ACCOUNTS - Final Accounts CHECK cashflow and Deferred tax notes
ACCOUNTS - Final Accounts CHECK cashflow and Deferred tax notes
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Registered number: 09512797
AUDITED
ANNUAL REPORT
AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 MARCH 2021 |
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CARDALE PFI INVESTMENTS LIMITED
COMPANY INFORMATION
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CARDALE PFI INVESTMENTS LIMITED
CONTENTS
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CARDALE PFI INVESTMENTS LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2021
The directors present their strategic report on the Group consolidated accounts of Cardale PFI Investments Limited for the year ended 31 March 2021.
During the year the principal activity of the Group was the provision of services under the Private Finance Initiative (PFI) focused upon the provision of operational services in healthcare, education, court and police facilities projects.
Cardale PFI Investments Limited continues to seek opportunities within the sector to integrate with its existing PFI contract portfolio. All centres have been fully operational during the year providing revenues in line with the underlying financial models in order for the Group to meet its financial obligations.
The principal risks and uncertainties facing the Group relate to the non - delivery of services in accordance with PFI contracts by the individual project Companies which could impact on the level of the unitary charge receipts and the Group’s ability for debt services to be met.
The key financial performance indicators are revenue, cash flow, its management and profitability as reported in monthly management accounts and Group financial overview.
Group turnover in the year ended 31 March 2021 was £34,861,957 (2020 - £33,736,065) resulting in a Group loss for the year of £3,154,860 (2020 - £1,915,804) and the management of cash flow increased cash and cash equivalents to £36,723,953 in the current 2021 year compared to £31,167,248 in 2020.
Financial penalties are levied by the relevant Authority or Council in the event the project companies are unable to make certain areas of the facilities available or certain service requirements are not achieved as set out in the Concession Agreement.
Any penalties incurred are passed down to the project Companies' subcontractors and their quantum is an indication of the performance level achieved. The directors’ consider the group performance to be satisfactory when judged against this metric for the year end as at 31 March 2021.
This report was approved by the board and signed on its behalf.
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CARDALE PFI INVESTMENTS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2021
The directors present their report and the financial statements for the year ended 31 March 2021.
The directors are responsible for preparing the group strategic report, the directors' report and the consolidated 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group 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 the Group and to 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 the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The loss for the year, after taxation and minority interests, amounted to £3,541,585 (2020 - loss £1,760,233).
The directors who served during the year were:
No director has or has held during the year any personal interests in any significant or material contract with the Group.
The Group continues to seek future opportunities commensurate with the Group's skill and expertise in the PFI and related markets.
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CARDALE PFI INVESTMENTS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2021
The Group holds both basic and complex financial instruments to manage its financial risk (including interest rate risk, inflation risk, liquidity risk and cash flow risk) and operates hedge accounting as part of its group policy.
Subsequent to the year end date, global economies and financial marketsbcontinue to experience significant volatility as a result of the uncertainties arising from the COVID-19 virus pandemic. The Group and Company earns income from PFI contracts through its trading company subsidiaries which mature in future years. The Directors have assessed the impact and risk of the current market conditions on the Group and Company and do not believe these to be material in nature. Details of the Directors' going concern assessment are included in note 2.4.
This report was approved by the board and signed on its behalf.
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CARDALE PFI INVESTMENTS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CARDALE PFI INVESTMENTS LIMITED
We have audited the financial statements of Cardale PFI Investments Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 March 2021, which comprise the Group income statement, the Group statement of comprehensive income, the Group and Company statements of financial position, the Group statement of cash flows, the Group and Company statement of changes in equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's or the parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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CARDALE PFI INVESTMENTS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CARDALE PFI INVESTMENTS LIMITED (CONTINUED)
The directors are responsible for the other information. The other information comprises the information included in the Annual Report, other than the financial statements and our auditors' report thereon. 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.
In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Group strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the group strategic report or the directors' report.
