The directors present the Annual Report for the year ended 30 April 2024.
The principal activities of the group continue to be that of ownership and the operation of nursing homes primarily for the elderly. The group owns 10 care homes providing nursing and residential care to 575 registered beds within the Greater London.
The group has had an excellent year, highlighted by the acquisition of the 65-bed Uplands Care Home in January 2024.
At the reporting date, the group’s turnover has risen by 30.4% to £33.9m (2023 - £26m). Profit before tax after fair value loss of £0.4m on derivative financial instruments for the year ended 30 April 2024 amounted to £5.07m, up from £4.89m in 2023 which included a £0.6m fair value gain on derivative financial instruments.
While increased staff remuneration and higher agency costs have impacted the results, the group's strict control over support costs demonstrates its ability to perform well in an otherwise challenging market. Local Authorities have continued to maintain tight budget controls, with little or no increases in fees. Despite these challenges, the group has upheld rigorous financial discipline, ensuring its cash generation capacity remains strong.
We are seeing strong progress in occupancy rates and are very optimistic about the future. The group is well placed to continue to perform strongly in the foreseeable future and to take advantage of future business opportunities. With the addition of highly skilled experts to our existing team, we are making significant strides in refreshing our strategic foundations. This continued evolution ensures that we are well-prepared for future success.
The management team remains deeply committed to its responsibilities in Sustainability, Environmental, and Social Governance (ESG) and works diligently to uphold these principles across all areas of the business.
Careful financial management has enabled the group to make substantial reinvestments in modernising care home facilities and infrastructure, ensuring we maintain our position as a high-quality, preferred care provider within our local communities. There is an ongoing focus on developing and improving our portfolio, with continuous enhancements to our care homes. As in previous years, the steady increase in the group's portfolio valuation reflects the quality of the assets from which the income is derived.
Strong governance, corporate responsibility, and sustainability are central to the success of the Abbey brand. The group is dedicated to addressing the challenging healthcare needs of its residents and the wider community. At the heart of our service delivery are our people, who ensure the highest standards of care for our residents. Abbey is well-positioned to remain a sector leader in employee engagement, career development, and training by continually investing in both our people and services. Our team is supported by an innovative learning and development programme that fosters growth and excellence.
The second phase of the group's flagship "Total Care" project at Forest Place is now in its final stage. Once complete, the redevelopment will feature 165 high-quality care units, including 45 extra care assisted living units, as well as a range of recreational facilities. A key part of the development will be a hydrotherapy centre, alongside ancillary medical facilities, such as consulting rooms, opticians, dentistry, physiotherapy services, and a pharmacy. The centre will also include wellness facilities, further enhancing the care and services we offer.
As with previous phases, the ongoing development has temporarily reduced the number of available beds. However, once the Forest Place, Balham and Ravenscroft projects are completed and fully operational, the value of the group's portfolio is expected to significantly increase. A valuation carried out in May 2023 estimated the portfolio’s worth at £156m.
As construction at Forest Place moves towards completion, planning permission has already been obtained for expansion at Ravenscroft-Barnet, and we are in the process of seeking approval for further developments in Balham, where additional premises have recently been acquired. There is substantial development potential within the Group's existing property portfolio, particularly with the recent acquisition of residential properties adjacent to some of our care homes. These opportunities will be explored to maximise value and improve the facilities available to our residents.
The future of Abbey Total Care Group looks very promising, underpinned by strong foundations, a solid financial Balance Sheet, and a continued focus on meeting the evolving needs of our residents. Our commitment to high-quality care remains unwavering, with constant monitoring and assessment by the group’s Executive Board, Governance Teams, Operational and Area Managers and Home Managers. The group’s key focus remains over and above regulatory, the local authority and NHS requirements.
We continue to invest in strengthening our management team, bringing in specialists such as in-house trainers, Care Quality Commission (CQC) experts, Local Authority Contracts Advisors and Environmental Health professionals. Additionally, our associate Medical Consultants and GPs play a vital role in providing more specialised care to residents, working closely with Integrated Commissioning Boards and local hospitals to ensure the best possible outcomes.
Abbey Total Care Group's homes are regulated by the Care Quality Commission (CQC), which ensures that care homes and services in England deliver safe, effective, compassionate, and high-quality care. The group remains fully committed to compliance with all health and safety regulations, as well as labour and employment laws, to provide the highest standards of care to our residents.
