Company Registration No. 11149036 (England and Wales)
HCRG Support Services Limited
Annual report and financial statements
for the year ended 30 June 2021
HCRG Support Services Limited
Company information
Directors
Ian Munro
Jamie Webb
Company number
11149036
Registered office
33 Soho Square
London
W1D 3QU
Independent auditor
Saffery Champness LLP
Trinity
16 John Dalton Street
Manchester
M2 6HY
HCRG Support Services Limited
Contents
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 8
Statement of comprehensive income
9
Statement of financial position
10 - 11
Statement of changes in equity
12
Notes to the financial statements
13 - 33
HCRG Support Services Limited
Strategic report
For the year ended 30 June 2021
Page 1
The directors present the strategic report for the year ended 30 June 2021.
Fair review of the business
The Company is a subsidiary of Health Care Resourcing Group Limited (“HCRG” or “Group”) and its principal activity during the year was the provision of central support services to other group entities within the UK.
An operating profit of £689k (£558k deficit in the period to 30 June 2020) is reported, generating profit before tax of £474k (£901k loss in the period to 30 June 2020). The company had net current liabilities of £96k and net liabilities of £8k at 30 June 2021.
Principal risks and uncertainties
The Group has management structures and policies and procedures which are designed to enable the achievement of the business objectives while controlling risks associated in the environment in which it operates. The group has a risk management process in place which is designed to identify, manage and mitigate business risk. The risk management process covers financial, operational, commercial and clinical areas of risk.
In terms of financial risk management, the Group considers that it has limited exposure to the various aspects of financial risk. The majority of the Group's revenue is invoiced in sterling whilst all of its operations and costs arise within the UK. The Group does not enter into currency hedging contracts. Furthermore, the Group ensures its liquidity is maintained by entering into long term or short-term financial instruments as necessary to support operational and other funding requirements. The risk that there is a reduction in demand for our services is mitigated by providing services in several different marketplaces, both from a sector and geographical perspective.
Commercial risks are managed closely by the Group Board, and fundamentally include loss of contracts, reputation, changes to legislation, and political risks, for instance as a result of Brexit. The strengthening of the Group Board over the last few years has brought substantial experience and knowledge into the Group, which will enable these risks to be managed appropriately and mitigated wherever possible.
Covid-19
The majority of this year was operated under the restrictions of the local and national lockdowns imposed by the UK Government on businesses and households.
Whilst some of the Group’s activities were curtailed significantly during the period of total lockdown, in particular the education division and permanent healthcare recruitment, other areas performed more strongly than would ordinarily be anticipated for the time of year, particularly those business units with a greater degree of exposure to the healthcare sector.
Consequently, the adverse impacts in some areas were broadly offset by favourable developments in others and, owing to the diverse range of end clients which the Group continues to serve, the Directors consider that the ongoing pandemic poses less of a risk to the Group’s ability to continue in operation than it does to many businesses of comparable scope and scale.
At the time of signing this report, education establishments are now fully open and the vaccination process has had its desired effect so the businesses previously affected by the pandemic are expected to make a full recovery and achieve the trading levels reached prior to the onset of the virus.
HCRG Support Services Limited
Strategic report (continued)
For the year ended 30 June 2021
Page 2
Key performance indicators
In addition to the KPIs noted above, all of which are managed by the Group at Divisional and Branch level, the Group maintains and reports a substantial number of other financial and non-financial indicators routinely each month.
Governance
During the past year, there has been a continued focus on corporate governance, with the board spending a large proportion of its time examining and strengthening our processes throughout the wider Group. Ensuring that a solid governance framework is in place is key to maintaining trust and transparency and an important building block for future growth.
Outlook
The directors are pleased with the results of the Group for the year and are confident of making further performance improvements and achieving additional growth through contract wins in the forthcoming year |
|
Jamie Webb
Director
6 September 2022
HCRG Support Services Limited
Directors' report
For the year ended 30 June 2021
Page 3
The directors present their annual report and financial statements for the year ended 30 June 2021.
Principal activities
The principal activity of the company is that of a support company providing support services to fellow subsidiary companies.
Results and dividends
The results for the year are set out on page 9.
No ordinary dividends were paid. 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:
Ian Munro
Jamie Webb
Auditor
Saffery Champness LLP have expressed their willingness to continue in office.
