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Mental Health Care (U.K) Limited
Registered number: 02206038
Annual report
For the year ended 30 June 2023
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MENTAL HEALTH CARE (U.K) LIMITED
COMPANY INFORMATION
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MRA UK Investments Limited
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Chartered Accountants & Statutory Auditor
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MENTAL HEALTH CARE (U.K) LIMITED
CONTENTS
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Independent Auditor's Report
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Consolidated Statement of Comprehensive Income
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Consolidated Statement of Financial Position
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Company Statement of Financial Position
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Consolidated Statement of Changes in Equity
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Company Statement of Changes in Equity
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Consolidated Statement of Cash Flows
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Notes to the Financial Statements
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MENTAL HEALTH CARE (U.K) LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2023
The Group continued its principal activities throughout the current year as detailed in the Directors' Report.
As reported in the Consolidated Statement of Comprehensive Income, revenue has shown an increase of 20% from £29,491,149 to £36,856,114 in the current period.
MHC incurred exceptional costs in the year ended 30 June 2023 of £35,282 (2022: £336,118).
Financial position at the reporting date
The Consolidated Statement of Financial Position shows that the Group’s net assets at the year-end have increased from £33,613,127 to £37,205,430. This is due to the profit in the year.
Principal risks and uncertainties
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The directors consider 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 directors have considered the MHC group and subsidiary companies trading and cash flows for the foreseeable future taking into account reasonably possible changes in trading performance. After making enquiries and taking into account the uncertainties arising from the current economic circumstances, the directors have a reasonable expectation that the company and the MHC group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and financial statements.
The company’s strategy is to continually improve the quality of the services provided and to increase its capacity. This will be delivered through continued investment in the development of our employees and refurbishment of our existing properties.
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MENTAL HEALTH CARE (U.K) LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
Financial key performance indicators
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Management monitors a number of financial and non-financial performance indicators to monitor the performance of the business. These include:
Average occupancy represents the average number of saleable beds occupied during the year.
EBITDAR is calculated by adding back depreciation, amortisation, interest, taxation and property rental charges to profit for the financial year. The EBITDAR margin is calculated by dividing EBITDAR by turnover.
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MENTAL HEALTH CARE (U.K) LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
Directors' statement of compliance with duty to promote the success of the Group
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The board of directors of Mental Health Care (UK) Limited consider that both individually and together for the year ended 30 June 2023 they have acted in the way they consider, in good faith, would be the most likely to promote the success of the company for the benefit of its members as a whole and having regard to the matters set out in s172 (1)(a-f) as below:
a)the likely consequences of any decision in the long term;
b)the interest of the company's employees;
c)the need to foster the company's business relationships with suppliers, customers and others;
d)the impact of the company's operations on the community and the environment;
e)the desirability of the company maintaining a reputation for high standards of business conduct;
f)the need to act fairly between members of the company.
The directors work closely with the management team and make decisions by taking their legal duty into account and also the priorities and requirements of the stakeholders.
(a) the likely consequences of any decision in the long term;
The directors have regard to the likely consequences of their decisions on the long term objectives and sustainability of the Group, its stakeholders and the community whilst also preserving its values and culture. Cash requirements are monitored taking into account operating costs, cash required for capital investment in the living environment of the homes, schools and hospitals as well as capital investment in opportunities for future growth. These decisions are taken by balancing the requirements of stakeholders and without prejudicing the position of other creditors.
We assess the profitability and performance of each of our homes and hospitals on an individual basis and would only make the decision to dispose or close an operation if the costs outweigh the fees or if there were serious operational concerns with the environment. This decision would be made based on a long term view and factor in the needs of care provision for our residents and patients.
Investment in skills and training is an area where initial costs are more than outweighed by long term benefits. We will strive to train our employees to the highest standard possible as they are our greatest investment. Investment in our portfolio of properties is important to provide high quality living and working environments for our residents, patients and staff and this is an area of focus for the directors and management team.
