Registration number:
for the
Year Ended
Sonnet Care Homes Holdco Limited
Contents
Company Information |
|
Strategic Report |
|
Directors' Report |
|
Statement of Directors' Responsibilities |
|
Independent Auditor's Report |
|
Consolidated Profit and Loss Account |
|
Consolidated Balance Sheet |
|
Balance Sheet |
|
Consolidated Statement of Changes in Equity |
|
Statement of Changes in Equity |
|
Consolidated Statement of Cash Flows |
|
Notes to the Financial Statements |
Sonnet Care Homes Holdco Limited
Company Information
Directors |
M T Biddulph J M Clinton J Moore |
Registered office |
|
Bankers |
|
Auditors |
|
Sonnet Care Homes Holdco Limited
Strategic Report for the Year Ended 31 March 2022
The directors present their strategic report for the year ended 31 March 2022.
Principal activity
The principal activity of the group is that of the provision of a care home for the elderly and providing care for people with dementia.
The principal activity of the company is that of a non-trading holding company.
Fair review of the business
The Directors of the company consider that the financial position of the company at the year end is satisfactory. The results for the year, which are set out in the profit and loss account, show turnover for the year of £5,390,220 (2021 - £6,488,959) and an operating profit before exceptional items of £151,123 (2021 - £445,343).
Turnover included income from COVID-19 related Government Grants during the year including Infection Control Fund Income, PPE funding support, and the Coronavirus Job Retention Scheme (CJRS) used to support vulnerable staff to shield, and beginning March 2021 as a temporary measure to mitigate payroll costs due to reduced occupancy. Altogether grant income totalled £557,645 (2021 - £471,807) in the year to 31 March 2022.
Additional costs are also incurred in the period relative to COVID-19 income grants including PPE, increased staff and supply costs required to meet Government COVID-19 guidelines. At 31 March 2022, the group had net liabilities of £572,119 (2021 - net assets of £144,307). During the year, £290,310 (2021 - £59,867) has been spent on capital expenditure.
As at the reporting date, the business was operating 2 homes (2021 – 2 homes) in Braintree in Essex. Provision of quality, person-centred care and support is of utmost importance and central to the philosophy and values of the business.
The business produces monthly management information including Key Performance Indicators (“KPI”s) which are an integral part of the reporting. KPIs include quality indicators, occupancy, average fees and wage costs, including agency use. During the year, the company has experienced revenue decline of 16.9% (2021 - 14.7%) due to pandemic related movement in occupancy. Average occupancy in the year was 52% (2021 - 65%). KPI’s are reviewed and altered to meet changes both in the internal and external environments.
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 affecting the company are considered to relate to ongoing compliance with current and future regulations and legislation affecting the sector. In addition, during 2021 and 2022, the ongoing conditions arising as a result of the COVID-19 global pandemic has presented additional safety risks.
The business risks are managed through the recruitment of highly experienced managers, input from external experts and undertaking regular reviews of operational performance and KPIs. In 2020 a dedicated COVID-19 response team was established. This team led the Group response to the pandemic to ensure Government guidelines were followed throughout. Some remaining Covid-19 protocols are expected to be in place post year-end.
Approved by the
Director
Sonnet Care Homes Holdco Limited
Directors' Report for the Year Ended 31 March 2022
The directors present their report and the for the year ended 31 March 2022.
Directors of the company
The directors who held office during the year were as follows:
Financial instruments
Objectives and policies
The board constantly monitors the group's trading results and revise projections as appropriate to ensure that the group can meet its future obligations as they fall due.
Price risk, credit risk, liquidity risk and cash flow risk
The group is exposed to the usual credit and cash flow risks associated with selling on credit and manages this through credit control procedures. The group's bank loans and loan stock are subject to price and liquidity risk as disclosed in note 19 to the financial statements.
The wider UK economy is currently experiencing an increased inflationary environment, the group reviews and manages key suppliers to minimise the impact on overall operating costs. The group has sufficient resources available and the directors have prepared forecasts for the next 12 months that indicate that this will continue to be the case and that these cashflows will be sufficient for the group to meet its financing commitments as they fall due. The directors therefore have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future and have continued to adopt the going concern basis in preparing the financial statements.
