The directors present the strategic report for the Company and the Group for the year ended 31 March 2026.
These financial statements have been prepared under FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland".
Group objectives
The objectives of the Group are to successfully design, construct, finance and operate communication facilities at the Ministry of Defence, Basil Hill, Corsham for a period of 25 years through a contract with the Ministry of Defence under the government's Private Finance Initiative (the PFI contract).
Group's strategy
To ensure that the Group achieves its objective, the strategy is to implement processes, policies and procedures to comply with the control matrices stipulated in the project documentation committed to at the inception of the project. This includes minimising performance and availability deductions, cash monitoring and maintenance of good working relationships between all stakeholders.
Ownership
Inteq Services (Holdings) Ltd is owned by its parent companies Coral Project Investments LP and Dalmore Capital Fund LP, acting by their general manager, Dalmore Capital Limited, and operates in the United Kingdom.
The Company is a holding company, owned by its ultimate parent companies, with one wholly owned subsidiary undertaking, Inteq Services Ltd.
The Group's operations are managed under the supervision of its shareholders and lender and are largely determined by the detailed terms of the PFI contract. For this reason, the Group's directors believe no other key performance indicators are necessary or appropriate to understand the performance and financial position of the Group.
The Group declared dividends in the year of £1,093,000 (2025: £637,000).
The profit for the financial year is £1,380,000 (2025: £919,000)
At the year end the Group had net liabilities of £439,000 (2025: £1,392,000).
The PFI contract and related subcontracts are fixed for the life of the contract and this enables the Group to have reasonable certainty over its income and expenditure for this period. In addition, the Group has a Facilities Agreement in place with its lender which fixes the levels of borrowing and repayments due until the loans are fully repaid in 2033.
There have not been any changes in the Group's activities in the period under review, and the Directors are not aware, at the date of this report, of any likely changes in the next year.
As the project is currently in its operational phase, operational risks are monitored closely. This takes the form of full-time representation on site through the Group's management services agent, periodic reporting by an independent Technical Assessor, and regular dialogue with the executive team of The Ministry of Defence.
Whilst the main elements of cash flow (unitary payments, facility management costs and lifecycle costs) are contractually linked to RPI and AWE indices, a relatively small proportion of total costs is not. A rise in these costs above the general rate of inflation would reduce debt service cover ratios. The most significant of these costs is insurance. The Group’s claims history so far is good, and recent policy renewals have led only to moderate premium increases. In addition, there are mechanisms under the terms of the PFI contract to share with The Ministry of Defence any extreme changes in policy premiums.
The Group's revenues have largely been in line with expectations, with very few deductions applied for non-availability of the assets. Any such deductions are passed down to the subcontractors so there is no direct financial consequence to the Group. Sustained non-availability can lead to contract termination but the Group is not anywhere close to such termination trigger points. Compliance with the detailed and complex operational requirements of the PFI contract remains a key risk given the potential termination consequences. Directors receive regular reports on actual performance compared to termination trigger thresholds.
Another risk is the continued funding from the public sector counterparties to the PFI contract, especially as these counterparties are under pressure to make savings on their operational PFI contracts. To date, most of the pressure to make such cost savings has fallen on the sub-contractors to the PFI project companies rather than on the PFI project companies themselves. Furthermore, it is understood that current policy from central government is not to encourage voluntary termination of PFI projects.
The operational activity is closely monitored throughout the year. This takes several forms: regular site visits by Directors, full-time representation on site through the Group’s management services agent, an annual report by the Lender's technical advisor and quarterly reporting by the management services agent.
The Group made a pre-tax profit of £1,840,000 compared to a pre-tax profit of £1,225,000 in 2025, largely due to higher direct costs increasing turnover, and lower operating costs in 2026.
The delivery of operational services is generally running well and is expected to continue to do so.
The Group's operations are managed under the supervision of its shareholders and lender and are largely determined by the detailed terms of the PFI contract.
The level of performance and availability deductions arising from failures to achieve specified levels of contract service is a key performance indicator. These are reported quarterly to the Board and have been extremely small in relation to total unitary payments.
Another key indicator is the ratio of operating cash flow to the senior debt service amount. This ratio is tested at six monthly intervals and each time it has been to the satisfaction of the lender.
The going concern disclosure for the Company can be found in note 1.3 of the financial statements.
The directors of the Group consider they have acted appropriately and in such a way as to promote the long term success of the Group for the benefit of its members as a whole.
