Company registration number 06413394 (England and Wales)
CAPITA HEALTH HOLDINGS LIMITED
ANNUAL REPORT AND UNAUDITED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
CAPITA HEALTH HOLDINGS LIMITED
COMPANY INFORMATION
Directors
D Howitt on behalf of Capita Corporate Director Limited
G Bate-Williams
(Appointed 14 August 2024)
Secretary
Capita Group Secretary Limited
Company number
06413394
Registered office
65 Gresham Street
London
England
EC2V 7NQ
Banker
Barclays Bank PLC
1 Churchill Place
London
United Kingdom
E14 5HP
CAPITA HEALTH HOLDINGS LIMITED
CONTENTS
Page
Strategic report
1 - 6
Directors' report
7 - 8
Income statement
9
Balance sheet
10 - 11
Statement of changes in equity
12
Notes to the financial statements
13 - 25
CAPITA HEALTH HOLDINGS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The Directors present their Strategic report and financial statements for the year ended 31 December 2023.
Capita Health Holdings Limited ('the Company') is a wholly owned subsidiary (indirectly held) of Capita plc. Capita plc, along with all its subsidiaries' is hereafter referred to as 'the Group'.
Principal activities
The principal activity of the Company is that of carrying on the business of a holding and investment Company. On 31 July 2023, the Company disposed of its investment in subsidiary CHKS Limited to Adv Finance Holding Limited. There have not been any significant changes in the Company's principal activities in the year under review. The Directors are not aware, at the date of this report, of any likely major changes in the Company's activities in the next year.
Review of the business
As shown in Company's income statement on page 9, the Company's loss before tax has increased from £117,832 in 2022 to profit before tax of £3,290,724 in 2023 mainly due to dividends received from subsidiaries during the year.
The balance sheet on pages 10 to 11 of the financial statements shows the financial position at the year end. Net liabilities have decreased from £78,831,971 in 2022 to £75,770,843 in 2023 primarily due to profits earned by the Company during the year.
Details of the amounts owed by/to its parent company and fellow subsidiary companies are shown in notes 9 and10 to the financial statements.
Although the Company is in a net current liability position, the ultimate parent company has stated that it will provide continuing financial assistance to the Company for the foreseeable future.
The Company has not identified any key performance indicators due to the nature of its operations as a holding company and as described in the principal activities above.
CAPITA HEALTH HOLDINGS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Principal risks and uncertainties
The Company is exposed to a wide range of risks that, should they materialise, could have a detrimental impact on financial performance, reputation or operational resilience. The Company’s risk management framework provides a consistent approach to the identification, assessment, monitoring and reporting of risks and opportunities. The risk management process is based on risk registers and risk reporting at the established risk governance committees. Key risks are documented in the risk registers and have assigned risk owners who review them regularly, and report on them at least quarterly, as part of the risk reporting process. The strength of existing controls is evaluated to determine whether any further mitigating actions are needed to manage the risk level to within the risk appetite set by the Board.
As a holding company, majority of Company’s assets consists of investments in subsidiary companies, accordingly principal risks of the Company relate to its inability to recover the carrying value of its investments due to adverse conditions in markets where its subsidiaries operate.
The principal risks for the Company are:
Financial stability
Maintain financial stability and achieve financial targets.
Cyber security
Protect our systems, networks and programs from unauthorised use and access.
ESG
Comply with regulatory and contractual requirements to drive a purpose driven organisation with the right focus on governance.
Data governance and data privacy
Manage our data effectively (both clients and Capita) as a strategic asset across the organisation.
As a subsidiary of Capita plc, the Company is subject to controls and risk governance techniques applied across all the Group's businesses. Details of the specific risk assessments and mitigating actions are outlined on pages 57-63 of the Group's 2023 Annual Report.
CAPITA HEALTH HOLDINGS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
Section 172 statement
Capita plc’s section 172 statement applies to its Divisions and the Company to the extent it relates to the Company’s activities. Common policies and practices are applied across the Group through divisional management teams and a common governance framework. The following disclosure describes how the Directors have regard to the matters set out in section 172(1)(a) to (f) and forms the Directors’ statement as required under section 414CZA of the Companies Act 2006.
Further details of the Group’s approach to each stakeholder are provided in Capita plc’s section 172 statement on pages 45, 46 and 47 of Capita plc’s 2023 Annual Report.
Our People
Why they are important
They deliver our business strategy; they support the organisation to build a values-based culture; and they deliver our products and services ensuring client satisfaction.
