Company Registration No. SC431859 (Scotland)
TARGET HEALTHCARE LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
TARGET HEALTHCARE LIMITED
CONTENTS
Page
Company information
1
Strategic report
2 - 3
Directors' report
4 - 5
Independent auditor's report
6 - 8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Notes to the financial statements
12 - 24
Detailed trading and profit and loss account
TARGET HEALTHCARE LIMITED
COMPANY INFORMATION
- 1 -
Directors
Mr L Campbell
Mrs G Grant
(Appointed 23 August 2022)
Mr Stephen Duncan
(Appointed 23 August 2022)
Company number
SC431859
Registered office
8 Redwood Crescent
East Kilbride
Glasgow
Scotland
G74 5PA
Auditor
Consilium Audit Limited
169 West George Street
Glasgow
Scotland
G2 2LB
TARGET HEALTHCARE LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 2 -
The directors present the strategic report for the year ended 31 December 2022.
Principal activities
The principal activity of the Company in the year under review was the manufacture and supply of generic, branded and unlicenced medicines.
Review of business
The directors considers the results of the financial year and the position of the company at the year-end to be satisfactory. The company will continue to seek every opportunity to increase profitable turnover. The directors are committed to long term creation of shareholder value by increasing the company's market share through organic growth and seeks opportunities for growth through business expansion.
During the year, the Target Healthcare Group restructured and the subsidiaries of Target Healthcare Limited were transferred to Target Healthcare Group Limited. The Group acquired Impact Health Limited in March 2022 and transferred the export division out of Target Healthcare Limited to Impact during the financial year.
The directors will continue to pursue growth for Target Healthcare Limited as part of the larger group and explore the commercial advantages of acquisitions and investments that were made by the wider Group during the year ended 31 December 2022.
TARGET HEALTHCARE LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 3 -
Principal risks and uncertainities
The management of the business and the execution of the company's strategy are subject to several risks.
The key business risks and uncertainties affecting the company is government regulation. With the delivery of Brexit still presenting uncertainty and operational challenges, the director remains vigilant as to the opportunities and threats which may arise.
Environment
The company recognises it responsibility to promote the use of recycled materials and to carry out its operations whilst minimising environmental impacts. The director's continued aim is to comply with all applicable environmental legislation, prevent pollution and reduce waste wherever possible.
Health and Safety
The company is committed to achieving the highest practicable standards in health and safety management and strives to make its sites and offices safe environments for employees and customer alike.
Human resources
The company's most important resource is its people, their knowledge and experience is crucial to meeting customer requirements. Retention of key staff is critical, and the company has invested increasingly in employment training and development and has introduced appropriate incentive and career progression. arrangements.
Financial risk management
The company's operations expose it to a variety of financial risks that include the effects of changes in price risk, liquidity risk, foreign currency risk and Interest rate risk.
Liquidity risk
The company actively maintains a mixture of long term and short-term debt finance that is designed to ensure the company has sufficient available funds for operations and planned expansions.
Foreign currency risk
While the greater part of the company's revenues and expenses are denominated in sterling, the company is exposed to some foreign exchange risk in the normal course of business. While the company has not used financial instruments to date to hedge foreign exchange exposure, this position is kept constantly under review.
Interest rate risk
The company has interest-bearing liabilities. The interest-bearing liabilities include bank loans and overdrafts on which interest charged varies in line with the banks base rate. The company has a policy of maintaining debt at a competitive rate to ensure a reasonable degree of certainty over future interest cash flows. The directors will revisit the appropriateness of this policy should the company's operations change in size of nature.
Mr L Campbell
Director
5 June 2023
TARGET HEALTHCARE LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 4 -
The directors present their annual report and financial statements for the year ended 31 December 2022.
Principal activities
The principal activity of the company continued to be that of manufacture and supply of generic, branded and unlicensed medicines.
Results and dividends
The results for the year are set out on page 9.
Ordinary dividends were paid amounting to £5,025,000 (2021: £171,000). The directors do not recommend payment of a further dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr L Campbell
Mrs G Grant
(Appointed 23 August 2022)
Mr Stephen Duncan
(Appointed 23 August 2022)
Auditor
The auditor, Consilium Audit Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
TARGET HEALTHCARE LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 5 -
On behalf of the board
Mr L Campbell
Director
5 June 2023
TARGET HEALTHCARE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF TARGET HEALTHCARE LIMITED
- 6 -
Opinion
We have audited the financial statements of Target Healthcare Limited (the 'company') for the year ended 31 December 2022 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity 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 FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 December 2022 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
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 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 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.
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.
TARGET HEALTHCARE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF TARGET HEALTHCARE LIMITED
- 7 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and 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, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of 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 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 company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's 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 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.
