Company registration number SC333467 (Scotland)
GEORGE STREET CAPITAL LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
GEORGE STREET CAPITAL LIMITED
COMPANY INFORMATION
Directors
JS Gordon
PR Hepburn
(Appointed 8 February 2023)
PK Johnstone
(Appointed 20 December 2023)
Secretary
Resolis Limited
Company number
SC333467
Registered office
C/O Resolis Limited
Exchange Tower, 11th Floor
19 Canning Street
Edinburgh
United Kingdom
EH3 8EG
Auditor
Johnston Carmichael LLP
Bishop's Court
29 Albyn Place
Aberdeen
AB10 1YL
GEORGE STREET CAPITAL LIMITED
CONTENTS
Page
Directors' report
1 - 2
Directors' responsibilities statement
3
Independent auditors' report
4 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Notes to the financial statements
11 - 21
GEORGE STREET CAPITAL LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 1 -
The directors present their annual report and financial statements for the year ended 30 September 2023.
Principal activities
The principal activity of the company is that of a holding company developing Public Private Partnership opportunities.
George Street Capital Limited was established as a bespoke specialist development, consultancy and investment company focused on niche opportunities in the public procurement and healthcare markets, as well as delivering tailored solutions in the private, commercial and residential sector.
The profit for the year after taxation and fair value movements on cash flow hedging instruments is £218,164, (2022 as restated: £1,041,333) as set out in the Statement of Comprehensive Income on page 8. The profit for the year will be transferred to reserves.
Results and dividends
During the period, the company made dividend payments totalling £260,000 (2022: £108,000). The directors do not recommend the payment of a dividend as at 30th September 2023 (2022: £nil).
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
R W Christie
(Resigned 8 February 2023)
PR Hepburn
(Appointed 8 February 2023)
J McDonagh
(Appointed 1 March 2023 and resigned 20 December 2023)
PK Johnstone
(Appointed 20 December 2023)
Financial instruments
Due to the nature of the company’s business, the financial risks the directors consider relevant to the company are credit, interest rate, cash flow and liquidity risk.
Interest Rate Risk
The financial risk management objectives of the company are to ensure that the financial risks are mitigated by the use of financial instruments. The company uses interest rate swaps to reduce its exposure to interest rate movements. Financial instruments are not used for speculative purposes.
Cash flow and liquidity Risk
The company’s cash flow and liquidity risk is principally managed through financing the company by means of long term borrowing.
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 action.
Auditor
In accordance with the company’s articles, a resolution proposing that Johnston Carmichael LLP be reappointed as auditor of the company will be put at a general meeting.
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.
This report has been prepared in accordance with the provisions applicable to companies entitled to the small companies’ exemption.
GEORGE STREET CAPITAL LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 2 -
On behalf of the board
PR Hepburn
Director
29 February 2024
GEORGE STREET CAPITAL LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 3 -
The directors are responsible for preparing the Directors’ Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with 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:
select suitable accounting policies and then apply them consistently;
make judgements and accounting 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 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.
GEORGE STREET CAPITAL LIMITED
INDEPENDENT AUDITORS' REPORT
TO THE MEMBER OF GEORGE STREET CAPITAL LIMITED
- 4 -
Opinion
We have audited the financial statements of George Street Capital Limited (the 'company') for the year ended 30 September 2023 which comprise the statement of comprehensive income, balance sheet, 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 FRS 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:
Give a true and fair view of the state of the company's affairs as at 30 September 2023 and of its profit for the year then ended;
Have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
Have been prepared in accordance with the requirements of the Companies Act 2006.
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.
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 the audit:
The information given in the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
The directors' report has been prepared in accordance with applicable legal requirements.
GEORGE STREET CAPITAL LIMITED
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBER OF GEORGE STREET CAPITAL 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:
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 hav not received all the information and explanations we require for our audit; or
The directors were not entitled to take advantage of the small companies' exemption in preparing the directors' report and from the requirement to prepare a strategic report.
