Information  X 
Enter a valid email address

Transform Sch NL Fd (73GD)

  Print   

Thursday 30 April, 2015

Transform Sch NL Fd

Annual Financial Report

RNS Number : 8600L
Transform Schools (N.Lanarks)FdgPLC
30 April 2015
 



 

Company Registration No. 5358471

 

Transform Schools (North Lanarkshire) Funding plc

 

Annual Report and Financial Statements

31 December 2014

 

 


Transform Schools (North Lanarkshire) Funding plc

 

 

Annual report and financial statements 2014

 

Contents                                                                                                        Page

 

Strategic report                                                                                                                                                                                   1

Directors' report                                                                                                                                                                                 2

Statement of Directors' responsibilities                                                                                                                                         4

Independent auditor's report                                                                                                                                                             5

Profit and loss account                                                                                                                                                                       6

Balance sheet                                                                                                                                                                                       7

Notes to the financial statements                                                                                                                                                      8

 


Transform Schools (North Lanarkshire) Funding plc

Strategic report

 

The Directors have pleasure in presenting their report together with the Financial Statements and the Auditor's report, for the year ended 31 December 2014.

Principal activities and business review

The Company's principal activity is the financing of a Private Finance Initiative (PFI) concession contract with North Lanarkshire Council.

On 8 June 2005, the Company issued £87,796,000 index-linked bonds and took out an index-linked loan of £70,000,000.  The proceeds less issue costs were loaned on the same terms to a fellow subsidiary of Transform Schools (North Lanarkshire) Holdings Limited, Transform Schools (North Lanarkshire) Limited. 

The Directors expect the activities to continue on this basis.

Key performance indicators (KPIs)

The key performance indicator is that the Company is able to service the funding requirements through interest and capital repayments. This is achieved through the successful operation of Transform Schools (North Lanarkshire) Limited's PFI concession contract and that it's net cash flow is in line with or better than forecast. The directors can report that the company was able to meet all of its funding requirements during the year under review.

The Company's profit and loss account is set out on page 6 and shows a profit after taxation for the year of nil (2013: nil).

Principal risks and uncertainties

The Company recognises that effective risk management is fundamental to achieving its business objectives in order to meet its commitments in financing the PFI contract. Risk management contributes to the success of the business by identifying opportunities and anticipating risks in order to improve business performance and fulfil the Company's contractual obligations.

The financial statements also include details of the Company's financial risk management objectives and policies, and its exposure to price risk, credit risk, liquidity risk, interest risk and cash flow risk.

 

Approved by order of the Board of Directors

and signed on its behalf

 

 

R K Sheehan

Director

21st April 2015



 

Transform Schools (North Lanarkshire) Funding plc

Directors' report

 

The directors have pleasure in presenting their annual report for the year ended 31 December 2014.

Financial risk management objectives and policies

The Company has outsourced the financial reporting function to HCP Social Infrastructure (UK) Limited (HCP). Authorities remain vested in the board members of the Company. HCP reports regularly to the board of the Company. The Board receives regular reports from HCP which specifically summarise and address the financial, contractual and commercial risks that the company is exposed to, and are pertinent to the industry in which the Company operates.

The Board also receives quarterly management accounts with explanations of variances from annual budgets and forecasts, which are in turn compared to the Financial Model, which represents the long term business plan of the Company and outlines its ability to comply with its debt obligations and covenants. Material deviations from the business plan are investigated and reported on. Supporting this process, HCP evaluates its performance under the framework of an Internal Audit and Assessment programme which sits within its own Corporate Governance framework.

This process ensures that the project remains robust and viable throughout the life of the contract.

Results and Dividends

As set out on page 6, the result for the year after taxation amounted to £nil (2013: £nil). The directors do not propose to pay any dividend in respect of the year ended 31 December 2014 (2013: £nil). The directors expect the Company to continue its operations for the foreseeable future.

Directors

The following persons were Directors of the Company throughout the year:

J Graham

R K Sheehan

J E Haan (resigned 2nd January 2015)

S L Jones

K O'Brien (appointed 2nd January 2015)

 

The directors confirm to the best of their knowledge:

(a)   the financial statements, prepared in accordance with UK Generally Accepted Accounting practice, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

(b)   the Strategic report includes a fair rreview of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that they face.

Directors' indemnities

The Company has made qualifying third party indemnity provisions for the benefit of its directors which remain in force at the date of this report.