We are a business built on our standards and reputation and would not take a decision which would have a detrimental impact on this whether in the short term or the long term. We are dedicated to ensuring we maintain our culture whilst achieving our purpose.
(b) the interests of the Group's employees;
Our employees represent our business so it is very important that they have the right attitude and the drive to create ideas, promote high levels of care, grow and develop and set high standards. All employees are encouraged to be honest and regular supervisions and employee surveys are held to facilitate this. The board receives reports on the results of these surveys together with action plans that management intend to take forward.
The directors and management team provide supervisions to many staff and visit the locations and talk to the employees which gives them the opportunity to hear their ideas and see first-hand where any improvements can be made.
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MENTAL HEALTH CARE (U.K) LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
(c) the need to foster the Group's business relationships with suppliers, customers and others;
The directors are in regular dialogue with Commissioning Authorities, Health Boards and Local Authorities and work with them, as well as families and advocates of our residents and patients to collaborate with them and seek to provide care, support and protect the adults and children we look after.
Our common purpose is to improve the lives of the residents and patients through positive relationships leading to outcomes.
Our homes, hospitals and schools are located throughout the UK and we seek to use local suppliers where possible and build strong and trusted supplier relationships to support the business.
(d) the impact of the Group's operations on the community and environment;
Where possible we engage with the local communities and work with stakeholders to provide good levels of dialogue and communication.
e) the desirability of the Group maintaining a reputation for high standards of business conduct;
All new employees get an Offer Pack which includes our standards, equal opportunities and safeguarding policies. A training programme is shared thereafter. All employees have easy access to our Staff handbook and understand the requirement for them to comply with the Group’s high standards of care to support the adults and children we work with and to maintain high standards of business conduct at all times. Any issues of noncompliance with any of our policies can be dealt with in confidence and there is a Speak Up Guardian.
f) The need to act fairly between members of the Group;
The Group aims to act with integrity and courtesy in all of its business relationships and will consider all members and stakeholders when making decisions for the overall good of the Group.
This report was approved by the board and signed on its behalf.
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MENTAL HEALTH CARE (U.K) LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2023
The directors present their report and the financial statements for the year ended 30 June 2023.
Directors' responsibilities statement
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The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgments 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;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
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 the Group and to 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 the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Company's principal activity is the management of a group of companies engaged in the care of adults with learning difficulties, autism and mental health conditions. The Group carries out this activity by operating residential care homes and hospitals which are directly owned and operated by subsidiary companies.
The profit for the year, after taxation, amounted to £3,592,303 (2022 - £2,207,381).
The directors who served during the year were:
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MRA UK Investments Limited
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D Russell (appointed 1 February 2023)
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MENTAL HEALTH CARE (U.K) LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
Liquidity is managed on a group wide basis with the group currently not being reliant on third party finance and does not expect to be so for the foreseeable future.
The board has considered the group's and the company's future trading and cash flows for the foreseeable future, taking into account reasonably possible changes in trading performance, and has concluded that the group has adequate resources to continue in operational existence for the foreseeable future. The financial statements are thus prepared on a going concern basis.
The group remains both profitable and in a net asset position.
The Directors consider the Group to be resilient and able to respond to any adverse effects in order to minimise the impact on the financial performance of the Group.
Economic impact of global events
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UK businesses are currently facing many uncertainties such as the consequences of Brexit, COVID-19, environmental sustainability and geopolitical events such as the Russian invasion of Ukraine. These uncertainties have contributed to an environment where there exists a range of issues and risks, including inflation, rising interest rates, labour shortages, disrupted supply chains and new ways of working.
The Directors have carried out an assessment of the potential impact of these uncertainties on the business, including the impact of mitigation measures, and have concluded that these are non-adjusting events with the greatest impact on the business expected to be from the economic ripple effect on the global economy. The Directors have taken account of these potential impacts in their going concern assessment.
The Group continues to work with its partners to minimise any impacts of these events and maximise the realisation of any opportunities they may provide to the business.
