Central England Healthcare (Holdings) Limited - Period Ending 2020-02-29

Registration number: 11630122

Central England Healthcare (Holdings) Limited

Annual Report and Consolidated Financial Statements

for the Year Ended 29 February 2020

Hazlewoods LLP
Windsor House
Bayshill Road
Cheltenham
GL50 3AT

Central England Healthcare (Holdings) Limited

Contents

Company Information	1
Director's Report	2
Strategic Report	3
Statement of Director's Responsibilities	4
Independent Auditor's Report	5 to 7
Consolidated Profit and Loss Account	8
Consolidated Balance Sheet	9
Balance Sheet	10
Consolidated Statement of Changes in Equity	11
Statement of Changes in Equity	12
Consolidated Statement of Cash Flows	13
Notes to the Financial Statements	14 to 29

Central England Healthcare (Holdings) Limited

Company Information

Directors

K K Kandola Dr S S Kandola S S Kandola

Company secretary

S S Kandola S S Kandola

Registered office

8 Clarendon Place Leamington Spa Warwickshire CV32 5QN

Bankers

Santander UK PLC Business Banking Centre T54 Ground Floor Ops Bridle Road Bootle L30 4GB

Auditors

Hazlewoods LLP Windsor House Bayshill Road Cheltenham GL50 3AT

- 1 -

Central England Healthcare (Holdings) Limited

Director's Report for the Year Ended 29 February 2020

The directors present their report and the for the year ended 29 February 2020.

Director of the company

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

K K Kandola

The following directors were appointed after the year end:

Dr S S Kandola (appointed 1 September 2020)

S S Kandola (appointed 1 September 2020)

Future developments

The external commercial environment is expected to remain competitive in the remainder of 2020. However, the director remains confident that the company will improve its current level of performance in the future and will continue to trade as a going concern.

Disclosure of information to the auditor

Each director has taken the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditor is aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditor is unaware.

Reappointment of auditors

Hazlewoods LLP have expressed their willingness to continue in office.

Approved by the Board on 8 December 2020

.........................................
K K Kandola
Director

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Central England Healthcare (Holdings) Limited

Strategic Report for the Year Ended 29 February 2020

The directors present their strategic report for the year ended 29 February 2020.

Principal activity

The principal activity of the group is that of providing residential and nursing care to the elderly.

Fair review of the business

During the year Central England Healthcare (Holdings) Limited undertook a share for share exchange with Central England Healthcare Limited. The ultimate owners of the group remained exactly the same and therefore the results of the group headed up by Central England Healthcare (Holdings) Limited have been consolidated using merger accounting. The results for the year, which are set out in the consolidated profit and loss account, show an operating profit of £1,344,208 (2019 - £977,786). At 28 February 2020, the group had intangible and tangible fixed assets valued in the financial statements at cost less amortisation/depreciation amounting to £11,151,115 (2019 - £8,235,238). The director considers the result for the year and the financial position of the group at the year end to be satisfactory.

Given the nature of the business, the group's director is of the opinion that key performance indicators are important. The group uses a number of indicators to monitor and improve development, performance or the position of the business, including occupancy, average fee rate, wages, overheads, EBITDA and debtor days. 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 position of the group.

Principal risks and uncertainties

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

Financial instruments

Objectives and policies

The director constantly monitors the group's trading results and revises 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 group is exposed to the usual credit and cash flow risk associated with selling on credit and manages this through credit control procedures. The financial instruments are subject to price risk and liquidity risk, as disclosed in note 17 to the financial statements.

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

The group has sufficient resources available and continues to trade profitably generating cash. The director has prepared forecasts for the next 12 months that indicate that these trends will continue. The director therefore has a reasonable expectation that the group 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 Board on 8 December 2020

.........................................
K K Kandola
Director

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Central England Healthcare (Holdings) Limited

Statement of Director's Responsibilities

The directors are responsible for preparing the Director's Report, the Strategic 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 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; and
•	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 group's and the company's transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

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Central England Healthcare (Holdings) Limited

Independent Auditor's Report to the Members of Central England Healthcare (Holdings) Limited

Opinion

We have audited the financial statements of Central England Healthcare (Holdings) Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 29 February 2020, which comprise the Consolidated Profit and Loss Account, Consolidated Balance Sheet, Balance Sheet, Consolidated Statement of Changes in Equity, Statement of Changes in Equity, Consolidated 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 group's and the parent company's affairs as at 29 February 2020 and of the group's 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.

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 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 directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
•	the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group’s or the parent 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.

