Company registration number SC271565 (Scotland)
ELGIN HEALTH (GARTNAVEL) LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
ELGIN HEALTH (GARTNAVEL) LIMITED
CONTENTS
Page
Directors' report
1 - 2
Directors' responsibilities statement
3
Independent auditors' report
4 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Notes to the financial statements
11 - 22
ELGIN HEALTH (GARTNAVEL) LIMITED
COMPANY INFORMATION
Directors
MA Donn
JS Gordon
FD Laing
P Johnstone
Secretary
Resolis Limited
Company number
SC271565
Registered office
Exchange Tower
11th Floor
19 Canning Street
Edinburgh
Scotland
EH3 8EG
Auditor
Johnston Carmichael LLP
7-11 Melville Street
Edinburgh
EH3 7PE
ELGIN HEALTH (GARTNAVEL) LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2024
- 1 -

The Directors present their report and the audited Annual Report and Financial Statements of Elgin Health (Gartnavel) Limited ("the Company") for the year ended 31 March 2024.

Principal activities

The principal activity of the Company is the provision of services of the site of Gartnavel Royal Hospital through an agreement with Greater Glasgow & Clyde Health Board. The agreement was entered into under the Government's Private Finance Initiative Scheme.

Results and dividends

The profit for the financial year, after taxation, amounted to £664,829 (2023: £604,453).

 

The profit for the financial year will be transferred to reserves.

 

The Directors are satisfied with the overall performance of the Company and do not foresee any significant change in the Company's activities in the coming financial year.

 

Key Performance Indicators

The performance of the Company from a cash perspective is assessed biannually by the testing of the covenants of the senior debt provider, with the key indicator being the debt service cover ratio. The Company has been performing well and has been compliant with the covenants laid out in the Group loan agreement. At the year-end, this ratio was 1.45 (2023: 1.33).

 

Going Concern

The Company prepares cash flow forecasts covering the expected life of the asset and so including the 12 month period from the date the financial statements are signed. In drawing up these forecasts, the Directors have made assumptions based upon their view of the current and future economic conditions, and the effect these could still have over the forecast period. Based on these forecasts, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future and meet its debt covenants as they fall due. The Company's operating cash flows are largely dependent on the unitary charge receipts and the Directors expect these amounts will be received even in severe, but plausible downside scenarios.

 

In light of this, the Directors continue to adopt the going concern basis of accounting in preparing the Company’s annual financial statements.

Particulars of dividends paid are detailed in note 10 to the financial statements.

Directors

The Directors who held office during the year and up to the date of signature of the financial statements were as follows:

MA Donn
JS Gordon
FD Laing
P Johnstone
(Resigned 30 June 2023)
P Johnstone
(Appointed 29 January 2024)
J McDonagh
(Appointed 30 June 2023 and resigned 29 January 2024)
M Templeton
(Appointed 7 August 2023 and resigned 29 January 2024)
Qualifying third party indemnity provisions

The Company has made qualifying third party indemnity provisions for the benefit of its directors during the year. These provisions remain in force at the reporting date.

ELGIN HEALTH (GARTNAVEL) LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 2 -
Financial instruments

Due to the nature of the Company's business, the financial risks the Directors consider relevant to this Company are credit, interest rate, cash flow and liquidity risk. The credit risk is not considered significant as the client is a quasi governmental organisation.

 

Cash Flow and Liquidity risk

Many of the Cash Flow risks are addressed by means of contractual provisions. The Company's liquidity risk is principally managed through financing the Company by means of long-term borrowings.

Interest rate risk

The financial risk management objectives of the Company are to ensure that financial risks are mitigated by the use of financial instruments. The Company uses interest rate swaps to reduce its exposure to interest rate movements. Financial instruments are not used for speculative purposes.

Statement of disclosure to auditor

Each of the persons who is a director at the date of approval of this report confirms that:

 

 

 

The auditor, Johnston Carmichael LLP, is deemed to have been re-appointed in accordance with section 487 of the Companies Act 2006.

Small companies exemption

This report has been prepared in accordance with the provisions applicable to companies entitled to the small companies exemption.

This report was approved by the Board of Directors and signed by order of the Board by:
..............................
..............................
MA Donn
P Johnstone
Director
Director
Date: .............................................
2024-07-30
ELGIN HEALTH (GARTNAVEL) LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MARCH 2024
- 3 -

The Directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law).

