Company registration number SC240996 (Scotland)
LOCHGILPHEAD HEALTHCARE SERVICES LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
LOCHGILPHEAD HEALTHCARE SERVICES LIMITED
COMPANY INFORMATION
Directors
Stewart Small
Carl Dix
John Cavill
Kirsty O'Brien
Secretary
Infrastructure Managers Limited
Company number
SC240996
Registered office
2nd Floor, Drum Suite
Saltire Court
20 Castle Terrace
Edinburgh
EH1 2EN
Independent Auditors
PricewaterhouseCoopers LLP
Chartered Accountants & Statutory Auditors
Atria One
144 Morrison Street
Edinburgh
EH3 8EX
Bankers
Bank of Ireland plc
Global Finance
Eastcheap Court
11 Philpot Lane
London
EC3M 8BA
Solicitors
CMS Cameron McKenna LLP
Mitre House
160 Aldersgate Street
London
EC1A 4DD
LOCHGILPHEAD HEALTHCARE SERVICES LIMITED
CONTENTS
Page
Directors' report
1 - 2
Directors' responsibilities statement
3
Independent auditors' report
4 - 7
Statement of comprehensive income
8
Statement of financial position
9
Statement of changes in equity
10
Notes to the financial statements
11 - 21
LOCHGILPHEAD HEALTHCARE SERVICES LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -

The directors present their annual report and the financial statements of Lochgilphead Healthcare Services Limited ("the Company") for the year ended 31 December 2023.

Principal activities

The principal activity of the company continued to be that of the provision of a hospital building and associated facilities management for Highland Health Board. The contract is in year 17 of its term, expiring in 2037.

Results and dividends

The results for the year are set out on page 8.

 

The profit for the financial year, after taxation, amounted to £868,888 (2022: £618,614).

 

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.

Ordinary dividends were paid amounting to £743,497 (2022: £206,652). The directors do not recommend payment of a further dividend.

Directors

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

Stewart Small
Carl Dix
(Appointed 2 February 2023)
John Cavill
Kirsty O'Brien
John Wrinn
(Resigned 2 February 2023)
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.

Financial instruments

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

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.

Auditors

The auditors, PricewaterhouseCoopers LLP, are deemed to be reappointed under section 487(2) of the Companies Act 2006.

Statement of disclosure to auditors

In the case of each director in office at the date the Directors' Report is approved:

 

•    so far as the director is aware, there is no relevant audit information of which the Company's auditors are unaware; and

•    they have taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

LOCHGILPHEAD HEALTHCARE SERVICES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Key performance indicators

The performance of the Company from a cash perspective is assessed six monthly by the testing of the covenants of the senior debt provider. 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 loan agreement.

 

Climate change

The directors recognise that it is important to disclose their view of the impact of climate change on the Company. The Company's key operational contracts are long-term and with a small number of known counterparties. In most cases, the cashflows from these contracts can be predicted with reasonable certainty for at least the medium-term. Having considered the Company's operations, its contracted rights and obligations and forecast cash flows, there is not expected to be a significant impact upon the Company's operational or financial performance arising from climate change.

Going concern

These financial statements have been prepared on the going concern basis for the reasons set out in the Accounting Policies.

Small companies exemption

This report has been prepared in accordance with the special provisions applicable to small companies within Part 15 of the Companies Act 2006. Exemption has also been taken from the requirement to prepare a Strategic Report.

This report was approved by the board of directors on 6 June 2024 and signed by order of the board by:
Mike Forrest
For and on behalf of Infrastructure Managers Limited
Secretary
6 June 2024
LOCHGILPHEAD HEALTHCARE SERVICES LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -

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 prepared the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland", 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 the financial statements, the directors are required to:

 

 

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.

 

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.

 

 

The financial statements were approved and signed by the director and authorised for issue on 6 June 2024

 

 

 

 

Carl Dix

Director                        

 

LOCHGILPHEAD HEALTHCARE SERVICES LIMITED
INDEPENDENT AUDITORS' REPORT
TO THE MEMBERS OF LOCHGILPHEAD HEALTHCARE SERVICES LIMITED
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
Report on the Audit of the Financial Statements
Opinion

In our opinion, Lochgilphead Healthcare Services Limited's financial statements:

 

 

 

 

We have audited the financial statements, included within the Annual Report and Financial Statements (the "Annual Report"), which comprise: the Statement of financial position as at 31 December 2023; the Statement of comprehensive income and the Statement of changes in equity for the year then ended; and the notes to the financial statements, which include a description of the significant accounting policies.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

 

Independence

We remained independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

Conclusions relating to going concern

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.

