TIDM80UC
RNS Number : 7590F
Connect M77/GSO
30 July 2016
CONNECT M77/GSO PLC
Annual Report and Financial Statements
For the year ended 31 March 2016
CONNECT M77/GSO PLC
Annual Report and financial
statements
Page
Company information 1
2 -
Strategic report 4
5 -
Directors' report 6
Statement of Directors' responsibilities 7
Independent auditor's report 8
Profit and loss account 9
Balance sheet 10
Statement of changes in equity 11
12
Notes to the financial statements - 23
CONNECT M77/GSO PLC
Company Information
Directors
David William Bowler
Andrew Dean
Louis Javier Falero
Brian Roland Walker
Company secretary
Patrick McCarthy
Auditor
Deloitte LLP
Chartered Accountants and Statutory Auditor
London
United Kingdom
EC4A 3BZ
Bankers
Royal Bank of Scotland
9th Floor
280 Bishopsgate
London
United Kingdom
EC2M 4RB
Registered office
6th Floor
350 Euston Road
Regents Place
London
United Kingdom
NW1 3AX
Registered number
04698798
CONNECT M77/GSO
PLC
Strategic
Report
for the year ended 31
March 2016
The Directors, in preparing this Strategic
Report, have complied with s414C of the Companies
Act 2006.
Principal Activity and Business
Review
The Company is incorporated in Great Britain,
registered in England and Wales and domiciled
in the United Kingdom.
On 7 May 2003 a contract was signed with
East Renfrewshire Council (on behalf of the
Scottish Government for the M77 and South
Lanarkshire Council and East Renfrewshire
Council for the Glasgow Southern Orbital
(GSO)) to design, build, finance and operate
(DBFO) the M77 from Fenwick to Malletsheugh
and the GSO from Malletsheugh to Philipshill,
East Kilbride and sections of the A726 and
to maintain these roads under a licence over
a 32 year period as well as modify certain
sections of the A77. In accordance with the
concession agreement the Company is responsible
for operating the roads together with carrying
out all of the routine and major life cycle
maintenance for the life of the concession.
The new road sections were opened to the
public in April 2005 and the final completion
certificate was issued in September 2005.
At 31 March 2016, the Company entered into
a demand variation contract, whereby changing
from demand element of the Payment Mechanism
(based on actual traffic usage) with a fixed
usage payment for the remaining life of the
concession. This variation eliminates the
exposure of traffic usage risk on the Project.
There have been no other changes to the Company's
activities in the year under review and no
others are currently contemplated.
The Company's operating profit and its profit
on ordinary activities after taxation have
benefited by GBP27.4m recognised on the reclassification
of the PFI concession from a fixed asset
to a financial asset because of the demand
variation contract. Otherwise performance
is in line with expectations.
Change to accounting framework
The Financial Reporting Council ('FRC') developed
a set of new Financial Reporting Standards
('FRS') applicable for periods beginning
on or after 1 January 2015 that provide a
number of options for all UK entities. These
revised financial reporting standards fundamentally
reform financial reporting and are implemented
by FRS 100 'Application of Financial Reporting
Requirements' ('FRS 100'). FRS 100 sets out
rules and guidance on the appropriate accounting
framework options for companies and groups
within FRS 101 'Reduced Disclosure Framework'
('FRS 101'), FRS 102 'The Financial Reporting
Standard Applicable in the UK and Republic
of Ireland' ('FRS 102') or EU-adopted IFRS.
Transition to FRS 102
The Company has chosen to adopt FRS 102.
The Company assessed the options available
and by deciding to adopt FRS102, the existing
accounting treatment in the concession is
retained to a high degree. This is because
this choice of treatment allows the existing
concession accounting treatment for the financial
asset to be retained by invoking Section
35.10 and the 'grandfathering' provisions
that permit the retention and use of the
existing financial standard. "Grandfathering"
is only relevant up to the point that a PPP
asset is converted from a fixed asset to
a financial asset during the year.
An explanation of how the transition affected
the previously reported financial position
and financial performance of the Company
has been disclosed in Note 20 to the financial
statements. The transition date from the
previous accounting standards is 1 April
2014.
