The directors present the strategic report for the year ended 31 December 2022.
The statement of financial position shows the company's financial position at the period end. The company's turnover for the period was £51,356,715 (31 December 2021: £45,286,646), The net assets as at 31 December 2022 were £19,153,946 (31 December 2021: £19,536,750).
Included within the profit and loss is an exceptional charge of £1,596,419 relating to impairment of software. The group continually strives to improves its software and processes to adapt to changing market conditions, costs associated with development have been capitalised under the Intangible asset Software. The software has been developed over a number of years, however due to changing market conditions during 2022, it is difficult to value or give a useful life to the software. Therefore, the Directors have impaired the carrying value of the asset to £Nil. This has resulted in the exceptional item .
The COVID-19 pandemic started to impact the company in early 2020. National lockdowns in 2020 and 2021 created issues in supply chains and have extended case life cycles due to the availability of medical experts, medical records and court dates.
The introduction of the Official Injury Claim Portal in May 2021, has resulted in the total number of cases in the market reducing, however this has not had a significant negative impact on the performance of the company. The company has been impacted by the change in collection profiles, however the Directors believe that any change in collection profile in the short term will reverse in the long term, as the services provided support access to justice for individual claimants.
On the 8 March 2021 the group acquired Mobile Doctors Limited, therefore these Financial Statements represent the first full year of trade including Mobile Doctors Limited.
All of the above mean the results are not easily comparable to preceding years.
Given some of the challenges that have been faced over the last three years, the directors are satisfied with the performance of the company for the year ended 31 December 2022 and with its balance sheet position at this date.
Key performance indicators are disclosed below.
Legislative risk
The industry in which the group operates has been affected by uncertainty caused by the Chancellors announcement in the 2015 Autumn Statement that they will abolish general damages for 'minor' soft tissue claims which was proposed to include whiplash injuries. The reforms have been implemented in May 2021 and present both a risk and an opportunity to future volumes.
The Directors continue to review and consider the group's options and strategies to mitigate any potential negative impact and seek growth in other areas unaffected by the reforms.
Credit and cashflow risk
The group gives long credit terms to many of its customers. This is abrogated by reconciling regularly and issuing any credit notes promptly. The company monitors its short and middle term cash requirements and makes sure it has adequate funds to pay liabilities as they fall due. To offset the problems caused by the delays in cases within the Official Injury Claims Portal the group is actively looking to improve the ratio of short to long term credit.
Competitive risk
The industry in which the group operates is subject to strong competition from other providers. The group remains focused in providing the industry best service at a competitive price. Customer contracts generally extend past three years; both relationships and commercials are regularly reviewed to ensure contracts are the best value in the market.
The industry in which the group operates is expected to change following the introduction of the Official Injury Claims Portal. There has been a reduction in the total number of cases following implementation of the portal, although this has not had a significant negative impact on the performance of the group. There is currently uncertainty on the effect the portal will have on collection profiles, and this has an impact on group’s cash flows. The Directors remain of the opinion that any change in collection profile in the short term will reverse in the long term as the services provided support access to justice for individual claimants.
The group intends to consolidate its position in core markets to successfully manage any uncertainty caused by the reforms discussed, whilst exploring growth opportunities in adjacent markets.
Key performance indicators used by the group were as follows:
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| 31.12.2022 |
| 31.12.2021 |
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| as restated |
Turnover | £'000 | 51,357 |
| 45,287 |
Gross margin | % | 22.1 |
| 23.4 |
Profit After Tax (PAT) | £'000 | (383) |
| 1,187 |
PAT / Turnover | % | (0.7) |
| 2.6 |
Net Assets | £'000 | 19,154 |
| 19,537 |
Average employees | No's | 341 |
| 329 |
Receivable Collection | Days | 342 |
| 329 |
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The directors of Kuro Health Limited are required to act in a way that they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole, and in so doing have regard, among other matters to:
The likely consequences of any decision in the long term;
The interests of the Company’s employees;
The need to foster the Company’s business relationships with suppliers, customers and others;
The impact of the Company’s operations on the community and the environment;
The desirability of the Company maintaining a reputation for high standards of business conduct; and
The need to act fairly as between members of the Company.
