Registered number: SC210981
AUDITED
DIRECTORS' REPORT
AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 MARCH 2021 |
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
COMPANY INFORMATION
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
CONTENTS
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2021
The directors present their report and the financial statements for the year ended 31 March 2021.
The directors are responsible for preparing the Directors' 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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.
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 to 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.
The profit for the year, after taxation, amounted to £
570,486
(2020 -
£
481,944
)
.
Dividends of £500,000 (2020 - £151,500) were paid during the year and the directors have not recommended a final dividend to be paid (2020 - £nil).
The directors who served during the year were:
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2021
Subsequent to the year end date, global economies and financial markets have continued to be affected by the uncertainties arising from the COVID-19 virus pandemic. The Company earns income from a PFI contract with The Highland Council which matures in 2027. The Directors have assessed the impact and risk of the current market conditions on the Company and do not believe these to be material in nature. Details of the Directors' going concern assessment are included in note 2.4.
In preparing this report, the directors have taken advantage of the small companies exemptions provided by section 415A of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
We have audited the financial statements of Community Schools (Highlands) Limited (the 'Company') for the year ended 31 March 2021, which comprise the Profit and Loss Account, the Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Equity
and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards,
including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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.
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.
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF COMMUNITY SCHOOLS (HIGHLANDS) LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' 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.
In our opinion, based on the work undertaken in the course of the 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 Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Directors' Report.
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF COMMUNITY SCHOOLS (HIGHLANDS) LIMITED (CONTINUED)
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 Auditors' 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 misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
∙
Enquiry of management and those charged with governance as to actual and potential litigation and claims;
∙
Enquiry of management and those charged with governance to identify any instances of non-compliance with laws and regulations;
∙
Performing audit work over the risk of management override of controls, including testing of journal entriesand other adjustments for appropriateness, evaluating the business rationale of significant transactionsoutside the normal course of business, and reviewing accounting estimates for bias;
∙
Assessing the reasonableness of revenue recognised in the period based on PFI contract terms and obligations and the requirement of accounting standards;
∙
Reviewing and challenging the underlying fair valuation of the Company's swap instruments in the context of market available data to assess for indicators of management bias;
∙
Reviewing and challenging the underlying assumptions and valuation methodology used for the valuation of the Company's group and third party loans including assessing the reasonableness of valuation inputs and assumptions in the context of market available data to assess for indicators of management bias;
∙
Reviewing the tax provisions of the Company with the assistance of our independent tax specialists; and
∙
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.
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 for the audit of the financial statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities
. This description forms part of our Auditors' Report.
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF COMMUNITY SCHOOLS (HIGHLANDS) LIMITED (CONTINUED)
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 Auditors' 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.
for and on behalf of
Chartered Accountants
Statutory Auditors
Albany House
Claremont Lane
Surrey
KT10 9FQ
Date:
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MARCH 2021
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2021
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
REGISTERED NUMBER:
SC210981
BALANCE SHEET
AS AT
31 MARCH 2021
The financial statements were approved and authorised for issue by the board and were signed on its behalf by
:
The notes on pages 11 to 23 form part of these financial statements.
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
31 MARCH 2021
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
Community Schools (Highlands) Limited is a private Company, limited by shares, incorporated in Scotland, registered number
2.
ACCOUNTING POLICIES
The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
∙
the requirements of Section 7 Statement of Cash Flows;
∙
the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
∙
the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of Cardale PFI Investments Limited as at 31 March 2021 and these financial statements may be obtained from the registered office at 4 Greengate, Cardale Park, Harrogate, North Yorkshire, HG3 1GY.
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
2.
ACCOUNTING POLICIES (CONTINUED)
The financial statements have been prepared on a going concern basis. The Company is profitable and generates sufficient cash from operations to meet its liabilities as they fall due. In assessing the appropriateness of the going concern basis of preparation, the Directors have taken into account the key risks of the business, including the uncertainty in relation to the impact of COVID-19. In doing so the Directors have considered the Company’s business model and availability of cash resources. The Directors have prepared projected cash flow information for at least twelve months from the date of their approval of these financial statements. On the basis of this cash flow information, the Directors consider that the Company will continue to operate within the long term facility currently agreed. In addition, during the operational phase of the project, sufficient cash flow is projected to be generated to allow the Company to continue to meet its liabilities as they fall due for payment.
The Company’s senior loan is repayable by 31 July 2025 and is supported by the future cash flows from a PFI contract with The Highland Council which matures 2027. Furthermore, the balance sheet asset position is driven down by the historic swap positions which are significantly out of the money. It is not the intention of management to close out these instruments before their maturity date and the required cash flows to service the swaps are built into forward cash flow models supporting management’s going concern assessment. Having undertaken this assessment the Directors consider it is appropriate to prepare the financial statements on a going concern basis. Transactions to which the Company does not have access to all the significant benefits and risks are excluded from the financial statements.
The Company operates a PFI contract. During the operational phase, income is allocated between interest receivable and the finance debtor using an asset specific interest rate. The remainder of the PFI unitary charge is included within turnover.
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
2.
ACCOUNTING POLICIES (CONTINUED)
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
2.
ACCOUNTING POLICIES (CONTINUED)
Derivatives, including interest rate and inflation swaps, are not basic financial instruments.
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
2.
ACCOUNTING POLICIES (CONTINUED)
To qualify for hedge accounting, the Company documents the hedged item, the hedging instrument and the hedging relationship between them and the causes of hedge ineffectiveness. The Company elects to adopt hedge accounting for interest rate swaps (the 'swaps') where:
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
Critical accounting estimates and assumptions The Company makes estimates and assumptions concerning the future. The resulting accounting estimates and assumptions will, by definition, seldom equal the actual results. Critical areas of judgement The Company makes judgements in applying its accounting policies as described below: The recoverability of the amounts recoverable on long term contracts is based on the receipt of the unitary fee in accordance with the contractual payment mechanisms contained in the project agreement with its client, The Highlands Council. The accounting for service concession contracts and finance debtors requires estimation of service margins, finance debtors interest rates and associated amortisation profile which is based on forecasted results of the PFI contract. An estimation is required on future LIBOR rates when accounting for loan facilities held at amortised cost, based on current market data. Actual rates will vary from forecast over the loan lifetime, rendering the effective interest rate calculated as an estimate subject to these variations. The valuation of the interest rate swaps held requires estimation of the cost of capital associated with the loan facility and future LIBOR rates over the lifetime of the swap which is based on current market data. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of revision and future periods if the revision affects both current and future periods.
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
There were no factors that may affect future tax charges.
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
Financial assets held that are debt instruments measured at amortised cost amounted to £5,891,845 (2020 - £7,147,620).
Financial liabilities held that are debt instruments measured at amortised cost amounted to £6,167,144 (2020 - £7,388,366).
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
Under the terms of an operating agreement with Mitie PFI Limited, the Company is committed to pay facilities management costs net of any deductions that are for the account of Mitie PFI Limited in the period to August 2028.
Payments in the year to 31 March 2021 were £1,113,685 (2020 - £1,084,071). The outstanding commitment at 31 March 2021 is £8,207,245 (2020 - £9,202,535).
Share premium account
Other reserves
Profit & loss account
The Company's immediate parent undertaking is Community Schools Holdings Limited, a Company registered in Scotland.
Cardale PFI Investments Limited is considered to hold the ultimate controlling interest. Consolidated financial statements are available from the registered office at 4 Greengate, Cardale Park, Harrogate, North Yorkshire, HG3 1GY.
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