The directors present their Strategic report of Road Management Services (Darrington) Holdings Limited ("the Group") for the year ended 31 December 2024.
The principal activity of Road Management Services (Darrington) Holdings Limited ( "the Company") during the year was that of a holding company for Road Management Services (Darrington) Limited and its subsidiary, Road Management Services (Finance) PLC, (together "the Group"). The principal objectives of Road Management Services (Darrington) Limited were to operate and maintain the Roadway Concession in line with the contracted terms. In doing so the entity intends to ensure that the full amount of income is collected in the form of Congestion Management Payments as entitled under the contract.
On 13 February 2003, the Company entered into a design, build, finance and operate (DBFO) contract ("Roadway Concession") with the Secretary of State for the Environment, Transport and the Regions to upgrade a 53km section of the A1(M) in Yorkshire from Dishforth to Darrington. The contract is in the operational phase and in year 21 of its 33 year term, expiring in May 2036.
The new construction works comprised of two major schemes to upgrade the road to motorway standard.
The first scheme was the improvement of the A1 between Darrington and Hook Moor, the junction with the M1, and is referred to as the A1(M) Ferrybridge to Hook Moor Scheme. The existing dual two lane all-purpose trunk road was upgraded to a dual three lane motorway constructed to a new alignment, amounting to 16.5Km, bypassing the communities of Knottingley, Ferrybridge, Brotherton and Fairburn.
A new junction, known as Holmfield Interchange, was built between the A1(M) and the M62, located to the north-west of Westcliffe Hill and to the north of Pontefract, close to Ferrybridge Power Station. The interchange caters for six of the possible eight movements between the proposed motorway and the M62. The two movements not accommodated are the M62 westbound to the A1 southbound and the A1 northbound to the M62 eastbound. Both of these movements continue to utilise the existing M62/A1 Junction 33 at Ferrybridge. Due to free-flow design, many link roads pass over or under the link roads as well as the two motorways, resulting in the need for seven bridges with an additional two to allow for the motorway to cross adjacent side roads.
The scheme also includes works to de-trunk parts of the existing A1 trunk road, some of which have become two-lane single carriageway roads, handed back to the local authority.
The second scheme was to upgrade the existing A1 motorway standard between Wetherby and Walshford on a new alignment, amounting to 5.3Km of new road to the east of the existing roadway. The motorway is typically dual three lane standard, except for a short length of two lane standard at the southbound tie-in with Wetherby Bypass. The existing A1 was retained for local access purposes, de-trunked and handed back to the local authority.
The two lane section at Wetherby Bypass was upgraded by National Highways Limited with completion in July 2009, such that the whole length of the Project Road is dual three lane standard.
The Group continues to maintain the Project Road and will continue to do so in accordance with the requirements of the DBFO contract for the remaining term of the concession.
Commencing on 7 May 2003 and for a period of 33 years, the Group is receiving annual Congestion Management Payments for carrying out the operation and maintenance of the roads to the satisfaction of National Highways Limited.
The directors intend for the business to continue to operate in line with the contractual terms and do not expect any strategic changes.
The Company has performed inline with the directors' expectations and model forecasts with the results for the year detailed in the Directors' report.
Whilst the Group's turnover for the year varies from the prior period, it is in line with the directors' expectations given the fluctuation in RPI within the year. RPI is used to not only calculate the fees payable by National Highways Limited, under the terms of the contract, but also impacts all costs incurred, including senior debt costs, all of which are included within the turnover calculation. Further details of the methodology used to calculate turnover can be found in the accounting policies. As such the Group has performed in line with the directors' expectations and model forecasts.
The risk management policy of the Group is designed to identify and manage risk at the earliest point. The Group keeps a detailed risk register which is formally reviewed by the board on a bi-annual basis.
