Company Registration No. 04318265 (England and Wales)
ACORN LODGE LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 NOVEMBER 2023
ACORN LODGE LIMITED
COMPANY INFORMATION
Directors
Mr N J Lukka
Mr B N Lukka
Secretary
Mrs A N Lukka
Company number
04318265
Registered office
Macneil House
9-17 Lodge Lane
London
N12 8JH
Auditor
HW Fisher LLP
Acre House
11-15 William Road
London
NW1 3ER
United Kingdom
Bankers
Royal Bank of Scotland
5-10 Great Tower Street
London
EC3P 3HX
Handlesbanken
2nd Floor Hathaway House
Popes Drive
Finchley Central
London
N3 1QF
ACORN LODGE LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2
Directors' responsibilities statement
3
Independent auditor's report
4 - 6
Statement of comprehensive income
7
Balance sheet
8
Statement of changes in equity
9
Statement of cash flows
10
Notes to the financial statements
11 - 23
ACORN LODGE LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 1 -
The directors present the strategic report for the year ended 30 November 2023.
Fair review of the business
The principal activity of the company continues to be the provision of nursing home facilities for the elderly.
The company made a pre-tax profit of £2,453,263 (2022: £2,380,048) for the year on a turnover of £6,179,709 (2022: £5,193,606).
At 30 November 2023 the company had net assets of £23,974,263 (2022: £22,084,556).
Principal risks and uncertainties
The directors recognise that within the business there are a number of risks which may affect the performance of the company. These risks are subject to regular review and, where appropriate, processes are established to minimise the level of exposure.
Regulatory - the company's nursing home is regulated by the Care Quality Commission and is exposed to adverse findings that the Commission may raise. The company ensures that the nursing home is run to a high standard and to-date no such adverse findings have been reported.
Financial risk - the company is exposed to financial risk through its assets and liabilities. The key financial risk is that, in the current climate, the proceeds from its assets may not be sufficient to fund the obligations from liabilities as they fall due. The most important components of financial risk are:
1) Credit risk - the company continues to minimise commercial credit risk and has not suffered unduly from bad debts.
2) Interest rate risk - the company's borrowings are on a variable rate basis and the company is exposed to potential increases in interest rates. The company continues to monitor its interest obligations and its investment portfolio to ensure that future increases in interest rates will not unduly affect the performance of the business.
Key performance indicators
In the opinion of the directors, occupancy percentage and average fee per resident are considered key performance indicators when assessing business performance and is reviewed monthly by the management team, with both having remained in line with the directors' expectations, in the current climate.
EBITDA is also considered a key performance indicator and is reviewed on a monthly basis, by the management team.
Mr N J Lukka
Director
29 August 2024
ACORN LODGE LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 2 -
The directors present their annual report and financial statements for the year ended 30 November 2023.
Results and dividends
The results for the year are set out on page 7.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr N J Lukka
Mr B N Lukka
Auditor
The auditor, HW Fisher LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the director has taken all the necessary steps that he ought to have taken as director in order to be aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
Mr N J Lukka
Director
29 August 2024
ACORN LODGE LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 3 -
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
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 company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
ACORN LODGE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF ACORN LODGE LIMITED
- 4 -
Opinion
We have audited the financial statements of Acorn Lodge Limited (the 'company') for the year ended 30 November 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 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 company's affairs as at 30 November 2023 and of its profit 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.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
ACORN LODGE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF ACORN LODGE LIMITED
- 5 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report 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, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of 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 directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
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.
As part of our planning process:
We enquired of management the systems and controls the company has in place, the areas of the financial statements that are mostly susceptible to the risk of irregularities and fraud, and whether there was any known, suspected or alleged fraud. The company did not inform us of any known, suspected or alleged fraud.
We obtained an understanding of the legal and regulatory frameworks applicable to the company. We determined that the following were most relevant: FRS 102, Companies Act 2006 and CQC compliance.
We considered the incentives and opportunities that exist in the company, including the extent of management bias, which present a potential for irregularities and fraud to be perpetuated, and tailored our risk assessment accordingly.
Using our knowledge of the company, together with the discussions held with the company at the planning stage, we formed a conclusion on the risk of misstatement due to irregularities including fraud and tailored our procedures according to this risk assessment.
