The directors present the strategic report for the year ended 30 June 2024.
The directors are pleased with the performance in this year, particularly in light of the decision to close the smallest home – Kirkwood. The remaining 3 homes have shown an increased revenue and good profitability. The reduction in profit in this year is mainly due to a significant increase in Bank Interest; a situation which has been significantly improved at start of the new financial year with a new 5 year loan facility.
Occupancy remains good with a good percentage of private clients and average fee levels have increased again this year. Additional head office staff have provided more resources for our continual improvement program and agency usage has been very low.
A recent valuation of the 3 homes clearly indicates the success of the business and of the improvements made over recent years. The increase in value has been reflected in the group's financial statements. The group balance sheet continues to strengthen with net assets increasing from £2,760,166 at 30 June 2023 to £4,454,357 at 30 June 2024.
The high cost of living and interest rises continue to pose a significant challenge for the business over the coming year. The changes proposed by the new Government both in terms of Employment Law and taxation, coupled with a bigger push from Local Authorities to keep people in their own homes rather than funding care home placements pose further uncertainty for our sector.
The ongoing review of the CQC inspection process and rating system continues to put pressure on our business and the staff team, but we continue to work tirelessly to minimise the financial impact on the business.
We remain committed to recruitment, staff retention and continual professional development. We continue to strive toward reaching Outstanding in the eyes of the regulator and intend to add further technology, including eMAR, in the coming year to assist in this goal. We are considering options for developing the Kirkwood site to increase the value prior to sale and are considering acquisition options for further growth in the future.
| 2024 | 2023 |
Turnover | £5.09m | £5.04m |
Profit before tax | £0.76m | £1.18m |
Net profit margin | 11.3% | 18.8% |
On behalf of the board
The directors present their annual report and financial statements for the company and its subsidiaries for the year ended year ended 30 June 2024.
The results for the year are set out on page 8.
Dividends were paid on ordinary shares amounting to £161,900. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The group's activities expose it to a variety of financial risks. The Board reviews and agrees policies for managing these risks at regular intervals dependant on circumstances. The group’s principal financial instruments include assets and liabilities such as trade receivables and trade payables arising directly from its operations. In accordance with group’s treasury policy, derivative instruments are not entered into for speculative purposes.
The group manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the group has sufficient liquid resources to meet the operating needs of the business.
The group is exposed to fair value interest rate risk on its fixed rate borrowings and cash flow interest rate risk on floating rate deposits, bank overdrafts and loans.
Investments of cash surpluses, borrowings and derivative instruments are made through banks and companies which must fulfil credit rating criteria approved by the Board.
All residents who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary.
The group is not exposed to commodity price risk.
Subsequent to the year end, Franklyn Care Limited refinanced its borrowings of £3,803,470 and in doing so repaid circa £742,000. The new loan totals £3,040,000 with a loan term of 5 years from drawdown at a margin of 2.55% above the Bank of England Bank Rate.
The auditor, Morris Lane, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
The directors are responsible for the maintenance and integrity of the company website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
We have audited the financial statements of Franklyn Care Ltd (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 June 2024 which comprise the group income statement, the group statement of comprehensive income, the group statement of financial position, the company statement of financial position, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
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
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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Identifying and assessing the risks of material misstatement due to irregularities, including fraud
We obtained an understanding of the legal and regulatory frameworks that are applicable to the group and company through discussion with the directors and from our general commercial experience. The identified laws and regulations were communicated to the audit team in order that they remained alert to any non-compliance throughout the audit.
The group and company are subject to laws and regulations which have a direct effect on the financial statements and the disclosures contained therein. These have been identified as: the financial reporting framework under which the group and company operates - Financial Reporting Standard 102; Statutory Instrument 2008/410 – The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008; the Companies Act 2006 and taxation legislation including Pay As You Earn; corporation tax and pensions legislation.
In addition to the above, the group and company are subject to other operational laws and regulations where non-compliance may have a material effect on the financial statements. Non-compliance of such laws and regulations may result in litigation, the imposition of fines or the closure of the business which could have a material impact on amounts or disclosures in the financial statements. We have identified the following laws and regulations which are more likely to have significant effect as: compliance with the Care Quality Commission regulations; food hygiene laws; health and safety laws; Consumer Credit Act; Bribery Act; General Data Protection Regulation (GDPR) and employment law.
In order to identify risks of material misstatement due to fraud, we assessed events and conditions where opportunities and incentives may exist within the company for fraud to occur. Our risk assessment procedures included enquiring of directors as to any instances of fraud, their procedures to identify fraud and by using analytical procedures to identify any unusual or unexpected relationships. We identified the greatest potential for fraud in the following areas: recognition of income; diversion of income; ghost employees and grant income. As required by auditing standards, we are also required to perform specific procedures to respond to the risk of management override.
