Charty Registratlon No. 310637 Company Regi8tratlon No. 00068471 (England and Walèsl THE GODSTOWE PREPARATORY SCHOOL COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2021 THE GODSTOWE PREPARATORY SCHOOL COMPANY LIMITED LEGAL AND ADMINISTRATIVE INFORMATION Trusteè8 Mrs T Leaver (Chairl Mrs K AAllner Mr T Bunbury MrA Logan Dr F R Neale Mr S R Nicholls Mrs E Perkins Mrs G Rogers Mrs S Stokes Mr A VVThlkinson Charity numb9r 310637 Company numb•r 00068471 Registered offl¢e Shrubbery Road High W¢ombe Buckinghamshire United Kingdom HP13 6PR Auditor ets Audit Services Suites B & D Burnham Yaid Beaconsfield Buckinghamshi HP92JH Bankors National Weslminsler Bank PIC Svenska HandelsbankenAB Barelays Bank PIC Key executives Headmistress Director of Finance & Operations Clerk to the Governors Ms Sophie Green Bsc Econ (Honsl, PGCE Mrs S North Mrs Gundula Ackem)ann Websit www.godslowe.org THE GODSTOWE PREPARATORY SCHOOL COMPANY LIMITED CONTENTS Page Trustees, report Statement of Trustees. responsibilities Independent auditor's report 9-11 Stslement of financial activities 12 Balance sheet ststement of cash flows 14 Notes lo the financial slalements 15-26 THE GODSTOWE PREPARATORY SCHOOL COMPANY LIMITED TRUSTEES, REPORT (INCLUDING DIRECTORS, REPORT AND STRATEGIC REPORT) FOR THE YEAR ENDED 31 AUGUST 2021 The Trustees, who are also directors of the charity for the purposes of the Companies Act 2006. present their report and financial siatemenls for the year ended 31 August 2021. The financial statements have been prepared in accordance with the accounting policies set out in the notes lo the financial siatements and comply with the Company's governing document, the Companies Act 2006 and "Accounting and Reporting by Charities. Slalemenl of Recommended Pracliee applicable to charities preparing their accounts In accordance with the Financial Reporting Slsndard applicable in the UK and Republic of Ireland IFRS 1021" las amended for accounting periods commencing from 1 January 2019). Structure, Govemancg and Management Constitution and Objects The Godstowe Preparatory School Company Limited (the 'Company'l was incorporated in 1900 as a company limited by shares, as defined by the Companies Act 2006, is registered in England and is registered with the Charity Commission. The Company is governed by its Articles ofAssociation. The Company's objects, as sel out in its Articles of Association. are to advance the education of young girls and boys by the provision of schooling (including nursery schooling). In pursuance of these objects for the public benefit, the Company's sole business is the operation of Godslowe Preparatory School Ilhe 'School'), incorporating a nursery. 'pre-prep' department and m8in school. and it has established and administers bursaries. scholarships and other benefaction5 and acts as trustee and manager of property and gifts given in pursuance of these objects. The Trustees have paid due regard to guidance issued by the Charity Commission in deciding what a¢Xivilies the Company should Ljndertake. School Objectives andA¢tlvities The School was established in 1900 with Ihe principal objective of providing systematic educatson and training for young girls and boys so as to prepare them for subsequent education in public or other large schools. Ttie School operates with boarding houses and a nursery as envisaged In the original obiecls. The School also holds lectures, exhibitions. public meetings and classes calculated lo advance the cause of edu¢alion, which is also in a¢cordance with the objects of the School. The School aims lo provide a firsl-class education to girls from age 3 10 13 and boys from age 3 to 7. 11 seeks to provide a structured educational environment that develops pupils, cap8bilities. competences and skills and gives them the confidence lo go on lo senior schools and succeed. The School promotes the academic. moral and physical development of ils pupils through the academic curriculum, pastoral care. sport and other activities. The School provides an educational environment where each sludenl can develop and fulfil their potential, building their sell-confidence and instilling a desire lo contribute lo the wider community. The School is committed to safeguarding and promoting the welfare of pupils and expects all staff and volunteers lo share this commitment Appropriate policies and procedures are in place lo support this aim and all activities across the School are judged against this objective. Alission Statemgnt The School's mission is to provide the necessary education and training to enable pupils to be confident, happy and successful with a love DI learning, in an environment where they feel valued as they are yepared for the demand$ of the modem world. In doing so the School aims lo promote the best opportunities fi)r pupils by providing a challenging curriculum and a wide range of extra-curricular aclivilies, together with a stimulating and enjoyable boarding experien￿. THE GODSTOWE PREPARATORY SCHOOL COMPANY LIMITED TRUSTEES. REPORT (INCLUDING DIRECTORS, REPORT AND STRATEGIC REPORT ICONTINUED) FOR THE YEAR ENDED 31 AUGUST 2021 Goveming Body The Board of Govemors, or 'Council', is responsible for the overall management and control of the Company and the School. All members of Council are Trustees of the Charity, Directors of the Company and Governors of the School. Council meets at least three limes per year. Currently Council has a General Purposes sub- committee which also meets three limes a year and reports to Council. The purpose of this Committee Is to oversee all financial aspects of the School, working along$ide the Director of Finance & Operations lo ensure the School's short-lerm and long-lerm viability. Further committees are established when considered appropriate, for example, an Estates Committee lo consider investment proposals in all their details, from financial through health and safety to logistic5 and a RevenLJe and Remuneration Committee lo provide recommendations to Council on the annual review of staff remuneration and school fees. The Trvslees. who are also the Directors of the Company for the purposes of company law, and who served during the year and up lo the dale of signature of the financial slalements were.. Mrs T Leaver Ichairl Mrs K AAllner Mr T Bunbury MrA Logan Dr F R Neale Mr S R Nicholl$ Mrs E Perkins Mrs LA Poore Mrs G Rogers Mrs S Stokes Mr M J Tebbot Mr A Wilkinson Mrs S Young lappoinled 24 November 20201 lappoinled 15 March 20221 (resigned 6 September 20211 lappoinled 23 November 20211 lappoinled 24 November 20201 Iresigned 24 November 20201 Iresigned 7 February 20221 None of the Trustees has any beneficial interest in the Company. All of the Trustees are members of the Company and guarantee lo contribute £1 in the event of a winding up. Organisational Managgment The day-lo-day management of the School is delegated lo the