 

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.

 

However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Company's ability to continue as a going concern.

 

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

LOCHGILPHEAD HEALTHCARE SERVICES LIMITED
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBERS OF LOCHGILPHEAD HEALTHCARE SERVICES LIMITED
FOR THE YEAR ENDED 31 DECEMBER 2023
- 5 -

Reporting on other information

The other information comprises all of the information in the Annual Report other than the financial statements and our auditors' report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.

In connection with our audit of the financial statements, 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 audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. 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 based on these responsibilities.

With respect to the Directors' Report, we also considered whether the disclosures required by the UK Companies Act 2006 have been included.

Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as described below.

Directors' report

In our opinion, based on the work undertaken in the course of the audit, the information given in the Directors' report for the year ended 31 December 2023 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements.

 

In light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we did not identify any material misstatements in the Directors' Report.

Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements

As explained more fully in the Directors' Responsibilities Statement, the directors are responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are also responsible for such internal control as they 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.

LOCHGILPHEAD HEALTHCARE SERVICES LIMITED
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBERS OF LOCHGILPHEAD HEALTHCARE SERVICES LIMITED
FOR THE YEAR ENDED 31 DECEMBER 2023
- 6 -

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.

 

Based on our understanding of the company and industry, we identified that the principal risks of non­ compliance with laws and regulations related to Companies Act 2006 and UK tax legislation, and we considered the extent to which non-compliance might have a material effect on the financial statements. We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to inappropriate journal entries and the risk of management bias in accounting estimates. Audit procedures performed by the engagement team included:

 

 

 

 

 

There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

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

Use of this report

This report, including the opinions, has been prepared for and only for the Company's members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

 

Other required reporting

 

Companies Act 2006 exception reporting

Under the Companies Act 2006 we are required to report to you if, in our opinion:

 

 

 

 

 

We have no exceptions to report arising from this responsibility.

LOCHGILPHEAD HEALTHCARE SERVICES LIMITED
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBERS OF LOCHGILPHEAD HEALTHCARE SERVICES LIMITED
FOR THE YEAR ENDED 31 DECEMBER 2023
- 7 -

Entitlement to exemptions

Under the Companies Act 2006 we are required to report to you if, in our opinion, the directors were not entitled to: take advantage of the small companies exemption in preparing the Directors' report; and take advantage of the small companies exemption from preparing a strategic report. We have no exceptions to report arising from this responsibility.

Paul Cheshire (Senior Statutory Auditor)
For and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Edinburgh
6 June 2024
LOCHGILPHEAD HEALTHCARE SERVICES LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
1,993,494
1,496,959
Cost of sales
(600,483)
(437,666)
Gross profit
1,393,011
1,059,293
Administrative expenses
(170,287)
(165,788)
Operating profit
4
1,222,724
893,505
Interest receivable and similar income
6
803,720
746,541
Interest payable and similar expenses
7
(824,859)
(805,697)
Profit before taxation
1,201,585
834,349
Tax on profit
8
(332,697)
(215,735)
Profit for the financial year
868,888
618,614
Other comprehensive income
Fair value (loss)/gain on cash flow hedging instruments, net of tax
(123,163)
1,330,590
Total comprehensive income for the year
745,725
1,949,204

This income statement has been prepared on the basis that all operations are continuing operations.

The notes on pages 11 to 21 form part of these financial statements.

