The directors present the strategic report for the year ended 31 December 2025.
Principal Activities and Fair Review of Business
The Company is principally engaged in providing financing to Healthcare Support (Newcastle) Limited (the “SPV”), a fellow subsidiary undertaking of Healthcare Support (Newcastle) Holdings Limited for the construction of new extensions to the Royal Victoria Infirmary and Freeman Hospital, 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 Company raised external and shareholder financing in the form of a bond, bank loans and loans from its parent company which it then lent to the SPV on substantially the same terms. The principal risk to the Company is the risk of potential 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.
The Company continues to have a £115,000,000 in an index linked loan from the European Investment Bank and a £197,800,000 in index linked bond debt held by Bank of New York Mellon.
In March 2010 the Company drew down £24,607,000 of subordinated debt from Healthcare Support (Newcastle) Holdings Limited.
Going Concern
Nature of the Company
Healthcare Support (Newcastle) Finance PLC (the “Company”) is a special purpose vehicle (“SPV”) formed solely to act as a financing conduit for Healthcare Support (Newcastle) Limited (the “Operating SPV”), a fellow subsidiary undertaking with common directors. The Company raised bond and bank loan facilities from the bond and bank loan lenders (the “Majority Creditors”) and on-lent the proceeds to the Operating SPV on substantially the same terms, including the Events of Default provisions, under the finance documents governing those facilities (the “Finance Documents”). As the Company depends on the Operating SPV generating sufficient cash flows to meet its own obligations and covenants, its going concern assessment and cash flow forecasts are directly dependent on those of the Operating SPV.
Basis of Preparation
The financial statements are prepared on a going concern basis. The Company had technical Events of Default under the Finance Documents that were unwaived at the balance sheet date of 31 December 2025, and further technical Events of Default arose after that date (see Technical Events of Default below). At the date of approval of these financial statements, the Majority Creditors had not formally waived, or confirmed as remedied, the remaining technical Events of Default, such that technical Events of Default were continuing at that date. The Directors consider that this indicates the existence of a material uncertainty, as described below.
Service Performance and Settlement Agreements
During 2017 and 2018 the level of service provided by the Operating SPV’s principal subcontractor, Mitie FM Limited (formerly Interserve (Facilities Management) Limited) (the “Service Provider”), gave rise to Service Failure Points (“SFPs”) above threshold levels in certain Project Documents. This led to warning notices from the Newcastle upon Tyne Hospitals NHS Foundation Trust (the “Trust”) to the Operating SPV and triggered an Event of Default under the Finance Documents. Although SFP levels have since been relatively low, further Events of Default occurred in October 2021, December 2022, May 2023 and June 2023 in relation to a specific set of circumstances. The financial impact of service performance shortfalls is described in the going concern statement of the Operating SPV.
On 20 August 2025 a Settlement Agreement (“SA2”) was executed between all concerned parties. SA2 wiped clean all historic SFPs and financial deductions relating to the performance issues that gave rise to Events of Default, and all such Events of Default were formally waived and deemed remedied by the Majority Creditors during the year. Ventilation, electrical and fire matters, which have given rise to disputed SFPs and deductions, remain to be resolved; two further settlement agreements addressing these matters are being negotiated, and standstill agreements are in place for all outstanding issues.
Parent Company Guarantee
On 15 March 2019 Interserve PLC, the former parent company of the Service Provider, entered administration, invalidating its parent company guarantee (“PCG”) and triggering an Event of Default. Mitie PLC acquired the Service Provider on 1 December 2020, and the replacement PCG from Mitie PLC executed during the year ended 31 December 2024 formally remedied that Event of Default.
Technical Events of Default
The Directors have considered all technical Events of Default, both those unwaived at 31 December 2025 and those arising after that date, as the position at the date of approval is relevant to the going concern assessment. The classification of borrowings in the balance sheet is determined by the position at 31 December 2025 only.
Unwaived at 31 December 2025:
1. Late submission of the September 2025 financial model.
2. Late delivery of the 2024 annual financial statements to the Majority Creditors.
3. Late filing and publication of the 2024 annual financial statements under the Companies Act 2006 and the Disclosure Guidance and Transparency Rules.
4. Entry into Major Repairs contracts, and acceptance of Variation VE754, without the prior consent of the Majority Creditors.
