The directors present the strategic report for the year ended 31 December 2024.
Principal Activities and Fair Review of Business
The principal activity of the Company is to design, develop and finance the construction of new extensions to the Royal Victoria Infirmary and Freeman Hospital, together with providing the ongoing maintenance and lifecycle services to these extensions, on behalf of the Newcastle Upon Tyne Hospitals NHS Foundation Trust (the “Trust”). Financial close was achieved on 4 May 2005. The concession period is 38 years. The principal risk to the Company is any future Events of Default under the Finance Documents which gives the bond and loan lenders ("Majority Creditors") the right to demand amounts owed under the Finance Documents to be repaid in full. This risk is outlined in the following Going Concern section.
Going Concern
The financial statements are prepared on a going concern basis notwithstanding that the Company had historical Events of Default that were unwaived at the balance sheet date of these financial statements in relation to its borrowings. The Events of default mainly relate to historical service performance issues.
Historically (during the years ended 31 December 2017 and 2018), the level of service provided by the Service Provider, gave rise to declared Service Failure Points (“SFPs”) that exceeded threshold levels within various contract documents. This led to warning notices from the Newcastle Upon Tyne Hospitals NHS Foundation Trust (the "Trust") to the Company, and warning notices issued in turn from the Company to the Service Provider and also triggered an Event of Default in the finance documents governing the lending arrangement in respect of the fellow subsidiary undertaking, Healthcare Support (Newcastle) Finance Plc’s (HSNFP) bond and bank loan facilities (the “Finance Documents“). HSNFP obtained the loan facilities from the bond and bank loan lenders (the “Majority Creditors”), and passed on the funding to the Company on substantially the same terms, including the Event of Default. Although the level of SFPs since 2018 has been relatively low, further Events of Default occurred in October 2021, December 2022, May 2023 and June 2023 which was due to the service levels delivered, but related to a specific set of circumstances. The financial impact of shortfalls in service performance was that the Trust claimed entitlement to deductions of £527,000 (2023: £728,000) from the revenues due under the agreement with the Trust (the “Project Agreement“) in the year ended 31 December 2024. These were passed on in full to the Service Provider. Additionally the Trust claimed entitlement to deductions of £4,199,000 (£2023: £0) from revenues due under the agreement with the Trust in the year to 31 December 2024 which related to electrical issues. It was agreed not to pass these deductions on to the Service Provider or the Building Contractor and these continue to be disputed. A standstill agreement is currently in place with the Trust in respect of electrical and ventilation issues where no further Trust deductions are being applied while a remedial works plan is being agreed and undertaken and a settlement agreement being negotiated.
As a result, in conjunction with the Service Provider and with the consent of the bond and bank loan lenders (the “Majority Creditors”), the Company put in place a service performance improvement plan, which has now been substantially delivered. The Trust has recognised the improvement in service delivery by the Service Provider. Other than the isolated events that gave rise to Events of Default in October 2021, December 2022, May 2023 and June 2023, the agreed declared level of SFPs have remained below the thresholds for an Event of Default under the Finance Documents since May 2018. There are however several other alleged service failure issues (different from the specific set of circumstances in October 2021, December 2022, May 2023 and June 2023 above) in relation to which the Trust has claimed a level of SFPs and financial deductions over 2018 to 2024 that the Company does not accept. The quantum of these SFPs under dispute, if agreed in the Trust’s favour, would lead to a further Event of Default under the Finance Documents.
Fire rectification works are being undertaken by the Building Contractor, these were scheduled to complete in February 2020 (claimed by the Trust to represent the “Longstop Date”). However, due to repeated restrictions of access to certain areas of the hospital these works are still continuing. In relation to these fire rectification works, the Trust has claimed a level of SFPs and financial deductions over 2021 to 2024 that the Company does not accept. Deductions of £1,375,000 (2023: £183,000) were incurred in relation to unavailability caused by fire rectification works which was passed down to the Service Provider and Laing O’Rourke (the “Building Contractor”). The Company disputes the level of deductions levied by the Trust, however, to protect the financial stability of the Company all deductions are passed down to subcontractors to the fullest extent possible in line with the contractual framework. The Dispute Avoidance Committee (“DAC”), set up under the Project Agreement, has ruled in March 2021 that there is no valid Longstop Date as there was no valid Notice of Fireworks Programme Approval. Under this ruling, the Trust was not, and is not, entitled to levy deductions and SFPs for any failure to rectify fire deficiencies by this date.
The Trust exercised their right to appeal the decision of the DAC and the matter was taken to Adjudication. The outcome of the Adjudication also ruled in favour of the Company, in that there is no valid Longstop date. The Trust do have a further right to refer the matter to court. However, the Board consider this and the probability that the Trust would be successful to be a low risk and not plausible and given the fact that this has not happened to date.
Following the balance sheet date, on 20 August 2025, a Settlement Agreement ('SA2') was executed between all concerned parties which wiped clean historic SFPs and financial deductions relating to service performance and transferred some obligations for remedial works and cost from the Trust to the Company. As remedial works are already underway, the Company is already incurring costs for these remedial works and the remaining costs have been included as a provision at the balance sheet date (refer to provision note 14). Two additional settlement agreements are also currently being negotiated between parties which will deal with ventilation, electrical and fire issues as well as deal with the wipe clean of historic related SFPs and deductions relating to these. It is anticipated that these agreements will also transfer some obligations for remedial works and cost from the Trust to the Company which can be reliably estimated therefore these costs have also been included as a provision at the balance sheet date (refer to provision note 14).
