Company Registration No. 03943652 (England and Wales)
AJ & CO.(DEVON) LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2020
AJ & CO.(DEVON) LTD
COMPANY INFORMATION
Directors
Mr D J Smallridge
Mrs G M Smallridge
Secretary
Mr D J Smallridge
Company number
03943652
Registered office
Ludbrook House
Ludbrook
Ivybridge
Devon
PL21 0LL
Auditor
Azets Audit Services
20 Western Road
Launceston
Cornwall
PL15 7BA
AJ & CO.(DEVON) LTD
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 6
Profit and loss account
7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 24
AJ & CO.(DEVON) LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 31 JULY 2020
- 1 -
The directors present the strategic report for the year ended 31 July 2020.
Fair review of the business
AJ & Co.(Devon) Ltd runs Meadowside and St Francis Residential and Nursing Home as well as Merafield Nursing Home which provide a total of 69 beds and 40 beds respectively in the South Devon area.
The Company has a significant number of private paying residents, in addition to this, a number are funded by local authorities. The company is in constant dialogue regarding the negotiation of funding levels from local authorities.
The measures the company use to monitor it’s progress against its objectives are
-
Occupancy rates
-
Fee Levels
-
Margin
-
Staff and Agency Costs
The business is supported by strong future demand based on the demographics of the UK population. The segment of the UK population aged over 80 or over is projected to increase from 3,400,000 in 2020 to 6,100,000 in 2037.
The company’s growth strategy is to develop and update their existing facilities and improve the care levels it offers.
Where possible the company seeks to employ well qualified and experienced staff.
Principal risks and uncertainties
The management of the business and the execution of the Company’s strategy are subject to a number of risks. The key business risks and uncertainties are considered to relate to competition from other residential and nursing homes, low local authority fees, staff retention, compliance with care standards and interest rates rises.
In order to mitigate these risks, the company: maintains its property to a high standard, endeavours to maintain a healthy dialogue with the local authorities, seeks it engage well trained and experienced staff, and has long term finance in place.
During the year the Covid-19 pandemic continued throughout the United Kingdom and residential and nursing homes are particularly vulnerable. The company continues to take robust measures in accordance with the Governments advice (regular mass testing, provision of personal protective equipment, and cleaning) to minimise the risk of the virus entering the home and to protect its residents and staff. Well over 90% of staff and residents have been fully vaccinated against Covid-19 which substantially reduces the risk of a significant outbreak in the home.
AJ & CO.(DEVON) LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2020
- 2 -
Key performance indicators
For the year ended 31
st
July 2020, the turnover of the Meadowside & St Francis Nursing home has increased by 10.7% to £3,103,146 with occupancy rates remaining at 86%. The gross profit margin had improved from 21.1% to 26.5%. Wages (excluding administrative and Directors) reduced from 72% to 67% of turnover and a net profit of £279,905 (2019 loss of £36,333) was achieved in the year. There was improvement in occupancy rates over the year, until March 2020 when the difficulties of the Coronavirus arose. The home received a good/outstanding CQC report in April 2019.
The Merafield Nursing Home had shown a small reduction in profit over the past year but still performing consistently. The turnover of Merafield Nursing Home had increased by 3.3% to £1,524,866 but with the occupancy rates slightly reducing from 93% to 92% for the year to 31st July 2020. The gross profit margin had also reduced from 26.2% to 23.6%. Wages (excluding administrative) slightly increased to 69% of turnover. Overall a net profit before tax of £46,516 was achieved compared to a profit of £76,052 in the previous year. The home received a good/outstanding CQC report in January 2020.
Mr D J Smallridge
Director
26 April 2021
AJ & CO.(DEVON) LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 JULY 2020
- 3 -
The directors present their annual report and financial statements for the year ended 31 July 2020.
Principal activities
The principal activity of the company continued to be that of the operation of a Nursing and Residential Home.
Results and dividends
The results for the year are set out on page 7.
Ordinary dividends were paid amounting to £125,620. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr D J Smallridge
Mrs G M Smallridge
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
Mr D J Smallridge
Director
26 April 2021
AJ & CO.(DEVON) LTD
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 JULY 2020
- 4 -
The directors are responsible for preparing the annual report 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;
-
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.
AJ & CO.(DEVON) LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF AJ & CO.(DEVON) LTD
- 5 -
Opinion
We have audited the financial statements of AJ & Co.(Devon) Ltd (the 'company') for the year ended 31 July 2020 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows 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 FRS 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 31 July 2020 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.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the
Auditor's
responsibilities for the audit of the financial statements
section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the 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
.
