Company registration number 04928318 (England and Wales)
SENTIMENTAL CARE LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
SENTIMENTAL CARE LTD
COMPANY INFORMATION
Director
T Ellis
Company number
04928318
Registered office
Horton Cross Nursing Home
Horton Cross
Ilminster
Somerset
TA19 9PT
Auditor
Price Bailey LLP
36 Tyndall Court
Commerce Road
Lynchwood
Peterborough
PE2 6LR
Business address
Horton Cross Nursing Home
Horton Cross
Ilminster
Somerset
TA19 9PT
SENTIMENTAL CARE LTD
CONTENTS
Page
Strategic report
1
Director's report
2
Independent auditor's report
3 - 5
Profit and loss account
6
Statement of comprehensive income
7
Balance sheet
8
Statement of changes in equity
9
Statement of cash flows
10
Notes to the financial statements
11 - 22
SENTIMENTAL CARE LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 30 APRIL 2022
- 1 -
The director presents the strategic report for the year ended 30 April 2022.
Fair review of the business
The principal activity of the company is that of nursing home activities.
The company increased turnover from the prior year by almost 5% to £3,369,208 (2021: £3,219,522). However, due to increased direct costs, gross profit fell to £345,113 (2021: £599,169). As a result of the receipt of life insurance proceeds of £3,875,009 the profit before taxation increased to £3,529,287 (2021: £69,864).
The above all took place following the untimely death of the company's founding director, James Ellis, on 1 May 2021. Mr Ellis' wife, Tazmina Ellis, took over day to day running of the company from this date.
Principal risks and uncertainties
The Covid-19 pandemic continued to present a significant risk to the company and its employees. The health and safety of our employees and also our residents has remained the company's top priority throughout this period and a wide range of exceptional measures were maintained to keep them all safe.
The combined effects of the pandemic and Brexit have made recruitment and retention of staff much more difficult. This has led to the increased use of subcontract labour during the year to cover shortages due to illness and difficulties recruiting, increasing by 87% to £488,333 (2021: £260,974).
Development and performance
The company is currently undergoing a period of assessment and change. The relative state of the homes are being thoroughly assessed with a view to carrying out major improvement works where necessary, with a view to increase capacity and occupancy and therefore revenues.
Key performance indicators and analysis
The key financial performance indicators used by the business are revenue, gross margin, forecast cash resources and EBITDA. These are complimented by KPI's associated with occupancy rates, average weekly fees and target performance linked to customer service and regulatory inspection results. Turnover increased by £150k from the previous financial year, whilst gross profit decreased by £254k as the company continues to develop it's business post Covid-19.
T Ellis
Director
22 November 2023
SENTIMENTAL CARE LTD
DIRECTOR'S REPORT
FOR THE YEAR ENDED 30 APRIL 2022
- 2 -
The director presents her annual report and financial statements for the year ended 30 April 2022.
Principal activities
The principal activity of the company continued to be that of nursing home activities.
Results and dividends
The results for the year are set out on page 6.
No ordinary dividends were paid. The director does not recommend payment of a final dividend.
Director
The director who held office during the year and up to the date of signature of the financial statements was as follows:
T Ellis
J Ellis Dec'd
(Deceased 1 May 2021)
Statement of director's responsibilities
The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has 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 director must not approve the financial statements unless she is 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 director is 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 director is 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. She is 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.
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
T Ellis
Director
22 November 2023
SENTIMENTAL CARE LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF SENTIMENTAL CARE LTD
- 3 -
Opinion
We have audited the financial statements of Sentimental Care Ltd (the 'company') for the year ended 30 April 2022 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including 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 April 2022 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.
Material uncertainty related to going concern
We draw your attention to note 1.2 in the financial statements which indicates that the company's term loan with the bank is due for renewal in February 2024 and the company is dependent on the continuing support of the director due to the losses incurred since the year end. As stated in note 1.2, these events or conditions, along with other matters as set forth in note 1.2, indicate that a material uncertainty exists that may cast significant doubt over the company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
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.
Our responsibilities and the responsibilities of the director with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The director is responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the director's report have been prepared in accordance with applicable legal requirements.
SENTIMENTAL CARE LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF SENTIMENTAL CARE LTD
- 4 -
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 director's 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 director
As explained more fully in the director's responsibilities statement, the director is 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 director determines 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 director is 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 director either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
We identified the laws and regulations applicable to the company through discussion with directors and our knowledge of the business;
In addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments;
Assessing whether the judgements made in accounting estimates are indicative of a potential basis;
Evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business;
Analytical procedures are performed as well as substantive testing to identify any potential misstatement due to fraud;
The audit procedures would also involve being aware of any such items from reviewing reports and discussions held with staff and management to obtain an understanding;
Enquiring of management as to actual and potential litigation and claims; and
Making enquires of management as to their knowledge of actual and suspected fraud.
