The directors present their annual report and financial statements for the year ended 30 September 2023.
The results for the year are set out on page 8. Ordinary dividends totalling £560,000 were paid (2022: £1,033,000). The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Indemnity provisions
Indemnity provisions are in place whereby the directors are entitled to be indemnified out of the assets of the Company against claims from third parties in respect of certain liabilities arising in connection with the performance of their functions, in accordance with the provisions of the UK Companies Act 2006. Indemnity provisions of this nature have been in place during the financial year, but have not been utilised by the directors.
The Group recognises that effective risk management is fundamental to achieving its business objectives in order to meet its commitments in fulfilling the PFI contract and in delivering a safe and efficient service. Risk management contributes to the success of the business by identifying opportunities and anticipating risks in order to improve business performance and fulfil the Group’s contractual obligations.
Major maintenance
There is a risk that maintenance costs exceed those forecasted in the financial model agreed at Financial Close (and updated through later reprofiling as appropriate). This risk is mitigated by regular management review of actual expenditure against budget and technical evaluations of the physical condition of the facilities.
Availability
Investment in the project is funded by debt. During the operational phase the principal source of funds available to meet its liabilities is from the unitary charge received from the Authority. Failure to achieve the forecast levels of availability would result in lower than forecast revenues and this may adversely affect the group’s ability to make payments to debt holders. Availability is forecast to be high, with no anticipated interruptions.
Service performance
Performance risk under the Project Agreement and related contracts are passed on to the service providers. The obligations of these subcontractors are underwritten by parent company guarantees. Ultimately, poor performance may result in the Authority having the right to terminate the Project Agreement. There is no history of high levels of poor performance and none anticipated.
The Group’s credit risk is primarily attributable to its trade and other receivables and the finance debtor. With the exception of relatively small trade receivables for activities ancillary to the PFI contracts recharged to other parties, the receivables arise from NHS Property Services. The credit and cash flow risks are not considered significant as the client is a quasi-governmental organisation.
For cash and short-term deposits, where they do occur, are subject to terms under the Credit Facility Agreement, notably ‘Authorised Investments’, which restrict the maximum aggregate Authorised Investment with any one institution and with a maximum maturity of six months.
All borrowings are at a fixed rate, due to a corresponding hedge in place for the long term debt finance, to mitigate interest rate risk. The majority of the Group’s borrowings comprise the bank loans of £10,757,293 and subordinated loan notes of £1,169,476. Repayment of this debt, in addition to meeting operational expenditure commitments, will be made from income which is itself subject to indexation. The Group therefore mitigates any exposure to movements in the retail price index.
Tax risk
The Group is exposed to changes in tax rates, as an increase in tax rate will increase the tax charge for the year, increasing tax outflow in future years of the concession.
The Group’s liquidity risk is principally managed through financing the Group by means of long-term borrowings with an amortising profile that matches the expected availability of funds from the Group’s operating activities.
The Group is exposed to the risk of claims and disputes from contractual requirements not being met. The Directors have considered whether any such potential claims exist and have not identified any material issues.
We have audited the financial statements of Willcare Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 September 2023 which comprise the group statement of comprehensive income, the group statement of financial position, the company statement of financial position, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including 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).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the directors' report has been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the directors' report.
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; or
the directors were not entitled to take advantage of the small companies exemption from the requirement to prepare a strategic report.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the group and parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Extent the audit is considered capable of detecting irregularities, including fraud
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. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
We assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations by considering their experience, past performance and support available.
All engagement team members were briefed on relevant identified laws and regulations and potential fraud risks at the planning stage of the audit. Engagement team members were reminded to remain alert to any indications of fraud or non- compliance with laws and regulations throughout the audit.
We obtained an understanding of the legal and regulatory frameworks that are applicable to the group and parent company and the sector in which it operates, focusing on provisions that had a direct effect on the determination of material amounts and disclosures in the financial statements. The most relevant frameworks we identified include:
FRS 102
Companies Act 2006
Corporation Tax legislation
VAT legislation
We gained an understanding of how the group and company is complying with these laws and regulations by making enquiries of management and those charged with governance. We corroborated these enquiries by review of relevant correspondence with regulatory bodies and board meeting minutes.
