13/04/2012 08:30
RNS Number : 2451B
Severn River Crossing PLC
13 April 2012
 



13 April 2012

SEVERN RIVER CROSSING PLC

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER, 2011

 

CHAIRMAN'S STATEMENT

 

 

In 2011 traffic travelling westbound over the Severn Bridge and Second Severn Crossing increased by 0.5% to 12,495,001 toll paying vehicles (2010 : 12,428,765).  Car journeys increased by 0.6% (2010 : decrease of 1.2%), Light Goods Vehicles journeys increased by 2.8% (2010 : increase of 1.2%) and Heavy Goods Vehicle journeys decreased by 1.8% (2010 : increase of 0.5%).  With inflation-linked increases in 2011 toll prices and allowance for the increase in the VAT rate from 17.5% to 20% from January 2011, the Company's turnover rose by 2.1% to £77.6 million (2010 : £76.0 million).

 

During 2011 the Company changed its Depreciation estimate from an annuity method to a straight line method for the two bridges.  With higher depreciation charges of £41.7 million (2010 : £36.2 million), and a £1.4 million charge for the credit card payment installation project on both Toll Plazas (2010 : £NIL), the Company reported a loss before tax of £13.7 million (2010 : £7.3 million).   However, with the phased abolition of Industrial Buildings Allowances the Company's tax charge was £4.9 million (2010 : £4.9 million), and the Company recorded a loss after tax of £18.6 million (2010 : £12.2 million).

 

The combination of continuing lower traffic levels, low interest rates on treasury deposits and a higher effective tax rate, due to the abolition of Industrial Buildings Allowances, has affected the Company's forecasts of future cash flows, and has an impact on the redemption of the Company's Debenture Stock in June 2013 (as reported to the London Stock Exchange by press release in December 2009 and July 2011).  Whilst there is an expectation that the Company will be able to arrange a Working Capital Facility, the Company's financing agreements do permit a deferral of part of the redemption of the Debenture Stock.

 

The Company has continued to retain the cash generated by the business in 2011, and will use these cash balances together with retained cash in 2012 and the first half of 2013 to fund the redemption of the Debenture Stock in June 2013.

 

During 2011 the funding position of the Company's Pension Scheme deteriorated.  The FRS valuation at

31 December 2011 confirmed a Net Pension Liability of £2.4 million (2010 : £1.0 million).  The market value of the Scheme Assets improved to £15.5 million (2010 : £15.3 million) and the value of Scheme Liabilities increased to £18.6 million (2010 : £16.7 million).

 

The contracts for toll management and maintenance on both bridges with Cofiroute UK Limited and Laing O'Rourke respectively have both worked well during the year.

 

 

 

 

 

A H MOORE

Chairman

 

 

 

 

DIRECTORS' REPORT

 

The Directors submit their Annual Report and the audited Financial Statements for the year ended

31 December 2011.

 

 

BUSINESS REVIEW AND PRINCIPAL ACTIVITIES

 

The Company was formed to take over the operation and maintenance of the Severn Bridge and finance the outstanding debt and to design, construct, finance, operate and maintain the Second Severn Crossing.

 

Revenue from toll charges is being used to repay the debt finance and both bridges will revert to public ownership once the project's required revenue, as defined in the Concession Agreement with the Secretary of State for Transport, has been collected, subject to a maximum Concession period of 30 years.  A Business Review is included in the Chairman's Statement; this includes the recent movements in traffic levels; however,  the Directors expect continued traffic growth, and hence turnover, in 2012 and subsequent years.

 

FINANCIAL RISK MANAGEMENT

 

The Company's activities expose it to a number of financial risks including inflation, interest rates, traffic/revenue and maintenance repair costs.  The Company has sought to mitigate these risks by:

 

(i)            Index-linking toll revenues, two of the debt instruments, and its two main subcontracts for maintenance and tolling management;

 

(ii)           Debt management and reviewing suitable treasury products for cash on deposit (the Company uses the main United Kingdom listed banks for its treasury deposits);

 

(iii)          Keeping traffic levels and projections under review; and

 

(iv)          A proactive programme of inspections and maintenance repairs on both bridges.

 

 

The Company has a combination of fixed rate and floating rate borrowings as set out in Note 10.

 

Tolls are collected from drivers as they cross the bridges or on a prepayment basis through an electronic tolling system.  This removes credit risk from the Company's revenues.

 

The Company has developed a Risk Control Matrix which is regularly reviewed by the Board.

 

 

RESULTS AND DIVIDENDS

 

The Company's 2011  turnover increased by 2.1% to £77.6  million (2010 : £76.0  million) and the Company reported a loss after tax of £18.6 million  (2010 : loss £12.3 million).  No dividends are proposed (2010 : £nil).

 

 

DIRECTORS

 

The Directors (all non-Executive) who served during the year were:

 

Directors

Alternates



A H Moore (Chairman)


P R Armstrong


A Battersby (appointed 29 March 2011)

K L Pearson (appointed 29 March 2011)

D W Bowler

L R Burgard

M Mercer-Deadman


N W Middleton

M Reicherter (resigned 30 September 2011)


J Cavill (appointed 30 December 2011)

K Gidwani (resigned 29 March 2011)

K L Pearson (resigned 29 March 2011)

O Mathieu

P-L Delseny

 

 

A H Moore is an  independent Director appointed by the Board.

 

 

DIRECTORS' INTERESTS

 

The Directors and Alternate Directors had no interest in any shares or debt of the Company at any time during the year.

 

M Mercer-Deadman and P Armstrong are Operations Directors of John Laing Investments Limited. 

 

O Mathieu is Chief Financial and Asset Management Officer of Vinci Concessions S.A.S..  D Bowler is a Director of Vinci PLC.  The ultimate parent company of Vinci PLC is Vinci S.A., a company incorporated in France.  L R Burgard is Chief Executive Officer of Vinci Concessions S.A.S..    P-L Delseny is Portfolio Manager (Concessions and Operations) of Vinci Concessions S.A.S., a fully owned subsidiary of Vinci S.A..

 

A Battersby and K L Pearson are Directors of and Shareholders in Bank of America Merrill Lynch.  N W Middleton and 

J Cavill are employed in activities undertaken by Barclays Infrastructure Funds Management Limited, a business wholly owned by Barclays plc.  Barclays Capital,  the investment banking arm of Barclays Plc, and Bank of America arranged respectively the Debenture Stock and the original Senior Facility for the project.

 

John Laing plc, Vinci Concessions S.A.S., Barclays plc and Bank of America between them own, through subsidiary companies, 100% of the issued ordinary share capital of the Company.

 

The Company has appointed Cofiroute (UK) Limited, a subsidiary of Vinci Concessions S.A.S., as its tolling contractor.

