Company registration number 6261520 (England and Wales)
TRANSFORM SCHOOLS (KNOWSLEY) LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
TRANSFORM SCHOOLS (KNOWSLEY) LIMITED
COMPANY INFORMATION
Directors
M Templeton
JS Gordon
Secretary
Resolis Limited
Company number
6261520
Registered office
1 Park Row
Leeds
United Kingdom
LS1 5AB
Auditor
RSM UK Audit LLP
Third Floor
2 Semple Street
Edinburgh
EH3 8BL
TRANSFORM SCHOOLS (KNOWSLEY) LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Statement of financial position
9
Statement of changes in equity
10
Notes to the financial statements
11 - 20
TRANSFORM SCHOOLS (KNOWSLEY) LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
- 1 -

The directors present the strategic report for the year ended 31 December 2024.

Principal activities

On 13 December 2007, Transform Schools (Knowsley) Limited entered into a PFI concession contract ('Project Agreement') with Knowsley Metropolitan Borough Council ('the Authority') to design, build or refurbish, and provide services within seven secondary schools. A second PFI contract was entered into on 19 May 2011 to consolidate two existing Special Educational Needs ('SEN') buildings into a single SEN facility. The contract end date for both contracts is 31 August 2034.

Review of the business

The Company's loss after taxation is £350k (202 3: loss of £9,082k) and the net liabilities of the Company are £22,446k (202 3: £22,859k).

The company has incurred losses during the financial year, primarily attributed to the deferral of subordinated debt payments. These delays have resulted in the continued accrual of interest which have negatively impacted the income statement.

The company's operations are managed under the supervision of its shareholders and funders and are monitored by key performance indicators in the PFI contract with the Authority and the subcontract with Equans FM Ltd who supply the facilities maintenance services throughout the life of the concession. These key performance indicators are in place to monitor certain operational functions and failure to meet minimum targets result in financial penalties, which are ultimately payable by Equans FM Limited.

Principal risks and uncertainties

The company's principal activity as detailed above is considered low risk as its trading relationships with its customer, funders and sub-contractors are determined by the terms of their respective detailed PFI contracts with the company.

Financial risk management

The company has exposure to a variety of financial risks which are managed with the purpose of minimising any potentially adverse effect on the company's performance.

The board has policies for managing each of these risks and they are summarised below:

Interest rate risk

The company hedged its interest rate risk at the inception of the project by swapping its variable rate debt into fixed rate by the use of an interest rate swap.

Inflation risk

The company's project revenue and most of its costs were linked to inflation at the inception of the project, resulting in the project being largely insensitive to inflation.

Liquidity risk

The company adopts a prudent approach to liquidity management by maintaining sufficient cash and liquid resources to meet its obligations. Due to the nature of the project cash flows are reasonably predictable and so this is not a major risk area for the company.

Credit risk

The company receives the bulk of its revenue from it's local authority and therefore is not exposed to significant credit risk.

Cash investments and interest rate swap arrangements are with institutions of a suitable credit quality.

TRANSFORM SCHOOLS (KNOWSLEY) LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
- 2 -
Key performance indicators

The key performance indicator for the Company is the level of performance and unavailability deductions levied by the client, since this reflects the quality of the service being provided. During the period, the Company suffered nominal deductions.

Financial performance indicators during the year were compliance with its debt covenants as set out in the Facilities Agreement with the Lender. In 2022 there were defaults at 31 March and 30 September which the Lenders are aware of (see note 1.2). T here have been no events of default since and are no anticipated future breaches.

On behalf of the board

M Templeton
Director
3 September 2025
TRANSFORM SCHOOLS (KNOWSLEY) LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
- 3 -

The directors present their annual report and financial statements for the year ended 31 December 2024.