The Company has no direct employees as it is managed under a Managed Service Agreement (MSA). The directors are satisfied that those people employed under the MSA are appropriately qualified and have the support systems in place to carry out their role. The directors are engaged with each team under the MSA to ensure the ongoing management of the underlying contracts of the Group and they work collaboratively with the teams to achieve success.
The Group is a special purpose company which has a finite lifespan with a defined set of obligations under Concession Agreements. The Group delivers its objectives through effective relationships with its stakeholders including suppliers and customers. This is affected by regular reporting and reviews with suppliers and customers to ensure delivery of the Group's objectives, whilst considering those stakeholders' needs. The directors of the Group meet regularly to review strategies for effective risk mitigation and service delivery in the context of its impact on all stakeholder interests, including shareholders, suppliers, customers and the wider community.
Due to the nature of the Group's operations, their impact on the community and environment is of paramount importance to the Group's success. Operating safely is the Group's primary objective and is as such integrated in everything the Group undertakes. A safe environment is managed through effective leadership, implementation of robust policies, procedures and instructions, safety management review processes both internally and externally with relevant stakeholders, reporting, audit and monitoring. An independent safety advisor is appointed by the Group, who reports directly to the Board of Directors.
The Group delivers contracts to support essential services to the public sector and takes its responsibility for ensuring that an appropriate environment is managed and maintained extremely seriously, ensuring the highest quality service is delivered from the assets under the Group's management.
On behalf of the board
The directors present their annual report and financial statements for the Company and the Group for the year ended 31 March 2026.
Strategic report
The information that fulfils the Companies Act requirements of the business review is included in the strategic report. This includes a review of the development of the business of the Group during the year, of its position at the end of the year including a going concern statement, principal risks and uncertainties, and of the likely future developments in its business.
Environment
The Group recognises the importance of its environmental responsibilities, monitors its impact on the environment, and implements policies via its subcontractors to reduce any damage that might be caused by the Group's activities.
The results for the year are set out on page 11.
Ordinary dividends were paid amounting to £1,093,000 (2025: £637,000).
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The Group is exposed to fair value interest rate risk on its fixed rate borrowings and cash flow interest rate risk on floating rate deposits and loans. The company uses interest rate derivatives to manage the mix of fixed and variable rate debt so as to reduce its exposure to changes in interest rates.
The Group holds or issues financial instruments for the purpose of financing its construction activity. In addition, various financial instruments - for example, trade debtors, trade creditors, accruals and prepayments - arise directly from the Group's operations.
The main risks arising from the Group's financial instruments are interest rate risk and liquidity risk. The board reviews and agrees policies for managing each of these risks and they are summarised below.
The latest financial forecasts show that unitary payment receivable under the PFI contract will be sufficient to repay all senior loan payments as they fall due.
The Group hedged its interest rate risk at the inception of the project by swapping its variable rate debt into a fixed rate by the use of an interest rate swap.
The Group places excess funds on fixed term deposit until required to service its debt.
The Group receives the majority of its income from The Ministry of Defence and is not exposed to significant credit risk.
Cash investments and the interest rate swap arrangements are with institutions of a suitable credit quality.
The Group's project revenue and most of its costs were linked to inflation at the inception of the project, resulting in the project being largely insensitive to inflation.
We have audited the financial statements of Inteq Services (Holdings) Ltd (the 'parent company') and its subsidiaries ('the group') for the year ended 31 March 2026, which comprise the Group Statement of Comprehensive Income, Group Balance Sheet, Company Balance Sheet, Group Statement of Changes in Equity, Company Statement of Changes in Equity, Group Statement of Cash Flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Conclusions relating to going concern
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.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group or parent 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.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
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 financial year for which the financial statements are prepared is consistent with the financial statements; and
The Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
Extent to which the audit was considered 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 is detailed below.
We assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations by considering their experience, past performance and support available.
All engagement team members were briefed on relevant identified laws and regulations and potential fraud risks at the planning stage of the audit. Engagement team members were reminded to remain alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
We obtained an understanding of the legal and regulatory frameworks that are applicable to the group and the parent company and the sector in which they operate, focusing on those provisions that had a direct effect on the determination of material amounts and disclosures in the financial statements. The most relevant frameworks we identified include:
Companies Act 2006;
UK Corporation Tax legislation;
VAT legislation; and
United Kingdom Generally Accepted Accounting Practice.
We gained an understanding of how the group and the parent company are complying with these laws and regulations by making enquiries of management and those charged with governance. We corroborated these enquiries through our review of submitted returns and board meeting minutes.