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. 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.
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 we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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 our audit
:
-
the information given in the strategic report and the directors' r
eport 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.
AJ & CO.(DEVON) LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF AJ & CO.(DEVON) LTD
- 6 -
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 identifie
d
material misstatements in the strategic report and the directors'
r
eport
.
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 directors'
r
esponsibilities
s
tatement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company
'
s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's 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.
Mr Andrew Baker FCA (Senior Statutory Auditor)
for and on behalf of Azets Audit Services
29 April 2021
20 Western Road
Launceston
Cornwall
PL15 7BA
AJ & CO.(DEVON) LTD
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 JULY 2020
- 7 -
2020
2019
Notes
£
£
Turnover
4,628,010
4,277,015
Cost of sales
(3,444,296)
(3,298,428)
Gross profit
1,183,714
978,587
Administrative expenses
(887,050)
(842,281)
Other operating income
116,261
Operating profit
2
412,925
136,306
Interest payable and similar expenses
5
(86,504)
(96,588)
Profit before taxation
326,421
39,718
Tax on profit
6
(62,547)
(2,654)
Profit for the financial year
263,874
37,064
The profit and loss account has been prepared on the basis that all operations are continuing operations.
AJ & CO.(DEVON) LTD
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 JULY 2020
- 8 -
2020
2019
£
£
Profit for the year
263,874
37,064
Other comprehensive income
-
-
Total comprehensive income for the year
263,874
37,064
AJ & CO.(DEVON) LTD
BALANCE SHEET
AS AT
31 JULY 2020
31 July 2020
- 9 -
2020
2019
Notes
£
£
£
£
Fixed assets
Goodwill
8
162,187
203,437
Tangible assets
9
4,580,233
4,604,035
4,742,420
4,807,472
Current assets
Stocks
10
22,370
19,112
Debtors
11
418,133
424,331
Cash at bank and in hand
63,253
11,189
503,756
454,632
Creditors: amounts falling due within one year
12
(480,351)
(524,679)
Net current assets/(liabilities)
23,405
(70,047)
Total assets less current liabilities
4,765,825
4,737,425
Creditors: amounts falling due after more than one year
13
(2,027,099)
(2,172,846)
Provisions for liabilities
Deferred tax liability
16
192,847
156,954
(192,847)
(156,954)
Net assets
2,545,879
2,407,625
Capital and reserves
Called up share capital
18
375,013
375,013
Share premium account
19
133,170
133,170
Revaluation reserve
20
1,485,847
1,485,847
Capital redemption reserve
21
393,915
393,915
Profit and loss reserves
22
157,934
19,680
Total equity
2,545,879
2,407,625
The financial statements were approved by the board of directors and authorised for issue on 26 April 2021 and are signed on its behalf by:
Mr D J Smallridge
Director
Company Registration No. 03943652
AJ & CO.(DEVON) LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JULY 2020
- 10 -
Share capital
Share premium account
Revaluation reserve
Capital redemption reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
£
Balance at 1 August 2018
375,013
133,170
1,485,847
393,915
111,316
2,499,261
Year ended 31 July 2019:
Profit and total comprehensive income for the year
-
-
-
-
37,064
37,064
Dividends
7
-
-
-
-
(128,700)
(128,700)
Balance at 31 July 2019
375,013
133,170
1,485,847
393,915
19,680
2,407,625
Year ended 31 July 2020:
Profit and total comprehensive income for the year
-
-
-
-
263,874
263,874
Dividends
7
-
-
-
-
(125,620)
(125,620)
Balance at 31 July 2020
375,013
133,170
1,485,847
393,915
157,934
2,545,879
AJ & CO.(DEVON) LTD
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 JULY 2020
- 11 -
2020
2019
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
27
523,150
304,548
Interest paid
(86,504)
(96,588)
Income taxes refunded/(paid)
6,129
Net cash inflow from operating activities
442,775
207,960
Investing activities
Purchase of tangible fixed assets
(24,421)
(26,073)
Net cash used in investing activities
(24,421)
(26,073)
Financing activities
Repayment of bank loans
(138,009)
(180,990)
Payment of finance leases obligations
(6,753)
(7,853)
Dividends paid
(125,620)
(128,700)
Net cash used in financing activities
(270,382)
(317,543)
Net increase/(decrease) in cash and cash equivalents
147,972
(135,656)
Cash and cash equivalents at beginning of year
(84,719)
50,937
Cash and cash equivalents at end of year
63,253
(84,719)
Relating to:
Cash at bank and in hand
63,253
11,189
Bank overdrafts included in creditors payable within one year
(95,908)
AJ & CO.(DEVON) LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2020
- 12 -
1
Accounting policies
Company information
AJ & Co.(Devon) Ltd is a
private
company
limited by shares
incorporated in England and Wales.
