The Director presents this Group Strategic Report together with the audited financial statements for the year ended 31 May 2024.
The Consolidated Statement of Comprehensive Income on page 12 shows Group turnover of £116,203,304, an increase of 19% in the year (2023 - £97,640,080). The gross profit in the year ended 31 May 2024 was £44,505,269, (2023 - £34,889,215) with profit before tax of £3,925,047 (2023 - £2,021,598).
The significant increase in revenues is attributed to a growth within the existing portfolio of businesses and the further maturing of start-up businesses. The only acquisition in the year was EQL Limited, which contributed £1,888,774 of revenue in the period. The increase is considered to be extremely pleasing given market conditions and the general economic climate during the year.
The acquisitions in the past part of a continued strategy to diversify the Group away from historic core markets, including medico-legal evidence and associated medical services in relation to road traffic accidents, where legislative changes have significantly impacted the market size. The Group's acquisition strategy has continued in the new year with the acquisition of 3 businesses, enhancing the range and reach of services offered by the Group.
On 1 June 2024 the Group acquired 100% of the issued share capital of Osiris Health Limited. The consideration, inclusive of deal costs was £195,450.
Also on 1 June 2024 the Group acquired 75% of the issued share capital of PSP Paediatric & Neuro Rehabilitation Limited. The consideration, inclusive of deal costs was £2,031,134. At the same time the Group entered into a Put & Call option with the vendor to acquire the remaining 25% of the issued share capital. The Put & Call option period is between the date of the signing of the year ended 31 May 2027 statutory accounts and 30 November 2027. The option price is to be calculated as 4 times the EBITDA for the year ended 31 May 2027, plus the increase in surplus cash since the original acquisition date, times 25%.
On 1 August 2024 the Group acquired 100% of the issued share capital of Children's Services Network Limited trading as Willis Palmer. The initial acquisition cost, inclusive of deal costs was £761,215. A further payment is payable to the vendor dependent upon the profitability of Children's Services Network Limited in the 10 months ended 31 May 2025, calculated as being five times the annualised EBITDA, less the initial consideration paid.
The MedCo system introduced in April 2015 has adversely affected the Group’s ability to compete on the basis of quality of service provision. The legislative changes introduced by the Ministry of Justice in relation to the level of compensation payable where the predominant injury was one of a soft tissue nature also had a material impact upon the size of the market. The Group therefore has to continue to preserve and grow market share by increasing in non-Medco regulated services and by diversifying its range of products and services through both existing businesses and acquisition.
The nature of the business sector in which the Group operates means that the level of trade debtors has historically been significantly higher than other business sectors. This continues to be the case. The level of working capital is a continuing risk for the Group. The Group continues to address this risk by closely monitoring and controlling the level of working capital required. Investment in acquisitions and start-up businesses with shorter working capital cycles continues to be a strategy pursued to help reduce the overall working capital cycle and therefore reduce risk.
Credit risk
The Group's principal financial asset is trade debtors. In order to manage credit risk the Director sets limits for customers based on a combination of payment history and third party credit references. Credit limits are reviewed on a regular basis in conjunction with debt ageing and collection history. The Group continues to seek new sources of referrals to diversify its portfolio of customers and hence dilute individual customer credit risk to the business.
The credit terms agreed with some customers within the historic core markets of the Group can typically be greater than one year due to the timescales involved in settling the underlying cases which results in a significant level of working capital being absorbed by the business. The proportion of such contracts has reduced during the year as a result of the growth in turnover of historic acquisitions, diversification into new products and markets by the original subsidiary undertakings and start-up businesses. The Group's credit risk is therefore considered to have been significantly reduced over the last few years.
Liquidity risk
The Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. Short term flexibility is achieved by invoice financing arrangements.
Interest rate and cash flow risk
The Group finances its operations through bank borrowings. The Group exposure regarding interest rate fluctuations on its borrowings is managed by the use of fixed rate facilities on fixed asset acquisitions wherever possible to ensure certainty of cash flows. Facilities subject to invoice discounting can be managed by reducing trading activity and significant positive cash flows would result owing to the debtor days cycle supporting these facilities.
The day to day key performance indicators of the business are monitored and measured and include the following categories:
New instructions received and accepted
Number of instructions issued/appointments booked;
Number of expert witness reports received;
Level of cash received and time taken to collect
The Group continues with its plan of growing its market share and strong sales by continuing to offer excellent levels of service. Acquisitions form a key part of that strategy, allowing the group to strengthen its relationships with large corporate customers by increasing the range and depth of allied services it provides.
