Key Healthcare (Operations) Limited - Period Ending 2019-09-30

Registration number: 04321969

Key Healthcare (Operations) Limited

Annual Report and Financial Statements

for the Period from 1 April 2018 to 30 September 2019

Hazlewoods LLP
Windsor House
Bayshill Road
Cheltenham
GL50 3AT

Key Healthcare (Operations) Limited

Contents

Company Information	1
Director's Report	2
Strategic Report	3 to 4
Statement of Director's Responsibilities	5
Independent Auditor's Report	6 to 8
Profit and Loss Account	9
Balance Sheet	10
Statement of Changes in Equity	11
Statement of Cash Flows	12
Notes to the Financial Statements	13 to 24

Key Healthcare (Operations) Limited

Company Information

Director

R D Keyes

Company secretary

E J Keyes

Registered office

2nd Floor Unit 5 Cromwell Park York Road Industrial Estate Wetherby West Yorkshire LS22 7SU

Bankers

Santander UK PLC 44 Merrion Street Leeds West Yorkshire LS2 8JQ

Auditors

Hazlewoods LLP Windsor House Bayshill Road Cheltenham GL50 3AT

- 1 -

Key Healthcare (Operations) Limited

Director's Report for the Period from 1 April 2018 to 30 September 2019

The director presents his report and the financial statements for the period from 1 April 2018 to 30 September 2019.

Director of the company

The director who held office during the period was as follows:

R D Keyes

Future developments

The external commercial environment is expected to remain competitive. However, the director remains confident that occupancy has improved and the company will improve its current level of performance in the future and will continue to trade as a going concern.

Going concern

Key Healthcare continues to improve its performance by returning to historical occupancy levels of in excess of 85%. This will strengthen cash flow and liquidity within the group further reducing the overdraft to historic levels.

The company’s director continues to work closely with the bank, which continues to support the company and the director in pushing forward good commercial standards ensuring CQC compliance within the company. This will allow the company to repay loans to the bank monthly and equally allow the director to secure new funding via refinancing or private investor input.

The company continues to deliver sound monthly MI trading and maintains a strong balance sheet along with good EBITD.

The Covid Pandemic continues to bring uncertainty to the care sector however the director believes the company is in a better position to deal with any secondary outbreak. This is supported by weekly testing of all staff and monthly testing of residents. Daily temperature tests and the testing of new residents prior to admission will reduce the risk of the virus entering any of our homes. We have followed local and national health advice including Government guidelines. Finally, each home will continue to restrict third parties to each home until risk levels diminish.

Disclosure of information to the auditors

The director has taken the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information. The director confirms that there is no relevant information that he knows of and of which he knows the auditors are unaware.

Reappointment of auditors

Hazlewoods LLP have expressed their willingness to continue in office.

Approved by the director on 25 September 2020

.........................................
R D Keyes
Director

- 2 -

Key Healthcare (Operations) Limited

Strategic Report for the Period from 1 April 2018 to 30 September 2019

The director presents his strategic report for the period from 1 April 2018 to 30 September 2019. The comparative period is for the year ended 31 March 2018.

Principal activity

The principal activity of the company is the running of nursing homes for the elderly.

Fair review of the business

The results for the period, which are set out in the profit and loss account, show turnover for the period of £6,764,740 (2018 - £4,410,514) and operating profit of £722,342 (2018 - £530,256). At 30 September 2019, the company had net assets of £2,992,340 (2018 - £2,791,981). The director considers that the results for the period and financial position of the company at the period end is satisfactory.

The director is pleased with the progress made by the business and results achieved during the period. These have been achieved in times of austerity and financial constraint.

Over the last twelve months the directors have seen the company recover from operation issues with our regulator CQC in particular relating two care homes totalling 114 beds, 54% of total beds. Occupancy and revenues are returning to historical levels.

The impact of Covid-19 has compounded the recovery and has presented challenging environment for each of our care homes. Action plans and strict lockdown protocals have limited the potential damage to the company’s cash flow. However each home has been affected by Covid-19 and an increase in deaths has been registered compared to previous years. Government support through the IC grant has helped the company mitigate PPE issues. Limited staff have been furloughed due to under lying individual health issues.

Over all the company has weathered the Covid-19 virus and is well prepared for any second phase presented.

Given the nature of the business, the director is of the opinion that key performance indicators are important. The company uses a number of indicators to monitor and improve development and performance of the position of the business. Indicators are reviewed and altered to meet changes both in the internal and external environments. The director does not consider the inclusion of an analysis, using key performance indicators, to be necessary to assist users of the financial statements in their understanding of the financial performance or the position of the company.

