The directors present the strategic report for the year ended 31 March 2026.
On 23 November 2007 the group entered into an agreement (the ‘Project Agreement’) with the Tyne and Wear Passenger Transport Authority (which is now integrated into the North East Mayoral Strategic Authority “North East MSA”, previously known as the North East Combined Authority (“NECA”)), for the design, construction, financing and operation of a new two-lane immersed vehicular tunnel (‘New Tunnel’), the refurbishment and operation of the existing road tunnel, and the operation of the existing pedestrian and cycle tunnels, each crossing the River Tyne near Newcastle (the ‘Project’).
The Project aims to improve journey convenience and reliability for customers to support the economic development of the North and South Tyneside region. Safety of tunnel users, local residents and staff is a key priority and the group continues to operate with an excellent safety record whilst ensuring that environmental impact is minimised. The group liaises with all stakeholders with the objective of improving services to meet their future needs, in accordance with its Environmental, Social and Governance policies.
TT2 has embraced the transition to a Green Economy by harnessing the necessary knowledge, engagement, collaboration, and innovation to foster environmental and social sustainability. In doing so, and following a strategic framework developed in accordance with the ISO14001 Standard and a commitment to Corporate Social Responsibility, the group is devoted to discharging its responsibilities to create a positive impact beyond commercial objectives.
TT2 has continued to improve and develop its relationship with the local community. This is through the funding of various transport schemes for local charities, providing transport cost relief, working with local schools and employability foundations to offer career insights and employment opportunities, and the continued support of the region's sustainability targets through our successful transition to open road tolling.
TT2 employees continue to display high levels of professionalism and support for the Project and its customers, through the delivery of providing the most reliable, safe, sustainable and efficient service.
Total income in respect of toll usage for the year was £33,992k (2025: £31,782k). The increase was driven principally by the increase in shadow toll, due to rise in RPI in the period, although there remains strong traffic numbers with overall traffic volume reaching an historic high. Turnover was £28,797k (2025: £27,211k) and is presented as a mark-up on operating costs based on an overall estimated outcome for the Concession and other income.
The result for the financial year is a profit before tax of £4,910k after interest costs of £16,145k (2025: profit before tax of £6,493k after interest costs of £16,180k).
The directors regularly consider Board reports related to the performance of the company and the information and Key Performance Indicators (‘KPIs’) contained therein. These include, amongst other things, forward cash flow forecasting, variance against budget in the financial statements, business risk and other qualitative and quantitative indicators of performance that provide the basis for management of the company.
Annual total traffic for the year to 31 March 2026 is 19.9m (2025: 19.77m). The increase in traffic is largely attributable to the full reopening of the Northbound tunnel in August 2025. There have been no breaches of safety, labour, or environmental regulations during the reporting period and the client and lenders remain supportive to the company.
The group is committed to establishing, maintaining and continually improving arrangements to manage risk. The group is certified in accordance with ISO 9001 Quality management, ISO 14001 Environmental management and ISO 45001 Health and Safety Management.
The group’s principal financial instruments comprise debt, RPI swaps, interest rate swaps and cash. The main risks arising from the group’s financial instruments are interest rate, inflation, liquidity and credit. The Board has policies for managing each of these risks and they are summarised below:
Interest rate and inflation risk
The group has entered into RPI swap agreements as the business model of the Project is based on an assumed level of inflation affecting turnover streams. This restricts the exposure of the business to RPI fluctuations.
The group's exposure to interest rate and inflationary fluctuations will continue to be monitored.
Liquidity risk
The group adopts a prudent approach to liquidity management by maintaining sufficient cash and liquid resources to meet its obligations.
Credit risk
The company receives the majority of its turnover from the North East Mayoral Strategic Authority and is therefore not exposed to significant credit risk. Cash investments and the swap agreements are with institutions of suitable credit quality.
Construction defect
The group has resolved all defect matters with the contractor to its satisfaction.
The group continues to maintain sufficient liquidity and has met all debt servicing.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 March 2026.
The results for the year are set out on page 10.
No ordinary dividends were paid (2025: £8,000k). The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The group's policy is to pay suppliers and service providers by the end of the month following the date of the invoice, unless otherwise contractually agreed. The policy is made known to suppliers and service providers upon request.