The change in the legislation in respect of road traffic personal injury claims is considered to be a reduced threat to the Group as it has and continues to diversify away from this type of work both via acquisition and by new services within its existing brands.
The Group will continue to win new business from its competitors by providing unrivalled service to its customers through the use of sophisticated information technology systems, good customer service by retaining experienced staff and by offering new services where it can profitably do so.
The Group continues its policy of investing in its current portfolio of businesses to facilitate their success. Acquisitions will continue to be made where they can add to the strength and resilience of the Group by enhancing and diversifying the product range and customer base. The Group will continue to invest in its startup businesses where appropriate.
The Director is aware of and considers he has acted in accordance with his statutory duties under s172(1) of the Companies Act 2006. In accordance with these duties, the Director has acted in good faith, seeking to promote the long-term success of the Group for the benefit of its shareholders and in order to do so has had regard to their duties in respect of;
The likely consequences of any decisions in the long-term;
The interests of the Group's employees;
The need to foster the Group business relationships with suppliers, customers and others;
The impact of the Group's operations on the community and environment;
The desirability of the Group maintaining a reputation for high standards of business conduct; and
The need to act fairly as between shareholders of the Group.
The Director acknowledges his responsibility to exercise his duty in a way which promotes the success of the company for the benefit of all of its stakeholders. He has evaluated the key stakeholders and how engagement with them has occurred during the year.
Our colleagues are key to the delivery of our services and therefore to the long term success of the business. It is imperative that we keep them engaged and motivated. Regular communication with staff takes place at all of the operating units through team meetings and training, as well as developing and enhancing the organisational culture through updates and emails throughout the year.
The Director recognises that securing new customers and maintaining long term client relationships with existing customers is vital to the success of the business. Our teams have communication with customers to ensure we are meeting their requirements. Larger customers are serviced at business unit level by directors and senior managers.
The main suppliers to our businesses are medical and other experts in their field either by delivering expert witness or treatment services. Relationships with suppliers are developed through daily business activities. Clinical governance is extremely important to us and we are supported by independent clinical advisory panels at business units where appropriate.
It is critical that shareholders and lenders have confidence in the management and operating of the business and its long term strategic objectives. Lenders are kept up to date with the Group's financial performance via regular reports.
The Director considers that this has been a normal trading year and there have been no major decisions that impacted on stakeholders where additional engagement was considered necessary.
On behalf of the board
The director presents his annual report and financial statements for the year ended 31 May 2024.
The results for the year are set out on page 12.
A dividend of £Nil (2023- £Nil) was paid during the year.
The director who held office during the year and up to the date of signature of the financial statements was as follows:
The Group's financial statements have been prepared on a going concern basis which the Director considers to be appropriate for the reasons set out below.
In determining whether the Group's financial statements for the year ended 31 May 2024 can be prepared on a going concern basis, the director has considered all factors likely to affect the future development, performance and financial position, including cash flows, liquidity position and borrowing facilities and the risks and uncertainties relating to its various business activities in the current economic climate.
The Group utilises short term borrowing, mainly in the form of an invoice discounting facility but complemented by small overdraft facilities at two group companies. At no point during the year ended 31 May 2024 nor, on the basis of budget and cash flow projections for a period covering more than the next 12 months after the date of these accounts, are any of the covenants relating to these facilities expected to be breached.
The Director has prepared detailed budgets and cash flows based on the circumstances known at the time of their preparation for a period beyond the next twelve months. The assumptions used have then been flexed so as to stress test the budgets to enable the Director to confirm his belief that the group can remain as a going concern.
During the year, the policy of providing employees with information about the Group has been continued through internal media methods in which employees have also been encouraged to present their suggestions and views on the Company's performance. Regular meetings are held between local management and employees to allow a free flow of information and ideas.
We rely on suppliers to source and support the products and services we sell. The Directors at each Group trading company are actively involved in discussions with key suppliers to ensure service quality, clinical governance where applicable and value for money.
Our customers are key to the continued existence and growth of the business and the Directors at each group business obtain and act promptly upon customer feedback provided through a variety of means.
