Company registration number 01793096 (England and Wales)
PARK HEALTHCARE LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2023
PARK HEALTHCARE LIMITED
COMPANY INFORMATION
Directors
Mr R D Murugupillai
Mrs C N Desilva-Murugupillai
Company number
01793096
Registered office
Lynwood House
373-375 Station Road
Harrow
Middlesex
HA1 2AW
Auditor
RDP Newmans LLP
Lynwood House
373-375 Station Road
Harrow
Middlesex
HA1 2AW
Business address
Hays House
Sedgehill
Shaftesbury
SP7 9JR
PARK HEALTHCARE LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Notes to the financial statements
12 - 24
PARK HEALTHCARE LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 AUGUST 2023
- 1 -
The directors present the strategic report for the year ended 31 August 2023.
Principal activities
The principal activity of the company continued to be that of providing residential nursing care facilities.
Review of the business
The results for the year and the financial position at the year end were considered satisfactory by the directors who expect performance to remain stable in the foreseeable future. The business overall continues to demonstrate resilience and has managed to uphold financial performance as well as regulatory standards despite the challenges.
Turnover and net profit have both increased during the year due to an acquisition of a new care home during the financial period.
The company remains in a strong financial position at the balance sheet date with net assets being £4.45m (2022: £3.46m).
Principal risks and uncertainties
The directors believe that the key business risks are in respect of costs anticipated to increase at a rate far higher than revenue is expected to keep pace with. This will squeeze margins at a time when the business is also experiencing the longer term effect of the coronavirus pandemic in terms of staff well-being and regulatory adjustments. In view of these risks and uncertainties the directors regularly review their operations to mitigate the impact of such risks and uncertainties.
The principal risks and uncertainties facing Park Healthcare Limited are:
Financial instruments
The company's principal financial instruments comprise trade creditors and bank loans. The main purpose of these financial instruments is to raise finance for the company's operations. The company has various other financial assets such as trade debtors which arise directly from its operations.
The main risks arising from the company's financial instruments are credit and liquidity risk. The board reviews and agrees policies for managing each of these risks and they are summarised below.
Credit risk
The company performs ongoing credit evaluations of its customers and to date has rarely experienced any material loss. The company works primarily with Council bodies and local healthcare districts which are funded by the NHS.
All residents who are admitted pay on a timely basis. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary.
Liquidity risk
Liquidity risk arises in relation to the company's management of working capital and the risk that the company will encounter difficulties in meeting financial obligations as and when they fall due. The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.
Interest rate risk
The company is exposed to interest rate risk on floating rate bank overdrafts and loans. The company does not use interest rate derivatives to manage the mix of fixed and variable rate debts.
PARK HEALTHCARE LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2023
- 2 -
Development and performance
This year has been another challenging one in regards to above average inflationary pressure on costs. Despite the challenges, the company's current ratio has improved from 2.28 to 2.85, indicating a better performance with regards to the company's short term working capital position. The increase is attributable to a significant increase in amounts due from the parent undertaking as a result of the restructuring which took place in the financial year.
Despite this, compliance requirements continue to be met and operationally the business remains sound. The directors are also exploring alternative ways to bolster revenue outside of inflationary growth.
Key performance indicators
The Key Performance Indicators of Park Healthcare Limited over the last two years are detailed below:
2023 2022
Turnover (GBP £'000) 6,864 4,927
Gross profit % 39.70% 36.28%
Net profit after tax % 14.46% 11.77%
Interest cover 6.08 26.17
The turnover has increased by 39% during the year due to the acquisition of a new care home during the financial year. The directors are monitoring the costs continually due to inflationary rises of costs and food. The gross profit and net profit margins have improved during the year as a result of this.
The interest cover ratio has reduced significantly this year due to restructuring and increase in loans taken out in the year with higher interest rates.
