The financial statements have been prepared in accordance with the accounting policies set out in note 1 to the financial statements and comply with the charity's governing document, the Companies Act 2006 and “Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102)” (as amended for accounting periods commencing from 1 January 2019) .
We present the Annual Report and Accounts for the Academic year 2020/2021. The directors’ report is included as part of the annual accounts as required by company law. The accounts were approved by the board on 9 December 2021 .
Trustees' Report
The Hammond has enjoyed another successful year despite the range of ongoing challenges presented as the COVID-19 pandemic continued to impact the day-to-day life of the S chool for most of the academic year. We would like to offer our sincere thanks to our Principal Jennifer Roscoe and her colleagues. They have worked tirelessly to ensure that students continued to receive the best possible education in the circumstances. There were two periods in the year when teaching moved exclusively online, and the board continues to be impressed by the adaptability of both our teachers and students in responding so positively to this teaching method.
Yet again, the preparation of this Annual Report, especially after such a demanding and challenging year, reminds us of The Hammond's continued excellence and reputation. The Trustees' recognise that it is the hard work, commitment and dedication of the people who work at the School who make this possible. We are very grateful to all of them .
History and Development
The School continues to be supported by a range of funding schemes. For the BA course, the funding is by the Higher Education Funding Council of England (“HEFCE”). The Music and Dance Scheme (“MDS”) award places for the lower s chool, and, in the upper s chool, the Dance and Drama Awards (“DADA”) grant funding assists a number of our senior dance students
The junior s chool comprises five years from the age of 11 to 16. In addition to providing the entire national curriculum, key stage 3 and 4 subjects further broaden the music and dance curriculum. A similarly extensive range of extra-curricular activities is offered to junior s chool students.
The s enior s chool takes boys and girls aged 16+. In addition to their vocational training, students are offered a wide range of educational options, again of the highest standard, for those who wish to continue pursuing further academic qualifications.
At the end of the last academic year, the School secured a medium-term solution for our boarding accommodation by signing a three-year lease with the University of Chester for whole s chool boarding provision. This has proven to be a highly successful move for all our students. One year on during the summer months we conducted a review of the new facilities. This resulted in the introduction of a new staffing structure for the start of the Summer Term. We now have in post a very experience resident Head of Boarding overseeing the delivery of our boarding provision with our students at the centre of all decision-making processes .
The Hammond continues to provide education for young people and in particular in the performing arts. It gives students the skills, knowledge and confidence necessary for their future for its pupils aged between 11 and 21 plus.
The School’s caring and supportive ethos, where the welfare and development of the individual is of the utmost importance, is one of its real strengths. This together with the School’s enviable academic and specialist dance, music and drama results place it in a pre-eminent position within the region. The School attracts both local day students and boarders from all parts of the UK, and a number of international students.
Our s chool continues to welcome pupils from all backgrounds. An individual’s economic status, gender, ethnicity, race, religion or disability do not form part of our entrance assessment criteria. It is important to us that access to the education we provide is not restricted to those who can afford our fees. Our Bursary Policy enables access by children of families who might otherwise not be able to afford the fees and our Outreach Programme enables access to our facilities by the wider community.
The School operates a limited bursary policy. The School’s board and senior management team assess students for grant funding and other financial support, on a case by case basis, taking into account both the student’s talent and the financial circumstances of the family. The aim is to ensure that the policy of welcoming students from all backgrounds described above, is met.
The School continues to produce well-educated, rounded individuals, with the life skills to take their places as contributory members of society. Self-discipline and self-motivation are stressed and the School expects the students to be its ambassadors, setting high standards of behaviour in the eyes of the general public.
Every pupil attending The Hammond School receives a high-quality academic education tailored to the individual. Dance students have full vocational training, specialising as necessary, according to the talents and aspirations of the individual. Drama students are offered an extensive and varied drama supplement to their general academic education. Dance, music, and drama students have regular opportunities to perform publicly and fully develop their talents.
The School works closely with all parents and actively involves them in the progress of their children. The Parent Teacher and Friends Association is an important body in this respect. The School also seeks to ensure that equal opportunities are available to all staff for training, professional development, and promotion. The School complies with disability legislation. All the School’s activities are undertaken with due regard to the broader public benefit. More information on significant activities to achieve these objectives can be found in the Principal’s Review of the Year.