Principal risks and uncertainties

The management of the business and the execution of the company's strategy are subject to a number of risks. The key business risks and uncertainties affecting the company are considered to relate to the continued provision of adequate government funding and the ongoing compliance with current and future legislation affecting the sector.

- 3 -

Key Healthcare (Operations) Limited

Strategic Report for the Period from 1 April 2018 to 30 September 2019

Financial instruments

Objectives and policies

The director constantly monitors the group's trading results and revises the projections as appropriate to ensure that the company can meet its future obligations as they fall due.

Price risk, credit risk, liquidity risk and cash flow risk

The company is exposed to the usual credit and cash flow risk associated with selling on credit and manages this through credit control procedures. The nature of its financial instruments means that price and liquidity risks are minimised by the predetermination of the funding facilities and terms.

In accordance with the Financial Reporting Council's 'Going Concern and Liquidity Risk: Guidance for Directors of UK Companies 2009', the directors of all companies are now required to provide disclosures regarding the adoption of the going concern basis of accounting.

The company has sufficient resources available and the director has prepared forecasts for the next 12 months that indicate that this will continue to be the case. The director therefore has a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future and has continued to adopt the going concern basis in preparing the financial statements.

Approved by the director on 25 September 2020

.........................................
R D Keyes
Director

- 4 -

Key Healthcare (Operations) Limited

Statement of Director's Responsibilities

The director is responsible for preparing the Director's Report, Strategic Report and the financial statements in accordance with applicable law and regulations.

Company law requires the director to prepare financial statements for each financial year. Under that law the director has 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 director must not approve the financial statements unless he is 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 director is required to:

•	select suitable accounting policies and apply them consistently;
•	make judgements and accounting estimates that are reasonable and prudent;
•	state whether applicable UK Accounting Standards has been followed, subject to any material departures disclosed and explained in the financial statements; and
•	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The director is 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 him to ensure that the financial statements comply with the Companies Act 2006. He is 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.

- 5 -

Key Healthcare (Operations) Limited

Independent Auditor's Report to the Members of Key Healthcare (Operations) Limited

Opinion

We have audited the financial statements of Key Healthcare (Operations) Limited (the 'company') for the period from 1 April 2018 to 30 September 2019, which comprise the Profit and Loss Account, Balance Sheet, Statement of Changes in Equity, Statement of Cash Flows, and Notes to the Financial Statements, including a summary of 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 30 September 2019 and of its profit for the period 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.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

•	the director's use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
•	the director has not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The director is responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. 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.

In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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.

- 6 -

Key Healthcare (Operations) Limited

Independent Auditor's Report to the Members of Key Healthcare (Operations) Limited

Opinion on other matter prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

•	the information given in the Strategic Report and Director's Report for the financial period for which the financial statements are prepared is consistent with the financial statements; and

•	the Strategic Report and Director's Report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of our 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 and the Director's Report.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

•	adequate accounting records have not been kept, 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 director's remuneration specified by law are not made; or
•	we have not received all the information and explanations we require for our audit.

Responsibilities of the director

As explained more fully in the Statement of Director's Responsibilities set out on page 5, 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 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 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.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

- 7 -

Key Healthcare (Operations) Limited

Independent Auditor's Report to the Members of Key Healthcare (Operations) Limited

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.

......................................
Simon Worsley (Senior Statutory Auditor)
For and on behalf of Hazlewoods LLP, Statutory Auditor

Windsor House
Bayshill Road
Cheltenham
GL50 3AT

25 September 2020

- 8 -

Key Healthcare (Operations) Limited

Profit and Loss Account for the Period from 1 April 2018 to 30 September 2019

	Note	1 April 2018 to 30 September 2019  £	Year ended 31 March 2018  £
Turnover	3	6,764,740	4,410,514
Cost of sales		(4,929,116)	(3,119,981)
Gross profit		1,835,624	1,290,533
Administrative expenses		(1,113,282)	(760,277)
Operating profit	4	722,342	530,256
Other interest receivable and similar income	7	-	92,003
Interest payable and similar charges	8	(417,857)	(188,968)
Profit before tax		304,485	433,291
Taxation	9	(69,626)	(85,679)
Profit for the financial period		234,859	347,612

The above results were derived from continuing operations.

