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Registered number: 03192708
EUROPEAN HEALTHCARE OPERATIONS LIMITED
DIRECTORS' REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
BAGINSKY COHEN
CHARTERED ACCOUNTANTS
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EUROPEAN HEALTHCARE OPERATIONS LIMITED
COMPANY INFORMATION
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CHARTERED ACCOUNTANTS AND STATUTORY AUDITORS
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NATIONAL WESTMINSTER BANK PLC
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EUROPEAN HEALTHCARE OPERATIONS LIMITED
CONTENTS
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Independent auditors' report
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Notes to the financial statements
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EUROPEAN HEALTHCARE OPERATIONS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2014
The directors present their report and the financial statements for the year ended 31 December 2014.
DIRECTORS' RESPONSIBILITIES STATEMENT
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The directors are responsible for preparing the Strategic report, the Directors' report and the financial statements in accordance with applicable law and regulations.
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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:
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·select suitable accounting policies and then apply them consistently;
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·make judgments and accounting estimates that are reasonable and prudent;
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·state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
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·prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
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The directors are 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. They are 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.
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The profit for the year, after taxation, amounted to £180,347 (2013 - £429,732).
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The directors do not recommend the payment of a dividend (2013: £nil).
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The directors who served during the year were:
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POST BALANCE SHEET EVENTS
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Avondale Nursing Home was closed after the year end.
The directors consider that it is appropriate to prepare the financial statements on a going concern basis, having received confirmation of continued financial support from the parent undertaking.
Page 1
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EUROPEAN HEALTHCARE OPERATIONS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2014
DISCLOSURE OF INFORMATION TO AUDITORS
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Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:
·so far as that director is aware, there is no relevant audit information of which the Company's auditors are unaware, and
·that director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information.
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Under Section 487 of the Companies Act 2006, Baginsky Cohen will be deemed to have been reappointed as auditors 28 days after these financial statements were sent to members or 28 days after the latest date prescribed for filing the accounts with the registrar, which ever is earlier.
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This report was approved by the Board on 29 September 2015 and signed on its behalf.
Page 2
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EUROPEAN HEALTHCARE OPERATIONS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2014
The Company owns, operates and develops facilities for the care of the elderly. Formed in 1996, there are currently three homes in the portfolio.
It is the unique character of each home, fashioned by the interaction of its residents, staff and ambience that will build long-term value and a sustainable business in a sector that continues to be under close scrutiny from regulators, the media and the general public.
The objectives of the company are achieved by the balanced investment of resources into:
• improvements to care practises and quality assurance programmes;
• mandatory and specialist training, development and mentoring of staff; and
• regular capital expenditure, refurbishment and upgrade works at each site.
Executive management guidance through central care and human resources, training and health and safety support home management, set standards and provide continuity.
The key performance indicators relevant at this time are the number of available beds per day, average occupancy of the beds expressed as a percentage and EBITDA and cash flow. In the future, the Care Quality Commission’s Rating System will be a very important measure.
The number of daily available care beds in 2014 was 145 (2013: 144).
It was disappointing that average occupancy for the year was lower at 89.1% compared with the previous year (2013: 91.7%). The configuration of the smaller homes makes it difficult to cope with highly dependent residents and consequently they struggled to maintain occupancy levels.
EBITDA was £826,202 (2013: £960,714) on a turnover of £5,186,403 (2013: £5,225,758) with a strong focus during the year on the control of costs.
The cost of maintaining care standards continues to rise with greater frequencies of inspection, demand for higher staffing levels and the increasing amounts of documentation required. The Company has monitored the trends and will take time to ensure that any efficiency gains should not be detrimental to the standards of care provided. There continues to be a need to be more selective and prioritise the programme of capital investment.
The key risks and uncertainties facing the business relate mainly to compliance with statutory and other regulations, failure of which could lead to the loss of the registration necessary to operate care facilities and damage the reputation of the Company. There is also financial risk due to the impact on cash flow of sustained periods of lower occupancy levels.
However, the Board believes that the quality assurance programmes for care, the continued capital investment and staff training, supervision and mentoring will help mitigate these risks.
The Board has and will continue to monitor, and change where necessary, the categories of care provided at each of the homes to ensure that high quality care is maintained.
 
Page 3
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EUROPEAN HEALTHCARE OPERATIONS LIMITED
STRATEGIC REPORT (continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
Since the balance sheet date, the Company has closed Avondale Nursing Home and will be reviewing options for the property going forward in order to maximise value. The Board also believes that the current difficult trading environment will continue for the foreseeable future and will need to consider further development programmes at each of its sites, where possible.
This report was approved by the board on 29 September 2015 and signed on its behalf.
