REGISTERED NUMBER: 15836181 (England and Wales)

Group Strategic Report, Report of the Directors and

Consolidated Financial Statements

for the Period 12 July 2024 to 31 October 2025

for

Broadstone Healthcare Limited

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

5

Report of the Independent Auditors

7

Consolidated Income Statement

11

Consolidated Other Comprehensive Income

12

Consolidated Balance Sheet

13

Company Balance Sheet

14

Consolidated Statement of Changes in Equity

15

Company Statement of Changes in Equity

16

Consolidated Cash Flow Statement

17

Notes to the Consolidated Cash Flow Statement

18

Notes to the Consolidated Financial Statements

19

DIRECTORS:

B A Rosenberg

S N Dinan

S G Hamir

B White

REGISTERED OFFICE:

Room 16, Toll Bar House Business Centre

1 Derby Road

Ilkeston

Derbyshire

DE7 5FH

REGISTERED NUMBER:

15836181 (England and Wales)

AUDITORS:

TC Group

Statutory Auditor

First Floor

Spitalfields House

Stirling Way

Borehamwood

Hertfordshire

WD6 2FX

The directors present their strategic report of the company and the group for the period 12 July 2024 to 31 October 2025.

REVIEW OF BUSINESS

The results of the group for the period are set out on page 11 and the position at 31 October 2025 is shown on page 13.

The parent company was incorporated on 12 July 2024 and on 7 March 2025 acquired Tregwilym Lodge Limited and its subsidiary, Ashgate Care Limited. This is the first year reporting as group.

For the period ended 31 October 2025, the Group reported turnover of £7.2m and Gross profit of £1.99m representing a margin of 28%. The focus in the current year reflected in enhancing operational efficiency and improving occupancy levels. Operating profit was £0.7m, reflecting a continued recovery in the performance of each home compared with prior years.

The group's fixed assets stood at £7.6m, while cash balances were £0.58m. Net assets were £0.14m at the year end, 31 October 2025.

The group's long-term objective remains focused on delivering high-quality care and improving the wellbeing of its residents, particularly elderly individuals with dementia and those requiring end-of-life care. During the period, management's primary focus has been on restoring occupancy levels to pre-COVID standards, enhancing care delivery, and maintaining sustainable margins.

The group operates within the UK social care sector, which continues to face structural challenges including workforce shortages, funding constraints, and increasing regulatory demands. While the sector has shown resilience since the COVID-19 pandemic, during which many care providers experienced severe disruption, the recovery remains uneven. The group has, however, made significant progress in stabilising and rebuilding its operations following the wider sector collapse during the pandemic.

Despite this improvement, broader economic pressures persist. The ongoing cost-of-living crisis continues to impact both operating costs and staffing, while geopolitical instability-including the war in Ukraine and in the Middle East, alongside the longer-term effects of Brexit, continue to create a challenging economic environment in the UK. Inflationary pressures have contributed to an increase in overheads generally.

Although recent reductions in interest rates have provided some relief, there remains uncertainty regarding future rate movements due to inflationary risks. The group continues to focus on strengthening its financial and operational foundations to navigate these ongoing challenges.

Given the critical role of the social care sector in supporting vulnerable populations, there remains a strong case for increased and sustained government support. Long-term funding reform, workforce investment, and policy stability will be essential to ensure the sector's resilience and to enable providers such as the group to continue delivering high-quality care.

Post year end the company restructured its finance with a consolidating the debt from individual subsidiaries to parent company. £6.3m was raised to clear the borrowings and pay off the debenture holders.

PRINCIPAL RISKS AND UNCERTAINTIES

The Group operates within the UK social care sector and is therefore exposed to a range of financial and operational risks. The directors continually monitor these risks and implement appropriate measures to mitigate their potential impact.

Economic and Funding Environment

The group's performance is closely linked to the broader UK economic environment. Factors such as inflation, energy costs, employment levels, and consumer confidence directly influence operating costs and the availability of public funding. Uncertainty in the UK and global economy may place pressure on government finances, potentially affecting funding levels for the NHS and local authorities, which are key commissioners of social care services. The directors mitigate this risk through maintaining strong relationships with commissioning bodies and continuing to focus on high-quality care delivery, which supports sustainable fee rates.

Regulatory and Sector Risk

The social care sector in the United Kingdom continues to face structural challenges, including increased regulatory scrutiny, staffing shortages, and funding constraints. Changes in legislation, inspection regimes, or compliance requirements may impact the company's operations and cost base. The directors actively monitor regulatory developments and ensure that the group maintains high standards of compliance and care delivery.

Occupancy and Demand Risk

The group's financial performance is dependent on maintaining appropriate occupancy levels within its care facilities. Demand may be affected by demographic trends, local authority funding decisions, or competition within the sector. The directors seek to mitigate this risk by maintaining high standards of care, investing in facilities, and fostering strong relationships with local authorities and healthcare providers.

