The directors present the Strategic report for the year ended 31 December 2024.
Principal Activity
The principal activity of the company is that of being a holding company. The core principal activity of the company's subsidiaries is the operation of care homes and supported living services. The company and its subsidiaries are domiciled in the UK.
The primary activity of the group is the provision of accommodation with personal care for adults between the ages of 18-65 in care homes. It also provides supported living accommodation for adults to live more independently. Hours of support are provided in supported living services depending on needs.
DRS Care has been operational for 35+ years. Following the completion of the development of a new 15 bed facility the group now provides accommodation in the form of 24 residential care beds situated in one of three care homes and 89 supporting living beds. The directors remain confident of maintaining high occupancy rates and level of care.
The directors are satisfied with the performance of the group during the year given the impact of the 'cost of living crisis' along with changes in inflation and interest rates. Profit before tax has increased from £664K (being the profit before tax excluding any changes in the fair value of the properties) to £1,0m as a result of increased occupancies following the completion of the new 15 bed supported living facility. The economic climate is uncertain, but risks are being managed with a focus on increasing our core cost fee, continued expansion of the business and also streamlining our costs.
Despite the above-mentioned challenges, the group remained profitable with a profit before tax of £1,0m up from £664K (after adjusting for the movement in the fair value of the properties) and gross margin increased from 36% to 38%.
EBITDA (before adjusting for the movement in the fair value of the properties) has increased from £1,7m to £2.0m.
Relationships with suppliers and customers remained strong throughout the period. As at the reporting date the group had a positive cash position of £278K which is a decrease from our position last year of £299K, but there was an increase in net assets from £4.3m to £4.9m as a result of the profit for the year.
The net debt position of the group at the reporting date compromise of the following:
The economic climate is clearly uncertain due to a number of factors including changes in inflation and interest rates. The relevant risks are being appropriately managed.
We are committed to providing high quality care. This is monitored through Local Authority inspections, CQC inspections and internal audits. We ensure there is a structure for reporting to senior management and the Board of any potential issues. All action plans are regularly reviewed to ensure implementation.
Risks to Health and Safety are minimised through appropriate staffing and training. We ensure a safe working environment is provided and regular safety audits are completed.
The shortage of staffing across the sector has an impact and as a result we are utilising the government scheme to sponsor staff from abroad to help fill open vacancies.
There are cost pressures with regard to inflation. We are trying to mitigate these risks by using energy efficiently and sourcing food at better prices.
The board of directors see the following key priorities to develop and drive performance:
Increase core cost rates.
Increase the marketing of our service to other Local Authorities.
Continued growth and expansion.
Achieving a 100% occupancy.
The board monitor and review all aspects of the business as a matter of course and through monthly board meetings. Turnover, gross margins, EBITDA, cash position and net assets are the key financial performance indicators reviewed by the business. Further analysis is completed on new revenue / profit stream growth; services trends and cost base analysis.
The 2024 performance is summarised in the fair review of business section of this report.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2024.
The results for the year are set out on page 8.
No ordinary dividends were paid during the current or prior year. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The auditor, Shaw Gibbs (Audit) Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
The group has chosen in accordance with Companies Act 2006, s.414C(11) to set out the group's Strategic report information required by Large and Medium-sized Companies and Groups (Accountants and Reports) Regulations 2008, Sch.7 to be contained in the Directors' report. It has done so in respect of principal risks and uncertainties and development and performance.
The directors have reviewed the financial performance and position of the group and they are mindful of the net current liabilities of the group totalling £1,976,586 (2023: £2,369,759). The relevant balance includes £661,026 (2023: £1,300,542) owed to a company director. The relevant director has issued a letter of support to the company stating that repayment of the relevant amount due, which is repayable on demand, will not be requested unless the relevant company has sufficient funds to settle it. In addition to this, the group has prepared detailed cash flow forecasts, taking into consideration all available information, showing that it has and it is expected to generate sufficient funds to meet its liabilities as they fall due.
At the time of approving the financial statements, having taken into consideration the current and forecasted performance and position of the group, in combination with the available additional funding should this be considered necessary, the directors have a reasonable expectation that the company and group have adequate resources to continue in operational existence for the foreseeable future. Therefore, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
We have audited the financial statements of DRS Care Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2024 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
The information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
The strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
At the planning stage of the audit we gain an understanding of the laws and regulations which apply to the company and how the management seek to comply with those laws and regulations. This helps us to plan appropriate risk assessments.
During the audit we focus on relevant risk areas and review the compliance with the laws and regulations by making relevant enquiries and undertaking corroboration, for example by reviewing Board Minutes and other documentation. This includes ensuring compliance with the Care Quality Commission, as independent regulator for some of the group companies.
We assess the risk of material misstatement in the financial statements including as a result of fraud and undertake procedures including:
Reviewing the controls set in place by management;
Making enquiries of management as to whether they consider fraud or other irregularity may have taken place, or where such opportunity might exist;
Challenging management assumptions with regard to accounting estimates; and
Identifying and testing journal entries, particularly those which appear to be unusual by size or nature.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
The group statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company's loss for the year was £20,760 (2023: £67,316).
DRS Care Holdings Limited (the "company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 45 Pembury Road, Tottenham, London, N17 6SS.
The group consists of DRS Care Holdings Limited and all of its subsidiaries.
The company's and group principal activities and nature of operations are disclosed in the Directors' report.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006, including the provisions of the Large and Medium sized Companies and Groups (Accountants and
Reports) Regulations 2008.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £1.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold and investment properties at fair value. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent (being this company) of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated group financial statements consist of the financial statements of the parent company DRS Care Holdings Limited together with all entities controlled by the parent company (its subsidiaries).
