Lovett Care Holdings Limited - Limited company accounts 20.1

LOVETT CARE HOLDINGS LIMITED - Company Information

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REGISTERED NUMBER: 12113398 (England and Wales)

Group Strategic Report,

Report of the Directors and

Consolidated Financial Statements

for the Year Ended 31 December 2021

for

Lovett Care Holdings Limited

Page

Company Information

Group Strategic Report

Report of the Directors

Report of the Independent Auditors

Consolidated Profit and Loss Account

Consolidated Other Comprehensive Income

Consolidated Balance Sheet

Company Balance Sheet

Consolidated Statement of Changes in Equity

Company Statement of Changes in Equity

Consolidated Cash Flow Statement

Notes to the Consolidated Cash Flow Statement

Notes to the Consolidated Financial Statements

DIRECTORS:

C Cook

L A Bedson

Mrs D Baker

REGISTERED OFFICE:

Hilton House

Hilton Road

Stoke-on-Trent

Staffordshire

ST4 6QZ

REGISTERED NUMBER:

12113398 (England and Wales)

AUDITORS:

Thompson Wright Limited

Chartered Accountants

and Statutory Auditors

Ebenezer House

Ryecroft

Newcastle under Lyme

Staffordshire

ST5 2BE

The directors present their strategic report of the company and the group for the year ended 31 December 2021.

REVIEW OF BUSINESS

The financial statements show that the group has continued with its expansion plan despite the difficulties arising from operating and trading in a Covid-19 climate.

The group acquisition plan proceeded part way through the year the acquisition of 4 care homes from Barchester. Completion took place at the end of August. However, this has meant that the group has not yielded the benefits of a full year's trading for these acquisitions.

The directors consider the following to be KPIs;

2021

2020

EBITDA

1,020,248

583,072

Debtors days

27.77

13.65

Average Weekly Fee

£808

£687

Occupancy %

76%

63%

PRINCIPAL RISKS AND UNCERTAINTIES

Market Risk

The directors are constantly monitoring both the quality and cost of the care the group provides as well as closely monitoring the competition, to minimise the market risk.

Financial Risks

The group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably.

The policy throughout the period has been to maintain liquid funds at the bank and avoid incurring overdraft interest whilst also funding the repayment of loan obligations.

The maturity of borrowings is set out in note 15 to the financial statements.

Under the terms of the loan facility, the group currently has access to further funds for use as and when is necessary.

Credit Risk

The principal credit risk arises from its trade debtors. To manage credit risk, the directors set limits for its customers based on experience and individual circumstances of the residents. During 2019, credit risk exposure was spread over many residents and has remained throughout 2020 and current financial year.

Covid-19

As at the date of signing the accounts, the world is continuing to fight against the Covid-19 virus. Vaccines have been rolled out and infection rates have decreased significantly. However, the board remain vigilant of any variants of the virus which could impact the business.

Management continue to take necessary steps to steer the business through the pandemic in these unprecedented times which the care sector is at the forefront. The board are updated by the operational teams daily about the virus and are working with key suppliers to mitigate any shortage in supply of food, medicine and PPE.

To date however, occupancy rates have remained stable, death rates are no different to our historic rates and the business has received a request from the NHS to block book beds in its third home.

Based on the above and the indications from the sector on the impact of the virus the Directors believe that it remains appropriate to prepare the financial statements on a going concern basis

FUTURE DEVELOPMENTS

Looking to the future, the directors want to maintain appropriate investment levels in the company to maintain and secure the group's position in the market. The directors closely monitor the market place to ensure that the group can deliver the best care at the best prices.

ON BEHALF OF THE BOARD:

L A Bedson - Director

19 May 2022

The directors present their report with the financial statements of the company and the group for the year ended 31 December 2021.

PRINCIPAL ACTIVITY

The principal activity of the group in the year under review was that of the care and well-being of persons requiring 24 hour care, excluding nursing provision over the age of 55.