Supplier Risk

The group procures goods and services from a broad range of suppliers and is not materially dependent on any single supplier. This diversification reduces concentration risk. The directors maintain regular communication with key suppliers and monitor pricing and availability to ensure continuity of supply, particularly in light of inflationary pressures.

Workforce and People Risk

The group's success is dependent on the recruitment, retention, and development of skilled staff. The social care sector continues to experience workforce shortages and wage inflation. The directors recognise that employees are a key asset and are committed to providing a supportive working environment, competitive remuneration, and ongoing training to ensure high standards of care and staff engagement.

Cost Inflation and Energy Risk

Rising costs, particularly in relation to wages, utilities, and food supplies, represent a significant risk to margins. Energy price volatility remains a key concern. The directors monitor cost trends closely and, where possible, seek to improve operational efficiencies and negotiate fee increases with commissioners to offset rising costs.

Liquidity and Credit Risk

The group is exposed to credit risk in relation to amounts receivable from local authorities, the NHS, and private residents. The directors maintain robust credit control procedures, including regular monitoring of debtor balances and prompt follow-up of overdue amounts. The company also manages liquidity risk through careful cash flow forecasting and maintaining adequate cash reserves.

Interest Rate Risk

The group is exposed to interest rate risk on its borrowings. Changes in interest rates may impact financing costs and cash flow. The directors monitor interest rate movements and consider appropriate financing arrangements to manage this exposure.

KEY PERFORMANCE INDICATORS

The results of the company for the period are set out on page 11 and the financial position at 31 October 2025 is shown on page 13.

FUTURE DEVELOPMENTS

The group will continue to focus on maintaining and improving margins through cost control and operational efficiencies, alongside regular review of fee structures. Priority will be given to increasing and sustaining occupancy levels while maintaining high standards of care. The directors plan to invest in the expansion and refurbishment of care home facilities to meet growing demand, particularly in dementia and specialist care. Ongoing investment in staff development and systems will support service quality and compliance. The group remains focused on sustainable growth despite continued sector and economic challenges.

This report was approved by the board on 28 July 2026 and signed by its order.

ON BEHALF OF THE BOARD:

B A Rosenberg - Director

30 July 2026

The directors present their report with the financial statements of the company and the group for the period 12 July 2024 to 31 October 2025.

INCORPORATION

The group was incorporated on 12 July 2024 and commenced trading on 7 March 2025.

The group passed a special resolution on 5 November 2025 changing its name from Ballickmoyler Holdings Limited to Broadstone Healthcare Limited.

PRINCIPAL ACTIVITY

The principal activity of the group in the period under review was that of residential nursing care facilities.

DIVIDENDS

No dividends will be distributed for the period ended 31 October 2025.

EVENTS SINCE THE END OF THE PERIOD

Information relating to events since the end of the period is given in the notes to the financial statements.

DIRECTORS

The directors who have held office during the period from 12 July 2024 to the date of this report are as follows:

B A Rosenberg - appointed 4 April 2025

S N Dinan - appointed 23 October 2025

C Martin - appointed 12 July 2024 - resigned 15 October 2025

S G Hamir and B White were appointed as directors after 31 October 2025 but prior to the date of this report.

All the directors who are eligible offer themselves for election at the forthcoming first Annual General Meeting.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Group Strategic Report, the Report of the Directors and the 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 United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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 the group and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	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 and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group and 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 the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the group's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the group's auditors are aware of that information.

AUDITORS

The auditors, TC Group, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

B A Rosenberg - Director

30 July 2026

Opinion

We have audited the financial statements of Broadstone Healthcare Limited (the 'parent company') and its subsidiaries (the 'group') for the period ended 31 October 2025 which comprise the Consolidated Income Statement, Consolidated Other Comprehensive Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Cash Flow Statement and Notes to the Consolidated Cash Flow Statement, Notes to the Financial Statements, including a summary of 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).

In our opinion the financial statements:

-	give a true and fair view of the state of the group's and of the parent company affairs as at 31 October 2025 and of the group's profit for the period then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

-	have been prepared in accordance with the requirements of the Companies Act 2006.

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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and the parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

-	the information given in the Group Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Group Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

-	adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

-	the parent company financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of directors' remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page five, 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 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 group's and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

Auditors' 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 a Report of the Auditors 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.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

Extent to which the audit was considered capable of detecting irregularities, including fraud

The objectives of our audit, in respect to fraud, are: to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses; and to respond appropriately to fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and its management.

