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2022-08-31-accounts

Charity Registration No. 312732

Company Registration No. 00672569 (England and Wales)

BLACKHEATH PREP

FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2022

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL LEGAL AND ADMINISTRATIVE INFORMATION

Trustees G H Stallard H C Wisher G D Ducharme S Parton D Hudson G Janakan M Melia T A Meunier Secretary H E Pratt Charity number 312732 Company number 00672569 Registered office 4 St Germans Place Blackheath London United Kingdom SE3 0NJ Auditor Azets Audit Services Suites B & D Burnham Yard Beaconsfield Bucks United Kingdom HP9 2JH Bankers Barclay Bank Plc 6 Market Place Bexleyheath Kent DA6 7DY Key Employees Head Teacher A Matthews Assistant Head Teacher P Watkins Bursar H E Pratt

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL CONTENTS

Page
Trustees' report 1 - 5
Statement of trustees' responsibilities 6
Independent auditor's report 7 - 9
Statement of financial activities 10
Balance sheet 11
Statement of cash flows 12
Notes to the financial statements 13 - 28

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL TRUSTEES' REPORT (INCLUDING DIRECTORS' REPORT) FOR THE YEAR ENDED 31 AUGUST 2022

The trustees, who are also directors and members of the charity for the purposes of the Companies Act 2006, present their annual report and financial statements for the year ended 31 August 2022.

The charitable company changed its name from Blackheath Preparatory School Limited to Blackheath Prep on the 28 June 2021.

These financial statements have been prepared in accordance with the accounting policies set out in Note 1 of the financial statements and comply with the charitable company's governing document, the Companies Act 2006 and “Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102)” (as amended for accounting periods commencing from 1 January 2019).

Objectives and Activities

The object of the company, in accordance with its Articles and Association, is the education of children up to the age of 11.

In setting their objectives and planning their activities the trustees have followed the Charity Commission’s general guidance on public benefit and its supplementary public benefit guidance on advancing education and on fee charging.

Strategic Aim and Intended Effect

The School’s strategic aim is the attainment of the highest academic standards while allowing pupils to benefit from an extensive extra-curricular programme. This is intended to draw out pupils’ abilities and academic potential, awaken and develop wider interests in life and motivate them for successful outcomes and transfers to their chosen senior school.

The School seeks to provide a stimulating learning environment, develop their academic potential to the full and provide a happy and secure pastoral environment in which pupils can learn to work together to develop a sense of community, respect for one another and good citizenship. The School aims to provide pupils with the opportunity to take advantage of a wide range of extra-curricular activities to develop positively all aspects of their character.

The School seeks to benefit the public through the achievement of its strategic aim. The School’s fees are set to ensure both the financial viability of the School and an education of the highest quality.

The School is committed to safeguarding and promoting the welfare of its pupils in full compliance with all regulatory requirements. Regular contact with parents is promoted throughout the year whereby parents are given information about their children’s academic and social progress.

Principal Activity

The School’s principal activity continues to be the operation of a nursery, pre-preparatory and preparatory school in Blackheath, London SE3.

Objectives for the year

Our objectives are set annually to reflect the educational aims and ethos of the school.

In setting the objectives, the Trustees have considered the Charity Commission’s general guidance on public benefit and supplementary guidance on advancing education and fee charging.

Our key objectives for the year 2021- 2022 were:

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL TRUSTEES' REPORT (INCLUDING DIRECTORS' REPORT) (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2022

Statement of Compliance with Charity Commission guidance

The trustees have paid due regard to guidance issued by the Charity Commission in determining what activities the charitable company should undertake.

Grant Making Policy

The School can support some pupils through a bursary scheme.

The School is committed to widening public access and recognises that bursaries are a means to ensure that children from low-income families can benefit from the education offered. Bursary awards are currently available to children who meet the entry requirements to the Prep School and are means tested. In assessing means the School considers various factors including family income and assets, investments and savings and family circumstances. Some awards are made to relieve financial hardship where a pupil’s continuing education at the School may be at risk.

When determining the number and value of bursaries to be awarded the Trustees are mindful that, as the School has no endowments, the cost of bursaries awarded must not jeopardise the financial security of the School or be to the detriment of fee-paying parents, many of whom make considerable sacrifices to fund their children’s education.

Volunteers

The trustees would like to take this opportunity to confirm their appreciation for the continuing valuable support provided by parents and other volunteers. The trustees wish to formally record special thanks to the school’s PTFA for their work to raise funds and organise social events for children and parents.

Achievements and Performance

The school has had to adapt constantly during the year due to the changing threat of Covid-19 and the accompanying guidance from the Government and the DfE. This brought about many changes to the operational framework and practices the school employed, especially with the arrival of the Delta and Omicron variants. Enhanced cleaning regimes were maintained, particularly to the touch points. These measure proved successful in limiting the number of cases within the school community.

Much of the year was focused reviewing the schools strategic aims to be launched to the school community, local residents and organisations in September2022.

A significant review has been completed to maximise the full potential of the five acre estate to improve existing buildings , facilities and grounds to ensure they are fit for purpose in the 21st Century.

Our year 6 pupils moved on to a wide range of secondary schools including Alleyn’s, Bexley Grammar School, Blackheath High School, Brighton College, Bromley High School, City Of London School, City of London School for Girls, Colfe’s, Dartford Grammar School for Boys, Dulwich College, Eltham College, Farringtons, Gresham’s School, James Allen’s Girls’ School, Kent College, Newstead Woods School, St Dunstan’s, St Mary’s Ascot, St Pauls Girls School. The pupils received the following scholarships in total.

The School preserved the partnerships with the local community and the 40th Grange Scout Group, Blackheath School of Dance, LAMDA, Ace of Base Tennis and Charlton Athletics Club continue to use the school facilities. In addition we host the provision of holiday camps providing sporting, artistic and creative activities for the local community.

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL TRUSTEES' REPORT (INCLUDING DIRECTORS' REPORT) (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2022

Financial Review

The Trustees consider that the School has adequate resources to continue for the foreseeable future and therefore continue to adopt the going concern basis in preparing financial statements.

The School’s principal source of income is school fees which are set at a level to cover operating costs and to provide for appropriate and prudent investment to support the operation of the School. The Trustees intend to maintain this policy to ensure the financial viability of the School consistent with the aim of providing a first-class well-rounded education.

The Financial Statements for the year ended 31st August 2022 report a loss of £325,872.

Reserves

The School’s free reserves (presented by unrestricted general funds) were £5,847,321 on 31st August 2022 (2021: £5,573,193).

The School’s liquid reserves, represented by the surplus of current assets over current liabilities, were £2,174,703 on 31st August 2022 (2021: £2,467,842). The Trustees have reviewed the reserves policy and deemed it prudent that an amount representing approximately 25% of annual costs is held as liquid reserves (current assets less short-term liabilities) to ensure the School meets its ongoing requirements. The reserves allow for improvement of the School’s facilities

Principal Risks and Uncertainties

The Trustees assess the major risks to which the School is exposed on an annual basis. These risks are identified and assessed, and controls established. The assessment comprises a review of the external operating environment as well as specific areas including governance, management, human resources, health and safety, technology, curriculum, child protection and finance. The reviews enable the Trustees to establish systems and procedures to mitigate risks and the Trustees are satisfied that such systems continue to operate satisfactorily.

The principal risks identified of:

The most significant threat is that of financial uncertainty due to geo-political events. This years expenditure was deemed necessary to future proof the school in terms of support services whilst effecting a controlled change management programme to ensure the best educational environment for our pupils

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL TRUSTEES' REPORT (INCLUDING DIRECTORS' REPORT) (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2022

Future Plans

The Trustees’ key objective for the future continues to be to educate all the School’s pupils to the highest standards within a environment that that reflects the schools values and future facility aspirations. The School is committed to the capital project plans for the site and are working closely with its architects

Governing Document

The Company is governed by its Articles of Association dated 16 May 2012 and is constituted as a company, limited by guarantee, as defined by the Companies Act 2006.

Governing Body

The Trustees, who are also required under the Articles to serve as Directors and Members of the Company, form the School’s Governing Body and are elected by the Governing Body.

Trustees serve for a term of three years and are eligible to stand for re-election. The Trustees give their time free of charge and no remuneration or expenses were paid in this financial year. No Trustee or person connected with a Trustee received any benefit.

Operational Management

The Trustees meet as a Board at least six times a year to determine the general policy of the Charitable Company and to review its overall management and control, for which they are legally responsible. The day-today running of the School is delegated to the Head and the Bursar, supported by teaching members of the Senior Leadership Team.

Remuneration Policy for Senior Staff

Senior Leadership Team remuneration is based on the School’s Leadership Pay Scale which in turn is linked to national teaching rates of pay. In determining remuneration, reference is also made to the guidance issued by the Independent Association of Prep Schools (IAPS) of which the School is a member.

Induction and Training of Trustees

The Trustees operate a continuing training programme designed to keep them informed and updated on current issues in the education sector and the regulatory requirements. New Trustees undergo an appropriate induction process.

Structure and Relationships

The School is an active member of IAPS which aims to define and inspire excellence in education.

The School co-operates with local charities in its ongoing endeavours to widen public access to the School. The School has a thriving and active PTFA which works to raise funds for equipment and to organise social events.

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL TRUSTEES' REPORT (INCLUDING DIRECTORS' REPORT) (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2022

Trustees

The trustees, who are the Directors for the purpose of company law, and who served during the year were:

G H Stallard H C Wisher C H Niven G D Ducharme S Parton E Palmer D Hudson G Janakan M Melia T A Meunier

(Resigned 31 December 2021)

(Resigned 6 July 2022)

No trustees has any beneficial interest in the charitable company. All of the trustees are also members of the charitable company.