DIVIDENDS

The total distribution of dividends for the year ended 31 December 2021 will be £71,743 (2020 - £335,079).

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2021 to the date of this report.

C Cook

L A Bedson

Other changes in directors holding office are as follows:

C Scarlett - resigned 12 January 2021

Ms R L Scarlett - resigned 12 January 2021

L Stringfellow - resigned 12 January 2021

Mrs D Baker - appointed 16 August 2021

DISCLOSURE IN THE STRATEGIC REPORT

Future developments and principal risks and uncertainties are disclosed in the strategic report.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Group 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 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 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 and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group 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 the group 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 group's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the group's auditors are aware of that information.

AUDITORS

The auditors, Thompson Wright Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

L A Bedson - Director

19 May 2022

Opinion

We have audited the financial statements of Lovett Care Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2021 which comprise the Consolidated Profit and Loss Account, Consolidated Other Comprehensive Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Cash Flow Statement and Notes to the Consolidated 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 group's and of the parent company affairs as at 31 December 2021 and of the group's loss 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 group 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 and the 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 directors are responsible for the other information. The other information comprises the information in the Group 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 Group 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 Group 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 group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group 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 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.

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 group's and the 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 either intend to liquidate the group or the parent 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:

- the Senior Statutory Auditor ensured that the audit team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;

- we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the care home industry.

- we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation, data protection, anti-bribery, employment, environmental consumer rights act, other industry specific accreditations and health and safety legislation as well as regulations enforced by the Care Quality Commission and the Care Inspector of Wales;

- we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and

- identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.

We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

- making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and

- considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.

To address the risk of fraud through management bias and override of controls, we:

- performed analytical procedures to identify any unusual or unexpected relationships;

- tested journal entries to identify unusual transactions;

- assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and

- investigated the rationale behind significant or unusual transactions.

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

- agreeing financial statement disclosures to underlying supporting documentation;

- reading the minutes of meetings of those charged with governance;

- enquiring of management as to actual and potential litigation and claims; and

- reviewing correspondence with HMRC, relevant regulators including the Health and Safety Executive, and the company's legal advisors.

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.

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.

Jeremy Bostock BA BFP FCA (Senior Statutory Auditor)

for and on behalf of Thompson Wright Limited

Chartered Accountants

and Statutory Auditors

Ebenezer House

Ryecroft

Newcastle under Lyme

Staffordshire

ST5 2BE

19 May 2022

TURNOVER

11,405,479

3,328,230

Cost of sales

649,840

217,900

GROSS PROFIT

10,755,639

3,110,330

Administrative expenses

11,600,150

3,474,530

(844,511

)

(364,200

)

Other operating income

690,092

OPERATING LOSS

(154,419

)

(364,200

)

Interest receivable and similar income

12,877

(154,344

)

(351,323

)

Interest payable and similar expenses

2,056,205

1,654,607

LOSS BEFORE TAXATION

(2,210,549

)

(2,005,930

)

Tax on loss

37,903

56,342

LOSS FOR THE FINANCIAL YEAR

(2,248,452

)

(2,062,272

)

Loss attributable to:

Owners of the parent

(2,248,452

)

(2,062,272

)

LOSS FOR THE YEAR

(2,248,452

)

(2,062,272

)

OTHER COMPREHENSIVE INCOME

Revaluation of land and buildings

8,348,301

3,412,792

Income tax relating to other comprehensive
income

(1,349,553

)

(522,898

)

OTHER COMPREHENSIVE INCOME FOR THE
YEAR, NET OF INCOME TAX

6,998,748

2,889,894

TOTAL COMPREHENSIVE INCOME FOR THE
YEAR

4,750,296

827,622

Total comprehensive income attributable to:

Owners of the parent

4,750,296

827,622

FIXED ASSETS

Intangible assets

1,592,379

1,467,530

Tangible assets

51,589,222

27,541,283

Investments

53,181,601

29,008,813

CURRENT ASSETS

Debtors

2,107,063

1,414,867

Cash at bank and in hand

1,050,920

2,342,202

3,157,983

3,757,069

CREDITORS

Amounts falling due within one year

1,587,387

953,229

NET CURRENT ASSETS

1,570,596

2,803,840

TOTAL ASSETS LESS CURRENT LIABILITIES

54,752,197

31,812,653

CREDITORS

Amounts falling due after more than one
year

(45,322,881

)

(27,100,023

)

PROVISIONS FOR LIABILITIES

(2,404,852

)

(1,017,166

)

NET ASSETS

7,024,464

3,695,464

CAPITAL AND RESERVES

Called up share capital

204

Non distributable retained

earnings

9,962,328

4,540,124

Merger reserve

(170,241

)

(170,241

)

Retained earnings

(2,767,827

)

(674,623

)

SHAREHOLDERS' FUNDS

7,024,464

3,695,464

The financial statements were approved by the Board of Directors and authorised for issue on 19 May 2022 and were signed on its behalf by:

L A Bedson - Director

FIXED ASSETS

Intangible assets

Tangible assets

Investments

170,445

CREDITORS

Amounts falling due within one year

170,218

NET CURRENT LIABILITIES

(170,218

)

(170,218

)

TOTAL ASSETS LESS CURRENT LIABILITIES

227

CREDITORS

Amounts falling due after more than one
year

NET ASSETS

204

CAPITAL AND RESERVES

Called up share capital

204

SHAREHOLDERS' FUNDS

204

Company's profit for the financial year

71,743

335,079

The financial statements were approved by the Board of Directors and authorised for issue on 19 May 2022 and were signed on its behalf by:

L A Bedson - Director

Non

Called up

distributable

Retained

retained

Merger

Total

capital

earnings

reserve

equity

Balance at 1 January 2020

204

1,635,847

2,260,009

(170,241

)

3,725,819

Changes in equity

Dividends

(335,079

)

(335,079

)

Total comprehensive income

(2,062,272

)

2,889,894

827,622

Excess depreciation over

depreciation on historical

cost

86,881

(86,881

)

Deferred taxation

(522,898

)

(522,898

)

Balance at 31 December 2020

204

(674,623

)

4,540,124

(170,241

)

3,695,464

Changes in equity

Dividends

(71,743

)

(71,743

)

Total comprehensive income

(2,248,452

)

6,998,748

4,750,296

Excess depreciation over

depreciation on historical

cost

226,991

(226,991

)

Deferred taxation

(1,349,553

)

(1,349,553

)

Balance at 31 December 2021

204

(2,767,827

)

9,962,328

(170,241

)

7,024,464

Called up

Retained

Total

capital

earnings

equity

Balance at 1 January 2020

204

Changes in equity

Dividends

(335,079

)

(335,079

)

Total comprehensive income

335,079

Balance at 31 December 2020

204

Changes in equity

Dividends

(71,743

)

(71,743

)

Total comprehensive income

71,743

Balance at 31 December 2021

204

Cash flows from operating activities

Cash generated from operations

748,815

1,387,011

Interest paid

(2,056,205

)

(1,654,607

)

Tax paid

229

(162,278

)

Net cash from operating activities

(1,307,161

)

(429,874

)

Cash flows from investing activities

Purchase of intangible fixed assets

(319,898

)

Purchase of tangible fixed assets

(21,627,101

)

(9,223,489

)

Purchase of fixed asset investments

(859,338

)

Sale of tangible fixed assets

3,811,687

Interest received

12,877

Net cash from investing activities

(18,135,237

)

(10,069,950

)

Cash flows from financing activities

New loans in year

20,222,859

9,000,000

Loan repayments in year

(2,000,000

)

(8,330,379

)

Amount withdrawn by directors

(1,376

)

Equity dividends paid

(71,743

)

(335,079

)

Net cash from financing activities

18,151,116

333,166

Decrease in cash and cash equivalents

(1,291,282

)

(10,166,658

)

