Ovalseal Limited - Limited company accounts 20.1

REGISTERED NUMBER: 02358974 (England and Wales)

Ovalseal Limited

Group Strategic Report, Report of the Director and

Consolidated Financial Statements

For The Year Ended 31 March 2020

Page

Company Information

1

Group Strategic Report

2

Report of the Director

4

Report of the Independent Auditors

6

Consolidated Statement of Comprehensive Income

8

Consolidated Statement of Financial Position

9

Company Statement of Financial Position

10

Consolidated Statement of Changes in Equity

11

Company Statement of Changes in Equity

12

Consolidated Statement of Cash Flows

13

Notes to the Consolidated Statement of Cash Flows

14

Notes to the Consolidated Financial Statements

15

DIRECTOR:

Mr M D Hartey

SECRETARY:

Randomlight Limited

REGISTERED OFFICE:

6 - 8 Old Hall Road

Gatley

Cheadle

Cheshire

SK8 4BE

REGISTERED NUMBER:

02358974 (England and Wales)

AUDITORS:

Lloyd Piggott Limited

Chartered Accountants and Statutory Auditor

St George's House

56 Peter Street

Manchester

M2 3NQ

The director presents his strategic report of the company and the group for the year ended 31 March 2020.

REVIEW OF BUSINESS

The group continued its principal activities throughout the current year as detailed in the Report of the Director.

As reported in the profit and loss account, revenue has shown an increase of 21.3% from £13,473,361 to £16,341,217 in the current period. Profit after tax has decreased from £1,149,571 to £177,955.

The increase in turnover and reduction in profit is primarily due to the acquisition of St Nicholas Nursing Home along with a reduction in occupancy.

Financial position at the reporting date

The balance sheet shows that the group's net assets at the year-end have increased from £15,857,359 to £16,035,314. This is due to the profit in the year.

PRINCIPAL RISKS AND UNCERTAINTIES

The director considers the key risks and uncertainties facing the group to be as follows:

Competitive pressure in a market for specialist challenging behaviour services is a continuing risk for the company as a number of alternative providers exist across the UK. The group continues to mitigate for this risk by developing services which are sufficiently differentiated from the competition by means of both the behavioural models applied and the niche client groups cared for by the group.

The service users are wholly funded by public sector sources. Consequently the group is therefore exposed to risks surrounding changes in government policies and the impact of enacted and planned reductions in spending on health and social care. This risk is mitigated by providing robust evidence of quality and service user outcomes, as well as ensuring that the group continues to contract with a wide range of funding providers. The group will continue to review and amend its cost base to counteract funding changes.

The director has considered the company's trading and cash flows for the foreseeable future, including the impact of Covid-19 and Brexit risk implications, and is confident that the company does have adequate resources to continue in operational existence for the foreseeable future. Accordingly, the company continues to adopt the going concern basis in preparing the annual report and financial statements.

Covid-19

Towards the end of the financial year and during the period thereafter, like most care operators, the Group was impacted by the Covid virus. From the very onset the Group was proactive in implementing Government guidance, obtaining appropriate levels of PPE and training our staff to deal with the pandemic in order to mitigate the effects.

Our staff have worked tirelessly throughout the pandemic to ensure that our homes maintain the highest standards of care and infection control, implementing continuous improvements throughout this period.

Where a location did suffer an outbreak in the early stages of the pandemic, with consequent occupancy losses, steps were undertaken by the management team to mitigate these effects in a timely manner.

We look forward to the imminent rollout of a new vaccine to our residents and staff and hope that this will have a significant positive impact in keeping our care homes safe.

Brexit risk implications

The terms on which the United Kingdom will withdraw from the European Union are not clear and therefore it is not possible to fully evaluate the level of risk to the Group. Management does not regard the level of risk as significant as the company's operations are UK based.

FINANCIAL KEY PERFORMANCE INDICATORS

Management monitor cash balances throughout the year as key performance indicators.

2020

2019

£

£

Cash at bank

388,097

543,175

EBITDAR

1,216,608

2,329,553

FUTURE DEVELOPMENT

The group's strategy is to continually improve the quality of the services provided and to increase its capacity. This will be delivered through:

- Investment into the development of clinical and management teams;

- development of new properties;

- refurbishment of existing properties; and

- strategic acquisitions.

