Transport Scotland Annual Report and Accounts 2010/11
NOTES TO THE ACCOUNTS
1. Statement of Accounting Policies
In accordance with the accounts direction issued by Scottish Ministers under section 19(4) of the Public Finance and Accountability (Scotland) Act 2000 (reproduced at page 60) these accounts have been prepared in compliance with the principles and disclosure requirements of the Government Financial Reporting Manual, which follows general accepted accounting practice as defined by International Financial Reporting standards (IFRS) as adopted by the European Union and reflected in the Companies Act 2006 to the extent that it is meaningful and appropriate in the public sector context. The particular accounting policies applied by Transport Scotland are described below. They have been applied consistently in dealing with items considered material in relation to the accounts.
The accounts are prepared using accounting policies, and, where necessary, estimation techniques which are selected as the most appropriate for the purpose of giving a true and fair view in accordance with the principles, set out in International Accounting Standard 8: Accounting Policies, Changes in Accounting Estimates and Errors. Changes in accounting policies which do not give rise to a prior year adjustment are reported in the relevant note.
1.1 Accounting Convention
These accounts have been prepared under the historical cost convention, modified where appropriate for the revaluation of property, plant and equipment, intangible assets, and, where material, current asset investment to fair value as determined by the relevant accounting standard.
1.2 Trunkings / Detrunkings
Transport Scotland accounts reflect ownership of the trunk road network which it has responsibility to maintain. Transfers of the responsibility for maintaining sections of the road as part of the trunk road network from or to the local authority network are referred to as 'trunkings' or 'detrunkings' respectively. The trunking or detrunking of roads from or to local authorities is treated as a transfer from or to other government departments. Roads and structures detrunked are effectively dealt with as disposals in accounting terms at nil consideration. The associated profit or loss is processed through the general fund.
1.3 Prior Year Adjustments
Material adjustments relating to prior periods and arising from changes in accounting principles or from the correction of material errors are accounted for as prior year adjustments. Opening balances are adjusted for the cumulative effect of the prior year adjustment and comparative figures for the preceding period are restated.
1.4 Business Combinations
These financial statements reflect the combination of the former Scottish Government Transport Directorate with the previous Transport Scotland Agency. The Government Financial Reporting Manual states that the International Financial Reporting Standard relating to business combinations (IFRS3) excludes from its scope business combinations involving entities or businesses under common control. Public sector bodies are deemed to be under common control. The transfer of functions from the responsibility of one part of the public sector to another should be accounted for using merger accounting. The carrying value of the assets and liabilities of the combining bodies or functions are not adjusted to fair value on consolidation. Details of the adjustments made are disclosed in note 2 to the accounts.
1.5 Property, Plant and Equipment (PPE)
All PPE assets will be accounted for as non-current assets unless they are deemed to be held-for-sale (see 1.7)
Non-infrastructure assets include land and buildings, information & technology equipment, software licences and other assets under construction. Title to the freehold land and buildings shown in the accounts of Transport Scotland is held by the Scottish Ministers.
Capitalisation Policy
The trunk road network is recognised as a single infrastructure asset in accordance with the applicable guidance outlined in the Financial Reporting Manual. However it comprises four distinct elements that are accounted for differently: Land; the Road Pavement; Structures (such as bridges and culverts); and Communications (such as variable message signs).
Subsequent expenditure is capitalised where it adds to or replaces the existing elements of assets that were previously identified in the Road Asset Valuation system employed. Expenditure that does not replace or enhance service potential will be expensed as a charge to the Statement of Comprehensive Net Expenditure.
Pre contract advance work is capitalised once a road scheme has been approved to proceed, and subsequent expenditure after contract award is capitalised for all road construction projects. Where a scheme is subsequently cancelled the capital costs are written off to the Statement of Comprehensive Net Expenditure. Any retained land or buildings are transferred to land and buildings where it is not currently possible to market them for sale, or to Assets Held for Sale where they are being marketed for sale. These assets are held at market values.
