The directors present the strategic report for the year ended 31 March 2024.
The principal activity of the group of companies is in the UK and Ireland involving the management of Purpose-Built Student Accommodation (“PBSA”), with an element of Co-living and Build to Rent ("BTR") via our subsidiary VervLife. The Services we provide include sales and marketing agency, customer experience, hard and soft facilities management, project management, principal contractor, compliance assurance, internet services, resident engagement, property insurance, and energy procurement and management associated with the properties we manage. The accounts have been prepared for the year ended 31 March 2024.
Homes for Students is now the leading third-party operator in the student accommodation sector with around 45,000 purpose-built student accommodation (Third party “PBSA”) beds under management for 2024 under our “Homes for Students,” “Prestige Student Living,” “Essential Student Living,” “Urban Student Life,” “Universal Student Living” “EVO Student” brands and 1400 houses in multiple occupation (HMO) beds under management under our “UK Student Houses” brand. Under our VervLife brand we have circa 3,000 operational units.
We managed to increase our financial strength and we are profitable year on year supported by an increase in our bed numbers, as well as the pipeline secured as a result of new developments. Key to success is our ability to invest in the business to maintain our market lead, our retention of staff and our focus on sales, marketing and occupancy as well as compliance and ESG. We have recently been awarded ISO 9001 (Quality Management), ISO 20000-1 (Information Technology Service Management) and ISO 27001 (Information Security Management) and we are preparing for ISO 14001 and ISO 45001.
We are also exploring with our scale what other services we can provide to students and the potential of employing our own health and fitness coaches and wellbeing psychiatrist to extend the student ESG education programme we started a few years ago which has been so successful.
We have also changed shareholders with two of our passive shareholders being replaced by a wholly owned subsidiary of Far East Orchard Limited (FEOR) who now owns 49% of the company.
We have over 15,000 PBSA beds at various stages in the pipeline. We have invested heavily in the capability of our advisory team over the last few years which includes in-house engineering and interior design expertise. As a result, our pipeline of new development schemes has grown substantially.
Cashflows are positive from operating activities and we have driven the business with scale and leveraged on our supply chain strengths. Our financial strength has also allowed us to invest in diversifying the business further into the residential sector, development advisory and tech offering.
The market has become more competitive, against the backdrop of increased regulation and higher client expectations of having inhouse expertise on the Building Safety Act, Fire Compliance, Data Protection, ESG, IT Security.
While rental growth is expected to start to level out from 2024/25 academic year to be more in line with inflation, energy costs have stabilised. Demand for student accommodation is expected to remain strong with the UK's 18-year-old demographic growth along with the attractiveness of the UK Higher Education sector to students outside of UK.
The Directors recognise that effective performance management is key to client service. Progress is monitored by review of key financial indicators, including but not limited to:
The PBSA side of the business has a strong pipeline and continues to expand, and we have had a number of contract renewals. However, we note that the number of new builds has slowed with the increased build costs and cost of borrowing. Our interior project management and engineering team also have a good order book in this increasingly important support area for clients who need support with compliance, ESG and refreshing and enhancing older schemes.
We will continue to provide cashflow support to VervLife albeit it is envisaged VervLife will become financially self-sufficient over the next few years based on their order book.
Statement by the Directors in accordance with Section 172(1)(a) to (f) of the Companies Act 2006
The likely consequences of any decision in the long term and desirability to maintain a reputation for high standards of business conduct
The Board meets quarterly to maintain the reputation for high standards of business conduct which is at the very forefront of its decision making and ongoing and future strategies. To formulate future strategies, the Board works closely with the Executive and Senior Leadership Teams to ensure that operational excellence, values, attitudes and behaviours the company works hard to achieve can be maintained and how all decision-making will impact on all stakeholders.
The Board approves the annual and long-term business objectives and monitors the effectiveness of the management teams in delivering these objectives through regular oversight and measurement. All significant decisions, strategies and deployment of capital are decided by the Board.