However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the company’s ability to continue as a going concern. For example, it is difficult to evaluate all of the potential implications of the current COVID-19 outbreak on the company’s trade, employees, customers, suppliers and the wider economy.

Other information

The directors are 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.

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Central England Healthcare (Holdings) Limited

Independent Auditor's Report to the Members of Central England Healthcare (Holdings) 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 year 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 group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report and the 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 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.

Responsibilities of directors

As explained more fully in the Statement of Director's Responsibilities set out on page 4, 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 group’s and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent 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.

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Central England Healthcare (Holdings) Limited

Independent Auditor's Report to the Members of Central England Healthcare (Holdings) 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.

......................................
Martin Howard (Senior Statutory Auditor)
For and on behalf of Hazlewoods LLP, Statutory Auditor

Windsor House
Bayshill Road
Cheltenham
GL50 3AT

10 December 2020

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Central England Healthcare (Holdings) Limited

Consolidated Profit and Loss Account for the Year Ended 29 February 2020

	Note	2020  £	2019  £
Turnover	3	8,660,908	5,761,602
Cost of sales		(5,495,294)	(3,590,550)
Gross profit		3,165,614	2,171,052
Administrative expenses		(1,829,164)	(1,196,541)
Other operating income		7,759	3,275
Operating profit	4	1,344,209	977,786
Other interest receivable and similar income	5	14,029	16,767
Interest payable and similar charges	6	(420,121)	(271,638)
Profit before tax		938,117	722,915
Taxation	9	(67,137)	(169,450)
Profit for the financial year		870,980	553,465

The above results were derived from continuing operations.

The group has no other comprehensive income for the year.

The notes on pages 14 to 29 form an integral part of these financial statements.
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Central England Healthcare (Holdings) Limited

(Registration number: 11630122)
Consolidated Balance Sheet as at 29 February 2020

	Note	2020  £	2019  £
Fixed assets
Intangible assets	10	2,220,488	126,243
Tangible assets	11	8,930,627	8,108,995
		11,151,115	8,235,238
Current assets
Stocks	14	9,000	9,000
Debtors	15	2,444,151	907,890
Cash at bank and in hand		1,324,300	1,230,070
		3,777,451	2,146,960
Creditors: Amounts falling due within one year	16	(5,303,062)	(4,657,515)
Net current liabilities		(1,525,611)	(2,510,555)
Total assets less current liabilities		9,625,504	5,724,683
Creditors: Amounts falling due after more than one year	16	(7,115,428)	(3,534,173)
Provisions for liabilities	9	-	(47,414)
Net assets		2,510,076	2,143,096
Capital and reserves
Called up share capital	18	200	200
Retained earnings		2,509,876	2,142,896
Total equity		2,510,076	2,143,096

Approved and authorised by the Board on 8 December 2020 and signed on its behalf by:
 

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

K K Kandola
Director

The notes on pages 14 to 29 form an integral part of these financial statements.
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Central England Healthcare (Holdings) Limited

(Registration number: 11630122)
Balance Sheet as at 29 February 2020

	Note	2020  £	2019  £
Fixed assets
Investments	12	1,100	-
Current assets
Debtors: Amounts falling due within one year	15	1,037,196	200
Cash at bank and in hand		2	-
		1,037,198	200
Creditors: Amounts falling due within one year	16	(1,100)	-
Net current assets		1,036,098	200
Total assets less current liabilities		1,037,198	200
Creditors: Amounts falling due after more than one year	16	(1,020,201)	-
Net assets		16,997	200
Capital and reserves
Called up share capital	18	200	200
Retained earnings		16,797	-
Total equity		16,997	200

The company made a profit after tax for the financial year of £520,797 (2019 - loss of £-).

Approved and authorised by the Board on 8 December 2020 and signed on its behalf by:
 

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

K K Kandola
Director

The notes on pages 14 to 29 form an integral part of these financial statements.
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Central England Healthcare (Holdings) Limited

Consolidated Statement of Changes in Equity for the Year Ended 29 February 2020
 

	Share capital £	Retained earnings £	Total £
At 1 March 2019	200	2,142,896	2,143,096
Profit for the year	-	870,980	870,980
Dividends	-	(504,000)	(504,000)
At 29 February 2020	200	2,509,876	2,510,076

	Share capital £	Retained earnings £	Total £
At 1 March 2018	-	1,809,431	1,809,431
Profit for the year	-	553,465	553,465
Dividends	-	(220,000)	(220,000)
New share capital subscribed	200	-	200
At 28 February 2019	200	2,142,896	2,143,096

