Company registration number 04608449 (England and Wales)
ROAD MANAGEMENT SERVICES (FINANCE) PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
ROAD MANAGEMENT SERVICES (FINANCE) PLC
COMPANY INFORMATION
Directors
Neil Rae
Richard Little
M Edwards
Daniel North
Prince Dakpoe
Secretary
Infrastructure Managers Limited
Company number
04608449
Registered office
8th Floor
6 Kean Street
London
WC2B 4AS
Independent Auditors
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Atria One
144 Morrison Street
Edinburgh
EH3 8EX
Bankers
Citibank N.A
CGC Centre
Canary Wharf
London
E14 5LB
Solicitors
Addleshaw Goddard LLP
Milton Gate
60 Chiswell Street
London
EC1Y 4AG
ROAD MANAGEMENT SERVICES (FINANCE) PLC
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4 - 5
Directors' responsibilities statement
6
Independent auditors' report
7 - 12
Statement of comprehensive income
13
Statement of financial position
14
Statement of changes in equity
15
Notes to the financial statements
16 - 22
ROAD MANAGEMENT SERVICES (FINANCE) PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
- 1 -

The directors present their Strategic report on Road Management Services (Finance) plc ("the Company") for the year ended 31 December 2024.

Principal Activities, Objectives and Strategies

The principal activity of the Company during the year was as a financing vehicle for the Design, Build, Finance and Operation contract which was entered into with the Secretary of State for Environment, Transport and the Regions on 13 February 2003 by its parent Road Management Services (Darrington) Limited. The contract is in the operational phase and in year 21 of its 33 year term, expiring in May 2036.

 

On 26 February 2004, the Company authorised the creation and issue of £113,240,000 in aggregate principal amount of 2.8332 per cent Secured Guaranteed Sterling Index Linked Bonds due 2035. The bonds are listed on the London Stock Exchange. The Company also entered into a loan agreement with the European Investment Bank ("EIB") under which EIB granted a loan of £105,000,000 at 2.3774 per cent Index Linked. The bonds and bank loan have the benefit of an unconditional and irrevocable financial guarantee as to all payments of interest and principal issued by the monoline insurer AMBAC. The Board acknowledges that the AMBAC rating was downgraded in November 2008 and April 2009 (to below BBB) and that this created uncertainty due to the risk that EIB may request that this institution be replaced. As in previous years a waiver letter has been provided by EIB in respect of the AMBAC downgrade dated 13 March 2025 which covers the period to 30 April 2026. This letter postpones testing of the covenant until after that date. Given the continued discussions with EIB the directors are assured that adequate safeguards are in place to enable this funding to remain in place for the foreseeable future.

 

All funds were on-loaned to Road Management Services (Darrington) Limited.

 

On 31 March 2005 Road Management Services (Darrington) Limited cancelled variation bonds with a nominal value of £1,500,000 against a corresponding portion of on-loan from the Company, reducing the nominal value of the bond from £113,240,000 to £111,740,000.

 

Principal risks and uncertainties

The risk management policy of the Company is linked to the risk management policy of the Company's immediate parent company, Road Management Services (Darrington) Limited (the "Parent"), being designed to identify and manage risk at the earliest point.

 

The Parent's exposure to financial instruments, price risk, credit risk, liquidity risk, major maintenance replacement risk and legislative risks are detailed below:

 

Financial Instrument Risk

The Company has raised finance through guaranteed secured bonds and has on-lent these to Road Management Services (Darrington) Limited.

 

Interest on financial instruments is fixed until maturity of the investment. As such, there is no associated interest rate risk. However, the financial liabilities comprise a 2.8332% (coupon rate) Index Linked Guaranteed Secured Bond and a 2.3774% (coupon rate) Index Linked European Investment Bank loan and are therefore affected by fluctuations in RPI. This forms part of the Parent's risk strategy, used to offset the effect of RPI on the Parent's income. The financial assets comprise cash and short term investments. The return on cash is determined by bank market interest rates.

