Company registration number 05071716 (England and Wales)
DERBY SCHOOL SOLUTIONS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
DERBY SCHOOL SOLUTIONS LIMITED
COMPANY INFORMATION
Directors
David Davies
John George
Secretary
Infrastructure Managers Limited
Company number
05071716
Registered office
Cannon Place
78 Cannon Street
London
EC4N 6AF
Independent Auditors
Johnston Carmichael LLP
Chartered Accountants & Statutory Auditors
7-11 Melville Street
Edinburgh
EH3 7PE
Bankers
Barclays Bank Plc
1 Churchill Place
London
E14 5HP
DERBY SCHOOL SOLUTIONS LIMITED
CONTENTS
Page
Directors' report
1 - 2
Directors' responsibilities statement
3
Independent auditors' report
4 - 7
Statement of comprehensive income
8
Statement of financial position
9
Statement of changes in equity
10
Notes to the financial statements
11 - 21
DERBY SCHOOL SOLUTIONS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -

The directors present their annual report and the financial statements of Derby School Solutions Limited ("the Company") for the year ended 31 December 2023.

Principal activities

The principal activity of the company continued to be that of a Private Finance Initiative (PFI) Concessionaire for the Derby City Schools PFI Project, under the terms of a Project Agreement. The Agreement is for a term of 25 years and was entered into with Derby City Council (the authority), providing operation and support services functions at five replacement primary and secondary schools in the city of Derby.

Results and dividends

The results for the year are set out on page 8.

 

The profit for the financial year, after taxation, amounted to £905,177 (2022:£708,005).

 

The directors are satisfied with the overall performance of the Company and do not foresee any significant change in the Company's activities in the coming financial year.

Ordinary dividends were paid amounting to £nil (2022: £nil). The directors do not recommend payment of a final dividend.

Directors

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

David Davies
John George
Qualifying third party indemnity provisions

The company has made qualifying third party indemnity provisions for the benefit of its directors during the year. These provisions remain in force at the reporting date.

Financial instruments

Many of the cash flow risks are addressed by means of contractual provisions. The Company's liquidity risk is principally managed through the Company by means of long term borrowings.

The financial risk management objectives of the Company are to ensure that 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.

Auditors

The auditors, Johnston Carmichael LLP, are deemed to be reappointed under section 487(2) of the Companies Act 2006.

Statement of disclosure to auditors

In the case of each director in office at the date the Directors' Report is approved:

 

DERBY SCHOOL SOLUTIONS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Key Performance Indicators

The performance of the Company from a cash perspective is assessed six monthly by the testing of the covenants of the senior debt provider. The key indicator being the debt service cover ratio. The Company has been performing well and has been compliant with the covenants laid out in the Group loan agreement.

 

Climate Change

The directors recognise that it is important to disclose their view of the impact of climate change on the Company. The Company's key operational contracts are long-term and with a small number of known counterparties. In most cases, the cashflows from these contracts can be predicted with reasonable certainty for at least the medium-term. Having considered the Company's operations, its contracted rights and obligations and forecast cash flows, there is not expected to be a significant impact upon the Company's operational or financial performance arising from climate change.

Going Concern

These financial statements have been prepared on the going concern basis for the reasons set out in the Accounting Policies.

 

Lifecycle risk

The company's lifecycle risk is held by the SPV. In order to ensure costs are recorded in the year in which they are incurred, routine monitoring is carried out on lifecycle costs, this compares actual spend to a pre-approved plan.

Small companies exemption

This report has been prepared in accordance with the special provisions applicable to small companies within Part 15 of the Companies Act 2006. Exemption has also been taken from the requirement to prepare a Strategic Report.

This report was approved by the board of directors on 27 June 2024 and signed by order of the board by:
Mike Forrest
For and on behalf of Infrastructure Managers Limited
Secretary
27 June 2024
DERBY SCHOOL SOLUTIONS LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 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 prepared the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland", 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 the financial statements, the directors are required to:

 

 

They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

The 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.