We assessed the susceptibility of the group’s and parent company’s financial statements to material misstatement, including how fraud might occur, by meeting with management and those charged with governance to understand where it was considered there was susceptibility to fraud. This evaluation also considered how management and those charged with governance were remunerated and whether this provided an incentive for fraudulent activity. We considered the overall control environment and how management and those charged with governance oversee the implementation and operation of controls. In areas of the financial statements where the risks were considered to be higher, we performed procedures to address each identified risk. We identified a heightened fraud risk in relation to:
Management override of controls; and
Revenue recognition
In addition to the above, the following procedures were performed to provide reasonable assurance that the financial statements were free of material fraud or error:
Reviewing minutes of meetings of those charged with governance for reference to: breaches of laws and regulation or for any indication of any potential litigation and claims; and events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud;
Reviewing the level of and reasoning behind the group’s and parent company’s procurement of legal and professional services;
Performing audit procedures over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and assessing judgements made by management in their calculation of accounting estimates for potential management bias;
Recalculating the unitary charge received by taking the base charge per the project agreement and uplifting for RPI;
Agreeing a sample of monthly income receipts to supporting documents and bank statements;
Performing an assessment on the service margins used in the year and agreeing margins used to the active financial models;
Reconciling the finance income and amortisation to the finance debtor reconciliation to ensure allocation methodology is in line with contractual terms and relevant accounting standards;
Completion of appropriate checklists and use of our experience to assess the group’s and parent company’s compliance with the Companies Act 2006; and
Agreement of the financial statement disclosures to supporting documentation.
Our audit procedures were designed to respond to the risk of material misstatements 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 intentional concealment, forgery, collusion, omission or misrepresentation. 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 would become aware of it.
Use of our report
This report is made solely to the parent 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 parent 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 parent company and the parent company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
The notes on pages 17 to 31 form part of these financial statements.
The notes on pages 17 to 31 form part of these financial statements.
The notes on pages 17 to 31 form part of these financial statements.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £1,093,000 (2025 - £637,000 profit).
Inteq Services (Holdings) Ltd is a private company limited by shares incorporated in England and Wales. The registered office is 1 Park Row, Leeds, United Kingdom, LS1 5AB.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £'000.
The financial statements are prepared on a going concern basis, under the historical cost convention, as modified by the revaluation of certain financial assets and liabilities.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these financial statements.
The consolidated financial statements include the financial statements of the Company and its subsidiary undertakings made up to 31 March 2026. A subsidiary is an entity that is controlled by the Company. The results of subsidiary undertakings are included in the consolidated profit and loss account from the date that control commences until the date that control ceases. Control is established when the Company has the power to govern the operating and financial policies of an entity so as to obtain benefits from its activities. In assessing control, the Company takes into consideration potential voting rights that are currently exercisable.
The Group financial statements consolidate the financial statements of the Company and its subsidiary undertaking. As a consolidated statement of comprehensive income is published, a separate statement of comprehensive income for the parent company is omitted from the Group financial statements by virtue of section 408 of the companies Act 2006. The profit for the financial year of the parent company was £1,093,000 (2025: £637,000).
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
The Company acts as a holding company for Inteq Services Ltd., it has no immediate requirement for funding.
The Group currently has £63,325,000 of total debt (2025: £70,908,000). Whilst it has net liabilities of £439,000 in 2026 (2025: £1,392,000), this is as a result of accounting for the fair value of an interest rate swap agreement, the majority of which does not crystallise as liabilities for a number of years and as such the Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that it should be able to operate within the level of its current facilities.
Therefore, the directors, having considered the financial position of the Group and its expected future cash flows for at least 12 months from the date of signing the financial statements, and have prepared the financial statements on a going concern basis. The directors confirm that they do not intend to liquidate the Group or cease trading. At the time of approving the financial statements, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.
Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover, which is stated net of value added tax, represents the services' share of the management services income received by the Group for the provision of a PFI (Private Finance Initiative) asset to the customer (The Ministry of Defence). This income is received over the life of the concession period. Management service income is allocated between turnover, finance debtor interest and reimbursement of finance debtor so as to generate a constant rate of return in respect of the finance debtor over the life of the contract.
In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
The Group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the Group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Basic financial instruments are initially recognised at the transaction price and subsequently at amortised cost, unless the arrangement constitutes a financing transaction, where it is recognised at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.
Debt instruments are initially recognised at the present value of cash payable to the lender and are subsequently measured at amortised cost using the effective interest rate method, less impairment. The effective interest rate method is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument. The effective interest rate amortisation is included in interest payable and similar charges in the Statement of Comprehensive Income. Any transaction fees, costs, discounts and premiums directly related to the debt instrument are recognised in the Statement of Comprehensive Income over the duration of its life. Debt instruments with maturities greater than twelve months after the reporting date are classified as non-current liabilities.