 

The terms of the financial instruments ensure that the profile of the debt service costs is tailored to match expected revenues arising from the contract. The Company does not undertake financial instrument transactions that are speculative or unrelated to the trading activities.

ROAD MANAGEMENT SERVICES (FINANCE) PLC
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
- 2 -
Price Risk

A proportion of the Parent's cash-flows generated from the roadway concession increase in line with RPI inflators and this covers all expenditure which is affected by inflation.

 

Credit Risk

The roadway concession cash-flows are secured under contract with National Highways Limited, a government body. As such the directors of the Company consider it to be exposed to very low credit risk.

 

Liquidity Risk

The Parent is required to hold at all times funds in a special reserve account equal to the sum required for the next two debt service payments. Under the financing arrangements the Parent can elect to make a loan to the shareholders, via its immediate parent undertaking, from this reserve account in return for Letters of Credit amounting to the same value and currently such loans amount to £19,500K (2023: £19,500K). In addition the Parent is required to maintain levels of net cash flow in each year equal to 1.125 times the annual debt service payments.

 

The liquidity risk is further managed via intra-group loan agreements in place to define funding arrangements between the Parent and Road Management Services (Darrington) Holdings Limited.

 

Major Maintenance replacement risk

The Parent takes the risk that its projections for ongoing major maintenance replacement of the roadway are adequate. These projections have been agreed with third parties and are subject to regular review by the directors.

 

Legislative Risk

The Parent faces legislative risks such as any matters which would normally materially increase the flow of traffic on the roadway through restrictions placed on traffic movements of any alternative routes, a policy which forces traffic onto this roadway, or by major developments in the locality which increases traffic volumes, which could adversely impact on the Company. These risks are managed by close monitoring by management of significant developments and maintaining an awareness regarding exposure to penalties.

Performance Review

The Company's results are in line with expectations, with all transactions passed through to the Parent on a back to back basis.

 

Going concern

These financial statements have been prepared on the going concern basis for the reasons set out in the Accounting Policies.

Key Performance Indicators

Throughout the year the directors monitor the Company's financial covenants, as set out by the senior debt providers. The key condition reviewed is the debt service ratio and during the year the company was fully compliant with the required loan covenant ratios. The directors believe that any further analysis using key performance indicators for the company is not necessary or appropriate for an understanding of the performance or position of the company.

 

Climate Change

The directors recognise that it is important to disclose their view of the impact of climate change on the company. Whilst the company has no contracts which could be impacted by climate change, the company's parent holds key operational contracts are long-term and with a small number of known counterparties. In most cases, the cashflows from these contracts can be predicted with reasonable certainty for at least the medium-term. Having considered the parent company's operations, its contracted rights and obligations and forecast cash flows, there is not expected to be a significant impact upon the company's operational or financial performance arising from climate change.

ROAD MANAGEMENT SERVICES (FINANCE) PLC
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
- 3 -
S 172 Statement

The following disclosure describes how the Board has had regard to the matters set out in section 172 (1) (a) to (f) and forms the Directors' Statement required under section 414CZA of the Companies Act 2006.

 

The purpose of the Company is a special purpose vehicle established to be the financing vehicle for the Design, Build, Finance and Operate contract which was entered into by its parent company Road Management Services (Darrington) Limited under the Government's Private Finance Initiative scheme ("PFI"). The parent company operates the A1 road between Darrington and Dishforth over a concession period of 33 years to the satisfaction of National Highways Limited. The aim of the group, headed by the parent company is to work in partnership with National Highways Limited to provide effective infrastructure, in which congestion is managed and with a focus on the safety performance of the road. This shapes the group's values and objectives and defines long term success. Decisions are taken in the context of this ethos of working in partnership. The Company has the long term funding in place, as described in the Strategic Report and has on-lent these to Road Management Services (Darrington) Limited. The detailed PFI contracts set out the relationships with National Highways Limited, debt funders, maintenance and operations contractors. These parties are the Company's main stakeholders. The Company also works with the local authority to ensure their requirements are met. Debt funders are provided with operational and financial performance reports on a quarterly basis. The operational management team works closely with National Highways Limited and the maintenance and operations contractors to programme major works on the road. National Highways Limited receive regular updates on programmed works and applications for road closures to enable major works, so that disruption to the public can be kept to a minimum. The group ensures that the road is maintained to the required standards and works collaboratively to ensure that factors impacting traffic flow are addressed between the parties. The Company does not have any employees. As described in the Strategic Report the principal risk of the Company is the ability of the parent company to meet its debt service obligations to the Company. The success of the Company is therefore dependent upon the success of the parent company.

