Ofsted found that "The St Laurence Education Trust and the Ampleforth Abbey Trust remain linked closely" and clearly weren't happy about it for reasons I described in my previous article. So one needs to take a look at precisely how closely they are linked, and how easy would it be to separate them. An experienced professional accountant has conducted an examination of Ampleforth's finances, based on their Companies House and Charities Commission returns published last year.
A quick summary of the organisations involved: The Abbey is represented by The Ampleforth Abbey Trustees Ltd and Ampleforth Abbey Trust, and the St Laurence Education Trust runs the school. Where a charitable body also engages in trading activities of some kind, it is common for it to be registered both as a company and a charity. Both the abbey and the school have this dual registration. The key question analysed is how independent the school is from the Abbey.
The overall conclusion is that the school is dependent on the Abbey financially, organisationally and operationally, and their combined somewhat precarious financial position offers little or no prospect of being able to achieve a meaningful separation for the foreseeable future.
In fact the ability of Abbey and school to continue operating as going concerns is an open question, since there is a substantial bank loan secured on the property (all owned by the Abbey) and repayable in full by January 2024. That's a stiff repayment schedule for a group of organisations which collectively appear currently to be losing money.
It may be that satisfying Ofsted that the school can meet the Independent School Standards section on leadership depends (among other things) on achieving the separation in governance which the Independent Inquiry into Child
Sex Abuse has described as essential. If so, then there's very little chance of the school passing an Ofsted any time soon. Quite what this means for the future of the school remains to be seen.
Here is the accountant's analysis.
===
The statements examined were those for 31 August 2019 in respect of:
- The Ampleforth Abbey Trustees Ltd, (TAAT) Company
- Ampleforth Abbey Trust (AAT) Charity and
- St Laurence Education Trust (SLET) Charity, Company
The relevant financial statements can be inspected through the hyperlinks listed above.
All figures and quotations below come from these statements. Underlining and italics have been added for emphasis.
How independent is SLET?
The purported independence of SLET is set out by implication in SLET's financial statements, Note 16: “St Laurence Education Trust is a company limited by guarantee and until May 2019 was a wholly owned subsidiary of the Ampleforth Abbey Trust, a charity registered in the United Kingdom (charity registration number 1026493).… In May 2019 the Ampleforth Abbey Trustees (on behalf of Ampleforth Abbey Trust) ceased being the sole member of the St Laurence Education Trust and there was no ultimate controlling party from this date. In May 2019 the Ampleforth Abbey Trustees (on behalf of Ampleforth Abbey Trust) ceased being the sole member of the St Laurence Education Trust and there was no ultimate controlling party from this date.”.
Eight criteria normally associated with control or autonomy are shown below in points (a) – (h). For an entity to qualify as independent, all eight need to be met, but not one is in respect of SLET. Evidence for the non-compliance with the criteria is demonstrated for each of the eight criteria by the numerous extracts below taken from the financial statements that the Ampleforth companies have drafted themselves:
(a) Not being a subsidiary of any other body and/or no
other body publishes consolidated accounts incorporating those of the body
claiming control or autonomy.
The following extracts portray a different picture from the one shown in
italics above, while perhaps not being necessarily mutually exclusive.
AAT’s audited financial statements at 31 August 2019 were consolidated ones which
included 100% of SLET’s figures. Per Note 1 “In relation to the subsidiary
entity of St Laurence Education Trust, which represents a material component of
these consolidated financial statements …”.
Similarly, per AAT Note 6. “St Laurence Education Trust (company number
3415320, charity number 1063808) and The St Benet's Trust (company number
7684231, charity number 1143350) are wholly owned or controlled subsidiary
charities, incorporated in the United Kingdom which are included within the
consolidated figures.” These figures related to the year ended 31 August
2019.
(b) The unfettered ability to appoint directors/trustees
(and dismiss them).
According to SLET Note 16 “Trustees [directors of SLET] are
appointed by the sole corporate member of the St Laurence Education Trust, The
Ampleforth Abbey Trustees.” (TAAT)
Until 10 December 2019, all the directors
of TAAT are/were in holy orders, thereafter (Companies House records were
accessed on 15 March 2021), the majority of the directors are/were in holy
orders and therefore in control. (Information taken from the TAAT Directors
report and Companies House).
(c) Having a business model that is independently
sustainable
For the year ending 31 August 2019 SLET lost £(1,473,000) and at 31 August
2019 it had net liabilities of £(1,083,000) (SLET Pages 16 and 17). SLET is
entirely dependent on AAT’s goodwill to continue.
Per SLET Page 11: “The College’s projected deficits to 31 August 2021 are
expected to be funded by a non-repayable grant from Ampleforth Abbey Trust. The intention to provide this funding has
been confirmed in writing to the Trustees and this support is subject to
certain performance and monitoring conditions.”
Per SLET Page 13 “the Trust [SLET] is financially reliant upon the
support facility provided by Ampleforth Abbey Trust for the foreseeable future”.