Future developments
The emergence of COVID-19 has represented various challenges to all care providers during the last 2 years. The measures that providers have been required to operate within have now started to ease. While this is the case it is expected that Covid-19 management measures will continue to be monitored carefully and to some extent influence the sector and the competitive external commercial environment. Despite these challenges during the year and the impact on occupancy the business has performed resiliently. The Directors remain confident that with Covid-19 restrictions continuing to diminish, the business is well placed to improve occupancy and achieve a steady improvement towards pre pandemic performance and continue to trade as a going concern.
Disclosure of information to the auditor
Each director has taken the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditor is aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditor is unaware.
Reappointment of auditors
Hazlewoods LLP have expressed their willingness to continue in office.
Approved by the
Director
Sonnet Care Homes Holdco Limited
Statement of Directors' Responsibilities
The directors are responsible for preparing the Directors' Report, Strategic 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 group and the company and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:
• |
select suitable accounting policies and apply them consistently; |
• |
make judgements and accounting estimates that are reasonable and prudent; |
• |
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and |
• |
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 group's and the company's transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Sonnet Care Homes Holdco Limited
Independent Auditor's Report to the Members of Sonnet Care Homes Holdco Limited
Opinion
We have audited the financial statements of Sonnet Care Homes Holdco Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 March 2022, which comprise the Consolidated Profit and Loss Account, Consolidated Balance Sheet, Balance Sheet, Consolidated Statement of Changes in Equity, Statement of Changes in Equity, Consolidated 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 Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
• |
give a true and fair view of the state of the group's and the parent company's affairs as at 31 March 2022 and of the group's loss 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 Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the original financial statements were authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. 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.
Sonnet Care Homes Holdco Limited
Independent Auditor's Report to the Members of Sonnet Care Homes Holdco Limited
Opinion on other matter 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 Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
• |
the Strategic Report and Directors' Report have been prepared in accordance with applicable legal requirements. |
Matters on which we are required to report by exception
In the light of our knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report and the Directors' Report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
• |
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or |
• |
the parent company financial statements are not in agreement with the accounting records and returns; or |
• |
certain disclosures of directors’ remuneration specified by law are not made; or |
• |
we have not received all the information and explanations we require for our audit. |
Responsibilities of directors
As explained more fully in the Statement of Directors' Responsibilities set out on page 4, 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 group’s and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.
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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Sonnet Care Homes Holdco Limited
Independent Auditor's Report to the Members of Sonnet Care Homes Holdco Limited
As part of an audit in accordance with ISAs (UK), we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting amaterial misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group or the parent company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the group or the parent company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
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 auditor's report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
For and on behalf of
Windsor House
Bayshill Road
GL50 3AT
Sonnet Care Homes Holdco Limited
Consolidated Profit and Loss Account for the Year Ended 31 March 2022
Note |
2022 |
2021 |
|
Turnover |
|
|
|
Other income |
557,645 |
471,807 |
|
Cost of sales |
( |
( |
|
Gross profit |
|
|
|
Administrative expenses |
( |
( |
|
Group operating profit before exceptional costs |
151,123 |
445,343 |
|
Exceptional costs |
(175,273) |
- |
|
Operating (loss)/profit |
( |
|
|
Other interest receivable and similar income |
|
|
|
Interest payable and similar charges |
( |
( |
|
Loss before tax |
( |
( |
|
Taxation |
( |
( |
|
Loss for the financial year and total comprehensive income |
( |
( |
The above results were derived from continuing operations.
The group has no other comprehensive income for the year.