LOCHGILPHEAD HEALTHCARE SERVICES LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
31 December 2023
- 9 -
2023
2022
Notes
£
£
£
£
Current assets
Debtors: amounts falling due within one year
10
1,042,467
892,807
Debtors: amounts falling due after one year
10
10,332,737
11,051,774
Cash at bank and in hand
2,994,693
3,017,761
14,369,897
14,962,342
Creditors: amounts falling due within one year
11
(1,329,051)
(1,210,854)
Net current assets
13,040,846
13,751,488
Creditors: amounts falling due after more than one year
12
(10,994,111)
(11,509,640)
Provisions for liabilities
Deferred taxation
14
(1,263,234)
(1,460,575)
(1,263,234)
(1,460,575)
Net assets
783,501
781,273
Capital and reserves
Called up share capital
16
185
185
Hedging reserve
(409,376)
(286,213)
Profit and loss reserve
1,192,692
1,067,301
Total shareholders' funds
783,501
781,273

The notes on pages 11 to 21 form part of these financial statements.

The financial statements were approved by the board of directors and authorised for issue on 6 June 2024 and are signed on its behalf by:
Carl Dix
Director
Company registration number SC240996 (Scotland)
LOCHGILPHEAD HEALTHCARE SERVICES LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
Called up share capital
Hedging reserve
Profit and loss reserve
Total
Notes
£
£
£
£
Balance at 1 January 2022
185
(1,616,803)
655,339
(961,279)
Year ended 31 December 2022:
Profit for the financial year
-
-
618,614
618,614
Other comprehensive income:
Fair value movements on cash flow hedging instruments, net of tax
-
1,330,590
-
1,330,590
Total comprehensive income for the year
-
1,330,590
618,614
1,949,204
Dividends
9
-
-
(206,652)
(206,652)
Balance at 31 December 2022
185
(286,213)
1,067,301
781,273
Year ended 31 December 2023:
Profit for the financial year
-
-
868,888
868,888
Other comprehensive income:
Fair value movements on cash flow hedging instruments, net of tax
-
(123,163)
-
(123,163)
Total comprehensive income for the year
-
(123,163)
868,888
745,725
Dividends
9
-
-
(743,497)
(743,497)
Balance at 31 December 2023
185
(409,376)
1,192,692
783,501
Included in the fair value movement on cash flow hedging instrument is £30,578 (2022: £333,118) that was recycled through Interest Payable in the Statement of Comprehensive Income.

The notes on pages 11 to 21 form part of these financial statements.

LOCHGILPHEAD HEALTHCARE SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
1
Accounting policies
Company information

Lochgilphead Healthcare Services Limited ("the Company") is a private company limited by shares incorporated in the United Kingdom and is registered Scotland. The registered office is located at 2nd Floor, Drum Suite, Saltire Court, 20 Castle Terrace, Edinburgh, EH1 2EN.

 

The principal activity of the company continued to be that of the provision of a hospital building and associated facilities management for Highland Health Board. The contract is in year 17 of its term, expiring in 2037.

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, as modified by the revaluation of certain financial assets and liabilities. The principal accounting policies adopted are set out below and have been consistently applied to the years presented, unless otherwise stated.

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:

 

 

The financial statements of the company are consolidated in the financial statements of BIIF Holdco Limited. These consolidated financial statements are available from its registered office Cannon Place, 78 Cannon Street, London, EC4N 6AF

LOCHGILPHEAD HEALTHCARE SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 12 -
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.

The financial statements are prepared on a going concern basis which the directors believe to be appropriate for the following reasons;

 

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 that will prevail 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.

 

In light of this, the directors continue to adopt the going concern basis of accounting in preparing the company's annual financial statements.

1.3
Turnover

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 the finance debtor so as to generate a constant rate of return in respect of the finance debtor over the life of the contract.

1.4
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.

 

The company is obligated to keep cash reserves as at the balance sheet date 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 £1,341,724 (2022: £1,340,291).

1.5
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 statement of financial position when the company becomes party to the contractual provisions of the instrument.

Basic financial assets

Basic financial assets, which include debtors, cash and bank balances, are initially measured at transaction price including transaction costs and debtors 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 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.

LOCHGILPHEAD HEALTHCARE SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
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 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 at each reporting date. The fair values of the derivatives have been calculated by discounting the fixed cash flows at forecasted forward interest rates over the term of the financial instrument. 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.

LOCHGILPHEAD HEALTHCARE SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

1.6
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.

1.7
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.

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

1.8
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 income statement 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 income statement, 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.

LOCHGILPHEAD HEALTHCARE SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
1.9
Finance debtor

The company has taken the transition exemption in FRS102 Section 35.10(i) that allows the company to continue the service concession arrangement accounting policies from previous UK GAAP.

