Company registration number 10237960 (England and Wales)
TREATMENT DIRECT LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
TREATMENT DIRECT LIMITED
COMPANY INFORMATION
Directors
D Gerrard
S Davis
(Appointed 22 August 2024)
Company number
10237960
Registered office
Unit 1, 1st Floor
Imperial Place
Maxwell Road
Borehamwood
Hertfordshire
WD6 1JN
Auditor
Gerald Edelman LLP
73 Cornhill,
London,
United Kingdom,
EC3V 3QQ
TREATMENT DIRECT LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Independent auditor's report
4 - 6
Profit and loss account
7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 21
TREATMENT DIRECT LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The directors present the strategic report for the year ended 31 December 2023.
Principal activities
The principal activity of the company continued to be that of drug and alcohol rehabilitation services.
Review of the business
The principal activity of the company continued to be that of operating rehabilitation and recovery facilities.
The key financial performance indicators during the year were as follows:
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Operating profit margin (%) | | | | |
The company continues to be profitable during the period with results which were slightly down year on year. This decrease has been caused in relation to lower consumer confidence due to the current economic climate. This decrease is believed to be short term as the need for residential rehabilitation services grows year on year.
Principal risks and uncertainties
Liquidity risk
The Company is part of a Group. All cash resources are held at Group level.
Regulatory risk
The Company’s principle activity of the provision of addiction treatment services, is a highly regulated area, covered by various UK and EU legislation. The Company has strong operating procedures in place to ensure compliance with existing legislation and has historically been able to adapt to any new legislation put in place. However any future changes in relevant legislation may require further changes which could incur costs and result in a reduction in operating profitability of the Company.
Operating risk
The Company’s activities involve the provision of services to at-risk and vulnerable clients. The company has robust policies and procedures to protect the safety of clients and staff at all times however the health risks cannot be mitigated completely. Any adverse events could have a damaging impact on the reputation of the Company and its financial performance. This financial risk is somewhat mitigated by a comprehensive level of insurance in place.
Change of control post year end
During the financial year, the company was under control of UK Addiction Treatment Group Limited. Subsequent to year end, on 6 September 2024, the Company was acquired by Panacea Bidco Limited and as a result, the ultimate parent company is now Panacea Investco Limited.
S Davis
Director
29 November 2024
TREATMENT DIRECT LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
The directors present their annual report and financial statements for the year ended 31 December 2023.
Principal activities
The principal activity of the company continued to be that of drug and alcohol rehabilitation services.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
D Gerrard
M Workman
(Resigned 30 June 2023)
N J Pike
(Appointed 30 June 2023 and resigned 22 August 2024)
S Davis
(Appointed 22 August 2024)
B Raingill
(Appointed 6 September 2024 and resigned 3 October 2024)
Results and dividends
The results for the year are set out on page 7.
No ordinary dividends were paid in respect of financial year ended 31 December 2023.The directors do not recommend payment of a final dividend.
Post reporting date events
On 5 September 2024, the entity declared a dividend of £6,000,000 to its previous immediate holding company, UK Addiction Treatment Group Limited.
On 6 September 2024, the entity was acquired by Panacea Bidco Limited. As a result, the ultimate parent company is now Panacea Investco Limited.
Auditor
The auditor, Gerald Edelman LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of directors' responsibilities
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;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
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.
TREATMENT DIRECT LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
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.
Going concern
The financial statements have been prepared on the assumption that the Company is a going concern. In the previous financial year, there was a material uncertainty due to the previous parent company, UK Addiction Treatment Group Limited, was placed into administration in 13 July 2023. Subsequent to year end, on 6 September 2024, the Company was acquired by Panacea Bidco Limited which is a going concern.
The company continues to trade profitably, and the directors have reviewed the forecast for the business for at least 12 months from the date of approval of the financial statements. The directors have therefore concluded that the company has adequate resources to continue in operational existence for the foreseeable future and thus, the going concern basis to be appropriate for the preparation of the financial statements for the year ended 31 December 2023.