TARGET HEALTHCARE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF TARGET HEALTHCARE LIMITED
- 8 -
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.
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
We ensured that the engagement 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 management and from our knowledge of the regulatory environment relevant to the company.
We assessed the extent of compliance with laws and regulations through making enquiries of management and inspecting legal correspondence.
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 and their knowledge of actual, suspected and alleged fraud.
To address the risk of fraud through management bias and override of controls, we tested journal entries to identify unusual transactions, we assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias and we investigated the rationale behind significant or unusual transactions.
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.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
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.
David Holt (Senior Statutory Auditor)
For and on behalf of Consilium Audit Limited
Statutory Auditor
169 West George Street
Glasgow
Scotland
G2 2LB
7 June 2023
TARGET HEALTHCARE LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
- 9 -
2022
2021
Notes
£
£
Turnover
3
27,102,681
24,113,907
Cost of sales
(21,507,855)
(18,913,788)
Gross profit
5,594,826
5,200,119
Administrative expenses
(7,485,181)
(5,708,715)
Other operating income
2,100,684
325,509
Operating profit/(loss)
4
210,329
(183,087)
Interest receivable and similar income
8
5,000,000
Interest payable and similar expenses
9
(168,055)
(93,751)
Profit/(loss) before taxation
5,042,274
(276,838)
Tax on profit/(loss)
10
41,459
47,645
Profit/(loss) for the financial year
5,083,733
(229,193)
The profit and loss account has been prepared on the basis that all operations are continuing operations.
TARGET HEALTHCARE LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2022
31 December 2022
- 10 -
2022
2021
Notes
£
£
£
£
Fixed assets
Intangible assets
12
968,965
975,373
Tangible assets
13
738,651
692,921
Investments
14
38
6,861,257
1,707,654
8,529,551
Current assets
Stocks
16
1,344,326
1,217,979
Debtors
17
9,457,973
5,543,910
Cash at bank and in hand
1,435,572
107,111
12,237,871
6,869,000
Creditors: amounts falling due within one year
18
(12,599,338)
(12,451,561)
Net current liabilities
(361,467)
(5,582,561)
Total assets less current liabilities
1,346,187
2,946,990
Creditors: amounts falling due after more than one year
19
(121,102)
(1,786,396)
Provisions for liabilities
Deferred tax liability
21
100,154
94,396
(100,154)
(94,396)
Net assets
1,124,931
1,066,198
Capital and reserves
Called up share capital
23
100
100
Profit and loss reserves
1,124,831
1,066,098
Total equity
1,124,931
1,066,198
The financial statements were approved by the board of directors and authorised for issue on 5 June 2023 and are signed on its behalf by:
Mr L Campbell
Director
Company Registration No. SC431859
TARGET HEALTHCARE LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
- 11 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 January 2021
100
1,466,291
1,466,391
Year ended 31 December 2021:
Loss and total comprehensive income for the year
-
(229,193)
(229,193)
Dividends
11
-
(171,000)
(171,000)
Balance at 31 December 2021
100
1,066,098
1,066,198
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
5,083,733
5,083,733
Dividends
11
-
(5,025,000)
(5,025,000)
Balance at 31 December 2022
100
1,124,831
1,124,931
TARGET HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 12 -
1
Accounting policies
Company information
Target Healthcare Limited is a private company limited by shares incorporated in Scotland. The registered office is 8, Redwood Crescent, East Kilbride, Glasgow, Scotland, G74 5PA. The company's registration number is SC431859.
1.1
Accounting convention
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. The principal accounting policies adopted are set out below.
This 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:
The financial statements of the company are consolidated in the financial statements of Target Healthcare Group Limited.These consolidated financial statements are available from Companies House.
The company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.
1.2
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company 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.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
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.
1.4
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
TARGET HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 13 -
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Patents & licences
10% straight line
1.5
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Fixtures and fittings
25% straight line
Office equipment
33% straight line
Motor vehicles
20% straight line
There is no depreciation charge on assets under construction.
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 credited or charged to profit or loss.
1.6
Fixed asset investments
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company. 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 company considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Entities in which the company has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
1.7
Stocks
Inventories are stated at lower of cost and net realisable value. In determining the cost of raw materials, consumables and goods purchased for resale, the weighted average purchase price is used. For work in progress and finished goods cost is taken as production cost, which includes an appropriate proportion of attributable overheads.
1.8
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
TARGET HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 14 -
1.9
Financial instruments
The company 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 company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with 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
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.
Classification of financial liabilities
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 company after deducting all of its liabilities.
Basic financial 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.
1.10
Equity instruments
Equity instruments issued by the company 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 company.