Engagement with employees
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The business places significant value on the involvement and engagement of our employees throughout all aspects of our business. Employees are actively engaged through annual staff surveys, regular newsletters and regular business activities which enable and promote staff engagement. Employees receive a wide range of information about the business and its activities and are encouraged to speak openly and frankly to managers and senior leaders about their experience of the business and to make suggestions for improvements.
The Company's strategy in to continually improve the quality of the services provided and to increase its capacity. This will be delivered through continued investment in the development of our employees and the refurbishment of our existing properties.
The business operates in a non-discriminatory way giving full consideration to application for employment from all individuals including those with a disability and where that disability does not prevent the applicant from fulfilling the requirements of the role. The business actively looks at reasonable adjustments that would help disabled individuals to fulfills job roles both at the commencement of employment and in the event of a disability becomes apparent during the course of employment. The business provides a range of learning and development activities all of which are accessible to individuals with disabilities and ensures that all recruitment and promotion activity is based on merit.
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MENTAL HEALTH CARE (U.K) LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
Greenhouse gas emissions, energy consumption and energy efficiency action
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The Companys Carbon Reporting results are disclosed in the ultimate parents, MRA UK Investment limited, consolidated accounts. The Company has therefore taken the subsidiary exemption.
Disclosure of information to auditor
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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 the director is aware, there is no relevant audit information of which the Company and the Group's auditor is unaware, and
∙the 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 and the Group's auditor is aware of that information.
The auditor, Mazars LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board on 4 March 2024 and signed on its behalf.
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MENTAL HEALTH CARE (U.K) LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MENTAL HEALTH CARE (U.K) LIMITED
Opinion
We have audited the financial statements of Mental Health Care (U.K) Limited (the ‘Parent Company’) and its subsidiaries (the 'Group') for the year ended 30 June 2023 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated and Company Statements of Financial Position, the Consolidated and Company Statements of Changes in Equity, the 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 FRS 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 Parent Company’s affairs as at 30 June 2023 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 and the Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's or Parent Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report. 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.
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MENTAL HEALTH CARE (U.K) LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MENTAL HEALTH CARE (U.K) LIMITED
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 course of 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 this gives rise to a material misstatement in the financial statements themselves. 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 Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Group Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In 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 Strategic Report or the Directors' Report.
We have nothing to report in respect of the following matters in relation to which 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.
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MENTAL HEALTH CARE (U.K) LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MENTAL HEALTH CARE (U.K) LIMITED
Responsibilities of Directors
As explained more fully in the Directors' Responsibilities Statement set out on page 5, 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 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 intend either to liquidate the Group or 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.
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.
Based on our understanding of the Group and Parent Company and its industry, we considered that non-compliance with the following laws and regulations might have a material effect on the financial statements: employment regulation, health and safety regulation, anti-money laundering regulation.
To help us identify instances of non-compliance with these laws and regulations, and in identifying and assessing the risks of material misstatement in respect to non-compliance, our procedures included, but were not limited to:
∙Inquiring of management and, where appropriate, those charged with governance, as to whether the Group and the Parent company is in compliance with laws and regulations, and discussing their policies and procedures regarding compliance with laws and regulations;
∙Inspecting correspondence, if any, with relevant licensing or regulatory authorities;
∙Communicating identified laws and regulations to the engagement team and remaining alert to any indications of non-compliance throughout our audit; and
∙Considering the risk of acts by the Group and the Parent company which were contrary to applicable laws and regulations, including fraud.
We also considered those laws and regulations that have a direct effect on the preparation of the financial statements, such as: tax legislation, pension legislation, the Companies Act 2006.
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MENTAL HEALTH CARE (U.K) LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MENTAL HEALTH CARE (U.K) LIMITED
In addition, we evaluated the directors' and management’s incentives and opportunities for fraudulent manipulation of the financial statements, including the risk of override of controls, and determined that the principal risks were related to posting manual journal entries to manipulate financial performance, management bias through judgements and assumptions in significant accounting estimates, in particular in relation to revenue recognition (which we pinpointed to the cut off assertion) and significant one-off or unusual transactions.
