Company registration number 08403335 (England and Wales)
BLUE3 (STAFFS) LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
BLUE3 (STAFFS) LIMITED
COMPANY INFORMATION
Directors
JS Gordon
PR Hepburn
(Appointed 8 February 2023)
J McDonagh
(Appointed 1 March 2023)
Secretary
Resolis Limited
Company number
08403335
Registered office
1 Park Row
Leeds
United Kingdom
LS1 5AB
Auditor
Johnston Carmichael LLP
7-11 Melville Street
Edinburgh
EH3 7PE
BLUE3 (STAFFS) LIMITED
CONTENTS
Page
Directors' report
1 - 2
Directors' responsibilities statement
3
Independent auditors' report
4 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Notes to the financial statements
11 - 20
BLUE3 (STAFFS) LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2023
- 1 -
The directors present their annual report and financial statements for the year ended 30 June 2023.
Principal activities
Date of incorporation: 14 February 2013
The principal activities of the Company are the design, construction, financing, supply of certain services and maintenance of a set of 11 fire stations in accordance with the terms of an agreement with Stoke on Trent and Staffordshire Fire and Rescue Authority, now the Police and Crown Commission. This agreement together with a loan facilities agreement, a construction contract, a facilities management contract and other related contracts were signed on 10 July 2013. The commission period runs for a period of 25 years from the completion of the final station.
Business Review
All the 11 stations were handed over to the Police and Crown Commission in June 2016. This is the seventh full year of operations and there have been no significant issues reported during the year.
The risk of increased deductions is primarily mitigated through performance risk under the Project Agreement and in related contracts being substantially passed onto service providers.
Blue 3 (Staffs) receives all of its revenues from the Police and Crown commission and the government continues to actively encourage the full and prompt payment of suppliers by such bodies. Consequently, Blue 3 (Staffs) fully anticipates being able to continue to deliver on its financial and other commitments.
Results and dividends
The profit for the financial year is £93,000 (2022: profit £142,000).
The Company declared dividends in the year of £150,000 (2022: £150,000). The directors do not recommend payment of a further dividend.
Key performance indicators
The company's results are measured against the original financial model, agreed as part of the financial close on 10 July 2013. Variances from the model are highlighted and reported to the board on an ongoing basis.
Going concern
The directors have reviewed cash flow forecasts over the next 12 months from the date of signing these financial statements. Taking into account reasonably possible risks in operations in the company, the directors believe that the company will be able to settle its liabilities as they fall due for the foreseeable future and therefore it is appropriate to prepare these financial statements on the going concern basis.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
AP Fordyce
(Resigned 31 August 2022)
JS Gordon
R W Christie
(Resigned 8 February 2023)
PR Hepburn
(Appointed 8 February 2023)
J McDonagh
(Appointed 1 March 2023)
Qualifying third party indemnity provisions
The company has made qualifying third party indemnity provisions for the benefit of its directors during the year. These provisions remain in force at the reporting date.
Principal risks and uncertainties
As this project is heavily geared there is the potential financial risk that interest rate fluctuations in the market could impact the project. However, as management have put in place fixed price debt instruments for the life of the project this risk is deemed to be mitigated.
BLUE3 (STAFFS) LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 2 -
Auditor
The auditor, Johnston Carmichael LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
Small companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the small companies exemption.
On behalf of the board
PR Hepburn
Director
21 December 2023
BLUE3 (STAFFS) LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 30 JUNE 2023
- 3 -
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.
BLUE3 (STAFFS) LIMITED
INDEPENDENT AUDITORS' REPORT
TO THE MEMBERS OF BLUE3 (STAFFS) LIMITED
- 4 -
Opinion
We have audited the financial statements of Blue3 (Staffs) Limited (the 'company') for the year ended 30 June 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 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 30 June 2023 and of its profit 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.
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.
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 the 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.
BLUE3 (STAFFS) LIMITED
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBERS OF BLUE3 (STAFFS) LIMITED
- 5 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not 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 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 from the requirement to prepare a strategic report.
Responsibilities of directors
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.
Auditors' responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an 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.