 

The company accounts 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 asset have been treated as a finance debtor within these financial statements.

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:

Impairment of assets

The carrying value of those assets recorded in the Company's Statement of Financial Position, at amortised cost less any impairment losses, 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 compare that with the carrying value of the asset or assets in the Statement of Financial Position. 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.

Fair value of derivative contracts

Fair values for derivative contracts are based on mark-to-market valuations provided by the contract counterparty. Whilst these can be tested for reasonableness, the exact valuation methodology and forecast assumptions for future interest rates or inflation rates are specific to the counterparty.

Service concession contract

Accounting for the service concession contract and finance debtor requires estimation of service margin, finance debtor interest rates and associated amortisation profile which is based on projected trading results to the end of the contract.

3
Turnover
2023
2022
£
£
Turnover analysed by class of business
Rendering of services
1,993,494
1,496,959
LOCHGILPHEAD HEALTHCARE SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
3
Turnover
(Continued)
- 16 -

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

4
Operating profit
2023
2022
Operating profit for the year is stated after charging:
£
£
Fees payable to the company's auditors for the audit of the company's financial statements
13,100
12,250

Included in the fee above is £2,660 (2022: £2,490) for the audit of the immediate parent entity Lochgilphead Healthcare Services (Holdings) Limited.

5
Employees

The average number of persons employed by the company during the financial year amounted to nil (2022: nil). The directors are not employed by the company and did not receive any remuneration from the Company during the year (2022: £nil).

6
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
105,763
23,753
Interest received on finance debtor
686,191
720,461
Other interest income
11,766
2,327
803,720
746,541
7
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
611,866
592,912
Interest payable to group undertakings
204,000
204,000
Other interest payable and similar expenses
8,993
8,785
824,859
805,697
LOCHGILPHEAD HEALTHCARE SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
8
Taxation on profit
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
393,579
239,957
Deferred tax
Origination and reversal of timing differences
(60,882)
(24,222)
Total tax charge
332,697
215,735

In 2021 an increase in the corporation tax rate to 25% with effect from 1 April 2023 was substantively enacted. The 23.52% rate used above reflects 9 months of this new rate and 3 months of the previous rate of 19%.

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
1,201,585
834,349
Expected tax charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
282,613
158,526
Tax effect of expenses that are not deductible in determining taxable profit
53,681
40,833
Effect of change in corporation tax rate
(3,597)
16,376
Taxation charge for the year
332,697
215,735
9
Dividends
2023
2022
2023
2022
Per share
Per share
Total
Total
£
£
£
£
Ordinary Shares
Final paid
40.19
11.17
743,497
206,652
LOCHGILPHEAD HEALTHCARE SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
10
Debtors
2023
2022
Amounts falling due within one year:
£
£
Corporation tax recoverable
32,730
34,544
Finance debtor
623,633
587,239
Prepayments and accrued income
386,104
271,024
1,042,467
892,807
2023
2022
Amounts falling due after more than one year:
£
£
Finance debtor
10,332,737
10,956,370
Deferred tax asset (note 14)
-
0
95,404
10,332,737
11,051,774
Total debtors
11,375,204
11,944,581
11
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans
13
681,947
641,303
Trade creditors
203,929
102,033
Amounts owed to group undertakings
50,875
50,875
Taxation and social security
109,509
123,775
Accruals and deferred income
282,791
292,868
1,329,051
1,210,854

The amounts owed to Group undertakings include accrued interest of £50,875 (2022: £50,875), due within the year, in respect of loan notes issued by Lochgilphead Healthcare Services (Holdings) Limited.

12
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans
13
8,895,654
9,575,400
Other borrowings
13
1,552,623
1,552,623
Derivative financial instruments
545,834
381,617
10,994,111
11,509,640
LOCHGILPHEAD HEALTHCARE SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
12
Creditors: amounts falling due after more than one year
(Continued)
- 19 -
Amounts included above which fall due after five years are as follows:
Payable by instalments
5,762,015
6,616,509
Payable other than by instalments
1,552,622
1,552,622
7,314,637
8,169,131
13
Loans and overdrafts
2023
2022
£
£
Bank loans
9,577,601
10,216,703
Loans from group undertakings
1,552,623
1,552,623
11,130,224
11,769,326
Payable within one year
681,947
641,303
Payable after one year
10,448,277
11,128,023

Bank loans are secured over the assets of the company.

