ALUM_CARE_LIMITED - Accounts
ALUM_CARE_LIMITED - Accounts
The directors present the strategic report for the year ended 31 May 2022.
The results for the year are set out on page 8.
Revenue of £5,269,739 for 2022 represents an increase of £242,719 (5%) over the £5,027,020 revenue reported for the period 2021.
Operating profit for the year ended 31 May 2022 increased to £1,262,025 from £917,438 for the year ended 31 May 2021, an increase of £344,587. The home continued to receive government grants and also made further reductions to staff costs.
Profit before taxation differed slightly to the operating profit figures due to a nominal amount of interest, £1,233,441 (2022) from £904,886 (2021).
As of 31 May 2022, the financial position of the company has continued to strengthen from the prior period, with net assets of £5,560,355 compared with £4,431,355 at 31 May 2021.
The principal risks and uncertainties facing the company is the continued pressure from local authorities driving down fees due to being able to place residents into other homes with poorer occupancies leading to a slower recovery, however we are undertaking robust fee negotiations and focusing on broadening the patient cohorts, whilst admitting patients with more complex needs. We have seen an increase of 5% in our average weekly fee which accounts for the increase in revenue.
Due to the COVID-19 pandemic and Brexit, staff shortages, in particular qualified nurses, is still a potential risk to the business but to mitigate this we are actively recruiting both at home and overseas in lines with UKBA compliance.
The Company has and continues to take full advantage of the Government grants and financial assistance available. Both staff and residents are still tested on a regular basis.
The increase in energy costs present a risk to the business, however we have procurement procedures in place to ensure we source this at the best rates possible.
Management continues to work closely with the Care Quality Commission to ensure that required regulatory standards are maintained.
During the period under review the Company has maintained a consistent level of Occupancy across several different patient cohorts whilst admitting patients with more complex conditions.
The aim for the future is to continue to broaden the patient cohorts that can be admitted to the facility in order to further strengthen the level of occupancy.
The Directors are still reviewing options for altering the structure of the premises in order to increase operational efficiency and increasing the number of rooms by 2.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 May 2022.
The results for the year are set out on page 8.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The company's activities expose it to a variety of financial risks. The Board reviews and agrees policies for managing these risks at regular intervals dependant on circumstances. The company's principal financial instruments include assets and liabilities such as trade receivables and trade payables arising directly from its operations. In accordance with company's treasury policy, derivative instruments are not entered into for speculative purposes.
The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.
The company is exposed to fair value interest rate risk on floating rate deposits, bank overdrafts and loans. The cash flow interest rate risk is managed within the company's business projections and planning, in the monitoring of financial covenants and through negotiation of facility terms with the provider of the borrowing facility at specified intervals.
Investments of cash surpluses, borrowings and derivative instruments are made through banks and companies which must fulfil credit rating criteria approved by the Board. All residents who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary. The company is not exposed to commodity price risk.
Subsequent to the year end, the Company's ultimate parent company disposed of two subsidiary companies and the bank borrowings referred to in note 19 below, for which Alum Care Limited has provided security, were in part repaid. As part of the restructure of the group's financing arrangements, the remaining group debt together with Alum Care Limited's outstanding bank debt of £570,000 was consolidated and refinanced by Alum Care Limited by way of a new £5,200,000 loan. As a result, the maximum debt exposure for which the company has provided security (as detailed in note 19 below) has reduced from £13,000,000 to £5,200,000.
In addition, subsequent to the end of the year, a programme of refurbishment commenced in respect of the property and the costs incurred to date total £461,859.
During the period under review, despite a reduction in average occupancy overall, the Company has maintained a consistent level of occupancy across several different patient cohorts whilst admitting patients with more complex conditions.
The aim for the future is to continue to broaden the patient cohorts that can be admitted to the facility in order to further strengthen the level of occupancy.
The Directors are still reviewing options for altering the structure of the premises in order to increase operational efficiency and increasing the number of rooms by 2.
The auditor, Morris Lane, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
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 the maintenance and integrity of the company website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
give a true and fair view of the state of the company's affairs as at 31 May 2022 and of its profit for the year 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
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 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.
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 remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit.
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.
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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Identifying and assessing the risks of material misstatement due to irregularities, including fraud
We obtained an understanding of the legal and regulatory frameworks that are applicable to the company through discussion with the directors and from our general commercial experience. The identified laws and regulations were communicated to the audit team in order that they remained alert to any non-compliance throughout the audit.
The company is subject to laws and regulations which have a direct effect on the financial statements and the disclosures contained therein. These have been identified as: the financial reporting framework under which the company operates - Financial Reporting Standard 102; Statutory Instrument 2008/409 – The Large and Medium-sized Companies and Groups (Accounts and Directors’ Report) Regulations 2008; the Companies Act 2006; taxation legislation including pay as you earn and corporation tax and pensions legislation together with COVID-19 funding including grant income.