All other categories of tangible fixed asset are capitalised if the expenditure is greater than:
| Land & Buildings | £10,000 |
| Information & Communication Technology (ICT) | £1,000 |
| Plant & Machinery | £5,000 |
Items falling below these limits are charged as an expense and shown in the Statement of Comprehensive Net Expenditure. Furniture and fittings are not capitalised unless part of a specially identified ring fenced project such as a major relocation exercise.
Major rail projects, which are capital in nature, are funded by Transport Scotland but as control of the economic benefit of the asset ultimately sits with Network Rail, the assets are not on the Statement of Financial Position of the Agency.
Valuation
Land and Buildings and Dwellings are held at current market values assessed by the VOA.
Other items of property, plant and equipment are held at depreciated historic cost. From 1 April 2007 these assets were no longer revalued using indices as the movement in these indices was considered to be negligible and the economic lives of the assets so short that the relative value of any potential adjustment was not likely to be significant.
Infrastructure Assets - the road network
The road network is valued at its depreciated replacement cost in terms of the guidance in the Financial Reporting Manual for specialist assets for which market valuations are not available. Land is valued by rates supplied by the Valuation Office Agency (VOA).
The road pavement element is valued using agreed rates determined to identify the gross replacement cost of applicable types of road on the basis of new construction on a greenfield site. These rates are re-valued annually using indices to reflect current prices and are also updated when new construction costs become available as comparators to the costs previously identified for specific road types.
Structures are valued using agreed rates determined to identify the replacement cost of applicable types of structure on the basis of new construction on a greenfield site where these are available but special structures, which tend to be one off by their nature, are valued using specific costs that are updated to current prices.
Communications are valued using agreed rates determined to identify the replacement cost of applicable types of communications.
Depreciation is accounted for in respect of the road pavement by reference to the service potential assessed by condition surveys that are carried out over the whole network as part of a rolling programme that covers every section of road at least every five years. The Structures and Communications elements are depreciated using the straight line method applied to the revalued replacement costs, and also inspected every five years to identify any other changes. Land is not depreciated.
The indexation factors applied are:
| Road Pavement and Structures | Baxter Index, published quarterly by the Department for Business, Innovation and Skills |
| Communications | Traffic Scotland provides new gross and calculated depreciated values each year. |
| Land | Land indices produced by VOA |
Upwards movements in value are taken to the revaluation reserve. Downward movements in value are set off against any credit balance held in the revaluation reserve until the credit is exhausted and thereafter expensed in the Statement of Comprehensive Net Expenditure.
Assets Under Construction
Road building schemes in the course of construction are capitalised at actual cost with no indexation.
Land and Buildings
Land and property released from road schemes and now deemed surplus to requirements is transferred to, and accounted for, as Assets Held For Sale (see Note 1.7).
Information Technology
Information technology assets are stated at historical cost with no indexation applied.
1.6 Depreciation
Infrastructure assets - the road network
Roads and associated street furniture are surveyed over a five year rolling period to assess their estimated remaining useful lives and the resultant assessment is used to determine their valuation, with any changes reflected as a condition variance. The variance is valued according to the rates applied to the respective sections of road.
The useful economic lives of elements of the road valuation are assessed according to the following design lives:
| Life in years | |
|---|---|
| Road surface, sub-pavement layer, fencing, drainage and lighting | 20 to 50 |
| Road bridges, tunnels and underpasses | 20 to 120 |
| Culverts, retaining walls and gantries | 20 to 120 |
| Road communications assets | 15 to 50 |
| Assets under construction | No depreciation |
The annual depreciation charge for the road surface is the value of the service potential replaced through the maintenance programme plus, or minus, any adjustment resulting from the annual condition variance.
Structures and communications assets are depreciated on a straight line basis over the expected useful life of the asset, normally 20 to 120 years.
Land is considered to have an indefinite life and is not depreciated.