Headmislre5s, who is supported by the Director of Finance & Operations and other members of the senior management team. The Headmistress. the Director ol Finance & Operalions and the Clerk lo the Governors attend Council and General Purposes sub-committee meeb'ngs. Recruitment and Training of Govemo Governors are appointed by a9reemenl al a full Council meeting. Suitable candidates for new governors are identified by existing Governors or key executives of the School followed by a formal recruilmenl p￿Cess. with a recommendation presented lo Council. New Governors are Introduced to the workings of the School through an induction programme. The Council has periodic training up4ate events. Employment Policy The Company Is an equal opportunities èmployer. Full and fair Consideration 18 given lo job applications from disabled persons and due consideration is given lo their training and employment needs Consultation with employees has continued al all levels with the aim of taking the views of employees into account when decisions are made that are likely lo affect their interests. Employees are made aware of the financial and economic performance of the Company_ THE GODSTOWE PREPARATORY SCHOOL COMPANY LIMITED TRUSTEES, REPORT (INCLUDING DIRECTORS. REPORT AND STRATEGIC REPORT (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2021 Publ1¢ Benefit In setting objectives and planning. the Governors give ¢aTeful consideration lo the Charty Commission's guidance on public benefit. The Company is a charity which seeks lo benefit the public through the pursuit of its slated aims. Fees are sel al a level lo ensure the financial viability of the School and al a level that is consislenl with Council's aim ol providing a first-class education for the School's pupils. In setting the fees the Governors tske into account future plans for the School. the current economic climate and the ability of parents lo meet their financial ¢ommilments. The School welcomes pupils from all backgrounds. The School is non-seleclive but aims lo ensure that pupils can cope with the pace ol learning and IhLts benefit from the education provided. An Individual's economic ststus. elhni¢ity. race, religion or disability does not form part of the School's assessment prO￿ss. The Governors are committed lo their policy with regard lo allowing those who cannot afford the CLKrent fees, to gain access lo the firsl-class education provided by the School. Council is determined not lo dilute the quality of the education currently provided while still offering assisted places in defined circumstances. With this in mind, Council has put In place the provision of means tested burs8ries (assisted places) for able children from families who are less well-off, and the bursaries granted in the current year were worth £139,460 12020.. £131,605). Further bursaries will be awarded for the academic year 202112022. The School does not have endowments and in funding bursary awards the Governors are mindful that a balance musl be struck behNeen fee-paying parents, many of whom make considerable person81 sacrifices to fund their children's education. and those benefiting from the awards The Governors seek to maximise the number of bursaries awarded each year whilst remaining within the constraints both of the foregoing and being able to identify suitsble beneficiaries. Social Investments The School is part of the wider local community and the Governors are keen that staff and pupils partlClP81e in that community. During the year, pupils raised thousands ol pounds for various children's charities under the direction of a Charity Officer. The School regularly meets with the local church In High Wy¢ombe lo coordinate senrices held in town and at the School. The Governors have allowed the School lo be used as an examination centre al no Cost and the local community is allowed lo use the School's facilities where appropriate Wcombe District Swim Club have the use of the School's recently completed swimming pool complex when not in use by the School and the School is in discussion with local schools lo determine whether the facilities can 8Lso be made available lo them. The neighbourhood watch and local resKlenls' association both use the School's premises on a regular basis al no charge. The School continues to ci>operale with the local fire brigade by each year allowing a fire drill to be carried out by the fire brigade in one of the boarding houses. Counal is very aware that the security of pupils is of primary importance and thus the School is always careful fully lo vel any outside use of the School's facilities. Unfortunately. the ongoing impact of the COVID pandemic continued lo limit the opportunities to make the School's facilities available to all these parties during the year. bul these arrangements are being reinstated as Government guidance allows. THE GODSTOWE PREPARATORY SCHOOL COMPANY LIMITED TRUSTEES. REPORT (INCLUDING DIRECTORS. REPORT AND STRATEGIC REPORT {CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2021 Strategy The Governors are responsible for setting a strategy for achieving the objectives they have set. The focus ol the strategy is the development of the pupils and their continued high level of academic achievement. In taking forward the strategy, the Governors.. review and benchmark the School's academic syllabus, leaching practices and academic results.. ensure that the range of co-curricular activities available to our pupils is slimulaling and challenging., invest in technology and the infrastructure of the School, co-operate and share resources with local schools., and continue lo review and develop methods for awarding bursarie5 and scholarships lo ensure wider a￿esS lo pupils from all backgrounds. Principal Risk8 and Un¢ertaintie8 and Rlsk Management The COVID pandemic continues to create unprecedented economic uncertainty, both dornestically and internationally. The School is sensitive lo how this rnay affect our parents and has put in place measures to assist Ihem in these circumsiances. Developments In the pandemic and ils Impael on the School are kept under constanl review and the Headmislress. tO9elher with other members of the Executive Leadership Team. liaise with key Governors lo ensure compliance with Govefnmenl guidelines and appropriate responses to the challenges laced. The Governors also eonlinue to monitor the situation from a wider perspective to ensuie that the School responds to challenges when they arise and that il remains financially viable. Fluctuations in pupil numbers will always be a major risk to any school. Although pupil numbers are currently bLJoyanl and there are wailing lists in some classes, the Governors and senior management are aware that this situation can ehange quickly, particularly in the current situation. In order lo miligale this risk, the School con11nues lo investigate and