Public benefit
In setting the School’s objectives and planning its activities, the Trustees' have given careful consideration to the duty placed on them by Section 17(5) of the Charities Act 2011 to have due regard to public benefit guidance published by the Charity Commission and in particular to its supplemental guidance on advancing education and fee-charging.
Specifically, the Trustees' take every step to ensure that the School’s intake, activities, and achievements are focused on maximising the benefit to both the students and the wider community of the School's academic, pastoral, and social activities. The Board of Trustees' regularly reviews the School’s activities in this regard as part of its monthly meeting. Albeit due to COVID restrictions, contact with the broader community has been limited in this academic year.
Strategic Report
Over the last three years, the Board has conducted a strategic review of all The Hammonds educational offering, both academically and the performing arts curriculum. There has also been a strategic review of all back-office services. See the Principals Report for more details on our enhanced offer to students resulting from these reviews.
Principal Risks and Uncertainties
The Hammond, like any other organisation is subject to a range of potential risks and uncertainties which can have an impact on future performance to a greater or lesser degree. Of these risks and uncertainties, some cannot be anticipated and as a result no financial management tool can cater for these. However, identifying risks and planning for uncertain future events enables the organisation to react more quickly to mitigate risks when they arise and reduce the risk in the first instance.
During the year, the board has continued to develop and embed internal control and risk management systems designed to protect the S chool’s assets and reputation.
The board has continued its annual review of the School’s business plan to identify the risks to which it is exposed and identify the systems and procedures to mitigate those risks. Internal controls have been implemented and each year the effectiveness of those controls will be reviewed. As well as an annual review, at every board meeting, the board reviews the ‘risk register’ and considers current risks and their ratings and any emerging risks.
The work currently being undertaken by the School, has identified the following key risks and uncertainties . The actions to mitigate these are detailed below:
The ongoing COVID 19 Pandemic and the disruption to both teaching and student attendance , creating both academic and financial risk. The former has been mitigated by a rapid and successful switch to remote teaching and learning, the latter by an increased role for the finance sub-committee to ensure that both reduced revenue and increased cost (principally of supply staff) have been mitigated and managed. This risk has, to date, been successfully managed.
The lack of an up-to-date Estate Strategy and programme of work to replace the ageing estate places the School at risk of, at some time in the future being unable to accommodate the boarding cohort. In the short to medium term this has been mitigated by securing suitable accommodation provided by the University of Chester. The longer-term solution is a matter of a detailed and extensive work by the board of Trustees'.
T he BA Course, in conjunction with the University of Chester, has been successfully reviewed this year by Chester University. This course has become a fundamental part of the School's activities and is inherently vital to the finances of the School. The medium-term future of the BA Course has been secured, significantly mitigating this risk and work is now underway to develop an enhanced offer for undergraduate students to secure the longer-term.
Reductions in available grant funding is a significant and constant threat which the School's Board constantly monitors. These funds are subject to political and social changes , the majority of which are outside the School's control. In the short to medium term, funding of talented but underfinanced individuals by central Government looks relatively secure. The work carried out by the School's Accountant and finance team, to ensure that these funds are properly administered and accounted for, is significant and ongoing and seen by the board as crucial in doing all we can to secure this future income stream. Additionally, t he S chool is actively looking to build up its b u rsary funding to offer additional support or alternatives to Government funding in the future.
The continued availability and cost of suitable staff , which is the single largest cost to the School is a significant risk area which is actively managed. The board and senior management team recognise that there is reliance on a smaller pool of suitably qualified specialist staff than the mainstream education sector . At present, the Hammond continues to attract a steady supply of high-quality staff , a reflection of the work being done to make the School an attractive and rewarding place to work.
The other principal f inancial risk identified by the board is in relation to the facilities provided by Barclays Bank. The S chool has a very favourable loan facility (base rate +0.95%) of just under £2m, fixed in 2008 for 25 years. Increases in the bank base rate would quickly significantly increase interest payments and reduce the working capital availability. While it is recognised that the bank rate is determined by factors beyond the School's control, the board and finance team expend significant time and resources managing its facilities and ensure that the agreed lending covenants are complied with.
