Priory HoldCo Limited is a private company limited by shares incorporated in England and Wales. The registered office is Quarry House, Cattle Hill, Warter, York, United Kingdom, YO42 1XG.
The Company extended its comparative accounting reference date from 30 September to 31 December 2022, reporting a 15 month accounting period. The current period presented is that of a year only. As such, the comparative amounts presented in the financial statements (including the related notes) may not be entirely comparable.
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 Company has net liabilities of £1,258,650 and net current assets of £849,445 as at 31 December 2023, which includes cash balances of £1,521.
The Directors have carried out an evaluation of the Company’s ability to continue as a going concern for the foreseeable future, defined as a period of at least 12 months from the date of approval of these financial statements (the going concern period) and note that the company is reliant on the group to support its cash flows, and that post down conditions attached to its long-term loans have not been met.
Warrendale Group Limited (Ultimate Parent Company) has indicated its intention to support by making available such funds as are needed by the Company for the going concern period.
The Directors of the Ultimate Parent Company have conducted a comprehensive assessment of the Group’s ability to continue for the going concern period.
In making this assessment, the Directors have considered two significant uncertainties:
Hire purchase liabilities and long-term loan post drawdown conditions:
The Group has substantial hire purchase liabilities due for refinancing and long-term loans which have not met post drawdown conditions. Consequently, the hire purchase liability and long-term borrowings remain immediately repayable at the discretion of the financier. They have accepted an offer of debt funding from the financier, and both the financier and the Directors continue, on a completely consensual basis to reorganise the group and refinance all existing debt into the new structure. Once completed this will satisfy both hire purchase liabilities and post drawdown conditions. There is currently no committed timeline from the financier regarding this, however the Directors are confident that this will be resolved during the going concern period.
Severe but plausible stress-tested cash flow:
The Directors have performed a severe but plausible stress test on the Group’s cash flow projections to account for potential adverse scenarios. This stress test indicates that, under a severe but plausible scenario whereby several of the groups business risks crystallise simultaneously, the Group would require additional funding to maintain liquidity. Whilst the Directors consider this scenario highly unlikely, they acknowledge the potential need, as a separate investment case project they have recently explored various funding options and have accepted an offer of debt funding from a financier. While the Directors are confident that this funding will be completed within the necessary timeframe, there is no commitment from the financier regarding the timing of the funding receipt, and the funding is conditional on an ongoing group restructure. Furthermore, the group could liquidate certain assets to raise near term funding to enable it to continue to meet its liabilities.
Should multiple of the groups business risks crystallise simultaneously and the Group is unable to secure the necessary refinancing or additional funding, this would cast significant doubt on the Group’s ability to continue as a going concern, potentially leading to an inability to realise its assets and discharge its liabilities in the normal course of business.
Given these uncertainties, the Directors of the Ultimate Parent Company acknowledge a material uncertainty regarding the Group’s ability to continue as a going concern. However, after considering all available information about the future, including the increase in trade through long-term contracts and the accepted offer of additional funding through refinancing, the Directors have a reasonable expectation that the Group has adequate resources to continue its operations for the foreseeable future.
The Directors of the Company have assessed the conclusions reached by the Directors of the Ultimate Parent Company and agree with their conclusion.
The Directors of the Company are satisfied that the Parent Company has the ability, intention and economic rationale to continue to support the Company.
As with any company placing reliance on other group entities for financial support, the Directors acknowledge that there can be no certainty that this support will continue and are aware that if multiple of the groups business risks crystallise simultaneously and the Group is unable to secure the necessary refinancing or additional funding, this would cast significant doubt on the Group’s ability to continue as a going concern, potentially leading to an inability to provide the required support to the Company.
The Directors acknowledge the existence of a material uncertainty regarding the Company’s ability to continue as a going concern but have a reasonable expectation that the Company has access to sufficient resources to continue its operations for the foreseeable future.
Therefore, the financial statements have been prepared on a going concern basis.
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 credited or charged to profit or loss.
Freehold land is not depreciated.
Within land and buildings are properties held to generate rental income for the Company. Such properties are let to fellow group undertakings, and as such the Company has elected not to recognise the properties as Investment Property.
Basic financial assets, which include debtors, amounts owed by fellow group companies and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Financial 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 company after deducting all of its liabilities.
Basic financial liabilities, including creditors, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Equity instruments issued by the company 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 company.
In the application of the company’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.
Management are of the opinion that there are no estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities as at year end.
The average monthly number of persons (including directors) employed by the company during the year was:
Included in cost of land and buildings is freehold land of £1,549,626 (2022 - £1,549,626) which is not depreciated.
During the year the Company transferred ownership of its only subsidiary, Wot-An-Egg Limited to a fellow group undertaking at cost.
Amounts owed by group undertakings are stated net of a provision for bad debts of £nil (2022: £224,425).
Other borrowings are comprised of secured borrowings as follows:
£518,462 carrying interest at 7.74%, repayable in instalments and due to be repaid in full in December 2038.
£3,155,173 carrying interest at 5.5% repayable in full in December 2031.
Security was provided for these loans by way of a fixed and floating charge dated 17 December 2021 which covers all the property or undertaking of the company. The charge contains a negative pledge.
As the income statement has been omitted from the filing copy of the financial statements, the following information in relation to the audit report on the statutory financial statements is provided in accordance with s444(5B) of the Companies Act 2006:
The auditor's report was unqualified.
Priory HoldCo Limited is a guarantor for the loan liability with AFP Assets Limited in Warrendale Properties Limited, a fellow subsidiary, and for the loan liability with AFP Assets Limited in WFAFP Limited, an associate of the group.
Subsequent to the year end, the company has not met post drawdown conditions attached to its long-term loans. Consequently, the affected long-term borrowings totalling £519,465 have become immediately repayable at the discretion of the financier. The Group has accepted an offer of debt funding from the financier, and both the financier and the Directors continue, on a completely consensual basis to reorganise the group and refinance all existing debt into the new structure. Once completed this will satisfy both hire purchase liabilities and post drawdown conditions.