take advantage of rental opportunities for the School's facilities. Any decision regarding rentals will ensure that Government guidelines are addressed and that the School remains COVID secure. Consideration is also given lo the need lo safeguard both the pupils and the School's assets. The Governors and senior management constantly strive lo improve performance and facilities and with our fNe- year rolling development plan, is continuing lo plan the future path of the School. Health and safety is always a significant area for fisk management. The risks range from fire and infrastructure lo personal risks. most notably when away from School on trips and expeditions. The risks associated with all activities are minimised by thorough planning and risk assessments. The School has an annual health and safely audit carried out by the School's independent expert accompanied by a Governor responsible lor reporting lo the Board on health and safety matters. Also. an annual fire risk assessment is carried out by the School's professional fire advisers. Council keeps thè School's activities under review and monitors risks that arise from lime-lo-time. The key controls include.. formal agendas for all Council and sub-committee meetings., comprehensive strategic planning, budgeting and management a¢￿￿ntIng,. an esiablished organisalional Structure and lines of reporting., form81 written policies., and vetting procedures for the protection of children. In addition, the Governors can establish additional sub-commillees lo deal with specific risks as they arise. Through the risk management pro￿sseS and controls eslablished for the School, the Governors are satisfied that all major risks identified have been adequately managed. It is recognised, however. that such processes and controls can orily provide reasonable but not absolute assurance that major risks have been adequately miligaled THE GODSTOWE PREPARATORY SCHOOL COMPANY LIMITED TRUSTEES, REPORT (INCLUDING DIRECTORS, REPORT AND STRATEGIC REPORTI (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2021 Future Plans The main focus for the future continues to be the regular review and updating of Council's strategic plan lo determine the School's future requirements for both education and boarding and therefore a plan for the School eslale to ensure all elements of il are fully ulilised. The plan also covers the School's IT provision. The School has coped well with the demands placed on ils IT infrastructure and capability during the COVID pandemic, particularly the delivery of virtual sehooling during periods of School full or partial closure. However, the Governors recognise the importance of keeping the School's IT provision up-lo-dale and fit for purpose, 8nd that further investment could enhance the quality ol the School's education provision in all respects. The strategic plan for IT remains under review In the light of recent events. Reviow ofAchievem•nts and Performance forthe Year The School has had another very successful ye8r. Pupil numbers were 440 compared with 449 the year before, which given the uncertainty created by the pandemic. was considered lo be encouraging. There are wailing lists for a number of classes and interest at open days was very strong. 22 scholarships, awards and distinctions were offered lo pupils for their next schools and every wpil went to the school of their choice. The continued uncertainty created by the COVID pandemic created challenges in ensuring that the Sd)ool ontinued lo provide the standard of education that parents expect in a COVID secure environment. Wnere necessary, as a result of national lockdowns or individual circumstsnces, a virtual school was made available, and every effort was made lo replicate live" School as closely as possible. Throughout the year. significant emphasis was pla￿d on safeguarding in all environments whilst providing the pupils with appropriate pastoral support. Once again, the efforts of all the staff across the School has been well received by the parents. Opportunities lor cost savings during the second national lockdown were fewer than during the first IDckdDwn due to a number of laclors. The ststulory Critical Worker School ran with more than 50 children and the Virtual School ran very comprehensively as the School adapted the piovision to provide a more 'normal" school day with live leaching in rnore subjects. whilst remaining conscious of the appropriate amount ol screen time for each pupil. The Government's decision lo keep nurseries open meant that the School offered both live and virtual nursery provision in tandem. Additionally. ensuring a COVID secure environment Created additional osls ol over £150.000. The iesull of all these factors was that over the course of the second lOck￿Wn any savings achieved were offset by additional costs. Accordingly, the reduction in fees offered lo parents was reduced from that offered during the first lockdown. Due to the uncertainty created by the COVID pandemic, Council remained cautious when determining capital expenditure plans. Major expenditure during the year related lo wmplelion of the refurbishment of the Highlands House tower and refurbishment of the stsff room. The kitchen and dining 8re8s have also been modernised, with the proje¢l funded through an arrangement with the School's caterers. The wider investment plan for the ftjture is being kept under revw and decisions will be made dependent on needs and the financial strength of the School. THE GODSTOWE PREPARATORY SCHOOL COMPANY LIMITED TRUSTEES. REPORT (INCLUDING DIRECTORS. REPORT AND STRATEGIC REPORT) (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2021 Flnancial review Results for the Y￿r The nel income for the year was £63.407 compared with nel expenditure of £44,168 in the previous year. Despite this modest improvement. the impact from the COVID pandemic, In the form of redLJCtions in fees lor the spring term, additional costs and reductions in the opportunities for letting and other income. continued to result in a lower level of surplus than recorded in recent years. Nevertheless. the School's cash position continued lo be strong with cash generation from operations of £666.55812020.. £690,6721 and year-end cash balan￿S re¢ovenng lo £2,141,185 12020.. £1,783,220). As in the previous year. this reflects careful cash management, Cost control and the poslponemenl of major capitsl project expenditure. The creation of ￿sh surpluses from operating activities are an essential part of the long-lerm plans for the improvement of the School lo ensure it remains the school of first choice in the area. A school of this age will always require continuing maintenance to meet the demands of modern technology and society. The Govefnors. focus is the return of the School to a stronger nel income position as soon as possible. but il is recognised that this 15 10 a large extent dependent on the return to a full year of more normal Schwl operating conditions as the day-to4ay impact of the COVID pandemic wanes Fundraising Donations lolalling £21,920 were received during the year compared with £29,949 in the previous year. 