Company registration number 04317602 (England and Wales)
PYRAMID SCHOOLS (TAMESIDE) LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
PYRAMID SCHOOLS (TAMESIDE) LIMITED
CONTENTS
Page
Directors' report
1 - 2
Directors' responsibilities statement
3
Independent auditors' report
4 - 7
Statement of comprehensive income
8
Balance sheet
9
Notes to the financial statements
11 - 20
PYRAMID SCHOOLS (TAMESIDE) LIMITED
COMPANY INFORMATION
Directors
JS Gordon
MT Smith
CT Solley
J McDonagh
(Appointed 30 June 2023)
Secretary
Resolis Limited
Company number
04317602
Registered office
1 Park Row
Leeds
United Kingdom
LS1 5AB
Auditor
Johnston Carmichael LLP
7-11 Melville Street
Edinburgh
EH3 7PE
PYRAMID SCHOOLS (TAMESIDE) LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2023
- 1 -

The directors present their annual report and financial statements for the year ended 31 March 2023.

Principal activities

The company was formed to enter into a Private Finance Initiative ("PFI") concession contract with the Tameside Metropolitan Borough Council to design, build, finance and operate schools. The contract was signed on 19 March 2002, construction commenced immediately, and full services started 1 April 2003. The contract will run until 31 August 2032. There have not been any changes in the company's activities in the year under review and the directors are not aware, at the date of this report, of any likely changes in activity for the foreseeable future.

 

The company was incorporated in Great Britain, registered in England and Wales and is domiciled in the United Kingdom.

Results and dividends

In the year the company made a profit of £320,000 (2022: loss £633,000).

 

The value of shareholders funds at 31 March 2023 £3,354,000 (2022: £2,768,000).

Ordinary dividends were paid amounting to £237,038 (2022: £114,884).

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

JS Gordon
PK Johnstone
(Resigned 30 June 2023)
MT Smith
CT Solley
J McDonagh
(Appointed 30 June 2023)
Auditor

Pursuant to section 487 of the Companies Act 2006, the auditor will be deemed to be reappointed and Johnston Carmichael LLP will therefore continue in office.

PYRAMID SCHOOLS (TAMESIDE) LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 2 -
Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

 

Going concern

The directors have prepared a detailed model forecast to project completion incorporating the relevant terms of the PFI contract, subcontracts and Credit Agreement and reasonably prudent economic assumptions. This forecast and associated business model, which is updated regularly, predicts that the Company will remain profitable and will have sufficient cash resources to operate within the terms of the PFI contract, Subcontract and Credit agreement. Therefore, the directors, having considered the financial position of the Company and its expected future cash flows, for at least 12 months from the date of signing the accounts, and have prepared the financial statements on a going concern basis. The directors confirm that they do not intend to liquidate the Company or cease trading as they consider they have realistic alternatives to doing so.

 

The directors confirm the completeness of the information provided regarding events and conditions relating to going concern at the date of approval of the financial statements, including plans for future actions.

Small companies exemption

This report has been prepared in accordance with the provisions applicable to companies entitled to the small companies exemption.

On behalf of the board
MT Smith
Director
25 October 2023
PYRAMID SCHOOLS (TAMESIDE) LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MARCH 2023
- 3 -

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

 

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

PYRAMID SCHOOLS (TAMESIDE) LIMITED
INDEPENDENT AUDITORS' REPORT
TO THE MEMBERS OF PYRAMID SCHOOLS (TAMESIDE) LIMITED
- 4 -
Opinion

We have audited the financial statements of Pyramid Schools (Tameside) Limited (the 'company') for the year ended 31 March 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

Basis for opinion

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 UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

 

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

 

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

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.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

PYRAMID SCHOOLS (TAMESIDE) LIMITED
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBERS OF PYRAMID SCHOOLS (TAMESIDE) LIMITED
- 5 -
Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the directors' report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

 

Responsibilities of directors

As explained more fully in the directors' responsibilities statement set out on page 3, 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.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an 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.