Key Performance Indicators
The Company has set specific business objectives,
which are monitored using a number of key
performance indicators ("KPIs"). The relevant
KPIs for this report are detailed below:
Interest payable and
similar charges 2016 2015
GBP GBP
'000 '000
Pre deed of variation
Profit / (Loss)
after taxation (3,442) (5,418)
Net liabilities (51,079) (47,638)
Post deed of
variation
Profit / (Loss)
after taxation 18,500 (5,418)
Net liabilities (29,137) (47,638)
The Directors consider that KPI's should
be presented both pre deed and post deed
in order to assess the performance of the
Group.
The difference in the KPIs has resulted
from the gain (GBP21.9m after tax) on the
reclassification from fixed asset to financial
asset recognised on signing the deed of variation.
Principal Risks and Uncertainties
The Company recognises that effective risk
management is fundamental to achieving its
business objectives in order to meet its
commitments in fulfilling the Public Private
Partnership ("PPP") contract and in delivering
a safe and efficient service. Risk management
contributes to the success of the business
by identifying opportunities and anticipating
risks in order to enable the business to
improve performance and fulfil its contractual
obligations. The financial risks are described
in detail in note 14 of the financial statements.
The main uncertainty affecting the Company
has been future traffic volumes. On 31 March
2016 the deed of variation effectively removed
this risk by replacing the variablke element
of the payment mechanism with an agreed,
fixed profile for the remaining life of the
concession.
Financial instruments
The financial risk management objectives
of the Company are to ensure that financial
risks are mitigated by the use of financial
instruments where they cannot be addressed
by means of contractual provisions. Financial
instruments are not used for speculative
purposes.
Principal Risks and Uncertainties
(continued)
Credit and cash flow risks to the Company
arise from its client, East Renfrewshire
Council. The credit and cash flow risks are
not considered significant as the client
is a quasi governmental organisation.
The Company's liquidity risk is principally
managed through financing the Company by
means of long- term borrowings with an amortisation
profile that matches the expected availability
of funds from the Company's operating activities.
All borrowings are in the form of secured
bonds issued at a fixed rate of interest
of 5.404% per annum and secured loan stock
issued at a fixed rate of interest of 12.1%
per annum.
In addition the Company maintains reserve
bank accounts to provide short-term liquidity
against future debt service and other expenditure
requirements.
Contractual relationships
The Company operates within a contractual
relationship with its primary customer East
Renfrewshire Council. A significant impairment
of this relationship could have a direct
and detrimental effect on the Company's results
and could ultimately result in termination
of the concession. To manage this risk the
Company has regular meetings with East Renfrewshire
Council including discussions on performance,
project progress, future plans and customer
requirements.
Future Developments
Following the deed of variation being agreed,
the Directors expect the general level of
activity to remain stable in the forthcoming
year. There have been no other changes to
the Group's activities in the year under
review and no others are currently contemplated.
This report was approved by the board on
July 2016 and signed by its order.
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Patrick McCarthy
Company Secretary
CONNECT M77/GSO PLC
Registered number: 04698798
Directors' Report
"The Directors present their annual report together with the
audited financial statements of the Company for the year ended 31
March 2016.
The following information has been disclosed in the Strategic
Report:
1. Principal Activity and Business Review
2. Key Performance Indicators
3. Principal Risks and Uncertainties"
Results and Dividends
The Company recorded a profit for the year after taxation of
GBP18,500,000 (2015: loss of GBP5,418,000).
This result was due to the change of accounting basis that was
adopted following the signing of the deed of variation with East
Renfrewshire Council on 31 March 2016, to replace the usage element
of the payment mechanism with deemed usage. The Directors do not
propose to pay a dividend in respect of the year ended 31 March
2016 (2015: GBPnil).
Going Concern
The Company's forecasts and projections, taking account of
reasonably possible changes in trading performance, show that the
Company has adequate resources to continue in operational existence
for the foreseeable future. Accordingly, the Directors continue to
adopt the going concern basis in preparing the financial statements
(see note 1 to the financial statements).
Directors
The following persons were Directors of the Company throughout
the year:
David William Bowler
Andrew Dean
Louis Javier Falero
Brian Roland Walker
Directors' Indemnities
The Company has made qualifying third party indemnity provisions
for the benefit of its Directors which remain in force at the date
of this report.