Mr R D Murugupillai
Director
9 August 2024
PARK HEALTHCARE LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 AUGUST 2023
- 3 -
The directors present their annual report and financial statements for the year ended 31 August 2023.
Results and dividends
The results for the year are set out on page 9.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr R D Murugupillai
Mrs C N Desilva-Murugupillai
Auditor
RDP Newmans LLP were appointed as auditor to the company on 29 May 2024 and in accordance with section 485 of the Companies Act 2006 and are deemed to be reappointed under section 487(2) of the Companies Act 2006.
Strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
Medium-sized companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
On behalf of the board
Mr R D Murugupillai
Director
9 August 2024
PARK HEALTHCARE LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 AUGUST 2023
- 4 -
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
PARK HEALTHCARE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF PARK HEALTHCARE LIMITED
- 5 -
We have audited the financial statements of Park Healthcare Limited (the 'company') for the year ended 31 August 2023 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, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, the financial statements:
give a true and fair view of the state of the company's affairs as at 31 August 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for qualified opinion - opening balances
The evidence available to us was limited because we were appointed as auditors on 29 May 2024 and we have been unable to carry out auditing procedures necessary to obtain adequate assurance regarding the opening balances and comparative figures as the financial statements for the year ended 31 August 2022 were unaudited. Any adjustments to the opening balances would have a consequential effect on the profit for the year. In addition, the amounts shown as corresponding amounts for the year ended 31 August 2022 may not be comparable with the figures for the current period.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified 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.
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.
As described in the basis for qualified opinion section of our report, we were unable to satisfy ourselves concerning the opening balances at 1 September 2022 and therefore have concluded that opening balances would have an impact on related balances in the financial statements.
PARK HEALTHCARE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF PARK HEALTHCARE LIMITED (CONTINUED)
- 6 -
Opinions on other matters prescribed by the Companies Act 2006
Except for the possible effects of the matter described in the basis for qualified opinion, 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.
Matters on which we are required to report by exception
In respect solely of the limitation on our work relating to opening balances, described above:
we have not obtained all the information and explanations that we considered necessary for the purpose of our audit; and
we were unable to determine whether adequate accounting records had been maintained.
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
The extent to which the audit was considered capable of detecting irregularities including fraud
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
PARK HEALTHCARE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF PARK HEALTHCARE LIMITED (CONTINUED)
- 7 -
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the sector;
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation and data protection, anti-bribery, employment, environmental and health and safety legislation;
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
reviewed and tested journal entries to identify unusual transactions and other adjustments for appropriateness, and evaluating the business rationale of significant transactions outside the normal course of business;
assessed whether judgements and assumptions made in determining the accounting estimates set out in note 2 were indicative of potential bias; and
investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
reviewing and agreeing financial statement disclosures and testing to underlying supporting documentation;
enquiring of management as to actual and potential litigation and claims; and
reviewing correspondence with HMRC and bankers.
No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity’s controls, and the nature, timing and extent of the audit procedures performed. There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
The financial statements of the company for the year ended 31 August 2022 were unaudited.
PARK HEALTHCARE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF PARK HEALTHCARE LIMITED (CONTINUED)
- 8 -
This report is made solely to the company's member in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's member those matters we are required to state to the member in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's member, for our audit work, for this report, or for the opinions we have formed.