 

 

SUBSTANTIAL SHAREHOLDINGS

 

At 31 December 2011 Prudential Trustee Company Limited was beneficially interested in 50,000 ordinary shares (100%) of the issued ordinary share capital of the Company, and Prudential Assurance Company Limited has a charge over the Company's Ordinary Shares.

 

SUPPLIER PAYMENT POLICY

 

The Company's policy is to settle terms of payment with suppliers when agreeing the terms of each transaction, ensure that suppliers are made aware of the terms of payment and abide by them.  Included within the Creditors falling due within one year are Trade Creditors of £836,000 (2010 : £726,000).  Trade creditor days for 2011 was 52 days (2010 : 41 days).

 

 

AUDITOR

 

 

Each of the persons who is a director at the date of approval of this report confirms that:

 

       as far as the director is aware, there is no relevant audit information of which the Company's auditor is unaware; and

 

∙       the director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the Company's auditor is aware of that information.

 

This confirmation is given and should be interpreted in accordance with the provisions of S418 of the Companies Act 2006.

 

A resolution to reappoint Deloitte LLP as the Company's auditor will be proposed at the forthcoming Annual General Meeting.

 

 

 

 

ON BEHALF OF THE BOARD

 

 

 

 

……………………………………

J A RAWLE

COMPANY SECRETARY

 

Bridge Access Road

AUST

South Gloucestershire 

BS35 4BD

 

28 March 2012

 

 

 

 

 

 

 

CORPORATE GOVERNANCE

 

Chairman's Introduction

 

Severn River Crossing recognises the importance of good Corporate Governance.  Although not required to, as companies with only listed debt fall outside the scope of the June 2010 FRC UK Corporate Governance Code ('the Code'), the Board is committed to the principals of good Corporate Governance and voluntarily follows the Code to the fullest extent possible.  Given the structure of the Company, it is not possible to comply with all aspects of the Code; though we make every effort to comply where possible.  I am pleased with the Company's commitment to good Corporate Governance.

 

1.             Statement of Compliance with the Code

               

                Throughout the year ended 31 December 2011 the Company has been in compliance with the Code provisions set out in Section 1 of the June 2010 FRC UK Corporate Governance Code except for the following matters:

 

·      Provision A1.2/B1.2 - As set out below and in the Directors' Report (pages 2 to 4) six of the non-executive Directors are not independent in that they have relationships and business interests with the Company, and consequently there is no senior independent Director.  The Company believes that the non-executive Directors make a valuable contribution and the present composition of the Board is appropriate to its needs.

 

·      Provision B2.1/B2.2/B2.3/B2.4/B3.2/B7.1- Given the composition of the Board, non-executive Directors are not appointed nor re-elected by the Company for specific terms.  They are not selected through a formal process nor is their appointment considered by the Board as a whole.  The power to appoint Directors lies with the shareholders, who may act independently of each other in making their appointments, as set forth in the Memorandum and Articles of Association of the Company.  The holders of each class of Ordinary Shares determine the term of office of their appointed Directors.  As a result there is no Nomination Committee.

 

·      Provision B4.1/B6.1/B6.3 - As the members of the Board (apart from the Chairman) are appointed by shareholder companies no formal training has been provided to the Board by the Company and no formal evaluation of the performance of the Board has been carried out by the Company during the year.

 

·      Provision D2.1 - Since the Directors do not act in an executive capacity and since they, other than the Chairman, receive no remuneration from the Company, no Remuneration Committee is considered necessary. The Chairman's  remuneration is set by the Board.

 

·      Provision D2.2 - The Company has not included a Directors' Remuneration Report because it has taken advantage of the exemption under the Directors' Remuneration Report Regulations 2002, which states that Companies with only listed Debt do not fall within the scope of these Regulations.

 

·      Provision C3.1- Due to the nature of the appointment of the non-executive Directors, as discussed above, the Audit Committee does not consist of a majority of independent, non-executive Directors.

 

2.             Statement About Application of the Principles of Good Governance

 

The Board currently comprises seven non-executive Directors.  One of these is independent, A H Moore, who as Chairman is responsible for the leadership and effective operation of the Board.   The other six non-executive Directors comprise two representatives from each of John Laing plc and Vinci and one from each of BankAmerica International Financial Corporation and Barclays plc, who directly or through subsidiaries, are sole equity shareholders of the Company.

 

The Company has a General Manager and a Deputy General Manager who as Executive Management attend Board Meetings and report to the Board.

 

The Board met four times in 2011.  It receives Board Papers one week in advance of meetings.

 

The Chairman, together with a Director or Alternate Director from each shareholder, attended all of the Board Meetings during 2011.

                Monthly reports comprising Operational Summaries and Monthly Management Accounts are circulated to all 
                Directors by Executive Management.

                The Company ensures effective reporting to investors and shareholders by providing Annual and Interim Financial 
                Statements, Six Monthly Cash Flows and Traffic Reports.

 

            3.             Internal Control System

 

               The Board has applied Principle C.2 of the Code by establishing a process for identifying, evaluating and managing the
               significant risks the Company faces.    The Board regularly reviews the process, which has been in place from the start 
               of the year  
to the date of approval of this Report and which is in accordance with Internal Control : Revised 
               Guidance for Directors on the Combined Code published in October 2005, issued by the Turnbull Committee. The 
               Board is responsible for the Company's System of Internal Control and for reviewing its effectiveness.  Such a 
               System is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only 
               provide reasonable and not absolute assurance against material misstatement or loss.

 

               In compliance with Provision C2.1 of the Code, the Board reviews the effectiveness of the Company's System 
               of Internal Control.  The Board's monitoring covers all controls, including Financial, Operational and Compliance 
               Controls and Risk Management.  It is based principally on reviewing Reports from Management to consider whether 
               significant risks are identified, evaluated, managed and controlled and whether any significant weaknesses are 
               promptly remedied and indicate a need for more extensive monitoring.

 

               The Audit Committee assists the Board in discharging its review responsibilities through direct liaison with the 
               Company's external and internal auditors.  It reviews the plan, work and reporting of the Internal Audit function.  
               It also oversees the external audit process and has primary responsibility for making a recommendation on the 
               appointment, reappointment and removal of the external auditor.  There are no contractual obligations that restrict 
               the Audit Committee's capacity to recommend a particular firm for appointment.  The Committee has determined that 
               providing the work of the external auditor  remains entirely satisfactory, formal consideration of a tender process 
               is at the Committee's discretion.  The current external auditor was appointed to the role on 1 August 2002.  The 
               lead audit engagement partner is rotated every five years with the next rotation due for the year ended 31 December 
               2012.  The Company has a policy of permitting the external auditor to provide other services to the Company on the 
               provision that this does not impair their independence.  The Committee reviews the independence of the external 
               auditor through monitoring the level and nature of non-audit services.  The fees paid to the external auditor are 
               disclosed in Note 3 to the Financial Statements.  The Committee also considers the Company's financial statements.  
               Formal terms of reference are available on request.

