Morris Care Limited - Limited company accounts 23.2

REGISTERED NUMBER: 01898554 (England and Wales)

STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE PERIOD

1 APRIL 2022 TO 21 JUNE 2023

FOR

MORRIS CARE LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

5

Statement of Comprehensive Income

8

Balance Sheet

9

Statement of Changes in Equity

10

Notes to the Financial Statements

11

DIRECTORS:

Mr A C Cowley

Mr D J Yaldron

Mr M S Patel

SECRETARY:

JTC (UK) Limited

REGISTERED OFFICE:

The Scalpel

18th Floor

52 Lime Street

London

EC3M 7AF

REGISTERED NUMBER:

01898554 (England and Wales)

SENIOR STATUTORY AUDITOR:

Mr Phillip Bott FCA

AUDITORS:

Mark J Rees LLP Chartered Accountants

and Statutory Auditors

Granville Hall

Granville Road

Leicester

LE1 7RU

The directors present their strategic report for the period 1 April 2022 to 21 June 2023.

REVIEW OF BUSINESS

The business consists of six care homes, which provide care services to its residents.

The results for the period and financial position of the company are as shown in the annexed financial statements.

Performance of the business and outlook

The current period is a 15 month period from 1st April 2022 to 21st June 2023 so when comparing to the previous year it is not entirely comparable. We have prorated the income to compare to 2022 as detailed below.

Our KPI's for the year show how much we have achieved this year:

1st April 2022 to 21st June 2023 (15 Month Period)

2023(Prorated)

2022

£'000

£'000

£'000

Turnover

33,404

26,723

22,768

Staff costs

16,226

12,981

12,359

The company completes monthly management accounts, agreeing these to budgets to measure actual performance.

The business assets were sold on 21st June 2023, and the business ceased trading on the 20th June 2023.

PRINCIPAL RISKS AND UNCERTAINTIES

The risks to the business are occupancy drops, reduction in average fees and higher staffing costs. By investing in careful staff selection, retention and training programs, both homes have achieved excellent local reputations. Most enquiries are a result of word-of-mouth recommendations.

ON BEHALF OF THE BOARD:

Mr D J Yaldron - Director

21 March 2024

The directors present their report with the financial statements of the company for the period 1 April 2022 to 21 June 2023.

DIVIDENDS

DIRECTORS

The directors who have held office during the period from 1 April 2022 to the date of this report are as follows:

Mr A C Cowley - appointed 21 June 2023

Mr D J Yaldron - appointed 21 June 2023

Mr M S Patel - appointed 21 June 2023

Ms L P O'Loughlin - resigned 9 January 2023

Mr M P Madden - appointed 9 January 2023 - resigned 21 June 2023

Mr C W Morris - resigned 9 January 2023

Mr R C Morris - resigned 9 January 2023

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

-	select suitable accounting policies and then apply them consistently;

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

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

The 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.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

AUDITORS

After this period end the entity will be covered within Impact Healthcare REIT plc group's audit so the engagement will move to BDO.

ON BEHALF OF THE BOARD:

Mr D J Yaldron - Director

21 March 2024

Opinion

We have audited the financial statements of Morris Care Limited (the 'company') for the period ended 21 June 2023 which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 21 June 2023 and of its profit for the period then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

-	have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the 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

Please see the emphasis of matter paragraph below, where the financial statements have been prepared on a basis other than that of a going concern.

Emphasis of matter

The company's trade ceased on 20 June 2023 and was sold on 21 June 2023, with the freehold property interests being retained by the company, at which point the company ceased its principal activity. The freehold properties are expected to be hived up into an existing group company within the year. Therefore the accounts have been prepared on the break up basis and not on the going concern basis, which we have concluded is appropriate. Our opinion is not modified in respect of this matter.

We draw attention to Note 2 to the financial statements which references the above matters.

Other information

The directors are responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether 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 Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

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

Matters on which we are required to report by exception

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

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.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page three, 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 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 company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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.

We have determined that the principal risk areas where material irregularities could occur were related to posting manual journal entries to manipulate financial performance, revenue recognition, significant one-off or unusual transaction and CQC ratings.

Our audit procedures were designed to respond in particular to these identified risks (including non compliance with laws and regulations, and fraud).

