The Directors present their report and financial statements for the year ended 30 June 2023.
This year has continued to be a challenging time in healthcare, with all NHS providers impacted by recovery from Covid-19 with ongoing care access and delivery problems.
The principal activity of the social enterprise continues to be that of providing unscheduled urgent integrated care (NHS111 and urgent primary care) to some 6.3 million patients.
Integrated Care 24 (IC24) also provides in-hours primary care to patients in Sussex.
The social enterprise owns 100% of the issued share capital of Brightdoc 24 Limited, which provides locum doctors to the organisation; Pharma Alert 24 Limited, which operates a pharmacy in Hastings; and 50% of the issued share capital of iDental Care 24 Ltd which provides out of hours dental care in Brighton.
IC24 were also commissioned in year to provide an England-wide National Service Advisor resilience service on a one-year contract from February 2023. IC24 continues to provide the unique, national NHS paediatric clinical assessment service (PCAS) which was initiated in August 2021 and is an exemplar of providing senior opinion at an early stage in the patient pathway.
IC24 continues to operate several smaller contracts in Sussex, including an overnight district nursing service, home visiting service, roving GP service and emergency department primary care service.
CLEO Systems 24 Ltd is a wholly owned subsidiary of IC24. CLEO Systems is a leading developer and integrator of digital solutions for primary, secondary, urgent and emergency care markets and has continued to evolve and grow in this financial year. CLEO Systems is committed to improving the digital experience of patients using Integrated Urgent Care (IUC) services and the most notable impact was the development and marketing of an NHS electronic prescribing solution (EPS).
The financial statements include subsidiaries and have been consolidated to include the associate, iDental, using the equity method.
Results for the year show a decrease in turnover from £76.3m for 2022 to £73.0m in 2023. The group generated a surplus on ordinary activities after taxation of £4.1m (2022: £6.2m) for the year.
We have seen a revenue reduction in the current year. This is driven mainly by the loss of a large Health and Justice contract which ran for most of 2021/22. This impact was offset partially by the introduction of new services (Primary Care and National Service Advisors) as well as small increased revenue in Out of Hours and CAS in Essex and Norfolk, along with the full year benefit of the National Paediatric Service. Large-scale, long-term ICS based IUC contracts are unlikely to emerge in the current operating environment. However, the movement of IC24 into primary care services, a new national resilience service advisor contract and continued funding of the PCAS have challenged the view that new business opportunities are limited.
IC24 is responsible for answering 4% of all the calls into NHS 111 across England and answered 669,261 based on national NHS data for year ended 30th March 2023, a small reduction of 1.7% compared to the previous 12 months. Nationally, demand into 111 has dropped 3.7% in 2022/23, a reduction from the extreme demand seen in 2021/22 in relation to the response to the COVID pandemic.
However, IC24 NHS111 contact centre performance recovery was below expectation in the first 6 months of the year, and a successful performance improvement programme was instigated to improve experience for patients and improved commissioner confidence in the service going forwards.
Operational focus on the effectiveness of the clinical assessment service (CAS) has been maintained, with the aim of reducing downstream dispositions to statutory ambulance and acute trust providers. A key operational priority is ensuring that IC24 minimises the impact of urgent care demand on the systems in which we work. For example, in Mid and South Essex and Norfolk and Waveney, IC24 clinicians reviewed over 90% of all 111 calls that initially indicated an emergency referral to hospital (48,709) resulting in 26,664 patients appropriately diverted to a more suitable service, and thus reducing the load on hospital emergency services.
Similarly, IC24 clinicians reviewed over 59,000 calls which initially proposed sending a category 3 or 4 ambulance resulting in some 59% of these no longer requiring an ambulance to be dispatched.
CLEO Systems is achieving steady growth with a pipeline of new and potential contracts with NHS providers. The CLEO Board has ensured that the infrastructure and governance is in place to ensure safe, and sustained delivery and growth, in particular setting up a clinical safety oversight committee.
CLEO SOLO Electronic Prescribing System was launched in August 2022. A successful first of type pilot with Midlands Partnership NHS Foundation Trust, aided the Trust’s community clinicians to realise the productivity benefits of digital prescribing, whilst also enhancing prescription security.
We’ve continued to strive to make IC24 a great place to work for our people, as part of our strategy to deliver the best possible care to our patients.
We use the results of our annual employment engagement survey, b-Heard (from ‘bestcompanies’), and our mid-year pulse survey, to identify opportunities to make IC24 a better place to work.