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 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.
SENTIMENTAL CARE LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF SENTIMENTAL CARE LTD
- 5 -
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.
Kerry Hilliard ACA FCCA CTA
Senior Statutory Auditor
For and on behalf of Price Bailey LLP
22 November 2023
Chartered Accountants
Statutory Auditor
36 Tyndall Court
Commerce Road
Lynchwood
Peterborough
PE2 6LR
SENTIMENTAL CARE LTD
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 APRIL 2022
- 6 -
2022
2021
Notes
£
£
Turnover
3
3,369,208
3,219,522
Cost of sales
(3,024,095)
(2,620,353)
Gross profit
345,113
599,169
Administrative expenses
(821,191)
(685,869)
Other operating income
232,893
273,794
Exceptional other income
3
3,875,009
Operating profit
4
3,631,824
187,094
Interest payable and similar expenses
7
(102,537)
(117,230)
Profit before taxation
3,529,287
69,864
Tax on profit
8
319,542
(19,562)
Profit for the financial year
3,848,829
50,302
The profit and loss account has been prepared on the basis that all operations are continuing operations.
SENTIMENTAL CARE LTD
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 APRIL 2022
- 7 -
2022
2021
£
£
Profit for the year
3,848,829
50,302
Other comprehensive income
Revaluation of tangible fixed assets
(1,536,437)
Total comprehensive income for the year
2,312,392
50,302
SENTIMENTAL CARE LTD
BALANCE SHEET
AS AT 30 APRIL 2022
30 April 2022
- 8 -
2022
2021
Notes
£
£
£
£
Fixed assets
Tangible assets
9
6,400,470
7,974,583
Current assets
Stocks
10
2,923
3,188
Debtors
11
1,011,556
479,235
Cash at bank and in hand
3,018,517
85,844
4,032,996
568,267
Creditors: amounts falling due within one year
12
(1,456,567)
(802,514)
Net current assets/(liabilities)
2,576,429
(234,247)
Total assets less current liabilities
8,976,899
7,740,336
Creditors: amounts falling due after more than one year
13
(3,307,176)
(4,063,463)
Provisions for liabilities
Deferred tax liability
15
146,780
466,322
(146,780)
(466,322)
Net assets
5,522,943
3,210,551
Capital and reserves
Called up share capital
17
3
3
Revaluation reserve
473,453
2,009,890
Profit and loss reserves
5,049,487
1,200,658
Total equity
5,522,943
3,210,551
The financial statements were approved by the board of directors and authorised for issue on 22 November 2023 and are signed on its behalf by:
T Ellis
Director
Company Registration No. 04928318
SENTIMENTAL CARE LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 APRIL 2022
- 9 -
Share capital
Revaluation reserve
Profit and loss reserves
Total
£
£
£
£
Balance at 1 May 2020
3
2,009,890
1,150,356
3,160,249
Year ended 30 April 2021:
Profit and total comprehensive income for the year
-
-
50,302
50,302
Balance at 30 April 2021
3
2,009,890
1,200,658
3,210,551
Year ended 30 April 2022:
Profit for the year
-
-
3,848,829
3,848,829
Other comprehensive income:
Revaluation of tangible fixed assets
-
(1,536,437)
-
(1,536,437)
Total comprehensive income for the year
-
(1,536,437)
3,848,829
2,312,392
Balance at 30 April 2022
3
473,453
5,049,487
5,522,943
SENTIMENTAL CARE LTD
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 APRIL 2022
- 10 -
2022
2021
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
21
3,780,271
482,491
Interest paid
(102,537)
(117,230)
Income taxes refunded
144,222
Net cash inflow from operating activities
3,821,956
365,261
Investing activities
Purchase of tangible fixed assets
(1,886)
(31,769)
Loans to directors
(192,000)
(251,764)
Net cash used in investing activities
(193,886)
(283,533)
Financing activities
Repayment of bank loans
(576,582)
(1,893)
Net cash used in financing activities
(576,582)
(1,893)
Net increase in cash and cash equivalents
3,051,488
79,835
Cash and cash equivalents at beginning of year
(32,971)
(112,806)
Cash and cash equivalents at end of year
3,018,517
(32,971)
Relating to:
Cash at bank and in hand
3,018,517
85,844
Bank overdrafts included in creditors payable within one year
(118,815)
SENTIMENTAL CARE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
- 11 -
1
Accounting policies
Company information
Sentimental Care Ltd is a private company limited by shares incorporated in England and Wales. The registered office is Horton Cross Nursing Home, Horton Cross, Ilminster, Somerset, TA19 9PT.