 

               During the year A H Moore, D W Bowler, M Mercer-Deadman, A Battersby and N W Middleton (who is 
               a Chartered Accountant) served on the Audit Committee which met once and was fully attended.

 

               The key features of the Internal Financial Control System that operated throughout the period covered by the 
               Financial Statements are described under the following headings :

 

               ·          Control Environment             

 

                           The Board has put in place a documented Organisational Structure with clearly defined and understood 
               lines of responsibility and delegation of authority from the Board to Executive Management.  There 
               are established Policies and Procedures, which are subject to regular review.  This includes the 
               Company's Health & Safety Policies.

 

               ·          Identification and Evaluation of Business Risks and Control Objectives

                 

                           The Board has the primary responsibility for identifying the major business risks facing the Company and 
               developing appropriate policies to manage those risks.  The Risk Management approach is used to focus 
               the work of the Internal Audit Function on the Company's most significant areas of risk and to determine 
               key control objectives.

 

                ·          Information Systems

 

                            The Company prepares an Annual Budget which is approved by the Board.  There is a Financial Reporting 
                System which compares results with budget on a monthly basis to explain any significant variance.  
                Cash flow projections are prepared every six months and these are used to ensure that the Company 
                has adequate funding for its future needs.

 

·      Main Control Procedures

 

                        The Board has set up Committees, comprising Directors and Executive Management, to review the Company's main areas of activity.  The Board and these Committees meet to consider Strategic, Financial, Organisational and Compliance Issues and make recommendations for Board approval.

 

·      Monitoring

 

The Board has delegated to Executive Management implementation of the System of Internal Financial Control.  The operation of the System is monitored by an outsourced Internal Audit Function which carries out a programme of cyclical reviews focusing on key aspects of the business.  The Internal Audit Function, together with the Company's Auditor  report to the Audit Committee.

 

The Board has reviewed the operation and effectiveness of this System of Internal Financial Control.  No weaknesses in this System have led to any material losses or contingencies during the last year or the period from the balance sheet date to the date of this Report.

 

4.             Going Concern Basis

 

The Company's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman's Statement and Directors' Report on Pages 1 to 4.  The Company has a Concession from the Secretary of State for Transport which includes the right to collect tolls from drivers who cross the Severn Bridge and Second Severn Crossing.  This has been, and remains, a business which generates cash to service and repay the Company's debts as they fall due, as well as meets its running costs.  No debts fall due for repayment in the next 12 months, however, as acknowledged in the Chairman's Statement a Short Term Working Capital facility may be required in 2013 to cover the redemption of the Company's Debenture Stock.

 

Whilst there is an expectation that the Company will be able to arrange a Working Capital Facility, the Company's financing agreements do permit a deferral of part of the redemption of the Debenture Stock.

 

After making enquiries, the Directors have concluded that the Company has adequate resources to continue in operational existence for at least 12 months from the date of approval of these accounts.  Accordingly, they continue to adopt the going concern basis in preparing the annual report and accounts.

 

 

5.             Directors' Responsibilities Statement

 

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year.  Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law).  Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period.  In preparing these financial statements, the directors are required to:

 

      select suitable accounting policies and then apply them consistently;

      make judgements and accounting estimates that are reasonable and prudent;

      state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

      prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006.  They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

                ON BEHALF OF THE BOARD

               

                N W MIDDLETON                                                             

                DIRECTOR                                                                                                 

                28 March 2012                                                   

 

 

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF

 

SEVERN RIVER CROSSING PLC

 

 

 

We have audited the financial statements of Severn River Crossing Plc for the year ended 31 December 2011 which comprise the Profit and Loss Account, the Balance Sheet, the Cash Flow Statement, the Statement of Total Recognised Gains and Losses and the related notes 1 to 18.  The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

 

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.

 

Respective responsibilities of directors and auditor

 

As explained more fully in the Directors' Responsibilities Statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view.  Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland).  Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

 

 

Scope of the audit of the financial statements

 

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error.  This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements.  If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

 

Opinion on financial statements

 

In our opinion the financial statements:

·      give a true and fair view of the state of the company's affairs as at 31 December 2011 and of its loss 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.

 

 

Opinion on other matters prescribed by the Companies Act 2006

 

In our opinion the information given in the Directors' Report and the Chairman's Statement for the financial year for which the financial statements are prepared is consistent with the financial statements.

 

Matters on which we are required to report by exception

 

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

 

·      adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

·      the financial statements are not in agreement with the accounting records and returns; or

·      certain disclosures of directors' remuneration specified by law are not made; or

·      we have not received all the information and explanations we require for our audit.

 

Although not required to do so, the directors have voluntarily chosen to make a Corporate Governance Statement detailing the extent of their compliance with the June 2010 FRC UK Corporate Governance Code. We reviewed:

 

·      the directors' statement contained within the Corporate Governance Statement in relation to going concern; and

·      the part of the Corporate Governance Statement relating to the Company's compliance with the provisions of the June 2010 FRC UK Corporate Governance Code specified for our review.

 

 

 

Nigel Thomas (Senior statutory auditor)

for and on behalf of Deloitte LLP

Chartered Accountants and Statutory Auditor

Bristol, United Kingdom

 

28 March 2012

 

 

 

 

PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED 31 DECEMBER 2011

 


NOTE

2011

£000

2010

£000


 



Turnover

1(c)

77,623

76,003

Cost of Sales

 

(54,756)

(46,836)


 



Gross Profit

 

22,867

29,167

Administrative Expenses

 

(478)

(384)

Other Operating Income (Net)

2

    1,513

       894


 



Operating Profit

3

23,902

29,677

Finance Charges (Net)

5

(37,592)

(36,984)


 



Loss on Ordinary Activities before Taxation

 

(13,690)

(7,307)


 



Tax Charge on Loss on Ordinary Activities

6

(4,946)

(4,948)


 



Loss for the Financial Year


 (18,636)

=======

 (12,255)

=======

 

 

 

The accompanying notes form an integral part of this Profit and Loss Account.  All operations of the Company continued throughout both years and no operations were acquired or discontinued.

