The directors present the strategic report for the year ended 31 May 2023.
The consolidated results for the year are set out on page 9.
During the year the strategy of the Group has been to continue the growth in revenue streams and profitability across its core care service and profit centre at Kings Lodge. This follows the disposal of The Royal Buckinghamshire Hospital property asset from its portfolio. As part of this rationalisation strategy the Group is refining its businesses services at ACM to match.
Total Group’s annual revenue increased to £9,826,490 for the year to 31 May 2023 from £9,411,876 for the prior year. This is mainly due to the increase in performance of the Group’s care home operation, operated by the subsidiary company Alum Care Limited.
The Group recognised an aggregate operating profit of £373,866 for the year ended 31 May 2023 compared with an operating loss of £318,112 for the year ended 31 May 2022. This is primarily due to the decrease of operating expenses during the year compared to 2022 as a result of the sale of Group's rehabilitation services in January 2023.
The Group had net assets of £1,718,831 as at 31 May 2023 compared to net assets of £152,622 in 2022. This is mainly due to the sale of the sub-par performance of the Group’s rehabilitation services (see note 26).
The principal risks and uncertainties facing the group’s various businesses are:
Employment of Staff
Our businesses thrive on the skills and expertise of the staff we employ. The shortage of appropriate labour is a potential risk to the business, this is particularly acutely felt with the national shortage of qualified nursing staff along with the new employment rules due to Brexit. To mitigate this the Board has a Tier 2 Home office license and has recruited significantly from overseas to ensure service compliance, sustainability and to enable the growth in revenue at Kings Lodge.
CQC
Changes to Care Quality Commission (CQC) legislation, which require the company to be responsive to all compliance matters in order to ensure the continued support of care regulators, loss of revenue through lack of demand for places, reduction in Government funding and external restrictions on new resident admissions. Kings Lodge continues to have a ‘Good’ CQC rating to enable a positive relationship with regulators and service commissioners.
Following the sale of The Royal Buckinghamshire Hospital Rehabilitation facility, significant investment has been made in the Care Services facility, management team and staff to ensure service sustainability, compliance, and financial performance. This investment in the Care Services facility and its operations remains the core area of focus for the group for the future.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 May 2023.
The results for the year are set out on page 9.
No ordinary dividends were paid. 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:
The group’s activities expose it to a variety of financial risks. The Board reviews and agrees policies for managing these risks at regular intervals dependant on circumstances. The group’s principal financial instruments include assets and liabilities such as trade debtors and trade creditors arising directly from its operations. In accordance with group’s treasury policy, derivative instruments are not entered into for speculative purposes.
The group manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the group has sufficient liquid resources to meet the operating needs of the business.
The group is exposed to fair value interest rate risk on its borrowings and cash flow interest rate risk on floating rate deposits, bank overdrafts and loans. The group uses interest rate derivatives to manage the mix of fixed and variable debt so as to reduce its risk to expose to changes in the interest rates. Further details are given in note 21 to the financial statements.
Investments of cash surpluses, borrowings and derivative instruments are made through banks and companies which must fulfil credit rating criteria approved by the Board. All residents who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary. The group is not exposed to commodity price risk.
The Group is at the forefront of ground breaking innovation and new treatment strategies for rehabilitating patients with a wide range of disabilities. The Group continues to work with its own Innovation Group consisting of senior staff including directors and other staff throughout the group to develop its knowledge and to implement new innovative products within the Group with the view to establish treatments and procedures to be adopted globally.
Subsequent to the year end, the Company disposed of 100% of the share capital of Affinity Care Management Limited for £2. Affinity Care Management Limited reported a loss of £24,397 after deducting intercompany debt write offs for the year ended 31 May 2023 and showed a balance sheet deficit of £15,700 as at 31 May 2023. The full financial effects cannot yet reliably be determined.
Additionally, after the year end, a subsidiary company secured additional borrowings from their current bankers and then subsequently consolidated and refinanced the bank borrowings by way of a new £10,000,000 loan. As a result, the security increased from £5,200,000 to £10,000,000.
Subsequent to the year end, a charge was registered on the shares held by the company of a subsidiary, Alum Care Limited. The charge pledges the shares held in Alum Care Limited as security for the repayment of an intercompany loan with a fellow group company.
Following the sale of The Royal Buckinghamshire Hospital Rehabilitation facility, significant investment has been made in the Care Services facility, management team and staff to ensure service sustainability, compliance, and financial performance. This investment in the Care Services facility and its operations remains the core area of focus for the group for the future.