ON BEHALF OF THE BOARD:

Mr M D Hartey - Director

18 December 2020

The director presents his report with the financial statements of the company and the group for the year ended 31 March 2020.

PRINCIPAL ACTIVITIES

The principal activities of the group in the year under review were those of the provision of specialist healthcare services and trading in antiques.

DIVIDENDS

No dividends will be distributed for the year ended 31 March 2020.

FUTURE DEVELOPMENTS

Information regarding the future developments of the group can be found in the strategic report.

EVENTS SINCE THE END OF THE YEAR

Information relating to events since the end of the year is given in the notes to the financial statements.

DIRECTOR

Mr M D Hartey held office during the whole of the period from 1 April 2019 to the date of this report.

FINANCIAL INSTRUMENTS

The group seeks to operate within its agreed overdraft facility with the bank. All sales are to UK customers and the majority of suppliers are UK based; the company has therefore not entered into any hedging arrangements in respect of risks relating to trade debtors or trade creditors.

The group currently utilises loans and overdrafts facilities from the bank, and therefore has a cash flow and liquidity risk. The bank is currently satisfied with the group's financial performance and the director does not think there is any risk of facilities being withdrawn.

EMPLOYMENT OF DISABLED PERSONS

The group's policy is to give full and fair consideration to applications for employment made by disabled persons, having regard to their particular aptitudes and abilities.

Disabled employees receive appropriate training to promote their career development within the group. Employees who become disabled are retained in their existing posts where possible or retained for suitable alternative posts.

EMPLOYEE INVOLVEMENT

Regular meetings are held between senior management and employee representatives to discuss matters of concern. Employees are kept well-informed about the progress and position of the group by means of regular meetings.

STATEMENT OF DIRECTOR'S RESPONSIBILITIES

The director is responsible for preparing the Group Strategic Report, the Report of the Director 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), including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 the group and of the profit or loss of the group for that period. In preparing these financial statements, the director is required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The director is responsible for keeping adequate accounting records that are sufficient to show and explain the company's and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group 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 the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the director is aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the group's auditors are unaware, and he has taken all 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 group's auditors are aware of that information.

AUDITORS

The auditors, Lloyd Piggott Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

Mr M D Hartey - Director

18 December 2020

Opinion

We have audited the financial statements of Ovalseal Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 March 2020 which comprise the Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial Position, Company Statement of Financial Position, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Statement of Cash Flows and Notes to the Consolidated Statement of Cash Flows, 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 of the parent company affairs as at 31 March 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 Auditors' 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 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 group'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 in the Group Strategic Report and the Report of the Director, but does not include the financial statements and our Report of the Auditors 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.

Opinions on other matters 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 Group Strategic Report and the Report of the Director for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Group Strategic Report and the Report of the Director have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Report of the Director.

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 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 director

As explained more fully in the Statement of Director's Responsibilities set out on page four, 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 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 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 director either intends to liquidate the group or the parent company or to cease operations, or has no realistic alternative but to do so.

Auditors' 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 a Report of the Auditors 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 Report of the Auditors.

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 a Report of the Auditors 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.

Joanne Beamish ACA, FCCA (Senior Statutory Auditor)

for and on behalf of Lloyd Piggott Limited

Chartered Accountants and Statutory Auditor

St George's House

56 Peter Street

Manchester

M2 3NQ

18 December 2020

TURNOVER

3

16,341,217

13,473,361

Cost of sales

-

4,306

GROSS PROFIT

16,341,217

13,469,055

Administrative expenses

15,667,131

11,638,433

674,086

1,830,622

Other operating income

71,406

42,759

OPERATING PROFIT

5

745,492

1,873,381

Interest receivable and similar income

1,024

31

746,516

1,873,412

Interest payable and similar expenses

6

465,857

411,844

PROFIT BEFORE TAXATION

280,659

1,461,568

Tax on profit

7

102,704

311,997

PROFIT FOR THE FINANCIAL YEAR

177,955

1,149,571

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

177,955

1,149,571

Profit attributable to:

Owners of the parent

177,955

1,149,571

Total comprehensive income attributable to:

Owners of the parent

177,955

1,149,571

FIXED ASSETS

Intangible assets

10

372,187

593,212

Tangible assets

11

22,388,394

22,495,241

Investments

12

-

-

22,760,581

23,088,453

CURRENT ASSETS

Stocks

13

11,756,118

11,377,937

Debtors

14

1,347,834

1,620,274

Cash at bank and in hand

388,097

543,175

13,492,049

13,541,386

CREDITORS

Amounts falling due within one year

15

16,800,522

4,054,847

NET CURRENT (LIABILITIES)/ASSETS

(3,308,473

)

9,486,539

TOTAL ASSETS LESS CURRENT LIABILITIES

19,452,108

32,574,992

CREDITORS

Amounts falling due after more than one year

16

(3,285,000

)

(16,566,775

)

PROVISIONS FOR LIABILITIES

21

(131,794

)

(150,858

)

NET ASSETS

16,035,314

15,857,359

CAPITAL AND RESERVES

Called up share capital

22

2

2

Revaluation reserve

23

172,000

172,000

Retained earnings

23

15,863,312

15,685,357

SHAREHOLDERS' FUNDS

16,035,314

15,857,359

The financial statements were approved by the director and authorised for issue on 18 December 2020 and were signed by:

Mr M D Hartey - Director

FIXED ASSETS

Intangible assets

10

-

-

Tangible assets

11

5,000

5,000

Investments

12

25,004

25,004

30,004

30,004

CURRENT ASSETS

Debtors

14

413,220

413,220

CREDITORS

Amounts falling due within one year

15

257,768

257,768

NET CURRENT ASSETS

155,452

155,452

TOTAL ASSETS LESS CURRENT LIABILITIES

185,456

185,456

CAPITAL AND RESERVES

Called up share capital

22

2

2

Retained earnings

23

185,454

185,454

SHAREHOLDERS' FUNDS

185,456

185,456

Company's profit for the financial year

-

30,000

The financial statements were approved by the director and authorised for issue on 18 December 2020 and were signed by:

Mr M D Hartey - Director

Called up

share

Retained

Revaluation

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 April 2018

2

14,565,786

172,000

14,737,788

Changes in equity

Dividends

-

(30,000

)

-

(30,000

)

Total comprehensive income

-

1,149,571

-

1,149,571

Balance at 31 March 2019

2

15,685,357

172,000

15,857,359

Changes in equity

Total comprehensive income

-

177,955

-

177,955

Balance at 31 March 2020

2

15,863,312

172,000

16,035,314

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 April 2018

2

185,454

185,456

Changes in equity

Dividends

-

(30,000

)

(30,000

)

Total comprehensive income

-

30,000

30,000

Balance at 31 March 2019

2

185,454

185,456

Changes in equity

Balance at 31 March 2020

2

185,454

185,456

Cash flows from operating activities

Cash generated from operations

1

987,194

1,075,306

Interest paid

(465,857

)

(411,844

)

Tax paid

(126,349

)

(348,768

)

Net cash from operating activities

394,988

314,694

Cash flows from investing activities

Purchase of tangible fixed assets

(322,873

)

(4,259,452

)

Sale of tangible fixed assets

178,196

832,752

Interest received

1,024

31

Net cash from investing activities

(143,653

)

(3,426,669

)

Cash flows from financing activities

New loans in year

-

3,600,000

Loan repayments in year

(741,760

)

(676,015

)

Amount introduced by directors

8,406

45,000

Amount withdrawn by directors

-

(38,058

)

Equity dividends paid

-

(30,000

)

Net cash from financing activities

(733,354

)

2,900,927

Decrease in cash and cash equivalents

(482,019

)

(211,048

)

Cash and cash equivalents at beginning of year

2

543,175

754,223

Cash and cash equivalents at end of year

2

61,156

543,175

1.	RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2020

2019

£

£

Profit before taxation

280,659

1,461,568

Depreciation charges

470,115

456,114

Loss/(profit) on disposal of fixed assets

2,432

(289

)

Increase/(decrease) in provision

(61,982

)

6,057

Finance costs

465,857

411,844

Finance income

(1,024

)

(31

)

1,156,057

2,335,263

Increase in stocks

(378,181

)

(1,409,911

)