Non-Infrastructure Assets
With the exception of surplus land and properties awaiting resale, non-infrastructure assets are depreciated on a straight line basis over the expected life of the particular asset category as follows:
| Life in years | |
|---|---|
| Freehold buildings | 5 to 100 |
| Leasehold buildings | Shorter of length of lease or specific asset life |
| IT Equipment | 3 to 10 |
1.7 Assets Held For Sale
A property is derecognised and held for sale according to the requirements of IFRS5 when all of the following requirements are met:
- it is available for immediate sale;
- a plan is in place, supported by management, and steps have been taken to conclude the sale; and
- it is actively marketed and there is an expectation that the sale will be made in less than 12 months.
Assets held for sale are those which Transport Scotland expects to sell within one year. Assets classified as held for sale are measured at the lower of their carrying amounts and their fair value less cost of sale. Assets classified as held for sale are not subject to depreciation or amortisation.
1.8 Donated Assets
Donated PPE assets are capitalised at their valuation on receipt and this value is credited to the Donated Asset Reserve. Any subsequent revaluations are also accounted for through this reserve. Each year an amount equal to the depreciation charge on the asset is released from the Donated Asset Reserve to the Statement of Comprehensive Net Expenditure.
1.9 Intangible Non-Current Assets
Intangible Non-Current assets are capitalised where expenditure of £1,000 or more is incurred in acquiring them. These are valued at historic cost and amortised on a straight line basis over the expected life of the asset.
1.10 Financial Instruments
Transport Scotland measures and presents financial instruments in accordance with IAS37, IAS39, and IFRS7 as interpreted and adapted by the Government Financial Reporting Manual (FReM). IAS39 requires the classification of financial instruments into separate categories for which the accounting treatment is different. Transport Scotland has classified its financial instruments as follows:
Financial Assets:
- Cash and cash equivalents, trade receivables, short term loans, accrued income relating to EU funding, amounts receivable and shares and loans will be reported in the 'Loans and Receivables' category.
- Shares held in and loans advanced to public sector bodies will be reported in a separate category.
Financial Liabilities:
- Borrowings, trade payables, accruals, payables, bank overdrafts and financial guarantee contracts are classified as 'Other Liabilities'.
Financial instruments are initially measured at fair value with the exception of 'Shares held in and loans advanced to public sector bodies' which are held at historic cost. The fair value of the financial assets and liabilities is determined as follows:
- the fair value of cash and cash equivalents and current non-interest bearing monetary financial assets and financial liabilities approximate their carrying value, and
- the fair value of other non current monetary financial assets and financial liabilities is based on market values where a market exists, or has been determined by discounting expected cash flows by the current interest rate for financial assets and liabilities with similar risk profiles.
Financial instruments subsequent measurement depends on their classification:
- all financial instruments that are held at fair value with any changes going through the Statement of Comprehensive Net Expenditure
- loans and receivables and other liabilities are held at amortised cost and not revalued unless they are included in a fair value hedge accounting relationship. Any impairment losses are charged to the Statement of Comprehensive Net Expenditure.
- shares held in and loans advanced to public sector bodies are held at historic cost less impairment with any impairment losses going through the Statement of Comprehensive Net Expenditure.
1.11 Rail Infrastructure Expenditure
Rail infrastructure expenditure is differentiated between capital and resource. The capital expenditure relates to infrastructure expenditure that is capital in nature, but the asset created or enhanced is reflected by Network Rail rather than Transport Scotland. The capital expenditure reflects both direct activity in the year and the costs, in terms of capital and interest, of financing projects undertaken by Network Rail and recovered over a 30 year period.
1.12 Operating Income
Operating income relates directly to the operating activities of Transport Scotland. It principally comprises fees and charges for services provided on a full-cost basis to external customers in both the public and private sectors. It includes not only income retained but also income due to the Consolidated Fund, in accordance with the FReM. Operating income is stated net of VAT.
1.13 Administration and Programme Expenditure
The Statement of Comprehensive Net Expenditure is analysed between administration and programme income and expenditure, in line with the definition of administration costs by HM Treasury.
Administration costs reflect the costs of running the Agency and include staff costs as well as accommodation, communications and office supplies.
