The directors present the strategic report for the year ended 31 December 2023.
The principal activity of the group is to operate two outpatient fertility and gynaecology clinics, The Evewell Harley Street, located at 61 Harley Street, that opened in October 2018 and, The Evewell West London, located at 182 Hammersmith Road, that opened in May 2022.
The group made a pre-tax profit of £929,414 (2022: £646,932) for the year on turnover of £14,518,585 (2022: £12,162,772).
At 31 December 2023, the group had net liabilities of £1,679,445 (2022: £1,478,185). The movement in the balance sheet position is due to the positive results for the year offset against dividends paid to the shareholders.
The group’s key financial performance indicators are revenue and operating profit.
The key financial and other performance indicators for the group are as follows:
| 2023 | 2022 |
Revenue | £14,518,585 | £12,162,772 |
Operating profit | £1,492,445 | £1,331,578 |
The group has grown revenue by 19% from £12.2 million to £14.5 million, driven primarily by growth in egg collection cycles and the trading of the new clinic for a full year in 2023. Gross margin was consistent at 81%, and operating profit margin decreased slightly from 11% in 2022 to 10% in 2023. The decrease is due to increased administration expenses.
The latest publicly available clinical success rates are available on the website of the company, at www.evewell.com, and the website of the Human Fertilisation and Embryology Authority (HFEA).
As a clinic that provides comprehensive fertility and gynaecological services, the group has clinical quality and safety risks. The group maintains strict operating procedures and processes for the provision of patient care as well as in the laboratories, which are managed though a quality management system and quality management team. The group also invests in advanced laboratory technologies, an electronic medical records system and an electronic quality management system to provide safe and efficient care. The key area of focus for the group is providing high quality patient care that also ensures the safety of patients and staff.
The group, which is regulated by the HFEA and the Care Quality Commission, strives to maintain the highest standards.
A principal risk of the group is clinical and general liability, which is managed through its operating procedures and processes and various insurance policies, including healthcare liability insurance.
The group is subject to data protection and cyber risk from information technology systems failure, threats to data protection and cybercrime. These risks are mitigated through a cyber insurance policy, as well as regular review and certification through Cyber Essentials.
The main risks associated with the group's financial assets and liabilities are set out below.
Credit risk, liquidity risk and cash flow risk
The directors do not consider these risks to be material risks to the business, given that the majority of income is
received as at the time of providing the service.
Price risk
The directors regularly monitor the price competitiveness of the services offered. The directors consider that pricing is in line with competitors operating in similar parts of the market in the UK.
There have been no significant changes in the business activities post year-end. The business has been trading well during 2024 and is profitable at the time of approving these financial statements. The directors have prepared forecasts and believe the group will continue to be profitable for the foreseeable future.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2023.
The results for the year are set out on page 8.
Ordinary dividends were paid amounting to £750,000. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Please refer to note 25 for details of all post reporting date events.
The auditor, HW Fisher LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
We have audited the financial statements of The Evewell Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2023 which comprise the group profit and loss account, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group 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 FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the 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.
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 group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our 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.
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.
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and the directors' report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
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 parent 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.
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.
Detection of irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
As part of our planning process:
We enquired of management the systems and controls the group and parent company has in place, the areas of the financial statements that are mostly susceptible to the risk of irregularities and fraud, and whether there was any known, suspected or alleged fraud. The group and parent company did not inform us of any known, suspected or alleged fraud.
We obtained an understanding of the legal and regulatory frameworks applicable to the group and parent company. We determined that the following were most relevant: HFEA, CQC, FRS 102 and Companies Act 2006.
We considered the incentives and opportunities that exist in the group and parent company, including the extent of management bias, which present a potential for irregularities and fraud to be perpetuated, and tailored our risk assessment accordingly.
Using our knowledge of the group and parent company, together with the discussions held with the group and parent company at the planning stage, we formed a conclusion on the risk of misstatement due to irregularities including fraud and tailored our procedures according to this risk assessment.