The key procedures we undertook to detect irregularities including fraud during the course of the audit included:
Identifying and testing journal entries and the overall accounting records, in particular those that were significant and unusual.
Reviewing the financial statement disclosures and determining whether accounting policies have been appropriately applied.
Reviewing and challenging the assumptions and judgements used by management in their significant accounting estimates, in particular in relation to property valuations.
Assessing the extent of compliance, or lack of, with the relevant laws and regulations.
Testing key revenue lines, in particular cut-off, for evidence of management bias.
Verifying the existence of key assets.
Obtaining third-party confirmation of material bank and loan balances.
Documenting and verifying all significant related party balances and transactions.
ACORN LODGE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF ACORN LODGE LIMITED
- 6 -
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. The primary responsibility for the prevention and detection of irregularities and fraud rests with the directors.
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.
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.
Gilles Siow (Senior Statutory Auditor)
For and on behalf of HW Fisher LLP
Chartered Accountants
Statutory Auditor
Acre House
11-15 William Road
London
NW1 3ER
United Kingdom
29 August 2024
ACORN LODGE LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 7 -
2023
2022
Notes
£
£
Turnover
3
6,179,709
5,193,606
Cost of sales
(3,345,936)
(3,071,979)
Gross profit
2,833,773
2,121,627
Administrative expenses
(434,511)
(413,822)
Other operating income
71,816
114,743
Operating profit
4
2,471,078
1,822,548
Interest receivable and similar income
6
102,554
54,676
Interest payable and similar expenses
7
(201,569)
(103,796)
Investment gains/(losses)
8
81,200
606,620
Profit before taxation
2,453,263
2,380,048
Taxation
9
(563,236)
(501,653)
Profit for the financial year
1,890,027
1,878,395
Other comprehensive income
Tax relating to other comprehensive income
47,614
Total comprehensive income for the year
1,890,027
1,926,009
The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
ACORN LODGE LIMITED
BALANCE SHEET
AS AT
30 NOVEMBER 2023
30 November 2023
- 8 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
10
12,449,520
12,345,104
Investments
11
1,420,328
1,420,228
13,869,848
13,765,332
Current assets
Debtors
14
6,970,295
11,262,660
Investments
15
1,792,000
1,710,800
Cash at bank and in hand
6,842,637
1,294,852
15,604,932
14,268,312
Creditors: amounts falling due within one year
16
(2,236,303)
(1,232,750)
Net current assets
13,368,629
13,035,562
Total assets less current liabilities
27,238,477
26,800,894
Creditors: amounts falling due after more than one year
17
(1,595,224)
(3,046,233)
Provisions for liabilities
Deferred tax liability
19
1,668,670
1,670,105
(1,668,670)
(1,670,105)
Net assets
23,974,583
22,084,556
Capital and reserves
Called up share capital
21
100
100
Revaluation reserve
7,690,634
7,815,968
Profit and loss reserves
16,283,849
14,268,488
Total equity
23,974,583
22,084,556
The financial statements were approved by the board of directors and authorised for issue on 29 August 2024 and are signed on its behalf by:
Mr N J Lukka
Director
Company Registration No. 04318265
ACORN LODGE LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 9 -
Share capital
Revaluation reserve
Profit and loss reserves
Total
£
£
£
£
Balance at 1 December 2021
100
7,893,687
12,264,760
20,158,547
Year ended 30 November 2022:
Profit for the year
-
-
1,878,395
1,878,395
Other comprehensive income:
Tax relating to other comprehensive income
-
47,614
47,614
Total comprehensive income for the year
47,614
1,878,395
1,926,009
Transfers
-
(125,333)
125,333
-
Balance at 30 November 2022
100
7,815,968
14,268,488
22,084,556
Year ended 30 November 2023:
Profit and total comprehensive income for the year
-
-
1,890,027
1,890,027
Transfers
-
(125,334)
125,334
-
Balance at 30 November 2023
100
7,690,634
16,283,849
23,974,583
ACORN LODGE LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 10 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
24
6,579,487
608,376
Interest paid
(201,569)
(103,796)
Income taxes paid
(460,398)
(418,620)
Net cash inflow from operating activities
5,917,520
85,960
Investing activities
Purchase of tangible fixed assets
(345,905)
(52,005)
Purchase of subsidiaries
(100)
Interest received
36,873
132
Dividends received
65,681
54,544
Net cash (used in)/generated from investing activities
(243,451)
2,671
Financing activities
Repayment of bank loans
(126,284)
(238,110)
Net cash used in financing activities
(126,284)
(238,110)
Net increase/(decrease) in cash and cash equivalents
5,547,785
(149,479)
Cash and cash equivalents at beginning of year
1,294,852
1,444,331
Cash and cash equivalents at end of year
6,842,637
1,294,852
ACORN LODGE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 11 -
1
Accounting policies
Company information
Acorn Lodge Limited is a private company limited by shares incorporated in England and Wales. The registered office is Macneil House, 9-17 Lodge Lane, London, N12 8JH.