The auditor, Morris Lane, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
The directors are responsible for the maintenance and integrity of the company website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
We have audited the financial statements of The Buckinghamshire Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 May 2023 which comprise the group income statement, the group statement of comprehensive income, the group statement of financial position, the company statement of financial position, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company 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).
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 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.
Material uncertainty related to going concern
In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosure made in note 1.3 to the financial statements concerning the group and company’s ability to continue as a going concern. The group and company are dependent on maintaining the group and company’s current debt facilities and in addition, are dependent on the cash generated from operating activities of its subsidiaries which are in turn subject to market and macroeconomic factors, including staff shortages as a result of Brexit, rising inflation, rising interest rates, the 9.8% increase in the National Living Wage from 1 April 2024, the cost of living crisis and higher insurance premiums. These conditions, along with other matters set out in note 1.3 to the financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the group and company’s ability to continue as a going concern. The financial statements do not include the adjustments that would result if the group and company were unable to continue as a going concern.
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 the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and the directors' report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
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 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 extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Identifying and assessing the risks of material misstatement due to irregularities, including fraud
We obtained an understanding of the legal and regulatory frameworks that are applicable to the group and company through discussion with the directors and from our general commercial experience. The identified laws and regulations were communicated to the audit team in order that they remained alert to any non-compliance throughout the audit.
The group and company are subject to laws and regulations which have a direct effect on the financial statements and the disclosures contained therein. These have been identified as: the financial reporting framework under which the group and company operates - Financial Reporting Standard 102; Statutory Instrument 2008/410 – The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008; the Companies Act 2006; taxation legislation including pay as you earn and corporation tax and pensions legislation.
In addition to the above, the group and company are subject to other operational laws and regulations where non-compliance may have a material effect on the financial statements. Non-compliance of such laws and regulations may result in litigation, the imposition of fines or the closure of the business which could have a material impact on amounts or disclosures in the financial statements. We have identified the following laws and regulations which are more likely to have significant effect as: compliance with the Care Quality Commission regulations; food hygiene laws; health and safety laws; General Data Protection Regulation (GDPR) and employment law.
In order to identify risks of material misstatement due to fraud, we assessed events and conditions where opportunities and incentives may exist within the group and company for fraud to occur. Our risk assessment procedures included enquiring of directors as to any instances of fraud, their procedures to identify fraud and by using analytical procedures to identify any unusual or unexpected relationships. We identified the greatest potential for fraud in the following areas: recognition of income; ghost employees and grant income. As required by auditing standards, we are also required to perform specific procedures to respond to the risk of management override.
The identified risks of material misstatement due to fraud were communicated to the audit team in order that they remained alert to any non-compliance throughout the audit.
Audit procedures designed to respond to the risks of material misstatement due to irregularities, including fraud
As a result of performing our risk assessments as detailed above, we planned and performed our audit so as to identify non-compliance with such laws and regulations, including fraud by undertaking the following:
Reviewing the disclosures contained within the financial statements and testing to supporting documentation in order to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements.
Enquiring of the directors concerning actual and potential non-compliance of laws and regulations.
Reviewing Care Quality Commission inspection reports in order to identify any potential non-compliance of laws and regulations.
Performing substantive testing with regard to employees to ensure that identification and employment contracts are on file, the pay as you earn system is operating correctly, pension deductions are made where appropriate and valid right to work documentation is available where required.
Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud.
Revenue recognition was addressed by obtaining an understanding of relevant controls with regard to revenue recognition and undertaking substantive testing to ensure that revenue is recognised in line with the company’s accounting policy and in line with accounting standards.
The risk relating to management override of controls was addressed by testing the appropriateness of journal entries and other adjustments, assessing whether accounting estimates are indicative of potential bias and evaluating the business rationale of any significant transactions that are considered unusual or outside the normal course of business.
Due to the inherent limitations of an audit, there is an unavoidable risk that, despite properly planning and performing our audit in accordance with accounting standards, some material misstatements may not have been detected.
Auditing standards limit the audit procedures required to identify non-compliance with other operational laws and regulations to enquiry of directors and management and inspection of any correspondence. If a breach of operational regulations is not evident from relevant correspondence or disclosed to us, an audit is unlikely to detect that breach. In addition, the further removed non-compliance with laws and regulations is from the events and transactions included in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it.
In addition, the risk of not detecting material misstatement from due to fraud is higher than the risk of one not being detected through error as fraud may involve deliberate concealment through collusion, forgery, misrepresentations and intentional omissions.