All financial statements are made up to 31 December 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
The directors have reviewed the financial performance and position of the group and they are mindful of the net current liabilities of the group totalling £1,976,586 (2023: £2,369,759). The relevant balance includes £661,026 (2023: £1,300,542) owed to a company director. The relevant director has issued a letter of support to the company stating that repayment of the relevant amount due, which is repayable on demand, will not be requested unless the relevant company has sufficient funds to settle it. In addition to this, the group has prepared detailed cash flow forecasts, taking into consideration all available information, showing that it has and it is expected to generate sufficient funds to meet its liabilities as they fall due.
At the time of approving the financial statements, having taken into consideration the current and forecasted performance and position of the group, in combination with the available additional funding should this be considered necessary, the directors have a reasonable expectation that the company and group have adequate resources to continue in operational existence for the foreseeable future. Therefore, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover represents the income derived from the provision of care home and supporting living services to residents during the period and is measured at the fair value of the consideration receivable.
Income is recognised when the service is delivered and the amount can be reliably measured. Any amounts received in advanced are deferred and recognised in other creditors.
Freehold land is not depreciated.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting date, the group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's/company's balance sheet when the group/company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include trade and other debtors, amounts owed by group undertakings, and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group/company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group/company after deducting all of its liabilities.
Basic financial liabilities, including trade and other creditors, bank loans, and amounts owed to group undertakings, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the group's/company's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the parent company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due. Difference between contributions payable in the year and contributions actually paid are shown as other creditors.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The directors consider there to be no key judgements that are material to the group or company.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets are as follows:
The fair values of the relevant properties have been arrived at on the basis of the valuations carried out by Eddisons Real Estate & Business Valuers, who are not connected with the company, as at 3 August 2023 or 12 September 2024 depending on the properties. The valuations were carried out on a market value basis (which is considered to be a true reflection of the fair value) in accordance with the Royal Institute of Chartered Surveyors Valuation - Global Standards 2022 and the UK national supplement. The directors do not believe that there has been a material change in the fair value of the properties between the valuation dates and the year end other than the additions made in the year which have enhanced the value of the properties. Freehold and investment properties are set out in further detail in notes 11 and 12.
The useful economic lives of tangible fixed assets have been derived from the judgement of the directors, using their best estimate of the write-down period. Land, which is generally estimated to be 35% of the properties' value, is not depreciated. Tangible fixed assets are set out in further detail in note 11.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined benefit schemes amounted to nil (2023: nil)
In the budget on 3 March 2021, the UK Government announced an increase in the main UK corporation tax rate from 19% to 25% with effect from 1 April 2023.
The actual charge for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
The fair values of the relevant properties have been arrived at on the basis of the valuations carried out by Eddisons Real Estate & Business Valuers, who are not connected with the company, as at 3 August 2023 or 12 September 2024 depending on the properties. The valuations were carried out on a market value basis (which is considered to be a true reflection of the fair value) in accordance with the Royal Institute of Chartered Surveyors Valuation - Global Standards 2022 and the UK national supplement. The directors do not believe that there has been a material change in the fair value of the properties between the valuation dates and the year end other than the additions made in the year which have enhanced the value of the properties.
Freehold land and buildings are carried at valuation. If the relevant assets were measured using the cost model, the carrying amounts would be as follows:
The fair value of the investment property has been arrived at on the basis of the valuation carried out by Eddisons Real Estate & Business Valuers, who are not connected with the company, as at 3 August 2023. The valuation was carried out on a market value basis (which is considered to be a true reflection of the fair value) in accordance with the Royal Institute of Chartered Surveyors Valuation - Global Standards 2022 and the UK national supplement. The directors do not believe that there has been a material change in the fair value of the property between the valuation date and the reporting date.
The historical cost of the investment property is £105,000.
Details of the company's subsidiaries at 31 December 2024 are as follows:
Registered office address:
The dormant indirect subsidiary, Fusion Flavour Ltd, was dissolved on 16 April 2024.
Amounts owed by group undertakings are unsecured, do not bear interest and are repayable on demand.
Amounts owed to group undertakings are unsecured, do not bear interest and are repayable on demand.
Bank loans are secured by a fixed and floating charge over the assets of the group.
The company’s bank loans consist of three facilities, all of which accrue interest at 7.25% and are repaid in instalments. Two of the facilities have a final payment due in November 2040, while the third has a final payment date in December 2041.
The remaining bank loan accrues interest at a rate of 10.4%, is also repaid in installments, with the final payment due in September 2029.
Finance lease payments represent rentals payable by the group for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average remaining lease term is 1.1 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
The Ordinary shares carry full voting, dividend and capital distribution rights, including on winding up. They
confer no right to redemption.
Triodos Bank UK Limited has a fixed and floating charge over the assets of the company, covering the relevant group borrowings. At the reporting date, the relevant group borrowings totalled £8,526,376 (2023: £8,788,805).
At the reporting date, the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
In accordance with Section 33.1A of FRS 102, related party transactions and outstanding balances have not been disclosed with and between wholly owned subsidiaries within the group.
At the reporting date, the company and group owed Mrs R Datoo £661,026 (2023: £1,300,542). This loan is interest free, repayable on demand and included within other creditors.
The directors have provided a personal guarantee in relation to the company's overdraft facility. The exposure as at the reporting date was £nil (2023: £nil).