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 certain financial instruments at fair value. The principal accounting policies adopted are set out below.
1.2
Going concern
The truedirectors have considered the effect of the on-going Covid-19 pandemic. As the company operates in the care sector, the pandemic caused some disruption to the company’s business. However with tighter operational controls, accompanied by various government grants and financial assistance, the directors have been able to mitigate the Covid-19 impact on the business such that it has continued to trade and generate positive cash flows throughout the pandemic.
Accordingly, the directors have a reasonable expectation that the company has adequate resources to continue in operation for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for care services provided in the normal course of business.
Revenue for the provision of nursing home services is recognised by reference to the occupation and use of the facilities of the nursing home.
1.4
Tangible fixed assets
Freehold land and buildings are initially measured at cost and subsequently measured at valuation, net of depreciation and any impairment losses.
Fixtures fittings and equipment are initially measured at cost and subsequently measured at cost, 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 land and buildings
2% straight line (excluding land)
Fixtures, fittings & equipment
15% reducing balance
The excess depreciation between revalued land and buildings and historical cost is transferred between the profit and loss reserve and revaluation reserve.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
ACORN LODGE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
1
Accounting policies
(Continued)
- 12 -
1.5
Fixed asset investments
Investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
1.6
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible 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.
1.7
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including current asset investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
ACORN LODGE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
1
Accounting policies
(Continued)
- 13 -
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors and loans, 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 receipts discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.8
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.9
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax is provided in full on timing differences which result in an obligation at the balance sheet date to pay more tax, or a right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law. Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in the accounts. Deferred tax is not provided on timing differences arising from the revaluation of fixed assets where there is no commitment to sell the assets. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered. Deferred tax assets and liabilities are not discounted.
1.10
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
1.11
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
ACORN LODGE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
1
Accounting policies
(Continued)
- 14 -
1.12
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
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.
Valuation of land and buildings
The company carries its property used in the business at fair value, with changes in fair value being recognised through other comprehensive income. The company has consulted with external valuers to ascertain the fair value of the land and buildings. The valuation of the company’s land and buildings is inherently subjective due to, among other factors, the individual nature, location and condition of the nursing home premises. The land element of the land and buildings is also a subjective judgement. As a result the valuation is subject to a degree of uncertainty.
The most recent external valuation took place in January 2021 and was reflected in the 2020 financial statements. Since then the Directors have assessed the market value of the property each year and deem the net book value to be materially in line with the market value at the year-end date.
Deferred tax has been recognised on revalued property, based on the estimated fair value at the year-end date.
Related Party Debtors
Included in the accounts are amounts due from companies under the control of Mr N J Lukka and members of his close family. The directors have considered the quality and performance of the underlying assets and deemed these amounts to be recoverable and not impaired.