As the execution of SA2 wiped clean all the historic service failure points and financial deductions relating to performance issues that gave rise to the Events of Default under the Finance Documents, all Events of Default relating to performance issues have now been formally waived and deemed remedied by the bond and bank loan lenders (the "Majority Creditors"). There still however remains ongoing ventilation and electrical issues which have historically resulted in disputed service performance failure points and financial deductions that still require resolve. The SPV is committed to resolving all remaining disputed SFPs, and financial deductions, and negotiations are ongoing to reach further settlement agreements to resolve these disputed service performance items and remedial works programmes. In relation to the fire rectification works, the parties are also committed to concluding these which are now significantly underway with an agreed works programme in place. There are standstill agreements in place for all these issues.
In addition, on 15 March 2019, the former parent company of the Service Provider, Interserve PLC, went into administration with its lenders taking control of a newly formed parent company, Interserve Group Limited (“IGL”). Under the Finance Documents the administration of Interserve PLC triggered an Event of Default as the parent company guarantee (“PCG”) that was given by Interserve Plc became invalid. The Majority Creditors were notified of the situation on 29 March 2019. On 1 December 2020 Mitie Plc purchased the Service Provider. To date there has been no change to the operating structure or delivery of the service by the Service Provider. The replacement PCG from Mitie Plc was executed during the year to 31 December 2024 and as such there is no longer an Event of Default in this respect as it has been deemed remedied under the Finance Documents.
As all historic Events of Default in respect of SA2 performance related issues have been formally waived by the Majority Creditors as at the date of approval of these financial statements it is unlikely that the Majority Creditors would exercise their right. The implications of an Event of Default are that the Majority Creditors have a number of rights/remedies available to them which include requiring that the amounts owing under the Finance Documents are immediately repaid in full. The Company does not have the required funds to repay the amounts owing under the finance documents if the Majority Creditors demands repayment.
The impact of there still being an Event of Default present under the Finance Documents as at the balance sheet dates of 31 December 2024 and 2023 is to classify the outstanding amounts of the bond and the bank loan and associated amounts of interest payable as a current liability as the Company does not have an unconditional right to avoid repayment for at least 12 months at the balance sheet date. As a result, £363,355,000 (2023: £351,687,000) of bond and bank loan which would otherwise be classified as ‘Creditors: Amounts due after more than one year’ have been included in ‘Creditors: Amounts due within one year’.
In addition, as a result of the Events of Default at the balance sheet date, the Company’s payables to group undertakings (different from the onward loan from HSNFP above) also became repayable on demand and hence the balance of £24,337,000 (2023: £24,337,000) has been classified as current at 31 December 2024 and 2023. The counterparty would only be able to recall this debt on demand if the Majority Creditors were to exercise their rights of requiring immediate repayment. These payables are subordinate to the amounts due to the Majority Creditors.
The Directors have discussed the current levels of service, the execution of Settlement Agreement 2 ("SA2") following the balance sheet date, the ongoing negotiations to reach future settlement agreements, and the replacement of the parent company guarantee executed during the year with the Majority Creditors and received assurances that the Majority Creditors would not intend to exercise their rights if a future Event of Default occurred to require repayment of the outstanding borrowings immediately. The Majority Creditors are provided with regular updates from the Directors to ensure that they are kept informed of the Company’s progress in remedying all outstanding issues and preventing any future Events of Default.
Additionally, the Finance Documents contain covenants with regard to financial performance. The Directors have prepared cashflow and covenant compliance forecasts for the Company and the SPV covering a period of at least 12 months from the date of approval of these financial statements which indicate that, taking account of severe but plausible downside scenarios, the Company will have sufficient funds to meet its liabilities as they fall due for that period and there are no forecasted covenant breaches. Furthermore all historic events of default have been remedied in the SPV relating to performance issues following the execution of SA2. Both the base case and the severe but plausible downside scenarios incorporate estimates of cash outflows in relation to the finalisation of the remaining settlement agreements which assume that the Majority Creditors will not accelerate the repayments of principal in future as a result of potential future events of defaults occurring relating to ongoing issues.
The Directors have a reasonable expectation that the Majority Creditors will not exercise their rights if future Events of Default occur to accelerate repayment of the outstanding borrowings for a period of at least 12 months from the date of approval of the financial statements, however this is not guaranteed as there remains a large degree of uncertainty around the ongoing issues with the project and impact these could have on service failure points and deductions. As such, the Company is dependent on the Majority Creditors not exercising their rights to demand repayment of amounts owed following the existence of potential future Events of Default caused by these issues, which is not guaranteed. This indicates the existence of a material uncertainty which may cast significant doubt on the Company's ability to continue as a going concern and therefore, the Company may be unable to realise its assets and discharge its liabilities in the normal course of business.
Additionally, due to the passage of time between the balance sheet date and signing date, the Directors are aware of two technical events of default under the finance documents that remain unwaived, these however are not deemed to impact the going concern of the Company.
Based on the above, the directors believe it remains appropriate to prepare the financial statements on a going concern basis.
The financial statements do not include any adjustments that would result from the basis of preparation being inappropriate.
Principle risks and uncertainties.
Lifecycle
A risk borne by the Company is that lifecycle costs exceed those forecast in the financial model. This risk is mitigated by future estimates of lifecycle expenditure being prepared by maintenance experts on an asset-by asset basis and by the periodic technical evaluations of the physical condition of the facilities. In addition, comparisons of actual expenditure are compared to the lifecycle forecast.
