Company registration number 08102633 (England and Wales)
FIRE SERVICE COLLEGE LIMITED
ANNUAL REPORT AND UNAUDITED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
FIRE SERVICE COLLEGE LIMITED
COMPANY INFORMATION
Directors
Capita Corporate Director Limited
R Holroyd
Secretary
Capita Group Secretary Limited
Company number
08102633
Registered office
65 Gresham Street
London
England
EC2V 7NQ
Banker
Barclays Bank PLC
1 Churchill Place
London
United Kingdom
E14 5HP
FIRE SERVICE COLLEGE LIMITED
CONTENTS
Page
Strategic report
1 - 6
Directors' report
7 - 8
Income statement
9
Balance sheet
10 - 11
Statement of changes in equity
12
Notes to the financial statements
13 - 30
FIRE SERVICE COLLEGE LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The Directors present their Strategic report and financial statements for the year ended 31 December 2023.
Fire Service College Limited ('the Company') is a wholly owned subsidiary (indirectly held) of Capita plc. Capita plc, along with its subsidiaries are hereafter referred to as 'the Group'. The Company operates within the Capita Public Service division of the Group.
Principal activities
The principal activity of the Company continues to be that of providing training for the fire and rescue services (FRSs), emergency responders and a wide spectrum of commercial and public sector clients globally.
Review of the business
As shown in the Company’s income statement on page 9, the Company's revenue has increased from £18,970,798 in 2022 to £20,946,628 in 2023. The Company's operating profit has decreased from £1,225,869 in 2022 to operating loss of £888,473 in 2023. Despite experiencing growth and inflationary price increases that boosted revenue in 2023, the Company reported reduced profits for the year. This reduction was mainly due to the increase in utility prices and higher depreciation and amortisation expenses arising from increased investments in capital expenditure.
In addition, towards the end of 2022 the Group reorganised its technology software and solutions business and group support services business by transferring the underlying trade and assets from various Group companies in the UK into Capita Shared Services Limited (‘CSSL’). CSSL’s principal activity is the provision of certain head office and shared services, such as finance and HR support, payroll, IT and software services, to other companies within the Group. CSSL recovers the cost of providing these shared services by charging the Group companies that benefit from them, including the Company. Prior to the aforementioned reorganisation, the charges for the provision of these services were lower.
The balance sheet on pages 10 to 11 of the financial statements shows the Company's financial position at the year end. Net liabilities have increased from £12,314,463 in 2022 to £13,598,314 in 2023. Details of amounts owed by/to its parent company and fellow subsidiary companies are shown in notes 9 and 11 to the financial statements.
Despite the Company being in a net liability position, the ultimate parent company has undertaken to provide continuing financial support as necessary and to the extent it is able to do so until December 2025.
The key financial performance indicators used by the Group, on a consolidated basis, include adjusted revenue, adjusted profit before tax, adjusted basic/diluted earnings per share, free cash flow excluding business exits, and gearing ratios. The Group manages its operations on a divisional basis and consequently, some of these indicators are monitored at a divisional level. The performance of the Capita Public Service division of the Group is discussed in the Group’s Annual Report which does not form part of this report.
FIRE SERVICE COLLEGE LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Principal risks and uncertainties
The Company is exposed to a wide range of risks that, should they materialise, could have a detrimental impact on financial performance, reputation or operational resilience. The Company’s risk management framework provides a consistent approach to the identification, assessment, monitoring and reporting of risks and opportunities. The risk management process is based on risk registers and risk reporting at the established risk governance committees. Key risks are documented in the risk registers and have assigned risk owners who review them regularly, and report on them at least quarterly, as part of the risk reporting process. The strength of existing controls is evaluated to determine whether any further mitigating actions are needed to manage the risk level to within the risk appetite set by the Board.
The principal risks for the Company are:
Profitable growth
Attract new clients and retain existing clients on appropriate commercial terms.
Contract performance
Deliver services to clients in line with contractual and legal obligations.
Innovation
Innovate and develop new customer value propositions with speed and agility.
People attraction and retention
Attract, develop, engage and retain the right talent.
Financial stability
Maintain financial stability and achieve financial targets.
Cyber security
Protect our systems, networks and programs from unauthorised use and access.
ESG
Comply with regulatory and contractual requirements to drive a purpose driven organisation with the right focus on governance.
Safety and Health
Protect the safety, health and duty of care of all Capita’s employees, the people we work with and those affected by our acts and omissions.
Data governance and data privacy
Manage our data effectively (both clients and Capita) as a strategic asset across the organisation.
As a subsidiary of Capita plc, the Company is subject to controls and risk governance techniques applied across all the Group's businesses. Details of the specific risk assessments and mitigating actions are outlined on pages 57-63 of the Group's 2023 Annual Report.
FIRE SERVICE COLLEGE LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
Section 172 statement
Capita plc's section 172 statement applies to its Divisions and the Company to the extent it relates to the Company's activities. Common policies and practices are applied across the Group through divisional management teams and a common governance framework. The following disclosure describes how the Directors have regard to the matters set out in section 172(1)(a) to (f) and forms the Directors' statement as required under section 414CZA of the Companies Act 2006.
Further details of the Group's approach to each stakeholder are provided in Capita plc's section 172 statement on pages 45, 46 and 47 of Capita plc's 2023 Annual Report.
Our People
Why they are important
They deliver our business strategy; they support the organisation to build a values-based culture; and they deliver our products and services ensuring client satisfaction.
What matters to them
Flexible working; learning and development opportunities leading to career progression; fair pay and benefits as a reward for performance; and two-way communication and feedback.
How we engaged
People surveys
Regular all-employee communications
Employee director on the Capita plc Board
Employee focus groups and network groups
Workforce engagement on remuneration
Regular ‘breakfast’ sessions with the Executive Committee for our colleagues
Topics of engagement
Creating an inclusive workplace
Health and wellbeing
Speak Up policy
Directors’ remuneration
Acting on survey feedback
The career path framework
The redundancy consultation programme announced in November 2023
Outcomes and actions
The 2023 employee survey showed key indices had either improved or remained steady with a five-point increase in the eNPS compared with 2022. 63% of colleagues who responded felt proud to work at Capita. We are developing and delivering a range of action plans, including ensuring our leaders feel confidence in, and ownership of Capita’s strategy, plans and successes, developing inclusive opportunities for internal career mobility.
