The directors present the strategic report for the year ended 31 March 2024.
Principal Activities
The principal activity of the company during the year was the provision and maintenance of six primary schools and two secondary schools in Dundee under the Government's Private Finance Initiative Scheme.
On 27 February 2007 Discovery Education plc entered into a contract with Dundee City Council to design, construct, finance and operate six primary schools and two secondary schools in Dundee under the Government's Private Finance Initiative Scheme. Construction of the final two schools was completed in April 2009.
At 31 March 2024 the company had retained losses of £6,991,007 (2023: £4,658,142). In the current year the company made a loss of £2,332,865 (2023: Loss of £4,754,731) primarily as a result of inflation increasing both the valuation of the index-linked bond and related interest payments.
The company uses Key Performance Indicators to provide analysis of the development, performance and position of the company.
There were service deductions of £10,043 (2023: £7,287) during the year. These were passed on in full to the facilities management provider.
The company has exposures to a variety of financial risks which are managed with the purpose of minimising any potential adverse effect on the company's performance. The board has established risk management policies for managing each of these risks and they are summarised below:
Interest rate risk and Inflation risk
The company mitigated its interest rate risk at the inception of the project by ensuring that the majority of its debt is at a fixed rate or a fixed rate uplifted by RPI increases. The company's exposure to interest and inflationary fluctuations will continue to be monitored. The company's project revenue and most of its costs were linked to inflation at the inception of the project.
Contract Performance risk
The company's contract performance risk is mostly mitigated as facilities management services and lifecycle risk has been subcontracted to a third party provider. The performance of the subcontractor is being monitored every month to ensure that it stays at the required standard.
Cash Flow and Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fall due. The company adopts a prudent approach to liquidity management by maintaining sufficient cash and liquid resources to meet its obligations. The nature of the project is such that the cash flows are reasonably predictable. Surplus cash is placed on deposit with institutions of a suitable credit quality.
Credit risk
Credit risk is the risk of financial loss to the company if a counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the company's receivables from customers. The company receives its revenue from Dundee City Council. The directors monitor amounts due carefully and do not consider there to be a significant credit risk. The company does not undertake financial instrument transactions which are speculative or unrelated to the company's trading activities. Board approval is required for the use of any new financial instruments.
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, which is the ratio of the company's net cash inflows available for debt service relative to actual debt service payments. At the year end this ratio was 1.32 (2023: 1.13). The company has been performing well and has been compliant with the covenants laid out in the group loan agreement.
The company's principal financial instruments comprise index linked bonds, which are listed on the London Stock Exchange main market, subordinated debt, cash at bank and short term deposits and the finance debtor. The main purpose of these financial instruments is to ensure, via the terms of the various financial instruments, that the profile of the debt service costs is tailored to match expected revenues arising from the concession contract.
The company has issued £86,800,000 of 1.948% Guaranteed Secured Index-Linked Bonds. The bonds are repayable in instalments from 2010 until the final repayment in 2037.
The following disclosures describes how the Board has had regard to the matters set out in section 172 (1)(a) to (f) and forms the Directors' Statement required under section 414CZA of the Companies Act 2006.
The likely consequences of any decision in the long term
The purpose of the company is to design, build, finance and operate six primary schools and two secondary schools under the Government's Private Finance Initiative scheme over a concession period of 30 years. The company's aim is to work in partnership with Dundee City Council to provide effective infrastructure of a high quality standard. This shapes the company's values and objectives and defines long term success. Decisions are taken in the context of this ethos of working in partnership. The detailed PFI contracts set out the relationships with Dundee City Council, debt funders, maintenance and operations contractors. These parties are the company's main stakeholders. Debt Funders are provided with operational and financial reports on a quarterly basis. The operational management teams works closely with Dundee City Council and the maintenance and operations contractors to plan any works on the Schools. The company ensures the schools are maintained to the required standards.
The interest of the Company's employees
The company's activities are all outsourced through service agreements and therefore it does not have any employees. The company does however, pay due regard to the interests and safety of all those engaged by contractors to the company to perform services on its behalf.