ACORN LODGE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 15 -
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2023
2022
£
£
Turnover analysed by class of business
Nursing home fees
6,159,660
5,193,606
Escort fees
7,995
-
Training grants
12,054
-
6,179,709
5,193,606
2023
2022
£
£
Other significant revenue
Interest income
36,873
132
Dividends received
65,681
54,544
Grants received
71,816
102,243
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
6,179,709
5,193,606
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants
(71,816)
(102,243)
Fees payable to the company's auditor for the audit of the company's financial statements
12,241
9,820
Depreciation of owned tangible fixed assets
241,489
233,160
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Administration and care staff
90
97
ACORN LODGE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
5
Employees
(Continued)
- 16 -
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
2,675,435
2,478,259
Social security costs
247,855
234,322
Pension costs
64,746
47,391
2,988,036
2,759,972
6
Interest receivable and similar income
2023
2022
£
£
Interest income
Other interest income
36,873
132
Other income from investments
Dividends received
65,681
54,544
Total income
102,554
54,676
7
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
201,569
102,434
Other finance costs:
Other interest
1,362
201,569
103,796
8
Investment gains/(losses)
2023
2022
£
£
Fair value gains/(losses) on financial instruments
Change in value of financial assets held at fair value through profit or loss
81,200
606,620
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
564,671
358,551
ACORN LODGE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
9
Taxation
2023
2022
£
£
(Continued)
- 17 -
Deferred tax
Origination and reversal of timing differences
(1,435)
143,102
Total tax charge
563,236
501,653
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
2,453,263
2,380,048
Expected tax charge based on the standard rate of corporation tax in the UK of 23.01% (2022: 19.00%)
564,496
452,209
Tax effect of expenses that are not deductible in determining taxable profit
267
2,155
Permanent capital allowances in excess of depreciation
(20,621)
(14,492)
Depreciation on assets not qualifying for tax allowances
55,567
44,300
Effect of revaluations of investments
(18,684)
(115,258)
Dividend income
(15,113)
(10,363)
Origination and reversal of timing differences
18,865
(62)
Deferred tax on capital losses brought forward
(20,300)
143,164
Pension contributions adjustment
(1,241)
Taxation charge for the year
563,236
501,653
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
-
(47,614)
ACORN LODGE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 18 -
10
Tangible fixed assets
Freehold land and buildings
Fixtures, fittings & equipment
Total
£
£
£
Cost or valuation
At 1 December 2022
12,346,978
1,827,297
14,174,275
Additions
265,166
80,739
345,905
At 30 November 2023
12,612,144
1,908,036
14,520,180
Depreciation and impairment
At 1 December 2022
345,096
1,484,075
1,829,171
Depreciation charged in the year
177,895
63,594
241,489
At 30 November 2023
522,991
1,547,669
2,070,660
Carrying amount
At 30 November 2023
12,089,153
360,367
12,449,520
At 30 November 2022
12,001,882
343,222
12,345,104
The carrying value of land and buildings was revalued as at 30 November 2020. The revaluation was based on a valuation report prepared on 7 January 2021 by a third party RICS certified property consultant. Their valuation was based on the special assumption that the land and buildings are fully equipped as operational entities and valued having regard to trading potential, as at the date of valuation. As at 30 November 2023 the directors believe that the carrying value of the land and buildings correctly reflect their fair value.
If revalued assets were stated on an historical cost basis rather than a fair value basis, the carrying amounts included would have been £2,747,027 (2022: £2,534,422), being cost of £3,592,343 (2022: £3,327,177) and depreciation of £845,316 (2022: £792,755).
11
Fixed asset investments
2023
2022
Notes
£
£
Investments in subsidiaries
12
100
Unlisted investments
1,420,228
1,420,228
1,420,328
1,420,228
ACORN LODGE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
11
Fixed asset investments
(Continued)
- 19 -
Movements in fixed asset investments
Shares in group undertakings
Other investments other than loans
Total
£
£
£
Cost or valuation
At 1 December 2022
-
1,420,228
1,420,228
Additions
100
-
100
At 30 November 2023
100
1,420,228
1,420,328
Carrying amount
At 30 November 2023
100
1,420,228
1,420,328
At 30 November 2022
-
1,420,228
1,420,228
12
Subsidiaries
Details of the company's subsidiaries at 30 November 2023 are as follows:
Name of undertaking
Address
Class of
% Held
shares held
Direct
LCH Brook Limited
1
Ordinary
100.00
Registered office addresses (all UK unless otherwise indicated):
1
Macneil House, 9-17 Lodge Lane, London, England, N12 8JH
As at 31 November 2023. LCH Brook Limited is dormant and is not considered material for consolidation purposes.