Results and dividends

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

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

Directors

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

M Templeton
JS Gordon
Qualifying third party indemnity provisions

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

Auditor

The auditor, RSM UK Audit LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

Statement of disclosure to auditor

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

Principal risks and uncertainties

The risk management policy of the Company is designed to manage risk at the earliest possible point. The Company maintains a detailed risk register which is formally reviewed by the Board of Directors. The Company recognises that effective risk management is fundamental to achieving its business objectives in order to meet its commitments in fulfilling the PFI contract and in delivering a safe and efficient service.

Going concern

The Going Concern disclosure note can be found in note 1.2 of the financial statements.

On behalf of the board
M Templeton
Director
3 September 2025
TRANSFORM SCHOOLS (KNOWSLEY) LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2024
- 4 -

The directors are responsible for preparing the Strategic Report and the Directors' Report and the financial statements in accordance with applicable law and regulations.

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

In preparing these financial statements, the directors are required to:

- select suitable accounting policies and then apply them consistently;

- make judgements and accounting estimates that are reasonable and prudent; and

- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

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

TRANSFORM SCHOOLS (KNOWSLEY) LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF TRANSFORM SCHOOLS (KNOWSLEY) LIMITED
- 5 -
Opinion

We have audited the financial statements of Transform Schools (Knowsley) Limited (the 'company') for the year ended 31 December 2024 which comprise the statement of comprehensive income, the statement of financial position, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

- give a true and fair view of the state of the company's affairs as at 31 December 2024 and of its loss for the year then ended;

- have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

- have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty related to going concern

We draw attention to note 1.2, which highlights an event of default on the senior debt for which no waiver has been granted. As stated in note 1.2, these events of conditions, along with other matters set out in note 1.2, indicate that a material uncertaint y exist s that may cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

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

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

- the information given in the strategic report and the directors' r eport 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.

TRANSFORM SCHOOLS (KNOWSLEY) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF TRANSFORM SCHOOLS (KNOWSLEY) LIMITED
- 6 -
Matters on which we are required to report by exception

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

- adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

- the financial statements are not in agreement with the accounting records and returns; or

- certain disclosures of remuneration specified by law are not made; or

- we have not received all the information and explanations we require for our audit

Responsibilities of directors

As explained more fully in the directors' r esponsibilities s tatement set out on page 4, 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.

Auditor's responsibilities for the audit of the financial statements

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

The extent to which the audit was considered capable of detecting irregularities, including fraud

Irregularities are instances of non-compliance with laws and regulations. The objectives of our audit are to obtain sufficient appropriate audit evidence regarding compliance with laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements, to perform audit procedures to help identify instances of non-compliance with other laws and regulations that may have a material effect on the financial statements, and to respond appropriately to identified or suspected non-compliance with laws and regulations identified during the audit.

In relation to fraud, the objectives of our audit are to identify and assess the risk of material misstatement of the financial statements due to fraud, to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud through designing and implementing appropriate responses and to respond appropriately to fraud or suspected fraud identified during the audit.

However, it is the primary responsibility of management, with the oversight of those charged with governance, to ensure that the entity's operations are conducted in accordance with the provisions of laws and regulations and for the prevention and detection of fraud.

TRANSFORM SCHOOLS (KNOWSLEY) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF TRANSFORM SCHOOLS (KNOWSLEY) LIMITED
- 7 -

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud, the audit engagement team:

- obtained an understanding of the nature of the industry and sector, including the legal and regulatory framework that the company operates in and how the company is complying with the legal and regulatory framework;

- inquired of management, and those charged with governance, about their own identification and assessment of the risks of irregularities, including any known actual, suspected or alleged instances of fraud;

- discussed matters about non-compliance with laws and regulations and how fraud might occur including assessment of how and where the financial statements may be susceptible to fraud.

As a result of these procedures we consider the most significant laws and regulations that have a direct impact on the financial statements are FRS 102 and the Companies Act 2006. We performed audit procedures to detect non-compliances which may have a material impact on the financial statements which included reviewing financial statement disclosures.