The key procedures we undertook to detect irregularities including fraud during the course of the audit included:
Identifying and testing journal entries and the overall accounting records, in particular those that were significant and unusual.
Reviewing the financial statement disclosures and determining whether accounting policies have been appropriately applied.
Reviewing and challenging the assumptions and judgements used by management in their significant accounting estimates, in particular in relation to the valuation of share options.
Assessing the extent of compliance, or lack of, with the relevant laws and regulations.
Reviewing the inspection reports from HFEA visit and correspondence with the regulator to identify potential breaches.
Testing key revenue lines, in particular cut-off, for evidence of management bias.
Performing a physical verification of key assets.
Obtaining third-party confirmation of material bank and loan balances.
Documenting and verifying all significant related party balances and transactions.
Reviewing documentation such as the company board minutes for discussion of irregularities including fraud.
Testing all material consolidation adjustments.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements even though we have properly planned and performed our audit in accordance with auditing standards. The primary responsibility for the prevention and detection of irregularities and fraud rests with the directors.
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.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an 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.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the period was £679,087 (2022 - £147,017 loss).
The Evewell Group Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 61 Harley Street, London, England, W1G 8QU.
The group consists of The Evewell Group Limited and all of its subsidiaries.
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 are set out below.
The consolidated group financial statements consist of the financial statements of the parent company The Evewell Group Limited together with all entities controlled by the parent company (its subsidiaries).
On 9 July 2021, The Evewell Group Limited became the parent company of The Evewell (Harley Street) Limited following a group reorganisation. The group financial statements have been prepared in accordance with the merger accounting principles as permitted by FRS 102 paragraph 19.27 on the basis that the ultimate equity holders remain the same, and the rights of each equity holder, relative to the others, are unchanged. The Evewell (West London) Limited was incorporated and brought into the group as a subsidiary of The Evewell Group Limited on 12 May 2021.
All financial statements are made up to 31 December 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
The company is a holding company and therefore does not generate revenue. As of 31 December 2023, the company's balance sheet had a net asset position of £18,949 (2022: £89,824) and the group's balance sheet had a net liability position of £1,679,445 (2022: £1,478,185). The business has been trading well during 2024 and is profitable at the time of approving these financial statements. The directors have prepared forecasts and believe the group will continue to be profitable for the foreseeable future. The group also has the on-going support of the principal investors who provided loans to the business, should support be required. Accordingly the directors have a reasonable expectation that the group will 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.
Turnover is recognised at the fair value of the consideration received or receivable for services provided in the normal course of business.
Deferred income is recognised in line with annual storage fees for storage of medical sample.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
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 derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group 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.
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 group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans and loans from fellow group companies 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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs.
The tax expense represents the sum of the tax currently payable and deferred 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 group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
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 if, and only if, there is 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.
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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the Black Scholes model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.
The expense in relation to options over the parent company’s shares granted to employees of a subsidiary is recognised by the company as a capital contribution, and presented as an increase in the company’s investment in that subsidiary.
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 leased asset are consumed.
In the application of the group’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.
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.
The parent company has granted share options to employees of its subsidiaries. The fair value of the share based payments is determined at the grant date and the calculation requires estimates to be made as to the valuation of the company's share capital, discount rates and the likelihood of the options vesting. The directors consider these assumptions to be reasonable based on the current size and conditions of the company and the sector it operates in.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2022 - 2).
The actual charge/(credit) 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:
The group has tax losses carried forward of £2,931,389 (2022: £4,441,923).
Factors that may affect future tax charges
Changes to the UK corporation tax rates were substantially enacted as part of the 2021 budget on 3 March 2021. This included an increase to the main rate from 19% to 25% from April 2023. The group will be taxed at a rate of 25% unless its profits are sufficiently low enough to qualify for a lower rate of tax, the lowest being 19%.
Where applicable, deferred taxes at the balance sheet date have been measured using a tax rate of 25% to reflect the rate that the timing differences are likely to unwind and are reflected in the financial statements.