Principle risks and uncertainties (continued)
Availability
Investment in the project is funded primarily by the Loan, Bond and subordinated unsecured loan stock which have been on-lent to the Company from Healthcare Support (Newcastle) Finance Plc. During the operational phase the principal source of funds available to meet its liabilities under the Loan and Bond is the unitary charge received from the Trust under the Project Agreement. Failure to achieve the forecast levels of availability would result in lower than forecast revenues and this may adversely affect the Company’s ability to make payments to Healthcare Support (Newcastle) Finance Plc, who then in turn pays the Majority Creditors. Total Deductions of £6,101,000 (2023: £911,000) were incurred in the year, of which £1,902,000 (2023: £911,000) was recovered from the Service Provider and the Building Contractor, resulting in a net cash outflow of £4,199,000 (2023: £0) which mostly relates to electrical issues. The Company disputes the level of financial deductions levied by the Trust. However, to protect the financial stability of the Company, deductions are passed down to the Service Provider and the Building Contractor as appropriate and to the fullest extent possible in line with the contractual framework. The Board deemed it was not appropriate to pass on the electrical deductions to the Service Provider or the Building Contractor at this time. Post year end a standstill agreement was negotiated with the Trust to stop any further deductions while the remedial works package was agreed and works undertaken to fix the issue and a settlement agreement negotiated to wipe clean disputed deductions and service failure points.
Service Provider failure
The likelihood of this risk is assessed through the review of the Service Provider financial statements and through discussions with the Service Provider. On 15th March 2019 the parent company of the Service Provider, Interserve PLC, went into administration with its lenders taking control of a newly formed parent company, Interserve Group Limited (“IGL”). On 1 December 2020 Mitie Plc acquired Interserve Support Services and services are now being provided by Mitie FM Limited (“Mitie”). There has been no disruption in the services provided since the acquisition. The replacement parent company guarantee (“PCG”) from Mitie Plc was finalised during the year and the PCG is now in place and as such the related Event of Default is deemed remedied under the finance documents. Substantial resources have been invested in improving service performance of the Service Provider by Mitie and the Company currently considers the likelihood of a failure of the Service Provider to be low. However, as continuity of service delivery is of paramount importance, the Company has a Business Continuity Plan which details how it would deal with a service provider failure. Sufficient cash reserves are maintained within the Company to enable it to take appropriate action should the need arise.
Interest rate risk
The Company is exposed to interest rate risk on bank balances with floating interest rates, however the directors do not consider this exposure to be significant. The guaranteed secured loan and bond, and the unsecured subordinated loan notes, all have fixed rates until 2038, 2041 and when the directors deem repayable respectively, thus there is no interest rate risk associated with these financial liabilities (senior debt is index linked) therefore directors are comfortable this does not affect the ability of the Group to continue a going concern.
Inflation Risk
The Company has senior debt borrowings which are index linked to RPI (all items). The Company partially mitigates this RPI risk by having an index linked unitary contract with the Newcastle Upon Tyne Hospitals NHS Foundation Trust, thereby partially mitigating inflationary risk therefore the directors are comfortable inflation risk will not affect the Group's ability to continue as a going concern.
Credit Risk
The Company’s principal financial assets are cash, finance debtor and trade and other receivables. The Company’s credit risk is primarily attributable to its trade receivables which are with one counterparty, although in the opinion of the board of directors this risk is limited as the receivables are with Newcastle Upon Tyne Hospitals NHS and underwritten by the Department of Health.
Financial performance and position
The Company made a pre-tax loss of £8,374,000 (2023: pre-tax loss of £12,158,000) for the year on a turnover of £26,181,000 (2023: £18,729,000). The increase in profits was largely due to an decrease in bond and loan interest due to them being linked to indexation partially offset by higher sub debt interest being payable resulting from compounded interest on the unpaid accrued sub debt interest balance.
Turnover has increased by 40% during the year due to both an increase in costs on which service margin is recognised which has subsequently increased the gross profit to £17,035,000 (2023: £10,708,000). Operating loss however has increased to £2,971,000 (2023: £1,872,000) due to higher professional and remedial/settlement cost provisions. Included within cost of sales on the Statement of Comprehensive Income is lifecycle expenditure of £2,802,000 for the year ended 31 December 2024 (2023: £1,170,000).
Interest receivable and similar income, which is largely comprised of interest earned on the finance debtor balance has decreased to £22,054,000 (2023: £43,672,000) for the year due to the annual repayment of the outstanding finance debtor balance and due to an decrease in indexation.
Loan interest payable, which is also index-linked, has decreased to £20,919,000 (2023: £48,067,000) in the year due to the continuing repayment of the Company's borrowings and due to an decrease in indexation. Interest payable on the subordinated loan has increased to £6,537,000 (2023: £5,891,000) due to the impact of compounded interest unpaid from previous years.
At 31 December 2024 the Company had net liabilities of £9,307,000 (2023: £3,500,000).
Cash and deposit balances at 31 December 2024 were £77,567,000 (2023: £70,357,000). Included in this were restricted cash balances of £42,218,000 (2023: £5,729,000) and fixed term deposits of £0 (2023: £35,529,000). The fixed term deposits are classified within debtors at the prior year end as the deposit term is longer than 3 months. The increase in total cash is largely due to an increase in lifecycle underspend which is reserved in the lifecycle account and also due to not being permitted to pay subordinated loan interest due to current Event of Defaults. Of the restricted cash balances and fixed term deposits, £22,160,000 (2023: £21,338,000) is held relating to the Lifecycle Reserve Account (one of the reserve accounts mandated by senior lenders under the company’s finance arrangements, from which future lifecycle expenditure is funded). There were also balances of £83,000 (2023: £249,000) within Trade creditors, relating to payments for lifecycle at 31 December 2024.
During the year the Company has not repaid any of the subordinated unsecured loan stock.
The Company has not declared any dividends to shareholders in the year ended 31 December 2024 (2023: £nil).
Key performance indicators
Performance and availability deductions
Financial penalties and SFPs are levied by the Trust in the event of performance standards not being achieved according to detailed criteria set out in the Project Agreement. The level of financial deductions and SFPs currently being levied by the Trust are disputed by the Company and negotiations are ongoing between all parties to resolve the associated issues, details of which are outlined in Going Concern note 1.2.