The Group's exposure to financial instruments and interest rate risk, price risk, credit risk, liquidity risk, major maintenance replacement risk and legislative risks are detailed below:
Financial Instruments and Interest Rate Risk
A subsidiary of the Group, Road Management Services (Finance) PLC, has raised finance through guaranteed secured bonds and has on-lent these to Road Management Services (Darrington) Limited.
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 ("EIB") loan and are therefore affected by fluctuations in RPI. This forms part of the Group's risk strategy, used to offset the effect of RPI on the Group'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 Group does not undertake financial instrument transactions that are speculative or unrelated to the trading activities.
Price Risk
A proportion of the 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 the National Highways Limited, a government body. As such the directors of the Group consider it to be exposed to very low credit risk.
Liquidity Risk
The Group 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 Group 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. As at 31 December 2024 such loans totaled £19,500K (2023: £19,500K). In addition the Group is required to maintain levels of net cash flow in each year equal to 1.125 times the annual debt service payments.
The directors acknowledge 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. Consistent with previous years, we note a waiver letter was provided by EIB in respect of the AMBAC downgrade, dated 13 March 2025, which covers the period to 30 April 2026. 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 and therefore consider the liquidity risk low.
The liquidity risk is further managed via intra-group loan agreements in place to define funding arrangements between the Group and Road Management Services (Darrington) Holdings Limited.
Major Maintenance Replacement Risk
The Group 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 Group 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 Group. These risks are managed by close monitoring by management of significant developments and maintaining an awareness regarding exposure to penalties.
Contractual risk
The Group has taken on the activity, as detailed above and is risk averse in its trading relationships with customers, funders and sub-contractors as determined by the terms of the respective PFI (Private Finance Initiative) contracts. In extreme circumstances, the Group could be exposed to sub-contractor failure to perform their obligations. The directors monitor the financial stability of its sub-contractors and has contingency plans in place to ensure the continuity of service provisions to its client should the sub-contractor become unable to perform its obligations. The financial risks and the measures taken to mitigate these risks are detailed within the above within this Strategic Report.
Key performance indicators
Three key performance indicators are used to measure the performance of the Group:
(1) The maximisation of the revenue from the Congestion Management Payments, which require the traffic to be moving at a minimum of 90km per hour. This is monitored regularly by the directors and if sources of delays are found to be remediable the management team take the appropriate action. However, by the nature of congestion some delays are outside of the management team's control and subject to external causes. The directors have not identified any concerns with regards to the management of congestion.
(2) The achievement of cash flow targets as set out in the annual budgets. The annual budgets are accurate as the result of the experience gained during the last 21 years and did not vary significantly in 2024.
(3) The maintenance and improvement of the shareholders' internal rate of return as projected in financial models which are produced on a six-monthly basis. This is monitored regularly by the directors through regular reporting by the management team as detailed in Section 172 of this report. The directors are satisfied with the Group's performance.
Climate Change
The directors recognise that it is important to disclose their view of the impact of climate change on the Group. The Group's 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 Group's operations, its contracted rights and obligations and forecast cash flows, there is not expected to be a significant impact upon the Group's operational or financial performance arising from climate change.
These financial statements have been prepared on the going concern basis for the reasons set out in the Accounting Policies.
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 Group is to design, build, finance and operate the A1 road between Darrington and Dishforth over a concession period of 33 years to the satisfaction of National Highways Limited. The Group's aim 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 Group has the long term funding in place, as described in the Directors' Report. The detailed PFI contracts set out the relationships with National Highways Limited, debt funders, maintenance and operations contractors. These parties are the Group's main stakeholders. The Group 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 Group does not have any employees.
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.
Principle decisions of the Group are those that are key to the Group'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 principal decisions made by the Board of directors during the year ended 31 December 2024 related in the main to major maintenance expenditure and payment of dividends.
Major maintenance expenditure is planned following asset condition surveys, with the aim to maintain the asset at the required contractual standards and to ensure that the asset will meet the required contractual standards at the end of the concession. The delivery of these works is carefully planned with the maintenance and operation contractors and client, to ensure minimum disruption to the users of the roads and the safety of the contractors' employees.