 

 

STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

FOR THE YEAR ENDED 31 DECEMBER 2011

 


 

2011

£000

2010

£000


 



Loss for the Financial Year

 

(18,636)

(12,255)


 



Actuarial (Loss)/Gain

 

(1,878)

2,789


 



Associated Deferred Tax

 

           409  

       (739) 


 



Total Recognised Losses Related to the Year

 

(20,105)

=======

(10,205)

=======

 

 

BALANCE SHEET AS AT 31 DECEMBER 2011

 

 


NOTE

2011

£000

2010

£000


 



FIXED ASSETS

7

248,929

290,070


 



CURRENT ASSETS

 




 



Debtors due within one year

8

1,026

1,458

Investments - Short-Term Deposits

 

108,383

57,145

Cash at Bank and in Hand

 

  30,980

35,069


 

140,389

93,672


 



CREDITORS

 



Amounts falling due within one year

9

(13,097)

(12,277)


 



NET CURRENT ASSETS

 

127,292

  81,395


 



TOTAL ASSETS LESS CURRENT LIABILITIES

 

376,221

371,465


 



CREDITORS

 



Amounts falling due after more than one year

10

(389,294)

(363,430)


 



PROVISION FOR DEFERRED TAX

11

     (9,060)

   (11,402)


 



 

NET LIABILITIES BEFORE PENSION LIABILITY

 

 

(22,133)

 

    (3,367)


 



NET PENSION LIABILITY

12

   (2,361)

(1,022)

 

 



NET LIABILITIES

 

(24,494)

=======

(4,389)

=====

CAPITAL AND RESERVES

 



Ordinary Share Capital

13

13

13

Share Premium Account

14

319

637

Capital Redemption Reserve

14

26

26

Profit and Loss Account

14

 (24,852)

 (5,065)


 



SHAREHOLDERS' DEFICIT

14

(24,494)

 =======

(4,389)

 =====


 



The financial statements of Severn River Crossing Plc, registered number 02379695, on pages 1 to 32 were approved by the Board of Directors and authorised for issue on 28 March 2012.

 

 

Signed on behalf of the Board of Directors

 

 

 

N W MIDDLETON                                                              M MERCER-DEADMAN

DIRECTOR                                                                          DIRECTOR




The accompanying notes form an integral part of this Balance Sheet.

 

 

CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2011

 

 


NOTE

2011

£000

2010

£000


 



NET CASH INFLOW

FROM OPERATING ACTIVITIES

 

15

 

66,970

 

65,049


 



RETURNS ON INVESTMENT AND

SERVICING OF FINANCE

 




 



Interest Received

                                        1,352                          418

Interest Paid

                                     (13,532)                  (12,855)


 



NET CASH OUTFLOW FROM RETURNS

ON INVESTMENT AND SERVICING OF FINANCE

 

 

(12,180)

 

(12,437)


 



TAXATION PAID

 

(7,116)

(8,642)


 



CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT

 



Purchase of Tangible Fixed Assets

 

(525)

(239)

Proceeds on Sale of Tangible Fixed Assets

 

      -

4  


 



CASH INFLOW BEFORE MANAGEMENT OF LIQUID

RESOURCES AND FINANCING

 

  _____

47,149

_____

43,735


 



MANAGEMENT OF LIQUID RESOURCES

 



Increase in Cash on Short-Term Deposit

16

(51,238)

(19,406)


 




 



(DECREASE)/INCREASE IN CASH IN THE YEAR

16

(4,089)

======

24,329

======


 




 




 




 




 




 




 



The accompanying notes form an integral part of this Cash Flow Statement


 

 


 

 

 

 

NOTES TO THE ACCOUNTS

 

 

1.             ACCOUNTING POLICIES

 

The Principal Accounting Policies, all of which have been applied consistently throughout the current period and previous period, are set out below.

 

(a)            Basis of Accounting

 

The accounts have been prepared on a Going Concern basis in accordance with applicable United Kingdom accounting standards and under the historical cost convention.

 

(b)           Going Concern

 

The company's business activities, together with the factors likely to affect its future development, performance and position are set out in the Directors' Report on pages 2 to 4.  The financial position of the company, its cash flows, liquidity position and borrowing facilities are described in the Chairman's Statement on page 1, and in the Corporate Governance Statement on page 7.

 

(c)            Turnover

 

                Turnover represents revenue received from tolls net of VAT.  All turnover, operating results and net assets have derived from operations within the United Kingdom.  Revenue is recognised when vehicles cross one of the two Severn Crossings.

 

                                (d)           Taxation

 

Current tax is provided at amounts expected to be paid (or recovered) using the tax rates and Laws that have been enacted or substantively enacted by the balance sheet date.

 

Deferred tax is recognised in respect of all temporary timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. Timing differences are differences between the Company's taxable profits and its results as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised in the financial statements.

 

A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.

 

Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax is measured on a discounted basis to reflect the time value of money over the period between the balance sheet date and the dates on which it is estimated that the underlying timing differences will reverse. The discount rates used reflect the post-tax yields to maturity that can be obtained on Government Bonds with similar maturity dates and currencies to those of the deferred tax assets or liabilities.

 

 

                (e)           Tangible Fixed Assets

                               

                                Tangible fixed assets are shown at original historical cost less depreciation and any provision for impairment.

 

                                Depreciation is provided at rates calculated to write off the cost of the fixed assets on a straight-line basis over their expected useful life, as follows :

 

Bridges

-

straight line over remaining length of Concession

Leasehold improvements

-

over the term of the lease

Office, furniture, fittings and toll equipment

-

over 1 to 8 years

 

 

In previous years the depreciation on the Severn Bridges was calculated on an annuity basis.  The change  to a straight line basis has resulted in an increase of £2.4 million in the depreciation charge for the current year.

 

                (f)            Capitalised Interest

 

Interest payable which relates to funds borrowed for the design and construction of the Second Severn Crossing has been capitalised in the Balance Sheet as part of the cost of the Bridges.

 

                (g)           Pension Arrangements

 

The Company has made pension arrangements for  substantially all of its employees through a funded defined benefit Pension Scheme set up in April 1992.  The assets of the Severn River Crossing Plc Pension Fund are held independently from the Company in a fund administered by Trustees.

 

For defined benefit schemes the amounts charged to operating profit are the current service costs and gains and losses on settlements and curtailments.  They are included as part of staff costs.  Past service costs are recognised immediately in the profit and loss account if the benefits have vested.  If the benefits have not vested immediately, the costs are recognised over the period until vesting occurs.  The interest cost and the expected return on assets are shown as a net amount of other finance costs or credits adjacent to interest.  Actuarial gains and losses are recognised immediately in the statement of total recognised gains and losses.

 

Defined benefit schemes are funded, with the assets of the scheme held separately from those of the Company, in separate trustee administered funds.  Pension scheme assets are measured at fair value and liabilities are measured on an actuarial basis using the projected unit method and discounted at a rate equivalent to the current rate on a high quality corporate bond of equivalent currency and term to the scheme liabilities.  The actuarial valuations are obtained at least triennially and are updated at each balance sheet date.  The resulting defined benefit asset or liability, net of the related deferred tax, is presented separately after other net assets on the face of the balance sheet.

 

                (h)           Debt

 

Capital Instruments are initially stated in the Balance Sheet at the fair value of the consideration received on their issue.

 

Finance costs are charged to the Profit and Loss Account so as to allocate the finance cost over the term of the capital instruments at a constant rate on their carrying amount.