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EUROPEAN HEALTHCARE OPERATIONS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF EUROPEAN HEALTHCARE OPERATIONS LIMITED
We have audited the financial statements of European Healthcare Operations Limited for the year ended 31 December 2014, set out on pages 7 to 16. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
This report is made solely to the Company's shareholders, 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 shareholders those matters we are required to state to them in an Auditors' 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 shareholders as a body, for our audit work, for this report, or for the opinions we have formed.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
As explained more fully in the Directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.
SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENTS
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Strategic report and the Directors' report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
OPINION ON FINANCIAL STATEMENTS
In our opinion the financial statements:
·give a true and fair view of the state of the Company's affairs as at 31 December 2014 and of its 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.
OPINION ON OTHER MATTER PRESCRIBED BY THE COMPANIES ACT 2006
In our opinion the information given in the Strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements.
Page 5
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EUROPEAN HEALTHCARE OPERATIONS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF EUROPEAN HEALTHCARE OPERATIONS LIMITED
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
·adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
·the financial statements are not in agreement with the accounting records and returns; or
·certain disclosures of directors' remuneration specified by law are not made; or
·we have not received all the information and explanations we require for our audit.
Jerry Michael (Senior statutory auditor)
for and on behalf of
BAGINSKY COHEN
CHARTERED ACCOUNTANTS AND STATUTORY AUDITORS
930 HIGH ROAD
LONDON
N12 9RT
29 September 2015
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EUROPEAN HEALTHCARE OPERATIONS LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2014
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Interest payable and similar charges
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PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
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Tax on profit on ordinary activities
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PROFIT FOR THE FINANCIAL YEAR
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All amounts relate to continuing operations.
There were no recognised gains and losses for 2014 or 2013 other than those included in the profit and loss account.
The notes on pages 9 to 16 form part of these financial statements.
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EUROPEAN HEALTHCARE OPERATIONS LIMITED
REGISTERED NUMBER: 03192708
BALANCE SHEET
AS AT 31 DECEMBER 2014
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CREDITORS: amounts falling due within one year
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TOTAL ASSETS LESS CURRENT LIABILITIES
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CREDITORS: amounts falling due after more than one year
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The financial statements were approved and authorised for issue by the Board and were signed on its behalf on 29 September 2015.
The notes on pages 9 to 16 form part of these financial statements.
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EUROPEAN HEALTHCARE OPERATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
1.ACCOUNTING POLICIES
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention and in accordance with applicable accounting standards.
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The company, being a subsidiary undertaking where 90% or more of the voting rights are controlled within the Group whose consolidated financial statements are publicly available, is exempt from the requirement to draw up a cash flow statement in accordance with FRS 1.
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Full provision is made for deferred tax assets and liabilities arising from all timing differences between the recognition of gains and losses in the financial statements and recognition in the tax computation.
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A net deferred tax asset is recognised only if it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.
Deferred tax assets and liabilities are calculated at the tax rates expected to be effective at the time the timing differences are expected to reverse.
Deferred tax is not provided on timing differences arising from the revaluation of fixed assets in the financial statements.
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The directors consider that it is appropriate to prepare the financial statements on a going concern basis, following confirmation of continuing support from its parent undertaking.
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Goodwill is the difference between amounts paid on the acquisition of a business and the fair value of the identifiable assets and liabilities. It is amortised to the Profit and loss account over its estimated economic life.
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Government grants in respect of capital expenditure are deducted from the purchase price of the related
asset with a consequent reduction in the annual charge for depreciation.
Grants of a revenue nature are credited to the profit and loss account so as to match them with the
expenditure to which they relate.
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Rentals under operating leases are charged to the profit and loss account on a straight line basis over the lease term.
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Page 9
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EUROPEAN HEALTHCARE OPERATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
1.ACCOUNTING POLICIES (continued)
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The company operates a defined contribution pension scheme and the pension charge represents the amounts payable by the company to the fund in respect of the year.
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The pension costs charged against the profit and loss account represent the amount of contributions payable to the scheme in the accounting period.
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Stock and work in progress
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Land and buildings held for development are classified as stock and are stated at the lower of cost and net realisable value. Costs comprise the purchase costs together with any associated cost. Work in progress and consumables are valued at the lower of cost and net realisable value.
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Tangible fixed assets and depreciation
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Tangible fixed assets are stated at cost less depreciation. Depreciation is not charged on freehold land. Depreciation on other tangible fixed assets is provided at rates calculated to write off the cost of those assets, less their estimated residual value, over their expected useful lives on the following bases:
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Furniture, fittings and equipment
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The carrying values of tangible fixed assets are reviewed for impairment when events or circumstances indicate that the carrying value may not be recoverable.