Paresh Radia FCA
Senior Statutory Auditor
For and on behalf of RDP Newmans LLP
9 August 2024
Chartered Accountants
Statutory Auditor
Lynwood House
373-375 Station Road
Harrow
Middlesex
HA1 2AW
PARK HEALTHCARE LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 AUGUST 2023
- 9 -
Audited
Unaudited
2023
2022
Notes
£
£
Turnover
3
6,863,555
4,927,385
Cost of sales
(4,138,767)
(3,139,618)
Gross profit
2,724,788
1,787,767
Administrative expenses
(1,394,222)
(1,191,413)
Other operating income
85,595
161,281
Operating profit
4
1,416,161
757,635
Interest receivable and similar income
8
2,037
-
Interest payable and similar expenses
9
(235,415)
(28,948)
Profit before taxation
1,182,783
728,687
Tax on profit
10
(190,400)
(148,639)
Profit for the financial year
992,383
580,048
The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
PARK HEALTHCARE LIMITED
BALANCE SHEET
AS AT
31 AUGUST 2023
31 August 2023
- 10 -
Audited
Unaudited
2023
2022
Notes
£
£
£
£
Fixed assets
Goodwill
11
127,500
135,000
Tangible assets
12
6,140,006
3,473,847
6,267,506
3,608,847
Current assets
Stocks
13
210,019
210,019
Debtors
14
3,758,682
1,571,090
Cash at bank and in hand
1,461,002
1,621,676
5,429,703
3,402,785
Creditors: amounts falling due within one year
15
(1,906,952)
(1,495,227)
Net current assets
3,522,751
1,907,558
Total assets less current liabilities
9,790,257
5,516,405
Creditors: amounts falling due after more than one year
16
(5,138,284)
(1,863,750)
Provisions for liabilities
Deferred tax liability
18
197,769
190,834
(197,769)
(190,834)
Net assets
4,454,204
3,461,821
Capital and reserves
Called up share capital
20
175,000
175,000
Revaluation reserve
21
572,637
572,637
Capital redemption reserve
22
75,000
75,000
Profit and loss reserves
3,631,567
2,639,184
Total equity
4,454,204
3,461,821
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
The financial statements were approved by the board of directors and authorised for issue on 9 August 2024 and are signed on its behalf by:
Mr R D Murugupillai
Director
Company registration number 01793096 (England and Wales)
PARK HEALTHCARE LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 AUGUST 2023
- 11 -
Share capital
Revaluation reserve
Capital redemption reserve
Profit and loss reserves
Total
£
£
£
£
£
Balance at 1 September 2021
175,000
572,637
75,000
2,059,136
2,881,773
Year ended 31 August 2022:
Profit and total comprehensive income
-
-
-
580,048
580,048
Balance at 31 August 2022
175,000
572,637
75,000
2,639,184
3,461,821
Year ended 31 August 2023:
Profit and total comprehensive income
-
-
-
992,383
992,383
Balance at 31 August 2023
175,000
572,637
75,000
3,631,567
4,454,204
PARK HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2023
- 12 -
1
Accounting policies
Company information
Park Healthcare Limited is a private company limited by shares incorporated in England and Wales. The registered office is Lynwood House, 373-375 Station Road, Harrow, Middlesex, HA1 2AW.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Dalton Care Services Limited. These consolidated financial statements are available from Companies House, Crown Way, Cardiff, CF14 3UZ.
1.2
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for residential and care services provided in the normal course of business.
Revenue from the provision of residential and care services is recognised in the period in which the services were performed.
Rent receivable is recognised in the period to which the rent relates.
Other income
Non-domestic renewable heat incentive receivable is recognised in the period to which it relates to.
PARK HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2023
1
Accounting policies
(Continued)
- 13 -
1.4
Intangible fixed assets - goodwill
Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is [XXXX].
For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.
1.5
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Freehold property
50 years straight line (property improvements only)
Plant and equipment
10% straight line
Fixtures and fittings
7 years straight line
Motor vehicles
33% reducing balance
Biomass boiler
20 years straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
On adoption of FRS 15 and subsequently FRS 102, the company has followed the transitional provisions to retain the book value of land and buildings which were re-valued in 1997/98 and not to adopt a policy of revaluation. No depreciation is provided in relation to these land and buildings as the directors consider the carrying value to be equivalent to the residual value subject to impairment in accordance with FRS 102.
1.6
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
PARK HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2023
1
Accounting policies
(Continued)
- 14 -
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.7
Stocks
Flats held for sale are included at the lower of cost and net realisable value.