Sonnet Care Homes Holdco Limited
(Registration number: 08621705)
Consolidated Balance Sheet as at 31 March 2022
Note |
2022 |
2021 |
|
Fixed assets |
|||
Intangible assets |
|
|
|
Tangible assets |
|
|
|
|
|
||
Current assets |
|||
Stocks |
|
|
|
Debtors |
|
|
|
Cash at bank and in hand |
1,372,900 |
1,422,677 |
|
|
|
||
Creditors: Amounts falling due within one year |
( |
( |
|
Net current assets |
|
|
|
Total assets less current liabilities |
|
|
|
- |
- |
||
Creditors: Amounts falling due after more than one year |
|
|
|
Deferred tax liabilities |
|
|
|
Capital and reserves |
|||
Called up share capital |
|
|
|
Share premium reserve |
|
|
|
Capital redemption reserve |
|
|
|
Retained earnings |
( |
( |
|
Equity attributable to owners of the company |
( |
|
|
Total capital, reserves and long term liabilities |
14,908,571 |
15,662,028 |
Approved and authorised by the
Director
Sonnet Care Homes Holdco Limited
(Registration number: 08621705)
Balance Sheet as at 31 March 2022
Note |
2022 |
2021 |
|
Fixed assets |
|||
Intangible assets |
|
|
|
Tangible assets |
|
- |
|
Investments |
|
|
|
|
|
||
Current assets |
|||
Debtors: Amounts falling due within one year |
10,113 |
7,230 |
|
Debtors: Amounts falling due after one year |
9,099,938 |
15,836,600 |
|
|
|
||
Creditors: Amounts falling due within one year |
( |
( |
|
Net current assets |
|
|
|
Total assets less current liabilities |
|
|
|
- |
- |
||
Creditors: Amounts falling due after more than one year |
- |
|
|
Capital and reserves |
|||
Called up share capital |
|
|
|
Share premium reserve |
|
|
|
Capital redemption reserve |
|
|
|
Retained earnings |
( |
|
|
Total equity |
|
|
|
Total capital, reserves and long term liabilities |
9,350,402 |
16,223,702 |
Approved and authorised by the
Director
Sonnet Care Homes Holdco Limited
Consolidated Statement of Changes in Equity for the Year Ended 31 March 2022
Equity attributable to the parent company
Share capital |
Share premium |
Capital redemption reserve |
Retained earnings |
Total equity |
|
At 1 April 2021 |
|
|
|
( |
|
Loss for the year |
- |
- |
- |
( |
( |
At 31 March 2022 |
|
|
|
( |
( |
Share capital |
Share premium |
Capital redemption reserve |
Retained earnings |
Total equity |
|
At 1 April 2020 |
|
|
|
( |
|
Loss for the year |
- |
- |
- |
( |
( |
At 31 March 2021 |
|
|
|
( |
|
Sonnet Care Homes Holdco Limited
Statement of Changes in Equity for the Year Ended 31 March 2022
Share capital |
Share premium |
Capital redemption reserve |
Retained earnings |
Total |
|
At 1 April 2021 |
|
|
|
|
|
Loss for the year |
- |
- |
- |
( |
(5,151,238) |
At 31 March 2022 |
|
|
|
( |
|
Share capital |
Share premium |
Capital redemption reserve |
Retained earnings |
Total |
|
At 1 April 2020 |
|
|
|
|
|
Profit for the year |
- |
- |
- |
|
445,977 |
At 31 March 2021 |
|
|
|
|
|
Sonnet Care Homes Holdco Limited
Consolidated Statement of Cash Flows for the Year Ended 31 March 2022
Note |
2022 |
2021 |
|
Cash flows from operating activities |
|||
Loss for the year |
( |
( |
|
Adjustments to cash flows from non-cash items |
|||
Depreciation and amortisation |
|
|
|
Finance income |
( |
( |
|
Finance costs |
|
|
|
Income tax expense |
|
|
|
|
|
||
Working capital adjustments |
|||
Decrease/(increase) in inventories |
|
( |
|
Decrease in trade and other receivables |
|
|
|
Increase/(decrease) in trade and other payables |
|
( |
|
(Decrease)/increase in deferred income, including government grants |
( |
|
|
Net cash flow from operating activities |
|
|
|
Cash flows from investing activities |
|||
Interest received |
|
|
|
Acquisitions of property plant and equipment |
( |
( |
|
Net cash flows from investing activities |
( |
( |
|
Cash flows from financing activities |
|||
Interest paid |
( |
( |
|
Repayment of bank borrowing |
(118,351) |
(118,350) |
|
Net cash flows from financing activities |
( |
( |
|
Net (decrease)/increase in cash and cash equivalents |
( |
|
|
Cash and cash equivalents at 1 April |
|
|
|
Cash and cash equivalents at 31 March |
1,372,900 |
1,422,677 |
Sonnet Care Homes Holdco Limited
Notes to the Financial Statements for the Year Ended 31 March 2022
General information |
The company is a private company limited by share capital, incorporated in England and Wales.
The address of its registered office is:
Accounting policies |
Summary of significant accounting policies and key accounting estimates
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Statement of compliance
These financial statements were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'.
Basis of preparation
These financial statements have been prepared using the historical cost convention except for, where disclosed in these accounting policies, certain items that are shown at fair value.
