Company Registration No. 04209709 (England and Wales)
EAST AND WEST HEALTHCARE LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
EAST AND WEST HEALTHCARE LIMITED
COMPANY INFORMATION
Directors
Miss N Choudhry
Miss N Ali
(Appointed 1 November 2022)
Miss R Khan
(Appointed 1 November 2022)
Company number
04209709
Registered office
The Mews Nursing Home
Fenton Street
Rochdale
England
OL11 3TH
Auditor
Rogers Spencer
Newstead House
Pelham Road
Nottingham
NG5 1AP
EAST AND WEST HEALTHCARE LIMITED
CONTENTS
Page
Strategic report
2
Directors' report
1
Directors' responsibilities statement
3
Independent auditor's report
4 - 7
Profit and loss account
8
Statement of comprehensive income
9
Balance sheet
11
Statement of changes in equity
10
Statement of cash flows
12
Notes to the financial statements
13 - 22
EAST AND WEST HEALTHCARE LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MAY 2023
- 1 -
The directors present their annual report and financial statements for the year ended 31 May 2023.
Results and dividends
The results for the year are set out on page 8.
Ordinary dividends were paid amounting to £335,000. 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 A Choudhry
(Resigned 1 November 2022)
Miss N Choudhry
Mr C M Ali
(Resigned 1 November 2022)
Miss N Ali
(Appointed 1 November 2022)
Miss R Khan
(Appointed 1 November 2022)
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
Miss R Khan
Director
30 August 2024
EAST AND WEST HEALTHCARE LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MAY 2023
- 2 -
The directors present the strategic report for the year ended 31 May 2023.
Principal activities
The principal activity of the company is that of the provision of residential nursing health care for the elderly.
Review of the business
Turnover for 2023: £6,485,258 (2022: £5,947,597) - 9.0 % increase from previous year
Cost of Sales 2023: £356,029 (2022: £321,858) - 10.6% increase from previous year
Profit before tax 2023: £96,691 (2022: £601,541) - 83.9% decrease from previous year
Bank debt over 1 year 2023: £1,591,832 (2022: £1,625,659) - 2.1% decrease from previous year
The business profitability has seen a decrease over the last few years, this has been due to a number of factors including lack of staffing and high cost of living and low occupancy in two homes due to changes in management in Rochdale and low demand in Rotherham.
Due to the above challenges the company will continue to show weak profit in 23-24 however due to actions taken to secure operations managers to support managers, recruitment from abroad which has led to a more stable workforce, the company will begin to see significant improvement in 24-25. This will be due to stable management in Braeside which has increased occupancy from 50% to 90%. There will be some improvement on energy bills with gas coming down by 70% and a decrease in the electricity costs in Mews and Roche Abbey. The company is working hard to reduce staffing costs and in negotiation with the council for better fees and this will put the company in a stronger position in 24-25.
The dependency of the residents received into the home is significantly higher than previously and this has led to higher staff levels which has meant significant increases in wages, the company is working with the council to ensure that the business is being paid appropriately for the clients, this will ensure that wage bills for the homes will decrease as a percentage of turnover.
The market in Rochdale is very stable and homes are achieving high occupancy levels , the company is still continuing to work in Rotherham to increase the occupancy and have secured a contract with Doncaster which should boost the occupancy of the home going forward.
Principal risks and uncertainties
The care sector still has a lot of uncertainty with regard to staffing and to help this the company has began recruitment from abroad to stabilise the workforce and reduce agency usage. This however comes with increased initial costs as recruitment of one employee from abroad costs £5,000 and then there are additional costs involved in training them and to support nurses to do their conversion to obtain a UK Pin. The business envisages that the benefits of this will not be seen short term, but it will support the company and increase profitability long term.
There has also been the added uncertainty with the cost of living and in particular the increase in energy prices which have increased from previous levels. Over the coming years there will be a drop in these as the market begins to recover. The business has begun to look at solar panels to see if these would help to reduce costs.
Miss R Khan
Director
30 August 2024
EAST AND WEST HEALTHCARE LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MAY 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 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.
EAST AND WEST HEALTHCARE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF EAST AND WEST HEALTHCARE LIMITED
- 4 -
Opinion
We have audited the financial statements of East and West Healthcare Limited (the 'company') for the year ended 31 May 2023 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 May 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.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We draw your attention to note 10 in the financial statements which describes uncertainty of the valuation of the property at the carrying value of £5,926,592.
We do not modify our opinion with regard to this matter.
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.
We have nothing to report in this regard.
EAST AND WEST HEALTHCARE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF EAST AND WEST HEALTHCARE LIMITED (CONTINUED)
- 5 -
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of 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.
EAST AND WEST HEALTHCARE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF EAST AND WEST HEALTHCARE LIMITED (CONTINUED)
- 6 -
The extent to which the audit was considered capable of detecting irregularities including fraud
Our approach to identifying and assessing the risk of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
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 residential care home 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;
Considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations; and
Understanding the design of the company’s remuneration policies.