Cash and cash equivalents at beginning of
year

2,342,202

12,508,860

Cash and cash equivalents at end of year

1,050,920

2,342,202

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

2021

2020

Loss before taxation

(2,210,549

)

(2,005,930

)

Depreciation charges

1,407,769

731,582

Profit on disposal of fixed assets

(446,497

)

Finance costs

2,056,205

1,654,607

Finance income

(75

)

(12,877

)

806,853

367,382

(Increase)/decrease in trade and other debtors

(692,196

)

468,377

Increase in trade and other creditors

634,158

551,252

Cash generated from operations

748,815

1,387,011

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 2021

31.12.21

1.1.21

Cash and cash equivalents

1,050,920

2,342,202

Year ended 31 December 2020

31.12.20

1.1.20

Cash and cash equivalents

2,342,202

12,508,860

3.	ANALYSIS OF CHANGES IN NET DEBT

At 1.1.21

Cash flow

At 31.12.21

Net cash

Cash at bank and in hand

2,342,202

(1,291,282

)

1,050,920

2,342,202

(1,291,282

)

1,050,920

Debt

Debts falling due after 1 year

(27,100,023

)

(18,222,858

)

(45,322,881

)

(27,100,023

)

(18,222,858

)

(45,322,881

)

Total

(24,757,821

)

(19,514,140

)

(44,271,961

)

4.	ACQUISITION OF BUSINESS

During the year, the group made a series of acquisitions.

On 17th March 2021, the company, Lovett Care NW Limited, was set up and group acquired 100% of the share capital. Trading commenced on 1st August 2021.

At the same time the group also acquired the assets and the trade of four care homes for a combined value of £19,500,000, which were placed within Lovett Care NW Limited.

The following table summarises the consideration paid by the group, the fair value of the assets acquired and the liabilities assumed.

Lovett Care NW Limited

Consideration at 17th September 2020

Incidental costs

319,898

Net cash outflow

319,898

Goodwill

319,898

5.	DISPOSAL OF BUSINESS

During the year, the group made a disposal of a business as follows:

On 3rd June 2021, the trade and assets of Goldendale House Limited were disposed off for a combined value of £2,000,000.

1.	STATUTORY INFORMATION

Lovett Care Holdings 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 General 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.

Going concern

After making enquiries, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future, being the 12 month period from the date of these accounts being approved and therefore the financial statements have been prepared on a going concern basis.

Basis of consolidation

The group financial statements consolidate the financial statements of the limited company and its

subsidiary and its associate undertakings.

Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control and continue to be consolidated until the date that such control ceases.

Subsidiaries are included in the consolidated financial statements on the acquisition basis whilst associates are included using the equity method.

Group reconstructions are included in the consolidated financial statements using the merger basis

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.

Transactions between group entities which have been eliminated on consolidation are not disclosed within the financial statements.

Critical accounting judgements and key sources of estimation uncertainty

In the application of the group's accounting policies, which are described in note 2, management is required to make judgements, estimates and assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and underlying assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

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.

Sources of estimation uncertainty

Valuation of land and buildings

As described in the notes to the financial statements, land and buildings are stated at fair value based on the valuation performed by an independent professional valuer Knight Frank with recent experience in the location and category of property valued. The valuer used observable market prices adjusted as necessary for any difference in the future, location or condition of the specific asset.

Turnover

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

Turnover is attributable to the principle activity of the group being the care and well-being of persons requiring 24 hour care, excluding nursing provision over the age of 55 which is carried out entirely within the United Kingdom.

Turnover represents net invoiced sales of services.

Revenue is recognised as the company becomes entitled to consideration for the services supplied. Therefore, turnover also includes the element of services supplied but not yet invoiced..

Goodwill

Goodwill being the amount paid in connection with the acquisition of businesses in 2010 and 2020, is being amortised evenly over its estimated useful life of 10 years.

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.