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
Jamie Webb
Director
6 September 2022
HCRG Support Services Limited
Directors' responsibilities statement
For the year ended 30 June 2021
Page 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.
HCRG Support Services Limited
Independent auditor's report
To the member of HCRG Support Services Limited
Page 5
Opinion
We have audited the financial statements of HCRG Support Services Limited (the 'company') for the year ended 30 June 2021 which comprise the statement of comprehensive income, the statement of financial position, the statement of changes in equity 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 Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 30 June 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
In auditing the financial statements, we have concluded that the directors' 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 financial statements are 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.
HCRG Support Services Limited
Independent auditor's report (continued)
To the member of HCRG Support Services Limited
Page 6
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.
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 the audit:
the information given in the strategic report and the directors' report 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.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which 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' responsibilities statement, 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.
HCRG Support Services Limited
Independent auditor's report (continued)
To the member of HCRG Support Services Limited
Page 7
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 specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud are detailed below.
Identifying and assessing risks related to irregularities:
We assessed the susceptibility of the company’s financial statements to material misstatement and how fraud might occur, including through discussions with the directors, discussions within our audit team planning meeting, updating our record of internal controls and ensuring these controls operated as intended. We evaluated possible incentives and opportunities for fraudulent manipulation of the financial statements. We identified laws and regulations that are of significance in the context of the company by discussions with directors and by updating our understanding of the sector in which the company operates.
Laws and regulations of direct significance in the context of the company include The Companies Act 2006 and UK Tax legislation.
Audit response to risks identified
We considered the extent of compliance with these laws and regulations as part of our audit procedures on the related financial statement items including a review of financial statement disclosures. We reviewed the company's records of breaches of laws and regulations, minutes of meetings and correspondence with relevant authorities to identify potential material misstatements arising. We discussed the company's policies and procedures for compliance with laws and regulations with members of management responsible for compliance.
During the planning meeting with the audit team, the engagement partner drew attention to the key areas which might involve non-compliance with laws and regulations or fraud. We enquired of management whether they were aware of any instances of non-compliance with laws and regulations or knowledge of any actual, suspected or alleged fraud. We addressed the risk of fraud through management override of controls by testing the appropriateness of journal entries and identifying any significant transactions that were unusual or outside the normal course of business. We assessed whether judgements made in making accounting estimates gave rise to a possible indication of management bias. At the completion stage of the audit, the engagement partner’s review included ensuring that the team had approached their work with appropriate professional scepticism and thus the capacity to identify non-compliance with laws and regulations and fraud.
HCRG Support Services Limited
Independent auditor's report (continued)
To the member of HCRG Support Services Limited
Page 8
There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
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 member 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 member those matters we are required to state to the member 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 member, for our audit work, for this report, or for the opinions we have formed.
Simon Kite BSc FCA (Senior Statutory Auditor)
For and on behalf of Saffery Champness LLP
6 September 2022
Chartered Accountants
Statutory Auditors
Trinity
16 John Dalton Street
Manchester
M2 6HY
HCRG Support Services Limited
Statement of comprehensive income
For the year ended 30 June 2021
Page 9
Year
Period
ended
ended
30 June
30 June
2021
2020
Notes
£
£
Revenue
3
5,014
164,963
Cost of sales
(3,751)
(9,540)
Gross profit
1,263
155,423
Administrative expenses
(9,654,198)
(11,624,356)
Other operating income
3
9,565,086
11,288,475
Gain on write off of intercompany balance
4
743,294
Exceptional items
4
33,582
(377,708)
Operating profit/(loss)
5
689,027
(558,166)
Finance costs
10
(215,413)
(343,208)
Profit/(loss) before taxation
473,614
(901,374)
Tax on profit/(loss)
9
212,000
114,000
Profit/(loss) for the financial year
685,614
(787,374)
The income statement has been prepared on the basis that all operations are continuing operations.