These results inform The Times’ Top 100 lists and IC24 was recognised as a 'Good Organisation to work for in 2023', as well as being recognised in four other categories. Other achievements include:
Health & Social Care’s Top 5 Companies to work for Q1 2023
The UK’s Top 50 Best Large Companies to work for Q1 2023
East of England's Top 25 Best Companies to work for Q1 2023
The South East's Top 50 Best Companies to work for Q1 2023
The purpose of IC24 is to improve the experience of people seeking urgent care and primary care. We do this by helping local NHS systems improve the way their urgent and primary care pathways / partnerships work, and deploying our values of innovation, care, and excellence, and in particular our digital system capabilities. There is a risk that our capability to help systems improve patient experience and system efficiency is overlooked due to the impact of the NHS system re-organisation into Integrated Care Systems (ICS) and the dominance of statutory NHS provider Trusts. This means that the contribution of 3rd sector / VSCE partners to improvement can be overlooked.
However, the new structures have presented opportunities to renew and revitalise some partnerships. For example, IC24 is a member of the East Kent Health and Care Partnership and the ICB Chair’s group in Kent and Medway ICS.
Our major IUC contracts are Norfolk and Waveney (extended to March 2025) and our mid and south Essex contract is in the fifth year of a 'five plus two’ contract. The inability to retain either of these contracts is a significant strategic risk to the organisation, although we continue to work with these systems to build a vision for a longer contractual period that enables the long-term partnership investments that are needed to deliver a better patient experience and system efficiency.
NHS England are seeking improved efficiency of contact centres through the development of a ‘single virtual contact centre’ (SVCC) model. The expected national launch in 2022 did not materialise but east of England commissioners remain committed to developing the model and we continue to work in partnership with them to optimising patient experience and outcomes. There are both risks and opportunities if this changed model of working is implemented.
The financial position of the NHS systems in which we work is a strategic risk. Our financial outcome for 2022-2023 was satisfactory, however inflation meant significantly increased staff costs towards the latter part of the year which was not reflected in contract inflationary increases. Looking forward, achieving financial balance will prove difficult as costs are increasing significantly ahead of contract values. The directors' view is that IC24 remains a going concern and will continue to meet the NHS Provider Licence conditions.
In common with statutory NHS partners, retaining and attracting sufficient workforce is an ever-present challenge. Our “Great Place to Work” Strategy is our principal mitigation. This includes the development of home and hybrid working opportunities for lay and clinical staff, improvements in rostering, a focus on tackling barriers to staff feeling included, and significant pay increases over and above the commissioner pay uplift allowance.
The proposed Provider Selection Regime (PSR) will be a new set of rules replacing the existing procurement rules for arranging healthcare services in England. The PSR will be introduced by regulations made under the Health and Care Bill. A supplementary consultation was undertaken in 2022 and the legislation will be enacted in early 2024. It is too early to know how the risk of the PSR will impact on IC24.
The principal risk to our fast growing Cleo Systems subsidiary is our capacity to manage significant growth whilst maintaining high quality support for customers.
The principal risks to our developing Primary care services are recruiting and retaining clinical staff whilst maintaining financial sustainability. We also need to implement the new ways of operating GP services in line with the “Fuller Report” recommendations to separate planned and urgent care to provide better patient experience and clinical outcomes.
2023-4 will see the publication of our revised strategy centred on Patients, People, and Partners. This is a response to NHS strategic priorities and operational planning guidance, the NHSE delivery plan for recovering urgent and emergency care services, and the Fuller Stocktake report.
Leadership and effective governance are key to successfully delivering our purpose. In 23-4 we will invest in leadership and board development and strengthen our systems of control and assurance. Improved Contact centre operational performance, a new people strategy, strengthened programme management office arrangements, and a redesign of the clinical operating model will be features of the next reporting period.
On behalf of the board
The directors present their report and financial statements for the year ended 30 June 2023.
In accordance with s414c(11) of the Companies Act 2006, the information relating to future developments and financial risk management are included in the Strategic Report.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The results for the year are set out on page 15.
We are the leading Social Enterprise providing Integrated Urgent Care to patients 24/7 in the South East and East of England. We deploy our values of innovation, care, excellence and respect to improve patient’s experience of urgent and Primary care. In particular we use our technological expertise to improve health system services by developing innovative IT systems and solutions that improve patient safety and quality as well as organisational efficiency.
The directors, in line with their duties under s172 of the Companies Act 2006, act individually and collectively in the way they consider, in good faith, would be most likely to promote the success of the group for the benefit of its stakeholders, and in doing so have regard, amongst other matters, to the:
Likely consequences of any decision in the long term;
Interests of the group's employees;
Need to foster the group's business relationships with suppliers, partners and others;
Impact of the group's operations on the community and the environment;
Desirability of the group maintaining a reputation for high standards of business conduct;
Need to act fairly as between members of the group.