The notes on pages 14 to 29 form an integral part of these financial statements.
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Central England Healthcare (Holdings) Limited

Statement of Changes in Equity for the Year Ended 29 February 2020

	Share capital £	Retained earnings £	Total £
At 1 March 2019	200	-	200
Profit for the year	-	520,797	520,797
Dividends	-	(504,000)	(504,000)
At 29 February 2020	200	16,797	16,997

	Share capital £	Retained earnings £	Total £
New share capital subscribed	200	-	200
At 28 February 2019	200	-	200

The notes on pages 14 to 29 form an integral part of these financial statements.
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Central England Healthcare (Holdings) Limited

Consolidated Statement of Cash Flows for the Year Ended 29 February 2020

	Note	2020  £	2019  £
Cash flows from operating activities
Profit for the year		870,980	553,465
Adjustments to cash flows from non-cash items
Depreciation and amortisation	4	300,284	282,721
Loss on disposal of property plant and equipment		126,702	-
Finance income	5	(14,029)	(16,767)
Finance costs	6	420,121	271,638
Corporation tax expense	9	67,137	169,450
		1,771,195	1,260,507
Working capital adjustments
Increase in trade and other receivables	15	(1,155,544)	(215,478)
Increase in trade and other payables	16	571,577	332,343
Cash generated from operations		1,187,228	1,377,372
Income taxes paid		(121,683)	(131,762)
Net cash flow from operating activities		1,065,545	1,245,610
Cash flows from investing activities
Interest received		14,029	16,767
Acquisitions of property plant and equipment		(81,258)	(184,849)
Proceeds from sale of fixed assets		150,000	-
Acquisition of subsidiaries net of cash received	12	(1,275,898)	-
Net cash flows from investing activities		(1,193,127)	(168,082)
Cash flows from financing activities
Interest paid		(394,281)	(271,638)
Proceeds from bank borrowing draw downs		3,769,293	213,344
Repayment of bank borrowing		(2,535,522)	(485,679)
Payments to finance lease creditors		(91,588)	(62,914)
Dividends paid		(504,000)	(220,000)
Net cash flows from financing activities		243,902	(826,887)
Net increase in cash and cash equivalents		116,320	250,641
Cash and cash equivalents at 1 March		1,196,463	945,822
Cash and cash equivalents at 29 February		1,312,783	1,196,463

The notes on pages 14 to 29 form an integral part of these financial statements.
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Central England Healthcare (Holdings) Limited

Notes to the Financial Statements for the Year Ended 29 February 2020

1

General information

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

The address of its registered office is:
8 Clarendon Place
Leamington Spa
Warwickshire
CV32 5QN

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.

Basis of consolidation

The consolidated financial statements consolidate the financial statements of the company and its subsidiary undertakings drawn up to 29 February 2020.

A subsidiary is an entity controlled by the company. Control is achieved where the company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the Profit and Loss Account from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the group.

The purchase method of accounting is used to account for business combinations that result in the acquisition of subsidiaries by the group. The cost of a business combination is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the business combination. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Any excess of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised is recorded as goodwill.

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Central England Healthcare (Holdings) Limited

Notes to the Financial Statements for the Year Ended 29 February 2020

Inter-company transactions, balances and unrealised gains on transactions between the company and its subsidiaries, which are related parties, are eliminated in full.

Intra-group losses are also eliminated but may indicate an impairment that requires recognition in the consolidated financial statements.

Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group. Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the group’s equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling shareholder’s share of changes in equity since the date of the combination.

Going concern

After reviewing the company's forecasts and projections, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. The company therefore continues to adopt the going concern basis in preparing its financial statements.

Judgements and estimation uncertainty and estimation uncertainty

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

Revenue recognition

Turnover comprises the fair value of the consideration received or receivable for the provision of care in the ordinary course of the group’s activities. Where the amount covers the balance sheet date, the amount is apportioned over the period to which it relates.

The group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the group's activities.

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.

Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements and on unused tax losses or tax credits in the group. 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 are 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.

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Central England Healthcare (Holdings) Limited

Notes to the Financial Statements for the Year Ended 29 February 2020

Depreciation

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

Asset class	Depreciation method and rate
Land and buildings	1% of cost
Furniture, fittings and equipment	15% reducing balance
Freehold land	nil

Goodwill

Goodwill arising on the acquisition of an entity represents the excess of the cost of acquisition over the group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the entity recognised at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

Amortisation

Amortisation is provided on intangible assets so as to write off the cost, less any estimated residual value, over their useful life as follows:

Asset class	Amortisation method and rate
Goodwill	10 years straight line

Investments

Investments in equity shares which are not publicly traded and where fair value cannot be measured reliably are measured at cost less impairment.

