Company Registration No. 03943652 (England and Wales)
AJ & CO.(DEVON) LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2021
AJ & CO.(DEVON) LTD
COMPANY INFORMATION
Directors
Mrs G M Smallridge
Mr B J Smallridge
(Appointed 6 January 2022)
Mrs K M White
(Appointed 6 January 2022)
Company number
03943652
Registered office
Ludbrook House
Ludbrook
Ivybridge
Devon
United Kingdom
PL21 0LL
Auditor
Azets Audit Services
20 Western Road
Launceston
Cornwall
United Kingdom
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 - 10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 24
AJ & CO.(DEVON) LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 31 JULY 2021
- 1 -
The directors present the strategic report for the year ended 31 July 2021.
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 2021
- 2 -
Key performance indicators
For the year ended 31
st
July 2021, the turnover of the Meadowside & St Francis Nursing home decreased by 4.3% to £2,967,933 with occupancy rates remaining at 86%. The gross profit margin decreased from 26.5% to 19.2%. Wages and agency costs (excluding administrative and Directors) increased from 67% of turnover to 73% and a net profit of £20,910 (2020 profit of £279,905) was achieved in the year. Due to Covid lockdowns occupancy rates were below the historic norm (well over 90%) at 86%. The home received a good CQC report in February 2021.
The Merafield Nursing Home has shown a small reduction in profit over the past year but still performing consistently. The turnover of Merafield Nursing Home had decreased slightly from £1,524,866 to £1,510,527. Due to Covid lockdowns occupancy rates reduced from 92% to 86.5% which is well below the historic norm (well over 90%). The gross profit margin had also reduced from 23.6% to 16.8% with wages (excluding administrative and Directors) increasing from to 69% to 82% of turnover. Overall a net profit before tax of £20,245 was achieved compared to a profit of £46,516 in the previous year. The home received a good CQC report in February 2021.
Mrs G M Smallridge
Mrs K M White
Director
Director
Mr B J Smallridge
Director
28 July 2022
AJ & CO.(DEVON) LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 JULY 2021
- 3 -
The directors present their annual report and financial statements for the year ended 31 July 2021.
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 £94,200. 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 (dec'd)
(Deceased 2 January 2022)
Mrs G M Smallridge
Mr B J Smallridge
(Appointed 6 January 2022)
Mrs K M White
(Appointed 6 January 2022)
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
Mrs G M Smallridge
Mr B J Smallridge
Director
Director
Mrs K M White
Director
28 July 2022
AJ & CO.(DEVON) LTD
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 JULY 2021
- 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 2021 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 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 2021 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 contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of 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
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 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.
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
20 Western Road
Launceston
Cornwall
United Kingdom
PL15 7BA
29 July 2022
AJ & CO.(DEVON) LTD
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 JULY 2021
- 7 -
2021
2020
Notes
£
£
Turnover
4,478,461
4,628,010
Cost of sales
(3,655,925)
(3,444,296)
Gross profit
822,536
1,183,714
Administrative expenses
(1,001,078)
(887,050)
Other operating income
293,220
116,261
Operating profit
2
114,678
412,925
Interest payable and similar expenses
5
(73,343)
(86,504)
Profit before taxation
41,335
326,421
Tax on profit
6
(8,147)
(62,547)
Profit for the financial year
33,188
263,874
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 2021
- 8 -
2021
2020
£
£
Profit for the year
33,188
263,874
Other comprehensive income
Tax relating to other comprehensive income
(43,456)
Total comprehensive income for the year
(10,268)
263,874
AJ & CO.(DEVON) LTD
BALANCE SHEET
AS AT
31 JULY 2021
31 July 2021
- 9 -
2021
2020
Notes
£
£
£
£
Fixed assets
Goodwill
8
120,937
162,187
Tangible assets
9
4,550,617
4,580,233
4,671,554
4,742,420
Current assets
Stocks
10
22,324
22,370
Debtors
11
467,660
418,133
Cash at bank and in hand
7,200
63,253
497,184
503,756
Creditors: amounts falling due within one year
12
(682,011)
(480,351)
Net current (liabilities)/assets
(184,827)
23,405
Total assets less current liabilities
4,486,727
4,765,825
Creditors: amounts falling due after more than one year
13
(1,813,393)
(2,027,099)
Provisions for liabilities
Deferred tax liability
15
231,923
192,847
(231,923)
(192,847)
Net assets
2,441,411
2,545,879
Capital and reserves
Called up share capital
17
375,013
375,013
Share premium account
18
133,170
133,170
Revaluation reserve
19
1,442,391
1,485,847
Capital redemption reserve
20
393,915
393,915
Profit and loss reserves
21
96,922
157,934
Total equity
2,441,411
2,545,879
AJ & CO.(DEVON) LTD
BALANCE SHEET (CONTINUED)
AS AT
31 JULY 2021
31 July 2021
- 10 -
The financial statements were approved by the board of directors and authorised for issue on 28 July 2022 and are signed on its behalf by:
Mrs G M Smallridge
Mr B J Smallridge
Director
Director
Mrs K M White
Director