 

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

 

In preparing these financial statements, the Directors are required to:

 

 

 

 

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

ELGIN HEALTH (GARTNAVEL) LIMITED
INDEPENDENT AUDITORS' REPORT
TO THE MEMBERS OF ELGIN HEALTH (GARTNAVEL) LIMITED
- 4 -
Opinion

We have audited the financial statements of Elgin Health (Gartnavel) Limited (the 'Company') for the year ended 31 March 2024 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

 

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

 

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

 

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditors' report thereon. The Directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

 

ELGIN HEALTH (GARTNAVEL) LIMITED
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBERS OF ELGIN HEALTH (GARTNAVEL) LIMITED
- 5 -
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 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:

 

Responsibilities of directors

As explained more fully in the directors' responsibilities statement on page 3, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Auditors' 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 auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

 

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors' report.

The extent to which the audit was 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.

 

We assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations by considering their experience, past performance and support available.

 

All engagement team members were briefed on relevant identified laws and regulations and potential fraud risks at the planning stage of the audit. Engagement team members were reminded to remain alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

 

 

 

 

ELGIN HEALTH (GARTNAVEL) LIMITED
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBERS OF ELGIN HEALTH (GARTNAVEL) LIMITED
- 6 -

We obtained an understanding of the legal and regulatory frameworks that are applicable to the Company and the sector in which it operates, focusing on those provisions that had a direct effect on the determination of material amounts and disclosures in the financial statements. The most relevant frameworks we identified include:

 

 

We gained an understanding of how the Company is complying with these laws and regulations by making enquiries of management and those charged with governance. We corroborated these enquiries through our review of relevant correspondence with regulatory bodies and board meeting minutes.

 

We assessed the susceptibility of the financial statements to material misstatement, including how fraud might occur, by meeting with management and those charged with governance to understand where it was considered there was susceptibility to fraud. This evaluation also considered how management and those charged with governance were remunerated and whether this provided an incentive for fraudulent activity. We considered the overall control environment and how management and those charged with governance oversee the implementation and operation of controls. We identified a heightened fraud risk in relation to:

 

In addition to the above, the following procedures were performed to provide reasonable assurance that the financial statements were free of material fraud or error:

 

Our audit procedures were designed to respond to the risk of material misstatements in the financial statements, recognising that 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 intentional concealment, forgery, collusion, omission or misrepresentation. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it.

 

ELGIN HEALTH (GARTNAVEL) LIMITED
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBERS OF ELGIN HEALTH (GARTNAVEL) LIMITED
- 7 -

Use of our report

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Fiona Munro (Senior Statutory Auditor)
For and on behalf of Johnston Carmichael LLP
Date: .........................
2024-07-30
Chartered Accountants
Statutory Auditor
7-11 Melville Street
Edinburgh
EH3 7PE
ELGIN HEALTH (GARTNAVEL) LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2024
- 8 -
2024
2023
Notes
£
£
Turnover
4
2,436,454
2,242,812
Cost of sales
(1,082,181)
(1,000,100)
Gross profit
1,354,273
1,242,712
Administrative expenses
(245,186)
(227,260)
Operating profit
5
1,109,087
1,015,452
Other interest receivable and similar income
7
850,289
819,381
Other interest payable and similar expenses
8
(1,072,869)
(1,087,404)
Profit before taxation
886,507
747,429
Tax on profit
9
(221,678)
(142,976)
Profit for the financial year
664,829
604,453
Other comprehensive income
Fair value adjustments reclassified to profit or loss
153,161
1,637,594
Total comprehensive income for the year
817,990
2,242,047

All the activities of the Company are from continuing operations.

The notes on pages 11 to 22 form part of these financial statements.

ELGIN HEALTH (GARTNAVEL) LIMITED
BALANCE SHEET
AS AT
31 MARCH 2024
31 March 2024
- 9 -
2024
2023
Notes
£
£
£
£
Current assets
Debtors falling due after more than one year
11
12,639,654
13,376,742
Debtors falling due within one year
11
4,962,375
4,401,724
Cash at bank and in hand
2,405,122
2,255,609
20,007,151
20,034,075
Creditors: amounts falling due within one year
12
(2,546,259)
(2,398,324)
Net current assets
17,460,892
17,635,751
Creditors: amounts falling due after more than one year
13
(15,395,945)
(16,182,283)
Net assets
2,064,947
1,453,468
Capital and reserves
Called up share capital
16
2,020
2,020
Share premium account
17
199,980
199,980
Hedging reserve
17
(463,611)
(616,772)
Profit and loss reserves
17
2,326,558
1,868,240
Total equity
2,064,947
1,453,468

The notes on pages 11 to 22 form part of these financial statements.