Disclosure of information to auditor

The Directors who held office at the date of approval of this Directors' report confirm that, so far as they are each aware, there is no relevant audit information of which the Company's auditor is unaware; and each Director has taken all the steps that they ought to have taken as a Director to make themselves aware of any relevant audit information and to establish that the Company's auditor is aware of that information.

Auditor

During the year Deloitte LLP resigned as auditor and KPMG LLP were appointed. Pursuant to Section 487 of the Companies Act 2006, the auditor will be deemed to be reappointed and KPMG LLP will therefore continue in office.



 

Directors' report (continued)

Registered office

The Company's Registered Office is 8 White Oak Square, Swanley, Kent, BR8 7AG.

 

By order of the board

R K Sheehan

Director

21st April 2015



 

Statement of Directors' Responsibilities in respect of the Strategic report, the Directors' report and the financial statements

The Directors are responsible for preparing the Strategic report, 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 they have elected to prepare the financial statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice).

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 estimates that are reasonable and prudent; 

·      state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and 

·      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 have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the company and to prevent and detect fraud and other irregularities.


We have audited the financial statements of Transform Schools (North Lanarkshire) Funding plc for the year ended 31 December 2014 set out on pages 6 to 14. The financial reporting framework that has been applied in their preparation is applicable law and UK Accounting Standards (UK Generally Accepted Accounting Practice).

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. 

Respective responsibilities of Directors and auditor 

As explained more fully in the Directors' Responsibilities Statement set out on page 4, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view.  Our responsibility is to audit, and express an opinion on, the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland).  Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors. 

Scope of the audit of the financial statements 

A description of the scope of an audit of financial statements is provided on the Financial Reporting Council's website at www.frc.org.uk/auditscopeukprivate.

Opinion on financial statements 

In our opinion the financial statements: 

·      give a true and fair view of the state of the company's affairs as at 31 December 2014 and of its result for the year then ended; 

·      have been properly prepared in accordance with UK Generally Accepted Accounting Practice; and 

·      have been prepared in accordance with the requirements of the Companies Act 2006. 

Opinion on other matter prescribed by the Companies Act 2006 

In our opinion 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.

Matters on which we are required to report by exception 

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 Directors' remuneration specified by law are not made; or 

·      we have not received all the information and explanations we require for our audit.

 

 

Amanda Moses (Senior Statutory Auditor) 

for and on behalf of KPMG LLP, Statutory Auditor 

Chartered Accountants 

Arlington Business Park

Theale

Reading

RG7 4SD

                         2015


Transform Schools (North Lanarkshire) Funding plc

 

Profit and loss account

For the year ended 31 December 2014

 

Notes

 

2014

£'000

2013

£'000

 

 

 

 

 

Interest receivable and similar income

4

 

10,274

10,363

Interest payable and similar charges

4

 

(10,274)

(10,363)

 

 

 

 

 

Profit on ordinary activities before taxation

 

 

-

-

 

 

 

 

 

Taxation on profit on ordinary activities

5

 

-

-

 

 

 

 

 

Profit for the financial year

11

 

-

-

 

 

 

 

 

 

All activities are derived from continuing operations in the United Kingdom.

The Company had no recognised gains or losses during the year or the preceding year other than the reported profit shown above; consequently no statement of total recognised gains and losses is presented.


Transform Schools (North Lanarkshire) Funding plc

 

Balance sheet

At 31 December 2014

 

Notes

 

2014

£'000

2013

£'000

 

 

 

 

 

Current assets

 

 

 

 

Debtors: amounts falling due within one year

6

 

8,544

8,673

Debtors: amounts falling due after more than one year

6

 

174,458

176,878

 

 

 

 

 

 

 

 

183,002

185,551

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

Creditors: amounts falling due within one year

7

 

(8,544)

(8,673)

 

 

 

 

 

Net current assets

 

 

174,458

176,878

 

 

 

 

 

Creditors: amounts falling due after more than one year

8

 

(174,408)

(176,828)

 

 

 

 

 

Net assets

 

 

50

50

 

 

 

 

 

Capital and reserves

 

 

 

 

Called-up share capital

10

 

50

50

Profit and loss account

11

 

-

-

 

 

 

 

 

Shareholders' funds

12

 

50

50

 

 

 

 

 

 

 

The financial statements of Transform Schools (North Lanarkshire) Funding plc, registered number 5358471 were approved by the Board of Directors on 21st April 2015.

