18,036

377,205

 

11

Intangible assets

Group

Goodwill
 £

Cost

At 1 September 2022

4,272,530

Disposals

1,091,812

At 31 August 2023

5,364,342

Amortisation

At 1 September 2022

748,984

Amortisation charge

892,794

Amortisation eliminated on disposals

325,649

At 31 August 2023

1,967,427

Carrying amount

At 31 August 2023

3,396,915

At 31 August 2022

3,523,546

 

Holmes Group Management Services Limited

Notes to the Financial Statements for the Year Ended 31 August 2023

 

12

Tangible assets

Group

Land and buildings
£

Furniture, fittings and equipment
 £

Motor vehicles
 £

Total
£

Cost

At 1 September 2022

44,860,477

1,577,256

59,816

46,497,549

Additions

23,995

1,159,403

19,072

1,202,470

Disposals

(38,420,515)

-

-

(38,420,515)

At 31 August 2023

6,463,957

2,736,659

78,888

9,279,504

Depreciation

At 1 September 2022

440,508

388,630

9,059

838,197

Charge for the year

567,341

629,638

19,874

1,216,853

Eliminated on disposal

(787,583)

-

-

(787,583)

At 31 August 2023

220,266

1,018,268

28,933

1,267,467

Carrying amount

At 31 August 2023

6,243,691

1,718,391

49,955

8,012,037

At 31 August 2022

44,419,969

1,188,626

50,757

45,659,352

Included within the net book value of land and buildings is £5,242,270 (2022 - £43,373,029) in respect of freehold land and buildings and £1,001,421 (2022 - £1,046,940) in respect of short term leasehold property.

 

Holmes Group Management Services Limited

Notes to the Financial Statements for the Year Ended 31 August 2023

 

13

Investments

For the year ending 31 August 2023 the following subsidiaries were entitled to exemption from audit under section 479A of the Companies Act 2006 relating to subsidiary companies:

The Holmes Care Limited

Holmes Care Group Scotland Ltd

The Holmes Care (Group) Limited

Company

2023
£

2022
£

Investments in subsidiaries

31,685,494

31,685,494

Subsidiaries

£

Cost and carrying amount

At 1 September 2022 and at 31 August 2023

31,685,494

Details of undertakings

Details of the investments (including principal place of business of unincorporated entities) in which the company holds 20% or more of the nominal value of any class of share capital are as follows:

Undertaking

Registered office

Holding

Proportion of voting rights and shares held

     

2023

2022

Subsidiary undertakings

The Holmes Care (Group) Limited

England and Wales

Ordinary

100%

100%

The Holmes Care Limited

England and Wales

Ordinary

100%

100%

Holmes Care Group Scotland Ltd

Scotland

Ordinary

100%

100%

Morar Properties Limited

Scotland

Ordinary

95%

95%

Holmes Care (Nelson) Limited

England and Wales

Ordinary

100%

100%

Kingdom Finco 1 Ltd

England and Wales

Ordinary

0%

100%

Kingdom Homes Limited

Scotland

Ordinary

0%

100%

Barrogil Limited

Scotland

Ordinary

0%

100%

Holmes Care (Group) Limited is held directly.

 

Holmes Group Management Services Limited

Notes to the Financial Statements for the Year Ended 31 August 2023

Subsidiary undertakings

The Holmes Care (Group) Limited

The principal activity of The Holmes Care (Group) Limited is as an intermediate holding company.

The Holmes Care Limited

The principal activity of The Holmes Care Limited is the provision of residential nursing care.

Holmes Care Group Scotland Ltd

The principal activity of Holmes Care Group Scotland Ltd is the provision of residential nursing care.

Morar Properties Limited

The principal activity of Morar Properties Limited is as a property holding company.

Holmes Care (Nelson) Limited

The principal activity of Holmes Care (Nelson) Limited is as a property holding company.

Kingdom Finco 1 Ltd

The principal activity of Kingdom Finco 1 Ltd is as an intermediate holding company.

Kingdom Homes Limited

The principal activity of Kingdom Homes Limited is the provision of residential nursing care.

Barrogil Limited

The principal activity of Barrogil Limited is the provision of residential nursing care.

 

14

Disposals

On 28 June 2023, the group disposed of its interest in Kingdom Finco 1 Limited. The gain/(loss) on disposal of Kingdom Finco 1 Limited was £1,337,826. Kingdom Finco 1 Limited contributed £1,178,188 to the group profit/(loss).