In December 2023, the Board agreed that while the appointment of employee directors had been successful, it was appropriate for the Board to consider a wider level of engagement with colleagues, including site visits arranged for individual directors to meet with local management and colleagues at Capita’s businesses. In addition, the Board has appointed Nneka Abulokwe as the designated non-executive director to engage with colleagues. Adolfo Hernandez, our new CEO, has also commenced a series of breakfast sessions to meet with colleagues of differing seniority and at different locations throughout the Group. Janine Goodchild stepped down from the Board as an employee director on 31 December 2023.
The UK real living wage increase was applied from 1 April 2023. At the end of 2023, we took the difficult decision to withdraw from the UK’s real living wage. Since 2020, the Group has increased the salaries of our lowest earners by 22% and the 2024 real living wage increase of 10.1% was not something we could commit to given the need for Capita to remain cost competitive and reflecting the fact that this is not a cost we are able to pass on to clients.
FIRE SERVICE COLLEGE LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
The global career path framework which defines career levels, career job content, and reward framework within Capita was launched during the year.
In October 2023, Capita was recognised by Forbes, as being one of the top companies for women, ranking at number 18 out of 400 global companies on their list.
We continued to promote our Speak Up policy throughout the organisation.
Risks to stakeholder relationship
Our ability to recruit due to the national and global labour market demand for resources
Our ability to retain and develop people, impacting our quality of service and our financial performance
Our ability to evolve our culture and practices in line with our responsible business agenda
Key metrics
Voluntary attrition, employee NPS, employee engagement Index and people survey completion level.
Clients and customers
Why they are important
They are recipients of Capita’s services; and Capita’s reputation depends on consistent and timely delivery of the services they need from us.
What matters to them
High-quality service delivery; delivery of transformation projects within agreed timeframes; and responsible and sustainable business credentials.
How we engaged
Client meetings and surveys
Regular meetings with government stakeholders and annual review with the Cabinet Office
Through our customer advisory boards
Through our senior client partner programme giving an experienced single point of contact for key clients and customers
Introductory meetings and correspondence with the new CEO and new interim CEO, Capita Public Service
Topics of engagement
Current service delivery
Transition and mobilisation of services
Capita’s digital transformation capabilities
Possible future services
Co-creation of client value propositions
The cyber incident
Ongoing benefits of hybrid working on client services
Outcomes and actions
Feedback provided to business units to address any issues raised; client value proposition teams supporting divisions with co-creation ideas; direct customer and sector feedback; and senior client partner programme undertaking client-focused growth sprints to build understanding of client issues and ideas to help address them.
Risks to stakeholder relationship
Loss of business by not providing the services that our clients and customers want
Damage to reputation by not delivering to the requirements of our clients and customers
Loss of customers for our clients
Key metrics
Customer NPS; specific feedback on client engagements.
FIRE SERVICE COLLEGE LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 5 -
Suppliers and Partners
Why they are important
They share our values and help us deliver our purpose; maintain high standards in our supply chain; and achieve social, economic and environmental benefits aligned to the Social Value Act. Our suppliers and partners provide additional expertise, skill and technology, elevating our offering.
What matters to them
Payments made within agreed payment terms; clear and fair procurement process; building lasting commercial relationships; and working inclusively with all types of business.
How we engaged
Supplier meetings throughout source to procure process
Regular reviews with suppliers
Supplier questionnaires and risk assessments
Topics of engagement
Outcomes and actions
Our supplier charter, which is available on our website, remains at the core of strengthening our commitments and sets out how we conduct business in an open, honest and transparent manner, and what we expect of our suppliers. This year, it was refreshed and relaunched.
To understand Capita’s Scope 3 carbon footprint, a supplier engagement programme was also undertaken with suppliers accounting for £1bn annual spend (over 50% of the supply chain by spend) to ask them to disclose their carbon emissions to CDP.
During 2023, 99% of our suppliers were paid within 60 days.
Risks to stakeholder relationship
Key metrics
99% of supplier payments within agreed terms; SME spend allocation; and supplier diversity profile.
FIRE SERVICE COLLEGE LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 6 -
Society
Why they are important
Capita is a provider of key services to government impacting a large proportion of the population.
What matters to them
Social mobility; youth skills and jobs; digital inclusion; diversity and inclusion; climate change; business ethics; accreditations and benchmarking; and cost of living crisis.
How we engaged
Membership of non-governmental organisations
Charitable and community partnerships
External accreditations and benchmarking
Working with clients, suppliers and the Cabinet Office
Topics of engagement
Youth employment
Workplace inequalities
Diversity & inclusion
Climate change
Outcomes and actions
Youth and employability programme such as Social Shifters; ranked 18 on the Forbes Global list of top employers for women; a 5% reduction in our gender pay gap (compared with 2022); awarded Employer’s Network for Equality and Inclusion; achieved a silver Tidemark and an A CDP (Carbon Disclosure Project) score as well as a silver medal in EcoVadis for Capita plc.
Risks to stakeholder relationship
Key metrics
Community investment, workforce diversity and ethnicity data, including pay gaps.
R Holroyd
Director
20 September 2024
FIRE SERVICE COLLEGE LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 7 -
The Directors present their Directors' report and financial statements for the year ended 31 December 2023.
Results and dividends
The results for the year are set out on page 9.
No dividend was paid or proposed during the year (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:
Capita Corporate Director Limited
R Holroyd
Qualifying third party indemnity provisions
The Company has granted an indemnity to the directors of the Company against liability in respect of proceedings brought by third parties, subject to the conditions set out in the Companies Act 2006. Such qualifying third-party indemnity provisions remains in force as at the date of approving the directors' report.
Political donations
The Company made no political donations and incurred no political expenditure during the year (2022: £nil).
Environment
The Company recognises the importance of its environmental responsibilities, monitors its impact on the environment, and designs and implements policies to reduce any damage that might be caused by the it’s activities. The Company operates in accordance with Group policies, which are described in the Group’s 2023 annual report that does not form part of this report. Initiatives designed to minimise the Company’s impact on the environment include safe disposal of waste, recycling and reducing energy consumption.
Employees
Details of the number of employees and related cost can be found in note 16 to the financial statements.
Statement of Directors' responsibilities
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 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;
assess the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
use the going concern basis of accounting unless they intend to liquidate the Company or to cease operations, or have not realistic alternative but to do so.
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 responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.
FIRE SERVICE COLLEGE LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
Strategic report
In accordance with s414c(11) of the Companies Act 2006, the Company has set out certain information in its Strategic report that is otherwise required to be disclosed in the Directors' report. This includes information regarding results and activities and a description of the principle risks and uncertainties facing the Company.