'Friends of Godslowe, Ilhe parental charitable organisalionl continues lo play an Invaluable role in raising funds for the School and the Governors are extremely appreciative ol their efftjrts and the generosity ol everyone who has contributed. These donations allow the School lo bring forward plans and complele them earlier than would otherwise have been possible, or provide 'icing on the cake, items that are not considered essential bul lurther enhance the children's experiences. Investment Policies The School does not have any èxtemal inveslmenls, bul in line with our policy of diversifying financial risk the School divides its cash deposrts be￿een its principal bankers. The Governors continue to keep this policy under careful review. ReseNe Levels and Poll¢y The Governors are mindful that the School does not have endowments and that the current economic dimale makes the future somewhat uncertain. The running Costs of the School continue to rise, and the financial dynarnics of ils operations make the School heavily dependent on pupil numbers and fee levels. Imlh this in mind. Ihe Governors need to ensure that the level of reserves is adequate lo maintain the running expenses of the School and to allow for future capital projects. Al the end of the year, the Company had lolal reseNes of £9,998,598 12020 £9.935,1911 and unrestricted reserves of £9,250,623 12020.. £9,181,166). After adjusting for unrestricted functional fixed assets for the Company's own use, there were no remaining free reserves 12020." £nill. It remains the intention of Ihe Governors to Improve the free reserves pos11ion as soon as possible, bul il is recognised that, with the continuing uncertainty created by the COVID pandemic and the economic conditions and the incidence ol unavoidable eslale management proiecls, this may not be achievable in the short term. 11 is the policy of the Company that ils cash balances and access lo additional liquidity should te maintsined al a level equivalent lo between three and six month's expendiluo and significant management attention is given lo forecasting and monitoring cash levels for this purpose. The Governors consider that maintaining cash reserves al this level will ensure that. in the event of a significant drop in cash generation from operations, they will be able lo continue the School's current activities while consideration is given to ways in which additional funds may be raised. This level of cash reserves has been maintained throughout the year with no requirement lo call on the Company's revolving credit facility with ils bankers. This facilty, which expired al the end of the year, has been replaced by a one year overdraft facility of the same amount. Auditor THE GODSTOWE PREPARATORY SCHOOL COMPANY LIMITED TRUSTEES, REPORTIINCLUDING DIRECTORS, REPORT AND STRATEGIC REPORT (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2021 In accordance with the Company's Articles of Assoicalion, a resolution proposing that Azets Audit Services be reappointed as auditor of thecompany will be pul al 8 General Meeting. The Trustees, report. includirg the strategic report, was approved by the Board of Trustees. Mrs T Leaver (Chairl Chair of Trustees Dated.. IS IOZZ THE GODSTOWE PREPARATORY SCHOOL COMPANY LIMITED STATEMENT OF TRUSTEES, RESPONSIBILITIES FOR THE YEAR ENDED 31 AUGUST 2021 The Trustees, who are also the directors of The Godstowe Preparatory School Company Limited for the purpose of company law. are responsible for preparing the Trustees, Report and the financial slalernenls in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Praclicel. Company Law requires the Trustees lo prepare financial statements for each financ¢al year which gwe a true and lair view of the slate of affair5 of the Company and of the incoming resources and application of resour￿$, including the Income and expenditure, of the Company for that year. In preparing these financia1 statements, the Trustees are requiied lo.. select suitable accounting policies 8nd then apply them consistently., observe the methods and principles in Ihe Charities SORP.. make jud9emenls and eslimales that are reasonable and prudent", and prepare the financial slalements on the going concem basis unless it 15 inappropriate lo presurne that the Company will continue in operation. The Trustees are responsible for keeping adequate accounting records that disclose with reasonable accuraey at any lime the financial position of the Company and enable them lo ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguard1ng the assets of the Company and hence for taking reasonable steps for the prevention and delec110n of fraud and other irregularities. THE GODSTOWE PREPARATORY SCHOOL COMPANY LIMITED INDEPENDENT AUDITOR'S REPORT TO THE TRUSTEES OF THE GODSTOWE PREPARATORY SCHOOL COMPANY LIMITED Oplnlon We have audited the financial slalemenls of The Godstowe Preparatory School Company Limited Ilhe 'Company'l for the year ended 31 August 2021 which comprise the statement of financial aclivilies, the balance sheet, the statement of cash f5ows and the notes lo the fin8ncial slalemenls, including a summary ol significant accounting policies The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards. including Finan¢i81 Reporting Standard 102 The Financi81 Reporting Standard applicable in the UK al￿ Republic of Ireland (United Kingdom General￿ Accepted Accounting Practice). In our opinion, the financial slalemenls. give a true and fair view of the state of the Company's affairs a$ al 31 August 2021 and of ils incoming resources and application of resources, for the year then ended", have been properly prepared in accordance with United Kingdom Generally Acceptèd Accounting Practice,. and have been prepared in accordance with the requirements of the Companies Act 2006. Basis for opinion We condLJcled our audit in accordance with Internab'onal Stsndards on Auditing {UKI IISAS IUKII and applicable law. Our responsibilities under those standards are further described in the Audifrorfs responsibililies for the audit of the financial stal&ments section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant lo our akjdit of the financial slalemenls in the UK. including the FRC'S Ethical Standard. and we have fulfilled our other ethical responsibilities in accordance with these reqLJiremenl5. We believe that the audit evidence we have obtainèd is sufficient and appropriate lo provide a basis for our opinion Conclusion$ relating to golng Concem In auditing th& financial slalemenls, 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 perfomed, we have not identified any material un¢ertainties