Stakeholders
The board understands the importance of engagement with all of its stakeholders and gives appropriate weighting to the outcome of its decisions for the relevant stakeholder in weighing up how best to promote the success of the group. The board regularly discusses issues concerning partners, suppliers, employees, community and environment, regulators and its members, which it takes into account in its discussions and in its decision-making process. In addition to this, the board seeks to understand the interests and views of the group's stakeholders by engaging with them directly when required. The below summarises the key stakeholders and how we engage with each:
We work in some formal and many informal partnerships. Our key skill is helping integrate work between partners. We work closely with NHS GP services to help them manage their patients' urgent care needs, ambulance services and accident and emergency services to reduce the numbers of people who use their scarce resources unnecessarily and of course, NHS commissioners and many other NHS providers to improve patient safety and experience. We are grateful to commissioners for entrusting us with the Primary Care needs of the populations for whom they are responsible.
The auditors, Moore Kingston Smith LLP, are deemed to be reappointed under section 487(2) of the Companies Act 2006.
We have audited the financial statements of Integrated Care 24 (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 June 2023 which comprise the Consolidated Statement of Total Comprehensive Income, the Group Balance Sheet, the Company Balance Sheet, the Group Statement of Changes in Equity, the Company Statement of Changes in Equity, the Consolidated Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 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 Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and 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 auditor's 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.
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 Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept 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 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 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 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.
As part of an audit in accordance with ISAs (UK) we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group's or the parent company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the group or the parent company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Explanation as to what extent the audit was considered capable of detecting irregularities, including
fraud
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.
The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the company.
Our approach was as follows:
We obtained an understanding of the legal and regulatory requirements applicable to the company and considered that the most significant are the Companies Act 2006, UK financial reporting standards as issued by the Financial Reporting Council, and UK taxation legislation.
We obtained an understanding of how the company complies with these requirements by discussions with management and those charged with governance.
We assessed the risk of material misstatement of the financial statements, including the risk of material misstatement due to fraud and how it might occur, by holding discussions with management and those charged with governance.
We inquired of management and those charged with governance as to any known instances of noncompliance or suspected non-compliance with laws and regulations.
Based on this understanding, we designed specific appropriate audit procedures to identify instances of non-compliance with laws and regulations. This included making enquiries of management and those charged with governance and obtaining additional corroborative evidence as required.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
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 for no purpose other than to draw to the attention of the company’s members those matters we are required to include in an auditor's report addressed to them. To the fullest extent permitted by law, we do not accept or assume responsibility to any party 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 consolidated statement of total comprehensive income has been prepared on the basis that all operations are continuing operations.
As permitted by s408 Companies Act 2006, the Company has not presented its own income and expenditure account and related notes. The Company’s surplus for the period was £4,376,251 (2022: £5,656,848 surplus).
Integrated Care 24 (“the Company”) is a company limited by guarantee which is domiciled and incorporated in England and Wales. The registered office is Kingston House, Orbital Park, Ashford, Kent, TN24 0GP.
The Group consists of the company and all its subsidiaries.
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 pound.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
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 surplus or deficit of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 4 ‘Statement of Financial Position’ – Reconciliation of the opening and closing number of shares;
Section 7 ‘Statement of Cash Flows’ – Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’ – Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in surplus or deficit and in other comprehensive income;
Section 33 ‘Related Party Disclosures’ – Compensation for key management personnel.
Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.
Investments in joint ventures and associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.
If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.
Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.
As permitted by s408 Companies Act 2006, the Company has not presented its own income and expenditure account and related notes. The Company’s surplus for the period was £4,376,251 (2022: £5,656,848 surplus).
In the opinion of the directors the group is a going concern with sufficient liquidity to cope with the current and expected future trading environment. In addition, the group continues to perform satisfactorily, despite the challenging conditions created by the current economic environment, and has sufficient financial resources to meet operational requirements.
The directors have based this assessment on forecasts showing the group’s expected financial position over the next twelve months and considering the group’s cash reserves and net assets at June 2023. The company also has a number of contracts in place with Integrated Care Boards in four different counties which extend beyond this period.
Income represents amounts receivable for the provision of out of hours services and NHS 111 service and associated services net of VAT. Income is recognised in the period in which the services are performed in line with the underlying contract.
Income received in respect of government grants has been recognised on the accruals basis in line with the recognition criteria outlined in section 24 of FRS 102. Where the income relates to capital grants, the income is recognised over the useful life of the assets to which the funding relates and where the funding relates to non-capital grants, this is recognised in the period where the expenditure to which it relates is incurred.
Amortisation of intangible fixed assets is included in administrative expenses.
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 income and expenditure account.
Where assets are used exclusively for a particular contract, the asset will be depreciated over the duration of the contract. This may result in change in depreciation policy if contracts are extended.
Equity instruments are measured at fair value through surplus or deficit except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably which are recognised at cost less impairment until a reliable measure of fair value becomes available.
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.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the surplus or deficit, other comprehensive income and equity of the associate using the equity method.
Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.
Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.