Financial performance
The directors have modelled the anticipated financial outcome of the project across the term of the contract up to the end of the concession. The directors monitor actual performance against this anticipated performance. As a result, the directors deem that the Company's performance as at 31 December 2024 against this measure is considered satisfactory.
The directors have a duty to promote the success of the Company for the benefit of the shareholders as a whole and to describe how this duty has been performed with regard to those matters set out in section 172 of the Companies act 2006 (“section 172”).
The directors have identified the Company’s main stakeholders as the following:
i. The Company’s shareholders, bondholders and majority creditors
Principal considerations of the board are whether the investment objective of the Company is meeting shareholder and bondholder expectations and how the manager implements the objective. These are discussed at all board meetings, which are held regularly throughout the year. The board also attends regular shareholder and bondholder briefing meetings to ensure that shareholder and bondholder engagement is optimized.
ii. The client
The board recognises the importance of working in partnership with its public sector client to successfully deliver a key public infrastructure asset. On behalf of the Company, the manager fosters this partnership through regular meetings with the client representative and other key managers. The manager provides regular monthly reporting to the public sector client on the performance of its obligations under the PFI arrangement. Periodically the directors will also meet with the public sector client to discuss key service delivery matters.
iii. The service provider
On behalf of the Company, the manager seeks to maintain a constructive relationship with the service provider by meeting regularly. The service provider reports provided to the Company contain relevant information about the performance of the PFI contract. These reports are reviewed by both the manager and the board. Periodically the directors will also meet with the service provider to discuss key service delivery matters.
iv. The manager
The delivery by the manager of its services is fundamental to the long-term success of the Company. The board seeks to engage regularly with the manager through a number of forums, including at board meetings, portfolio briefings and through engagement with the manager’s senior leadership team. Regular reporting is provided to the board by the manager, which will alert the board to changes to regulation or market practice, which will inform the board’s decision making.
Throughout the year the board has made due consideration during its discussions and decision-making of the matters set out in section 172 and below is a description of how the directors have had regards to these matters when performing their duties:
Section 172 Companies Act 2006 Statement (continued)
(a) The likely consequences of any decision in the long term
The Company has outsourced the management of the Company to Resolis Limited (“Resolis”), the manager. Resolis took over the management services of the Company from Vercity Social Infrastructure (UK) Limited on 1 July 2022. The delivery by the manager of its services is fundamental to the long-term success of the Company. The board seeks to engage regularly with the manager through a number of forums, including at board meetings, portfolio briefings and through engagement with the manager’s senior leadership team. Regular reporting is provided to the board by the manager, which will alert the board to changes to regulation or market practice, which will inform the board’s decision making. Given the Event of Default that occurred in the year described further in note 1.2, the Board have made decisions regarding the management of Mitie and the inclusion of this EoD into the ongoing negotiations to reach a settlement agreement.
(b) The interests of the Company’s employees
As an externally managed Company, the Company’s activities are all outsourced and therefore it does not have any employees. The Company does however, pay due regard to the interests and safety of all those engaged by contractors to the Company to perform services on its behalf.
(c) The need to foster the Company’s business relationships with suppliers, customers and others
The Company is committed to upholding the underlying principle of PFI of working in partnerships with all parties to the arrangement. As noted above, the Company has policies and procedures to ensure regular communication is maintained between the parties.
(d) The impact of the Company’s operations on the community and the environment, The Company has very limited direct impact on the environment. Notwithstanding that the Company is committed to minimizing environmental disruption from its activities. The board upholds the Company’s environmental policy in all its activities and requires all parties to the arrangement to do the same.
The board recognises that the Company is a key partner in the delivery of public infrastructure and encourages its partners in considering and delivering Environmental, Social and Governance (ESG) values and initiatives to achieve socially responsible investing.
(e) The desirability of the Company maintaining a reputation for high standards of business conduct. The Company is committed, in its day to day operations and dealings with all affiliates to uphold the highest standard of business conduct and integrity. The directors are not responsible for setting a “business culture” in the traditional sense, but are committed to understanding the culture of the manager and service providers and raise any concerns in this regard if necessary.
(f) The need to act fairly between members of the Company. The members of the Company are represented at board meetings by their appointed director(s). Conflicts on matters to be discussed are identified at each meeting of the board. Directors representing a member with a conflict of interest may therefore be excluded from any discussion or vote in regards to it.
The directors are cognisant of their duty under s172 in their deliberation as a board on all matters Decisions made by the board take into account the interests of all the Company’s key stakeholders and reflect the board’s belief that the long-term sustainable success of the Company is linked directly to its key stakeholders.
On behalf of the board
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards 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 company and of the profit or loss of the company for that period.
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.
The directors are 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. They are also 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 present their annual report and financial statements for the year ended 31 December 2024.
The results for the year are set out on page 15.
No interim dividends were paid (2023: nil). 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:
No Director has any interests in the issued share capital of the Company.
The Company's current policy concerning the payment of trade creditors is to follow the CBI's Prompt Payers Code (copies are available from the CBI, Centre Point, 103 New Oxford Street, London WC1A 1DU).
The Company's current policy concerning the payment of trade creditors is to:
settle the terms of payment with suppliers when agreeing the terms of each transaction;
ensure that suppliers are made aware of the terms of payment by inclusion of the relevant terms in contracts; and
pay in accordance with the Company's contractual and other legal obligations.
The Company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the Company has sufficient liquid resources to meet the operating needs of the business. At the start of the PFI contract, the Company negotiated debt facilities with an external party to ensure that the Company has sufficient funds over the life of the PFI concession.
Inflation Risk
The Company has an intercompany loan with Healthcare Support (Newcastle) Finance Plc which is index linked to RPI (all items). The Company partially mitigates this RPI risk by having an index linked unitary contract with the Newcastle Upon Tyne Hospitals NHS Foundation Trust, thereby partially mitigating inflationary risk.
