The directors present the strategic report for the year ended 30 June 2023.
The financial year has been another positive one reflected by continued Group operating profits. The directors continue to work to ensure the control and management of the group remains focused, and the Board are confident the Group will continue to progress.
As always, the care sector remains an extremely sensitive market, with fee levels in particular remaining challenging, whilst at the same time costs continue to rise and staffing proving increasingly exigent. The Group well established and constantly adapting to embrace the changing environments, we continue to offer competitive wages rates for all levels of staffing, with this assisting with improvements in staff retention and recruitment, as well as working towards reducing utilisation of agency staff,
The Group's policy of investment in property and facilities and maintaining high quality care, augmented by our staff continuing to prove to be hard working and diligent, sustains the enhancement of the Group's position. Moving forward, we intend to maintain and build on our standards of quality and further strengthen and grow the Group, with investment infacilities the key component in this.
The main risks associated with the Group's financial assets and liabilities are set out below:
The Group is finance by bank borrowing and therefore there is exposure to interest rate fluctuations and liquidity risk. The group aims to mitigate liquidity risk by managing cash generate by its operations.
Credit risk is managed by invoicing in advance whenever possible to private residents and ensuring that all sales invoices are raised timeously Appropriate credit control procedures are followed for all operations. Credit risk is also reduced by being in the advantageous position of having a significant level of income generated through local government.
Due to the current employment market,, the Group has faced staffing risks which has meant incurring increased cost for agency staff rather than long term permeant staff. More time has been spent on training new staff with the high turnover.
Currently, energy prices for power, heat and light are at an all time high which has impacted the Group significantly. Given the care homes have to been heated and well lit to ensure safety standards are met, there is little control over reducing such costs.
The Group use a number of keep performance indicators (KPI's) to manage its daily operations and management review. These include, but are not limited to, the KPI's detailed below:
2023 2022
£ £
Turnover 10,115,669 9,744,503
Operating profit 858,078 966,963
Profit before tax 564,545 830,161
Net assets 13,564.267 13,757,613
On behalf of the board
The directors present their annual report and financial statements for the year ended 30 June 2023.
The profit for the year, after taxation, amounted to £295,201 (2022 - £656,874).
The results for the year are set out on page 9.
Ordinary dividends were paid amounting to £108,000. 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:
It is the Group's policy that all payments to suppliers are made in accordance with our standard payment terms.
The Group places strong emphasis in ensuring the well being of our employees and look to share and communicate information to our staff using all possible means.
Details of employees and related costs can be found in note 8 to the financial statements.
Applications for employment by disabled persons are always fully considered, bearing in mind the attitudes of the applicant concerned related to the position in questions. In the event of any member of staff becoming disabled, every effort is made to ensure their employment within the Group continues.
Moving forward, we intend to maintain and build on our standards of quality and further strengthen and grow the Group, with investment infacilities the key component in this.
The auditor, Findlays Chartered Accountants, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
The Group recognises the importance of its environmental responsibilities and monitor its impact on the environment by implementing any policies necessary to reduce any damage that might be caused by the Group's activities. Consultants are employed when looking at new facilities to try and ensure there are as environmentally friendly as possible.
The Group recognises the importance and implications of the Health & Safety at Work Act 1974, the Environmental Protection Legislation and all new Health & Safety legislation, including that being introduced through EU directives.
We have audited the financial statements of Priority Care Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 June 2023 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company 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 strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
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 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.
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 mis-statements in respect of irregularities, including fraud and non-compliance with laws and regulations is detailed below
The audit team has appropriate skills and expertise required and through discussions with management and Directors knowledge of the sector to ensure any non compliance is recognised and all necessary disclosures are made. the controls in place help the company mitigate the risk of fraud and also aids them in highlighting any instances of fraud that might have occurred.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Making enquiries of management about any known or suspected instances of non compliance with laws and regulations, including GDPR, health and safety, employment law and fraud, both in company and the group
Enquiries of Management and Directors as to where they consider the susceptibility to fraud and their knowledge of how actual, suspected and alleged fraud might occur
Review of any correspondence with regulators including HMRC for both company and group
Challenging assumptions and judgements made by management in their significant accounting estimates
Auditing the risk of management override controls, including through testing of journal entries and other judgments for appropriateness
Review of legal fees to ensure all necessary disclosures made
Review of any areas where there is potential management bias or large and unusual transactions
Because of the field in which the client operates we identified the following areas as those most likely to have a material impact on the financial statements:
Direct impact on financial statements:
Companies Act 2006
International Standards of Auditing (UK)
Accounting Standards
Indirect impact on financial statements:
Health and Safety Act
GDPR
Employment Law
Care Inspectorate regulations & Social Care Standards
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's 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.