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CARDALE PFI INVESTMENTS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CARDALE PFI INVESTMENTS LIMITED (CONTINUED)
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
∙Enquiry of management and those charged with governance as to actual and potential litigation and claims;
∙Enquiry of management and those charged with governance to identify any instances of non-compliance with laws and regulations;
∙Performing audit work over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business, and reviewing accounting estimates for bias;
∙Assessing the reasonableness of interest receivable and payable recognised in the period based on contractual terms and obligations and the requirement of accounting standards;
∙Reviewing and challenging the underlying fair valuation of the Group's swap instruments in the context of market available data to assess for indicators of management bias;
∙Reviewing and challenging the underlying assumptions and valuation methodology used for the valuation of the Company's group and third party loans including assessing the reasonableness of valuation inputs and assumptions in the context of market available data to assess for indicators of management bias;
∙Reviewing the tax provisions of the Company with the assistance of our independent tax specialists; and
∙Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors' report.
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CARDALE PFI INVESTMENTS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CARDALE PFI INVESTMENTS LIMITED (CONTINUED)
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 auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Chartered Accountants
Statutory Auditors
Albany House
Claremont Lane
Surrey
KT10 9FQ
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CARDALE PFI INVESTMENTS LIMITED
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2021
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CARDALE PFI INVESTMENTS LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2021
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CARDALE PFI INVESTMENTS LIMITED
REGISTERED NUMBER: 09512797
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2021
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 18 to 37 form part of these financial statements.
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CARDALE PFI INVESTMENTS LIMITED
REGISTERED NUMBER: 09512797
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2021
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2021
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2020
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CARDALE PFI INVESTMENTS LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2021
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CARDALE PFI INVESTMENTS LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2020
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CARDALE PFI INVESTMENTS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2021
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CARDALE PFI INVESTMENTS LIMITED
CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 MARCH 2021
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
Cardale PFI Investments Limited is a private Company, limited by shares, incorporated in England and Wales, registered number
2.ACCOUNTING POLICIES
The following principal accounting policies have been applied:
The accounts have been prepared in accordance with the provisions of FRS 102, with the exception of matters disclosed in note 2.21. Management have concluded that the financial statements present a true and fair view of the Group and Company's affairs as at 31 March 2021 and its loss for the year then ended.
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated income statement from the date on which control is obtained. They are deconsolidated from the date control ceases. In accordance with the transitional exemption available in FRS 102, the group has chosen not to retrospectively apply the standard to business combinations that occurred before the date of transition to FRS 102, being 31 December 2015.
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
2.ACCOUNTING POLICIES (CONTINUED)
The financial statements have been prepared on the going concern basis as the Group's senior loans; subordinated loans; and debenture loans that are repayable by 31 March 2042 are supported by future cash flows from PFI contracts under the Group's management. Management and service charge income enables the parent Company to meet its current liabilities as they fall due. The Group has a portfolio of PFI contracts under management by its subsidiary undertakings for periods coinciding with the senior and subordinated loan periods.
The directors acknowledge that the Group has net liabilities. The Group's balance sheet net liability position is driven by historic movement on swap positions held by the Group subsidiary companies which are significantly out of the money. It is not the intention of management to close out these instruments before their maturity date and therefore there is no impact on the Group’s ability to meet its liabilities as they fall due. In assessing the appropriateness of the going concern basis of preparation, the Directors have taken into account the key risks of the business, including the uncertainty in relation to the impact of COVID-19. In doing so the Directors have considered the Group's and Company’s business model and availability of cash resources. The directors have prepared projected Group and Company cash flow information for at least twelve months from the date of their approval of these financial statements. On the basis of this cash flow information, the directors consider that the Group and Company will continue to operate within the long term facilities currently agreed. In addition, during the operational phase of the projects, sufficient cash flows have been, and are, projected to continue to be generated to allow the Group to meet its liabilities as they fall due for payment. Accordingly, the directors believe it is appropriate to prepare the financial statements on a going concern basis. The financial statements do not include any adjustments that would result from the going concern basis of preparation being inappropriate. The Company recognises income when it has fully fulfilled its contractual obligations. In accordance with FRS 102 the Group includes sales and purchase transactions related to variations under the original contract where the benefits and risks are retained by the Company, within the financial statements as turnover and operating costs. Transactions to which the Company does not have access to all the significant benefits and risks are excluded from the financial statements.