 

                (i)            Foreign Currency

 

Transactions denominated in foreign currencies are translated into sterling at the rates ruling at the dates of the transactions.  Monetary assets and liabilities denominated in foreign currencies at the Balance Sheet date are translated at the rates ruling at that date.  These translation differences are dealt with in the Profit and Loss Account.

 

                (j)            Financial Instruments

 

Financial assets and financial liabilities are recognised on the company's balance sheet when the company becomes a party to the contractual provisions of the instrument.

 

                                -   Cash

 

Cash comprises cash on hand and demand deposits that are readily converted to a known amount of cash and are subject to insignificant risk of changes in value.  The carrying amount of these assets approximates their fair value.         

 

                                -   Investments

 

Investments comprise short-term monetary deposits that are convertible to a known amount of cash and are subject to insignificant risks of changes in values.  The carrying amount of these assets approximates their fair value.

 

                                -   Other Receivables

 

Other receivables comprise amounts due in respect of other operating income and accrued interest on investments.  The receivables are stated net of allowance for doubtful debts.  No interest is charged on these receivables.  The carrying value of these assets approximates to their fair value.

 

                                -   Impairment of Financial Assets

 

Other receivables are assessed for impairment on an individual basis.  Objective evidence of impairment includes the Company's past experience of collecting payments.  There is currently no impairment of any financial asset.

 

Financial Liabilities and Equity

 

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangement 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.

 

-             Index-Linked Debt

 

 Index-Linked Debt (Debenture Stock and Government Subordinated Loan) are recorded at the proceeds received, net of direct issue costs.  Finance charges, including interest and indexation charges, are accounted for on an accruals basis in the Profit and Loss account and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

 

-          Trade Payables

 

           Trade payables are initially measured at fair value, and are subsequently measured at amortised cost.

 

                (k)           Equity Instruments

 

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

 

                                   

 

 

2.             OTHER OPERATING INCOME (NET)

 




2011

£000

2010

£000


Income receivable from Highways Agency for Maintenance Works

990

4,518


Subcontractor Costs


(521)

(3,964)


Net Income


469

554)


Other Income


1,044

340




1,513

=====

894

=====

 

 

3.

OPERATING PROFIT










Operating Profit is stated after charging/(crediting):







2011

£000

2010

£000


Auditor's Remuneration    - auditing of accounts of the company pursuant to  legislation

- other assurance services - cashflow forecast reviews

- Tax compliance services - corporate tax returns

- Tax advisory services

 

24

 

6

10

10

 

23

 

6

10

29


Depreciation of Tangible Fixed Assets


41,699

36,180


Profit on Disposal of Tangible Fixed Assets


-

(3)


Foreign Exchange Gains


(21)

(18)


Credit Card Facility Installation Costs


1,428

-






4.

STAFF COSTS










The average monthly number of persons, including Directors, employed during the year was :

 




2011

NUMBER

2010

NUMBER


Tolling Operations


89

86


Maintenance Operations


66

63


Administration


  30

  30




185

===

179

===







Their aggregate remuneration comprised :







2011

£000

2010

£000


Wages and Salaries


4,827

4,553


Social Security Costs


392

360


Pension Costs


   667

   629




5,886

=====

5,542

=====





Directors' remuneration paid during the year was as follows :






2011

£000

2010

£000


Chairman and Highest Paid Director


50

==

60

==







No other Director received any remuneration for their services in the current or prior year.




Shareholders' Companies have been paid for the services of their Directors during the year as follows :

 




2011

£000

2010

£000


John Laing Investments Limited


61

66


Vinci Concessions S.A.S.


62

70


BankAmerica International Financial Corporation


31

33


Barclays plc


  32

  34




186

===

203

===

 

5.

FINANCE CHARGES (NET)










INVESTMENT INCOME










Investment Income represents interest received on short-term deposits with

Banks and Building Societies as follows:









2011

£000

2010

£000


Interest Receivable and Similar Income


1,821

====

703

===












INTEREST PAYABLE AND SIMILAR CHARGES










On Bank Loans and Overdrafts

repayable within five years not by instalments


 

458

 

395


Interest on Pension Scheme Liabilities


9

187







On all other Loans :





  Interest


22,727

21,305


  Indexation


16,219

15,800


 

Total Interest Payable


 

39,413

 

37,687


 

Finance Charges (Net)


 

37,592

======

 

36,984

======

 

 

Indexation costs on the Debenture Stock and Government Subordinated Loan are calculated by reference to movements in the 'All Items Retail Price Index'. 

 

In 2011 the percentage increase was 5.2% (2010 : increase 5.3%).  If the increase had been 2.5% then the indexation costs would have been £7,830,000.   With a 7.5% increase, the indexation costs would have been £23,350,000.

 

In 2010 if the increase had been 2.5% then the indexation costs would have been £7,410,500.   With a 7.5% increase, the indexation costs would have been £22,231,500.

 

 

6.

TAX CHARGE ON (LOSS)/PROFIT ON ORDINARY ACTIVITIES










2011

£000

2010

£000


The Tax Charge comprises :










Current Tax :





UK Corporation Tax


7,288

6,714


Adjustment in Respect of Prior Years


          -

   (28)


                          Total Current Tax


7,288

6,686







Deferred Tax :





Origination and Reversal of Timing Differences


(1,954)

(1,538)


Effect of Change in Tax Rate


(769)

(441)


Adjustment in Respect of Prior Year


-

1


Movement in Discount


381

240




_____

_____


                           Total Deferred Tax


(2,342)

(1,738)







Tax on Loss on Ordinary Activities


4,946

=====

4,948

=====







Factors Affecting Tax Charge for the Current Period

The tax charge for the period differs from the weighted average standard rate of corporation tax in the UK of 26.5% (2010: 28%).  The differences are explained below:









2011

£000

2010

£000







Loss on Ordinary Activities before Tax


(13,690)

(7,307)







Tax at 26.5% (2010: 28%) thereon


(3,628)

(2,046)


Expenses not Deductible for Tax Purposes


8,998

7,165


Depreciation in Excess of Capital Allowances


1,954

1,539


Movement in Short-Term Timing Differences


(36)

       56


 

Current Tax Charge for the Year


 

7,288

=====

 

6,714

=====




 

Factors that may affect Future Tax Charge

 

Following the abolition of Industrial Building Allowances, the related deferred tax liability was released in 2007 in line with Financial Reporting Standard 19 paragraph 9.  In the current and future years, depreciation in excess of Industrial Buildings Allowances has been and will be included as a permanent difference in the tax reconciliation and will act to significantly increase the company's effective tax rate.




The Finance Bill 2011 reduced the corporation tax rate from 28% to 26% with effect from April 2011 and to 25% from 1 April 2012 and therefore 25% has been used to calculate the position on Deferred Tax at 31 December 2011 (2010 : 27%).




The directors are not aware of any other factors that will materially affect the future tax charge.

 

 

7.