By order of the Board of Directors

 

 

R K Sheehan

Director


Transform Schools (North Lanarkshire) Funding plc

 

Notes to the financial statements

For the year ended 31 December 2014

 

1.         Accounting policies

A summary of the principal accounting policies of the Company, all of which have been applied consistently, is set out below:

Basis of preparation

The financial statements have been prepared in accordance with applicable law and United Kingdom accounting standards and under the historical cost convention.

Going Concern

The Company's business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategic Report and Directors' Report on pages 1 to 3.  The financial position of the Company, its cash flows, liquidity position and borrowing facilities are described in note 9 to the financial statements.  This note to the financial statements includes the Company's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments; and its exposures to credit risk and liquidity risk.

The directors have considered the ability of Transform Schools (North Lanarkshire) Limited (a related company) to pay interest amounts due to the Company and do not consider this to be a material risk.  After making enquiries, the directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future.  Accordingly, they continue to adopt the going concern basis in preparing the annual report.

Cashflow

The Company is exempt from the requirement of Financial Reporting Standard No.1 (Revised) 1996 to prepare a cash flow statement as it is a wholly-owned subsidiary of Transform Schools (North Lanarkshire) Holdings Limited, which prepares consolidated financial statements that include a cash flow statement and are publicly available.

Financial Instruments

FRS 26 is required to be adopted by listed companies.  The Company has issued listed debt and has therefore prepared its accounts in accordance with FRS 26.  The Company and all subsidiaries of Transform Schools (North Lanarkshire) Holdings Limited have also adopted FRS 26 to ensure that consistent accounting policies are applied within the Group.

FRS 26 provides the requirements for the measurement, recognition and derecognition of financial instruments.

FRS 29, which requires certain disclosures in respect of financial instruments, is applicable for periods beginning on or after 1 January 2007 and is required for entities applying FRS 26.  The Company has elected to take the exemptions permitted in FRS 29 as the results are included in the publicly available consolidated financial statements of Transform Schools (North Lanarkshire) Holdings Limited, which include disclosures that comply with FRS 29.

Taxation

Current tax is provided at amounts expected to be paid or recovered using the tax rates and laws that have been enacted, or substantively enacted, by the balance sheet date.  Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date.  Timing differences are differences between the Company's taxable profits and its results stated in the financial statements that arise from the inclusion of gains or losses in tax assessment periods different from those in which they are recognised in the financial statements.  A deferred tax asset is regarded as recoverable and therefore recognised only to the extent that, on the basis of the evidence available, it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.

Finance costs

Finance costs of debt are charged in the profit and loss account over the term of the instrument at a constant rate on the carrying amount.

Financial liabilities and equity

Financial liabilities and equity 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.  Other instruments are classified as liabilities if they contain an obligation to transfer economic benefits and if they are not included in shareholders' funds.  The finance cost recognised in the profit and loss account in respect of capital instruments other than equity shares is allocated over the term of the instrument.

Senior secured bonds and term loan

Senior secured bonds and term loans are initially stated at the amount of the net proceeds after deduction of related issue costs.  The carrying amount is increased by the finance cost in respect of the accounting period and reduced by payments made in that period.  The index-linked secured bonds and index-linked secured term loan are each valued at amortised cost, using the effective interest rate method, taking account of projected indexation across the term of the liability.

Issue costs are written off to the profit and loss account, over the term of the debt on a straight line basis.

2.         Remuneration of Directors and employees

Directors' emoluments for the year amounted to £nil (2013: £nil). The Company has no employees (2013: nil).

3.         Auditors' remuneration

 

 

 

2014
£'000

2013
£'000

 

 

 

 

 

Fees payable to the Company's auditor for the audit of the Company's annual accounts

 

 

1

1

 

 

 

 

 

The auditor remuneration was borne by Transform Schools (North Lanarkshire) Limited.

4.         Net interest receivable

 

 

 

2014
£'000

2013
£'000

 

 

 

 

 

Interest receivable on loan to Transform

 

 

10,274

10,363

      Schools (North Lanarkshire) Limited

 

 

 

 

Interest and fees payable on bonds and loan

 

 

(10,274)

(10,363)

 

 

 

 

 

 

 

 

-

-

 

 

 

 

 

5.         Taxation

The results for the year do not give rise to a tax charge (2013: £nil).