 

The Board is an experienced team with representatives of all shareholders. The Board members have experience of working with other key stakeholders, which enables them to identify the long term consequences of the principal decisions. The Board meet on a quarterly basis and information is provided at the meetings by the operational and financial management teams. This information will have regard to health and safety matters, the operational and financial performance of the project, planned major maintenance works and relationships with the client and the main sub-contractors. The operational and financial management team make recommendations to the Board of directors. These are considered at the quarterly board meetings. These Board meetings are minuted and actions arising are monitored. Decisions made by the directors that have a financial impact are accounted for in a concession length forecast of financial performance.

 

Principal decisions of the group are those that are key to the Company's success. These include but are not limited to: decisions impacting upon the relationships between the parties, decisions impacting upon the availability and safety of the road and decisions impacting the return to the shareholders.

 

The above decisions ensure that the relationships between the parties that work together in partnership continue and that the road is maintained with minimum disruption to users. The safety performance of the road is maintained both in terms of users and the health and safety of the contractors' staff. These decisions ensure the long term success of the project, which protects shareholder returns.

This report was approved by the board of directors on 24 April 2025 and signed on behalf of the board by:

 

Neil Rae
Director
24 April 2025
ROAD MANAGEMENT SERVICES (FINANCE) PLC
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
- 4 -

The directors present their annual report and the audited financial statements of Road Management Services (Finance) plc ("the Company") for the year ended 31 December 2024.

Results and dividends

The results for the year are set out on page 13.

 

The profit for the financial year, after taxation, amounted to £nil (2023: nil).

 

The directors are satisfied with the overall performance of the Company and do not foresee any significant change in the Company's activities in the coming financial year.

Ordinary dividends were paid amounting to £nil (2023: £nil). The directors do not recommend payment of a final dividend.

Directors

The directors who held office during the year and up to the date of approval of the financial statements were as follows:

Neil Rae
Richard Little
M Edwards
Daniel North
Prince Dakpoe
(Appointed 21 October 2024)
Qualifying third party indemnity provisions

The company has made qualifying third party indemnity provisions for the benefit of its directors during the year. These provisions remain in force at the reporting date.

Auditors

The independent auditors, PricewaterhouseCoopers LLP, are deemed to be reappointed under section 487(2) of the Companies Act 2006.

Strategic Report

The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of going concern and principal risks and objectives/uncertainties.

Statement of disclosure to auditors

In the case of each director in office at the date the Directors' Report is approved:

 

ROAD MANAGEMENT SERVICES (FINANCE) PLC
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
- 5 -
Corporate governance

The board are appointed by the shareholders and meet quarterly to review the financial and operational performance of the Company. The Company's business is confined to those activities detailed in the Strategic Report and is restricted by the contracts which it has entered into. Please see the Section 172 statement within the Strategic Report for more details.

 

The directors oversee external financial reporting and reviews the external auditor's assessment of their independence and ensures that auditor rotation rules are adhered to.

 

The directors have overall responsibility for ensuring that the company has adequate risk management and internal controls in relation to the financial reporting process.

 

For the year ended 31 December 2024 the Company did not have securities carrying voting rights admitted to trading on a regulated market and therefore disclosures required by paragraph 13 of Schedule 7 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (SI 2008/4210) are not applicable.

This report was approved by the board of directors on 24 April 2025 and signed by order of the board by:
Steve Cooper
For and on behalf of Infrastructure Managers Limited
Secretary
24 April 2025
ROAD MANAGEMENT SERVICES (FINANCE) PLC
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2024
- 6 -

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland", and applicable law).