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.
GEORGE STREET CAPITAL LIMITED
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBER OF GEORGE STREET CAPITAL LIMITED
- 6 -
We obtained an understanding of the legal and regulatory frameworks that are applicable to the company and the sector in which it operates, focusing on those 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:
Reviewing minutes of meetings of those charged with governance for reference to: breaches of laws and regulation or for any indication of any potential litigation and claims; and events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud;
Reviewing the level of and reasoning behind the company’s procurement of legal and professional services;
Performing audit work procedures over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing judgements made by management in their calculation of accounting estimates for potential management bias;
Completion of appropriate checklists and use of our experience to assess the company's compliance with the Companies Act 2006; and
Agreement of the financial statement disclosures to supporting documentation.
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 would become aware of it.
GEORGE STREET CAPITAL LIMITED
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBER OF GEORGE STREET CAPITAL LIMITED
- 7 -
This report is made solely to the company's member 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 member those matters we are required to state to the member 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 member for our audit work, for this report, or for the opinions we have formed.
Jenny Junnier
Senior Statutory Auditor
For and on behalf of Johnston Carmichael LLP
29 February 2024
Chartered Accountants
Statutory Auditor
Bishop's Court
29 Albyn Place
Aberdeen
AB10 1YL
GEORGE STREET CAPITAL LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 8 -
Year
Period
ended
ended
30 September
30 September
2023
2022
Notes
£'000
£'000
Turnover
3
53
53
Administrative expenses
(18)
(4)
Operating profit
35
49
Income from shares in group undertakings
3
260
108
Interest receivable from group undertakings
3
149
328
Interest payable and similar expenses
5
(201)
(230)
Profit before taxation
243
255
Tax on profit
(35)
Profit for the financial year
243
220
Other comprehensive income
Cash flow hedges gain arising in the year
36
1,027
Tax relating to other comprehensive income
(9)
(257)
Total comprehensive income for the year
270
990
The profit and loss account has been prepared on the basis that all operations are continuing operations.
The notes on pages 11 to 21 form part of the financial statements.
GEORGE STREET CAPITAL LIMITED
BALANCE SHEET
AS AT
30 SEPTEMBER 2023
30 September 2023
- 9 -
2023
2022
Notes
£'000
£'000
£'000
£'000
Fixed assets
Investments
7
4,873
4,921
Current assets
Debtors falling due after more than one year
10
2
Debtors - deferred tax
16
9
Debtors falling due within one year
10
82
Cash at bank and in hand
6
2
8
93
Creditors: amounts falling due within one year
11
(845)
(820)
Net current liabilities
(837)
(727)
Total assets less current liabilities
4,036
4,194
Creditors: amounts falling due after more than one year
12
(3,061)
(3,229)
Net assets
975
965
Capital and reserves
Called up share capital
17
150
150
Hedging reserve
1
(26)
Profit and loss reserves
824
841
Total equity
975
965
These financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.
The notes on pages 11 to 21 form part of the financial statements.
The financial statements were approved by the board of directors and authorised for issue on 29 February 2024 and are signed on its behalf by:
PR Hepburn
Director
Company Registration No. SC333467
GEORGE STREET CAPITAL LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 10 -
Share capital
Hedging reserve
Profit and loss reserves
Total
Notes
£'000
£'000
£'000
£'000
Balance at 1 September 2021
150
(796)
729
83
Period ended 30 September 2022:
Profit for the period
-
-
220
220
Other comprehensive income:
Cash flow hedges gains
-
1,027
-
1,027
Tax relating to other comprehensive income
-
(257)
(257)
Total comprehensive income for the period
-
770
220
990
Dividends
6
-
-
(108)
(108)
Balance at 30 September 2022
150
(26)
841
965
Year ended 30 September 2023:
Profit for the year
-
-
243
243
Other comprehensive income:
Cash flow hedges gains
-
36
-
36
Tax relating to other comprehensive income
-
(9)
(9)
Total comprehensive income for the year
-
27
243
270
Dividends
6
-
-
(260)
(260)
Balance at 30 September 2023
150
1
824
975
GEORGE STREET CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 11 -
1
Accounting policies
Company information
George Street Capital Limited is a private company limited by shares incorporated in Scotland. The registered office is C/O Resolis Limited, Exchange Tower, 11th Floor, 19 Canning Street, Edinburgh, United Kingdom, EH3 8EG.