What matters to them
Flexible working; learning and development opportunities leading to career progression; fair pay and benefits as a reward for performance; and two-way communication and feedback.
How we engaged
People surveys
Regular all-employee communications
Employee director on the Capita plc Board
Employee focus groups and network groups
Workforce engagement on remuneration
Regular ‘breakfast’ sessions with the Executive Committee for our colleagues
Topics of engagement
Creating an inclusive workplace
Health and wellbeing
Speak Up policy
Directors’ remuneration
Acting on survey feedback
The career path framework
The redundancy consultation programme announced in November 2023
Outcomes and actions
The 2023 employee survey showed key indices had either improved or remained steady with a five-point increase in the eNPS compared with 2022. 63% of colleagues who responded felt proud to work at Capita. We are developing and delivering a range of action plans, including ensuring our leaders feel confidence in, and ownership of Capita’s strategy, plans and successes, developing inclusive opportunities for internal career mobility.
In December 2023, the Board agreed that while the appointment of employee directors had been successful, it was appropriate for the Board to consider a wider level of engagement with colleagues, including site visits arranged for individual directors to meet with local management and colleagues at Capita’s businesses. In addition, the Board has appointed Nneka Abulokwe as the designated non-executive director to engage with colleagues. Adolfo Hernandez, our new CEO, has also commenced a series of breakfast sessions to meet with colleagues of differing seniority and at different locations throughout the Group. Janine Goodchild stepped down from the Board as an employee director on 31 December 2023.
The UK real living wage increase was applied from 1 April 2023. At the end of 2023, we took the difficult decision to withdraw from the UK’s real living wage. Since 2020, the Group has increased the salaries of our lowest earners by 22% and the 2024 real living wage increase of 10.1% was not something we could commit to given the need for Capita to remain cost competitive and reflecting the fact that this is not a cost we are able to pass on to clients.
CAPITA HEALTH HOLDINGS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
Section 172 statement (continued)
The global career path framework which defines career levels, career job content, and reward framework within Capita was launched during the year.
In October 2023, Capita was recognised by Forbes, as being one of the top companies for women, ranking at number 18 out of 400 global companies on their list.
We continued to promote our Speak Up policy throughout the organisation.
Risks to stakeholder relationship
Our ability to recruit due to the national and global labour market demand for resources
Our ability to retain and develop people, impacting our quality of service and our financial performance
Our ability to evolve our culture and practices in line with our responsible business agenda
Key metrics
Voluntary attrition, employee NPS, employee engagement Index and people survey completion level.
Clients and customers
Why they are important
They are recipients of Capita’s services; and Capita’s reputation depends on consistent and timely delivery of the services they need from us.
What matters to them
High-quality service delivery; delivery of transformation projects within agreed timeframes; and responsible and sustainable business credentials.
How we engaged
Client meetings and surveys
Regular meetings with government stakeholders and annual review with the Cabinet Office
Through our customer advisory boards
Through our senior client partner programme giving an experienced single point of contact for key clients and customers
Introductory meetings and correspondence with the new CEO and new interim CEO, Capita Public Service
Topics of engagement
Current service delivery
Transition and mobilisation of services
Capita’s digital transformation capabilities
Possible future services
Co-creation of client value propositions
The cyber incident
Ongoing benefits of hybrid working on client services
Outcomes and actions
Feedback provided to business units to address any issues raised; client value proposition teams supporting divisions with co-creation ideas; direct customer and sector feedback; and senior client partner programme undertaking client-focused growth sprints to build understanding of client issues and ideas to help address them.
Risks to stakeholder relationship
Loss of business by not providing the services that our clients and customers want
Damage to reputation by not delivering to the requirements of our clients and customers
Loss of customers for our clients
Key metrics
Customer NPS; specific feedback on client engagements.
CAPITA HEALTH HOLDINGS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 5 -
Section 172 statement (continued)
Suppliers and Partners
Why they are important
They share our values and help us deliver our purpose; maintain high standards in our supply chain; and achieve social, economic and environmental benefits aligned to the Social Value Act. Our suppliers and partners provide additional expertise, skill and technology, elevating our offering.
What matters to them
Payments made within agreed payment terms; clear and fair procurement process; building lasting commercial relationships; and working inclusively with all types of business.
How we engaged
Supplier meetings throughout source to procure process
Regular reviews with suppliers
Supplier questionnaires and risk assessments
Topics of engagement
Outcomes and actions
Our supplier charter, which is available on our website, remains at the core of strengthening our commitments and sets out how we conduct business in an open, honest and transparent manner, and what we expect of our suppliers. This year, it was refreshed and relaunched.