The Company is exposed to interest rate risk on bank balances with floating interest rates, however the directors do not consider this exposure to be significant.
The guaranteed secured loan and bond, and the unsecured subordinated loan notes, all have fixed rates until 2038, 2041 and when directors deem repayable respectively, thus there is no interest rate risk associated with these financial liabilities (senior debt is index linked).
The Company’s principal financial assets are cash, finance debtor and trade and other receivables. The Company’s credit risk is primarily attributable to its trade receivables which are with one counterparty, although in the opinion of the board of directors this risk is limited as the receivables are underwritten by the Secretary of State for Health.
Lifecycle expenditure is the main risk to the business. The risk being that the allowance for lifecycle costs factored into the financial model is insufficient to cover future lifecycle expenditure, thus resulting in lower profitability and reduced distributions. This is mitigated by regular lifecycle reviews undertaken by the management services provider and a detailed lifecycle review performed every five years.
The Company has post reporting date events to report. Please refer to note 17 in the financial statements for further details.
Details of future developments, events that have occurred after the balance sheet date and the directors' statement can be found in the strategic report on page 1 and form part of this report by cross-reference.
Prior Year Adjustment
During the year, the Directors identified adjustments relating to prior periods in respect of revenue recognition and associated cost provisions.
In accordance with Section 10 of FRS 102, these have been treated as a prior year adjustment, with comparative amounts restated accordingly. The impact of these adjustments has been recognised in opening reserves at the start of the comparative period.
The adjustments primarily relate to:
• Reassessment of service revenue recognition; and
• Recognition of obligations relating to remedial works and settlement arrangements.
The Directors consider that these adjustments provide a more reliable and relevant representation of the Company’s financial position and performance.
Provisions
The Company has recognised provisions in respect of obligations arising from contractual and settlement arrangements.
These include:
• Costs of remedial works; and
• Settlement amounts agreed or expected to be agreed with counterparties.
Provisions are recognised where:
• The Company has a present obligation (legal or constructive) as a result of a past event;
• It is probable that an outflow of economic benefits will be required to settle the obligation; and
• A reliable estimate can be made.
The amounts recognised reflect the Directors’ best estimate of the expenditure required to settle the obligations at the balance sheet date, taking into account known risks and uncertainties.
BDO LLP were appointed as auditor to the Company for the year to 31 December 2024.
As the Company has not consumed more than 40,000 kWh of energy in this reporting period, it qualifies as a low energy user under these regulations and is not required to report on its emissions, energy consumption or energy efficiency activities.
The directors acknowledge that the auditor's report for the year ended 31 December 2024 contains a disclaimer of opinion. This has arisen as a consequence of the directors' decision to finalise and file the financial statements prior to the completion of all audit procedures.
Given the complexity of the matters affecting the Company during the year, including the prior year adjustments, the recognition of settlement agreement provisions and the ongoing resolution of Events of Default under the Finance Documents, the audit process has been protracted. In the circumstances, the directors concluded that it was in the best interests of the Company and its stakeholders to file the financial statements at the earliest opportunity, notwithstanding that the auditors hadn’t been able to complete the audit.
The directors are satisfied that the financial statements, taken as a whole, present a true and fair view of the state of affairs of the Company as at 31 December 2024 and of its loss for the year then ended, and that the accounting policies and estimates applied are appropriate. The directors will continue to engage constructively with the auditors to resolve any outstanding matters.
Disclaimer of opinion
Other Companies Act 2006 reporting
Because of the significance of the matter described in the basis for disclaimer of opinion section of our report, we have been unable to form an opinion, whether based on the work undertaken in the course of the audit:
• the information given in the strategic report and directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
• the strategic report and directors’ report have been prepared in accordance with applicable legal requirements.
Notwithstanding our disclaimer of an opinion on the financial statements, in the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit performed subject to the pervasive limitation described above, we have not identified material misstatements in the strategic report or the directors’ report.
Arising from the limitation of our work referred to above:
• we have not obtained all the information and explanations that we considered necessary for the purpose of our audit; and
• we were unable to determine whether adequate accounting records have been kept.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
• returns adequate for our audit have not been received from branches not visited by us; or
• the financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made.
Extent to which the audit was capable of detecting irregularities, including fraud
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, which were limited by the matters described in the basis for disclaimer of opinion section of our report, is detailed below:
Non-compliance with laws and regulations
Based on:
• Our understanding of the Company and the industry in which it operates;
• Discussion with management and those charged with governance; and
• Obtaining an understanding of the Company’s policies and procedures regarding compliance with laws and regulations,
we considered the significant laws and regulations to be the applicable accounting framework, UK tax legislation, VAT legislation and Companies Act 2006.
Our procedures in respect of the above which were limited by the matters described in the basis for disclaimer of opinion section of our report included:
• Enquires of management whether there were any litigations and claims;
• Review of minutes of meetings of those charged with governance for any instances of non-compliance with laws and regulations; and
• Review of financial statement disclosures and agreeing to supporting documentation.
Fraud
We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk assessment procedures which were limited by the matters described in the basis for disclaimer of opinion section of our report included:
• Enquiry with management and those charged with governance regarding any known or suspected instances of fraud;
• Obtaining an understanding of the Company’s policies and procedures relating to:
- Detecting and responding to the risks of fraud; and
- Internal controls established to mitigate risks related to fraud.
• Review of minutes of meetings of those charged with governance for any known or suspected instances of fraud;
• Discussion amongst the engagement team as to how and where fraud might occur in the financial statements; and
• Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud.
Based on our risk assessment, we considered the area’s most susceptible to fraud to be management override of controls, revenue recognition and management bias regarding the accounting estimates and judgements over the determinations of service margins and lifecycle costs.