Auditor
"Each of the persons who is a Director at the date of approval
of the report confirms that:
i) so far as the Director is aware, there is no relevant audit
information of which the Company's auditor is unaware; and
ii) 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 appoint KPMG as auditor will be proposed at the
forthcoming Annual General Meeting."
This report was approved by the board on July 2016 and signed by its order.
Patrick McCarthy
Company Secretary
CONNECT M77/GSO
PLC
Statement of Directors'
Responsibilities
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), including FRS 102 "The
Financial Reporting Standard applicable in
the UK and Republic of Ireland". 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 estimates
that are reasonable and prudent;
-- state whether applicable UK Accounting
Standards have been followed,
subject to any material departures
disclosed and explained in the
financial statements; and
-- prepare the financial statements
on the going concern basis unless
it is inappropriate to presume
that the Company will continue
in business.
The Directors are responsible for keeping
adequate accounting records that are sufficient
to show and explain the Company's transactions
and disclose with reasonable accuracy at any
time the financial position of the Company
and enable them to ensure that the financial
statements comply with the Companies Act 2006.
They are also responsible for safeguarding
the assets of the Company and hence for taking
reasonable steps for the prevention and detection
of fraud and other irregularities.
The Directors are responsible for the maintenance
and integrity of the corporate and financial
information included in the Company's website.
Legislation in the United Kingdom governing
the preparation and dissemination of financial
statements may differ from legislation in
other jurisdictions.
CONNECT M77/GSO PLC
Independent auditor's report
to the members of CONNECT
M77/GSO PLC
We have audited the financial statements of Connect
M77/GSO plc for the year ended 31 March 2016 which
comprise the profit and loss account, the balance
sheet, statement of changes in equity and the related
notes 1 to 20. 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),
including FRS 102, "The Financial Reporting Standard
applicable in the UK and Republic of Ireland".
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 Statement of Directors'
Responsibilities, 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 and to identify
any information that is apparently materially incorrect
based on, or materially inconsistent with, the
knowledge acquired by us in the course of performing
the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the
implications for our report.
Opinion on the 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 March 2016 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.
Opinion on other matters prescribed by the Companies
Act 2006
In our opinion the information given in the Directors'
Report and the Strategic Report 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.
Mark Beddy
(Senior Statutory Auditor)
for and on behalf of
Deloitte LLP
Chartered Accountants and
Statutory Auditor
London, United Kingdom
July 2016
CONNECT M77/GSO PLC
Profit and loss account
for the year ended 31
March 2016
Notes 2016 2015
GBP GBP
'000 '000
Turnover 2 14,941 13,544
Cost of sales (8,804) (9,226)
Gross profit 6,137 4,318
Administrative expenses (290) (250)
Operating profit 3 5,847 4,068
Interest receivable
and similar income 4 81 66
Gain on Financial Asset 8 27,428 -
Interest payable and
similar charges 5 (10,462) (10,985)
Profit/(loss) on ordinary
activities before taxation 22,894 (6,851)
Tax (charge)/credit on
profit/(loss) on ordinary
activities 6 (4,394) 1,433
Profit/(loss) for the
financial year 15,16 18,500 (5,418)
========= =========
There were no items going through Other Comprehensive
Income in either year other than the reported
profit / (loss) shown above; consequently
no separate statement of other comprehensive
income is presented.
All activities are from continuing operations
in the United Kingdom.
