A MERGER, which could have seen New Park and the junior school of St Leonards, St Katharine's, join together, has fallen by the wayside after detailed discussions

It had been reported that plans to create a new junior co-educational facility in St Andrews had fallen through owing to financial difficulties at St Leonards.

However, St Leonards' Principal, Wendy Bellars, has strongly refuted the claims.

Recent figures produced by the Scottish Council of Independent Schools revealed a substantial fall in the St Leonards school roll in recent years.

In 1985, the roll stood at 440 pupils but, by 2001, this had fallen to 273. During the same period, the number of boarding pupils dropped from 370 to 122.

Accounts prepared to the end of August last year, but lodged only last month, show that the school made a loss of almost 1 million on a turnover of 3 million, and that its overdraft stood at almost 2 million.

In a statement accompanying the latest set of St Leonards accounts, school Chairman, Sir Fraser Morrison, acknowledged a loss of 979,029, but said that action was well in hand to remedy the situation.

He said St Leonards had substantial property assets surplus to requirements, and that the school council were continuing to rationalise their property portfolio in order to reduce unnecessary overhead costs and ensure the most efficient use of resources.

Sir Fraser added that the school had a ''sound financial platform'' and that cash inflows from property sales would be reflected in this year's financial statement.

It was also stressed that part of the proceeds from the property sale would be reinvested in a planned programme of capital expenditure, which would include computer facilities and sports amenities.

Mrs Bellars said this week: ''For the avoidance of any doubt, the school has a strong balance sheet with a cash positive position and has not been in a stronger financial position for very many years.

''A measure of the growing confidence in St Leonards is that projected pupil numbers show an increase for the next academic year, and the availability of capital to invest in the school infrastructure following the recent sale of surplus land will enable us to fulfil our planned programme of expansion over the next few years.''

She said that, last year, New Park had approached St Leonards seeking a merger of interests. However, talks had broken down after a period of time.

''Negotiations went on for some months, and were broken off by St Leonards Council when it became apparent that we were not going to reach an agreement that we could recommend to St Katharines parents,'' she said.

Chairman of New Park School Board, Douglas Williams, said it had made sense to explore combining the businesses of the junior elements of New Park and St Leonards. Talks had taken place on and off over the years and were re-opened following an approach by Sir Fraser Morrison.

''We were disappointed St Leonards withdrew from the discussions, as a lot of ground work had gone into them,'' he said.

''St Leonards wanted control, but it was essential from our perspective that any new school maintained its independence - financial and otherwise.

''We continue to promote New Park as the only fully-co-educational independent junior school in Fife, offering a full curriculum with outstanding results inside and outside the classroom to match.''