The interest of our employees
There are many ways in which we utilise the feedback collected from colleagues to shape our business, ensuring that people are at the heart of our decision making. Our ‘Peoples Voice’ colleague forum and cultural diversity programme ‘Together is better’ promote a culture of inclusion by empowering our teams to share new ideas; guided by our company values, ultimately helping to continuously improve HFS as a place to work. Delivered in partnership by our People & Culture Director and Communications Director and their respective teams, our strategy of offering regular pulse surveys, team building events, an intranet platform, an extensive skills programme and colleague engagement initiatives ensures we can respond at pace to meet the needs of our evolving workforce, adapting our language and updating processes regularly.
HFS won ‘the People Award’ at the Northwest LGBTQ+ Business Awards in 2022. Our Together is Better Programme won Diversity Initiative of the year at the 2023 UK Company Culture Awards and this year our People Team won the silver award for Team of the Year.
The need to foster business relationships with our key stakeholders including our customers, University partners and suppliers:
Our Customers
Our property teams on the ground, with the support of our Marketing department have continued to run a variety of student experience events throughout the year with the aim of nurturing a community within the buildings, adding to the overall university experience for our residents, and helping them enjoy their time living with us, and increasing positive social impact.
We utilise social media daily and our property teams are empowered to manage this locally and provide an authentic and engaging view of life in our buildings. Our award winning KLIQ Resident Experience App continues to be a key tool in interacting and engaging with our student community in line with our strategy, and the feedback we garner from residents via KLIQ has allowed us to continue to bespoke and tailor our student experience and improve our students’ satisfaction and wellbeing.
Our approach to Student Experience is to hold showcase events at key times of the year, and to offer a consistent, daily high level of service and a wider overall offering of events and experience that delight our residents, build community and trust, make residents proud to live with us, and lead to high satisfaction.
Our year-round focus on student experience, student satisfaction, social proof and excellent standards have remained critical aspects, and significant time and energy has been spent on this within the properties to ensure we maintain our excellent track record of retention.
Our continued focus on securing thousands of 5-star Google and StudentCrowd ratings, and achieving Investor in Students Gold Accreditation for a third year, alongside retaining overall Gold Certification from Global Student Living, while significantly increasing individual property certifications, and surveying a huge pool of residents (over 30,000 survey responses received this year) are evidence of our strategy working.
The recent Investor in Students accreditation process has led to a new highest ever Net Promoter Score, of the back of significant gains last year, now with a score of 45.7, an increase of 11 points from last year. This consistent and improving service delivery and satisfaction is a long-term strategy that is paying dividends for the business, backed up further by record levels of student retention rates year on year. This is higher than our competitors.
University Partners
Our Partnerships Team nurture university relationships, increase partnership working with them, renew nominations and referral arrangements, and seek out new business, and as part of our sector engagement activities each year, work closely with our unrivalled network of contacts built up over many years of collaboration, and lead and support the wider business at a national and localised level.
We attended numerous outreach events, supporting universities’ teams to highlight some of the issues around student wellbeing such as loneliness, sexual consent, budgeting advice, positive nutrition, and volunteering in the local community.
Our rich data analysis and market intelligence supports university teams with information about digital behaviour, student decision making trends, benchmarking against national averages, and student survey performance, and we have continued to expand this insight and add even more value to our university contacts and partners.
We prospected, negotiated, arranged, and contracted formal commercial agreements with a multitude of HE institutions over the course of the year and secured multi-year deals in some key markets.
Suppliers
We work with a network of local and national suppliers, across the UK and Ireland. Our Central Procurement team work closely with our property teams to ensure delivery of high-quality service from our supplier network; and where possible, leveraging our scale to ensure standardisation of service across our portfolio. All suppliers must evidence their relevant accreditations, qualifications and/or membership of regulatory or professional bodies. We have robust governance in fair selection of suppliers.