Decrease/(increase) in trade and other debtors

272,440

(126,747

)

(Decrease)/increase in trade and other creditors

(63,122

)

276,701

Cash generated from operations

987,194

1,075,306

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of these Statement of Financial Position amounts:

Year ended 31 March 2020

31.3.20

1.4.19

£

£

Cash and cash equivalents

388,097

543,175

Bank overdrafts

(326,941

)

-

61,156

543,175

Year ended 31 March 2019

31.3.19

1.4.18

£

£

Cash and cash equivalents

543,175

1,303,841

Bank overdrafts

-

(549,618

)

543,175

754,223

3.	ANALYSIS OF CHANGES IN NET DEBT

At 1.4.19

Cash flow

At 31.3.20

£

£

£

Net cash

Cash at bank and in hand

543,175

(155,078

)

388,097

Bank overdrafts

-

(326,941

)

(326,941

)

543,175

(482,019

)

61,156

Debt

Debts falling due within 1 year

(871,510

)

(12,540,014

)

(13,411,524

)

Debts falling due after 1 year

(16,566,775

)

13,281,775

(3,285,000

)

(17,438,285

)

741,761

(16,696,524

)

Total

(16,895,110

)

259,742

(16,635,368

)

1.	STATUTORY INFORMATION

Ovalseal Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the General Information page.

The presentation currency of the financial statements is the Pound Sterling (£).

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention as modified by the revaluation of certain assets.

Basis of consolidation

The group financial statements consolidate the financial statements of the company and its subsidiary undertakings drawn up to 31 March 2020.

Subsidiary undertakings are included using the acquisitions method of accounting. Under this method the group profit and loss account and statement of cashflows include the results and cashflows of subsidiaries from the date of acquisition and to the date of sale outside the group in the case of disposals of subsidiaries. The purchase consideration has been allocated to the assets and liabilities on the basis of fair value at the date of acquisition. No profit and loss account is presented for the company as permitted by Section 408 of the Companies Act 2006.

Related party exemption

The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group.

Transactions between group entities which have been eliminated on consolidation are not disclosed within the financial statements.

During the year the group has paid rent of £12,000 to the director for use of assets.

Turnover

Income recognition, which is stated net of value added tax, is dependant upon the type of income concerned:

- The provision of care is recognised as it is earned on a periodic basis.

- Income from antiques is recognised at the point of sale.

Goodwill

Positive goodwill arising on acquisitions is capitalised, classified as an asset on the balance sheet and amortised on a straight line basis over its useful economic life up to a presumed maximum of 10 years. It is reviewed for impairment at the end of the first full financial year following acquisition and in other periods if events or changes in circumstances indicate that the carrying value may not be recoverable.

Intangible assets

Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Plant and machinery

-

25% on reducing balance and 25% on cost

Fixtures and fittings

-

33% on reducing balance, 25% on reducing balance, 20% on reducing balance and 15% on cost

Motor vehicles

-

25% on reducing balance

Computer equipment

-

33% on reducing balance and 25% on cost

No depreciation has been provided on the freehold buildings on the grounds that it would be immaterial as the estimated remaining useful economic life of the buildings exceed 50 years and the buildings have high residual values.

Stocks

Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Consolidated Statement of Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the statement of financial position date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the statement of financial position date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the statement of financial position date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result.

Hire purchase and leasing commitments

Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the lease.

Pension costs and other post-retirement benefits

The group operates a defined contribution pension scheme. Contributions payable to the group's pension scheme are charged to profit or loss in the period to which they relate.

Critical accounting judgements and estimation uncertainties

The preparation of the financial statements in conformity with generally accepted accounting principles requires the director to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results in the future could differ from those estimates. In this regard, the director believes that the critical accounting policies where judgements or estimations are necessarily applied are summarised below:

Goodwill and residual values

The Director has reviewed the asset lives and associated residual values of goodwill, and in particular, the useful economic life and residual value and has concluded that asset lives and residual values are appropriate.

Depreciation and residual values

The Director has reviewed the asset lives and associated residual values of all fixed asset classes, and in particular, the useful economic life and residual values and has concluded that asset lives and residual values are appropriate.

Investments

Investments are recorded at cost and reviewed for impairment on an annual basis.