The group recognises the importance of its environmental responsibilities, monitors its impact on the environment, and implements appropriate policies for management.
Health and safety policy
Health and safety is a major priority for the Board and is reviewed and discussed as an agenda item. The group holds the following certifications: ISO 9001/2015 (Quality Management System), ISO 14001/2015 (Environmental Management System) and BSOHSAS 18001/2007 (Occupational Health & Safety Assessment Series).
The auditor, Johnston Carmichael LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
We have audited the financial statements of TT2 (Holdings) Limited (‘the parent company’) and its subsidiary (‘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
Other information
Opinions on other matters prescribed by the Companies Act 2006
As explained more fully in the Directors’ responsibilities statement set out on page 5, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Directors are responsible for assessing the group’s and parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the group or parent company or to cease operations, or have no realistic alternative but to do so.
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 Generally Accepted Accounting Practice.
UK Corporation Tax legislation;
VAT legislation;
Employment legislation.
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, external inspections, relevant correspondence with regulatory bodies 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
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 company and group’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 reviewing judgements made by management in their calculation of accounting estimates for potential management bias;
Performed integrity testing over the operating model using data analytics tools to ensure any changes in assumptions made by management are appropriate and not indicative of management bias;
Recalculating the Service Fee revenue recognised by applying the relevant margin percentage outlined in the operating model to the actual costs incurred during the period;
Reviewing the reasonableness of the estimated service margins against expectations from prior years and understand any significant variances;
Recalculating the unitary charge received by taking the base charge per the project agreement and uplifting from RPI;
Completion of appropriate checklists and use of our experience to assess the company and group’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 are to become aware of it.
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 group statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
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 £0 (2025 - £7,999,983 profit).
TT2 (Holdings) Limited (“the company”) is a private company limited by shares incorporated and domiciled in England and Wales. The registered office is Tyne Tunnels, Wallsend, Tyne and Wear, United Kingdom, NE28 0PD.
The group consists of TT2 (Holdings) Limited and its subsidiary.
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 £.
The financial statements have been prepared under the historical cost convention, modified to include certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements (to the extent applicable):
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, 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 consolidated group financial statements consist of the financial statements of the parent company TT2 (Holdings) Limited together with all entities controlled by the parent company (its subsidiaries).
All financial statements are made up to 31 March 2026. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
A full and detailed assessment of going concern has been carried out and considered by the directors who have assessed liquidity and covenant compliance for a period of at least twelve months from the date of approval of the financial statements.
As part of the going concern assessment, detailed cash flow forecasts have been produced for a period of several years from the date of the signing of the financial statements. Based on these forecasts the Group is expected to continue to meet its debt servicing commitments and related covenants and have sufficient liquidity to continue as a going concern. The Directors have run various stress scenarios, including adjustments to traffic volumes and enforcement income which indicate that the Group can continue to meet all its debt obligations in the next twelve months.
After making reasonable enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to prepare the financial statements on a going concern basis.
Turnover represents the element of total income recognised in respect of toll usage from the operation of the Tyne Tunnels. All turnover is derived in the UK. Turnover is defined as the value of services rendered excluding discounts and VAT, and comprises service remuneration which relates to operation and maintenance activity, associated with keeping the asset at a minimum standard, and ad hoc asset related service income. Service fee income is recognised as a margin on operating and maintenance costs.
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.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include certain 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.
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 the statement of comprehensive income.
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 the statement of comprehensive income.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including certain creditors and interest bearing borrowings, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Other financial instruments
Other financial instruments not meeting the definition of Basic Financial Instruments are recognised initially at fair value. Subsequent to initial recognition other financial instruments are measured at fair value with changes recognised in profit or loss except as follows:
investments in equity instruments that are not publicly traded and whose fair value cannot otherwise be measured reliably shall be measured at cost less impairment; and
hedging instruments in a designated hedging relationship shall be recognised as set out below.
Derivative financial instruments and hedging
Derivative financial instruments are recognised at fair value. The gain or loss on remeasurement to fair value is recognised immediately in profit or loss. However, where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature of the item being hedged (see below).
