FOR THE YEAR ENDED 30 JUNE 2023
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FAIRLIE HOLDINGS LIMITED
COMPANY INFORMATION
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FAIRLIE HOLDINGS LIMITED
CONTENTS
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FAIRLIE HOLDINGS LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2023
Despite the difficulties provided by the lasting effects of the Covid-19 pandemic on the care sector on occupancy, recruitment, and retention, trading for the year was strong. Turnover has increased to £21.5m from £20.6m (restated) to June 2022. Gross profit has increased from £20.4m against £19.1m in 2022.
The group made an operating loss of £0.2m against a profit of £0.6m (restated) in the previous year. During the year the group recognised exceptional impairment charges against certain fixed assets totalling £0.88m giving an underlying operating profit of £0.67m. Wage and agency costs have continued to increase as the newest home, Woodstown House opens to new admissions and the established homes, Fairlie House and Highfield House, invest in recruitment and retention initiatives to reduce the lasting impact of Covid-19 on recruitment and retention in their services. Pre tax losses of £1.5m (£0.25m restated in 2022) are attributable to an increase in interest payable primarily because of the Bank of England Base rate changes during the year.
The management of the business and the execution of the group’s strategy are subject to several risks. In line with other businesses operating in the care sector business, we are reliant on maintaining strong collaborative relations with the Clinical Commissioning Groups (CCGs) and Social Services from whom our residents are primarily sourced.
To help mitigate some of the risks, we are in the process of agreeing a new deal with a significant purchaser of blocked beds. This would guarantee over 50% of our income going forward. Due to the intensive nature of care, we provide, we need to ensure a highly trained and motivated level of staff. We have been successful in recruiting several overseas nurses and other staff from countries with English as their first language and we continue to look at innovative ways to ensure we offer a very competitive package to attract and retain staff. A major element of this strategy is the ability to provide staff accommodation and we will be opened a new 9x3-bedroom facility in the spring of 2023. Although Covid19 is still an on-going risk, the impact on operational costs has now significantly reduced with PPE costs now just above the pre-Covid 19 levels.
The directors believe that turnover, net profit, and cash generated from operations are the financial key performance indicators of the group.
The key nonfinancial performance indicator is occupancy levels at the three homes. Fairlie Healthcare Ltd was at 94% (93% in 2021/22), 92 Higher Drive ltd was 80% (85%) and Woodstown was 31% (27%).
FUTURE DEVELOPMENTS We continue to seek new opportunities for further growth as well on focusing on maintaining and improving the highest levels of specialised care.
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FAIRLIE HOLDINGS LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
The Directors consider that they have acted in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole and having regard (amongst other matters) to factors (a) to (f) S172 Companies Act 2006, in the decisions taken during the year ended 30 June 2023. Specifically, the Board ensure in all decisions taken that:
∙Business is conducted morally and ethically, in line with the company’s Code of Conduct
∙Short-term gains do not have an adverse consequence on the company’s long-term strategy, success and benefits
∙Employee welfare, training and interests are taken care of
∙Customer and supplier relationships are strong, mutually beneficial and comply with company’s policies
∙Any community and environmental impacts as a result of the company’s operations are considered
During the financial year, the group ensured the following:
∙The group continued to invest in its people and processes throughout the last financial year, notwithstanding the significant financial pressures, in order to maintain the quality of care.
∙Informally and formally consulted with its employees to ensure staff felt safe in their working environment, and on staff’s mental wellbeing.
This report was approved by the board on 30 October 2024 and signed on its behalf.
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FAIRLIE HOLDINGS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2023
The directors present their report and the financial statements for the year ended 30 June 2023.
The loss for the year, after taxation, amounted to £1,714,331 (2022: profit £97,652).
Dividends of £398,859 in 2023 and £161,308 in 2022 were paid when the company had insufficient distributable reserves. The directors are taking steps to regularise the position, and return the company profit and loss account to a surplus, through the payment of dividends from subsidiary companies to the parent.
The directors who served during the year were:
The Group places considerable value on the involvement of its employees and has continued to keep them informed on matters affecting them as employees and on the various factors affecting the performance of the group. This is achieved through formal and informal meetings. Employee representatives are consulted regularly on a wide range of matters affecting their current and future interests.