In January 2024 we implemented Delta e-sourcing; an end-to-end, EU-compliant, web-based platform to manage tenders, suppliers and contracts. The roll out of Delta e-sourcing strengthens our governance and selection process; providing a fully traceable communications audit trail and an enhanced evaluation and selection process.
Our tender process, pro-active ‘supplier call’ campaign, and access to Delta e-sourcing supplier search tool, provides us with the opportunity to identify new suppliers and invite them to potentially join our network.
Our teams, centrally and property-based, forge strong relationships with suppliers and regularly monitor performance against a robust set of KPIs
Our impact on the community and the environment
Environmental, Social and Governance (ESG) issues and measures are a crucial part of the HFS business process, and with the support we provide to our clients.
They affect the way we operate and behave as a business and they also inform our sustainability engagement agenda, which is the list of issues that we target to influence our internal and external stakeholders for the better within the areas we can control, particularly with shaping and influencing our student population awareness and behaviours around living more sustainably, through our “Go Greener with Homes for Students” campaign theme.
Significant progress has been made to date and work continues to ensure that the informed decisions taken by the Board, Executive Team and the Senior Leadership Team are quickly and effectively implemented, and now including our new “Green Team” which has been established as a cross-functional group of stakeholders across the business working towards common sustainability aims.
HFS has a specific ESG Policy and Measures document addressing requirements and goals for our business which has underpinned by BCorp membership.
The need to act fairly between members of the Company
The Board recognises that acting fairly between members is extremely important to ensure strong governance within the business. The Board meetings are attended by majority and minority shareholders and all decision making is made on a open and transparent basis. All members have an opportunity to express their opinions and views to determine the best possible decision making and provide confidence to the wider stakeholder population.
We have highlighted some key decisions demonstrating how the Board has taken Section 172 matters into account in decision making:
Commencing a programme of obtaining ISO's and being successful with the award of ISO 9001 (Quality Management), ISO 20000-1 (Information Technology Service Management) promoting good governance
Preparing for ISO 14001 (Environmental Standard) to support our ESG credentials
Enhancement of our ESG programme by implementing a "Green Team" to work towards our sustainability aims.
We have invested heavily in the capability of this advisory team over the last few years and including inhouse engineering and interior design to enhance our client service.
Continued investment in our award-winning technology.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 March 2024.
The results for the year are set out on page 14.
Ordinary dividends were paid amounting to £1,000,000. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Homes For Students endeavours to maintain a consistent level of transparency and to engage employees in issues that may impact their interests. Our organisation benefits from an accessible Executive and Senior Leadership Team, distinguished by their commitment to attentively consider employee feedback and to effect advantageous adjustments whenever feasible.
Our annual business objectives are systematically circulated across all team members in an ongoing manner. This current year witnessed the introduction of our exclusive T.L.C. initiative, a tailored one-to-one program devised exclusively for Homes for Students. This program intricately incorporates our business objectives and their corresponding Key Performance Indicators (KPIs), strategically designed to foster comprehensive employee understanding and recognition of their potential to significantly contribute to the overarching success of Homes for Students.
We maintain a rigorous and dedicated internal communications platform, which we present through a diverse array of mediums to guarantee comprehensive access for all employees to forthcoming news and business events. In conjunction with 'The People's Voice,' our exclusive employee representative forum, this construct affords us a complete 360-degree feedback loop, ensuring the quality of our messaging and the effective reception of employee input.
In the current year, we have implemented a transformative adjustment to our approach for gathering structured employee feedback. We have transitioned from conducting an annual employee engagement survey to administering quarterly pulse surveys to a statistically representative subset of our workforce. This strategic evolution empowers us to expedite the feedback collection process and enhances our ability to promptly address insights, thereby bolstering employee retention and fostering sustained engagement.
Following the merger of MHA Moore & Smalley with MHA, the company’s independent auditor has now become MHA. A resolution to reappoint MHA as independent auditor will be proposed.
This section of the report sets out the group's report on emissions, energy consumption and energy efficiency activities.