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.
Dividends are declared only after having had regard to the Group's ability to meet its debt payments and covenant ratios both now and in the future. This ensures the stability of the Group to allow it to continue providing an asset to its client, for use by the public.
This report was approved by the board of directors on 24 April 2025 and signed on behalf of the board by:
The directors present their annual report and the audited consolidated financial statements of Road Management Services (Darrington) Holdings Limited ("the Company") for the year ended 31 December 2024.
The results for the year are set out on page 17.
Ordinary dividends were paid amounting to £8,486,025 (2023: £6,308,616). The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The independent auditors, PricewaterhouseCoopers LLP, are deemed to be reappointed under section 487(2) of the Companies Act 2006.
The chosen intensity measurement ratio is the total gross emissions in metric tonnes CO2e per equivalent full time employee (based on contractors engaged in the year), being the recommended ratio for the sector.
The group has followed the 2019 HM Government Environmental Reporting Guidelines. The group has also used the GHG Reporting Protocol – Corporate Standard and have used the 2020 UK Government’s Conversion Factors for Group Reporting
The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per full time equivalent employee, the recommended ratio for the sector.
During the year ended 31 December 2024 the Group completed the installation of LED lighting units, in place of the previous incandescent fittings, on all lighting columns. The Group also specified the use of low temperature asphalt for the major resurfacing scheme on Wetherby Bypass which reduces the amount to carbon in the mixing process and made extensive use of a relatively new technique to repair potholes and fretting, which uses recycled material instead of virgin material. This repair solution by Thermal Road Repairs reduces carbon emissions by using 100% recycled material and reduced construction vehicles and claims over 85% savings in carbon emissions compare to traditional repair methods. The Group continues to recommend the use of video conferencing for meetings wherever possible so as to reduce travel.
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have have prepared the group and company 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, the 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 group and company, and of the profit or loss of the group for that period. In preparing the financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
state whether applicable UK Accounting Standards, comprising FRS102 have been followed, subject to any material departures disclosed and explained in the financial statements;
make judgements and accounting estimates that are reasonable and prudent; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and company will continue in business.
They are also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and company financial statements, which have been prepared in accordance with United Kingdom Accounting Standards, comprising FRS 102, give a true and fair view of the assets, liabilities and financial position of the group and company, and of the profit of the group; and
the Directors' report includes a fair review of the development and performance of the business and the position of the group and company, together with a description of the principal risks and uncertainties that it faces.
The financial statements were approved and signed by the director and authorised for issue on 24 April 2025
Neil Rae
Director
In our opinion, Road Management Services (Darrington) Holdings Limited's group financial statements and company financial statements ("the financial statements"):
Basis for opinion
Overview
Audit scope
• The group’s financial statements comprise three components, each of which was subject to a full scope audit.
Key audit matters
• Revenue recognition (group)
• Impairment of investments (parent)
Materiality
• Overall group materiality: £1,436,350 (2023: £527,900) based on 5% of EBITDA (2023:profit before tax)
• Overall company materiality: £275,430 (2023: £282,320) based on 1% of total assets.
• Performance materiality: £1,077,260 (2023: £395,925) (group) and £206,573 (2023: £211,740) (company).
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 matters below are consistent with last year.
Revenue recognition (group)
The Group entered into a design, build, finance and operate (DBFO) contract with the Secretary of State for the Environment, Transport and the Regions (the "Authority") to upgrade the 53km section of the A1 (M) in Yorkshire from Darrington to Dishforth. The Group accounts for the asset created under this service concession arrangement as a fixed asset. The congestion management payments received monthly from the Authority are adjusted to reflect the revenue that has been earned during the year, based on a margin calculated on the expenditure (including operating costs, depreciation and net finance costs) incurred during the year. This can result in an accrued or deferred position, currently disclosed within 'Other debtors' in the financial statements. Due to the estimates required to calculate the margin and its impact on the recognition of revenue and other debtors, we consider this risk to be a key audit matter. (Refer to note 14 to the financial statements).