BLUE3 (STAFFS) LIMITED
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBERS OF BLUE3 (STAFFS) LIMITED
- 6 -
Extent to which the audit is considered capable of detecting irregularities, including fraud (continued)
We obtained an understanding of the legal and regulatory frameworks that are applicable to the 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:
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:
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:
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;
Recalculating the unitary charge received by taking the base charge per the project agreement and uplifting
for RPI;
Agreeing a sample of months' income receipts to invoice and bank statements;
Performing an assessment on the service margins used in the year and agreeing margins used to the active financial models;
Reconciling the finance income and amortisation to the finance debtor reconciliation to ensure allocation methodology is in line with contractual terms and relevant accounting standards;
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 we would become aware of it.
BLUE3 (STAFFS) LIMITED
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBERS OF BLUE3 (STAFFS) LIMITED
- 7 -
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.
Allison Dalton
Senior Statutory Auditor
For and on behalf of Johnston Carmichael LLP
21 December 2023
Chartered Accountants
Statutory Auditor
7-11 Melville Street
Edinburgh
EH3 7PE
BLUE3 (STAFFS) LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
- 8 -
2023
2022
Notes
£000
£000
Turnover
1,939
1,759
Other external expenses
(1,430)
(1,269)
Other operating expenses
(211)
(188)
Operating profit
298
302
Interest receivable and similar income
5
1,487
1,555
Interest payable and similar expenses
6
(1,517)
(1,580)
Profit before taxation
268
277
Tax on profit
7
(175)
(135)
Profit for the financial year
93
142
BLUE3 (STAFFS) LIMITED
BALANCE SHEET
- 9 -
2023
2022
Notes
£000
£000
£000
£000
Fixed assets
Finance Asset - due within 1 year
9
1,185
1,337
Finance Asset - due after more than 1 year
9
24,355
25,500
25,540
26,837
Current assets
Debtors
10
10
Cash at bank and in hand
1,268
852
1,268
862
Creditors: amounts falling due within one year
11
(1,795)
(1,567)
Net current liabilities
(527)
(705)
Total assets less current liabilities
25,013
26,132
Creditors: amounts falling due after more than one year
12
(24,014)
(25,292)
Provisions for liabilities
14
(958)
(742)
Net assets
41
98
Capital and reserves
Called up share capital
15
10
10
Profit and loss reserves
31
88
Total equity
41
98
These financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.
The financial statements were approved by the board of directors and authorised for issue on 21 December 2023 and are signed on its behalf by:
PR Hepburn
Director
Company Registration No. 08403335
BLUE3 (STAFFS) LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
- 10 -
Share capital
Profit and loss reserves
Total
Notes
£000
£000
£000
Balance at 1 July 2021
10
96
106
Year ended 30 June 2022:
Profit and total comprehensive income for the year
-
142
142
Dividends
8
-
(150)
(150)
Balance at 30 June 2022
10
88
98
Year ended 30 June 2023:
Profit and total comprehensive income for the year
-
93
93
Dividends
8
-
(150)
(150)
Balance at 30 June 2023
10
31
41
BLUE3 (STAFFS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
- 11 -
1
Accounting policies
Statement of Compliance
The individual financial statements of Blue3 (Staffs) Limited have been prepared in compliance with United Kingdom Accounting Standards, including Financial Reporting Standard 102, ‘‘The Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland’’ (‘‘FRS 102’’) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime convention. The disclosure requirements of section 1A have been applied, other than where additional disclosures is required to show a true and fair view.
General information
Blue3 (Staffs) Limited (the Company) is a private company limited by shares and is incorporated and domiciled in England. The address of its registered office is 1 Park Low, Leeds, United Kingdom, LS1 5AB. The Company has developed and will service and maintain a set of eleven fire stations under an agreement with the Stoke and Staffordshire Fire Authority, now the Police and Crown Commission.
The Company’s functional and presentation currency is the pound sterling. Monetary amounts in these financial statements are rounded to the nearest thousand pound.
1.1
Basis of preparation
These financial statements are prepared on a going concern basis under the historical cost convention.