In addition to the commercial and regulatory challenges, the impact of rising living costs and inflation continues to challenge the group’s operations. However, the group consistently monitors and assesses the risks facing its business and Balance Sheet, evaluating how these factors interact. By understanding these risks, the group identifies appropriate opportunities for risk diversification and management, enabling it to confidently respond to emerging challenges.
With local authorities and the NHS continuing to restrict annual fee increases and extend payment periods, the group ensures its cash flow remains adequately provisioned to address these financial pressures.
During the reporting period, the group increased its term loan and acquisition banking facility. This expanded facility supported the acquisition of the 65 bed Uplands Care Home.
The care sector remains challenging, with recruitment of healthcare workers continuing to be a sector-wide issue. Rising inflation further increases costs across the business. Despite these pressures, the Group is well-positioned to adapt to changing circumstances, balancing the needs of its residents with a focus on growth and long-term sustainability.
Looking ahead, conditions will continue to be challenging due to a number of economic uncertainties. The scale and further likelihood of which particular care homes being impacted cannot be predicted with any certainty. The group is however taking all possible precautions to minimise and mitigate the risk with continuous monitoring of the business. The group is well prepared in maintaining its growth momentum well into the foreseeable future.
The group’s Key Performance Indicators (KPIs) are regularly reviewed to ensure they align with our strategic objectives. Detailed monthly management reports and accounts are produced, with several KPIs—such as turnover, payroll costs, operating costs, and cash generation from operations—forming an integral part of the review process and are detailed in the financial statements. Over the course of the year, the movement in occupancy was as follows:
| 2023/24 | 2022/23 |
|
Occupancy Percentage % | 93% | 91% | During the year, occupancy rates increased as a result of strong demand for care beds and diversifying the provision of specialised care services including 1:1 care provisions. |
Registered Beds
| 575
| 480
| Addition of 65 beds from the acquired Uplands Care Home and additional 30 beds registration at Forest Place. Registered beds will increase to 620 upon registration of 45 additional beds from Forest Place Phase 2 development. |
The directors of the Company, as those of all UK companies, must act in accordance with a set of general duties. These duties are detailed in section 172 of the UK Companies Act 2006 which is summarised as follows:
‘A director of a company must act in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its shareholders as a whole and, in doing so have regard (amongst other matters) to:
• the likely consequences of any decisions in the long term;
• the interests of the company’s employees;
• the need to foster the company’s business relationships with suppliers, customers and others;
• the impact of the company’s operations on the community and environment;
• the desirability of the company maintaining a reputation for high standards of business conduct; and
• the need to act fairly as between members of the Company.
Risk Management
As we grow, our business and our risk environment also become more complex. It is therefore vital that we effectively identify, evaluate, manage and mitigate the risks we face, and that we continue to evolve our approach. We have set out earlier in this report our principle risks and how we manage our risk environment.
Our people
The Group is committed to being a responsible business. Our behaviour is aligned with the expectations of our people, clients, investors, communities and society as a whole. For our business to succeed we need to manage our people’s performance and develop and bring through talent while ensuring we operate as efficiently as possible. We must also ensure we share common values that inform and guide our behaviour so we achieve our goals in the right way. Throughout the pandemic, the Group has supported its colleagues. Our colleagues have worked tirelessly throughout the pandemic, adopted various changes, to provide outstanding care to our residents.
Business Relationships
Our strategy priorities organic growth. To do this, we need to develop and maintain strong customer relationships. We value all of our suppliers.
Community and Environment
The Group’s approach is to use our position of strength to create positive change for the people and communities with which we interact.
Reputation maintenance
The board expects the highest standards of business conduct. The directors receive updates in respect of matters of regulatory compliance and further escalated issues.
Shareholders
The board contains all the company’s shareholders so there is never a conflict between the two parties.
The directors take this opportunity to thank all the stakeholders in supporting the operation of the business – that is all the frontline staff and management, the suppliers, the commissioning and contracting authorities, the social and healthcare workers – for their tremendous support during the very challenging period of the pandemic. The directors extend our thanks to all the families and relatives for their understanding and working in partnership with the group.
On behalf of the board
The directors present their financial statements for the year ended 30 April 2024.
The results for the year are set out on page 11.