Under company law, directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

 

They are responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

The directors are also responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006.

 

Directors’ confirmations

Each of the directors, whose names and functions are listed in The Directors' report confirm that, to the best of their knowledge:

 

 

The financial statements were approved and signed by the director and authorised for issue on 24 April 2025

 

 

 

 

Neil Rae

Director        

ROAD MANAGEMENT SERVICES (FINANCE) PLC
INDEPENDENT AUDITORS' REPORT
TO THE MEMBER OF ROAD MANAGEMENT SERVICES (FINANCE) PLC
FOR THE YEAR ENDED 31 DECEMBER 2024
- 7 -
Report on the Audit of the Financial Statements
Opinion

In our opinion, Road Management Services (Finance) plc's financial statements:

 

 

We have audited the financial statements, included within the Annual Report and Financial Statements (the "Annual Report"), which comprise: the Statement of financial position as at 31 December 2024; the Statement of comprehensive income and the Statement of changes in equity for the year then ended; and the notes to the financial statements, which include a description of the significant accounting policies.

 

Our opinion is consistent with our reporting to the directors.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

 

Independence

We remained independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

 

To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided.

 

We have provided no non-audit services to the company in the period under audit.

 

ROAD MANAGEMENT SERVICES (FINANCE) PLC
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBER OF ROAD MANAGEMENT SERVICES (FINANCE) PLC
FOR THE YEAR ENDED 31 DECEMBER 2024
- 8 -
Our audit approach

 

Overview

Audit scope

 

Key audit matter

 

Materiality

 

The scope of our audit

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.

 

Key audit matters

Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

 

This is not a complete list of all risks identified by our audit.

 

The key audit matter below is consistent with last year.

Key audit matter
How our audit addressed the key audit matter

Recoverability of loans to group undertakings.

Road Management Services (Finance) PLC has borrowings in the form of Secured Guaranteed Sterling Index linked bonds listed on the London Stock Exchange (LSE) and other external borrowings. The amounts payable at the year-end date in respect of these borrowings are set out in notes 8 and 9 to the financial statements. All borrowings are on-loaned to group undertakings and the repayment of the external borrowings is dependent on the recoverability and timely receipt of the amounts loaned on to group undertakings. Due to the long term nature of the project, there are inherent risks and uncertainties in relation to the future financial performance of the group undertakings. As a result of its significance to the financial statements and to our audit, we have identified this to be a key audit matter.

In order to obtain evidence as to the recoverability of the loans to group undertakings, we considered the financial position of the counterparty from which the amounts were due, and their ability to provide funds to the company when needed. We also read the terms of the bond agreement with the lender to understand the repayment schedule and any terms which might trigger earlier repayment. We found no indications that earlier repayment would be required, nor that the counterparties did not have sufficient realisable net assets to be able to provide the necessary funds to enable the company to meet the repayment schedule for the foreseeable future.

ROAD MANAGEMENT SERVICES (FINANCE) PLC
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBER OF ROAD MANAGEMENT SERVICES (FINANCE) PLC
FOR THE YEAR ENDED 31 DECEMBER 2024
- 9 -
How we tailored the audit scope

We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole, taking into account the structure of the company, the accounting processes and controls, and the industry in which it operates.

 

The company is a financing vehicle, and issuer of listed senior bonds on the London Stock Exchange. It had no trading activities during the year. It operates in one geographic location and we performed a full scope audit.

 

The impact of climate risk on our audit

As part of our audit we made enquiries of management to understand the extent of the potential impact of climate risk on the company’s financial statements, and we remained alert when performing our audit procedures for any indicators of the impact of climate risk. Our procedures did not identify any material impact as a result of climate risk on the company’s financial statements.

 

Materiality

The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.

 

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

 

Overall company materiality

£1,921,840 (2023: £501,505).

How we determined it

1% of total assets

Rationale for benchmark applied

The company is a financing company to the group and as such total assets is considered the most appropriate benchmark.