HCRG Support Services Limited
Statement of financial position
As at 30 June 2021
Page 10
2021
2020
Notes
£
£
£
£
Non-current assets
Intangible assets
11
454,940
581,825
Property, plant and equipment
12
1,310,865
1,729,920
Investments
13
833,939
2,599,744
2,311,745
Current assets
Inventories
15
1,121
1,121
Trade and other receivables
16
67,381,944
56,262,569
Cash and cash equivalents
1,149
311
67,384,214
56,264,001
Current liabilities
17
(67,480,205)
(56,954,800)
Net current liabilities
(95,991)
(690,799)
Total assets less current liabilities
2,503,753
1,620,946
Non-current liabilities
18
(879,745)
(889,794)
Provisions for liabilities
Provisions
21
77,278
77,278
(77,278)
(77,278)
Deferred income
23
(1,555,173)
(1,347,931)
Net liabilities
(8,443)
(694,057)
Equity
Called up share capital
25
1
1
Retained earnings
26
(8,444)
(694,058)
Total equity
(8,443)
(694,057)
HCRG Support Services Limited
Statement of financial position (continued)
As at 30 June 2021
Page 11
The financial statements were approved by the board of directors and authorised for issue on 6 September 2022 and are signed on its behalf by:
Jamie Webb
Director
Company Registration No. 11149036
HCRG Support Services Limited
Statement of changes in equity
For the year ended 30 June 2021
Page 12
Share capital
Retained earnings
Total
£
£
£
Balance at 1 April 2019
1
93,316
93,317
Period ended 30 June 2020:
Loss and total comprehensive income for the period
-
(787,374)
(787,374)
Balance at 30 June 2020
1
(694,058)
(694,057)
Year ended 30 June 2021:
Profit and total comprehensive income for the year
-
685,614
685,614
Balance at 30 June 2021
1
(8,444)
(8,443)
HCRG Support Services Limited
Notes to the financial statements
For the year ended 30 June 2021
Page 13
1
Accounting policies
Company information
HCRG Support Services Limited is a private company limited by shares incorporated in England and Wales. The registered office is 33 Soho Square, London, W1D 3QU.
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 are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
- Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
- Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: Interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, and loan defaults or breaches;
- Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Health Care Resourcing Group Limited. These consolidated financial statements are available from its registered office, 33 Soho Square, London W1D 3QU.
1.2
Going concern
Atruet the time of approving the financial statements, the directors consider the going concern basis to be appropriate, in spite of the loss in the year, the net current liabilities and the net liabilities, because of the support of its fellow group companies.
The company is a subsidiary of Health Care Resourcing Group Limited ('HCRG') and relies upon group facilities for the finances to meet its liabilities as they fall due. Based on the forecasts for the trade of the company over the next 12 months and beyond this time frame the Board believe that a going concern basis is correct. Therefore the board of HCRG have provided a letter of support for this subsidiary and ensures the trading support for the 12 months from the date that these accounts are signed.
HCRG Support Services Limited
Notes to the financial statements (continued)
For the year ended 30 June 2021
1
Accounting policies (continued)
Page 14
1.3
Reporting period
The current accounting period relates to the year ended 30 June 2021. The previous accounting period was extended and therefore the comparative figures relate to the 15 month period ended 30 June 2020.
1.4
Revenue
Revenue is recognised at the fair value of the consideration received or receivable for services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
1.5
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Amortisation 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:
Software
25% straight line
1.6
Property, plant and equipment
Property, plant and equipment are initially measured at cost and subsequently measured at cost or valuation, 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:
Leasehold improvements
20% straight line
Fixtures and fittings
25% straight line
Computers
25% straight line
Motor vehicles
33% straight line
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.
1.7
Non-current investments
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
HCRG Support Services Limited
Notes to the financial statements (continued)
For the year ended 30 June 2021
1
Accounting policies (continued)
Page 15
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The company considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Entities in which the company has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
1.8
Impairment of non-current assets
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.9
Inventories
Inventories are stated at the lower of cost and estimated selling price less costs to sell, which is equivalent to net realisable value.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of inventories over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
HCRG Support Services Limited
Notes to the financial statements (continued)
For the year ended 30 June 2021
1
Accounting policies (continued)
Page 16
1.10
Cash and cash equivalents
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.
1.11
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 statement of financial position 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 trade and other receivables, 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.
HCRG Support Services Limited
Notes to the financial statements (continued)
For the year ended 30 June 2021
1
Accounting policies (continued)
Page 17
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 trade and other payables, 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 payments 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 payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts 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 payables 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 subsequently 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 through 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.
HCRG Support Services Limited
Notes to the financial statements (continued)
For the year ended 30 June 2021
1
Accounting policies (continued)
Page 18
1.12
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
1.13
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 income statement 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.