To address the risk of fraud through management bias and override of controls, we:
Performed analytical procedures to identify any unusual or unexpected relationships;
Tested journal entries to identify unusual transactions;
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:
Agreeing financial statement disclosures to underlying supporting documentation;
Enquiring of management as to actual and potential litigation and claims; and
Reviewing correspondence with HMRC, relevant regulators and the company’s legal advisors.
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.
EAST AND WEST HEALTHCARE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF EAST AND WEST HEALTHCARE LIMITED (CONTINUED)
- 7 -
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an 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 members as a body, for our audit work, for this report, or for the opinions we have formed.
Alistair Allcock
Senior Statutory Auditor
For and on behalf of Rogers Spencer
30 August 2024
Chartered Accountants
Statutory Auditor
Newstead House
Pelham Road
Nottingham
NG5 1AP
EAST AND WEST HEALTHCARE LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MAY 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
6,485,258
5,947,597
Cost of sales
(356,029)
(321,858)
Gross profit
6,129,229
5,625,739
Administrative expenses
(6,156,353)
(5,359,063)
Other operating income
255,934
380,794
Operating profit
4
228,810
647,470
Interest payable and similar expenses
7
(132,119)
(45,929)
Profit before taxation
96,691
601,541
Tax on profit
8
(30,185)
(113,113)
Profit for the financial year
66,506
488,428
The profit and loss account has been prepared on the basis that all operations are continuing operations.
EAST AND WEST HEALTHCARE LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MAY 2023
- 9 -
2023
2022
£
£
Profit for the year
66,506
488,428
Other comprehensive income
Tax relating to other comprehensive income
(152,227)
Total comprehensive income for the year
(85,721)
488,428
EAST AND WEST HEALTHCARE LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MAY 2023
- 10 -
Share capital
Share premium account
Revaluation reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 June 2021
16,500
464,000
2,055,062
1,748,395
4,283,957
Year ended 31 May 2022:
Profit and total comprehensive income
-
-
-
488,428
488,428
Dividends
9
-
-
-
(340,000)
(340,000)
Balance at 31 May 2022
16,500
464,000
2,055,062
1,896,823
4,432,385
Year ended 31 May 2023:
Profit
-
-
-
66,506
66,506
Other comprehensive income:
Tax relating to other comprehensive income
-
-
(152,227)
(152,227)
Total comprehensive income
-
-
(152,227)
66,506
(85,721)
Dividends
9
-
-
-
(335,000)
(335,000)
Balance at 31 May 2023
16,500
464,000
1,902,835
1,628,329
4,011,664
EAST AND WEST HEALTHCARE LIMITED
BALANCE SHEET
- 11 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
10
6,179,842
6,232,192
Current assets
Stocks
11
8,505
16,410
Debtors
12
1,319,862
781,900
Cash at bank and in hand
810,617
784,291
2,138,984
1,582,601
Creditors: amounts falling due within one year
13
(2,040,691)
(1,239,042)
Net current assets
98,293
343,559
Total assets less current liabilities
6,278,135
6,575,751
Creditors: amounts falling due after more than one year
14
(1,591,832)
(1,625,659)
Provisions for liabilities
Deferred tax liability
16
674,639
517,707
(674,639)
(517,707)
Net assets
4,011,664
4,432,385
Capital and reserves
Called up share capital
18
16,500
16,500
Share premium account
464,000
464,000
Revaluation reserve
1,902,835
2,055,062
Profit and loss reserves
1,628,329
1,896,823
Total equity
4,011,664
4,432,385
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 30 August 2024 and are signed on its behalf by:
Miss R Khan
Director
Company registration number 04209709 (England and Wales)
EAST AND WEST HEALTHCARE LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MAY 2023
- 12 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
21
489,665
690,971
Interest paid
(132,119)
(45,929)
Income taxes paid
(44,246)
(80,000)
Net cash inflow from operating activities
313,300
565,042
Investing activities
Purchase of tangible fixed assets
(35,646)
(44,186)
Repayment of loans
40,000
Net cash generated from/(used in) investing activities
4,354
(44,186)
Financing activities
Repayment of bank loans
(73,828)
(113,829)
Dividends paid
(217,500)
(340,000)
Net cash used in financing activities
(291,328)
(453,829)
Net increase in cash and cash equivalents
26,326
67,027
Cash and cash equivalents at beginning of year
784,291
717,264
Cash and cash equivalents at end of year
810,617
784,291
EAST AND WEST HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
- 13 -
1
Accounting policies
Company information
East and West Healthcare Limited is a private company limited by shares incorporated in England and Wales. The registered office is The Mews Nursing Home, Fenton Street, Rochdale, England, OL11 3TH.
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.
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 goods and services provided in the normal course of business.
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Land and buildings Freehold
No depreciation
Fixtures, fittings & equipment
15% straight line & 25% straight line
In the opinion of the directors, in order for the accounts to show a true and fair view, no depreciation is charged in respect of freehold land and buildings.
1.5
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
1.6
Stocks
Stocks are stated at the lower of cost and estimated selling price.
1.7
Financial instruments
EAST AND WEST HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 14 -
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.
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.
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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.8
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.
1.9
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
EAST AND WEST HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 15 -
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.
1.10
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.
