ACCOUNTS - Final Accounts preparation
ACCOUNTS - Final Accounts preparation
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Registered number: 09512797
AUDITED
ANNUAL REPORT
AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 MARCH 2023 |
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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 2023
The directors present their strategic report on the Group consolidated accounts of Cardale PFI Investments Limited for the year ended 31 March 2023.
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.
All centres have been fully operational during the year providing revenues in line with the 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 management and profitability as reported in quarterly management accounts and Group financial overview.
Group turnover in the year ended 31 March 2023 was £41,220,939 (2022 - £36,601,535) resulting in a Group loss after tax for the year of £1,897,976 (2022 - £4,943,304). The management of cash flow increased cash and equivalents to £45,100,015 in the current 2023 year compared to £38,588,065 in 2022.
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 2023.
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 2023
The directors present their report and the financial statements for the year ended 31 March 2023.
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.
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 £2,594,051 (2022 - loss £5,561,983).
No dividends were paid during the year (2022 - £Nil) and the directors have not recommended a final dividend to be paid (2022 - £Nil)
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.
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CARDALE PFI INVESTMENTS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
The Group continues to seek future opportunities commensurate with the Group's skill and expertise in the PFI and related markets.
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, economies and financial markets continue to experience significant volatility as a result of economic uncertainties. 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 2023, which comprise the consolidated profit and loss account, the Consolidated statement of comprehensive income, the Consolidated balance sheet, the Company balance sheet, the Consolidated statement of cash flows, the Consolidated statement of changes in equity, the 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).
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 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.
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. We have identified the greatest risk of a material impact on the financial statements from irregularities, including fraud, to relate to the timing and recognition of revenue, and the override of controls by management. We have obtained an understanding of the legal and regulatory frameworks that the Group and Company operates within including both those that directly have an impact on the financial statements and more widely those for which non-compliance could have a significant impact on the Group's and Company’s operations and reputation. The Companies Act 2006, employee legislation, health and safety legislation, and data protection are those we have identified in this regard. Auditing standards limit the required procedures as to non-compliance with laws and regulations to enquiries of those charged with governance and review of any applicable correspondence.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 revenue, interest receivable and payable and finance income recognised in the period based on contractual terms and obligations and the requirement of accounting standards;
∙Reviewing and challenging assumptions and judgements in respect of significant accounting estimates, regarding the valuation of fixed assets and investments and related impairment assessment, including valuation methodology and financial models and key inputs such as forward cash flow forecasts and associated growth rates and discount rates;
∙Reviewing and challenging assumptions and judgements in respect of significant accounting estimates, regarding the valuation of finance debtors and related recoverability, including valuation methodology and financial models and key inputs such as forward cash flow forecasts and associated growth rates and discount rates;
∙Verifying the Group's and Company's fair value swap positions to independent third party commercial valuations;
∙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;
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CARDALE PFI INVESTMENTS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CARDALE PFI INVESTMENTS LIMITED (CONTINUED)
∙Reviewing the tax provisions of the Group and 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.
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
Date:
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CARDALE PFI INVESTMENTS LIMITED
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MARCH 2023
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CARDALE PFI INVESTMENTS LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2023
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CARDALE PFI INVESTMENTS LIMITED
REGISTERED NUMBER: 09512797
CONSOLIDATED BALANCE SHEET
AS AT 31 MARCH 2023
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CARDALE PFI INVESTMENTS LIMITED
REGISTERED NUMBER: 09512797
CONSOLIDATED BALANCE SHEET (CONTINUED)
AS AT 31 MARCH 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 19 to 40 form part of these financial statements.
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CARDALE PFI INVESTMENTS LIMITED
REGISTERED NUMBER: 09512797
COMPANY BALANCE SHEET
AS AT 31 MARCH 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 19 to 40 form part of these financial statements.