Auditor

In accordance with the charitable company's Articles of Association, a resolution proposing that Azets Audit Services be reappointed as auditor of the charitable company will be put at a general meeting of the Trustees.

Post YEar Events

Eltham College and Blackheath Prep are to merge to become one family of schools from September 2023. The merger provides an exciting opportunity to cement the schools’ already close ties, bringing new opportunities for pupils to share facilities and expertise, and for staff to develop their careers within a wider pool of professionals.

The planned capital investment projects are intended to proceed subject to planning consents. This will enable the School to maximise the use of its existing site, but there are no plans to expand further and the focus of the new family of schools on providing an excellent education to existing communities in South East London.

From September 1st 2023 the two charities will merge under Eltham College and Blackheath Prep will become a dormant charity.

As we will now be operating as one charity there will be one set of statutory accounts for the family of schools considering the 2023/2024 academic year onwards

Disclosure of information to auditor

The trustees have confirmed that there is no information of which they are aware which is relevant to the audit, but of which the auditors are unaware of. The trustees have further confirmed that they have taken appropriate steps to identify such relevant information and to establish that hte auditor is aware of such information.

The trustees' report was approved by the Board of Trustees.

..............................

G H Stallard

Trustee

Dated: .........................

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL STATEMENT OF TRUSTEES' RESPONSIBILITIES

FOR THE YEAR ENDED 31 AUGUST 2022

The trustees, who are also the directors of Blackheath Prep for the purpose of company law, are responsible for preparing the Trustees' Report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

Company Law requires the trustees to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the charitable company and of the incoming resources and application of resources, including the income and expenditure, of the charitable company for that year.

In preparing these financial statements, the trustees are required to:

The trustees are responsible for keeping adequate accounting records that disclose with reasonable accuracy at any time the financial position of the charitable 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 charitable company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL INDEPENDENT AUDITOR'S REPORT TO THE TRUSTEES OF BLACKHEATH PREP

Opinion

We have audited the financial statements of Blackheath Prep (the ‘charitable company’) for the year ended 31 August 2022 which comprise the statement of financial activities, the balance sheet, the statement of cash flows and the notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion, the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the charitable 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 trustees' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the charitable 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 trustees with respect to going concern are described in the relevant sections of this report.

Other information

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

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL INDEPENDENT AUDITOR'S REPORT (CONTINUED) TO THE TRUSTEES OF BLACKHEATH PREP

Matters on which we are required to report by exception

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

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 trustees' 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:

Responsibilities of trustees

As explained more fully in the statement of trustees' responsibilities, the trustees, who are also the directors of the charitable 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 statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the trustees are responsible for assessing the charitable 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 trustees either intend to liquidate the charitable company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the 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.

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL INDEPENDENT AUDITOR'S REPORT (CONTINUED) TO THE TRUSTEES OF BLACKHEATH PREP

Extent to which 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 and on the Financial Reporting Council’s website, to detect material misstatements 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 to 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 material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.

In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Use of our report

This report is made solely to the charitable company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the charitable company's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the charitable company and the charitable company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

(Senior Statutory Auditor) for and on behalf of Azets Audit Services

.........................

Chartered Accountants Statutory Auditor

Suites B & D Burnham Yard Beaconsfield Bucks United Kingdom HP9 2JH

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL STATEMENT OF FINANCIAL ACTIVITIES INCLUDING INCOME AND EXPENDITURE ACCOUNT

FOR THE YEAR ENDED 31 AUGUST 2022

Unrestricted
funds
2022
Notes
£
Income and endowments from:
Donations and legacies
3
554
Charitable activities
4
5,594,843
Other trading activities
5
30,271
Investments
6
6,412
Other income
7
-
Total income
5,632,080
Expenditure on:
School operating costs
8
5,929,087
Support costs
9
28,865
Total expenditure
5,957,952
Net gains/(losses) on investments
12
-
Net movement in funds
(325,872)
Fund balances at 1 September 2021
9,460,362
Fund balances at 31 August 2022
9,134,490		 Restricted
funds
2022
£
-
-
-
-
-
-
-
-
-
-
-
14,547
14,547		 Total
2022
£
554
5,594,843
30,271
6,412
-
5,632,080
5,929,087
28,865
5,957,952
-
(325,872)
9,474,909
9,149,037		 Total
2021
£
7,920
4,840,075
11,362
10,626
94,230
4,964,213
5,654,387
19,364
5,673,751
8,940
(700,598)
10,175,507
9,474,909

The statement of financial activities includes all gains and losses recognised in the year.

All income and expenditure derive from continuing activities.

There was movement in restricted funds duirng the year ended 31 August 2022.

The statement of financial activities also complies with the requirements for an income and expenditure account under the Companies Act 2006.

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL BALANCE SHEET

AS AT 31 AUGUST 2022

2022 2021
Notes £ £ £ £
Fixed assets
Intangible assets 13 28,140 37,519
Tangible assets 14 6,899,034 6,922,388
Investments 15 47,160 47,160
6,974,334 7,007,067
Current assets
Debtors 16 63,618 59,785
Cash at bank and in hand 3,145,604 4,404,116
3,209,222 4,463,901
Creditors: amounts falling due within
one year 18 (1,034,519) (1,996,059)
Net current assets 2,174,703 2,467,842
Total assets less current liabilities 9,149,037 9,474,909
Income funds
Restricted funds 19 14,547 14,547
Unrestricted funds - general 5,847,321 5,573,193
Revaluation reserve 3,887,169 3,887,169
9,134,490 9,460,362
9,149,037 9,474,909
The financial statements were approved by the Trustees on .........................

.............................. G H Stallard Trustee

Company Registration No. 00672569

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 AUGUST 2022

Notes
Cash flows from operating activities
Cash (absorbed by)/generated from
operations
24
Interest paid
Net cash provided in operating activities
Investing activities
Purchase of intangible assets
Purchase of tangible fixed assets
Investment income received
Net cash used in investing activities
Financing activities
Repayment of bank loans
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year		 2022
£
£
(792,187)
(2,959)
(795,146)
-
(145,657)
6,414
(139,243)
(324,123)
(324,123)
(1,258,512)
4,404,116
3,145,604		 2021
£
£
282,424
(5,710)
276,714
(46,898)
(769,686)
10,625
(805,959)
(49,803)
(49,803)
(579,048)
4,983,164
4,404,116

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 AUGUST 2022

1 Accounting policies

Charity information

Blackheath Prep is a private company limited by guarantee incorporated in England and Wales. The registered office is 4 St Germans Place, Blackheath, London, SE3 0NJ, United Kingdom.

1.1 Accounting convention

The financial statements have been prepared in accordance with the charitable company's articles of association, the Companies Act 2006 and "Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) (effective 1 January 2019)". The charitable company is a Public Benefit Entity as defined by FRS 102.

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

The financial statements have been prepared under the historical cost convention, The principal accounting policies adopted are set out below.

1.2 Going concern

At the time of approving the financial statements, the trustees have a reasonable expectation that the charitable 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 statements.

1.3 Charitable funds

Unrestricted funds are available for use at the discretion of the trustees in furtherance of their charitable objectives.

Designated funds comprise funds which have been set aside at the discretion of the trustees for specific purposes. The purposes and uses of the designated funds are set out in the notes to the financial statements.

Restricted funds are subject to specific conditions by donors as to how they may be used. The purposes and uses of the restricted funds are set out in the notes to the financial statements.

Endowment funds are subject to specific conditions by donors that the capital must be maintained by the charitable company.

1.4 Incoming resources

Income is recognised when the charitable company is legally entitled to it after any performance conditions have been met, the amounts can be measured reliably, and it is probable that income will be received.

Cash donations are recognised on receipt. Other donations are recognised once the charitable company has been notified of the donation, unless performance conditions require deferral of the amount. Income tax recoverable in relation to donations received under Gift Aid or deeds of covenant is recognised at the time of the donation.

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 AUGUST 2022

1 Accounting policies

(Continued)

1.5 Resources expended

Liabilities are recognised as expenditure as soon as there is a legal or constructive obligation committing the charity to that expenditure, it 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 on an accruals basis and has been classified under headings that aggregate all cost related to the category. Where costs cannot be directly attributed to particular headings they have been allocated to activities on a basis consistent with the use of resources.

1.6 Intangible fixed assets other than goodwill

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.

Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Website costs

1.7 Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Freehold land and buildings 50 years
School equipment 5 years
Fixtures and fittings 5 years
Office equipment 5 years
Catering equipment 5 years

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the statement of financial activities.

All computer and school equipment under £1,000 is written off in the year of expenditure.

1.8 Fixed asset investments

Fixed asset investments are initially measured at transaction price excluding transaction costs, and are subsequently measured at fair value at each reporting date. Changes in fair value are recognised in net income/(expenditure) for the year. Transaction costs are expensed as incurred.

1.9 Impairment of fixed assets

At each reporting end date, the charitable company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 AUGUST 2022

1 Accounting policies

(Continued)

1.10 Cash and cash equivalents

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

1.11 Financial instruments

The charitable company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the charitable company's balance sheet when the charitable company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic 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 interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in net income/(expenditure), except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Impairment of financial assets

Financial assets, other than those held at fair value through income and expenditure, are assessed for indicators of impairment at each reporting date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected.

If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in net income/(expenditure) for the year.

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in net income/(expenditure) for the year.

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2022

1 Accounting policies

(Continued)

Basic financial liabilities

Basic financial liabilities, including creditors and bank loans are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

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

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

Other financial liabilities

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in or in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

Derecognition of financial liabilities

Financial liabilities are derecognised when the charitable company’s contractual obligations expire or are discharged or cancelled.