CONNECT M77/GSO
PLC
Balance sheet
as at 31 March
2016
Notes 2016 2015
GBP GBP
'000 '000
Fixed assets
Tangible assets 7 - 104,294
---------- ----------
Total fixed assets - 104,294
Current assets
Financial asset:
due within one
year 8 955 -
Debtors: due within
one year 9 1,764 2,166
Investments: due
within one year 10 16,624 15,762
Financial asset:
due after one year 8 125,592 -
Debtors: due after
one year 9 - 2,013
Cash at bank and
in hand 1,227 495
---------- ----------
Total current assets 146,162 20,436
Total Assets 146,162 124,730
---------- ----------
Current liabilities
Creditors: due
within one year 11 (24,957) (20,830)
---------- ----------
Total current liabilities (24,957) (20,830)
Net current assets
/ (liabilities) 121,205 (394)
========== ==========
Non-current liabilities
Creditors: due
after one year 12 (148,682) (151,538)
Deferred tax liability 12 (1,660) -
---------- ----------
Total non-current
liabilities (150,342) (151,538)
Total liabilities (175,299) (172,368)
---------- ----------
Net Liabilities (29,137) (47,638)
========== ==========
Capital and reserves
Called-up share
capital 14 50 50
Profit and loss
account 15 (29,187) (47,688)
Shareholders' deficit 16 (29,137) (47,638)
========== ==========
These financial statements for Connect M77/GSO
plc, company registration number 04698798,
were approved by the Board of Directors and
authorised for issue on July 2016 and signed
on its behalf by:
Andrew Dean
Director
Approved by the board
on July 2016
CONNECT M77/GSO
PLC
Statement of changes
in equity
for the year ended 31
March 2016
Called Profit
Up Share and Total
capital Loss Equity
GBP GBP GBP
'000 '000 '000
At 1 April 2014 50 (42,270) (42,220)
Recognised income
and expense for
the year - (5,418) (5,418)
----------- --------- ------------
Total comprehensive
income - (5,418) (5,418)
At 31 March 2015 50 (47,688) (47,638)
=========== ========= ============
Called Profit
Up Share and Total
capital Loss Equity
GBP GBP GBP
'000 '000 '000
At 1 April 2015 50 (47,688) (47,638)
Recognised income
and expense for
the year - 18,500 18,500
---------
Total comprehensive
income - 18,500 18,500
At 31 March 2016 50 (29,188) (29,137)
=========== ========= ============
CONNECT M77/GSO PLC
Notes to the Financial
Statements
for the year ended 31
March 2016
Summary of significant accounting
1 policies
A Basis of preparation
These financial statements have been prepared
in accordance with FRS 102 "The Financial Reporting
Standard applicable in the UK and Republic of
Ireland" ("FRS 102") and the requirements of
the Companies Act 2006.
The financial statements are prepared in sterling,
which is the functional currency of the Company.
Monetary amounts in these financial statements
are rounded to the nearest GBP'000.
The financial statements have been prepared
on the historical cost convention. The principal
accounting policies adopted are set out below.
These financial statements for the year ended
31 March 2016 are the first financial statements
of Connect M77/GSO Plc prepared in accordance
with FRS 102. The Financial Reporting Standard
applicable in the UK and Republic of Ireland.
The date of transition to FRS 102 was 1 April
2014. The impact of this transition has been
disclosed in Note 20.
The Company meets the definition of a qualifying
entity under FRS102 and has therefore taken the
advantage of the disclosure exemptions available
to it in respect of its separate financial statements.
Exemptions have been taken in relation to financial
instruments and presentation of a cash flow statement.
The Company's parent undertaking, Connect M77/GSO
Holdings Limited was notified of and did not
object to the use of EU-adopted IFRS disclosure
exemptions. The group financial statements of
Connect M77/GSO Holdings Limited are available
to the public and can be obtained from 6th Floor,
350 Euston Road, Regent's Place, London NW1 3AX.
B Turnover
Revenue is recognised as turnover as it is earned
and represents amounts due, exclusive of value
added tax, in respect of services provided under
the Design, Build, Finance and Operate (DBFO)
Contract.
C Tangible fixed assets
Tangible fixed assets are stated at cost less
accumulated depreciation and provision for impairment.
DBFO Road
Measurement basis: historical cost
Depreciation method: straight line
Useful life: 32 years
The fixed asset was re-classified as a financial
asset from 31 March 2016.
D Financial asset
The Company has elected to apply the provisions
of Section 11 'Basic Financial Instruments' and
Section 12 'Other Financial Instruments Issues'
of FRS 102 to all of its financial instruments.
Financial assets are recognised in the Company's
balance sheet when the Company becomes party
to the contractual provisions of the instrument.
Financial assets have been classified as 'loans
and receivables', which includes cash and cash
equivalents.. The classification depends on the
nature and purpose of the financial assets and
is determined at the time of recognition.
Basic financial assets, which include trade
and other receivables 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.