The presentational currency of the financial statements is Pounds Sterling, being the functional currency of the primary economic environment in which the company operates. Monetary amounts in these financial statements are rounded to the nearest Pound.
Basis of consolidation
The consolidated financial statements consolidate the financial statements of the company and its subsidiary undertakings drawn up to 31 March 2022.
A subsidiary is an entity controlled by the company. Control is achieved where the company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in the Profit and Loss Account from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the group.
The purchase method of accounting is used to account for business combinations that result in the acquisition of subsidiaries by the group. The cost of a business combination is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the business combination. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Any excess of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised is recorded as goodwill.
Inter-company transactions, balances and unrealised gains on transactions between the company and its subsidiaries, which are related parties, are eliminated in full. Intra-group losses are also eliminated but may indicate an impairment that requires recognition in the consolidated financial statements.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group. Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the group’s equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling shareholder’s share of changes in equity since the date of the combination.
Sonnet Care Homes Holdco Limited
Notes to the Financial Statements for the Year Ended 31 March 2022
Going concern
Details of the group's business activities, performance and position can be found in the Strategic Report on page 2 and Directors' Report on page 3 of these financial statements. This also includes disclosures regarding risks and uncertainties, including an assessment of credit risk and liquidity risk.
The group has adequate financial resources available. The forecasts for the years ending 31 March 2023 and 31 March 2024 and the management accounts prepared for the post year end period confirmed this to be the case up to the date the financial statements were approved. The directors therefore have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future and have continued to adopt the going concern basis in preparing the financial statements.
Judgements and estimation uncertainty
The directors consider that there are no key areas of judgement or estimation uncertainty to be disclosed in these financial statements. |
Revenue recognition
Turnover represents amounts receivable during the year for the provision of care services. Where the amount received relates to a period which covers the balance sheet date, it is apportioned over the period to which it relates.
Government grants
Government grants are recognised based on the accrual model and are measured at the fair value of the asset received or receivable. Grants are classified as relating either to revenue or to assets. Grants relating to revenue are recognised in income over the period in which the related costs are recognised. Grants relating to assets are recognised over the expected useful life of the asset. Where part of a grant relating to an asset is deferred, it is recognised as deferred income.
Tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in the profit or loss, except that a change attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.
The current tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the group operates and generates taxable income.
Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements and on unused tax losses or tax credits in the group. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
The carrying amount of deferred tax assets are reviewed at each reporting date and a valuation allowance is set up against deferred tax assets so that the net carrying amount equals the highest amount that is more likely than not to be recovered based on current or future taxable profit.
Tangible assets
Tangible assets is stated in the balance sheet at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.
The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.
Sonnet Care Homes Holdco Limited
Notes to the Financial Statements for the Year Ended 31 March 2022
Depreciation
Depreciation is charged so as to write off the cost of assets, other than freehold land and buildings over their estimated useful lives, as follows:
Asset class |
Depreciation method and rate |
Freehold land and buildings |
Nil |
Leasehold land |
Over term of the lease |
Building improvements |
10-50 years straight line |
Furniture, fittings and equipment |
5 years straight line |
Motor vehicles |
3-5 years straight line |
No depreciation is provided on freehold land and buildings as it is the company's policy to maintain these assets so that they keep their previously assessed standard of performance. As the useful economic lives of these assets are of such length and the residual values are such that they are not materially different from the carrying amount any depreciation would not be material.
Business combinations
Business combinations are accounted for using the purchase method. The consideration for each acquisition is measured at the aggregate of the fair values at acquisition date of assets given, liabilities incurred or assumed, and equity instruments issued by the group in exchange for control of the acquired, plus any costs directly attributable to the business combination. When a business combination agreement provides for an adjustment to the cost of the combination contingent on future events, the group includes the estimated amount of that adjustment in the cost of the combination at the acquisition date if the adjustment is probable and can be measured reliably.
Goodwill
Positive goodwill is capitalised, classified as an asset on the balance sheet and amortised on a straight line basis over its useful economic life of 20 years. It is reviewed for impairment at the end of the first full financial year following the acquisition and in other periods if events or changes in circumstances indicate that the carrying value may not be recoverable.