To understand Capita’s Scope 3 carbon footprint, a supplier engagement programme was also undertaken with suppliers accounting for £1bn annual spend (over 50% of the supply chain by spend) to ask them to disclose their carbon emissions to CDP.
During 2023, 99% of our suppliers were paid within 60 days.
Risks to stakeholder relationship
Key metrics
99% of supplier payments within agreed terms; SME spend allocation; and supplier diversity profile.
CAPITA HEALTH HOLDINGS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 6 -
Section 172 statement (continued)
Society
Why they are important
Capita is a provider of key services to government impacting a large proportion of the population.
What matters to them
Social mobility; youth skills and jobs; digital inclusion; diversity and inclusion; climate change; business ethics; accreditations and benchmarking; and cost of living crisis.
How we engaged
Membership of non-governmental organisations
Charitable and community partnerships
External accreditations and benchmarking
Working with clients, suppliers and the Cabinet Office
Topics of engagement
Youth employment
Workplace inequalities
Diversity & inclusion
Climate change
Outcomes and actions
Youth and employability programme such as Social Shifters; ranked 18 on the Forbes Global list of top employers for women; a 5% reduction in our gender pay gap (compared with 2022); awarded Employer’s Network for Equality and Inclusion; achieved a silver Tidemark and an A CDP (Carbon Disclosure Project) score as well as a silver medal in EcoVadis for Capita plc.
Risks to stakeholder relationship
Key metrics
Community investment, workforce diversity and ethnicity data, including pay gaps.
D Howitt on behalf of Capita Corporate Director Limited
Director
17 September 2024
CAPITA HEALTH HOLDINGS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 7 -
The Directors present their Directors' Report and Financial statements for the year ended 31 December 2023.
Results and dividends
The results for the year are set out on page 9.
No dividends were paid out or proposed during the year (2022 : £nil).
Directors
The Directors, who held office during the year and up to the date of signature of the financial statements were as follows:
D Howitt on behalf of Capita Corporate Director Limited
E H Brownell
(Resigned 19 August 2024)
G Bate-Williams
(Appointed 14 August 2024)
Political donations
The Company made no political donations and incurred no political expenditure during the year (2022: £nil).
Statement of Directors' responsibilities
The Directors are responsible for preparing the Strategic report, the Directors’ report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with United Kingdom ('UK') accounting standards and applicable law (UK Generally Accepted Accounting Practice), including FRS 101 Reduced Disclosure Framework.
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 its profit or loss 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 estimates that are reasonable and prudent;
state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
assess the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and use the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
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 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, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.
Strategic report
In accordance with s414c(11) of the Companies Act 2006, the Company has set out certain information in its Strategic report that is otherwise required to be disclosed in the Directors' report. This includes information regarding results and activities and a description of the principle risks and uncertainties facing the Company.
CAPITA HEALTH HOLDINGS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
Qualifying third party indemnity provisions
The Company has granted an indemnity to the directors of the Company against liability in respect of proceedings brought by third parties, subject to the conditions set out in the Companies Act 2006. Such qualifying third-party indemnity provisions remains in force as at the date of approving the directors' report.
On behalf of the board
D Howitt on behalf of Capita Corporate Director Limited
Director
17 September 2024
CAPITA HEALTH HOLDINGS LIMITED
INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
2023
2022
Notes
£
£
Administrative expenses
(571)
(211,777)
Investment income
6
2,485,623
6,991,002
Impairments
(6,982,815)
Net finance income
4
805,672
85,758
Profit/(loss) before tax
3,290,724
(117,832)
Income tax (charge)/credit
5
(229,596)
23,944
Profit/(loss) and total comprehensive income/(expense) for the year
3,061,128
(93,888)
The income statement has been prepared on the basis that all operations are continuing operations.
The notes and information on pages 13 to 25 form an integral part of these financial statements.
CAPITA HEALTH HOLDINGS LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 10 -
2023
2022
Notes
£
£
Non-current assets
Investments in subsidiaries
7
5,283,114
9,236,508
5,283,114
9,236,508
Current assets
Trade and other receivables
9
39,030,327
31,189,807
Income tax receivable
23,597
39,030,327
31,213,404
Total assets
44,313,441
40,449,912
Current liabilities
Trade and other payables
10
119,861,175
119,265,551
Financial liabilities
11
17,457
16,332
Income tax payable
205,652
Total liabilities
120,084,284
119,281,883
Net liabilities
(75,770,843)
(78,831,971)
CAPITA HEALTH HOLDINGS LIMITED
BALANCE SHEET (CONTINUED)
AS AT
31 DECEMBER 2023
31 December 2023
2023
2022
Notes
£
£
- 11 -
Capital and reserves
Issued share capital
12
20,000
20,000
Share premium
1,980,000
1,980,000
Retained deficit
(77,770,843)
(80,831,971)
Total deficit
(75,770,843)
(78,831,971)
The notes and information on pages 13 to 25 form an integral part of these financial statements.