Other financial assets classified as fair value
through profit or loss are measured at fair value.
Trade receivables and other receivables that
have fixed or determinable payments that are
not quoted in an active market are also classified
as 'loans and receivables'. Loans and receivables
are measured at amortised cost using the effective
interest rate method, less any impairment. Interest
income is recognised by applying the effective
interest rate except for short term receivables
where the recognition of interest would be immaterial.
Cash and cash equivalents comprise cash on hand,
demand deposits, and other short term highly
liquid investments, that are readily convertible
into cash and are subject to an insignificant
risk of change in value.
Financial assets are impaired where there is
objective evidence that as a result of one or
more events that have occurred after the initial
recognition of the financial asset, the estimated
future cash flows have been impacted. The carrying
amount of a financial asset is reduced by the
impairment directly with the exception of trade
receivables which would be reduced through the
use of an allowance account, unless it is considered
that it is uncollectible.
The Company derecognises a financial asset only
when the contractual rights to receive the cash
flows from the asset expire, or it transfers
the financial asset and substantially all the
risk and rewards of ownership of the asset to
another entity.
E Taxation
Corporation 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 balance sheet date and is consistent
with accounting policy.
Deferred tax is provided in full on timing differences
which result in an obligation at the balance
sheet date to pay more tax, or a right to pay
less tax, at a future date, at rates expected
to apply when they crystallise based on current
tax rates and law. Timing differences arise from
the inclusion of items of income and expenditure
in taxation computations in periods different
from those in which they are included in financial
statements. Deferred tax assets are recognised
to the extent that it is regarded as more likely
than not that they will be recovered. Deferred
tax assets and liabilities are not discounted.
F Finance Costs
Finance costs in relation to the fixed rate senior
secured bonds and the secured loan stock are
recognised using the effective interest rate
method under FRS 102 whereby expected interest
over the life of the project is spread and recognised
in each period.
Fixed rate senior
G secured bonds
Senior secured bonds are initially stated at
the amount of the net proceeds after deduction
of related issue costs. The carrying amount is
increased by the finance cost in respect of the
accounting period and reduced by payments made
in that period.
H 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 Strategic
Report on pages 2 to 4 and the Directors' Report
on pages 5 to 6.
The Directors have reviewed the Company's supply
chain and do not believe that any specific risk
has been identified. The Directors have also
considered the ability of the client (East Renfrewshire
Council) to continue to pay unitary fees due
under the concession contract to the Company
and do not consider this to be a material risk.
The Directors have also taken into account the
waiver by Connect M77/GSO Holdings Limited of
its right to receive interest for the years ended
31 March 2017 and 31 March 2016. Despite the
Company showing net liabilities and recording
a profit in the year, the Company's projections,
taking account of reasonably possible counterparty
performance, show that the Company expects to
be able to continue to operate for the foreseeable
future.
The Directors have a reasonable expectation
that the Company has adequate resources to continue
in operational existence for the foreseeable
future. Accordingly, they continue to adopt the
going concern basis in preparing the annual report
and financial statements.
2 Segmental Information
Turnover
Turnover by origin
and destination:
2016 2015
GBP GBP
'000 '000
United Kingdom 14,941 13,544
14,941 13,544
========== =========
All activities are from continuing
operations in the United Kingdom.
3 Operating Profit
Operating profit is
stated after charging:
2016 2015
GBP GBP
'000 '000
Fees payable to the Company's
auditor for the audit of
the Company's annual financial
statements 16 15
---------- ---------
Total audit fees 16 15
Depreciation 5,175 5,141
---------- ---------
Amounts payable to Deloitte LLP by the shareholders
and on behalf of the company in respect of non
audit services were GBP12k (2015: GBPnil).
The Directors received no salary, fees or other
benefits in the performance of their duties in
the current and preceding year. All staff costs
are borne by the shareholders of Connect M77/GSO
Holdings Limited who second employees to the
Company and charge related service costs. The
Company had no employees during the year (2015:
none).