To achieve their duties under Section 172 the directors pride themselves in ensuring that the Company is properly financed so that going concern should never be an issue. There is a fair dividend policy that ensures that the shareholders are adequately rewarded and the company retains sufficient profits to maintain a healthy balance sheet.
The directors/shareholders are involved in the day to day running of the business and have a team of managers who report regularly and meet on a monthly basis.
Good supplier relationships are fostered by the directors and managers and the Company ensures that suppliers are paid within their terms.
The Company strives to improve its standards which benefit its customers. The Company continually reviews financial information.
The directors produce three year plans to ensure the succession of the business, taking into account the local environment and communities in which their sites operate.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2022.
The results for the year are set out on page 12.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The group’s principal financial instruments comprise cash and cash equivalents, trade creditors and trade debtors. The main purpose of these instruments is to raise funds for the group’s operations. Due to the nature of these funds there is no exposure to price risk. There is a bank funding line from Barclays Bank PLC, this provides working capital and is secured against the assets of the group. A CBILS loan was taken out at the start of the pandemic.
Trade debtors are managed in respect of credit and cash flow risk by policies concerning the credit offered to customers and the regular monitoring of amounts outstanding and overdue. Trade creditors risk is managed by ensuring sufficient funds are available to meet amounts due.
The group's policy is to consult and discuss with employees, through, staff councils, at meetings and online platforms, matters likely to affect employees' interests. Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance.
An important part of the company's long term success is considered to be the need to regularly engage with all customers, potential customers and suppliers trying to match the needs of the customers and improving the service offered to them. This is achieved by seeking innovative ideas to improve service and to heed the request from suppliers for alternative methods to fulfil their contracts. During the pandemic the video assessment protocols have benefited all in the industry in the short term.
The group's mid term strategy is to consolidate it's position post pandemic as a leading supplier of medical reports and related services by continually improving the solutions and services offered to customers.
The auditor, Price Bailey LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Greenhouse Gas Emissions Data
In line with the Greenhouse Gas Protocol (GHG) Corporate Accounting and Reporting Standard, Kuro Health Limited continues to be engaged in a process aimed at reducing our energy and greenhouse gases, which is a response to increased customers’ requirements, as well as our belief in reducing emissions. This continues to be achieved by:
controlling our consumption of natural and energy resources where possible,
fighting against global warming and pollution by managing our energy and emissions better,
sharing sustainable development principles within the organisation, with a view to expanding with stakeholders and associated parties.
We have a longstanding commitment to tackling climate change. We have also committed to source 100% of our electricity from renewable sources by 2030.
Our emissions have reduced by 24.8%, which has been due to an increased awareness of our emissions and introducing better practices to manage it, as well as reducing our office space.
We have reported all of emission sources under the Companies Act 2006 (Strategic Report and Director’s Reports) Regulations 2013 as required. Kuro can report figures below, calculated based on the GHG Protocol Corporate Standard using emissions factors from UK government-produced conversion 2022 factor guidance. Reporting corresponds with our financial year and reflect emissions from the leased, owned, and controlled assets for which Kuro is responsible.
Kuro maintains scope one (1) and two (2) emissions, which are generated from our offices and processes. We also maintain scope three (3) emissions from transport covered under “grey fleet” (personal cars used for business purposes) and electricity transmission and distribution.
We have calculated and reported our emissions in line with the GHG Protocol Corporate Accounting and Reporting Standard (revised edition).
The reporting period is the fiscal year from 1 January 2022 to 31 December 2022, the same as that covered by the Annual Report and Financial Statements. The boundaries of the GHG inventory are defined using the financial control approach. In general, the emissions reported are the same as those which would be reported based on a financial control boundary.
Recorded energy consumption during the financial year was 345,954 (345.9 MWh).
The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per metre squared, the recommended ratio for the sector.
Kuro has been actively engaged in measures to reduce its energy throughout the reporting period as follows:
Replaced T8 and inefficient lamps with low-energy LEDs in the kitchen areas.
Installed passive infra-red (motions sensors) for all lighting.
Continue to expand video conferencing and online meetings where possible.
Update on objectives for prior year
In order to achieve the objectives set last year, the Group has implemented a new company car policy that includes leasing of electric vehicles and continued its strategy to reduce office space reducing its overall consumption of electricity.
Objectives for 2023
Kuro has initiated several objectives for the forthcoming fiscal year (to be reported on in the next set of accounts) as follows:
Property strategy: review property strategy and reduce office footprint.
