The directors present their Strategic report of Road Management Services (Darrington) Limited ("the Company") for the year ended 31 December 2024.
The principal objectives of the Company are to operate and maintain the Roadway Concession in line with the contracted terms. In doing so the Company 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 ("RoadwayConcession") 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 Company 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 Company is receiving annual Congestion Management Payments for carrying out the operation and maintenance of the roads to the satisfaction of National Highways Limited.
The risk management policy of the Company is designed to identify and manage risk at the earliest point. The Company keeps a detailed risk register which is formally reviewed by the board on a bi-annual basis.
The Company'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 Company, 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 loan and are therefore affected by fluctuations in RPI. This forms part of the Company's risk strategy, used to offset the effect of RPI on the Company'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.
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 Company consider it to be exposed to very low credit risk.
Liquidity Risk
On 26 February 2004, Road Management Services (Finance) PLC, which is a subsidiary of 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 ("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 on the same back to back terms.
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 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 Company 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 Company 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 totalled £19,500K (2023: £19,500K). In addition the Company 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 Company and Road Management Services (Darrington) Holdings Limited.
Major Maintenance replacement risk
The Company 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.
The Company 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.
Results
The results for the year are set out on page 12.
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.
The directors intend for the business to continue to operate in line with the contractual terms and do not expect any strategic changes.
Key Performance Indicators
Three key performance indicators are used to measure the performance of the Company:
(1) The maximisation of the revenue from the Congestion Management Payments, which require the traffic to be moving at a minimum of 90 km 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 Company's performance.
Climate Change
The directors recognise that it is important to disclose their view of the impact of climate change on the company. The company'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 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.
The Company 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 Company 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 Directors report.
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 Company 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 Highways England. The Company'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 Company'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 directors report. 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 Company 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.
Principal decisions of the Company 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 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 Company's ability to meet its debt payments and covenant ratios both now and in the future. This ensures the stability of the Company 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 financial statements of Road Management Services (Darrington) Limited ("the Company") for the year ended 31 December 2024.
The results for the year are set out on page 12.
The profit for the financial year, after taxation, amounted to £5,866,572 (2023: profit of £8,085,412).
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 £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 approval of the financial statements were as follows:
Risks associated with financial instruments are disclosed in the Strategic Report.
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 total gross emissions in metric tonnes CO2e per equivalent full time employee (based on contractors engaged in the year), the recommended ratio for the sector.
We have followed the 2019 HM Government Environmental Reporting Guidelines. We have also used the GHG Reporting Protocol – Corporate Standard and have used the 2020 UK Government’s Conversion Factors for Company 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 Company completed the installation of LED lighting units, in place of the previous incandescent fittings, on all lighting columns. The Company 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 Company continues to recommend the use of video conferencing for meetings wherever possible, so as to reduce travel.
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).
In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
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.
The financial statements were approved and signed by the director and authorised for issue on 24 April 2025
Neil Rae
Director
Basis for opinion
Conclusions relating to going concern
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
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 the 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.
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 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 inappropriate journal entries and the risk of management bias in accounting estimates. 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;
Review of board minutes;
Challenging management on assumptions and judgements made in their significant accounting estimates;
Testing journal entries to assess whether any appeared unusual, in particular any affecting revenue or distributable reserves;
Reviewing financial statement disclosures and testing to supporting documentation, where appropriate, to assess compliance with applicable laws and regulations.
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.
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 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 financial statements are not in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
All the activities of the company are from continuing operations.
The notes on pages 15 to 28 form part of these financial statements.
The notes on pages 15 to 28 form part of these financial statements.
The notes on pages 15 to 28 form part of these financial statements.
Road Management Services (Darrington) Limited ("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 objectives of the Company are to operate and maintain the Roadway Concession in line with the contracted terms. In doing so the Company intends to ensure that the full amount of income is collected in the form of Congestion Management Payments as entitled under the contract.
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.
On 26 February 2004, Road Management Services (Finance) PLC, which is a subsidiary of 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 ("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 on the same back to back terms.
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 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.
After making enquiries of management, existing shareholders and existing and potential financiers, the directors have a reasonable expectation that the Company has the necessary resources to continue in operational existence. Appropriate measures have been put in place in respect of the Company's financing arrangements and the directors therefore consider expected future cash flows to be sufficient to support the Company for the period of at least 12 months from the date of approval of these financial statements.