Our approach was as follows:

- We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience, and through discussion with the directors and other management (as required by auditing standards), and discussed with the directors and other management the policies and procedures regarding compliance with laws and regulations;

- We considered the legal and regulatory frameworks directly applicable to the financial statements reporting framework (FRS 102 and the Companies Act 2006) and the relevant tax compliance regulations in the UK;

- We considered the nature of the industry, the control environment and business performance, including the key drivers for management's remuneration;

- We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit;

- We considered the procedures and controls that the company has established to address risks identified, or that otherwise prevent, deter and detect fraud; and how senior management monitors those programmes and controls.

Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Where the risk was considered to be higher, we performed audit procedures to address each identified fraud risk. These procedures included: testing manual journals; reviewing the financial statement disclosures and testing to supporting documentation; performing analytical procedures; and enquiring of management, and were designed to provide reasonable assurance that the financial statements were free from fraud or error.

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

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 a Report of the Auditors 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.

Sadikali Premji FCCA (Senior Statutory Auditor)

for and on behalf of TC Group

Statutory Auditor

First Floor

Spitalfields House

Stirling Way

Borehamwood

Hertfordshire

WD6 2FX

30 July 2026

TURNOVER

4

7,175,458

Cost of sales

(5,189,392

)

GROSS PROFIT

1,986,066

Administrative expenses

(1,222,139

)

OPERATING PROFIT

7

763,927

Interest payable and similar expenses

9

(573,511

)

PROFIT BEFORE TAXATION

190,416

Tax on profit

10

(48,942

)

PROFIT FOR THE FINANCIAL PERIOD

141,474

Profit attributable to:

Owners of the parent

141,474

PROFIT FOR THE PERIOD

141,474

OTHER COMPREHENSIVE INCOME

-

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

141,474

Total comprehensive income attributable to:

Owners of the parent

141,474

FIXED ASSETS

Intangible assets

13

735,458

Tangible assets

14

6,907,927

Investments

15

-

7,643,385

CURRENT ASSETS

Stocks

16

8,324

Debtors

17

711,271

Cash at bank and in hand

579,001

1,298,596

CREDITORS

Amounts falling due within one year

18

(4,275,386

)

NET CURRENT LIABILITIES

(2,976,790

)

TOTAL ASSETS LESS CURRENT LIABILITIES

4,666,595

CREDITORS

Amounts falling due after more than one year

19

(4,329,121

)

PROVISIONS FOR LIABILITIES

23

(195,998

)

NET ASSETS

141,476

CAPITAL AND RESERVES

Called up share capital

24

2

Retained earnings

25

141,474

SHAREHOLDERS' FUNDS

141,476

The financial statements were approved by the Board of Directors and authorised for issue on 30 July 2026 and were signed on its behalf by:

B A Rosenberg - Director

FIXED ASSETS

Intangible assets

13

-

Tangible assets

14

-

Investments

15

890,549

890,549

CURRENT ASSETS

Cash in hand

2

CREDITORS

Amounts falling due within one year

18

(1,161,728

)

NET CURRENT LIABILITIES

(1,161,726

)

TOTAL ASSETS LESS CURRENT LIABILITIES

(271,177

)

CAPITAL AND RESERVES

Called up share capital

24

2

Retained earnings

25

(271,179

)

SHAREHOLDERS' FUNDS

(271,177

)

Company's loss for the financial year

(271,179

)

The financial statements were approved by the Board of Directors and authorised for issue on 30 July 2026 and were signed on its behalf by:

B A Rosenberg - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Changes in equity

Issue of share capital

2

-

2

Total comprehensive income

-

141,474

141,474

Balance at 31 October 2025

2

141,474

141,476

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Changes in equity

Issue of share capital

2

-

2

Total comprehensive income

-

(271,179

)

(271,179

)

Balance at 31 October 2025

2

(271,179

)

(271,177

)

Cash flows from operating activities

Cash generated from operations

1

967,382

Interest paid

(437,511

)

Net cash from operating activities

529,871

Cash flows from investing activities

Purchase of tangible fixed assets

(77,639

)

Acquisition consideration less cash

(553,941

)

Net cash from investing activities

(631,580

)

Cash flows from financing activities

New loans in year

850,000

Loan repayments in year

(169,292

)

Share issue

2

Net cash from financing activities

680,710

Increase in cash and cash equivalents

579,001

Cash and cash equivalents at beginning of period

2

-

Cash and cash equivalents at end of period

2

579,001

1.	RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

£

Profit before taxation

190,416

Depreciation charges

129,080

Finance costs

573,511

893,007

Increase in stocks

(8,324

)

Increase in trade and other debtors

(710,759

)

Increase in trade and other creditors

793,458

Cash generated from operations

967,382

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts:

Period ended 31 October 2025

31.10.25

12.7.24

£

£

Cash and cash equivalents

579,001

-

3.	ANALYSIS OF CHANGES IN NET DEBT

Acquisition

of

subsidiarie

At 12.7.24

Cash flow

s

At 31.10.25

£

£

£

£

Net cash

Cash at bank

and in hand

-

242,393

336,608

579,001

-

242,393

336,608

579,001

Debt

Debts falling due

within 1 year

-

(680,708

)

(935,230

)

(1,615,938

)

Debts falling due

after 1 year

-

-

(4,329,121

)

(4,329,121

)

-

(680,708

)

(5,264,351

)

(5,945,059

)

Total

-

(438,315

)

(4,927,743

)

(5,366,058

)

1.	STATUTORY INFORMATION

Broadstone Healthcare Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the General Information page.