On behalf of the board
R Holroyd
Director
20 September 2024
FIRE SERVICE COLLEGE LIMITED
INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
2023
2022
Notes
£
£
Revenue
3
20,946,628
18,970,798
Cost of sales
(10,121,746)
(7,785,389)
Gross profit
10,824,882
11,185,409
Administrative expenses
(11,713,355)
(9,959,540)
Operating (loss)/profit
4
(888,473)
1,225,869
Net finance cost
5
(184,743)
(69,694)
(Loss)/profit before tax
(1,073,216)
1,156,175
Income tax (charge)/credit
6
(210,635)
50,785
(Loss)/profit and total comprehensive (expense)/income for the year
(1,283,851)
1,206,960
The income statement has been prepared on the basis that all operations are continuing operations.
The notes and information on pages 13 to 30 form an integral part of these financial statements.
FIRE SERVICE COLLEGE LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 10 -
2023
2022
Notes
£
£
Non-current assets
Property, plant and equipment
7
22,784,478
20,222,607
Intangible assets
8
800,694
233,226
Deferred tax assets
6
736,604
589,563
24,321,776
21,045,396
Current assets
Trade and other receivables
9
1,999,426
1,853,368
1,999,426
1,853,368
Total assets
26,321,202
22,898,764
Current liabilities
Trade and other payables
11
29,992,670
29,103,134
Deferred income
13
203,492
368,127
Financial liabilities
10
9,151,920
5,260,531
Provisions
12
31,209
66,000
Income tax payable
540,225
415,435
Total liabilities
39,919,516
35,213,227
Net liabilities
(13,598,314)
(12,314,463)
FIRE SERVICE COLLEGE LIMITED
BALANCE SHEET (CONTINUED)
AS AT
31 DECEMBER 2023
31 December 2023
2023
2022
Notes
£
£
- 11 -
Capital and reserves
Issued share capital
14
1
1
Retained deficit
(13,598,315)
(12,314,464)
Total deficit
(13,598,314)
(12,314,463)
The notes and information on pages 13 to 30 form an integral part of these financial statements.
For the financial year ended 31 December 2023, the Company was entitled to exemption from audit under section 479A of the Companies Act 2006 relating to subsidiary companies.
The Directors acknowledge their responsibilities for complying with the requirements of the Companies Act 2006 with respect to accounting records and the preparation of financial statements.
The members have not required the Company to obtain an audit of its financial statements for the year in question in accordance with section 476 of the Companies Act 2006.
These financial statements were approved by the board of directors and authorised for issue on
20 September 2024
20 September 2024
and are signed on its behalf by:
R Holroyd
Director
Company registration number 08102633 (England and Wales)
FIRE SERVICE COLLEGE LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
Share capital
Retained deficit
Total deficit
£
£
£
At 1 January 2022
1
(13,521,424)
(13,521,423)
Profit for the year
-
1,206,960
1,206,960
At 31 December 2022
1
(12,314,464)
(12,314,463)
Loss for the year
-
(1,283,851)
(1,283,851)
At 31 December 2023
1
(13,598,315)
(13,598,314)
Share capital
The balance classified as share capital is the nominal proceeds on issue of the Company's equity share capital, comprising one ordinary share of £1.
Retained deficit
Represents net losses accumulated in the Company.
The notes and information on pages 13 to 30 form an integral part of these financial statements.
FIRE SERVICE COLLEGE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 13 -
1
Accounting policies
1.1
Basis of preparation
Fire Service College Limited is a Company incorporated and domiciled in the United Kingdom.
The financial statements have been prepared under the historical cost basis except where stated otherwise and in accordance with applicable accounting standards.
In determining the appropriate basis of preparation for the annual report and financial statements for the year ended 31 December 2023, the Company’s Directors (‘the Directors’) are required to consider whether the Company can continue in operational existence for the foreseeable future, being a period of at least twelve months following the approval of these financial statements. The Directors have concluded that it is appropriate to adopt the going concern basis, having undertaken a rigorous assessment of the financial forecasts, key uncertainties, and sensitivities, as set out below.
Accounting standards require that ‘the foreseeable future’ for going concern assessment covers a period of at least twelve months from the date of approval of these financial statements, although those standards do not specify how far beyond twelve months the Directors should consider. In its going concern assessment, the Directors have considered the period from the date of approval of these financial statements to 31 December 2025 (‘the going concern period’) and which aligns to the period considered by the Directors of the ultimate parent company, Capita plc.
Board assessment
The financial forecasts used for the going concern assessment are derived from financial projections for 2024-2025 for the Company which have been subject to review and challenge by management and the Directors. The Directors have approved the projections.
Inter-dependency with Capita plc ('the Group')
The Director’s assessment of going concern has considered the extent to which the Company’s ability to remain a going concern is inter-dependent with that of the Group. The Company has dependency with the Group in respect of the following:
provision of certain services, such as administrative support services and should the Group be unable to deliver these services, the Company would have difficulty in continuing to trade;
participation in the Group’s notional cash pooling arrangements, of which £13,309,945 was held at 31 August 2024. In the event of the cash being required elsewhere in the Group, the Company may not be able to access its cash balance within the pooling arrangement;
additional funding that may be required if the Company suffers continuing future losses; and
revenue from other Group entities and key contracts that may be terminated in the event of a default by the Group.
Despite the Company being in a net liability and is loss making the ultimate parent undertaking, Capita plc, has stated that it will provide continuing financial support as necessary and to the extent it is able to do so.
The financial projections are dependent on the Group providing additional financial support over the period to 31 December 2025 (the ‘going concern period’) and not seeking repayment of the amounts currently due, which at 31 December 2023 amounts to £25,593,674. The Group has indicated its intention to provide financial support to the Company in order to meet its liabilities as and when they fall due, but only to the extent that money is not otherwise available to the Company to meet such liabilities.
FIRE SERVICE COLLEGE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
Basis of preparation (continued)
As with any company placing reliance on other group entities for financial support, the Directors acknowledge that there can be no certainty that this support will continue although, at the date of approval of these financial statements, they have no reason to believe that it will not do so.true
Given the reliance the Company has on the Group, the Directors have considered the financial position of the ultimate parent undertaking as disclosed in its most recent condensed consolidated financial statements, being for the six months period ended 30 June 2024.