We assessed the susceptibility of the group’s financial statements to material misstatement, including how fraud might occur, by meeting with management and those charged with governance to understand where it was considered there was susceptibility to fraud. This evaluation also considered how management and those charged with governance were remunerated and whether this provided an incentive for fraudulent activity. We considered the overall control environment and how management and those charged with governance oversee the implementation and operation of controls. We identified a heightened fraud risk in relation to:
Revenue recognition; and
Management override of controls
In addition to the above, the following procedures were performed to provide reasonable assurance that the financial statements were free of material fraud or error:
Recalculating the unitary charge recieved by taking the base charge per the project agreement and uplifting for RPI;
Agreeing a sample of months' income receipts to invoice and bank statements;
Performing an assessment on the service margins used in the year and agreeing margins used to the active financial models;
Reconciling the finance income and amortisation to the finance debtor reconciliation to ensure allocation methodology is in line with contractual terms and relevant accounting standards;
Reviewing minutes of meetings of those charged with goverance for reference to: breaches of laws and regulations or for any indication of any potential litigation and claims; and events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud;
Reviewing the level of and reasoning behind the group and company's procurement of legal and professional services;
Performing audit work procedures over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing judgements made by management in their calculation of accounting estimates for potential management bias;
Completion of appropriate checklists and use of our experience to assess the group and company's compliance with the Companies Act 2006; and
Agreement of the financial statement disclosures to supporting documentation.
Our audit procedures were designed to respond to the risk of material misstatements in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve intentional concealment, forgery, collusion, omission or misrepresentation. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.
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 an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
No other comprehensive income has been presented as there have been no other comprehensive income in either current or previous years.
The notes on pages 14 to 29 form part of these financial statements.
The notes on pages 14 to 29 form part of these financial statements.
The notes on pages 14 to 29 form part of these financial statements.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £1,956,305 (2022 - £2,316,699 profit).
The notes on pages 14 to 29 form part of these financial statements.
The notes on pages 14 to 29 form part of these financial statements.
The notes on pages 14 to 29 form part of these financial statements.
Willcare Holdings Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales and the registered number is 04298662. The registered office is 128 Buckingham Palace Road, London, United Kingdom, SW1W 9SA.
The group consists of Willcare Holdings Limited and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 4 ‘Statement of Financial Position’: Reconciliation of the opening and closing number of shares;
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated group financial statements consist of the financial statements of the parent company Willcare Holdings Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 30 September 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
The financial statements have been prepared on a going concern basis which the directors consider to be appropriate for the following reasons.
The Directors have prepared cash flow forecasts covering a period of at least 12 months from the date of approval of these financial statements which indicate that, taking account of severe but plausible downsides, the Group and Company will have sufficient funds to meet its liabilities as they fall due for that period and to operate within the covenants on its external borrowings
Specifically, the directors have considered if, in modelled severe but plausible downside scenarios, the level of operational performance of the Group would lead to service failure points being awarded against the Group in accordance with the terms of Group’s contract with Brent Primary Care Trust (now NHS Property Services) (the "Trust") sufficient to cause an event of default under the terms of the Group’s external borrowings. To date, there has been no material adverse impact on the Group’s cashflows, or the service levels provided and no indication of heightened risk of subcontractor failure. As a result, the cashflow forecasts indicate that, even in downside scenarios, the Group will be able to meet its liabilities as they fall due.
Consequently, the Directors are confident that the Group and Company will have sufficient funds to continue to meet its liabilities as they fall due for at least 12 months from the date of approval of the financial statements and therefore have prepared the financial statements on a going concern basis.
Public to private concession arrangements
A substantial portion of the company's assets are used within the framework of concession contracts granted by public sector customers ('grantors'). Under these contracts, the company constructs primary care centres that are leased to the NHS on a 30 year lease.
There is additional turnover received for pass through costs recovered from NHS Property Services for direct purchasing of consumables as well as minor works undertaken by the FM contractor that are outside both the Principal and FM contract.
To be classified as a Service Concession Arrangement under section 34 of FRS 102, a contract must satisfy the following two criteria:
the grantor controls or regulates what services the operator must provide using the infrastructure, to whom, and at what price; and
the grantor controls, through ownership, beneficial entitlement or otherwise any significant residual interest in the infrastructure at the end of the terms of the arrangement.
Pursuant to section 34 of FRS 102, such infrastructure is not recognised as assets of the operator as property, plant and equipment but as financial assets ( 'financial asset model').
Financial asset model
The financial asset model applies when the operator has an unconditional right to receive cash or other financial asset from the grantor.