The Group operates a portfolio of PFI contracts. During the operational phase income is allocated between interest receivable and the finance debtor using an asset specific interest rate. The remainder of the PFI unitary charge is included within turnover.
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
2.ACCOUNTING POLICIES (CONTINUED)
Under transitional rules, the Group has elected not to apply FRS102 to service concession arrangements that were entered into before the date of transition. These relate to PFI contracts which under FRS 5 Application Note F "Private Finance Initiative and Similar Contracts" the Directors are of the opinion that the Company bears the majority of the risks and benefits of the property and equipment and as a result this asset was correctly disclosed as a tangible fixed asset. Revenues received from the client are credited to the profit and loss account as receivable.
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
2.ACCOUNTING POLICIES (CONTINUED)
Goodwill
Other intangible assets
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The estimated useful lives range as follows:
At each reporting date the company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
The estimated useful lives range as follows:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
2.ACCOUNTING POLICIES (CONTINUED)
Provisions are charged as an expense to profit or loss in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the statement of financial position date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the statement of financial position.
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
2.ACCOUNTING POLICIES (CONTINUED)
Derivatives, including interest rate and inflation swaps, are not basic financial instruments.
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
2.ACCOUNTING POLICIES (CONTINUED)
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to fair value at each reporting date. Fair value gains and losses are recognised in the statement of comprehensive income unless hedge accounting is applied and the hedge is a cash flow hedge.
To qualify for hedge accounting, the Company documents the hedged item, the hedging instrument and the hedging relationship between them and the causes of hedge ineffectiveness. The Company elects to adopt hedge accounting for interest rate swaps and inflation rate swaps (the 'swaps') where:
∙The swaps are a qualifying hedging instrument with an external party that hedges rate risk on a loan, part of the nominal amount of a loan, or a group of loans managed together that share the same risk and that qualify as a hedged item;
∙The hedging relationship between the swaps and the interest rate risk and inflation rate risk on the loan is consistent with the risk management objectives for undertaking hedges (i.e. to manage the risk that fixed interest rates or inflation rates variation become unfavourable in comparison to market rates or the variability in cash flows arising from the changes in these rates); and
∙The change in the fair value of the swaps is expected to move inversely to the change in the fair value of the interest rate risk and the inflation rate risk on the loan.
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
Critical accounting estimates and assumptions The Group makes estimates and assumptions concerning the future. The resulting accounting estimates and assumptions will, by definition, seldom equal the actual results. Critical areas of judgement The Group makes judgements in applying its accounting policies as described below: The recoverability of the amounts recoverable on long term contracts is based on the receipt of the unitary fee in accordance with the contractual payment mechanisms contained in the project agreement with its clients. The accounting for service concession contracts and finance debtors requires estimation of service margins, finance debtors interest rates and associated amortisation profile which is based on forecasted results of the PFI contract. The depreciation charge calculated for the fixed assets requires estimations and judgements on their useful lives. This will affect the value of assets and expenses in the accounts. An estimation is required on future LIBOR rates when accounting for loan facilities held at amortised cost, based on current market data. Actual rates will vary from forecast over the loan lifetime, rendering the effective interest rate calculated as an estimate subject to these variations. The valuation of the interest rate swaps held requires estimation of the cost of capital associated with the loan facility and future LIBOR rates over the lifetime of the swap which is based on current market data. 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 if the revision affects only that period or in the period of revision and future periods if the revision affects both current and future periods.
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
Page 26
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
There were no factors that may affect future tax charges.
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own income statement in these financial statements. The loss after tax of the parent Company for the year was £
Page 27
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
Page 28
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
Page 29
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
Page 30
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
Page 31
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
Page 32
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
Details of amounts falling due after more than 5 years are shown in note 19.
Page 33
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
Page 34
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
Page 35
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
Page 36
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
Other reserves
Profit and loss account
There is no ultimate controlling party.
Page 37
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