5. Account bank consent and waiver not executed (executed on 11 September 2026).
Arising after 31 December 2025:
6. Late delivery of the 2025 annual financial statements (due 29 June 2026).
7. Late submission of the March 2026 financial model.
8. Entry into further Major Repairs contracts without the prior consent of the Majority Creditors.
9. Expiry on 20 August 2026 of the waiver, granted in connection with SA2, of Events of Default relating to the ratings of the Bonds or the Project (the “Ratings Issues”), which remain unresolved and in respect of which the parties have reserved their rights.
Item 5 was resolved on 11 September 2026. A waiver and confirmation letter in respect of the remaining items has been negotiated with the Majority Creditors but had not been executed at the date of approval of these financial statements. Accordingly, technical Events of Default were continuing at the date of approval. The Directors do not consider that these reflect any deterioration in the underlying financial performance of the Operating SPV, and have received assurances that the Majority Creditors do not intend to exercise their rights in connection with them.
Lender Assurances and Cash Flow Forecasts
The Directors have discussed the current level of service, SA2, the further settlement agreements and the replacement PCG executed in 2024 with the Majority Creditors, who receive regular updates, and have received assurances that the Majority Creditors would not intend to exercise their rights to require immediate repayment if a future Event of Default occurred.
The Directors have prepared cash flow and covenant compliance forecasts for the Company and the Operating SPV covering at least 12 months from the date of approval of these financial statements. Taking account of severe but plausible downside scenarios, these indicate that the Company will have sufficient funds to meet its liabilities as they fall due and that no covenant breaches are forecast. Both the base case and the downside scenarios include estimated cash outflows for the remaining settlement agreements and assume that the Majority Creditors will not accelerate repayment as a result of any future Event of Default arising from the ongoing issues.
Classification of Liabilities – FRS 102
Because Events of Default existed at 31 December 2025, the Company did not have an unconditional right at that date to defer repayment of its borrowings for at least 12 months. Accordingly, the bond and bank loan, together with associated interest payable, are classified as current liabilities: £366,101,000 (2024: £367,653,000) that would otherwise be included in ‘Creditors: amounts due after more than one year’ is included in ‘Creditors: amounts due within one year’. This classification reflects the position at 31 December 2025 only.
Material Uncertainty – FRS 102 Disclosure
As technical Events of Default were continuing at the date of approval of these financial statements, the Majority Creditors were entitled at that date to exercise their rights under the Finance Documents, including to require immediate repayment, and the Company does not have the funds to repay the amounts outstanding if such repayment were demanded. Following SA2, the Majority Creditors cannot exercise these rights on performance-related grounds.
The Directors have a reasonable expectation, based on the assurances received, that the Majority Creditors will not exercise their rights in respect of the continuing technical Events of Default, that those Events of Default will be waived or remedied, and that the Majority Creditors would not require repayment if further Events of Default arose within at least 12 months from the date of approval. The standstill agreements mitigate the risk of service failure point breaches, and further settlement agreements are expected to be executed in the coming months. However, none of these outcomes is guaranteed, given that the waiver and confirmation letter has not been executed and the uncertainty that remains around the ongoing project issues.
The Company therefore remains dependent on the Majority Creditors not exercising their rights to demand repayment. In accordance with FRS 102 paragraph 3.9, this dependence 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.
Conclusion
Based on the foregoing, 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.
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 Company to continue as 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.
The Company made a pre-tax profit of £40,000 (2024: £40,000) for the year.
Interest receivable has increased to £31,699,000 (2024: £26,433,000) for the year. Interest is charged to fellow subsidiary, Healthcare Support (Newcastle) Limited, to cover the cost of the loan and bond interest payable, plus a mark-up of 0.5%. As such, the interest receivable by the Company will be directly affected by fluctuations in indexation as the underlying debt is index-linked. There is a compensating increase in interest payable to £31,659,000 (2024: £26,393,000).
At 31 December 2025 the Company had net assets of £672,000 (2024: net assets of £642,000).
Loan interest payable, which is also index-linked, has increased to £24,150,000 (2024: £19,856,000) in the year due to the continuing repayment of the Company's borrowings and due to an increase in indexation. Interest payable on the subordinated loan has increased to £7,509,000 (2024: £6,537,000) due to the impact of compounded interest unpaid from previous years.
During the year the Company has not repaid any of the subordinated debt loan.
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 discussed above the Company’s performance as at 31 December 2025 against this measure was 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 optimised.
ii. 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 regard 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.
(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 minimising 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
The directors present their annual report and financial statements for the year ended 31 December 2025.
The results for the year are set out on page 17.
No ordinary dividends were paid (2024: 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 interest in the issued share capital of the Company.
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Company aims to mitigate this risk by closely monitoring the timing of cash flows within the Company.