The bank term loan is repayable in semi-annual instalments commencing on 30 September 2006. The final repayment date of the bank loans is 2 February 2034.

 

Bank loans bear interest based on SONIA. As part of the interest rate management strategy the company entered into an interest rate swap in respect of the majority of the debt maturing in February 2034. The loan bears interest at SONIA plus 1.0% however the Company has an interest rate swap arrangement receiving SONIA and paying interest fixed at 5.2575% for the full amount of the loan drawn, hence fixing the total interest payable on the bank loan to 6.2575%. The full amount of loan drawdowns at at December 2023 is £9,549,600 (2022: £10,197,695). Bank loans are stated inclusive of finance costs of £28,001 (2022: £19,008). These costs are allocated to the Statement of Comprehensive Income over the term of the facility using the effective interest rate method following completion of the construction.

 

Amounts owed to Group undertakings relate to loan notes issued by the company to Lochgilphead Healthcare Services (Holdings) Limited. The loan bears interest at 13% per annum and payment of capital falls due in the year 2036. The Coupon on the principal amount accrues daily and is payable in cash on 30 September and 31 March each year. Partial repayments are scheduled throughout the project however the company is not contractually obliged to make future scheduled repayments and any future repayments are at the company's discretion. The investment sum was advanced under a subordinated loan agreement and is therefore unsecured, and would rank alongside ordinary creditors in the case of winding up.

LOCHGILPHEAD HEALTHCARE SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
14
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:

Liabilities
Liabilities
Assets
Assets
2023
2022
2023
2022
Balances:
£
£
£
£
Accelerated capital allowances
1,588,907
1,666,563
-
-
Short term timing differences
(189,214)
(205,988)
-
-
Derivative financial instruments
(136,459)
-
-
95,404
1,263,234
1,460,575
-
95,404
2023
Movements in the year:
£
Liability at 1 January 2023
1,365,171
Credit to profit or loss
(60,882)
Credit to other comprehensive income
(41,055)
Liability at 31 December 2023
1,263,234

The net deferred tax liability expected to reverse in 2024 is £128,906 (2023: £117,960). This primarily relates to the reversal of timing differences on capital allowances offset by short term timing differences.

15
Financial instruments

The fair values of the interest rate swap have been calculated by discounting the fixed cash flows at forecasted forward interest rates over the term of the financial instrument. The bank borrowing and finance debtor are both held at amortised cost.

16
Called up share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary Shares of 1p each
18,500
18,500
185
185

There is a single class of ordinary share. There are no restrictions on the distribution of dividends and the repayment of capital.

LOCHGILPHEAD HEALTHCARE SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
17
Related party transactions

The company is wholly owned by Lochgilphead Healthcare Services (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.

 

The following disclosures are with related parties that are not part of the Group described above:

 

The company paid £120,823 (2022: £85,158) to BIIF Bidco Limited and its subsidiaries for the provision of two directors and management services.

 

The company paid £11,225 (2022: £10,082) to Equitix Infrastructure 4 Limited and its subsidiaries for the provision of two directors.

 

During the year Infrastructure Managers Limited, a fellow group company, provided management services to Lochgilphead Healthcare Services Limited.

18
Ultimate controlling party

The immediate parent undertaking is Lochgilphead Healthcare Services (Holdings) Limited.

 

The share capital of Lochgilphead Healthcare Services (Holdings) Limited is held in the proportions of: PFI Infrastructure Finance Limited, 55%, and Lochgilphead Holdco Limited, 45%, the share capital of which is held by Equitix Infrastructure 4 Limited. Each of these companies are registered in England and Wales.

The ultimate parent and controlling entity of Equitix Infrastructure 4 Limited is Equitix Fund IV LP. Equitix Fund IV LP is owned by a number of investors, with no one investor having individual control.

 

The ultimate parent and controlling entity of PFI Infrastructure Finance Limited is BIIF LP. BIIF LP is owned by a number of investors, with no one investor having iindividual control.

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