relating to events or conditions that, individually or collectively. may cast significant doubt on the Company's ability lo continue as a going concem for a period of al least twelve months from when the financial statements a￿ authorised for issue. Our responsibilities and the responsibilities of the Trustees with respect lo going concern are described in the Ye￿Vant sections of this report. Other infomiation The other information comprises the information included in the annual report other than the financial statements and our auditor's report Ihereon. The Trustees are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other infomalion and we (b not express any form of assurance conclusion Ihereon. Our responsibility is lo read the other information and, in doing 50, consider whether the other infomalion is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears lo be materially misslaled. If we identify such material Inconsistencies or apparent material misstatements. we are required lo determine whether this gives rise lo a material misslalement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misslalemenl of this other infom8tion, we are required lo report that fact We have nothing lo report in this regard. THE GODSTOWE PREPARATORY SCHOOL COMPANY LIMITED INDEPENDENT AUDITOR'S REPORT (CONTINUED) TO THE TRUSTEES OF THE GODSTOWE PREPARATORY SCHOOL COMPANY LIMITED Matters on which we are required to report by •xception We have nothing lo report in respect of the following matters in ￿latiOn to which the Charities {Accounls and Reports) Regulaligns 2008 require us lo report lo you if. in our opinion.. the infomiation given in the financial statements is inconsislenl in any material respect w(th the Truslee5' report, or sufficient accounting records have not been kept,. or the financial slalements are not in ag￿ement with the accounting records.. or we have not received all the infomalion and explanations we require for our audit. Responsibilities of Trust•¢s As explained more fully in the statement of Trustees, responsibilitie5, the Trustees, who are also the directors ol the Company 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 slalemenls that are free from material misstatement. whether due lo fraud or error. In preparing the financial stslements, they are responsible for assessing the Company's ability lo continue as going concern, d1￿10$1ng. as applicable. mallers related lo going concern and using the going concern basis of aecounling unless Trustees either intend lo liquidate the charitable company or lo cease operations, or have no realistic allernalive bLJI to do so. Auditor's responslbilities for the audlt of the financial statements Our obieclives are lo obtain reasonable assurance about whether the financial statements as a whole are f￿e from material rnisslalemenl. whether due to fraud or error, and lo issue an audilorfs 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 IUKI will always detect a material miss181ement when il exists. Misststemenis can arise from fraud or error and are Considered materi81 if, individually or in tt)e aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial stalemenls. A further description of our responsibilities is available on the Financial Reporting Council's website at". https'.11 www.frc.org.uklaudilorsresponsibililies. This description forms part of our auditor's report. 10- THE GODSTOWE PREPARATORY SCHOOL COMPANY LIMITED INDEPENDENT AUDITOR'S REPORT (CONTINUED) TO THE TRUSTEES OF THE GODSTOWE PREPARATORY SCHOOL COMPANY LIMITED Extent to which thè audlt was considered capablo of detecting irregularities, includlng fraud Irregularities, including fraud, are instances of non4omplian¢e with laws and ￿gUlations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council's website, lo delect material misstatemen15 in respect of irregularities, including fraud. We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation lo the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of materi81 misslatemenl of the financial slalemenls. whether due lo fraijd or error, design and perform audit pro¢edures responsive lo those risks. and obtain audit evidence that Is sufficient and appropriate lo provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary lo applicable laws and regulations, including fraud. In response lo the risk of irregularities and non-cornpli8nce with laws and regulations, including fraud, we designed procedures which included.. Enquiry of management and those charged with governance around actual and potential lilig81ion and claims as well as actual, suspected and alleged fraud., Reviewing minutes of meetings of those char9ed with governance., Assessing the extent of compliance with the laws and regulations considered lo have a direct material effect on the financial statements or the operations of the entity through enquiry and inspection., Reviewing financial statement disclosures and lesling to supporting documentstion lo assess complianee with applicable laws and regulations., Performing audit work over the risk of management bias and override of controls, including testing ol journal entries and other adjuslmenls for appropriateness, evaluating the busines5 rationale ol significant Iiansaclions outside the normal course of business and reviewing 8ccounting eslimales for indicators of potential bias Because of the inherent limitations of an audit, there is a risk that we will not delecl all irregularities, Including those leading to a material misstslement In the financial statements or non Net assets 9.998,598 9,935,191 Income fund$ Restricted funds Unreslrided funds 747,975 9.250.623 754,025 9.181,166 9,998.598 9,935,191 The financial slalements were approved by the Trustees on 1S....mLi￿ZO1￿ Mrs T Leaver (Chairl Trustee Company Rogistration No. 00068471 13- THE GODSTOWE PREPARATORY SCHOOL COMPANY LIMITED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 AUGUST 2021 2021 2020 Noto$ Cash flows from operating activitle8 Cash generated from operations 19 666,558 690,672 Investing activitie8 Purchase of tangible fixed assets Interest re￿iVed 1302,111} 634 1697.8921 6,360 Net cash used in investlng actlvitles 1301,4771 1691,5321 Financlng activitie6 Repayment of borrowings Inerease in deposits 143,9911 36.875 140,5491 27,782 Not cash used in financing a¢tivltie$ 17.1161 112.7671 Net increasel{decreasel in cash and cash equivalents 3S7.965 113,6271 Cash and cash equivalents at beginning of year 1,783,220 1,796,847 Cash and cash equlvalenl$ at end of year 2,141,185 1,783,220 14- THE GODSTOWE PREPARATORY SCHOOL COMPANY LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2021 Accounting policle8 Company information The G¢xlstowe Prepaialory School Company Limited is a private eompany limited by shares incorporated in England and Wales. The registeTed office is Shrubbery Road. High Vvycombe. Buckinghamshire, HP13 6PR, United Kingdom. 