1.11
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current 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 company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
TARGET HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 15 -
Deferred tax
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 when the company has 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.
1.12
Employee benefits
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.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.14
Leases
Assets held under hire purchase agreements are capitalised and disclosed under tangible fixed assets at their fair value, and are depreciated in accordance with the above depreciation policies.
Future instalments payable under such agreements, net of finance charges, are included within creditors. Rentals payable are apportioned between the capital element, which reduces the outstanding obligation included within creditors, and the finance element, which is charged to the profit and loss account on a straight line basis.
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 leases asset are consumed.
1.15
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
TARGET HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 16 -
1.16
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
2
Judgements and key sources of estimation uncertainty
In the application of the company’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.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Recoverability of debtors
Estimates are made in respect of the recoverable value of trade and other debtors. When assessing the level of provision required, factors including current trading experience, and the ageing profile of the debtors are considered.
Carrying value of stock
Net realisable value of stock is the estimated selling price in the ordinary course of business, less the necessary costs to make the sale. Provision for obsolete stock is made based on historical experience.
3
Turnover and other revenue
2022
2021
£
£
Turnover analysed by geographical market
United Kingdom
26,736,900
22,740,614
Europe
268,313
1,373,293
Rest of the World
97,468
-
27,102,681
24,113,907
2022
2021
£
£
Other significant revenue
Dividends received
5,000,000
-
Grants received
-
7,500
TARGET HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 17 -
4
Operating profit/(loss)
2022
2021
Operating profit/(loss) for the year is stated after charging/(crediting):
£
£
Exchange differences apart from those arising on financial instruments measured at fair value through profit or loss
(37,189)
190,280
Government grants
-
(7,500)
Depreciation of owned tangible fixed assets
248,387
190,826
Depreciation of tangible fixed assets held under finance leases
36,063
38,770
Amortisation of intangible assets
120,523
111,531
Operating lease charges
316,159
286,572
5
Auditor's remuneration
2022
2021
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
17,750
15,500
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
111
90
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
3,258,948
2,489,635
Social security costs
287,314
232,704
Pension costs
69,452
60,094
3,615,714
2,782,433
7
Directors' remuneration
2022
2021
£
£
Remuneration for qualifying services
136,176
9,538
Company pension contributions to defined contribution schemes
3,463
-
139,639
9,538
TARGET HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 18 -
8
Interest receivable and similar income
2022
2021
£
£
Income from fixed asset investments
Income from shares in group undertakings
5,000,000
9
Interest payable and similar expenses
2022
2021
£
£
Interest on bank overdrafts and loans
18,292
77,252
Interest on invoice finance arrangements
140,942
10,586
Other interest on financial liabilities
166
Interest on finance leases and hire purchase contracts
8,655
5,913
168,055
93,751
10
Taxation
2022
2021
£
£
Current tax
UK corporation tax on profits for the current period
38,888
Adjustments in respect of prior periods
(86,105)
(78,410)
Total current tax
(47,217)
(78,410)
Deferred tax
Origination and reversal of timing differences
5,758
30,765
Total tax credit
(41,459)
(47,645)
From April 2023 onwards, the main rate of Corporation Tax will rise from 19% to 25%. Companies with profits of £50,000 or less will continue to be taxed at 19% which is a new small profits rate. As this change has been substantively enacted, deferred tax has been calculated at a rate of 25%.