For the financial year ended 31 December 2023, the company was entitled to exemption from audit under section 479A of the Companies Act 2006 relating to subsidiary companies.
The Directors acknowledge their responsibilities for complying with the requirements of the Companies Act 2006 with respect to accounting records and the preparation of financial statements.
The members have not required the company to obtain an audit of its financial statements for the year in question in accordance with section 476.
These financial statements were approved by the board of directors and authorised for issue on 17 September 2024 and are signed on its behalf by:
D Howitt on behalf of Capita Corporate Director Limited
Director
Company registration number 06413394 (England and Wales)
CAPITA HEALTH HOLDINGS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
Share capital
Share premium
Retained deficit
Total deficit
£
£
£
£
At 1 January 2022
20,000
1,980,000
(80,738,083)
(78,738,083)
Loss for the year
-
-
(93,888)
(93,888)
At 31 December 2022
20,000
1,980,000
(80,831,971)
(78,831,971)
Profit for the year
-
-
3,061,128
3,061,128
At 31 December 2023
20,000
1,980,000
(77,770,843)
(75,770,843)
Share capital
The balance classified as share capital is the nominal proceeds on issue of the Company's equity share capital, comprising 20,000 ordinary shares of £1 each.
Share premium
The amount paid to the Company by shareholders, in cash or other consideration, over and above the nominal value of the shares issued to them less issuance costs.
Retained deficit
Net profits accumulated in the Company after dividends are paid.
The notes and information on pages 13 to 25 form an integral part of these financial statements.
CAPITA HEALTH HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 13 -
1
Accounting policies
1.1
Basis of preparation
Capita Health Holdings Limited is a Company incorporated, registered and domiciled in the United Kingdom .
The financial statements are prepared under the historical cost basis except where stated otherwise and in accordance with applicable accounting standards .
In determining the appropriate basis of preparation for the annual report and financial statements for the year ended 31 December 2023, the Company’s Directors (‘the Directors’) are required to consider whether the Company can continue in operational existence for the foreseeable future, being a period of at least twelve months following the approval of these financial statements. The Directors have concluded that it is appropriate to adopt the going concern basis, having undertaken a rigorous assessment of the financial forecasts, key uncertainties, and sensitivities, as set out below.
Accounting standards require that ‘the foreseeable future’ for going concern assessment covers a period of at least twelve months from the date of approval of these financial statements, although those standards do not specify how far beyond twelve months the Directors should consider. In its going concern assessment, the Directors have considered the period from the date of approval of these financial statements to 31 December 2025 (‘the going concern period’) and which aligns to the period considered by the Directors of the ultimate parent company, Capita plc.
Board assessment
The financial forecasts used for the going concern assessment are derived from financial projections for 2024-2025 for the Company which have been subject to review and challenge by management and the Directors. The Directors have approved the projections.
Inter-dependency with Capita plc ('the Group')
The Director’s assessment of going concern has considered the extent to which the Company’s ability to remain a going concern is inter-dependent with that of the Group. The Company has dependency with the Group in respect of the following:
provision of certain services, such as administrative support services and should the Group be unable to deliver these services, the Company would have difficulty in continuing to trade; and
recovery of receivables of £52,022,642 from fellow Group companies as of 31 August 2024. If these receivables are not able to be recovered when forecast by the Company, then the Company may have difficulty in continuing to trade.
Despite the Company being in a net liability and is loss making the ultimate parent undertaking, Capita plc, has stated that it will provide continuing financial support as necessary and to the extent it is able to do so.
The financial projections are dependent on the Group providing additional financial support over the period to 31 December 2025 (the ‘going concern period’) and not seeking repayment of the amounts currently due, which at 31 December 2023 amounts to £119,861,175. The Group has indicated its intention to provide financial support to the Company in order to meet its liabilities as and when they fall due, but only to the extent that money is not otherwise available to the Company to meet such liabilities.
As with any company placing reliance on other group entities for financial support, the Directors acknowledge that there can be no certainty that this support will continue although, at the date of approval of these financial statements, they have no reason to believe that it will not do so.