Our procedures in respect of the above which were limited by the matters described in the basis for disclaimer of opinion section of our report included:
• Testing the appropriateness of journal entries throughout the year, which met defined risk criteria, by agreeing to supporting documentation; and
• Assessing significant estimates and judgements made by management, and challenging Management on the appropriateness of these estimates and judgements for bias.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members who were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that 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, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.
Notwithstanding the above, the extent to which the audit was capable of detecting irregularities, including fraud was limited by the matters described in the Basis for disclaimer of opinion section of our report.
Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
Healthcare Support (Newcastle) Limited is a private company limited by shares incorporated in England and Wales. The registered office is 1 Park Row, Leeds, United Kingdom, LS1 5AB.
The financial statements are prepared in pound sterling, which is the functional and presentational currency of the Company. Monetary amounts in these financial statements are rounded to the nearest £000.
This Company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this Company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The Company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 4 ‘Statement of Financial Position’: Reconciliation of the opening and closing number of shares;
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’: Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the Company are consolidated in the financial statements of Healthcare Support (Newcastle) Holdings Limited. Copies of the consolidated financial statements are available from Companies House.
Going concern (continued)
Following the balance sheet date, on 20 August 2025, a Settlement Agreement ('SA2') was executed between all concerned parties which wiped clean historic SFPs and financial deductions relating to service performance and transferred some obligations for remedial works and cost from the Trust to the Company. As remedial works are already underway, the Company is already incurring costs for these remedial works and the remaining costs have been included as a provision at the balance sheet date (refer to provision note 14). Two additional settlement agreements are also currently being negotiated between parties which will deal with ventilation, electrical and fire issues as well as deal with the wipe clean of historic related SFPs and deductions relating to these. It is anticipated that these agreements will also transfer some obligations for remedial works and cost from the Trust to the Company which can be reliably estimated therefore these costs have also been included as a provision at the balance sheet date (refer to provision note 14).
As the execution of SA2 wiped clean all the historic service failure points and financial deductions relating to performance issues that gave rise to the Events of Default under the Finance Documents, all Events of Default have now been formally waived and deemed remedied by the bond and bank loan lenders (the "Majority Creditors"). There still however remains ongoing ventilation and electrical issues which have historically resulted in disputed service performance failure points and financial deductions that still require resolve. The SPV is committed to resolving all remaining disputed SFPs, and financial deductions, and negotiations are ongoing to reach further settlement agreements to resolve these disputed service performance items and remedial works programmes. In relation to the fire rectification works, the parties are also committed to concluding these which are now significantly underway with an agreed works programme in place. There are standstill agreements in place for all these issues.
In addition, on 15 March 2019, the former parent company of the Service Provider, Interserve PLC, went into administration with its lenders taking control of a newly formed parent company, Interserve Group Limited (“IGL”). Under the Finance Documents the administration of Interserve PLC triggered an Event of Default as the parent company guarantee (“PCG”) that was given by Interserve Plc became invalid. The Majority Creditors were notified of the situation on 29 March 2019. On 1 December 2020 Mitie Plc purchased the Service Provider. To date there has been no change to the operating structure or delivery of the service by the Service Provider. The replacement PCG from Mitie Plc was executed during the year to 31 December 2024 and as such there is no longer an Event of Default in this respect as it has been deemed remedied under the Finance Documents.
As all historic Events of Default in respect of SA2 performance related issues have been formally waived by the Majority Creditors as at the date of approval of these financial statements it is unlikely that the Majority Creditors would exercise their right. The implications of an Event of Default are that the Majority Creditors have a number of rights/remedies available to them which include requiring that the amounts owing under the Finance Documents are immediately repaid in full. The Company does not have the required funds to repay the amounts owing under the finance documents if the Majority Creditors demands repayment.
The impact of there still being an Event of Default present under the Finance Documents as at the balance sheet dates of 31 December 2024 and 2023 is to classify the outstanding amounts of the bond and the bank loan and associated amounts of interest payable as a current liability as the Company does not have an unconditional right to avoid repayment for at least 12 months at the balance sheet date. As a result, £363,355,000 (2023: £351,687,000) of bond and bank loan which would otherwise be classified as ‘Creditors: Amounts due after more than one year’ have been included in ‘Creditors: Amounts due within one year’.
Going concern (continued)
In addition, as a result of the Events of Default at the balance sheet date, the Company’s payables to group undertakings (different from the onward loan from HSNFP above) also became repayable on demand and hence the balance of £24,337,000 (2023: £24,337,000) has been classified as current at 31 December 2024 and 2023. The counterparty would only be able to recall this debt on demand if the Majority Creditors were to exercise their rights of requiring immediate repayment. These payables are subordinate to the amounts due to the Majority Creditors.
The Directors have discussed the current levels of service, the execution of SA2 following the balance sheet date, the ongoing negotiations to reach future settlement agreements, and the replacement of the parent company guarantee executed during the year with the Majority Creditors and received assurances that the Majority Creditors would not intend to exercise their rights if a future Event of Default occurred to require repayment of the outstanding borrowings immediately. The Majority Creditors are provided with regular updates from the Directors to ensure that they are kept informed of the Company’s progress in remedying all outstanding issues and preventing any future Events of Default.
Additionally, the Finance Documents contain covenants with regard to financial performance. The Directors have prepared cashflow and covenant compliance forecasts for the Company and the SPV covering a period of at least 12 months from the date of approval of these financial statements which indicate that, taking account of severe but plausible downside scenarios, the Company will have sufficient funds to meet its liabilities as they fall due for that period and there are no forecasted covenant breaches. Furthermore all historic events of default have been remedied in relation to SA2 related performance issues. Both the base case and the severe but plausible downside scenarios incorporate estimates of cash outflows in relation to the finalisation of the remaining settlement agreements and assume that the Majority Creditors will not accelerate the repayments of principal in future as a result of potential future events of defaults occurring relating to ongoing issues.