A policy of 20 years for amortising the goodwill has been retained following the transition to FRS 102 in 2016. Whilst FRS 102 recommends a default maximum economic life for goodwill of 10 years, the directors’ consider that there was no revision required to the existing policy of 20 years and that there is an active and sustainable market for the asset that supports a longer period being used.
If a subsidiary, associate or business is subsequently sold or closed, any goodwill arising on acquisition that was written off directly to reserves or that has not been amortised through the profit and loss account is taken into account in determining the profit or loss on sale or closure.
Intangible assets
Separately acquired trademarks and licences are shown at historical cost.
Trademarks, licences (including software) and customer-related intangible assets acquired in a business combination are recognised at fair value at the acquisition date.
Trademarks, licences and customer-related intangible assets have a finite useful life and are carried at cost less accumulated amortisation and any accumulated impairment losses.
Amortisation
Amortisation is provided on intangible assets so as to write off the cost, less any estimated residual value, over their useful life as follows:
Asset class |
Amortisation method and rate |
Trademarks, patents and licenses |
5 years straight line |
Sonnet Care Homes Holdco Limited
Notes to the Financial Statements for the Year Ended 31 March 2022
Investments
Investments in equity shares which are publicly traded or where the fair value can be measured reliably are initially measured at fair value, with changes in fair value recognised in profit or loss. Investments in equity shares which are not publicly traded and where fair value cannot be measured reliably are measured at cost less impairment.
Interest income on debt securities, where applicable, is recognised in income using the effective interest method. Dividends on equity securities are recognised in income when receivable.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.
Trade debtors
Trade debtors are amounts due from customers for services performed in the ordinary course of business.
Trade debtors are recognised initially at the transaction price. All trade debtors are repayable within one year and hence are included at the undiscounted cost of cash expected to be received. A provision for the impairment of trade debtors is established when there is objective evidence that the group will not be able to collect all amounts due according to the original terms of the debtors.
Stocks
Stock is valued at the lower of cost and net realisable value, after due regard for obsolete and slow moving stocks. Net realisable value is based on selling price less anticipated costs to completion and selling costs.
Trade creditors
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if the group does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.
Trade creditors are recognised initially at the transaction price and subsequently measured at amortised cost using the effective interest method.
Borrowings
Interest-bearing borrowings are initially recorded at fair value, net of transaction costs. Interest-bearing borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the Profit and Loss Account over the period of the relevant borrowing.
Interest expense is recognised on the basis of the effective interest method and is included in interest payable and similar charges.
Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.
Leases
Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease.
Share capital
Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.
Sonnet Care Homes Holdco Limited
Notes to the Financial Statements for the Year Ended 31 March 2022
Defined contribution pension obligation
A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the group has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.
Financial instruments
Classification
Recognition and measurement
Financial assets and liabilities are only offset in the statement of financial position when, and only when there exists a legally enforceable right to set off the recognised amounts and the company intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Impairment
A non financial asset is impaired where there is objective evidence that, as a result of one or more events that occurred after initial recognition, the estimated recoverable value of the asset has been reduced. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use.
The recoverable amount of goodwill is derived from measurement of the present value of the future cash flows of the cash-generating units ('CGUs') of which the goodwill is a part. Any impairment loss in respect of a CGU is allocated first to the goodwill attached to that CGU, and then to other assets within that CGU on a pro-rata basis.
Where indicators exist for a decrease in impairment loss, the prior impairment loss is tested to determine reversal. An impairment loss is reversed on an individual impaired asset to the extent that the revised recoverable value does not lead to a revised carrying amount higher than the carrying value had no impairment been recognised. Where a reversal of impairment occurs in respect of a CGU, the reversal is applied first to the assets (other than goodwill) of the CGU on a pro-rata basis and then to any goodwill allocated to that CGU.
For financial assets carried at amortised cost, the amount of an impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.
For financial assets carried at cost less impairment, the impairment loss is the difference between the asset’s carrying amount and the best estimate of the amount that would be received for the asset if it were to be sold at the reporting date.
Where indicators exist for a decrease in impairment loss, and the decrease can be related objectively to an event occurring after the impairment was recognised, the prior impairment loss is tested to determine reversal. An impairment loss is reversed on an individual impaired financial asset to the extent that the revised recoverable value does not lead to a revised carrying amount higher than the carrying value had no impairment been recognised.