Cash flow hedges
Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability, or a highly probable forecast transaction, the effective part of any gain or loss on the derivative financial instrument is recognised directly in other comprehensive income. Any ineffective portion of the hedge is recognised immediately in profit or loss.
For cash flow hedges, where the forecast transactions resulted in the recognition of a non-financial asset or non-financial liability, the hedging gain or loss recognised in other comprehensive income is included in the initial cost or other carrying amount of the asset or liability. Alternatively when the hedged item is recognised in profit or loss the hedging gain or loss is reclassified to profit or loss.
When a hedging instrument expires or is sold, terminated or exercised, or the group discontinues designation of the hedge relationship but the hedged forecast transaction is still expected to occur, the cumulative gain or loss at that point remains in equity and is recognised in accordance with the above policy when the transaction occurs. If the hedged transaction is no longer expected to take place, the cumulative unrealised gain or loss recognised in equity is recognised in the income statement immediately.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the statement of comprehensive income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the group is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The group’s net obligation in respect of defined benefit plans is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The fair value of any plan assets is deducted. The group determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate as determined at the beginning of the annual period to the net defined benefit liability (asset) taking account of changes arising as a result of contributions and benefit payments.
The discount rate is the yield at the balance sheet date on AA credit rated bonds denominated in the currency of, and having maturity dates approximating to the terms of the group’s obligations. A valuation is performed annually by a qualified actuary using the projected unit credit method. The group recognises net defined benefit plan assets to the extent that it is able to recover the surplus either through reduced contributions in the future or through refunds from the plan. Changes in the net defined benefit liability arising from employee service rendered during the period, net interest on net defined benefit liability, and the cost of plan introductions, benefit changes, curtailments and settlements during the period are recognised in the statement of comprehensive income. Remeasurement of the net defined benefit liability/asset is recognised in other comprehensive income in the period in which it occurs.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Finance debtor
During the construction phase of the project, all attributable expenditure was included in amounts recoverable on contracts. Upon completion of the construction phase, 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, net of attributable operating costs and an annual amortisation charge to the finance debtor in order to release over the life of the project. The remainder of the income recognised in respect of toll usage is included in turnover in respect of a mark-up on operating costs based on an overall estimated outcome for the concession.
Operating leases
Rentals payable under operating leases, including any lease incentives received, are charged to the statement of comprehensive income on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
The company accounts for the tunnel concession as a finance debtor, the directors apply 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 the interest income on the finance debtor, 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. Accounting for service concession contracts and finance debtors requires modelling of service margins, finance debtor interest rates and associated amortisation profile which are based on the forecast results of the PFI contract over the respective concession length.
The group has an obligation to pay pension benefits to certain employees. The cost of these benefits and the present value of the obligation depend on a number of factors, including life expectancy, salary increases, asset valuations and the discount rate on corporate bonds. Management estimates these factors in determining the net pension deficit in the balance sheet. The assumptions reflect historical experience and current trends. See note 22 for the disclosures relating to the defined benefit pension scheme.
Fair value measurements for derivative financial instruments are obtained from external valuations based on market prices. These valuations will fluctuate based on external data, such as interest rates, and this will impact the financial position and the statement of other comprehensive income.
The group uses derivative financial instruments to hedge certain economic exposures in relation to movements in interest rates and movements in RPI as compared with the position that was expected at the date the underlying transaction being hedged was entered into.
There is a judgement on whether an economic hedge relationship exists to achieve hedge accounting. Whilst the hedge has been deemed to be almost entirely effective, any ineffectiveness is considered to be immaterial in the financial statements. Appropriate documentation has been prepared detailing the economic relationship between the hedging instrument and the underlying loan being hedged.
All turnover is derived from the operations of the Tyne Tunnels based in the United Kingdom.
The average monthly number of persons (excluding directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
No directors received emoluments in the year. Fees paid to investors in respect of their respective directors are disclosed in note 28.
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 registered office of TT2 Limited is Tyne Tunnels, Wallsend, Tyne and Wear, NE28 OPD.
The group has hedged against interest rate fluctuations on the long term loan by entering into interest rate swaps with Bank of Scotland, HSBC and Natixis, to fix the SONIA rate on these facilities at 5.264%.
