Esland North Limited - Limited company accounts 18.2

REGISTERED NUMBER: 04181878 (England and Wales)

Strategic Report,

Report of the Directors and

Financial Statements

for the Year Ended 30 November 2017

for

Esland North Limited

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

5

Statement of Comprehensive Income

7

Statement of Financial Position

8

Statement of Changes in Equity

9

Notes to the Financial Statements

10

DIRECTORS:

J Stamp

J R Stamp

SECRETARY:

Mrs A J Buller

REGISTERED OFFICE:

Suites 1 & 5 Riverside Business Centre

Foundry Lane

Milford

Belper

Derbyshire

DE56 0RN

REGISTERED NUMBER:

04181878 (England and Wales)

AUDITORS:

HSKS Greenhalgh

Chartered Accountants &

Statutory Auditor

3rd Floor

Butt Dyke House

33 Park Row

Nottingham

NG1 6EE

The directors present their strategic report for the year ended 30 November 2017.

REVIEW OF BUSINESS

The 2017 financial year end showed significant improvement from 2016 with turnover increasing by 40% to

over £8.4 million. This growth has been generated thanks to opening new properties during the year whilst

also seeing trading improve at the sites that existed at the last year end.

Cost of sales decreased as a proportion of sales resulting in a gross profit of 43.35% being achieved during

the year compared to 43.82% in 2016. This margin increase together with the significantly higher fee levels

have seen gross profit increase by over £1 million year on year.

Property costs have increased with the additional trading properties now being used. Most of these are

rented which has seen rent along with related property costs increase in the year.

The increasing size of the business has seen the management team strengthened further and as a result

overhead wages costs increased during 2017 by 10%.

The increased activity has seen profit increase during the year by 45.4% before tax with further growth

expected during 2018 with the additional properties that have opened during 2017 having a full year of trade.

PRINCIPAL RISKS AND UNCERTAINTIES

Provision of care to young people with complex needs and the associated risks associated with managing

such high end complex needs residents remains the main risk. The reputation of the company within the

local authorities continues to go from strength to strength with weekly referral levels remaining consistently

high. This shows that the company continues to maintain a strong reputation at managing these risks.

DEVELOPMENT AND PERFORMANCE OF THE COMPANY

The company continues to have a policy of continual training for its staff and to encourage employee

participation in its development of care homes. This attitude to recruitment and training of staff has seen

improvements in Ofsted ratings.

FINANCIAL KEY PERFORMANCE INDICATORS

The company prepares monthly management accounts as well as maintaining occupancy statistics and

weekly fee levels to ensure that business continues at the high levels now being achieved.

Some of the measures used by the company include the key statistic of wages as a percentage of fees and

Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA).

Wages percentage in the year has gone from 49.26% in 2016 to 49.48% in 2017. This increase in wages

costs as a percentage of fees was expected with new homes previously opened reaching maturity. In the lead

up to opening a new site the staff are taken on and trained while there is no fee income. Agency staff levels

are very low.

In order to measure profitability and cash generation for debt service costs EBITDA is monitored. The annual

accounts show an EBITDA of £1,773,504 compared to £1,230,043. This is a 44.4% increase.

ON BEHALF OF THE BOARD:

J Stamp - Director

30 August 2018

The directors present their report with the financial statements of the company for the year ended 30 November 2017.

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of residential care for young people.

DIVIDENDS

An interim dividend of £1,944.44 per share was paid on 9 June 2017. The directors recommend that no final dividend be paid.

The total distribution of dividends for the year ended 30 November 2017 will be £ 350,000 .

DIRECTORS

The directors shown below have held office during the whole of the period from 1 December 2016 to the date

of this report.

J Stamp

J R Stamp

Other changes in directors holding office are as follows:

S Rai - resigned 30 March 2017

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, 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 of the profit or loss of the company for that period. In

preparing these financial statements, the directors are required to:

-

select suitable accounting policies and then apply them consistently;

-

make judgements and accounting estimates that are reasonable and prudent;

-

state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

-

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain

the company's transactions and disclose with reasonable accuracy at any time the financial position of the

company and enable them to ensure that the financial statements comply with the Companies Act 2006.

They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps

for the prevention and detection of fraud and other irregularities.

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 company's auditors are unaware, and each director has taken all the steps

that he ought to have taken as a director in order to make himself aware of any relevant audit information and

to establish that the company's auditors are aware of that information.

ON BEHALF OF THE BOARD:

J Stamp - Director

30 August 2018

Opinion

We have audited the financial statements of Esland North Limited (the 'company') for the year ended

30 November 2017 which comprise the Statement of Comprehensive Income, Statement of Financial

Position, Statement of Changes in Equity and 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 company's affairs as at 30 November 2017 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

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

company 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

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to

report to you where:

-	the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The directors are responsible for the other information. The other information comprises the information in the

Strategic Report and the Report of the Directors, but does not include the financial statements and our Report

of the Auditors thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form

of assurance conclusion thereon.