Interest receivable
4 and similar income 2016 2015
GBP GBP
'000 '000
Bank interest receivable 81 66
81 66
========== =========
Interest payable and
5 similar charges 2016 2015
GBP GBP
'000 '000
Secured bond interest 8,025 8,157
Secured loan stock
interest 2,437 2,828
Total interest payable
and similar charges 10,462 10,985
========== =========
Tax (charge)/credit on profit/(loss)
6 on ordinary activities
The tax (charge)/credit is based on the
profit/(loss) for the year and comprises:
2016 2015
GBP GBP
'000 '000
Current tax
Corporation tax due (4,579) -
Group relief - losses
surrendered - 1,439
---------- ---------
Total current tax (4,579) 1,439
Deferred tax
Origination and reversal
of timing differences (see
note 9a) 185 (6)
---------- ---------
Total deferred tax 185 (6)
Total tax (charge)/credit
on loss on ordinary activities (4,394) 1,433
Profit / (Loss) on ordinary
activities before tax 22,894 (6,851)
Tax on profit / (loss) on
ordinary activities at standard
UK corporation tax rate
of 20% (2015: 21%) (4,579) 1,439
Effects of:
Other timing differences 185 (6)
---------- ---------
Total tax (charge)/credit
for the year (4,394) 1,433
========== =========
A reduction in the mainstream UK tax rate of
21% to 20%, effective from 1 April 2015, was
substantively enacted in the Finance Act 2013.
In the Summer Finance Bill 2015, which was substantively
enacted on 26 October 2015, it was announced
that the main rate of corporation tax for UK
companies would reduce to 19% from 1 April 2017,
and then reduce further to 18% from 1 April 2020.
The reduced rate of 18% has therefore been reflected
in the calculation of deferred tax at the balance
sheet date.
7 Tangible fixed assets
DBFO Roads
2016 2015
GBP GBP
'000 '000
Cost
Opening balance 156,480 156,480
Transfer to financial
asset (156,480) -
---------- ---------
Closing balance - 156,480
Depreciation
Opening balance 52,186 47,045
Charge for the year 5,175 5,141
Transfer to financial
asset (57,361) -
---------- ---------
Closing balance - 52,186
Net book value - 104,294
========== =========
8 Financial asset 2016 2015
GBP GBP
'000 '000
Opening balance - -
Additions at fair
value 126,547 -
---------- ---------
Closing Balance 126,547 -
========== =========
2016 2015
GBP GBP
'000 '000
Comprising:
Amounts falling due
within one year 955 -
Amounts falling due after
more than one year 125,592 -
---------- ---------
126,547 -
========== =========
A deed of variation was signed with the client
East Renfrewshire Council to replace the demand
element of the payment mechanism (based on actual
traffic usage) with a fixed usage payment for
the remaining life of the concession. Because
all of the revenue will now be based on availability
the accounting basis has been reclassified from
fixed asset to finanical asset. The gain on re-classification
has been calculated on net present value of forecast
operating cashflows, discounted by 8.0% on post-tax
cash flows.
9 Debtors 2016 2015
GBP GBP
'000 '000
Due within one year:
Trade debtors 1,764 1,498
Other debtors - group
relief receivable - 668
---------- ---------
1,764 2,166
Due after one year:
Deferred taxation - 2,013
---------- ---------
- 2,013
a: Deferred taxation
2016 2015
GBP GBP
'000 '000
Other timing differences - (1,942)
Losses not utilised - 3,955
Closing balance - 2,013
========== =========
GBP GBP
'000 '000
Opening balance 2,013 1,918
Current year credit/(charge)
to the profit and loss account - 95
Transfer (2,013) -
Closing balance - 2,013
========== =========
Investments - due
10 within one year
Investments due within one year represent amounts
held on deposit with a financial institution
which are not available for withdrawal without
penalty in under 24 hours and, in accordance
with the Company's funding arrangements, are
restricted and cannot be used to fund the ongoing
operations of the Company.
Creditors: due within
11 one year 2016 2015
GBP GBP
'000 '000
Trade creditors 160 12
Secured loan stock
interest 19,208 16,772
Accruals 1,619 1,204
VAT payable 221 185
Fixed rate guaranteed senior
secured bonds 3,029 2,657
Corporation tax payable 720 -
24,957 20,830
========== =========
All intercompany creditors are settled in accordance
with the agreed payment terms.