 

We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our performance materiality was 75% (2023: 75%%) of overall materiality, amounting to £1,441,380 (2023: £376,129) for the company financial statements.

 

In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment and aggregation risk and the effectiveness of controls - and concluded that an amount in the middle of our normal range was appropriate.

 

We agreed with the directors that we would report to them misstatements identified during our audit above £192,180 (2023: £50,151) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.

 

ROAD MANAGEMENT SERVICES (FINANCE) PLC
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBER OF ROAD MANAGEMENT SERVICES (FINANCE) PLC
FOR THE YEAR ENDED 31 DECEMBER 2024
- 10 -

Conclusions relating to going concern

Our evaluation of the directors’ assessment of the company’s ability to continue to adopt the going concern basis of accounting included:

 

obtaining and assessing management's going concern assessment and cash flow forecasts covering the expected life of the asset, including the 12-month period from the authorisation of this set of financial statements. Based on the review of the assessment and forecasts, the company has adequate resources to continue in operational existence for the foreseeable future (including a period of 12 months from the authorisation of this set of financial statements) and to make timely repayments to the EIB;

 

assessing the covenants and other terms and conditions, including the qualifying status of the Guarantor to the loan, laid out in the collateral deed. In response to the credit rating downgrade of the Guarantor (AMBAC), which resulted in AMBAC losing its qualifying status, the client obtained a waiver letter from the bank confirming that the bank will not seek to replace the Guarantor for a period of at least 12 months from authorisation of this set of financial statements. Based on the assessment no non-compliance during the year was noted, nor is non-compliance forecasted in for a period of 12 months from authorisation of this set of financial statements; and

 

reviewing the going concern disclosures in accordance with the requirements of FRS 102 and ISA (UK) 570.

 

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 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.

 

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

 

However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the company's ability to continue as a going concern.

 

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Reporting on other information

 

The other information comprises all of the information in the Annual Report other than the financial statements and our auditors' report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.

 

In connection with our audit of the financial statements, 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 audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. 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 based on these responsibilities.

 

With respect to the Strategic Report and Directors' Report, we also considered whether the disclosures required by the UK Companies Act 2006 have been included.

 

Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as described below.

ROAD MANAGEMENT SERVICES (FINANCE) PLC
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBER OF ROAD MANAGEMENT SERVICES (FINANCE) PLC
FOR THE YEAR ENDED 31 DECEMBER 2024
- 11 -

Strategic report and Directors' report

In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Directors' report for the year ended 31 December 2024 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements.

 

In light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we did not identify any material misstatements in the Strategic report and Directors' report.

Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements

As explained more fully in the Directors' responsibilities statement, the directors are responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are also responsible for such internal control as they 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 directors are responsible for assessing the 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 directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

 

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

 

Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with laws and regulations related to the Companies Act 2006 and UK tax legislation, and we considered the extent to which non-compliance might have a material effect on the financial statements. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries in order to improve reported performance and financial position. Audit procedures performed by the engagement team included:

 

Enquiries of management around known or suspected instances of non-compliance with laws and regulations, claims and litigation, and instances of fraud;

Understanding of management’s controls designed to prevent and detect irregularities;

Challenging management on assumptions and judgements made in their significant accounting estimates;

Identifying and testing journal entries to assess whether any of the journals appeared unusual; and

Reviewing financial statement disclosures and testing to supporting documentation, where appropriate, to assess compliance with applicable laws and regulations.

ROAD MANAGEMENT SERVICES (FINANCE) PLC
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBER OF ROAD MANAGEMENT SERVICES (FINANCE) PLC
FOR THE YEAR ENDED 31 DECEMBER 2024
- 12 -

There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected.

 

A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.

Use of this report

This report, including the opinions, has been prepared for and only for the company's members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

 

Other required reporting

 

Companies Act 2006 exception reporting

Under the Companies Act 2006 we are required to report to you if, in our opinion:

 

 

We have no exceptions to report arising from this responsibility.