Programme costs reflect the costs of operating, maintaining, managing and improving the road and rail infrastructure and aviation and maritime in Scotland over which Transport Scotland has power, as well as expenditure incurred in delivering transport policies such as concessionary fares and grants and subsidies to contribute to the provision of bus, ferry and air services.
1.14 Grants Payable
Grants payable are recorded as expenditure in the period that the underlying activity giving entitlement to the grant occurs. Where necessary obligations in respect of grant schemes are recognised as liabilities.
1.15 Pensions
Past and present employees are covered by the provisions of the Principal Civil Service Pension Scheme (PCSPS), more details of which can be found in note 3. The PCSPS is an unfunded multi-employer defined benefit scheme. Transport Scotland's contributions are recognised as a cost in the year. This complies with IAS26.
1.16 Private Finance Initiative (PFI) Transactions
PFI transactions are accounted for in accordance with the IFRS based FReM. PFI contracts that meet the definition of service concession arrangements are accounted for in accordance with IFRIC12.
Transport Scotland currently has 2 existing completed PFI schemes (see note 15 for more details). In both cases these assets are examples of service concessions under IFRIC12. The private sector operator is contractually obliged to provide the services related to the infrastructure on behalf of the Scottish Government.
The infrastructure is recognised as a non-current asset when it comes into use.
The unitary payment is divided into 3 elements, namely service charge, repayment of the capital element of the contract obligation and the interest expense on it (using the interest rate implicit in the contract).
1.17 Leases
At their inception, leases are classified as operating or finance leases, based on the extent to which the risks and rewards of ownership lie with the Agency. In making the classification, the Agency considers whether the land and buildings elements of arrangements which cover both elements need to be separately accounted for.
Arrangements whose fulfilment is dependent on the use of a specific asset or which convey a right to use an asset, are assessed at their inception to determine if they contain a lease. If an arrangement is found to contain a lease, that lease is then classified as an operating or finance lease.
Rentals under operating leases are charged to the Statement of Comprehensive Net Expenditure on a straight line basis over the term of the lease. Where the arrangement includes incentives, such as rent-free periods, the value is recognised on a straight-line basis over the lease term. Where the substantial risks and rewards of ownership are borne by the Agency, the asset is recorded as property, plant and equipment and a liability to the lessor is recorded of the minimum lease payments discounted by the interest rate implicit in the lease. The interest element of the finance lease payment is charged to the Statement of Comprehensive Net Expenditure over the period of the lease at a constant rate in relation to the balance outstanding.
1.18 Provisions
Transport Scotland provides for legal and constructive obligations that are of uncertain timing or amount in the Statement of Financial Position at 31 March 2011 on the basis of the best estimate available. Provisions are charged to the Statement of Comprehensive Net Expenditure unless they will be capitalised as part of additions to non-current assets.
1.19 Contingent Liabilities
Contingent Liabilities are recognised in respect of:
- possible obligations arising from past events whose existence will be confirmed by the occurrence of uncertain future events outwith Transport Scotland's control; or
- present obligations arising from past events where it is not likely that resources will be required to settle the obligation or it is not possible to measure it reliably.
1.20 VAT
Most of the Transport Scotland VAT input tax on purchases is non-recoverable. Irrecoverable VAT is charged to the relevant expenditure category or included in the capitalised purchase cost of non current assets. To avoid the distortion of competition, VAT can be recovered on certain categories of expenditure under s41 of the VAT Act 1994. Output VAT is charged on any taxable outputs.
Transport Scotland is not separately registered for VAT but is part of the overall Scottish Government VAT registration. The quarterly VAT return is completed centrally by the Scottish Government.
Apart from minor amounts arising from timing differences any outstanding VAT balances are accounted for by the Scottish Government.
1.21 Segmental Reporting
IFRS8 Segmental Reporting requires operating segments to be identified on the basis of internal reports about components of Transport Scotland that are regularly reviewed by the chief operating decision maker in order to manage their financial performance.
1.22 Trade Receivables
Trade receivables are valued at their carrying amount. A provision for impairment is made where there is objective evidence that Transport Scotland will not be able to collect all amounts due according to the original terms of the receivables.