1.12 Employee benefits

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Termination benefits are recognised immediately as an expense when the Company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

1.13 Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

The charitable company contributes to the Teachers' Pension Scheme at rates set by the Scheme Actuary and advised to the charitable company by the Scheme Administrator. The scheme is a multi-employer pension scheme, and it is not possible to identify the assets and liabilities of the scheme which are attributable to the charitable company. In accordance with FRS 102 therefore, the scheme is accounted for as a defined contribution scheme.

1.14 Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to net income/(expenditure) for the year so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Rentals payable under operating leases, including any lease incentives received, are charged as an expense on a straight line basis over the term of the relevant lease.

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2022

2 Critical accounting estimates and judgements

In the application of the charitable company’s accounting policies, the trustees are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

3 Donations and legacies

Unrestricted Restricted Total Unrestricted Restricted Total
funds funds funds funds
2022 2022 2022 2021 2021 2021
£ £ £ £ £ £
Donations and gifts 554 - 554 3,140 4,780 7,920

4 Charitable activities

Operation of a Operation of a
private school private school
2022 2021
£ £
School fees receivable 5,594,843 4,840,075

5 Other trading activities

Unrestricted Unrestricted
funds funds
2022 2021
£ £
Rental of premises and facilities 30,271 11,362

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 AUGUST 2022

6 Investments

Unrestricted Unrestricted
funds funds
2022 2021
£ £
Income from unlisted investments 1,200 1,230
Bank interest received 5,212 9,396
6,412 10,626

7 Other income

Unrestricted Unrestricted
funds funds
2022 2021
£ £
Job retention scheme - 80,886
Miscellaneous income - 13,344
- 94,230

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 AUGUST 2022

8 School operating costs

Staff costs
£
Teaching costs
3,363,950
Welfare costs
20,578
Premises costs
91,733
Other operating costs
739,544
4,215,805
Analysis by fund
Unrestricted funds
4,215,805
Restricted funds
-
4,215,805		 Other
Depreciation
£
£
360,647
36,066
435,457
-
425,361
142,321
313,430
-
1,534,895
178,387
1,534,895
178,387
-
-
1,534,895
178,387		 Total
2022
Staff costs
£
£
3,760,663
2,980,307
456,035
28,140
659,415
43,980
1,052,974
866,896
5,929,087
3,919,323
5,929,087
3,919,323
-
-
5,929,087
3,919,323		 Other
Depreciation
£
£
119,378
8,550
247,364
-
940,162
130,525
289,085
-
1,595,989
139,075
1,595,989
139,075
-
-
1,595,989
139,075		 Total
2021
£
3,108,235
275,504
1,114,667
1,155,981
5,654,387
5,654,387
-
5,654,387

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2022

9 Support costs

Unrestricted
funds
2022
£
Bank charges
5,064
Bank loan interest
2,959
Auditors' remuneration
20,842
28,865		 Total
Unrestricted
funds
2022
2021
£
£
5,064
2,291
2,959
5,710
20,842
11,363
28,865
19,364		 Total
2021
£
2,291
5,710
11,363
19,364

Included within auditors remuneration are fees of £2,200 (2021: £2,000) for accounts preparation.

10 Trustees

There were no trustees' remuneration or other benefits for the year ended 31 August 2022 nor for the year ended 31 August 2021.

There were trustees' expenses paid for the year ended 31 August 2022 of £1,251 (2021: £109) for one trustee in relation to travel expenses.

11 Employees

The average monthly number of employees during the year was:

Teaching
Domestic
Administartion
Total
Employment costs
Wages and salaries
Social security costs
Other pension costs		 2022
Number
63
10
13
86
2022
£
3,355,427
342,856
517,521
4,215,804		 2021
Number
60
20
12
92
2021
£
3,115,986
309,431
493,906
3,919,323

Included in employment costs is termination payments of £90,735 (2021: £10,519).

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2022

11 Employees

(Continued)

The number of employees whose annual remuneration, excluding employer social security costs and pension contributions, was £60,000 or more were:

2022 2021
Number Number
£60,001 - £70,000 3 3
£70,001 - £80,000 3 1
£80,001 - £90,000 - -
£90,001 - £100,000 1 1
£100,001 - £110,000 1 1
8 6

12 Net gains/(losses) on investments

Total Unrestricted
funds
2022 2021
£ £
Revaluation of investments - 8,940

The charitable company benefitted from an unrealised gain in the value of an investment, resulting from a generous parental gift to charitable company a number of years ago. The charitable company’s intention is to allocate these funds, when realised, to a worthy project, when appropriate, in recognition of this gift.

13 Intangible fixed assets

Intangible fixed assets
Website costs
£
Cost
At 1 September 2021 and 31 August 2022 46,898
Amortisation and impairment
At 1 September 2021 9,379
Amortisation charged for the year 9,379
At 31 August 2022 18,758
Carrying amount
At 31 August 2022 28,140
At 31 August 2021 37,519

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 AUGUST 2022

14 Tangible fixed assets

Freehold land
and buildings
£
Cost or valuation
At 1 September 2021
7,385,937
Additions
82,911
Disposals
-
At 31 August 2022
7,468,848
Depreciation and impairment
At 1 September 2021
624,977
Depreciation charged in the year
133,264
Eliminated in respect of disposals
-
At 31 August 2022
758,241
Carrying amount
At 31 August 2022
6,710,607
At 31 August 2021
6,760,961		 School
equipment
Fixtures and
fittings
£
£
215,923
416,392
-
50,393
(11,798)
(53)
204,125
466,732
212,266
263,044
914
30,670
(11,798)
(53)
201,382
293,661
2,743
173,071
3,657
153,348		 Office
equipment
£
13,843
10,746
-
24,589
9,422
4,161
-
13,583
11,006
4,422		 Catering
equipment
£
115,884
1,607
(9,827)
107,664
115,884
-
(9,827)
106,057
1,607
-		 Total
£
8,147,979
145,657
(21,678)
8,271,958
1,225,593
169,009
(21,678)
1,372,924
6,899,034
6,922,388

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2022

14 Tangible fixed assets

(Continued)

The freehold property was revalued on 31 August 2014 by Michael Parkes, Chartered Surveyors, as a specialised property on an open market value basis at £7,000,000. This valuation was adopted as deemed cost on transition to FRS 102 on 1 September 2014. Subsequent additions at cost have been added to this valuation at the balance sheet date.

Included in cost or valuation of land and buildings is an estimated underlying value of freehold land of £762,000 (2021: £762,000).

All the tangible fixed assets are used directly for charitable purposes.

15 Fixed asset investments

Unlisted
investments
£
Cost or valuation
At 1 September 2021 & 31 August 2022 47,160
Carrying amount
At 31 August 2022 47,160
At 31 August 2021 47,160

There were no fixed asset investments outside the United Kingdom.

16 Debtors

Amounts falling due within one year:
Trade debtors
Other debtors
Prepayments and accrued income
17
Loans and overdrafts
Bank loans
Payable within one year		 2022
£
2,294
-
61,324
63,618
2022
£
1,263
1,263		 2021
£
8,925
3,359
47,501
59,785
2021
£
325,386
325,386

The bank loan was repaid in full on the 18 October 2021, so at the date of the approval of the charitable company's financial statements, there is no outstanding balance.

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2022

17 Loans and overdrafts

(Continued)

18 Creditors: amounts falling due within one year

Creditors: amounts falling due within one year
Notes
Bank loans
17
Other taxation and social security
Trade creditors
Other creditors
Accruals and deferred income		 2022
£
1,263
84,174
134,985
448,261
365,836
1,034,519		 2021
£
325,386
84,686
126,441
381,207
1,078,339
1,996,059

19 Restricted funds

The income funds of the charity include restricted funds comprising the following unexpended balances of donations and grants held on trust for specific purposes:

Movement in funds Movement in funds
Balance at Incoming Balance at Incoming Balance at
1 September resources 1 September resources 31 August
2020 2021 2022
£ £ £ £ £
Restricted funds 9,767 4,780 14,547 - 14,547

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 AUGUST 2022

20 Analysis of net assets between funds

Unrestricted
funds
Restricted
funds
2022
2022
£
£
Fund balances at 31 August 2022 are represented by:
Intangible fixed assets
28,140
-
Tangible assets
6,899,034
-
Investments
47,160
-
Current assets/(liabilities)
2,160,156
14,547
9,134,490
14,547		 Total
Unrestricted
funds
Designated
funds
Restricted
funds
2022
2021
2021
2021
£
£
£
£
28,140
37,519
-
-
6,899,034
6,922,388
-
-
47,160
47,160
-
-
2,174,703
2,467,842
-
-
9,149,037
9,474,909
-
-		 Total
2021
£
37,519
6,922,388
47,160
2,467,842
9,474,909

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2022

21 Significant event

Eltham College and Blackheath Prep are to merge to become one family of schools from September 2023. The merger provides an exciting opportunity to cement the schools’ already close ties through a more formal partnership, bringing new opportunities for pupils to share facilities and expertise, and for staff to develop their careers within a wider pool of professionals.

The planned capital investment projects - including the rebuilding of the Jubilee block and sports pavilion at Blackheath Prep - will go ahead, subject to the usual planning consents. These investments will enable the school to maximise its existing site, but there are no plans to expand further and the focus of the new group is on providing an excellent education to existing communities in South East London.

From September the 1st the two charities will merge under Eltham College and Blackheath Prep will become a dormant charity.

As we will now be operating as one charity there will be one set of statutory accounts for the family of schools considering the 2023/2024 academic year onwards.

22 Related party transactions

There were no related party transactions to disclose during the year ended 31 August 2022 (2021: £nil)

Remuneration of key management personnel

The remuneration of key management personnel is as follows.