 

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.

Extent the audit was considered capable of detecting irregularities, including fraud

 

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.

We assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations by considering their experience, past performance and support available.

All engagement team members were briefed on relevant identified laws and regulations and potential fraud risks at the planning stage of the audit. Engagement team members were reminded to remain alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

PYRAMID SCHOOLS (TAMESIDE) LIMITED
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBERS OF PYRAMID SCHOOLS (TAMESIDE) LIMITED
- 6 -

We obtained an understanding of the legal and regulatory frameworks that are applicable to company and the sector in which it operates, focusing on provisions that had a direct effect on the determination of material amounts and disclosures in the financial statements. The most relevant frameworks we identified include:

 

We gained an understanding of how the company is complying with these laws and regulations by making enquiries of management and those charged with governance. We corroborated these enquiries through our review of relevant correspondence with regulatory bodies and board meeting minutes.

We assessed the susceptibility of the financial statements to material misstatement, including how fraud might occur, by meeting with management and those charged with governance to understand where it was considered there was susceptibility to fraud. This evaluation also considered how management and those charged with governance were remunerated and whether this provided an incentive for fraudulent activity. We considered the overall control environment and how management and those charged with governance oversee the implementation and operation of controls. We identified a heightened fraud risk in relation to:

In addition to the above, the following procedures were performed to provide reasonable assurance that the financial statements were free of material fraud or error:

Our audit procedures were designed to respond to the risk of material misstatements in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve intentional concealment, forgery, collusion, omission or misrepresentation. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.

PYRAMID SCHOOLS (TAMESIDE) LIMITED
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBERS OF PYRAMID SCHOOLS (TAMESIDE) LIMITED
- 7 -

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 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.

Grant Roger
Senior Statutory Auditor
For and on behalf of Johnston Carmichael LLP
25 October 2023
Chartered Accountants
Statutory Auditor
7-11 Melville Street
Edinburgh
EH3 7PE
PYRAMID SCHOOLS (TAMESIDE) LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2023
- 8 -
2023
2022
Notes
£'000
£'000
Turnover
3
2,805
2,725
Cost of sales
(2,345)
(2,360)
Gross profit
460
365
Administrative expenses
(311)
(271)
Operating profit
149
94
Interest receivable and similar income
7
979
941
Interest payable and similar expenses
8
(745)
(815)
Profit before taxation
383
220
Tax on profit
9
(63)
(853)
Profit/(loss) for the financial year
320
(633)
Other comprehensive income
Cash flow hedges gain arising in the year
671
835
Tax relating to other comprehensive income
(168)
(103)
Total comprehensive income for the year
823
99

The profit and loss account has been prepared on the basis that all operations are continuing operations.

PYRAMID SCHOOLS (TAMESIDE) LIMITED
BALANCE SHEET
AS AT
31 MARCH 2023
31 March 2023
- 9 -
2023
2022
Notes
£'000
£'000
£'000
£'000
Current assets
Debtors falling due after more than one year
11
12,080
12,909
Debtors falling due within one year
11
881
841
Cash at bank and in hand
3,953
3,945
16,914
17,695
Creditors: amounts falling due within one year
12
(3,404)
(3,274)
Net current assets
13,510
14,421
Creditors: amounts falling due after more than one year
13
(7,766)
(9,240)
Provisions for liabilities
(2,390)
(2,413)
Net assets
3,354
2,768
Capital and reserves
Called up share capital
6
6
Hedging reserve
14
(204)
(707)
Profit and loss reserves
15
3,552
3,469
Total equity
3,354
2,768

These financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.