The Company 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 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.
The Company has elected to take exemption under FRS102 paragraph 35.10(i) to continue to apply its previous accounting treatment in respect of Service Concession Arrangements entered into prior to the date of transition to FRS102. This has resulted in the measurement of fixed assets being different from that which would have resulted had the requirements of FRS102 Section 34 been fully adopted. The costs incurred in constructing the assets under the PFI contract have therefore been treated as a tangible fixed asset. This treatment arose from applying the guidance within previous UK GAAP which indicated that under the project's principal agreement, the risks and regards relating to the assets reside primarily with the Company.
Tangible assets are initially recorded at cost, and subsequently stated at cost less any accumulated depreciation. Depreciation is provided at rates calculated to write off the cost of fixed assets, less their estimated residual value, over their expected useful lives on the following bases:
Long term leasehold property - over 30 years
Plant and machinery - over 5 to 15 years
Roadway construction costs - on an annuity basis over the remaining periods of the concession's contract
The annuity basis is deemed to be the most appropriate systematic basis of depreciation, reflecting the consumption of the roadway's economic benefit by the Company over its economic life.
Investments of the group include loans to group undertakings and other loans where repayment is expected after one year. These loans are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method.
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 are largely independent of the cash inflows from other assets or groups of 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 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.
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.
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, 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.
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.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
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.
Provisions are recognised when the entity has an obligation at the reporting date as a result of a past event, it is probable that the entity will be required to transfer economic benefits in settlement and the amount of the obligation can be estimated reliably. Provisions are recognised as a liability in the Statement of Financial Position and the amount of the provision as an expense. Provisions are initially measured at the best estimate of the amount required to settle the obligation at the reporting date and subsequently reviewed at each reporting date and adjusted to reflect the current best estimate of the amount that would be required to settle the obligation. Any adjustments to the amounts previously recognised are recognised in profit or loss unless the provision was originally recognised as part of the cost of an asset.
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.
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 company wholly undertaken in the United Kingdom.
In addition to the Company's own audit fee, it has also borne the audit fee for a number of other Group companies amounting to £12K (2023: £12K).
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.
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).
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.
Amounts owed by group undertakings relates to interest on fixed asset loans. The loans attracted 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 receivable on the loans but not paid at 31 December 2024 amounted to £458K (2023: £475K). The balance is trading balances and are non-interest bearing and repayable upon demand.
The Other debtors represents accrued income in relation to the Group' policy of revenue recognition, through applying a margin on expenditure, as described in the Accounting Policies.
Amounts owed to Group undertakings includes £13,137K (2023: £12,807K) of capital due to Road Management Services (Finance) PLC in respect of intercompany loans, together with accrued interest of £1,443K (2023: £1,494K) in respect of those loans. In addition Amounts owed to Group undertakings includes accrued subordinated loan interest due to Road Management Services (Darrington) Holdings Limited, totaling £175K (2023: £190K) and capital due within the year on those loan notes of £328K (2023: £656K). The balance relates to trading balances which are non-interest bearing and repayable upon demand.
Amounts owed to Group undertakings relates to two intercompany loans due to Road Management Services (Finance) PLC. Interest on both loans is charged at the same terms as financing raised by the Company's subsidiary, Road Management Services (Finance) PLC and is payable 6 monthly in March and September, with capital repayments being made on the same 6 monthly basis, with final repayment due in March 2035.
The loans from the fellow subsidiary undertaking are secured by charges and assignments in favour of Road Management Services (Finance) PLC, over all the assets of Road Management Services (Darrington) Limited.
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 relates to capital of £6,885K (2023: £7,542K) due to Road Management Services (Darrington) Holdings Limited in respect of loan notes issued. Interest on the loan notes issued 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.
The following are the major deferred tax liabilities and assets recognised by the 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 dividends and the repayment of capital.
The Company is wholly owned by Road Management Services (Darrington) Holdings Limited and has taken advantage of the exemption in section 33 of FRS 102 'Related Party Disclosures', that allows it not to disclose transactions with wholly owned members of a group.
The Company paid £469K (2023: £440K) to Semperian PPP Investments Limited for the provision of 2 directors.
The Company paid £468K (2023: £449K) to BIIF Bidco Limited for the provision of 2 directors and the provision of management services.