1.23 Trade Payables
Trade payables are valued at their carrying amount.
1.24 Short Term Employee Benefits
A liability and expense is recognised for leave entitlement, bonuses and other short-term benefits when the employees render service that increases their entitlement to these benefits. As a result an accrual has been made for leave earned but not taken.
2. Prior Year Adjustments
Merger Accounting
On 1st August 2010 Transport Scotland merged with the former Scottish Government Transport Directorate. The Financial Reporting Manual requires that the results and cash flows of Transport Scotland and the former Transport Directorate are brought into the financial statements of the combined body from the beginning of the financial year, with any adjustments required to achieve uniformity of accounting policies. No such adjustments were identified as necessary.
Merger accounting also requires that corresponding figures are restated by including the results for Transport Scotland and the former Transport Directorate for the previous period.
Cost of Capital
Her Majesty's Treasury, under Clear Line of Sight - the Alignment Project has removed the cost of capital charges from budgets, estimates and resource accounts. From Financial Year 2010-11 onwards the cost of capital charges is no longer applicable. The prior year comparisons have been restated to reflect this change.
Roads Re-measurement
Adjustments to the valuation of the road network arise on completion of road schemes transferred from Assets Under Construction at cost, which are then valued at rates different from cost. Such differences are treated as revaluations. Other adjustments can arise through updates to the measurement of the dimension of the assets and these will be reflected through the Statement of Comprehensive Net Expenditure, General Fund or Revaluation Reserve as appropriate to circumstance.
The Road Asset Valuation System (RAVS) used to determine the value of the road network relies on a series of engineering measurements to be applied in a model that assigns agreed rates to these measurements according to the length and type of road identified. Much of the data used for these measurements had not been reviewed since it was first used to construct the initial valuation of the road network in 1998 so Transport Scotland decided to undertake a route and branch review of each section of road using physical inspection to verify the type and lengths of each section.
This led to several variations in the measurements applied in RAVS which were identified in 2010-11, leading to the overall reduction in the net book value of the network in the accounts of £652million, representing 4.2% of the net book value at 31 March 2009. This reduction mainly related to the data in respect of the types of roads being applied, in relation to the categorisation of measurements of individual sections of road.
This reduction in the valuation is considered to be sufficiently material to be reflected as a prior period adjustment to the opening General Fund and Revaluation Reserve. There is no impact on the Statement of Net Comprehensive Expenditure for 2009-10 or 2010-11. The adjustment is reflected as a reduction in the General Fund of £358.7m and a reduction in Revaluation Reserve of £293.5million.
The above inspection was carried out only in respect of the road type and a further review is to be undertaken in 2011-12 of the length of each section of the road network. It is not possible to determine the outcome of this further review and its potential impact on the valuation of the road network.
Details of the adjustments made to the corresponding figures in the Statement of Financial Position and Statement of Comprehensive Net Expenditure are shown in the following two tables.