The notes on pages 13 to 24 form an integral part of these financial statements.
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Key Healthcare (Operations) Limited

(Registration number: 04321969)
Balance Sheet as at 30 September 2019

	Note	30 September 2019  £	31 March 2018  £
Fixed assets
Tangible assets	10	9,088,567	9,084,066
Current assets
Stocks	11	6,435	6,435
Debtors: Amounts falling due within one year	12	936,411	1,177,912
Cash at bank and in hand		46,993	4,303
		989,839	1,188,650
Creditors: Amounts falling due within one year before current loans and borrowings	13	(558,156)	(606,238)
Net current assets before current loans and borrowings		431,683	582,412
Loans and borrowings falling due within one year	14	(6,469,980)	(6,849,634)
Net current liabilities		(6,038,297)	(6,267,222)
Total assets less current liabilities		3,050,270	2,816,844
Provisions for liabilities		(57,930)	(24,863)
Net assets		2,992,340	2,791,981
Capital and reserves
Called up share capital	15	1	1
Revaluation reserve		980,702	980,702
Retained earnings		2,011,637	1,811,278
Total equity		2,992,340	2,791,981

Approved and authorised by the director on 25 September 2020
 

.........................................

R D Keyes
Director

The notes on pages 13 to 24 form an integral part of these financial statements.
- 10 -

Key Healthcare (Operations) Limited

Statement of Changes in Equity for the Period from 1 April 2018 to 30 September 2019

	Share capital £	Revaluation reserve £	Retained earnings £	Total £
At 1 April 2018	1	980,702	1,811,278	2,791,981
Profit for the period	-	-	234,859	234,859
Dividends	-	-	(34,500)	(34,500)
At 30 September 2019	1	980,702	2,011,637	2,992,340

	Share capital £	Revaluation reserve £	Retained earnings £	Total £
At 1 April 2017	1	980,702	1,518,666	2,499,369
Profit for the year	-	-	347,612	347,612
Dividends	-	-	(55,000)	(55,000)
At 31 March 2018	1	980,702	1,811,278	2,791,981

The notes on pages 13 to 24 form an integral part of these financial statements.
- 11 -

Key Healthcare (Operations) Limited

Statement of Cash Flows for the Period from 1 April 2018 to 30 September 2019

	Note	1 April 2018 to 30 September 2019  £	Year ended 31 March 2018  £
Cash flows from operating activities
Profit for the period		234,859	347,612
Adjustments to cash flows from non-cash items
Depreciation and amortisation	4	81,207	98,478
Finance income	7	-	(92,003)
Finance costs	8	417,857	188,968
Taxation	9	69,626	85,679
		803,549	628,734
Working capital adjustments
Decrease/(increase) in trade and other receivables	12	241,501	(620,838)
(Decrease)/increase in trade and other payables	13	(16,587)	90,781
Cash generated from operations		1,028,463	98,677
Income taxes paid	9	(68,054)	-
Net cash flow from operating activities		960,409	98,677
Cash flows from investing activities
Interest received	7	-	92,003
Acquisitions of tangible assets		(85,708)	(61,558)
Net cash flows from investing activities		(85,708)	30,445
Cash flows from financing activities
Interest paid	8	(417,857)	(188,968)
Repayment of bank borrowing		(607,172)	(36,729)
Proceeds from other borrowing draw downs		277,440	107,657
Repayment of other borrowing		(617,977)	-
Dividends paid	17	(34,500)	(55,000)
Net cash flows from financing activities		(1,400,066)	(173,040)
Net decrease in cash and cash equivalents		(525,365)	(43,918)
Cash and cash equivalents at the beginning of the period		(89,189)	(45,271)
Cash and cash equivalents at the end of the period		(614,554)	(89,189)

The notes on pages 13 to 24 form an integral part of these financial statements.
- 12 -

Key Healthcare (Operations) Limited

Notes to the Financial Statements for the Period from 1 April 2018 to 30 September 2019

1

General information

The company is a private limited company, incorporated and domiciled in England and Wales.

The address of its registered office is:
2nd Floor
Unit 5 Cromwell Park
York Road Industrial Estate
Wetherby
West Yorkshire
LS22 7SU

2

Accounting policies

Summary of significant accounting policies and key accounting estimates

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Statement of compliance

These financial statements were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'.

Basis of preparation

These financial statements have been prepared using the historical cost convention except for, where disclosed in these accounting policies, certain items that are shown at fair value.

