The directors present the strategic report for the year ended 31 December 2023.
Pittshanger Holdco Limited is the parent company for the Happy Days Nurseries group, one of the largest regional chains of children's nurseries in the UK, currently with 21 settings and an operating capacity of over 1,750 places. It is the largest operator in Cornwall and has expanded across the South West.
Pittshanger Holdco Limited ("the Group") was operating 14 (2022: 11) of the group's nurseries at the end of 2023 with capacity of over 1,750 places.
Strategy & Funding
Happy Days opened their first Nursery in 1991 and now operate 30 Nurseries throughout the South West, South East and Wales. We have an ambitious growth plan to expand our portfolio through organic new developments and acquisitions. At the Happy Days Group we pride ourselves on all our Nurseries offering inspiring childcare and education where every child shines.
Our Nurseries are designed and resourced to ensure children have access to safe, challenging, impactful and engaging inclusive high quality indoor and outdoor continuous provision that supports them to be active, curious and independent learners. The Happy Days unique, broad and ambitious “Where Children Shine” curriculum provides opportunities for all children to learn, explore and discover enabling them to have the best start in life. The curriculum values children as unique, strong and resilient individuals, recognising that play is a fundamental aspect of a child’s learning and development. Our curriculum reflects Happy Days mission and vision supporting all children to feel safe and secure. This enables children to thrive and meet their full potential and become strong and motivated learners for life, which will have a positive impact on their future success.
The Group's strategy is to extend its geographic footprint across the South West and adjoining regions, with the objective of more than doubling the size of the Group in 5 years by a combination of acquisitions and roll-out.
A re-financing was completed in July 2022, when funds managed by Zetland Capital (“Zetland") acquired a majority stake in the business. £12 million was invested by Zetland in loan stock at completion and debt facilities are in place with Zetland for a further £60 million for business expansion.
In recent years, the business has expanded through organic growth. The funding from Zetland now presents the opportunity to scale the business by acquisition at a much faster rate, alongside continued opening of new sites.
Banking facilities with Santander UK plc ("Santander") were also renewed in July 2022 for a five year period till July 2027. A senior loan of £6 million remains in place and there is a growth capital facility of a further £1 million available for future use.
The investment structure used for Pittshanger Holdco is suited to an acquisition and roll-out strategy because the Zetland borrowing does not require payment of interest or repayment of debt until 2027.
In January, the Group opened a new nursery in Salisbury.
May 2023, the Group completed the acquisition of The Hollies Nursery Limited ("The Hollies"), which operates a single site in Cardiff. The Company is actively seeking further acquisitions.
In November 2023, the Group completed the acquisition of Yew Tree Nursery Limited (“Yew Tree”), which operates a single site in Yeovil.
The leases for two organic sites, Charlton Heights in Bristol and Droitwich Spa in Worcestershire, have recently been assigned by another chain. Both opened in September 2023.
Two new organic growth sites are planned to open in early 2024, Verwood in Dorset and Yate in South Gloucestershire.
Since 2014, the Group has opened ten modern, high quality nurseries with 70-100 places in areas of strong demographics, of which five sites have been conversions and five have been purpose-built. These sites cover an area spanning Exeter, Bristol, Swindon, Poole and Salisbury.
Trading Results for 2023
The Group’s turnover increased in 2023 by £7.0m to £16.4m based on the consolidated income statement, however as a result of the construction of the new Group full year revenue for 12 months in 2022 was £13.1m and therefore overall revenue increased by £3.3m on a like-for-like basis. This growth was as a result of recently opened sites continuing to mature and change in the pricing policy implemented during the year.
The Group achieved an operating loss of £4.8m in 2023 (2022: operating loss of £3.2m).
Depreciation resulted in a charge against profit of £0.7m (2022: £0.4m) within administrative expenses. Before this non-cash flow item, the Group recorded an operating loss of around £4.1m in 2023 (2022: £2.8m).
The net liabilities at the reporting date were £10.9m (2022: £3.9m) and the Group held cash of £1.3m (2022: £1.3m).
During 2023 the Group opened 3 new settings and acquired 2 settings. The business intends to continue to grow through acquisition and organic new developments.
Santander provides debt facilities, current accounts, deposit accounts and payment facilities to the Group.
Childcare is regulated in England by the Office for Standards in Education, Children's Services and Skills (Ofsted). Ofsted judgements on individual settings are a key measure of quality. All of the Group's nurseries that have been inspected were rated as either “Outstanding" or "Good” by Ofsted at 31 December 2023.