The accounting policies stated below have been consistently applied to the years presented, unless otherwise stated.
1.2
Going concern
The directors have reviewed cash flow forecasts over the next 12 months from the date of signing these financial statements. Taking into account reasonably possible risks in operations in the company, the directors believe that the company will be able to settle its liabilities as they fall due for the foreseeable future and therefore it is appropriate to prepare these financial statements on the going concern basis.true
1.3
The Company is accounting for the concession asset based on the ability to substantially transfer all the risks and rewards of ownership to the customer, with this arrangement the costs incurred by the Company on the design and construction of the assets have been treated as a finance debtor within these financial statements.
1.4
Revenue recognition
Turnover represents the services' share of the management services income received by the company for the provision of a PFI asset to the customer. This income is received over the life of the concession period. Management service income is allocated between turnover, finance debtors interest and reimbursement of finance debtors so as to generate a constant rate of return in respect of the finance debtor over the life of the contract. Turnover is represented net of VAT.
1.5
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and comprise of cash balances.
The Company is obligated to keep a separate cash reserve in respect of future major maintenance costs, which amounted to £542,000 at year end (2022: £307,000).
BLUE3 (STAFFS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 12 -
1.6
Financial instruments
The Company has elected to apply the provisions of Section 11 "Basic Financial Instruments" and Section 12 "Other Financial Instruments Issues" of FRS 102, in full, to all of its financial instruments.
A financial asset or a financial liability is recognised only when the entity becomes a party to the contractual provisions of the instrument.
Basic financial instruments are initially recognised at the transaction price and subsequently at amortised cost, unless the arrangement constitutes a financing transaction, where it is recognised at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.
Debt instruments are initially recognised at the present value of cash payable to the lender and are subsequently measured at amortised cost using the effective interest rate method, less impairment. The effective interest rate method is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument. The effective interest rate amortisation is included in interest payable and similar charges in the Statement of Comprehensive Income.
Other financial instruments are subsequently measured at fair value, with any changes recognised in the Statement of Comprehensive Income, with the exception of hedging instruments in a designated hedging relationship.
Financial assets that are measured at cost or amortised cost are reviewed for objective evidence of impairment at the end of each reporting date. If there is objective evidence of impairment, an impairment loss is recognised in the Statement of Comprehensive Income immediately.
For all equity instruments regardless of significance, and other financial assets that are individually significant, these are assessed individually for impairment. Other financial assets are either assessed individually or grouped on the basis of similar credit risk characteristics.
Any reversals of impairment are recognised in the Statement of Comprehensive Income immediately, to the extent that the reversal does not result in a carrying amount of the financial asset that exceeds what the carrying amount would have been had the impairment not previously been recognised. 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 entity after deducting all of its financial liabilities.
Where the contractual obligations of financial instruments (including share capital) are equivalent to a similar debt instrument, those financial instruments are classed as financial liabilities. Financial liabilities are presented as such in the Balance Sheet. Finance costs and gains or losses relating to financial liabilities are included in the Statement of Comprehensive Income. Finance costs are calculated so as to produce a constant rate of return on the outstanding liability.
Where the contractual terms of share capital do not have any terms meeting the definition of a financial liability then this is classed as an equity instrument.
1.7
Taxation
Taxation expense for the period comprises current and deferred tax recognised in the reporting period. Tax is recognised in the Statement of Comprehensive Income, except to the extent that it relates to items recognised in Other Comprehensive Income or directly in equity. In this case tax is also recognised in Other Comprehensive Income or directly in equity respectively. Current or deferred taxation assets and liabilities are not discounted.
BLUE3 (STAFFS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 13 -
Current 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
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.
1.8
Borrowings are recognised at amortised cost using the effective interest rate method. Under the effective interest rate method, any transaction fees, costs, discounts and premiums directly related to the borrowings are recognised in the Statement of Comprehensive Income over the life of the borrowings. Borrowings with maturities greater than twelve months after the reporting date are classified as non-current liabilities.