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. Where items recognised in other comprehensive income or equity are chargeable to or deductible for tax purposes, the resulting current or deferred tax expense or income is presented in the same component of comprehensive income or equity as the transaction or other event that resulted in the tax expense or income. 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.
HCRG Support Services Limited
Notes to the financial statements (continued)
For the year ended 30 June 2021
1
Accounting policies (continued)
Page 19
1.14
Provisions
Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
1.15
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.16
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.17
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the statement of financial position as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
HCRG Support Services Limited
Notes to the financial statements (continued)
For the year ended 30 June 2021
Page 20
2
Critical accounting judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Deferred tax asset
The company has tax losses of £1,443,000 (2020 - £1,158,000), but only recognises a deferred tax asset of these losses to the extent that it is probable that future taxable profit will be available against which the unused tax losses can be utilised. The directors consider that an appropriate period for which future taxable profits can be estimated with any reliability is seven years.
Key sources of estimation uncertainty
Bad debt provision
Management review the aged debtors listing on a weekly basis for any slow moving debts. If it is deemed probable they will not be able to recover the debt a provision is made in the financial statements.
Disputes
On occasion, the group is party to litigation and administrative proceedings related to its operations. Management consults with legal experts on issues related to legal disputes and with other experts internal or external to the group on issues related to the ordinary course of business.
3
Revenue
2021
2020
£
£
Revenue analysed by class of business
Labour Recruitment
5,014
164,963
HCRG Support Services Limited
Notes to the financial statements (continued)
For the year ended 30 June 2021
3
Revenue (continued)
Page 21
2021
2020
£
£
Revenue analysed by geographical market
United Kingdom
5,014
164,963
2021
2020
£
£
Other revenue
Management fees receivable
9,565,086
11,288,475
4
Exceptional items
2021
2020
£
£
(Income)/Expenditure
Gain on write off of intercompany balance
(743,294)
-
Restructuring costs
(33,582)
377,708
(776,876)
377,708
In the current year, the write off of an intercompany balance resulted in a gain of £743,494.
A gain was incurred in relation to the sale of a company of £200,000 which is included restructuring costs.
Other restructuring costs of £164,418 (2020: £377,708) were also incurred during the year.
5
Operating profit/(loss)
2021
2020
Operating profit/(loss) for the year is stated after charging/(crediting):
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
99,996
124,998
Depreciation of owned property, plant and equipment
119,340
38,477
Depreciation of property, plant and equipment held under finance leases
500,299
408,709
Profit on disposal of property, plant and equipment
(34,671)
Amortisation of intangible assets
264,286
118,679
Operating lease charges
439,837
481,016
HCRG Support Services Limited
Notes to the financial statements (continued)
For the year ended 30 June 2021
Page 22
6
Auditor's remuneration
2021
2020
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
99,996
124,998
This company incurs the audit fee payable on behalf of all members of the group.
7
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2021
2020
Number
Number
Administrative and management
65
83
Their aggregate remuneration comprised:
2021
2020
£
£
Wages and salaries
3,094,054
4,209,616
Social security costs
296,757
453,231
Pension costs
79,960
116,449
3,470,771
4,779,296
8
Directors' remuneration
2021
2020
£
£
Remuneration for qualifying services
339,880
568,341
Company pension contributions to defined contribution schemes
11,888
23,626
351,768
591,967
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2020 - 2).