Our audit procedures in relation to fraud included but were not limited to:
∙Making enquiries of the directors and management on whether they had knowledge of any actual, suspected or alleged fraud;
∙Gaining an understanding of the internal controls established to mitigate risks related to fraud;
∙Discussing amongst the engagement team the risks of fraud; and
∙Addressing the risks of fraud through management override of controls by performing journal entry testing.
There are inherent limitations in the audit procedures described above and the primary responsibility for the prevention and detection of irregularities including fraud rests with management. As with any audit, there remained a risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls.
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.
Use of the audit 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.
Neil Barton (Senior statutory auditor)
for and on behalf of Mazars LLP
Chartered Accountants and Statutory Auditor
One St. Peter's Square
Manchester
M2 3DE
6 March 2024
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MENTAL HEALTH CARE (U.K) LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
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Exceptional administrative expenses
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Profit for the financial year
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There were no recognised gains and losses for 2023 or 2022 other than those included in the consolidated statement of comprehensive income.
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There was no other comprehensive income for 2023 (2022:£NIL).
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The notes on pages 18 to 37 form part of these financial statements.
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MENTAL HEALTH CARE (U.K) LIMITED
REGISTERED NUMBER: 02206038
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
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Debtors: amounts falling due within one year
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Cash and cash equivalents
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Creditors: amounts falling due within one year
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The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 18 to 36 form part of these financial statements.
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MENTAL HEALTH CARE (U.K) LIMITED
REGISTERED NUMBER: 02206038
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
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Debtors: amounts falling due within one year
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Cash and cash equivalents
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Creditors: amounts falling due within one year
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The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements. The loss after tax of the Parent Company for the period was £3,426,631 (2022: £4,051,625).
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
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MENTAL HEALTH CARE (U.K) LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
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Comprehensive income for the year
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Comprehensive income for the year
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The notes on pages 18 to 37 form part of these financial statements.
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MENTAL HEALTH CARE (U.K) LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
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Comprehensive income for the year
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Comprehensive income for the year
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The notes on pages 18 to 37 form part of these financial statements.
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MENTAL HEALTH CARE (U.K) LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
Cash flows from operating activities
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Profit for the financial year
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Depreciation of tangible assets
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Profit on disposal of tangible assets
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Tangible fixed assets intra group transfers
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(Decrease)/increase in creditors
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Net cash generated from operating activities
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Cash flows from investing activities
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Purchase of tangible fixed assets
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Sale of tangible fixed assets
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Government grants received
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Net cash from investing activities
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Net (decrease)/increase in cash and cash equivalents
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|
|
Cash and cash equivalents at beginning of year
|
|
|
Cash and cash equivalents at the end of year
|
|
|
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|
|
|
Cash and cash equivalents at the end of year comprise:
|
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- 17 -
|
|
MENTAL HEALTH CARE (U.K) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Mental Health Care (UK) Limited is a private company limited by shares, incorporated in the United Kingdom and registered in England & Wales. The registered office is Alexander House, Highfield Park, Llandyrnog, Denbighsire, LL16 4LU.
The financial statements are presented in £ sterling, the company and group's functional currency.
2.Accounting policies
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|
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Basis of preparation of financial statements
|
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.
The following principal accounting policies have been applied:
Liquidity is managed on a group wide basis with the group currently not being reliant on third party finance and does not expect to be so for the foreseeable future.
The board has considered the group's and the company's future trading and cash flows for the foreseeable future, taking into account reasonably possible changes in trading performance, and has concluded that the group has adequate resources to continue in operational existence for the foreseeable future. The financial statements are thus prepared on a going concern basis.
The group remains both profitable and in a net asset position.
The Directors consider the Group to be resilient and able to respond to any adverse effects in order to minimise the impact on the financial performance of the Group.
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of Financial Position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases.