Electric Vehicles: To continue to encourage employee to take up the new car policy.
Behavioural Change: implementing a programme of educational and awareness of management team.
Kuro will report on progress in our next set of financial accounts.
We have audited the financial statements of Kuro Health Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2022, which comprise the Consolidated Statement of Comprehensive Income, the Consolidated and Company Balance Sheets, the Consolidated and Company Statement of Changes in Equity, the Consolidated Statement of Cash Flows and the related notes, 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).
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 Auditors' 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 United Kingdom, including the Financial Reporting Council'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 Group's or the parent 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.
Other information
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' Report thereon. The Directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinion 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 Group 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 Group Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
In the light of the 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 Group 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 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.
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 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.
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 Auditors' 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 Group 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:
We gained an understanding of the legal and regulatory framework applicable to the group and the industries in which it operates and considered the risk of the group and company not complying with the applicable laws and regulations including fraud in particular those that could have a material impact on the financial statements. This included those regulations directly related to the financial statements, including financial reporting, tax legislation and distributable profits. In relation to the industry, this included consideration of the Medco status of various members of the group, employment law and health & safety. The risks were discussed with the audit team and we remained alert to any indications of non-compliance throughout the audit.
The risks were discussed with the audit team and we remained alert to any indications of non-compliance throughout the audit. We carried out specific procedures to address the risks identified. As follows:
Reviewing legal fees incurred;
Reviewing minutes of meetings of those charged with governance;
Enquiring of management including those responsible for the key regulations;
Reviewing the latest Medco Reports with consideration of the policies and procedures in place to ensure the relevant company is compliant with Medco and the response from management in implementing recommendations and guidance highlighted by Medco in the most recent review.
Reviewing the key accounting policies and estimates
Agreeing the financial statement disclosures to underlying supporting documentation.
To address the risk of management override of controls, we reviewed systems and procedures to identify potential areas of management override risk. In particular, we carried out testing of journal entries and other adjustments for appropriateness, and evaluating the business rationale of significant transactions to identify large or unusual transactions. We reviewed key authorisation procedures and decision-making processes for any unusual or one-off transactions. We also assessed management bias in relation to the accounting policies adopted and in determining significant accounting estimates.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
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 Auditors' 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 Auditors' 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.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
Kuro Health Limited ("the company") is a private limited company domiciled and incorporated in England and Wales and limited by shares. The registered office is 4th Floor, Park Gate, 161-163 Preston Road, Brighton, East Sussex, BN1 6AF.
The group consists of Kuro Health Limited and all of its subsidiaries.
The group's consolidated and the company's financial statements have been prepared in compliance with FRS102 as it applies to the financial statements for the year ended 31 December 2022.
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 £.
Basis of preparation for the company
The 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'.
Section 33 ‘Related Party Disclosures’.
The consolidated financial statements of the group include the results of the company. Consequently, as permitted by s408 of the Companies Act 2006, no individual company income statement is presented in these financial statements for Kuro Health Limited.
The principal accounting policies adopted are set out below.
The consolidated financial statements incorporate those of Kuro Health Limited and all of its subsidiaries (ie entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits). Subsidiaries acquired during the period are consolidated using the purchase method. Their results are incorporated from the date that control passes.
All financial statements are made up to 31 December 2022. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
The financial statements have been prepared on a going concern basis. Forecasts have been prepared that show the Group will have sufficient liquidity to meet its financial obligations for a period of at least 12 months from the date of this financial report.
This assessment undertaken by the Directors has been predominantly considered from a cash-flow perspective, as the group operating profit remains positive and with a strong balance sheet £19m shareholders funds. The Directors have considered the implications of current rates of inflation and wider market conditions. To ensure the Business continues to operate as a going concern, the Group continually monitor the longer-term impacts of the pandemic on key stakeholders caused by issues such as court delays and availability of medical experts, which have extended case life cycles.
The Directors have also considered the impact of the Official Injury Claims portal, implemented on the 31st May 2021. The Directors monitor both internal and external key performance indicators for the work generated via the new portal, including volume of cases, instructions received and case cycle times. However, case cycle times have extended and there is uncertainty when collection profiles will return to pre OIC portal levels. This has an impact on Group’s cash flows. The Directors remain of the opinion that any change in collection profile in the short term will reverse in the long term as the services provided support access to justice for individual claimants. However, there remains a level of uncertainty around collections, due to limited number of cases that have settled during the first two years of operation for the new portal.