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, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
1.2
Going concern
The director is required to prepare the statutory financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.true
Day to day working capital requirements are met through existing cash and banking facilities, bank loans, and from the support of its beneficial owner. In addition, the company has a term loan with Barclays Bank that expires in February 2024.
At the time of signing, the company is in communication with Barclays regarding the refinancing of the loan.
Since the year end trading losses sustained by the company have resulted in a significant deterioration of cash balances.
The director has reviewed forecasts which demonstrate a significant improvement in the expected trading position of the company. The forecasts make key assumptions around occupancy levels and staffing costs and any reliance on the forecasts is highly dependent on the validity of these assumptions.
The company has obtained a letter of support from the director, whereby they have provided confirmation of their intention to support the company and to provide additional working capital as required to meet any shortfalls that may arise from variances to the forecast cash flows. The level and timing of the potential cash requirements have been considered by the director, however, they acknowledge that the letter of support is not legally binding and there is no contractual certainty that the director will make available such funding. If the support of the director was required and not forthcoming, the company may not be able to raise additional funding to provide sufficient cash to enable it to meet its liabilities as they fall due.
These events or conditions indicate that a material uncertainty exists which may cast significant doubt over the company’s ability to continue as a going concern.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for the provision of nursing home services in the normal course of business. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
SENTIMENTAL CARE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2022
1
Accounting policies
(Continued)
- 12 -
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.
1.4
Tangible fixed assets
Tangible fixed assets 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:
Freehold land and buildings
Nil
Property improvements
5% on cost
Fixtures and fittings
15% reducing balance
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.5
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible 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.
SENTIMENTAL CARE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2022
1
Accounting policies
(Continued)
- 13 -
1.6
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks 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.
1.7
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, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.8
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
SENTIMENTAL CARE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2022
1
Accounting policies
(Continued)
- 14 -
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.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future 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 creditors 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 creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are 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.
SENTIMENTAL CARE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2022
1
Accounting policies
(Continued)
- 15 -
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.9
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.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.11
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
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.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
SENTIMENTAL CARE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2022
1
Accounting policies
(Continued)
- 16 -
1.13
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.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the director is 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.
3
Turnover and other revenue
2022
2021
£
£
Turnover analysed by class of business
Rendering of services
3,369,208
3,219,522
2022
2021
£
£
Other revenue
Grants received
232,893
273,794
Life insurance received
3,875,009
-
Life insurance received includes non recurring exceptional amounts received by the company during the year.
4
Operating profit
2022
2021
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants
(232,893)
(273,794)
Fees payable to the company's auditor for the audit of the company's financial statements
24,000
30,000
Depreciation of owned tangible fixed assets
39,562
43,882
SENTIMENTAL CARE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2022
- 17 -
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
Nursing
117
115
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
2,080,705
1,991,662
Social security costs
160,736
142,711
Pension costs
67,720
33,614
2,309,161
2,167,987
6
Director's remuneration
2022
2021
£
£
Remuneration for qualifying services
50,371
50,371
Company pension contributions to defined contribution schemes
44,647
-
95,018
50,371
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2021 - 0).
7
Interest payable and similar expenses
2022
2021
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
95,123
115,884
Other finance costs:
Penalties and interest
7,414
1,346
102,537
117,230
8
Taxation
2022
2021
£
£
Deferred tax
Origination and reversal of timing differences
(319,542)
19,562
SENTIMENTAL CARE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2022
8
Taxation
(Continued)
- 18 -
The actual (credit)/charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2022
2021
£
£
Profit before taxation
3,529,287
69,864
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
670,565
13,274
Tax effect of income not taxable in determining taxable profit
(736,252)
Unutilised tax losses carried forward
60,508
(12,933)
Depreciation on assets not qualifying for tax allowances
5,179
(341)
Deferred tax adjustments in respect of prior years
(319,542)
19,562
Taxation (credit)/charge for the year
(319,542)
19,562
9
Tangible fixed assets
Freehold land and buildings
Property improvements
Fixtures and fittings
Total
£
£
£
£
Cost or valuation
At 1 May 2021
7,568,000
264,773
957,602
8,790,375
Additions
1,886
1,886
Revaluation
(1,318,000)
(264,773)
(1,582,773)
At 30 April 2022
6,250,000
959,488
7,209,488
Depreciation and impairment
At 1 May 2021
33,097
782,695
815,792
Depreciation charged in the year
13,239
26,323
39,562
Revaluation
(46,336)
(46,336)
At 30 April 2022
809,018
809,018
Carrying amount
At 30 April 2022
6,250,000
150,470
6,400,470
At 30 April 2021
7,568,000
231,676
174,907
7,974,583
Land and buildings with a carrying amount of £6,250,000 were revalued at 15 May 2023 by Pinders Professional & Consultancy Services Limited, independent valuers not connected with the company on the basis of market value. The valuation conforms to International Valuation Standards and was based on recent market transactions on arm's length terms for similar properties.