2022 2021
£ £
Aggregate compensation 748,467 359,914

Key Management Personnel increased from 3 in 2021 to 8 in 2022.

23 Operating lease commitments

At the reporting end date the charitable company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

Within one year
Between two and five years		 2022
£
56,946
89,230
146,176		 2021
£
35,320
34,719
70,039

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2022

24
Cash generated from operations
Deficit for the year
Adjustments for:
Investment income recognised in statement of financial activities
Interest paid
Fair value gains and losses on investments
Depreciation and impairment of tangible fixed assets
Movements in working capital:
(Increase)/decrease in stocks
(Increase)/decrease in debtors
(Decrease)/increase in creditors
Cash (absorbed by)/generated from operations
25
Analysis of changes in net funds
At 1 September
2021
£
Cash at bank and in hand
4,404,116
Loans falling due within one year
(325,386)
4,078,730		 2022
2021
£
£
(325,872)
(700,598)
(6,412)
(10,626)
2,959
5,710
-
(8,940)
178,388
139,075
-
739
(3,833)
62,641
(637,417)
794,423
(792,187)
282,424
Cash flows
At 31 August
2022
£
£
(1,258,512)
3,145,604
324,123
(1,263)
(934,389)
3,144,341

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2022

26 Pension contributions

Teaching staff

The charitable company participates in the Teachers' Pension Scheme ("the TPS") for its teaching staff. The pension charge for the year includes employer contributions payable to the TPS of £457,050 (2021: £431,594) and at the year-end £62,302 (2021: £36,313) was accrued in respect of contributions to this scheme.

The TPS is an unfunded multi-employer defined benefits pension scheme governed by the Teachers' Pension Scheme Regulations 2014 (as amended). Members contribute on a "pay as you go" basis with contributions from members and the employer being credited to the Exchequer. Retirement and other pension benefits are paid by public funds provided by Parliament.

The employer contribution rate is set following scheme valuations undertaken by the Government Actuary's Department. The latest actuarial valuation of the TPS was prepared as at 31 March 2012 and the valuation report, which was published in June 2014, confirmed an employer contribution rate for the TPS of 16.4% from 1 September 2015. Employers are also required to pay a scheme administration levy of 0.08% giving the total employer payment rate of 16.48%.

The employer contribution rate is set by the Secretary of State following scheme valuations undertaken by the Government Actuary's Department. The most recent valuation was prepared as at 31 March 2016 and the valuation report, which was published in March 2019, confirmed an employer contribution rate for the TPS of 23.6% from 1 September 2019. Employers are also required to pay a scheme administration levy of 0.08%, giving a total employer contribution rate of 23.68%.

The 31 March 2016 valuation report was prepared in accordance with the benefits set out in the scheme regulations and under the approach specified in the Directions, as they applied at 5 March 2019. However, the assumptions were considered and set by the Department for Education prior to the ruling in the ‘McCloud/ Sargeant case’. This case required the courts to consider cases regarding the implementation of the 2015 reforms to 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 transitional provisions introduced to the reformed pension schemes in 2015 gave rise to unlawful age discrimination. The government is respecting the Court’s decision and has said it will engage fully with the Employment Tribunal as well as employer and member representatives to agree how the discriminations will be remedied.

The TPS is subject to a cost cap mechanism which was put in place to protect taxpayers against unforeseen changes in scheme costs. The Chief Secretary to the Treasury, 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 Court of Appeal’s ruling in the McCloud/Sargeant case and until there is certainty about the value of pensions to employees from April 2015 onwards.

In view of the above rulings and decisions, the assumptions used in the 31 March 2016 actuarial valuation may become inappropriate. 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 to the discrimination conclusion has been determined by the Employment Tribunal, it is not possible to conclude on any financial impact or future changes to the contribution rates of the TPS. Accordingly, no provision for any additional past benefit pension costs is included in these financial statements.

Non-teaching staff

The charitable company contributes to a defined contribution stakeholder scheme for some non-teaching staff. The charitable company's pension arrangements are in compliance with the requirements of the Pension Auto Enrolment Regulations. The employer contributions paid for non-teaching staff were £60,471 (2021: £63,313).

Charity Registration No. 312732

Company Registration No. 00672569 (England and Wales)

BLACKHEATH PREP

FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2022

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL LEGAL AND ADMINISTRATIVE INFORMATION

Trustees G H Stallard H C Wisher G D Ducharme S Parton D Hudson G Janakan M Melia T A Meunier Secretary H E Pratt Charity number 312732 Company number 00672569 Registered office 4 St Germans Place Blackheath London United Kingdom SE3 0NJ Auditor Azets Audit Services Suites B & D Burnham Yard Beaconsfield Bucks United Kingdom HP9 2JH Bankers Barclay Bank Plc 6 Market Place Bexleyheath Kent DA6 7DY Key Employees Head Teacher A Matthews Assistant Head Teacher P Watkins Bursar H E Pratt

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL CONTENTS

Page
Trustees' report 1 - 5
Statement of trustees' responsibilities 6
Independent auditor's report 7 - 9
Statement of financial activities 10
Balance sheet 11
Statement of cash flows 12
Notes to the financial statements 13 - 28

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL TRUSTEES' REPORT (INCLUDING DIRECTORS' REPORT) FOR THE YEAR ENDED 31 AUGUST 2022

The trustees, who are also directors and members of the charity for the purposes of the Companies Act 2006, present their annual report and financial statements for the year ended 31 August 2022.

The charitable company changed its name from Blackheath Preparatory School Limited to Blackheath Prep on the 28 June 2021.

These financial statements have been prepared in accordance with the accounting policies set out in Note 1 of the financial statements and comply with the charitable company's governing document, the Companies Act 2006 and “Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102)” (as amended for accounting periods commencing from 1 January 2019).

Objectives and Activities

The object of the company, in accordance with its Articles and Association, is the education of children up to the age of 11.

In setting their objectives and planning their activities the trustees have followed the Charity Commission’s general guidance on public benefit and its supplementary public benefit guidance on advancing education and on fee charging.

Strategic Aim and Intended Effect

The School’s strategic aim is the attainment of the highest academic standards while allowing pupils to benefit from an extensive extra-curricular programme. This is intended to draw out pupils’ abilities and academic potential, awaken and develop wider interests in life and motivate them for successful outcomes and transfers to their chosen senior school.

The School seeks to provide a stimulating learning environment, develop their academic potential to the full and provide a happy and secure pastoral environment in which pupils can learn to work together to develop a sense of community, respect for one another and good citizenship. The School aims to provide pupils with the opportunity to take advantage of a wide range of extra-curricular activities to develop positively all aspects of their character.

The School seeks to benefit the public through the achievement of its strategic aim. The School’s fees are set to ensure both the financial viability of the School and an education of the highest quality.

The School is committed to safeguarding and promoting the welfare of its pupils in full compliance with all regulatory requirements. Regular contact with parents is promoted throughout the year whereby parents are given information about their children’s academic and social progress.

Principal Activity

The School’s principal activity continues to be the operation of a nursery, pre-preparatory and preparatory school in Blackheath, London SE3.

Objectives for the year

Our objectives are set annually to reflect the educational aims and ethos of the school.

In setting the objectives, the Trustees have considered the Charity Commission’s general guidance on public benefit and supplementary guidance on advancing education and fee charging.

Our key objectives for the year 2021- 2022 were:

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL TRUSTEES' REPORT (INCLUDING DIRECTORS' REPORT) (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2022

Statement of Compliance with Charity Commission guidance

The trustees have paid due regard to guidance issued by the Charity Commission in determining what activities the charitable company should undertake.

Grant Making Policy

The School can support some pupils through a bursary scheme.

The School is committed to widening public access and recognises that bursaries are a means to ensure that children from low-income families can benefit from the education offered. Bursary awards are currently available to children who meet the entry requirements to the Prep School and are means tested. In assessing means the School considers various factors including family income and assets, investments and savings and family circumstances. Some awards are made to relieve financial hardship where a pupil’s continuing education at the School may be at risk.

When determining the number and value of bursaries to be awarded the Trustees are mindful that, as the School has no endowments, the cost of bursaries awarded must not jeopardise the financial security of the School or be to the detriment of fee-paying parents, many of whom make considerable sacrifices to fund their children’s education.

Volunteers

The trustees would like to take this opportunity to confirm their appreciation for the continuing valuable support provided by parents and other volunteers. The trustees wish to formally record special thanks to the school’s PTFA for their work to raise funds and organise social events for children and parents.

Achievements and Performance

The school has had to adapt constantly during the year due to the changing threat of Covid-19 and the accompanying guidance from the Government and the DfE. This brought about many changes to the operational framework and practices the school employed, especially with the arrival of the Delta and Omicron variants. Enhanced cleaning regimes were maintained, particularly to the touch points. These measure proved successful in limiting the number of cases within the school community.

Much of the year was focused reviewing the schools strategic aims to be launched to the school community, local residents and organisations in September2022.

A significant review has been completed to maximise the full potential of the five acre estate to improve existing buildings , facilities and grounds to ensure they are fit for purpose in the 21st Century.

Our year 6 pupils moved on to a wide range of secondary schools including Alleyn’s, Bexley Grammar School, Blackheath High School, Brighton College, Bromley High School, City Of London School, City of London School for Girls, Colfe’s, Dartford Grammar School for Boys, Dulwich College, Eltham College, Farringtons, Gresham’s School, James Allen’s Girls’ School, Kent College, Newstead Woods School, St Dunstan’s, St Mary’s Ascot, St Pauls Girls School. The pupils received the following scholarships in total.

The School preserved the partnerships with the local community and the 40th Grange Scout Group, Blackheath School of Dance, LAMDA, Ace of Base Tennis and Charlton Athletics Club continue to use the school facilities. In addition we host the provision of holiday camps providing sporting, artistic and creative activities for the local community.