Tangible fixed assets

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

Freehold property

2% on cost

Fixtures and fittings

15% on reducing balance

Computer equipment

30% on reducing balance and 30% on reducing balance

Land and buildings held and used in the group's own activities for the supply of services or for administrative purposes are stated in the statement of financial position at their revalued amounts. The revalued amounts equate to the fair value at the date of revaluation, less any depreciation or impairment losses subsequently accumulated. Revaluations are carried out regularly so that the carrying amounts do not materially differ from using the fair value at the date of the statement of financial position.

Any revaluation increase or decrease on land and buildings is credited to the non distributable retained earnings.

Once a revalued property is sold or retired any attributable revaluation surplus that is remaining in the non distributable retained earnings reserve is transferred to retained earnings. No transfer is made from the non distributable retained earnings reserve to retained earnings unless an asset is derecognised, other than for depreciation in excess of the historical depreciation charge.

Government grants

Grants from local authorities are recognised where there is reasonable assurance that the grant will be received and the company will comply with all attached conditions.

Financial instruments

The group has chosen to adopt the Sections 11 and 12 of FRS 102 in respect of financial instruments.

(i) Financial assets

Basic financial assets, including trade and other debtors, and cash and bank balances are initially recognised at transaction price, 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. Such assets are subsequently carried at amortised cost using the effective interest method.

At the end of each reporting period financial assets measured at amortised cost are assessed for objective evidence of impairment. If an asset is impaired the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset's original effective interest rate. The impairment loss is recognised in profit or loss.

(ii) Financial liabilities

Basic financial liabilities, including trade and other creditors and loans from fellow group companies, are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

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

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Consolidated Profit and Loss Account, 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

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

Investments

Investments in shares are included at fair value.

3.	EMPLOYEES AND DIRECTORS

2021

2020

Wages and salaries

8,165,692

2,117,282

Social security costs

145,551

95,402

Other pension costs

69,834

53,431

8,381,077

2,266,115

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

2021

2020

Directors

Administration staff

Managers

Carers

495

257

530

276

2021

2020

Directors' remuneration

578,583

148,032

Directors' pension contributions to money purchase schemes

30,438

35,814

Information regarding the highest paid director for the year ended 31 December 2021 is as follows:

2021

Emoluments etc

216,898

Pension contributions to money purchase schemes

10,000

4.	OPERATING LOSS

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

2021

2020

Hire of plant and machinery

29,098

14,871

Depreciation - owned assets

1,212,720

568,523

Profit on disposal of fixed assets

(446,497

)

Goodwill amortisation

195,049

163,059

Auditors' remuneration

57,213

32,400

Local authority grants

690,092

INTEREST PAYABLE AND SIMILAR EXPENSES

2021

2020

Bank loan interest

2,056,205

1,654,607

TAXATION

Analysis of the tax charge

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

2021

2020

Current tax:

Prior year adjustment

(227

)

660

Deferred tax

38,130

55,682

Tax on loss

37,903

56,342

Reconciliation of total tax charge included in profit and loss

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

2021

2020

Loss before tax

(2,210,549

)

(2,005,930

)

Loss multiplied by the standard rate of corporation tax in the UK of 19 %
(2020 - 19 %)

(420,004

)

(381,127

)

Effects of:

Expenses not deductible for tax purposes

113,154

123,697

Depreciation in excess of capital allowances

14,000

Unutilised losses carried forward

409,714

428,672

Utilisation of losses bought forward

(64,734

)

Pre acquisition losses

(129,557

)

Adjustment to tax in respect of prior periods

(227

)

660

Total tax charge

37,903

56,342

Tax effects relating to effects of other comprehensive income

2021

Gross

Tax

Net

Revaluation of land and buildings

8,348,301

(1,349,553

)

6,998,748

2020

Gross

Tax

Net

Revaluation of land and buildings

3,412,792

(522,898

)

2,889,894

7.	INDIVIDUAL PROFIT AND LOSS ACCOUNT

As permitted by Section 408 of the Companies Act 2006, the Profit and loss account of the parent company is not presented as part of these financial statements.