These are the principal risks to the S chool. The Board believes that the preceding narrative demonstrates that it is doing everything possible to mitigate these key risks.
Challenges and Opportunities
The board identifies the challenges as stated above however it considers there are opportunities available to the S chool including, increased revenue funding from existing providers, targeted pupil growth with expanded boarding facilities, and general continued rationalisation of costs.
The School is recognised as a Centre of Excellence within the Government’s Music and Dance Scheme. This recognition, among other things, enables the School to help highly talented young people from a wide range of backgrounds to realise their potential.
The School remains committed to increasing its involvement in a wide range of community-based projects. These projects, which cover a range of activities and vary considerably in size, are very beneficial to both the local and wider community as well as being extremely rewarding for the staff and students who take part. It is disappointing that contact with our communities has been restricted in this academic year.
This Annual Report allows the Trustees' the opportunity, once again to express their thanks and appreciation to all the staff for the work carried out within the School. The development and achievement of the students and the resulting burgeoning reputation of The Hammond would not be possible without the hard work, enthusiasm and commitment willingly given by our exceptional team. This is something which the Chairman and Board of Trustees' , recognise. We are immensely grateful to them for their resilience and determination to provide an outstanding education to our students in such challenging times .
The Trustees' regularly review the School’s business plan both at board and sub-committee level. The detailed management information, forecasts and supporting documentation is an ongoing part of the Trustees' robust financial and strategic plan for the School in the short to medium term. This has been particularly true over the last seventeen months when the finance sub-committee has maintained an increased focus on the crucial area of cash management.
The S chool retains a close working relationship with its bankers who support the S chool’s plans to continue improving the provision to our students.
The financial year to 31 July 2021 has been another one of significant challenge for the School. Total income, including grant monies received under the Job Retention Scheme, was £ 4.78m compared to £4.89m in 2020. Student numbers in creased from 324 to 331 .
T otal staff costs were £3.13m in the year to 31 July 20 21 compared to £2.96m in 2020 reflecting several payments to staff leaving post. O verheads and direct costs increased by £90k in the year to £1.56m.
The financial position over the last five years is summarised below:
|
20 21 |
20 20 |
201 9 |
201 8 |
201 7 |
Pupil numbers |
331 |
324 |
3 34 |
329 |
307 |
|
£000 |
£000 |
£000 |
£000 |
£000 |
Income |
4,776 |
4,887 |
5,113 |
5,027 |
4,684 |
G rants received |
1,847 |
1, 908 |
1, 839 |
1, 812 |
1, 783 |
Income less grants |
2,929 |
2,979 |
3,274 |
3,215 |
2, 901 |
Salaries |
3,134 |
2,962 |
3,027 |
2, 950 |
2,438 |
Overheads |
1,564 |
1, 474 |
1, 785 |
1, 706 |
1, 656 |
Operating profit/(loss) |
78 |
451 |
301 |
371 |
590 |
Interest payable |
(26) |
( 36 ) |
( 44 ) |
( 39 ) |
(2 2 ) |
Net profit/(loss) for the year |
52 |
415 |
257 |
332 |
568 |
Ave. contribution/pupil |
8,849 |
9,194 |
9,802 |
9,772 |
9,450 |
Reserves
The School's net assets stood at £ 1.83 m at the end of the year, an increase of £ 53k compared to last year’s balance of £ 1.77 m. Restricted funds accounted for £ 16,346.
The Trustees' are very conscious of the requirement to continually review the reserves and assets of the School and maintain a target of reserves accounting for six months operating costs. The Hammond’s reserves currently account for 4.6 months operating expenses. The Trustees' maintain their vigilance over the School’s finances reviewing a monthly finance report, including management accounts and cash reporting. The monthly results are evaluated at board and board sub-committee level with reference to the regularly updated rolling 3-year forecast.
Bank balances
The S chool ended the year with an overdrawn bank balance of £223,000, down by £1 54 ,000 on the corresponding date last year. Outstanding mortgage debt at year-end was £1.75m.
Forecasts
The S chool maintains a rolling three-year profit and cash flow forecast which is used by the senior management team and board to monitor actual performance against forecast. The forecast is prepared using a rigorous methodology consistently applied from year to year.
This forecasting methodology has significantly assisted in obtaining and managing the finance required to complete the capital projects discussed above.