Per AAT Note 1: “[AAT] has agreed to provide a certain level of financial
support for the period to 31 August 2021. … The trustees of St Laurence
Education Trust have taken action accordingly and, having prepared updated
financial forecasts, are satisfied that, with the support provided by
Ampleforth Abbey Trust, there are adequate resources to continue in operation
for at least the next 12 months from the date of approval of these financial
statements.”
Without such support, SLET could not survive.
(d) Retaining sole control over all important activities
“Joint committees with Ampleforth Abbey Trust have been formed to
consider Trustee appointments and senior staff remuneration, safeguarding,
health and safety and risk management.” (SLET Page 4)
Similarly, “Management of Risk - The management of risk is exercised by the
Trust through the quarterly consideration of a consolidated risk register
containing risks pertaining to the three on-site entities (Ampleforth Abbey
Trust, St Laurence Education Trust and Ampleforth Abbey Trading Ltd).” (SLET
Page 5)
Also “On 26 October 2018, the Ampleforth Abbey Trust and the St Laurence
Education Trust signed a Framework Agreement governing the works of Ampleforth.
The revised governance relationship enshrined in the Agreement allows the
trustees of each Trust to discharge their legal duties and responsibilities,
operate as independent charities with intrinsic links.” (AAT Page 4)
(e) Having control of strategy
Work is almost complete, following significant collaboration and
consultation, on the development of a strategic plan for the Ampleforth site which
spans both trusts. (AAT Page 13)
(f) Having control of finance
“the trustees [of AAT] have renegotiated the existing banking
covenants and realised funds through the sale of a proportion of the Trusts investments
in order to fill the short term funding gap.” (AAT Page 11)
SLET is in no position, even if it were permitted to do so, to negotiate
finance, including for working capital or covering operating deficits - without
which it cannot continue to operate. It has no assets to offer as security and had net
liabilities of £1,083,000. (SLET Page 11)
(g) Having control over expenditure
Per AAT Note 1: “The Trust incurs expenditure on behalf of its
subsidiaries, the St Laurence Education Trust, The St Benet's Trust and
Ampleforth Abbey Trading Limited. These costs are then re-charged to the
relevant companies and are shown as income and expenditure within the Trust
accounts.” This re-charge exceeded £8,000,000 for 2018/9 (SLET Note 17b)
(h) Having control of its physical infrastructure
necessary to operate
SLET has no property (SLET Page 17) which is owned by AAT (Page 23). And
rather than being held under a lease, its occupancy of the property is included
in the arrangement overall agreement with AAT, which as shown above, is
conditional.
AMPLEFORTH FINANCES (BASED ON 31 AUGUST 2019 FINANCIAL STATEMENTS OF SLET AND CONSOLIDATED ONES OF AAT)
- Overall asset deficit, stripping out unrealised and
unrealisable property gain
“The unrestricted reserves at 31 August 2019 were £41 million. This figure is inclusive of £43.6m of fixed assets which are essential for the charity to operate. If the net book value of such unrestricted assets is excluded from the calculation of free reserves, this gives a net deficit of £2.6 million.” (AAT Page 11) - Auditors’ defensive comment
“ …the Trust [SLET] is financially reliant upon the support facility provided by Ampleforth Abbey Trust for the foreseeable future. … These events and conditions indicate that material uncertainties exist which may cast doubt on the College’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.” [SLET Page 13] - Bank reducing facility and requiring security.
The bank loan was £4,897,000 at 31 August 2019. “In April 2019 a new 5 year revolving credit bank facility of up to £7 million was taken out, secured over [Ampleforth Abbey Trust] property. Repayment of this facility commences in January 2022 (the reduction date) where the facility must be reduced to £4m. Repayment in full must be completed by January 2024. Subsequent to the year end this [£7 million] facility was capped at £5.65m.” (all AAT Page 37)
- A major reduction in employees
The average number employed including recharges was 370 (2018: 440) (SLET Page 34)
====
Since the accountant's analysis was carried out, a news item relevant to Ampleforth's finances has appeared. The Yorkshire Post has reported that Ampleforth has taken Gilling Castle (the former location of the Ampleforth's prep school St. Martins) off the market. The asking price had been £3.5m. Instead, Ampleforth has formed a partnership with children's activity camp provider Activate to use the site as a holiday resort and glamping site. It appears that the correct planning permissions for the change of use may not have been obtained and Ryedale Council is investigating whether there has been a breach of planning regulations.
Presumably the repayment terms for the bank loan were negotiated on the
assumption there would be a successful sale of Gilling Castle, and this
is not now happening. It is not
obvious how the necessary repayments to avoid a default on the loan can
be made without substantial proceeds from asset sales, so the withdrawal of Gilling Castle from the market is potentially a serious blow. Even if the planning issue is overcome, a partnership with a holiday camp company is hardly going to do much to fill a £3.5m gap in the finances.
Ampleforth's 2020 accounts are expected to be published towards the end of June, so we may find out more then.
No comments:
Post a Comment