Creditors: due after
12 more than one year 2016 2015
GBP GBP
'000 '000
Fixed rate guaranteed senior
secured bonds 135,845 138,873
Less: unamortised
arrangement fees (2,027) (2,200)
---------- ---------
133,818 136,673
Secured loan stock 14,865 14,865
---------- ---------
148,683 151,538
========== =========
a: Deferred taxation
2016 2015
GBP GBP
'000 '000
Opening balance /
transfer from debtor 2,013 -
Current year charge to the
profit and loss account 97 -
Utilisation of losses (3,955) -
Effect of change in
tax rate 185
Closing balance (1,660) -
========== =========
Creditors: amounts falling due after
12 more than one year (continued)
Fixed rate guaranteed senior secured bonds due
2034 of GBP152,429,000 were issued on 7 May 2003.
The bonds have been unconditionally and irrevocably
guaranteed by Syncora Guarantee (UK) Limited
(formerly XL Capital Assurance (UK) Limited)
for payment of principal and interest.
Interest on the bonds is payable semi-annually
in arrears on 31 March and 30 September in each
year at a fixed rate of 5.404% per annum commencing
on 30 September 2003.
Unless previously redeemed or purchased and
cancelled, the bonds will mature on 31 March
2034 and are subject to redemption in part from,
and including, 30 September 2006 in accordance
with the amortisation schedule set out in the
bonds offering circular.
The secured loan stock bears interest at 12.1%
per annum and accrues from the date of final
completion. It is redeemable in instalments between
2016 and 2035, or as the Company elects, but
subject to certain restrictions in the collateral
deed. The secured loan stock is held by Connect
M77/GSO Holdings Limited. Connect M77/GSO Holdings
Limited has waived its right to receive interest
for the years ending 31 March 2016 and 31 March
2017. Connect M77/GSO Holdings Limited has issued
loan stock to its immediate shareholders with
identical terms and conditions.
All borrowings contain either a fixed or varying
security interest over the assets of the Company,
as defined by an intercreditor agreement. The
bonds have certain covenants attached.
Fixed rate guaranteed senior secured bonds are
stated net of unamortised issue costs of GBP2,027,000
(2015: GBP2,200,000). The Company incurred total
issue costs of GBP4,403,000 in respect of the
fixed rate bonds. These costs, together with
the interest expense, are allocated to the profit
and loss amount over the term of the bonds. Interest
is calculated using the effective interest rate
method.
The Company has committed borrowing facilities
available of GBP167,294,000 which have been fully
drawn as at 31 March 2016 (2015: GBP167,294,000).
2016 2015
GBP GBP
'000 '000
Fixed rate guaranteed senior
secured bonds 138,873 139,330
Secured loan stock 14,865 14,865
153,738 154,195
========== =========
The borrowings are
repayable as follows:
2016 2015
GBP GBP
'000 '000
Repayable within one
year 3,029 2,657
Repayable between
one and two years 3,257 3,029
Repayable between
two and five years 13,063 11,513
Repayable after five
years 134,389 136,996
153,738 154,195
========== =========
The loan stock of GBP14,865,000 is repayable
after four years at the balance sheet date, 31
March 2016.
Financial instruments
13 and derivatives
The Company's financial instruments comprise
borrowings. The main purpose of these financial
instruments is to raise finance for the construction
and operation of the DBFO roads. The Company
has not entered into derivatives transactions.
It is, and has been throughout the year under
review, the Company's policy that no trading
in financial instruments shall be undertaken.
The main risk arising from the Company's financial
instruments is liquidity risk. The Board's policy
for managing this risk is summarised below:
Liquidity risk
The Company's policy throughout the year has
been, in order to ensure continuity of funding,
that substantially all of its borrowings should
mature in more than one year.
Interest rate risk
The Company has no exposure to interest rate
risk as all its borrowings are at a fixed rate
of interest.
Foreign currency risk
The Company has no foreign currency transactions.
All of the Company's borrowings are denominated
in sterling.
Interest rate profile
The interest rate profile of the
Company's financial liabilities
was as follows:
2016 2015
GBP GBP
'000 '000
Fixed rate borrowings 153,738 154,104
153,738 154,104
========== =========
The fixed rate bonds have interest payable at
5.404% per annum and the secured loan stock has
interest payable at 12.1% per annum.
