Registered number: SC210981
AUDITED
DIRECTORS' REPORT
AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 MARCH 2023 |
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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 2023
The directors present their report and the financial statements for the year ended 31 March 2023.
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.
In preparing these financial statements, the directors are required to:
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 £892,308 (2022 - £472,008).
Dividends of £500,000 (2022 - £250,000) were paid during the year and the directors have not recommended a final dividend to be paid (2022 - £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 2023
Subsequent to the year end date, economies and financial markets have continued to be affected by the global uncertainties. 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 2023, 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).
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. We have identified the greatest risk of a material impact on the financial statements from irregularities, including fraud, to relate to the timing and recognition of revenue, and the override of controls by management. We have obtained an understanding of the legal and regulatory frameworks that the Company operates within including both those that directly have an impact on the financial statements and more widely those for which non-compliance could have a significant impact on the Company’s operations and reputation. The Companies Act 2006, employee legislation, health and safety legislation, and data protection are those we have identified in this regard. Auditing standards limit the required procedures as to non-compliance with laws and regulations to enquiries of those charged with governance and review of any applicable correspondence.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 entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business, and reviewing accounting estimates for bias;
∙Assessing the reasonableness of revenue and finance income recognised in the period based on contractual terms and obligations and the requirement of accounting standards;
∙Reviewing and challenging assumptions and judgements in respect of significant accounting estimates, regarding the valuation of finance debtors and related recoverability, including valuation methodology and financial models and key inputs such as forward cash flow forecasts and associated growth rates and discount rates;
∙Verifying the Company's fair value swap positions to independent third party commercial valuations;
∙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.
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF COMMUNITY SCHOOLS (HIGHLANDS) LIMITED (CONTINUED)
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.
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 2023
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2023
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
REGISTERED NUMBER: SC210981
BALANCE SHEET
AS AT 31 MARCH 2023
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 24 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 2023
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Community Schools (Highlands) Limited is a private Company, limited by shares, incorporated in Scotland, registered number
2.Accounting policies
The following principal accounting policies have been applied:
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 2023 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 2023
2.Accounting policies (continued)
The financial statements have been prepared on a going concern basis. The Company is in a net asset position, has been profitable in the period and has generated 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 current economic global uncertainties. 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. 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.
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Company after the deduction of all its liabilities.
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
Basic financial liabilities, which include trade and other payables, bank loans and other loans are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Derecognition of financial instruments
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Company transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Company will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Company's contractual obligations expire or are discharged or cancelled.
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 2023
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 2023
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 on long term PFI contracts is based on the receipt of the unitary fee in accordance with the contractual payment mechanisms contained in the project agreement with the counterparty. In this instance, 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. As set out in note 13, the Group's bank borrowings attract interest at a variable rate based on SONIA, the risk free rate administered by the Bank of England. Bank loans are held at amortised cost which requires the Directors to forecast the expected interest payable over the life of the loan and recognise, in the profit and loss account, interest annually at an effective rate. Each year end the Directors update their forecasts and recognise any difference between actual and forecast interest payable as an adjustment to the effective interest expense. Forecasts require an estimation as to future SONIA rates, based on current market data. Actual rates will vary from forecast over the loan lifetime, rendering the effective interest rate calculated an estimate subject to these variations. If interest payable over the life of the loan were to be considerably different to the Directors’ forecasts there could be a material impact on the carrying value of the bank loans and associated interest payable expense. 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 2023
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
The Chancellor of the Exchequer announced an increase in the corporation tax rate from 19% to 25% with effect from April 2023. Deferred taxation has been provided at 25%.
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Financial assets held that are debt instruments measured at amortised cost amounted to £4,560,511 (2022 - £4,933,177).
Financial liabilities held that are debt instruments measured at amortised cost amounted to £3,987,191 (2022 - £4,918,500).
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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COMMUNITY SCHOOLS (HIGHLANDS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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 2023 were £1,204,444 (2022 - £1,121,605). The outstanding commitment at 31 March 2023 is £5,863,177 (2022 - £5,986,579).
Share premium account
Other reserves
Profit and loss account
The Company's immediate parent undertaking is
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