Details of the company's subsidiaries at 31 December 2023 are as follows:
Within amounts owed by group undertakings is an unsecured loan for £nil (2022: £1,150,000) which attracts interest at 10% and is repayable in full in 2026. The loan was fully repaid in 2023 and the remaining balance relates to interest still due.
Amounts owed to group undertakings are unsecured and repayable on demand.
The loans are in the form of three separate forms of loan stock, issued to certain shareholders, created by deed dated 2 November 2017, 25 July 2019 and 9 July 2021. Each tranche of loan stock is repayable in full on the 5th anniversary of issue. The loan stock dated 2 November 2017 is secured against all property and assets of The Evewell (Harley Street) Limited, both present and future, for the duration of the loans. The remaining loans are unsecured. The loans attract interest at 10%. Interest is included within accruals and deferred income in these financial statements.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The deferred tax asset set out above is expected to reverse within 12 months and relates to the utilisation of tax losses against future expected profits of the same period.
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
The directors have granted the following options to employees of the group. On exercise, these will be satisfied by the issue of new shares to the employee.
Of the options outstanding at 31 December 2023, 5,256 (2022: 7,155) had an exercise price of £0.02 and 7,136 (2022: nil) had an exercise price of £1.08, and all options have an indefinite remaining contractual life.
On 16 May 2022, the company passed a special resolution to reduce the share premium of the company by the sum of £1,500,000 and such sum be transferred to the profit and loss account of the company.
On 24 May 2022 625 ordinary share options were exercised by shareholders for £12.50 (see note 22). Ordinary shares hold the right to one vote per share held and the right to participate in dividend payments or any other distribution of assets of the company. The shares are not redeemable or liable to be redeemed at the option of the company or the shareholder.
On 7 December 2022, the company passed a special resolution to reduce the share premium of the company by the sum of £499,000 and such sum be transferred to the profit and loss account of the company.
On 7 June 2023 and 18 July 2023, 950 ordinary share options were exercised by shareholders for £19 and 949 ordinary share options were exercised by shareholders for £18.98 respectively (see note 22). Ordinary shares hold the right to one vote per share held and the right to participate in dividend payments or any other distribution of assets of the company. The shares are not redeemable or liable to be redeemed at the option of the company or the shareholder.
The ordinary shares have the right to one vote per share held and the right to participate in dividend payments or any other distribution of assets of the company (including on a winding-up of the company). The shares are not redeemable or liable to be redeemed at the option of the company or the holder.
The A ordinary shares have the right to one vote per share held and the right to participate in dividend payments or any other distribution of assets of the company (including on a winding-up of the company). The shares are not redeemable or liable to be redeemed at the option of the company or the holder.
The H1 ordinary shares have the right to participate in return of capital on liquidation or otherwise, if proceeds available for distribution among shareholders meets hurdle, in paying holders 15% of proceeds available for distribution in excess of hurdle, capped at £4m, or if proceeds available for distribution among shareholders is less than hurdle, in paying holders £10. The H1 ordinary shares have no right to vote and no right to participate in dividend payments. The shares are not redeemable or liable to be redeemed at the option of the company or the holder.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
On 11 July 2024, 949 ordinary share options were exercised by shareholders for £18.98. Ordinary shares hold the right to one vote per share held and the right to participate in dividend payments or any other distribution of assets of the company. The shares are not redeemable or liable to be redeemed at the option of the company or the shareholder.
On 27 June 2024, the company received an interim dividend of £1,600,000 from its subsidiary company, The Evewell (Harley Street) Limited.
On 28 June 2024, the company approved and paid a dividend of £1,400,000, representing £1.727605908 per share to the holders of Ordinary and A Ordinary shares.
On 10 September 2024, the company received an interim dividend of £800,000 from its subsidiary company, The Evewell (Harley Street) Limited.
On 11 September 2024, the company approved and paid a dividend of £800,000, representing £0.986048644 per share to the holders of Ordinary and A Ordinary shares.
At 31 December 2023 The Evewell (Harley Street) Limited owed £440 (2022: £376) to the directors.