The needs to foster the Company's business relationships with suppliers, customers and others
The Board is an experienced team with representatives of all shareholders. The Board members have experience of working with other key stakeholders, which enables them to identify the long term consequences of the principal decisions. The Board meet on a quarterly basis and information is provided at the meetings by the operational and financial management teams. This information will have regard to health and safety matters, the operational and financial performance of the project, planned major maintenance works and relationships with the client and the main subcontractors. The operational and financial management team make recommendations to the Board of directors. These are considered at the quarterly board meetings. These Board meetings are minuted and actions arising are monitored. Decisions made by the directors that have a financial impact are accounted for in a concession length forecast of financial performance.
The impact of the Company's operations on the community and environment
The company outsources all of its activities and has no direct energy consumption. Notwithstanding that the company is committed to minimising environmental disruption from its activities. The Board upholds the company's environmental policy in all its activities and require all parties to the arrangement to do the same. The Board recognises that the company is a key partner in the delivery of public infrastructure and encourages its partners in considering and delivering Environmental, Social and Governance (ESG) values and initiatives to achieve socially responsible investing.
The desirability of the company maintaining a reputation for high standards of business conduct
The company is committed, in its day to day operations and dealings with affiliates to uphold the high standard of business conduct and integrity. The directors are not responsible for setting a "business culture" in the traditional sense, but are committed to understanding the culture of the manager and the service providers and raise any concerns in this regard if necessary.
The need to act fairly between members of the company
Principal decisions of the company are those that are key to the company's success. These include but are not limited to: decisions impacting upon the relationships between the parties, decisions impacting upon the availability and safety of the schools and decisions impacting financial returns to the shareholders.
The principal decisions made by the Board of directors during the year ended 31 March 2024 related in the main to major maintenance expenditure.
Major maintenance expenditure is planned following asset condition surveys, with the aim to maintain the asset at the required contractual standards and to ensure that the asset will meet the required contractual standards at the end of the concession. The delivery of these works is carefully planned with the maintenance and operation contractors and client, to ensure minimum disruption to the users of the Schools and the safety of the contractors' employees.
This report was approved by the Board of directors and signed on behalf of the board by:
The directors present their report and the audited Annual Report and Financial Statements of Discovery Education plc ("the company") for the year ended 31 March 2024.
The results for the year are set out on page 14.
The directors do not recommend the payment of a dividend.
Performance Review
The loss for the year, after taxation, amounted to £2,332,865 (2023: Loss of £4,754,731) and the company had net liabilities as at 31 March 2024 of £6,517,007 (2023: £4,184,142). The customer, Dundee City Council, continued to make unitary payments as they fell due during the year. A review of the company performance is set out in the Strategic Report.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Details of the financial instruments are noted in the Strategic Report.
No significant changes are expected to the company's activities, as set out in the Strategic Report, in the foreseeable future.
Qualifying Indemnity Provision
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.
A Resolution to reappoint Johnston Carmichael LLP as auditor will be proposed at the Annual General Meeting.
The company prepares a detailed financial model semi-annually which forecasts cashflows, financial results and the financial position of the company through to the end of the concession. In preparing these financial models, the directors include assumptions based upon expected future economic conditions, including forecast inflation and interest rates, and include costs profiled on known and expected expenditure. The company's operating cash flows are largely dependent upon unitary charge receipts from Dundee City Council and the directors expect these amounts to be recovered even under the most severe economic conditions.
Based on these forecasts, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the remainder of the concession and continue to meet debt covenants and debt repayments as they fall due. In light of this, the directors continue to adopt the going concern basis of accounting in preparing the company's annual financial statements.
Basis for opinion
We planned our audit by first obtaining an understanding of the company and its environment, including its key activities delegated by the Board to relevant approved third-party service providers and the controls over provision of those services.
We conducted our audit using information maintained and provided by Resolis Limited (the “Management Service Provider”) to whom the company has delegated the provision of services.
We tailored the scope of our audit to reflect our risk assessment, taking into account such factors as the project’s financial model and the nature of the activities within the company, the involvement of the Management Service Provider, the accounting processes and controls, and the industry in which the company operates.