Sonnet Care Homes Holdco Limited
Notes to the Financial Statements for the Year Ended 31 March 2022
Revenue |
The total turnover of the group for the period has been derived from its principal activity wholly undertaken in the United Kingdom.
Other income |
The analysis of the group's other income for the year is as follows:
2022 |
2021 |
|
COVID grant income |
557,645 |
471,807 |
Operating profit |
Arrived at after charging:
2022 |
2021 |
|
Depreciation expense |
|
|
Amortisation expense |
|
|
Exceptional items |
2022 |
2021 |
|
Exceptional expenses |
175,273 |
- |
Exceptional expenses in the current year consist of non-recurring COVID related staff costs of £138,696 and non-recurring professional fees of £36,577.
Auditors' remuneration |
2022 |
2021 |
|
Audit of these financial statements |
18,480 |
17,760 |
Other fees to auditors |
||
All other non-audit services |
|
|
Sonnet Care Homes Holdco Limited
Notes to the Financial Statements for the Year Ended 31 March 2022
Staff costs |
Group
The aggregate payroll costs (including directors' remuneration) were as follows:
2022 |
2021 |
|
Wages and salaries |
|
|
Social security costs |
|
|
Pension costs, defined contribution scheme |
|
|
|
|
The average number of persons employed by the group (including directors) during the year, analysed by category was as follows:
2022 |
2021 |
|
Administration and support |
|
|
Care staff |
|
|
|
|
Company
The average number of persons employed by the company (including directors) during the year, analysed by category was as follows:
2022 |
2021 |
|
Directors and support staff |
|
|
Directors' remuneration |
The directors' remuneration for the year was as follows:
2022 |
2021 |
|
Remuneration (including benefits in kind) |
|
|
Contributions paid to money purchase schemes |
|
|
259,325 |
257,062 |
£35,769 (2021 - £nil) of directors' remuneration has been included within exceptional costs as it relates to non-recurring COVID related costs.
In respect of the highest paid director:
2022 |
2021 |
|
Remuneration (including benefits in kind) |
|
|
Company contributions to money purchase pension schemes |
|
|
Other interest receivable and similar income |
2022 |
2021 |
|
Other interest receivable |
949 |
1,050 |
Sonnet Care Homes Holdco Limited
Notes to the Financial Statements for the Year Ended 31 March 2022
Interest payable and similar expenses |
2022 |
2021 |
|
Interest on bank borrowings |
|
|
Finance costs adjacent to interest |
|
|
|
|
Corporation tax |
Tax charged/(credited) in the profit and loss account
2022 |
2021 |
|
Deferred taxation |
||
Arising from origination and reversal of timing differences |
( |
|
Arising from changes in tax rates and laws |
71,459 |
- |
Arising from previously unrecognised tax loss, tax credit or temporary difference of prior periods |
- |
2,561 |
Total deferred taxation |
|
|
The tax on profit before tax for the year is higher than the standard rate of corporation tax in the UK (2021 - higher than the standard rate of corporation tax in the UK) of
The differences are reconciled below:
2022 |
2021 |
|
Loss before tax |
( |
( |
Corporation tax at standard rate |
( |
( |
Effect of interest (receipts)/expense not (taxable)/deductible in determining taxable profit (tax loss) |
|
|
Deferred tax expense (credit) relating to changes in tax rates or laws |
|
- |
Deferred tax expense (credit) from unrecognised temporary difference from a prior period |
|
- |
Tax increase (decrease) from effect of capital allowances and depreciation |
|
|
Total tax charge |
|
|
The group has total tax losses available to carry forward against future taxable profits of £1,746,105 (2021 - £1,476,309). A deferred tax asset of £333,459 (2021 - £202,168) has been recognised at 25% (2021 - 19%) on the element of the losses that are considered recoverable.
