Northgate Healthcare Limited - Limited company accounts 18.2

REGISTERED NUMBER: 05773858 (England and Wales)

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

FOR

NORTHGATE HEALTHCARE LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

5

Income Statement

7

Other Comprehensive Income

8

Balance Sheet

9

Statement of Changes in Equity

10

Cash Flow Statement

11

Notes to the Cash Flow Statement

12

Notes to the Financial Statements

13

DIRECTORS:

A K Haines

K Haines

M K Haines

SECRETARY:

K Haines

REGISTERED OFFICE:

White Gables

Cross Lane Head

Bridgnorth

Shropshire

WV16 4SJ

REGISTERED NUMBER:

05773858 (England and Wales)

AUDITORS:

BSS & Co (Accountancy Services) Limited

75 Aston Road

Shifnal

Shropshire

TF11 8DU

The directors present their strategic report for the year ended 31 December 2017.

We aim to present a balanced and comprehensive review of the development and performance of our business during the

year and its position at the year end. Our review is consistent with the size and non-complex nature of our business and

is written in the context of the risks and uncertainties we face.

REVIEW OF BUSINESS

We are a provider of residential care homes for the elderly and currently own and operate four homes in the Midlands

following the purchase of our fourth home in this financial year. We assess the performance for each home separately.

We pride ourselves on the quality of our homes and care we provide. The purchase of our fourth home in 2017 has seen

the group enter the nursing care sector to expand the services and care we are able to offer across the group.

There have been a number of obstacles across the group but the occupancy rates across the three existing homes have

been satisfactory over the year. The newest home to the group was purchased with very low occupancy rates and with a

number of issues which have been reviewed and have now been rectified since the purchase. These issues have resulted

in lower than expected occupancy rates for that home for the 2017 year since acquisition but these rates have been

steadily growing during 2018.

We have continued with the on-going program of repairs to all homes to ensure they are kept to the high standards which

we continue to meet for all of our service users.

With the addition of nursing care to be provided at our newest home this enables the group to grow the range of care

available to residents across the group. Residential nursing care is a growing sector of our industry and the directors felt

this was a significant addition to the Northgate Healthcare group and although comes with challenges it will mean

residents can continue to receive the high quality care they have been used to from a Northgate Healthcare home when

nursing care is required.

We consider the key financial performance indicators are those that communicate the financial performance and strength

of the company as a whole, these being average occupancy rates, gross profit margin and earnings before interest, tax,

depreciation and amortisation (EBITDA).

We target occupancy rates to be in excess of 95% and this was largely achieved across our three original homes for the

year. Our newest home was well below our target but we are expecting that home will reach our occupancy targets

during 2019. We continue to have high resident retention and satisfaction across all homes in the group.

The gross profit margin for the company as a whole was just over 36% this year which was in line with the results for

2016. This was again below our target gross margin but this was due to the combination of lower than expected turnover

at our newest home which has meant the proportion of staff costs were vastly higher than envisaged. The home acquired

in 2015 now has a better gross margin of just under 36% which has improved further during 2018. We expect our gross

margins for 2018 will be slightly higher than for 2017 as the newest home occupancy grows throughout the year

following the reorganisation which has taken place since acquisition. We have planned occupancy rates for that home to

be nearer our overall target of 95% by the end of 2019.

PRINCIPAL RISKS AND UNCERTAINTIES

A number of risk factors continue to potentially impact the operating and financial performance of the company. These

being:

- The effects of a further economic downturn which could lead to further pressures on margins

- Changes in the availability of public sector funding. A number of users of the company's care homes rely on

government funding to assist with fees

With these risks and uncertainties in mind, we are aware that any plans for the future development of the business may

be subject to unforeseen events outside of our control.

ON BEHALF OF THE BOARD:

A K Haines - Director

27 September 2018

The directors present their report with the financial statements of the company for the year ended 31 December 2017.

DIVIDENDS

The total distribution of dividends for the year ended 31 December 2017 will be £ 198,000 .

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2017 to the date of this

report.

A K Haines

K Haines

M K Haines

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

The auditors, BSS & Co (Accountancy Services) Limited, will be proposed for re-appointment at the forthcoming

Annual General Meeting.