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 credit risk is attributable to its receivables with Healthcare Support (Newcastle) Limited from cashflow it receives from its client, the Newcastle Upon Tyne NHS Foundation Trust. In the opinion of the board of directors this risk is limited as the receivables are with Newcastle Upon Tyne Hospitals NHS Foundation Trust and guaranteed by the Department of Health.
The Company has issued a public bond which is subject to indexation in line with RPI. The Company mitigates this RPI risk by having an inter-company loan with Healthcare Support (Newcastle) Limited, a fellow group undertaking, which tracks the movement in RPI in bank financed debt.
The Company has no post reporting date events to report.
Details of future developments and the directors' statement can be found in the strategic report on pages 1 to 5 and form part of this report by cross-reference.
BDO LLP has informed the directors that it intends to resign as auditor of the Company once it has completed its audit of the financial statements for the year ended 31 December 2025. The directors are in the process of selecting a successor auditor. They will appoint one to fill the resulting casual vacancy, in accordance with section 485(3) of the Companies Act 2006.
Disclosure Transparency Rules require Public Listed Entities to have a body which is responsible, as a minimum, for monitoring the financial reporting process, monitoring the internal controls and risk management of the Company and monitoring the statutory audit and the independence of the statutory auditor. The Board considers it adequately performs the equivalent functions, roles and responsibilities that such a body is expected to undertake. The primary duties of the body, which are fulfilled by the Board of Directors are to:
monitor the integrity of the financial statements of the Company and to review significant judgements contained therein;
monitor the level and effectiveness of the internal financial controls;
assess the scope and effectiveness of systems to identify, assess, manage, and monitor financial and non-financial risk;
make recommendations concerning the appointment and terms of engagement of external auditors; and
review and monitor the independence of the statutory auditor and the provision of additional services by the auditor to the Company.
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.
In our opinion the financial statements:
give a true and fair view of the state of the Company’s affairs as at 31 December 2025 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
Material Uncertainty relating to going concern
We draw attention to Note 1.2 to the financial statement, which indicates that the Company is dependent on the Majority Creditors not exercising their rights to demand repayment of the amounts owed due to the events of defaults which is not guaranteed. As stated in Note 1.2, these events or conditions, along with other matters as set forth in Note 1.2, indicate a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that would result if the Company were unable to continue as a going concern. Our opinion is not modified in respect of this matter.
Given the conditions and uncertainties disclosed in Note 1.2, we determined going concern to be a key audit matter.
Our evaluation of the Directors’ assessment of the Company’s ability to continue to adopt the going concern basis of accounting, and in response to the key audit matter included:
We obtained a copy of the Directors’ cashflow forecast for the Company and the fellow subsidiary (as disclosed in Note 1.2),and assessed the reasonableness of the underlying assumptions by agreeing the inputs in the forecast including future lifecycle costs and contractual debt settlements, to externally sourced data, and signed contractual agreements. In addition, we tested the mathematical accuracy of the forecast.
We compared the previous forecasts of the fellow subsidiary to its actual performance to assess the Directors’ accuracy at forecasting.
We inspected the cashflow forecast to check if sufficient cash reserves were maintained to settle obligations, after which headroom exists. The forecast was stress tested, with future lifecycle costs seen as the key assumption. Furthermore, we recalculated the applicable financial covenants to assess if they will be met during the forecast period.
We assessed the reasonableness of the cash flows in the forecast by agreeing the cashflows to supporting documents.
We agreed the Service Failure Points and the resulting implications of the Events of Default to supporting evidence in order to assess how they impact the going concern assessment of the Company.
We reviewed Board of Directors’ minutes, operational reports, and correspondence with the Major Creditors in order to understand the implication of the Events of Default and to assess the Directors’ assessment of the Majority Creditors not exercising their rights.
We assessed the adequacy of the going concern disclosure in the financial statements against the requirements of the applicable standard and also checked if the disclosure gives a complete and accurate description of the Directors’ assessment of going concern and if it is consistent with our understanding obtained from audit procedures performed.
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.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
Key audit matters |
| 2025 | 2024 |
Recoverability of amounts owed by group undertaking | Yes | Yes | |
Going concern | Yes | No* | |
*Going concern was not a key audit matter in the prior year due to the matter described in the basis for disclaimer of opinion section of our auditor’s report for the year ended 31 December 2024.
| |||
Materiality |
Company financial statements as a whole £4.3m (2024: £4.2m) based on 1% of total assets (2024: 1% of total assets).
| ||
An overview of the scope of our audit
Our audit was scoped by obtaining an understanding of the Company and its environment, including the Company’s system of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
In addition to the matter described in the material uncertainty related to going concern section, we have determined the matters described below to be the key audit matters to be communicated in our report.