TANGIBLE FIXED ASSETS












 

 

SECOND

SEVERN

CROSSING

 

 

 

SEVERN

BRIDGE

 

LEASE-

HOLD

IMPROVE-MENTS

OFFICE

FURNITURE

FITTINGS

AND TOLL

EQUIPMENT

 

 

 

 

TOTAL





 

 


£000

£000

£000

£000

£000





 

 

Cost




 

 





 

 

At 1 January 2011

464,001

124,214

514

3,315

592,044

Additions

            -

            -

     -

558

558

Disposals

            -

            -

            -

            -

            -  

 

At 31 December 2011

 

464,001

 

124,214

 

514

 

3,873

 

592,602





 

 





 

 

Depreciation




 

 





 

 

At 1 January 2011

234,610

65,270

427

1,667

301,974

Charge for Year

   32,770

8,420

20

489

41,699

Disposals

            -

           -

           -

        -

            -

 

At 31 December 2011

 

267,380

 

73,690

 

447

 

2,156

 

343,673





 

 





 

 

Net Book Value




 

 





 

 

At 31 December 2011

 

196,621

=======

50,524

 ======

67

===

1,717

=====

248,929

=======

At 31 December 2010

229,391

=======

58,944

======

87

===

1,648

=====

290,070

=======





 

 





 

 

The cost of the Second Severn Crossing includes £387.4 million (2010 : £387.4 million) in respect of the

Construction Contract for the Second Crossing with the John Laing Construction Limited / GTM-Europe

Joint Venture and £76.6 million (2010 : £76.6 million) in respect of capitalised interest.

 

At the end of 2011 the Company was committed to further spending of £0.1 million on toll equipment during 2012

(2010: £0.3 million).

 

 

8.

DEBTORS












2011

£000

2010

£000


Amounts falling due within One Year :





Other Debtors


788

1,194


Prepayments


   238

   264




1,026

=====

1,458

=====







Other Debtors










No interest is charged on the debtors.  The Directors consider that the carrying amount of the other debtors approximates their fair value.




Credit Risk




The Company's principal financial assets are bank balances and cash and other debtors.  The Company's credit risk is primarily attributed to its other debtors, net of any provision for doubtful debts.  The majority of the other debtors balance is accrued interest on treasury deposits.




There is no provision for doubtful debts in the current or prior year.  There are no past due but not impaired debtors.
















9.

CREDITORS - AMOUNTS FALLING DUE WITHIN ONE YEAR














2011

£000

2010

£000







Amounts Owed to Related Undertakings (Note 17)


362

366


UK Corporation Tax


3,716

3,544


Other Creditors :





                VAT


1,160

772


                Social Security and PAYE


117

112


Trade Creditors


836

726


Accruals and Deferred Income


  6,906

  6,757




13,097

======

12,277

======







Trade creditors principally comprise amounts outstanding for trade purchases and ongoing costs.  The average credit period taken for trade creditors is 52 days  (2010 : 41 days).




The Directors consider that the carrying amount of trade payables approximates to their fair value.

 

 

10.

CREDITORS - AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR


 









2011

£000

2010

£000


Due Between One to Two Years :










6.125% Index-Linked Debenture Stock 2013


  222,544

           -




  222,544

=======

           -

======







Due Between Two and Five Years :










6.125% Index-Linked Debenture Stock 2013


            -

211,198




-

======

211,198

=======







Due After More Than Five Years :















6% Index-Linked Government Subordinated





Loan Repayable 2017


104,877

99,687


Accumulated Interest


  61,873

   52,545




166,750

=======

152,232

=======




389,294

=======

363,430

=======



















The Debenture Stock and Government Loan are secured by second and third floating charges on the

assets of the Company and second and third legal mortgages over the Ordinary Share Capital respectively.



 

 

11.

PROVISION FOR DEFERRED TAX


 


Movement on Deferred Taxation Balance in the Year :









2011

£000

2010

£000







At beginning of year


11,402

13,140


Credit to profit and loss account


(2,342)

(1,738) 


 

At end of year


 

9,060

=====

 

11,402

======












Deferred Tax is Provided as Follows :












2011

£000

2010

£000







Accelerated Capital Allowances


1,076

1,689


Capitalised Interest


8,112

10,222


Short-Term Timing Differences


         -

         -  


 

Undiscounted Provision for Deferred Tax


 

9,188

 

11,911


Discount


 (128)

    (509)


 

Discounted Provision for Deferred Tax


 

9,060

=====

 

11,402

======







 

The discount rates used to discount the Deferred Tax Liability reflect the post tax yields to maturity on Government Bonds with similar maturity dates.  These rates were from 0.4% to 1.3% in 2011 (2010 : 0.8% to 2.6%).

 

 

12

NET PENSION LIABILITY




 






 


Composition of the Scheme




 






 


The Company operates a pension fund for the majority of its employees, providing benefits based on final pensionable pay.  A full actuarial valuation was carried out at 1 April 2010 and updated to 31 December 2011 by a qualified independent actuary, using revised assumptions that are consistent with the requirements of FRS17.  Liabilities and service costs have been calculated using the Projected Unit Credit Actuarial cost method.

 



 


The major assumptions used by the actuary were (in nominal terms):

 

 



At year end

31/12/2011

At year end 31/12/2010

At year end 31/12/2009

At year end 31/12/2008

At year end 31/12/2007

 


Rate of increase in salaries*

1%/3.6%

1%/4%

4.55%

3.75%

4.15%

 


Rate of increase in pensions in payment

3.10%

3.50%

3.80%

3.00%

3.40%

 


Rate of increase of pensions in deferment

2.4%

3.00%

3.80%

3.00%

3.40%

 


Discount Rate

4.7%

5.30%

5.70%

5.60%

5.50%

 


RPI Price Inflation

3.1%

3.50%

3.80%

3.00%

3.40%

 


CPI Price Inflation

2.4%

3.0%

N/A

N/A

N/A

 



 


Salary increases assumed at 1% for the next year and RPI plus 0.5% thereafter.

 



 


Weighted average life expectancy for mortality tables used to determine benefit obligations at:

 



 



31 December 2011

31 December 2010

 



Male

Female

Male

Female

 


Member age 65 (current life expectancy)

21.0

23.8

21.0

23.8

 


Member age 45 (life expectancy at age 65)

22.9

25.7

22.9

25.7

 



 


The Company contributed 20% of members' pensionable salaries to the Fund in the period to April 2011 and then contributed 22% of members pensionable salaries from 1 May 2011 to 31 December 2011. 