Ultimate parent company – Capita plc
The Capita plc Board (‘the Board’) concluded that it was appropriate to adopt the going concern basis, having undertaken a rigorous assessment of the financial forecasts, key uncertainties, sensitivities, and mitigations when preparing the Group’s condensed consolidated financial statements for the period ended 30 June 2024. These condensed consolidated financial statements were approved by the Board on 1 August 2024 and are available on the Group’s website (www.capita.com/investors). Below is a summary of the position at 1 August 2024:
Accounting standards require that ‘the foreseeable future’ for going concern assessment covers a period of at least twelve months from the date of approval of these condensed consolidated financial statements, although those standards do not specify how far beyond twelve months a Board should consider. In its going concern assessment, the Board has considered the period from the date of approval of these condensed consolidated financial statements to 31 December 2025, which aligns with a period end and covenant test date for the Group.
The base case financial forecasts used in the going concern assessment are derived from financial projections for 2024-2025 business plans as approved by the Board in June 2024.
The going concern assessment considers the Group’s sources and uses of liquidity and covenant compliance throughout the period under review.
Board assessment
Under the base case scenario, the Group’s transformation programme and completion of the Portfolio non-core business disposal programme in January 2024 has simplified and strengthened the business and facilitates further efficiency savings enabling sustainable growth in revenue, profit and cash flow over the medium term. When combined with available committed facilities, this allows the Group to manage scheduled debt repayments. The most material sensitivities to the base case are the risk of not delivering the planned revenue growth and efficiency savings from the Group's previously announced restructuring programme.
The base case projections used for going concern assessment purposes reflect business disposals completed up to the date of approval of these condensed financial statements and the agreed sale of the Capita One business because the completion of the disposal has been assessed to be highly probable. The liquidity headroom assessment in the base case projections reflects the Group’s existing committed financing facilities and debt redemptions and does not reflect any potential future refinancing. The base case financial forecasts demonstrate liquidity headroom and compliance with all debt covenant measures throughout the going concern period to 31 December 2025.
In considering severe but plausible downside scenarios, the Board has taken account of the potential adverse financial impacts resulting from the following risks:
• revenue growth falling materially short of plan;
• operating profit margin expansion not being achieved;
• targeted cost savings delayed and/or not delivered;
• unforeseen operational issues leading to contract losses and cash outflows;
• sustained interest rates at current levels;
• non-availability of the Group’s non-recourse receivables financing facility; and
• unexpected financial costs linked to incidents such as data breaches and/or cyber-attacks.
FIRE SERVICE COLLEGE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
Basis of preparation (continued)
The likelihood of simultaneous crystallisation of the above risks is considered by the directors to be low. Nevertheless, in the event that simultaneous crystallisation were to occur, the Group would need to take action to mitigate the risk of insufficient liquidity and covenant headroom. In its assessment of going concern, the Board has considered the mitigations, under the direct control of the Group, that could be implemented including reductions or delays in capital investment, substantially reducing (or removing in full) bonus and incentive payments. The Board considered the impact of the above risks and mitigations on the Group both in the scenario where the Capita One disposal does occur, and if it were not to occur. In the event of the simultaneous crystallisation of risks and the Capita One disposal does not complete, the Board also considered the ability of the Group to refinance a portion of the 2025 maturing debt. Taking these mitigations into account, the Group’s financial forecasts, in a severe but plausible downside scenario, demonstrate sufficient liquidity headroom and compliance with all debt covenant measures throughout the going concern period to 31 December 2025.
Adoption of going concern basis by the Group:
Reflecting the levels of liquidity and covenant headroom in the base case and severe but plausible downside scenario, the Group continues to adopt the going concern basis in preparing these consolidated financial statements. The Board has concluded that the Group will be able to continue in operation and meet its liabilities as they fall due over the period to 31 December 2025.
Conclusion
Although the Company has a reliance on the Group as detailed above, even in a severe but plausible downside for both the Company and the Group, the Directors are confident the Company will continue to have adequate financial resources to continue in operation and discharge its liabilities as they fall due over the period to 31 December 2025 (the ‘going concern period’). Consequently, the annual report and financial statements have been prepared on the going concern basis.
FIRE SERVICE COLLEGE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
1.2
Compliance with accounting standards
The Company has applied FRS101 – Reduced Disclosure Framework in the preparation of its financial statements.
The Company has prepared and presented these financial statements by applying the recognition, measurement and disclosure requirements of international accounting standards in conformity with the requirements of the Companies Act 2006.
The Company's ultimate parent company, Capita plc, includes the Company in its consolidated statements. The consolidated financial statements are prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and with UK-adopted International Financial Reporting Standards ('IFRSs') and the Disclosure and the Transparency Rules of the UK's Financial Conduct Authority. They are available to the public and may be obtained from Capita plc’s website on https://www.capita.com/investors.
In these financial statements, the Company has applied the disclosure exemptions available under FRS 101 in respect of the following disclosures:
A cash flow statement and related notes;
Comparative period reconciliations for share capital, tangible fixed assets and intangible assets;
Disclosures in respect of transactions with wholly owned subsidiaries;
Disclosures in respect of capital management;
The effects of new but not yet effective IFRSs;
Certain disclosures as required by IFRS 15 ; and
Disclosures in respect of the compensation of key management personnel;
Since the consolidated financial statements of Capita plc include equivalent disclosures, the Company has also taken the disclosure exemptions under FRS 101 available in respect of the following disclosure:
Certain disclosures required by IFRS 2 in respect of Group settled share based payments;
Certain disclosures required by IAS 36 Impairment of Assets in respect of the impairment of goodwill, indefinite life intangible assets and investment in subsidiaries; and
Certain disclosures required by IFRS 7 and certain disclosure exemptions as permitted by IFRS 13 Fair value measurement.
1.3
Change in accounting policies
The Company has adopted the new amendments to standards detailed below but they do not have a material effect on the Company's financial statements.
New amendments or interpretations | |
IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts | |
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) | |
Definition of Accounting Estimates (Amendments to IAS 8) | |
Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12) | |
International Tax Reform - Pillar Two Model Rules (Amendments to IAS 12) | |
FIRE SERVICE COLLEGE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 17 -
1.4
Revenue
The Company operates a diverse range of businesses and accordingly applies a variety of methods for revenue recognition, based on the principles set out in IFRS 15.
The revenue and profits recognised in any period are based on the delivery of performance obligations and an assessment of when control is transferred to the customer.