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in the evaluation of the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, we do not provide a separate opinion on these matters.
We summarise below the key audit matter in arriving at our audit opinion above, together with how our audit addressed this matter and the results of our audit work in relation to this matter.
Revenue recognition and allocation of unitary charge receipts
The Company is in a service concession arrangement with the Dundee City Council to design, construct, finance and operate six primary schools and two secondary schools in Dundee.
Revenue in the year of £10.4m (2023: £8.9m) consists of unitary charge income of £15.5m offset by finance debtor amortisation of £3.1m, interest adjustments of £3m and unitary charge control account movement of £1m, plus £0.1m passthrough costs (see note 3 and accounting policy note 1).
Accounting for the service concession contract and finance debtor requires an allocation of unitary charge income based on estimation of service margins, finance debtor interest and associated amortisation profile which is based on forecast results of the contract. Given the level of estimation and judgement required, we consider this to be the most significant assessed risks of material misstatement due to error.
Central to our audit response was obtaining audit evidence and evaluating management’s estimate and allocation of revenue recognised.
Our audit response included:
reaffirming our understanding of the key contractual terms and establishing whether any contract revenue variations had arisen via review of the board minutes and latest operating model;
assessing whether performance of the underlying service concession is in line with the contract and establishing whether any performance issues had arisen;
enquiring of management, and corroborating responses of, any issues concerning revenue between the key contractual partners;
performing analytical procedures to identify any unusual or unexpected revenue relationships;
recalculating the unitary charge received by taking the base charge per the project agreement and uplifting for RPI;
reconciling the finance income and amortisation to the finance debtor reconciliation to ensure the allocation methodology was in line with our expectations, contractual terms and relevant accounting standards;
performing an assessment on the service margins used in the year via recalculation from the current operating model by reference to actual service costs;
ensuring calculations of revenue were performed accurately and recognised consistently based on historical comparisons; and
agreeing a sample of monthly income receipts to invoice and bank statements.
The procedures outlined above did not identify any material misstatements in the recognition of revenue.
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality in determining the nature and extent of our work and in evaluating the results of that work.
Materiality Measure | Value |
Materiality for the financial statements as a whole – we have set materiality as 0.95% of gross assets at planning (PY: 0.95%) as we believe that gross assets is the primary performance measure used by investors and is the key driver of shareholder value. It is also a standard industry benchmark for materiality for similar entities in this sector and we determined the measurement percentage to be commensurate with the risk and complexity of the audit and the Company’s listed status. |
£940,500 (2023: £946,000)
|
Performance materiality – performance materiality represents amounts set by the auditor at less than materiality for the financial statements as a whole, to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole. In setting this we consider the Company’s overall control environment and our past experience of the audit that indicates a lower risk of material misstatements. Based on our judgement of these factors, we have set performance materiality at 75% (PY: 75%) of our overall financial statement materiality. |
£705,300 (2023: £709,500)
|
Specific materiality – recognising that there are transactions and balances of a lesser amount which could influence the understanding of users of the financial statements we calculate a lower level of materiality for testing such areas. We have set a specific materiality of £10,000 in respect of related party transactions. We used our judgement in setting these thresholds and considered our past experience of the audit, the history of misstatements and industry benchmarks for specific materiality. | £10,000 (2023: £10,000)
|
Audit reporting threshold – we agreed with those charged with governance that we would report to them all differences in excess of 5% of overall materiality in addition to other identified misstatements that warranted reporting on qualitative grounds, in our view. For example, an immaterial misstatement as a result of fraud. |
£47,000 (2023: £47,000)
|
During the course of the audit, we reassessed initial materiality and found no reason to alter the basis of calculation used at year-end.
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. Our evaluation of the directors’ assessment of the company’s ability to continue to adopt the going concern basis of accounting included:
Evaluating the director’s method of assessing going concern, including consideration of market conditions and uncertainties such as COVID-19;
Assessing and challenging the forecast cashflows and associated sensitivity modelling used by the directors in support of their going concern assessment;
Evaluating and challenging the ability to meet current and future lending covenants; and
Assessing the adequacy of the company’s going concern disclosures included in the Annual Report.