Statement of compliance
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. 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 the historical cost convention.
1.1
Accounting convention
The preparation of financial statements in conformity with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed further in the accounting policies.
The principal accounting policies adopted are set out below have been consistently applied to the years presented, unless otherwise stated.
The financial statements contain information about George Street Capital Limited as an individual company and do not contain consolidated financial information of the parent and its subsidiaries. The company is exempt on the ground of its size from preparing group accounts.
1.2
Going concern
At 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.true
1.3
Reporting period
During the last reporting period the company changed its accounting period end from 31 August 2022 to 30 September 2022 to bring the financial statements in line with lender reporting deadlines. Previously the company had prepared financial statements for the financial year from 1 September to 31 August. The reporting period reverted back to a 12-month period from 1 October 2022. The comparative figures being from 1 September 2021 to 30 September 2022 are therefore not entirely comparable.
1.4
The company has taken advantage of the exemption in FRS 102 Section 7 ‘Statement of Cash Flows’ part 1B, which states that a small company is not required to prepare a cash flow statement.
The company has taken advantage of the exemption in Section 33 of FRS 102 ‘Related Party Disclosures’, that allows it not to disclose transactions with wholly owned members of a group.
1.5
Revenue recognition
Turnover represents amounts receivable for director’s services net of VAT. Income is recognised on the recharging of appropriate time management.
1.6
Fixed asset investments
Investments are stated at cost less any provision required for diminution in value.
GEORGE STREET CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
1
Accounting policies
(Continued)
- 12 -
1.7
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of six months or less and bank overdrafts.
1.8
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, in full, to all of its financial instruments. A financial asset or a financial liability is recognised only when the entity becomes a party to the contractual provisions of the instrument.
Basic financial instruments are initially recognised at the transaction price and subsequently at amortised cost, unless the arrangement constitutes a financing transaction, where it is recognised at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.
Debt instruments are initially recognised at the present value of cash payable to the lender and are subsequently measured at amortised cost using the effective interest rate method, less impairment. The effective interest rate method is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument. The effective interest rate amortisation is included in interest payable and similar charges in the Statement of Comprehensive Income.
Other financial instruments are subsequently measured at fair value, with any changes recognised in the Statement of Comprehensive Income, with the exception of hedging instruments in a designated hedging relationship.
Financial assets that are measured at cost or amortised cost are reviewed for objective evidence of impairment at the end of each reporting date. If there is objective evidence of impairment, an impairment loss is recognised in Statement of Comprehensive Income immediately.
For all equity instruments regardless of significance, and other financial assets that are individually significant, these are assessed individually for impairment. Other financial assets are either assessed individually or grouped on the basis of similar credit risk characteristics.
Any reversals of impairment are recognised in the Statement of Comprehensive Income immediately, to the extent that the reversal does not result in a carrying amount of the financial asset that exceeds what the carrying amount would have been had the impairment not previously been recognised. 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 entity after deducting all of its financial liabilities.
Where the contractual obligations of financial instruments (including share capital) are equivalent to a similar debt instrument, those financial instruments are classed as financial liabilities. Financial liabilities are presented as such in the Statement of Financial Position. Finance costs and gains or losses relating to financial liabilities are included in the Statement of Comprehensive Income. Finance costs are calculated so as to produce a constant rate of return on the outstanding liability.
Where the contractual terms of the share capital do not have any terms meeting the definition of a financial liability then this is classed as an equity instrument. Dividends and distributions relating to equity instruments are debited direct to equity.