The Directors have implemented a number of strategies to mitigate the impact of the change in collection profiles discussed above. These strategies include a review of all commercial arrangements, operational processes and associated costs and have the aim to reduce the working capital requirements of the Group in both short term and long term.
The Group have a long-term and close working relationship with its bankers. The Group’s facilities have been renegotiated during the year with a temporary increase invoice discounting facility, as well as drawing on other short-term finance that has been made available. Facilities have been agreed until August 2024 at a level consistent with forecasted requirements. The Group and the shareholders have confirmed they will support the working capital requirements if necessary via loans and personal guarantees.
The Directors have prepared forecasts for a period of more than 12 months from the date of approval of these financial statements and are confident that the sources of funding available, together with the mitigation strategies that are in place, will provide sufficient liquidity until the issues with the Official Injury Claims Portal are resolved.
The Group is well funded and capitalised, and despite the uncertainty above, the Directors believe that it is appropriate to prepare the accounts on a going concern basis.
Turnover is recorded at the fair value of the consideration receivable in the normal course of business, net of VAT, other sales related taxes and discounts.The group provides services in the medical legal sector and the IT software sector.
Medical work is contracted for delivery over an agreed period, typically ending at the settlement of the legal medical claim. Requests for payments are issued at predetermined points in the process according to contract and are recorded as turnover. At the balance sheet date, the company accrues for turnover in respect of services performed but un-invoiced, accrued income is included within other debtors. Any associated expected costs of services provided are accrued and included in other creditors.
IT software services are contracted for delivery over an agreed period. Requests for payments are issued at predetermined points in the process according to contract and are recorded as turnover. At the balance sheet date, the company accrues for turnover in respect of services performed but un-invoiced, accrued income is included within other debtors. Any associated expected costs of services provided are accrued and included in other creditors.
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 recognised in the profit and loss account.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group 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.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
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.
The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and 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, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, 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.
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.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group 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.
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 group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group 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 group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the period. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is 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.
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. Payments to the defined contribution scheme are charged as an expense as they fall due.
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.
The group 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. Payments to the defined contribution scheme are charged as an expense as they fall due.
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 leased asset are consumed.
The group is using the accrual model to account for government grants. Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received. Relevant grants in this period are:
Government grants relating to the 'Coronavirus Job Retention Scheme' are recognised as income over the periods when the related costs are incurred.
Government grants relating to the settlement of interest and lender-levied charges relating to the Coronavirus Business Interruption Loan Scheme are recognised as income in the period in which the related costs are incurred.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
In the application of the group’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.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Revenue from services are recognised on accordance with the policy set out at 1.4 on the expectation that most cases will be successfully concluded. Cases on average complete within two years however there are instances where cases are unsuccessful, and fees are not recoverable.
As a consequence, an element of judgement is required to account for potential fluctuations in income. A provision for credit notes is utilised to estimate the potential impact of such changes to case profiles and the respective incomes. The provision is calculated based on historical experience, current trends, industry knowledge and other relevant factors. The judgements used to calculate the provision, are material to the results of the company. A small change in those judgements could have a relatively significant impact on the accounts. Therefore the results of the company are sensitive to movements in this provision if assumptions and trends change.
The senior management team have adequate controls and KPIs in place to monitor and assess the suitability of the provision to ensure income is fairly stated in the financial statements.
Investment in subsidiaries are recognised in accordance with the policy set out at 1.8 on the expectation that costs are contractually payable. However, there are instances where costs payable are deferred and payable based on future contract performance.
Consequently, an element of judgement is required to account for potential fluctuations in cost of investments. The provision is calculated based on historical experience, current trends, industry knowledge and other relevant factors. A change in those judgements and future performance could have an impact on the accounts. Therefore, the balance sheet of the company is sensitive to movements in this provision if assumptions and future performance.
The senior management team have adequate controls and KPIs in place to monitor and assess the suitability of the assessment to ensure income and investment cost are fairly stated in the financial statements.
An analysis of the group's turnover is as follows:
All turnover derives from services rendered and from continuing operations.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The number of directors the company pension contributions relates to in the period under review is 2 (2021: 2).