On behalf of the board
S Davis
Director
29 November 2024
TREATMENT DIRECT LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF TREATMENT DIRECT LIMITED
- 4 -
Opinion
We have audited the financial statements of Treatment Direct Limited (the 'company') for the year ended 31 December 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 December 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.
Conclusion 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.
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.
TREATMENT DIRECT LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF TREATMENT DIRECT LIMITED (CONTINUED)
- 5 -
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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
We planned our audit so that we have a reasonable expectation of detecting material misstatements in the financial statements resulting from irregularities, fraud or non-compliance with law or regulations.
The extent to which the audit was considered capable of detecting irregularities including fraud
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our procedures included the following:
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.
Enquiring of management of whether they are aware of any non-compliance with laws and regulations.
Enquiring of management whether they have knowledge of any actual, suspected or alleged fraud.
Enquiring of management their internal controls established to mitigate risk related to fraud or non-compliance with laws and regulations.
Discussions amongst the engagement team on how and where fraud might occur in the financial statements and any potential indicators of fraud. As part of this discussion, we identified potential for fraud in the following areas; posting of unusual journals; fraudulent expenses.
Obtaining understanding of the legal and regulatory framework the company operates in focusing on those laws and regulations that had a direct effect on the financial statements or that had a fundamental effect on the operations. The key laws and regulations we considered in this context included UK Companies Act, tax legislation, employment law, health and safety, CQC regulations and Money Laundering Act.
TREATMENT DIRECT LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF TREATMENT DIRECT LIMITED (CONTINUED)
- 6 -
Audit response to risks identified Fraud due to management override
To address the risk of fraud through management bias and override of controls, we:
Performed analytical procedures to identify any unusual or unexpected relationships.
Audited the risk of management override of controls, including through testing journal entries for appropriateness.
Investigated the rationale behind significant or unusual transactions.
Irregularities and non-compliance with laws and regulations
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but are not limited to:
Agreeing financial statements disclosures to underlying supporting documentation.
Enquiring of management as to actual and potential litigation claims.
Reviewing correspondence with HMRC and the company’s legal advisors.
Reviewing latest CQC reports.
The test nature and other inherent limitations of an audit, together with the inherent limitations of any accounting and internal control system, mean that there is an unavoidable risk that even some material misstatements in respect of irregularities may remain undiscovered even though the audit is properly planned and performed in accordance with ISAs (UK). Furthermore, the more removed that laws and regulations are from financial transactions, the less likely that we would become aware of non-compliance. Our examination should therefore not be relied upon to disclose all such material misstatements or frauds, errors or instances of non-compliance that might exist. The responsibility for safeguarding the assets of the company and for the prevention and detection of fraud, error and non-compliance with law or regulations 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.
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.
Hemen Doshi FCCA
Senior Statutory Auditor
For and on behalf of Gerald Edelman LLP
29 November 2024
Chartered Accountants
Statutory Auditor
73 Cornhill
London
EC3V 3QQ
TREATMENT DIRECT LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 7 -
2023
2022
Notes
£
£
Turnover
2
6,482,977
7,039,805
Cost of sales
(3,230,233)
(3,098,669)
Gross profit
3,252,744
3,941,136
Administrative expenses
(1,399,587)
(817,733)
Profit before taxation
1,853,157
3,123,403
Tax on profit
6
21
Profit for the financial year
1,853,178
3,123,403
The profit and loss account has been prepared on the basis that all operations are continuing operations.