Key audit matter | How the scope of our audit responded to the risk | |
Recoverability of amounts owed by group undertakings
(Note 1.3 Financial Instruments, and Note 8 Debtors) | The carrying amount of the Company’s amounts owed by group undertakings, held at amortised cost less impairment represents 100% of the Company’s total assets.
The recoverability of amounts due is directly linked to the ability of the counterparty to continue generating cash flows which can be used to repay this balance
The recoverability of the balance is a key audit matter given the magnitude of the balance and judgement involved in assessing the recoverability.
| Our audit work included the following:
Key observations: Based on the work performed, we concluded management’s assessment of the recoverability of the amounts owed by group undertakings to be reasonable.
|
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows:
| Company financial statements | |
| 2025 | 2024 |
Materiality | £4.3m | £4.2m |
Basis for determining materiality | 1% of total assets | 1% of total assets |
Rationale for the benchmark applied | Given the principal activities of the Company our judgement was that the users of the financial statements would be most concerned with the recoverability of the amounts owed by group undertakings. We therefore considered the Company to be asset driven and total assets to be the most appropriate basis for determining materiality. | |
Performance materiality | £3.2m | £3.1m |
Basis for determining performance materiality | 75% of Materiality | 75% of Materiality |
Rationale for the percentage applied to performance materiality | The level of performance materiality applied was set after having considered a number of factors including expected level of likely misstatements based on past experience and managements attitude towards proposed adjustments. | |
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £0.2m (2024: £0.1m). We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.
Other information
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report and Directors’ report
| In our opinion, based on the work undertaken in the course of the audit:
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report or the Directors’ report.
|
Matters on which we are required to report by exception
| 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:
|
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 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, UK listing rules and the Companies Act 2006.
The Company is also subject to laws and regulations where the consequence of non-compliance could have a material effect on the amount or disclosures in the financial statements, for example through the imposition of fines or litigations. We identified such laws and regulations to be the health and safety legislation, Bribery Act and Data Protection Act.
Our procedures in respect of the above 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
Agreement of the financial statement disclosures to underlying supporting documentation.
Irregularities including fraud
We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk assessment procedures included:
Enquiries 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; and
Discussion amongst the engagement team as to how and where fraud might occur in the financial statements.
Based on our risk assessment, we considered the area’s most susceptible to fraud to be management override of controls and management bias regarding the accounting estimates and judgements over the recoverability of amounts owed by group undertakings.
Our procedures in respect of the above included:
Testing journal entries throughout the year 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.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's 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.
In due course, as required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.15R - 4.1.18R, these financial statements will form part of the Electronic Format Annual Financial Report filed on the National Storage Mechanism of the FCA in accordance with DTR 4.1.15R – DTR 4.1.18R. This auditor’s report provides no assurance
The Statement of Comprehensive Income has been prepared on the basis that all operations are continuing operations.
Healthcare Support (Newcastle) Finance Plc is a public company limited by shares incorporated in England and Wales. The registered office is Alder Castle, 10 Noble Street, London, United Kingdom, EC2V 7JX.
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. These consolidated financial statements are available from Companies House.
Going concern (continued)
Parent Company Guarantee
On 15 March 2019 Interserve PLC, the former parent company of the Service Provider, entered administration, invalidating its parent company guarantee (“PCG”) and triggering an Event of Default. Mitie PLC acquired the Service Provider on 1 December 2020, and the replacement PCG from Mitie PLC executed during the year ended 31 December 2024 formally remedied that Event of Default.
Technical Events of Default
The Directors have considered all technical Events of Default, both those unwaived at 31 December 2025 and those arising after that date, as the position at the date of approval is relevant to the going concern assessment. The classification of borrowings in the balance sheet is determined by the position at 31 December 2025 only.
Unwaived at 31 December 2025:
1. Late submission of the September 2025 financial model.
2. Late delivery of the 2024 annual financial statements to the Majority Creditors.
3. Late filing and publication of the 2024 annual financial statements under the Companies Act 2006 and the Disclosure Guidance and Transparency Rules.
4. Entry into Major Repairs contracts, and acceptance of Variation VE754, without the prior consent of the Majority Creditors.