- 18 -
|
|
MENTAL HEALTH CARE (U.K) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
2.Accounting policies (continued)
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|
|
Financial Reporting Standard 102 - reduced disclosure exemptions
|
The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
∙the requirements of Section 7 Statement of Cash Flows;
∙the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
∙the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
∙the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27,
12.29(a), 12.29(b) and 12.29A;
∙the requirements of Section 33 Related Party Disclosures paragraph 33.7.
Turnover comprises revenue recognised for the provision of health and social care residential and in-patient services and ancillary services. Revenue is recognised exclusive of trade discounts and sales taxes. Revenue paid in advance is included in deferred income until the service is provided. Revenue in respect of services provided but not yet invoiced by the period end is included within accrued income.
Goodwill
Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer’s interest in the fair value of the Group's share of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight line basis to the Consolidated Statement of Comprehensive Income over its useful economic life.
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
- 19 -
|
|
MENTAL HEALTH CARE (U.K) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
2.Accounting policies (continued)
|
|
|
Tangible fixed assets (continued)
|
Land is not depreciated. Depreciation on other assets is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
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3 to 5 years straight line
|
|
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|
|
Assets under construction
|
|
|
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Investments in subsidiaries are measured at cost less accumulated impairment.
Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
|
|
|
Cash and cash equivalents
|
Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
In the Consolidated Statement of Cash Flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the group's cash management.
- 20 -
|
|
MENTAL HEALTH CARE (U.K) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
2.Accounting policies (continued)
The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
The Group has elected to apply the recognition and measurement provisions of IFRS 9 Financial Instruments (as adopted by the UK Endorsement Board) with the disclosure requirements of Sections 11 and 12 and the other presentation requirements of FRS 102.
Financial instruments are recognised in the Group's Statement of Financial Position when the Group 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
Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.
Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
Other financial assets
Other financial assets, which includes investments in equity instruments which are not classified as subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in fair value being recognised in the profit or loss. Where other financial assets are not publicly traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting date.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
- 21 -
|
|
MENTAL HEALTH CARE (U.K) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
2.Accounting policies (continued)
|
|
|
Financial instruments (continued)
|
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Group after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other payables, bank loans, other loans and loans due to fellow group companies are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Other financial instruments
Derivatives, including forward exchange contracts, futures contracts and interest rate swaps, are not classified as basic financial instruments. These are initially recognised at fair value on the date the derivative contract is entered into, with costs being charged to the profit or loss. They are subsequently measured at fair value with changes in the profit or loss.
Debt instruments that do not meet the conditions as set out in FRS 102 paragraph 11.9 are subsequently measured at fair value through the profit or loss. This recognition and measurement would also apply to financial instruments where the performance is evaluated on a fair value basis as with a documented risk management or investment strategy.
Derecognition of financial instruments
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Group transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Group will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Group's contractual obligations expire or are discharged or cancelled.
- 22 -
|
|
MENTAL HEALTH CARE (U.K) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
2.Accounting policies (continued)
Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
Grants are accounted under the accruals model as permitted by FRS 102. Grants relating to expenditure on tangible fixed assets are credited to profit or loss at the same rate as the depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income.
Grants of a revenue nature are recognised in the Consolidated Statement of Comprehensive Income in the same period as the related expenditure.
The group and the company operates defined contribution pension schemes and the pension charge represents the amounts payable by the group and the company to the funds in respect of the year.
|
|
|
Provisions for liabilities
|
Provisions are made where an event has taken place that gives the Group a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the reporting date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Statement of Financial Position.
- 23 -
|
|
MENTAL HEALTH CARE (U.K) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
2.Accounting policies (continued)
|
|
|
Current and deferred taxation
|
The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the Company and the Group operate and generate income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the reporting date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits;
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and
∙Where they relate to timing differences in respect of interests in subsidiaries, associates, branches and joint ventures and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
Exceptional items are transactions that fall within the ordinary activities of the Group but are presented separately due to their size or incidence.