The identified risks of material misstatement due to fraud were communicated to the audit team in order that they remained alert to any non-compliance throughout the audit.
Audit procedures designed to respond to the risks of material misstatement due to irregularities, including fraud
As a result of performing our risk assessments as detailed above, we planned and performed our audit so as to identify non-compliance with such laws and regulations, including fraud by undertaking the following:
Reviewing the disclosures contained within the financial statements and testing to supporting documentation in order to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements.
Enquiring of the directors concerning actual and potential non-compliance of laws and regulations.
Reviewing Care Quality Commission inspection reports in order to identify any potential non-compliance of laws and regulations.
Performing substantive testing with regard to employees to ensure that identification and employment contracts are on file, the Pay As You Earn system is operating correctly, pension deductions are made where appropriate and valid right to work documentation is available where required.
Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud.
Revenue recognition was addressed by obtaining an understanding of relevant controls with regard to revenue recognition and undertaking substantive testing to ensure that revenue is recognised in line with the company’s accounting policy and in line with accounting standards.
In order to address the risks arising from the diversion of income, contracts with 3rd party service users and local authorities were agreed to the amounts charged and therefore reflected in the financial statements of the company.
The risk relating to management override of controls was addressed by testing the appropriateness of journal entries and other adjustments, assessing whether accounting estimates are indicative of potential bias and evaluating the business rationale of any significant transactions that are considered unusual or outside the normal course of business.
Due to the inherent limitations of an audit, there is an unavoidable risk that, despite properly planning and performing our audit in accordance with accounting standards, some material misstatements may not have been detected.
Auditing standards limit the audit procedures required to identify non-compliance with other operational laws and regulations to enquiry of directors and management and inspection of any correspondence. If a breach of operational regulations is not evident from relevant correspondence or disclosed to us, an audit is unlikely to detect that breach. In addition, the further removed non-compliance with laws and regulations is from the events and transactions included in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it.
In addition, the risk of not detecting material misstatement from due to fraud is higher than the risk of one not being detected through error as fraud may involve deliberate concealment through collusion, forgery, misrepresentations and intentional omissions.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own income statement and related notes. The company’s profit for the year was £220,779 (2023: £81,839 profit).
Franklyn Care Ltd (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is The Gatehouse, 9 Manor Road, Harrogate, North Yorkshire, HG2 0HP.
The group consists of Franklyn Care Ltd and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
As permitted by s408 Companies Act 2006, the company has not presented its own income statement and related notes. The company’s profit for the year was £220,779 (2023: £81,839 profit).
The consolidated group financial statements consist of the financial statements of the parent company Franklyn Care Ltd together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 30 June 2024. 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.
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.
Revenue is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
Revenue from the supply of care services represents the value of services provided under contracts to the extent that there is a right to consideration and is recorded at the fair value of the consideration received or receivable. Where payments are received from customers in advance of services provided the amounts are recorded as deferred income and included as part of payables due within one year.
Interest income is recognised when it is probable that the economic benefits will flow to the group and the amount of revenue can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and the effective interest rate applicable.
Freehold land is not depreciated.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's statement of financial position when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include trade and other receivables and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including trade and other payables, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or non-current assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
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.
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 at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
Government grants relating to turnover are recognised as income over the periods when the related costs are incurred. Grants relating to an asset are recognised in income systematically over the asset's expected useful life. If part of such a grant is deferred it is recognised as deferred income rather than being deducted from the asset's carrying amount.
Credit risk
The group implements appropriate credit checks on residents and service users prior to providing services. This reduces the exposure of the group in respect of credit risk.
Liquidity risk
The policy of the Group is to maintain a mix of short and long term borrowings to effectively manage liquidity risk.
Cash flow and interest rate risk
The Group’s interest rate risk arises primarily from long-term borrowings issued at variable rates which exposes the Group to cash flow interest rate risk. The cash flow interest rate risk is managed within the Group’s business projections and planning, in the monitoring of financial covenants and through negotiation of facility terms with the provider of the borrowing facility at specified intervals.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
An analysis of the group's revenue is as follows:
Amortisation of intangible assets is included in administrative expenses.
Government grants received in the year relate to various Covid-19 support schemes.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2023: 2).
Investment income includes the following:
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
In addition to the amount charged to the income statement, the following amounts relating to tax have been recognised directly in other comprehensive income:
In March 2024, the smallest of the homes closed and ceased to trade. The directors took the decision as they considered this to be an underperforming home and, by closing the business, this has allowed the directors to focus on the other homes within the group and other business opportunities. The directors are considering options for developing the site and its carrying value of £900,000 has been moved from Property, Plant and Equipment to Inventories in the financial statements.
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
Property, plant and equipment with a carrying amount of £8,358,363 (2023: £7,792,717) have been pledged to secure liabilities of the group. Further information is provided in note 22.
Land and buildings with a carrying amount of £7,893,925 were revalued in August 2024 by Colliers International Property Consultants, independent valuers not connected with the company, on the basis of market value. The valuation was based on recent marker transactions on arm's length terms for similar properties. The directors consider that the market value of land and buildings as at 30 June 2024 to not be materially different from the valuation obtained in August 2024.
Land and buildings with a carrying amount of £7,227,815 were valued in June 2023 based on the expected market value of the business as determined by the directors of the company. No formal valuation was prepared in regards to this valuation at that date, but the directors have concluded that they have sufficient and reliable market data to substantiate this value.
The following assets are carried at valuation. If the assets were measured using the cost model, the carrying amounts would be as follows:
Details of the company's subsidiaries at 30 June 2024 are as follows:
The investments in subsidiaries are all stated at cost, less provision for impairment.
The registered office of both subsidiaries is The Gatehouse, 9 Manor Road, Harrogate, England, HG2 0HP.
Further information relating to financial assets and liabilities can be found in notes 19, 20 and 21.
Inventories with a carrying amount of £910,705 (2023: £6,200) have been pledged to secure liabilities of the group. Further information is provided in note 22.
Trade debtors and other receivables with a carrying amount of £801,547 (2023: £603,298) have been pledged to secure liabilities of the group. Further information is provided in note 22.
Further information of other payables is provided in note 32.
Bank loans included above totalling £3,803,470 (2023: £3,970,000) are secured by way of a legal mortgage over freehold properties held as fixed assets owned by the subsidiary group companies and by way of a fixed and floating charge over the assets and undertakings of the group. Interest on bank loans is under a floating rate basis, under which the interest rate will never be less than 2.75% per annum. The loan matured in June 2024 and was subsequently refinanced in August 2024. See note 30 for additional information.
Finance lease payments represent rentals payable by the company or group 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 2.6 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
Of the deferred tax liability set out above, an amount of £20,672 is expected to reverse within 12 months and relates to accelerated capital allowances.
Of the deferred tax liability set out above, an amount of £15,301 is expected to reverse within 12 months and relates to revaluation of freehold property.
Government grants totalling £42,317 (2023: £35,206) were released in the year in connection with coronavirus funding. As at 30 June 2024, an amount of £90,128 (2023: £132,445) remains in other creditors to be released in line with the accounting policy for capital grants.
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
Contributions outstanding at the end of the year and included within other creditors amounted to £7,289 (2023: £9,195).
All shares carry voting rights but have no right to fixed income or fixed repayment of capital.
The revaluation reserve represents the cumulative effect of revaluations of freehold land and buildings which are revalued to fair value. At the end of each reporting period a transfer is made to retained earnings to transfer the excess depreciation that has been charged in the income statement which relates to the revalued portion of the assets. In respect of revaluation gains, deferred tax is recognised and is initially debited to the revaluation reserve. The amount of deferred tax recognised is adjusted on an annual basis for any movement in amounts debited or credited to the revaluation reserve in the year. Current year corporation tax is not required to be recognised in respect of any amounts debited or credited to the revaluation reserve.
Retained earnings represents cumulative profits or losses, net of dividends paid and other adjustments.
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:
Subsequent to the year end, Franklyn Care Limited refinanced its borrowings of £3,803,470 and in doing so repaid circa £742,000. The new loan totals £3,040,000 with a loan term of 5 years from drawdown at a margin of 2.55% above the Bank of England Bank Rate.
The remuneration of key management personnel is as follows.
During the year the group entered into the following transactions with related parties:
The following amounts were outstanding at the reporting end date:
Details of transactions with directors are shown in note 32.
The following amounts were outstanding at the reporting end date:
Dividends totalling £161,900 (2023: £326,000) were paid in the year in respect of shares held by the company's directors.
As at 30 June 2024 the group was owed amounts totalling £467,616 (2023: £340,525) from directors of the company. The loan is repayable on demand and interest is charged at the official rate.
As at 30 June 2024 the group owed amounts totalling £600,000 (2023: £700,000) to directors of the company. Of this amount, £600,000 (2023: £700,000) was loaned to the company in May 2018 by a director of the company and is repayable by annual repayments of £100,000 commencing on the second anniversary of the drawdown. Interest is charged from the first anniversary at 4% above the Bank of England base rate and is payable quarterly. The loan matures in May 2028.
The above loans are unsecured.