TREATMENT DIRECT LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
2023
2022
£
£
Profit for the year
1,853,178
3,123,403
Other comprehensive income
-
-
Total comprehensive income for the year
1,853,178
3,123,403
TREATMENT DIRECT LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Goodwill
7
674,997
774,997
Other intangible assets
7
1
1
Total intangible assets
674,998
774,998
Tangible assets
8
1,882,822
1,916,740
2,557,820
2,691,738
Current assets
Debtors
9
8,077,870
5,844,304
Cash at bank and in hand
32
531
8,077,902
5,844,835
Creditors: amounts falling due within one year
10
(608,219)
(362,248)
Net current assets
7,469,683
5,482,587
Net assets
10,027,503
8,174,325
Capital and reserves
Called up share capital
12
1,600,100
1,600,100
Profit and loss reserves
8,427,403
6,574,225
Total equity
10,027,503
8,174,325
The financial statements were approved by the board of directors and authorised for issue on 29 November 2024 and are signed on its behalf by:
S Davis
Director
Company registration number 10237960 (England and Wales)
TREATMENT DIRECT LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 January 2022
1,600,100
3,450,822
5,050,922
Year ended 31 December 2022:
Profit and total comprehensive income
-
3,123,403
3,123,403
Balance at 31 December 2022
1,600,100
6,574,225
8,174,325
Year ended 31 December 2023:
Profit and total comprehensive income
-
1,853,178
1,853,178
Balance at 31 December 2023
1,600,100
8,427,403
10,027,503
TREATMENT DIRECT LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
17
9,271
17,482
Income taxes refunded
1,795
Net cash inflow from operating activities
11,066
17,482
Investing activities
Purchase of tangible fixed assets
(11,565)
(96,705)
Net cash used in investing activities
(11,565)
(96,705)
Net decrease in cash and cash equivalents
(499)
(79,223)
Cash and cash equivalents at beginning of year
531
79,754
Cash and cash equivalents at end of year
32
531
TREATMENT DIRECT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
1
Accounting policies
Company information
Treatment Direct Limited is a private company limited by shares incorporated in England and Wales. The registered office is Unit 1, 1st Floor, Imperial Place, Maxwell Road, Borehamwood, Hertfordshire, WD6 1JN.
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
The financial statements have been prepared on the assumption that the Company is a going concern. In the previous financial year, there was a material uncertainty due to the previous parent company, UK Addiction Treatment Group Limited, was placed into administration in 13 July 2023. Subsequent to year end, on 6 September 2024, the Company was acquired by Panacea Bidco Limited which is a going concern.
The company continues to trade profitably, and the directors have reviewed the forecast for the business for at least 12 months from the date of approval of the financial statements. The directors have therefore concluded that the company has adequate resources to continue in operational existence for the foreseeable future and thus, the going concern basis to be appropriate for the preparation of the financial statements for the year ended 31 December 2023.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for services provided in the normal course of business. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all the following conditions are satisfied:
the amount of revenue can be measured reliably;
it is probable that the company will receive the consideration due under the contract;
the stage of completion of the contract at the end of the reporting period can be measured reliably; and
the costs incurred to complete the contract can be measured reliably.
TREATMENT DIRECT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
1.4
Intangible fixed assets - goodwill
Goodwill represents the excess of the cost of acquisition of businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years.
For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.
1.5
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
Amortisation 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:
Patents & licences
Straight line over 10 years
1.6
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Freehold buildings
1% on reducing balance
Property improvements
25% on reducing balance
Plant and equipment etc.
25% - 33% on reducing balance
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.7
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
TREATMENT DIRECT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.8
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.9
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
TREATMENT DIRECT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
TREATMENT DIRECT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.10
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.11
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.12
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.14
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.
TREATMENT DIRECT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
2
Turnover
2023
2022
£
£
Turnover analysed by class of business
6,482,977
7,039,805
The whole of turnover is attributable to the principal activity of the company wholly undertaken in the United Kingdom.
3
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange gains
(300)
Fees payable to the company's auditor for the audit of the company's financial statements
Depreciation of owned tangible fixed assets
45,483
120,291
Amortisation of intangible assets
100,000
100,000
4
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
76
74
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
1,576,849
1,518,929
Social security costs
125,209
128,706
Pension costs
34,054
33,838
1,736,112
1,681,473
5
Auditor's remuneration
The audit fee is borne by the company's parent company.
6
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
(21)
TREATMENT DIRECT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
6
Taxation
(Continued)
- 18 -
The main rate of corporation tax increased from 19% to 25% in April 2023.