DERBY SCHOOL SOLUTIONS LIMITED
INDEPENDENT AUDITORS' REPORT
TO THE MEMBERS OF DERBY SCHOOL SOLUTIONS LIMITED
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
Report on the Audit of the Financial Statements
Opinion

We have audited the financial statements of Derby School Solutions Limited (‘the company’) for the year ended 31 December 2023 , which comprise the Statement of Comprehensive Income, Statement of Financial Position, 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.

DERBY SCHOOL SOLUTIONS LIMITED
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBERS OF DERBY SCHOOL SOLUTIONS LIMITED
FOR THE YEAR ENDED 31 DECEMBER 2023
- 5 -

Opinions on other matters prescribed by the Companies Act 2006

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

 

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 the directors for the financial statements

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.

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 auditors' report.

 

Extent to which 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.

DERBY SCHOOL SOLUTIONS LIMITED
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBERS OF DERBY SCHOOL SOLUTIONS LIMITED
FOR THE YEAR ENDED 31 DECEMBER 2023
- 6 -

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.

 

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. In areas of the financial statements where the risks were considered to be higher, we performed procedures to address each identified risk. 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 would become aware of it.

DERBY SCHOOL SOLUTIONS LIMITED
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBERS OF DERBY SCHOOL SOLUTIONS LIMITED
FOR THE YEAR ENDED 31 DECEMBER 2023
- 7 -

Use of this 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.

William King
Senior Statutory Auditor
For and on behalf of Johnston Carmichael LLP
Chartered Accountants & Statutory Auditors
7-11 Melville Street
Edinburgh
EH3 7PE
United Kingdom
27 June 2024
DERBY SCHOOL SOLUTIONS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
4,860,252
4,312,824
Cost of sales
(3,716,566)
(3,180,725)
Gross profit
1,143,686
1,132,099
Administrative expenses
(596,988)
(575,737)
Operating profit
546,698
556,362
Interest receivable and similar income
6
1,062,818
1,139,572
Interest payable and similar expenses
7
(517,514)
(866,065)
Profit before taxation
1,092,002
829,869
Tax on profit
8
(186,825)
(121,864)
Profit for the financial year
905,177
708,005
Other comprehensive income
Fair value (loss)/gain on cash flow hedging instruments, net of tax
(70,372)
1,204,239
Total comprehensive income for the year
834,805
1,912,244

This income statement has been prepared on the basis that all operations are continuing operations.

The notes on pages 11 to 21 form part of these financial statements.

DERBY SCHOOL SOLUTIONS LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
31 December 2023
- 9 -
2023
2022
Notes
£
£
£
£
Current assets
Debtors: amounts falling due within one year
9
6,045,936
1,466,061
Debtors: amounts falling due after one year
9
5,128,378
5,432,960
Cash at bank and in hand
1,128,629
5,882,771
12,302,943
12,781,792
Creditors: amounts falling due within one year
10
(2,026,479)
(2,130,504)
Net current assets
10,276,464
10,651,288
Creditors: amounts falling due after more than one year
11
(8,340,252)
(9,549,881)
Net assets
1,936,212
1,101,407
Capital and reserves
Called up share capital
15
1,000
1,000
Hedging reserve
16
(262,133)
(191,761)
Profit and loss reserve
17
2,197,345
1,292,168
Total shareholders' funds
1,936,212
1,101,407

The notes on pages 11 to 21 form part of these financial statements.

The financial statements were approved by the board of directors and authorised for issue on 27 June 2024 and are signed on its behalf by:
David Davies
Director
Company registration number 05071716 (England and Wales)
DERBY SCHOOL SOLUTIONS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
Called up share capital
Hedging reserve
Profit and loss reserve
Total
£
£
£
£
Balance at 1 January 2022
1,000
(1,396,000)
584,163
(810,837)
Year ended 31 December 2022:
Profit for the financial year
-
-
708,005
708,005
Other comprehensive income:
Fair value movements on cash flow hedging instruments, net of tax
-
1,204,239
-
1,204,239
Total comprehensive income for the year
-
1,204,239
708,005
1,912,244
Balance at 31 December 2022
1,000
(191,761)
1,292,168
1,101,407
Year ended 31 December 2023:
Profit for the financial year
-
-
905,177
905,177
Other comprehensive income:
Fair value movements on cash flow hedging instruments, net of tax
-
(70,372)
-
(70,372)
Total comprehensive income for the year
-
(70,372)
905,177
834,805
Balance at 31 December 2023
1,000
(262,133)
2,197,345
1,936,212
Included in the fair value movement on cash flow hedging instrument is £(1,440) (2022: £81,509) that was recycled through Interest Payable in the Statement of Comprehensive Income.