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL TRUSTEES' REPORT (INCLUDING DIRECTORS' REPORT) (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2022

Financial Review

The Trustees consider that the School has adequate resources to continue for the foreseeable future and therefore continue to adopt the going concern basis in preparing financial statements.

The School’s principal source of income is school fees which are set at a level to cover operating costs and to provide for appropriate and prudent investment to support the operation of the School. The Trustees intend to maintain this policy to ensure the financial viability of the School consistent with the aim of providing a first-class well-rounded education.

The Financial Statements for the year ended 31st August 2022 report a loss of £325,872.

Reserves

The School’s free reserves (presented by unrestricted general funds) were £5,847,321 on 31st August 2022 (2021: £5,573,193).

The School’s liquid reserves, represented by the surplus of current assets over current liabilities, were £2,174,703 on 31st August 2022 (2021: £2,467,842). The Trustees have reviewed the reserves policy and deemed it prudent that an amount representing approximately 25% of annual costs is held as liquid reserves (current assets less short-term liabilities) to ensure the School meets its ongoing requirements. The reserves allow for improvement of the School’s facilities

Principal Risks and Uncertainties

The Trustees assess the major risks to which the School is exposed on an annual basis. These risks are identified and assessed, and controls established. The assessment comprises a review of the external operating environment as well as specific areas including governance, management, human resources, health and safety, technology, curriculum, child protection and finance. The reviews enable the Trustees to establish systems and procedures to mitigate risks and the Trustees are satisfied that such systems continue to operate satisfactorily.

The principal risks identified of:

The most significant threat is that of financial uncertainty due to geo-political events. This years expenditure was deemed necessary to future proof the school in terms of support services whilst effecting a controlled change management programme to ensure the best educational environment for our pupils

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL TRUSTEES' REPORT (INCLUDING DIRECTORS' REPORT) (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2022

Future Plans

The Trustees’ key objective for the future continues to be to educate all the School’s pupils to the highest standards within a environment that that reflects the schools values and future facility aspirations. The School is committed to the capital project plans for the site and are working closely with its architects

Governing Document

The Company is governed by its Articles of Association dated 16 May 2012 and is constituted as a company, limited by guarantee, as defined by the Companies Act 2006.

Governing Body

The Trustees, who are also required under the Articles to serve as Directors and Members of the Company, form the School’s Governing Body and are elected by the Governing Body.

Trustees serve for a term of three years and are eligible to stand for re-election. The Trustees give their time free of charge and no remuneration or expenses were paid in this financial year. No Trustee or person connected with a Trustee received any benefit.

Operational Management

The Trustees meet as a Board at least six times a year to determine the general policy of the Charitable Company and to review its overall management and control, for which they are legally responsible. The day-today running of the School is delegated to the Head and the Bursar, supported by teaching members of the Senior Leadership Team.

Remuneration Policy for Senior Staff

Senior Leadership Team remuneration is based on the School’s Leadership Pay Scale which in turn is linked to national teaching rates of pay. In determining remuneration, reference is also made to the guidance issued by the Independent Association of Prep Schools (IAPS) of which the School is a member.

Induction and Training of Trustees

The Trustees operate a continuing training programme designed to keep them informed and updated on current issues in the education sector and the regulatory requirements. New Trustees undergo an appropriate induction process.

Structure and Relationships

The School is an active member of IAPS which aims to define and inspire excellence in education.

The School co-operates with local charities in its ongoing endeavours to widen public access to the School. The School has a thriving and active PTFA which works to raise funds for equipment and to organise social events.

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL TRUSTEES' REPORT (INCLUDING DIRECTORS' REPORT) (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2022

Trustees

The trustees, who are the Directors for the purpose of company law, and who served during the year were:

G H Stallard H C Wisher C H Niven G D Ducharme S Parton E Palmer D Hudson G Janakan M Melia T A Meunier

(Resigned 31 December 2021)

(Resigned 6 July 2022)

No trustees has any beneficial interest in the charitable company. All of the trustees are also members of the charitable company.

Auditor

In accordance with the charitable company's Articles of Association, a resolution proposing that Azets Audit Services be reappointed as auditor of the charitable company will be put at a general meeting of the Trustees.

Post YEar Events

Eltham College and Blackheath Prep are to merge to become one family of schools from September 2023. The merger provides an exciting opportunity to cement the schools’ already close ties, bringing new opportunities for pupils to share facilities and expertise, and for staff to develop their careers within a wider pool of professionals.

The planned capital investment projects are intended to proceed subject to planning consents. This will enable the School to maximise the use of its existing site, but there are no plans to expand further and the focus of the new family of schools on providing an excellent education to existing communities in South East London.

From September 1st 2023 the two charities will merge under Eltham College and Blackheath Prep will become a dormant charity.

As we will now be operating as one charity there will be one set of statutory accounts for the family of schools considering the 2023/2024 academic year onwards

Disclosure of information to auditor

The trustees have confirmed that there is no information of which they are aware which is relevant to the audit, but of which the auditors are unaware of. The trustees have further confirmed that they have taken appropriate steps to identify such relevant information and to establish that hte auditor is aware of such information.

The trustees' report was approved by the Board of Trustees.

..............................

G H Stallard

Trustee

Dated: .........................

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL STATEMENT OF TRUSTEES' RESPONSIBILITIES

FOR THE YEAR ENDED 31 AUGUST 2022

The trustees, who are also the directors of Blackheath Prep for the purpose of company law, are responsible for preparing the Trustees' Report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

Company Law requires the trustees to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the charitable company and of the incoming resources and application of resources, including the income and expenditure, of the charitable company for that year.

In preparing these financial statements, the trustees are required to:

The trustees are responsible for keeping adequate accounting records that disclose with reasonable accuracy at any time the financial position of the charitable 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 charitable company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL INDEPENDENT AUDITOR'S REPORT TO THE TRUSTEES OF BLACKHEATH PREP

Opinion

We have audited the financial statements of Blackheath Prep (the ‘charitable company’) for the year ended 31 August 2022 which comprise the statement of financial activities, the balance sheet, the statement of cash flows and the notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion, the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the charitable 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 trustees' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the charitable 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 trustees with respect to going concern are described in the relevant sections of this report.

Other information

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

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL INDEPENDENT AUDITOR'S REPORT (CONTINUED) TO THE TRUSTEES OF BLACKHEATH PREP

Matters on which we are required to report by exception

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

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 trustees' 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:

Responsibilities of trustees

As explained more fully in the statement of trustees' responsibilities, the trustees, who are also the directors of the charitable 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 statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the trustees are responsible for assessing the charitable 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 trustees either intend to liquidate the charitable company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the 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.

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL INDEPENDENT AUDITOR'S REPORT (CONTINUED) TO THE TRUSTEES OF BLACKHEATH PREP

Extent to which 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 and on the Financial Reporting Council’s website, to detect material misstatements 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 to 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 material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.

In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Use of our report

This report is made solely to the charitable company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the charitable company's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the charitable company and the charitable company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

(Senior Statutory Auditor) for and on behalf of Azets Audit Services

.........................

Chartered Accountants Statutory Auditor

Suites B & D Burnham Yard Beaconsfield Bucks United Kingdom HP9 2JH

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL STATEMENT OF FINANCIAL ACTIVITIES INCLUDING INCOME AND EXPENDITURE ACCOUNT

FOR THE YEAR ENDED 31 AUGUST 2022

Unrestricted
funds
2022
Notes
£
Income and endowments from:
Donations and legacies
3
554
Charitable activities
4
5,594,843
Other trading activities
5
30,271
Investments
6
6,412
Other income
7
-
Total income
5,632,080
Expenditure on:
School operating costs
8
5,929,087
Support costs
9
28,865
Total expenditure
5,957,952
Net gains/(losses) on investments
12
-
Net movement in funds
(325,872)
Fund balances at 1 September 2021
9,460,362
Fund balances at 31 August 2022
9,134,490		 Restricted
funds
2022
£
-
-
-
-
-
-
-
-
-
-
-
14,547
14,547		 Total
2022
£
554
5,594,843
30,271
6,412
-
5,632,080
5,929,087
28,865
5,957,952
-
(325,872)
9,474,909
9,149,037		 Total
2021
£
7,920
4,840,075
11,362
10,626
94,230
4,964,213
5,654,387
19,364
5,673,751
8,940
(700,598)
10,175,507
9,474,909

The statement of financial activities includes all gains and losses recognised in the year.

All income and expenditure derive from continuing activities.

There was movement in restricted funds duirng the year ended 31 August 2022.

The statement of financial activities also complies with the requirements for an income and expenditure account under the Companies Act 2006.

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL BALANCE SHEET

AS AT 31 AUGUST 2022

2022 2021
Notes £ £ £ £
Fixed assets
Intangible assets 13 28,140 37,519
Tangible assets 14 6,899,034 6,922,388
Investments 15 47,160 47,160
6,974,334 7,007,067
Current assets
Debtors 16 63,618 59,785
Cash at bank and in hand 3,145,604 4,404,116
3,209,222 4,463,901
Creditors: amounts falling due within
one year 18 (1,034,519) (1,996,059)
Net current assets 2,174,703 2,467,842
Total assets less current liabilities 9,149,037 9,474,909
Income funds
Restricted funds 19 14,547 14,547
Unrestricted funds - general 5,847,321 5,573,193
Revaluation reserve 3,887,169 3,887,169
9,134,490 9,460,362
9,149,037 9,474,909
The financial statements were approved by the Trustees on .........................