The financial statements were approved by the board of directors and authorised for issue on 25 October 2023 and are signed on its behalf by:
MT Smith
Director
Company Registration No. 04317602
PYRAMID SCHOOLS (TAMESIDE) LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
- 10 -
Share capital
Hedging reserve
Profit and loss reserves
Total
Notes
£'000
£'000
£'000
£'000
Balance at 1 April 2021
6
(1,439)
4,217
2,784
Year ended 31 March 2022:
Loss for the year
-
-
(633)
(633)
Other comprehensive income:
Cash flow hedges gains
-
835
-
835
Tax relating to other comprehensive income
-
(103)
-
0
(103)
Total comprehensive income for the year
-
732
(633)
99
Dividends
10
-
-
(115)
(115)
Balance at 31 March 2022
6
(707)
3,469
2,768
Year ended 31 March 2023:
Profit for the year
-
-
320
320
Other comprehensive income:
Cash flow hedges gains
-
671
-
671
Tax relating to other comprehensive income
-
(168)
-
0
(168)
Total comprehensive income for the year
-
503
320
823
Dividends
10
-
-
(237)
(237)
Balance at 31 March 2023
6
(204)
3,552
3,354
PYRAMID SCHOOLS (TAMESIDE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
- 11 -
1
Accounting policies
Company information

Pyramid Schools (Tameside) Limited is a private company limited by shares incorporated in England and Wales. The registered office is 1 Park Row, Leeds, United Kingdom, LS1 5AB.

1.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.

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 £'000.

The financial statements have been prepared on a going concern basis under the historical cost convention. The principal accounting policies adopted are set out below.

1.2
Going concern

The directors have prepared a detailed model forecast to project completion incorporating the relevant terms of the PFI contract, subcontracts and Credit Agreement and reasonably prudent economic assumptions. This forecast and associated business model, which is updated regularly, predicts that the Company will remain profitable and will have sufficient cash resources to operate within the terms of the PFI contract, Subcontract and Credit agreement. Therefore, the directors, having considered the financial position of the Company and its expected future cash flows, have prepared the financial statements on a going concern basis. The directors confirm that they do not intend to liquidate the Company or cease trading as they consider they have realistic alternatives to doing so. trueAt the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

 

1.3

Accounting for PFI contracts

In prior years the company took advantage of exemptions made available under section 35 10 (i) of FRS 102, and as such there has been no substantial change to the treatment of the financial asset receivable due to the adoption of the standard.

 

Under the terms of the contract, substantially all the risks and rewards of ownership of the property remain with Tameside Metropolitan Borough Council (“the Council”).

 

During the period of construction, costs incurred as a direct consequence of financing, designing and constructing the schools, including finance costs, are capitalised and shown as work in progress. On completion of the construction, credit is taken for the deemed sale, which is recorded within turnover. The construction expenditure and associated costs are reallocated to cost of sales. Amounts receivable are classified as a financial asset receivable (PFI debtor).

 

Revenues received from the customer are apportioned between:

• capital repayments;

• finance income; and

• operating revenue.

PYRAMID SCHOOLS (TAMESIDE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 12 -
1.4
Service concession

The company has been established to provide services under certain private finance agreements with Tameside Metropolitan Borough Council. Under the terms of these Agreements, the Council (as grantor) controls the services to be provided by the company over the contract term. Based on the contractual arrangements, the company has classified the project as a service concession arrangement, and has accounted for the principal assets, of and income streams from, the project in accordance with FRS 102, Section 34.12 Service Arrangements.

 

The company has chosen to adopt the transitional arrangements available within FRS 102, Section 35.10 (i) and as such the service concession arrangement has continued to be accounted for using the same accounting policies being applied at the date of transition to FRS 102 (1 March 2014). The nature of the asset has therefore not changed.

Under the terms of the arrangement, the company has the right to receive a baseline contractual payment stream for the provision of the services from or at the direction of the grantor (the Council), and as such the asset is accounted for as a financial asset. The financial asset has initially been recognised at the fair value of the consideration received, based on the fair value of the construction (or upgrade) services, plus any directly attributable transaction costs, provided in line with FRS 102.