Revenue is recognised either when the performance obligation in the contract has been performed (so ‘point-in-time’ recognition) or ‘over-time’ when control of the performance obligation is transferred to the customer.
For all contracts, the Company determines if the arrangement with a customer creates enforceable rights and obligations. This assessment results in certain Master Service Agreements ('MSAs') or frameworks not meeting the definition of a contract under IFRS 15 and as such the individual call-off agreements, linked to the MSA, are treated as individual contracts.
The Company enters into contracts which contain extension periods, where either the customer or both parties can choose to extend the contract or there is an automatic annual renewal, and/or termination clauses that could impact the actual duration of the contract. Judgement is applied to assess the impact that these clauses have when determining the appropriate contract term. The term of the contract impacts both the period over which revenue from performance obligations may be recognised and the period over which contract fulfilment assets and capitalised costs to obtain a contract are expensed.
For contracts with multiple components to be delivered, for example transformation; transitions and the delivery of outsourced services; management applies judgement to consider whether those promised goods and services are:
distinct – to be accounted for as separate performance obligations;
not distinct – to be combined with other promised goods or services until a bundle is identified that is distinct; or
part of a series of distinct goods and services that are substantially the same and have the same pattern of transfer to the customer.
At a contract's inception the total transaction price is estimated, being the amount to which the Company expects to be entitled and has rights to under the contract. This includes an assessment of any variable consideration where the Company’s performance may result in additional revenues based on the achievement of agreed Key Performance Indicators ('KPIs'). Such amounts are only included based on the expected value or the most likely outcome, and only to the extent that it is highly probable that no revenue reversal will occur.
The transaction price does not include estimates of consideration resulting from change orders for additional goods and services unless these are already agreed.
FIRE SERVICE COLLEGE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 18 -
Revenue (continued)
Once the total transaction price is determined, the Company allocates this to the identified performance obligations in proportion to their relative stand-alone selling prices and recognises revenue when (or as) those performance obligations are satisfied.
The Company infrequently sells standard products with observable stand-alone prices due to the specialised services required by clients and therefore the Company applies judgement to determine an appropriate standalone selling price. More frequently, The Company sells a customer bespoke solution, and in these cases the Company typically uses the expected cost-plus margin or a contractually stated price approach to estimate the stand-alone selling price of each performance obligation.
The Company may offer price step downs during the life of a contract, but with no change to the underlying scope of services to be delivered. In general, any such variable consideration, price step down or discount is included in the total transaction price to be allocated across all performance obligations unless it relates to only one performance obligation in the contract.
For each performance obligation to be recognised over time, the Company applies a revenue recognition method that faithfully depicts the Company’s performance in transferring control of the goods or services to the customer. This decision requires assessment of the real nature of the goods or services that the Company has promised to transfer to the customer. The Company applies the relevant output or input method consistently to similar performance obligations in other contracts.
If performance obligations in a contract do not meet the overtime criteria, the Company recognises revenue at a point in time when the service or good is delivered.
Deferred and accrued income
The Company’s customer contracts include a diverse range of payment schedules dependent upon the nature and type of goods and services being provided. This can include performance-based payments or progress payments as well as regular monthly or quarterly payments for ongoing service delivery. Payments for transactional goods and services may be at delivery date, in arrears or part payment in advance. Our long-term service contracts tend to have higher cash flows early on in the contract to cover transformational activities.
Where payments made to date are greater than the revenue recognised to date at the period end date, the Company recognises a deferred income contract liability for this difference. Where payments made are less than the revenue recognised at the period end date, the Company recognises an accrued income contract asset for this difference.
At each reporting date, the Company assesses whether there is any indication that accrued income assets may be impaired by considering whether the revenue remains highly probable that no revenue reversal will occur. Where an indicator of impairment exists, The Company makes a formal estimate of the asset’s recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
FIRE SERVICE COLLEGE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 19 -
1.5
Intangible assets other than goodwill
Intangible assets are valued at cost less accumulated amortisation and impairment. Amortisation is calculated to write-off the cost in equal annual instalments over asset's estimated useful life, which is typically 3 to 15 years. In the case of capitalised software development costs, research expenditure is written-off to the income statement in the period in which it is incurred.
Development expenditure is written-off in the same way unless and until the Company is satisfied with the technical, commercial and financial viability of individual projects. In these cases, the development expenditure is capitalised and amortised over the period during which the Company is expected to benefit.
1.6
Property, plant and equipment
Property, plant and equipment other than freehold land are stated at cost less depreciation and impairment. Freehold land is not depreciated. Depreciation is provided at rates calculated to write-off the cost less estimated residual value of each asset over its expected useful life, as follows:
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Freehold buildings and long leasehold property
upto 50 years
Leasehold improvements
period of the lease
Fixtures, fittings and equipment
3 - 10 years
Computer equipment
3 - 10 years
Motor vehicles
3 - 5 years
1.7
Borrowing costs related to non-current assets
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
1.8
Financial instruments
Investments and other financial instruments
Classification
The Company classifies its financial instruments in the following measurement categories:
The classification depends on the Company’s business model for managing the financial assets and the contractual terms of the cash flows.
FIRE SERVICE COLLEGE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 20 -
Recognition and derecognition
At initial recognition, the Company measures a financial instrument at its fair value plus, in the case of a financial instrument not at FVPL, transaction costs that are directly attributable to the acquisition of the financial instrument. Transaction costs of financial instruments carried at FVPL are expensed in the income statement.
Financial instruments with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
Purchases and sales of financial instruments are recognised on their trade date (i.e., the date the Company commits to purchase or sell the instrument). Financial instruments are derecognised when the rights to receive/pay cash flows from the financial instrument have expired or have been transferred such that the Company has transferred substantially all risks and rewards of ownership.
Impairment
The Company assesses, on a forward-looking basis, the expected credit losses associated with its financial instruments carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
Trade and other receivables
Trade receivables are initially recognised at cost (being the same as fair value) and subsequently at amortised cost less any provision for impairment, to ensure the amounts recognised represent their recoverable amount.
For trade receivables, the Company applies the simplified approach permitted by IFRS 9 Financial instruments, resulting in trade receivables recognised and carried at original invoice amount less an allowance for any uncollectible amounts based on expected credit losses. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
Trade and other payables
Trade and other payables are recognised initially at cost (being same as fair value). Subsequent to initial recognition they are measured at amortised cost using the effective interest method.
Cash and cash equivalents
Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short-term deposits with original maturities of three months or less that are readily convertible in to known amounts of cash and which are subject to an insignificant risk of change in value. Bank overdrafts are shown within current financial liabilities.