.............................. G H Stallard Trustee

Company Registration No. 00672569

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 AUGUST 2022

Notes
Cash flows from operating activities
Cash (absorbed by)/generated from
operations
24
Interest paid
Net cash provided in operating activities
Investing activities
Purchase of intangible assets
Purchase of tangible fixed assets
Investment income received
Net cash used in investing activities
Financing activities
Repayment of bank loans
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year		 2022
£
£
(792,187)
(2,959)
(795,146)
-
(145,657)
6,414
(139,243)
(324,123)
(324,123)
(1,258,512)
4,404,116
3,145,604		 2021
£
£
282,424
(5,710)
276,714
(46,898)
(769,686)
10,625
(805,959)
(49,803)
(49,803)
(579,048)
4,983,164
4,404,116

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 AUGUST 2022

1 Accounting policies

Charity information

Blackheath Prep is a private company limited by guarantee incorporated in England and Wales. The registered office is 4 St Germans Place, Blackheath, London, SE3 0NJ, United Kingdom.

1.1 Accounting convention

The financial statements have been prepared in accordance with the charitable company's articles of association, the Companies Act 2006 and "Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) (effective 1 January 2019)". The charitable company is a Public Benefit Entity as defined by FRS 102.

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

The financial statements have been prepared under the historical cost convention, The principal accounting policies adopted are set out below.

1.2 Going concern

At the time of approving the financial statements, the trustees have a reasonable expectation that the charitable 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 statements.

1.3 Charitable funds

Unrestricted funds are available for use at the discretion of the trustees in furtherance of their charitable objectives.

Designated funds comprise funds which have been set aside at the discretion of the trustees for specific purposes. The purposes and uses of the designated funds are set out in the notes to the financial statements.

Restricted funds are subject to specific conditions by donors as to how they may be used. The purposes and uses of the restricted funds are set out in the notes to the financial statements.

Endowment funds are subject to specific conditions by donors that the capital must be maintained by the charitable company.

1.4 Incoming resources

Income is recognised when the charitable company is legally entitled to it after any performance conditions have been met, the amounts can be measured reliably, and it is probable that income will be received.

Cash donations are recognised on receipt. Other donations are recognised once the charitable company has been notified of the donation, unless performance conditions require deferral of the amount. Income tax recoverable in relation to donations received under Gift Aid or deeds of covenant is recognised at the time of the donation.

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 AUGUST 2022

1 Accounting policies

(Continued)

1.5 Resources expended

Liabilities are recognised as expenditure as soon as there is a legal or constructive obligation committing the charity to that expenditure, it 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 on an accruals basis and has been classified under headings that aggregate all cost related to the category. Where costs cannot be directly attributed to particular headings they have been allocated to activities on a basis consistent with the use of resources.

1.6 Intangible fixed assets other than goodwill

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.

Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Website costs

1.7 Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Freehold land and buildings 50 years
School equipment 5 years
Fixtures and fittings 5 years
Office equipment 5 years
Catering equipment 5 years

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the statement of financial activities.

All computer and school equipment under £1,000 is written off in the year of expenditure.

1.8 Fixed asset investments

Fixed asset investments are initially measured at transaction price excluding transaction costs, and are subsequently measured at fair value at each reporting date. Changes in fair value are recognised in net income/(expenditure) for the year. Transaction costs are expensed as incurred.

1.9 Impairment of fixed assets

At each reporting end date, the charitable company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 AUGUST 2022

1 Accounting policies

(Continued)

1.10 Cash and cash equivalents

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

1.11 Financial instruments

The charitable company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the charitable company's balance sheet when the charitable company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic 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 interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in net income/(expenditure), except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Impairment of financial assets

Financial assets, other than those held at fair value through income and expenditure, are assessed for indicators of impairment at each reporting date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected.

If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in net income/(expenditure) for the year.

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in net income/(expenditure) for the year.

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2022

1 Accounting policies

(Continued)

Basic financial liabilities

Basic financial liabilities, including creditors and bank loans are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

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

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

Other financial liabilities

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in or in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

Derecognition of financial liabilities

Financial liabilities are derecognised when the charitable company’s contractual obligations expire or are discharged or cancelled.

1.12 Employee benefits

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Termination benefits are recognised immediately as an expense when the Company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

1.13 Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

The charitable company contributes to the Teachers' Pension Scheme at rates set by the Scheme Actuary and advised to the charitable company by the Scheme Administrator. The scheme is a multi-employer pension scheme, and it is not possible to identify the assets and liabilities of the scheme which are attributable to the charitable company. In accordance with FRS 102 therefore, the scheme is accounted for as a defined contribution scheme.

1.14 Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to net income/(expenditure) for the year so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Rentals payable under operating leases, including any lease incentives received, are charged as an expense on a straight line basis over the term of the relevant lease.

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2022

2 Critical accounting estimates and judgements

In the application of the charitable company’s accounting policies, the trustees are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

3 Donations and legacies

Unrestricted Restricted Total Unrestricted Restricted Total
funds funds funds funds
2022 2022 2022 2021 2021 2021
£ £ £ £ £ £
Donations and gifts 554 - 554 3,140 4,780 7,920

4 Charitable activities

Operation of a Operation of a
private school private school
2022 2021
£ £
School fees receivable 5,594,843 4,840,075

5 Other trading activities

Unrestricted Unrestricted
funds funds
2022 2021
£ £
Rental of premises and facilities 30,271 11,362

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 AUGUST 2022

6 Investments

Unrestricted Unrestricted
funds funds
2022 2021
£ £
Income from unlisted investments 1,200 1,230
Bank interest received 5,212 9,396
6,412 10,626

7 Other income

Unrestricted Unrestricted
funds funds
2022 2021
£ £
Job retention scheme - 80,886
Miscellaneous income - 13,344
- 94,230

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 AUGUST 2022

8 School operating costs

Staff costs
£
Teaching costs
3,363,950
Welfare costs
20,578
Premises costs
91,733
Other operating costs
739,544
4,215,805
Analysis by fund
Unrestricted funds
4,215,805
Restricted funds
-
4,215,805		 Other
Depreciation
£
£
360,647
36,066
435,457
-
425,361
142,321
313,430
-
1,534,895
178,387
1,534,895
178,387
-
-
1,534,895
178,387		 Total
2022
Staff costs
£
£
3,760,663
2,980,307
456,035
28,140
659,415
43,980
1,052,974
866,896
5,929,087
3,919,323
5,929,087
3,919,323
-
-
5,929,087
3,919,323		 Other
Depreciation
£
£
119,378
8,550
247,364
-
940,162
130,525
289,085
-
1,595,989
139,075
1,595,989
139,075
-
-
1,595,989
139,075		 Total
2021
£
3,108,235
275,504
1,114,667
1,155,981
5,654,387
5,654,387
-
5,654,387

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2022

9 Support costs

Unrestricted
funds
2022
£
Bank charges
5,064
Bank loan interest
2,959
Auditors' remuneration
20,842
28,865		 Total
Unrestricted
funds
2022
2021
£
£
5,064
2,291
2,959
5,710
20,842
11,363
28,865
19,364		 Total
2021
£
2,291
5,710
11,363
19,364

Included within auditors remuneration are fees of £2,200 (2021: £2,000) for accounts preparation.

10 Trustees

There were no trustees' remuneration or other benefits for the year ended 31 August 2022 nor for the year ended 31 August 2021.

There were trustees' expenses paid for the year ended 31 August 2022 of £1,251 (2021: £109) for one trustee in relation to travel expenses.

11 Employees

The average monthly number of employees during the year was:

Teaching
Domestic
Administartion
Total
Employment costs
Wages and salaries
Social security costs
Other pension costs		 2022
Number
63
10
13
86
2022
£
3,355,427
342,856
517,521
4,215,804		 2021
Number
60
20
12
92
2021
£
3,115,986
309,431
493,906
3,919,323

Included in employment costs is termination payments of £90,735 (2021: £10,519).

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2022

11 Employees

(Continued)

The number of employees whose annual remuneration, excluding employer social security costs and pension contributions, was £60,000 or more were:

2022 2021
Number Number
£60,001 - £70,000 3 3
£70,001 - £80,000 3 1
£80,001 - £90,000 - -
£90,001 - £100,000 1 1
£100,001 - £110,000 1 1
8 6

12 Net gains/(losses) on investments

Total Unrestricted
funds
2022 2021
£ £
Revaluation of investments - 8,940

The charitable company benefitted from an unrealised gain in the value of an investment, resulting from a generous parental gift to charitable company a number of years ago. The charitable company’s intention is to allocate these funds, when realised, to a worthy project, when appropriate, in recognition of this gift.

13 Intangible fixed assets

Intangible fixed assets
Website costs
£
Cost
At 1 September 2021 and 31 August 2022 46,898
Amortisation and impairment
At 1 September 2021 9,379
Amortisation charged for the year 9,379
At 31 August 2022 18,758
Carrying amount
At 31 August 2022 28,140
At 31 August 2021 37,519

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 AUGUST 2022

14 Tangible fixed assets

Freehold land
and buildings
£
Cost or valuation
At 1 September 2021
7,385,937
Additions
82,911
Disposals
-
At 31 August 2022
7,468,848
Depreciation and impairment
At 1 September 2021
624,977
Depreciation charged in the year
133,264
Eliminated in respect of disposals
-
At 31 August 2022
758,241
Carrying amount
At 31 August 2022
6,710,607
At 31 August 2021
6,760,961		 School
equipment
Fixtures and
fittings
£
£
215,923
416,392
-
50,393
(11,798)
(53)
204,125
466,732
212,266
263,044
914
30,670
(11,798)
(53)
201,382
293,661
2,743
173,071
3,657
153,348		 Office
equipment
£
13,843
10,746
-
24,589
9,422
4,161
-
13,583
11,006
4,422		 Catering
equipment
£
115,884
1,607
(9,827)
107,664
115,884
-
(9,827)
106,057
1,607
-		 Total
£
8,147,979
145,657
(21,678)
8,271,958
1,225,593
169,009
(21,678)
1,372,924
6,899,034
6,922,388

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2022

14 Tangible fixed assets

(Continued)

The freehold property was revalued on 31 August 2014 by Michael Parkes, Chartered Surveyors, as a specialised property on an open market value basis at £7,000,000. This valuation was adopted as deemed cost on transition to FRS 102 on 1 September 2014. Subsequent additions at cost have been added to this valuation at the balance sheet date.