The Group manages key risks as follows:
Health & Safety
Health & safety is paramount in all aspects of the Group's activities, with strict policies & processes operated and regularly updated to ensure compliance with regulations.
Economy
The UK economy is experiencing a period of high inflation, experiencing cost and wage inflation and there is a risk of recession. We are managing the associated risks by carefully controlling costs, managing the portfolio of nurseries and maintaining forecasts.
Liquidity risk
Cash flow forecasts are maintained to ensure that the Group operates within its resources.
Customer credit risk
Customer credit risk is considered to be low and is managed through maximising payments in advance by direct debit and tax free childcare combined with credit control procedures.
Credit risk
The Group’s principal financial assets are bank balances, therefore the credit risk of the Group is low.
Cashflow
Majority of interest bearing liabilities are held at fixed rates to ensure certainty of cash flows.
Interest rate risk
Interest rates on Zetland loans to the company are fixed. Interest rates on Santander loans to the company are at Bank of England Base Rate plus a margin.
Regulatory risk
The nurseries are registered and regulated by Ofsted. Internal control procedures are in place to ensure high quality care and compliance with regulations.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2023.
The results for the year are set out on page 11.
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:
Where material for the assessment of the assets, liabilities, financial position and profit or loss of the Group, the directors have included comment on the financial risk management objectives and policies relevant by reference to the strategic report under principal risks and uncertainties.
The Group's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.
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.
There is no employee share scheme at present, but the directors are considering the introduction of such a scheme as a means of further encouraging the involvement of employees in the Group's performance.
On 28 June 2024, the Group completed the acquisition of Home Counties Nurseries and Day Care Limited, a single setting nursery in Surrey, Toddletown Nursery and Daycare (Farnham) Ltd, a single setting nursery in Surrey and Toddletown Nursery and Daycare (Eastleigh) Ltd, a single setting nursery in Hampshire.
On 27 September 2024, the Group completed the acquisition of Tiddlers Day Nursery Limited, a single setting nursery in Bristol.
On 30 October 2024, the Group completed the acquisition R&J Care Limited, a single setting nursery in Portsmouth.
The costs of investment and value of net assets acquired at completion were:
| Cost of investment | Net assets acquired |
| £ | £ |
Home Counties Nursery and Day Care Limited | 2,940,000 | 333,000 |
Toddletown Nursery and Daycare (Farnham) Limited | 4,280,000 | 605,000 |
Toddletown Nursery and Daycare (Eastleigh) Limited | 2,121,000 | 379,000 |
Tiddlers Day Nursery Limited | 1,301,000 | 517,000 |
R&J Care Limited | 1,969,000 | 1,238,000 |
The acquisitions were funded by a shareholder loan from Zetland Capital Partners LLP.
The directors intend to continue the development of the Group's principal activities and are confident of the future financial performance of the Group.
Azets Audit Services were appointed as auditor to the Group and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
We have audited the financial statements of Pittshanger Holdco Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2023 which comprise 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 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.
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.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Reviewing minutes of meetings of those charged with governance;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the entity through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Other matter – prior period financial statements
In forming our opinion on the Financial Statements, which is not modified, we note that the prior period Financial Statements for the company were not audited. Consequently, International Standards on auditing (UK and Ireland) require the auditor to state that the corresponding figures contained within these Financial Statements are unaudited.
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.
There was no other comprehensive income for 2023 (2022: £Nil).
The notes on pages 17 to 36 form part of these financial statements.
The notes on pages 17 to 36 form part of these financial statements.
The notes on pages 17 to 36 form part of these financial statements.
As permitted by S408 Companies Act 2006, the Company has not presented its own statement of comprehensive income and related notes. The Company’s loss for the year was £39,579 (2022: £0 profit).
The directors acknowledge their responsibilities for complying with the requirements of the Companies Act 2006 with respect to accounting records and the preparation of financial statements.
The notes on pages 17 to 36 form part of these financial statements.
The notes on pages 17 to 36 form part of these financial statements.
The notes on pages 17 to 36 form part of these financial statements.
Pittshanger Holdco Limited (“the Company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Happy Days Nurseries Head Office, Chapel Town, Summercourt, Newquay, Cornwall, United Kingdom, TR8 5YA.
The group consists of the Company and all of its subsidiaries ("the Group").
The prior reported period was for less than 12 months from 1 July 2022 to 31 December 2022. The reason for the change in reporting period was to align with the calendar year. The current period covers the 12 months ended 31 December 2023. The two periods are therefore not necessarily comparable.
Basis of preparation
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 Group. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The Company has taken advantage of the exemption in section 408 of the Companies Act from presenting its individual profit and loss account.