Given the reliance the Company has on the Group, the Directors have considered the financial position of the ultimate parent undertaking as disclosed in its most recent condensed consolidated financial statements, being for the six months period ended 30 June 2024.
CAPITA HEALTH HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
Basis of Preparation (continued)true
Ultimate parent undertaking – Capita plc
The Capita plc Board (‘the Board’) concluded that it was appropriate to adopt the going concern basis, having undertaken a rigorous assessment of the financial forecasts, key uncertainties, sensitivities, and mitigations when preparing the Group’s condensed consolidated financial statements for the period ended 30 June 2024. These condensed consolidated financial statements were approved by the Board on 1 August 2024 and are available on the Group’s website (www.capita.com/investors). Below is a summary of the position at 1 August 2024:
Accounting standards require that ‘the foreseeable future’ for going concern assessment covers a period of at least twelve months from the date of approval of these condensed consolidated financial statements, although those standards do not specify how far beyond twelve months a Board should consider. In its going concern assessment, the Board has considered the period from the date of approval of these condensed consolidated financial statements to 31 December 2025, which aligns with a period end and covenant test date for the Group.
The base case financial forecasts used in the going concern assessment are derived from financial projections for 2024-2025 business plans as approved by the Board in June 2024.
The going concern assessment considers the Group’s sources and uses of liquidity and covenant compliance throughout the period under review.
Board assessment
Under the base case scenario, the Group’s transformation programme and completion of the Portfolio non-core business disposal programme in January 2024 has simplified and strengthened the business and facilitates further efficiency savings enabling sustainable growth in revenue, profit and cash flow over the medium term. When combined with available committed facilities, this allows the Group to manage scheduled debt repayments. The most material sensitivities to the base case are the risk of not delivering the planned revenue growth and efficiency savings from the Group's previously announced restructuring programme.
The base case projections used for going concern assessment purposes reflect business disposals completed up to the date of approval of these condensed financial statements and the agreed sale of the Capita One business because the completion of the disposal has been assessed to be highly probable. The liquidity headroom assessment in the base case projections reflects the Group’s existing committed financing facilities and debt redemptions and does not reflect any potential future refinancing. The base case financial forecasts demonstrate liquidity headroom and compliance with all debt covenant measures throughout the going concern period to 31 December 2025.
In considering severe but plausible downside scenarios, the Board has taken account of the potential adverse financial impacts resulting from the following risks:
• revenue growth falling materially short of plan;
• operating profit margin expansion not being achieved;
• targeted cost savings delayed and/or not delivered;
• unforeseen operational issues leading to contract losses and cash outflows;
• sustained interest rates at current levels;
• non-availability of the Group’s non-recourse receivables financing facility; and
• unexpected financial costs linked to incidents such as data breaches and/or cyber-attacks.
CAPITA HEALTH HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
Basis of Preparation (continued)
The likelihood of simultaneous crystallisation of the above risks is considered by the directors to be low. Nevertheless, in the event that simultaneous crystallisation were to occur, the Group would need to take action to mitigate the risk of insufficient liquidity and covenant headroom. In its assessment of going concern, the Board has considered the mitigations, under the direct control of the Group, that could be implemented including reductions or delays in capital investment, substantially reducing (or removing in full) bonus and incentive payments. The Board considered the impact of the above risks and mitigations on the Group both in the scenario where the Capita One disposal does occur, and if it were not to occur. In the event of the simultaneous crystallisation of risks and the Capita One disposal does not complete, the Board also considered the ability of the Group to refinance a portion of the 2025 maturing debt. Taking these mitigations into account, the Group’s financial forecasts, in a severe but plausible downside scenario, demonstrate sufficient liquidity headroom and compliance with all debt covenant measures throughout the going concern period to 31 December 2025.
Adoption of going concern basis by the Group:
Reflecting the levels of liquidity and covenant headroom in the base case and severe but plausible downside scenario, the Group continues to adopt the going concern basis in preparing these consolidated financial statements. The Board has concluded that the Group will be able to continue in operation and meet its liabilities as they fall due over the period to 31 December 2025.
Conclusion
Although the Company has a reliance on the Group as detailed above, even in a severe but plausible downside for both the Company and the Group, the Directors are confident the Company will continue to have adequate financial resources to continue in operation and discharge its liabilities as they fall due over the period to 31 December 2025 (the ‘going concern period’). Consequently, the annual report and financial statements have been prepared on the going concern basis.