 

Revenue is recognised from the supply of services, which represents the timing of services provide under contracts to the extent that there is a right to consideration and is recorded at the fair value of the consideration received or receivable.

 

1.5
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

 

Cash at bank includes the seven current accounts with Lloyds Banking Group plc having a balance of £3,952,807 (2022: £3,944,802). The restricted cash balance is £3,734,720 (2022: £3,686,872). Withdrawals from these bank accounts are restricted to items set out in the Credit Agreement with The Governor and Company of the Bank of Scotland and the Company must satisfy certain requirements before being permitted to withdraw any amounts from these accounts.

1.6
Financial instruments

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

 

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

PYRAMID SCHOOLS (TAMESIDE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 13 -
Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

1.7
Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

1.8
Hedge accounting

The company designates certain derivatives as hedging instruments in cash flow hedges. At the inception of the hedge relationship, the entity documents the economic relationship between the hedging instrument and the hedged item, along with its risk management objectives, and clear identification of the risk in the hedged item that is being hedged by the hedging instrument. Furthermore, at the inception of the hedge the entity determines and documents causes for hedge ineffectiveness. Where hedge accounting recognises a liability then an associated deferred tax asset is also recognised.

Cash flow hedges

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss. Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods in which the hedged item affects profit or loss or when the hedging relationship ends.

 

Hedge accounting is discontinued when the entity revokes the hedging relationship, the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. Any gain or loss accumulated in equity at that time is reclassified to profit or loss when the hedged item is recognised in profit or loss. When a forecast transaction is no longer expected to occur, any gain or loss that was recognised in other comprehensive income is reclassified immediately to profit or loss.

1.9
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

PYRAMID SCHOOLS (TAMESIDE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 14 -
Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

PYRAMID SCHOOLS (TAMESIDE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 15 -
2
Judgements and key sources of estimation uncertainty

The preparation of the financial statements in conformity with FRS 102 requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based upon historical experience and various other factors that are believed to be reasonable under the circumstances, the result of which form the basis of making judgements about carrying values of assets and liabilities that are not readily available from other sources. 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 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.

 

Critical judgements in applying the company's accounting policies

▪ Derivative financial instruments are held at fair value.

▪ Applicability of hedge accounting.

Critical judgements

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Derivative financial instruments held at fair value

The company holds derivative financial instruments which have the effect of fixing the interest rate payable on bank borrowings. Amounts payable or receivable in respect of interest rate derivatives are recognised as adjustments to interest over the period of the contract. See hedge accounting below for how the derivative is accounted for.

Hedge accounting

The company designates certain derivatives as hedging instruments in cash flow hedges.

At the inception of the hedge relationship, the entity documents the economic relationship between the hedging instrument and the hedged item, along with its risk management objectives, and clear identification of the risk in the hedged item that is being hedged by the hedging instrument. Furthermore, at the inception of the hedge the entity determines and documents causes for hedge ineffectiveness. Where hedge accounting recognises a liability then an associated deferred tax asset is also recognised.

 

Cash flow hedges

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss. Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods in which the hedged item affects profit or loss or when the hedging relationship ends.

 

Hedge accounting is discontinued when the entity revokes the hedging relationship, the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. Any gain or loss accumulated in equity at that time is reclassified to profit or loss when the hedged item is recognised in profit or loss. When a forecast transaction is no longer expected to occur, any gain or loss that was recognised in other comprehensive income is reclassified immediately to profit or loss.

Key sources of estimation uncertainty

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

Service concessions

Accounting for the service concession contract and finance asset require an estimation of service margins, finance asset's interest rate and associated amortisation profile which is based on forecast results of the PFI contract.