The Directors have a reasonable expectation that the Majority Creditors will not exercise their rights if Events of Default occur in future to require repayment of the outstanding borrowings for a period of at least 12 months from the date of approval of the financial statements, however this is not guaranteed as there remains a large degree of uncertainty around the ongoing issues with the project and impact these could have on service failure points and deductions. As such, the Company is dependent on the Majority Creditors not exercising their rights to demand repayment of amounts owed following the existence of potential future Events of Default caused by these issues, which is not guaranteed. This indicates the existence of a material uncertainty which may cast significant doubt on the Company's ability to continue as a going concern and therefore, the Company may be unable to realise its assets and discharge its liabilities in the normal course of business.
Additionally, due to the passage of time between the balance sheet date and signing date, the Directors are aware of two technical events of default under the finance documents that remain unwaived, these however are not deemed to impact the going concern of the Company.
Based on the above, the directors believe it remains appropriate to prepare the financial statements on a going concern basis.
The financial statements do not include any adjustments that would result from the basis of preparation being inappropriate.
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 those investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Accrued service concession income
Accrued service concession income relates to future periods' income for services already performed.
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 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.
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. 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.
Service Concession
The Company is an operator of a Private Finance Initiative ("PFI") contract. As the Company entered into the contract prior to the date of transition to FRS102, the Company has taken advantage of the exemption in section 35.10 (i) of FRS102 which permit it to continue to account for the service concession arrangements under the accounting policies adopted under old UK GAAP. In particular, the underlying asset is not deemed to be an asset of the Company under old UK GAAP, because the risks and rewards of ownership as set out in that standard are deemed to lie principally with the Trust.
During the construction phase of the project, all attributable expenditure was included in amounts recoverable on contracts and turnover. Upon becoming operational, the costs were transferred to the finance debtor. During the operational phase income is allocated between interest receivable and the finance debtor using a project specific interest rate. The remainder of the PFI unitary charge income is included within turnover in accordance with FRS102 section 23. The Company recognises revenue in respect of the services provided, including lifecycle services, as it fulfils its contractual obligations in respect of those services and in line with the fair value of the consideration receivable in respect of those services.
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 following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
As disclosed in Note 1, the company accounts for the project as a service concession arrangement. The directors use their judgement in selecting the appropriate financial asset rate to be applied in order to allocate the income received between revenue, and capital repayment of and interest income on the financial asset; and also, the service margin that is used to recognise service revenue. The directors have also used their judgement in assessing the appropriateness of the future maintenance costs that are included in the company’s forecasts. The directors will continue to monitor the condition of the assets and undertake a regular review of maintenance spend.
A risk borne by the Company is that lifecycle costs exceed those forecast in the financial model. This risk is mitigated by future estimates of lifecycle expenditure being prepared by maintenance experts on an asset-by asset basis and by the periodic technical evaluations of the physical condition of the facilities. In addition, comparisons of actual expenditure are compared to the lifecycle forecast.
A further risk bourne by the Company is that estimated settlement and remedial costs exceed those forecast in the latest financial model. This risk is mitigated by having made substantial progress in discussions and negotiations around the series of settlement agreements and remedial works programmes required to remedy the issues and satisfy the Majority Creditors in respect of the Company performance. The risk is further mitigated through the Company having a high unrestricted cash balance at the signing date and the contractual future revenue which will be due from the Trust.
An analysis of the Company's turnover is as follows:
Total fees payable are £121,000 (2023: £56,000) to the Company's auditor for the audit of the Company and the Group's financial statements. This total cost is borne by Healthcare Support (Newcastle) Limited.
The average monthly number of persons (including directors) employed by the company during the year was 0 (2023: 0).
For the year ended 31 December 2024, the UK corporation tax rate of 25% (2023: 23.5%) is applied.
The Finance Act 2021 was substantively enacted in May 2021 and has increased the corporation tax rate from 19% to 25% with effect from 1 April 2023. This had an impact on the results of the Company with the effective tax rate being 25% in the period.
The actual credit for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
All amounts included within bank loans and bonds are amounts due to a fellow subsidiary, Healthcare Support (Newcastle) Finance plc, and are ultimately external debt raised by Healthcare Support (Newcastle) Finance Plc. As at the balance sheet date, there were Events of Default subsisting pursuant to those finance documents and the external lenders had not formally waived or deemed remedied those Events of Default. Consequently, the Company's bank loans and bonds are classified as due within 1 year in the balance sheet. Upon remediation of the Events of Default and receipt of a waiver from the lenders, amounts falling due within one year of £387,692,000 (2023: £351,687,000) will be transferred to Creditors: amounts falling due after more than one year.
Included within amounts due to fellow group undertakings is £24,337,000 (2023: £24,337,000) of principal borrowing (see note 12) and £34,510,000 (2023: £27,973,000) of accrued interest in respect of the subordinated loan notes from fellow subsidiary, Healthcare Support (Newcastle) Finance Plc. As there were Events of Default subsisting pursuant to the finance documents, amounts due to fellow group undertakings are also classified as due within 1 year in the balance sheet. Amounts owed to group undertakings represents subordinated unsecured loan stock.
All financial liabilities above are held at amortised cost.
All amounts included within bank loans and bonds are amounts due to a fellow subsidiary undertaking, Healthcare Support (Newcastle) Finance Plc, and are ultimately external debt raised by Healthcare Support (Newcastle) Finance Plc.
Healthcare Support (Newcastle) Finance Plc originally had a publicly offered bond held by Royal Bank of Canada for £197,800,000 and a loan with European Investment Bank (EIB) of £115,000,000. On 7 April 2014, the Principal Paying Agency Agreement novated from the Royal Bank of Canada to the Bank of New York Mellon, London branch. The debt is repayable in instalments based on an agreed percentage amount of the total facilities per annum over the next 15 - 18 years (the EIB loan having the shorter maturity). The loans are secured under the security document by a charge over all the assets of the company.