1.9
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity or other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
FIRE SERVICE COLLEGE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 21 -
Deferred tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax assets and unused tax losses can be utilised, except where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.
1.10
Provisions
Provisions are recognised when the Company has a present legal or constructive obligation arising from past events, it is probable that cash will be paid to settle it, and the amount can be estimated reliably.
If the effect of the time value of money is material, provisions are discounted using the yield on government bonds which have a similar timing and currency of cash flows to the provision being discounted. Where required adjustments are made to the yields to reflect the risks specific to the cash flows being discounted. The unwinding of the discount is recognised as a financing cost in the income statement.
The value of the provision is determined based on assumptions and estimates in relation to the amount, timing and likelihood of actual cash flows, which are dependent on future events. Where no reliable basis of estimation can be made, no provision is recorded. However, contingent liabilities disclosures are given when there is a greater than remote probability of outflow of economic benefits.
On an ongoing basis, management monitor provisions and their accurate estimation when compared to final outcomes.
FIRE SERVICE COLLEGE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 22 -
1.11
Pensions
The Company participates in a defined contribution pension scheme where contributions are charged to the profit and loss account in the year in which they are due. The scheme is funded and contributions are paid to a separately administered trust fund. The assets of the scheme are held separately from the Company. The Company remits monthly pension contributions to Capita Business Services Ltd, a fellow subsidiary company, which pays the group liability centrally. Any unpaid contributions at the year-end have been accrued in the accounts of Capita Business Services Ltd.
The Company also has employees who are members of the Group’s main defined benefit pension scheme (“HPS”) (formerly known as CPLAS). The Company has current employees who continue to accrue benefits in the HPS.
As there is no contractual agreement or stated group policy for charging the net defined benefit cost of the HPS to participating entities, the net defined benefit cost of the HPS is recognised fully by the Principal Employer (Capita Business Services Ltd). The Company then recognises a cost equal to its contribution payable for the period. The contributions payable by the participating entities are determined on the following basis:
At each full actuarial valuation of the HPS (carried out triennially), the contribution rates for those sections containing active members are calculated. These are then rationalised such that sections with similar employer contribution rates (when expressed as a percentage of pensionable pay) are grouped together and an average employer contribution rate for each of the rationalised groups calculated.
A full actuarial valuation of the HPS is carried out every three years by an independent qualified actuary for the Trustee of the HPS, with the last full valuation carried out as at 31 March 2023. The next full actuarial valuation is due to be carried out with an effective date of 31 March 2026.
1.12
Leases
The Company has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less, or for leases of low-value assets including IT equipment. The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.
1.13
Foreign exchange
Monetary assets and liabilities denominated in foreign currencies are translated into British pounds sterling at the rates of exchange ruling at the balance sheet date. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Transactions in foreign currencies are recorded at the rate of exchange ruling at the date of the transaction. All foreign exchanges gains/losses are recognised in the income statement.
FIRE SERVICE COLLEGE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 23 -
1.14
Current vs Non-current classification
The Company presents assets and liabilities in the balance sheet based on whether they are current or non-current.
An asset is current when it is:
Expected to be realised or intended to be sold or consumed in the normal operating cycle;
Held primarily for the purpose of trading;
Expected to be realised within twelve months after the balance sheet date; or
Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the balance sheet date.
All other assets are classified as non-current.
A liability is current when:
It is expected to be settled in the normal operating cycle;
It is held primarily for the purpose of trading;
It is due to be settled within twelve months after the balance sheet date; or
There is no unconditional right to defer the settlement of the liability for at least twelve months after the balance sheet date.
The Company classifies all other liabilities as non-current.
2
Significant accounting judgements, estimates and assumptions
The preparation of financial statements in conformity with generally accepted accounting principles requires the Directors to make judgements and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingencies at the date of the financial statements and the reported income and expense during the reported periods. Although these judgements and assumptions are based on the Directors' best knowledge of the amount, events or actions, actual results may differ.
No significant judgements, estimates and assumptions were used in preparation of financial statements in current reporting period.
3
Revenue
The total revenue of the Company for the year has been derived from its principal activity undertaken from the below geographical markets:
2023
2022
£
£
Revenue analysed by geographical market
United Kingdom
20,946,628
17,126,401
Europe and Middle East
-
1,844,397
20,946,628
18,970,798
FIRE SERVICE COLLEGE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 24 -
4
Operating (loss)/profit
Notes
2023
2022
Operating (loss)/profit for the year is stated after (crediting)/charging:
£
£
(Income)/expense from foreign exchange differences
(815)
2,337
Depreciation of property, plant and equipment
7
1,474,164
1,256,289
Loss on disposal of property, plant and equipment
24,680
-
Amortisation of intangible assets
8
316,114
75,342
Short term lease rentals
265,967
206,842
5
Net finance cost
2023
2022
£
£
Interest expense
Interest expense on bank overdrafts
(184,743)
(69,694)
Total net finance cost
(184,743)
(69,694)
6
Income tax
The major components of income tax charge/(credit) are:
2023
2022
£
£
Current tax
UK corporation tax
95,079
457,424
Adjustments in respect of prior periods
262,598
357,677
457,424
Deferred tax
Origination and reversal of temporary differences
(157,933)
(169,062)
Adjustment in respect of prior periods
10,891
(339,147)
(147,042)
(508,209)
Total tax charge/(credit)
210,635
(50,785)
FIRE SERVICE COLLEGE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
6
Income tax
(Continued)
- 25 -
The charge for the year can be reconciled to the (loss)/profit per the income statement as follows:
2023
2022
£
£
(Loss)/profit before taxation
(1,073,216)
1,156,175
Expected tax (credit)/charge based on the weighted average Corporation Tax rate of 23.52% (2022: 19.00%)
(252,426)
219,673
Expenses not deductible for tax purpose
198,918
109,264
Impact of changes in statutory tax rates
(9,346)
(40,575)
Adjustment in respect of deferred tax of prior periods
273,489
(339,147)
Total adjustments
463,061
(270,458)
Total tax charge/(credit) reported in the income statement
210,635
(50,785)
Balance sheet
Income statement
2023
2022
2023
2022
£
£
£
£
Deferred tax assets
Decelerated capital allowances
735,871
587,398
(157,934)
(508,209)
Other timing differences
733
2,165
Deferred tax assets
736,604
589,563
Deferred tax credit to income statement
(157,934)
(508,209)
A change to the main UK corporation tax rate was substantively enacted on 24 May 2021. The rate applicable from 1 April 2023 increased from 19% to 25%. The deferred tax asset at 31 December 2023 has been calculated based on this rate.