Company Registration No. 03943652
AJ & CO.(DEVON) LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JULY 2021
- 11 -
Share capital
Share premium account
Revaluation reserve
Capital redemption reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
£
Balance at 1 August 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
Year ended 31 July 2021:
Profit for the year
-
-
-
-
33,188
33,188
Other comprehensive income:
Tax relating to other comprehensive income
-
-
(43,456)
-
(43,456)
Total comprehensive income for the year
(43,456)
33,188
(10,268)
Dividends
7
-
-
-
-
(94,200)
(94,200)
Balance at 31 July 2021
375,013
133,170
1,442,391
393,915
96,922
2,441,411
AJ & CO.(DEVON) LTD
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 JULY 2021
- 12 -
2021
2020
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
26
253,004
523,150
Interest paid
(73,343)
(86,504)
Income taxes (paid)/refunded
6,129
Net cash inflow from operating activities
179,661
442,775
Investing activities
Purchase of tangible fixed assets
(10,980)
(24,421)
Net cash used in investing activities
(10,980)
(24,421)
Financing activities
Repayment of bank loans
(198,024)
(138,009)
Payment of finance leases obligations
(1,169)
(6,753)
Dividends paid
(94,200)
(125,620)
Net cash used in financing activities
(293,393)
(270,382)
Net (decrease)/increase in cash and cash equivalents
(124,712)
147,972
Cash and cash equivalents at beginning of year
63,253
(84,719)
Cash and cash equivalents at end of year
(61,459)
63,253
Relating to:
Cash at bank and in hand
7,200
63,253
Bank overdrafts included in creditors payable within one year
(68,659)
AJ & CO.(DEVON) LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2021
- 13 -
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, United Kingdom, 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 2021
1
Accounting policies
(Continued)
- 14 -
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 2021
1
Accounting policies
(Continued)
- 15 -
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 2021
1
Accounting policies
(Continued)
- 16 -
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
2021
2020
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants
(293,220)
(116,261)
Fees payable to the company's auditor for the audit of the company's financial statements
9,000
8,400
Depreciation of owned tangible fixed assets
40,595
44,818
Depreciation of tangible fixed assets held under finance leases
3,406
Amortisation of intangible assets
41,250
41,250
AJ & CO.(DEVON) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2021
- 17 -
3
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2021
2020
Number
Number
Nursing, catering and cleaners
166
182
Administrative
10
7
Total
176
189
Their aggregate remuneration comprised:
2021
2020
£
£
Wages and salaries
3,080,713
2,961,544
Social security costs
216,824
198,590
Pension costs
53,174
48,212
3,350,711
3,208,346
4
Directors' remuneration
2021
2020
£
£
Remuneration for qualifying services
75,000
75,000
Company pension contributions to defined contribution schemes
1,578
485
76,578
75,485
5
Interest payable and similar expenses
2021
2020
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
73,333
86,183
Other finance costs:
Interest on finance leases and hire purchase contracts
10
321
73,343
86,504
6
Taxation
2021
2020
£
£
Current tax
UK corporation tax on profits for the current period
12,527
26,654
AJ & CO.(DEVON) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2021
6
Taxation
2021
2020
£
£
(Continued)
- 18 -
Deferred tax
Origination and reversal of timing differences
(4,380)
35,893
Total tax charge
8,147
62,547
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:
2021
2020
£
£
Profit before taxation
41,335
326,421
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2020: 19.00%)
7,854
62,020
Tax effect of expenses that are not deductible in determining taxable profit
746
527
Tax effect of utilisation of tax losses not previously recognised
(38,599)
Permanent capital allowances in excess of depreciation
3,927
2,706
Deferred tax
(4,380)
35,893
Taxation charge for the year
8,147
62,547
In addition to the amount charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:
2021
2020
£
£
Deferred tax arising on:
Revaluation of property
43,456
-
7
Dividends
2021
2020
£
£
Interim paid
94,200
125,620
AJ & CO.(DEVON) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2021
- 19 -
8
Intangible fixed assets
Goodwill
£
Cost
At 1 August 2020 and 31 July 2021
675,000
Amortisation and impairment
At 1 August 2020
512,813
Amortisation charged for the year
41,250
At 31 July 2021
554,063
Carrying amount
At 31 July 2021
120,937
At 31 July 2020
162,187
9
Tangible fixed assets
Freehold land and buildings
Fixtures and fittings
Computers
Motor vehicles
Total
£
£
£
£
£
Cost or valuation
At 1 August 2020
4,390,955
642,025
57,988
41,641
5,132,609
Additions
8,383
2,597
10,980
At 31 July 2021
4,390,955
650,408
60,585
41,641
5,143,589
Depreciation and impairment
At 1 August 2020
488,244
33,354
30,779
552,377
Depreciation charged in the year
32,433
5,446
2,716
40,595
At 31 July 2021
520,677
38,800
33,495
592,972
Carrying amount
At 31 July 2021
4,390,955
129,731
21,785
8,146
4,550,617
At 31 July 2020
4,390,955
153,782
24,634
10,862
4,580,233
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 £181,068. This is now included within the deferred tax provision in the accordance with FRS 102.