The presentational currency of the financial statements is Pounds Sterling, being the functional currency of the primary economic environment in which the company operates. Monetary amounts in these financial statements are rounded to the nearest Pound.

Going concern

After reviewing the company's forecasts and projections, the director has a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future.

Key Healthcare continues to improve its performance by returning to historical occupancy levels of in excess of 85%. This will strengthen cash flow and liquidity within the company further reducing the overdraft to historical levels.

The company’s director continues to work closely with the bank, which continues to support the company and the director in pushing forward good commercial standards ensuring CQC compliance within the company. This will allow the company to repay loans to the bank monthly and equally allow the director to secure new funding via refinancing or private investor input.

The company continues to deliver sound monthly MI trading and maintains a strong balance sheet along with good EBITD.

The Covid Pandemic continues to bring uncertainty to the care sector however the director believes the company is in a better position to deal with any secondary outbreak. This is supported by weekly testing of all staff and monthly testing of residents. Daily temperature tests and the testing of new residents prior to admission will reduce the risk of the virus entering any of our homes. We have followed local and national health advice including Government guidelines. Finally, each home will continue to restrict third parties to each home until risk levels diminish.

The company therefore continues to adopt the going concern basis in preparing its financial statements.

- 13 -

Key Healthcare (Operations) Limited

Notes to the Financial Statements for the Period from 1 April 2018 to 30 September 2019

Judgements and estimation uncertainty

These financial statements do not contain any significant judgements or estimation uncertainty.

Revenue recognition

Turnover represents the amounts receivable during the year for the provision of care services. Where the amount received relates to a period which covers the balance sheet date, that amount is apportioned over the period to which it relates.

- 14 -

Key Healthcare (Operations) Limited

Notes to the Financial Statements for the Period from 1 April 2018 to 30 September 2019

Tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in the profit and loss account, except that a charge attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.

The current tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the company operates and generates taxable income.

Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements and on unused tax losses or tax credits in the company. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.

The carrying amount of deferred tax assets are reviewed at each reporting date and a valuation allowance is set up against deferred tax assets so that the net carrying amount equals the highest amount that is more likely than not to be recovered based on current or future taxable profit.

Tangible assets

Tangible assets is stated in the balance sheet at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.

Depreciation

Depreciation is charged so as to write off the cost of assets over their estimated useful lives, as follows:

Asset class	Depreciation method and rate
Freehold property	Nil
Furniture, fittings and equipment	15% straight line

No depreciation is provided on freehold properties as it is the company's policy to maintain these assets so that they keep their previously assessed standard of performance. As the useful economic lives of these assets are of such a length and the residual values are such that they are not materially different from the carrying amount any depreciation would not be material.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

Trade debtors

Trade debtors are amounts due from customers for services performed in the ordinary course of business.

Trade debtors are recognised initially at the transaction price. All trade debtors are repayable within one year and hence are included at the undiscounted cost of cash expected to be received. A provision for the impairment of trade debtors is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the debtors.

Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell.

- 15 -

Key Healthcare (Operations) Limited

Notes to the Financial Statements for the Period from 1 April 2018 to 30 September 2019

Trade creditors

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if the company does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.

Trade creditors are recognised initially at the transaction price and all are repayable within one year and hence are included at the undiscounted amount of cash expected to be paid.

Borrowings

Interest-bearing borrowings are initially recorded at fair value, net of transaction costs. Interest-bearing borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the Profit and Loss Account over the period of the relevant borrowing.

Interest expense is recognised on the basis of the effective interest method and is included in interest payable and similar charges.

Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

Leases

Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease.

Share capital

Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.

Dividends

Dividend distribution to the company’s shareholders is recognised as a liability in the financial statements in the reporting period in which the dividends are declared.

Defined contribution pension obligation

The company operates a defined benefit pension scheme. Contributions are recognised in the profit and loss account in the period in which they become payable in accordance with the rules of the scheme.

- 16 -

Key Healthcare (Operations) Limited

Notes to the Financial Statements for the Period from 1 April 2018 to 30 September 2019

Financial instruments

Classification
Financial instruments are classified and accounted for according to the substance of the contractual arrangement, as financial assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities. Where shares are issued, any component that creates a financial liability of the company is presented as a liability on the balance sheet. The corresponding dividends relating to the liability component are charged as interest expenses in the profit and loss account.

 Recognition and measurement
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 financing 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.