The Group fosters business relationships with its residents by acting on feedback and by maintaining a continuous commitment to achieving the highest standards of residential care. The Group fosters business relationships with its suppliers by supporting a number of local suppliers, ensuring relationships are mutually beneficial and paying invoices within agreed payment terms.
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FAIRLIE HOLDINGS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
We have followed the 2019 HM Government Environmental Reporting Guidelines. We have also used the GHG Reporting Protocol – Corporate Standard. Associated greenhouse gases have been calculated using the UK Government GHG Conversion Factors for Company Reporting.
During the year the group took the following energy efficiency actions:
∙Investment in technology to reduce travel for unnecessary meetings
∙The directors continue to monitor sources of emissions for future opportunities to further reduce our carbon footprint and are actively exploring plans to encourage use of public transport and electric vehicles.
∙Purchase of new staff transportation mini bus planned for year ended June 2024 to reduce the number of of trips required to transport staff between sites.
∙Installation of EV charge points at staff accomodation.
∙Initial planning with contractors to install additional solar pannels across care home sites and staff accomodation.
The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per employee.
The intensity ratio 2023 is 0.921 (2022: 0.959) metric tonnes CO2e per employee.
The Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 requires a Strategic Report to be prepared. Where mandatory disclosures in the Directors' Report are considered by the directors to be of strategic importance, these may alternatively be contained in the Strategic Report, provided that the Directors' Report contains a statement disclosing which information has been placed there.
The loan facility with Barclays of £7,214,947 was replaced by a new facility of £9,000,000 with Cynergy bank in March 2024.
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FAIRLIE HOLDINGS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
The auditors, Bishop Fleming Bath Limited, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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FAIRLIE HOLDINGS LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 30 JUNE 2023
The directors are responsible for preparing the Group strategic report, the Directors' report and the consolidated 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 the Group 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 for the Group's financial statements and then apply them consistently;
∙make judgments 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;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group 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 the Group and to 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 the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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FAIRLIE HOLDINGS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FAIRLIE HOLDINGS LIMITED
We have audited the financial statements of Fairlie Holdings Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 30 June 2023, which comprise the Consolidated statement of comprehensive income, the Consolidated Statement of Financial Position, the Company Statement of Financial Position, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity and the related notes, 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).
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 Auditors' 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 United Kingdom, including the Financial Reporting Council'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.
We draw attention to note 2.3 in the financial statements, which indicates that bank facilities held in certain subsidiaries was in breach of covenant. Whilst the directors are confident of a successful outcome to ongoing negotiations with the bank, no formal waiver of enforcement action as a result of this breach has been obtained by the directors.
As stated in note 2.3, these events or conditions, along with the other matters as set forth in note 2.3, indicate that a material uncertainty exists that may cast significant doubt on the Group's or the parent Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
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. Our evaluation of the directors' assessment of the Group's ability to continue to adopt the going concern basis of accounting included all matters referred to in note 2.3.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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FAIRLIE HOLDINGS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FAIRLIE HOLDINGS LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' 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.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group 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 Group 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 the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group strategic report or the Directors' report.
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FAIRLIE HOLDINGS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FAIRLIE HOLDINGS LIMITED (CONTINUED)
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 Auditors' 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 Group 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:
We have considered the following:
∙The nature of the industry and sector, control environment and business performance;
∙Results of our enquires of management and directors in relation to their own identification and assessment of the risks of irregularities within the Group and Company; and
∙Any matters we identified having obtained and reviewed the Group and Company’s documentation of their policies and procedures relating to: identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance; detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud; the internal controls established to mitigate risks of fraud or noncompliance with laws and regulations.
As a result of these procedures, we have considered the opportunities and incentives that may exist within the organisation for fraud and identified the areas of high risk to be in relation to revenue recognition. In common with all audits under ISAs (UK) we are also required to perform specific procedures to respond to the risk of management override.