These financial statements have been prepared and delivered in accordance with the provisions applicable to the small companies regime.

The financial statements were approved by the board of directors and authorised for issue on ......................... and are signed on its behalf by:
2024-07-30
..............................
..............................
MA Donn
P Johnstone
Director
Director
Company Registration No. SC271565
ELGIN HEALTH (GARTNAVEL) LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2024
- 10 -
Called up share capital
Share premium account
Fair value reserve
Retained Earnings
Total
Notes
£
£
£
£
£
Balance at 1 April 2022
2,020
199,980
(2,254,366)
1,668,945
(383,421)
Year ended 31 March 2023:
Profit for the year
-
-
-
604,453
604,453
Other comprehensive income:
Fair value movements on cash flow hedging instruments, net of tax
-
-
1,637,594
-
1,637,594
Total comprehensive income for the year
-
-
1,637,594
604,453
2,242,047
Dividends
10
-
-
-
(405,158)
(405,158)
Balance at 31 March 2023
2,020
199,980
(616,772)
1,868,240
1,453,468
Year ended 31 March 2024:
Profit for the year
-
-
-
664,829
664,829
Other comprehensive income:
Fair value movements on cash flow hedging instruments, net of tax
-
-
153,161
-
153,161
Total comprehensive income for the year
-
-
153,161
664,829
817,990
Dividends
10
-
-
-
(206,510)
(206,510)
Balance at 31 March 2024
2,020
199,980
(463,611)
2,326,558
2,064,947

The notes on pages 11 to 22 form part of these financial statements.

ELGIN HEALTH (GARTNAVEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
- 11 -
1
Company information

Elgin Health (Gartnavel) Limited ("the Company") is a private company limited by shares and is incorporated and domiciled in Scotland. The address of its registered office is C/O Resolis Limited, 19 Canning Street, Edinburgh, Scotland, EH3 8EG.

 

The principal activity of the Company is the provision of services of the site of Gartnavel Royal Hospital through an agreement with Greater Glasgow & Clyde Health Board.

 

The Company's functional and presentation currency is the pound sterling. Monetary amounts in these financial statements are rounded to the nearest pound.

2
Statement of Compliance

The individual financial statements of Elgin Health (Gartnavel) Limited have been prepared in compliance with United Kingdom Accounting Standards, including Financial Reporting Standard 102, The Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland ("FRS 102") and the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A have been applied, other than where additional disclosure is required to show a true and fair view.

 

The Company has taken advantage of the exemption in FRS 102 Section 7 'Statement of Cash Flows' part 1B, which states that a small company is not required to prepare a cash flow statement.

 

The Company has taken advantage of the exemption in section 33 of FRS 102 'Related Party Disclosures', that allows it not to disclose transactions with wholly owned members of a group.

3
Accounting policies
3.1
Basis of preparation

These financial statements are prepared on a going concern basis, under the historical cost convention.

 

The preparation of financial statements in conformity with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed further in the accounting policies.

 

The accounting policies stated below have been consistently applied to the years presented,

unless otherwise stated.

 

3.2
Going concern

The Company prepares cash flow forecasts covering the expected life of the asset and so including the 12 month period from the date the financial statements are signed. In drawing up these forecasts, the trueDirectors have made assumptions based upon their view of the current and future economic conditions, and the effect it could still have over the forecast period. Based on these forecasts the Directors have a reasonable expectation that the Company has adequate resources to continue in in operational existence for the foreseeable future and meet its debt covenants as they fall due. The Company's operating cash flows are largely dependent on the unitary charge receipts and the Directors expect these amounts will be received even in severe, but plausible downside scenarios.

 

In light of this, the Directors continue to adopt the going concern basis of accounting in preparing the Company’s annual financial statements.

 

ELGIN HEALTH (GARTNAVEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
(Continued)
- 12 -
3.3
Revenue recognition

Turnover represents the services' share of the management services income received by the Company for the provision of a PFI (Private Finance Initiative) asset to the customer. This income is received over the life of the concession period. Management service income is allocated between turnover, finance debtor interest and reimbursement of finance debtor so as to generate a constant rate of return in respect of the finance debtor over the life of the contract.