1.9
Hedge accounting
The Company has entered into an arrangement with third parties that is designed to hedge future cash flows arising on variable rate interest loan arrangements, with the net effect of exchanging the cash flows arising under those arrangements for a stream of fixed interest cash flows ("interest rate swaps").
GEORGE STREET CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
1
Accounting policies
(Continued)
- 13 -
To qualify for hedge accounting, documentation is prepared specifying the hedging strategy, the component transactions and methodology used for effectiveness measurement. Changes in the carrying value of financial instruments that are designated and effective as hedges of future cash flows ("cash flow hedges") are recognised directly in a hedging reserve in equity and any ineffective portion is recognised immediately in the Statement of Comprehensive Income. Amounts deferred in equity in respect of cash flow hedges are subsequently recognised in the Statement of Comprehensive Income in the same period in which the hedged item affects net profit or loss or the hedging relationship is terminated and the underlying position being hedged has been extinguished.
1.10
Taxation
Taxation expense for the period comprises current and deferred tax recognised in the reporting period. Tax is recognised in the Statement of Comprehensive Income, except to the extent that it relates to items recognised in Other Comprehensive Income or directly in equity. In this case tax is also recognised in Other Comprehensive Income or directly in equity respectively. Current or deferred taxation assets and liabilities are not discounted.
Current tax
Current tax is the amount of income tax payable in respect of the taxable profit for the year or prior years. Tax is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the period end. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred tax
Deferred tax arises from timing differences that are differences between taxable profits and total comprehensive income as stated in the financial statements. These timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements.
Deferred tax is recognised on all timing differences at the reporting date except for certain exceptions. Unrelieved tax losses and other deferred tax assets are only recognised when it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Deferred tax is also recognised on the revaluations of derivative financial instruments, with the movements going through the Statement of Comprehensive Income.
Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the period end and that are expected to apply to the reversal of the deferred tax asset or liability.
GEORGE STREET CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 14 -
2
Judgements and key sources of estimation uncertainty
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.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Hedge accounting and consideration of the fair value of derivative financial instruments
The company uses a derivative financial instrument to hedge certain economic exposures in relation to movements in interest rates as compared with the position that was expected at the date the underlying transaction being hedged was entered into. The company fair values its derivative financial instrument and records the fair value of the swap instrument on its Statement of Financial Position. No market prices are available for this instrument and consequently the fair value is derived using financial models developed by the lender based on counterparty information that is independent of the company,but uses observable market data in respect of interest rates as an input to valuing the derivative financial instrument. There is also a judgement on whether an economic hedge relationship exists in order to achieve hedge accounting. Appropriate documentation has been prepared detailing the economic relationship between the hedging instrument and the underlying loan being hedged.
The effective interest rate on senior debt instruments was calculated and is not deemed to be materially different to the interest rate applied in the financial statement and as such no adjustment has been made to the interest charge in the financial statements. This will continue to be monitored.
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:
Impairment of assets
The carrying value of those assets recorded in the company's Statement of Financial Position, at amortised cost, could be materially reduced where circumstances exist which might indicate that an asset has been impaired and an impairment review is performed. Impairment reviews consider the fair value and or value in use of the potentially impaired asset or assets and compares that with the carrying value of the asset or assets in the Statement of Financial Position. Any reduction in value arising from such a review would be recorded in the Statement of Comprehensive Income. Impairment reviews involve the significant use of assumptions. Consideration has to be given as to the price that could be obtained for the asset or assets, or in relation to a consideration of value in use, estimates of the future cash flows that could be generated by the potentially impaired asset or assets, together with a consideration of an appropriate discount rate to apply to those cash flows.
3
Turnover and other revenue
2023
2022
£'000
£'000
Turnover analysed by class of business
Service Fee
53
53
GEORGE STREET CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
3
Turnover and other revenue
(Continued)
- 15 -
2023
2022
£'000
£'000
Other significant revenue
Other finance income
149
328
Dividends received
260
108
The whole of the turnover is attributable to the principal activity of the company, wholly undertaken in the UK.