In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. 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.

Opinion on other matters prescribed by the Companies Act 2006

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

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

-	the 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 company and its environment obtained in the course of

the audit, we have not identified material misstatements in the 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, or returns adequate for our audit have not been received from branches not visited by us; or

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

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

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

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page three, 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 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.

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.

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 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.

Philip Handley FCA (Senior Statutory Auditor)

for and on behalf of HSKS Greenhalgh

Chartered Accountants &

Statutory Auditor

3rd Floor

Butt Dyke House

33 Park Row

Nottingham

NG1 6EE

31 August 2018

TURNOVER

3

8,461,722

6,004,225

Cost of sales

(4,793,979

)

(3,372,892

)

GROSS PROFIT

3,667,743

2,631,333

Administrative expenses

(2,204,660

)

(1,612,598

)

1,463,083

1,018,735

Other operating income

1,772

14,812

OPERATING PROFIT

5

1,464,855

1,033,547

Interest receivable and similar income

114

657

1,464,969

1,034,204

Gain/(loss) on financial liabilities at fair value

(536,564

)

-

928,405

1,034,204

Interest payable and similar expenses

6

(4,996

)

(6,357

)

PROFIT BEFORE TAXATION

923,409

1,027,847

Tax on profit

7

(249,827

)

(145,184

)

PROFIT FOR THE FINANCIAL YEAR

673,582

882,663

OTHER COMPREHENSIVE INCOME

Unrealised surplus on revaluation

Deferred tax movement on revaluation

(174,669

)

(65,258

)

Revaluation in the year

1,750,350

376,629

Income tax relating to components of other comprehensive income

-

-

OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX

1,575,681

311,371

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

2,249,263

1,194,034

FIXED ASSETS

Tangible assets

9

9,130,352

6,508,439

CURRENT ASSETS

Debtors

10

759,796

471,205

Cash at bank and in hand

394,029

52,879

1,153,825

524,084

CREDITORS

Amounts falling due within one year

11

2,903,038

2,266,475

NET CURRENT LIABILITIES

(1,749,213

)

(1,742,391

)

TOTAL ASSETS LESS CURRENT LIABILITIES

7,381,139

4,766,048

CREDITORS

Amounts falling due after more than one year

12

(575,669

)

(26,677

)

PROVISIONS FOR LIABILITIES

16

(919,377

)

(752,541

)

NET ASSETS

5,886,093

3,986,830

CAPITAL AND RESERVES

Called up share capital

17

180

180

Revaluation reserve

18

5,451,455

3,812,124

Retained earnings

18

434,458

174,526

SHAREHOLDERS' FUNDS

5,886,093

3,986,830

The financial statements were approved by the Board of Directors on 30 August 2018 and were signed on its behalf by:

J Stamp - Director

Called up

share

Retained

Revaluation

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 December 2015

180

(553,891

)

3,511,507

2,957,796

Changes in equity

Dividends

-

(165,000

)

-

(165,000

)

Total comprehensive income

-

893,417

300,617

1,194,034

Balance at 30 November 2016

180

174,526

3,812,124

3,986,830

Changes in equity

Dividends

-

(350,000

)

-

(350,000

)

Total comprehensive income

-

609,932

1,639,331

2,249,263

Balance at 30 November 2017

180

434,458

5,451,455

5,886,093

1.	STATUTORY INFORMATION

Esland North 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 Company 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 as modified by the revaluation of certain assets.

The company has made a profit on ordinary activities before taxation of £923,409 (2016: £1,027,847)

and the balance sheet details net current liabilities of £1,749,213 (2016: £1,742,391) and net assets of

£5,886,093 (£3,986,830).

At the balance sheet date, the company was dependent on the continued support of its parent

company and its bankers to finance its obligations during the course of the twelve months from the

date of approval of the financial statements.

It is on this basis that the directors consider that the company will have adequate cash resources to

fund its trading and other obligations during the course of the twelve months from the date the financial

statements are approved. Consequently the financial statements have been prepared on the going

concern basis.

Financial Reporting Standard 102 - reduced disclosure exemptions

The company has taken advantage of the following disclosure exemptions in preparing these financial

statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and

Republic of Ireland":

•

the requirements of Section 7 Statement of Cash Flows;

•

the requirement of Section 33 Related Party Disclosures paragraph 33.7.

Turnover

Turnover represents care services provided in the year, recognised according to the period of care

provided.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life or, if held under a finance lease, over the lease term, whichever is the shorter.