Included in cost or valuation of land and buildings is an estimated underlying value of freehold land of £762,000 (2021: £762,000).

All the tangible fixed assets are used directly for charitable purposes.

15 Fixed asset investments

Unlisted
investments
£
Cost or valuation
At 1 September 2021 & 31 August 2022 47,160
Carrying amount
At 31 August 2022 47,160
At 31 August 2021 47,160

There were no fixed asset investments outside the United Kingdom.

16 Debtors

Amounts falling due within one year:
Trade debtors
Other debtors
Prepayments and accrued income
17
Loans and overdrafts
Bank loans
Payable within one year		 2022
£
2,294
-
61,324
63,618
2022
£
1,263
1,263		 2021
£
8,925
3,359
47,501
59,785
2021
£
325,386
325,386

The bank loan was repaid in full on the 18 October 2021, so at the date of the approval of the charitable company's financial statements, there is no outstanding balance.

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2022

17 Loans and overdrafts

(Continued)

18 Creditors: amounts falling due within one year

Creditors: amounts falling due within one year
Notes
Bank loans
17
Other taxation and social security
Trade creditors
Other creditors
Accruals and deferred income		 2022
£
1,263
84,174
134,985
448,261
365,836
1,034,519		 2021
£
325,386
84,686
126,441
381,207
1,078,339
1,996,059

19 Restricted funds

The income funds of the charity include restricted funds comprising the following unexpended balances of donations and grants held on trust for specific purposes:

Movement in funds Movement in funds
Balance at Incoming Balance at Incoming Balance at
1 September resources 1 September resources 31 August
2020 2021 2022
£ £ £ £ £
Restricted funds 9,767 4,780 14,547 - 14,547

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 AUGUST 2022

20 Analysis of net assets between funds

Unrestricted
funds
Restricted
funds
2022
2022
£
£
Fund balances at 31 August 2022 are represented by:
Intangible fixed assets
28,140
-
Tangible assets
6,899,034
-
Investments
47,160
-
Current assets/(liabilities)
2,160,156
14,547
9,134,490
14,547		 Total
Unrestricted
funds
Designated
funds
Restricted
funds
2022
2021
2021
2021
£
£
£
£
28,140
37,519
-
-
6,899,034
6,922,388
-
-
47,160
47,160
-
-
2,174,703
2,467,842
-
-
9,149,037
9,474,909
-
-		 Total
2021
£
37,519
6,922,388
47,160
2,467,842
9,474,909

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2022

21 Significant event

Eltham College and Blackheath Prep are to merge to become one family of schools from September 2023. The merger provides an exciting opportunity to cement the schools’ already close ties through a more formal partnership, bringing new opportunities for pupils to share facilities and expertise, and for staff to develop their careers within a wider pool of professionals.

The planned capital investment projects - including the rebuilding of the Jubilee block and sports pavilion at Blackheath Prep - will go ahead, subject to the usual planning consents. These investments will enable the school to maximise its existing site, but there are no plans to expand further and the focus of the new group is on providing an excellent education to existing communities in South East London.

From September the 1st the two charities will merge under Eltham College and Blackheath Prep will become a dormant charity.

As we will now be operating as one charity there will be one set of statutory accounts for the family of schools considering the 2023/2024 academic year onwards.

22 Related party transactions

There were no related party transactions to disclose during the year ended 31 August 2022 (2021: £nil)

Remuneration of key management personnel

The remuneration of key management personnel is as follows.

2022 2021
£ £
Aggregate compensation 748,467 359,914

Key Management Personnel increased from 3 in 2021 to 8 in 2022.

23 Operating lease commitments

At the reporting end date the charitable company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

Within one year
Between two and five years		 2022
£
56,946
89,230
146,176		 2021
£
35,320
34,719
70,039

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2022

24
Cash generated from operations
Deficit for the year
Adjustments for:
Investment income recognised in statement of financial activities
Interest paid
Fair value gains and losses on investments
Depreciation and impairment of tangible fixed assets
Movements in working capital:
(Increase)/decrease in stocks
(Increase)/decrease in debtors
(Decrease)/increase in creditors
Cash (absorbed by)/generated from operations
25
Analysis of changes in net funds
At 1 September
2021
£
Cash at bank and in hand
4,404,116
Loans falling due within one year
(325,386)
4,078,730		 2022
2021
£
£
(325,872)
(700,598)
(6,412)
(10,626)
2,959
5,710
-
(8,940)
178,388
139,075
-
739
(3,833)
62,641
(637,417)
794,423
(792,187)
282,424
Cash flows
At 31 August
2022
£
£
(1,258,512)
3,145,604
324,123
(1,263)
(934,389)
3,144,341

BLACKHEATH PREP FORMERLY KNOWN AS BLACKHEATH PREPARATORY SCHOOL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2022

26 Pension contributions

Teaching staff

The charitable company participates in the Teachers' Pension Scheme ("the TPS") for its teaching staff. The pension charge for the year includes employer contributions payable to the TPS of £457,050 (2021: £431,594) and at the year-end £62,302 (2021: £36,313) was accrued in respect of contributions to this scheme.

The TPS is an unfunded multi-employer defined benefits pension scheme governed by the Teachers' Pension Scheme Regulations 2014 (as amended). Members contribute on a "pay as you go" basis with contributions from members and the employer being credited to the Exchequer. Retirement and other pension benefits are paid by public funds provided by Parliament.

The employer contribution rate is set following scheme valuations undertaken by the Government Actuary's Department. The latest actuarial valuation of the TPS was prepared as at 31 March 2012 and the valuation report, which was published in June 2014, confirmed an employer contribution rate for the TPS of 16.4% from 1 September 2015. Employers are also required to pay a scheme administration levy of 0.08% giving the total employer payment rate of 16.48%.

The employer contribution rate is set by the Secretary of State following scheme valuations undertaken by the Government Actuary's Department. The most recent valuation was prepared as at 31 March 2016 and the valuation report, which was published in March 2019, confirmed an employer contribution rate for the TPS of 23.6% from 1 September 2019. Employers are also required to pay a scheme administration levy of 0.08%, giving a total employer contribution rate of 23.68%.

The 31 March 2016 valuation report was prepared in accordance with the benefits set out in the scheme regulations and under the approach specified in the Directions, as they applied at 5 March 2019. However, the assumptions were considered and set by the Department for Education prior to the ruling in the ‘McCloud/ Sargeant case’. This case required the courts to consider cases regarding the implementation of the 2015 reforms to 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 transitional provisions introduced to the reformed pension schemes in 2015 gave rise to unlawful age discrimination. The government is respecting the Court’s decision and has said it will engage fully with the Employment Tribunal as well as employer and member representatives to agree how the discriminations will be remedied.

The TPS is subject to a cost cap mechanism which was put in place to protect taxpayers against unforeseen changes in scheme costs. The Chief Secretary to the Treasury, 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 Court of Appeal’s ruling in the McCloud/Sargeant case and until there is certainty about the value of pensions to employees from April 2015 onwards.

In view of the above rulings and decisions, the assumptions used in the 31 March 2016 actuarial valuation may become inappropriate. 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 to the discrimination conclusion has been determined by the Employment Tribunal, it is not possible to conclude on any financial impact or future changes to the contribution rates of the TPS. Accordingly, no provision for any additional past benefit pension costs is included in these financial statements.

Non-teaching staff

The charitable company contributes to a defined contribution stakeholder scheme for some non-teaching staff. The charitable company's pension arrangements are in compliance with the requirements of the Pension Auto Enrolment Regulations. The employer contributions paid for non-teaching staff were £60,471 (2021: £63,313).

Private & Confidential

The Board of Directors/Trustees Blackheath Prep 4 St. Germans Place Blackheath London SE3 0NJ

Our ref: CN/SW/CM/BEB212

31 May 2023

Dear Sirs

Blackheath Prep Audit findings for the year ended 31 August 2022

This Audit Findings letter highlights the significant findings arising from the audit for the benefit of those charged with governance. We appreciate that you may be aware of some of the matters contained in this report, however as required by International Standard on Auditing (UK) 260 we are communicating them to you formally.

As auditors we are responsible for performing the audit, in accordance with International Standards on Auditing (UK) (ISAs (UK)), which is directed towards forming and expressing an opinion on the financial statements that have been prepared on behalf of management with the oversight of those charged with governance. The audit of the financial statements does not relieve management or those charged with governance of their responsibilities for the preparation of the financial statements.

This letter has been provided on the basis that it is for the information of the Board of Directors/Trustees and management of Blackheath Prep only and that it will not be distributed to others, quoted, or referred to, in whole or in part, without our prior written consent.

Audit status and audit opinion

As per our audit planning letter, the audit was planned to be completed earlier and rescheduling was required due to delays in receiving the trial balance.

Our audit work is substantially complete, subject to the outstanding matters detailed below:

We do not propose any modifications to our audit opinion which is unqualified.

Significant findings

Findings related to significant risks

Significant risks are defined by professional standards as risks that, in the judgement of the auditor, require special audit consideration. In identifying risks, we consider the nature of the risk, the potential magnitude of misstatement, and its likelihood. Significant risks are those risks that have a higher risk of material misstatement.