The revaluation surplus is disclosed in note 19.
AJ & CO.(DEVON) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2021
9
Tangible fixed assets
(Continued)
- 20 -
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:
2021
2020
£
£
Cost
1,748,964
1,748,964
10
Stocks
2021
2020
£
£
Stocks
22,324
22,370
11
Debtors
2021
2020
Amounts falling due within one year:
£
£
Trade debtors
138,126
99,390
Other debtors
318,743
318,743
Prepayments and accrued income
10,791
467,660
418,133
12
Creditors: amounts falling due within one year
2021
2020
Notes
£
£
Bank loans and overdrafts
14
278,394
194,053
Obligations under finance leases
1,169
Trade creditors
172,420
97,136
Corporation tax
39,181
26,654
Other taxation and social security
60,835
53,934
Other creditors
105,830
96,435
Accrued expenses
25,351
10,970
682,011
480,351
13
Creditors: amounts falling due after more than one year
2021
2020
Notes
£
£
Bank loans and overdrafts
14
1,813,393
2,027,099
AJ & CO.(DEVON) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2021
- 21 -
14
Loans and overdrafts
2021
2020
£
£
Bank loans
2,023,128
2,221,152
Bank overdrafts
68,659
2,091,787
2,221,152
Payable within one year
278,394
194,053
Payable after one year
1,813,393
2,027,099
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.
15
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2021
2020
Balances:
£
£
Accelerated capital allowances
50,856
55,236
Land and buildings
181,067
137,611
231,923
192,847
2021
Movements in the year:
£
Liability at 1 August 2020
192,847
Credit to profit or loss
(4,380)
Effect of change in tax rate - profit or loss
43,456
Liability at 31 July 2021
231,923
AJ & CO.(DEVON) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2021
- 22 -
16
Retirement benefit schemes
2021
2020
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
53,174
48,212
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.
17
Share capital
2021
2020
2021
2020
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of £1 each
375,013
375,013
375,013
375,013
18
Share premium account
2021
2020
£
£
At the beginning and end of the year
133,170
133,170
19
Revaluation reserve
2021
2020
£
£
At beginning of year
1,485,847
1,485,847
Deferred tax on revaluation of tangible assets
(43,456)
-
At end of year
1,442,391
1,485,847
20
Capital redemption reserve
2021
2020
£
£
At the beginning and end of the year
393,915
393,915
21
Profit and loss reserves
2021
2020
£
£
At the beginning of the year
157,934
19,680
Profit for the year
33,188
263,874
Dividends declared and paid in the year
(94,200)
(125,620)
At the end of the year
96,922
157,934
AJ & CO.(DEVON) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2021
- 23 -
22
Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel is as follows.
2021
2020
£
£
Aggregate compensation
167,884
157,499
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 £3,675 and £1,470 respectively from 'Ludbrook Ladies'. These were provided by a farming business run by Mr D Smallridge, a director of the Company during the year.
Meat was supplied on an arms length basis to both Meadowside and Merafield homes during the year amounting to £31,657 & £27,200 respectively from 'Ludbrook Butchers'. These were provided by a business run by a new director, Mr B Smallridge, the son of Mr D Smallridge.
Hampers were supplied on an arms length basis to both Meadowside and Merafield homes during the year amounting to £3,360 & £1,670 respectively from 'Ludbrook Hampers'. These were provided by a business run by a new director, Mr B Smallridge, the son of Mr D Smallridge.
23
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.
24
Ultimate controlling party
The controlling party was Mr D Smallridge during the year.
25
COVID-19
The United Kingdom has continued to suffer from the Covid-19 pandemic during 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 2021
- 24 -
26
Cash generated from operations
2021
2020
£
£
Profit for the year after tax
33,187
263,874
Adjustments for:
Taxation charged
8,147
62,547
Finance costs
73,343
86,504
Amortisation and impairment of intangible assets
41,250
41,250
Depreciation and impairment of tangible fixed assets
40,595
48,224
Movements in working capital:
Decrease/(increase) in stocks
46
(3,258)
(Increase)/decrease in debtors
(49,527)
69
Increase in creditors
105,961
23,941
Cash generated from operations
253,002
523,151
27
Analysis of changes in net debt
1 August 2020
Cash flows
31 July 2021
£
£
£
Cash at bank and in hand
63,253
(56,053)
7,200
Bank overdrafts
(68,659)
(68,659)
63,253
(124,712)
(61,459)
Borrowings excluding overdrafts
(2,221,152)
198,024
(2,023,128)
Obligations under finance leases
(1,169)
1,169
-
(2,159,068)
74,481
(2,084,587)
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