- 24 -
|
|
MENTAL HEALTH CARE (U.K) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
|
|
Judgments in applying accounting policies and key sources of estimation uncertainty
|
In applying the group's accounting policies, the directors are required to make judgements, estimates and assumptions in determining the carrying amounts of assets and liabilities. The directors' judgments, estimates and assumptions are based on the best and most reliable evidence available at the time when the decisions are made and are based on historical experience and other factors that are considered to be applicable. Due to the inherent subjectivity involved in making such judgments, estimates and assumptions the actual results and outcomes may differ.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Critical judgments in applying the group's accounting policies
The critical judgments that the directors have made in the process of applying the group's accounting policies that have the most significant effect on the amounts recognised in the statutory financial statements are discussed below.
Assessing indicators of impairment
In assessing whether there have been any indicators of impaired assets, the directors have considered both external and internal sources of information such as market conditions, counterparty credit ratings and experience of recoverability.
Key sources of estimation uncertainty
The directors do not consider there to be any key assumptions concerning the future and other key sources of estimation uncertainty, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
|
|
All turnover arose within the United Kingdom.
|
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Government grants receivable
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- 25 -
|
|
MENTAL HEALTH CARE (U.K) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
|
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|
|
The operating profit is stated after charging:
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Other operating lease rentals
|
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|
(Profit) / Loss on sale of assets
|
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Fees payable to the Group's auditor for the audit of the consolidated and parent Company's financial statements
|
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|
|
Fees payable to the Group's auditor in respect of:
|
|
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|
|
The auditing of accounts of associates of the Group
|
|
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|
|
The Company has taken advantage of the exemption not to disclose amounts paid for non-audit services as these are disclosed in the consolidated accounts of the parent Company.
|
- 26 -
|
|
MENTAL HEALTH CARE (U.K) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
|
|
|
|
|
Staff costs, including directors' remuneration, were as follows:
|
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Cost of defined contribution scheme
|
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|
|
The average monthly number of employees, including the directors, during the year was as follows:
|
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Service management and care staff
|
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|
Management and administration
|
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Company contributions to defined contribution pension schemes
|
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|
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During the year retirement benefits were accruing to 5 directors (2022 - 4) in respect of defined contribution pension schemes.
|
|
|
The highest paid director received remuneration of £119,682 (2022 - £61,486).
|
|
|
The value of the Group's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £1,426 (2022 - £841).
|
- 27 -
|
|
MENTAL HEALTH CARE (U.K) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
|
|
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|
|
Current tax on profits for the year
|
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|
|
Adjustments in respect of previous periods
|
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Origination and reversal of timing differences
|
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Adjustments in respect of prior periods
|
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|
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Taxation on profit on ordinary activities
|
|
|
|
|
Factors affecting tax charge for the year
|
|
|
The tax assessed for the year is higher than (2022 - higher than) the standard rate of corporation tax in the UK of 20.5% (2022 - 19%). The differences are explained below:
|
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|
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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 20.5% (2022 - 19%)
|
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|
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Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
|
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|
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Adjustments to tax charge in respect of prior periods - deferred tax
|
|
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|
|
Adjustments to tax charge in respect of prior periods
|
|
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|
|
Remeasurement of deferred tax for changes in tax rates
|
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Adjustments to opening and closing deferred tax rates
|
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Deferred tax not recognised
|
|
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|
|
Other differences leading to an increase/(decrease) in the tax charge
|
|
|
|
|
|
|
|
|
|
Total tax charge for the year
|
|
|
- 28 -
|
|
MENTAL HEALTH CARE (U.K) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
10.Taxation (continued)
|
|
Factors that may affect future tax charges
|
From 1 April 2023, the rate of corporation tax in the United Kingdom increased from 19% to 25%. Companies with profits of £50,000 or less will continue to be taxed at 19%, which is a new small profits rate. Where taxable profits are between £50,000 and £250,000, the higher 25% rate will apply but with a marginal relief applying as profits increase.