TABLE 1
| Transport Scotland £'000 | Transport Directorate £'000 | Roads Re-measurement £'000 | Restated at 31/3/10 £'000 | |
|---|---|---|---|---|
| Non-current assets | ||||
| Property, plant & equipment | 16,029,642 | 34 | (652,184) | 15,377,492 |
| Intangible assets | 13 | 0 | 0 | 13 |
| Financial assets | 0 | 66,556 | 0 | 66,556 |
| Other receivables | 3,259 | 0 | 0 | 3,259 |
| Total non-current assets | 16,032,914 | 66,590 | (652,184) | 15,447,320 |
| Current assets | ||||
| Trade and other receivables | 54,673 | 6,832 | 0 | 61,505 |
| Cash & cash equivalents | 0 | 0 | 0 | 0 |
| Financial assets | 0 | 2,038 | 0 | 2,038 |
| Total current assets | 54,673 | 8,870 | 0 | 63,543 |
| Total assets | 16,087,587 | 75,460 | (652,184) | 15,510,863 |
| Current liabilities | ||||
| Provisions | (31,314) | 0 | 0 | (31,314) |
| Trade payables | (419) | (8,595) | 0 | (9,014) |
| Other payables | (161,999) | (22,720) | 0 | (184,719) |
| Financial liabilities | (4,377) | 0 | 0 | (4,377) |
| Total current liabilities | (198,109) | (31,315) | 0 | (229,424) |
| Total assets less current liabilities | 15,889,478 | 44,145 | (652,184) | 15,281,439 |
| Non-current liabilities | ||||
| Provisions | (37,900) | 0 | 0 | (37,900) |
| Other payables | (9,189) | 0 | 0 | (9,189) |
| Financial liabilties | (199,875) | 0 | 0 | (199,875) |
| Total non-current liabilities | (246,964) | 0 | 0 | (246,964) |
| Assets less liabilities | 15,642,514 | 44,145 | (652,184) | 15,034,475 |
| Taxpayers' equity | ||||
| General fund | 8,315,064 | 44,145 | (358,701) | 8,000,508 |
| Donated asset reserve | 890 | 0 | 0 | 890 |
| Revaluation reserve | 7,326,560 | 0 | (293,483) | 7,033,077 |
| Total taxpayers' equity | 15,642,514 | 44,145 | (652,184) | 15,034,475 |
| Transport Scotland £'000 | Transport Directorate £'000 | Roads Re-measurement £'000 | Restated at 31/3/09 £'000 | |
|---|---|---|---|---|
| Non-current assets | ||||
| Property, plant & equipment | 15,148,975 | 19 | (652,184) | 14,496,810 |
| Intangible assets | 0 | 0 | 0 | 0 |
| Financial assets | 0 | 61,818 | 0 | 61,818 |
| Other receivables | 3,768 | 0 | 0 | 3,768 |
| Total non-current assets | 15,152,743 | 61,837 | (652,184) | 14,562,396 |
| Current assets | ||||
| Trade and other receivables | 56,044 | 7,275 | 0 | 63,319 |
| Cash & cash equivalents | 0 | 0 | 0 | 0 |
| Financial assets | 0 | 2,040 | 0 | 2,040 |
| Total current assets | 56,044 | 9,315 | 0 | 65,359 |
| Total assets | 15,208,787 | 71,152 | (652,184) | 14,627,755 |
| Current liabilities | ||||
| Provisions | (37,976) | (3,000) | 0 | (40,976) |
| Trade payables | (504) | (8,095) | 0 | (8,599) |
| Other payables | (71,825) | (44,488) | 0 | (116,313) |
| Financial liabilities | (4,068) | 0 | 0 | (4,068) |
| Total current liabilities | (114,373) | (55,583) | 0 | (169,956) |
| Total assets less current liabilities | 15,094,414 | 15,569 | (652,184) | 14,457,799 |
| Non-current liabilities | ||||
| Provisions | (30,545) | 0 | 0 | (30,545) |
| Other payables | (11,266) | 0 | 0 | (11,266) |
| Financial liabilties | (204,251) | 0 | 0 | (204,251) |
| Total non-current liabilities | (246,062) | 0 | 0 | (246,062) |
| Assets less liabilities | 14,848,352 | 15,569 | (652,184) | 14,211,737 |
| Taxpayers' equity | ||||
| General fund | 8,160,335 | 15,569 | (358,701) | 7,817,203 |
| Donated asset reserve | 967 | 0 | 0 | 967 |
| Revaluation reserve | 6,687,050 | 0 | (293,483) | 6,393,567 |
| Total taxpayers' equity | 14,848,352 | 15,569 | (652,184) | 14,211,737 |
TABLE 2
| Transport Scotland £'000 | Transport Directorate £'000 | Remove Cost of Capital Charge | Restated at 31/3/10 £'000 | |
|---|---|---|---|---|
| Administration Costs | ||||
| Staff costs | 10,483 | 3,390 | 13,873 | |
| Other administration costs | 5,497 | 206 | 5,703 | |