Ordinary dividends were paid amounting to £76,043. 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 principal financial instruments are credit facilities and loans, the main purpose of which is to finance the group's operations. In addition, the group has various other financial assets and liabilities such as trade debtors and trade creditors arising directly from operations.
Liquidity risk is addressed by holding adequate liquid assets and through appropriate controls. The group continually reviews the residual risks arising and has mitigating actions in place to reduce the levels of these risks. Added to the liquid assets, a portion of the bank facility always remains undrawn to overcome unforeseen eventualities.
During May 2022 an interest rate cap was put in place over £20m of debt which capped the interest rate before margin at 1.5% per annum. The group is exposed to fair value interest rate risk on its borrowings over £20m and cashflow interest rate risk on bank overdrafts and loans. The group has agreed substantial interest rates on group cash credit balances which will help to manage interest cost on borrowing.
Investments of cash surpluses and borrowings are made through banks which must fulfil credit rating criteria approved by the Board. All service users enter into formal agreements with the group which stipulate payment terms. The directors regularly review trade debtors and pursue any outstanding debts on a timely basis. Where necessary, provisions are made for doubtful debts.
Abbey Total Care Group Limited has continued its development of an in-house learning facility. The group ensures that all care employees are trained up to the industry standard (appropriate QCF levels). This learning facility provides in-house trainers and assessors to deliver appropriate instructions and evaluation. Our trainers are experts familiar with the company’s values, policies and procedures. These training sessions have been welcomed by employees for their the more interactive style and content.
The group's policy remains that of a positive approach to problem solving and improving efficiency through consultations and discussions with employees at staff councils and meetings, for matters likely to affect employees' interests. All matters of concern by individuals are resolved as they arise by the manager.
Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance.
The Group is very pleased with the improving performance in health provision and aged care. We are doing everything we can to offer support to people in need. Our teams continue enthusiastically to deliver high standards of service for our customers at the same time as we transform the business.
The group continues to go from strength to strength, building on its solid foundation and years of expertise in the business. It has grown over the years by making progressive changes to existing buildings, conversions and new-builds. Importance is always given to developments that are superior and can provide a level of customer satisfaction which is exceptional. ‘Value for money and helping people live longer, healthier, happier lives’ are the key principles on which the Group’s foundations lie. We believe Abbey Total Care Group has an increasing part to play in the health of its customers.
Our ‘Care First’ approach will always be at the forefront all our activities. This approach has resulted in continuous training and development initiatives for all employees.
Forest Place, the group’s flagship home in Buckhurst Hill, located within the prestigious Epping Forest District of Essex, continues its Phase two development to supply additional beds, assisted living units for customers, restaurant facilities and an extensive medical centre.
Future planning includes new smaller developments at many of the group's other homes, to be rolled out soon after execution of the above project.
The auditor, Alwyns LLP is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Whilst the overall group has consumed more than 40,000 kWh of energy in this reporting period, none of the individual subsidiaries are large as defined by the Companies Act. In preparing this group Director’s Report, we have taken advantage of the option to exclude any energy and carbon information relating to those subsidiaries.
As the parent entity has very limited energy consumption, there is no energy and carbon information to be reported in respect of the parent entity.
We have audited the financial statements of Abbey Total Care Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 April 2024 which comprise the group profit and loss account, the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Audit procedures undertaken in responses to the potential risks relating to irregularities (which include fraud and non-compliance with laws and regulations) comprised of: enquiries of management and those charged with governance as to whether the entity complies with such laws and regulations; enquiries with the same concerning any actual or potential litigation or claim; inspection of relevant legal correspondence; testing the appropriateness of entries in the nominal ledger, including journal entries; reviewing transactions around the end of the reporting period; and the performance of analytical procedures to identify unexpected movements in account balances which may be indicative of fraud.
No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity's controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. As stated above, there is an unavoidable risk that material misstatements my not be detected, even though the audit have been planned and performed in accordance with ISAs (UK).
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.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £123,462 (2023 - £812,916 profit).
Abbey Total Care Group Limited ("the company") is a private company limited by shares incorporated in England and Wales. The registered office is 9 Spareleaze Hill, Loughton, Essex, IG10 1BS.
The group consists of Abbey Total Care 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 whole pound.
The financial statements have been prepared on the historical cost convention, modified to include the revaluation of freehold properties and derivative financial instruments. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group that prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’ – Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’ – Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’ – Compensation for key management personnel.