5. Account bank consent and waiver not executed (executed on 11 September 2026).
Arising after 31 December 2025:
6. Late delivery of the 2025 annual financial statements (due 29 June 2026).
7. Late submission of the March 2026 financial model.
8. Entry into further Major Repairs contracts without the prior consent of the Majority Creditors.
9. Expiry on 20 August 2026 of the waiver, granted in connection with SA2, of Events of Default relating to the ratings of the Bonds or the Project (the “Ratings Issues”), which remain unresolved and in respect of which the parties have reserved their rights.
Item 5 was resolved on 11 September 2026. A waiver and confirmation letter in respect of the remaining items has been negotiated with the Majority Creditors but had not been executed at the date of approval of these financial statements. Accordingly, technical Events of Default were continuing at the date of approval. The Directors do not consider that these reflect any deterioration in the underlying financial performance of the Operating SPV, and have received assurances that the Majority Creditors do not intend to exercise their rights in connection with them.
Lender Assurances and Cash Flow Forecasts
The Directors have discussed the current level of service, SA2, the further settlement agreements and the replacement PCG executed in 2024 with the Majority Creditors, who receive regular updates, and have received assurances that the Majority Creditors would not intend to exercise their rights to require immediate repayment if a future Event of Default occurred.
The Directors have prepared cash flow and covenant compliance forecasts for the Company and the Operating SPV covering at least 12 months from the date of approval of these financial statements. Taking account of severe but plausible downside scenarios, these indicate that the Company will have sufficient funds to meet its liabilities as they fall due and that no covenant breaches are forecast. Both the base case and the downside scenarios include estimated cash outflows for the remaining settlement agreements and assume that the Majority Creditors will not accelerate repayment as a result of any future Event of Default arising from the ongoing issues.
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 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.
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 and loans from fellow group companies 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.
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.
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.
The amounts owed by group undertakings are due from Healthcare Support (Newcastle) Limited. The recoverability of amounts due is directly linked to the ability of Healthcare Support (Newcastle) Limited to continue generating cash flows which can be used to repay this balance.
The directors have reviewed long-term forecasts of the performance of Healthcare Support (Newcastle) Limited and consider the amounts recoverable.
The fees payable of £22,000 (2024: £11,000) to the Company's auditor for the audit of the Company's annual accounts is borne by Healthcare Support (Newcastle) Limited, who will not seek reimbursement.
The average monthly number of persons (including directors) employed by the company during the year was: 0 (2024: 0).
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:
Amounts owed by group undertakings are amounts due from a fellow subsidiary, Healthcare Support (Newcastle) Limited, and is largely external debt raised by the Company and lent-on to the group undertaking.
Also, included within amounts owed by group undertakings is £24,337,000 (2024: £24,337,000) of principal borrowing (see note 10) and £40,418,000 (2024: £34,510,000) of accrued interest in respect of the subordinated debt lent-on to fellow subsidiary, Healthcare Support (Newcastle) Limited.
As at 31 December 2025 and at 31 December 2024, there were Events of Default subsisting pursuant to the Company's finance documents and the Company's lenders had not formally waived or deemed remedied those Events of Default (refer to Going Concern note 1.2 for further details). Consequently, the Company's loans, bonds and amounts owed to parent undertaking are classified as due within one year in the balance sheet.
Included within amounts owed to parent undertakings is £24,337,000 (2024: £24,337,000) of principal borrowing (see note 10) and £40,418,000 (2024: £34,510,000) of accrued interest. Amounts due to parent undertakings is subordinate to the bank loans and bonds.
The Company originally had a publicly offered bond held by Royal Bank of Canada for £197.8 million and a loan with European Investment Bank (EIB) of £115 million. 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. In line with this bond, the Company also has the capacity to draw a further £40 million of variations bonds if required, this has not been drawn upon to date. The public bond and loan debt are repayable in instalments based on an agreed percentage amount of the total facilities per annum over the next 16 years and 13 years respectively, subject to the right of the lenders to require immediate repayment should the company incur an Event of Default.
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 by RPI (all items).
In addition, Healthcare Support (Newcastle) Holdings Limited has provided a credit facility of £24,607,000; this was drawn down in March 2010. The 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 (2024: £24,337,000) of principal borrowing and £40,418,000 (2024: £34,510,000) of accrued interest (see note 9). Interest is also accrued on unpaid interest.
The Company has on lent the proceeds of the bond, loan and borrowings from its parent to Healthcare Support (Newcastle) Limited and charges interest to Healthcare Support (Newcastle) Limited at a 0.5% mark-up on the same terms as it is charged by EIB and Bank of New York Mellon.