THE full financial problems that led to the collapse and closure of an 84-year-old private school in Suffolk can be revealed today.

It was thought until recent weeks that funding was in place to keep Amberfield School, at Nacton, open until next July and accounts signed off in July of this year struck a positive note, saying governors expected financial conditions to improve and that the school could “ride out” swings in profit and loss.

Staff also agreed pay cuts – thought to be 10% – from September in a bid to keep the school afloat.

But efforts to attract more pupils did not bring in enough income and the board of governors was forced to act when it was presented with management accounts at the end of September.

Some of the alarming findings included:

– draft management accounts for 2010-2011, to the end of July, showing a loss of �398,000 – �50,000 higher than expected, attributed to an “exodus” of pupils in the previous academic year. This was more than double the �175,000 loss in 2009-10, over income of about �2million

– a loss of �100,000 in the first two months of 2011-12. When the budget was drawn up in June, the expected loss for the whole year was �91,000

– a cashflow forecast for the year to July 2012 showing the school could not meet its obligations

Governors announced the closure of the school last week, to the shock and dismay of teachers, pupils and parents, and said the company would go into liquidation on October 31. The move was blamed on significant losses because of falling pupil numbers.

The level of debt has not been disclosed, but the school had �679,000 of liabilities at the end of the 2009-10 year.

The school had 157 pupils at the time of its closure, which was nearly 50% down on eight years ago and a drop of about 60 from 2010. It charged up to �3,505 per term for senior school pupils and �2,685 for the junior school. It was previously an all-girls school but did move to accept boys in years two to seven.

Alistair Lang, chair of the board of governors, said: “When the decision to trade through 2011-12 was taken in June 2011, the board believed it had adequate resource and intended to use the period to seek to boost the school’s financial position by engaging in new initiatives to broaden the appeal of the school.

“Once the inability of the school to meet its short-term obligations became clear the board had no option under company law but to cease trading.”

Mr Lang said a commentary attached to the 2009-10 official accounts lodged with the Charity Commission, which was prepared in July this year, was based on expectations that Amberfield could attract more pupils to boost income, and was agreed by the board, its advisors, the school’s auditors and its bank. However, the expected rise failed to materialise, despite “strenuous” efforts.

He added that staff had played “an important part” in attempting to bridge a predicted funding gap. He said he was unable to discuss teachers’ contracts, but it is understood many agreed to take pay cuts of 10% and hours were also reduced.

Mr Lang said the optimistic tone to the July report sought to “reflect the stresses of the time yet avoid a self-fulfilling prophesy of closure by damaging public confidence in the school”.

But he said a decision had to be made when the bank’s advisors looked at the latest accounts and said there would not be enough money to last until July.

He added: “At that point the school had to consider how best to continue pupils’ education, in particular the GCSE years. The decision then taken was to close as soon as possible to allow those pupils the best possible chance to relocate.”