 



 


The assets in the Fund, the present value of the liabilities in the Fund and the expected rates of return (*) at the balance sheet date were:

 



At year end

31/12/2011

At year end 31/12/2010

At year end 31/12/2009

At year end 31/12/2008

At year end 31/12/2007
















£000


£000


£000


£000


£000


Equities

6.1%

9,456

6.2%

10,499

6.5%

9,404

5.9%

7,255

6.50%

11,352


Bonds

4.6%

5,934

4.5%

4,749

4.9%

4,142

4.7%

3,608

4.90%

2,994


Cash

3.1%

       75

4.2%

        56

4.5%

         41

0%

           8

3.50%

         58


Total market value of assets


 

15,465


 

15,304


 

13,587


 

10,871


 

14,404


Actuarial Value of Liability


 

(18,613)


 

(16,704)


 

(17,575)


 

(14,246)


 

(14,404)


Total Deficit in the Scheme


 

(3,148)


 

(1,400)


 

(3,988)


 

(3,375)


 

-


Tax Asset


       787


       378


    1,117


       945


           -


Net Pension Liability


(2,361)

======


(1,022) ======


(2,871)

======


(2,430)

======


-

======



 



 


(*)  The rates quoted above are the expected net rates of return after allowance for expenses.

 

 

 


Analysis of the Amount Charged to Operating Profit





Year to

31/12/2011

£000

Year to

31/12/2010

£000

Year to

31/12/2009

£000

Year to

31/12/2008

£000

Year to

31/12/2007

£000


 

Current Service Cost

 

500

 

622

 

494

 

549

 

660


Total Operating Charge

500

===

622

===

494

===

549

===

660

===




Analysis of Net Return on Fund





Year to

31/12/2011

£000

Year to

31/12/2010

£000

Year to

31/12/2009

£000

Year to

31/12/2008

£000

Year to

31/12/2007

£000


 

Expected Return on Pension Fund Assets

 

 

881

 

 

827

 

 

608

 

 

906

 

 

819


Interest on Pension Fund Liabilities

 

(890)

 

(1,014)

 

(804)

 

(805)

 

(753)


Net Interest (Cost)/Income

(9)

====

(187)

      ======

 

(196)

====

 

101

====

 

66

====

 




Analysis of Amount Recognised in Statement of Total Recognised Gains and Losses (STRGL)




 

Year to

31/12/2011

£000

Year to

31/12/2010

£000

Year to

31/12/2009

£000

Year to

31/12/2008

£000

Year to

31/12/2007

£000


Actual Return Less Expected Return on Assets

 

(1,024)

 

486

 

1,761

 

(4,998)

 

41


Experience Gains on Liabilities

-

524

-

-

88


Changes in Assumptions

   (854)

1,779

(2,295)

1,473

1,265


Actuarial Gain/(Loss)

Recognised in STRGL

(1,878)

======

2,789

=====

(534)

=====

(3,525)

====

1,394

====








Movement in Deficit During the Year













Year to

31/12/2011

£000

Year to

31/12/2010

£000

Year to

31/12/2009

£000

Year to

31/12/2008

£000

Year to

31/12/2007

£000


Deficit in Fund at Beginning of Year

 

(1,400)

 

(3,988)

 

(3,375)

 

-

 

(1,381)


Movement in Year







Current Service Cost

(500)

(622)

(494)

(549)

(660)


Contributions

639

608

611

598

581


Net Interest (Cost)/Income

(9)

(187)

(196)

101

66


Actuarial Gain/(Loss)

 (1,878)

  2,789

   (534)

(3,525)

1,394


 

Deficit in Fund at End of Year

 

(3,148)

======

 

(1,400)

======

 

(3,988)

=====

 

(3,375)

=====

 

-

====


 

The actuarial valuation at 31 December 2011 showed an increase in the deficit from £1,400,000 to £3,148,000.

 


History of Experience Gains and Losses





 



        Financial Year Ended in

 



 

 

2010

2009

2008

2007

 








 


Difference Between Expected and Actual Return on Fund Assets :






 


 

    Amount (£000s)

 

(1,024)

 

486

 

1,761

 

(4,998)

 

    41

 


    Percentage of Fund Assets

7%

3%

13%

46%

0.3%

 








 


Experience Gain/(Loss) on Fund Liabilities :






 


 

    Amount (£000s)

 

-

 

524

 

-

 

-

 

    88

 


    Percentage of Fund Liabilities

0%

3%

0%

0%

0.6%

 








 


Changes in Assumptions Underlying the Present Value of Fund Liabilities






 








 


 

    Amount (£000s)

 

(854)

 

1,779

 

(2,295)

 

1,450

 

  1,288

 


    Percentage of Fund Liabilities

4.6%

10.7%

13.1%

10.2%

8.9%

 








 


Total Amount Recognised in Statement of Total Recognised Gains and Losses :






 


 

    Amount (£000s)

 

(1,878)

 

2,789

 

(534)

 

(3,548)

 

  1,417

 


    Percentage of Fund Liabilities

10.1%

16.7%

3%

24.9%

9.8%

 








 








 








 








 

13.

SHARE CAPITAL






 








2011

£000

2010

£000



Authorised :












50,000 Ordinary Shares of £1


50

50









50,000 Redeemable Preference Shares of £1


  50

  50





100

===

100

===









Allotted and Called Up :












1,000 Ordinary Shares of £1, £1 Called Up and Fully Paid


1

1









49,000 Ordinary Shares of £1, 25 Pence Called Up


  12

  12





13

===

13

===


 

 

14.

COMBINED MOVEMENT IN RESERVES AND RECONCILIATION OF SHAREHOLDERS' (DEFICIT)/FUNDS




 

 

SHARE

CAPITAL

 

SHARE

PREMIUM

ACCOUNT

 

CAPITAL

REDEMPTION

RESERVE

 

PROFIT

AND LOSS

ACCOUNT

 

 

 

TOTAL

 

 

2010

TOTAL











£000

£000

£000

£000

£000

£000


 

 







 

 





At 1 January 2011

13

637

26

(5,065)


 

 





Transfer of Finance Costs Amortisation

 

-

 

(318)

 

-

 

318


 

 





 

Loss for the Financial Year                        -

 

-

 

-

 

(18,636)


 

FRS 17 Actuarial Gain/(Loss)

 

-

 

        -

 

-

 

(1,878)


 

Associated Deferred Tax

 

        -

 

      -

 

         -

 

        409

 

        409  

    (739)


 






At 31 December 2011

13

======

319

======

26

======

(24,852)

======

(24,494)

 ======

(4,389)

=====

 

15.

RECONCILIATION OF OPERATING PROFIT








Reconciliation of Operating Profit to Net Cash Inflow from Operating Activities :







2011

£000

2010

£000






  Operating Profit

23,902

29,677


  Depreciation

41,699

36,180


  Profit on Disposal of Fixed Assets

-

(3)


  Decrease /(Increase) in Debtors

901

(821)


  Increase  in Creditors

607

2


  Differences between pension contributions and amounts recognised

  in the Profit and Loss Account

            (139)

 

      14


 

Net Cash Inflow from Operating Activities

 

66,970

=====

 

65,049

=====

 

 

16.