Our audit procedures for addressing this risk included the following: - We tested the congestion management payments received from the Authority against invoices and evidence of cash receipt and used this to determine an expectation for total congestion management revenue for the year. We re-performed the calculation of what revenue was to be recognised and therefore what adjustment was to be made to the congestion management payments received and posted to other debtors. We compared the margin applied to costs to determine revenue to be recognised for the current year against the margin applied in the prior year and investigated any differences. Our audit work did not highlight any issues and we therefore concluded that revenue was not materially misstated.
Impairment of investments (parent)
The company holds an investment in Road Management Services (Darrington) Limited. The carrying value of the investment at 31 December 2024 is £525,000. As per the company's accounting policies, a review for indicators of impairment is carried out at each reporting date, with the recoverable amount being estimated where such indicators exist. We focused on this area due to the material value of the investment in the separate financial statements of the parent. (Refer to note 12 to the financial statements).
Our audit procedures for addressing this risk included the following: - We obtained and reviewed management's impairment indicator assessment and assessed it for reasonableness. - We also obtained management's valuation of the investments to confirm that the recoverable amount exceeded the carrying amount. - We reviewed management's evaluation to ensure it is not contradicted by work performed throughout our audit of the Group. - We tested the mathematical accuracy of management's valuation and tested the assumptions used for reasonability. - We reviewed minutes of board meetings to identify any matters that may be indicative of the investment being impaired. Our audit work did not highlight any issues and we therefore concluded that no indicators for impairment exists and that the recoverable amount of the investment exceeds its carrying value.
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 group and the company, the accounting processes and controls, and the industry in which they operate.
The group comprises of 3 components; being the holding company, Road Management Services (Darrington) Holdings Limited; the operating subsidiary, Road Management Services (Darrington) Limited, and the financing vehicle of the project, Road Management Services (Finance) PLC. The principal objectives of the group are to operate and maintain the Roadway Concession in line with the contracted terms under the Private Finance Initiative ('PFI'). All of the group's operations are within the UK and are partially funded by the debts listed on the London Stock Exchange.
A full scope audit over all components.
All audit work was performed by the same engagement team within the UK.
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 group’s and 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 group’s and 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:
| Financial statements - group | Financial statements - company |
Overall materiality | £1,436,350 (2023: £527,900). | £275,430 (2023: £282,320). |
How we determined it | 5% of EBITDA (2023: profit before tax) | 1% of total assets |
Rationale for benchmark applied | EBITDA is a generally accepted auditing benchmark for PIE PE backed entities. | The company is a holding company to the group and as such total assets is considered the most appropriate benchmark. |
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The range of materiality allocated across components was between £275,430 and £993,320. Certain components were audited to a local statutory audit materiality that was also less than our overall group materiality.
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 £1,077,260 (2023: £395,925) for the group financial statements and £206,573 (2023: £211,740) 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 those charged with governance that we would report to them misstatements identified during our audit above £143,635 (group audit) (2023: £52,790) and £27,543 (company audit) (2023: £28,232) as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the group's and 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 group's and 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 group's and 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
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 group and company and their environment obtained in the course of the audit, we did not identify any material misstatements in the Strategic Report and Directors' Report.
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. In our engagement letter, we also agreed to describe our audit approach, including communicating key audit matters.
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 not obtained all the information and explanations we require for our audit; or
adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us; or
certain disclosures of directors' remuneration specified by law are not made; or
the company financial statements are not in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
All of the activities of the group are from continuing operations.
The notes on pages 23 to 38 form part of these financial statements.
The notes on pages 23 to 38 form part of these financial statements.
The notes on pages 23 to 38 form part of these financial statements.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £8,486,025 (2023: £6,308,616 profit).
The notes on pages 23 to 38 form part of these financial statements.
The notes on pages 23 to 38 form part of these financial statements.