The board of Trustees' retains its commitment to this financial management process and continually looks at ways to further refine and develop these processes.
Fundraising Activities
The Trustees' of School wish to thank the continued support of the PTFA who are unstinting in their work to support the School.
Material Financial Expenditure
There was no material financial expenditure during the year.
Plans for the Future
Continued improvements and updates to facilities, equipment, and teaching, to provide the best possible learning experience across all ages in the S chool. Specific attention is currently being given to the School’s boarding house provision.
Development of significantly enhanced boarding accommodation.
Limited increases in pupil numbers to maintain the unique nature of the S chool, with the exception of the BA course which is expected to remain at around 100 students for the foreseeable future.
Maintaining a watching brief for opportunities to grow further the School in a range of ways.
Continued close involvement of the wider community to present the Hammond Experience to an ever-increasing audience through Productions, Outreach activities, Summer S chool, Hammond Youth Theatre and Hammond Associates.
The financial statements comply with current statutory requirements, the Memorandum and Articles of Association of the company and the Statements of Recommended Practice for Accounting and Reporting by Charities (effective January 2015).
The Board of Trustees is responsible for developing and approving the short, medium and long-term strategic plans to the School and tasking the management team to deliver them safely and cost-effectively for the benefit of our students.
The trustees, who are also the directors for the purpose of company law, and who served during the year and up to the date of signature of the financial statements were:
The Board of Trustees is responsible for the appointment of additional trustees, and in doing so seeks individuals with appropriate experience and interest to provide the board with the necessary skills and outlook required. New trustees have a formal induction process and School policies are made available to all Trustees.
The Trustees have a formal risk management process to assess business risks and implement risk management strategies.
The charity’s internal financial and management controls conform to the current SORP requirements and to operational guidelines issued by the Charity Commission.
The prescribed information the Trustees are required to provide is set out earlier in the report and accounts in the legal and administrative details section.
Financial Management and Control
The day-to-day financial operation of the S chool, the implementation of its budgets, application of the relevant internal controls and preparation of regular financial information is the responsibility of the Finance Department of the School, led by the Head of Resources under the supervision of the finance sub-committee which constitutes two Trustees , an external finance expert, the principal, the Head of Resources and members of the finance department.
The monthly reporting structure used in previous years continues to be employed.
The pay of the School’s senior staff is reviewed annually and normally increased in accordance with average earnings. In view of the nature of the charity, the Trustees benchmark against pay levels in its peer educational establishments. The Trustees believe that this policy is currently appropriate with successful recruitment in a challenging environment. However, should this change, this benchmark would be reviewed by the Board and senior management team.
The trustees, who are also the directors of The Hammond School Limited for the purpose of company law, are responsible for preparing the Trustees' Report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
Company Law requires the trustees to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the charity and of the incoming resources and application of resources, including the income and expenditure, of the charitable company for that year.
In preparing these financial statements, the trustees are required to:
- select suitable accounting policies and then apply them consistently;
- observe the methods and principles in the Charities SORP;
- make judgements and estimates that are reasonable and prudent;
- state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the charity will continue in operation.
The trustees are responsible for keeping adequate accounting records that disclose with reasonable accuracy at any time the financial position of the charity 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 charity and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
In accordance with the company's articles, a resolution proposing that Champion Accountants LLP be reappointed as auditor of the company will be put at a General Meeting.
The Hammond continues to go from strength to strength in terms of realising its vision of offering outstanding training to the next generation of performers. This has taken place even with the backdrop of a world pandemic.
The Hammond has enjoyed another successful year on many fronts. The S chool has continued to grow, and the roll for September 2021 was 331 pupils and students. The BA course, now into its sixth year, grew again taking the total cohort across the three years to 105.
We are very proud of The Hammond’s response to the movement to online learning, following Government directive. The period from March-July 2020 and the period from January-March 2021 saw The Hammond community move exclusively online, and the ingenious and creative methods of education and training meant that all pupils and students continued to receive outstanding provision, as commended by parents.
In September 2020 we enhanced our pastoral and wellbeing provision by introducing a non-teaching pastoral manager and a School Nurse. This was entirely necessary as the effects of the pandemic continue to manifest amongst young people.