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
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 Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
As explained more fully in the directors' Responsibilities Statement set out on page 6, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Extent to which the audit is 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.
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:
United Kingdom Generally Accepted Accounting Practice, including FRS 102;
Listing rules continuing obligations (Chapters 17);
Financial Conduct Authority (FCA) rules; and
UK Companies Act 2006.
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 company’s 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 revenue recognition (audit procedures performed in response to this risk are set out in the section on key audit matters above) and management override of controls (procedures in response to this risk are included below).
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:
Completion of appropriate checklists and use of our experience to assess the company’s compliance with the Companies Act 2006 and the Listing Rules;
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;
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;
Reviewing the level of and reasoning behind the company’s procurement of legal and professional services 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 described above 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.
Other matters which we are required to address
We were appointed by the Board on 18 May 2017 to audit the financial statements for the year ended 31 March 2017 and subsequent financial periods. The period of our total uninterrupted engagement is 8 years, covering the years ended 31 March 2017 to 31 March 2024.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the company and we remain independent of the Company in conducting our audit.
Our audit opinion is consistent with the additional report to the Directors.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
Discovery Education plc ("the company") is a public company limited by shares and is incorporated and domiciled in Scotland. The address of its registered office is Exchange Tower, 11th Floor, 19 Canning Street, Edinburgh, Scotland, EH3 8EG.
The principal activity of the company during the year was the provision and maintenance of six primary schools and two secondary schools in Dundee under the Government's Private Finance Initiative Scheme.
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 £.
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:
• Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures.
The company has also taken advantage of the exemption for Section 33 'Related Party Disclosures': Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Discovery Education (Holdings) Limited. These consolidated financial statements are available from its registered office, Exchange Tower, 11th Floor, 19 Canning Street, Edinburgh, EH3 8EG.
Finance debtor
The company has taken the transition exemption in FRS 102 section 35.10(i) that allows the Company to continue the service concession arrangement accounting policies from previous UK GAAP.
The company is accounting 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 assets have been treated as a finance debtor within these financial statements.
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 the 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.
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 Balance Sheet. 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 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.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
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.
Lifecycle
The company is responsible for the lifecycle costs associated with its principal activity, however risk here is mitigated by passing on lifecycle risk to a third party facilities management company. Lifecycle costs are accounted for on an accruals basis as disclosed in the indicative lifecycle works program or lifecycle tracker as used by all parties through the operating phase of the concession period, with any underspend included within accruals and creditors due less than one year.
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revision to the accounting estimates made are recognised in the period in which the estimate is revised, if the revision effects only that period, or in the period of revision and future periods if the revision offsets both current and future periods.
Accounting estimates and assumptions are made concerning the future and, by their nature, will rarely equal the related actual outcome. The key assumptions and other sources of estimation uncertainty are as follows:
i) Accounting for service concession arrangements
Accounting for service concession contract and finance debtors requires estimation of service margins, finance debtor interest rates and associated amortisation profile which is based on forecast results of the contract. These were forecast initially within the operating model at financial close and are updated on a six monthly basis throughout the duration of the project.
The whole of the turnover is attributable to the principal activity of the Company wholly undertaken in the United Kingdom.
Included in the fee above are costs borne for the audit of the immediate parent entity Discovery Education (Holdings) Limited. Auditor's remuneration is payable to Johnston Carmichael LLP.
The average monthly number of persons (including directors) employed by the company during the year was: nil (2023: nil).
Particulars of Employees and Directors
The directors did not receive any remuneration directly from the company during the year (2023: £nil). There were no employees in the financial year other than the directors (2023: nil).
Elgin Infrastructure Limited, one of the shareholders received fees of £16,152 (2023: £14,189) from the company during the year in respect of management services by the directors.
Crimson Project Investments Limited, one of the shareholders received fees of £16,152 (2023: £14,189) from the company during the year in respect of management services by the directors.