The notes on pages 23 to 38 form part of these financial statements.
Road Management Services (Darrington) Holdings Limited (“the company”) is a private limited company limited by shares incorporated in the United Kingdom and is registered in England and Wales. The registered office is 8th Floor, 6 Kean Street, London, WC2B 4AS.
The group consists of Road Management Services (Darrington) Holdings Limited and all of its subsidiaries.
The principal activity of the Company during the year was that of a holding company for Road Management Services (Darrington) Limited and its subsidiary, Road Management Services (Finance) PLC. The principal objectives of Road Management Services (Darrington) Limited were to operate and maintain the Roadway Concession in line with the contracted terms. In doing so the entity intends to ensure that the full amount of income is collected in the form of Congestion Management Payments as entitled under the contract.
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.
The 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 for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches.
The consolidated group financial statements consist of the financial statements of the parent company Road Management Services (Darrington) Holdings Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 December 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
At the time of approving the financial statements, the directors have a reasonable expectation that the group 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 Group prepare 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 Company and the Group have 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 Group and Company's annual financial statements. On 26 February 2004, Road Management Services (Finance) PLC, which is a member of the Road Management Services (Darrington) Holdings Limited group of companies, 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 ("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. All funds were on-loaned to the Company's subsidiary, Road Management Services (Darrington) Limited on the same back to back terms.
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 directors acknowledge 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. Consistent with previous years, we note a waiver letter was provided by EIB in respect of the AMBAC downgrade, dated 13 March 2025, which covers the period to 30 April 2026. 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.
Turnover is recognised to reflect the value of services provided through applying a margin on the expenditure incurred over the life of the contract (including operating costs, depreciation and net finance costs), the margin being reviewed annually by reference to the risk related to the contract's stage of completion and an assessment of the overall contract margin anticipated over its 33 year life. No margin was recognised during the construction phase of the concession.
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 income statement.
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
A review for indicators of impairment is carried out at each reporting date, with the recoverable amount being estimated where such indicators exist. Where the carrying value exceeds the recoverable amount, the asset is impaired accordingly. Prior impairments are also reviewed for possible reversal at each reporting date.
For the purposes of impairment testing, when it is not possible to estimate the recoverable amount of an individual asset, an estimate is made of the recoverable amount of the cash-generating unit to which the asset belongs. The cash-generating unit is the smallest identifiable group of assets that includes the asset and generates cash inflows that largely independent of the cash inflows from other assets or groups of assets.
The group 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 group's statement of financial position when the group becomes party to the contractual provisions of the instrument.
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, 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 profit or loss, 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.
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.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group 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.
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 group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, 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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group 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 group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
In the application of the group’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.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
The carrying value of those assets recorded in the Company's Statement of financial position, at amortised cost less any impairment losses, or fixed assets held at cost less any accumulated depreciation, 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. Consideration is also given with regards to the recoverability of the borrowings, in light of the down grading of the AMBAC guarantee, as detailed in the going concern review within this report.
Accounting for the service concession contract and the revenue that is recognized requires estimation of service margin and future costs which is based on projected trading results to the end of the contract.
The whole of the turnover is attributable to the principal activity of the group wholly undertaken in the United Kingdom.
In addition the the Company's own audit fee, it has borne a fee for a number of other Group companies amounting to £23K (2023: £22K).
The average number of persons employed by the Group during the financial year amounted to nil (2023: nil). The directors are not employed by the Group and receive remuneration from another company for their services as directors of this Group 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.
In the prior year, Interest receivable from fixed asset investments of £733K was disclosed as Interest receivable from group companies. This revised description aligns better with Companies Act definitions.
In the prior year, Interest payable to group undertakings of £591K and Other interest and charges of £825K were disclosed in total as Other interest of £1,416K. The revised split and descriptions in the current year align better with Companies Act definitions.
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
In 2021 an increase in the corporation tax rate to 25% with effect from 1 April 2023 was substantively enacted. The 23.52% rate used above in the prior year reflected 9 months of this new rate and 3 months of the previous rate of 19%.