 

6.         Debtors

 

2014
£'000

2013
£'000

 

 

 

Amounts owing from Transform Schools

 (North Lanarkshire) Limited

 

183,002

 

185,601

 

 

 

 

 

 

Due within one year

8,544

8,673

Due after one year

174,458

176,878

 

 

 

 

183,002

185,551

 

 

 

Amounts owing from Transform Schools (North Lanarkshire) Limited comprise a loan which is made up of the proceeds of £87,796,000 index linked secured bonds, a £70,000,000 loan from European Investment Bank, £17,194,683 subordinated loan stock and a £50,000 direct loan.  The balance is stated after the deduction of amortised issue costs of £4,524,000 (2013: £4,742,000).  The terms and conditions applicable to the amounts owing from Transform Schools (North Lanarkshire) Limited are the same as those applicable to the borrowings of Transform Schools (North Lanarkshire) Funding plc (see Note 8).

7.         Creditors: amounts falling due within one year

 

 

2014
£'000

2013
£'000

 

 

 

 

Index-linked secured bonds

 

4,022

4,171

Index-linked bank secured term loan

 

3,210

3,065

Accrued interest

 

1,312

1,437

 

 

 

 

 

 

8,544

8,673

 

 

 

 

 



 

8.         Creditors: amounts falling due after more than one year

 

 

 

2014
£'000

2013
£'000

Borrowings:

 

 

 

 

 

 

 

 

 

Index-linked secured bonds

 

 

87,080

88,419

Index-linked bank secured term loan

 

 

70,244

71,325

Subordinated loan stock

 

 

17,084

17,084

 

 

 

 

 

 

 

 

174,408

176,828

 

 

 

 

 

 

 

 

 

2014
£'000

2013
£'000

Repayable as follows:

 

 

 

 

 

 

 

 

 

Within one year

 

 

7,231

7,236

Between one and two years

 

 

7,185

7,222

Between two and five years

 

 

22,818

22,030

After five years

 

 

144,406

147,576

 

 

 

 

 

 

 

 

181,640

184,064

 

 

 

 

 

The index-linked secured bonds due 2036 of £87,796,000 were created on 8 June 2005, all of which were issued and sold.  Interest on the bonds is payable semi-annually at a rate of 2.343% plus RPI indexation, commencing on 30 September 2005.  Unless previously redeemed or purchased and cancelled, the bonds will mature on 31 March 2036. The principal amount outstanding of the bonds is adjusted semi-annually for RPI indexation. The indexation ratio is calculated as the RPI for the month, eight months prior to the payment date compared against the same month in the preceding year. 

The index linked bank secured term loan is from the European Investment Bank with repayments commencing September 2008 and semi-annually thereafter until September 2034.  The loan bears interest at a rate of 1.950% plus RPI indexation. The capital amount outstanding of the loan is adjusted semi-annually for RPI indexation. The indexation ratio is calculated as the RPI for the month, eight months prior to the payment date compared against the same month in the preceding year. 

The bank loan has attached certain covenants regarding, inter alia, performance of the company and Transform Schools (North Lanarkshire) Limited of financial and non-financial obligations under the PFI contracts. In the current and prior years, the company was fully compliant with all covenants.

The above borrowings are secured by a fixed and floating charge over the whole of the Company's undertaking and assets.

The secured subordinated loan stock bears interest at 7.550% above the six month LIBOR rate, and is repayable in instalments between 2009 and 2033.  It is secured by second fixed and floating charges over the undertaking, property, assets and rights of the Company.



 

9.         Financial instruments

The Company's financial instruments comprise borrowings.  The main purpose of these financial instruments is to raise finance for the Transform Schools (North Lanarkshire) Group operations.  The Company has not entered into derivative transactions.  It is, and has been throughout the period under review, the Company's policy that no trading in financial instruments be undertaken.  The main risks arising from the Company's financial instruments are interest rate risk and liquidity risk.  The Board reviews and agrees policies for managing each of these risks and they are summarised below.  These policies have remained unchanged throughout the period.

Interest rate risk / Inflation risk

The Company's exposure to adverse movements in interest rates and inflation on its borrowings is matched by an equal but opposite exposure on amounts owing from Transform Schools (North Lanarkshire) Limited with the same maturity.

Capital risk management

The Company manages its capital to ensure it is able to continue as a going concern and to maintain an optimal capital structure to reduce the cost of capital. The capital structure of the Company comprises equity attributable to equity holders consisting of ordinary share capital, reserves and retained earnings as disclosed in Notes 10, 11 and 12.