The notes on pages 11 to 21 form part of these financial statements.

DERBY SCHOOL SOLUTIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
1
Accounting policies
Company information

Derby School Solutions Limited ("the Company") is a private company limited by shares incorporated in the United Kingdom and is registered England and Wales. The registered office is located at Cannon Place, 78 Cannon Street, London, EC4N 6AF.

 

The principal activity of the company continued to be that of a Private Finance Initiative (PFI) Concessionaire for the Derby City Schools PFI Project, under the terms of a Project Agreement. The Agreement is for a term of 25 years and was entered into with Derby City Council (the authority), providing operation and support services functions at five replacement primary and secondary schools in the city of Derby.

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.

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 £.

The financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain financial assets and liabilities. The principal accounting policies adopted are set out below and have been consistently applied to the years presented, unless otherwise stated.

This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:

 

 

The financial statements of the company are consolidated in the financial statements of Derby School Solutions (Holdings) Limited]. These consolidated financial statements are available from its registered office, Cannon Place, 78 Cannon Street, London, EC4N 6AF.

1.2
Going concern

Atruet 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.

The financial statements are prepared on a going concern basis which the directors believe to be appropriate for the following reasons.

 

The Company prepares cash flow forecasts covering the expected life of the asset and so including the 12 month period from the date the financial statements are signed. In drawing up these forecasts, the Directors have made assumptions based upon their view of the current and future economic conditions that will prevail over the forecast period. Based on these forecasts the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future.

 

In light of this, the Directors continue to adopt the going concern basis of accounting in preparing the Company's annual financial statements.

DERBY SCHOOL SOLUTIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 12 -
1.3
Turnover

Turnover represents the services' share of the management services income received by the Company for the provision of a PFI (Private Finance Initiative) asset to the customer. This income is received over the life of the concession period. Management service income is allocated between turnover, finance debtor interest and reimbursement of the finance debtor so as to generate a constant rate of return in respect of the finance debtor over the life of the contract.

Revenue from the rendering of services is measured by reference to the stage of completion of the service transaction at the end of the reporting period provided that the outcome can be reliably estimated. When the outcome cannot be reliably estimated, revenue is recognised only to the extent that it is probable the expenses recognised will be recovered.

1.4
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.

 

The Company is obligated to keep a separate cash reserve in respect of future major maintenance and debt service costs, some of which has been placed in fixed term deposit accounts. This restricted balance, which is shown on the statement of financial position within the "cash at bank and in hand" balance for cash balances and within the "debtors due within one year" for amounts held in fixed term deposits, amounts to £4,454k at the year-end (2022: £5,039k).

1.5
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 statement of financial position when the company becomes party to the contractual provisions of the instrument.

Basic financial assets

Basic financial assets, which include debtors , cash and bank balances, are initially measured at transaction price including transaction costs and debtors 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

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.

DERBY SCHOOL SOLUTIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

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.

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 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.

Other financial liabilities

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 at each reporting date. The fair values of the derivatives have been calculated by discounting the fixed cash flows at forecasted forward interest rates over the term of the financial instrument. 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.

DERBY SCHOOL SOLUTIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

1.6
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.

1.7
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").

 

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.

 

The Compounded Reference rate is SONIA (sterling overnight index average) plus a 5 day credit adjustment spread.

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

For derivatives that are designated and qualify as cash flow hedges, the effective portion of changes in the fair value of the hedge is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss.

 

Any gain or loss previously recognised in other comprehensive income is reclassified to profit or loss when the hedge relationship ends. This occurs when the hedging instrument expires or no longer meets the hedging criteria, the forecast transaction is no longer highly probable, the hedged debt instrument is derecognised, or the hedging instrument is terminated.

1.8
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 Statment Of Comprehensive Income 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.