In addition to the above, the company is subject to other operational laws and regulations where non-compliance may have a material effect on the financial statements. Non-compliance of such laws and regulations may result in litigation, the imposition of fines or the closure of the business which could have a material impact on amounts or disclosures in the financial statements. We have identified the following laws and regulations which are more likely to have significant effect: compliance with the Care Quality Commission regulations; food hygiene laws; health and safety laws; General Data Protection Regulation (GDPR) and employment law.
In order to identify risks of material misstatement due to fraud, we assessed events and conditions where opportunities and incentives may exist within the company for fraud to occur. Our risk assessment procedures included enquiring of directors as to any instances of fraud, their procedures to identify fraud and by using analytical procedures to identify any unusual or unexpected relationships. We identified the greatest potential for fraud in the following areas: recognition of income; ghost employees and grant income. As required by auditing standards, we are also required to perform specific procedures to respond to the risk of management override.
The identified risks of material misstatement due to fraud were communicated to the audit team in order that they remained alert to any non-compliance throughout the audit.
Audit procedures designed to respond to the risks of material misstatement due to irregularities, including fraud
As a result of performing our risk assessments as detailed above, we planned and performed our audit so as to identify non-compliance with such laws and regulations, including fraud by undertaking the following:
Reviewing the disclosures contained within the financial statements and testing to supporting documentation in order to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements.
Enquiring of the directors concerning actual and potential non-compliance of laws and regulations.
Reviewing Care Quality Commission inspection reports in order to identify any potential non-compliance of laws and regulations.
Performing substantive testing with regard to employees to ensure that identification and employment contracts are on file, the pay as you earn system is operating correctly, pension deductions are made where appropriate and valid right to work documentation is available where required.
Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud.
Revenue recognition was addressed by obtaining an understanding of relevant controls with regard to revenue recognition and undertaking substantive testing to ensure that revenue is recognised in line with the company’s accounting policy and in line with accounting standards.
The risk relating to management override of controls was addressed by testing the appropriateness of journal entries and other adjustments, assessing whether accounting estimates are indicative of potential bias and evaluating the business rationale of any significant transactions that are considered unusual or outside the normal course of business.
The risk relating to the recognition of grant income available in respect of the COVID pandemic was addressed by reviewing the conditions attached to the grant income and the associated claims submitted.
Due to the inherent limitations of an audit, there is an unavoidable risk that, despite properly planning and performing our audit in accordance with accounting standards, some material misstatements may not have been detected.
Auditing standards limit the audit procedures required to identify non-compliance with other operational laws and regulations to enquiry of directors and management and inspection of any correspondence. If a breach of operational regulations is not evident from relevant correspondence or disclosed to us, an audit is unlikely to detect that breach. In addition, the further removed non-compliance with laws and regulations is from the events and transactions included in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it.
In addition, the risk of not detecting material misstatement from due to fraud is higher than the risk of one not being detected through error as fraud may involve deliberate concealment through collusion, forgery, misrepresentations and intentional omissions.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
The income statement has been prepared on the basis that all operations are continuing operations.
Alum Care Limited is a company limited by shares incorporated in England and Wales. The registered office is 31/33 Commercial Road, Poole, Dorset, BH14 0HU. The principal place of business is Kings Cross Lane, South Nutfield, Redhill, RH1 5PA.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill.
The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date.
Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date.
Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.
The Board has carefully considered those factors likely to affect the future development, performance and financial position of the company in relation to the ability of the company to operate within its current and foreseeable financial and operational resources.
The company is facing various ongoing challenges including rising inflation, rising interest rates, staff shortages as a result of Brexit, the 9.7% increase in the National Living Wage from 1 April 2023, the cost of living crisis and higher insurance premiums, however, the Board has put in place a number of strategies to mitigate the effect of these challenges as far as possible.
Furthermore, the performance of the company has improved subsequent to the year end and the company is expecting to achieve higher results than those achieved this year. In addition, the parent company has taken restructuring steps with the disposal of two subsidiary companies, subsequent to the year end, as part of a designed strategy to improve immediate group cash flow and to streamline future operations into core market sectors, with the aim of focusing on future group profitability and minimising cash leakage.
The company and its wider group are also dependent on the support of its bankers. In this connection, the group has not been able to comply with the banking covenants attaching to the borrowings in place as at 31 May 2022. The group maintains a positive relationship with its bankers and continued support has been provided as a result of ongoing discussion relating to potential cash flow uncertainties and notification of measures being taken by the parent company to address these. The borrowings in question were refinanced subsequent to the year end, as part of the group wide restructuring referred to above, and are due to be repaid in January 2026. In addition, other borrowings owed by the company were also repaid as part of the refinance and restructure.
With the restructuring of the group, the increase in company performance subsequent to the year end and on the basis of the current relationship with its bankers, the directors consider that the group is in a position to meet its liabilities as they fall due for at least 12 months following the date of the signing of these financial statements. As such, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Interest income is recognised when it is probable that the economic benefits will flow to the company and the amount of revenue can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and the effective interest rate applicable.
Freehold land is not depreciated.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
The best evidence of fair value is a quoted price for an identical asset in an active market. When quoted prices are unavailable, the price of a recent transaction for an identical asset provides evidence of fair value as long as there has not been a significant change in economic circumstances or a significant lapse of time since the transaction took place. If the market is not active and recent transactions of an identical assets on their own are not a good estimate of fair value, the fair value is estimated by using a valuation technique.