Our audit procedures included but were not limited to:

- A review of a sample of occupancy reports in the year to ensure these were correctly recorded in revenue and detailed cut off testing around the year end to ensure revenue is correctly recognised;

- A review of laws and regulations the company is subject to, being specifically the CQC review and rating and discussion with management to ensure no instances of non compliance; and

- Addressing the risks of fraud through management override of controls by performing journal entry testing.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Mr Phillip Bott FCA (Senior Statutory Auditor)

for and on behalf of Mark J Rees LLP Chartered Accountants

and Statutory Auditors

Granville Hall

Granville Road

Leicester

LE1 7RU

21 March 2024

TURNOVER

3

33,404,372

22,767,992

Cost of sales

19,660,894

14,278,482

GROSS PROFIT

13,743,478

8,489,510

Administrative expenses

8,879,582

4,802,704

OPERATING PROFIT

5

4,863,896

3,686,806

Loss on sale of operations

6

(1,842,826

)

-

Exceptional items

6

-

(676,754

)

Loss on disposal of tangible

fixed assets

6

(1,129,125

)

-

1,891,945

3,010,052

Interest payable and similar expenses

7

1,833,964

800,604

PROFIT BEFORE TAXATION

57,981

2,209,448

Tax on profit

8

(901,760

)

929,934

PROFIT FOR THE FINANCIAL PERIOD

959,741

1,279,514

OTHER COMPREHENSIVE INCOME

Revaluation of freehold property

9,878,151

-

Income tax relating to other comprehensive income

(2,469,538

)

966,951

OTHER COMPREHENSIVE INCOME FOR THE PERIOD, NET OF INCOME TAX

7,408,613

966,951

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

8,368,354

2,246,465

FIXED ASSETS

Tangible assets

10

57,225,000

51,146,202

CURRENT ASSETS

Debtors

11

-

1,747,130

Cash at bank and in hand

-

1,790,114

-

3,537,244

CREDITORS

Amounts falling due within one year

12

29,766,105

4,730,101

NET CURRENT LIABILITIES

(29,766,105

)

(1,192,857

)

TOTAL ASSETS LESS CURRENT LIABILITIES

27,458,895

49,953,345

CREDITORS

Amounts falling due after more than one year

13

-

(26,803,491

)

PROVISIONS FOR LIABILITIES

15

(1,160,170

)

(2,646,927

)

NET ASSETS

26,298,725

20,502,927

CAPITAL AND RESERVES

Called up share capital

16

2

2

Revaluation reserve

17

17,464,546

10,055,933

Retained earnings

17

8,834,177

10,446,992

SHAREHOLDERS' FUNDS

26,298,725

20,502,927

The financial statements were approved by the Board of Directors and authorised for issue on 21 March 2024 and were signed on its behalf by:

Mr D J Yaldron - Director

Called up

share

Retained

Revaluation

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 April 2021

2

9,167,478

9,088,982

18,256,462

Changes in equity

Total comprehensive income

-

1,279,514

966,951

2,246,465

Balance at 31 March 2022

2

10,446,992

10,055,933

20,502,927

Changes in equity

Dividends

-

(2,572,556

)

-

(2,572,556

)

Total comprehensive income

-

959,741

7,408,613

8,368,354

Balance at 21 June 2023

2

8,834,177

17,464,546

26,298,725

1.	STATUTORY INFORMATION

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

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

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

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

The comparative figures are for the 12 month period of trading to 31 March 2022. The current figures represent a 15 month period of trading to 21 June 2023.

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 FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":

- the requirements of Section 7 Statement of Cash Flows; and

- the requirement of paragraph 3.17(d).

Related party exemption

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

Turnover

Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

Revenue represents income receivable from health and care provision services rendered and goods supplied.

Revenue is recognised in the accounting period in which the company obtains the right to consideration in exchange for its services.

Tangible fixed assets

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

Plant and machinery

-

10% - 20% on cost

Motor vehicles

-

20% - 25% straight line

Fixed assets initially are measured at cost and properties are subsequently measured using the revaluation model.

Directors believe that the residual values of the buildings are high, due to an annual repair and maintenance programme and is unlikely to suffer from technological or economic obsolescence, therefore no depreciation is charged. It is the accepted industry norm to value such specialist properties on an existing use basis. This departure from the requirements of Companies Act 2006 with regards to depreciation of buildings, is, in the opinion of the directors, necessary for the financial statements to give a true and fair view.

Taxation

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

Current or deferred taxation assets and liabilities are not discounted.

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

Deferred tax

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

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

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

Hire purchase and leasing commitments

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

Pension costs and other post-retirement benefits

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

Debtors

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.

Creditors

Short term trade 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.

Going concern

The company's trade ceased on 20 June 2023 and, with exception to the freehold properties, was on 21 sold on 21 June 2023. The freehold properties are expected to be hived up into an existing group company within the year. Therefore, the Directors have adopted the break up basis for the preparation of the financial statements and not the going concern basis which the Directors have concluded is appropriate.

3.

TURNOVER

The turnover and profit before taxation are all attributable to the principal activities of the company all arising within the United Kingdom.

4.	EMPLOYEES AND DIRECTORS

Period

1.4.22

to

Year Ended

21.6.23

31.3.22

£

£

Wages and salaries

14,430,671

11,274,654

Social security costs

1,406,904

959,831

Other pension costs

388,508

268,798

16,226,083

12,503,283

The average number of employees during the period was as follows:

Period

1.4.22

to

Year Ended

21.6.23

31.3.22

Employee no.