ON BEHALF OF THE BOARD:

A K Haines - Director

27 September 2018

Opinion

We have audited the financial statements of Northgate Healthcare Limited (the 'company') for the year ended

31 December 2017 which comprise the Income Statement, Other Comprehensive Income, Balance Sheet, Statement of

Changes in Equity, Cash Flow Statement and Notes to the Cash Flow Statement, 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 31 December 2017 and of its profit for the year then ended;

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

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

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

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to

you where:

-	the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The 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 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, 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.

Opinion 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 four, 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.

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 B S Sahota F.C.C.A. (Senior Statutory Auditor)

for and on behalf of BSS & Co (Accountancy Services) Limited

75 Aston Road

Shifnal

Shropshire

TF11 8DU

27 September 2018

TURNOVER

5,047,701

4,133,379

Cost of sales

(3,226,054

)

(2,646,597

)

GROSS PROFIT

1,821,647

1,486,782

Administrative expenses

(871,047

)

(866,763

)

OPERATING PROFIT

4

950,600

620,019

Interest receivable and similar income

741

209

951,341

620,228

Interest payable and similar expenses

5

(172,555

)

(168,907

)

PROFIT BEFORE TAXATION

778,786

451,321

Tax on profit

6

(144,316

)

(85,543

)

PROFIT FOR THE FINANCIAL YEAR

634,470

365,778

PROFIT FOR THE YEAR

634,470

365,778

OTHER COMPREHENSIVE INCOME

Revaluation surplus

-

2,271,396

Income tax relating to other comprehensive income

28,620

(271,865

)

OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX

28,620

1,999,531

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

663,090

2,365,309

FIXED ASSETS

Intangible assets

8

988,721

903,546

Tangible assets

9

13,724,414

10,960,712

14,713,135

11,864,258

CURRENT ASSETS

Stocks

10

11,550

6,700

Debtors

11

475,809

176,431

Prepayments and accrued income

46,438

3,999

Cash at bank and in hand

509,219

233,007

1,043,016

420,137

CREDITORS

Amounts falling due within one year

12

1,462,758

916,163

NET CURRENT LIABILITIES

(419,742

)

(496,026

)

TOTAL ASSETS LESS CURRENT LIABILITIES

14,293,393

11,368,232

CREDITORS

Amounts falling due after more than one year

13

(8,502,661

)

(6,067,341

)

PROVISIONS FOR LIABILITIES

17

(911,273

)

(886,522

)

NET ASSETS

4,879,459

4,414,369

CAPITAL AND RESERVES

Called up share capital

18

100

100

Revaluation reserve

19

3,383,260

3,354,640

Retained earnings

19

1,496,099

1,059,629

SHAREHOLDERS' FUNDS

4,879,459

4,414,369

The financial statements were approved by the Board of Directors on 27 September 2018 and were signed on its behalf by:

A K Haines - Director

Called up

share

Retained

Revaluation

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 January 2016

100

891,851

1,355,109

2,247,060

Changes in equity

Dividends

-

(198,000

)

-

(198,000

)

Total comprehensive income

-

365,778

1,999,531

2,365,309

Balance at 31 December 2016

100

1,059,629

3,354,640

4,414,369

Changes in equity

Dividends

-

(198,000

)

-

(198,000

)

Total comprehensive income

-

634,470

28,620

663,090

Balance at 31 December 2017

100

1,496,099

3,383,260

4,879,459

Cash flows from operating activities

Cash generated from operations

1

1,230,190

784,293

Interest paid

(154,226

)

(167,989

)

Interest element of hire purchase payments paid

(769

)

(918

)

Tax paid

37,126

292

Net cash from operating activities

1,112,321

615,678

Cash flows from investing activities

Purchase of intangible fixed assets

(160,001

)

-

Purchase of tangible fixed assets

(2,839,731

)

(334,273

)

Sale of tangible fixed assets

729

-

Interest received

741

209

Net cash from investing activities

(2,998,262

)

(334,064

)

Cash flows from financing activities

New loans in year

2,740,500

-

Loan repayments in year

(285,211

)

-

Inter company loan

64

54

Capital repayments in year

(2,707

)

(2,556

)

Amount introduced by directors

4,001

120,432

Amount withdrawn by directors

(96,494

)

(126,044

)

Equity dividends paid

(198,000

)