DIVIDENDS

2021

2020

A Ordinary shares of £1 each

Interim

25,350

117,235

B Ordinary shares of £1 each

Interim

23,667

102,352

C Ordinary shares of £1 each

Interim

22,726

115,492

71,743

335,079

9.	INTANGIBLE FIXED ASSETS

Group

Goodwill

COST

At 1 January 2021

1,660,589

Additions

319,898

At 31 December 2021

1,980,487

AMORTISATION

At 1 January 2021

193,059

Amortisation for year

195,049

At 31 December 2021

388,108

NET BOOK VALUE

At 31 December 2021

1,592,379

At 31 December 2020

1,467,530

10.	TANGIBLE FIXED ASSETS

Group

Fixtures

Freehold

and

Computer

property

fittings

equipment

Totals

COST OR VALUATION

At 1 January 2021

27,100,000

1,327,730

136,731

28,564,461

Additions

19,782,088

1,683,914

161,099

21,627,101

Disposals

(3,400,000

)

(740,749

)

(19,442

)

(4,160,191

)

Revaluations

7,102,912

At 31 December 2021

50,585,000

2,270,895

278,388

53,134,283

DEPRECIATION

At 1 January 2021

487,975

484,314

50,889

1,023,178

Charge for year

972,650

187,311

52,759

1,212,720

Eliminated on disposal

(61,025

)

(193,958

)

(8,904

)

(263,887

)

Revaluation adjustments

(426,950

)

(426,950

)

At 31 December 2021

972,650

477,667

94,744

1,545,061

NET BOOK VALUE

At 31 December 2021

49,612,350

1,793,228

183,644

51,589,222

At 31 December 2020

26,612,025

843,416

85,842

27,541,283

Cost or valuation at 31 December 2021 is represented by:

Fixtures

Freehold

and

Computer

property

fittings

equipment

Totals

Valuation in 2020

4,434,141

Valuation in 2021

7,102,912

Cost

39,047,947

2,270,895

278,388

41,597,230

50,585,000

2,270,895

278,388

53,134,283

If freehold land and buildings had not been revalued they would have been included at the following historical cost:

2021

2020

Cost

39,047,947

21,520,739

Aggregate depreciation

745,659

424,313

Value of land in freehold land and buildings

2,070,062

Freehold land and buildings were valued on an open market basis basis on 31 December 2021 by Duff & Phelps .

11.	FIXED ASSET INVESTMENTS

The list of subsidiaries is as follows;

Lovett Care Limited

Hilton House Hilton Road,
Harpfields, Stoke-on-Trent,
Staffordshire ST4 6QZ

Holding investment
property

100% ordinary
shares

Hilton House Care Limited

Hilton House Hilton Road,
Harpfields, Stoke-on-Trent,
Staffordshire ST4 6QZ

Residential Care

100% ordinary
shares

Linley Point Limited

Hilton House Hilton Road,
Harpfields, Stoke-on-Trent,
Staffordshire ST4 6QZ

Holding investment
property

100% ordinary
shares

Charlotte House Care Limited

Hilton House Hilton Road,
Harpfields, Stoke-on-Trent,
Staffordshire ST4 6QZ

Residential Care

100% ordinary
shares

Parkland Regency Care Limited

Hilton House Hilton
Road,Harpfields,
Stoke-on-Trent, Staffordshire
ST4 6QZ

Residential Care

100% ordinary
shares

Lovett Care NW Limited

Hilton House Hilton
Road,Harpfields,
Stoke-on-Trent, Staffordshire
ST4 6QZ

Residential Care

100% ordinary
shares

Twyford House Care Limited

Hilton House Hilton
Road,Harpfields,
Stoke-on-Trent, Staffordshire
ST4 6QZ

Residential Care

100% ordinary
shares

12.

DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

Group

2021

2020

Trade debtors

867,694

124,160

Other debtors

28,669

142,454

Prepayments and accrued income

1,210,700

1,148,253

2,107,063

1,414,867

13.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

Group

Company

2021

2020

2021

2020

Trade creditors

573,439

228,780

Amounts owed to group undertakings

170,218

Social security and other taxes

212,245

32,852

Other creditors

453,689

90,035

Accruals and deferred income

348,014

601,562

1,587,387

953,229

170,218

14.

CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

Group

Company

2021

2020

2021

2020

Other loans (see note 15)

45,322,881

27,100,023

15.

LOANS

An analysis of the maturity of loans is given below:

Group

Company

2021

2020

2021

2020

Amounts falling due between two and five

years:

Other loans - 2-5 years

45,322,858

27,100,000

Amounts falling due in more than five years:

Repayable otherwise than by instalments

Preference shares

Details of shares shown as liabilities are as follows:

Allotted, issued and fully paid:

Number:

Class:

Nominal

2021

2020

value:

Preference

£1

16.	LEASING AGREEMENTS

Minimum lease payments fall due as follows:

Group

Non-cancellable operating

leases

2021

2020

Between one and five years

542,983

108,807

In more than five years

223,834

151,711

766,817

260,518

17.	SECURED DEBTS

The following secured debts are included within creditors:

Group

2021

2020

Other loans

45,322,858

27,100,000

The loan is secured by charges created on 21st August 2019 and 10th September 2019 by Tempus Holdings 61 S.A.R.L. over the freehold property, shares and intercompany debt of the group.

18.	PROVISIONS FOR LIABILITIES

Group

2021

2020

Deferred tax

Accelerated capital allowances

104,380

33,061

Tax losses carried forward

(17,525

)

Other timing differences

2,317,997

984,105

2,404,852

1,017,166

Group

Deferred

tax

Balance at 1 January 2021

1,017,166

Charge to Profit and Loss Account during year

38,133

Non distributable retained

1,349,553

earnings

Balance at 31 December 2021

2,404,852

Group deferred taxation consists of £2,288,445 (2020 - £984,105) relating to non distributable retained earnings, £133,932 (2020 - £33,061) relating to accelerated capital allowances and £17,525 asset (2020 - £nil) relating to tax losses carried forward.

19.	CALLED UP SHARE CAPITAL

Allotted and issued:

Number:

Class:

Nominal

2021

2020

value:

Ordinary A

£1

Ordinary B

£1

Ordinary C

£1

204

20.

RESERVES

Group

Non

distributable

Retained

retained

Merger

earnings

reserve

Totals

At 1 January 2021

(674,623

)

4,540,124

(170,241

)

3,695,260

Deficit for the year

(2,248,452

)

(2,248,452

)

Dividends

(71,743

)

(71,743

)

Revaluation

7,529,862

Disposals

(531,114

)

(531,114

)

Excess depreciation over

depreciation on historical

cost

226,991

(226,991

)

Deferred taxation

(1,349,553

)

(1,349,553

)

At 31 December 2021

(2,767,827

)

9,962,328

(170,241

)

7,024,260

Company

Retained

earnings

Profit for the year

71,743

Dividends

(71,743

)

At 31 December 2021

21.	DIRECTORS' ADVANCES, CREDITS AND GUARANTEES

The following advances and credits to directors subsisted during the years ended 31 December 2021 and 31 December 2020:

2021

2020

C Scarlett

Balance outstanding at start of year

(651

)

Amounts repaid

651

Amounts written off

Amounts waived

Balance outstanding at end of year

L Stringfellow

Balance outstanding at start of year

(680

)

Amounts repaid

680

Amounts written off

Amounts waived

Balance outstanding at end of year

Ms R L Scarlett

Balance outstanding at start of year

(45

)

Amounts repaid

Amounts written off

Amounts waived

Balance outstanding at end of year

22.	ULTIMATE CONTROLLING PARTY

The ultimate controlling party is Tempus Holdings 62 S.A.R.L, a company incorporated at the following address: 15, Boulevard F.W. Raiffeisen, L-2411 Luxembourg.