DERBY SCHOOL SOLUTIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
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 Statment Of Comprehensive Income, 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.

1.9
Finance debtor

The Company has taken the transition exemption in FRS102 Section 35.10(i) that allows the Company to continue the service concession arrangement accounting policies from previous UK GAAP.

 

The Company accounts for the concession asset based on the ability to substantially transfer all the risks and rewards of ownership to the customer, with this arrangement the costs incurred by the Company on the design and construction of the asset have been treated as a finance debtor within these financial statements.

1.10

Borrowings

Borrowings are recognised at amortised cost using the effective interest rate method. Under the effective interest rate method, any transaction fees, costs, discounts and premiums directly related to the borrowings are recognised in the Statement of Comprehensive Income over the life of the borrowings. Borrowings with maturities greater than twelve months after the reporting date are classified as non-current liabilities.

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.

DERBY SCHOOL SOLUTIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
2
Judgements and key sources of estimation uncertainty
(Continued)
- 16 -
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 less any impairment losses, 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 compare 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.

Fair value for derivative contracts

Fair values for derivative contracts are based on mark-to-market valuations provided by the contract counterparty. Whilst these can be tested for reasonableness, the exact valuation methodology and forecast assumptions for future interest rates or inflation rates are specific to the counterparty.

Service concession contract

Accounting for the service concession contract and finance debtor requires estimation of service margin, finance debtor interest rates and associated amortisation profile which is based on projected trading results to the end of the contract.

3
Turnover
2023
2022
£
£
Turnover analysed by class of business
Service fee
4,807,329
4,311,611
Passthrough and variation income
52,923
1,213
4,860,252
4,312,824

The whole of the turnover is attributable to the principal activity of the company wholly undertaken in the United Kingdom.

4
Auditors' remuneration
2023
2022
Fees payable to the company's auditors and associates:
£
£
For audit services
Audit of the financial statements of the company
15,021
15,650

The fee above is inclusive of the audit of the immediate parent entity Derby School Solutions (Holdings) Limited.

 

The total fee in relation to the 2023 year end audit is £16,200 (2022: £15,200). The reason for the reduction in fee shown above is due to an over accrual from a prior year.

DERBY SCHOOL SOLUTIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
5
Employees

The average number of persons employed by the Company during the financial year amounted to nil (2022: nil). The directors are not employed by the Company and did not receive any remuneration from the Company during the year (2022: £nil).

6
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
282,997
63,989
Interest received on finance debtor
778,413
874,097
Other interest income
1,408
201,486
1,062,818
1,139,572
7
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
561,368
645,002
Interest payable to group undertakings
203,288
221,063
Other interest payable and similar expenses
(247,142)
-
0
517,514
866,065
8
Taxation on profit
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
186,825
121,864

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:

2023
2022
£
£
Profit before taxation
1,092,002
829,869
Expected tax charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
256,845
157,675
Tax effect of income not taxable in determining taxable profit
(58,129)
(25,893)
Change in unrecognised deferred tax assets
1,160
2,132
Effect of change in corporation tax rate
(13,051)
(12,050)
Taxation charge for the year
186,825
121,864
DERBY SCHOOL SOLUTIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
8
Taxation on profit
(Continued)
- 18 -

In 2021 an increase in the corporation tax rate to 25% with effect from 1 April 2023 was substantively enacted. The 23.52% rate used above reflects 9 months of this new rate and 3 months of the previous rate of 19%.

 

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.

9
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
-
0
997
Finance debtor
1,509,634
1,436,355
Other debtors
4,515,237
7,714
Prepayments and accrued income
21,065
20,995
6,045,936
1,466,061
2023
2022
Amounts falling due after more than one year:
£
£
Finance debtor
5,041,000
5,369,039
Deferred tax asset (note 13)
87,378
63,921
5,128,378
5,432,960
Total debtors
11,174,314
6,899,021

Other financial assets relate to amounts held on term deposit which do not meet the definition of cash and cash equivalents.

