IIC_BRISTOL_FUNDING_INVES - Accounts

The directors present their annual report and audited financial statements for the year ended 31 December 2022.

The company’s principal activity is that of an intermediate investment company which provides funding to IIC Bristol Subdebt Limited in the form of loan stock, which in turn provides funding in the form of loan stock to Bristol PFI Limited.

The directors have reviewed the activities of the business for the period and the position as at 31 December 2022 and consider them to be satisfactory.

The trading results for the period under review and the company's financial position at 31 December 2022 are shown in the attached financial statements. The company has made a loss after tax during the year of £4,377 (2021: profit of £8,827) and the balance sheet at 31 December 2022 shows a total liabilities of £8,897 (2021: £4,520).

The directors do not recommend the payment of a dividend for the year ended 31 December 2022 (2021: £nil).

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

Strategic report

The company has taken advantage of the small companies exemption, under section 414B of the Companies Act 2006, from preparing a strategic report for the financial year.

Financial instruments

The company has borrowings in place of £2,297,922 (2021: £2,376,897). These are at a fixed interest rate and therefore the company is not exposed to interest rate volatility.

Going concern

The balance sheet shows net current liabilities of £90,694 (2021: £75,805). The directors have reviewed the forecast, which includes capital returns on the loan stock investment (note 8) in the next 12 months, from the balance sheet date, of £89,798 (2021: £79,287). The company will also receive interest income in excess of interest payable of £2,275 (2021: £2,357) in the next 12 months, from the balance sheet date. As the contractual cash returns exceed the net current liabilities in the short term there is are no material concerns regarding the ability for the companies liabilities to be meet and therefore consider that it is appropriate to prepare these financial statements on a going concern basis.

Johnston Carmichael LLP have indicated their willingness to be reappointed for another term and appropriate arrangements are being made for them to be deemed reappointed as auditors in the absence of an Annual General Meeting.

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.

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have 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;

•     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.

We have audited the financial statements of IIC Bristol Funding Investment Limited (the 'company') for the year ended 31 December 2022 which comprise of the statement of comprehensive income, balance sheet, 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 2022 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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

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

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditors' report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

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 directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• The directors' report has been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the directors' report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

•     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 directors' remuneration specified by law are not made; or

•     We have not received all the information and explanations we require for our audit; or

•     The directors were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies' exemption in preparing the directors' report and take advantage of the small companies exemption from the requirement to prepare a strategic report.

As explained more fully in the directors' responsibilities statement set out on page 3, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Extent the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

We assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations by considering their experience, past performance and support available.

All engagement team members were briefed on relevant identified laws and regulations and potential fraud risks at the planning stage of the audit. Engagement team members were reminded to remain alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

We obtained an understanding of the legal and regulatory frameworks that are applicable to company and the sector in which it operates, focusing on provisions that had a direct effect on the determination of material amounts and disclosures in the financial statements. The most relevant frameworks we identified include:

• UK Generally Accepted Accounting Practice, including FRS 102;

• Companies Act 2006; and

• UK Corporation Tax legislation.

We gained an understanding of how the company is complying with these laws and regulations by making enquiries of management and those charged with governance. We corroborated these enquiries through our review of relevant correspondence with regulatory bodies and board meeting minutes.

We assessed the susceptibility of the financial statements to material misstatement, including how fraud might occur, by meeting with management and those charged with governance to understand where it was considered there was susceptibility to fraud. This evaluation also considered how management and those charged with governance were remunerated and whether this provided an incentive for fraudulent activity. We considered the overall control environment and how management and those charged with governance oversee the implementation and operation of controls. We identified a heightened fraud risk in relation to:

• Income recognition; and

• Management override of controls.

In addition to the above, the following procedures were performed to provide reasonable assurance that the financial statements were free of material fraud or error:

• Recalculating the income received to ensure amounts are in line with contractual terms and relevant accounting standards;

• Agreeing a sample of income receipts to supporting documentation and bank statements;

• Reviewing minutes of meetings of those charged with governance for reference to: breaches of laws and regulation or for any indication of any potential litigation and claims; and events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud;

• Reviewing the level of and reasoning behind the company’s procurement of legal and professional services;

• Performing audit work procedures over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing judgements made by management in their calculation of accounting estimates for potential management bias;

• Completion of appropriate checklists and use of our experience to assess the company's compliance with the Companies Act 2006; and

• Agreement of the financial statement disclosures to supporting documentation.

Our audit procedures were designed to respond to the risk of material misstatements in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve intentional concealment, forgery, collusion, omission or misrepresentation. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.

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 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.

The profit and loss account has been prepared on the basis that all operations are continuing operations.

These financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.

IIC Bristol Funding Investment 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.

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

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

The financial statements have been prepared on a going concern basis under the historical cost convention. The principal accounting policies adopted are set out below.

The financial statements contain information about IIC Bristol Funding Investment Limited as an individual company and do not contain consolidated financial information. The Company is exempt from the requirement to prepare consolidated financial statements, under section 398 of the Companies Act 2006, as the group it heads is a small sized group.

At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.true

The balance sheet shows net current liabilities of £90,694 (2021: £75,805). The directors have reviewed the forecast, which includes capital returns on the loan stock investment (note 8) in the next 12 months, from the balance sheet date, of £89,798 (2021: £79,287). The company will also receive interest income in excess of interest payable of £2,275 (2021: £2,357) in the next 12 months, from the balance sheet date. As the contractual cash returns exceed the net current liabilities in the short term there is are no material concerns regarding the ability for the companies liabilities to be meet and therefore consider that it is appropriate to prepare these financial statements on a going concern basis.