The concession to operate the roadway has been acquired from National Highways Limited for a period of 33 years. Expenditure on improvements to the roadway is reflected in the roadway construction assets and includes net capitalised finance costs up to the date of completion of £31,524K (2023: £31,524k).
The Group, under its finance agreements is required at all times to hold funds in a special reserve account equal to the sum required for the next two debt service payments. Under the financing agreements the Group can elect to make a loan to shareholders, from this reserve account, in return for Letters of Credit amounting to the same value. These loans total £19,500K (2023: £19,500K).
The total amount of loans made to companies owned by Semperian PPP Investment Holdings Limited, who are the ultimate parent and controlling party of Road Management (Darrington) Holdings Limited amounted to £14,000 (2023: £14,000). The remaining balance of £5,500K (2023: £5,500K) relates to loans made to AM Holdco Limited.
Details of the company's subsidiaries at 31 December 2024 are as follows:
The carrying value of the investment is supported by the net assets of the subsidiary.
Road Management Services (Darrington) Limited was established as the project company to enter into a design, build, finance and operation contract with the Secretary of State for Environment, Transport and the Regions. Under these contracts they were granted the right, and undertook the obligation to design, build, finance and, for the 33-year contract term, operate and maintain two sections of the A1(M) in Yorkshire.
The finance for the projects was raised via Road Management Services (Finance) PLC, a subsidiary company with 100% of its share capital owned by Road Management Services (Darrington) Limited. On 26 February 2004, Road Management Services (Finance) PLC authorised the creation and issue of £113,240,000 in aggregate principal amount of 2.8332 percent Secured Guaranteed Sterling Index Linked Bonds due 2035, which are listed on the London Stock Exchange. It also entered into a loan agreement with the EIB under which the EIB 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. A portion of this loan facility has the benefit of an unconditional and irrevocable financial guarantee as to all payments of interest and principal issued by European Investment Fund. Both the bond and EIB loan proceeds are being on-lent to the Road Management Services (Darrington) Limited.
The Group, under its finance agreements is required at all times to hold funds in a special reserve account equal to the sum required for the next two debt service payments. Under the financing agreements the Group can elect to make a loan to shareholders, from this reserve account, in return for Letters of Credit amounting to the same value. As at 31 December 2024 such loans totalled £19,500K (2023: £19,500K). The loans attract interest at the equivalent rate received from bank deposits placed within the year, and is payable semi-annually on 31 March and 30 September. The loans are repayable if certain conditions are not met, for example, compliance with debt covenant ratios as specified in the senior loan agreements. The final maturity date of the loans is 31 March 2035 and interest accrued on the loans but not paid at 31 December 2024 amounted to £458K (2023: £475K).
The Other debtors represent accrued income in relation to the Group's policy of revenue recognition through applying a margin on expenditure, as described in the Accounting Policies, together with interest of £129K (2023: £136K) due from related parties on intercompany loans. Amounts owed by group undertakings represents similar interest due on intercompany loans, as described above. Both amounts of interest had previously been disclosed in the financial statements within amounts owed by group undertakings.
Amounts owed to group undertakings represents accrued interest in respect of loan notes issued totaling £131K (2023: £142K ) to the majority shareholder, and Other creditors represents interest of £44k (2023: £48k) owed by other related parties on similar loan notes. This interest had previously been disclosed in the financial statements within Amounts owed to group undertakings. The remaining sums are trading balances and are non-interest bearing and repayable upon demand. Other borrowings represent capital repayments due in respect of the loan notes, payable within the year of £328K (2023: £656K).
Other borrowings by the Company relates to the pass through of shareholder loans as detailed in note 12, which were extended to the subsidiary company on the same terms. Other borrowings in the group relates to capital due on loan notes issued falling due after more than 1 year (see note 17).
Other creditors relate to commuted sums received from National Highways which will be ammortised over the remaining life of the concession.