1.11
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.12
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.
1.13
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
EAST AND WEST HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 16 -
1.14
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
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.
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Residential nursing health care
6,485,258
5,947,597
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
6,485,258
5,947,597
2023
2022
£
£
Other revenue
Grants received
255,934
380,794
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants
(255,934)
(380,794)
Depreciation of owned tangible fixed assets
87,996
85,301
Operating lease charges
9,422
2,573
EAST AND WEST HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 17 -
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
9,100
12,000
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
228
207
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
4,402,367
3,916,670
Pension costs
40,952
43,150
4,443,319
3,959,820
7
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
85,930
45,929
Other finance costs:
Other interest
46,189
132,119
45,929
8
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
25,480
117,391
Deferred tax
Origination and reversal of timing differences
4,705
(4,278)
Total tax charge
30,185
113,113
EAST AND WEST HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
8
Taxation
(Continued)
- 18 -
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
96,691
601,541
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2022: 19.00%)
24,173
114,293
Permanent capital allowances in excess of depreciation
(13,950)
(13,109)
Depreciation on assets not qualifying for tax allowances
21,999
16,207
Deferred tax adjustments in respect of prior years
4,705
(4,278)
Tax at marginal rate
(6,742)
Taxation charge for the year
30,185
113,113
In addition to the amount charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:
2023
2022
£
£
Deferred tax arising on:
Revaluation of property
152,227
-
9
Dividends
2023
2022
£
£
Interim paid
335,000
340,000
EAST AND WEST HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 19 -
10
Tangible fixed assets
Land and buildings Freehold
Fixtures, fittings & equipment
Total
£
£
£
Cost or valuation
At 1 June 2022
5,926,592
763,693
6,690,285
Additions
35,646
35,646
At 31 May 2023
5,926,592
799,339
6,725,931
Depreciation and impairment
At 1 June 2022
458,093
458,093
Depreciation charged in the year
87,996
87,996
At 31 May 2023
546,089
546,089
Carrying amount
At 31 May 2023
5,926,592
253,250
6,179,842
At 31 May 2022
5,926,592
305,600
6,232,192
Land and buildings with a carrying amount of £5,140,000 were revalued at 13 November 2019 by Clydesdale Bank plc, independent valuers not connected with the company on the basis of market value. The valuation conforms to International Valuation Standards and was based on recent market transactions on arm's length terms for similar properties.
On 21 August 2023, the Company engaged Christie & Co to provide an updated valuation of the four properties. This Report reduced the valuation for the four properties to £5,000,000 in total. The Directors believe market conditions have deteriorated between the year end and August 2023 and therefore consider the 2019 valuation to be the most appropriate method to use.
Land and buildings are carried at valuation. If land and buildings were measured using the cost model, the carrying amounts would have been approximately £2,897,560 (2022 - £2,965,350), being cost £3,389,479 (2022 - £3,389,479) and depreciation £491,919 (2022 - £424,129).
11
Stocks
2023
2022
£
£
Finished goods and goods for resale
8,505
16,410
12
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
1,269,487
733,725
Prepayments and accrued income
50,375
48,175
1,319,862
781,900
EAST AND WEST HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 20 -
13
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans
15
73,828
113,829
Trade creditors
692,847
339,825
Corporation tax
151,742
170,508
Other taxation and social security
472,760
266,944
Dividends payable
117,500
Other creditors
311,891
190,439
Accruals and deferred income
220,123
157,497
2,040,691
1,239,042
14
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans and overdrafts
15
1,591,832
1,625,659
15
Loans and overdrafts
2023
2022
£
£
Bank loans
1,665,660
1,739,488
Payable within one year
73,828
113,829
Payable after one year
1,591,832
1,625,659
The bank loan is secured by way of debenture and legal charges over the properties owned by the company.
16
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
40,361
35,656
Revaluations
634,278
482,051
674,639
517,707
EAST AND WEST HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
16
Deferred taxation
(Continued)
- 21 -
2023
Movements in the year:
£
Liability at 1 June 2022
517,707
Charge to profit or loss
4,705
Charge to other comprehensive income
152,227
Liability at 31 May 2023
674,639
17
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
40,952
43,150
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.
18
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
16,500
16,500
16,500
16,500
19
Operating lease commitments
Lessee
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
56,948
56,168
Between two and five years
28,888
21,943
85,836
78,111
20
Analysis of changes in net debt
1 June 2022
Cash flows
31 May 2023
£
£
£
Cash at bank and in hand
784,291
26,326
810,617
Borrowings excluding overdrafts
(1,739,488)
73,828
(1,665,660)
(955,197)
100,154
(855,043)
EAST AND WEST HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 22 -
21
Cash generated from operations
2023
2022
£
£
Profit for the year after tax
66,506
488,428
Adjustments for:
Taxation charged
30,185
113,113
Finance costs
132,119
45,929
Depreciation and impairment of tangible fixed assets
87,996
85,301
Movements in working capital:
Decrease in stocks
7,905
10
Increase in debtors
(577,962)
(430,052)
Increase in creditors
742,916
388,242
Cash generated from operations
489,665
690,971
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