 

Appointment

We were appointed by the directors on 10 February 2015 to audit the financial statements for the year ended 31 December 2014 and subsequent financial periods. The period of total uninterrupted engagement is 11 years, covering the years ended 31 December 2014 to 31 December 2024.

Paul Cheshire (Senior Statutory Auditor)
For and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Edinburgh
24 April 2025
ROAD MANAGEMENT SERVICES (FINANCE) PLC
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2024
- 13 -
2024
2023
Notes
£000's
£000's
Interest receivable and similar income
5
14,454
26,871
Interest payable and similar expenses
6
(14,454)
(26,871)
Result before taxation
-
0
-
0
Taxation on result
-
0
-
0
Result for the financial year
-
0
-
0

All the activities of the company are from continuing operations.

The notes on pages 16 to 22 form part of these financial statements.

ROAD MANAGEMENT SERVICES (FINANCE) PLC
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2024
31 December 2024
- 14 -
2024
2023
Notes
£000's
£000's
£000's
£000's
Current assets
Debtors: amounts falling due within one year
7
14,629
14,350
Debtors: amounts falling due after more than one year
7
177,554
182,674
Cash at bank and in hand
1
1
192,184
197,025
Creditors: amounts falling due within one year
8
(14,580)
(14,301)
Net current assets
177,604
182,724
Creditors: amounts falling due after more than one year
9
(177,554)
(182,674)
Net assets
50
50
Capital and reserves
Called up share capital
11
50
50
Profit and loss reserve
-
0
-
0
Total shareholders' funds
50
50

The notes on pages 16 to 22 form part of these financial statements.

The financial statements were approved by the board of directors and authorised for issue on 24 April 2025 and are signed on its behalf by:
Neil Rae
Director
Company registration number 04608449 (England and Wales)
ROAD MANAGEMENT SERVICES (FINANCE) PLC
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2024
- 15 -
Called up share capital
Profit and loss reserve
Total
£000's
£000's
£000's
Balance at 1 January 2023
50
-
0
50
Year ended 31 December 2023:
Result for the financial year
-
-
0
-
0
Balance at 31 December 2023
50
-
0
50
Year ended 31 December 2024:
Result for the financial year
-
-
0
-
0
Balance at 31 December 2024
50
-
0
50

The notes on pages 16 to 22 form part of these financial statements.

ROAD MANAGEMENT SERVICES (FINANCE) PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
- 16 -
1
Accounting policies
Company information

Road Management Services (Finance) plc ("the Company") is a private company limited by shares incorporated in the United Kingdom and is registered England and Wales. The registered office is located at 8th Floor, 6 Kean Street, London, WC2B 4AS.

 

The principal activity of the Company during the year was as a financing vehicle for the Design, Build, Finance and Operation contract which was entered into with the Secretary of State for Environment, Transport and the Regions on 13 February 2003 by its parent Road Management Services (Darrington) Limited. The contract is in the operational phase and in year 21 of its 33 year term, expiring in May 2036.

1.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £000's.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below and have been consistently applied to the years presented, unless otherwise stated.

This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:

 

 

The financial statements of the company are consolidated in the financial statements of Road Management Service (Darrington) Holdings Limited. These consolidated financial statements are available from its registered office at 8th Floor, 6 Kean Street, London, WC2B 4AS.

ROAD MANAGEMENT SERVICES (FINANCE) PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
1
Accounting policies
(Continued)
- 17 -
1.2
Going concern

Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

The bond and bank loan have the benefit of an unconditional and irrevocable financial guarantee as to all payments of interest and principal issued by AMBAC. The Board acknowledges that the AMBAC rating was downgraded in November 2008 and April 2009 (to below BBB) and that this created uncertainty due to the risk that EIB may request that this institution be replaced. As in previous years a waiver letter has been provided by EIB in respect of the AMBAC downgrade dated 13 March 2025 which covers the period to 30 April 2026. This letter postpones testing of the covenant until after that date. Given the continued discussions with EIB the directors are assured that adequate safeguards are in place to enable this funding to remain in place for the foreseeable future.