3.4
Borrowing costs

Borrowings are recognised at amortised cost using the effective interest rate method. Under the effective interest rate method, any transaction fees, costs, discounts and premiums directly related to the borrowings are recognised in the Statement of Comprehensive Income over the life of the borrowings. Borrowings with maturities greater than twelve months after the reporting date are classified as non-current liabilities.

3.5
Lifecycle

The Company is responsible for the lifecycle costs associated with its principal activity, however risk here is mitigated by passing on lifecycle risk to a third party facilities management company. Lifecycle costs are accounted for on an accrual basis as disclosed in the indicative lifecycle works program or lifecycle tracker as used by all parties through the operating phase of the concession period, with any underspend included within accruals and creditors due less than one year.

3.6
Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of six months or less and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

 

The Company is obligated to keep cash reserves as at the balance sheet date and 30th September in respect of requirements in the Company’s funding agreements. This restricted cash balance, which is shown within the “cash at bank and in hand” balance amounts to £1,937,000 (2023: £1,685,000) as at the balance sheet date.

3.7
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, in full, to all of its financial instruments.

 

A financial asset or a financial liability is recognised only when the entity becomes a party to the contractual provisions of the instrument.

 

Basic financial instruments are initially recognised at the transaction price and subsequently at amortised cost, unless the arrangement constitutes a financing transaction, where it is recognised at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.

 

Debt instruments are initially recognised at the present value of cash payable to the lender and are subsequently measured at amortised cost using the effective interest rate method, less impairment. The effective interest rate method is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument. The effective interest rate amortisation is included in interest payable and similar charges in the Statement of Comprehensive Income.

 

Other financial instruments are subsequently measured at fair value, with any changes recognised in the Statement of Comprehensive Income, with the exception of hedging instruments in a designated hedging relationship.

 

ELGIN HEALTH (GARTNAVEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
(Continued)
- 13 -

Financial assets that are measured at cost or amortised cost are reviewed for objective evidence of impairment at the end of each reporting date. If there is objective evidence of impairment, an impairment loss is recognised in the Statement of Comprehensive Income immediately.

 

For all equity instruments regardless of significance, and other financial assets that are individually significant, these are assessed individually for impairment. Other financial assets are either assessed individually or grouped on the basis of similar credit risk characteristics.

 

Any reversals of impairment are recognised in the Statement of Comprehensive Income immediately, to the extent that the reversal does not result in a carrying amount of the financial asset that exceeds what the carrying amount would have been had the impairment not previously been recognised. 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 entity after deducting all of its financial liabilities.

 

Where the contractual terms of share capital do not have any terms meeting the definition of a financial liability then this is classed as an equity instrument. Dividends and distributions relating to equity instruments are debited direct to equity.

3.8
Finance debtor

The Company has taken the transition exemption in FRS 102 Section 35.10(i) that allows the Company to continue the service concession arrangement accounting policies from previous UK GAAP.

 

The Company is accounting for the concession asset based on the ability to substantially transfer all the risks and rewards of ownership to the customer, with this arrangement the costs incurred by the Company on the design and construction of the assets have been treated as a finance debtor within these financial statements.

 

3.9
Hedge accounting

The Company has entered into an arrangement with third parties that is designed to hedge future cash flows arising on variable rate interest loan arrangements, with the net effect of exchanging the cash flows arising under those arrangements for a stream of fixed interest cash flows ("interest rate swaps").

To qualify for hedge accounting, documentation is prepared specifying the hedging strategy, the component transactions and methodology used for effectiveness measurement. Changes in the carrying value of financial instruments that are designated and effective as hedges of future cash flows ("cash flow hedges") are recognised directly in a hedging reserve in equity and any ineffective portion is recognised immediately in the Statement of Comprehensive Income. Amounts deferred in equity in respect of cash flow hedges are subsequently recognised in the Statement of Comprehensive Income in the same period in which the hedged item affects net profit or loss or the hedging relationship is terminated and the underlying position being hedged has been extinguished.

 

The Company has elected to early adopt the FRS 102 Interest Rate Benchmark Reform Amendment.

3.10
Taxation

Taxation expense for the period comprises current and deferred tax recognised in the reporting period. Tax is recognised in the Statement of Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case tax is also recognised in other comprehensive income or directly in equity respectively.

 

Current or deferred taxation assets and liabilities are not discounted.