Directors of the business are deemed to be key management and have been remunerated accordingly.
The actual (credit)/charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:
Future tax rate changes
In the Budget, the Chancellor announced that corporation tax rates would increase to 25% from 1 April 2023. The rate used for calculating deferred tax is the 25% (2021: 19%).
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
The impairment losses in respect of financial assets are recognised in other gains and losses in the profit and loss account.
The group continually strives to improves its software and processes to adapt to changing market conditions, costs associated with development have been capitalised under the Intangible asset Software. The software has been developed over a number of years, however due to changing market conditions during 2022, it is difficult to value or give a useful life to the software. Therefore, the Directors have impaired the carrying value of the asset to £Nil. This has resulted in a charge to the Profit & Loss account of £1,596,419, which has been presented as an exceptional item.
During the year the group impaired property plant and equipment assets linked to an office where a break notice has been served during the year, therefore the useful life has been reduced.
Included above in respect of intangible assets is £170,399. This is the revaluation of an investment included in note 13.
More information on impairment movements in the year is given in note 11.
More information on impairment movements in the year is given in note 11.
Details of the company's subsidiaries at 31 December 2022 are as follows:
Registered office:
A - 4th Floor, Park Gate, 161-163 Preston Road, Brighton, East Sussex, England. BN1 6AF
B - Premier House, Eco Park Road, Ludlow, Shropshire, England. SY8 1ES
C - Palatine House, Belmont Business Park, Durham, England. DH1 1TW
D - Unit 4 The Courtyard, Calvin Street, Bolton, England. BL1 8PB
The group's finance facilities are provided by Barclays Bank PLC. The group has access to an invoice discount facility line of £15,275,000, an overdraft facility of £500,000, and a CBILS loan. As at 31 December 2022 the outstanding balance due to Barclays Bank PLC in respect of these facilities was £16,836,961 (31 December 2021: £15,073,105).
The facility is secured by a fixed and floating charge over current and future assets of various subsidiary companies.
The provisions for dilapidations are in respect of leases on properties occupied by the group. The group has five leases of varying lengths and optional break clauses. The senior management team assess the provisions with advice from qualified professionals where appropriate.
Deferred tax assets and liabilities are offset where the group or company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
40 B ordinary shares were incorrectly designated as C ordinary shares in 2020.
The preference shares rank ahead of the ordinary share capital. An annual dividend of 12% of the subscription price paid is due on 31 December. There is no redemption date set for the preference shares.
All classes of ordinary shares rank equally for dividend and voting rights.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
The lease commitments are in respect of rental agreements for properties. In the prior year the group calculated its commitment excluding any contractual break clauses. Two break clauses have been enacted which represents the movement shown above.
During the year the company made payments for consultancy and professional fees totalling £314,507 (31 December 2021: £461,965) to companies controlled or associated to the directors.
Folkington Finance Limited is a company controlled or associated to the directors, was owed £771,574 (31 December 2021: £141,000) as at 31 December 2022. During the year, it advanced £489,574 and accrued a preference dividend of £141,000 to the company.
No details are included for the transactions with subsidiaries that are 100% owned as the exemption for such companies is being claimed.
A cross guarantee was given by the group in favour of Barclays Bank PLC. The cross guarantee is in support of the finance facilities provided by Barclays Bank PLC to Kuro Health group of entities. The cross guarantee includes the following group companies: Kuro Health Limited, Premier Medical Group Limited, Rehab-Link Limited, South East Specialist Medical Reports Limited and Mobile Doctors Limited. The balance owed to Barclays Bank PLC at 31 December 2022 was £16,387,870 (31 December 2021: £15,073,106).
Descriptions of the effect of the prior period adjustments to the 2021 balance sheet and profit and loss are set out below.
The opening balances of assets and liabilities have been restated by £80,169. Overall there was no effect in the consolidated net current assets as at the 31 December 2021.
Also restated was turnover (decrease of £80,170), direct costs (increase of £1,060,008) and administrative expenses (decrease of £1,140,178). Overall there was no effect in the consolidated profit for the year ended 31 December 2021. The prior year adjustment is predominantly to reclassify the split of salaries between direct costs and administrative costs from the subsidiary acquired in the prior year.
The prior period adjustments did not give rise to any effect upon equity.