CAPITA HEALTH HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
1.2
Compliance with accounting standards
The Company has applied FRS101 – Reduced Disclosure Framework in the preparation of its financial statements.
The Company has prepared and presented these financial statements by applying the recognition, measurement and disclosure requirements of international accounting standards in conformity with the requirements of the Companies Act 2006 .
The Company's ultimate parent company, Capita plc, includes the Company in its consolidated statements. The consolidated financial statements are prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and with UK-adopted International Financial Reporting Standards ('IFRSs') and the Disclosure and the Transparency Rules of the UK's Financial Conduct Authority. They are available to the public and may be obtained from Capita plc’s website on https://www.capita.com/investors .
In these financial statements, the Company has applied the disclosure exemptions available under FRS 101 in respect of the following disclosures:
A cash flow statement and related notes;
Comparative period reconciliations for share capital;
Disclosures in respect of transactions with wholly owned subsidiaries;
Disclosures in respect of capital management;
The effects of new but not yet effective IFRSs; and
Disclosures in respect of the compensation of key management personnel.
Since the consolidated financial statements of Capita plc include equivalent disclosures, the Company has also taken the disclosure exemptions under FRS 101 available in respect of the following disclosure:
Certain disclosures required by IAS 36 in respect of the impairment of goodwill, indefinite life intangible assets and investment in subsidiaries; and
Certain disclosures required by IFRS 7 and certain disclosure exemptions as permitted by IFRS 13 Fair value measurement.
1.3
Change in accounting policies
The Company has adopted the new amendments to standards detailed below but they do not have a material effect on the Company's financial statements.
New amendments or interpretations | |
IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts | |
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) | |
Definition of Accounting Estimates (Amendments to IAS 8) | |
Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12) | |
International Tax Reform - Pillar Two Model Rules (Amendments to IAS 12) | |
CAPITA HEALTH HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 17 -
1.4
Investments
The Company has investments in subsidiaries and associates.
Investments in subsidiaries and associates are initially recorded at cost. Subsequently they are reviewed for impairment if events or changes in circumstances indicate the carrying value may not be recoverable.
At each balance sheet date, the Company assesses whether there are indicators to reverse the previously recognised impairment loss. The reversals of impairment are only recognised where there has been a change in the estimates used to determine the investment’s recoverable amount since the last impairment loss was recognised.
1.5
Financial instruments
Investments and other financial instruments
Classification
The Company classifies its financial instruments in the following measurement categories:
The classification depends on the Company’s business model for managing the financial assets and the contractual terms of the cash flows.
Recognition and derecognition
At initial recognition, the Company measures a financial instrument at its fair value plus, in the case of a financial instrument not at FVPL, transaction costs that are directly attributable to the acquisition of the financial instrument. Transaction costs of financial instruments carried at FVPL are expensed in the income statement.
Financial instruments with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
Purchases and sales of financial instruments are recognised on their trade date (i.e., the date the Company commits to purchase or sell the instrument). Financial instruments are derecognised when the rights to receive/pay cash flows from the financial instrument have expired or have been transferred such that the Company has transferred substantially all risks and rewards of ownership.
Impairment
The Company assesses, on a forward-looking basis, the expected credit losses associated with its financial instruments carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
CAPITA HEALTH HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 18 -
Financial instruments (continued)
Trade and other receivables
Trade receivables are initially recognised at cost (being the same as fair value) and subsequently at amortised cost less any provision for impairment, to ensure the amounts recognised represent their recoverable amount.
For trade receivables, the Company applies the simplified approach permitted by IFRS 9 Financial instruments, resulting in trade receivables recognised and carried at original invoice amount less an allowance for any uncollectible amounts based on expected credit losses. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
Derecognition: A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised (i.e., removed from the Company’s balance sheet) when (i) the rights to receive the cash flows from the asset have expired; or, (ii) the Company has transferred its right to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Company has transferred substantially all the risk and rewards of the asset; or, (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Trade and other payables
Trade and other payables are recognised initially at cost (being same as fair value). Subsequent to initial recognition they are measured at amortised cost using the effective interest method.
Interest-bearing loans and borrowings
All loans and borrowings are initially recognised at their fair value less any directly attributable transaction costs. After initial recognition, loans and borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the income statement over the period of the borrowings using the effective interest method.
Gains and losses are recognised in the income statement when the liabilities are derecognised, as well as through the amortisation process.
1.6
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity or other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax assets and unused tax losses can be utilised, except where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
CAPITA HEALTH HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 19 -
Taxation (continued)
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.