Risk Results and conclusions
Fraud in revenue recognition
Under ISA (UK) 240 there is a presumed risk
of fraud in relation to revenue recognition.
The presumption is that the company could
adopt accounting policies or recognise sales
in such a way as to lead to a material
misstatement in the reported revenue
position.		 Our work included:
•
Review and test the charitable company’s revenue
recognition policies.
•
Calculate the charitable company’s expected income
for the year ended 31 August 2022 based on school
fees for 2021/22 academic year and the number of
pupils, investigating any large or unusual differences.
•
Testing income cut-off and credit notes to ensure that
the charitable company’s income has been included
in the correct financial year.
•
Testing credit notes to ensure that the charitable
company’s income has been included in the correct
financial year.
The results of our testing did not highlight any issues with the
charitable company’s revenue recognitionpolicies.
Management override of controls
Under ISA (UK) 240 there is a presumed risk
that management and directors could
process transactions adjust to financial
records outside of the normal financial
control processes. Such transactions could
lead to a material misstatement in the
financial statements.		 Our work included:
•
Review of accounting estimates, judgements and
decisions made by management;
•
Testing of journal entries; and
•
Review of any unusual significant transactions.
The results of our testing found no evidence of management
override of controls.

Other identified risks

Other identified risks are those which were not considered to be significant but required specific consideration during the audit.

Other risks Results and conclusions
Going Concern
The directors must undertake a formal
assessment of the Charitable Company’s ability
to continue as a going concern for at least the 12
months following the signing of the financial
statements at both the planning stage of the
audit and at the date the financial statements
are signed.		 In respect of going concern, we reviewed:
•
your assessment of going concern at planning
and at the date of signing the financial
statements;
•
budgets covering the 12-month period from the
date of signing the financial statements;
•
post year end management accounts; and
•
the cash position at sign off.
In respect of post balance sheet events, we will review:
•
post year end Board minutes;
•
post year end management accounts; and

2

No significant issues were discovered in relation to the
charitable company’s ability to continue as a going
concern.
Fund Accounting
There is a risk that the charitable company’s
income and expenditure could be allocated
against the wrong type of fund (e.g. unrestricted
funds, designated funds and restricted funds)
and therefore result in a material misstatement
in the presentation of the charitable company’s
financial statements.		 Our work included:
•
Understand how this incident occurred and
whether this a one-off or evidence of weak
internal controls.
•
Review the process by which employee bank
details are updated with a view to suggesting
potential improvements.
The results from our testing did not highlight any issues
with the allocation of income and expenditure against
each type of fund.

There were no changes to our audit plan previously communicated to you.

Findings in respect of other areas

Going concern

As auditors, we are required to “obtain sufficient appropriate audit evidence about the appropriateness of management's use of the going concern assumption in the preparation and presentation of the financial statements and to conclude whether there is a material uncertainty about the entity's ability to continue as a going concern” (ISA (UK) 570).

Accounting policies, presentation, and disclosures

The accounting policies used in preparing the financial statements are unchanged from the prior year.

Our work included a review of the adequacy of disclosures in the financial statements and consideration of the appropriateness of the accounting policies adopted by the entity.

Overall we found the disclosed accounting policies, and the overall disclosures and presentation to be appropriate.

Other communication requirements

Fraud or suspected fraud

We have not been made aware of any incidents in the period and no other issues have been identified during our audit.

Our work as auditor is not intended to identify any instances of fraud of a non- material nature and should not be relied upon for this purpose. If the members wish to obtain enhanced assurance regarding the effectiveness of internal control in preventing and detecting fraud, we should be happy to provide additional services.

Non-compliance with laws and regulations

As part of our standard audit testing, we have reviewed the laws and regulations impacting the business. There are no indications from this work of any significant incidences of non-compliance or material breaches of laws and regulations stopping the business from continuing as a going concern or that would necessitate a provision or contingent liability.

3

There are also many other laws and regulations relating to health and safety as well as human resources generally and industry specific requirements. We are not aware of any significant incidences of non- compliance.

Written representations

The final draft letter of representation includes standard representation paragraphs.

Related parties

We are not aware of any related party transactions which have not been disclosed.

Confirmations from third parties

All requested confirmations have been received.

Misstatements

We are required to inform you of any significant misstatements within the financial statements presented for audit that have been discovered during our audit. Details of items corrected following discussions with you and your team are set out in Appendix I.

In addition, several non-trivial uncorrected misstatements were discovered during our audit and a summary of these can be found within Appendix II to this letter.

Internal controls

The purpose of an audit is to express an opinion on the financial statements. As part of our work we considered internal controls relevant to the preparation of the financial statements such that we were able to design appropriate audit procedures. However, this work was not for the purpose of expressing an opinion on the effectiveness of internal controls.

We are required to report to you in writing, significant deficiencies in internal controls that we have identified during the audit. These matters are limited to those which we have concluded are of sufficient importance to merit being reported to you.

The scope of our work is not designed to be an extensive review of all internal controls. If we had performed more extensive procedures, we might have identified more deficiencies than those reported in Appendix III below.

Independence

In accordance with our profession’s ethical guidance and further to our planning letter to you dated 30[th] January 2023, confirming audit planning arrangements there are no further matters to bring to your attention in relation to Integrity, Objectivity, and Independence.

We confirm that Azets Audit Services and the engagement team complied with the FRC’s Ethical Standards. We confirm that all threats to our independence have been properly addressed through appropriate safeguards and that we are independent and able to express an objective opinion on the financial statements.

The contents of this report relate only to those matters which came to our attention during the conduct of our normal audit procedures which are designed primarily for the purpose of expressing our opinion on the financial statements. We do not accept any responsibility for any loss occasioned to any third party acting or refraining from acting based on the content of this report, as this report was not prepared for, nor intended for, any other purpose.

4

We would like to take this opportunity to record our appreciation for the kind assistance provided by your team during our audit.

If we can be of any further assistance, please contact Chris Nisbet or Stephen Winterborne.

Yours faithfully,

Chris Nisbet Senior Statutory Auditor Chris.Nisbet@azets.co.uk

5

Appendix I Corrected misstatements

No Detail Assets Liabilities Equity (Profit) / loss
Dr / (Cr)
Dr / (Cr)
Dr / (Cr)
Dr / (Cr)
Details of corrected misstatements
£
£
£
£
Surplusper client TB
(85,785)
Openingbalances adjustments
201,215
1
Reclassification of fees received in advance
281,421
(281,421)
-
-
2
Reversal ofprioryear audit adjustment for the above
(182,714)
182,714
-
-
3
Inclusion of depreciation and amortisation
(178,388)
-
-
178,388
4
Inclusion of disposals(£21,678)
-
-
-
-
5
Agreement of fixed assets
249,480
(249,997)
-
517
6
Removepreviouslycapitalised fixed assets
(692,821)
692,821
-
-
7
Correction to accrual
-
16,462
-
(16,462)
8
Accrued settlementpay
-
(48,000)
-
48,000
Total
(523,022)
312,579
-
325,873

6

Appendix II Uncorrected misstatements

No Detail Assets Liabilities Equity (Profit) / loss
Dr / (Cr)
Dr / (Cr)
Dr / (Cr)
Dr / (Cr)
Details of uncorrected misstatements
£
£
£
£
1
Difference in trade debtors report
(5,417)
-
-
5,417
2
Bad debts received
14,394
-
-
(14,394)
3
Inclusion of insuranceprepayment
32,001
-
-
(32,001)
4
Revaluation of Octopus shares
2,340
-
-
(2,340)
5
Reclassifynegative trade creditors
4,797
(4,797)
-
-
6
Unknown other creditor
-
5,807
-
(5,807)
7
Agree bank loan
-
1,263
-
(1,263)
8
Increase audit fee accrual
-
(9,482)
-
9,482
Total
48,115
(7,209)
-
(40,906)

7

Appendix III Internal controls

Control points arising from our current year work and our recommendations are summarised below. The recommendations are categorised into three risk ratings as shown in the key.

Key: Significant deficiency in internal control, Other deficiency in internal control, Other observations from the audit

Area Observation Implication Recommendation Management response
Opening balances During our audit work we noted that
some of the opening balances (fixed
assets predominantly) did not agree to
the previous years signed financial
statements.		 Management accounts and real time
balance sheet figures may be incorrect
leading to inaccurate information being
used to make business decisions.		 We recommend opening balances
are reconciled to the signed
financial statements when they
are submitted to the relevant
authorities.
Deposits During our audit work it was noted that
deposits per ISAMs did not agree to the
financial statements.		 This
could
lead
deposits
being
untracked or unknown balances within
the deposits code.		 Deposits should be reconciled
monthly/termly from ISAMs to
iFinance to ensure an accurate
record of deposits are kept.
Accruals During our audit work it was noted that
an accruals schedule is not being kept.		 This could lead to confusion at the year
end as to what has been included within
accruals during the year and what has
been reversed.		 We recommend accruals are
updated regularly with a separate
schedule
kept
separately
reconciling to the accrual code on
iFinance at all times.
Related party
questionnaires		 During our audit work it was noted
some
of
the
related
party
questionnaires
did
not
include
directorships.		 This may lead to potential unidentified
related parties.		 We
recommend
these
questionnaires
include
all
directorships.
Fixed assets It was noted during our audit work that
the
depreciation,
disposals
and
additions were not up to date on
iFinance and an updated fixed asset
register was not available at the start of
the audit.		 This may lead to fixed asset additions
being missed and fixed asset values not
being
correct
on
management
accounts.		 We recommend the fixed asset
register is maintained and kept up
to date throughout the year. It is
also
best
practice
to
post
depreciation onto iFinance each
month.