PYRAMID SCHOOLS (TAMESIDE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 16 -
3
Turnover and other revenue
2023
2022
£'000
£'000
Turnover analysed by class of business
Turnover from operations
2,154
2,060
Turnover from pass-throughs
651
665
2,805
2,725

Turnover, which is stated net of value added tax, represents amounts invoiced for services provided, and is recognised each year as the applicable portions of the amounts receivable relating to finance and operating costs calculated on a consistent basis.

 

Turnover is attributable to one geographical market, the United Kingdom. Turnover from pass throughs in the current year and previous year relate to deductions and variations.

4
Auditors' remuneration
2023
2022
Fees payable to the company's auditor and associates:
£'000
£'000
For audit services
Audit of the financial statements of the company and subsidiary borne by the subsidiary
18
16
For other services
Taxation compliance services
6
5

Auditors remuneration is payable to Johnston Carmichael LLP.

5
Employees

The average monthly number of persons (including directors) employed by the company during the year was: nil (2022: nil).

6
Directors' remuneration
2023
2022
£'000
£'000
Remuneration paid to directors
86
81
7
Interest receivable and similar income
2023
2022
£'000
£'000
Interest income
Interest receivable on financial asset
979
941
PYRAMID SCHOOLS (TAMESIDE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 17 -
8
Interest payable and similar expenses
2023
2022
£'000
£'000
Interest on financial liabilities measured at amortised cost:
Senior debt interest
242
85
Subordinated loan stock
268
278
Swap Interest
225
441
Other finance costs
10
11
745
815
9
Taxation
2023
2022
£'000
£'000
Current tax
UK corporation tax on profits for the current period
86
166
Deferred tax
Origination and reversal of timing differences
(23)
687
Total tax charge
63
853

In addition to the amount charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:

2023
2022
£'000
£'000
Reclassifications from equity to profit or loss:
Relating to cash flow hedges
168
103

Corporation tax remained at 19% until March 2023. From April 2023 the main rate increased to 25% for business profits made by the Company over £250,000. A small profit rate (SPR) will also be introduced for companies with profits of £50,000 or less so that they will continue to pay corporation tax at 19%. Companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief providing a gradual increase in the effective corporation tax rate. The Company has assessed the impact of this change and consider the full rate of 25% will apply.

 

The Company has £nil tax losses during the year (2022: £nil). There is a deferred tax asset relating to the interest rate derivative, calculated at 25%, which will unwind over the term of the hedging arrangement. All movements in the deferred tax have been recognised in other comprehensive income.

 

 

PYRAMID SCHOOLS (TAMESIDE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 18 -
10
Dividends
2023
2022
£'000
£'000
Dividend paid on ordinary shares
237
115
11
Debtors
2023
2022
Amounts falling due within one year:
£'000
£'000
Trade debtors
-
0
12
Finance Debtor - due within 1 year
724
636
Prepayments and accrued income
144
118
868
766
Deferred tax asset
13
75
881
841
2023
2022
Amounts falling due after more than one year:
£'000
£'000
Finance Debtor - due after more than 1 year
12,025
12,749
Deferred tax asset
55
160
12,080
12,909
Total debtors
12,961
13,750
12
Creditors: amounts falling due within one year
2023
2022
£'000
£'000
Bank loans
1,020
949
Trade creditors
50
152
Amounts owed to group undertakings
133
50
Corporation tax
84
245
Other taxation and social security
142
127
Derivative financial instruments
53
300
Other creditors
3
-
0
Accruals and deferred income
1,919
1,451
3,404
3,274

The senior secured loan and standby loan represents amounts borrowed under a facility agreement with Bank of Scotland. The loans bear interest at a margin over SONIA of 0.9% and are repayable in instalments between 2003 and 2029. The loans are secured by fixed and floating charges over the undertaking, property, assets and rights of the company, and has certain covenants attached.