Sonnet Care Homes Holdco Limited
Notes to the Financial Statements for the Year Ended 31 March 2022
Deferred tax
Group
Deferred tax assets and liabilities
2022 |
Liability |
Difference between accumulated depreciation and amortisation and capital allowances |
|
Short term timing differences |
( |
Tax losses available |
( |
|
2021 |
Liability |
Difference between accumulated depreciation and amortisation and capital allowances |
|
Short term timing differences |
( |
Tax losses available |
( |
|
Company
Deferred tax assets and liabilities
2021 |
Asset |
Short term timing differences |
|
Sonnet Care Homes Holdco Limited
Notes to the Financial Statements for the Year Ended 31 March 2022
Intangible assets |
Group
Goodwill |
Trademarks, patents and licenses |
Total |
|
Cost |
|||
At 1 April 2021 and at 31 March 2022 |
|
|
|
Amortisation |
|||
At 1 April 2021 |
|
|
|
Amortisation charge |
|
- |
|
At 31 March 2022 |
|
|
|
Carrying amount |
|||
At 31 March 2022 |
|
|
|
At 31 March 2021 |
|
|
|
Company
Trademarks, patents and licenses |
|
Cost |
|
At 1 April 2021 and at 31 March 2022 |
|
Amortisation |
|
At 1 April 2021 and at 31 March 2022 |
|
Carrying amount |
|
At 31 March 2022 |
|
At 31 March 2021 |
|
Sonnet Care Homes Holdco Limited
Notes to the Financial Statements for the Year Ended 31 March 2022
Tangible fixed assets |
Group
Land and buildings |
Building improvements |
Furniture, fittings and equipment |
Motor vehicles |
Total |
|
Cost |
|||||
At 1 April 2021 |
|
|
|
|
|
Additions |
- |
|
|
- |
|
Disposals |
- |
- |
( |
- |
( |
At 31 March 2022 |
|
|
|
|
|
Depreciation |
|||||
At 1 April 2021 |
|
|
|
|
|
Charge for the year |
|
|
|
- |
|
Eliminated on disposal |
- |
- |
( |
- |
( |
At 31 March 2022 |
|
|
|
|
|
Carrying amount |
|||||
At 31 March 2022 |
|
|
|
- |
|
At 31 March 2021 |
|
|
|
- |
|
Freehold land of £733,535 (2021 - £733,535) is not subject to depreciation.
Sonnet Care Homes Holdco Limited
Notes to the Financial Statements for the Year Ended 31 March 2022
Company
Furniture, fittings and equipment |
|
Cost |
|
At 1 April 2021 |
- |
Transfers from subsidiary company |
|
At 31 March 2022 |
|
Depreciation |
|
At 1 April 2021 |
- |
Charge for the year |
|
Transfers from subsidiary company |
|
At 31 March 2022 |
|
Carrying amount |
|
At 31 March 2022 |
|
Sonnet Care Homes Holdco Limited
Notes to the Financial Statements for the Year Ended 31 March 2022
Investments |
Company
2022 |
2021 |
|
Investments in subsidiaries |
|
|
Subsidiaries |
£ |
Cost and net book value |
|
At 1 April 2021 and at 31 March 2022 |
|
Details of undertakings
Details of the investments in which the company holds 20% or more of the nominal value of any class of share capital are as follows:
Undertaking |
Country of incorporation |
Holding |
Proportion of voting rights and shares held |
|
2022 |
2021 |
Subsidiary undertakings |
||||
|
England and Wales |
Ordinary |
|
|
|
England and Wales |
Ordinary |
|
|
|
England and Wales |
Ordinary |
|
|
|
England and Wales |
Ordinary |
|
|
Subsidiary undertakings |
Sonnet Care Homes Midco Limited The principal activity of Sonnet Care Homes Midco Limited is |
Sonnet Care Homes Finance Limited The principal activity of Sonnet Care Homes Finance Limited is |
Sonnet Care Homes (Essex) Limited The principal activity of Sonnet Care Homes (Essex) Limited is |
Sonnet Care Homes Bocking Limited The principal activity of Sonnet Care Homes Bocking Limited is |
Stocks |
Group |
Company |
|||
2022 |
2021 |
2022 |
2021 |
|
Stocks |
22,086 |
29,007 |
- |
- |
Sonnet Care Homes Holdco Limited
Notes to the Financial Statements for the Year Ended 31 March 2022
Debtors |
Group |
Company |
||||
Note |
2022 |
2021 |
2022 |
2021 |
|
Trade debtors |
|
|
- |
- |
|
Other debtors |
|
|
- |
- |
|
Prepayments |
|
|
|
|
|
Deferred tax assets |
- |
- |
- |
|
|
Amounts owed by group undertakings |
- |
- |
9,099,938 |
15,836,600 |
|
|
|
|
|
||
Less non-current portion |
- |
- |
( |
( |
|
Total current trade and other debtors |
|
|
|
|
Details of non-current trade and other debtors
Company
£9,099,938 (2021 - £15,836,600) of amounts owed to group undertakings is classified as non current.