Maturity of financial
liabilities
The maturity profile of the Company's financial
liabilities was as follows:
2016 2015
GBP GBP
'000 '000
Repayable within one
year 3,029 2,657
Repayable between
one and two years 3,257 3,029
Repayable between
two and five years 13,063 11,513
Repayable after five
years 134,389 136,905
153,738 154,104
========== =========
Financial instruments and
13 derivatives (continued)
Fair values
Set out below is a comparison of book values
and fair values of the Company's financial instruments.
Book Value Fair Value
2016 2015 2016 2015
GBP GBP GBP GBP
'000 '000 '000 '000
Primary financial
instruments held or
issued to finance
the Company's operations
Fixed rate secured
bonds 138,873 139,330 146,137 148,414
Secured loan stock 14,865 14,865 6,958 15,379
153,738 154,195 153,095 163,793
======== ======== ========== =========
Market value has been used to determine the fair
value of the financial instruments at 31 March
2016 and 31 March 2015.
14 Called-up share capital 2016 2015
GBP GBP
'000 '000
Allotted, called-up
and fully paid
50,000 ordinary shares
of GBP1 each 50 50
50 50
========== =========
15 Profit and loss account 2016 2015
GBP GBP
'000 '000
Opening balance (47,688) (42,270)
Profit/(loss) for
the year 18,500 (5,418)
Closing Balance (29,187) (47,688)
========== =========
Reconciliation of movements
16 in shareholders' deficit 2016 2015
GBP GBP
'000 '000
Opening shareholders'
deficit (47,638) (42,220)
Profit/(loss) for
the financial year 18,500 (5,418)
Closing shareholders'
deficit (29,137) (47,638)
========== =========
17 Capital commitments 2016 2015
GBP GBP
'000 '000
Contracted but not
provided for 188 188
188 188
========== =========
18 Related party transactions
During the year to 31 March 2016 Balfour Beatty
Investments Limited, a wholly-owned subsidiary
of Balfour Beatty plc, was employed under a Secondment
Agreement with the Company for the provision
of technical and managerial staff. The value
of the contract provided in the year was GBP200,362
(2015: GBP224,564). The amount included in creditors
at the year end was GBP548,941 (2015: GBP348,579).
During the year to 31 March 2016 Balfour Beatty
Civil Engineering Limited, a wholly-owned subsidiary
of Balfour Beatty plc, was employed under a contract
with the Company for the provision of management
services for the operation and maintenance of
the DBFO roads. The value of the contract in
the year was GBP3,710,245.82 (2015: GBP4,084,639).
The amount included in creditors at the year
end was GBP179,567 (2015: GBP244,688).
Ultimate parent companies
19 and controlling parties
The Company's immediate parent company is Connect
M77/GSO Holdings Limited, which is incorporated
in Great Britain and registered in England and
Wales. Connect M77/GSO Holdings Limited is the
parent company of the largest and smallest group
of which the Company is a member and for which
group financial statements are drawn up. Copies
of these financial statements are available from
6th Floor, 350 Euston Road, Regent's Place, London
NW1 3AX.
The Company is jointly controlled by Balfour
Beatty plc and BIIF LP (acting by its manager,
3i BIFM Investments Ltd).
Explanation of transition
20 to FRS102
This is the first year that the Company has presented
its financial statements under FRS 102. The last
financial statements under previous UK GAAP were
for the year ended 31 March 2015 and the date
of transition to FRS 102 was therefore 1 April
2014.
Due to being a Plc, additional disclosures required
under FRS 102 had previously been adopted whilst
reporting under UK GAAP in relation to effective
interest rate calculations on senior debt, and
fair value disclosures on financial instruments
as per FRS 26 and FRS 29 under UK GAAP.
The accounting policies set out in note 1 have
been applied in preparing the financial statements
for the year ended 31 March 2016 and the corresponding
information presented in these financial statements
to the year ended 31 March 2015. There has been
no change to the comparative balance sheet or
profit and loss account for the Company. Therefore
no additional reconciliations have been required.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR WGUGUMUPQGAU
(END) Dow Jones Newswires
August 01, 2016 02:00 ET (06:00 GMT)
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