1.7
Group accounts
The financial statements present information about the Company as an individual company and not about its Group. The Company has not prepared Group accounts because it is fully exempt from the requirement to do so by section 400 of the Companies Act 2006 since it is a subsidiary company of Capita plc, a company incorporated in England and Wales, and is included in the consolidated financial statements of that company.
1.8
Current vs Non-current classification
The Company presents assets and liabilities in the balance sheet based on whether they are current or non-current.
An asset is current when it is:
Expected to be realised or intended to be sold or consumed in the normal operating cycle;
Held primarily for the purpose of trading;
Expected to be realised within twelve months after the balance sheet date; or
Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the balance sheet date.
All other assets are classified as non-current.
A liability is current when:
It is expected to be settled in the normal operating cycle;
It is held primarily for the purpose of trading;
It is due to be settled within twelve months after the balance sheet date; or
There is no unconditional right to defer the settlement of the liability for at least twelve months after the balance sheet date.
The Company classifies all other liabilities as non-current.
2
Significant accounting judgements, estimates and assumptions
The preparation of financial statements in conformity with generally accepted accounting principles requires the directors to make judgements and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingencies at the date of the financial statements and the reported income and expense during the reported periods. Although these judgements and assumptions are based on the Directors' best knowledge of the amount, events or actions, actual results may differ.
The key sources of estimation uncertainty that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year are the estimation of the recoverable amount of investments in subsidiaries. The measurement of value in use of investments involves estimation of future cash flows and the selection of a suitable discount rate.
CAPITA HEALTH HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
3
Profit/(loss) for the year
2023
2022
Profit/(loss) for the year is stated after charging
£
£
Impairment of Investment
6,982,815
Cost of disposal of investments
895,688
311,648
4
Net finance income
2023
2022
£
£
Interest income
Interest receivable from Group companies
806,419
85,923
806,419
85,923
Interest expense
Interest expense on bank overdrafts and loans
(747)
(165)
(747)
(165)
Total net finance income
805,672
85,758
5
Income tax
The major components of income tax charge/(credit) are:
2023
2022
£
£
Current tax
UK corporation tax
189,364
(23,944)
Adjustments in respect of prior periods
40,232
229,596
(23,944)
CAPITA HEALTH HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
5
Income tax
The major components of income tax charge/(credit) are:
(Continued)
- 21 -
The reconciliation between tax charge/credit and the accounting profit/(loss) multiplied by the UK corporation tax rate for the years ended 31 December 2023 and 2022 is as follows:
2023
2022
£
£
Profit/(loss) before taxation
3,290,724
(117,832)
Expected tax charge/(credit) based on the weighted average Corporation Tax rate of 23.52% (2022: 19.00%)
773,997
(22,388)
Expenses not deductible for tax purpose
4,596
1,326,734
Non-taxable income
(589,229)
(1,328,290)
Adjustment in respect of current income tax of prior periods
40,232
Total adjustments
(544,401)
(1,556)
Total tax charge/(credit) reported in the income statement
229,596
(23,944)
A change to the main UK corporation tax rate was substantively enacted on 24 May 2021. The rate applicable from 1 April 2023 increases from 19% to 25%.
6
Investment income
2023
2022
£
£
Dividend income from shares in subsidiary companies
2,505,166
6,991,002
Loss on disposal of investment
(19,543)
-
2,485,623
6,991,002
Investment income includes dividend in specie declared by its subsidiary CHKS Limited and Capita Health And Wellbeing Limited in advance of their disposal and liquidation settled via amounts due from Capita plc.
CAPITA HEALTH HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
7
Investments
Subsidiaries
£
Cost
At 1 January 2023
37,873,709
Derecognition ◙
(100)
Disposals ◄
(14,253,833)
At 31 December 2023
23,619,776
Impairment
At 1 January 2023
28,637,201
Derecognition ◙
(100)
Disposals ◄
(10,300,439)
At 31 December 2023
18,336,662
Net book value
At 31 December 2023
5,283,114
At 31 December 2022
9,236,508
CAPITA HEALTH HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
7
Investments
(Continued)
- 23 -
◄ During the year, the Company has sold its investments in CHKS Limited to Adv Finance holding Limited. The loss on disposal of these investments has been recognised in the income statement.
◙ The Company has derecognised its investments of £100 in Medicals Direct International Limited, following their dissolution in accordance with the wider Group restructuring plan. There is no impact on the income statement in the current year or the net book value of the investments as a result of this derecognition.