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2.TURNOVER
All turnover arose from the provision of assisted and close care, residential, nursing and dementia care and other services within the United Kingdom, stated net of value added tax.
3.OPERATING PROFIT
Operating profit is stated after charging:
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Depreciation of tangible fixed assets:
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During the year, no director received any emoluments (2013 - £NIL).
Page 10
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EUROPEAN HEALTHCARE OPERATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
4.AUDITORS' REMUNERATION
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Fees payable to the Company's auditor for the audit of the Company's annual accounts
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Fees payable to the Company's auditor and its associates in respect of:
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Other services relating to taxation
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5.STAFF COSTS
Staff costs were as follows:
The average monthly number of employees, excluding the directors, during the year was as follows:
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Management and administrative
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The emoluments of the directors were paid by European Healthcare Group PLC, the immediate parent undertaking. The directors were also directors of a number of other fellow subsidiary undertakings and it is not possible to make an accurate apportionment of their emoluments in respect of each of the subsidiary undertakings. Accordingly, the emoluments of the directors are disclosed within the accounts of European Healthcare Group PLC.
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EUROPEAN HEALTHCARE OPERATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
7.INTEREST PAYABLE
8.TAXATION
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Analysis of tax charge in the year
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UK corporation tax charge on profit for the year
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Adjustments in respect of prior periods
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Tax on profit on ordinary activities
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Factors affecting tax charge for the year
The tax assessed for the year is lower than (2013 - lower than) the standard rate of corporation tax in the UK of 21.50% (2013 - 23.25%). The differences are explained below:
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Profit on ordinary activities before tax
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Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 21.50% (2013 - 23.25%)
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Non-tax deductible amortisation of goodwill and impairment
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Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
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Capital allowances for year in excess of depreciation
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Adjustments to tax charge in respect of prior periods
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Other timing differences leading to an increase (decrease) in taxation
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Current tax charge for the year
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Factors that may affect future tax charges
There were no factors that may affect future tax charges.
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EUROPEAN HEALTHCARE OPERATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
9.INTANGIBLE FIXED ASSETS
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At 1 January 2014 and 31 December 2014
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10.TANGIBLE FIXED ASSETS
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Furniture, fittings and equipment
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Transfer from stock and work in progress
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Included in land and buildings is land at cost of £1.8 million (2013: £1.8 million) which is not subject to depreciation.
The assets of the Company are charged to secure facilities provided by National Westminster Bank PLC to the parent undertaking.
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EUROPEAN HEALTHCARE OPERATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
11.STOCKS AND WORK IN PROGRESS
12.DEBTORS
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Prepayments and accrued income
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13.CREDITORS:
Amounts falling due within one year
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Other taxation and social security
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Accruals and deferred income
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14.CREDITORS:
Amounts falling due after more than one year
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Amounts owed to group undertakings
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15.SHARE CAPITAL
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1,000 ordinary shares of £1 each
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Allotted, called up and fully paid
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Page 14
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EUROPEAN HEALTHCARE OPERATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
16.RESERVES
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Profit for the financial year
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17.RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
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Opening shareholders' deficit
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Profit for the financial year
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Closing shareholders' deficit
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18.PENSION COMMITMENTS
The company participates in a defined contribution scheme. The assets of the scheme are held separately
from those of the company in an independendtly administered fund. The pension cost charge for the year
represents conrtibutions payable by the company to the fund and amounted to £7,159 (2013: Nil).
19.OPERATING LEASE COMMITMENTS
At 31 December 2014 the Company had annual commitments under non-cancellable operating leases as follows:
20.CAPITAL COMMITMENTS
The Company had no capital commitments at 31 December 2014 or 31 December 2013.
Page 15
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EUROPEAN HEALTHCARE OPERATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
21.CONTINGENT ASSETS/LIABILITIES
The Group's bank has a cross corporate guarantee between European Healthcare Group PLC and all its subsidiary undertakings. The directors of European Healthcare Group PLC are of the opinion that the Group will be able to operate within agreed facilities.
There were no contingent assets or contingent liabilities at 31 December 2014 or 31 December 2013.
22.TRANSACTIONS WITH DIRECTORS AND OTHER RELATED PARTIES
The Company has taken advantage of the exemption in Financial Reporting Standard No 8 “Related party disclosures” and has not disclosed transactions with group undertakings.
There were no other related party transactions.
23.ULTIMATE PARENT UNDERTAKING AND CONTROLLING PARTY
The Company's immediate parent company is European Healthcare Group PLC, a company registered in England and Wales. The ultimate parent undertaking and controlling party is Givril Investment SA, a company incorporated in the Republic of Panama.
Copies of the immediate parent company's financial statements can be obtained from that company's registered office.
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