To ensure we continue to offer the very best provision for our boarding students, in the summer of 2021 we undertook a review of the staffing structure of boarding. The result was an enhancement of the structure, leading to the appointment of a resident Head of Boarding, g raduate b oarding t utors, and dedicated p astoral s upport h ouse p arents. The change has been exceptional and I am immensely proud of the way the boarding experience has vastly improved. We continue to reside in the leased accommodation (through partnership with the University of Chester) and look at exploring our accommodation options long term through a dedicated estates strategy.
I am pleased to say that the sound financial management and control that has been embedded over the last few years had enabled us to deal with these issues within our existing resources.
The School retains the support of Barclays Bank who we see as an important partner in the School. Their continued support for both current and future projects is much appreciated.
The School continues to receive three government funding streams. The Dance and Drama Award (DaDA) from the Education Funding Agency supports the School’s post-16 provision while the Music and Dance Scheme (MDS) which comes directly from the Department for Education, does the same for under-16s. Thirdly the Higher Education Funding Council of England (HEFCE), in respect of the Chester University accredited BA degree course in Musical Theatre Performance.
Previous reports have highlighted the pressure on the extended s chool site in terms of available studio and classroom space. This continues to be an issue for the School and one which is receiving considerable attention from the Board and senior management. Additional space has been created through the use of modular builds, with long-term strategic projects in the early planning stages. The S chool has also undertaken an extensive space utilisation survey that has enabled room changes, leading to the creation of an extra dance studio as no extra cost.
I also continue to forge strong relationships with the Principals and Headteachers of the other MDS-funded performance schools. These relationships help further align The Hammond with s chools similar to ours, enabling the sharing of good practice, including, amongst other things, participating in safeguarding conferences.
The autumn of 2020 saw The Hammond and the University of Chester forge even closer relationships as I became more involved in the strategic running of the course. Decisions were made to improve the pedagogical elements of the course, as well as the overall management and organisation. The success of the changes led to the university inviting The Hammond to add value to the course by way of a n enhancement programme. I am thrilled with the closer links with the university and continue to grow and develop our higher education provision.
The summer of 2021 saw the much-anticipated return of our s chool performances, and the standard was high. Students, unable to publicly perform for so long, certainly took the opportunity to demonstrate the limitless skill and talent within them. The degree students matched this wonder with a spectacular performance as they graduated.
We were also delighted to welcome our patron, Wayne Sleep, as guest of honour at our Prize Giving day, and worked with our local health authority to ensure all restrictions and safeguards were in place to enable visitors to share the experience.
It was also at this time that Year 11 and Year 13 pupils/students were informed that they would not sit GCSE and A Level examinations. The work undertaken by academic staff to complete accurate centre assessed grades ensured that Hammond results were again outstanding in the summer of 2021, including the successful matriculation of a college student to The University of Oxford. Results were again significantly above the national average; all students gained what they needed, and more, to access the next stage of their education.
Furthermore, all students who embarked on the senior s chool professional qualification in dance or musical theatre passed the course, with high recommendations from external examiners. The degree students also excelled with their examination results, with more than 50% of the cohort achieving first-class honours degrees, the remaining with 2.1 degree results.
In the Summer Term, 2021, we launched The Hammond’s Every Body movement, very much in response to the demands placed on young people and young people in the performance industry. The movement has developed with student leadership and again demonstrates how forward-thinking, innovative and caring The Hammond is. Crucially, we listen.
The Hammond’s Head of Marketing continues to use ingenuity and innovation to raise our profile, and uses social media to capture audiences far and wide. This included a revamped parents’ newsletter than not only demonstrated the successes of the year, but also presented in a more cutting-edge manner. The Hammond is currently working with a local design team to improve web-interface and logo design.
The Hammond’s recruitment strategy has also significantly improved this year, including more outward facing marketing and immersive taster days and workshops around the UK.
As we navigate our way through the challenges of this a utumn t erm, and the uncertainly of the world at the moment, I am delighted to have such a strong, positive, and expert team to guide The Hammond. All educators are aware of the challenges ahead, and I am optimistic we will manage and thrive.
Jennifer Roscoe
Principal
The Trustees' r eport was approved by the Board of Trustees.