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 that are measured at cost or amortised cost are reviewed for objective evidence of impairment at the end of each reporting date. If there is objective evidence of impairment, an impairment loss is recognised in the Statement of Comprehensive Income immediately.
For all equity instruments regardless of significance, and other financial assets that are individually significant, these are assessed individually for impairment. Other financial assets are either assessed individually or grouped on the basis of similar credit risk characteristics.
Where the contractual obligations of financial instruments (including share capital) are equivalent to a similar debt instrument, those financial instruments are classed as financial liabilities. Financial liabilities are presented as such in Balance Sheet. Finance costs and gains or losses relating to financial liabilities are included in the Statement of Comprehensive Income. Finance costs are calculated so as to produce a constant rate of return on the outstanding liability.
Where the contractual terms of share capital do not have any terms meeting the definition of a financial liability then this is classed as an equity instrument. Dividends and distributions relating to equity instruments are debited direct to equity.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Derivatives, including interest rate swaps, 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 group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the Group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the Group.
The Group has entered into an arrangement with third parties that is designed to hedge future cash flows arising on variable rate interest loan arrangements, with the net effect of exchanging the cash flows arising under those arrangements for a stream of fixed interest cash flows ("interest rate swaps").
To qualify for hedge accounting, documentation is prepared specifying the hedging strategy, the component transactions and methodology used for effectiveness measurement. Changes in the carrying value of financial instruments that are designated and effective as hedges of future cash flows ("cash flow hedges") are recognised directly in a hedging reserve in equity and any ineffective portion is recognised immediately in the Statement of Comprehensive Income. Amounts deferred in equity in respect of cash flow hedges are subsequently recognised in the Statement of Comprehensive Income in the same period in which the hedged item affects net profit or loss or the hedging relationship is terminated and the underlying position being hedged has been extinguished.
Taxation expense for the period comprises current and deferred tax recognised in the reporting period. Tax is recognised in the Consolidated Statement of Comprehensive Income, except to the extent that it relates to items recognised in Other Comprehensive Income or directly in equity. In this case tax is also recognised in Other Comprehensive Income or directly in equity respectively.
Current or deferred taxation assets and liabilities are not discounted.
Current tax is the amount of income tax payable in respect of the taxable profit for the year or prior years. Tax is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the period end.
The directors periodically evaluate positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and establish provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred tax arises from timing differences that are differences between taxable profits and total comprehensive income as stated in the financial statements. These timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in the financial statements.
Deferred tax is recognised on all timing differences at the reporting date except for certain exceptions. Unrelieved tax losses and other deferred tax assets are only recognised when it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.
Deferred tax is also recognised on the revaluations of derivative financial instruments, with the movements going through the Consolidated Statement of Comprehensive Income. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the period end and that are expected to apply to the reversal of the deferred tax asset or liability.
Lifecycle
Under the terms of the PFI contract, the Group has a programme of expenditure for the maintenance of and replacement of non-moveable assets in the facilities. The Group recognises such expenses as incurred, with any committed expenditure at the balance sheet dates being appropriately accrued for with the associated expense recognised through the Statement of Comprehensive Income.
Finance Debtor
The Group has taken advantage of the transition exemption in FRS 102 Section 35.10(i) that allows the Group to continue the service concession arrangement accounting policies from previous UK GAAP.
The Group is accounting for the concession asset based on the ability to substantially transfer all the risks and rewards of ownership to the customer.
The underlying finance asset is not deemed to be an asset of the Group under FRS102 section 34C, because the risks and rewards of ownership as set out in that Standard are deemed to lie principally with The Ministry of Defence. Under this arrangement, the costs incurred by the Group on the design and construction of the assets have been treated as a finance debtor within these financial statements.
The balance of Management service income received, after accounting for the finance debtor interest and amortisation components (which together sum to a constant figure in each period, as in a lease) is accounted for as turnover. This figure is adjusted in each period to ensure that income recognised more accurately reflects the value of economic benefits provided to the public sector client in each period, and is necessary due to the inflationary nature of the Management service income payments. As a consequence of this adjustment to turnover, which is generally positive in the first half of the concession and negative in the second half (and must net out over the whole concession), a unitary payment control account debtor or creditor is recorded on the balance sheet.