1.8
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.9
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
PARK HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2023
1
Accounting policies
(Continued)
- 15 -
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
PARK HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2023
1
Accounting policies
(Continued)
- 16 -
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.10
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.11
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.12
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.14
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
PARK HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2023
1
Accounting policies
(Continued)
- 17 -
1.15
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the 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.
Key sources of estimation uncertainty
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.
Accruals and provisions
Management review the accruals and provisions of costs and overheads at each reporting date so as to allocate the costs against the correct financial period.
Depreciation rates and estimated economic useful life of tangible fixed assets
Management review the useful economic lives of depreciable assets at each reporting date so as to allocate the costs of assets, less their residual value, over the estimated useful lives. Uncertainties in these estimates relate to the actual life of the tangible fixed assets.
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Care fees
6,820,598
4,902,483
Rental income
42,957
24,902
6,863,555
4,927,385
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
6,863,555
4,927,385
PARK HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2023
3
Turnover and other revenue
(Continued)
- 18 -
2023
2022
£
£
Other revenue
Interest income
2,037
-
Grants received
51,267
127,029
Renewable heat incentive received
34,328
34,252
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants
(51,267)
(127,029)
Fees payable to the company's auditor for the audit of the company's financial statements
17,500
Depreciation of owned tangible fixed assets
149,055
141,917
Amortisation of intangible assets
7,500
7,500
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
17,500
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Directors
2
2
Administration
3
3
Nursing and care home staff
148
117
Total
153
122
PARK HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2023
6
Employees
(Continued)
- 19 -
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
3,418,614
2,508,896
Social security costs
276,012
181,726
Pension costs
56,795
47,582
3,751,421
2,738,204
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
26,497
24,823
Company pension contributions to defined contribution schemes
608
-
27,105
24,823
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2022 - 1).
8
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
2,037
9
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
233,064
28,948
Other interest
2,351
235,415
28,948
10
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
183,465
88,068
PARK HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2023
10
Taxation
2023
2022
£
£
(Continued)
- 20 -
Deferred tax
Origination and reversal of timing differences
6,935
60,571
Total tax charge
190,400
148,639
The corporation tax rate has increased from 19% to 25% from 1 April 2023. The effective tax rate for the year ended 31 August 2023 was 7 months at 19% and 5 months at 25%.
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Profit before taxation
1,182,783
728,687
Expected tax charge based on the standard rate of corporation tax in the UK of 21.52% (2022: 19%)
254,476
138,451
Tax effect of expenses that are not deductible in determining taxable profit
34,377
28,391
Group relief
(18,708)
(30,486)
Capital allowances
(86,680)
(48,288)
Deferred tax movement
6,935
60,571
Taxation charge for the year
190,400
148,639
11
Intangible fixed assets
Goodwill
£
Cost
At 1 September 2022 and 31 August 2023
150,000
Amortisation and impairment
At 1 September 2022
15,000
Amortisation charged for the year
7,500
At 31 August 2023
22,500
Carrying amount
At 31 August 2023
127,500
At 31 August 2022
135,000
PARK HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2023
- 21 -
12
Tangible fixed assets
Freehold property
Plant and equipment
Fixtures and fittings
Motor vehicles
Biomass boiler
Total
£
£
£
£
£
£
Cost
At 1 September 2022
3,124,849
331,685
908,585
283,899
4,649,018
Additions
2,642,887
11,004
151,783
9,540
2,815,214
At 31 August 2023
5,767,736
342,689
1,060,368
9,540
283,899
7,464,232
Depreciation and impairment
At 1 September 2022
415,151
120,747
526,827
112,446
1,175,171
Depreciation charged in the year
4,417
30,103
97,192
3,148
14,195
149,055
At 31 August 2023
419,568
150,850
624,019
3,148
126,641
1,324,226
Carrying amount
At 31 August 2023
5,348,168
191,839
436,349
6,392
157,258
6,140,006
At 31 August 2022
2,709,698
210,938
381,758
171,453
3,473,847
13
Stocks
2023
2022
£
£
Flats held for resale
210,019
210,019
14
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
193,777
72,642
Corporation tax recoverable
4,105
Amounts owed by group undertakings
3,540,983
1,471,110
Other debtors
425
Prepayments and accrued income
23,497
23,233
3,758,682
1,571,090
PARK HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2023
- 22 -
15
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans
17
195,654
105,000
Trade creditors
488,213
460,214
Corporation tax
274,011
88,068
Other taxation and social security
98,493
43,961
Other creditors
401,616
247,756
Accruals and deferred income
448,965
550,228
1,906,952
1,495,227
16
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans and overdrafts
17
5,138,284
1,863,750
17
Loans and overdrafts
2023
2022
£
£
Bank loans
5,333,938
1,968,750
Payable within one year
195,654
105,000
Payable after one year
5,138,284
1,863,750
Bank loans and overdrafts amounting to £5,333,938 (2022: £1,968,750) have been secured by way of fixed and floating charges over all property and undertakings of the company.