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 income statement and related notes. The company’s loss for the year was £115,628 (2022: £2,916,869 loss).
The Buckinghamshire Group Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 31/33 Commercial Road, Poole, Dorset, BH14 0HU.
The group consists of The Buckinghamshire Group 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.
As permitted by s408 Companies Act 2006, the company has not presented its own income statement and related notes. The company’s loss for the year was £115,628 (2022: £2,916,869 loss).
The consolidated group financial statements consist of the financial statements of the parent company The Buckinghamshire Group 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 May 2023 apart from the discontinued operations, see note 12 for additional information. 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.
The Board has carefully considered those factors likely to affect the future development, performance and financial position of the company and its group in relation to the ability of the company to operate within its current and foreseeable financial and operational resources.
The company is reliant on its directors and its wider group to provide continued financial support in order to remain a going concern. The company continues to benefit from and rely upon the strong operational performance of a key subsidiary.
The company and its group are facing various ongoing challenges including rising inflation, rising interest rates, staff shortages as a result of Brexit, the 9.8% increase in the National Living Wage from 1 April 2024, the cost of living crisis and higher insurance premiums.
In addition, the group is also dependent on the support of its bankers. The company maintains a positive relationship with its bankers and continued support has been provided to the group.
A number of the factors above indicate the existence of a material uncertainty which may cast doubt on the company and group’s ability to continue as a going concern. The financial statements do not include the adjustments that would result if the company and its group were unable to trade as a going concern. With the increase in a key subsidiary’s performance subsequent to the year end and on the basis of the current relationship with its bankers, the directors consider that the company and group is in a position to meet its liabilities as they fall due for at least 12 months following the date of the signing of these financial statements. As such, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Revenue 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. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
Revenue from the supply of care services, care home management services, training services and domiciliary care services represents the value of services provided under contracts to the extent that there is a right to consideration and is recorded at the fair value of the consideration received or receivable. Where payments are received from customers in advance of services provided the amounts are recorded as deferred income and included as part of payables due within one year.
Interest income is recognised when it is probable that the economic benefits will flow to the group and the amount of revenue can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and the effective interest rate applicable.
Freehold land is not depreciated.
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 income statement.
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.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
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 statement of financial position 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.
The best evidence of fair value is a quoted price for an identical asset in an active market. When quoted prices are unavailable, the price of a recent transaction for an identical asset provides evidence of fair value as long as there has not been a significant change in economic circumstances or a significant lapse of time since the transaction took place. If the market is not active and recent transactions of an identical assets on their own are not a good estimate of fair value, the fair value is estimated by using a valuation technique.
Basic financial assets, which include trade and other receivables 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, including 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, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
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.
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 trade and other payables, bank loans, loans from fellow group companies and preference shares that are classified as debt, 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 payables 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 payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
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 income statement 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 income statement, 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, unless those costs are required to be recognised as part of the cost of stock or non-current assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
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.
Government grants relating to turnover are recognised as income over the periods when the related costs are incurred. Grants relating to an asset are recognised in income systematically over the asset's expected useful life. If part of such a grant is deferred it is recognised as deferred income rather than being deducted from the asset's carrying amount.
Credit risk
The group implements appropriate credit checks on residents and service users prior to providing services. This reduces the exposure of the group in respect of credit risk.
Liquidity risk
The policy of the Group is to maintain a mix of short and long term borrowings to effectively manage liquidity risk.
Cash flow and interest rate risk
The Group’s interest rate risk arises primarily from long-term borrowings issued at variable rates which exposes the Group to cash flow interest rate risk. The cash flow interest rate risk is managed within the Group’s business projections and planning, in the monitoring of financial covenants and through negotiation of facility terms with the provider of the borrowing facility at specified intervals. In addition, the group hedges against variations in interest rates by entering into appropriate interest rate management products with their lenders.
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.
An analysis of the group's revenue is as follows:
During the financial year ending on 31 May 2021, a subsidiary incurred significant storm damage to the freehold property it operates from. As a result, the subsidiary was unable to use parts of the building. This had a direct effect on the company's turnover and so a business interruption insurance claim was made.
Amortisation of intangible assets is included in administrative expenses.
Government grants received in the year relate to various Covid-19 support schemes.
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 1 (2022 - 3).
Investment income includes the following:
Of the charge to current tax in relation to discontinued operations, £0 relates to tax on profits and £0 arose on disposal.