Land and buildings are carried at valuation. If land and buildings were measured using the cost model, the carrying amounts would have been approximately £5,086,564 (2021 - £5,086,564), being cost £5,086,564 (2021 - £5,086,564) and depreciation £Nil (2021 - £Nil).
SENTIMENTAL CARE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2022
- 19 -
10
Stocks
2022
2021
£
£
Finished goods and goods for resale
2,923
3,188
11
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
273,817
188,155
Other debtors
450,155
258,154
Prepayments and accrued income
143,362
32,926
867,334
479,235
2022
2021
Amounts falling due after more than one year:
£
£
Other debtors
144,222
Total debtors
1,011,556
479,235
12
Creditors: amounts falling due within one year
2022
2021
Notes
£
£
Bank loans and overdrafts
14
284,200
223,310
Payments received on account
46,510
Trade creditors
339,155
199,554
Corporation tax
144,222
Other taxation and social security
398,893
185,006
Other creditors
156,776
100,362
Accruals and deferred income
86,811
94,282
1,456,567
802,514
13
Creditors: amounts falling due after more than one year
2022
2021
Notes
£
£
Bank loans and overdrafts
14
3,307,176
4,063,463
SENTIMENTAL CARE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2022
- 20 -
14
Loans and overdrafts
2022
2021
£
£
Bank loans
3,591,376
4,167,958
Bank overdrafts
118,815
3,591,376
4,286,773
Payable within one year
284,200
223,310
Payable after one year
3,307,176
4,063,463
The bank loan is due for repayment by 21 February 2024 and currently attracts interest at 2.65% above base rate. The bank loan is secured by a First legal charge over the company's freehold properties.
15
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2022
2021
Balances:
£
£
Accelerated capital allowances
8,031
8,441
Tax losses
(97,478)
(13,575)
Revaluations
236,227
471,456
146,780
466,322
2022
Movements in the year:
£
Liability at 1 May 2021
466,322
Credit to profit or loss
(319,542)
Liability at 30 April 2022
146,780
16
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
67,720
33,614
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.
SENTIMENTAL CARE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2022
16
Retirement benefit schemes
(Continued)
- 21 -
Contributions totalling £127,820 (2021 - £76,084) were payable to the scheme at the end of the year and are included in creditors.
17
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of £1 each
3
3
3
3
18
Operating lease commitments
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:
2022
2021
£
£
Within one year
41,175
29,810
Between two and five years
153,603
118,108
In over five years
36,148
22,838
230,926
170,756
19
Events after the reporting date
In September 2022 the company purchased a property for £435k. Subsequently in May 2023 this property was subject to a freehold valuation and was deemed to have a market value with vacant possession of £325k.
20
Directors' transactions
Dividends totalling £0 (2021 - £0) were paid in the year in respect of shares held by the company's directors.
Description
% Rate
Opening balance
Amounts advanced
Closing balance
£
£
£
T Ellis - Loan
-
-
192,000
192,000
J Ellis Dec'd - Loan
-
251,764
-
251,764
251,764
192,000
443,764
SENTIMENTAL CARE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2022
- 22 -
21
Cash generated from operations
2022
2021
£
£
Profit for the year after tax
3,848,829
50,302
Adjustments for:
Taxation (credited)/charged
(319,542)
19,562
Finance costs
102,537
117,230
Depreciation and impairment of tangible fixed assets
39,562
43,882
Movements in working capital:
Decrease in stocks
265
4,779
Increase in debtors
(340,321)
(37,915)
Increase in creditors
448,941
284,651
Cash generated from operations
3,780,271
482,491
22
Analysis of changes in net debt
1 May 2021
Cash flows
30 April 2022
£
£
£
Cash at bank and in hand
85,844
2,932,673
3,018,517
Bank overdrafts
(118,815)
118,815
(32,971)
3,051,488
3,018,517
Borrowings excluding overdrafts
(4,167,958)
576,582
(3,591,376)
(4,200,929)
3,628,070
(572,859)
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