639

529

Period

1.4.22

to

Year Ended

21.6.23

31.3.22

£

£

Directors' remuneration

-

-

5.	OPERATING PROFIT

The operating profit is stated after charging/(crediting):

Period

1.4.22

to

Year Ended

21.6.23

31.3.22

£

£

Hire of plant and machinery

2,719

20,968

Depreciation - owned assets

421,960

396,591

Profit on disposal of fixed assets

-

(3,814

)

Auditor's remuneration

15,000

15,600

6.	EXCEPTIONAL ITEMS

Period

1.4.22

to

Year Ended

21.6.23

31.3.22

£

£

Loss on sale of operations

(1,842,826

)

-

Exceptional items

-

(676,754

)

Loss on disposal of tangible

fixed assets

(1,129,125

)

-

(2,971,951

)

(676,754

)

The exceptional items in the period relate to the sale of the business trade and related assets of the Company on 21 June 2023.

The exceptional item last year relates to COVID 19 costs relating to infection and test control, wages and other related COVID 19 exceptional costs during the period which were partly funded by government grants.

7.

INTEREST PAYABLE AND SIMILAR EXPENSES

Period

1.4.22

to

Year Ended

21.6.23

31.3.22

£

£

Bank loan interest

1,509,667

359,767

Loans from group undertakings

324,297

421,329

Interest payable

-

19,508

1,833,964

800,604

8.

TAXATION

Analysis of the tax (credit)/charge

The tax (credit)/charge on the profit for the period was as follows:

Period

1.4.22

to

Year Ended

21.6.23

31.3.22

£

£

Current tax:

UK corporation tax

584,997

345,000

Deferred taxation

(1,486,757

)

584,934

Tax on profit

(901,760

)

929,934

UK corporation tax has been charged at 20.16% (2022 - 19%).

Reconciliation of total tax (credit)/charge included in profit and loss

The tax assessed for the period is lower than the standard rate of corporation tax in the UK. The difference is explained below:

Period

1.4.22

to

Year Ended

21.6.23

31.3.22

£

£

Profit before tax

57,981

2,209,448

Profit multiplied by the standard rate of corporation tax in the UK of 20.160% (2022 - 19%)

11,689

419,795

Effects of:

Other differences

(25,837

)

(74,795

)

Loss on disposal of asset

599,145

-

Deferred tax

(1,486,757

)

584,934

Total tax (credit)/charge

(901,760

)

929,934

Tax effects relating to effects of other comprehensive income

1.4.22 to 21.6.23

Gross

Tax

Net

£

£

£

Revaluation of freehold property

9,878,151

(2,469,538

)

7,408,613

2022

Gross

Tax

Net

£

£

£

Revaluation of freehold property

-

966,951

966,951

The Government announced that the rate of corporation tax would increase from 19% to 25% with effect from 1 April 2023.

As a result, we have calculated tax at an effective rate of 20.16% for the period to 21 June 2023 (2022: 19%).

9.

DIVIDENDS

Period

1.4.22

to

Year Ended

21.6.23

31.3.22

£

£

Ordinary shares of £1 each

Interim

2,572,556

-

The total distribution of dividends for the period ended 21 June 2023 is broken down to the following:

- £500,000 issued to Morris & Company (Shrewsbury) Ltd.

- £2,072,556 issued to Welford Bidco 5 Midco Limited.

10.	TANGIBLE FIXED ASSETS

Freehold

Plant and

Motor

property

machinery

vehicles

Totals

£

£

£

£

COST OR VALUATION

At 1 April 2022

49,685,954

6,089,116

41,155

55,816,225

Additions

130,434

-

99,097

229,531

Disposals

-

(6,089,116

)

(140,252

)

(6,229,368

)

Revaluations

7,408,612

-

-

7,408,612

At 21 June 2023

57,225,000

-

-

57,225,000

DEPRECIATION

At 1 April 2022

-

4,646,034

23,989

4,670,023

Charge for period

-

401,745

20,215

421,960

Eliminated on disposal

-

(5,047,779

)

(44,204

)

(5,091,983

)

At 21 June 2023

-

-

-

-

NET BOOK VALUE

At 21 June 2023

57,225,000

-

-

57,225,000

At 31 March 2022

49,685,954

1,443,082

17,166

51,146,202

Cost or valuation at 21 June 2023 is represented by:

Freehold

property

£

Valuation in 2023

57,225,000

If Freehold property had not been revalued they would have been included at the following historical cost:

2023

2022

£

£

Cost

49,816,388

40,734,442

Freehold property were valued on an open market basis on 10 January 2023 by Cushman & Wakefield .

Cushman & Wakefield are an independent RICS regulated firm of Chartered Surveyors.