Directors' and officers' insurance cover has been established for the Director to provide appropriate cover for their reasonable actions on behalf of the Group. The insurance was in force throughout the financial year ended 31 May 2024 and remains in force for all of the current and past Directors of the Group.
No individual companies within the group are classified as large companies and therefore the group are not required to report on its emissions, energy consumption or energy efficiency activities.
Disclosures required under S416(4) of the Companies Act 2006 are commented upon in the Strategic Report in accordance with S414C(11) as the Director considers them to be of strategic importance to the Group.
We have audited the financial statements of FL 360 Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 May 2024 which comprise the group statement of comprehensive income, 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 Financial Reporting Standard 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 group and parent 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 director's 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 director 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 director is 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 director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the director's 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 their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the director's 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 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 director's responsibilities statement, the director is 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 director determines 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 director is 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 director either intends to liquidate the parent company or to cease operations, or has 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.
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.
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
The engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
We identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the health services sector;
We focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation, data protection, anti-bribery, employment and health and safety legislation;
We assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
Identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
Making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
Considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
Performed analytical procedures to identify any unusual or unexpected relationships;
Tested journal entries to identify unusual transactions;
Tested a sample of revenue recognised either side of the period end to ensure revenue had been recognised in the correct period;
Reviewed the internal controls in place, specifically around payroll and bank transactions; and
Assessed whether judgements and assumptions made in determining the accounting estimates around depreciation, accruals and accrued income were indicative of potential bias.
Investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
Agreeing financial statement disclosures to underlying supporting documentation;
Reading the minutes of meetings of those charged with governance;
Enquiring of management as to actual and potential litigation and claims; and
Reviewing correspondence with HMRC and the company's legal advisors.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
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 loss for the year was £257,182 (2023 - £176,312 profit).
FL 360 Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Speed Medical House, Matrix Park, Chorley, Lancashire, PR7 7NA.
The group consists of FL 360 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 unless otherwise specified within these accounting policies. The principal accounting policies adopted are set out below.
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.
The Company's functional and presentational currency is Pound Sterling. All amounts presented are rounded to the nearest pound.
Parent Company reduced disclosure exemptions:
In preparing the financial statements of the Parent Company, advantage has been taken of the following disclosure exemptions under FRS 102:
A cash flow statement or net debt reconciliation have not been prepared for the Parent Company
Disclosures in respect of the Parent Company transactions with it wholly owned subsidiaires;
Disclosure has not been given for the aggregate remuneration of the key management personnel of the Parent Company as their remuneration is included in the total for the Group as a whole.
The consolidated group financial statements consist of the financial statements of the parent company FL 360 Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates. 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.
All financial statements are made up to 31 May 2024. 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.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of Financial Position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases.
In accordance with the transitional exemption available in FRS 102, the group has chosen not to retrospectively apply the standard to business combinations that occurred before the date of transition to FRS 102. Therefore, the Group continues to recognise a merger reserve which arose on a past business combination that was accounted for as a merger in accordance with UK GAAP as applied at that time.
The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategic Report.
The credit terms agreed with solicitor customers are predominantly that they must remit monies owed on settled cases within 14 days of receipt and in accordance with Solicitors Regulation Authority, Solicitors Accounts Rules. As such all debt is considered due in less than one year. However, the credit terms agreed with customers upon which they have to pay debt outstanding irrespective of whether the case has settled or not, can typically be greater than one year due to the timescale involved in setting the underlying cases which results in significant levels of working capital being absorbed into the business.
The Group's forecasts and projections, taking account of reasonably possible changes in trading performance and cash collection profile together with other means of managing cash outflows, show that the Group should be able to operate within the level of its current loans and facility.
The Group's forecasts cover a period of at least 12 months from the date of signing these financial statements and the forecasts do not indicate that the Group will breach the covenants in place for its current facility.
After making enquiries, the Director has a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis of accounting in preparing the annual report and financial statements.
Turnover is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:
Rendering of services
Turnover from contracts 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 of the following conditions are satisfied:
The amount of turnover 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 and the costs to complete the contract can be measured reliably.
The majority of turnover relates to the provision of medical reports and rehabilitation services predominantly to the legal profession and insurers. Turnover is recognised at the point of delivery of the service with the fair value provision made as appropriate.