The company extended its prior accounting period to 18 months, covering the period from 1 July 2020 to 31 December 2021 so as to align it's year end with other entities under common control. Because of the extension to the prior period the comparative amounts presented in the financial statements, including the notes to the financial statements, are not entirely comparable.

Interest receivable and interest payable

Interest receivable and similar income include interest receivable on funds invested. Interest payable and similar charges include interest payable on borrowings and associated ongoing financing fees.

Interest receivable and interest payable are recognised in the profit and loss account as they accrue, using the effective interest method.

Investments are stated at initial transaction cost less repayment and issues costs.

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

The company 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 balance sheet 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.

Trade and other debtors

Trade and other debtors are recognised initially at transaction price less attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any impairment losses in the case of trade debtors. If the arrangement constitutes a financing transaction, for example if payment is deferred beyond normal business terms, then it is measured at the present value of future payments discounted at a market rate of instrument for a similar debt instrument.

Interest-bearing borrowings classified as basic financial instruments

Interest-bearing borrowings are recognised initially at the present value of future payments discounted at a market rate of interest. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost using the effective interest method, less any impairment losses.

Financial assets (including trade and other debtors)

A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. For financial instruments measured at cost less impairment, an impairment is calculated as the difference between its carrying amount and the best estimate of the amount that the Company would receive for the asset if it were to be sold at the reporting date.

Interest on the impaired asset continues to be recognised through the unwinding of the discount. Impairment losses are recognised in profit or loss. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

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, including creditors 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 payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

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

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

Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.

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

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account 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 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 profit and loss account, 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.

The preparation of financial statements in conformity with FRS102 requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based upon historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily available from other sources. 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 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.

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.

The carrying value of those assets recorded in the company's balance sheet at amortised cost, could be materially reduced where circumstances exist which might indicate that an asset has been impaired and an impairment review is performed. Impairment reviews consider the fair value and/or value in use of the potentially impaired asset or assets and compare that with the carrying value of the asset or assets in the balance sheet. Any reduction in value arising from such a review would be recorded in the profit and loss account. Impairment reviews involve the significant use of assumptions. Consideration has to be given as to the price that could be obtained for the asset or assets, or in relation to a consideration of value in use, estimates of the future cash flows that could be generated by the potentially impaired asset or assets, together with a consideration of an appropriate discount rate to apply to those cash flows.

The directors, who are key management personnel, received no emoluments in respect of their services to the company during the year (2021: £nil). The company had no employees during the year (2021: no employees).

The actual charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:

A deferred tax asset of £nil (see note 10) in respect of available tax losses has been recognised at 31 December 2022 (2021: £427). During the year the directors assessed that the availability of suitable future taxable profits was not sufficiently certain to recognise a deferred tax asset.

The tax losses arise from excess management expenses available to carry forward of £6,194 (2021: £4,316).

Corporation tax remained at 19% until March 2023. From 1 April 2023 the main rate increased to 25% for business profits made by the Company over £250,000. A small profit rate (SPR) will also be introduced for companies with profits of £50,000 or less so that they will continue to pay corporation tax at 19%. Companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief providing a gradual increase in the effective corporation tax rate. The Company has assessed the impact of this change and consider the full rate of 25% will apply.

Details of the company's subsidiaries at 31 December 2022 are as follows:

IIC Bristol Subdebt Limited is a company registered in England and Wales. The registered office is 1 Park Row, Leeds, United Kingdom, LS1 5AB. Its principal activity is that of an intermediate investment company. IIC Bristol Subdebt Limited ultimately invests, in the form of loan stock, in Bristol PFI Limited, which is involved in the development, construction and facilities management operation of four schools under a private finance initiative (“PFI”) with Bristol City Council (the project). The loan stock in IIC Bristol Subdebt Limited had an interest coupon of 5.49% during the construction phase of the project. The coupon rate increased to 12.40% once the project became operational.

Included within loans from group undertakings are amounts which are repayable by instalments after five years of £1,755,254 (2021: 1,901,572).

On 30 June 2006, the company issued £3,168,000 of fixed rate unsecured subordinated loan stock due in 2034 part paid at the amount of £2,842,401. The loan stock is held by LouiseCo Limited. The loan stock had an interest rate of 5.49% during the construction stage of Bristol PFI Limited’s project and increased to 12.30% once the project became operational.

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

The company's issued shares rank pari passu to each other.

The profit and loss reserves is the cumulative profit or loss of the company since registration.

At the balance sheet date, the company was a wholly owned subsidiary of Jura Holdings Limited and has taken advantage of the exemption, under the terms of the Financial Reporting Standard 102, from disclosing related party transactions with entities that are part of the group headed by Jura Holdings Limited.

No remuneration was paid to key management by the company during the year (2021: £nil).

There were no other related party transactions entered into by the company during the year.

At the balance sheet date the directors regard Jura Holdings Limited, registered address North Suite, First Floor, Regency Court, Glategny Esplanade, St Peter Port, Guernsey, GY1 1WW, as the ultimate parent entity. Jura Holdings Limited is owned by a consortium jointly led by funds manged by Dalmore Capital Limited and Equitix Management Limited. The directors consider that there is no ultimate controlling entity.

The company’s immediate holding company is Louiseco Limited which is registered at 1 Park Row, Leeds, United Kingdom, LS1 5AB.

These financial statements are available to the public and may be obtained from the Company Secretary, Exchange Tower 11th Floor, 19 Canning Street, Edinburgh, EH3 8EG.