On 31 March 2022, the company had loans totalling £5,491,603 owed from Sonnet Care Homes Finance Limited. As part of a group financing restructure, the directors agreed that it was in the best interests of the company and its members to write off the loan. Therefore, it was agreed on 31 March 2022 to waive the full balance of £5,491,603 owed to the company.
Creditors |
Group |
Company |
||||
Note |
2022 |
2021 |
2022 |
2021 |
|
Due within one year |
|||||
Loans and borrowings |
|
|
- |
- |
|
Trade creditors |
|
|
- |
- |
|
Social security and other taxes |
|
|
- |
- |
|
Other creditors |
|
|
- |
- |
|
Accrued expenses |
|
|
|
|
|
Deferred income |
|
|
- |
- |
|
|
|
|
|
||
Due after one year |
|||||
Loans and borrowings |
|
|
- |
- |
|
Amounts owed to group undertakings |
- |
- |
- |
1,722,062 |
|
15,214,890 |
15,291,433 |
- |
1,722,062 |
Sonnet Care Homes Holdco Limited
Notes to the Financial Statements for the Year Ended 31 March 2022
Loans and borrowings |
Group |
Company |
|||
2022 |
2021 |
2022 |
2021 |
|
Current loans and borrowings |
||||
Bank borrowings |
|
|
- |
- |
Group |
Company |
|||
2022 |
2021 |
2022 |
2021 |
|
Non-current loans and borrowings |
||||
Bank borrowings |
|
|
- |
- |
Group
Bank borrowings
The bank loans are secured by a debenture over the assets and undertakings of each company in the group.
Total bank loans outstanding of £15,330,882 (2021 - £15,407,425) (after deducting £94,068 (2021 - £135,875) of costs associated with the raising of this finance which are being released to the profit and loss account over the term of the debt; i.e. total bank debt was £15,424,950 (2021 - £15,543,300) at 31 March 2022) are repayable in quarterly instalments, the amount of which have been agreed with the bank as a lump sum plus a fixed percentage of the capital amount outstanding. The final repayment date is on 20 June 2024. Interest is levied at a rate of 3% over SONIA per annum, subject to the group's compliance with banking covenants.
Obligations under leases and hire purchase contracts |
Group
Operating leases
The total of future minimum lease payments is as follows:
2022 |
2021 |
|
Not later than one year |
|
- |
Later than one year and not later than five years |
|
- |
|
- |
The amount of non-cancellable operating lease payments recognised as an expense during the year was £
Sonnet Care Homes Holdco Limited
Notes to the Financial Statements for the Year Ended 31 March 2022
Share capital |
Allotted, called up and fully paid shares
2022 |
2021 |
|||
No. |
£ |
No. |
£ |
|
|
|
4,200 |
|
4,200 |
|
|
1,350 |
|
1,350 |
|
|
85,000 |
|
85,000 |
|
|
48,000 |
|
48,000 |
|
|
|
|
Rights, preferences and restrictions
The A ordinary shares and B ordinary shares rank pari passu in relation to distribution on a return of capital (including winding up the company), redemption and dividends. The C ordinary shares and D ordinary shares have the right to participate in dividends, are entitled to the first £8,500,000 and £2,400,000 respectively upon distribution of capital (including on wind up) in proportion to the number of ordinary shares held by the holders, and carry no right of redemption.
|
Pension and other schemes |
Defined contribution pension scheme
The group operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the group to the scheme and amounted to
£
Analysis of net debt |
At 1 April 2021 |
Cash flow |
Other non-cash changes |
At 31 March 2022 |
|
£ |
£ |
£ |
£ |
|
Cash at bank and in hand |
1,422,677 |
(49,777) |
- |
1,372,900 |
Bank borrowings |
(15,407,425) |
118,351 |
(41,808) |
(15,330,882) |
Net debt |
(13,984,748) |
68,574 |
(41,808) |
(13,957,982) |
Other non-cash changes consist of amortisation of debt costs.
Related party transactions |
Group
During the year, the group accrued monitoring fees of £120,000 (2021 - £120,000) to August Equity LLP, a connected party of August Equity Partners III GP Limited.
Parent and ultimate parent undertaking |
The ultimate controlling party is