There is a cross guarantee between Park Healthcare Limited and Dalton Care Services Limited, in respect of any amounts due on loans. Park Healthcare Limited is a wholly owned subsidiary of Dalton Care Services Limited.
The company has loans in place which are repayable in monthly instalments until April 2028. The loans have a variable interest rate of 2.8% above the Bank of England base rate.
18
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
197,769
190,834
PARK HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2023
18
Deferred taxation
(Continued)
- 23 -
2023
Movements in the year:
£
Liability at 1 September 2022
190,834
Charge to profit or loss
6,935
Liability at 31 August 2023
197,769
The deferred tax liability set out above is expected to reverse and relates to accelerated capital allowances that are expected to mature within 12 months.
19
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
56,795
47,582
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund. The outstanding contributions at the reporting date are £16,109 (2022: £8,609).
20
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary "A" shares of £1 each
137,800
137,800
137,800
137,800
Ordinary "B" shares of £1 each
37,200
37,200
37,200
37,200
175,000
175,000
175,000
175,000
The Ordinary A and Ordinary B shares rank pari pasu with full voting rights, distribution rights and capital distribution rights on the winding up of the company.
21
Revaluation reserve
The revaluation reserve relates to fair value on freehold land and buildings carried out at the time of the transitional provisions to retain the book value of land and buildings which were revalued in 1997/1998.
22
Capital redemption reserve
The capital redemption reserve represents the nominal value of the share capital that the company repurchased.
PARK HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2023
- 24 -
23
Financial commitments, guarantees and contingent liabilities
The company has provided a number of commitments in relation to some leasehold life time occupancy tenants, regarding the flats sold by the company. The company has agreed to repurchase the flats once the tenant has vacated the property at an agreed price. The total commitments are £150,000 as at 31 August 2023 (2022: £150,000). The directors consider that the company would be able to resell the leases at amounts not significantly below the agreed price but this is subject to prevailing market conditions in the future, the timing of which is not certain.
24
Operating lease commitments
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
3,888
11,668
Between two and five years
4,866
8,754
11,668
25
Related party transactions
The company has taken advantage of the exemption available in accordance with FRS 102 para 33.1A not to disclose transactions entered into between two or more members of a group, as the company is a wholly owned subsidiary undertaking of the group.
26
Directors' transactions
Included within other creditors is an amount of £73,344 (2022: £64,414) due to directors of the company. No interest was charged on this loan.
27
Ultimate controlling party
The company is a 100% subsidiary of Dalton Care Services Limited.
The smallest and largest group in which this company is consolidated is Dalton Care Services Limited. The consolidated financial statements of Dalton Care Services Limited are available to the public and may be obtained from Companies House, Crown Way, Cardiff, CF14 3UZ.
The ultimate controlling party in Mr R D Murugupillai.
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