 

ELGIN HEALTH (GARTNAVEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
(Continued)
- 14 -
Current tax

Current tax is the amount of income tax payable in respect of the taxable profit for the year or prior years. Tax is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the period end. The Directors periodically evaluate positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred tax

Deferred tax arises from timing differences that are differences between taxable profits and total comprehensive income as stated in the financial statements. These timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in the financial statements.

 

Deferred tax is recognised on all timing differences at the reporting date except for certain exceptions. Unrelieved tax losses and other deferred tax assets are only recognised when it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Deferred tax is also recognised on the revaluations of derivative financial instruments, with the movements going through the Statement of Comprehensive Income.

 

Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the period end and that are expected to apply to the reversal of the deferred tax asset or liability.

 

ELGIN HEALTH (GARTNAVEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 15 -
3.12
Judgements and key sources of estimation uncertainty

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

 

Significant judgements

 

The judgements (apart from those involving estimations) that management has made in the process of applying the entity's accounting policies and that have the most significant effect on the amounts recognised in the financial statements are as follows:

 

i)    Hedge accounting and consideration of the fair value of derivative financial instruments

 

The Company uses derivative financial instruments to hedge certain economic exposures in relation to movements in interest rates as compared with the position that was expected at the date the underlying transaction being hedged was entered into. The Company fair values its derivative financial instruments and records the fair value of those instruments on its Balance Sheet. No market prices are available for these instruments and consequently the fair values are determined by calculating the present value of the estimated future cashflows based on observable yield curves. There is also a judgement on whether an economic hedge relationship exists in order to achieve hedge accounting. Appropriate documentation has been prepared detailing the economic relationship between the hedging instrument and the underlying loan being hedged.

 

ii)    Deferred taxation

Deferred tax is recognised on all timing differences at the reporting date except for certain exceptions. Judgement is required in the case of the recognition of deferred taxation assets, the Directors have to form an opinion as to whether it is probable that the deferred taxation asset recognised is recoverable against future taxable profits arising. This exercise of judgement requires the Directors to consider forecast information over a long time horizon having regard to the risks that the forecasts may not be achieved and then form a reasonable opinion as to the recoverability of the deferred taxation asset.

Key sources of estimation uncertainty

Accounting estimates and assumptions are made concerning the future and, by their nature, will rarely equal the related actual outcome. The key assumptions and other sources of estimation uncertainty are as follows:

i)    Impairment of assets

The carrying value of those assets recorded in the Company's Balance Sheet, at amortised cost, could be materially reduced where circumstances exist which might indicate that an asset has been impaired and an impairment review is performed. Impairment reviews consider the fair value and/or value in use of the potentially impaired asset or assets and compares that with the carrying value of the asset or assets in the Balance Sheet. Any reduction in value arising from such a review would be recorded in the Statement of Comprehensive Income. Impairment reviews involve the significant use of assumptions. Consideration has to be given as to the price that could be obtained for the asset or assets, or in relation to a consideration of value in use, estimates of the future cash flows that could be generated by the potentially impaired asset or assets, together with a consideration of an appropriate discount rate to apply to those cash flows.

ii)    Accounting for service concession arrangements

Accounting for the service concession contract and finance debtors requires estimation of service margins, finance debtor interest rates and associated amortisation profile which is based on forecast results of the contract. These were forecast initially within the operating model at financial close and are closely monitored throughout the duration of the project.

ELGIN HEALTH (GARTNAVEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 16 -
4
Turnover
2024
2023
£
£
Turnover arises from:
Rendering of services
2,436,454
2,242,812

The whole of the turnover is attributable to the principal activity of the Company wholly undertaken in the United Kingdom.

5
Operating profit
2024
2023
Operating profit for the year is stated after charging:
£
£
Fees payable to the Company's auditor for the audit of the Company's financial statements
11,610
10,800
Included in the fee above is £4,200 (2023: £3,726) for taxation compliance services. Also included in the fee above is £2,120 (2023: £2,000) for the audit of the immediate parent entity Elgin Health (Gartnavel) Holdings Limited. Auditors remuneration is payable to Johnston Carmichael LLP.
6
Particulars of Employees and Directors

The average monthly number of persons employed by the Company during the financial year amounted to nil (2023: nil). The Directors are not employed by the Company and did not receive any remuneration from the Company during the year (2023: £nil). Fees paid to the investors in respect of their directors are disclosed in note 18.