PYRAMID SCHOOLS (TAMESIDE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 19 -
13
Creditors: amounts falling due after more than one year
2023
2022
Notes
£'000
£'000
Bank loans and overdrafts
5,466
6,517
Loans from group undertakings
2,082
2,082
Derivative financial instruments
218
641
7,766
9,240

In order to hedge against interest variations on the loans, the company has entered into two interest rate swaps agreements whereby at six monthly intervals sums are exchanged reflecting the difference between floating and fixed interest rates, calculated on a predetermined notional principal amount.

 

Interest on the subordinated loan stock balance is paid at 12.75% per annum, principal is repayable upon expiry of the contract or earlier at the company's discretion.

14
Hedging reserve
2023
2022
£'000
£'000
At the beginning of the year
(707)
(1,439)
Fair value movement on interest swap liability
671
835
Deferred tax movement on interest swap liability
(168)
(103)
At the end of the year
(204)
(707)

On 19th June 2002 the Company entered into a 25 year fixed interest rate swap arrangement to hedge its exposure to the effect of interest rate fluctuations. The interest rate swap contracts are designated as a hedge of variable interest rate risk of the Company's floating rate borrowings. The hedged cashflows are expected to occur and to affect profit or loss over the period to maturity of the swap. The swap was effected on a notional amount of £18.1m payable in semi-annual amounts between 30 September 2003 and 31 March 2029.

 

The fair value of the interest rate swap liability in the current and prior years has been determined by Lloyds Banking Group who has used relevant market data to determine their valuations.

15
Profit and loss reserves
2023
2022
£'000
£'000
At the beginning of the year
3,469
4,217
Profit/(loss) for the year
320
(633)
Dividends declared and paid in the year
(237)
(115)
At the end of the year
3,552
3,469
PYRAMID SCHOOLS (TAMESIDE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
(Continued)
- 20 -
16
Related party transactions

At the year end PPP Equity PIP LP was due £1,041,000 (2022: £1,041,000) for subordinated debt. During the year the company was charged £134,000 (2022: £139,000) for subdebt interest of which £67,000 (2022: £25,000) was outstanding at the year end. The company received directors services from PPP Equity PIP LP of £44,000 (2022: £41,000). Amounts payable for directors services is £nil (2022: £nil). Dividends paid during the year are £119,000 (2022: £57,000).

 

At the year end Aberdeen Infrastructure Partners LP was due £1,041,000 (2022: £1,041,000) for subordinated debt. During the year the company was charged £134,000 (2022: £139,000) for subdebt interest of which £67,000 (2022: £25,000) was outstanding at the year end. The company received directors services from Aberdeen Infrastructure Partners LP of £44,000 (2022: £41,000). Amounts payable for directors services is £22,000 (2022: £nil). Dividends paid during the year are £119,000 (2022: £57,000).

17
Parent company

The company is incorporated and domiciled in Great Britain. The immediate controlling party is Pyramid Schools (Tameside) Holdings Limited which is the smallest and largest entity to consolidate these financial statements. Copies of the financial statements of Pyramid Schools (Tameside) Holdings Limited are available from Companies House, Crown Way, Maindy, Cardiff, CF14 3UZ. The registered address is C/O Dalmore Capital Limited Watling House - 1 Park Row, Leeds, England, LS1 5AB

 

At the balance sheet date, the immediate parent companies are Browning PFI Holdings Limited (previously known as Interserve PFI Holdings Limited) and Aberdeen Infrastructure (No.3) Limited which each holds 50% of the share capital of the Company. The registered offices of these companies are 1 Park Row, Leeds, England, LS1 5AB and 280 Bishopgate, London, England, EC2M 4AG, respectively. In the opinion of the directors no company is a controlling party. At the balance sheet date, the ultimate parent companies who jointly control the company are PPP Equity PIP LP (acting by its General Partner, Dalmore Capital 6 GP Limited and its Manager, Dalmore Capital Limited) and Aberdeen Infrastructure Partners LP Inc. (acting by its General Partner, Aberdeen Infrastructure Finance GP Ltd and its manager, abrdn Investments Limited).

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