Turnover derived from the supply of credit hire vehicles is recognised from conclusion of the hire, exclusive of VAT. Vehicles are only supplied and remain on hire after a strict validation process that assesses to the Company's satisfaction that liability for the accident rests with a third party. Turnover is accrued on a daily basis, after adjustments for an estimation of the recovery of those credit hire charges based on historical settlement rates and case characteristics including the size of the claim. This adjustment is made to ensure that turnover is only recognised to the extent that it is highly probably that a significant reversal of turnover will not occur upon settlement of a customer's claim. Turnover recognised is updated on settlement once the amount of fees that will be recovered is known. Turnover derived from the repair of a customer's vehicle is accounted for in the same way as credit hire charges.
Turnover is generated in the United Kingdom, all from trade in line with the Group's principal activity.
In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. Intangible assets are recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that its cost can be reliably measured. The capitalised development costs are subsequently amortised on a straight line basis over their useful economic lives, which range from 5 year.
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.
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.
Investments in subsidiaries are measured at cost less accumulated impairment.
Assets, other than those measured at fair value, are assessed for indicators of impairment at each reporting date. If there is objective evidence of impairment, an impairment loss is recognised in profit or loss as described below.
Non-financial assets
An asset is impaired where there is objective evidence that, as a result of one or more events that occurred after initial recognition, the estimated recoverable value of the asset has been reduced. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use.
Financial assets
For financial assets carried at amortised cost, the amount of an impairment is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate.
For financial assets carried at cost less impairment, the impairment loss is the difference between the asset's carrying amount and the best estimate of the amount that would be received for the asset if it were to be sold at the reporting date.
Where indicators exist for a decrease in impairment loss, and the decrease can be related objectively to an event occurring after the impairment was recognised, the prior impairment loss is tested to determine reversal. An impairment loss is reversed on an individual impaired financial asset to the extent that the revised recoverable value does not lead to a revised carrying amount higher than the carrying value had no impairment been recognised.
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangement 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.
All financial assets and liabilities are initially measured at transaction price (including transaction costs), except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value (which is normally the transaction price excluding transaction costs), unless the arrangement constitutes a financing transaction. If an arrangement constitutes a finance transaction, the financial asset or financial liability is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.
Debt instruments that are classified as payable or receivable within one year and which meet the above conditions are measured at the undiscounted amount of the cash or other consideration expected to be paid or received, net of impairment.
Financial assets are derecognised when and only when a) the contractual rights to the cash flows from the financial asset expire or are settled, b) the Company transfers to another party substantially all of the risks and rewards of ownership of the financial asset, or c) the Company, despite having retained some significant risks and rewards of ownership, has transferred control of the asset to another party and the other party has the practical ability to sell the asset in its entirety to an unrelated third party and is able to exercise that ability unilaterally and without needing to impose additional restrictions on the transfer.
Financial liabilities are derecognised only when the obligation specified in the contract is discharged, cancelled or expires.
Equity instruments issued by the group 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 group.
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.
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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
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.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
In the application of the group’s accounting policies, the director is 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.
Judgement is required on the adequacy of fair value provision held against trade debtors. The Group makes provisions for waivered referrals and expected recoveries using reliable past source data based on the average attrition rate.
The whole of the turnover is attributable to the Group's principal activity and arose within the United Kingdom.
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 1 (2023 - 1).
All director's remuneration relates to the highest paid director.
Key management personnel includes the Director and a number of senior managers across the Group who together have authority and responsibility for planning, directing and controlling the activities of the Group. The total compensation paid to key management personnel for services provided to the Group was £1,315,213 (2023 - £1,306,576).
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
The impairment losses in respect of financial assets are recognised in other gains and losses in the profit and loss account.
More information on impairment movements in the year is given in note 11.
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
All of the below subsidiaries are included in the consolidation.
The registered office of IPRS (Scotland) Ltd is First Floor Grampian Police Health & Welfare Ut, 200 Ashgrove Road West, Aberdeen, AB16 5NY.
The registered office of all other subsidiary undertakings is Speed Medical House, Matrix Park, Chorley, Lancashire, PR7 7NA.
The parent undertaking has given a guarantee to The Treatment Network Limited, The Treatment Network (Holdings) Limited, The Treatment Network Group Limited, Foresight Clinical Services Limited, Advanced Child Care Assessments Limited, Jan Harrison Limited, Handl Communications Limited, Claimspace Limited, TG Expert Witness and Associates Limited, Reach Personal Injury Management Services Limited, Mind Right Limited, Corpore Limited, IPRS Group Limited, IPRS Aeromed Limited, IPRS Mediquipe Limited, IPRS Health Limited, Personal Functional Assessment Services Limited, Robertson Cooper Limited, We’ve Got The Key Limited and EQL Limited under s479A and as such these subsidiary undertakings are exempt from an audit.