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 care services performed in the ordinary course of business.

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

Stocks

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

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 group 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.

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Central England Healthcare (Holdings) Limited

Notes to the Financial Statements for the Year Ended 29 February 2020

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 group has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee.

Assets held under finance leases are recognised at the lower of their fair value at inception of the lease and the present value of the minimum lease payments. These assets are depreciated on a straight-line basis over the shorter of the useful life of the asset and the lease term. The corresponding liability to the lessor is included in the Balance Sheet as a finance lease obligation.

Lease payments are apportioned between finance costs in the Profit and Loss Account and reduction of the lease obligation so as to achieve a constant periodic rate of interest on the remaining balance of the liability.

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

A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the group has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.

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Central England Healthcare (Holdings) Limited

Notes to the Financial Statements for the Year Ended 29 February 2020

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 group 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.

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.

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.

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.
 

- 18 -

Central England Healthcare (Holdings) Limited

Notes to the Financial Statements for the Year Ended 29 February 2020

3

Revenue

The total turnover of the group for the year has been derived from care services wholly undertaken in the United Kingdom.

4

Operating profit

Arrived at after charging

	2020  £	2019  £
Depreciation expense	174,041	152,495
Amortisation expense	126,243	130,226
Operating lease expense - plant and machinery	82,074	96,492

5

Other interest receivable and similar income

	2020 £	2019 £
Interest income on bank deposits	14,029	16,767

6

Interest payable and similar expenses

	2020  £	2019  £
Interest on bank overdrafts and borrowings	76,543	74,399
Interest on obligations under finance leases and hire purchase contracts	25,840	25,250
Other interest payable	317,738	171,989
	420,121	271,638

- 19 -

Central England Healthcare (Holdings) Limited

Notes to the Financial Statements for the Year Ended 29 February 2020

7

Staff costs

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

	2020  £	2019  £
Wages and salaries	4,419,144	2,946,764
Social security costs	230,040	130,005
Pension costs, defined contribution scheme	89,772	40,451
	4,738,956	3,117,220

The average number of persons employed by the group (including directors) during the year, analysed by category was as follows:

	2020  No.	2019  No.
Administration and support	10	13
Other departments	265	176
	275	189

8

Auditors' remuneration

	2020 £	2019 £
Audit of these financial statements	14,403	13,500
Other fees to auditors
All other non-audit services	6,200	7,126

- 20 -

Central England Healthcare (Holdings) Limited

Notes to the Financial Statements for the Year Ended 29 February 2020

9

Taxation

Tax charged/(credited) in the profit and loss account

	2020  £	2019  £
Current taxation
UK corporation tax	169,003	115,713
UK corporation tax adjustment to prior periods	-	5,967
	169,003	121,680
Deferred taxation
Arising from origination and reversal of timing differences	(101,866)	47,770
Tax expense in the income statement	67,137	169,450

The tax on profit before tax for the year is higher than the standard rate of corporation tax in the UK (2019 - higher than the standard rate of corporation tax in the UK) of 19% (2019 - 19%).

The differences are reconciled below:

	2020 £	2019 £
Profit before tax	938,117	722,915
Corporation tax at standard rate	178,242	137,354
Effect of (income)/expense not deductible in determining taxable profit	10,192	24,636
Effect of tax losses	(18,945)	-
Increase in UK and foreign current tax from adjustment for prior periods	-	5,967
Tax (decrease)/increase from effect of capital allowances and depreciation	(102,352)	1,493
Total tax charge	67,137	169,450

- 21 -

Central England Healthcare (Holdings) Limited

Notes to the Financial Statements for the Year Ended 29 February 2020

Deferred tax

Group

Deferred tax assets and liabilities

2020	Asset £
Difference between accumulated depreciation and amortisation and capital allowances	(74,018)
Short term timing differences	12,441
Losses carried forwards	116,029
	54,452

2019	Liability £
Difference between accumulated depreciation and amortisation and capital allowances	55,770
Short term timing differences	(8,356)
Losses carried forwards	-
	47,414