ANALYSIS AND RECONCILIATION OF NET DEBT












 

 

1 JANUARY  2011

 

 

 

CASH FLOW

OTHER

NON-CASH

CHANGES

 

 

31 DECEMBER

2011







£000

£000

£000

£000





 


Cash at Bank

35,069

(4,089)

-

30,980


Overdrafts

          -

          -

             -

          -


 

35,069

(4,089)

-

30,980


 






Debt Due after 1 Year

(363,430)

-

(25,864)

(389,294)


 






Current Asset Investments

     57,145

51,238

             -

   108,383


 






Net Debt

(271,216)

========

47,149

=======

(25,864)

=======

(249,931)

========


 




 


 




 


The Company includes Current Asset Investments, which comprise short term bank deposits as liquid resources.  Other non-cash changes comprise indexation, amortisation of finance costs and capitalisation of interest.


 




 


 



2011

£000

2010

£000


 






(Decrease)/Increase  in Cash in the Year


(4,089)

24,329







Cash Outflow from

Increase  in Liquid Resources

 

51,238

 

 19,406


 



47,149

43,735


 






Capitalisation of Interest - Government Loan

(9,327)

(8,529)


 






Indexation and Amortisation of Finance Costs

(16,537)

 (16,117)


 






Movement in Net Debt in Year

21,285

19,089


 






Net Debt at 1 January

(271,216)

 (290,305)


 






Net Debt at 31 December

(249,931)

========

(271,216)

========

 

 

17.

RELATED PARTY TRANSACTIONS




Severn River Crossing Plc's related parties, as defined by Financial Reporting Standard No. 8, the nature of the relationship and the extent of transactions with them are summarised below :




 

Transaction

 

Nature of Relationship

2011

£000

2010

£000







Vinci Concessions S.A.S.

Debenture Stock Interest

Shareholder Company

 

368

 

351







Cofiroute (UK) Limited

Tolling Services

The Company is a Subsidiary of a Shareholder Company

 

1,112

 

1,134












Under the terms of the Shareholder Agreement, John Laing Infrastructure Limited and Vinci Concessions S.A.S. held £3,500,000 (nominal value) of the Company's Debenture Stock.




With the agreement of the other Shareholders the Company purchased the John Laing Infrastructure Limited £3,500,000 (nominal value) of the Company's Debenture Stock in December 2008. This stock has been redeemed and cancelled.




During the year the Company received £700,000 under the terms of a Defects Settlement Agreement in respect of Second Severn Crossing.  This comprised £350,000 from John Laing and £350,000 from Vinci Construction.





 





 


Amounts owed to related parties are disclosed in Note 9, and can be summarised as follows :





 





 




2011

£000

2010

£000







Laing-GTM Joint Venture


13

21


Cofiroute (UK) Limited


160

139


John Laing Investments Limited


61

66


Vinci Concessions S.A.S.


65

73


Barclays Bank plc


32

34


Bank of America


  31

  33




362

===

366

===





 





 


Further information on the relationships with related parties is set out in the Directors' Report on Page 3.  Payments to Shareholder Companies in respect of Directors' Services are disclosed in Note 4.

 

 

18.

DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS




The Company has not used any derivative, interest rate swap or other financial instruments in the current or prior year. 




The Company's financial instruments, other than derivatives, comprise borrowings, long-term loans, cash and liquid resources that arise directly from its operations.  The main purpose of these financial instruments is to continue to finance the Company's operations.




Interest Rate Profile




The Company has no interest-bearing financial assets other than sterling cash and short-term deposits of £108.4 million (2010 : £57.1 million) which are part of the financing arrangements of the Company.  These attracted a floating interest rate of between 1.50% and 2.55%.




The interest rate profile of the Company's financial liabilities at 31 December 2011 was as follows :






CURRENCY

FLOATING

RATE

2011

£000

FIXED

RATE

2011

£000

 

TOTAL

2011

£000







Sterling





- Borrowings

327,421

=======

61,873

======

389,294

=======





 





 


The Index-Linked Debt totalling £327.4 million (2010 : £310.9 million) has been included under Floating Rate Debt.


 


The profile at 31 December 2010 for comparison purposes was as follows :





 





 


CURRENCY

FLOATING

RATE

2010

£000

FIXED

RATE

2010

£000

 

TOTAL

2010

£000





 


Sterling



 


- Borrowings

310,885

=======

52,545

======

363,430

=======

 

 


Further analysis of the interest rate profile for fixed and floating rate debt at 31 December 2011 and at

31 December 2010 is as follows :


 


 


CURRENCY

 

2011



 

WEIGHTED AVERAGE

INTEREST RATE


 

WEIGHTED AVERAGE

PERIOD


 

 

 

 


 

%

 

YEARS


 

 

 

 


Sterling

 

 

 


- Borrowings Fixed

- Borrowings Floating

 

6.0%

11.1%

 

 

5.5

2.8

 

 


CURRENCY

 

2010

 


 

 

 

 


 

WEIGHTED AVERAGE

INTEREST RATE

 

 

WEIGHTED AVERAGE

PERIOD


 

 

 

 


 

%

 

YEARS


 

 

 

 


Sterling

 

 

 


- Borrowings Fixed

- Borrowings Floating

6.0%

11.2%

 

6.0

3.6


 


 


The interest rate on floating rate financial liabilities is linked to Libor and the Retail Price Index.  Further details of interest rates on long-term borrowings are given in Note 10.  A sensitivity to movement in the Retail Price Index is given in Note 5.

 

 


Maturity of Financial Liabilities


 


The Maturity Profile of the Company's Financial Liabilities at 31 December 2011 and 2010 was as follows :


 


 

 

2011

2010


 

 

£000

£000


 

 

 

 


In one year or less

 

-

-


In more than one year but not more than two years

 

 

222,544

 

-


In more than two years but not more than five years

-

211,198


In more than five years

 

166,750

152,232


 

Total

 

 

389,294

=======

 

363,430

=======


 


 


Fair Values


 


Set out below is a comparison by category of book values and fair values of the Company's Financial Liabilities at 31 December 2011 and 2010.


 


 

 

2011

 

 

2010

 


 

BOOK

VALUE

£000

 

FAIR

VALUE

£000

BOOK

VALUE

£000

 

FAIR

VALUE

£000


 

 

 

 

 

 

 


Primary Financial Instruments held

 

 

 

 

 

 


or issued to finance the Company's Operations

 

 

 

 

 

 


 

 

 

 

 

 

 


Short-Term Financial Liabilities and Current portion of Long-Term Borrowings

 

-

 

 

-

 

-

 

 

-


Long-Term Borrowings

389,294

 

417,022

363,430

 

404,275


 


The fair values of the Index-Linked Debt with a Book Value of £327.4 million (2010 - £310.9 million) have been determined by reference to prices available from the markets on which the instruments involved are traded.

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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