The fair value of the interest rate swap derivative instruments above comprises the fair value of interest rate swap designated in an effective hedging relationship. The movement on these of £3,446,135 (2025: £6,132,863) gain goes through other comprehensive income. The interest rate swaps settle on a semi-annual basis. The floating rate on the interest rate swaps is six month SONIA. The group will settle the difference between the fixed and floating rate on a net basis. All interest rate swap contracts are designated as hedges of variable interest rate risk of the group’s floating rate borrowings. The hedged cash flows are expected to occur and to affect profit or loss over the period to maturity of the interest rate swaps.
The group holds an RPI Swap in regards to specific revenue flows which commenced in 2019. The fair value of the swap at the year end is included as a financial liability.
The RPI swaps have a fixed rate of 3.27% and expire in March 2037. The floating rate on the RPI swap is 12 month RPI. The group settles the difference between the fixed and floating rates on a net basis. All RPI swap contracts are designated as hedges of variable RPI risk of a portion of the group’s income. The hedged cash flows are expected to occur and to affect profit or loss over the period to maturity of the RPI swaps. The movement on these of £1,196,745 loss (2025: £3,298,535 gain) goes through other comprehensive income.
Loans are secured by fixed and floating charges over the assets of the company.
The group’s secured loans relate to a secured senior debt facility which is stated net of arrangement fees totalling of £1,744,148 (2025: £1,845,842). The facility incurs interest at a rate of SONIA + CAS, is repayable on a bi-annual basis and matures in 2037.
The group also has a subordinate debt loan of £38,603,381 (2025: £38,603,381), which bears interest at 8.5% plus RPI and is repayable in full at maturity in 2037.
The company has made provision in respect of anticipated works required to remove historic Reinforced Autoclaved Aerated Concrete (RAAC) from the Northern storage building. Detailed third party quotations have been obtained and work commenced in June 2026 with expected completion before the end of the financial year.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
Deferred tax asset is recognised to the extent that it is probable that the future taxable profit will be available against which the unused tax credit will be utilised.
The group participates in the Tyne and Wear Pension Fund, a Local Government Pension Scheme ('LGPS'), which is a funded defined benefit scheme. The latest full actuarial report of the fund as a whole was carried out at 31 March 2025.
The information disclosed below is in respect of the plans for which the group is either the sponsoring employer or has been allocated a share of cost under agreed group policies throughout the periods shown.
Assumed life expectations on retirement at age 65:
The amounts included in the balance sheet arising from obligations in respect of defined benefit plans are as follows:
Amounts recognised in the profit and loss account
Amounts taken to other comprehensive income
Movements in the present value of defined benefit obligations
The defined benefit obligations arise from plans funded as follows:
Movements in the fair value of plan assets
The actual return on plan assets was £984,000 (2025 - £508,000).
Fair value of plan assets at the reporting period end
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to vote per share at meetings of the company.
The cash flow hedge reserve is the net value of derivative financial instruments less deferred tax.
The profit and loss reserve relates to historic accumulated profits and losses net of any dividends paid.
On cessation of the project concession period in 2037, an exit valuation will occur on the entity's obligations under its participation in the Tyne and Wear Pension Fund. The basis of valuation will change from a unit credit method (Accounting basis) to a Gilt flat basis. The directors consider the likelihood of an exit event to be remote, due to the remaining concession period, therefore continue to account for its obligations under the defined benefit scheme on a unit credit method. The difference in valuation approach was last considered at 31 March 2019, with a projected increase to the scheme deficit of £1.5m using a Gilt flat basis.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
The company is controlled by the directors, in so far as they act in concert.
The company paid £nil (2025: £nil) to each of its shareholders in respect of reimbursement of expenses.
The following fees were paid directly to investors in respect of the services of their respective directors:
Aberdeen Infrastructure (No3) Limited £30,614 (2025: £29,507),
InfraRed Infrastructure Yield Holdings Limited £30,614 (2025: £29,507),
Bouygues Travaux Publics SA £30,614 (2025: £29,507).
At 31 March 2026 the amount outstanding in respect of shareholder loans was £41,042,436 (2025: £40,892,163), including accrued interest of £2,439,055 (2025: £2,288,782).