The audit engagement team identified the risk of management override of controls as the area where the financial statements were most susceptible to material misstatement due to fraud. Audit procedures performed included but were not limited to testing manual journal entries and other adjustments and evaluating the business rationale in relation to significant, unusual transactions and transactions entered into outside the normal course of business.

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.

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.

Christopher Sliman CA (Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP, Statutory Auditor
Chartered Accountants
Third Floor
2 Semple Street
Edinburgh
EH3 8BL
4 September 2025
TRANSFORM SCHOOLS (KNOWSLEY) LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2024
- 8 -
2024
2023
Notes
£'000
£'000
Turnover
10,230
13,823
Cost of sales
(7,425)
(9,849)
Gross profit
2,805
3,974
Administrative expenses
(2,784)
(3,608)
Operating profit
3
21
366
Interest receivable and similar income
6
13,349
9,609
Interest payable and similar expenses
7
(13,720)
(16,144)
Loss before taxation
(350)
(6,169)
Tax on loss
8
-
0
(2,913)
Loss for the financial year
(350)
(9,082)
Other comprehensive income
Cash flow hedges gain/(loss) arising in the year
1,018
(1,573)
Tax relating to other comprehensive income
8
(254)
393
Total comprehensive income for the year
414
(10,262)

The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.

TRANSFORM SCHOOLS (KNOWSLEY) LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2024
31 December 2024
- 9 -
2024
2023
Notes
£'000
£'000
£'000
£'000
Current assets
Debtors falling due after more than one year
9
111,255
119,308
Debtors falling due within one year
9
17,271
15,556
Cash at bank and in hand
27,275
21,559
155,801
156,423
Creditors: amounts falling due within one year
10
(162,139)
(155,287)
Net current (liabilities)/assets
(6,338)
1,136
Creditors: amounts falling due after more than one year
11
(16,108)
(23,995)
Net liabilities
(22,446)
(22,859)
Capital and reserves
Called up share capital
14
50
50
Hedging reserve
15
(4,376)
(5,140)
Profit and loss reserves
15
(18,120)
(17,769)
Total equity
(22,446)
(22,859)

The financial statements were approved by the board of directors and authorised for issue on 3 September 2025 and are signed on its behalf by:
M Templeton
Director
Company registration number 6261520 (England and Wales)
TRANSFORM SCHOOLS (KNOWSLEY) LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2024
- 10 -
Share capital
Hedging reserve
Profit and loss reserves
Total
£'000
£'000
£'000
£'000
Balance at 1 January 2023
50
(3,960)
(8,689)
(12,599)
Year ended 31 December 2023:
Loss
-
-
(9,082)
(9,082)
Other comprehensive income:
Cash flow hedges gains
-
(1,573)
-
(1,573)
Tax relating to other comprehensive income
-
393
-
0
393
Total comprehensive income
-
(1,180)
(9,082)
(10,262)
Balance at 31 December 2023
50
(5,140)
(17,769)
(22,859)
Year ended 31 December 2024:
Loss
-
-
(350)
(350)
Other comprehensive income:
Cash flow hedges losses
-
1,018
-
1,018
Tax relating to other comprehensive income
-
(254)
-
0
(254)
Total comprehensive income
-
764
(350)
414
Balance at 31 December 2024
50
(4,376)
(18,120)
(22,446)
TRANSFORM SCHOOLS (KNOWSLEY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
- 11 -
1
Accounting policies
Company information

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

1.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary a mounts in these financial statements are rounded to the nearest £'000.

The financial statements have been prepared under the historical cost conventio n. The principal accounting policies adopted are set out below.

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;

- Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;

- Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.

The financial statements of the company are consolidated in the financial statements of Transform Schools (Knowsley) Holdings Limited. These consolidated financial statements are available from its registered office, 1 Park Row, Leeds, United Kingdom, LS1 5AB.