7
Interest receivable and similar income
2024
2023
£
£
Interest on cash and cash equivalents
96,740
31,204
Interest receivable on finance debtor
753,549
788,177
Interest receivable from group companies
-
-
850,289
819,381
8
Interest payable and similar expenses
2024
2023
£
£
Interest on bank loans and overdrafts
781,661
797,416
Interest payable to group undertakings
280,879
281,666
Other interest payable and similar expenses
10,329
8,322
1,072,869
1,087,404
ELGIN HEALTH (GARTNAVEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 17 -
9
Tax on profit
Major components of tax expense
2024
2023
£
£
Current tax
UK corporation tax expense
217,594
138,130
Adjustments in respect of prior periods
-
0
825
Total current tax
217,594
138,955
Deferred tax
Origination and reversal of timing differences
4,084
4,021
Tax on profit
221,678
142,976

 

Reconciliation of a tax expense

 

The tax assessed on the profit for the year is lower than (2023: higher than) the standard rate of corporation tax in the UK of 25% (2023: 19%).

2024
2023
£
£
Profit before taxation
886,507
747,429
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2023: 19.00%)
221,627
142,012
Adjust closing deferred tax to average rate of 19.00%
-
0
965
Unexplained difference
51
(1)
Taxation charge for the year
221,678
142,976
Factors that may affect future tax expense
A change to the future UK corporation tax rate was announced in the March 2021 Budget. The rate increased from 19% to 25% with effect from 1 April 2023. This change has been substantively enacted at the balance sheet date.
10
Dividends
Dividends paid during the year (excluding those for which a liability existed at the end of the prior year):
2024
2023
£
£
Dividend paid of £1.02 (2023: £2.01) per ordinary share
206,510
405,158
ELGIN HEALTH (GARTNAVEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 18 -
11
Debtors
2024
2023
Debtors amounts falling due within one year as follows:
£
£
Trade debtors
367,076
-
0
Finance debtor
681,949
645,358
Other debtors
3,871,318
3,701,071
Prepayments and accrued income
42,032
55,295
4,962,375
4,401,724
2024
2023
Debtor amounts falling due after more than one year are as follows:
£
£
Finance debtor
12,481,360
13,163,309
Deferred tax asset
158,294
213,433
12,639,654
13,376,742

Included within Other debtors is £3,871,318 (2023: £3,701,071) relating to the unitary charge control account, of which £3,609,601 is forecast to be received within the next 12 months via Unitary Charge receipts with amounts received being offset by service concession accounting adjustments.

 

The finance debtor represents payments due from the Greater Glasgow & Clyde Health Board in respect of the Project Agreement. These payments are received over the remaining life of the agreement.

 

The movement in the finance debtor is analysed as follows:    

 

 

 

 

2024
2023
£
£
At beginning of year
13,808,667
14,419,396
Amortisation
(645,358)
(610,729)
At end of year
13,163,309
13,808,667
ELGIN HEALTH (GARTNAVEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 19 -
12
Creditors: amounts falling due within one year
2024
2023
£
£
Bank loans and overdrafts
554,692
583,766
Trade creditors
134,654
115,813
Amounts owed to group undertakings
57,715
57,715
Corporation tax
127,938
52,448
Taxation and social security
133,889
122,675
Accruals and deferred income
1,537,371
1,465,907
2,546,259
2,398,324

Included within accruals and deferred income are amounts recognised in respect of future payments due on lifecycle underspend of £1,327,469 (2023: £1,195,251), the timing of which is uncertain. Amounts owed to group undertakings relate to subordinated debt.

13
Creditors: amounts falling due after more than one year
2024
2023
£
£
Bank loans and overdrafts
12,906,085
13,488,208
Amounts owed to group undertakings
1,872,518
1,872,518
Derivative financial liability
617,342
821,557
15,395,945
16,182,283

The Company has a term loan with Bank of Scotland secured by fixed and floating charges over its assets and undertakings. The term loan is also secured by a guarantee supported by fixed and floating charges over the assets and undertakings of Elgin Healthcare (Gartnavel) Holdings Limited, the immediate parent company. The loan bears interest at 5.9% per annum under a swap agreement entered into by the Company. The swap rate is fixed for the duration of the term loan. The term loan is stated net of finance costs of £235,353 (2023: £245,683) and is repayable in quarterly instalments which commenced 15 October 2003. The final repayment date is 15 January 2035. Included within creditors: amounts falling due after more than one year is an amount of £10,196,750 (2023: £10,817,962) in respect of bank loan liabilities payable or repayable by instalments which fall due for payment after more than five years from the reporting date.