Loans from group undertakings reported for the Group relate to capital due on subordinated loan notes issued by the majority shareholders, with Loans to related parties relating to similar subordinated loan notes capital issued by an associate company. These related party capital balances were previously disclosed within the financial statements within Loans from group undertakings. Interest on all the loan notes is charged at 10% and is payable 6 monthly in March and September. The loan note capital is also repayable in 6 monthly instalments and are fully repayable in March 2035.
Loans from group undertakings owed by the Company to its subsidiaries are the shareholders loans entered into as part of the debt security, as detailed in note 12 as well a as the pass down of the subordinated loan notes recorded for the group.
On 26 February 2004, Road Management Services (Finance) PLC 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. Road Management Services (Finance) PLC also entered into a loan agreement with EIB under which EIB 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, repayable in six monthly instalments commencing 31 March 2007, held a liability of £118,237K (2023: £116,256K). An amount of £2,469K (2023: £2,742K) is included in amounts falling due within one year, and £115,768K (2023: £113,514K) is included in amounts falling due in greater than one year.
At the year end the EIB loan at an interest rate of 2.3774% per annum index linked, repayable in six monthly instalments commencing 31 March 2007, held a liability of £72,788K (2023: £79,743K). An amount of £10,746K (2023: £10,147K) is included in amounts falling due within one year and £62,042K (2023: £69,596K) is included in amounts falling due in greater than one year.
The loans are shown net of unamortised loan issue expenses of £435K (2023: £518K) of which £326K (2023: £388K) relates to the Bond and £109K (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 Group and over all the assets of Road Management Services (Darrington) Limited.
The Group'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.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The net deferred tax liability expected to reverse in 2025 is £284K (2024: £371K). This primarily relates to the reversal of timing differences on capital allowances.
There is a single class of ordinary share. There are no restrictions on the distribution of the dividends and the repayment of capital.
Group
The Group paid £468K (2023: £440K) to Semperian PPP Investments Limited for the provision of 2 directors.
The Group paid £478K (2023: £449K) to BIIF Bidco Limited for the provision of 2 directors and the provision of management services.
During the year to 31 December 2024 the Group was charged subordinated loan interest by its shareholders. The amount charged was £181K (2023: £197K) by each of Semperian PPP Holdings Limited, A1 PPP Infrastructure Holdings Limited, AM Holdco Limited and Semperian PPP Investment Partners No 2 Limited.
At 31 December 2024, the amount due in respect of subordinated debt and related interest was £1,721K (2023: £1,885K) and £44K (2023: £47.5K) respectively to each of Semperian PPP Holdings Limited, A1 PPP Infrastructure Holdings Limited, AM Holdco Limited and Semperian PPP Investment Partners No 2 Limited.
Road Management Services (Darrington) Holdings Limited Group has shareholder loans receivable totalling £19,500K (2023:£ 19,500K) from the shareholders, in the following proportions:
Semperian PPP Holdings Limited: £5,660K (2023: £5,660K)
Semperian PPP Investment Partners No.2 Limited: £2,670K (2023:£2,670K)
A1 PPP Infrastructure Holdings Limited: £5,670K (2023: £5,670K)
AM Holdco Limited: £5,500K (2023:£5,500K).
Interest paid by the shareholders in respect of the loans in the year amounts to :
Semperian PPP Holdings Limited: £272K (2023: £215K)
Semperian PPP Investment Partners No.2 Limited £128K (2023: £89K)
A1 PPP Infrastructure Holdings Limited: £272K (2023: £215k)
AM Holdco Limited: £264K (2023:£213K).
Interest accrued but not paid as at 31 December 2024 amount to :
Semperian PPP Holdings Limited: £133K (2023: £153K)
Semperian PPP Investment Partners No.2 Limited £63K (2023: £33K)
A1 PPP Infrastructure Holdings Limited: £133K (2023: £153K)
AM Holdco Limited: £129K (2023:£136K).