1.2
Going concern

In preparing the financial statements for the Company for the year ended 31 December 2024, the Directors have reviewed the Company’s ability to meet its obligations in respect of true the loan issued to it by the Senior Lenders and the loan notes issued by the Group’s immediate parent company, PPDI Assetco Limited.

The Senior Lenders believe an Event of Default (EOD) occurred at September 2022 as a result of the delayed receipt of settlement monies.

As a result of the EOD the senior lenders have the ability to recall the full loan balance on demand. The company’s cash position and future cash flow forecasts evidence that it would not be possible for the company to meet its liabilities if the debt was to be recalled for repayment in full. A waiver is required from the lenders to remedy the EOD and to allow future distributions. The waiver has not been granted to date however discussions continue with regards to the resolution. The Directors acknowledge that these circumstances indicate the existence of a material uncertainty which may cast significant doubt on the company’s ability to continue as a going concern.

TRANSFORM SCHOOLS (KNOWSLEY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
1
Accounting policies
(Continued)
- 12 -

The senior lenders have withheld their approval of the latest model submission which prevents the scheduled distributions to the Sub-Debt loan note holders for repayment of principal and accrued interest amounts. The Directors have obtained sub-debt lender approval to delay these repayments until successful approval of the model.

The Directors, with reference to the model forecast, have a reasonable expectation that the Company has adequate resources to continue in existence for the foreseeable future. The Directors continue to prepare the accounts on the basis of going concern. In making their assessment the Directors have considered a period of 12 months from the date of approval of these financial statements.

1.3
Turnover

All turnover and profit before taxation originates in the UK. Turnover represents the value, net of value added tax and discounts, of services provided in the year. Service revenue in respect of the unitary charge is recognised as described in the finance debtor accounting policy.

Service concession arrangements

The subsidiary Company entered into its Service concession arrangement before the date of transition to this FRS. Therefore, its service concession arrangements have continued to be accounted for using the same accounting policies being applied at the date of transition to this FRS.

The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these financial statements.

1.4
Cash and cash equivalents

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

1.5
Financial instruments

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

Financial instruments are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument.

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

Basic financial assets

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

Other financial assets

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.

TRANSFORM SCHOOLS (KNOWSLEY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
1
Accounting policies
(Continued)
- 13 -
Impairment of financial assets

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

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

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

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

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

Basic financial liabilities

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

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

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

Other financial liabilities

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are s ubsequently 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 th r ough 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.

Derecognition of financial liabilities

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

TRANSFORM SCHOOLS (KNOWSLEY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
1
Accounting policies
(Continued)
- 14 -
1.6
Equity instruments

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

1.7
Hedge accounting

The company designates certain hedging instruments, including derivatives, as either fair value hedges or cash flow hedges. At the inception of the hedge relationship, the company documents the relationship between the hedging instrument and the hedged item along with risk management objectives and strategy for undertaking various hedge transactions. At the inception of the hedge and on an ongoing basis, the company documents whether the hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item.

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

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

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

1.8
Taxation

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

Current tax

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

Deferred tax

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

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

TRANSFORM SCHOOLS (KNOWSLEY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
1
Accounting policies
(Continued)
- 15 -
1.9

Finance debtor and services income

During the construction phase of the project, all attributable expenditure was included in amounts recoverable on contracts and turnover. Upon becoming operational, the costs were transferred to the finance debtor. During the operational phase income is allocated between interest receivable and the finance debtor using a project specific interest rate. The remainder of the PFI unitary charge income is included within turnover in accordance with FRS102 section 23. The Company recognises income in respect of the services provided as it fulfils its contractual obligations in respect of those services and in line with the fair value of the consideration receivable in respect of those services.