We have also obtained an understanding of the legal and regulatory frameworks that the Group and Company operates in, focussing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures within the financial statements. The key laws and regulations we considered in this context included the UK Companies Act, Financial Reporting Standard 102 and UK tax legislation. In addition we considered the provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental for the Group and Company’s ability to operate or avoid a material penalty. These included the provisions pertaining to the employment of overseas workers, the Care Quality Commission, safeguarding regulations, health and safety regulations; employment legislation; and data protection laws. Our audit procedures performed to respond to the risks identified included, but were not limited to:
∙Reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
∙Reviewing the financial statement disclosures and testing to supporting documentation to assess the recognition of revenue;
∙Discussions with management, including consideration of known or suspected instances of non-compliance with laws and regulation and fraud;
∙Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
∙Identifying and testing journal entries, evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud; and
∙Challenging assumptions and judgements made by management in their significant accounting estimates.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
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FAIRLIE HOLDINGS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FAIRLIE HOLDINGS LIMITED (CONTINUED)
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 an 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 would become aware of it.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' 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 Auditors' 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.
for and on behalf of
Chartered Accountants
Statutory Auditors
10 Temple Back
BS1 6FL
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FAIRLIE HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
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FAIRLIE HOLDINGS LIMITED
REGISTERED NUMBER:07318751
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 18 to 40 form part of these financial statements.
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FAIRLIE HOLDINGS LIMITED
REGISTERED NUMBER:07318751
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 18 to 40 form part of these financial statements.
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FAIRLIE HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
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FAIRLIE HOLDINGS LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
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FAIRLIE HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
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FAIRLIE HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 30 JUNE 2023
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FAIRLIE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Fairlie Holdings Limited is a limited liability company incorporated in the UK. The registered office is 10 Temple Back, Bristol, BS1 6FL.
2.ACCOUNTING POLICIES
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases. In accordance with the transitional exemption available in FRS 102, the Group has chosen not to retrospectively apply the standard to business combinations that occurred before the date of transition to FRS 102, being 01 July 2014.
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FAIRLIE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
2.ACCOUNTING POLICIES (continued)
The group has made a loss after tax for the year of £1,714,331 (2022: profit of £97,652). This has been driven by the impact of the one-off costs from the disposal of investments, impairment of property, increased debt service costs and continued investment in the operations at Woodstown House as it has progressed towards full capacity and operating profit.
The revenue streams for the group are provided by Integrated Care Boards (ICBs) and Social Services and have remained strong and are forecast to continue to do so for the foreseeable future. The group continues to provide a high-quality provision for its patients to secure its revenue streams. The group’s two fully operational care homes continue to trade profitably and in a cash generative manner sufficient to support the other group companies. The directors have prepared forecasts, supported by post balance sheet trading performance to the date of approval of the accounts which demonstrate that Woodstown House will also become profitable on a monthly basis during 2023-24. The Fairlie Holdings Limited group (“the Group”) has two distinct and separate funding groups, one of which has borrowings from Barclays (“the Barclays borrowing group”) and the other which has borrowings from Triodos (“the Triodos borrowing group”). As disclosed in Note 22, cross guarantees exist amongst the members of the Triodos and Barclays borrowing groups. At the balance sheet date and subsequently the Barclays borrowing group funding facilities’ financial covenants are being met. As set out in Note 22, the Barclays facility is due to expire with 12 months of the year end date, and subsequent to the year end was replaced with a facility with Cynergy Bank. At the balance sheet date the Triodos borrowing group funding facilities’ financial covenants were not being met on facilities totalling £17,841,546. Additionally, the component of the Triodos facility attaching to Abercorn Property Limited, a subsidiary company, was due for repayment during 2024, this repayment was not made, and the facility has been extended to 31 December 2024. No formal waiver of enforcement action as a result of the covenant breach has been obtained by the directors and the facilities are therefore in default and treated as repayable on demand at the Balance Sheet date. Triodos has also instructed an independent review of likely future trading performance of companies in the Triodos borrowing group. This review has not yet been concluded. The directors are in discussions with Triodos regarding this breach and ongoing review, and are seeking confirmation that existing facilities will continue to be made available. Whilst continuing in a positive way, and the outcome of ongoing discussions is expected to be positive, the conclusion remains uncertain. Notwithstanding the above breach, based on financial performance to date and forecasts, the directors are satisfied that the Company and other companies in the Triodos borrowing group have sufficient resources to meet the covenant, debt finance service and working capital requirements attaching to their respective debt facilities going forward. Certain companies within each borrowing group have also received funding from companies within the other borrowing group. Companies within each borrowing group are dependent upon the continued availability of these advances, which is in turn dependent upon the companies within the other borrowing group continuing as going concerns and vice versa. The directors expect this to be the case. The directors therefore consider that it is appropriate to prepare the group accounts on a going concern basis. The Company has balances due to and from companies in both borrowing groups. The recoverability of balances due are predicated on the counterparty continuing to trade, and recoverability would be uncertain if this were not the case. If the counterparty company were to seek repayment of balances
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FAIRLIE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
2.ACCOUNTING POLICIES (continued)
payable by the Company, the Company would need to seek alternative sources of funding, which would be uncertain. Based on the assessment of trading and cashflows referred to above, the directors do not believe that repayment or payment will be sought within twelve months of the date of the approval of the financial statements if to do so would be detrimental to the interest of the Company or Group.