4
Directors' remuneration
The directors, who are also key management personnel, received no emoluments from the company during the period for their services as directors. There are no other employees of the company.
The Company received £53,342 (2022: £52,782) from it's subsidiaries in respect of the services of J S Gordon, P R Hepburn, J McDonagh and R W Christie as directors during the period.
5
Interest payable and similar expenses
2023
2022
£'000
£'000
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
201
230
6
Dividends
2023
2022
£'000
£'000
Dividend paid on ordinary shares
260
108
7
Fixed asset investments
2023
2022
Notes
£'000
£'000
Shares in group undertakings
8
3,205
3,205
Unlisted investments
1,668
1,716
4,873
4,921
GEORGE STREET CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
7
Fixed asset investments
(Continued)
- 16 -
Movements in fixed asset investments
Shares in subsidiaries
Other investments
Total
£'000
£'000
£'000
Cost or valuation
At 1 October 2022
3,205
1,716
4,921
Repayments
-
(48)
(48)
At 30 September 2023
3,205
1,668
4,873
Carrying amount
At 30 September 2023
3,205
1,668
4,873
At 30 September 2022
3,205
1,716
4,921
8
Subsidiaries
Details of the company's subsidiaries at 30 September 2023 are as follows:
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Ayrshire Hospitals Ltd
C/O Resolis Limited Exchange Tower,11th Floor, 19 Canning Street, Edinburgh, United Kingdom, EH3 8EG
Direct
100.00
Stonehouse Hospitals Ltd
C/O Resolis Limited Exchange Tower,11th Floor, 19 Canning Street, Edinburgh, United Kingdom, EH3 8EG
Direct
100.00
The aggregate capital and reserves and the result for the year of the subsidiaries noted above was as follows:
Name of undertaking
Capital and Reserves
Profit/(Loss)
£'000
£'000
Ayrshire Hospitals Ltd
1,152,847
609,264
Stonehouse Hospitals Ltd
674,222
130,768
GEORGE STREET CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
8
Subsidiaries
(Continued)
- 17 -
Shares in group undertakings:
The directors consider that the carrying value of the investment in Ayrshire Hospitals Limited is fairly stated at cost of £1,661,250 (2022: £1,661,250) given the nature of the PFI/PPP contract, the underlying financial model and contractual future income streams related to the NHS Ayrshire long term PFI contract.
The directors consider that the carrying value of the investment in Stonehouse Hospitals Limited is fairly stated at cost of £1,543,895 (2022: £1,543,895) given the nature of the PFI/PPP contract, the underlying financial model and contractual future income streams related to the NHS Lanarkshire long term PFI contract.
Unlisted investments
Other unlisted investments comprise 13% non-convertible loan notes issued by Ayrshire Hospitals Limited of £1,204,486 (2022: £1,252,050). During the year there was a capital repayment of the loan during the year of £47,565 (2022: £61,007). These loan notes are due to be fully repaid by September 2034.
In addition, other unlisted investments comprise 14% non-convertible loan notes issued by Stonehouse Hospitals Limited of £464,000 (2022: £464,000). These loans notes are due to be repaid on 30 September 2032.
9
Financial instruments
2023
2022
£'000
£'000
Carrying amount of financial assets
Measured at fair value through profit or loss
- Derivative financial instruments
2
-
Carrying amount of financial liabilities
Measured at fair value through profit or loss
- Derivative financial instruments
-
34
10
Debtors
2023
2022
Amounts falling due within one year:
£'000
£'000
Amounts owed by group undertakings
82
2023
2022
Amounts falling due after more than one year:
£'000
£'000
Derivative financial instruments
2
-
Deferred tax asset (note 16)
9
2
9
Total debtors
2
91
GEORGE STREET CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 18 -
11
Creditors: amounts falling due within one year
2023
2022
Notes
£'000
£'000
Bank loans
13
136
153
Other borrowings
13
710
622
Trade creditors
(1)
Corporation tax
45
845
820
12
Creditors: amounts falling due after more than one year
2023
2022
Notes
£'000
£'000
Bank loans and overdrafts
13
3,061
3,195
Derivative financial instruments
34
3,061
3,229
The bank loans are secured by a bond and floating charge over the assets of the company.