Opinion
We have audited the financial statements of The Hammond School Limited (the ‘charity’) for the year ended 31 July 2021 which comprise the statement of financial activities, the balance sheet, the statement of cash flows and the 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:
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the charity 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.
In auditing the financial statements, we have concluded that the Trustees' 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 charity’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 trustees with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The trustees 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 our audit:
the information given in the Trustees' r eport, which includes the d irectors ' r eport prepared for the purposes of company law, for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the d irectors ' r eport included within the Trustees' r eport has been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the charity and its environment obtained in the course of the audit, we have not identified material misstatements in the d irectors ' r eport included within the Trustees' r eport.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
we have not received all the information and explanations we require for our audit; or
the trustees were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies' exemptions in preparing the Trustees' r eport and from the requirement to prepare a s trategic r eport.
As explained more fully in the s tatement of Trustees' r esponsibilities, the trustees, who are also the directors of the charity for the purpose of company law, 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 trustees 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 trustees are responsible for assessing the charity’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 trustees either intend to liquidate the charitable 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 auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
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 .
Extent to which the audit is considered capable of detecting irregularities, including fraud
The responsibility for the prevention and detection of irregularities, including fraud, lies with the trustees and with those charged with governance. The objectives of our audit in respect of irregularities and fraud are to assess the risk of material misstatement of the financial statements due to fraud, to obtain sufficient, appropriate audit evidence regarding the assessed risks and to respond appropriately to fraud or suspected fraud identified during the audit.
Audit procedures
We determine significant applicable laws and regulations through discussion with those charged with governance and our own knowledge of the industry and design audit procedures to help identify instances of non-compliance with those laws and regulations that may have a material effect on the financial statements.
We consider the applicable laws and regulations to be the financial reporting framework (FRS 102 and the Companies Act 2006), Charity Law, the relevant tax regulations in the UK, employment law, the Health and Safety at Work Act 1974 and Safeguarding legislation.
We consider the control environment and the procedures in place to address identified risks, including management override, non-compliance with laws and regulations and to prevent and detect fraud or irregularity. Our procedures are designed to provide reasonable assurance that the financial statements are free from material misstatement or error and include: enquiries of management and of staff in key compliance functions; review of reports from regulators; review of minutes of meetings of those charged with governance; review and testing of manual journals, relevant nominals and significant transactions outside the normal course of business; review of financial statement disclosures and testing to supporting documentation; performance of analytical procedures.
We are not responsible for preventing non-compliance and due to the inherent limitations of an audit, as described above, the audit cannot be relied upon to detect all instances of non-compliance with laws and regulations
A further description of our responsibilities is available on the Financial Reporting Council’s website at: http s ://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the charitable 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 charitable 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 charitable company and the charitable company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
School fees and associated income
Education
The statement of financial activities includes all gains and losses recognised in the year.
All income and expenditure derive from continuing activities.
The Hammond School Limited is a private company limited by shares incorporated in England and Wales. The registered office is Hoole Bank House, Mannings Lane, Chester, CH2 4ES.
The financial statements have been prepared in accordance with the charity's governing document, the Companies Act 2006 and "Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) (effective 1 January 2019)". The charity is a Public Benefit Entity as defined by FRS 102.
The financial statements are prepared in sterling , which is the functional currency of the charity. Monetary a mounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
At the time of approving the financial statements, the trustees have a reasonable expectation that the charity has adequate resources to continue in operational existence for the foreseeable future. Thus the trustees continue to adopt the going concern basis of accounting in preparing the financial statements.
Unrestricted funds are available for use at the discretion of the trustees in furtherance of their charitable objectives.
Restricted funds are subject to specific conditions by donors as to how they may be used. The purposes and uses of the restricted funds are set out in the notes to the financial statements.
Designated funds comprise unrestricted funds that have been set aside by the trustees for particular purposes. The aim and use of each designated fund is set out in the notes to the financial statements.
Grants are recognised in the period in which they are received.
School fees and similar income are accounted for in the period to which they relate. Fees receivable are stated after deducting allowances and Bursaries allowed by the School.
Bank interest is recognised in the period in which it is receivable.
Rental income is recognised in the period in which it is due.
Expenditure is charged on an accruals basis and is inclusive of VAT where appropriate.