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2022
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CARDALE PFI INVESTMENTS LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
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CARDALE PFI INVESTMENTS LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2022
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CARDALE PFI INVESTMENTS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2023
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CARDALE PFI INVESTMENTS LIMITED
CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 MARCH 2023
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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 consolidated financial statements incorporate the results of business combinations using the purchase method. In the balance sheet, 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 profit and loss account 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 2023
2.Accounting policies (continued)
In assessing the appropriateness of the going concern basis of preparation, the Directors have taken into account the key risks of the business, including economic uncertainties. In doing so the Directors have considered the Group's business model and availability of cash resources. The directors have prepared projected cash flow information and financial models for the life of the projects. 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. 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 agreed and the Group has the ability, should it be required, to manage its cashflows to meet liabilities for at least twelve months from the date of their approval of these financial statements. Further, the Directors cite, that the Group’s portfolio of PFI contracts extend beyond the senior and subordinated loan maturity dates such that the Group is expected to be profitable in the longer term including the repayment of Group provided sub debt. 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.
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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 Group 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.
Depreciation is provided on the following basis:
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 2023
2.Accounting policies (continued)
In the consolidated accounts, interests in associated undertakings are accounted for using the equity method of accounting. Under this method an equity investment is initially recognised at the transaction price (including transaction costs) and is subsequently adjusted to reflect the investors share of the profit or loss, other comprehensive income and equity of the associate. The consolidated profit and loss account includes the Group's share of the operating results, interest, pre-tax results and attributable taxation of such undertakings applying accounting policies consistent with those of the Group. In the consolidated balance sheet, the interests in associated undertakings are shown as the Group's share of the identifiable net assets, including any unamortised premium paid on acquisition. Any premium on acquisition is dealt with in accordance with the goodwill policy.
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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 balance sheet 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 balance sheet.
The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
The Group has elected to apply the recognition and measurement provisions of IFRS 9 Financial Instruments (as adopted by the UK Endorsement Board) with the disclosure requirements of Sections 11 and 12 and the other presentation requirements of FRS 102.
Financial instruments are recognised in the Group's balance sheet when the Group 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
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
Derecognition of financial instruments
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Group transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Group will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Group's contractual obligations expire or are discharged or cancelled.
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 2023
2.Accounting policies (continued)
To better reflect the nature of the long term financing structure in operation and in a modification to accounting standards, all cumulative hedging gains or losses on the hedged item are recognised as an asset or liability with a corresponding gain or loss recognised in the statement of comprehensive income. Management believe that this treatment better reflects the financing profile in operation across the life of the structure.
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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 Company makes judgements in applying its accounting policies as described below: The recoverability of the amounts on long term PFI 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 and counterparties. 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. As set out in note 17, the Group's bank borrowings attract interest at a variable rate based on SONIA, the risk free rate administered by the Bank of England. Bank loans are held at amortised cost which requires the Directors to forecast the expected interest payable over the life of the loan and recognise, in the profit and loss account, interest annually at an effective rate. Each year end the Directors update their forecasts and recognise any difference between actual and forecast interest payable as an adjustment to the effective interest expense. Forecasts require an estimation as to future SONIA rates, based on current market data. Actual rates will vary from forecast over the loan lifetime, rendering the effective interest rate calculated an estimate subject to these variations. If interest payable over the life of the loan were to be considerably different to the Directors’ forecasts there could be a material impact on the carrying value of the bank loans and associated interest payable expense. The valuation of the interest and inflation rate swaps held requires estimation of the cost of capital associated with the loan facility, future SONIA and inflation rates over the lifetime of the swaps which is based on current market data. Actual rates will vary from forecast over the lifetime of the swaps rendering the fair value of the position an estimate subject to these variations. An estimation is required on the reasonableness of future costs when accounting for lifecycle maintenance requirements. This is assessed based on historical costs which have been incurred and the future forecast of maintenance work contractually required. Actual costs will vary from forecast over the contract’s life rendering the lifecycle costs as an estimate subject to these variations. 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 2023
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
The Chancellor of the Exchequer announced an increase in the corporation tax rate from 19% to 25% with effect from 1 April 2023. Deferred taxation has been provided at 25%.
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own profit and loss account in these financial statements. The loss after tax of the parent Company for the year was £
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 30
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 31
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 32
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 33
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 34
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 35
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Details of amounts falling due after more than 5 years are shown in note 17.
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 37
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
18.Deferred taxation (continued)
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Other reserves
Profit and loss account
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CARDALE PFI INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
There is no ultimate controlling party.
Page 40
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