Exemptions for qualifying entities under FRS 102
The Company is a qualifying entity for the purposes of FRS 102. The Company has taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated Group financial statements consist of the financial statements of the Company together with all entities controlled by the Company (its subsidiaries).
All financial statements are made up to 31 December 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the Group.
All intra-group transactions, balances and unrealised gains on transactions between Group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the Group's financial statements from the date that control commences until the date that control ceases.
At the time of approving the financial statements, the directors have a reasonable expectation that the Group has 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.
The Group has access to finance facilities provided by the ultimate controlling entity, Zetland Special Situations Fund II SICAV-RAIF, which can be drawn down to support the Group’s acquisition strategy and to fund working capital needs. These facilities have a final repayment date of July 2027.
The Group has received a commitment from the ultimate controlling entity that it will continue to provide financial support to the Group, if required for a period of at least 12 months from the approval of these financial statements. In addition, confirmation has been received that the related party loan balances will not be recalled unless sufficient liquidity exists.
As at the reporting date the Group had net current liabilities of £1,548,097 (2022: net current liabilities of £840,677), the directors consider they have sufficient access to funding to meet these liabilities when they fall due. The balance outstanding on the related party loans was £20,829,930 at the yearend (2022: £12,522,740). As part of their assessment the directors have reviewed the financial projections, cash flow forecast and facilities available, to satisfy themselves that there is sufficient cash and headroom on loan covenants to support the going concern basis.
Based on this review the Directors believe that it remains appropriate to prepare the financial statements on a going concern basis.
Turnover represents the total invoice value of nursery services provided during the year and is recognised through the Statement of Comprehensive Income. Turnover is recognised to the extent that it is probable that the economic benefits will flow to the Group in the period in which the services are provided. Turnover is recognised if it can be reliably measured, if it is probable that the Group will receive the consideration due under the contract and the costs incurred to complete the contract can be measured reliably.
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.
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Tangible fixed assets also comprise assets in the course of construction which are held at cost. Depreciation is due to commence when the assets are fully operational.
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in the statement of comprehensive income.
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.
The Group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ 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, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price less any impairments whereas loans receivable are initially measured at fair value net of transaction costs. Subsequently, basic financial assets are carried at amortised cost using the effective interest method.
Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received.
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 fixed 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 Group is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.
The contributions are recognised as an expense in statement of comprehensive income when they fall due. Amounts not paid are shown in accruals as a liability in the statement of financial position. The assets of the plan are held separately from the Group in independently administered funds.
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 statement of financial position 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.
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
Interest Income
Interest income is recognised in the statement of comprehensive income using the effective interest method.
Finance costs
Finance costs are charged to the statement of comprehensive income over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as reduction in the proceeds of the associated capital instrument.
Exceptional costs
Exceptional costs are disclosed separately in the financial statements where it is necessary to do so to provide further understanding of the financial performance of the Group. They are costs that are material either because of their size or their nature, and are considered non-recurring. These items are presented within the line items to which they best relate and reported separately as exceptional costs.
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 directors consider there to be no critical accounting estimates or judgements that are material to the Group.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
The useful economic life of assets are determined based on management's judgement, considering the specific circumstances of the tangible assets and the expected period over which the assets will contribute to the entity's cash flows.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
The Group has assessed whether at the reporting date that a provision is required in respect of the obligation stated in the lease to return a property to the original condition. The provision is based on an estimate of the cost required considering the condition and size of the property. The estimate of the provision is revisited at each reporting date.
The recoverable amount of goodwill is considered relative to the individual performance of the sites to which the goodwill relates. The net book value of goodwill at year end is £10,249,354 (2022: £10,105,831) and is stated after an impairment of £350,000 (2022: £Nil).
In determining whether or not an impairment provision is required, the directors take into account a variety of factors such as the expected use of the acquired business, and the expected useful life of the cash generating units to which the goodwill is attributed.
The turnover of the Group is generated from its principal activity. The directors consider there to be only one geographical market, the United Kingdom.
Exceptional costs incurred in the prior year are considered to be non-recurring. These include IT projects, professional fees, restructuring costs and write off of fixed assets costs at the closed sites.
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 7 (2022 - 5).
The actual charge/(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:
At the reporting date, management assessed the goodwill for "The Hollies Nursery Limited" and reported an impairment charge of £350,000.
Details of the Company's subsidiaries at 31 December 2023 are as follows:
Registered office addresses (all UK unless otherwise indicated):
See note 27 for details regarding the acquisition of subsidiary undertakings.
Amounts owed by group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand.
See note 21 for details regarding obligations under finance leases.