Financial assets and liabilities are only offset in the statement of financial position when, and only when there exists a legally enforceable right to set off the recognised amounts and the company intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

 Impairment
Assets, other than those measured at fair value, are assessed for indicators of impairment at each balance sheet date. If there is objective evidence of impairment, an impairment loss is recognised in profit or loss as described below.

A non financial 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.

The recoverable amount of goodwill is derived from measurement of the present value of the future cash flows of the cash-generating units ('CGUs') of which the goodwill is a part. Any impairment loss in respect of a CGU is allocated first to the goodwill attached to that CGU, and then to other assets within that CGU on a pro-rata basis.

Where indicators exist for a decrease in impairment loss, the prior impairment loss is tested to determine reversal. An impairment loss is reversed on an individual impaired 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. Where a reversal of impairment occurs in respect of a CGU, the reversal is applied first to the assets (other than goodwill) of the CGU on a pro-rata basis and then to any goodwill allocated to that CGU.

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.
 

- 17 -

Key Healthcare (Operations) Limited

Notes to the Financial Statements for the Period from 1 April 2018 to 30 September 2019

3

Revenue

The total turnover of the company for the year has been derived from its principal activity wholly undertaken in the United Kingdom.

4

Operating profit

Arrived at after charging

	1 April 2018 to 30 September 2019  £	Year ended 31 March 2018  £
Depreciation expense	81,207	98,478
Operating lease expense - property	36,539	19,911

5

Auditors' remuneration

	2019 £	2018 £
Audit of the financial statements	8,700	8,340

 

6

Staff costs

The aggregate payroll costs (including director's remuneration) were as follows:

	1 April 2018 to 30 September 2019  £	Year ended 31 March 2018  £
Wages and salaries	4,407,400	2,787,787
Social security costs	286,425	127,026
Other employee expense	40,390	19,034
	4,734,215	2,933,847

The average number of persons employed by the company (including the director) during the period, analysed by category was as follows:

	1 April 2018 to 30 September 2019  No.	Year ended 31 March 2018  No.
Administration and support	3	3
Other departments	188	192
	191	195

- 18 -

Key Healthcare (Operations) Limited

Notes to the Financial Statements for the Period from 1 April 2018 to 30 September 2019

7

Other interest receivable and similar income

	2019 £	2018 £
Waiver of bank loan	-	92,003

8

Interest payable and similar expenses

	2019 £	2018 £
Interest on bank overdrafts and borrowings	417,857	188,968

- 19 -

Key Healthcare (Operations) Limited

Notes to the Financial Statements for the Period from 1 April 2018 to 30 September 2019

9

Taxation

Tax charged/(credited) in the income statement

	1 April 2018 to 30 September 2019  £	Year ended 31 March 2018  £
Current taxation
UK corporation tax	14,980	54,034
Other taxation costs	21,579	-
Total current income tax	36,559	54,034
Deferred taxation
Arising from origination and reversal of timing differences	33,067	31,645
Tax expense in the income statement	69,626	85,679

The tax on profit before tax for the period is lower than the standard rate of corporation tax in the UK (2018 - higher than the standard rate of corporation tax in the UK) of 19% (2018 - 19%).

The differences are reconciled below:

	2019 £	2018 £
Profit before tax	304,485	433,291
Corporation tax at standard rate	57,852	82,325
Effect of revenues exempt from taxation	(373)	(50)
Effect of expense not deductible in determining taxable profit (tax loss)	1,443	6,564
Tax decrease from effect of capital allowances and depreciation	(10,875)	(3,160)
Other tax effects for reconciliation between accounting profit and tax expense (income)	21,579	-
Total tax charge	69,626	85,679

Deferred tax

Deferred tax assets and liabilities

2019	Liability £
Fixed asset timing differences	62,595
Short term timing differences	(4,665)
	57,930

2018	Liability £
Fixed asset timing differences	25,266
Short term timing differences	(403)
	24,863

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Key Healthcare (Operations) Limited

Notes to the Financial Statements for the Period from 1 April 2018 to 30 September 2019

10

Tangible assets

	Land and buildings £	Furniture, fittings and equipment  £	Total £
Cost or valuation
At 1 April 2018	8,879,198	1,115,112	9,994,310
Additions	50,737	34,971	85,708
At 30 September 2019	8,929,935	1,150,083	10,080,018
Depreciation
At 1 April 2018	-	910,244	910,244
Charge for the period	-	81,207	81,207
At 30 September 2019	-	991,451	991,451
Carrying amount
At 30 September 2019	8,929,935	158,632	9,088,567
At 31 March 2018	8,879,198	204,868	9,084,066

Freehold property is not depreciated. The freehold land and buildings were valued at £8,800,000 including plant, on an open market basis for existing use by a firm of independent Chartered Surveyors (Edward Symmons LLP) on 30 June 2015. If these properties were sold for their revalued amounts it would be necessary to replace them with similar property, and rollover relief against tax on the gain would be available. Accordingly, no timing differences arise and no provision has been made for deferred tax in respect of the revaluation.