TARGET HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
10
Taxation
(Continued)
- 19 -
The actual credit for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:
2022
2021
£
£
Profit/(loss) before taxation
5,042,274
(276,838)
Expected tax charge/(credit) based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
958,032
(52,599)
Tax effect of expenses that are not deductible in determining taxable profit
29,800
42,568
Tax effect of income not taxable in determining taxable profit
(950,000)
Adjustments in respect of prior years
(86,105)
(78,410)
Adjustments in respect of prior years - deferred tax
15,158
Group relief
19,803
Fixed asset differences
(6,088)
(1,662)
Remeasurement of deferred tax for changes in tax rates
(2,256)
22,655
Taxation credit for the year
(41,459)
(47,645)
11
Dividends
2022
2021
£
£
Final paid
5,025,000
171,000
12
Intangible fixed assets
Patents & licences
£
Cost
At 1 January 2022
1,141,427
Additions
114,115
At 31 December 2022
1,255,542
Amortisation and impairment
At 1 January 2022
166,054
Amortisation charged for the year
120,523
At 31 December 2022
286,577
Carrying amount
At 31 December 2022
968,965
At 31 December 2021
975,373
TARGET HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 20 -
13
Tangible fixed assets
Assets under construction
Fixtures and fittings
Office equipment
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 January 2022
26,800
643,529
119,523
293,926
1,083,778
Additions
91,281
99,592
29,869
109,438
330,180
At 31 December 2022
118,081
743,121
149,392
403,364
1,413,958
Depreciation and impairment
At 1 January 2022
272,031
69,414
49,412
390,857
Depreciation charged in the year
179,163
14,769
90,518
284,450
At 31 December 2022
451,194
84,183
139,930
675,307
Carrying amount
At 31 December 2022
118,081
291,927
65,209
263,434
738,651
At 31 December 2021
26,800
371,498
50,109
244,514
692,921
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2022
2021
£
£
Fixtures and fittings
178,377
205,897
Motor vehicles
56,231
64,774
234,608
270,671
14
Fixed asset investments
2022
2021
Notes
£
£
Investments in subsidiaries
6,861,219
Investments in associates
15
38
38
38
6,861,257
TARGET HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
14
Fixed asset investments
(Continued)
- 21 -
Movements in fixed asset investments
Shares in subsidiaries and associates
£
Cost or valuation
At 1 January 2022 & 31 December 2022
6,861,257
Impairment
At 1 January 2022
-
Transfers (see below)
6,861,219
At 31 December 2022
6,861,219
Carrying amount
At 31 December 2022
38
At 31 December 2021
6,861,257
The company and its wider group undertook a restructuring exercise in the year. As part of this the company transferred to Target Healthcare Group Limited (UK), the new parent company via dividend in specie, its investments in Quantum Pharmaceutical Limited and PERN Consumer Products Limited.
TARGET HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 22 -
15
Associates
Details of the company's associates at 31 December 2022 are as follows:
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
The Saltire Group Limited
8 Redwood Crescent, East Kilbride, Glasgow, Scotland, G74 5PA
Ordinary
38.00
16
Stocks
2022
2021
£
£
Finished goods and goods for resale
1,344,326
1,217,979
17
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
5,187,666
3,872,884
Corporation tax recoverable
47,717
Amounts owed by group undertakings
2,861,585
113,503
Other debtors
782,970
1,219,651
Prepayments and accrued income
578,035
337,872
9,457,973
5,543,910
18
Creditors: amounts falling due within one year
2022
2021
Notes
£
£
Bank loans
20
291,233
Obligations under finance leases
153,398
147,873
Other borrowings
20
34,361
Trade creditors
3,334,572
2,374,007
Amounts owed to group undertakings
2,233,963
5,199,887
Corporation tax
(500)
Other taxation and social security
700,637
171,755
Other creditors
4,638,881
3,440,396
Accruals and deferred income
1,503,526
826,910
12,599,338
12,451,561
Included within other payables is an invoice discounting facility of £4,590,972 (2021: £3,053,158). This is secured by a fixed charge over the purchased debts and a floating charge over all assets and undertakings.
TARGET HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 23 -
19
Creditors: amounts falling due after more than one year
2022
2021
Notes
£
£
Obligations under finance leases
121,102
252,035
Other borrowings
20
34,361
Other creditors
1,500,000
121,102
1,786,396
20
Loans and overdrafts
2022
2021
£
£
Bank loans
291,233
Other loans
34,361
34,361
34,361
325,594
Payable within one year
34,361
291,233
Payable after one year
34,361
Banking facilities are secured by a floating charge over the company's assets.
21
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2022
2021
Balances:
£
£
Accelerated capital allowances
102,664
119,748
Tax losses
-
(25,352)
Short term timing differences
(2,510)
-
100,154
94,396
2022
Movements in the year:
£
Liability at 1 January 2022
94,396
Charge to profit or loss
5,758
Liability at 31 December 2022
100,154
TARGET HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 24 -
22
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
69,452
60,094
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
23
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
100
100
100
100
24
Related party transactions
The following amounts were outstanding at the reporting end date:
2022
2021
Amounts due from related parties
£
£
Entities with common control
713,339
1,196,651
Other information
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.
No further transactions with related parties were undertaken such as are required to be disclosed under the provisions of Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland".
25
Ultimate controlling party
For the period up to 21 August 2022, the Company was a wholly owned subsidiary of Target Healthcare Group Limited, a company registered in the Isle of Man..
From 22 August 2022 onwards, following a group reorganisation, the Company became a wholly owned subsidiary of Target Healthcare Group Limited. The company is included within the consolidated financial statements of Target Healthcare Group Limited, available at the registered address 8 Redwood Crescent, East Kilbride, Glasgow, Scotland, G74 5PA.
The ultimate parent company is Target Healthcare Group Limited, a company registered in the Isle of Man. No consolidated accounts are required at this level.
The ultimate controlling party is L Campbell.
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