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Thera Trust

Financial Performance

In 2018 Thera Trust issued £4.35m worth of bonds, which will help them to provide more homes for people with a learning disability and complex needs.

Income

There are now 29 companies in the Thera Group. Care and support income is derived from local authority contracts for the provision of support and rental income from properties made available for people with a learning disability. Other income includes donations, grants and project management income.

Costs

The majority of costs relate to staff providing care support and services direct to people with a learning disability. Other costs include lease costs for the head office building, motor vehicles provided for employees and other administrative and running costs.

Financial Forecasts (Summary Profit and Loss (£'000's))

Note: forward looking statements are merely unaudited forecasts and projections based on a number of assumptions and should not be relied upon as indicators of future performance. There is no guarantee these forecasts or projections will be achieved.

Year ended 31 March 2017 (000s) 2018 (000s) 2019 (000s) 2020 (000s) 2021 (000s) 2022 (000s) 2023 (000s)
Income and expenditure Audited Audited Projected Projected Projected Projected Projected
Income 64,592 67,205 66,710 67,648 68,723 69,386 69,523
Costs 61,584 65,972 64,913 65,738 66,683 67,267 67,388
Net surplus before depreciation and interest 2,618 1,526 1,798 1,910 2,039 2,119 2,135
Depreciation 532 408 478 239 324 400 460
Interest on existing loans and bonds 235 216 157 144 25 17 7
2018 bond interest - - 229 275 275 275 275
Net surplus for the year 1,851 902 934 1,253 1,416 1,427 1,393
Interest cover 5.4 7.4 4.7 4.6 6.8 7.3 7.6

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A summary of the projected balance sheet

Note: forward looking statements are merely unaudited forecasts and projections based on a number of assumptions and should not be relied upon as indicators of future performance. There is no guarantee these forecasts or projections will be achieved.

Year ended 31 March 2017 2018 2019 2020 2021 2022 2023 2024
Balance sheet Audited Audited Projected Projected Projected Projected Projected Projected
Fixed assets 10,418 9,999 10,051 11,376 12,616 13,332 13,172 12,952
Cash 1,269 4,918 7,022 5,010 5,261 5,895 7,319 3,862
Other current assets 9,907 9,517 8,353 8,353 8,353 8,353 8,353 8,353
Current liabilities (7,541) (7,510) (8,929) (7,079) (7,244) (7,433) (7,320) (7,327)
Net current assets 3,635 6,924 6,446 6,284 6,369 6,815 8,352 4,888
Existing loans and bonds (4,993) (6,336) (828) (563) (298) (33) (18) -
New Bond - - (5,000) (5,000) (5,000) (5,000) (5,000) -
Net assets 9,061 10,587 10,668 12,096 13,687 15,113 16,506 17,840

The projected balance sheets shown below assume that the Bonds are repaid in full as planned on 31 December 2020 through retained cash reserves, although the Trustees reserve the right to consider other forms of repayment, such as through raising bank loans against the freehold property portfolio.

Fixed assets are primarily represented by freehold property - the Charity currently has a portfolio of houses and investment properties. Some of the properties are valued at cost and depreciated at a rate of between 2-4% per annum, however some are classified as investment properties and held at their open market value and are not depreciated. The directors estimate that the current open market value of the freehold property portfolio is in excess of the net book value.

Financial covenants

The Bond Instruments contain the following financial covenants:

Interest cover covenant

An Interest cover covenant which stipulates that Thera’s Earnings Before Interest and Tax must be at least 2.5 times total interest costs for the 2015 bond and at least 3 times total interest costs for the 2018 bond..

Asset cover covenant

An Asset cover covenant for both the 2015 and 2018 bonds which stipulates that the ratio of Thera’s total net assets to its total net debt must be at least 130%. For these purposes, the ratio is calculated as total net assets (fixed assets, current assets less current liabilities) to total net debt (bank loans, overdraft, bonds and other loans less cash). Both covenants are measured annually based on Thera’s consolidated audited accounts. In the event that either covenants are breached, the interest rate of the Bonds will increase from 5.5% to 8.5% with effect from the audited year end at which the breach occurred until the next audited year end where both covenants are no longer in breach. The trustees of the Charity will endeavour to ensure that no breach of the financial covenants occurs.

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