The actual credit for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
On 1 April 2023 the Corporation Tax rate in the United Kingdom changed from 19% to 25%. As disclosed in the Deferred Tax note, losses incurred in the current year are expected to reverse within 54 months of the year end.
Other financial assets include amounts held within deposit accounts with a maturity of greater than three months but less than eight months from the initial deposit date.
Included within accruals and deferred income are amounts recognised in respect of future payments due on lifecycle underspends of £8,324,482 (2023: £7,407,831), the timings of which are uncertain.
The Index-Linked Senior Guaranteed Secured Bonds, which are listed on the London Stock Exchange main market, have a nominal value of £86,800,000 and mature on 31 March 2037. Capital repayments are such that they pay down a percentage of each bond note in issue rather than the individual bond notes in their entirety and at the year end £37,762,000 of the nominal value of the bonds issued had been repaid. The bonds are the subject of and have the benefit of a bond trust deed dated 27 February 2007 between the Company, Ambac Assurance UK Limited and Prudential Trustee Company Limited in its capacity as bond trustee. The bonds are index linked, assume a base RPI index of 198.5 and attract interest at 1.948% per annum. Repayment of the bond including indexation is half yearly and commenced on 31 March 2010. The bonds are held at amortised cost.
Included within creditors: amounts falling due after more than one year is an amount of £60,590,437 (2023: £57,395,966) in respect of liabilities payable or repayable otherwise than by instalments which fall due for payment after more than five years from the reporting date.
Prudential Trustee Company Limited has a floating charge over all the assets of the Company for all present or future, actual or contingent obligations.
Amounts owed to group undertakings comprises subordinated debt. The subordinated debt is unsecured and attracts an effective interest at 14% per annum payable half yearly. The debt will be fully repaid by 31 March 2038. The subordinated debt is held at amortised cost.
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
The deferred tax asset set out above is expected to reverse within 4-5 years and relates to the utilisation of tax losses against future expected profits of the same period.
There is a single class of ordinary share. There are no restrictions on the distribution of dividends and the repayment of capital.
Profit and Loss Reserves - This reserve records accumulated profits and losses.
The immediate parent undertaking is Discovery Education (Holdings) Limited, a company incorporated in Scotland.
The accounts of Discovery Education (Holdings) Limited can be obtained from Exchange Tower, 11th Floor, 19 Canning Street, Edinburgh, EH3 8EG.
At the year end Discovery Education (Holdings) Limited is owned 49.25% by Elgin Infrastructure Limited, which is a joint venture between Cobalt Project Investments Limited and Ednaston Project Investments Limited, and 49.25% by Crimson Project Investments Limited and 1.5% by Dundee City Council.
The directors consider the material transactions undertaken by the Company during the year with related parties were as follows:
The following disclosures are with entities in the group that are not wholly owned.
Discovery Education plc is owned 99.9% by Discovery Education (Holdings) Limited. During the year interest of £773,891 (2023: £575,467) was payable from the Company to Discovery Education (Holdings) Limited. Interest of £nil (2023: £nil) was due to Discovery Education (Holdings) Limited at the year end.
During the year £720,843 (2023: £nil) relating to subordinated debt principal was paid to Discovery Education (Holdings) Limited. Subordinated debt due to Discovery Education (Holdings) Limited at the year end was £4,263,229 (2023: £4,999,348).
Discovery Education (Holdings) Limited is owned 49.25% by Elgin Infrastructure Limited. The Company paid £16,152 (2023: £14,189) to Elgin Infrastructure Limited for the provision of directors. £nil (2023: £nil) remained outstanding at the year end.
Discovery Education (Holdings) Limited is owned 49.25% by Crimson Project Investments Limited. The Company paid £16,152 (2023: £14,189) to Crimson Project Investments Limited for the provision of directors. £nil (2023: £nil) remained outstanding at the year end.
During the year Resolis Limited provided management services to Discovery Education plc. The Company paid £141,613 (2023: £124,402) to Resolis Limited for the provision of management services, £nil (2023: £nil) remained outstanding at the year end.