Due to the nature of the charity, all expenditure is currently considered to be expenditure on charitable activities and therefore the governance costs are all apportioned to this area.
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in net income/(expenditure) for the year.
Freehold land and buildings (including new buildings), some of which are listed properties, are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses. Valuations are undertaken on a regular basis, with a formal valuation every five years, to ensure that the carrying amount does not differ materially from the fair value. Gains and losses on revaluation are recognised in the SOFA. The directors do not consider it appropriate to depreciate such buildings as they do not consider that the depreciation would be material having regard to the life of the assets. In addition to the costs of minor repairs, which are written off as incurred, provision is made for major repairs which are likely to arise in the future. An impairment review is carried out annually by the charity.
At each reporting end date, the charity reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any ) .
Cash and cash equivalents 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 charity 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 charity's balance sheet when the charity 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, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Basic financial liabilities, including creditors and bank loans 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 p aymen ts discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of operations 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.
Financial liabilities are derecognised when the charity’s contractual obligations expire or are discharged or cancelled.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the charity is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
In the application of the charity’s accounting policies, the trustees are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Grants
School fees and associated income
School fees and associated income
School fees and associated income
Rent received
Education
Education
Production costs
School books and equipment
Exam fees
Telephone
Printing, postage and stationery
Licenses
Catering
Motor expenses
School transport
School trips
General expenses
Degree course expenses
Subscriptions and donations
Rent and rates
Insurance
Light and heat
Repairs and renewals
Ground maintenance
Cleaning
Advertising and marketing
Recruitment
Bad debts
Bank loan interest
Legal and professional
Bank charges
The average monthly number of employees during the year was:
Redundancy costs in the year totalled £33,326 (2020: £38,000).
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
The accounting policy with regard to freehold property requires valuations to be undertaken on a regular basis and a formal valuation every five years. A formal external valuation was carried out by Mason Owen Property Consultants as at 31 July 2020 which valued the property portfolio at £4,150,000. Consequently an impairment adjustment of £2,424,232 was made. As at 31 July 2021 the trustees are of the opinion that the carrying value of freehold property does not materially differ from the fair value.
All assets are used for direct charitable purposes.
The comparable amounts for Land and Buildings determined according to the historical cost convention are as follows:
The bank loans are secured by a first legal charge over the company's freehold property. The first loan was for £2.3M over 25 years and has an interest rate of 0.95% over the bank's base rate. The second loan was for £490K over 5 years and has an interest rate of 2.75% over the bank's base rate. The secured bank loans and overdraft represent 48% of the value (2020 - 55%) of the freehold property they are secured against based on its market value per the accounts at 31 July 2021.
The bank loan and overdraft are secured by a first legal charge over the company's freehold property.
Deferred income of £ 64,092 (20 20 - £ 44,831 ) which is included in the above figures relates to school fees paid in advance which would be potentially refundable .
Diverse Dance Project
Monies received from The Bank of America Charitable Foundation towards the support of The Hammond School's Diverse Dance Project through three outreach programmes.
An amount of £4,000 was received from the PTFA which was designated for the purpose of buying a minibus.
The welfare fund was introduced last year from amounts recovered on bad debts that had previously been written off. The fund is to be used to provide short term help for parents struggling to pay the fees.
At the reporting end date the charity had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
The key management personnel of the charity comprise the Principal, the Vice-Principals, the Head of Resources and the Heads of Departments.
The remuneration of key management personnel is as follows.
During the year the charity entered into the following transactions with related parties:
Mr J Devoy is a director of the company and a partner of Aaron & Partners LLP Solicitors who invoiced £ 4,200 (20 20 - £ 1,227 ) during the year in respect of Legal and Professional charges. These charges have been incurred at fair market value. A balance of £ nil was due to Aaron and Partners LLP at 31 July 20 21 (20 20 - £ 1,034 ) .
Prof A Sutton is a director of the company and is also a director of the University of Chester Trust. The Hammond School Limited run a degree course on behalf of the University of Chester for which it received net funding from the University of £ 926,563 (20 20 - £ 826,659 ). A balance of £ 127,188 was due to the University of Chester at 31 July 20 21 (20 20 - £ nil ). An amount of £443,402 (2020: £133,949) was paid to the University during the year in relation to the costs of the degree course and rental of a University building.