In the Company financial statements investments in associates are accounted for at cost less impairment.
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.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. 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 surplus or deficit, 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 surplus or deficit, 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’ of FRS 102 to all of its financial instruments as Section 12 ‘Other Financial Instruments Issues’ is not relevant to the group.
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.
Financial assets, other than those held at fair value through surplus or deficit, 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 surplus or deficit.
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 surplus or deficit.
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.
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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable surplus for the year. Taxable surplus differs from net surplus as reported in the income and expenditure 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 surpluses. 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 surplus nor the accounting surplus.
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 surpluses 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 income and expenditure 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 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.
Pension benefits for most employees of the company are provided by the NHS Pension Scheme, which is a statutory, unfunded, defined benefit scheme. The company’s liability is limited to the amount of contributions made to the scheme and liability for meeting pension payments sits solely with the scheme. For this reason the scheme is accounted for as if it were a defined contribution scheme. Accordingly company contributions are charged to surplus or deficit in the period to which they relate.
Employees that are not eligible to join the NHSPS are given the option to enrol in an alternative defined contribution scheme.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the asset's fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to the income and expenditure account so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
In a prior year the company merged with StourCare Community Interest Company and On Call Care Limited. The companies operated similar businesses to Integrated Care 24. The reserves were included in the merger reserve.
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.
The annual depreciation charge for tangible fixed assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets.
The annual amortisation charge for intangible assets is sensitive to changes in the estimated lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. Goodwill impairment reviews are also performed annually. These reviews require an estimation of the value in use of the cash generating units to which goodwill has been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise for the cash generating unit and a suitable discount rate to calculate present value.
On an ongoing basis the group assesses provisions that are required for liabilities as a result of past events. Provisions comprise estimated costs of insurance claims against the group ongoing at the year end and estimated costs of restoring office premises to its original condition at the termination of a lease. These are estimated with reference to the group insurance policies and industry expected restoration rates respectively.
An analysis of the group's income is as follows:
The average monthly number of persons (including directors) employed by the group during the year was:
Their aggregate remuneration comprised:
The directors are the group's key management personnel.
The charge for the year can be reconciled to the surplus per the income and expenditure account as follows:
Development costs represent the development of the group's 111 and Out-of-Hours management and security software.
The net carrying value of tangible fixed assets in both the group and the company includes the following in respect of assets held under finance leases or hire purchase contracts. The depreciation charge in respect of such assets amounted to £66,122 (2022: £139,723). Assets purchased in the period under finance lease or hire purchase contracts amounted to £nil (2022: £nil).
Details of the company's subsidiaries at 30 June 2023 are as follows:
The companies above all have their registered office at Kingston House, The Long Barrow, Orbital Park, Ashford, Kent, TN24 0GP.
Details of the company's associates at 30 June 2023 are as follows:
iDental Care 24 Limited has its registered office at Kingston House, The Long Barrow, Orbital Park, Ashford, Kent, TN24 0GP.
Other provisions is comprised of the estimated costs of insurance claims against the group ongoing at the year end as well as the estimated cost of staff who will deal with these claims.
From April 2019, following the launch of the Clinical Negligence Scheme for General Practice (CNSGP), the company has not needed to fund its own clinical negligence insurance cover as this is provided by the new state-backed scheme.
The company does, however, have liability for claims brought after April 2019 for medical incidents occurring prior to this date. In September 2023 the company purchased clinical negligence cover for the 12 months to September 2024 for £424,108 to cover claims brought in this period relating to medical incidents prior to April 2019.
The company has also made a provision of £210,000 (2022: £210,000) for potential future claims made under the Human Rights Act relating to the termination of the Health and Justice Contract in the year. This provision is included within note 21. This is the best estimate of the Directors of any potential further liability relating to this contract based on the evidence they have available but note that there may be future claims which will require settlement for amounts beyond the provision already made within these financial statements.
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:
The NHS Pension Scheme, which is a defined benefit scheme, is available for all qualifying employees. As the company’s liability is limited to the amount of contributions made to the scheme, it is accounted for as if it were a defined contribution scheme.
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:
Group
The group has taken advantage of the exemption within FRS 102 Section 33.1A Related Party Disclosures to not disclose transactions with entities that are within the same group and included in the consolidated financial statements of the group.
Company
During the year the company charged a management fee of £12,226 (2022: £10,188) to its associate iDental Care 24 Limited. The outstanding balance at the year end was £95 (2022: £2,051).
The company’s active subsidiaries Brightdoc 24 Limited and Pharma Alert 24 Limited are exempt from the requirements of the Companies Act 2006 relating to the audit of their individual accounts by virtue of section 479A of the Companies Act 2006.
The parent company has therefore guaranteed all existing liabilities of the above entities and this guarantee will remain in force until those liabilities are settled.