The registered office is
Ludbrook House, Ludbrook, Ivybridge, Devon, PL21 0LL.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
1.2
Going concern
A
true
t the time of approving the financial statements
,
t
he directors have a reasonable expectation that the
company
has adequate resources to continue in operational existence for the foreseeable future. Thus
t
he directors continue to adopt the going concern basis of accounting in preparing the financial statements.
The Directors have considered the current Covid-19 pandemic and the associated impact and risks to the business and have put in place measures (see note 26) to minimise these risks. Well over 90% of staff and residents have been fully vaccinated against Covid-19 which substantially reduces the risk of a significant outbreak in the care homes. They have also reviewed the Company’s cash flow requirements, and together with unused banking facilities and the ongoing support of the company’s bankers, they consider that they would be able to continue in operation for a period of not less than 12 months from the date of approval of the financial statements.
1.3
Turnover
Turnover represents gross income from residents occupation of rooms and the provision of care and nursing facilities. It accrues on a time basis, and is recognised by the company as such. The Company is not VAT registered.
1.4
Intangible fixed assets - goodwill
Goodwill, being the amount paid in connection with the purchase of Meadowside and St Francis in 2004 is being amortised evenly over it's estimated useful life of twenty years.
Goodwill, being the amount paid in connection with the purchase of Merafield in 2015 is being amortised evenly over it's estimated useful life of 10 years.
1.5
Tangible fixed assets
Tangible fixed assets
are initially measured at cost and subsequently measured at cost or
deemed cost
, 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:
Fixtures and fittings
20% Reducing Balance
Motor vehicles
25% Reducing Balance
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
.
AJ & CO.(DEVON) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2020
1
Accounting policies
(Continued)
- 13 -
No depreciation is charged on the Company's properties as depreciation is deemed to be immaterial. The buildings are expected to have long economic lives and very high residual values. The Company's property known as Meadowside/St Francis was revalued in 2012 and this is now regarded as "deemed historic cost" under FRS102.
1.6
Stocks
Stocks held for distribution at no or nominal consideration are measured at the lower of replacement cost and cost, adjusted where applicable for any loss of service potential.
1.7
Cash at bank and in hand
Cash and cash equivalents
are basic financial assets
and
include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.8
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.
Other financial assets
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.
Impairment of financial assets
Financial assets, other than those
held
at
fair value through profit and loss
, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected.
If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
AJ & CO.(DEVON) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2020
1
Accounting policies
(Continued)
- 14 -
Derecognition of financial assets
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.
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
paymen
ts 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. A
m
ounts 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.
Other financial liabilities
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
s
ubsequently 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 th
r
ough 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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.9
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The
company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
AJ & CO.(DEVON) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2020
1
Accounting policies
(Continued)
- 15 -
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the
company
has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.10
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.11
Leases
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 lives or the lease term, whichever is shorter.
The interest element of these obligations are charged to the profit & loss over the relevant period. The capital element of the future payments are treated as liabilities.
1.12
Government grants
Government grants are recognised at the fair value of the asset receive
d
or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met
. Where a
grant does not specify performance conditions
it
is recognised in income when the proceeds are received or receivable
. A grant received before the recognition criteria are satisfied is recognised as a liability.