 

The performance of the Company's parent, Road Management Services (Darrington) Limited, is important when considering and assessing the Company's going concern status. The parent prepares cash flow forecasts covering the expected life of the asset and so including the 12 month period from the date the financial statements are signed. In drawing up these forecasts, the directors have made assumptions based upon their view of the current and future economic conditions that will prevail over the forecast period. Based on these forecasts the directors have a reasonable expectation that the parent and therefore the Company has adequate resources to continue in operational existence for the foreseeable future, including a period of 12 months from the authorisation of this set of financial statements.

 

In light of this, the directors continue to adopt the going concern basis of accounting in preparing the Company's annual financial statements.

1.3
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and 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.

1.4
Financial instruments

The 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 company's statement of financial position when the company becomes party to the contractual provisions of the instrument.

Basic financial assets

Basic financial assets, which include debtors, cash and bank balances, are initially measured at transaction price including transaction costs and debtors 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 instruments are subsequently measured at fair value, with any changes recognised in the Statement of Comprehensive Income, with the exception of hedging instruments in a designated hedging relationship.

ROAD MANAGEMENT SERVICES (FINANCE) PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
1
Accounting policies
(Continued)
- 18 -
Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end 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 profit or loss.

 

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 profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including Creditors, bank loans, loans from fellow group 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 business 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 at each reporting date. The fair values of the derivatives have been calculated by discounting the fixed cash flows at forecasted forward interest rates over the term of the financial instrument. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

 

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

ROAD MANAGEMENT SERVICES (FINANCE) PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
1
Accounting policies
(Continued)
- 19 -
Derecognition of financial liabilities

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

1.5
Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

2
Judgements and key sources of estimation uncertainty

In the application of the company’s accounting policies, the directors 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.

Critical judgements

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Impairment of assets

The carrying value of those assets recorded in the Company's Statement of financial position, at amortised cost less any impairment losses, could be materially reduced where circumstances exist which might indicate that an asset has been impaired and an impairment review is performed. Impairment reviews consider the fair value and/or value in use of the potentially impaired asset or assets and compare that with the carrying value of the asset or assets in the Statement of financial position. Any reduction in value arising from such a review would be recorded in the Statement of comprehensive income. Impairment reviews involve the significant use of assumptions. Consideration has to be given as to the price that could be obtained for the asset or assets, or in relation to a consideration of value in use, estimates of the future cash flows that could be generated by the potentially impaired asset or assets, together with a consideration of an appropriate discount rate to apply to those cash flows.

3
Auditors' remuneration

The auditors' remuneration of £6K (2023: £6K) was borne by the parent company, Road Management Services (Darrington) Limited and was not recharged.

4
Employees

The average number of persons employed by the Company during the financial year amounted to nil (2023: nil). The directors are not employed by the Company and receive remuneration from another company for their services as directors of this entity and a number of fellow subsidiaries. It is not possible to make an accurate apportionment of their remuneration in respect of each of the subsidiaries.

 

ROAD MANAGEMENT SERVICES (FINANCE) PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
- 20 -
5
Interest receivable and similar income
2024
2023
£000's
£000's
Interest income
Interest receivable from group companies
14,454
26,871
6
Interest payable and similar expenses
2024
2023
£000's
£000's
Interest on bank overdrafts and loans
13,846
26,268
Other interest payable and similar expenses
608
603
14,454
26,871

The European Investment Bank (EIB) loan instrument incorporates an embedded derivative in the form of step up interest payable if the credit rating of the guarantor falls below a certain grading. For the EIB loan, the AMBAC rating downgrade in November 2008 and April 2009 (to below BBB), has led to an additional interest charge of 0.45% and 0.85% respectively.