 

Subordinated debt provided by Elgin Healthcare (Gartnavel) Holdings Limited bears interest at 15% and is repayable semi-annually in equal instalments until 2035. Included within creditors: amounts falling due after more than one year is an amount of £1,872,518 (2023: £1,872,518) in respect of subordinated debt liabilities payable or repayable by instalments which fall due for payment after more than five years from the reporting date.

ELGIN HEALTH (GARTNAVEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 20 -
14
Deferred taxation

The deferred tax included in the Balance Sheet is as follows:

2024
2023
£
£
Included in debtors (note 11)
158,294
213,433
2024
2023
Balances:
£
£
Accelerated capital allowances
3,958
8,044
Derivative financial instruments
154,336
205,389
158,294
213,433

No portion of the deferred tax balance is likely to be recovered or settled in the 12 months following the Balance Sheet date.

Movements in the year:
£
Closing balance at 1 April 2023
(213,433)
Movement through Other Comprehensive income
55,139
Closing balance at 31 March 2024
(158,294)
ELGIN HEALTH (GARTNAVEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 21 -
15
Financial Instruments

Hedge accounting

 

Derivatives are financial instruments that derive their value from the price of an underlying item, such as interest rates or other indices. The Company's use of derivative financial instruments is described below.

 

Interest rate swaps

The Company has entered into interest rate swaps with third parties for the same notional amount as the Company's variable rate borrowings with banks which has the commercial effect of swapping the variable rate interest coupon on those loans for a fixed rate coupon. The bank loans and related interest rate swaps amortise at the same rate over the life of the loan/swap arrangements. The interest rate swaps were entered into at a base rate of 4.6% in September 2007 and expire in July 2035.

 

The Directors believe that the hedging relationship between the interest rate swaps and related variable rate bank loans is highly effective and as a consequence have concluded that these derivatives meet the definition of a cash flow hedge and have formally designated them as such.

 

The Company's derivative financial instruments are carried at fair value. The net carrying value of the derivative financial instruments at 31 March 2024 amounted to net liabilities of £617,343 (2023: £821,558). All of the movements during the year in the fair value, net of deferred tax, of these derivative financial instruments have been recorded in the cash flow hedge reserve amounting to a debit of £153,161 (2023: £1,637,594).

16
Called up share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of 1p each
202,000
202,000
2,020
2,020
17
Reserves

Fair value reserve – This reserve records fair value movements on cash flow hedging instruments.

 

Retained earnings - This reserve records retained earnings and accumulated losses.

 

Share premium account - This reserve records the amount above the nominal value received for shares sold, less transaction costs.

18
Related Party Transactions

The Directors consider the material transactions undertaken by the Company during the year with related parties were as follows:

 

The following disclosures are with entities in the group that are not wholly owned.

 

Elgin Health (Gartnavel) Holdings Limited is owned 70% by Elgin Infrastructure Limited. The Company paid £17,394 (2023: £15,280) to Elgin Infrastructure Limited for the provision of directors.

 

Elgin Health (Gartnavel) Holdings Limited is owned 30% by Aberdeen Infrastructure (No.3) Limited. The Company paid £17,394 (2023: £15,280) to Aberdeen Infrastructure (No.3) Limited for the provision of directors. Of this amount, £4,348 (2023: £7,640) was outstanding at the year end.

 

The Company is wholly owned by Elgin Health (Gartnavel) Holdings Limited and has taken advantage of the exemption in section 33 of FRS 102 'Related Party Disclosures', that allows it not to disclose transactions with wholly owned members of a group.

ELGIN HEALTH (GARTNAVEL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 22 -
19
Controlling Party

The immediate parent undertaking is Elgin Health (Gartnavel) Holdings Limited, a limited company incorporated in Scotland.

 

The accounts of Elgin Health (Gartnavel) Holdings Limited can be obtained from Exchange Tower, 11th Floor, 19 Canning Street, Edinburgh, EH3 8EG.

 

At the year end Elgin Health (Gartnavel) Holdings Limited is owned 70% by Elgin Infrastructure Limited, which is jointly owned between Cobalt Project Investments Limited and Ednaston Project Investments Limited, and 30% by Aberdeen Infrastructure (No.3) Limited. There is no ultimate controlling party.

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