2
Operating profit
2020
2019
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants
(116,261)
Fees payable to the company's auditor for the audit of the company's financial statements
8,400
7,100
Depreciation of owned tangible fixed assets
44,819
49,936
Depreciation of tangible fixed assets held under finance leases
3,406
4,541
Amortisation of intangible assets
41,250
41,250
AJ & CO.(DEVON) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2020
- 16 -
3
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2020
2019
Number
Number
Nursing, catering and cleaners
182
183
Administrative
7
8
Total
189
191
Their aggregate remuneration comprised:
2020
2019
£
£
Wages and salaries
2,961,544
2,983,687
Social security costs
198,590
201,549
Pension costs
48,212
38,709
3,208,346
3,223,945
4
Directors' remuneration
2020
2019
£
£
Remuneration for qualifying services
75,000
75,000
Company pension contributions to defined contribution schemes
485
75,485
75,000
5
Interest payable and similar expenses
2020
2019
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
86,183
95,718
Other finance costs:
Interest on finance leases and hire purchase contracts
321
870
86,504
96,588
6
Taxation
2020
2019
£
£
Current tax
UK corporation tax on profits for the current period
26,654
AJ & CO.(DEVON) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2020
6
Taxation
2020
2019
£
£
(Continued)
- 17 -
Deferred tax
Origination and reversal of timing differences
35,893
2,654
Total tax charge
62,547
2,654
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:
2020
2019
£
£
Profit before taxation
326,421
39,718
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2019: 19.00%)
62,020
7,546
Tax effect of expenses that are not deductible in determining taxable profit
527
808
Tax effect of utilisation of tax losses not previously recognised
(38,599)
(11,535)
Permanent capital allowances in excess of depreciation
2,706
3,181
Deferred tax
35,893
2,654
Taxation charge for the year
62,547
2,654
7
Dividends
2020
2019
£
£
Interim paid
125,620
128,700
AJ & CO.(DEVON) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2020
- 18 -
8
Intangible fixed assets
Goodwill
£
Cost
At 1 August 2019 and 31 July 2020
675,000
Amortisation and impairment
At 1 August 2019
471,563
Amortisation charged for the year
41,250
At 31 July 2020
512,813
Carrying amount
At 31 July 2020
162,187
At 31 July 2019
203,437
9
Tangible fixed assets
Freehold land and buildings
Fixtures and fittings
Computers
Motor vehicles
Total
£
£
£
£
£
Cost or valuation
At 1 August 2019
4,390,955
632,334
43,258
41,641
5,108,188
Additions
9,691
14,730
24,421
At 31 July 2020
4,390,955
642,025
57,988
41,641
5,132,609
Depreciation and impairment
At 1 August 2019
449,798
27,196
27,158
504,152
Depreciation charged in the year
38,445
6,158
3,621
48,224
At 31 July 2020
488,243
33,354
30,779
552,376
Carrying amount
At 31 July 2020
4,390,955
153,782
24,634
10,862
4,580,233
At 31 July 2019
4,390,955
182,536
16,062
14,482
4,604,035
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2020
2019
£
£
Motor vehicles
10,218
13,624
Depreciation charge for the year in respect of leased assets
3,406
4,541
AJ & CO.(DEVON) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2020
9
Tangible fixed assets
(Continued)
- 19 -
The land and buildings known as Meadowside & St Francis were revalued during the year ended 31st July 2012 to £3,375,000. This valuation was completed
by
Jones Lang LaSalle
,
an
independent valuers not connected with the company on the basis of market value.
If disposed of at this valuation, the corporation tax arising would be £137,611. This is now included within the deferred tax provision in the accordance with FRS 102.
I
f
revalued assets
were
stated on an historical cost basis rather than a fair value basis, the totals amounts included
would
have been as follows:
2020
2019
£
£
Cost
1,748,964
1,748,964
Accumulated depreciation
-
-
Carrying value
1,748,964
1,748,964
The revaluation surplus is disclosed in note 20.
10
Stocks
2020
2019
£
£
Stocks
22,370
19,112
11
Debtors
2020
2019
Amounts falling due within one year:
£
£
Trade debtors
99,390
99,459
Corporation tax recoverable
6,129
Other debtors
318,743
318,743
418,133
424,331
AJ & CO.(DEVON) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2020
- 20 -
12
Creditors: amounts falling due within one year
2020
2019
Notes
£
£
Bank loans and overdrafts
14
194,053
283,392
Obligations under finance leases
15
1,169
6,753
Trade creditors
97,136
75,106
Corporation tax
26,654
Other taxation and social security
53,934
53,271
Other creditors
96,435
97,167
Accrued expenses
10,970
8,990
480,351
524,679
13
Creditors: amounts falling due after more than one year
2020
2019
Notes
£
£
Bank loans and overdrafts
14
2,027,099
2,171,677
Obligations under finance leases
15
1,169
2,027,099
2,172,846
14
Loans and overdrafts
2020
2019
£
£
Bank loans
2,221,152
2,359,161
Bank overdrafts
95,908
2,221,152
2,455,069
Payable within one year
194,053
283,392
Payable after one year
2,027,099
2,171,677
The above debts are secured by a 1st legal charge dated 08/01/2004 over the freehold property of Meadowside & St Francis, Plymbridge Road, Plympton and a 1st legal charge dated 29/05/2015 over the freehold of Merafield View Nursing Home, Underlane, Plympton.