The Company considered whether there was an indicator of impairment in investments in subsidiaries at 31 December 2023. At 31 December 2023 the Company’s ultimate parent company, Capita plc, identified an indicator of impairment existed due to the market capitalisation of the Group being below the carrying value of Capita plc’s net assets. As a holding company for the Group, this indicator of impairment is also considered to be relevant for the Company, and so an impairment test was carried out for the Company. Impairment test was performed at the balance sheet date, comparing the carrying value of each subsidiary investment held by the Company with its recoverable amount. The recoverable amount has been determined using fair value less costs of disposal. For non-trading subsidiaries this is based on the net asset value of the entity as at 31 December 2023, which is considered to not be materially different to the fair value derived by other means. For all other entities, recoverable amount is estimated on a discounted cash flow basis. Recoverable amounts will also factor in the recoverable amount of an entity’s direct and indirect subsidiaries.
The cash flow projections used for the impairment test are derived from the 2024-2026 business projections approved by the Board. The enterprise value is then calculated based on the present value of estimated future cash flows discounted at the current market rate of return. The enterprise value of each investment has then been adjusted for cash and other debt like items, including working capital and long-term intercompany balances. The long-term growth rate is based on economic growth forecasts by recognised bodies and this has been applied to the forecast cash flows for the terminal period. The 2023 long-term growth rate is 1.7% (2022: 2.2%). For deriving fair value less cost of disposal (FVLCOD), management estimates discount rates using pre-tax rates that reflect the latest market assumptions for the risk-free rate, the equity risk premium and the net cost of debt, which are all based on publicly available external sources. The average pre-tax discount rate used for the impairment test is 11.0% (2022: 11.8%). No further risk adjustment has been made to discount rates applied to outer years for the purpose of the impairment test.
At 31 December 2023, as a result of the Company’s impairment test, investments in subsidiaries were not impaired as the recoverable value being NAV of its subsidiaries were higher than the carrying value of the investments (2022: £61,796).
8
List of Subsidiaries
Details of the company's subsidiaries at 31 December 2023 are as follows:
Name of company
Address
Class of
% Held
shares held
Direct
Indirect
Capita Health And Wellbeing Limited
1
Ordinary
100.00
-
Clinical Solutions Holdings Limited
1
Ordinary
100.00
-
Cymbio Limited
1
Ordinary
100.00
-
Contact Associates Limited
1
Ordinary
100.00
-
Clinical Solutions Finance Limited
1
Ordinary
-
100.00
Clinical Solutions Acquisition Limited
1
Ordinary
-
100.00
Clinical Solutions International Limited
1
Ordinary
-
100.00
Clinical Solutions IP Limited
1
Ordinary
-
100.00
Registered office addresses (all UK unless otherwise indicated):
1
1 More London Place, London, SE1 2AF
CAPITA HEALTH HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 24 -
9
Trade and other receivables
Current
2023
2022
£
£
Amounts due from Group companies
39,030,327
31,189,807
39,030,327
31,189,807
Amounts due from group companies are repayable on demand. These are not chargeable to interest except for the amounts due from Capita Plc, on which interest is charged as per the prevailing Bank of England rates.
10
Trade and other payables
Current
2023
2022
£
£
Amount due to Group companies
119,861,175
119,265,551
119,861,175
119,265,551
Amounts due to group companies are repayable on demand and are not chargeable to interest.
11
Financial liabilities
Current
2023
2022
£
£
Bank overdrafts
17,457
16,332
17,457
16,332
12
Share capital
2023
2022
2023
2022
Number
Number
£
£
Allotted, called up and fully paid
Ordinary shares of £1 each
At 1 January and 31 December
20,000
20,000
20,000
20,000
13
Employees
There were no employees during the year apart from the Directors (2022: None).
All directors are paid by other companies within the Capita Group. The Company has not paid any fees or other remuneration to the Group based Directors related to the directorship role they provided to the Company as a part of their Group-wide executive management role. The Company has estimated that allocation of the qualifying services that these Group based Directors provided to the Company is inconsequential.
CAPITA HEALTH HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 25 -
14
Controlling party
The company's immediate parent undertaking is Capita Holdings Limited, a company incorporated in England and Wales.
The company's ultimate parent undertaking is Capita plc, a company incorporated in England and Wales. The accounts of Capita plc are available from the registered office at 65 Gresham Street, London, United Kingdom, EC2V 7NQ.
15
Post balance sheet date events
On 8 Jan 2024, the Company received dividend in specie amounting to £12,140,280 from Clinical Solutions Holdings Limited in advance of its liquidation.
There are no other significant events which have occurred after the reporting period.
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