Interest on the public bond is fixed at 2.187% per annum and interest on the EIB loan is fixed at 2.1492% per annum (coupon of 1.9592% and margin of 0.19%). Both the public bond and EIB loan are index linked. This finance is lent to Healthcare Support (Newcastle) Limited from Healthcare Support (Newcastle) Finance Plc on the same terms plus an agreed margin of 0.5%.
In addition, Healthcare Support (Newcastle) Limited was provided with a credit facility of £24,607,000 from Healthcare Support (Newcastle) Finance Plc, drawn down in March 2010. This facility accrues interest at an agreed rate not exceeding 12% per annum. This facility is subordinate to the bond and bank loan facilities. Accrued at the balance sheet date and included within amounts owed to parent undertakings in respect of this is £24,337,000 (2023: £24,337,000) of principal borrowing and £34,510,000 (2023: £27,973,000) of accrued interest (see note 11). The loans are repayable on demand but subordinate to the majority creditors and thus expected to be payable after one year on remedy of the event of default.
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
The deferred tax asset set out above is not expected to fully unwind within 12 months. The deferred tax asset relates to losses and profits in the next 12 months are not expected to exceed the brought forward losses. The split of current and non current deferred tax assets is set out in note 9.
Provisions are recognised when the company has a present legal or constructive obligation as a result of a past event, it is probable that the company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
Provisions are measured at the best estimate of the expenditure required to settle the obligation at the reporting date, taking into account all known risks and uncertainties.
The company recognises provisions in respect of obligations arising under settlement agreements, including:
• Remedial works: where the company is obligated to undertake or fund rectification or repair works under contractual or settlement arrangements. The provision reflects the expected cost of completing the works based on current estimates, including contractor costs, professional fees, and associated direct costs.
• Settlement amounts: where the company has agreed to make payments to third parties to settle disputes or claims. The provision reflects the agreed or estimated settlement amount payable, including any directly attributable costs.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Where it is no longer probable that a transfer of economic benefits will be required to settle the obligation, the provision is reversed. Where obligations are uncertain in timing or amount and do not meet the recognition criteria, they are disclosed as contingent liabilities unless the possibility of an outflow of resources is remote.
The Company is in discussions with the Trust and Technical Advisers regarding whether remedial works are required in respect of additional electrical survey findings.
At the reporting date no agreement has been reached and the directors are unable to reliably estimate the potential financial impact, if any, on the company, therefore no provision has been recognised.
Other reserves
The Company's other reserves are as follows:
The profit and loss account represents cumulative profits or losses net of dividends.
The Company and its associated companies Healthcare Support (Newcastle) Finance Plc (Plc) and Healthcare Support (Newcastle) Holdings Limited (Holdco) concluded two material transactions following the balance sheet date.
The Company entered into a settlement transaction with the Newcastle Upon Tyne Hospitals NHS Foundation Trust (the Trust), Mitie FM Limited (Mitie) and Laing O'Rourke Delivery Limited on 20 August 2025 whereby the parties agreed to settle certain historical claims between them, Project Co and the Trust agreed to effect certain amendments to the terms of the Project Agreement entered into by them on 4 May 2005 in connection with the Project, Project Co and Mitie agreed to effect certain amendments to the terms of the Service Contract entered into by them on 4 May 2005 in connection with the Project and Project Co's Majority Creditors agreed a waive a number of Events of Default and Trigger Events subsisting for the purposes of the financing agreements related to the Project.
The Company also entered into a Bond Commutation transaction with their senior creditors on 20 August 2025 whereby the guarantee provided by Syncora Guarantee Inc in respect of the index-linked secured bonds issued by the Company was terminated and Syncora Guarantee Inc was released from certain of its related obligations under financing agreements related to the Project and the coupon payable on the index-linked secure bonds issued by the Company was increased from 2.1870% to 2.3495%.
As these transactions do not materially affect the recognition or measurement of the amounts in the financial statements at the reporting date and their finalisation occurred after the reporting period, they are classified as non-adjusting subsequent events.
Vercity Social Infrastructure (UK) Limited and Innisfree PFI Secondary Partners 1 LLP are under common control. Innisfree PFI Secondary Fund is an ultimate shareholder of Healthcare Support (Newcastle) Holdings Limited.
Resolis Limited and Healthcare Support (Newcastle) Holdings Limited are under common control. Healthcare
Support (Newcastle) Holdings Limited is a minority shareholder of Healthcare Support (Newcastle) Holdings
Limited.
The directors consider there to be no ultimate controlling party.
During the year, the company identified errors in the recognition of service revenue and the completeness of cost provisions in prior periods.
Service revenue in prior years had been overstated due to the inclusion of amounts that did not meet the recognition criteria under the company’s accounting policies. In addition, certain costs relating to contractual obligations, including remedial works and settlement-related expenditures, had not been fully provided for in the appropriate accounting periods.
These items have been corrected as prior year adjustments in accordance with Section 10 of FRS 102 “Accounting Policies, Estimates and Errors”. The corrections have been applied retrospectively, resulting in the restatement of opening reserves at the start of the earliest comparative period presented and the restatement of the comparative figures.
The impact of the prior year adjustments is summarised below:
• A decrease in previously reported service revenue to exclude amounts not meeting recognition criteria.
• An increase in provisions to recognise obligations existing at the prior period reporting dates.
• A corresponding reduction in retained earnings.
There is no impact on the company’s cash position.
The effect of the adjustments on the prior period financial statements is as presented above.
The directors consider that these adjustments provide a more reliable and relevant representation of the company's financial performance and position.