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 £385,928 (2022 - £127,986 profit).
Priority Care Group Limited (“the company”) is a private limited company domiciled and incorporated in Scotland. The registered office is .
The group consists of Priority Care Group 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 the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The Company have taken advantage of teh exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements
The consolidated group financial statements consist of the financial statements of the parent company Priority Care Group 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 June 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.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover is recognised to the extent that it is probable that the economic benefits will flow to the Company an the revenue can be reliable measured. Turnover is recognised in respect of the provision of care services.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
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, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
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.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.
Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.
In the parent company financial statements, investments in associates are accounted for at cost less impairment.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
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.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
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 balance sheet 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.
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 and preference shares that are classified as debt, 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.
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 profit and loss account 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 profit and loss account, 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.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
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.
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.
Tangible fixed assets are depreciated over a period to reflect their estimated useful lives. The applicability of the assumed lives is reviewed annually, taking into account factors such as physical condition, maintenance and obsolescence.
Fixed assets are also assessed as to whether there are indicators of impairment. This assessment involves consideration of the economic viability of the purpose for which the asset is used.
The properties are revalued on a regular basis by qualified Chartered Surveyors and the directors use their knowledge of the sector to review the valuation of their properties at each year end.
The valuations have been made by the directors of the company on an open market value basis.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The tax rate changed in April 2023 from 19% to 25%. The effective rate of 20.5% has been used in the tax reconciliation.
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:
In addition to the amount charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:
The carrying value of land and buildings comprises:
Land and buildings with a carrying amount of £18,646,143 were revalued in June 2019 by Jones, Lang Lasalle, Chartered Surveyors on the basis of open market value. The valuation conforms to International Valuation Standards and was based on recent market transactions on arm's length terms for similar properties.
The directors believe this valuation still accurately reflects the value of the land & buildings at the year end 30 June 2023
The cost or valuation at 30 June 2023 is as follows
£
Cost 10,646,427
At Valuation
Valuation 2008 6,144,442
Valuation 2009 (47,278)
Valuation 2010 355,387
Impairment 2014 (290,586)
Valuation 2017 728,965
Valuation 2019 2,758,357
9,629,287
20,275,714
The following assets are carried at valuation. If the assets were measured using the cost model, the carrying amounts would be as follows:
Investment property comprises 2 properties held for rental purposes. These were purchased last year and the value has been deemed to be appropriate by the directors.
Details of the company's subsidiaries at 30 June 2023 are as follows:
Financial assets are measured at amortised cost comprises of cash at bank and in hand, trade and other debtors.
Financial liabilities measured at amortised cost comprise of bank overdrafts and loans, trade and other creditors, payments on account, accruals and deferred income.
Bank loans and overdrafts are secured by a standard security over the group properties and by a bond and floating charge over all of the company assets. An intercompany guarantee is held over the assets of all the companies of Priority Care Group Limited.
Bank loans and overdrafts are secured by a standard security over the group properties and by a bond and floating charge over all of the company assets. An intercompany guarantee is held over the assets of all the companies of Priority Care Group Limited.
In September 2020 the company secured a loan repayable over 7 years. The loan is secured by a standard security over the properties owned by Priority Care Group Limited, Priority Care Limited and Priority Care Nursing Limited and via a bond and floating charge over the assets of all the group companies. An intercompany guarantee is held over the assets of all the companies of Priority Care Group Limited. At the balance sheet date the loan was due for repayment within 5 years.
A further loan was secured in May 2022 repayable over 10 years with the same conditions and security as the previous loans.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The deferred tax liability set out above is expected to reverse within the next few years and relates to accelerated capital allowances that are expected to mature within the same period.
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
Included in creditors at the year end is £15,395 (2021 - £12,715) relating to pension contributions outstanding at the year end.
The revaluation reserve relates to the revaluation of the properties owned by the group, as adjusted for deferred tax. At the year end £8,647,974 (2022 - £9,122,388) was included in a revaluation reserve relating to properties held in the group revalued in 2019. This is considered to be a non distributable reserve.
Of the above £1,597,928 (2022 - £1,819,897) relates to the company's share of the non distributable reserves.
The capital redemption reserve within the company relates to the buy back of 50 ordinary shares in 2010, and 25 ordinary shares in 2019.
During the year the following transactions occurred between the group and its directors:
Mr Andrew J Prior was advanced funds of £18,183 from the group and made repayments totalling £54,757. Included in other debtors at the year end is a balance of £292,469 (2022 - £329,042).
Mrs Veronica Gibson was advanced funds of £14,627 from the group and made repayments totalling £53,906. Included in other debtors at the year end is a balance of £270,561 (2022 - £309,840).
There is no ultimate controlling party.