10
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans
12
956,908
1,369,714
Other borrowings
12
316,600
336,251
Trade creditors
13,361
10,422
Corporation tax
134,075
86,476
Other taxation and social security
445
65,689
Accruals and deferred income
605,090
261,952
2,026,479
2,130,504
DERBY SCHOOL SOLUTIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
11
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans
12
6,810,639
8,047,076
Other borrowings
12
1,180,103
1,247,123
Derivative financial instruments
349,510
255,682
8,340,252
9,549,881

Included within creditors: amounts falling due after more than one year is an amount of £3,102,908 (2022: £4,947,856) in respect of liabilities payable or repayable by instalments which fall due for payment after more than five years from the reporting date.

 

The subordinated loan due to a parent company is valued at £1,496,703 (2022: £1,583,374) at a nominal interest rate of 14% per annum repayable over the concession period from 2007. During the year ended 31st December 2023, the company has made repayments of £107,726 (2022: £25,300) in agreement with the parent company.

 

Included within bank loans are arrangement fees of £92,881 (2022: £106,140) which will be written off to the profit and loss account over the period of the loan.

12
Loans and overdrafts
2023
2022
£
£
Bank loans
7,767,547
9,416,790
Loans from group undertakings
1,496,703
1,583,374
9,264,250
11,000,164
Payable within one year
1,273,508
1,705,965
Payable after one year
7,990,742
9,294,199

The bank loan is secured over all the assets, rights and undertakings of the Company.

The company is committed to senior debt facilities of £31,838,367. This loan is under a nonrecourse financing agreement and is repayable over 25 years following financial close in six monthly instalments commencing 31 March 2009, at a rate of 4.885% and 5.23% per annum.

 

Other borrowings in note 10 & 11 relates to loans from Group undertakings and incurs interest at a nominal interest rate of 14% per annum repayable over the concession period from 2007

DERBY SCHOOL SOLUTIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
13
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:

Assets
Assets
2023
2022
Balances:
£
£
Deferred tax on derivative financial instrument
87,378
63,921
2023
Movements in the year:
£
Asset at 1 January 2023
(63,921)
Credit to other comprehensive income
(23,457)
Asset at 31 December 2023
(87,378)

The net deferred tax asset expected to reverse in 2024 is £nil (2023: £nil).

14
Financial instruments
2023
2022
£
£
Carrying amount of financial liabilities
Measured at fair value through profit or loss
- Other financial liabilities
349,160
255,426

The fair values of the interest rate swap have been calculated by discounting the fixed cash flows at forecasted forward interest and RPI rates over the term of the financial instrument. The bank borrowing and finance debtor are both held at amortised cost.

15
Called up share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary Shares of £1 each
1,000
1,000
1,000
1,000

There is a single class of ordinary share. There are no restrictions on the distribution of dividends and the repayment of capital.

16
Hedging reserve

The hedging reserve records fair value movements on cash flow and net investment hedging instruments.

17
Profit and loss reserve

Retained earnings records retained earnings and accumulated losses.

DERBY SCHOOL SOLUTIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
18
Related party transactions

The Company is a wholly owned subsidiary of Derby School Solutions (Holdings) Limited (DSSHL) which in turn is a wholly owned subsidiary of Infrastructure Investments Holdings Limited (IIHL).

 

IIHL has a subordinated loan balance, including accrued interest, of £1,496,703 (2022: £1,583,374) with the Company.

 

During the year, the company paid subordinated debt interest of £203,288 (2022: £221,063) and Directors fees of £135,365 (2022: £120,203). The Directors fees accrued at the end of the financial year end was £135,365 (2022: £nil). The subordinated debt interest accrued at the end of the financial year was £155,609 (2022: £166,941) and is included in amounts owed to group undertakings.

19
Ultimate controlling party

The Company is a wholly owned subsidiary undertaking of Derby School Solutions (Holdings) Limited and incorporated in the United Kingdom The registered address of this company is Cannon Place, 78 Cannon Street, London, England, EC4N 6AF.

The ultimate parent company HICL Infrastructure Plc, a company listed on the London Stock Exchange and registered at One Bartholomew Close, Barts Square, London, England, EC1A 7BL.

 

The largest and smallest group in which the results of the Company are consolidated is that headed by Derby School Solutions (Holdings) Limited. The consolidated accounts of this group are available to the public from its registered address which is stated above.

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