7
Debtors
2024
2023
Amounts falling due within one year:
£000's
£000's
Amounts owed by group undertakings
14,629
14,350
2024
2023
Amounts falling due after more than one year:
£000's
£000's
Amounts owed by group undertakings
177,554
182,674
Total debtors
192,183
197,024

Amounts owed by Group undertakings of £192,133K (2023: £196,974K) relate to the on-loan of the Company's senior debt to its parent company, Road Management Services (Darrington) Limited. Repayment of and interest receivable on the on-loan are aligned with the Secured Guaranteed Sterling Index Linked Bond and the EIB loan detailed in note 10. The on-loan also carries the same guarantees and loan referred to.

 

Other amounts owed by group undertakings are unsecured, have no fixed repayment date and are recoverable on demand.

ROAD MANAGEMENT SERVICES (FINANCE) PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
- 21 -
8
Creditors: amounts falling due within one year
2024
2023
Notes
£000's
£000's
Bank loans
10
13,137
12,807
Accruals and deferred income
1,443
1,494
14,580
14,301
9
Creditors: amounts falling due after more than one year
2024
2023
Notes
£000's
£000's
Bank loans
10
177,554
182,674
Amounts included above which fall due after five years are as follows:
Payable by instalments
88,190
108,087
10
Loans and overdrafts
2024
2023
£000's
£000's
Bank loans
190,691
195,481
Payable within one year
13,137
12,807
Payable after one year
177,554
182,674
ROAD MANAGEMENT SERVICES (FINANCE) PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
10
Loans and overdrafts
(Continued)
- 22 -

On 26 February 2004, the Company authorised the creation and issue of £113,240,000 in aggregate principal amount of 2.8332 per cent Secured Guaranteed Sterling Index Linked Bonds due 2035. It also entered into a loan agreement with the European Investment Bank under which the European Investment Bank granted it a loan of £105,000,000 at 2.3774 per cent Index Linked. On 31 March 2005, variation bonds with a nominal value of £1,500,000 were cancelled, reducing the nominal value of the bond to £111,740,000.

 

At the year end the Secured Guaranteed Sterling Index Linked Bond due 2035, listed on the London Stock Exchange, with a coupon rate of 2.8332% per annum index linked, which are repayable in instalments on 31 March and 30 September each year, commencing 31 March 2007, held a liability of £118,337K (2023: £116,256K). An amount of £2,469K (2023: £2,743K) is included in amounts falling due within one year, and £115,868K (2023: £113,513K) is included in amounts falling due in greater than one year.

 

At the year end the European Investment Bank loan at an interest rate of 2.3774% per annum index linked, which are repayable in instalments on 31 March and 30 September each year, commencing 31 March 2007, held a liability of £72,789K (2023: £79,743K). An amount of £10,746K (2023: £10,147k) is included in amounts falling due within one year and £62,043K (2023: £69,596K) is included in amounts falling due in more than one year.

 

The loans are shown net of unamortised loan issue expenses of £435K (2023: £518K) of which £311K (2023: £388K) relates to the Bond and £124K (2023: £130K) the EIB Loan. £357K (2023: £435K) is included in amounts falling due in greater than one year.

 

The Bond and EIB loan are secured by charges and assignments in favour of the Company and over all the assets of Road Management Services (Darrington) Limited.

 

The Company's bonds and bank loan have the benefit of an unconditional and irrevocable financial guarantee as to all payments of interest and principal issued, by the monoline insurer AMBAC.

11
Called up share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£000's
£000's
Issued and fully paid
Ordinary shares of £1 each
50,000
50,000
50
50

There is a single class of ordinary share. There are no restrictions on the distribution of dividends and the repayment of capital.

12
Ultimate controlling party

The immediate parent undertaking is Road Management Services (Darrington) Limited.

The ultimate parent undertaking is Road Management Services (Darrington) Holdings Limited, which is the parent undertaking of the smallest and largest group to consolidate these financial statements. Copies of Road Management Services (Darrington) Holdings Limited consolidated financial statements can be obtained from the Company Secretary at 8th Floor, 6 Kean Street, London, WC2B 4AS.

 

The ultimate controlling party is Semperian PPP Investment Partners Holdings Limited, a company registered in Jersey and owned by a number of investors with no one investor having individual control, and who own 75% of the shares in Road Management Services (Darrington) Holdings Limited.

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