|
|
Exceptional COVID-19 costs
|
|
|
|
|
Exceptional employee legal claim settlement
|
|
|
|
|
|
|
|
- 29 -
|
|
MENTAL HEALTH CARE (U.K) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
|
|
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|
|
Assets under construction
|
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Transfers between classes
|
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Charge for the year on owned assets
|
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Included in freehold property is freehold land at cost of £2,055,670 (2022 - £2,055,670), which is not depreciated.
|
- 30 -
|
|
MENTAL HEALTH CARE (U.K) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
13.Tangible fixed assets (continued)
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Charge for the year on owned assets
|
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- 31 -
|
|
MENTAL HEALTH CARE (U.K) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
|
|
Investments in subsidiary companies
|
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- 32 -
|
|
MENTAL HEALTH CARE (U.K) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
|
|
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|
|
The following were subsidiary undertakings of the Company:
|
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|
Mental Health Care (Avalon) Limited*
|
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|
Mental Health Care (Clwyd) Limited*
|
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Mental Health Care (Community) Limited*
|
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Mental Health Care (Furze Mount) Limited*
|
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Mental Health Care (Grove Hall) Limited
|
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Mental Health Care (Heswall) Limited
|
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Mental Health Care (Highfield Park) Limited*
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Mental Health Care (Hoylake) Limited*
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Mental Health Care (New Hall) Limited*
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Mental Health Care (Newton House) Limited*
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Mental Health Care (Plas Coch) Limited
|
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Mental Health Care (Rockfield) Limited*
|
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Mental Health Care (St David's) Limited*
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Mental Health Care (Wirral) Limited*
|
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Senior Healthcare (UK) Limited
|
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MHC (Social Care) Limited
|
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* held indirectly
The registered office of Mental Health Care (Wirral) Limited is located at 7 Grosvenor Street, Chester, CH1 2DD. All other subsidiaries have their registered office located at Alexander House, Highfield Park, Llandyrnog, Denbighshire LL16 4LU.
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- 33 -
|
|
MENTAL HEALTH CARE (U.K) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
|
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|
Amounts owed by group undertakings
|
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Amounts owed by related parties
|
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Prepayments and accrued income
|
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Amounts owed by group undertakings are interest free and repayable on demand.
|
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Cash and cash equivalents
|
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Creditors: Amounts falling due within one year
|
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Amounts owed to group undertakings
|
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Other taxation and social security
|
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Accruals and deferred income
|
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Amounts owed to group undertakings are interest free and repayable on demand.
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- 34 -
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MENTAL HEALTH CARE (U.K) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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Charged to profit or loss
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Charged to profit or loss
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Tax losses carried forward
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Short term timing differences
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- 35 -
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MENTAL HEALTH CARE (U.K) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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Allotted, called up and fully paid
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200,000 (2022 - 200,000) Ordinary shares of £1 each
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200,000 (2022 - 200,000) Redeemable shares of £1 each
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All shares rank pari passu in respect of voting, dividends and distribution of capital.
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Share premium account
This reserve records the amount above the nominal value received for shares sold, less transaction costs.
Profit & loss account
The profit & loss account comprises accumulated profits and losses less any dividends declared by the balance sheet date.
The Group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounted to £320,149 (2022 - £256,914). Payments outstanding at the year end were £86,640 (2022 - £74,767).
- 36 -
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MENTAL HEALTH CARE (U.K) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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Commitments under operating leases
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At 30 June 2023 the Group and the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
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Later than 1 year and not later than 5 years
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Related party transactions
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The group have taken advantage of the exemption available under Financial Reporting Standard 102 section 33 relating to the disclosure of related party transactions between wholly owned companies.
At year end, Mental Health Care (UK) limited was due £674,556 (2022: £648,666) from MRA Professional Services Group Limited, an entity under common control.
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As at 30 June 2023 the ultimate parent company per companies house is MRA UK Investments Limited.
The smallest and largest group into which the financial statements are consolidated are that of MRA UK Investments Limited which are publicly available from Alexander House Highfield Park, Llangwyfan, Denbighshire, Wales, Wales, LL16 4LU.
As at 30 June 2023 the ultimate controlling party is Mr M Adey.
- 37 -
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