The actual credit for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
During the year, on 19 January 2023 the company disposed of its 100% shareholding The Buckinghamshire Limited and its subsidiary, The Royal Buckinghamshire Hospital Limited. The disposal was effected as a strategic withdrawal from the provision of specialist rehabilitation care services by the company.
A profit of £1,250,720 arose on the disposal, being the proceeds of the sale, less the costs of sale, carrying amount of the business assets and attributable goodwill.
Intangible fixed assets with a carrying amount of £416,566 (2022: £760,322) have been pledged to secure liabilities of the group. Detail of these liabilities are given in note 21.
Property, plant and equipment with a carrying amount of £4,655,804 (2022: £8,172,239) have been pledged to secure liabilities of the group. Detail of these liabilities are given in note 21.
Fixed asset investments with a carrying amount of £1,992,118 (2022: £1,412,654) have been pledged to secure liabilities of the company. Detail of these liabilities are given in note 21.
During the year the company was allotted an additional share of one of it's subsidiaries. The subsidiary was subsequently disposed of during the year.
Additionally, the company acquired 25% of a subsidiary company from a fellow group company. As a result the company now has 100% direct control of the subsidiary.
Details of the company's subsidiaries at 31 May 2023 are as follows:
The investments in subsidiaries are all stated at cost, less provision for impairment.
The registered office of each of the above subsidiaries is 31/33 Commercial Road, Poole, Dorset, BH14 0HU.
Patient requisites with a carrying amount of £3,444 (2022: £4,620) have been pledged to secure liabilities of the group. Detail of these liabilities are given in note 21.
Trade debtors and other receivables with a carrying amount of £3,605,567 (2022: £3,194,562) have been pledged to secure liabilities of the group. Detail of these liabilities are given in note 21.
Bank loans included above totalling of £5,113,037 (2022: £7,226,276) are secured by way of first legal charges over the properties and other assets of the group, a debenture and an intercompany guarantee up to an amount of £5,200,000 (2022: £13,000,000). Interest is payable at a rate of 2.75% over Sterling Over Night Index Average (2022: interest was payable at a rate of 2.65% plus a compounded reference rate) and the loan matures in January 2026.
At 31 May 2022 the group was in breach of the financial covenants relating to is bank borrowings and as such bank loans totalling £7,234,906 have been shown as fully repayable within one year.
The loans from related parties were repaid in the year ended 31 May 2023. With regards to the balance of £1,500,000 as at 31 May 2022, this was secured by way of a fixed and floating debenture over the group's assets which has now been part satisfied. Interest was payable at two different rates: 5% on a balance of £1,033,000 and 10% on the remaining £467,000.
The Coronavirus Business Interruption Loan Scheme loan was repaid in the year ended 31 May 2023. With regards to the balance of £570,000 as at 31 May 2022, this was secured by way of first legal charges over the properties and other assets of the group, a debenture and an intercompany guarantee. Interest was payable at a rate of 4.5% over the Coutts Base rate and in the first 12 months of the loan, the interest was met by the Government. The loan was due to mature in December 2026.
Deferred tax assets and liabilities are offset where the group or 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:
Of the deferred tax asset set out above, an amount of £617 is expected to reverse within 12 months and relates to decelerated capital allowances, an amount of £nil is expected to reverse within 12 months and relates to accelerated capital allowances, an amount of £283,460 is expected to reverse within 12 months and relates to the utilisation of tax losses against future expected profits of the same period and an amount of £5,727 is expected to reverse within 12 months and relates to fair value adjustments.
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. At the balance sheet date, unpaid contributions of £14,354 (2022: £16,949) were due to the fund. They are included in other creditors.
Ordinary 'A' shares have voting rights but have no right to fixed income or fixed repayment of capital.
Ordinary 'B' shares have voting rights but have no right to fixed income or fixed repayment of capital.
Ordinary 'C' shares have voting rights but have no right to fixed income or fixed repayment of capital.
The share premium reserve contains the premium arising on issue of equity shares, net of issue expenses.
Other equity comprises unsecured borrowings repayable at the discretion of the group or on the occurrence of specific contingent conditions arising. Any interest payable on these borrowings is to be paid as part of a return of capital and the conditions attaching to the loan specify that the payment of interest must be matched to a dividend payment to Ordinary 'A' and Ordinary 'B' equity holders. As such the characteristics of the borrowings are that of equity instruments and they are therefore reported on this basis in the financial statements.
Other reverses comprises merger relief reserve.
Retained earnings represents cumulative profits or losses, including unrealised profit on the remeasurement of investment properties, net of dividends paid and other adjustments.