13
Financial instruments
2023
2022
£
£
Carrying amount of financial assets
Instruments measured at fair value through profit or loss
1,792,000
1,710,800
14
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
776,577
474,760
Amounts owed by companies under common control
2,859,369
9,409,382
Other debtors
3,306,559
1,203,320
Prepayments and accrued income
27,790
175,198
6,970,295
11,262,660
ACORN LODGE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 20 -
15
Current asset investments
2023
2022
£
£
Listed investments
1,792,000
1,710,800
16
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans
18
1,433,338
108,613
Trade creditors
52,459
466,962
Amounts due to companies under common control
1,768
Corporation tax
362,317
258,044
Other taxation and social security
67,968
62,651
Other creditors
236,902
191,802
Accruals and deferred income
83,319
142,910
2,236,303
1,232,750
17
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans and overdrafts
18
1,595,224
3,046,233
Amounts included above which fall due after five years are as follows:
Payable by instalments
578,970
1,395,942
18
Loans and overdrafts
2023
2022
£
£
Bank loans
3,028,562
3,154,846
Payable within one year
1,433,338
108,613
Payable after one year
1,595,224
3,046,233
ACORN LODGE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
18
Loans and overdrafts
(Continued)
- 21 -
The bank loans are secured by a legal charge over the freehold property and a debenture over the assets of the company, as well as by a cross-guarantee given by the other companies under the control of the shareholder. The loans are repayable on a monthly basis and interest of base rate plus 2.05%/2.15% is payable on the loans. The loan terms range between 1 and 15 years.
At 30 November 2023, the net bank loans subject to the cross guarantee amounted to £22,127,809 (2022: £23,148,432).
There is a second tier fixed and floating charge over the assets of the company.
19
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
43,918
67,001
Short term timing differences
(1,123)
(2,471)
Revaluations
1,651,490
1,651,490
Capital gains/(losses)
(25,615)
(45,915)
1,668,670
1,670,105
2023
Movements in the year:
£
Liability at 1 December 2022
1,670,105
Credit to profit or loss
(1,435)
Liability at 30 November 2023
1,668,670
Deferred tax is based on the future expected rate of corporation tax of 25% (2022: 25%).
20
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
64,746
47,391
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
ACORN LODGE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 22 -
21
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
100
100
100
100
22
Related party transactions
At 30 November 2023 the company was owed £2,859,369 by companies under common control (2022: £9,409,382). The company charged no interest on this balance in the current or previous year.
At 30 November 2023 the company owed £nil to companies under common control (2022: £1,768). The company charged no interest on this balance in the current or previous year.
All of the above companies are related parties by virtue of the significant interest in the share capital of each by Mr N J Lukka and members of his close family, and the balances arose from loans made to/received from the above companies.
The assets of the companies are subject to a cross-guarantee given in relation to the borrowings of other companies under the control of the shareholders.
At the year end the company owed £146 (2022: £146) to Mr N J Lukka.
At the year end the company was owed £3,303,320 (2022: £1,203,320) by SJV Group Limited, a company owned by Mr N J Lukka's daughter. The company charged no interest on this loan in the current or previous year.
23
Ultimate controlling party
The ultimate controlling party is Mr N J Lukka, by virtue of his shareholding.
24
Cash generated from operations
2023
2022
£
£
Profit for the year after tax
1,890,027
1,878,395
Adjustments for:
Taxation charged
563,236
501,653
Finance costs
201,569
103,796
Investment income
(102,554)
(54,676)
Depreciation and impairment of tangible fixed assets
241,489
233,160
Amounts written (back on)/off investments
(81,200)
(606,620)
Movements in working capital:
Decrease/(increase) in debtors
4,292,365
(1,475,348)
(Decrease)/increase in creditors
(425,445)
28,016
Cash generated from operations
6,579,487
608,376
ACORN LODGE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 23 -
25
Analysis of changes in net funds/(debt)
1 December 2022
Cash flows
30 November 2023
£
£
£
Cash at bank and in hand
1,294,852
5,547,785
6,842,637
Borrowings excluding overdrafts
(3,154,846)
126,284
(3,028,562)
(1,859,994)
5,674,069
3,814,075
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