The directors present the strategic report for the year ended 31 July 2022.
The result for the year ended 31 July 2022, and the company’s financial position at the end of the year, are shown in the financial statements.
The profit and loss account for the year shows a total comprehensive profit for the year of £12,294 (2021: £934).
Business review and future developments
The directors considered the performance of the company and future prospects to be satisfactory. The company has undertaken no new lending and does not intend to do so in the coming period and therefore there are no significant future developments to address.
The company continued enhancing its management team, risk management strategies and internal control processes throughout the year. The directors and management consider the key risks and uncertainties affecting the company’s business to be: the general economic environment; global interest rates; reputational risks; regulatory risks; liquidity and credit risks.
While the company’s management has developed specific plans to deal with each of those risk areas and the directors consider such plans to be adequate, not all risk factors are within management’s control. Other risks and uncertainties not listed above could also affect the company. The directors continually monitor credit risk and perform recoverability assessments at year end based on their credit risk exposure assessments.
The directors have identified a number of Key Performance Indicators for the company. For reasons of commercial confidentiality, the directors resolved that further detail can be provided on request and at the company’s discretion.
Corporate governance
The company has progressed with its phased implementation plan of the principles it adopted from “Corporate Governance Guidance and Principles for Unlisted Companies in the UK”, published by the Institute of Directors and the European Confederation of Directors’ Associations. The directors consider the company's governance arrangements to be sufficient after taking account of the complexity of the business.
Section 172(1) statement
This section of the Strategic Report describes how the Directors have had regard to the matters set out in section 172(1) (a) to (f), and forms the Directors’ statement required under section 414C(11) of The Companies Act 2006. The Directors consider that they have, in good faith, promoted the success of the Company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to:
Long-term decisions
The Board is focused on the long term success of the Company and makes decisions to deliver long-term security and commercial performance. All key decisions are scrutinised by the Board and assessed on the balance of risk, reward and overall strategy in line with the code of corporate governance.
Employees
The company has no employees other than directors.
Business relationships
The Company has been built on solid relationships with its customers and professional advisers. We are reliant on external suppliers for a small number of key specialist services such as legal, audit and advisory. The Company believes in fair treatment of suppliers who are all paid within the agreed engagement terms.
Community and environment
The Company has limited physical presence, operates digitally, and minimal travel is undertaken. The Company seeks to be as efficient and environmentally friendly as it can be, with regular reviews of how this can be improved.
The Company, and the group it belongs to, contributes to charities and other worthy bodies who provide support in the local community. Separately, members of the Board dedicate their time and resources to good causes and are encouraged and supported to do so.
Business conduct
The Company has been built on its impeccable conduct and high business standards. The Board recognise the value in maintaining these vales and the reputation which has been built on them. All Board members are expected to adhere to these standards which are regularly communicated throughout the Company.
Communication, monitoring, and review are key to the Company maintaining the high ethical standards and conduct expected. Risks to the business are continually monitored and communicated within the Company to promote high business standards.
Interaction between members
The Board acts in the best interests of all of its members, ensuring a consistent and impartial approach is taken, aiming for a fair outcome for all. The Board are committed to clear and frequent communications with its members.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 July 2022.
The results for the year are set out on page 9.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Please refer to Note 14 of these financial statements.
The Company intends to continue to operate in line with its principal activity for the foreseeable future.
Gravita Audit Limited were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
As the Company has not consumed more than 40,000 kWh of energy in this reporting period, it qualifies as a low energy user under these regulations and is not required to report on its emissions, energy consumption or energy efficiency activities.
Basis for 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. However, because not all future events or conditions can be predicted this statement is not a guarantee as to the company's ability to continue as a going concern.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
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.
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.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management.
The extent to which the audit was considered capable to detecting irregularities including fraud
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:
the engagement partner 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 other management;
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006 and taxation legislation;
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
understanding the business model as part of the control and business environment;
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates in note 2 were indicative of potential bias; and
investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
agreeing financial statement disclosures to underlying supporting documentation;
enquiring of management as to actual and potential litigation and claims; and
reviewing correspondence and enquiring with the company of actual and potential non-compliance with laws and regulations.
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, if any.
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.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment by for example forgery, or intentional misrepresentation or through collusion. Our audit procedures are designed to detect material misstatement. We are not responsible for preventing noncompliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.
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.
Use of our 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.
Lake Bridge International PLC is a public company limited by shares incorporated on 30 March 2015 in England and Wales. The registered office is 30 Holborn, Buchanan House, London, EC1N 2HS.
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 £.
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.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
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.
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.
The principal judgement made by directors is in respect of the recoverable amount on amounts due by group companies. The directors perform credit risk assessments by reference to a range of credit characteristics of the debtors as well as by reference to wider economic factors which could impact the ability of the debtors to comply with the terms of the loans as well as an assessment of the likelihood and timing of any restructuring which may affect the ability of the company to recover the balances. The directors have also had regard to a guarantee issued by Global University Systems Holding B.V., which has control over all debtor entities, in respect of intercompany debts and have considered the current and expected financial position of that company in forming an assessment of recoverability. The directors concluded that no provision was required at the year end.
All of the company's turnover relates to interest income. All interest paid (and received) relates to balances with group companies.
The average number of persons (including directors) employed by the company during the year was
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
Other loans payable after one year include floating rate loan notes of £280,980,001, issued on 22 December 2017, due for repayment on 18 December 2024, and £17,910,000, issued on 23 February 2018, due for repayment on 18 December 2024.
Ordinary shares entitle the holder to full voting, dividend and rights on winding up.
The company, along with certain other companies in the Global University Systems group, is named as a guarantor in the senior facilities agreement for Markermeer Finance B.V., a group company. A fixed and floating security has been provided over certain of the company's assets. The facility which totals approximately €1 billion is due for repayment in 2027 and an associated revolving credit facility of £120m is due to be repaid in 2026. The Directors consider that no material exposure arises as a result of the guarantee commitment as at the year end.
The immediate parent undertaking is Global University Systems Holding B.V., a company incorporated in The Netherlands.
The ultimate controlling party is The Heritage Trust, registered in Guernsey.
The smallest and largest group into which the entity is consolidated is Global University Systems Holding B.V., a company registered in The Netherlands. The registered office is Keizersgracht 307, 1016ED Amsterdam, The Netherlands.
The directors are of the opinion that there were no significant adjusting or non-adjusting events occurring after the reporting date.
The company has taken advantage of the exemption allowed in FRS 102 Section 33 - Related Party Disclosures and has not disclosed details of related party transactions with wholly-owned entities within the group.
At the year end and at the date of approval of the financial statements, HMRC enquiries into certain tax filings relating to earlier accounting periods of entities in the Global University Systems group were ongoing. The conclusion of the enquiries may result in additional tax becoming payable, plus interest and penalties, however the Directors consider the outcome, and the amount of any tax potentially payable, to be uncertain.
The directors identified that in the prior year, credit balances of £59,311,062 relating to intercompany loans had incorrectly been reflected within debtors. A prior year restatement has been recorded to increase debtors and creditors by this amount. This prior year restatement has no impact on the reported profit or loss for the comparative year.