 

15

Stocks

 

Group

Company

2023
£

2022
£

2023
£

2022
£

Consumables

24,000

24,000

-

-

 

16

Debtors

 

Group

Company

31 August 2023
 £

31 August 2022
 £

31 August 2023
 £

31 August 2022
 £

Trade debtors

1,647,487

2,432,358

-

-

Other debtors

424,931

222,272

1

1

Prepayments and accrued income

1,793,771

1,372,468

-

-

Deferred tax assets

991,782

377,205

-

-

Total current trade and other debtors

4,857,971

4,404,303

1

1

 

Holmes Group Management Services Limited

Notes to the Financial Statements for the Year Ended 31 August 2023

 

17

Creditors

   

Group

Company

Note

31 August 2023
 £

31 August 2022
 £

31 August 2023
 £

31 August 2022
 £

Due within one year

 

Trade creditors

 

1,733,441

1,680,457

-

-

Amounts due to group undertakings

 

-

-

14,771,444

14,771,444

Social security and other taxes

 

761,192

1,158,704

-

-

Outstanding defined contribution pension costs

 

111,923

-

-

-

Other creditors

 

946,993

960,879

-

-

Accrued expenses

 

2,828,481

2,425,870

-

-

Corporation tax liability

10

23,671

202,374

-

-

Directors' loan accounts

 

1,470,513

1,587,951

-

-

 

7,876,214

8,016,235

14,771,444

14,771,444

Due after one year

 

Loans and borrowings

18

-

37,500,000

-

-

 

18

Loans and borrowings

   

Group

Company

31 August 2023
£

31 August 2022
£

31 August 2023
£

31 August 2022
£

Non-current loans and borrowings

Bank borrowings

 

-

37,500,000

-

-

The group's financing facility included a loan of £37.5m from Impact Property 6 Limited. This loan accrued at an annual interest of 8.75% and was disposed of as part of the sale of certain subsidiaries.

 

19

Pension and other schemes

Defined contribution pension scheme

The group operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the group to the scheme and amounted to £465,135 (2022 - £352,920).

Contributions totalling £111,923 (2022 - £88,682) were payable to the scheme at the end of the year and are included in creditors.

 

Holmes Group Management Services Limited

Notes to the Financial Statements for the Year Ended 31 August 2023

 

20

Share capital

Allotted, called up and fully paid shares

 

31 August 2023

31 August 2022

 

No.

£

No.

£

Ordinary shares of £1 each

150,000

150,000

150,000

150,000

         
 

21

Obligations under leases and hire purchase contracts

Group

Operating leases

The total of future minimum lease payments is as follows:

2023
£

2022
£

Not later than one year

6,281,000

3,500,000

Later than one year and not later than five years

25,124,000

14,000,000

Later than five years

129,025,000

63,000,000

160,430,000

80,500,000

 

22

Dividends

31 August 2023
 £

31 August 2022
 £

Dividends paid

-

171,509

 

23

Analysis of changes in net debt

Group

At 1 September 2022
£

Financing cash flows
£

Other non-cash changes
£

At 31 August 2023
£

Cash and cash equivalents

Cash

5,331,325

(3,672,059)

-

1,659,266

Borrowings

Bank loans

(37,500,000)

-

37,500,000

-

Directors' loan accounts

(1,587,951)

47,446

-

(1,540,505)

(39,087,951)

47,446

37,500,000

(1,540,505)

 

(33,756,626)

(3,624,613)

37,500,000

118,761


Other non-cash changes comprise bank loans which were disposed of on sale of a subsidiary, but were not immediately repaid on the sale date.

 

Holmes Group Management Services Limited

Notes to the Financial Statements for the Year Ended 31 August 2023

 

24

Related party transactions

Summary of transactions with key management

Key management personnel are considered to be the directors of the company and key management personnel compensation is disclosed in note 8 to the financial statements.

The Group owed £56,250 (2022 - £18,750) at the period end to Care Cottage Limited, a company controlled by a director, Shiraz Lakhani. The Group was charged £75,000 (2022 - £75,000) by Care Cottage Limited for rental of office premises.

The Group has outstanding obligations of £1,724,245 (2022 - £1,843,873) to Shiraz Lakhani. Sharifa Lakhani and Indumati Lakhani owe £188,190 (2022 - £124,642) and £65,542 (2022 - £65,542) to the Group respectively.

 

25

Parent and ultimate parent undertaking

The most senior parent entity producing publicly available financial statements is Holmes Group Management Services Limited. These financial statements are available upon request from the company's registered office

 The ultimate controlling party is the directors.