| Operating income | (77) | 0 | (77) | |
| Total administration costs | 15,903 | 3,596 | 0 | 19,499 |
| Programme costs | ||||
| Staff costs | 4,121 | 0 | 4,121 | |
| Programme costs | 1,888,632 | 282,386 | (538,722) | 1,632,296 |
| Income | (185) | (2,096) | (2,281) | |
| Total programme costs | 1,892,568 | 280,290 | (538,722) | 1,634,136 |
| Totals | 1,908,471 | 283,886 | (538,722) | 1,653,635 |
| Net operating costs | 1,908,471 | 283,886 | (538,722) | 1,653,635 |
3. Staff Numbers and Costs
| 2010-11 | 2009-10 | |||||
|---|---|---|---|---|---|---|
| Permanently Employed Staff | Others | Total | Permanently Employed Staff | Others | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Wages and salaries costs | 10,400 | 1,234 | 11,634 | 9,668 | 1,419 | 11,087 |
| Social security costs | 819 | 0 | 819 | 755 | 0 | 755 |
| Other pension costs | 1,970 | 0 | 1,970 | 1,908 | 0 | 1,908 |
| Early Retiral Costs | 1,211 | 0 | 1,211 | 123 | 0 | 123 |
| Staff costs in programme | 5,089 | 0 | 5,089 | 4,121 | 0 | 4,121 |
| Total staff costs | 19,489 | 1,234 | 20,723 | 16,575 | 1,419 | 17,994 |
Permanent staff are civil servants who have an employment contract with Transport Scotland. Others are agency staff.
Wages & salaries include gross salaries, performance pay or bonuses received in year, overtime, recruitment and retention allowances, private office allowances, ex-gratia payments and any other allowance to the extent that it is subject to UK taxation. The payment of legitimate expenses is not part of salary.
Transport Scotland granted 9 staff early retirement and 21 staff early severance in 2010-11 (2009-10, 0 and 3) under the flexible early retirement and flexible early severance terms of the Civil Service Compensation Scheme. No staff retired early on ill-health grounds.
The average annualised sick days for full time equivalent staff is 5.83 days.
| 2010-11 | 2009-10 | |||||
|---|---|---|---|---|---|---|
| Exit package cost band | Number of compulsory redundancies | Number of other departures agreed | Total number of exit packages by cost band | Number of compulsory redundancies | Number of other departures agreed | Total number of exit packages by cost band |
| less than £10,000 | 0 | 3 | 3 | 0 | 0 | 0 |
| £10,000 to £25,000 | 0 | 9 | 9 | 0 | 1 | 1 |
| £25,000 to £50,000 | 0 | 7 | 7 | 0 | 1 | 1 |
| £50,000 to £100,000 | 0 | 9 | 9 | 0 | 1 | 1 |
| £100,000 to £150,000 | 0 | 1 | 1 | 0 | 0 | 0 |
| £150,000 to £200,000 | 0 | 1 | 1 | 0 | 0 | 0 |
| over £200,000 | 0 | 0 | 0 | 0 | 0 | 0 |
| Total Number of exit packages | 0 | 30 | 30 | 0 | 3 | 3 |
| Total Resource cost (£'000) | £0 | £1,211 | £1,211 | £0 | £124 | £124 |
Exit costs are provided for in full in 2010-11 but the staff costs incurred only includes the elements actually paid in year.
Pension Costs
The Principal Civil Service Pension Scheme (PCSPS) is an unfunded multi-employer defined benefit scheme but Transport Scotland is unable to identify its share of the underlying liabilities. The scheme Actuary valued the scheme liabilities as at 31 March 2007. Details can be found in the resource accounts of the Cabinet Office: Civil Superannuation (http://www.civilservice-pensions.gov.uk).
From 30 July 2007, new civil servants may join one of two schemes, either Nuvos or Partnership. Nuvos is a career average defined benefit scheme and Partnership is a defined contribution arrangement (Partnership Pension Account).
For 2010-11, employers' contributions of £1,970k were payable to the PCSPS at one of four rates in the range 16.7% to 24.3% of pensionable pay, based on salary bands (the rates were unchanged from 2009-10). The scheme's Actuary reviews employer contributions every four years following a full scheme valuation.
