EASTGATE_CARE_INVESTMENTS - Accounts

The director presents his annual report and financial statements for the year ended 30 September 2019.

The principal activity of the company continued to be that of property investment.

The director who held office during the year and up to the date of signature of the financial statements was as follows:

The auditor, M.T.Manley & Co Limited, are deemed to be reappointed under section 487(2) of the Companies Act 2006.

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

This report has been prepared in accordance with the provisions applicable to companies entitled to the small companies exemption.

The director is responsible for preparing the annual 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 then apply them consistently;

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

•     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 them 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.

Disclaimer of opinion on financial statements

We were engaged to audit the financial statements of Eastgate Care Investments Ltd (the 'company') for the period ended 30 September 2019 which comprise the profit and loss account, the balance sheet 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 FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

We do not express an opinion on the accompanying financial statements of the company. Because of the significance of the matter described in the basis for disclaimer of opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the financial statements of the company.

Basis for disclaimer of opinion

Eastgate Care Investments Ltd, has not maintained adequate accounting records and the financial statements consequently include significant amounts based on estimates. We were unable to carry out sufficient appropriate audit procedures to obtain sufficient and appropriate audit evidence over these estimates and hence do not express an opinion on the financial statements of the company.

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.

Opinions on other matters prescribed by the Companies Act 2006

Because of the significance of the matter described in the basis for disclaimer of opinion section of our report, we have been unable to form an opinion, whether based on the work undertaken in the course of our audit:

• the information given in the director's report for the financial period for which the financial statements are prepared is consistent with the financial statements; and

• the director's report have been prepared in accordance with applicable legal requirements.

Notwithstanding our disclaimer of an opinion on the financial statements of the company, in the light of the knowledge and understanding of the company and its environment obtained in the course of the audit performed subject to the pervasive limitation described above, we have not identified material misstatements in the directors' report.

Arising from the limitation of our work referred to above:

•     we have not received all the information and explanations that we considered necessary for the purpose of our audit; and

•     we were unable to determine whether adequate accounting records have been kept,

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:

•     the financial statements are not in agreement with the accounting records and returns; or

•     certain disclosures of directors' remuneration specified by law are not made.

As explained more fully in the director's responsibilities statement, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the director determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the director is responsible for assessing the 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 has no realistic alternative but to do so.

Our responsibility is to conduct an audit of the financial statements of the company in accordance with International Standards on Auditing (UK) and to issue an auditor's report.

However, because of the matter described in the basis for disclaimer of opinion section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.

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.

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 him 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.

These financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.

Eastgate Care Investments Ltd is a private company limited by shares incorporated in England and Wales. The registered office is 2 Regan Way, Chetwynd Business Park, Chilwell, Nottingham, NG9 6RZ.

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.

Eastgate Care Investments Ltd is a wholly owned subsidiary of Eastgate Care Group Ltd and the results of Eastgate Care Investments Ltd are included in the consolidated financial statements of Eastgate Care Group Limited which are available from its registered office, 2 Regan Way, Chetwynd Business Park, Chilwell, Nottingham, NG9 6RZ.

Eastgate Care Investments Limited reported a net profit of £9,814 for the year ended 30 September 2019, and, as of that date, the company's total liabilities exceeded its total assets by £168,722. Eastgate Care Investment Limited is reliant on the support of Eastgate Care Group Limited, which in turn is reliant on the trading performance of the principal trading subsidiary, Eastgate Care Limited.

The trading performance of Eastgate Care Limited has declined since the period end and there is a risk around future trading results and cash flows. The director has been reviewing his retirement options and has taken independent advice in regard to the options available, one of which is to sell the care homes either as a group or individually. The Bank has clearly noted its desire to be repaid and in the absence of the opportunity to refinance, the director has decided to pursue a sale of the homes owned by Eastgate Care Limited as a going concern to achieve repayment of the bank borrowing and extract shareholder value. This strategy requires the support of the bank until the homes are sold.

On this basis, the Director has a reasonable expectation that Eastgate Care Limited has adequate resources to continue in operational existence for the foreseeable future until the homes are sold. For this reason he continues to adopt the going concern basis of accounting in preparing the financial statements of Eastgate Care Limited. The director therefore continues to adopt the going concern basis of accounting in preparing the financial statements of Eastgate Care Investments Limited in the expectation that adequate support will be forthcoming from the parent company.

Turnover is recognised at the fair value of the consideration received for rental income charged. Revenue from rental income is recognised by reference to the month the rent charge relates to.

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently it is measured at fair value at the reporting end date. Changes in fair value are recognised in profit or loss.

Where fair value cannot be achieved without undue cost or effort, investment property is accounted for as tangible fixed assets.

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

The average monthly number of persons (including directors) employed by the company during the year was:

Aggregate of secured liabilities £Nil (2018: £258,983).

Bank lending is secured against the properties and assets of the company, by way of a fixed charge.

The company has cross guarantees in place with related companies in respect of borrowings outstanding at the year end. The maximum liability is £76,806 (2018: £181,519).

On the 11 March 2020 the World Health Organisation declared the novel outbreak of Covid-19 as a global pandemic which has resulted in unprecedented consequences. The future implications of the Covid-19 pandemic continue to remain unclear and it is therefore difficult to evaluate the likely effect on the company’s trade, customers, suppliers and the wider economy. However as detailed within the gong concern accounting policy, the Directors’ assessment at that date of approval of these financial statements is that the virus does not create a material uncertainty as to going concern.

The following amounts were outstanding at the reporting end date:

The company has taken advantage of the exemption in Section 33.1A of FRS102 to not disclose transactions with wholly owned subsidiaries within the group.

Advances or credits have been granted by the company to its directors as follows:

The loans are unsecured and repayable on demand.

The parent company of Eastgate Care Investments Ltd is Eastgate Care Group Ltd and its registered office is 2 Regan Way, Chetwynd Business Park, Chilwell, Nottingham, NG9 6RZ.