10

Intangible assets

Group

	Goodwill  £
Cost
At 1 March 2019	1,738,594
Additions acquired separately	2,220,488
At 29 February 2020	3,959,082
Amortisation
At 1 March 2019	1,612,351
Amortisation charge	126,243
At 29 February 2020	1,738,594
Carrying amount
At 29 February 2020	2,220,488
At 28 February 2019	126,243

- 22 -

Central England Healthcare (Holdings) Limited

Notes to the Financial Statements for the Year Ended 29 February 2020

11

Tangible assets

Group

	Freehold land and buildings £	Furniture, fittings and equipment  £	Total £
Cost
At 1 March 2019	8,125,999	1,408,089	9,534,088
Additions	87,759	140,963	228,722
Acquired through business combinations	1,000,000	631,529	1,631,529
Disposals	(299,845)	-	(299,845)
At 29 February 2020	8,913,913	2,180,581	11,094,494
Depreciation
At 1 March 2019	586,512	838,581	1,425,093
Charge for the year	72,144	101,897	174,041
Eliminated on disposal	(23,143)	-	(23,143)
Acquired on business combination	-	587,876	587,876
At 29 February 2020	635,513	1,528,354	2,163,867
Carrying amount
At 29 February 2020	8,278,400	652,227	8,930,627
At 28 February 2019	7,539,487	569,508	8,108,995

Land of £1,210,000 (2019 - £1,210,000) has not been depreciated.

Assets held under finance leases and hire purchase contracts

The net carrying amount of tangible assets includes the following amounts in respect of assets held under finance leases and hire purchase contracts:

	2020 £	2019 £
Furniture, fittings and equipment	124,281	146,213

- 23 -

Central England Healthcare (Holdings) Limited

Notes to the Financial Statements for the Year Ended 29 February 2020

12

Investments

Company

	2020 £	2019 £
Investments in subsidiaries	1,100	-

Subsidiaries	£
Cost and net book value
Additions	1,100

Details of undertakings

Details of the investments in which the company holds 20% or more of the nominal value of any class of share capital are as follows:

Undertaking	Country of incorporation	Holding	Proportion of voting rights and shares held
			2020	2019

Subsidiary undertakings
Central England Healthcare (Stoke) Limited	England and Wales	Ordinary	100%	100%
Central England Healthcare (Wolverhampton) Limited	England and Wales	Ordinary	100%	100%
Central England Healthcare (Coventry) Limited	England and Wales	Ordinary	100%	0%
Central England Healthcare (Cannock) Limited	England and Wales	Ordinary	100%	0%

The principal activity of Central England Healthcare (Stoke) Limited is providing residential and nursing care to the elderly.

The principal activity of Central England Healthcare (Wolverhampton) Limited is providing residential and nursing care to the elderly.

The principal activity of Central England Healthcare (Coventry) Limited is providing residential and nursing care to the elderly.

The principal activity of Central England Healthcare (Cannock) Limited is providing residential and nursing care to the elderly.

- 24 -

Central England Healthcare (Holdings) Limited

Notes to the Financial Statements for the Year Ended 29 February 2020

13

Business combinations

On 1 April 2019, Central England Healthcare Limited acquired 100% of the issued share capital of Central England Healthcare (Coventry) Limited , obtaining control.

Central England Healthcare (Coventry) Limited contributed £2,342,701 revenue and £182,032 to the group's profit for the period between the date of acquisition and the balance sheet date.

The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are as set out in the table below:
 

	Fair value 2020 £
Assets and liabilities acquired
Financial assets	283,228
Tangible assets	1,043,653
Financial liabilities	(2,247,495)
Total identifiable assets	(920,614)
Goodwill	2,220,488
Total consideration	1,299,874
Satisfied by:
Cash	1,277,944
Other	21,930
Total consideration transferred	1,299,874
Cash flow analysis:
Cash consideration	1,277,944
Less: cash and cash equivalent balances acquired	(2,046)
Net cash outflow arising on acquisition	1,275,898

The useful life of goodwill is 10 years.