BLUE3 (STAFFS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 14 -
2
Judgements and key sources of estimation uncertainty
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Significant judgements
The judgements (apart from those involving estimations) that management has made in the process of applying the entity's accounting policies and that have the most significant effect on the amounts recognised in the financial statements are as follows:
Critical judgements
The judgements (apart from those involving estimations) that management has made in the process of applying the entity's accounting policies and that have the most significant effect on the amount recognised in the financial statements are as follows:
i) Income tax
Current taxation
The taxation charge or credit arising on profit before taxation and in respect of gains or losses recognised through Other Comprehensive Income reflect the tax rates in effect or substantially enacted at the Statement of Financial Position date as appropriate. The determination of appropriate provisions for taxation requires the Directors to take into account anticipated decisions of HM Revenue and Customs which inevitably requires the Directors to use judgements as to the appropriate estimate of taxation provisions.
Deferred taxation
Deferred taxation is provided using the Statement of Financial Position liability method and is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding taxation bases used in the computation of taxable profit. Judgements are required to be made as to the calculation and identification of temporary differences and in the case of the recognition of deferred taxation assets, the Directors have to form an opinion as to whether it is probable that the deferred taxation asset recognised is recoverable against future taxable profits arising. This exercise of judgement requires the Directors to consider forecast information over a long time horizon having regard to the risks that the forecasts may not be achieved and then form a reasonable opinion as to the recoverability of the deferred taxation asset.
ii) Market rate of interest
The directors have reviewed the interest rates applied to the unsecured subordinated loan stock and consider these to be at a market rate.
BLUE3 (STAFFS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
2
Judgements and key sources of estimation uncertainty
(Continued)
- 15 -
Key sources of estimation uncertainty
Accounting estimates and assumptions are made concerning the future and, by their nature, will rarely equal the related actual outcome. The key assumptions and other sources of estimation uncertainty are as follows:
Impairment of assets
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 compares that with the carrying value of the asset or assets in the Statement of Financial Position. Any reduction in value arising from such a review would be recorded in the Statement of Comprehensive Income. 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.
Accounting for service concession arrangements
Accounting for the service concession contract and finance debtors requires estimation of service margins, finance debtor interest rates and associated amortisation profile which is based on forecast results of the contract. The directors use their judgement in selecting the appropriate financial asset rate to be applied in order to allocate the income received between revenue and capital repayment of and interest income on the financial asset; and also the service margin that is used to recognise service revenue. The directors have also used their judgement in assessing the appropriateness of the future maintenance costs that are included in the company's forecasts. The directors will continue to monitor the condition of the assets and undertake a regular review of maintenance spend.
3
Auditors' remuneration
2023
2022
Fees payable to the company's auditor and associates:
£000
£000
For audit services
Audit of the financial statements of the company
12
13
Blue 3 (Staffs) Limited also pay the audit fee for its parent company Blue 3 (Staffs) (Holdings) Limited. The fee is deemed to be £2,000 (2022: £1,000) and is included in the figures shown above.
4
Employees
The directors were not directly remunerated for their services during the year (2022: nil).
The company has no employees (2022: nil).
5
Interest receivable and similar income
2023
2022
£000
£000
Interest receivable and similar income includes the following:
Interest receivable on financial asset
1,487
1,555
BLUE3 (STAFFS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 16 -
6
Interest payable and similar expenses
2023
2022
£000
£000
Interest on financial liabilities measured at amortised cost:
Interest on term loans
1,212
1,267
Interest payable to group undertakings
279
287
1,491
1,554
Other finance costs:
Bank charges
13
13
Unwinding of discount on provisions
13
13
1,517
1,580
7
Taxation
2023
2022
£000
£000
Current tax
UK corporation tax on profits for the current period
-
41
Adjustments in respect of prior periods
(41)
Total current tax
(41)
41
Deferred tax
Origination and reversal of timing differences
216
94
Total tax charge
175
135
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£000
£000
Profit before taxation
268
277
Expected tax charge based on the standard rate of corporation tax in the UK of 20.50% (2022: 19.00%)
55
53
Tax effect of utilisation of tax losses not previously recognised
(55)
(13)
Adjustments in respect of prior years
(41)
Deferred tax adjustments in respect of prior years
55
Deferred tax origination and reversal of timing differences
161
95
Taxation charge for the year
175
135
BLUE3 (STAFFS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
7
Taxation
(Continued)
- 17 -
Corporation tax was 19% until 31 March 2023. Thereafter, the main rate increased to 25% for business profits of over £250,000 made by the Company. A small profit rate (SPR) was also introduced for companies with profits of £50,000 or less so that they continue to pay corporation tax at 19%. Companies with profits between £50,000 and £250,000 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 from 1 April 2023, therefore a blended rate of 20.50% is shown above.