2
Judgements and key sources of estimation uncertainty

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

Critical judgements

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

Fair Value of Derivative Financial Instruments

The Company uses derivative financial instruments to hedge certain economic exposures in relation to movements in interest rates as compared with the position that was expected at the date the underlying transaction being hedged was entered into. The Company fair values its derivative financial instruments and records the fair value of those instruments on its Statement of Financial Position. Fair values for derivative contracts are based on mark-to-market valuations provided by the contract counterparty. Whilst these can be tested for reasonableness, the exact valuation methodology and forecast assumptions for future interest rates or inflation rates are specific to the counterparty. There is also a judgment on whether an economic hedge relationship exists in order to achieve hedge accounting. Appropriate documentation has been prepared detailing the economic relationship between the hedging instrument and the underlying loan being hedged.

Key sources of estimation uncertainty

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

Accounting for service concession arrangements

Accounting for the 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 closely monitored throughout the duration of the project.

3
Operating profit
2024
2023
Operating profit for the year is stated after charging:
£'000
£'000
Audit fee
17
16
Taxation compliance services
5
5
TRANSFORM SCHOOLS (KNOWSLEY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
- 16 -
4
Auditor's remuneration
2024
2023
Fees payable to the company's auditor and associates:
£'000
£'000
For audit services
Audit of the financial statements of the company
17
16
Audit of the financial statements of other companies in the group
6
6
23
22
For other services
Taxation compliance services
9
10
5
Employees

The average number of persons employed by the Company during the financial year, including the directors, was nil (2023: nil).

6
Interest receivable and similar income
2024
2023
£'000
£'000
Interest income
Bank interest
1,112
785
Finance debtor interest
8,296
8,824
Total interest revenue
9,408
9,609
Other income from investments
Gains on financial instruments measured at fair value through profit or loss
3,941
-
0
Total income
13,349
9,609
7
Interest payable and similar expenses
2024
2023
£'000
£'000
Interest on bank loans
6,822
6,240
Interest payable to group undertakings
6,711
9,718
Other interest on financial liabilities
49
47
Unwinding of discount on provisions
138
139
13,720
16,144
TRANSFORM SCHOOLS (KNOWSLEY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
- 17 -
8
Taxation
2024
2023
£'000
£'000
Deferred tax
Origination and reversal of timing differences
-
0
2,913

The actual charge 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:

2024
2023
£'000
£'000
Loss before taxation
(350)
(6,169)
Expected tax credit based on the standard rate of corporation tax in the UK of 25.00% (2023: 23.52%)
(88)
(1,451)
Tax effect of expenses that are not deductible in determining taxable profit
-
0
1
Tax effect of income not taxable in determining taxable profit
-
0
(91)
Remeasurement of deferred tax for changes
88
4,454
Taxation charge for the year
-
2,913

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

2024
2023
£'000
£'000
Deferred tax arising on:
Revaluation of financial instruments treated as cash flow hedges
254
(393)

An increase in the UK corporation tax rate from 19% to 25% took effect from 1 April 2023.

9
Debtors
2024
2023
Amounts falling due within one year:
£'000
£'000
Trade debtors
2,301
1,275
Amounts owed by group undertakings
3
3
Other debtors
5,517
4,525
Finance debtor
8,065
8,330
Prepayments and accrued income
1,385
1,423
17,271
15,556
TRANSFORM SCHOOLS (KNOWSLEY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
9
Debtors
(Continued)
- 18 -
2024
2023
Amounts falling due after more than one year:
£'000
£'000
Finance debtor
109,796
117,595
Deferred tax asset (note 13)
1,459
1,713
Total debtors
128,526
134,864
10
Creditors: amounts falling due within one year
2024
2023
Notes
£'000
£'000
Bank loans
12
93,036
100,819
Loans from group undertakings
12
3,969
-
0
Trade creditors
4,517
2,893
Taxation and social security
440
343
Deferred income
26,240
23,820
Other creditors
32,504
25,912
Accruals
1,433
1,500
162,139
155,287
11
Creditors: amounts falling due after more than one year
2024
2023
Notes
£'000
£'000
Loans from group undertakings
12
13,196
17,142
Derivative financial instruments
2,912
6,853
16,108
23,995

Derivatives, including interest rate swaps, 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 they are included in a hedging arrangement.