Comparable historical cost for the freehold land and buildings and associated plant and machinery included at a valuation was £6,461,130 (2018 - £6,375,432) and accumulated depreciation thereon was £677,059 (2018 - £595,852).

11

Stocks

	2019 £	2018 £
Inventories	6,435	6,435

12

Debtors

	Note	30 September 2019  £	31 March 2018  £
Trade debtors		127,644	120,518
Receivables from related parties	19	167,958	447,389
Accrued income		88,635	15,550
Other receivables		520,179	592,493
Prepayments		31,995	1,962
		936,411	1,177,912

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Key Healthcare (Operations) Limited

Notes to the Financial Statements for the Period from 1 April 2018 to 30 September 2019

13

Creditors

	Note	30 September 2019  £	31 March 2018  £
Due within one year
Loans and borrowings	14	6,469,980	6,849,634
Trade creditors		219,422	106,575
Social security and other taxes		63,224	25,973
Other payables		120,939	156,895
Accrued expenses		61,267	191,996
Corporation tax liability	9	93,304	124,799
		7,028,136	7,455,872

14

Loans and borrowings

	2019 £	2018 £
Current loans and borrowings
Bank borrowings	5,711,635	6,617,778
Bank overdrafts	661,547	93,492
Other borrowings	96,798	138,364
	6,469,980	6,849,634

The bank loan facility is over a 15 year period with monthly repayments of £45,685. Interest is payable at 2.25% above base rate.

All of the group's bank loans outstanding as at 30 September 2019 and 31 March 2018 have been included within creditors amounts falling due within one year due to a breach of covenant as at the balance sheet date.

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Key Healthcare (Operations) Limited

Notes to the Financial Statements for the Period from 1 April 2018 to 30 September 2019

15

Share capital

Allotted, called up and fully paid shares

	30 September 2019		31 March 2018
	No.	£	No.	£
Ordinary A shares of £0.01 each	95	0.95	95	0.95
Ordinary B shares of £0.01 each	5	0.05	5	0.05
	100	1	100	1

Rights, preferences and restrictions

The ordinary A and B shares rank pari passu in all respects, other than dividend rights.

16

Obligations under leases and hire purchase contracts

Operating leases

The total of future minimum lease payments is as follows:

	2019 £	2018 £
Not later than one year	49,384	20,615
Later than one year and not later than five years	-	683
	49,384	21,298

The amount of non-cancellable operating lease payments recognised as an expense during the period was £49,384 (2018 - £19,911).

17

Dividends

	30 September 2019  £	31 March 2018  £
Dividends paid	34,500	55,000

18

Contingent liabilities

The company has entered into a cross guarantee arrangement (with respect of borrowings from the same bank) with Key Healthcare (St Helens) Limited, a company under common control. The amount guaranteed is £2,138,478 (2018 - £2,000,000).

19

Related party transactions

During the period, the company made the following related party transactions:

At 30 September 2019, the company was owed £167,958 (2018 - £447,389) from Key Healthcare (St Helens) Limited, a company under common control.

At 30 September 2019, the company was owed £435,749 (2019 - £506,144) by director shareholder R Keyes and his spouse E Keyes. The maximum amount overdrawn in the year was £648,907 (2018 - £506,144). No interest was charged on the loan during the year and the loan has no fixed repayment terms.

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Key Healthcare (Operations) Limited

Notes to the Financial Statements for the Period from 1 April 2018 to 30 September 2019

20

Analysis of net debt

	At 1 April 2018	Cash flow	Other non-cash changes	At 30 September 2019
	£	£	£	£
Cash at bank and in hand	4,303	42,690	-	46,993
Bank overdraft	(93,492)	(568,055)	-	(661,547)
	(89,189)	(525,365)	-	(614,554)
Debt due within one year	(6,756,142)	947,709	-	(5,808,433)
Net debt	(6,845,331)	422,344	-	(6,422,987)

21

Parent and ultimate parent undertaking

The ultimate controlling party is R D Keyes, the director of the company.

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