The debts are also secured against an unlimited debenture dated 19/07/2000 incorporating a fixed and floating charge and the right of set off.
AJ & CO.(DEVON) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2020
- 21 -
15
Finance lease obligations
2020
2019
Future minimum lease payments due under finance leases:
£
£
Within one year
1,169
6,753
In two to five years
1,169
1,169
7,922
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
16
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2020
2019
Balances:
£
£
Accelerated capital allowances
55,236
57,941
Tax losses
-
(38,598)
Land and buildings
137,611
137,611
192,847
156,954
2020
Movements in the year:
£
Liability at 1 August 2019
156,954
Charge to profit or loss
35,893
Liability at 31 July 2020
192,847
17
Retirement benefit schemes
2020
2019
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
48,212
38,709
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.
AJ & CO.(DEVON) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2020
- 22 -
18
Share capital
2020
2019
2020
2019
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of £1 each
375,013
375,013
375,013
375,013
19
Share premium account
2020
2019
£
£
At the beginning and end of the year
133,170
133,170
20
Revaluation reserve
2020
2019
£
£
At beginning and end of year
1,485,847
1,485,847
21
Capital redemption reserve
2020
2019
£
£
At the beginning and end of the year
393,915
393,915
22
Profit and loss reserves
2020
2019
£
£
At the beginning of the year
19,680
111,316
Profit for the year
263,874
37,064
Dividends declared and paid in the year
(125,620)
(128,700)
At the end of the year
157,934
19,680
23
Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel is as follows.
2020
2019
£
£
Aggregate compensation
157,499
159,167
AJ & CO.(DEVON) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2020
23
Related party transactions
(Continued)
- 23 -
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Eggs were supplied on an arms length basis to both Meadowside and Merafield homes during the year amounting to £7,035 and £3,517 respectively from 'Ludbrook Ladies'. These were provided by a farming business run by Mr D Smallridge, the director of the Company.
Meat was supplied on an arms length basis to both Meadowside and Merafield homes during the year amounting to £29,420 & £19,216 respectively from 'Ludbrook Butchers'. These were provided by a business run by Mr B Smallridge, the son of the director of the Company Mr D Smallridge.
24
Directors' transactions
During the year the Company operated a loan account with Mr D Smallridge, a director. The loan is interest free and repayable on demand. The loan of £254,994 is owing to the Company and is included in Other Debtors.
£55,000 of the loan to Mr D Smallridge relates to a loan to the director's farming business.
Description
% Rate
Opening balance
Closing balance
£
£
Loan
-
254,994
254,994
254,994
254,994
25
Ultimate controlling party
The controlling party is Mr D Smallridge.
26
COVID-19
The United Kingdom has suffered from the Covid-19 pandemic during the final 5 months of the financial year as well as since the year end to the date of approval of these financial statements. The company has only had a handful of infections to date, and has put in place robust measures in accordance with the Government’s recommendations to prevent the virus entering the home, including the provision of personal protective equipment for all staff, restricting visiting, regular testing of all staff and residents, thorough cleansing and disinfecting of the home. Well over 90% of staff and residents have been fully vaccinated against Covid-19 which substantially reduces the risk of a significant outbreak in the home. The directors are committed to doing everything possible to minimise the risks of an infection. This is an ongoing situation and the directors are adopting their strategy to manage the ever-changing situation as effectively as possible.
AJ & CO.(DEVON) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2020
- 24 -
27
Cash generated from operations
2020
2019
£
£
Profit for the year after tax
263,874
37,064
Adjustments for:
Taxation charged
62,547
2,654
Finance costs
86,504
96,588
Amortisation and impairment of intangible assets
41,250
41,250
Depreciation and impairment of tangible fixed assets
48,224
54,477
Movements in working capital:
(Increase) in stocks
(3,258)
(615)
Decrease in debtors
69
47,679
Increase in creditors
23,941
25,450
Cash generated from operations
523,151
304,547
28
Analysis of changes in net debt
1 August 2019
Cash flows
31 July 2020
£
£
£
Cash at bank and in hand
11,189
52,064
63,253
Bank overdrafts
(95,908)
95,908
(84,719)
147,972
63,253
Borrowings excluding overdrafts
(2,359,161)
138,009
(2,221,152)
Obligations under finance leases
(7,922)
6,753
(1,169)
(2,451,802)
292,734
(2,159,068)
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