1.1 Accounting convention The financial slalements have been prepared in accordance with the Company's governing document. the Comp8nies Act 2006 and "Aceounting and Reporting by Charities.. Statement of Recommended Practice applicable lo eharilies preparing IheiT accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland IFRS 1021" las amended for accounting periods commencing from 1 January 20191. The Company is a Public Benefit Entity as defined by FRS 102. The financial statements are prepared in sterling, which is the funelional currency of the Company. Monetary amounts in these financial stalemenls are rounded to the nearest £. The financial slalemenls have been prepared under the historical eost convention with the exeeplion of investments which are included al market value. The principal accounting policies adopted are sel out below. 1.2 Going concern At the lime of approving the financial statements, the Trustees have a reasonable expectation that the Company 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 slaternenl5. 1.3 Charitable funds Unrestricted funds are available for use at the diserelion of the Trustees in furtherance of their charitable objectives. Reslricled funds are subject lo specific conditions by donors as lo how they may be used. The purposes and uses of thè restricted funds are sel out in the notes to the financial slalements. 1.4 Income Income is recognised when the Company is legally entitled lo il after any perfomiance conditions have been mel, the amounts can be measured reliably, and Il is probable that Income will be received. Cash donations are recognised on receipt. Other donations a￿ recognised once the Company has been notified of the donation. unless performance ¢ondilions require deferral of the amount. Income tax recoverable in relation to donations received under Gift M'd or deeds of covenant is recognised al the lime ol the donation. Legacies are recognised on receipt or otherwise if the Company has been notified of an impending dislribulion, the amount is known, and receipt is expected. If the amount is not known. the legacy is treated as a contingent asset. 1.5 Expenditure Liabilities are recognised as expenditure as soon as there is a legal or constructive obligation committing the Company lo that expenditure. il is probable that a transfer of economic benefits will be required in settlement and the amount of the obligation Can be measured reliably. Expenditure is accounted for cn an accruals basis and has been classified undef headings that aggregate all cost related to the category. 1s- THE GODSTOWE PREPARATORY SCHOOL COMPANY LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2021 Accounting pollcles IContlnu&dl 1.6 Tangible fixed assets Tangible fixed assets are initially measured at cost and subsequently measured at cost, nel of depreciation and any impairment losses. Depreciation is provided on all fixed as5els other than freehold land and is recognised so as to write off the cost of the fixed assets less their residual values on a slraighl line basis using the following eslimaled useful economic lives". Freehold buildings Fixtures and fittings Motor vehicles 50 years 5 - 20 years 5 years The gain or loss arising on the disposal of an asset is determined as the differenee be￿een the sale proceeds and the carrying value of the asset, and is recognised in nel incomellexpenditurel for the year. 1.7 Fixed assel investments Fixed asset investments are initially measured at transaction price excluding transaction costs. and are subsequently measured al fair value al each reporting dale Changes in fair value are recognised in nel incomelexpendilure lor the year. Transaction costs are expensed as incurred. 1.8 Impaimient of fixed assets At each reporting end dale, the Company reviews the carying amounts of ils tangible assets lo delerrnin8 whether there is any indication that those assets have suffered an impairment loss. If any such ind￿allOn exists, the recoverable amount of the asset is estimated in order lo detemine the extent of the im￿lrMent loss (if any). 1.9 Cash and cash gquivalents Cash and cash equivalents include cash in hand, deposit$ held al call with banks, other short-lerm liquid investment5 With original malurilies of three months or less. and bank overdrafts. Bank overdrafts a shown within borrowings in current liabilities. 1.10 Financlal instruments The Company has elected lo apply the provisioris of Section 11 'Basic Financial Instruments, and Section 12 '0ther Financial Instruments Issues, of FRS 102 ID all of its financial instruments. Financial instruments are recognised in the Company's balance sheet when the Company beeomes party lo the contractual provisions of the inslrumenl. Financial assets and liabilities are offset. with the nel amounts presented in the financial slatemenls, when there Is a legally enforceable right lo sel off the recognised amounts and there 15 an intention lo settle on a nel basis or lo realise the asset and settle the liability simultaneously. Basi¢ financial assets 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 inleresl method unless the arrangement ¢onslilules a financing transaction, where the transaction is measured at the present value of the future receipts discounted al a market rate of interest. Financial assets classified as receivable within one year are not amortised. 16- THE GODSTOWE PREPARATORY SCHOOL COMPANY LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2021 Accounting pollcles (Continued) Basi¢ financial liabilltles Basic financi81 liabilities. including creditors and bank loans are ini11811y recognised al transaction pr￿e unless the arrangement conslitLJtes a financing transaction, where the debt instrument is measured al the present value of the future psymenls discounted al a market rale of interest. Financial liabilities classified as payable within one year are not amort1sed. Debt instruments are subsequently carried al amorti$ed cost, using the effective Interest rate method Trade creditors are obligation5 to pay for goods or services Ih8t have been acquired in the ordinary course of operations from suppliers Amounts payable a￿ classified as eurrenl liabilities rf payment is due within one year or less. If not, they are presented as non-currenl liabilities Trade creditors are recognised initially al transaction price and subsequently measured al amortised cost using the effective interest method. Derecognition of financial liabilitles Financial liabilities are derecognised when the Company's conlradual obligations expire or are discharged or cancelled. 1.11 Employee benefits The cost of any unused holiday entitlement is recognised in the period in which the employee's seTvices are received. Termination benefits are recognised immediately as an expense when the Company is demonstrably committed lo terminate Ihe employment of an employee or to provide termination benefits. 