Liquidity risk

The Company's policy throughout the year has been that, to ensure continuity of funding, all of its borrowings should be matched by amounts owing from Transform Schools (North Lanarkshire) Limited with the same maturity.

Credit risk

The Company's credit risk is primarily attributable to its other receivables however this is mitigated as the counterparties are all related parties.

Interest rate profile

The interest rate profile of the Company's financial liabilities was as follows:

 

 

 

2014
£'000

2013
£'000

 

 

 

 

 

Borrowings

 

 

181,640

184,064

 

 

 

 

 

The index-linked bonds have interest payable at a rate of 2.343% plus RPI indexation on a principal amount that is also subject to RPI indexation.

The bank term loan has interest payable at a rate of 1.950% plus RPI indexation on a principal amount that is also subject to RPI indexation.

The loan stock has interest payable at a rate of 7.550% above the six month LIBOR rate.

Borrowing facilities

The Company had no more undrawn committed borrowing facilities at 31 December 2014 (2013: £nil).



9.         Financial instruments (continued)

Fair values

 

2014

2013

 

Book value
£'000

Fair value
£'000

Book value
£'000

Fair value
£'000

Primary financial instruments held or issued to finance the Company's operations:

 

 

 

 

 

 

 

 

 

Index-linked bonds

91,102

109,633

92,640

98,229

Index-linked loans

73,454

83,648

74,390

75,787

Subordinated loan stock

17,084

34,102

17,084

30,464

 

 

 

 

 

The fair values of the index-linked loan, index-linked bond and the subordinated debt have been calculated by discounting the expected future cash flows at prevailing interest rates.  Expected future cash flows have been calculated assuming that future increases in the Retail Price Index are constant at 2.5%.  The UK gilt yield curve and an assumed credit spread of 1% for the index-linked loan and 1% for the subordinated debt, have been used as appropriate discount rates.

10.       Called-up share capital

 

 

 

2014
£'000

2013
£'000

Allotted. called up and unpaid

 

 

 

 

Equity: 50,000 ordinary shares of £1.00 each

 

 

50

50

 

 

 

 

 

11.       Reserves

 

 

 

2014
£'000

2013
£'000

Profit and loss account

 

 

 

 

At 1 January

 

 

-

-

Profit for the financial year

 

 

-

-

 

 

 

 

 

At 31 December

 

 

-

-

 

 

 

 

 

12.       Reconciliation of movements in shareholders' funds

Profit for the financial year

 

 

-

-

 

 

 

 

 

Net increase in shareholders' funds

 

 

-

-

 

 

 

 

 

Opening shareholders' funds

 

 

50

50

 

 

 

 

 

Closing shareholders' funds

 

 

50

50

 

 

 

 

 

 



 

13.       Related party disclosure

At 31 December 2014, the subordinated loan stock totalled £17,083,641, divided between Equitix Education 2 Limited, £8,541,821 (2013: £8,541,821) and Innisfree Nominees Limited £8,541,820 (2013: £8,541,820) split between Innisfree PFI Secondary Fund LP (ISF) and Innisfree PFI Secondary Fund 2 LP (ISF2) in the ratio 16% to 34% respectively.

Subordinated debt interest accrued at 31 December 2014 totalled £360,364 (2013: £358,701), divided between Equitix Education 2 Limited for £180,182 and Innisfree Nominees Limited for £180,182 split between ISF and ISF2 in the ratio noted above.

As a wholly-owned subsidiary of Transform Schools (North Lanarkshire) Holdings Limited, the company has taken advantage of the exemption in FRS 8 'Related party disclosures' from disclosing related party transactions with other group companies within these financial statements.

14.       Ultimate parent undertakings and controlling parties

The Company is a subsidiary of Transform Schools (North Lanarkshire) Holdings Limited, which is incorporated in Great Britain and registered in England and Wales.  The ultimate parent undertakings of Transform Schools (North Lanarkshire) Holdings Ltd are Equitix Education 2 and two limited partnerships, Innisfree PFI Secondary Fund and Innisfree PFI Secondary Fund 2 LP, managed by Innisfree Limited.  The Company has no ultimate controlling party.

The only company in which the result of Transform Schools (North Lanarkshire) Funding plc is consolidated is Transform Schools (North Lanarkshire) Holdings Limited.  Copies of the financial statements are available from the registered office at 8 White Oak Square, London Road, Swanley, Kent, London BR8 7AG.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
FR PKKDQKBKDQQN

a d v e r t i s e m e n t