Basic financial assets, which include trade and other receivables and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the 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 company after deducting all of its liabilities.
Basic financial liabilities, including trade and other payables, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
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.
Credit risk
The company implements appropriate credit checks on residents and service users prior to providing services. This reduces the exposure of the company in respect of credit risk.
Liquidity risk
The policy of the company is to maintain a mix of short and long term borrowings to effectively manage liquidity risk.
Cash flow and interest rate risk
The company's interest rate risk arises primarily from long-term borrowings issued at variable rates which exposes the company to cash flow interest rate risk. The cash flow interest rate risk is managed within the company's business projections and planning, in the monitoring of financial covenants and through negotiation of facility terms with the provider of the borrowing facility at specified intervals. In addition, the group hedges against variations in interest rates by entering into appropriate interest rate management products with their lenders.
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
An analysis of the company's revenue is as follows:
Government grants received in the year relate to various Covid-19 support schemes.
Amortisation of intangible assets is included in administrative expenses.
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
Intangible fixed assets with a carrying amount of £4,267 (2021 - £11,200) have been pledged to secure borrowings of the Group. Details of these borrowings are given in notes 14 and 19.
Property, plant and equipment with a carrying amount of £6,744,392 (2021 - £6,841,251) have been pledged to secure borrowings of the Group. Details of these borrowings are given in notes 14 and 19.
Inventories with a carrying amount of £3,553 (2021: £2,601) have been pledged to secure borrowings of the Group. Details of these borrowings are given in notes 14 and 19 respectively.
Trade and other receivables with a carrying amount of £706,288 (2021 - £691,817) have been pledged to secure borrowings of the Group. Details of these borrowings are given in notes 14 and 19.
Bank loans included above totalling £570,000 (2021: £600,000) are secured by way of first legal charges over the properties and other assets of the group, a debenture and an intercompany guarantee. Interest is payable at a rate of 4.5% over the Coutts Base rate. The interest charge in respect of the first 12 months of the loan is met by the Government under the Coronavirus Business Interruption Loan Scheme. The loan matures in December 2026.
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Of the deferred tax liability set out above, an amount of £nil is expected to reverse within 12 months and relates to accelerated capital allowances.
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund. At the balance sheet date, unpaid contributions of £6,319 (2021 - £6,497) were due to the fund. They are included in other creditors.
The company has two classes of shares, Ordinary 'A' shares and Ordinary 'B' shares, which hold voting rights of one vote per share. Each class of share has proportionality of dividends within the class and carry no right to fixed income or fixed repayment of capital.
The share premium reserve contains the premium arising on issue of equity shares, net of issue expenses.
Retained earnings represents cumulative profits or losses, including unrealised profit on the remeasurement of investment properties, net of dividends paid and other adjustments.
At 31 May 2022, the Company had contingent liabilities amounting to £236,128 (2021 - £236,128) in respect of possible additional charge to stamp duty land tax and corporation tax resulting from the initial apportionment on purchase of the values attributable to freehold property and goodwill. The determination of any liability to charge remains under assessment as at the end of the financial period.
At 31 May 2022, the Company had secured borrowings of its ultimate parent company, The Buckinghamshire Group Limited, by way of a first legal charge over the property and other assets, a debenture and an intercompany guarantee up to an amount of £13,000,000. At 31 May 2022, the maximum exposure of the company in respect of amounts drawn by the parent company was £8,883,755 (2021 - £9,016,970).
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Subsequent to the year end, the Company's ultimate parent company disposed of two subsidiary companies and the bank borrowings referred to in note 19 above, for which Alum Care Limited has provided security, were in part repaid. As part of the restructure of the group's financing arrangements, the remaining group debt together with Alum Care Limited's outstanding bank debt of £570,000 was consolidated and refinanced by Alum Care Limited by way of a new £5,200,000 loan. As a result, the maximum debt exposure for which the company has provided security (as detailed in note 19 above) has reduced from £13,000,000 to £5,200,000.
In addition, subsequent to the end of the year, a programme of refurbishment commenced in respect of the property and the costs incurred to date total £461,859.
During the year the company entered into the following transactions with related parties:
Services received and expenses recharged to the company were conducted on a normal commercial basis.
The following amounts were outstanding at the reporting end date:
The following amounts were outstanding at the reporting end date:
The ultimate parent company is The Buckinghamshire Group Limited, whose registered office is 31/33 Commercial Road, Poole, Dorset, BH14 0HU.
Alum Care Limited is a subsidiary of The Buckinghamshire Group Limited, by way of 75% direct control of the company and 25% indirect control of the company via Ballinderry LLP, a subsidiary of The Buckinghamshire Group Limited.
The ultimate controlling parties are the directors of The Buckinghamshire Group Limited by virtue of their 80% shareholding of the issued share capital in the company.
The smallest and largest group into which the company is consolidated is The Buckinghamshire Group Limited.