FIRE SERVICE COLLEGE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 26 -
7
Property, plant and equipment
Freehold buildings and long leasehold property
Leasehold improvements
Fixtures, fittings and equipment
Computer equipment
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 January 2023
20,605,409
4,244,002
446,005
293,242
73,249
25,661,907
Additions
333,649
3,070,578
107,501
548,987
4,060,715
Disposals
(24,680)
(24,680)
Reclassification
140
1
1
1
143
Asset retirement
(1,608,024)
(20,250)
(26,750)
(1,655,024)
At 31 December 2023
19,331,174
7,289,901
533,257
842,229
46,500
28,043,061
Accumulated depreciation and impairment
At 1 January 2023
4,846,499
305,490
183,369
57,563
46,379
5,439,300
Charge for the year
719,017
538,785
51,021
151,645
13,696
1,474,164
Reclassification
2,468
2
(2,327)
143
Asset retirement
(1,608,024)
(20,250)
(26,750)
(1,655,024)
At 31 December 2023
3,959,960
844,277
211,813
209,208
33,325
5,258,583
Net book value
At 31 December 2023
15,371,214
6,445,624
321,444
633,021
13,175
22,784,478
At 31 December 2022
15,758,910
3,938,512
262,636
235,679
26,870
20,222,607
8
Intangible assets
Software
£
Cost
At 1 January 2023
396,255
Additions
883,582
Asset retirement
(25,863)
At 31 December 2023
1,253,974
Amortisation and impairment
At 1 January 2023
163,029
Charge for the year
316,114
Asset retirement
(25,863)
At 31 December 2023
453,280
Net book value
At 31 December 2023
800,694
At 31 December 2022
233,226
FIRE SERVICE COLLEGE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 27 -
9
Trade and other receivables
Current
2023
2022
£
£
Trade receivables
1,548,984
1,554,998
VAT recoverable
249,560
Amounts due from Group companies
1,390
Other receivables
810
Accrued income
46,237
167,566
Prepayments
154,645
128,604
1,999,426
1,853,368
10
Financial liabilities
Current
2023
2022
£
£
Bank overdrafts
9,151,920
5,260,531
9,151,920
5,260,531
11
Trade and other payables
Current
2023
2022
£
£
Trade payables
3,035,030
1,709,922
Amount due to Group companies
25,593,674
25,249,346
Accruals
1,363,602
2,117,772
Other taxes and social security
179
24,673
Other payables
185
1,421
29,992,670
29,103,134
Amounts due to Group companies are repayable on demand. These are not chargeable to interest.
FIRE SERVICE COLLEGE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 28 -
12
Provisions
2023
2022
£
£
Current
31,209
66,000
31,209
66,000
Claims
£
At 1 January 2023
66,000
Additions made during the year
13,000
Released during the year
(44,082)
Utilised during the year
(3,709)
At 31 December 2023
31,209
Claim provision represents pension payments and PI claims transferred over to the college at the time of acquisition by Capita Group in 2013.
13
Deferred income
2023
2022
£
£
Current
Deferred income
203,492
368,127
203,492
368,127
The deferred income balances solely relates to revenue from contracts with customers. Movements in the deferred income balances were driven by transactions entered into by the Company within the normal course of business in the year.
14
Share capital
2023
2022
2023
2022
Number
Number
£
£
Allotted, called up and fully paid
Ordinary of £1 each
At 1 January and 31 December
1
1
1
1
FIRE SERVICE COLLEGE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 29 -
15
Employee benefits
The Company participates in both defined benefit and defined contribution pension schemes.
The pension charge for the defined contribution pension schemes for the year is £382,156 (2022: £376,363). The pension charge excludes pension contributions paid by the Company on behalf of employees via a salary sacrifice arrangement.
The Company has current and former employees who are members of the Group’s main defined benefit pension scheme ('HPS') (formerly known as CPLAS). The Company has current employees who continue to accrue benefits in the HPS.
The pension charge for the Company in relation to the HPS for the year was £316,067 (2022: £287,649). This pension charge is included in the pension charge for the defined contribution pension schemes set out above.
A full actuarial valuation of the HPS is carried out every three years by an independent qualified actuary for the Trustee of the HPS, with the last full valuation carried out as at 31 March 2023. Amongst the main purposes of the valuation is to agree a contribution plan such that the pension scheme has sufficient assets available to meet future benefit payments, based on assumptions agreed between the Trustee of the HPS and the Principal Employer (Capita Business Services Ltd, a fellow subsidiary company). The 31 March 2023 valuation showed a funding surplus of £51.4m (31 March 2020: funding deficit of £182.2m). This equates to a funding level of 105% (31 March 2020: 89%).
Given the funding position of the HPS, the Principal Employer and the Trustee of the HPS agreed that no further deficit recovery contributions from the Principal Employer are required other than those already committed1 as part of the 31 March 2020 actuarial valuation. In accordance with the schedule of contributions put in place following the 31 March 2020 actuarial valuation, the Principal Employer has paid £30m of regular deficit contributions during 2023 and £16.3m of accelerated deficit funding contributions and other contributions triggered by the disposal of certain businesses in the second half of 2022 and 2023. The Principal Employer will pay a further £21m of contributions in 2024, with no further deficit contributions in 2025 and beyond.
Finally, the Principal Employer agreed an average employer contribution rate of 23.6% of pensionable salary towards the expected cost of benefits accruing.
The next full actuarial valuation is due to be carried out with an effective date of 31 March 2026.
For the purpose of the consolidated accounts of Capita plc, an independent qualified actuary projected the results of the 31 March 2023 full actuarial valuation to 31 December 2023 taking into consideration the relevant accounting requirements.
The principal assumptions for the accounting valuation as at 31 December 2023 were as follows: rate of increase in RPI/CPI price inflation – 3.05% pa/2.45% pa (2022: 3.15% pa/2.50% pa); rate of salary increase – 3.05% pa (2022: 3.15% pa); rate of increase for pensions in payment (where RPI inflation capped at 5% pa applies) – 3.00% pa (2022: 3.05% pa); discount rate – 4.55% pa (2022: 4.75% pa).