The consolidated financial statements incorporate those of Abbey Total Care Group Limited and all of its subsidiaries (ie entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits). Subsidiaries acquired during the year are consolidated using the purchase method. Their results are incorporated from the date that control passes.
All financial statements are made up to 30 April 2024 and have consistent accounting policies.
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.
At the time of approving the financial statements, the directors have a reasonable expectation that the company and its subsidiary undertakings have adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover represents amounts receivable for services provided.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
In the parent company financial statements, investments in subsidiaries 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.
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 through the profit and loss account, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
The group and parent company have elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of their financial instruments.
Financial instruments are recognised in the balance sheet when the entity becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including interest rate caps, 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.
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 derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans and loans from fellow group and related companies 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 receipts discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
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 though 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 currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The costs of short-term employee benefits are recognised as a liability and an expense.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
The group operates a defined contribution scheme for the benefit of its employees. Contributions payable are charged to the profit and loss account in the period to which they relate.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
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.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
Government grants are recognised when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
Liquid resources
Liquid resources for the purpose of preparing the cashflow statement includes cash at bank and in hand.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following judgements and estimates have had the most significant effect on amounts recognised in the financial statements.
Freehold land and buildings are reflected at fair value based upon a valuation from qualified surveyors. Calculation of the valuation requires judgements to be made and estimates based on information at the time of the valuation including the competitive and economic environment.
At each reporting date the company assesses whether there is any indication of the non recovery of trade debts. If any such indication exists a provision is recognised based on the director's estimate of amounts recoverable.
The group's turnover is generated from its principal activity of the operation of care homes which is wholly undertaken in the United Kingdom.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2023 - 2).
Only the directors are considered to be the key management.
The charge for the year can be reconciled to the profit per the profit and loss account as follows:
In addition to the amount charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:
Land and buildings held at 30 April 2023 were revalued during the prior year on a valuation concluded as at 24 May 2023 by Knight Frank LLP, independent valuers not connected with the group, on the basis of market value as defined in the publication RICS Valuation - Global Standards, which incorporate the International Valuation Standard and the RICS UK National Supplement.
If freehold land and buildings were stated on an historical cost basis rather than a fair value basis, the total amounts included would have been as follows:
The company acquired 100% of the share capital in each of Devi (London) Properties Limited and Newvalley Developments Limited. Following acquisition, properties held within those entities were transferred to the group companies at net book value and dividends paid to the parent to reduce the distributable reserves in the subsidiary undertakings to nil. Provision was subsequently made against acquisition cost as a result of the distributions.
Details of the company's subsidiaries at 30 April 2024 are as follows:
The principal activity of the above undertakings, apart from those identified as dormant or non trading, was the operation of care homes and ancillary services. All the above companies are registered in the United Kingdom which the same registered office as the parent undertaking.
The bank debt is secured by a debenture and unlimited intercompany composite guarantee between the group and connected companies, supported by first legal charges over the assets of the group and connected companies.
The bank facilities, which were amended and increased to £41,602,500 during the year, comprise term loans and a revolving credit facility, repayable in instalments with bullet repayments at the end of the term. Interest is charged on the term loans at between 2.25% and 2.45% above SONIA and on the revolving credit facility at 3.35% above.
During May 2022 an interest rate cap was agreed with the group's bankers over £20,000,000 of debt which capped the interest rate before margins at 1.5% per annum.
Other loans represent the executive pension scheme which was secured over some of the group's properties, which were repayable in instalments, bore interest at 1% above bank base rate and were repaid in full during the year.
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 5 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
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:
Defined contribution pension schemes are operated for all qualifying employees. The assets of the schemes are held separately from those of the group in an independently administered fund.
On 20 June 2023 the group acquired 100 percent of the issued capital of Newvalley Developments Limited.
The adjustments to fair value reflect the revaluation of property to fair value together with associated deferred tax provision thereon.
The goodwill arising on acquisition relates to a discount on the acquisition cost.
On 22 March 2024 the group acquired 100 percent of the issued capital of Devi (London) Properties Limited.
The adjustments to fair value reflect the revaluation of property to fair value together with associated deferred tax provision thereon.
The goodwill arising on acquisition relates to a discount on the acquisition cost.
During the year the group entered into transactions with related parties as follows: