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Registered number: 03454787
BUSY BEES NURSERIES LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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BUSY BEES NURSERIES LIMITED
CONTENTS
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Directors' responsibilities statement
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Independent auditor's report
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Statement of changes in equity
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Notes to the financial statements
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BUSY BEES NURSERIES LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
The directors present their strategic report for the year ended 31 December 2024.
The Company’s principal activity is the provision of childcare services under the Busy Bees brand. The Company is a wholly owned subsidiary of Eagle Superco Limited and, the Company with fellow subsidiaries, is collectively referred to as the Busy Bees group of companies (‘the Group’). The principal activity of the Group is the provision of childcare services.
Business review and future developments
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The Group, including the Company, have demonstrated resilience and the operational and financial performance of the business has been strong during 2024 although the Company has experienced an element of labour shortages, which has temporarily impacted our ability to deliver occupancy growth in certain locations. In addition, the Company has experienced inflationary cost pressures although these have been mitigated by fee increases.
Turnover for the Company for the year was £316.0m (2023: £280.1m) and EBITDA (as defined below) was £86.4m (2023: £58.7m). Profit for the financial year was £45.6m (2023: £18.4m). Turnover for the year has increased as a result of increases in fees. EBITDA and profit decreased due to an increase in staff and other costs in excess of the fee increases. The directors are satisfied with the financial position of the Company, shareholder’s funds were £199.7m at 31 December 2024 (2023: £154.1m).
Key performance indicators for Busy Bees Nurseries Limited are places available and occupancy of those places. Average occupancy for the year ended 31 December 2024 was 62.9% (2023: 60.9%) being 16,317 full time equivalents (FTEs) (2023: 15,988 FTEs) on average places available of 25,938 FTEs (2023: 26,270 FTEs). The average occupancy in terms of FTEs increased year on year, despite the places available having decreased during the year; this has resulted in a increase in the average occupancy percentage for 2024. The directors are satisfied with each KPI.
The directors expect the general level of performance to continue in the coming year, despite the challenges faced of the increase in national insurance contributions and the continued challenges in recruiting and retaining appropriately qualified employees, particularly centre-level qualified employees.
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Depreciation on tangible fixed assets
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Depreciation of right of use assets
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Other (gains)/ loss on the sale of tangible fixed assets
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Amortisation of intangible assets
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EBITDA is an alternative performance measure but considered an appropriate performance metric by the directors as it is a good indication of the cash generated by the business. EBITDA has increased in the year as a result of an increase in operating profit. Operating profit has increased as a result of increased income from additional occupancy in excess of increased costs in the year.
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BUSY BEES NURSERIES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
Business review and future developments (continued)
There is an unlimited cross guarantee between the Company and other group companies in respect of bank borrowings. The Group has a Senior Facilities Agreement (“SFA”) in place with GBP and Euro Term Loan B (“TLB”) loans of £365.9m and €932.1m respectively. On the 29 August 2025 an amend and extend process was completed on the Group's TLB loans to extend the term to February 2032. The TLB loans incur interest at SONIA + a margin and EURIBOR + a margin, dependent on the Group’s leverage ratio as reported by the Group to its lenders on a quarterly basis. For the majority of the year ended 31 December 2024, the Group was incurring interest at SONIA + 4.75% on the GBP loan and EURIBOR + 3.75% on the Euro loan. At the time of signing these financial statements, the Group is incurring interest at SONIA + 4.75% on the GBP loan and EURIBOR +3.75% on the Euro loan. The Group now has a £150.0m RCF facility with a term to August 2031, £24.0m of the RCF was drawn at 31 December 2024 and £16.0m was held for bank guarantees. At the time of signing the financial statements, the RCF facility incurs interest on any amount drawn at SONIA + 3.50%.
The Wates Principles provide a framework for the Group to not only demonstrate how the Board of Eagle Topco Limited, (an indirect parent of the Company) operates good governance (see page 10 for the Group’s framework) but also have regard to how the Board of Eagle Topco Limited determines the governance framework for the whole of the Group (including the Company) and ensure it complies with the Regulations’ other governance reporting regimes, including the Board’s application of their section 172 duty to promote the success of the Group (including the Company), as set out in the Companies Act 2006, along with wider stakeholder and employee engagement.
Section 172 of the Companies Act 2006 requires a director of a company to act in the way he or she considers, in good faith, would most likely promote the success of the company for the benefit of its members as a whole.
In discharging the section 172 duty, the members of the Board, the Board Committees and Group Management (to which the Board delegates authority for executive management of the Group) have had regard to the factors set out in section 172. Collectively and separately they consider the Group’s Vision, Mission and Core Values together with its strategic priorities, and have a process in place for decision-making which is aimed at ensuring decisions are consistent and predictable.
Explanations and examples of how the section 172 factors have been considered are set out below:
1. The likely consequences of any decisions in the long-term
The Board’s decision making is focussed, in the long-term, on the Group’s Mission and Vision, with the Group strategy underpinned by the Group’s Core Values. The Group’s strategy also applies to the Company.
Management of employee turnover, employee costs and cost inflation
During 2024, the Group (including the Company) like many other businesses continued to experience employee constraints in certain locations, albeit to a significantly lesser degree than in the previous year; as well as wage inflation pressures. Other supplier cost inflation was noted to a lesser extent.
The Company operates as the main trading entity for the Group in the UK, and the Company employs most of the UK workforce. The UK currently represents the largest proportion of the Group’s operations. The Company’s management of employee turnover and employee costs is therefore relevant in the context of the Group’s UK operations.
Employee turnover has improved significantly in the Group and Company in 2024 and is now just 2% above our Group KPI target of 25%, this is similar for the Company. Centre Director turnover has also reduced significantly and is now at a manageable level. There is confidence that this will be brought into line in the coming year.
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BUSY BEES NURSERIES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
Section 172(1) Statement (continued)
There is always a risk that wider economic factors and labour market shifts will affect employee turnover and thus it is recognised that employee turnover will always be an area of focus for us. We continue to report employee shortages and employee turnover to the Board which allows the Board to monitor the operational and financial impact more closely and take appropriate action as needed.
During the year, the Board dedicated time to discuss and evaluate how best to continue to recruit, retain, and motivate employees considering these pressures over the longer term. A Group wide employee engagement strategy has been successfully deployed to measure and monitor employee satisfaction and sentiment, to ensure our people strategies in each territory are relevant and it is anticipated this will have an impact on the retention of motivated employees.
The Group has developed Education and Training capability in the UK, Asia and Australia. This not only allows the Group to offer high quality training to employees, but also to bring through a pipeline of apprentices to meet demand for childcare professionals into the future. In response to challenges around employee turnover and retention, the Group currently has 1,577 employees currently studying for a qualification through the apprenticeship (or international equivalent) route, to support a strategy for increased employee loyalty and longer term occupancy growth. In the UK we were placed for the third year running in the Top 100 Apprenticeship Employers in the UK.
In addition, a continued review and improvement to recruitment processes has led to improvements in Time to Offer. A review and upgrade of technology, people and process and improvements have been made where possible to improve efficiency and effectiveness. In the UK, following on feedback from employees, investment has been made into the Centre Director onboarding and induction program and training materials to better support Centre Directors joining our business. A Group wide initiative to identify and develop future Centre Directors has been undertaken, and the first cohort of learners will start on the programme in February 2025.
A further investment in employee renumeration and employee benefits, particularly for centre employees has been made. In addition, we have enhanced our recognition and long service awards.
The work the People Team have done on employee engagement and culture has been recognised with a number of UK external awards in 2024:
∙The Reward Gateway Appreciation Awards - Most Transformational Culture Change through Employee Engagement Award
∙The Personnel Today Awards - Workplace Culture Award
∙The HR Excellence Awards – Best Employee Engagement Strategy
∙ADP Culture at Work - Shortlisted
∙Culture Leader Award by Kudos
The Group’s Chief People Officer continues to evaluate the Group’s recruitment and retention strategies.
Other costs to the Group such as food supplies have increased during the year; whilst energy costs have stabilised. These cost items, when combined, represent less than 5% of the Group’s cost base. The Group has taken action to fix energy prices across its main territories for 2025 (UK, Singapore, Australia, Canada and the US), and has revised food procurement processes to help mitigate rising costs.
Annual approval of the Group Operating Plan
Each year the Board considers the Operating Plan for the Group which, whilst focussing on the aims and objectives for the Group for the next 12 months, also considers longer term risks and opportunities, and strategy. The Board also engages directly with Group Management on the preparation of the Operating Plan to discuss and further understand the detail behind some of the assumptions set out in the plan.
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BUSY BEES NURSERIES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
Section 172(1) Statement (continued)
The presentation will include a detailed financial forecast for each territory and detail on the assumptions that underpin these forecasts, including a consideration of the impact on the Group and Company's key stakeholders. Market and strategic commentary for each territory is also provided to ensure the objectives for the year consider the Group’s overall Vision and Mission.
The preparation, consideration and discussion around the Operating Plan focusses on balancing different Group stakeholder needs and priorities. The Group’s vision, to give every child the best start in life, requires a balancing of priorities and objectives in the plan every year, with the desire to maintain or grow profit margins and grow the business (in the interest of our investors and the long-term sustainability of the Group) balancing with strategies around investment in our centres, including environmental measures, strengthening workforce capability and retention, responding to cost and wage inflation pressures and developing our curriculum and tools.
The Board recognises that the outcome of any Board review and approval of the Operating Plan may not result in full alignment with all stakeholder views and their priorities for the year ahead.
The 2025 Operating Plan review (during 2024) involved consideration about whether all risks and opportunities have been appropriately identified in arriving at a challenging operating plan for the Group. Consideration of the impact of forecast price increases to minimise the impact of increased costs on the Group’s parents and guardians was given and the balance between this, and the Group’s plans to deliver value to parents and guardians. In 2025, consideration was also given how planned changes to UK, Canada, NZ and Ireland early years government funding and UK employer contributions may impact the business over the longer term and how the business can respond and adapt.
Environmental, Social and Governance (“ESG”)
The Group has continued to make progress and report against its ESG strategy which was developed during 2021.
During 2024, the Board reviewed the 2023 ESG performance. Progress was made against targets for energy consumption, use of renewable energy and carbon emissions. However, the need for further progress was highlighted in relation to targets around waste generation and waste diverted from landfill. The Board focus was for more detailed and regular reporting across the Group on environmental targets and performance, quarterly reporting has commenced from Q1 2024 and this is assisting the Group in setting more specific targets for reduction in this area. At the time of this report, the 2024 ESG performance review has not been completed. The Group’s Climate related financial disclosures were finalised during early 2024 and this was considered by the Board during 2024.
The Company has taken an exemption from the requirement to prepare a non-financial and sustainability information statement as the Company is a subsidiary of a UK parent Group which meets the requirements.
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BUSY BEES NURSERIES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
Section 172(1) Statement (continued)
2. Other section 172 considerations
The below cross references to the relevant area of the Corporate Governance Statement or the Strategic Report for compliance with other section 172 consideration by the Board.
The interests of the Group’s employees:
∙Stakeholder Engagement – Workforce - page 18
∙Remuneration - page 20
The need to foster the Group’s business relationships with suppliers, customers and others:
∙Stakeholder Engagement – Investors, Parents, Suppliers, Lenders, Sector Stakeholders – government and other regulatory bodies - page 17
The impact of the Group’s operations on the community and environment:
∙Stakeholder Engagement – Community and environment - page 20
The desirability of the Group maintaining a reputation for high standards of business conduct:
∙The Board – Purpose, vision and leadership - page 10
∙Opportunities and Risk - page 15
The need to act fairly as between members of the Group:
∙The Board – Purpose, vision and leadership - page 10
∙Stakeholder Engagement - page 17
∙The consequences of decisions in the long term - page 2
The Corporate Governance Statement on pages 10 to 20 (including Stakeholder Engagement) contains a statement summarising how the Board has engaged with the employees of the Group during the financial year and a statement summarising how the Board has engaged with other key stakeholders, including investors, customers, suppliers and lenders during the financial year.
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BUSY BEES NURSERIES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
Principal risks and uncertainties
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People risk
The Company has noted an increase in the risk around the recruitment and retention of employees, particularly centre-level qualified employees during the current year and this is currently a principal risk for the Company. This increases the risk of not achieving the desired business performance, growth and quality as the Company may not have enough suitable employees to operate at the desired level and replacement employees may have less experience.
Alongside this, the Company has experienced increased wage and recruitment costs due to a competitive recruitment market and wider macroeconomic pressures. These increased costs have been built into operating plans.
In response to this risk the Board monitor the operational and financial impact more closely and take appropriate action as needed. The Company has access to the Group’s Education and Training capability in the UK, this not only allows the Company to offer high quality training to employees, but also to bring through a pipeline of apprentices to meet demand and address this risk.
The Company has continued with investment in the number of apprentices and trainees recruited and changes to the wider recruitment processes to allow these to be more efficient and effective. At the start of 2024, and into 2024 the Group made a further investment in employees’ renumeration as well as enhancing benefits around recognition and long service to support retention..
Credit risk
The directors manage the credit risk in the Company by requiring the majority of the parents whose children attend the Company’s nurseries to pay in advance and by carefully managing receivables exposure on all parents.
Liquidity risk
Liquidity risk is relevant for financial risk management objectives. Liquidity risk is a principal risk of the Group. During 2024, SONIA and EURIBOR rates were around 5% and 4% respectively. The Group’s cash interest costs and borrowing costs therefore remain high and the likelihood and impact of liquidity risk is unchanged from prior year.
In response to this risk the Group has mitigated the risk of SONIA and EURIBOR increases through to June 2027 using interest rate caps. The risk from additional borrowing costs and availability of affordable borrowing has been and is mitigated to some extent by utilising external advisers and closely monitoring the external debt market; raising additional borrowing when market conditions are most favourable.
The Group have a policy of maintaining sufficient cash balances required for working capital purposes to provide a buffer against liquidity and recessional risks. As a result of this policy and careful working capital management, the directors are able to ensure the Company has excess liquidity and is well placed to make payments to suppliers as they fall due.
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BUSY BEES NURSERIES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
Principal risks and uncertainties (continued)
Market risk
Aside from the key risks facing most businesses, for example those of reputation and competition and market change, the Group, and therefore the Company, considers its key risks to be as follows:
∙health and safety for young children, employees and our centres, in relation to which the Group has a dedicated Safeguarding Committee and Safeguarding teams and compliance teams across territories that define policy and procedures and closely monitor and report compliance performance as well as Health and Safety protocols to monitor and take action in respect of health and safety risks;
∙change of government policy and the implementation of policy at a local level, including free entitlement funding. The Group actively engages in a positive way in many of the territories it operates in, with government at a ministerial, civil service and local level and regularly reviews its compliance with policy and funding requirements. Any changes to the legal and regulatory environment are captured as emerging risks through our risk management process with identified owners and action plans to ensure compliance when the changes come into effect. Our external legal advisers also provide detailed reviews in respect of existing and upcoming legislation that may affect the Group. A failure to comply could lead to unanticipated regulatory penalties or sanctions, as well as damage to our reputation;
∙cyber attack/(s) on our IT environment leading to loss of personal data and Company information, as well as ongoing disruption to business operations. The Group has formalised disaster recovery plans, ongoing training, data protection controls and review of IT processes as well as stress testing of IT systems;
∙the medium to longer term impact of the wider economy in relation to recession, cost of living and inflation and the impact on the affordability of childcare which has increased in terms of likelihood and impact during the year.
We do not believe there is any short-term material risk to either our customer base, our workforce or our supply chain other than those described separately above.
In preparation of the financial statements, the directors have made an assessment of the Group’s and the Company’s ability to continue as a going concern. The Company’s business activities, together with the factors likely to affect its future development, performance and position and its exposures to credit risk are set out above. The Company is dependent on the ability of other group companies to settle their obligations to the Company on a timely basis.
The Company made a profit after taxation of £45.6m (2023: £18.4m) and has net assets of £199.7m (2023: £154.1m). The Company is financed through an inter-company facility with other wholly-owned group companies, and there is an unlimited cross guarantee between the Company and other group companies in respect of bank borrowings.
The Company is reliant on the support of its ultimate parent Company, Eagle Superco Limited, to be able to meet its liabilities as they fall due. However, the directors consider that the Company is an integral part of Eagle Superco Limited structure and strategy, which is evidenced by a letter of comfort from Eagle Superco Limited, which states its commitment to provide necessary financial support to ensure that the Company is a going concern for at least twelve months from the date of approval of these financial statements.
The Group has existing TLB loans of £365.9m and €932.1m under its SFA. In addition, the Group had a £100.0m RCF facility up to 29 August 2025, at which point the facility has been increased to £150.0m. The TLB loans expire in February 2032, the RCF facility expires in August 2031. The TLB loans are a ‘cov-lite’ facility meaning there are no leverage covenant tests on the Group’s financing other than if more than 40% of the Group’s RCF facility is drawn. In this scenario, a leverage covenant of Group indebtedness to EBITDA of 9.85 times would apply.
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BUSY BEES NURSERIES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
Going concern (continued)
During the year, the Group drew down on its RCF facility to fund acquisitions completed during the year. The maximum amount drawn at any one time was £38.0m. The amount drawn at 31 December 2024 was £24.0m; an amount of £16.0m is held for bank guarantees leaving available undrawn RCF facility of £60.0m at 31 December 2024. In the year to 31 December 2024 the Group made a loss after tax of £79.7m and has net liabilities of £595.9m, but has EBITDA of £269.9m.
The Group has prepared detailed forecasts for the period up to September 2026 which demonstrate that the Group is able to generate sufficient cash flows to operate within its financing arrangements. These assumptions are made by management based on recent performance, external forecasts and management’s knowledge and expertise of the Group’s cashflow drivers. The Group’s forecasts include the effect of changes in government funding from 2025, increases in employment and other costs realised or expected to be realised during 2025 and 2026 and expected increases in income as a result of planned price increases and expected occupancy growth. The forecast excludes any non-committed future acquisitions and developments.
The forecast demonstrated that the Group is able to operate within its financing arrangements. The covenant compliance ratio at December 2024 is 4.4:1 vs a maximum ratio of 9.85:1. EBITDA at 31 December 2024, as per lender reporting requirements, would need to fall by 54% in order to breach forecast covenant compliance. The Group cannot predict the indirect impact of any potential economic slowdown or other events, and the below sensitivities are deemed sufficiently robust in light of current global macro-economic developments in the US following the market response to state enforced tariffs. Having reviewed the Group’s principal risks, the most significant impact on the Group’s cashflows would be a combination of the Group’s principal risks materialising in a temporary or prolonged reduction in occupancy, and consequently, cashflows. The current forecast is based on the Group’s 2025 operating plan and thereafter the Group’s longer term forecasts. To assess any potential impact on the Group’s cashflows and liquidity, various sensitivities have been performed reflecting a reduction in occupancy rates, including occupancy falling up to 7% below the current forecast. This reduction in occupancy is considered a reasonable reduction to sensitise the Group’s cashflows as it is based on the Group’s previous experience of occupancy trends following the impact of global economic slowdowns. In combination with sensitising the impact of a fall in occupancy, the Group has also sensitised the Group’s cashflows in 2026 to the specific principal risk of further cost and interest cost increases. Cost increases of a further 2%, from higher than expected employee costs and other supply costs above those already included within the Group’s forecast which reflects all announced UK employment tax changes as at December 2024.
The Group has also sensitised higher than expected interest costs over what has been included in the forecast by modelling a slower than expected fall in SONIA/ EURIBOR rates, with a delay of three months, which is broadly comparable with actual SONIA/ EURIBOR rate performance in 2024. To offset the effect of these items, the Group has modelled the effect of removing planned capital expenditure cashflows on new sites in FY25 and FY26. Under the combination of these sensitivities, and with occupancy falling to 7% below the current forecast, the Group would have a minimum liquidity headroom, inclusive of the available undrawn RCF facility, of £135.2m in the forecast period and would remain in compliance with the leverage test covenant within its SFA. The impact of other mitigating actions, such as reducing development capital expenditure and reducing head office costs, which could protect cashflow and profitability have not been modelled and would be available as further mitigating actions to preserve liquidity.
In the period to August 2025, the Group has performed ahead of forecast in relation to cashflows. At 31 August 2025 the Group has no additional amounts drawn from the RCF, but £16.0m is held for guarantees and therefore has £134.0m of available RCF.
As a consequence, the directors believe that the Group is well-placed to manage its business risks successfully and have a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future, being not less than 12 months from date of approval of these financial statements. Accordingly, the directors continue to adopt the going concern basis in preparing the annual report and financial statements.
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BUSY BEES NURSERIES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
Going concern (continued)
After making inquiries and taking account of the factors noted above, the directors have a reasonable expectation that the Company will have access to adequate resources to continue in existence for the foreseeable future. Accordingly, the Company continues to adopt the going concern basis in preparing the annual report and financial statements.
This report was approved by the board and signed on its behalf.
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BUSY BEES NURSERIES LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
The directors present their report and the financial statements for the year ended 31 December 2024. Details of the Directors’ assessment of future developments, going concern, engagement with stakeholders including employees, suppliers, customers and others and financial risks are set out in the strategic report.
The profit for the year, after taxation, amounted to £45,635,000 (2023: £18,449,000).
The directors do not recommend payment of a final dividend (2023: £nil). No dividend has been paid since the year end.
Post balance sheet events
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There have been no significant events affecting the Company since the year end.
The directors who served during the year and up to the date of this report were:
C J Creaser (resigned 3 September 2025)
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C A McCandless (appointed 3 September 2025)
Qualifying third party indemnity provisions
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The Company has made qualifying third party indemnity provisions for the benefit of its directors, which were made during the year and remain in force at the date of this report. The provisions made by the Company are in force for the benefit of one or more directors of associated companies.
The Group endeavours to follow high standards of corporate governance, with the board of Eagle Topco Limited (“Board”), an indirect parent company of the Company, determining the governance framework for the whole of the Group, including for the Company. The Board has considered the Companies (Miscellaneous Reporting) Regulations 2018 (the Regulations) for the year beginning on 1 January 2024, including the requirement to state which corporate code it has applied.
Noting the above, the corporate governance statement in this section is extracted from the financial statements for Eagle Topco Limited, with the governance framework adopted by the Board applying to the whole Group, including the Company. The Board of Eagle Topco Limited comprises:
R M Walker (Chairman)
S A Irons (Executive Director - resigned 7 July 2025)
M J Randles (Non-executive Director - resigned 24 October 2024)
J C Douin (Investor nominated Non-executive Director - resigned 25 September 2024)
R E Williams (Investor nominated Non-executive Director)
D Kowalska (Investor nominated Non-executive Director – appointed 3rd July 2024)
J S Holbrook (Independent Non-executive Director)
S E Yates (Investor nominated Non-executive Director)
N J Jansa (Investor nominated Non-executive Director – appointed 25 September 2024)
R Roger (Independent Non-executive Director – appointed 31 March 2025)
P D Gowers (Executive Director- appointed 7 July 2025)
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BUSY BEES NURSERIES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
Governance framework (continued)
Purpose, vision and leadership
The Group continues to apply the Wates Corporate Governance Principles for Large Private Companies (published by the Financial Reporting Council (FRC) in December 2018 and available on the FRC website) (the Wates Principles).
The Wates Principles provide a framework for the Group to not only demonstrate how the Board makes decisions for the long term success of the Group and its stakeholders (see Stakeholder Engagement, on page 17-20), but also have regard to how the Board ensures the Group complies with the requirements of Section 172 of the Companies Act 2016. Our reporting against Section 172 of the Companies Act 2016 has been included on page 2.
The Board determines the long-term strategy, direction and performance of the Group. The Group’s Vision is to give every child the best start in life and the Board is responsible for ensuring that the Group’s strategy and culture is aligned with this.
The Group’s Mission is to “deliver high quality childcare and exciting opportunities for learning that give every child a head start as they prepare for school”, supported by its Values of “Care, Service, Quality and Value”.
The Group’s Vision, Mission and Values were established, under the Board’s direction, to underpin the Group’s strategy, decisions and culture. These are codified in the Group’s Code of Conduct, and form the basis of all other Group policies, all of which are distributed to employees annually as part of their training programmes and are included as part of any new employee induction process.
The Group’s Code of Conduct makes clear that the Group is expected to operate to the highest standards in everything it does, setting out expectations for employees and requiring them to always operate fairly and ethically in all areas of the business to maintain the Group’s reputation and status. This policy, and all other Group policies, is supported by the Speak Up policy, which sets out the action employees are expected to take if they have a concern about something they see or hear that is in breach of the Group’s policies. This policy is further supported by the Group’s Speak Up line, which allows employees to raise concerns through a dedicated, independently operated, helpline.
During 2024, the Group continued to communicate its strategy and messages to all key stakeholders. Communication to the Group’s keys stakeholders has continued through the Group’s management structure and via frequent Company-wide communications and meetings.
Board composition
There are currently eight members on the Board. The Board comprises a Chairman, one executive director (the Group Chief Executive Officer), three investor nominated board members (who are non-executive Directors), and two other non-executive directors, one of whom is independent. A biography for the executive member of the Board can be found on our website.
The size and structure of the Board is framed by the investment agreement in place between the Group’s investors (Investment Agreement), with Ontario Teachers’ Pension Plan (OTPP), which holds a controlling interest in the Group, entitled to appoint such number of non-executive directors as it chooses, as well as the Chairman and an independent non-executive director. Esta Investments Pte Ltd (Temasek), OTPP’s co-investor in the Group, is entitled to appoint one non-executive director to the Board.
The Chairman sets both the annual agenda and the agenda for each Board meeting and encourages an open and constructive debate at Board level. The Group Chief Executive Officer is responsible for the implementation and delivery of the strategy agreed by the Board.
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BUSY BEES NURSERIES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
Governance framework (continued)
The Board maintains a Board composition summary, which reviews and considers the skills and experience the various Board members bring to decision making. Diversity of background, experience and skillset at Board level is important to the Group and the need to achieve balance of views and influence is key (and considered by reference to the composition summary) when appointing new members to the Board.
The non-executive directors bring judgement on key issues affecting the Group and its business operations, including strategy, performance, resources (including key appointments) and standards of conduct. They also bring experience in branding, marketing, M&A, international growth, talent management and headline risk and government policy, in addition to perspectives and challenge from outside the sectors in which the Group operates.
The Board has one independent non-executive director, J S Holbrook. J S Holbrook and the Chairman, R M Walker, are both independent of the Group’s executive management and J S Holbrook is free from any business or other relationships that could materially interfere with the exercise of their judgement.
The size and composition of the Board is considered to be appropriate with all members contributing to a wide variety of experience. The Investment Agreement also entitles OTPP and Temasek to invite observers to Board meetings, which they did regularly during the financial year, to provide a further combination of skills and judgement.
Each member of the Board is required to make the Board aware of any significant commitments outside the Group. They are also required to notify the Chairman if they become aware of actual or potential conflict situations, or situations which might impact the time they are able to devote to their directorship role for the Group.
Both the non-executive directors and the Board observers meet regularly with the Group’s management team to ensure they understand the needs of the business. These meetings, where possible, include visits to the Group’s centres, both in the UK and the other territories and allows the Board to be made aware of a wide range of topics impacting the business. There is an induction programme for all new members of the Board, which is tailored to their specific experience and knowledge and which provides access to all parts of the business.
The Chairman, with support of the Board, conducts an annual informal evaluation of the effectiveness of the Board, looking at the leadership of the Chairman (in setting the agenda and directing discussions), the composition and skillset of the Board as a whole as well as specific matters such as review of risk, management accountability, financial performance and talent management. The Board considers these assessments important in the identification of key areas for future improvements, focus and for strengthening its overall performance, with assessments shaping the annual agenda for Board meetings in the following year. A Board effectiveness evaluation was completed during the financial year, and a number of actions and areas for improvement identified. The review highlighted a need for more external parties to present to the Board, for example around economic outlook. In addition, for Board time to be more focussed on questions and discussion rather than presentation and with a specific focus on organic growth and investment appraisal. The Board identified a training need to better understand the impact Artificial Intelligence could have on the business. These areas of improvement have been taken forward to implement.
Director responsibilities
The Board is responsible for creating the framework within which the Group operates and is collectively responsible to the Company’s investors for the direction, promotion and oversight of the Company to ensure its long-term success. It provides leadership for the Group, setting standards. Other core activities include monitoring performance and approval of material business development (including through acquisition) and commitments. The Investment Agreement dictates matters which are subject to OTPP nominated director or investor (OTPP) consent and sets out the terms of reference for Board committees. Matters which must also receive the consent of the OTPP investor director and/or OTPP include:
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BUSY BEES NURSERIES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
Governance framework (continued)
∙Structure and capital;
∙Approval of dividends;
∙Acquisitions;
∙Financial and accounting controls;
∙Material projects and contracts; and
∙Group business plan.
The Board delegates authority for the running of the Group’s business to the Group Management team (Group Management), led by the Group Chief Executive Officer. A biography for each member of Group Management can be found on the Group’s website at https://www.busybeeschildcare .co.uk/management -team.
The Board has an annual calendar of meetings, with the timetable set in the preceding year to ensure that at least six meetings are held, as required by the Investment Agreement. An outline agenda is set at the start of the year, with standing agenda items including:
∙A report on safeguarding matters
∙The Group Chief Executive Officer’s report on strategic and business developments, together with relevant updates from each of the Group’s territories.
∙The Group Chief Financial Officer’s report which includes commentary on financial performance against the Operating Plan for the year.
∙The Group Development Director’s review of business development opportunities for the Group.
On a cyclical basis, the Board agenda will also include detailed assessments of Group strategy, business plans, governance, deep dives into Group territories and, where applicable, reports from the Board committees. Board meeting papers (including the meeting agenda) are circulated in good time prior to Board meetings to allow the Board members time to review in advance. Board meeting papers include a board update, providing a summary financial and operational update for the Group. In addition to Board meeting papers, the Board receives regular and timely information (at least monthly) on all key aspects of the business including safeguarding matters, health and safety, people, risks and opportunities, the financial performance of the business, strategy, operational matters, market conditions, all supported by Key Performance Indicators (KPIs). Key financial information is collated from the Group’s accounting systems. The Group’s finance function is appropriately qualified to ensure the integrity of this information and is provided with the necessary training to keep up to date with regulatory changes. The Group’s financial controls are reviewed by the Group’s risk and internal audit function which consists of two individuals. The Group also engages an established mid-size professional services firm as an internal audit co-source partner to provide specialist and additional support as required. During 2024 the Group also engaged an external advisor to help review the robustness of the Group’s internal financial controls and provide guidance on how these can be improved over time. Group Management are focussed on further improving the Group’s financial controls.
Other key information is prepared by the relevant internal Group function. Processes for collecting data, as well as the reporting of that data, is reviewed on a cyclical basis by the Group’s internal audit function with reporting provided to the Audit Committee.
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BUSY BEES NURSERIES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
Governance framework (continued)
During 2024 the Board:
∙Received regular and detailed reports on safeguarding and health and safety across the Group
∙Approved the annual reports and accounts for 2023.
∙Approved the Operating Plan for 2025.
∙Reviewed progress against the Group’s Strategic plan.
∙Approved the Group’s additional Euro TLB loan and interest rate hedging strategies.
∙Approved the Group's acquisitions and reviewed pipeline acquisitions.
∙With the assistance of the Audit Committee, reviewed and approved the Group’s risk register, prepared by Group Management, taking account of level of risk and steps implemented to mitigate impact.
∙Was briefed regularly as to whether any environmental, safety or governance issues had arisen, along with the action taken and the related risk mitigation steps. Progress against the Group’s ESG strategy and initiatives were presented and approved, with next steps agreed.
∙Received regular and detailed reports on the Group’s operating and financial performance in each territory, with Group Management given the opportunity to present to the Board.
∙Reviewed plans for the development of a Group wide curriculum.
The Board also delegates some of its functions to Board sub-committees: The Audit Committee and the Remuneration Committee.
Audit Committee
The Audit Committee members include the Chairman, and two investor appointed members, who are also non-executive directors of the Board. There is a further non-executive director of the Board who is independent and also chair of the Audit Committee. The current members of the Audit Committee are:
∙R M Walker (Chairman)
∙J S Holbrook (Chair of the Audit Committee, Independent Non-executive director)
∙J C Douin (Non-executive director - resigned from the Audit Committee 25 September 2024)
∙S E Yates (Non-executive director)
∙D Kowalska (Non-executive director - appointed to the Audit Committee 12 December 2024)
The terms of reference for the committee are as follows:
∙To monitor the integrity of the financial statements of the Group, reviewing significant financial reporting judgements contained in them.
∙To review the Group’s internal financial controls and the Group’s internal control and risk management systems.
∙To establish and monitor and review the effectiveness of the Group’s internal audit function.
∙To make recommendations to the Board in relation to the appointment of the Group’s external auditor and to approve the remuneration and terms of engagement of that external auditors.
∙To review and monitor the external auditor’s independence and objectivity and the effectiveness of the audit process, taking into consideration relevant professional and regulatory requirements.
∙To develop and implement policy on the engagement of the Group’s external auditor to supply non-audit services, taking into account relevant ethical guidance regarding the provision of non-audit services by that external audit firm.
∙To report to the Board on the above, identifying any matters in respect of which it considers that action or improvement is needed, and making recommendations as to the steps to be taken.
∙To require the attendance before it of any officer or employee of a Group member and to obtain (at the cost of the Group) legal or other professional advice in respect of any matters within its terms of reference.
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BUSY BEES NURSERIES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
Governance framework (continued)
The Audit Committee also reviews and manages risk generally across the Group, and is the Board committee with primary responsibility for review and approval of the Group’s risk management strategy and processes, including the management of cyber risk. The Audit Committee reviews and approves the Group’s risk register and the financial and governance controls (detailed in Opportunities and Risk on page 15) and including risks associated.
Remuneration Committee
The Remuneration Committee members include the Chairman (who also acts as Chair for this committee), the Independent Non-executive director and two investor appointed members, who are also non-executive directors of the Board. The current members of the Remuneration Committee are:
∙R M Walker (Chairman)
∙J C Douin (Non-executive director - resigned from the Renumeration Committee 25 September 2024)
∙R E Williams (Non-executive director)
∙J S Holbrook (Independent Non-executive director)
∙S E Yates (Non-executive director - appointed to the Renumeration Committee 25 September 2024)
∙N J Jansa (Non-executive director - appointed to the Renumeration Committee 25 September 2024)
The terms of reference for the committee are as follows:
∙To determine and action on behalf of the Group all matters concerning:
°the salary and other remuneration and benefits (including bonus, share incentive and pension arrangements) and terms and conditions of employment of the Group’s senior employees (including Group Management), including, without limitation, salary reviews and the setting of bonus levels and performance targets).
°the appointment or dismissal (and terms of appointment or dismissal) of a senior employee (including a member of Group Management but excluding the Board of Directors).
°any employee share-based remuneration schemes.
∙To amend or take actions under any agreement in place between a member of the Group and a senior employee (including Group Management).
Financial risk management objectives and policies
Financial risk management objectives and policies are disclosed within the strategic report on page 6.
Opportunities and Risk
Long term strategic opportunities are reviewed by the Board as part of the Group’s annual Operating Plan review, presented to the Board before the start of every year and on a cyclical basis through the Group’s three year strategy plans. This review will consider key drivers for growth of the Group and improvement in Adjusted EBITDA, including growth through development of new centres and acquisition, integration of acquired businesses, centre fees, occupancy and child to staff ratios in each territory, childcare quality and investment in and management of people. The review also identifies key future opportunities, including: leveraging of new digital systems and technology investment, and other market differentiators such as the development of curriculum frameworks and other tools to improve occupancy, brand recognition, and the impact of new funding regimes in territories.
The Group recognises that risk management is an essential activity for the Group, supporting the achievement of its strategic objectives. The Board and Group Management look to identify, assess and manage the key areas of risk on a proactive basis, embedding risk management into the culture of the Group without introducing unnecessary bureaucracy. The aim for the risk management framework is that it is fit for purpose and uses the Group’s skills and capabilities to the full.
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BUSY BEES NURSERIES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
Opportunities and Risk (continued)
For effective risk management the Board ensures that there is a robust and formalised process across the Group. The policies that underpin this process support the Group, across all the territories, to manage risk. The Board gives ownership of the identification and management of risk to Group Management, with risks highlighted to and considered by the Board and further by the Audit Committee on behalf of the Board including mitigation actions and controls and the risk management systems as a whole. The identification and management of climate change related risks and opportunities has been delegated by the Board to the Environmental management board.
The Group uses Group financial controls and governance questionnaires and confirmations both of which were fully reviewed and updated during 2024. The financial controls questionnaire and confirmation (FCC) requires each territory in the Group, on a quarterly basis, to confirm compliance with the Group’s financial policies and to disclose any areas of concern that the Group should be aware of, highlighting areas that require further discussion and actions to remediate. The FCC is designed to document the territory level confirmations required by the Board and to enable the territories to highlight areas of risk.
The governance and compliance confirmation (GCC) requires each territory in the Group, on a bi-annual basis, to confirm compliance with the Group’s policies and to disclose any areas of concern that the Group and Board should be aware of, highlighting areas that require further discussion or investigation and remediation. The compliance section includes a series of statements relating to compliance with applicable laws and regulations, Anti-Bribery and Corruption, GDPR, Modern Slavery, anti-fraud, Code of Conduct, financial policies and procedures, litigation and audit and non-audit related work.
Group Management maintain a Group risk register, with risks scored based on likelihood and impact on the Group and have a process in place to identify emerging risks, and consider the action required to manage the risk to an acceptable level. The register is presented and considered, including management actions required, and approved at every Audit Committee meeting and every other Board meeting. Financial and some operational controls are reviewed by the Group’s Risk and Internal Audit function which during the year was increased from one to two individuals and is supported by a mid-size firm co-source internal audit partner.
During 2024, the Group has invested in reviewing and documenting its key risks and control processes as well as considering and documenting its financial risks and controls. This exercise has helped to identify areas where controls can be better implemented and monitored. The Group was supported by an external consultant in this process. During 2025, the Group management intend to focus on further improving the Group’s financial controls, aligning and standardising these across the Group where possible. The Group’s Risk and Internal Audit function will provide an opinion on the design, implementation and operating effectiveness Group’s financial controls with a plan to test a sample of the Group’s key financial controls annually, working through all the Group’s key financial controls over a three- year period.
The Group has internal policies, training and procedures in place to ensure compliance with the Group’s Code of Conduct and its other global policies, including Anti-Bribery and Corruption and anti-facilitation of tax evasion, Modern Slavery and the Reporting of Serious Incidents. All employees have access to these policies, with appropriate mandatory training in place (in many cases via e-learning) to ensure compliance with best practice. The Reporting of Serious Incidents policy highlights to the Group the need to report serious incidents to the Board (including those with a potential reputational impact on the Group), with risk mitigation actions to be explained as part of the reporting process.
The Group operates a Speak Up policy and supporting helpline to allow employees (and other key stakeholders) to confidentially raise any concerns about conduct. This helpline is independently administered. The Speak Up policy is distributed to all employees, who receive appropriate training on the key elements of the policy.
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BUSY BEES NURSERIES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
Environmental, Social and Governance (ESG)
The Group’s environmental strategy focuses on reducing carbon emissions with a target to achieve net zero carbon by 2040, reducing energy and material consumption and improving procurement traceability. The Group’s social strategy includes a commitment to continue to deliver outstanding early years education, build upon our diverse and inclusive workforce, and to continue to support families in crisis as well as charity and community partners. We aim to continue to deliver exceptional governance across the Group and our governance programme, policies and procedures exist to help hold us accountable. As the Group grows and makes further acquisitions, our governance programme helps to maintain the cohesiveness of our organisation.
The Board are responsible for the approval of the Group’s ESG strategy and the Group’s annual ESG performance and will continue to monitor performance in this area both separately at specific Board meetings and through inclusion of the ESG strategy in the Group’s strategic plan. Group Management are responsible for the delivery of the ESG strategy.
To measure our performance, we have set a baseline in terms of how we are currently performing across environmental, social and governance as a Group. External support was sought to help Group Management to develop the ESG strategy on behalf of the Board and align the Group’s ESG strategy to the UN SDGs. The independent Non- executive director has been nominated as a Board sponsor.
Stakeholder Engagement
The Board promotes accountability and transparency with all external stakeholders and with representatives of government and other opinion leaders, whilst maintaining an open and visible presence in the media. The Board understands that good governance and effective communication are essential on a day-to-day basis to deliver the Group’s Vision and to protect the Group’s brand, reputation and relationships with all stakeholders including investors, customers, employees, suppliers, lenders and the wider community.
The Group has management teams across four territories, with governance of the business across the territories and the Group as a whole, including engagement with stakeholders, delegated to a large extent to Group Management, led by the Group Chief Executive Officer. This delegation is subject to a documented delegation of authority matrix, with defined authorities and levels, which are subject to regular review and monitoring by the Board and the Board Committees. Group Management carefully consider the impact of any decision making, in respect of their territory or the wider Group, and the consequences for affected stakeholders. This is, in large part and where possible, achieved by discussing the decisions with relevant stakeholders and balancing the different and sometimes conflicting positions.
Group Management report regularly to the Board on key decisions taken to enable the Board to review and monitor the effectiveness of their decision-making, in particular that sufficient balanced consideration is given to stakeholders. The Board is also kept informed of stakeholder views through the information prepared for and shared regularly with the Board, detailed in Board Information on page 10.
Details of how our key stakeholders and how we engage with them are detailed below.
Investors
The Chairman and the respective investor directors ensure that the Board and the Group is made aware of the views of the significant investors and the issues relevant to them. The Group attaches significant importance to maintaining an effective engagement with investors to ensure a mutual understanding of investor and Board objectives and to deal with issues of concern. Consent is required from the ultimate controlling party, as per note 22, Ontario Teachers’ Pension Plan (OTPP) for certain key decisions, with communication on these matters led by the Chairman and the Group Chief Executive Officer. The Board and Group Management are also aware of and comply fully with the investor information requirements detailed in the Investment Agreement. The Board engage with investors through a number of formal Board and Committee mechanisms and in addition have a good working relationship with open communication between the Board, Senior Management and OTPP and Temasek.
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BUSY BEES NURSERIES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
Stakeholder Engagement (continued)
Parents, guardians and children
The Group and Company strives to put our customers, our parents and their children, at the heart of our business through ongoing, honest and personal communications to parents about their children, their development and the wider business.
The Group and Company communicates with parents through several channels which help to ensure the achievement of the Group’s Vision, to deliver the best start in life for each child which is aligned with what is important for our parents.
Net Promoter Score (NPS) programmes continue to be fully utilised and are now fully embedded across all Strategic Business Units (SBU’)s and countries within which we operate, giving our marketing support teams daily real-time insight into parent’s satisfaction, as well as providing an actionable feedback loop with which our Centre and Operational Teams can directly and personally address individual parent comments.
Across the Group, we operate a number of parent facing apps (iConnect/Parent Zone in the UK for example), designed to support direct parent partnership with centres and educators and allowing instantaneous flow of information to parents about their children and their Busy Bees experience. The Group also actively encourages the development of relationships at centre level, with Parent Partnership Groups (including elected parents) meeting on a regular basis to encourage good communication between parents and the centre. Centre social media pages are also used to promote parent community and drive word-of-mouth and positive local reputation. From the start of a parent’s journey with us, our Customer Relationship Management (CRM) programmes allow customisable parent communications to help shape the parent enquiry management journey, allowing us to send communication (both operational and marketing) to parents centrally or at a centre level. Our CRM system works hand in hand with our childcare management systems, which enables the business to keep its parents up to date with all key relevant information from the business as well as regular updates on the impact of Government guidance on how centres operate, and the safety measures taken to protect children and educators.
The Board recognises how fundamental the relationship with parents is to achieve the Group’s Vision and Mission. The Board ensures it is regularly briefed on key issues raised at a centre level by parents and decisions such as pricing, quality and curriculum tools and initiatives, all of which is reflected in discussions on the annual Operating Plan.
Workforce
The Group and Company values its workforce and considers its people to be our most important asset. We believe in supporting and investing in everyone who works at Busy Bees, and key to this is open communication with our people. The Group and Company has an independently administered whistleblowing helpline, ‘Speak Up’, which allows the workforce and other stakeholders to raise concerns if required.
The Group and Company, with Board support and direction, has commenced a wider HR Strategy encompassing a diversity and inclusion strategy and succession planning strategy. Although Busy Bees is an equal opportunities employer, most organisations within our sector have a predominantly female front-line workforce. Whilst we celebrate a high percentage of women in leadership roles within our business, a goal for us remains to attract more male practitioners and managers to our Company. We firmly believe a diverse workforce will allow us to provide rich learning opportunities and effective role modelling to the children in our care and create a well-rounded pool of talent.
During 2024 weekly management meetings across Europe were held, attended by the Group directors and UK National Support Centre management. The meetings facilitated the communication of key business and operational matters and also gave employees an opportunity to ask questions about the business, its strategy, and objectives, with the outcome disseminated through the business through the management structure. In addition to monthly data being available on dashboards, members of Group Management hold an annual update meeting for UK National Support Centre employees to attend where performance and department specific initiatives are presented.
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BUSY BEES NURSERIES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
Stakeholder Engagement (continued)
The Group and Company has internal communications for all employees and Centre Directors via a weekly communication summarising key business messages.
UK annual events are extended to centre level managers where they are invited to attend an annual managers’ awards ceremony, to recognise the achievements of the wider workforce during the year. The ceremony includes a Group update and a presentation on upcoming initiatives. The ceremony also provides an opportunity for networking, with senior managers (including Group Management) in attendance and available for managers to discuss issues of concern to them and raise questions.
Group management, including the CEOs of Europe, North America, Asia and Australia met in person in November for strategy building and discussions for 2025. The Group has internal communications for all employees and Centre Directors to a weekly communication summarising key business messages.
Suppliers
Suppliers are managed by Group Management on both a territory and Group basis, with the Board briefed regularly on significant supplier relationships or issues. Suppliers are important to our business because a steady supply of great value and quality goods and services enables our centres to deliver continuity of service to our families.
Each significant supplier is required to have a dedicated account manager, with a commitment to maintain regular meetings (at least quarterly) to assess the relationship and ensure consistent communication. We recognise the importance of good supplier management and are proactive in how we handle them. We are focused on ensuring we meet our payment terms with suppliers and measure of payment practice reporting. We have an established procurement process that ensures suppliers go through a level of diligence prior to being onboarded which includes, assessing the size of the Company, financial diligence, an assessment of the origin of products and supplies, submission of their Anti-Bribery and Corruption, Modern Slavery policies and any (where applicable) legal and industry standard accreditations. We also assess prospective suppliers’ ESG credentials giving preference to suppliers who are actively working to reduce their impact on the environment. We contractually mandate suppliers to reduce packaging to the bare minimum.
Significant suppliers, being those providing centre-facing products or services and critical infrastructure, and critical systems/software are required to observe key procurement principles in order to be listed as a preferred supplier. Tailored procurement principles are communicated to these suppliers clearly at the outset and during the relationship, covering quality standards, service levels, payment, price and margin transparency. In the UK, preferred suppliers are now mandated to be onboarded to our contract terms which cover and bind the suppliers to adhere to the standards of our key global policies and must submit their own accreditations, to us on an annual basis.
Sector Stakeholders – government and other regulatory bodies
As a leading childcare provider in the UK, the Group and Company places significant emphasis on its engagement with government representatives (local and central) as well as the key related regulatory and sector organisations. The Group actively engages in a positive way in many of the territories it operates in, with government at a ministerial, civil service and local level and regularly reviews its compliance with policy and funding requirements. Any changes to the legal and regulatory environment are captured as emerging risks through our risk management process with identified owners and action plans to ensure compliance when the changes come into effect. Our external legal advisers also provide detailed reviews in respect of existing and upcoming legislation that may affect the Group. A failure to comply could lead to unanticipated regulatory penalties or sanctions, as well as damage to our reputation. Engagement with these stakeholders affords the opportunity for Busy Bees to influence and affect policy through the collection of data, the amplification of our vision and demonstration of exemplary practice. The Group has a dedicated external affairs and government relations officer, who leads this interaction, to share knowledge, challenges and issues on behalf of the Group and the wider sector.
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BUSY BEES NURSERIES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
Stakeholder Engagement (continued)
This engagement, which includes round table discussions, regular meetings as well as reactive meetings and discussions provides us with government thinking and advice around sector regulation but also enables us to share pre-policy views and guidance, the aim of which is to influence the direction of regulation of the sector as a whole. The Board receives regular reports on all engagement with government across the Group, with the impact of external factors such as regulation of the sector and government funding of the sector reviewed and considered when making decisions around short term and long-term strategy for the Group.
Community
The Group and Company engages with the community both centrally and locally, with centre directors given the autonomy to engage with their local communities to support local causes and issues. Centres are encouraged and supported to partner with local community causes, and local fund raising (often for families using our centres).
The UK has recently secured a new partnership with Children In Need. In addition, in the UK, we continue to support Child Bereavement UK, a charity we have partnered for six years raising money with the help of our generous families and thoughtful staff teams. In the UK, we offer support on a short-term basis by sharing our expertise and care with families in need.
Key community initiatives are reported to the Board as part of the regular reporting structures in place.
Lenders
The Group, through the Group Management team and members of the Board, provide our bank lending syndicate with a quarterly covenant compliance certificate and quarterly accounts to ensure they are kept informed of business activities and progress. On an annual basis, the Group Chief Executive Officer and the Group Chief Financial Officer hold a lender presentation to provide them with an update on the Group and its strategy (both financial and operational) for the coming year. This has been supplemented during the year when the Group borrowed additional funds under its SFA.
The Group Chief Financial Officer often attends lender conferences and the team also maintains regular ad hoc dialogue with the lending syndicate throughout the year (predominantly through the agent) to inform them of acquisitions and any other material changes in the business.
Remuneration
Executive Pay
The Group’s remuneration structure for senior employees is set by the Remuneration Committee – see the composition of the committee and terms of reference at page 15. The Remuneration Committee’s primary objective is to set remuneration at a level that will enhance the Group’s resources by securing and retaining quality senior employees who can deliver the Group’s strategic ambitions in a manner consistent with both its Vision and Mission and the interests of its investors. Senior and executive pay is benchmarked internally and externally and as we have brought in new senior employees, we have ensured internal pay parity.
The Remuneration Committee approved the long-term incentive plan (LTIP) for senior employees of the Group, including Group management, during 2019 and a subsequent LTIP in 2021. During the year, a shareholder exit event was completed, whereby new third party debt was raised outside of the Group and this was used to repay shareholders and loan note holders in Eagle Topco Limited (an indirect parent of the Company), this process allowed some of the Group’s senior employee’s to realise long term incentives previously granted to them. Following this process, the Renumeration Committee approved a new long-term incentive plan in May 2024. The overriding objective of the LTIP is to incentivise the management team and to align their goals and rewards to those of the existing shareholders. The intention was to achieve this by linking their reward to the growth in value of the overall business. The LTIP includes a shadow equity bonus plan scheme, through Equity Participation Units (EPUs). The EPU is a bonus paid out to management on an exit by the investors, the aim being to incentivise participants on both the growth in equity value of the Group and local contribution to this growth.
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BUSY BEES NURSERIES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
Remuneration (continued)
Pay Equality
The Group reported its Gender Pay Reporting in 2024, further detail of which is available on the Group’s website, https://bbcdn2.fra1.digitaloceanspaces .com /downloads/gpg2024 .pdf.
The Group has continued to be an active equal opportunities employer and promotes an environment free from discrimination, harassment and victimisation, where everyone receives equal treatment and career development regardless of age, gender, nationality, ethnic origin, religion, marital status, sexual orientation or disability. All decisions relating to employment practices (including remuneration) are objective, free from bias and based solely upon work criteria and individual merit.
Benchmarking and pay scales/awards
We continue to review and improve our internal salary scales to ensure fairness applies to any individual appointed into a role, this also includes a robust Pay Review and Approval Policy applicable to all levels within the organisation and accessible by all staff members. We carry out benchmarking activities to ensure we remain competitive and are cognisant of the current pressures of the cost of living pressures on our employees.
Starting salaries will be offered in line with Group pay scales, which are reviewed annually. Any salaries that are to be offered above the starting points must go through an approval process as detailed within the policy.
The Group will detail in annual budgets, the percentage increases that can be awarded to the wider workforce each year. Managers cannot award pay increases which would breach the approved pay remit.
For the 2024 uplift, the guidance to managers was to give low paid workers higher percentage increases than those earning over £50,000 per annum. This was in direct response to the cost of living pressures and to support those on lower incomes.
Performance bonus
Employees who are eligible to receive a bonus will have their bonus criteria set out to them in writing at the start of the relevant period, which will usually be at the start of the year or their contract if they start part way through. The Group commits to fair bonus objectives that are deemed to be achievable, with a goal to reward good performance that contributes to the overall financial and operational success of the business and behaviours consistent with our values. The following key roles are eligible to receive performance bonuses:
∙Centre Directors – based on the KPIs of their centre including financial performance and quality
∙Area Directors – based on their area KPIs including financial performance and quality.
∙Operations Directors – based on their division KPIs including financial performance and quality.
∙Senior department heads – based on Group financial performance and their specific personal objectives.
∙Group Management – based on territory and Group EBITDA financial performance and their specific personal objectives.
Objectives and bonuses for Group Management are determined and agreed by the Remuneration Committee in line with the wider strategic objectives for the Group. The Board also receives regular and comprehensive briefings on wider workforce remuneration structures and changes.
Research and development activities
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No expenditure in relation to research and development has been capitalised in the year (2023: £nil).
During the year, there were no political donations (2023: £nil).
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BUSY BEES NURSERIES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
During the year, there were charitable contributions of £10,000 (2023: £12,000).
The Group pursues a policy of meeting with representatives of various sections of employees at which relevant information and developments are discussed. Full and fair consideration is given to applications for employment from disabled persons and to continuing the employment of those who become disabled while employed. The policy is to give equal opportunity for training, career development and promotion.
During 2024 and the prior period there were no employee consultations.
Energy and carbon reporting
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The Company has taken advantage of the exemption in Part 7A of schedule 7 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 from the carbon reporting disclosure as it is a subsidiary undertaking and is included in the consolidated financial statements of Eagle Midco Limited and Eagle Superco Limited. See note 22 for further details.
Disclosure of information to auditor
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Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:
∙so far as the director is aware, there is no relevant audit information of which the Company's auditor is unaware, and
∙the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies Act 2006.
Deloitte LLP are deemed to be reappointed as the Company's auditor under s487(2) of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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BUSY BEES NURSERIES LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2024
The directors are responsible for preparing the Annual report financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 101 ‘Reduced Disclosure Framework’. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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BUSY BEES NURSERIES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF BUSY BEES NURSERIES LIMITED
Report on the audit of the financial statements
Opinion
In our opinion the financial statements of Busy Bees Nurseries Limited (the 'company'):
∙give a true and fair view of the state of the company's affairs as at 31 December 2024 and of its profit for the year then ended;
∙have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice, including Financial Reporting Standard 101 “Reduced Disclosure Framework"; and
∙have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
∙the profit and loss account;
∙the balance sheet;
∙the statement of changes in equity; and
∙the related notes 1 to 22.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 “Reduced Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor's responsibilities for the audit of the financial statements section of our report.
We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the Financial Reporting Council's (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.
Our evaluation of the directors’ assessment of the company’s ability to continue to adopt the going concern basis of accounting consider the performance of both the company and the Group. The company is dependant on the ability of the other Group companies to settle their obligations to the company on a timely basis. Our evaluation included:
∙an assessment of the Group’s financing arrangements noting that no amount of the revolving credit facility has been drawn, with £16.0m held for bank guarantees as at the date of approval of these financial statements;
∙an assessment of management’s cash flow forecast for a period of more than twelve months from the date of approval of the financial statements and the key assumptions which support these forecasts including growth in occupancy rates over the assessment period;
∙an assessment of managements historical forecasting accuracy; and
∙an assessment of managements sensitivity analysis and our own independent sensitivity analysis to determine whether any material uncertainty exists, and to assess the impact on the covenant requirements which would apply once the facility is 40% withdrawn under these scenarios.
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 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.
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BUSY BEES NURSERIES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF BUSY BEES NURSERIES LIMITED
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.
Responsibilities of directors
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 company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
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 for the audit of the financial statements is located on the FRC's website at: 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, 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.
We considered the nature of the company's industry and its control environment, and reviewed the company's documentation of their policies and procedures relating to fraud and compliance with laws and regulations. We also enquired of management and the directors about their own identification and assessment of the risks of irregularities, including those that are specific to the company's business sector.
We obtained an understanding of the legal and regulatory framework that the company operates in, and identified the key laws and regulations that:
∙had a direct effect on the determination of material amounts and disclosures in the financial statements. These included the UK Companies Act and tax legislation; and
∙do not have a direct effect on the financial statements but compliance with which may be fundamental to the company's ability to operate or to avoid a material penalty.
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BUSY BEES NURSERIES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF BUSY BEES NURSERIES LIMITED
We discussed among the audit engagement team including relevant internal specialists such as tax, valuations, and IT specialists regarding the opportunities and incentives that may exist within the organisation for fraud and how and where fraud might occur in the financial statements.
In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override. In addressing the risk of fraud through management override of controls, we tested the appropriateness of journal entries and other adjustments; assessed whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluated the business rationale of any significant transactions that are unusual or outside the normal course of business.
In addition to the above, our procedures to respond to the risks identified included the following:
∙reviewing financial statement disclosures by testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
∙performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
∙enquiring of management and in-house legal counsel concerning actual and potential litigation and claims, and instances of non-compliance with laws and regulations; and
∙reading minutes of meetings of those charged with governance.
Report on other legal and regulatory requirements
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the 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 company and its environment obtained in the course of the audit, we have not identified any material misstatements in the strategic report or the directors' report.
Matters on which we are required to report by exception
Under the Companies Act 2006 we are required to report in respect of the following matters if, in our opinion:
∙adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
∙the 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.
We have nothing to report in respect of these matters.
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.
Helen Wildman, ACA (Senior Statutory Auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
Birmingham, United Kingdom
26 September 2025
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BUSY BEES NURSERIES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF BUSY BEES NURSERIES LIMITED
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BUSY BEES NURSERIES LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2024
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Interest receivable and similar income
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Interest payable and similar expenses
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Profit for the financial year
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All amounts relate to continuing activities.
There were no recognised gains and losses for 2024 or 2023 other than those included in the profit and loss account and so no separate statement of other comprehensive income is presented.
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The notes on pages 32 to 57 form part of these financial statements.
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BUSY BEES NURSERIES LIMITED
REGISTERED NUMBER: 03454787
BALANCE SHEET
AS AT 31 DECEMBER 2024
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Amounts owed by group undertakings
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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BUSY BEES NURSERIES LIMITED
REGISTERED NUMBER: 03454787
BALANCE SHEET (CONTINUED)
AS AT 31 DECEMBER 2024
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 26 September 2025.
The notes on pages 32 to 57 form part of these financial statements.
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BUSY BEES NURSERIES LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2024
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Profit and total comprehensive income for the year
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Profit and total comprehensive income for the year
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The notes on pages 32 to 57 form part of these financial statements.
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BUSY BEES NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
1.Accounting policies
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Basis of preparation of financial statements
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Busy Bees Nurseries Limited (the 'Company') is a company incorporated in the United Kingdom under the Companies Act 2006. The Company is a private company limited by shares and is registered in England and Wales. The address of the Company’s registered office is shown on page 22.
The Company meets the definition of a qualifying entity under Financial Reporting Standard 101 (FRS 101) issued by the Financial Reporting Council. Accordingly, these financial statements are prepared in accordance with Financial Reporting Standard 101 ‘Reduced Disclosure Framework’.
As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available under that standard in relation to financial instruments, presentation of a cash flow statement, standards not yet effective, certain disclosure in respect of revenue from contracts with customers, impairment of assets, certain related party transactions, and certain disclosure requirements in respect of leases.
The financial statements are prepared under the historical cost convention.
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Financial Reporting Standard 101 - reduced disclosure exemptions
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The Company has taken advantage of the following disclosure exemptions under FRS 101:
∙the Company has adopted a previous GAAP revalued cost as deemed cost for: Goodwill, freehold and long leasehold property; and
∙the Company has elected to determine whether arrangements contain a lease on the basis of facts and circumstances on the date of transition to FRS 101 rather than when the arrangements were first entered into.
∙financial instruments as otherwise required by section 8 of FRS 101;
∙a cash flow statement as otherwise required by section 8 of FRS 101;
∙key management personnel compensation as otherwise required by paragraph 16 of FRS 101;
∙The requirements of Paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (requirement for the disclosure of information when an entity has not applied a new IFRS that has been issued but is not yet effective);
∙The requirements of Paragraph 17 of IAS 24 Related Party Disclosures (key management compensation); and
∙The Company has applied amendments to FRS 101 issued by the FRC in July 2023, for the first time during the year: The amendments introduce a temporary exception to the accounting for deferred tax arising from Pillar Two legislation and require related targeted disclosures.
This information is included in the consolidated financial statements of Eagle Midco Limited or Eagle Superco Limited as at 31 December 2024 and these financial statements may be obtained from Shaftsbury Drive, Burntwood, Staffordshire, WS7 9QP.
Functional currency
The functional currency is pounds sterling as that is the currency of the economic environment in which the Company operates.
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BUSY BEES NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
1.Accounting policies (continued)
In preparation of the financial statements, the directors have made an assessment of the Group’s and the Company’s ability to continue as a going concern. The Company’s business activities, together with the factors likely to affect its future development, performance and position and its exposures to credit risk are set out above. The Company is dependent on the ability of other group companies to settle their obligations to the Company on a timely basis.
The Company made a profit after taxation of £45.6m (2023: £18.4m) and has net assets of £199.7m (2023: £154.1m). The Company is financed through an inter-company facility with other wholly-owned group companies, and there is an unlimited cross guarantee between the Company and other group companies in respect of bank borrowings.
The Company is reliant on the support of its ultimate parent Company, Eagle Superco Limited, to be able to meet its liabilities as they fall due. However, the directors consider that the Company is an integral part of Eagle Superco Limited structure and strategy, which is evidenced by a letter of comfort from Eagle Superco Limited, which states its commitment to provide necessary financial support to ensure that the Company is a going concern for at least twelve months from the date of approval of these financial statements.
The Group has existing TLB loans of £365.9m and €932.1m under its SFA. In addition, the Group had a £100.0m RCF facility up to 29 August 2025, at which point the facility has been increased to £150.0m. The TLB loans expire in February 2032, the RCF facility expires in August 2031. The TLB loans are a ‘cov-lite’ facility meaning there are no leverage covenant tests on the Group’s financing other than if more than 40% of the Group’s RCF facility is drawn. In this scenario, a leverage covenant of Group indebtedness to EBITDA of 9.85 times would apply.
During the year, the Group drew down on its RCF facility to fund acquisitions completed during the year. The maximum amount drawn at any one time was £38.0m. The amount drawn at 31 December 2024 was £24.0m; an amount of £16.0m is held for bank guarantees leaving available undrawn RCF facility of £60.0m at 31 December 2024. In the year to 31 December 2024 the Group made a loss after tax of £79.7m and has net liabilities of £595.9m, but has EBITDA of £269.9m.
The Group has prepared detailed forecasts for the period up to September 2026 which demonstrate that the Group is able to generate sufficient cash flows to operate within its financing arrangements. These assumptions are made by management based on recent performance, external forecasts and management’s knowledge and expertise of the Group’s cashflow drivers. The Group’s forecasts include the effect of changes in government funding from 2025, increases in employment and other costs realised or expected to be realised during 2025 and 2026 and expected increases in income as a result of planned price increases and expected occupancy growth. The forecast excludes any noncommitted future acquisitions and developments.
The forecast demonstrated that the Group is able to operate within its financing arrangements. The covenant compliance ratio at December 2024 is 4.4:1 vs a maximum ratio of 9.85:1. EBITDA at 31 December 2024, as per lender reporting requirements, would need to fall by 54% in order to breach forecast covenant compliance.
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BUSY BEES NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
1.Accounting policies (continued)
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Going concern (continued)
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The Group cannot predict the indirect impact of any potential economic slowdown or other events, and the below sensitivities are deemed sufficiently robust in light of current global macro-economic developments in the US following the market response to state enforced tariffs. Having reviewed the Group’s principal risks, the most significant impact on the Group’s cashflows would be a combination of the Group’s principal risks materialising in a temporary or prolonged reduction in occupancy, and consequently, cashflows. The current forecast is based on the Group’s 2025 operating plan and thereafter the Group’s longer term forecasts. To assess any potential impact on the Group’s cashflows and liquidity, various sensitivities have been performed reflecting a reduction in occupancy rates, including occupancy falling up to 7% below the current forecast. This reduction in occupancy is considered a reasonable reduction to sensitise the Group’s cashflows as it is based on the Group’s previous experience of occupancy trends following the impact of global economic slowdowns. In combination with sensitising the impact of a fall in occupancy, the Group has also sensitised the Group’s cashflows in 2026 to the specific principal risk of further cost and interest cost increases. Cost increases of a further 2%, from higher than expected employee costs and other supply costs above those already included within the Group’s forecast which reflects all announced UK employment tax changes as at December 2024.
The Group has also sensitised higher than expected interest costs over what has been included in the forecast by modelling a slower than expected fall in SONIA/ EURIBOR rates, with a delay of three months, which is broadly comparable with actual SONIA/ EURIBOR rate performance in 2024. To offset the effect of these items, the Group has modelled the affect of removing planned capital expenditure cashflows on new sites in FY25 and FY26. Under the combination of these sensitivities, and with occupancy falling to 7% below the current forecast, the Group would have a minimum liquidity headroom, inclusive of the available undrawn RCF facility, of £135.2m in the forecast period and would remain in compliance with the leverage test covenant within its SFA. The impact of other mitigating actions, such as reducing development capital expenditure and reducing head office costs, which could protect cashflow and profitability have not been modelled and would be available as further mitigating actions to preserve liquidity.
In the period to August 2025, the Group has performed ahead of forecast in relation to cashflows. At 31 August 2025 the Group has no additional amounts drawn from the RCF, but is £16.0m held for guarantees and therefore has £134.0m of available RCF.
As a consequence, the directors believe that the Group is well-placed to manage its business risks successfully and have a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future, being not less than 12 months from date of approval of these financial statements. Accordingly, the directors continue to adopt the going concern basis in preparing the annual report and financial statements.
After making inquiries and taking account of the factors noted above, the directors have a reasonable expectation that the Company will have access to adequate resources to continue in existence for the foreseeable future. Accordingly, the Company continues to adopt the going concern basis in preparing the annual report and financial statements.
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Impact of new international reporting standards, amendments and interpretations
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IAS 1 Presentation of Financial Statements - 2020 and 2022 amendments to IAS 1 - Effective 1 January 2024
The amendments introduce a definition of ‘settlement’ which clarifies that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services. It also clarifies that
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BUSY BEES NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
1.Accounting policies (continued)
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Impact of new international reporting standards, amendments and interpretations (continued)
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the classification of liabilities as current or non-current is based on rights that are in existence at the end of the reporting period.
The Company has reviewed the amendments and concluded that there is no material impact or changes to financial liability presentation required as a result of the adoption of these amendments.
The Company have reviewed new or revised standards and interpretations issued but not yet effective at the time of signing these financial statements. None of these new or revised standards and interpretations are expected to have a material impact on the Company.
Revenue represents the value of services provided, excluding value added tax and is attributable to the Company’s principal activity.
Childcare Services
The principal activity of the Company is the provision of childcare services. The activity is considered as a single performance obligation and revenue from providing these services is recognised over time in the accounting period in which the services are rendered, as the customer simultaneously receives and consumes the benefits of these services over time. Fees for childcare services are paid in advance are recognised as contract liabilities and only recognised in the period to which they relate. Where payments are received from customers in advance of services provided, the amounts are recorded as contract liabilities.
Government funding
Government funding is directly linked to the provision of childcare services, representing additional government funding to supplement the amounts paid by parents. This activity is considered to be linked to the single performance obligation of providing childcare services which is recognised over time as described above. Government funding paid in advance is recognised as contract liabilities and only recognised in the period to which it relates. Where payments are received from funding providers in advance of services provided, the amounts are recorded as contract liabilities.
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Interest payable and similar expenses
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Interest payable on financial liabilities are recognised in the profit and loss account over the term of such instruments at a constant rate on the carrying amount.
The Company contributes to a number of money purchase pension schemes. The assets of the schemes are held separately from those of the Company in an independently administered fund. The pension charge represents the amounts payable by the Company to the schemes during the year. Differences between contributions payable in the year and contributions actually paid are shown as either accruals or prepayments in the balance sheet.
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BUSY BEES NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
1.Accounting policies (continued)
Financial assets and financial liabilities are recognised in the Company’s statement of financial position when the Company becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.
Financial assets
Debt instruments that meet the following conditions are measured subsequently at amortised cost:
- the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
(i) Amortised cost and effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period.
For financial assets other than purchased or originated credit-impaired financial assets (i.e. assets that are credit-impaired on initial recognition), the effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) excluding expected credit losses, through the expected life of the debt instrument, or, where appropriate, a shorter period, to the gross carrying amount of the debt instrument on initial recognition. For purchased or originated credit-impaired financial assets, a credit-adjusted effective interest rate is calculated by discounting the estimated future cash flows, including expected credit losses, to the amortised cost of the debt instrument on initial recognition.
The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortised cost of a financial asset before adjusting for any loss allowance.
Interest income is recognised using the effective interest method for debt instruments measured subsequently at amortised cost. For financial assets other than purchased or originated credit-impaired financial assets, interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for financial assets that have subsequently become credit-impaired (see below). For financial assets that have subsequently become credit-impaired, interest income is recognised by applying the effective interest rate to the amortised cost of the financial asset. If, in subsequent reporting periods, the credit risk on the credit-impaired financial instrument improves so that the financial asset is no longer credit-impaired, interest income is recognised by applying the effective interest rate to the gross carrying amount of the financial asset.
Interest income is recognised in profit or loss and is included in the "interest receivable and similar income" line item.
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BUSY BEES NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
1.Accounting policies (continued)
Impairment of financial assets
The Company recognises a loss allowance for expected credit losses on investments in debt instruments that are measured at amortised cost, lease receivables, trade receivables and other receivables. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.
The Company always recognises lifetime ECL (expected credit losses) for trade receivables, contract assets and lease receivables. The expected credit losses on these financial assets are estimated using a provision matrix based on the Company’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate.
For all other financial instruments, the Company recognises lifetime ECL when there has been a significant increase in credit risk since initial recognition. However, if the credit risk on the financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month ECL.
Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.
(i) Significant increase in credit risk
In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the Company compares the risk of a default occurring on the financial instrument at the reporting date with the risk of a default occurring on the financial instrument at the date of initial recognition. In making this assessment, the Company considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort. Forward-looking information considered includes the future prospects of the industries in which the Company’s debtors operate, obtained from economic expert reports, financial analysts, governmental bodies, relevant think-tanks and other similar organisations, as well as consideration of various external sources of actual and forecast economic information that relate to the Company’s core operations.
In particular, the following information is taken into account when assessing whether credit risk has increased significantly since initial recognition:
- an actual or expected significant deterioration in the financial instrument’s external (if available) or internal credit rating;
- significant deterioration in external market indicators of credit risk for a particular financial instrument, e.g. a significant increase in the credit spread, the credit default swap prices for the debtor, or the length of time or the extent to which the fair value of a financial asset has been less than its amortised cost;
- existing or forecast adverse changes in business, financial or economic conditions that are expected to cause a significant decrease in the debtor’s ability to meet its debt obligations;
- an actual or expected significant deterioration in the operating results of the debtor;
- significant increases in credit risk on other financial instruments of the same debtor; and
- an actual or expected significant adverse change in the regulatory, economic, or technological environment of the debtor that results in a significant decrease in the debtor’s ability to meet its debt obligations.
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BUSY BEES NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
1.Accounting policies (continued)
Financial liabilities
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
All financial liabilities are measured subsequently at amortised cost using the effective interest method or at FVTPL.
Financial liabilities that are not (i) contingent consideration of an acquirer in a business combination, (ii) held-for-trading, or (iii) designated as at FVTPL, are measured subsequently at amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the amortised cost of a financial liability.
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.
When the Company exchanges with the existing lender one debt instrument into another one with the substantially different terms, such exchange is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, the Company accounts for substantial modification of terms of an existing liability or part of it as an extinguishment of the original financial liability and the recognition of a new liability. It is assumed that the terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective rate is at least 10 per cent different from the discounted present value of the remaining cash flows of the original financial liability. If the modification is not substantial, the difference between: (1) the carrying amount of the liability before the modification; and (2) the present value of the cash flows after modification is recognised in profit or loss as the modification gain or loss within other gains and losses.
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BUSY BEES NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
1.Accounting policies (continued)
At each reporting period date, the Company reviews the carrying amounts of its property plant and equipment, right-of-use assets, and finite lived intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. For the purpose of impairment testing, the recoverable amount (that is, higher of the fair value less costs to sell and the value-in-use) is determined on an individual asset basis, unless the asset does not generate cash flows that are largely independent of those from other assets, in which case the recoverable amount is determined at the cash generating unit level to which the said asset belongs. If such individual assets or cash generating units are considered to be impaired, the impairment is recognised in the statement of comprehensive income is measured by the amount by which the carrying value of the asset or cash generating unit exceeds their estimated recoverable amount and allocated on pro-rata basis.
Impairment losses are reversed in the statement of comprehensive income and the carrying value is increased to its revised recoverable amount provided that this amount does not exceed the carrying value that would have been determined had no impairment loss been recognised for the said asset or cash generating unit in previous years.
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Intangible assets - goodwill
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Goodwill recognised on the acquisition of subsidiary businesses or acquisition of trade and asset purchases is not amortised; this is a departure from the Companies Act 2006 and is in accordance with IFRS 3. Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. For the purpose of impairment testing, cash- generating units are aggregated into groups of cash-generating units. A cash generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or group of assets. Goodwill is allocated to each of the Company’s groups of cash-generating units expected to benefit from the synergies of the relevant business combination. The impairment review requires management to consider the recoverable value of the group of cash-generating units to which the goodwill relates, based on either the fair value less costs to sell or the value in use. Value in use calculations require management to consider the net present value of future cash flows generated by the group of cash-generating units to which the goodwill relates. Fair value less costs to sell is based on management’s estimate of the net proceeds which could be generated through disposing of that group of cash-generating units. If the recoverable amount of the group of cash-generating units is less than the carrying amount of the group of cash-generating units, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the group of cash-generating units and then to the other assets of the group of cash-generating units pro-rata on the basis of the carrying amount of each cash-generating unit in the group of cash-generating units. An impairment loss is recognised immediately in the profit and loss account and is not subsequently reversed.
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Intangible assets – brand names & customer relationships.
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Other intangible assets arising on the acquisition of subsidiary undertakings and businesses relate to customer databases and contracts, and brand names. Intangible assets are carried at cost less accumulated amortisation and any impairment losses. Intangible assets arising on an acquisition are recognised separately from goodwill if the fair value of these assets can be identified separately and measured reliably. Amortisation is calculated on a straight-line basis over the estimated useful life of the intangible asset. The estimated useful life of both brand names and customer relationships is five years. Impairment reviews are carried out more frequently if events or changes in circumstances indicate that the carrying value of an asset may be impaired. Any impairment of carrying value is charged to the profit and loss account.
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BUSY BEES NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
1.Accounting policies (continued)
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Intangible assets – Project UP and licences
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The costs associated with the application “Unleashing Potential” (UP) and other licences are stated at cost less accumulated amortisation. Such costs include costs directly attributable to making the asset capable of operating as intended. Amortisation is calculated so as to write off the costs of the application and licences over their useful economic lives, which is deemed to be 4 years.
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
The estimated useful lives range as follows:
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Freehold and long leasehold buildings
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over the 50 years with an expected residual value of 50%
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Short leasehold improvements
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over the period of the lease
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Centre and office equipment
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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.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Residual value represents the estimated amount which would currently be obtained from disposal of an asset, after deducting estimated costs of disposal, if the asset was already of the age and in the condition expected at the end of its useful life
Leases
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Company uses its incremental borrowing rate.
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BUSY BEES NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
1.Accounting policies (continued)
Lease payments included in the measurement of the lease liability comprise:
∙Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable;
∙Variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;
∙The amount expected to be payable by the lessee under residual value guarantees;
∙The exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and
∙Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease.
The lease liability is presented as a separate line in the consolidated statement of financial position. The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.
The Company remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:
∙The lease term has changed or there is a significant event or change in circumstances resulting in a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.
∙The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used).
∙A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day, less any lease incentives received and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Whenever the Company incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognised. To the extent that the costs relate to a right-of-use asset, the costs are included in the related right-of-use asset, unless those costs are incurred to produce inventories.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Company expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease.
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BUSY BEES NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
1.Accounting policies (continued)
The right-of-use assets are presented as a separate line in the statement of financial position.
The Company applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as described in the ‘Property, Plant and Equipment’ policy.
Variable rents that do not depend on an index or rate are not included in the measurement the lease liability and the right-of-use asset. The related payments are recognised as an expense in the period in which the event or condition that triggers those payments occurs and would be included in "Other operating expenses" should they arise.
Sale and leaseback transactions are accounted based on the principle of determining whether control over the properties has transferred to the Purchaser. The Company considers the sale as not an effective transfer of control of these properties and accordingly does not derecognise the transferred asset. The consideration received on transfer of property is recognised as a secured borrowing. This borrowing is a financial liability and is measured on an amortised cost basis using effective interest rate.
Government grants are recognised based on the accrual model and are measured at the fair value of the asset received or receivable. Grants are classified as relating either to income or to assets. Grants relating to assets are deferred and credited to the profit and loss account as the related asset is depreciated. Grants relating to income are recognised as income over the period in which the related costs are recognised. Grants relating to income are recognised in revenue if they relate to Government grant income directly linked to the provision of childcare services, representing additional government funding to supplement the amounts paid by parents.
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Cash and cash equivalents
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Cash and cash equivalents comprise cash and short-term bank deposits with an original maturity of three months or less, net of outstanding bank overdrafts. The carrying amount of these assets is approximately equal to their fair value.
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BUSY BEES NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
1.Accounting policies (continued)
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Current and deferred taxation
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Current UK corporation tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Current tax assets and liabilities are offset only when there is a legally enforceable right to set off the amounts and the company intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax or a right to pay less tax in the future have occurred at the balance sheet date. Timing differences are differences between the company's taxable profits and its results as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised in the financial statements.
Unrelieved tax losses and other deferred tax assets are recognised only to the extent that, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.
Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date that are expected to apply to the reversal of the timing difference. Deferred tax relating to property, plant and equipment carried at deemed cost is provided based on the difference between the financial statements and tax base costs. Deferred tax assets and liabilities are offset only if the Company has a legally enforceable right to set off current tax assets against current tax liabilities.
Provisions are recognised when there is a present obligation as a result of a past event, and it is probable that the Company will be required to settle that obligation. Provisions are measured at the directors’ best estimate of the expenditure required to settle the obligation at the balance sheet date and are discounted to present value where the effect is material.
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BUSY BEES NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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Judgments in applying accounting policies and key sources of estimation uncertainty
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In the application of the Company’s accounting policies, which are described in note 1, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from the sources. The estimates and assumptions relate to provisioning against receivables and recognition of grant income. 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 if the revision affects only that period, or in the period of the revision and future period if the revision affects both current and future periods. The Company does not have any key sources of estimation uncertainty.
Critical accounting judgements:
Classification of sale and leaseback transaction
The sale and leaseback transactions, carried out primarily during 2017 and also in 2018, involves the legal form of a lease. It is necessary to determine whether the associated transactions are linked and whether the arrangement meets the form of a lease under FRS 101. The directors have concluded based on the facts and circumstances that the sale and leaseback transaction does not meet the requirement of a sale and leaseback transaction under FRS 101, due to buyback provisions within the lease contract with another Group entity. As a result, the Company has a right of use asset and lease liability in relation to a lease held between the Company and another Group entity. The transaction has been treated consistently in each year end since 31 December 2017.
In 2021, the Company completed a sale and leaseback transaction which involved the legal form of a lease property. It is necessary to determine whether the associated transactions are linked and whether the arrangement meets the form of a lease under FRS 101. The directors have concluded based on the facts and circumstances that the sale and leaseback transaction does not meet the requirement of a sale and leaseback transaction under FRS 101, due to buyback provisions for the Company within the lease contract. As a result, the Company has not derecognised the assets under the lease and has recognised a financial liability in relation to the amount received by the Company from the sale and leaseback transaction.
Determining the lease term
Under IFRS 16 if it is reasonably certain that a lease will be extended, the Company is required to estimate the expected lease period in excess of the current contractual terms. The Company has various lease agreements with a right to extend or renew wherein it considers the nature of the contractual terms and economic factors to determine. The Company has used judgement in determining the lease period considering such factors and the lease liability has been calculated using the remaining contractual lease period for all of such lease contracts.
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BUSY BEES NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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An analysis of the Company's turnover, which all arises within the United Kingdom, by class of business is as follows:
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Childcare services and Government funding
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The operating profit is stated after charging/(crediting):
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Amortisation of intangible assets
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Depreciation of tangible fixed assets
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Impairment of tangible fixed assets
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Reversal of impairment of tangible fixed assets
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Depreciation of right of use assets
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Impairment of right of use assets
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Reversal of impairment of right of use assets
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Loss on the sale of tangible fixed assets
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The fees payable to the Company’s auditor for the audit of the Company’s annual financial statements of £226,000 (2023: £200,000) and fees payable to the Company’s auditor and their associates for other services to the Company of £nil (2023: £nil) were borne by another Group company.
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BUSY BEES NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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Staff costs were as follows:
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The average monthly number of employees, including the directors, during the year was as follows:
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Administrative and management
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The directors were remunerated in the current and prior year by fellow Group companies. All directors were renumerated by Busy Bees Holdings Limited. It is not considered practical or possible to accurately apportion these costs to each entity in the Group. Given the relative size of the respective entities, the effect of not apportioning these costs for disclosure purposes is not considered to be material.
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Interest receivable and similar income
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BUSY BEES NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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Interest payable and similar expenses
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Bank and other interest payable
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Current tax on profits for the year
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Adjustments in respect of previous periods
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Adjustment in respect of previous periods
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Effect of changes in tax rates
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BUSY BEES NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
9.Taxation (continued)
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Factors affecting tax charge for the year
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The tax assessed for the year is lower than (2023 - lower than) the standard rate of corporation tax in the UK of 25.00% (2023 - 23.52%). The differences are explained below:
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Profit before tax multiplied by standard rate of corporation tax in the UK of 25.00% (2023 - 23.52%)
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Expenses not deductible for tax purposes,
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Movement in deferred tax not recognised
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Group relief obtained for nil consideration
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Adjustments to tax charge in respect of prior periods
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Total tax charge for the year
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Factors that may affect future tax charges
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The standard rate of tax applied to the reported profit before tax is 25.00% (2023: 23.52%). At 31 December 2024 the Company had £1.9m (2023: £1.8m) of unrecognised deferred tax assets which relate to fixed assets and losses. There is no expiry date on the unrecognised deferred tax assets.
The Company has applied the amendments made to FRS 101 that introduce a temporary exception to the accounting and disclosure for deferred tax, or potential income tax consequences arising from Pillar Two legislation. Disclosures relating to the potential income tax consequences of Pillar Two legislation on the Group are disclosed within the Group’s financial statements. Accordingly, the Company neither recognises nor discloses information about deferred tax assets and liabilities related to Pillar Two income taxes.
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BUSY BEES NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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Charge for the year on owned assets
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BUSY BEES NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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Freehold and long leashold property
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Short leasehold improvements
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Centre and office equipment
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Transfers between classes
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Charge for the year on owned assets
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BUSY BEES NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
11.Tangible fixed assets (continued)
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The net book value of freehold land is £42.9m (2023: £45.8m), the net book value of long leasehold land is £36.5m (2023: £36.9m).
During the year, the Company carried a review of the recoverable amount of its cash generating units (“CGUs”), which the directors define as individual centres. The recoverable amount of CGUs is determined based on a value in use calculation which uses cash flow projections, reflecting cash tax payments, and based on up to date financial budgets approved by the directors covering a five-year period and applying post tax discount rates. Cash flows beyond that five year period have been extrapolated using a long-term growth rate. In determining the value in use of CGUs it is necessary to make a series of assumptions to estimate the present value of future cash flows. In each case, these key assumptions have been made by management reflecting their past experience, based on actual performance.
Forecast operating cash flows are dependent on assumptions made around forecast centre revenues, pricing and centre occupancy levels and the ability for new or currently under-performing centres to perform inline with management expectations. Forecast operating cash flows used in this exercise reflect the directors current expectations of performance and strategy delivery based on the business in its current form and reflective of macroeconomic backdrops, including an estimate of inflation. Forecast operating cash flows are post tax and have been discounted using a post tax discount rate but in line with best practice have disclosed the pre-tax discount rate used of 10.2% (2023: 10.4%).
Impairments were required on a number of closed or loss making centres. The review led to the recognition of an overall net impairment of £0.3m, being £0.7m impairment and £1.0m reversal, (2023: net impairment of £2.0m, being £2.0m impairment and £nil reversal) which has been recognised in the income statement and disclosed in note 4. Sensitivity analysis has been undertaken to determine the sensitivity of the impairment review, see note 13 for the output of this analysis.
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Investments in subsidiary companies
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The Company holds 50% of the ordinary B share capital of a joint venture entity, Lauder Learning Limited, which owns the freehold of a childcare centre which it leases to another of the Group’s subsidiaries. The registered office of this joint venture is Fife College, Pittsburgh Road, Dunfermline, Fife, KY11 8DY.
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BUSY BEES NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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This note provides information for leases where the Company is a lessee.
i) Amounts recognised in the balance sheet
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Additions in the year, amounted to £15,240,000 (2023: £10,711,000).
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ii) Amounts recognised in the profit and loss account
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Depreciation charge of Right of Use Assets
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Interest expense included in interest payable
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Net impairment (reversal)/charge
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Expenses relating to short term and low value leases
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BUSY BEES NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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Leases (continued)
The total cash outflow for leases was £21,727,000 (2023: £20,817,000). The Company does not sub lease any of its leased assets. There are no expenses relating to either short term or low value leases (2023: £nil).
The Company leases centres, various offices, equipment and vehicles. Rental contracts are typically made for fixed periods of typically ten years but may have extension options as described below. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.
Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised on a straight-line basis as an expense in the Profit and loss account. Short-term leases are leases with a lease term of 12 months or less without a purchase option. Low-value assets comprise small items of office furniture and IT.
Extension and termination options are included in a number of property and equipment leases across the Company. These are used to maximise operational flexibility in terms of managing the assets used in the Company’s operations. The majority of extension and termination options held are exercisable only by the Company and not by the respective lessor.
The Company has no variable lease payments.
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Contractual undiscounted cash flows are due as follows:
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Between one year and five years
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Impairment
During the year, the Company carried a review of the recoverable amount of its cash generating units, which the directors define as individual centres, further details on this review are provided in Note 12. Impairments were required on a number of closed or loss making centres as well as the reversal of some previous impairment where centre performance has improved and this is expected to continue. For the year ended 31 December 2024, an impairment charge of £1,253,000 (2023: £6,851,000) and an impairment reversal of £3,629,000 (2023: £nil) has been recognised against Right of Use Assets.
Sensitivity analysis has been undertaken to determine the sensitivity of the headroom on the Company’s CGUs. A plausible downside analysis has been performed by assuming that occupancy and Child To Staff (CTS) ratio remains at 2024 actual amounts in the forecast period; this analysis modelled a decrease in estimated cashflows. This would lead to further impairment of PPE of £1,371,000 and ROU assets of £803,000.
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BUSY BEES NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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Amounts falling due within one year:
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Prepayments and accrued income
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Amounts falling due in more than one year:
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Amounts owed by group undertakings
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There is no repayment date attached to the amount owed by group undertakings but these are not expected to be settled in the next 12 months. There was no interest charged on the amounts owed by group undertakings (2023: 0%).
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Creditors: Amounts falling due within one year
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Amounts owed to group undertakings
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Other taxation and social security
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Accruals and deferred income
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BUSY BEES NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
15.Creditors: Amounts falling due within one year (continued)
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There is no repayment date attached to the amount owed to group undertakings. There was no interest charged on the amounts owed by group undertakings (2023: 0%).
Included within the accruals and deferred income balance is £5.4m of fees in advance (2023: £5.9m). Included within other creditors are deposits from parents of £0.6m (2023: £0.3m), both of which are considered to be contract liabilities. During the year, £5.9m of fees in advance recognised at the previous reporting date were recognised as income. £5.4m, being fees in advance and 90% of the contract liabilities balance at 31 December 2024, is expected to be recognised in the year ended 31 December 2025. The remainder of the balance relates to deposits from parents which is expected to be repaid to parents when their contractual arrangement with the Company ceases which is unknown.
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Creditors: Amounts falling due after more than one year
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Secured loans relate to amounts received in relation to transactions completed by the Company related to the sale of freeholds of some of the Company’s UK centres. The secured loan is secured on 17 (2023: 17) of the Company’s UK centres.
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The aggregate amount of liabilities repayable wholly or in part more than five years after the balance sheet date is:
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Total amounts due after more than five years
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BUSY BEES NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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Charged to profit or loss account
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Deferred tax balances have been calculated based on the rates at the date of restatement that will apply when the timing differences are expected to reverse. Accordingly, a rate of 25.0% has been used as at 31 December 2024 (2023: 25%). The Group has applied the temporary exception issued by the IASB in May 2024 from the accounting requirements for deferred taxes in IAS 12. Accordingly, the Group neither recognises nor discloses information about deferred tax assets and liabilities related to Pillar Two income taxes. The deferred tax provision is as follows and all items are expected to reverse within 12 months.
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The provision for deferred taxation is made up as follows:
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Fixed asset timing differences
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Short-term timing differences
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Allotted, called up and fully paid
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2 (2023 - 2) Ordinary shares of £1 each
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The Company’s other reserves are as follows:
The profit and loss account represents cumulative profits and losses net of dividends paid and other adjustments.
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BUSY BEES NURSERIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
19.Other financial commitments
(a) The Company had no capital commitments at 31 December 2024 (2023: £nil).
(b) The Company provides an unlimited cross guarantee to other group companies in respect of bank borrowings. Total Group and Company bank borrowings at 31 December 2024 are £1,066.8m (2023: £1,111.8m.
The Company operates a money purchase scheme for the benefit of certain employees. Contributions are charged to the profit and loss account in the year to which they relate. The charge in the year was £2,988,000 (2023: £2,701,000). At 31 December 2024 there was £687,000 outstanding, still to be paid (2023: £550,000).
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Related party transactions
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The company has taken the exemption available under FRS 101 not to disclose related party transactions with other 100% controlled members of the same group. There were no other related party transactions in the year.
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The Company’s immediate parent undertaking is Busy Bees Holdings Limited. The largest group into which the Company is consolidated is the group headed by Eagle Superco Limited and the smallest group into which the Company is consolidated is the group headed by Eagle Midco Limited. Busy Bees Holdings Limited, Eagle Superco Limited and Eagle Midco Limited are all incorporated in Great Britain and registered at Shaftsbury Drive, Burntwood, Staffordshire, WS7 9QP. The consolidated financial statements of Eagle Superco Limited can be obtained from the Company’s registered address above. The ultimate parent Company is Eagle Superco Limited and the ultimate controlling party is the Ontario Teachers’ Pension Plan incorporated in Canada, its registered address is 5650 Yonge Street, Toronto, Ontario, M2M 2H5.
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