1.12 Retirement benefits Payments lo defined contribution retirement benefit schemes are charged as an expense as they fall due. The Company also contributes to the Teachers, Pension Scheme al rates sel by the Scheme Actuary and advised lo the Company by the Scheme Administrator The ￿herne is a rnulli-employer pension scheme, and il is not possible lo identify the assets and liabilities of the scheme which are 8ttribulable to the Company. In 8ccordance with FRS 102 therefore. the scheme is accounted for as a defined contribution scheme. Critical accounting estimates and judgements In the application ol the Company's accounting policies, the Tru51ees are required lo make judgements. eslimales and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The e51imales and associated assumptions are based on historical experience and other factor5 that are Considered to be relevant. Actual results may differ from these eslimales. The eslim8les and underlying assumptions are reviewed on an ongoing basis. Revisions lo 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. THE GODSTOWE PREPARATORY SCHOOL COMPANY LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED FOR THE YEAR ENDED 31 AUGUST 2021 Donation$ and legacies Unrestricted Restricted fund$ funds 2021 2021 Total Unrestrlcted Rostricted funds lunds 2020 2020 Total 2021 2020 Donations and gifts 920 21,000 21,920 29,949 29,949 Charitabl• actlvitlO$ Charitable Income 2021 Charitable Income 2020 Fees receivable from luilion and boarding Charitable rental income 6,846,378 53.808 6,325.545 27,810 6,900,186 6,353.355 Investments Unr&stricted Unrèstricted funds funds 2021 2020 Dep)sil account interest 634 6.360 Other income Unrestricted Unrestrict?d fund$ funds 2021 2020 Job retention scheme 49,301 1 S3,768 18- THE GODSTOWE PREPARATORY SCHOOL COMPANY LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED FOR THE YEAR ENDED 31 AUGUST 2021 Charitable actlvltles Charitsble Charitable Expenditure Expenditure 2021 2020 Wages and salaries Teaching costs Support service costs Management 8nd admin costs Depreciation and impairment Bank charges and interest Bad debts 4,675,555 199,322 1,090.147 247.248 626.567 37,794 32,001 4,481,085 174,693 1,096,919 211,050 600,425 40,138 116,7101 6.908,634 6,587,600 Analysls by fund Unrestricted funds Restricted fund 6.881,584 27,050 6,559,549 28,051 6.908,634 6,587,600 19- THE GODSTOWE PREPARATORY SCHOOL COMPANY LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2021 Employees Number of employees The average monthly number of employees during the year was.. 2021 Number 2020 Number Teachers- Full time Teachers- Part lime Admin - Full lime Admin - Part lime 41 19 43 28 28 126 126 Employment C08ts 2021 2020 Wages and salaries Social security costs Other pension costs 3,710,498 363,835 601,222 3,570,4S1 345,857 564,777 4,675,555 4,481,085 The number of employees whose annual reM￿nerat￿n, excluding social security and pension conlribulions, was £60,000 or more were.. 2021 Number 2020 Number £60,000- £70,QDO £70,001- £80,000 £110,001 £120,000 £120,001- £130,000 Truste•s' remuneration and benefits There were no Iruslees. remuneration or other benefits paid for by the Company for the year ended 31 August 2021 nor for the year ended 31 August 2020. There were no trustees, expenses paid for by the Company for the year ended 31 August 2021 nor for the year ended 31 August 2020. -20- THE GODSTOWE PREPARATORY SCHOOL COMPANY LIMITED NOTES TO THE FINANCIAL STATEMENTS {CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2021 10 Tangible flxed assgts Freehold Flxtures and Motor vehiGI¢$ buildings fittings Total Cost Al 1 September 2020 Additions Transfers 14,127.808 2,325,238 226,063 76,048 11,658,951) 1,658,951 30.711 16,483,757 302,111 Al 31 August 2021 12,694,920 4.060,237 30.711 16,785,868 Depreclatlon and impairnient Al 1 September 2020 Depreciation charged in the year Transfers 3,778, 173 1,666,484 373,038 253,529 1179,2421 179,242 30,711 5,475,368 626,567 At 31 August 2021 3,971,969 2,099,255 30.711 6,101,935 Carrying amount At 31 August 2021 8,722,951 1,960,982 10,683,933 At 31 August 2020 10,349,635 658,754 11,008,389 The transfers between freehold land and buildings and fixtures and fittings shown above relate to a reassessment of the fixed plant and equipment included In the swimming pool complex which was completed in the year ended 31 August 2019. The lolal cost of the swimming pool complex, including such plant and equipment. was previously all shown within freehold18nd and buildings. 11 Fixed asset investments Other investments Cost or valuation Al 1 September 2020 & 31 August 2021 Carrying amount Al 31 August 2021 Al 31 August 2020 Fixed asset investments at the balance sheet dale comprise the entire ordinary share capital of the Company's two domiant subsidiaries, High Wcombe Music Acts"vilies Limited and Godslowe Developments Limited. 21 THE GODSTOWE PREPARATORY SCHOOL COMPANY LIMITED NOTES TO THE FINANCIAL STATEMENTS ICONTINUED) FOR THE YEAR ENDED 31 AUGUST 2021 12 Debtor8 2021 2020 Amount8 falling dug within one y&ar: Trade debtors (see below) Other debtors Prepayments and accrued income 1,609.799 45.815 130.286 1.866 57,652 112,196 1,785.900 171,714 School fees for the Autumn Term following the year end are raised and issued prior lo the year end Following changes made to the Company's accounting systems, such fees are shown as trade debtors in the Balance Sheet lo the exlenl they are unsellled al the year end, nO￿lthstandIng that they are not due and payable until the beginning of the term. The income arising from such fees 15 not recorded In the Income and Expenditure account until the following year. in accordance with the Companys income recognition policy, but is shown in the Balance Sheel al the year-end as deferred income. This represents a change from the prior year, where SLJch fees We￿ not recorded a5 trade debtors until the following year and any amounts received in settlement prior lo the year-end were treated as fees received in advance. 13 Loans and deposits 2021 2020 Bank loans - due in 1 yeaT Bank loans - 1-2 years Bank loans - 2-5 years Bank loans - over S years 44.940 45,673 141,542 638,418 41,910 42,860 134,500 695,294 870,573 914,564 Deposits due in 1 year Deposits - 1-2 years Deposits - 2-5 years Deposits - over S years 130,539 39.743 155.951 115.494 104.397 48.965 143,365 108,125 441.727 404,852 Bank Loans Deposits 870.573 441,727 914,564 404.852 1,312.300 1,319.416 Payable within one year Payable after one year 175.479 1,136.821 146,307 1.173,109 1,312,300 1.319,416 -22- THE GODSTOWE PREPARATORY SCHOOL COMPANY LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2021 13 Loans and deposit8 Continuodl Secured debts On 8 August 2018, the Company entered into 8 20 year lemi loan with National Westrninster Bank PIC which is secured by a charge on certain freehold land and buildings. At 31 August 2021. £870,573 was still outstanding on this loan12020.. £914,5641. On 14 September 2021, the Company entered into a one year. £1 million overdraft facility with National Weslminsler Bank PIC which is secured by a charge over certain freehold land and buildings. This faolily replaced the previous revolving credit facility which expired, undrawn, on 31 August 2021. 