The actual (credit)/charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Profit before taxation
1,853,157
3,123,403
Expected tax charge based on the standard rate of corporation tax in the UK of 23.50% (2022: 19.00%)
435,492
593,447
Tax effect of expenses that are not deductible in determining taxable profit
34,218
41,855
Group relief
(442,020)
(629,576)
Other deductions
(27,711)
(5,726)
Taxation credit for the year
(21)
-
7
Intangible fixed assets
Goodwill
Patents & licences
Total
£
£
£
Cost
At 1 January 2023 and 31 December 2023
999,997
1
999,998
Amortisation and impairment
At 1 January 2023
225,000
225,000
Amortisation charged for the year
100,000
100,000
At 31 December 2023
325,000
325,000
Carrying amount
At 31 December 2023
674,997
1
674,998
At 31 December 2022
774,997
1
774,998
TREATMENT DIRECT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
8
Tangible fixed assets
Freehold buildings
Property improvements
Plant and equipment etc.
Fixtures and fittings
Computers
Total
£
£
£
£
£
£
Cost
At 1 January 2023
1,775,415
152,521
45,411
131,170
15,894
2,120,411
Additions
1,279
10,286
11,565
At 31 December 2023
1,776,694
152,521
45,411
141,456
15,894
2,131,976
Depreciation and impairment
At 1 January 2023
54,997
41,456
18,114
79,097
10,007
203,671
Depreciation charged in the year
2,795
15,405
6,855
17,926
2,502
45,483
At 31 December 2023
57,792
56,861
24,969
97,023
12,509
249,154
Carrying amount
At 31 December 2023
1,718,902
95,660
20,442
44,433
3,385
1,882,822
At 31 December 2022
1,720,418
111,065
27,297
52,073
5,887
1,916,740
9
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
372,109
214,831
Corporation tax recoverable
1,774
Amounts owed by group undertakings
7,655,103
5,550,158
Prepayments and accrued income
50,658
77,541
8,077,870
5,844,304
10
Creditors: amounts falling due within one year
2023
2022
£
£
Trade creditors
140,541
15,129
Other creditors
34,787
-
Accruals and deferred income
432,891
347,119
608,219
362,248
TREATMENT DIRECT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
11
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
34,054
33,838
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.
12
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
100
100
1,600,100
1,600,100
13
Financial commitments, guarantees and contingent liabilities
The company has given unlimited guarantees in favour of other group companies in support of certain borrowings of those entities. The combined borrowings for those entities amounted to £21,308,436 (2022: £22,486,847) as at the year end. Subsequent to year end, these charges were satisfied.
14
Related party transactions
The company has taken the advantage of the exemption in Paragraph 33.1.A within FRS 102 to not disclose transactions entered into between two or more members of a group, provided that any subsidiary which is party to the transactions is wholly owned by such a member.
15
Ultimate controlling party
The immediate parent company is UK Addiction Treatment Group Limited, a company incorporated in the United Kingdom. The ultimate parent company as at the year end is UKAT Holdings LLC, a company incorporated in the USA. UK Addiction Treatment Group Limited was placed in administration on 13 July 2023 and the company is now under the control of the appointed administrators.
On 6 September 2024, the entity was acquired by Panacea Bidco Limited. As a result, the ultimate parent company is now Panacea Investco Limited.
16
Post balance sheet event
On 5 September 2024, the entity declared a dividend of £6,000,000 to its previous immediate holding company, UK Addiction Treatment Group Limited.
TREATMENT DIRECT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
17
Cash generated from operations
2023
2022
£
£
Profit for the year after tax
1,853,178
3,123,403
Adjustments for:
Taxation credited
(21)
Amortisation and impairment of intangible assets
100,000
100,000
Depreciation and impairment of tangible fixed assets
45,483
120,291
Movements in working capital:
Increase in debtors
(2,235,340)
(3,200,854)
Increase/(decrease) in creditors
245,971
(125,358)
Cash generated from operations
9,271
17,482
18
Analysis of changes in net funds
1 January 2023
Cash flows
31 December 2023
£
£
£
Cash at bank and in hand
531
(499)
32
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