HCRG Support Services Limited
Notes to the financial statements (continued)
For the year ended 30 June 2021
8
Directors' remuneration (continued)
Page 23
Remuneration disclosed above include the following amounts paid to the highest paid director:
2021
2020
£
£
Remuneration for qualifying services
157,500
300,738
Company pension contributions to defined contribution schemes
8,891
8,800
9
Taxation
2021
2020
£
£
Deferred tax
Origination and reversal of timing differences
(212,000)
(114,000)
The actual credit for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:
2021
2020
£
£
Profit/(loss) before taxation
473,614
(901,374)
Expected tax charge/(credit) based on the standard rate of corporation tax in the UK of 19.00% (2020: 19.00%)
89,987
(171,261)
Tax effect of expenses that are not deductible in determining taxable profit
3,467
38,950
Tax effect of income not taxable in determining taxable profit
(182,526)
Unutilised tax losses carried forward
54,192
98,623
Group relief
-
156,409
Permanent capital allowances in excess of depreciation
(118,600)
Depreciation on assets not qualifying for tax allowances
167,946
(170,465)
Other non-reversing timing differences
(14,466)
47,744
Deferred tax
(212,000)
(114,000)
Taxation credit for the year
(212,000)
(114,000)
HCRG Support Services Limited
Notes to the financial statements (continued)
For the year ended 30 June 2021
Page 24
10
Finance costs
2021
2020
£
£
Interest on bank overdrafts and loans
51,077
23,103
Interest on invoice finance arrangements
94,316
264,924
Interest on finance leases and hire purchase contracts
70,020
55,181
215,413
343,208
11
Intangible fixed assets
Software
£
Cost
At 1 July 2020
727,456
Additions - internally developed
137,401
At 30 June 2021
864,857
Amortisation and impairment
At 1 July 2020
145,631
Amortisation charged for the year
264,286
At 30 June 2021
409,917
Carrying amount
At 30 June 2021
454,940
At 30 June 2020
581,825
HCRG Support Services Limited
Notes to the financial statements (continued)
For the year ended 30 June 2021
Page 25
12
Property, plant and equipment
Leasehold improvements
Fixtures and fittings
Computers
Motor vehicles
Total
£
£
£
£
£
At 1 July 2020
102,966
11,191
286,467
1,776,632
2,177,256
Additions
6,710
234,804
5,417
246,931
Disposals
(79,674)
(79,674)
At 30 June 2021
102,966
17,901
521,271
1,702,375
2,344,513
At 1 July 2020
15,943
2,598
20,086
408,709
447,336
Depreciation charged in the year
20,520
3,788
95,032
500,299
619,639
Eliminated in respect of disposals
(33,327)
(33,327)
At 30 June 2021
36,463
6,386
115,118
875,681
1,033,648
Carrying amount
At 30 June 2021
66,503
11,515
406,153
826,694
1,310,865
At 30 June 2020
87,023
8,593
266,381
1,367,923
1,729,920
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2021
2020
£
£
Motor vehicles
826,694
1,367,923
13
Fixed asset investments
2021
2020
Notes
£
£
Investments in subsidiaries
14
833,939
HCRG Support Services Limited
Notes to the financial statements (continued)
For the year ended 30 June 2021
13
Fixed asset investments (continued)
Page 26
Movements in non-current investments
Shares in subsidiaries
£
Cost or valuation
At 1 July 2020
-
Additions
1,333,939
Disposals
(500,000)
At 30 June 2021
833,939
Carrying amount
At 30 June 2021
833,939
At 30 June 2020
-
During the year, the company purchased the entire issued share capital of Sugarman Group Limited, and then disposed of the share capital of Sugarman Australia Limited within the year.
HCRG Support Services Limited
Notes to the financial statements (continued)
For the year ended 30 June 2021
Page 27
14
Subsidiaries
Details of the company's subsidiaries at 30 June 2021 are as follows:
Name of undertaking
Registered office
Nature of business
Class of shares held
% Held
Direct
Indirect
Sugarman Group Limited
See below
Labour recruitment
Ordinary
100.00
-
The registered office address of Sugarman Group Limited is 33 Soho Square, London W1D 3QU.
15
Inventories
2021
2020
£
£
Consumables
1,121
1,121
16
Trade and other receivables
2021
2020
Amounts falling due within one year:
£
£
Trade receivables
301,797
60,212
Amounts owed by group undertakings
65,259,288
54,403,245
Other receivables
874,495
970,354
Prepayments and accrued income
620,364
714,758
67,055,944
56,148,569
Deferred tax asset (note 22)
326,000
114,000
67,381,944
56,262,569
HCRG Support Services Limited
Notes to the financial statements (continued)
For the year ended 30 June 2021
Page 28
17
Current liabilities
2021
2020
Notes
£
£
Bank loans
19
2,540,037
1,484,254
Obligations under finance leases
20
398,153
608,288
Trade payables
1,392,499
456,595
Amounts owed to group undertakings
60,656,014
52,124,377
Taxation and social security
928,926
1,829,564
Other payables
1,564,576
451,722
67,480,205
56,954,800
Obligations under finance leases are secured on the asset to which they relate.