See note 20 for details regarding bank loans and other borrowings and see note 21 for details regarding obligations under finance leases.
Bank loans falling due after more than one year includes £6,001,292 (2022: £5,802,391) relating to senior debt facilities. This amount is secured by fixed and floating charges over the undertaking, all property and all assets present and future of H. Days Holdings Limited, a subsidiary within the Group. The loan is interest bearing at a margin of 5% above the Bank of England base rate per annum and has capital repayments falling due from July 2025, accrued interest falls due July 2027. Interest payable is calculated on a quarterly basis and compounded quarterly, where unpaid.
A further growth capital facility of £1,000,000 is available for future investments which at the period end remained undrawn. A commitment fee of 1.75% per annum calculated is calculated on a quarterly basis and compounded quarterly, where unpaid which at the period end amounted to £3,212 (2022: £5,452). When drawn, this amount will be interest bearing at a margin of 5-10% above the Bank of England base rate per annum depending on the level of leverage facilitated.
Loans from related parties falling due after more than one year of £20,829,930 (2022: £12,522,740) relates to an interest bearing loan agreement provided by a related party of the Group. This amount is unsecured, interest bearing at 10% per annum and has a final repayment date for capital and accrued interest of July 2027. Interest payable is calculated on a quarterly basis and compounded annually, where unpaid.
Finance lease obligations relate to assets held under hire purchase contracts that are on a fixed repayment basis and are secured against the assets they relate to.
The directors have estimated the cost of restoration where the lease contains an obligation to return the property to its original condition.
The Group operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the Group in an independently administered fund. Contributions to the defined contribution pension scheme are expected to be settled wholly within 12 months of the reporting period.
A Ordinary Shares and B Ordinary Shares rank pari passu in respect of the distribution of income and the rights to receive dividends.
A Ordinary Shares have full voting rights, are entitled to the appointment of directors and are entitled to receive capital in accordance with the articles. These shares are not redeemable.
B Ordinary Shares have voting rights, are entitled to receive capital in accordance with the articles. Class rights attached to these shares can be abrogated capital in accordance with the articles.
On 13 October 2023, 84 B Ordinary Shares were allocated at a nominal value per share of £0.0001 for a consideration of £1.74 per share.
The share premium account represents the excess of proceeds received from the issue of shares over their nominal value.
As a result of the B Ordinary Shares allotted on 13 October 2023, share premium of £147 was generated and is recognised in the share premium account.
This reserve relates to the cumulative retained earnings less amounts distributed to shareholders.
On 5 July 2023 the group acquired the issued capital of The Hollies Nursery Limited.
On 2 November 2023 the group acquired the issued capital of Yew Tree Nursery Limited.
H. Days Holdings Limited, a subsidiary within the Group, and their subsidiaries are party to cross guarantees given in respect of certain bank borrowings between H. Days Holdings Limited and Santander UK PLC, providing access to a senior loan facility of £6,000,000 and a growth capital facility of £1,000,00, which at the period end amounted to £6,004,504 (2022: £5,807,843). This guarantee is secured by fixed and floating charges over the undertaking, all property and assets present and future including land, shares and securities, intellectual property, investments, monetary claims, plant and equipment, goodwill, uncalled capital, assigned contracts and assigned insurances of H. Days Holdings Limited.
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:
On 28 June 2024, the Group completed the acquisition of Home Counties Nurseries and Day Care Limited, a single setting nursery in Surrey, Toddletown Nursery and Daycare (Farnham) Ltd, a single setting nursery in Surrey and Toddletown Nursery and Daycare (Eastleigh) Ltd, a single setting nursery in Hampshire.
On 27 September 2024, the Group completed the acquisition of Tiddlers Day Nursery Limited, a single setting nursery in Bristol.
On 30 October 2024, the Group completed the acquisition of R&J Care Limited, a single setting nursery in Portsmouth.
The costs of investment and value of net assets acquired at completion were:
| Cost of investment | Net assets acquired |
| £ | £ |
Home Counties Nursery and Day Care Limited | 2,940,000 | 333,000 |
Toddletown Nursery and Daycare (Farnham) Limited | 4,280,000 | 605,000 |
Toddletown Nursery and Daycare (Eastleigh) Limited | 2,121,000 | 379,000 |
Tiddlers Day Nursery Limited | 1,301,000 | 517,000 |
R&J Care Limited | 1,969,000 | 1,238,000 |
The acquisitions were funded by a shareholder loan from Zetland Capital Partners LLP.
The company has taken advantage of the exemption available under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' not to disclose related party transactions with wholly owned subsidiaries within the group.