The presentation currency of the financial statements is the Pound Sterling (£).

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

Going concern

At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

Reporting period

The reporting period is from 12 July 2024 to 31 October 2025. The period was extended to align the year end of all companies in the group.

Basis of consolidation

The consolidated group financial statements consist of the financial statements of the parent company Broadstone Healthcare Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.

All financial statements are made up to 31 October 2025. 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.

Turnover

Turnover represents amounts receivable for residential and nursing care services provided during the period, net of discounts and value added tax where applicable. Revenue is recognised as the care services are provided. Amounts relating to services provided but not invoiced at the reporting date are recognised as accrued income.

Goodwill

Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years.

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

Intangible assets

Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Freehold land

not depreciated

Freehold buildings

2% straight line basis

Plant and machinery

20% straight line basis

Fixtures and fittings

15% reducing balance basis / 20% straight line basis

Motor vehicles

25% straight line basis

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.

Fixed asset investments

Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.

In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

Impairment of fixed assets

At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Financial instruments

The company 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 company's balance sheet when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include debtors 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.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

Taxation

Taxation for the period comprises current and deferred tax. Tax is recognised in the Consolidated Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the period end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Pension costs and other post-retirement benefits

The group operates a defined contribution pension scheme. Contributions payable to the group's pension scheme are charged to profit or loss in the period to which they relate.

3.	CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the company's accounting policies, the director is 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 the following areas to involve the most significant judgements and estimates in the preparation of the financial statements:

Going concern

The directors have exercised judgement in assessing the company's ability to continue as a going concern. In making this assessment, the directors have considered the company's current and forecast occupancy levels, expected care fee income, local authority and private resident funding arrangements, payroll and agency staffing costs, utility and other operating cost inflation, loan repayments, available finance facilities and forecast cash flows for a period of at least twelve months from the date of approval of these financial statements.

Having considered these matters, the directors are satisfied that the company has adequate resources to continue in operational existence for the foreseeable future and therefore continue to adopt the going concern basis of accounting in preparing the financial statements.

Revenue recognition

Judgement is applied in determining the timing of revenue recognition for care services provided to residents. Revenue is recognised in the period in which the care services are provided. Estimation may be required where amounts are funded by local authorities, NHS bodies, private residents or third parties and where billing or funding confirmations are not finalised at the reporting date.

Recoverability of trade debtors

The directors estimate the recoverability of debtor balances by reviewing aged balances, payment history, local authority and third-party funding arrangements, disputes and other known circumstances affecting recovery.

Carrying value and useful economic lives of property and fixed assets

The directors assess whether there are any indicators of impairment in respect of the company's property and other tangible fixed assets, taking into account asset condition, trading performance, occupancy levels, regulatory matters, market conditions and expected future cash flows.

The directors also estimate the useful economic lives and residual values of tangible fixed assets when determining depreciation. These estimates are reviewed where circumstances indicate that they may have changed. Where an asset's carrying amount exceeds its recoverable amount, an impairment loss is recognised.

4.

TURNOVER

The turnover and profit before taxation are attributable to the one principal activity of the group.

An analysis of turnover by geographical market is given below:

£

United Kingdom

7,175,458

7,175,458

5.	EMPLOYEES AND DIRECTORS

£

Wages and salaries

4,551,100

Social security costs

517,596

Other pension costs

73,668

5,142,364

The average number of employees during the period was as follows:

Directors

2

Administration and care workers

231

233

6.	DIRECTORS' EMOLUMENTS

£

Directors' remuneration

20,000

7.	OPERATING PROFIT

The operating profit is stated after charging:

£

Depreciation - owned assets

77,548

Goodwill amortisation

51,532

8.	AUDITORS' REMUNERATION

£

Fees payable to the company's auditors for the audit of the company's financial statements

16,000

9.

INTEREST PAYABLE AND SIMILAR EXPENSES

£

Bank loan interest

338,043

Other interest

235,468

573,511

10.

TAXATION

Analysis of the tax charge

The tax charge on the profit for the period was as follows:

£

Current tax:

UK corporation tax

41,868

Deferred tax

7,074

Tax on profit

48,942