8
Dividends
2023
2022
£000
£000
Final paid
150
150
9
Finance asset
2023
2022
£000
£000
Finance Asset - due within 1 year
1,185
1,337
Finance Asset - due after more than 1 year
24,355
25,499
25,540
26,836
10
Debtors
2023
2022
Amounts falling due within one year:
£000
£000
Other debtors
10
11
Creditors: amounts falling due within one year
2023
2022
Notes
£000
£000
Bank loans
13
1,193
1,097
Trade creditors
6
39
Corporation tax
41
Other taxation and social security
199
158
Other creditors
397
232
1,795
1,567
BLUE3 (STAFFS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 18 -
12
Creditors: amounts falling due after more than one year
2023
2022
Notes
£000
£000
Bank loans and overdrafts
13
21,709
22,901
Other creditors
13
2,305
2,391
24,014
25,292
Borrowing consists of:
The term loan facility and equity bridge facility were granted by Aviva Public Finance Limited on 10 July 2013 and are secured on the assets of the Company. The loan is shown net of issue costs of £215,000 (2022: £228,000). The loan facility is for a total of £33,314,000, of which £23,118,000 (2022: £24,226,000) was outstanding at 30 June 2023.
13
Loans and overdrafts
An analysis of the maturity of loans is given below:
2023
2022
£000
£000
Amounts falling due within one year or on demand:
Senior secured loan
1,206
1,110
Unamortised issue costs
(13)
(13)
Subordinated loans
85
73
1,278
1,170
Amounts falling due between one and two years:
Senior secured loan
1,274
1,205
Unamortised issue costs
(13)
(13)
Subordinated loans
99
85
1,360
1,277
Amounts falling due between two and five years:
Senior secured loan
3,045
3,347
Unamortised issue costs
(39)
(39)
Subordinated loans
202
249
3,208
3,557
Amounts falling due after more than five years:
Repayable by instalments
Senior secured loan
17,593
18,565
Unamortised issue costs
(151)
(164)
Subordinated loans
2,004
2,057
19,446
20,458
BLUE3 (STAFFS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
13
Loans and overdrafts
(Continued)
- 19 -
The total cash repayable on the loan is as follows :
Bank loans
22,902
24,227
Subordinated loans
2,390
2,464
25,292
26,691
Payable within one year
1,278
1,183
Payable after one year
24,014
25,508
14
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2023
2022
Balances:
£000
£000
Accelerated capital allowances
1,329
1,324
Tax losses
(371)
(582)
958
742
2023
Movements in the year:
£000
Liability at 1 July 2022
742
Charge to profit or loss
216
Liability at 30 June 2023
958
15
Called up share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£000
£000
Issued and fully paid
Ordinary of £1 each
10,000
10,000
10
10
Retained earnings includes retained earnings and accumulated losses.
16
Related party disclosures
The Company is wholly owned by Blue 3 (Staffs) (Holdings) Limited and has taken advantage of the exemption in section 33 of FRS 102 "Related Party Disclosures" that allows it to not disclose transactions with wholly owned investors in the group.
BLUE3 (STAFFS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 20 -
17
Parent undertaking
The immediate parent company is Blue 3 (Staffs) (Holdings) Limited, a company incorporated in England. The accounts for Blue 3 (Staffs) (Holdings) Limited can be obtained from 1 Park Row, Leeds, United Kingdom, LS1 5AB.
The immediate parent undertaking of Blue 3 (Staffs) (Holding) Limited is PPDI Assetco Limited and the ultimate holding company is PPP Equity PIP LP, a limited partnership registered in England.
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