The loans are payable by instalments concluding in 2032. Interest is payable at 6.011% and 6.35%.
GEORGE STREET CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 19 -
13
Loans and overdrafts
An analysis of the maturity of loans is given below:
2023
2022
£'000
£'000
Amounts falling due within one year or on demand:
Senior secured loan
136
153
Loans from group undertakings
710
622
846
775
Amounts falling due between one and two years:
Senior secured loan
147
135
147
135
Amounts falling due between two and five years:
Senior secured loan
646
540
646
540
Amounts falling due after more than five years:
Repayable by instalments
Senior secured loan
2,268
2,520
2,268
2,520
The total cash repayable on the loan is as follows :
Bank loans
3,197
3,348
Loans from group undertakings
710
622
3,907
3,970
Payable within one year
846
775
Payable after one year
3,061
3,195
14
Related Party Transactions
The company has taken advantage of the exemption available in FRS 102 section 33 from the requirement to disclose related party transactions with wholly owned group companies.
Cobalt Project Investments Ltd
2023
2022
£'000
£'000
Group Relief
6
-
GEORGE STREET CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 20 -
15
Immediate and ultimate holding Company
PFI (Pacific) Limited is the immediate parent entity. The ultimate controlling entity is considered to be Dalmore Capital Fund LP, a limited partnership registered in England and Wales. The registered office of Dalmore Capital Fund LP is 1 Park Row, Leeds, LS1 5AB. Copies of the financial statements of Dalmore Capital Fund LP are available from the General Partner at C/O Dalmore Capital Limited, Caledonian Exchange, 19a Canning Street, Edinburgh, EH3 8EG.
16
Deferred taxation
Deferred tax has been provided for at 25% (2022: 25%) in the financial statements.
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Assets
Assets
2023
2022
Balances:
£'000
£'000
Deferred tax liability
9
2023
Movements in the year:
£'000
Asset at 1 October 2022
(9)
Charge to other comprehensive income
9
Liability at 30 September 2023
-
The deferred tax asset will unwind over the life of the hedge which expires in September 2033.
No portion of the deferred tax balance is likely to be recovered or settled in the 12 months following the Statement of Financial Position date.
17
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£'000
£'000
Issued and fully paid
of £1 each
150,006
150,006
150
150
18
Reserves
The company has two main reserves:
Hedging reserve - This reserve records fair value movements on cash flow hedging instruments.
Retained earnings - This reserve records retained earnings and accumulated losses.
GEORGE STREET CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2023
- 21 -
19
Hedge Accounting
Derivatives are financial instruments that derive their value from the price of an underlying item, such as interest rates or other indices. The company's use of derivative financial instruments is described below.
The company has entered into interest rate swaps with a third party for the same notional amount as the company's variable rate borrowings with banks which have the commercial effect of swapping the variable rate interest coupon on those loans for a fixed rate coupon. The interest rate swaps were entered into at a fixed interest rate of 6.35% in June 2006 and expires in December 2032 and 6.01% in November 2008 and expires in September 2032.
The Directors believe that the hedging relationship between the interest rate swap and related variable rate bank loans is highly effective and as a consequence have concluded that these derivatives meet the definition of cash flow hedges and have formally designated them as such.
The company's derivative financial instruments are carried at fair value. The carrying value of the interest swaps at 30 September 2023 amounted to assets of £1,685 (2022: £34,424 liabilities). The movement during the year in the fair value of the interest rate swap is a debit of £32,738 (2022: £1,026,870 credit) which has been recorded in the cash flow hedge reserve, and a debit of £8,185 (2022: £256,717 credit) to deferred tax.
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