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

The fair value of the derivatives is based on the bank's valuation which is provided annually at the year end. The directors consider this to be an appropriate basis.

Hedge accounting has been discontinued during the year as the criteria has no longer been met. During the year, £1,017k was recycled from the cash flow hedge reserve to the income statement.

TRANSFORM SCHOOLS (KNOWSLEY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
- 19 -
12
Loans and overdrafts
2024
2023
£'000
£'000
Bank loans
93,036
100,819
Loans from group undertakings
17,165
17,142
110,201
117,961
Payable within one year
97,005
100,819
Payable after one year
13,196
17,142

The secured senior loans represent amounts borrowed by the Company under a facility agreement with banks. The loans are repayable in instalments between 2010 and 2034. The loans bear interest at a margin over SONIA. As part of the interest rate management strategy, the Company entered interest rate swaps in respect of all senior debt. Under these swaps and the financing in place, the Company pays fixed interest at fixed rates between 5.82% and 6.27%. The loans are secured by fixed and floating charges over the undertaking, property, assets and rights of the Company and have certain covenants attached. Due to an ongoing Event of Default (see note 1.2) secured senior loans have been categorised as falling due in less than one year.

The subordinated loan stock is held 100% by Transform Schools (Knowsley) Intermediate Limited and is repayable in semi-annual instalments over the life of the concession. Interest is charged at 10% plus a margin for the movement in RPI year on year. There is a fixed and floating charge over the assets of the Company. Due to the events of default which occurred in 2022 not yet being waived, payments have not been made in relation to this debt, however this has been waived by the loan stock holder.

13
Deferred taxation

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

Assets
Assets
2024
2023
Balances:
£'000
£'000
Cash flow hedge
1,459
1,713
2024
Movements in the year:
£'000
Asset at 1 January 2024
(1,713)
Charge to profit or loss
254
Asset at 31 December 2024
(1,459)
TRANSFORM SCHOOLS (KNOWSLEY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
13
Deferred taxation
(Continued)
- 20 -

The deferred tax asset set out above is expected to reverse in line with movements in the fair value adjustments in relation to the interest rate swap held by the Company.

No deferred tax asset has been recognised as long term forecasts show that the asset cannot be utilised against future taxable profits.

14
Share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£'000
£'000
Issued and fully paid
Ordinary shares of £1 each
50,100
50,100
50
50

The company has one class of ordinary shares which carry no right to fixed income. The shares carry standard voting rights.

15
Reserves
Hedging reserve

Hedge accounting has been discontinued during the year as the criteria has no longer been met. During the year, £1,017k was recycled from the cash flow hedge reserve to the income statement.

Profit and loss reserves

Retained earnings represent cumulative profit and losses net of distributions to the shareholders. There are no unrealised profits or losses included within retained earnings.

16
Ultimate controlling party

The Company is indirectly a wholly owned subsidiary of Transform Schools (Knowsley) Holdings Limited which is incorporated in the United Kingdom and registered in England and Wales. Transform Schools (Knowsley) Holdings Limited owns 100% of the share capital in Transform Schools (Knowsley) Intermediate Limited, which in turns owns 0.2% of the share capital in the Company. The remaining 99.8% of the share capital in the Company is owned by Transform Schools (Knowsley) Holdings Limited. The only Group in which the results of Transform Schools (Knowsley) Limited are consolidated is Transform Schools (Knowsley) Holdings Limited, copies of whose financial statements are available from 1 Park Row, Leeds, United Kingdom, LS1 5AB.

The immediate parent Company of Transform Schools (Knowsley) Holdings Limited is PPDI Assetco Limited. The company is ultimately controlled by PPP Equity PIP LP, a limited partnership registered in England.

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