The preparation of the financial statements in conformity with FRS 102 requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based upon historical experience and various other factors that are believed to be reasonable under the circumstances, the result of which form the basis of making judgements about carrying values of assets and liabilities that are not readily available from other sources. 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 if the revision affects only that period or in the period of revision and future periods if the revision affects both current and future periods.
The Group’s borrowings are linked to SONlA and the Group has entered into interest rate swaps to restrict its exposure to future interest rate fluctuations.
In assessing whether the Group is entitled to apply cash flow hedge accounting, the directors must apply judgement in considering whether there is appropriate matching between the hedged item (the loan balance) and the hedging instrument (the interest rate swap). The directors must prepare documentation to demonstrate this consideration.
In the director’s judgement, the Group has met the criteria for cash flow hedge accounting, accordingly the Group has therefore recognised fair value movements on derivatives in effective hedging relationships through other comprehensive income as well as deferred taxation thereon.
The Group was established to provide services under certain private finance agreements with the Ministry of Defence. Under the terms of these Agreements, the Ministry of Defence (as grantor) controls the services to be provided by the Company over the contract term. Based on the contractual arrangements the Group has classified the project as a service concession arrangement, and has accounted for the principal assets, of and income streams from, the project in accordance with FRS 102, Section 34.12 Service Arrangements.
Accounting for the service concession contract and finance debtors requires estimation of service margins, finance debtor interest rates and associated amortisation profile which is based on forecast results of the contract. These were forecast initially within the operating model at financial close and are closely monitored throughout the duration of the project.
Derivative financial instruments are carried at fair value, which required estimation of various factors including future interest rates and credit risk.
Fair values for derivative contracts are based on mark-to-market valuations provided by the contract counterparty. Whilst these can be tested for reasonableness, the exact valuation methodology and forecast assumptions for future interest rates or inflation rates are specific to the counterparty.
The group's turnover and profit before tax arose entirely within the United Kingdom and through one principal activity.
Auditor's remuneration is payable to Johnston Carmichael LLP.
The average monthly number of persons (including directors) employed by the group and company during the year was nil (2025: nil)
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 addition to the amount charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:
Details of the company's subsidiaries at 31 March 2026 are as follows:
The finance debtor represents payments due from The Ministry of Defence in respect of the Project Agreement. These payments are received over the remaining life of the agreement.
The secured senior loan represents amounts borrowed under the Facility Agreement with Commerzbank.
The loan bears interest at a 0.9% margin over SONIA and is repayable in six-monthly instalments between 2012 and 2033. The loan is secured by fixed and floating charges over the property, assets and rights of Inteq Services Ltd., and has certain covenants attached.
In order to hedge against interest variations on the loan, the Group has entered into an interest rate swap agreement with the bank whereby at six monthly intervals sums are exchanged reflecting the difference between floating and fixed interest rates, calculated on a predetermined notional principal amount.
The subordinated unsecured loan stock was subscribed by the shareholders on 25 October 2011 and bears interest at 12% per annum payable six-monthly in March and September each year. The stock is subordinated until all of the secured obligations of the Group have been repaid or discharged in full. Loans from group undertakings are unsecured.
The Company also has a Working Capital Facility of £250,000 (2025: £250,000, Change in Law Facility of £2,408,686 (2025: £2,408,686) and Service Reserve Facility of £6,469,526 (2025: £6,469,526) with CommerzBank which bears a rate of 0.4% paid semi annually. This has not been drawn down.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The deferred tax asset set out above relates to the interest rate derivative which will unwind over the term of the hedging arrangement.
There is a deferred tax asset relating to the interest rate derivative, calculated at 25%, which will unwind over the term of the hedging arrangement. All movements in the deferred tax have been recognised in other comprehensive income.
The Company has one class of ordinary shares which carry no rights to fixed income.
Post year end, dividends were paid amounting to £609,000.
During the year the group entered into the following transactions with related parties:
The following amounts were outstanding at the reporting end date:
At the reporting end date the group had an outstanding balance with Dalmore Capital Fund LP and its associates of £3,040,000 (2025: £3,662,000), comprised of loan stock principal and loan stock interest payable. During the year the group recognised £407,000 (2025: £449,000) in relation to loan stock interest; £591,000 (2025: £379,000) in relation to loan stock principal; and £548,000 (2025: £319,000) in relation to dividends.
At the reporting end date the group had an outstanding balance with Coral Project Investments and its associates of £3,028,000 (2025: £3,648,000), comprised of loan stock principal amount payable. During the year the group recognised £406,000 (2025: £447,000) in relation to loan stock interest; £589,000 (2025: £378,000) in relation to loan stock principal; and £546,000 (2025: £318,000) in relation to dividends.