There is a cross company guarantee in place for all Health Care Resourcing Group Limited (HCRG) subsidiary trading companies in relation to the invoice discount facility held by HCRG. The total group liability at 30 June 2021 in respect of this facility was £12,395,044 (2020: £6,937,411 ).
18
Non-current liabilities
2021
2020
Notes
£
£
Obligations under finance leases
20
345,624
889,794
Taxation and social security
534,121
879,745
889,794
19
Borrowings
2021
2020
£
£
Bank loans
2,540,037
1,484,254
Payable within one year
2,540,037
1,484,254
The bank loans, which include invoice discounting facilities, are secured by debentures and fixed and floating charges over the all the assets of the company including properties owned by the company.
HCRG Support Services Limited
Notes to the financial statements (continued)
For the year ended 30 June 2021
Page 29
20
Finance lease obligations
2021
2020
Future minimum lease payments due under finance leases:
£
£
Within one year
398,153
693,888
In two to five years
345,624
804,194
743,777
1,498,082
Finance lease payments represent rentals payable by the company for motor vehicles. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
21
Provisions for liabilities
2021
2020
£
£
Property dilapidations
77,278
77,278
Movements on provisions:
Property dilapidations
£
At 1 July 2020 and 30 June 2021
77,278
22
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Assets
Assets
2021
2020
Balances:
£
£
Accelerated capital allowances
-
114,000
Tax losses
326,000
-
326,000
114,000
HCRG Support Services Limited
Notes to the financial statements (continued)
For the year ended 30 June 2021
22
Deferred taxation (continued)
Page 30
2021
Movements in the year:
£
Asset at 1 July 2020
(114,000)
Credit to profit or loss
(212,000)
Asset at 30 June 2021
(326,000)
An amount of £38,000 (2020: £nil) of the above deferred tax asset set out above is expected to reverse within 12 months and relates to losses available to set off against future profits.
Deferred tax is not recognised in respect of tax losses of £43,000 (2020: £605,000) as it is not probable that they will be recovered against the reversal of deferred tax liabilities or future taxable profits.
23
Deferred income
2021
2020
£
£
Accruals and deferred income
1,555,173
1,347,931
24
Retirement benefit schemes
2021
2020
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
79,960
116,449
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.
25
Share capital
2021
2020
2021
2020
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary share of £1 each
1
1
1
1
HCRG Support Services Limited
Notes to the financial statements (continued)
For the year ended 30 June 2021
Page 31
26
Retained earnings
Retained earnings represents accumulated profits.
27
Acquisitions
On 20 August 2020 the company acquired the business of Sugarman Group Limited from a party connected by common shareholders.
Fair Value
£
Property, plant and equipment
111,963
Investments
500,000
Trade and other receivables
1,007,963
Cash and cash equivalents
85,897
Trade and other payables
(2,681,461)
Tax liabilities
(73,094)
Total identifiable net assets
(1,048,732)
Goodwill
2,210,232
Total consideration
1,161,500
Satisfied by:
£
Cash
1,161,500
28
Business disposals
On 29 September 2020 the company disposed of its indirect 100% holding in Sugarman Group International Pty Limited. There are no profits included in these financial statements arising from the company's interests in Sugarman Group International Pty Limited up to the date of its disposal.
The gain on disposal of £200,000 is recognised in exceptional items (note 4).
HCRG Support Services Limited
Notes to the financial statements (continued)
For the year ended 30 June 2021
Page 32
29
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2021
2020
£
£
Within one year
147,520
156,151
Between two and five years
316,481
461,930
464,001
618,081
30
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Sales
Sales
Purchases
Purchases
2021
2020
2021
2020
£
£
£
£
Other related parties
47,687
295,728
-
The following amounts were outstanding at the reporting end date:
2021
2020
Amounts due to related parties
£
£
Other related parties
186,842
-
The following amounts were outstanding at the reporting end date:
2021
2020
Amounts due from related parties
£
£
Other related parties
251,905
-
HCRG Support Services Limited
Notes to the financial statements (continued)
For the year ended 30 June 2021
Page 33
31
Ultimate controlling party
The immediate and ultimate parent undertaking is Health Care Resourcing Group Limited, a company incorporated and registered in England & Wales. This is the smallest and largest group in which this company is consolidated. Copies of the Health Care Resourcing Group Limited financial statements are available from 33 Soho Square, London, W1D 3QU.
There is not considered to be an ultimate controlling party.
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