14

Stocks

	Group		Company
	2020  £	2019  £	2020  £	2019  £
Stocks	9,000	9,000	-	-

- 25 -

Central England Healthcare (Holdings) Limited

Notes to the Financial Statements for the Year Ended 29 February 2020

15

Debtors

		Group		Company
	Note	2020  £	2019  £	2020  £	2019  £
Trade debtors		978,477	326,956	-	-
Other debtors		1,286,238	549,023	1,037,196	200
Prepayments		124,984	31,911	-	-
Deferred tax assets	9	54,452	-	-	-
		2,444,151	907,890	1,037,196	200

16

Creditors

		Group		Company
	Note	2020  £	2019  £	2020  £	2019  £
Due within one year
Loans and borrowings	17	3,750,796	3,804,773	-	-
Trade creditors		298,726	224,392	-	-
Social security and other taxes		69,365	40,842	-	-
Outstanding defined contribution pension costs		20,342	9,729	-	-
Other creditors		233,801	135,446	1,100	-
Accrued expenses		766,999	326,620	-	-
Corporation tax	9	163,033	115,713	-	-
		5,303,062	4,657,515	1,100	-
Due after one year
Loans and borrowings	17	5,616,499	2,382,007	-	-
Amounts owed to group undertakings		-	-	833,000	-
Related party creditors		1,498,929	1,152,166	187,201	-
		7,115,428	3,534,173	1,020,201	-

- 26 -

Central England Healthcare (Holdings) Limited

Notes to the Financial Statements for the Year Ended 29 February 2020

17

Loans and borrowings

	Group		Company
	2020  £	2019  £	2020  £	2019  £
Current loans and borrowings
Bank borrowings	3,574,251	3,656,420	-	-
Bank overdrafts	11,517	33,607	-	-
Finance lease liabilities	159,934	114,746	-	-
Other borrowings	5,094	-	-	-
	3,750,796	3,804,773	-	-

	Group		Company
	2020 £	2019 £	2020 £	2019 £
Non-current loans and borrowings
Bank borrowings	5,420,609	2,222,645	-	-
Finance lease liabilities	195,890	159,362	-	-
	5,616,499	2,382,007	-	-

Group and company

Bank borrowings

The bank loans incur interest at a rate of 2.25% above LIBOR and are secured against the homes owned by the borrowing companies, a mortgage debenture and by way of an intercompany guarantee. The loans are repayable in monthly instalments up to 14 April 2020, when the loan falls due for repayment in full.

18

Share capital

Allotted, called up and fully paid shares

	2020		2019
	No.	£	No.	£
Ordinary A shares of £1 each	180	180	180	180
Ordinary B shares of £1 each	10	10	10	10
Ordinary C shares of £1 each	10	10	10	10
	200	200	200	200

Rights, preferences and restrictions

The different classes of shares rank pari passu in all respects other than dividend rights.

- 27 -

Central England Healthcare (Holdings) Limited

Notes to the Financial Statements for the Year Ended 29 February 2020

19

Obligations under finance and operating leases

Group

Finance leases

The total of future minimum lease payments is as follows:

	2020 £	2019 £
Not later than one year	159,934	114,746
Later than one year and not later than five years	195,890	159,362
	355,824	274,108

Operating leases

The total of future minimum lease payments is as follows:

	2020 £	2019 £
Not later than one year	50,524	29,446
Later than one year and not later than five years	111,651	55,733
Later than five years	-	2,241
	162,175	87,420

20

Pension and other schemes

Defined contribution pension scheme

The group operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the group to the scheme and amounted to £89,772 (2019 - £40,451).

Contributions totalling £20,342 (2019 - £9,729) were payable to the scheme at the end of the year and are included in creditors.

21

Dividends

	2020  £	2019  £
Dividend paid on Ordinary A shares	504,000	-

- 28 -

Central England Healthcare (Holdings) Limited

Notes to the Financial Statements for the Year Ended 29 February 2020

22

Related party transactions

Group and company

Transactions with key management personnel

At the balance sheet date, the group was owed £12,378 (2019 - £29,861) from K Kandola in the form of a directors loan account. The loan has no fixed repayment terms.

There are no other key management personnel other than the director.

Other related party transactions

At the balance sheet date, the company owed £187,201 (2019 - £nil) to Central England Healthcare (Great Wyrley) Limited, a company controlled by K Kandola and the group owed £1,498,929 (2019 - £1,152,166). These amounts are classified as non-current on the basis that the companies have confirmed unconditionally that the loans are repayable after more than one year. Interest of £7,201 (2019 - £nil) has been charged to the company, and £82,294 (2019 - £74,150) charged to the group on these loans.

During the year a property owned by Central England Healthcare Limited was sold to a different company owned and controlled by K Kandola for £150,000. The sale value was at a market valuation and the transaction was made at arms length.

At the balance sheet date, the company was owed £1,036,996 (2019 - £nil) and the group was owed £1,208,331 (2019 - £465,228) from other companies controlled by K Kandola. No interest was charged during the year on these balances.

23

Control

The ultimate controlling party is K Kandola.

- 29 -