In the case of concession services the operator has an unconditional right if the grantor contractually guarantees the payment of:
amounts specified or determined in the contract or
the shortfall, if any, between amounts received from users of the public service and amounts specified or determined in the contract.
Financial assets resulting from the application of section 34 of FRS 102 are recorded in the balance sheet under the heading financial assets and measured at amortised cost.
Pursuant to section 23 of FRS 102, revenue associated with this financial model comprises of service remuneration which relates to the lifecycle maintenance and facilities income and ad hoc property related services income.
The financial asset is stated at amortised cost using the effective rate of interest. The effective rate of interest method is a method of calculating the amortised costs of a financial asset and of allocating interest expense over the relevant period. The effective interest rate is the rate which exactly discounts estimated future cash payments through the expected life of the financial asset.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries are held at fair value with changes in fair value going through the fair value reserve.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's statement of financial position when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method 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. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. 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.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, 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 payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
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. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are separately recognised in profit or loss in finance costs or finance income as appropriate.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
Finance issue costs
The costs incurred directly in connection with the financing of the project undertaken by the company are deducted from the proceeds raised and amortised over the period of the financing, in accordance with Section 11 of FRS 102.
Service Concession Accounting
The company is an operator of a Public Finance Initiative ("PFI") contract. The company entered into a project agreement (the "contract") with Brent Primary Care Trust (now NHS Property Services) (the "Trust") to design, build, finance, operate and maintain community hospitals. The contract negotiations were successfully completed on 6th December 2002 and construction commenced on 6th January 2003. The project has been fully operational since April 2005. The concession period is for 30 years (post Construction), during this period the company has contracted to provide soft services to the Trust. The company has passed these obligations down to a subcontractor via a subcontract. The obligation to provide major maintenance works (lifecycle) is undertaken by the Facilities Management Provider, however the risk that the costs exceed those forecast (and the benefit in the case of savings) in the financial model is borne by the company. The timing and extent of the major maintenance works is a key assumption that will affect the cashflows of the company, further information is shown in Note 2. The contract does not entitle the Trust to any share of the profits of the company.
The Trust are entitled to terminate the Contract at any time by giving 12 months written notice. If the Trust exercise this right they are liable to pay the company compensation as set out in the Contract, which would include the senior debt, redundancy costs and other Facilities Management provider losses and the market value of the subordinated debt and shareholder equity.
During the construction phase of the project, all attributable expenditure was included in amounts recoverable on contracts and turnover. Upon becoming operational, the costs were transferred to the financial asset. During the operational phase income is allocated between interest receivable and the financial asset using a project specific interest rate. The remainder of the PFI unitary charge income is included within turnover in accordance with FRS102 section 23. The company recognises income in respect of the services provided as it fulfils its contractual obligations in respect of those services and in line with the fair value of the consideration receivable in respect of those services.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated 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 where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
There are not deemed to be any critical judgements within these financial statements.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Accounting for the service concession contract and financial asset requires of estimation of service margins, interest rates and associated amortisation profile which is based on forecasted results of the service concession contract. Lifecycle maintenance costs are a significant proportion of future expenditure. Given the length of the Company's service concession contract, the forecast of lifecycle maintenance costs is subject to significant estimation uncertainty and changes in the amount and timing of expenditure could have a significant impact on the Company. As a result, there is a significant level of judgement applied in estimating future lifecycle costs. To reduce the risk of misstatement, future estimates of expenditure are prepared by maintenance experts on an asset by asset basis and periodic technical evaluations of the physical condition of the facilities are undertaken. Comparisons of actual expenditure are compared to the lifecycle maintenance forecast, and in the current year, the forecast was for a total spend of £464,360. The actual spend was £359,177. If lifecycle costs cumulatively, over the remainder of the concession increased or decreased by 5%, the impact would be a decrease or increase in profit of £112,020 and £109,391 respectively.
The valuation of the investment in subsidiaries requires judgements around the discount rate of 8.4% (2022: 7.3%) applied to the future cashflows of the investment (see note 11). An increase of 0.5% to the discount rate would decrease the fair value by £560,866, with a 0.5% decrease to the rate increasing the fair value by £1,484,948.
The turnover and profit before taxation are attributable to the one principal activity of the group.
All turnover originates in the United Kingdom.
All turnover relates to services provided under the Service Agreement including all variations to the contract since the date of commencement.
Auditors remuneration is payable to Johnston Carmichael LLP.
No non audit services have been provided in either year.