If the Group or Company were unable to obtain adequate funding, it would not be able to continue trading and adjustments would have to be made to reduce the assets to their realisable amount and to provide for any further liabilities.
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FAIRLIE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
2.ACCOUNTING POLICIES (continued)
Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer’s interest in the fair value of the group's share of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, Goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight line basis to the Consolidated statement of comprehensive income over its useful economic life of 10 years.
At each reporting date the Group assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
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FAIRLIE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
2.ACCOUNTING POLICIES (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.
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FAIRLIE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
2.ACCOUNTING POLICIES (continued)
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
Basic financial assets
Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.
Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting date.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of
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FAIRLIE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
2.ACCOUNTING POLICIES (continued)
the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Group after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other payables, bank loans, other loans and loans due to fellow group companies are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Derecognition of financial instruments
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Group transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Group will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Group's contractual obligations expire or are discharged or cancelled.
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FAIRLIE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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 if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. The critical judgments made by management that have a significant effect on the amounts recognised in the financial statements are described below. Management have considered the valuation of fixed asset investments. These have been recognised at cost and reviewed for impairment. Freehold property is principally specialist care homes held at cost and the director's assess at each period end if there are any indicators of impairment. Freehold property held in Abercorn Property Limited, a subsidiary, pending development into a specialist care home is held at a cost a £2,208,431. In considering any indicators of impairment the directors assess the anticipated development project and whether this is expected to maintain the net realisable value of the property. In making their assessment in the current year the directors are of the opinion that this will be the case. Such redevelopment is also dependent upon the availability of suitable banking facilities and note 2.3 sets out the uncertainty in this respect. It may be necessary to write down the carrying value of the property to the value achievable if it were sold in its current state without further development, which could be materially lower than its current carrying value.
The whole of turnover is attributable to the group's principal activity.
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FAIRLIE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Page 26
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FAIRLIE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Page 27
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FAIRLIE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Page 28
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FAIRLIE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
10.TAXATION (CONTINUED)
There are no factors that may affect future tax charges.
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FAIRLIE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements. The loss after tax of the parent Company for the year was £
Page 30
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FAIRLIE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Page 31
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FAIRLIE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
15.TANGIBLE FIXED ASSETS (CONTINUED)
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FAIRLIE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Page 33
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FAIRLIE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
The 2023 valuations were made by the directors, on an open market value for existing use basis.
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FAIRLIE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Page 35
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FAIRLIE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
See note 23 for details of loan securities.
Page 36
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FAIRLIE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Page 37
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FAIRLIE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
23.LOANS (CONTINUED)
Page 38
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FAIRLIE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
24.DEFERRED TAXATION (CONTINUED)
Profit and loss account
During the year the directors identified expenditure in a subsidiary company that was not recorded in prior periods. The effect of these adjustments is a reduction in the opening profit and loss account at 1 July 2021 of £213,958 and a reduction in profit in the year ended 30 June 2022 of £113,596 and corresponding increases in other creditors. The cumulative effect of these adjustments in the years ended 30 June 2022 and 30 June 2023 is a reduction in profit and loss account of £327,554 and an increase in other creditors of £327,554.
The group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the group in an independently administered fund. The pension cost charge represents contributions payable by the group to the fund and amounted to £454,203 (2022: £360,734). Contributions totalling £77,597 (2022: £73,907) were payable to the fund at the reporting date.
Page 39
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FAIRLIE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
The directors owed the group £172,546 (2022: £744,738) at the year end date. These balances are unsecured. The maximum overdrawn balance in the year was £591,768 (2022: £744,738). Interest was charged at the HMRC official rate.
The ultimate controlling party is J Whelan by virtue of his majority shareholding in Fairlie Holdings Limited.
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