14 Creditors: amounts falling due wlthin one year 2021 2020 Notes Trade creditors Bank loans Other laxalion and social security Fees received in advance (see Note 121 Deposits Other creditors Accruals Deferred income (see Note 121 167,818 44.940 92.767 313,005 130,539 81,105 147,130 2,498,299 227.690 41,910 85,114 1.303,228 104,397 82.688 10,000 13 13 3,475,603 1.855.027 15 Credltors: amounts falling dua after more than one year 2021 2020 Notes Bank loans Deposits 13 13 825.633 311.188 872,654 300,455 1.136,821 1,173,109 -23- THE GODSTOWE PREPARATORY SCHOOL COMPANY LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2021 16 Analysis of not assets between lundy Unrestricted Restricted Funds Funds 2021 2021 Total Total 2021 2020 Fund balances at 31 August 2021 are represented by". Tangible assets Investments Current assets Long lemi liabilities 9,956,958 726,975 10,683,933 11.008.389 430,482 11,136,821) 21,000 451,482 99.907 11,136.8211 11,173,109) 9,250.623 747,975 9,998.598 9,935,191 Restri¢led Funds represent donations received for specific tangible fixed assets less accumulated depreciation in respect of those fixed assets, together with unexpenrjed donations received for specifie lulure capital and non-capital expenditure. 17 Relatgd party transactions During thè year ended 31 August 2021, the following payments were made ft)r services provided lo 11 Company.. £1,105 to Mr D Ellis, son of Ms L Ellis. previous Finance Director £795 to Mr J Stobbs, son of Ms S Green, Headmistress £588 to Mr T Nicholls, son of Mr S Nicholls, Governor All these transactions were approved by the Trustees and were conducted at market rates. Rèmuneration of key management per8onn•l The remuneration of key management personnel is as follows. 2021 2020 Aggregate compensation 584,794 548,722 18 Operating lease Commitments Al the reporting end date the Company had outstanding commitments for future minimum lease payments under non-c8ncellable operating leases, which fall due as follows.. 2021 2020 Wlhin one year Between two and five years 27,027 49,902 38,501 60,455 76,929 98,956 -24- THE GODSTOWE PREPARATORY SCHOOL COMPANY LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2021 19 Cash generatsd from opgrations 2021 2020 Surpluslldeficill for the year 63.407 144,1681 Adjustments for.. Investment income recognised in slalement of financial activities Depreciation and impairment of tangible fixed assets 16341 626,567 16,360 600,425 Movements in working capital.. Ilncreaselldeerease in debtors Increase in creditors 11,614,186) 1,591,404 512 140,263 Cash generated from operations 666,55e 690,672 20 Analysi$ of changes In net debt At 1 September 2020 Cash nows At 31 August 2021 Cash al bank and in hand 1.783,220 3S7,965 2,141,185 Loans falling due within one year Loons falling due after more than one year 141,9101 1872,6541 13,0301 47,021 144,9401 1825.6331 868,656 401,9S6 1.270.612 25- THE GODSTOWE PREPARATORY SCHOOL COMPANY LIMITED NOTES TO THE FINANCIAL STATEMENTS {CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2021 21 Pension ¢ommitment$ The School participates In the Teachers, Pension Scheme I the TPS I for ils leaching staff and conlribules lo defined contribution schemes lor certain employees, including a stakeholder pension scheme. The pension cost charge represents contributions payable lo the TPS and defined contribution schemes and amounted lo £534,794 12020. £524,732) for the TPS and £86,428 12020. £40,045) for defined contribution schemes. At the year-end £72.889 12020.. £69,415) was accrued in respect of contributions lo the schemes. The TPS is an unfunded mulli*mployer defined benefits pension scheme governed by the Teachers. Pensions Seheme Regulations 2014 las amended). Members contribute on a "pay as you go basis with contributions from members and the employer being credited lo the Exchequer. Retirement and other pension benefits are p8id by public funds provided by Parliament. The employer contribution rale is sel by the Secretary of Slate following scheme valijalions undertaken by the Govemmenl Actuary's Department. The most recent actuarial valu8tion of the TPS was prepared as al 31 March 2016 and the valuation report, which was published in March 2019, confimied an erTiployer contribution rale for the TPS of 23.6% from 1 September 2019 Employers are also required lo pay a scheme adminislralion levy of 0.08%, oiving a totsl employer contribution rale o123.680k. The 31 March 2016 valuation report was prepared in accordance with the benefits sel out in the scheme regulations and under the approach specified In the Direction5, as they applied at 5 March 2019. However, the 8ssumplions were considered and set by the Department for Education prior lo the ruling in the 'McCloudlSargeanl case,. This case requirecl the courts lo consider cases regarding the implemenlalion ol the 2015 refomis lo Public Service Pensions including Teachers, Pensions. On 27 June 2019, the Supreme Court denied the government permission to appeal the Court of Appeal's judgement that Iransilional provisions introdu￿d lo the reformed pension schemes in 2015 gave rise lo unlawful age discrimination. The govemmenl 15 respecting the Court's decision and ha5 said il will engage fLJlly with the Employment Tribunal as well as employer and member representatives to agree how the discriminations will be remedied The TPS is subject lo a cost cap mechanism which was put in place to protect taxpayers againsl unforeseen changes in scheme costs. The Chief Secretary lo the Tre8sury, having in 2018 announced that there would be a review of this cost cap mechanism, in January 2019 announced a pause to the cost cap mechanism following the CoLJrt of Appeal's ruling in the McCIoLJdlSargeanl case and until there is certainty about the value of pensions lo employees from April 2015 onwards. In view of the above rulings and decisions, the assumptions used in the 31 March 2016 aduarial valuation may become in8ppropriale. In this scenario. a valuation prepared in accordance with revised benefits and suitably revised assumptions would yield different results than those contained in that actuarial valuation. Until a remedy lo the discrimination conclusion has been determined by the Employment Tribunal, il is not possible lo conclude on any financial impact or future changes lo the contribution rates of the TPS. Accordingly. no provision for any additional past benefit pension cosls is included in these financial statements. -26-