The HPS assets at fair value as at 31 December 2023 totalled £1,154.4m (2022: £1,126.3m). The actuarially assessed value of HPS liabilities as at 31 December 2023 was £1,125.0m (2022: £1,087.0m) indicating that the HPS had a net asset of £29.4m (2022: £39.3m). These figures are quoted gross of deferred tax. The full disclosure is available in the consolidated accounts of Capita plc.
For the purpose of these accounts, the Company’s interest in the HPS is reported on a defined contribution basis recognising a cost equal to its contributions payable during the period.
1These include additional, non-statutory, contributions to meet a secondary funding target with the objective of having sufficient assets to invest in a portfolio of low-risk assets with a low dependency covenant that will generate income to pay members’ benefits as they fall due.
FIRE SERVICE COLLEGE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 30 -
16
Employees
The average monthly number of employees (including non-executive directors) were:
2023
2022
Number
Number
Sales
-
5
Operations
108
94
Administration
9
7
Total
117
106
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
3,888,850
3,426,378
Social security costs
410,496
413,109
Pension costs
382,156
376,363
4,681,502
4,215,850
Agency staff costs
1,646,803
2,066,162
6,328,305
6,282,012
The above includes payroll costs for temporary staff as well as recharges from other Group entities in respect of various services received by the Company throughout the year.
17
Directors' remuneration
All directors are paid by other companies within the Capita Group. The Company has not paid any fees or other remuneration to the Group based Directors related to the directorship role they provided to the Company as a part of their Group-wide executive management role. The Company has estimated that allocation of the qualifying services that these Group based Directors provided to the Company is inconsequential.
18
Controlling party
The Company's immediate parent company is Capita Business Services Ltd, a company incorporated in England and Wales. The Company's ultimate parent company is Capita plc, a company incorporated in England and Wales. The consolidated financial statements of Capita plc are available from the registered office at 65 Gresham Street, London, United Kingdom, EC2V 7NQ.
19
Post balance sheet date events
There are no significant events which have occurred after the reporting date.
2023-12-312023-01-01Capita Corporate Director LimitedR HolroydCapita Group Secretary LimitedfalseCCH SoftwareiXBRL Review & Tag 2022.2The company is not entitled to exemption from audit under section 477 of the Companies Act 2006 relating to small companiesThe members have not required the company to obtain an auditThe accounts have not been prepared in accordance with the provisions of the small companies regime081026332023-01-012023-12-3108102633bus:Director12023-01-012023-12-3108102633bus:Director22023-01-012023-12-3108102633bus:CompanySecretary12023-01-012023-12-3108102633bus:RegisteredOffice2023-01-012023-12-3108102633bus:Agent12023-01-012023-12-31081026332023-12-31081026332022-01-012022-12-3108102633core:RetainedEarningsAccumulatedLosses2023-01-012023-12-31081026332022-12-3108102633core:ComputerSoftware2023-12-3108102633core:ComputerSoftware2022-12-3108102633core:Non-currentFinancialInstruments2023-12-3108102633core:Non-currentFinancialInstruments2022-12-3108102633core:CurrentFinancialInstruments2023-12-3108102633core:CurrentFinancialInstruments2022-12-3108102633core:WithinOneYear2023-12-3108102633core:WithinOneYear2022-12-3108102633core:ShareCapital2023-12-3108102633core:ShareCapital2022-12-3108102633core:RetainedEarningsAccumulatedLosses2023-12-3108102633core:RetainedEarningsAccumulatedLosses2022-12-3108102633core:ShareCapital2021-12-3108102633core:RetainedEarningsAccumulatedLosses2021-12-31081026332021-12-3108102633core:AcceleratedTaxDepreciationDeferredTax2023-12-3108102633core:AcceleratedTaxDepreciationDeferredTax2022-12-3108102633core:OtherDeferredTax2023-12-3108102633core:OtherDeferredTax2022-12-3108102633core:AcceleratedTaxDepreciationDeferredTax2023-01-012023-12-3108102633core:AcceleratedTaxDepreciationDeferredTax2022-01-012022-12-3108102633core:OtherDeferredTax2023-01-012023-12-3108102633core:OtherDeferredTax2022-01-012022-12-3108102633core:LandBuildingscore:OwnedOrFreeholdAssets2022-12-3108102633core:LeaseholdImprovementscore:LeasedAssetsHeldAsLessee2022-12-3108102633core:FurnitureFittings2022-12-3108102633core:ComputerEquipment2022-12-3108102633core:MotorVehicles2022-12-31081026332022-12-3108102633core:LandBuildingscore:OwnedOrFreeholdAssets2023-12-3108102633core:LeaseholdImprovementscore:LeasedAssetsHeldAsLessee2023-12-3108102633core:FurnitureFittings2023-12-3108102633core:ComputerEquipment2023-12-3108102633core:MotorVehicles2023-12-3108102633core:LandBuildingscore:OwnedOrFreeholdAssets2023-01-012023-12-3108102633core:LeaseholdImprovementscore:LeasedAssetsHeldAsLessee2023-01-012023-12-3108102633core:FurnitureFittings2023-01-012023-12-3108102633core:ComputerEquipment2023-01-012023-12-3108102633core:MotorVehicles2023-01-012023-12-3108102633core:LandBuildingscore:OwnedOrFreeholdAssets2022-12-3108102633core:LeaseholdImprovementscore:LeasedAssetsHeldAsLessee2022-12-3108102633core:FurnitureFittings2022-12-3108102633core:ComputerEquipment2022-12-3108102633core:MotorVehicles2022-12-3108102633core:ComputerSoftware2023-01-012023-12-3108102633core:ComputerSoftware2022-12-3108102633core:FurtherSpecificTypeProvisionContingentLiability2ComponentTotalProvisionsContingentLiabilities2022-12-3108102633core:FurtherSpecificTypeProvisionContingentLiability2ComponentTotalProvisionsContingentLiabilities2023-12-3108102633core:FurtherSpecificTypeProvisionContingentLiability2ComponentTotalProvisionsContingentLiabilities2023-01-012023-12-3108102633core:FurtherSpecificTypeProvisionContingentLiability1ComponentTotalProvisionsContingentLiabilities2023-01-012023-12-310810263312023-01-012023-12-3108102633bus:PrivateLimitedCompanyLtd2023-01-012023-12-3108102633bus:FRS1012023-01-012023-12-3108102633bus:AuditExempt-NoAccountantsReport2023-01-012023-12-3108102633bus:FullAccounts2023-01-012023-12-31xbrli:purexbrli:sharesiso4217:GBP