(198,000

)

Net cash from financing activities

2,162,153

(206,114

)

Increase in cash and cash equivalents

276,212

75,500

Cash and cash equivalents at beginning of year

2

233,007

157,507

Cash and cash equivalents at end of year

2

509,219

233,007

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

2017

2016

£

£

Profit before taxation

778,786

451,321

Depreciation charges

150,854

127,076

Profit on disposal of fixed assets

(729

)

-

Finance costs

172,555

168,907

Finance income

(741

)

(209

)

1,100,725

747,095

(Increase)/decrease in stocks

(4,850

)

3,300

Increase in trade and other debtors

(378,985

)

(23,911

)

Increase in trade and other creditors

513,300

57,809

Cash generated from operations

1,230,190

784,293

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these

Balance Sheet amounts:

Year ended 31 December 2017

31.12.17

1.1.17

£

£

Cash and cash equivalents

509,219

233,007

Year ended 31 December 2016

31.12.16

1.1.16

£

£

Cash and cash equivalents

233,007

157,507

1.	STATUTORY INFORMATION

Northgate Healthcare 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.

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.

Turnover

Turnover represents the fees derived from the provision of care services to residents during the year. Income is

recognised on a daily basis for the provision of nursing care services.

Goodwill

Intangible assets

Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost

less any accumulated amortisation and any accumulated impairment losses.

Intellectual property & books are being amortised evenly over their estimated useful life of nil years.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life or, if held under a finance lease, over the lease term, whichever is the shorter.

Freehold property

-

not provided

Fixtures fittings & equipment

-

10% on reducing balance

Motor vehicles

-

25% on reducing balance

Computer equipment

-

25% on reducing balance

Freehold property is not depreciated, as it is the opinion of the directors that periodic revaluation in line with

generally accepted accounting principles fairly reflects the fair market value of the properties, and therefore

depreciation is considered to be immaterial.

Stocks

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

moving items.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, 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 year end and that are expected to apply to the reversal of the

timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they

will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Hire purchase and leasing commitments

Assets obtained under hire purchase contracts or finance leases are capitalised in the balance sheet. Those held

under hire purchase contracts are depreciated over their estimated useful lives. Those held under finance leases

are depreciated over their estimated useful lives or the lease term, whichever is the shorter.

The interest element of these obligations is charged to profit or loss over the relevant period. The capital element

of the future payments is treated as a liability.

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.

3.	EMPLOYEES AND DIRECTORS

2017

2016

£

£

Wages and salaries

2,930,423

2,383,845

Social security costs

120,627

93,104

Other pension costs

12,081

10,099

3,063,131

2,487,048

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

2017

2016

Lane House

45

44

The Firs

73

70

Meadowfields

76

58

Autumn House

53

-

247

172

2017

2016

£

£

Directors' remuneration

17,304

17,304

4.	OPERATING PROFIT

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

2017

2016

£

£

Hire of plant and machinery

46,900

34,616

Other operating leases

3,600

4,200

Depreciation - owned assets

73,146

56,406

Depreciation - assets on hire purchase contracts

2,883

3,844

Profit on disposal of fixed assets

(729

)

-

Goodwill amortisation

74,201

66,201

Intellectual property & books amortisation

625

625

Auditors' remuneration

5,100

4,950

5.

INTEREST PAYABLE AND SIMILAR EXPENSES

2017

2016

£

£

Bank interest

-

30

Bank loan interest

171,786

167,959

Hire purchase

769

918

172,555

168,907

6.

TAXATION

Analysis of the tax charge

The tax charge on the profit for the year was as follows:

2017

2016

£

£

Current tax:

UK corporation tax

90,945

42

Deferred tax

53,371

85,501

Tax on profit

144,316

85,543

Reconciliation of total tax charge included in profit and loss

The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The difference is

explained below:

2017

2016

£

£

Profit before tax

778,786

451,321

Profit multiplied by the standard rate of corporation tax in the UK of 19.247% (2016 - 20%)

149,893

90,264

Effects of:

Expenses not deductible for tax purposes

623

578

Capital allowances in excess of depreciation

(55,529

)

(49,784

)

Utilisation of tax losses

(4,042

)

(41,017

)

Deferred movement

53,371

85,502

Total tax charge

144,316

85,543