The average monthly number of persons (including directors) employed by the group and the company during the year was none (
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
Factors impacting the tax charge:
The March 2021 Budget announced that a rate of 25% would apply from 1 April 2023. This will increase the group’s future current tax charge accordingly.
Fixed asset investments were valued on a future cash flow basis on 30 September 2023 by the directors. If the fixed assets had not been revalued they would have been included at the historical cost of £10,000 (2022: £10,000).
Willcare (MIM) Limited is a Special Purpose Vehicle for a development under the Private Finance Initiative.
The company held £1,395,000 Series 1 subordinated loan notes, £500,000 Series 2 loan notes and £59,580 Series 3 subordinated loan notes in Willcare (MIM) Limited initially issued December 2002. The Series 1 and 3 subordinated loan notes attract interest at 14% per annum from the date of building services completion, which was 31 March 2005.
The Series 2 subordinated loan notes attract interest at 7% per annum from commencement of the loan in December 2002 until the date of completion, and 14% thereafter. Interest is to be capitalised until the date of completion.
The loan notes are repayable in six monthly instalments commencing September 2005 until the termination date, which is defined as March 2032.
Details of the company's subsidiaries at 30 September 2023 are as follows:
Financial assets measured at amortised cost relate to trade debtors.
Financial liabilities measured at fair value through profit and loss relate to interest rate swap, which has been determined by reference to prices available from the markets on which the instruments involved are traded. The cashflows arising from the interest rate swap will continue until their maturity 31 March 2031, coincidental with the repayment of the term loan.
Financial liabilities measured at amortised cost comprise subordinated loans, bank loans, trade creditors and other creditors.
Subordinated loans are shown net of issue costs £3,333 (2022: £3,333).
Subordinated loans are shown net of issue costs £35,008 (2022: £38,339).
The bank loan £10,757,293 (2022: £11,614,774) is secured over the company's financial assets and by a fixed and floating charge over all of the remaining assets of the company.
The term loan represents amounts drawn down on an available facility of up to £26,080,000. Interest is chargeable on the loan at a rate of LIBOR plus 1.05%. The terms of the loan provides for repayment by instalments every six months commencing from September 2005 until the termination date, which is defined as March 2032.
The subordinated loan notes are stated net of issue costs of £38,341 (2022: £41,672). The Series 1 subordinated loan notes of £1,395,000 attract interest at 14% per annum from the date of building services completion, which was March 2005.
The Series 2 subordinated loan notes of £500,000 attract interest at 7% per annum from commencement of the loan in December 2002 until date of completion and 14% thereafter.
The Series 3 subordinated loan notes of £59,580 attract interest at 7% per annum from the date of building services completion, which was March 2005.
The loan notes are repayable in six monthly instalments commencing from September 2005 until the termination date, which is defined as March 2032
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meeting of the company.
The Group (and company) is wholly owned by Infrastructure Investment Holdings Limited and has taken advantage of the exemption in section 33 of FRS 102 'Related Party Disclosures', that allows it not to disclose transactions with wholly owned members of a group. Balances held with related parties are disclosed in notes 12, 16 and 17.
During the year, directors fees of £100,000 (2022: £100,000) were paid to Infrastructure Investment Holdings Limited, an intermediate holding company. At the balance sheet date, the company owed £50,000 (2022: £50,000) as accrued expenditure to Infrastructure Investment Holdings Limited.
The company is a wholly owned subsidiary of Infrastructure Investments Holdings Limited, a company registered in England and Wales.
Infrastructure Investments Holdings Limited is a subsidiary undertaking of Infrastructure Investments Limited Partnership (acting by its general partner, Infrastructure Investments General Partner Limited), which is incorporated in England and Wales.
The ultimate controlling party is HICL Infrastructure Company Limited, a company incorporated in Guernsey, Channel Islands. The accounts are available from 1 Le Truchot, St Peter Port, GY1 1WD, Guernsey.
On 1 April 2019, HICL Infrastructure Company Limited transferred all of its assets to HICL Infrastructure Plc. As a result, the ultimate beneficial owner of the company changed from HICL Infrastructure Company Limited to HICL Infrastructure Plc, a company listed on the London Stock Exchange and Registered at 12 Charles II Street, London, SW1Y 4QU.
The smallest group in which the results of the company are consolidated is that headed by Willcare Holdings Limited. The consolidated accounts are available from Companies House, Crown Way, Cardiff, CF14 3UZ.