Details of the company's subsidiaries at 31 May 2024 are as follows:
Amounts owed by group undertakings are interest free and repayable on demand.
Included within group other debtors are amounts owed by related parties of £9,294,288 (2023 - £18,204,191).
The impairment loss recognised in the Group profit or loss for the year in respect of bad and doubtful trade debtors was £534,455 (2023 - £76,693).
The bank overdraft is secured by a debenture giving fixed or floating charges on all the assets of Speed Medical Examination Services Limited and Medical Legal Appointments Limited, dated 3rd August 2018, This is further referred to in note 27.
There is a charge in favour of Svenska Handelsbanken AB against a freehold property owned by FL 360 Limited dated 1 November 2016.
Amounts owed to group undertakings are interest free and repayable on demand.
Finance lease payments represent rentals payable by the company or group for certain items of plant and machinery.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
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.
‘C’ and ‘D’ ordinary shares of 0.1p each carry equal voting rights.
The holder of C shares is the ultimate controlling party, Dr Rajnish Luthra.
The holder of D shares is a company incorporated in the United Kingdom, NNN Investments Limited. The ultimate controlling party of NNN Investments Limited is Dr Rajnish Luthra.
The Group and Company capital and reserves are as follows:
Called up share capital
Called up share capital represents the nominal value of the shares issued.
Merger Reserve
The merger reverse represents the difference between the cost of investment and the nominal value of the ordinary shares issued during the Group re-organisation.
Profit and loss account
The profit and loss account represents cumulative profits and losses, net of any dividends and other adjustments.
On 1 June 2023 the group acquired 52.86 percent of the issued capital of EQL Limited.
An unlimited cross guarantee exists between Medical-Legal Appointments Limited, Speed Medical Examination Services Limited and FL 360 Limited as part of the invoice financing arrangement. The contingent liability at the statement of Financial Position date was £24,505,068 (2023 - £20,561,260). Advanced Child Care Assessments Limited, Corpore Limited, IPRS Aeromed Limited, IPRS Health Limited, Jan Harrison Limited, Personal Functional Assessment Services Limited, Reach Personal Injury Services Limited, TG Expert Witness and Associates Limited, Foresight Clinical Services Limited and Cogent Hire Limited are also party to this arrangement.
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 1 June 2024 the Group acquired 100% of the issued share capital of Osiris Health Limited. The consideration, inclusive of deal costs was £195,450.
Also on 1 June 2024 the Group acquired 75% of the issued share capital of PSP Paediatric & Neuro Rehabilitation Limited. The consideration, inclusive of deal costs was £2,031,134. At the same time the Group entered into a Put & Call option with the vendor to acquire the remining 25% of the issued share capital. The Put & Call option period is between the date of the signing of the year ended 31 May 2027 statutory accounts and 30 November 2027. The option price is to be calculated as 4 times the EBITDA for the year ended 31 May 2027, plus the increase in surplus cash since the original acquisition date, times 25%.
On 1 August 2024 the group acquired 100% of the issued share capital of Children's Services Network Limited trading as Willis Palmer. The initial acquisition cost, inclusive of deal costs, was £761,215. A further payment is payable to the vendor dependent upon the profitability of Children's Services Network Limited in the 10 months ended 31 May 2025, calculated as being five times the annualised EBITDA, less the initial consideration paid.
The following amounts were outstanding at the reporting end date:
The following amounts were outstanding at the reporting end date:
Balances of £683,980 included within amounts owed by related parties are charged interest at a rate of the Bank of England base rate plus 2%.
Balances of £1,158,511 included within amounts owed by related parties are charged interest at a rate of the Bank of England base rate plus 4%.
Balances of £6,425,136 included within amounts owed by related parties are charged interest at a rate of 2%.
Balances of £29,928 included within amounts owed by related parties are charged interest at a rate of the Bank of England base rate plus 2%.
Balances of £7,765,139 included within amounts owed to shareholder are charged interest at a rate of 15% per annum.
All other balances are interest free.
All amounts are repayable on demand.