On 19 January 2023 the group disposed of its 100% holding in The Buckinghamshire Limited and it's subsidiary, The Royal Buckinghamshire Hospital Limited. Included in these financial statements are losses of £64,328 arising from the company's interests in The Buckinghamshire Limited and losses of £372,470 arising from the company's interests in The Royal Buckinghamshire Hospital Limited up to the date of their disposal.
At 31 May 2023, the group had contingent liabilities amounting to £236,391 (2022: £236,391) in respect of possible additional charge to stamp duty land tax and corporation tax within Alum Care Limited. This possible charge is in respect of the initial apportionment on purchase of the care home held by the company and relates to the values attributable to freehold property and goodwill. The determination of any liability to charge remains under assessment as at the end of the financial period.
At 31 May 2023, the company had secured borrowings of its subsidiary company Alum Care Limited, by the way of fixed and floating charge over all its assets, a debenture and an intercompany guarantee up to a maximum of £nil (2022: £600,000). At 31 May 2023, the maximum exposure of the company in respect of amounts drawn by the subsidiary company was £nil (2022 - £570,000).
At 31 May 2023, the group and company had contingent liabilities amounting to £1,231,149 (2022: £1,157,709) and £1,231,149 (2022: £787,419) respectively, in respect of interest due on equity loans made by the operators of a pension fund of which a director of the parent company is a beneficiary. The interest is only payable when specific contingent conditions are conditions are met. See note 25: Equity reserve for additional details in connection with these borrowings and the contingent conditions.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Amounts contracted for but not provided in the financial statements:
Subsequent to the year end, the Company disposed of 100% of the share capital of Affinity Care Management Limited for £2. Affinity Care Management Limited reported a loss of £24,397 after deducting intercompany debt write offs for the year ended 31 May 2023 and showed a balance sheet deficit of £15,700 as at 31 May 2023. The full financial effects cannot yet reliably be determined.
Additionally, after the year end, a subsidiary company secured additional borrowings from their current bankers and then subsequently consolidated and refinanced the bank borrowings by way of a new £10,000,000 loan. As a result, the security increased from £5,200,000 to £10,000,000.
Subsequent to the year end, a charge was registered on the shares held by the company of a subsidiary, Alum Care Limited. The charge pledges the shares held in Alum Care Limited as security for the repayment of an intercompany loan with a fellow group company.
The remuneration of key management personnel is as follows.
The remuneration of key management personnel of the parent company amounted to £221,077 (2022: £219,429), of which £13,332 (2022: £14,487) was paid by a subsidiary of the company.
During the year the group entered into the following transactions with related parties:
In addition to the above, there was a donation of £nil (2022: £15,000) paid to other related parties during the year, services were provided to related parties by a subsidiary company with an estimated value of £96,000 (2022: £16,000) at no cost and tangible assets were sold to a director for £2,400.
On 1 June 2022, as part of a group reorganisation, a subsidiary of the company, Ballinderry LLP transferred its assets and liabilities to The Buckinghamshire Group Limited. Included in the transfer were the shares held by the limited liability partnership in Alum Care Limited, a fellow group undertaking, totalling £579,716 and loans due to other related parties of £571,000 and £7,716.
The following amounts were outstanding at the reporting end date:
Included above within other related parties is an amount of £571,000 (2022: £571,000 owed by Ballinderry Limited Liability Partnership, a subsidiary company) owed by the parent company, to the operators of a pension fund of which a director of the parent company is a beneficiary. The loan is repayable at the lender's discretion. Please see note 27 for further details.
Included above within other related parties is an amount of £7,716 (2022: £7,716 owed by Ballinderry Limited Liability Partnership, a subsidiary company) owed by the parent company, to a shareholder of the parent company. This loan is interest free and the loan is repayable on demand.
The following amounts were outstanding at the reporting end date:
In addition to the above, as at 31 May 2023, amounts due to the company by its subsidiaries totalling £nil (2022: £2,167,891) were considered irrecoverable and a provision has been made in the accounts of The Buckinghamshire Group Limited in this respect.
The following amounts were recognised as (income) an expense in the period in respect of bad and doubtful debts due to and from related parties:
Loans from related parties were repaid in the year ended 31 May 2023. With regards to the balance of £1,500,000 as at 31 May 2022, this was secured by way of a fixed and floating debenture over the group's assets which has now been part satisfied. Interest was payable at two different rates: 5% on a balance of £1,033,000 and 10% on the remaining £467,000.
The loans are unsecured and repayable on demand.