The group operates from serviced offices and does not own any investment property. For its serviced offices, the group does not separately purchase gas or electricity. All managed properties are owned by third parties and energy consumption at these properties is not the responsibility of the group to report on.
Therefore the following sections are limited to the group's Scope 3 emissions from business travel.
The group has followed the 2019 HM Government Environmental Reporting Guidelines. The group has also used the GHG Reporting Protocol – Corporate Standard and have used the 2023 UK Government’s Conversion Factors for Company Reporting
The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per average number of employees over the financial year.
The business has implemented an electric car scheme for employees as a measure to reduce emissions.
We have audited the financial statements of Homes for Students Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 March 2024 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
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.
In the light of the knowledge and understanding of the group and parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
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.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.
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 specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud, is detailed below:
Enquiries with management about any known or suspect instances of non-compliance with laws and regulations and fraud;
Auditing the risk of fraud in revenue recognition through proof in totals and testing a sample of revenue transactions to supporting contracts;
Challenging assumptions and judgements made by management in their significant accounting estimates;
Auditing the risk of management override of controls, including through journals testing and other adjustments for appropriateness, and evaluating the business rationale of significant transactions outside the normal course of business;
Enquiry of staff in tax and compliance functions to identify any instances of non-compliance with laws and regulations;
An evaluation of the company's internal control environment; and
Reviewing board minutes and resolutions.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £2,697,091 (2023 - £2,918,774 profit).
Homes for Students Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Hornbeam House, Hornbeam Park, Harrogate, HG2 8QT.
The group consists of Homes for Students Limited and all of its subsidiaries.
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. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated group financial statements consist of the financial statements of the parent company Homes for Students Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 March 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
At the time of approving the financial statements, the directors have a reasonable expectation that the group and company has adequate resources to continue in operational existence for the foreseeable future. This is taking account of the balance sheet position, cash resources and forecasted growth. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes.
Revenue from annual contracts is recognised on a straight line basis over the period to which they relate. Where the contract includes a management fee, this is calculated and invoiced on a monthly basis.
Project income is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. Revenue is recognised only to the extent of the expenses recognised that are recoverable or the work has been certified.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, 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.
Financial assets 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.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
Current asset investments
Investments are initially measured at cost and subsequently reviewed for impairment. Interest income is recognised on a straight line basis over the term to which it relates.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
At each balance sheet date, management undertake an assessment of the recoverability of trade debtors and amounts owed by group undertakings, based upon their knowledge of the customers, ageing of the balances outstanding and previous write off history. Where necessary, an impairment is recorded as a doubtful debt. The actual level of debt collected may differ from the estimated level of recovery.
All turnover is derived in the UK from the principal activity as outlined on page 1.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2023 - 2).
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:
From 1 April 2023 there was an increase in the corporation tax from 19% to 25%. The deferred tax rate of 25% has been used in both periods, due to the new rate being substantively enacted before 31 March 2023.
Details of the company's subsidiaries at 31 March 2024 are as follows:
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
The company has two classes of ordinary shares which carry full voting rights and full rights to receive dividends.
Both classes have full rights to distributions, firstly of the issue price of shares held and the balance pro rata on a return of assets on liquidation, capital reduction or otherwise pari passu with the other share class.
The aggregate remuneration paid to key management personnel (including directors) during the period was £875,548 (2023: £872,566).
During the year the company made sales of £18,553,659 (2023: £13,290,669) and purchases of £1,849 (2023: £38,696) to/from entities with significant influence over the company. In addition the company made sales of £19,356 (2023: £17,567) and purchases of £24,744 (2023: £97,601) from other related parties.
Within trade debtors are £1,676,810 (2023: £1,677,552) and £9,954 (2023: £4,462) due from entities with significant influence over the company and other related parties respectively. Within trade creditors are £Nil (2023: £Nil) and £16,030 (2023: £8,846) owed to entities with significant influence over the company and other related parties respectively.