Freehold property

-

2% on valuation

Improvements to property

-

15% on reducing balance

Plant and machinery

-

15% on reducing balance

Fixtures and fittings

-

15% on reducing balance

Motor vehicles

-

20% on reducing balance

Computer equipment

-

33% on cost

Tangible assets are measured at cost, or valuation in the case of freehold property, less accumulated

depreciation.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Statement of

Comprehensive Income, 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 statement of financial position date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at

the statement of financial position 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 year 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.

Hire purchase and leasing commitments

Assets obtained under hire purchase contracts or finance leases are capitalised in the balance sheet.

Those held under hire purchase contracts are depreciated over their estimated useful lives. Those

held under finance leases are depreciated over their estimated useful lives or the lease term,

whichever is the shorter.

The interest element of these obligations is charged to profit or loss over the relevant period. The

capital element of the future payments is treated as a liability.

Pension costs and other post-retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the

company's pension scheme are charged to profit or loss in the period to which they relate.

Derivative instruments

Derivative financial instruments are initially measured at fair value on the date on which a derivative

contract is entered into and are subsequently measured at fair value through profit or loss. Derivatives

are carried as assets when the fair value is positive and as liabilities when the fair value is negative.

3.

TURNOVER

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

An analysis of turnover by class of business is given below:

2017

2016

£

£

Rendering of services

8,461,722

6,004,225

8,461,722

6,004,225

4.	EMPLOYEES AND DIRECTORS

2017

2016

£

£

Wages and salaries

4,649,256

3,343,057

Social security costs

6,350

1,463

Other pension costs

58,527

42,199

4,714,133

3,386,719

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

2017

2016

Directors

2

1

Care

144

110

Administration

23

19

169

130

2017

2016

£

£

Directors' remuneration

83,743

42,075

The social security costs above relate to directors only with all other social security costs being

included within wages and salaries.

5.	OPERATING PROFIT

The operating profit is stated after charging:

2017

2016

£

£

Depreciation - owned assets

234,332

165,588

Depreciation - assets on hire purchase contracts

18,093

26,300

Loss on disposal of fixed assets

57,329

3,951

Auditors' remuneration

5,568

5,460

6.

INTEREST PAYABLE AND SIMILAR EXPENSES

2017

2016

£

£

Interest and penalties

80

-

Hire purchase interest

4,916

6,357

4,996

6,357

7.

TAXATION

Analysis of the tax charge

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

2017

2016

£

£

Current tax:

UK corporation tax

257,592

177,418

Under provision of prior year corporation tax

68

(45,668

)

Total current tax

257,660

131,750

Deferred tax

(7,833

)

13,434

Tax on profit

249,827

145,184

Reconciliation of total tax charge included in profit and loss

The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The

difference is explained below:

2017

2016

£

£

Profit before tax

923,409

1,027,847

Profit multiplied by the standard rate of corporation tax in the UK of 19.332% (2016 - 20%)

178,513

205,569

Effects of:

Expenses not deductible for tax purposes

2,436

700

Depreciation in excess of capital allowances

42,306

20,331

Adjustments to tax charge in respect of previous periods

68

(45,668

)

Group loss relief

(69,392

)

(49,182

)

Deferred tax

(7,833

)

13,434

Gain/(loss) on financial liabilities at fair value

103,729

-

Total tax charge

249,827

145,184

Tax effects relating to effects of other comprehensive income

2017

Gross

Tax

Net

£

£

£

Unrealised surplus on revaluation

Deferred tax movement on revaluation

(174,669

)

-

(174,669

)

Revaluation in the year

1,750,350

-

1,750,350

1,575,681

-

1,575,681

2016

Gross

Tax

Net

£

£

£

Unrealised surplus on revaluation

Deferred tax movement on revaluation

(65,258

)

-

(65,258

)

Revaluation in the year

376,629

-

376,629

311,371

-

311,371

8.

DIVIDENDS

2017

2016

£

£

Ordinary shares of £1 each

Interim

350,000

165,000

9.	TANGIBLE FIXED ASSETS

Improvements

Freehold

to

Plant and

property

property

machinery

£

£

£

COST OR VALUATION

At 1 December 2016

6,368,431

10,951

69,696

Additions

1,041,497

-

5,906

Disposals

-

(2,374

)

(50,440

)

Revaluations

1,750,350

-

-

At 30 November 2017

9,160,278

8,577

25,162

DEPRECIATION

At 1 December 2016

127,369

3,380

38,156

Charge for year

183,205

905

2,956

Eliminated on disposal

-

(841

)

(32,697

)

At 30 November 2017

310,574

3,444

8,415

NET BOOK VALUE

At 30 November 2017

8,849,704

5,133

16,747

At 30 November 2016

6,241,062

7,571

31,540