The contribution rates are set to meet the cost of the benefits accruing during 2009-10 to be paid when the member retires, and not the benefits paid during this period to existing pensioners.
(a) Classic Scheme
Benefits accrue at the rate of 1/80th of pensionable pay for each year of service. In addition, a lump sum equivalent to three years pension is payable on retirement. Members pay contributions of 1.5% of pensionable earnings.
(b) Premium Scheme
Benefits accrue at the rate of 1/60th of final pensionable earnings for each year of service. Unlike the Classic scheme, there is no automatic lump sum, but members can commute some of their pension to provide a lump sum. Members pay contributions of 3.5% of pensionable earnings.
(c) Classic Plus Pension Scheme
This is essentially a variation of Premium, but with benefits in respect of service before 1 October 2002 calculated broadly as per Classic.
(d) Nuvos Pension Account
Like the Premium Scheme there is no automatic lump sum, but members can commute some of their pension to provide a lump sum. Members pay contributions of 3.5% of pensionable earnings.
(e) Partnership Pension Account
The Partnership Pension Account is a stakeholder pension arrangement. The employer makes a basic contribution of between 3% and 12.5% (depending on the age of the member) into a stakeholder pension product chosen by the employee from a selection of approved products. The employee does not have to contribute but where they do make contributions, these will be matched by the employer up to a limit of 3% of pensionable salary (in addition to the employer's basic contribution). Employers may also contribute a further 0.8% of pensionable salary to cover the cost of the future provision of lump sum.
| 2010-11 | 2009-10 | |||||
|---|---|---|---|---|---|---|
| Permanent Staff | Others | Total | Permanent Staff | Others | Total | |
| Trunk roads major projects | 58 | 4 | 62 | 57 | 6 | 63 |
| Trunk road maintenance | 110 | 8 | 118 | 92 | 14 | 106 |
| Rail | 83 | 14 | 97 | 71 | 15 | 86 |
| Strategy & investments | 41 | 0 | 41 | 45 | 2 | 47 |
| Finance and other | 62 | 6 | 68 | 58 | 10 | 68 |
| Aviation, maritime, freight & canals | 37 | 2 | 39 | 34 | 5 | 39 |
| Transport policy | 27 | 7 | 34 | 30 | 6 | 36 |
| Total average staff numbers | 418 | 41 | 459 | 387 | 58 | 445 |
The above figures exclude consultants.
| 2010-11 | 2009-10 | ||
|---|---|---|---|
| note | £'000 | £'000 | |
| Rentals under operating leases | 1,097 | 1,295 | |
| Accommodation | 1,546 | 1,320 | |
| Office costs and supplies | 973 | 1,558 | |
| Hospitality | 53 | 65 | |
| Travel | 971 | 323 | |
| Training | 90 | 198 | |
| Consultancy | 43 | 253 | |
| Non-cash items | |||
| Depreciation | 7/8 | 533 | 478 |
| Prior year depreciation adjustment | 0 | 6 | |
| Auditors remuneration and expenses - external | 22 | 198 | 207 |
| Total administration costs | 5,504 | 5,703 | |
| 2010-11 | 2009-10 | ||
|---|---|---|---|
| note | £'000 | £'000 | |
| Other programme expenditure | |||
| Roads | |||
| Capital maintenance | 77,076 | 90,429 | |
| Current maintenance | 130,552 | 99,307 | |
| Forth replacement crossing | 18,889 | 30,639 | |
| Other | 215 | 284 | |
| Interest charges | 14,949 | 14,461 | |
| PFI service charges | 21,419 | 19,967 | |
| Rail | |||
| ScotRail franchise | 290,121 | 271,268 | |
| Rail infrastructure in Scotland capital | 257,688 | 238,300 | |
| Rail Infrastructure in Scotland resource | 126,000 | 128,669 | |
| Scotland railways | 0 | 2,156 | |
| Other | 487 | 478 | |
| Concessionary travel | |||
| Smartcard applications | 9,279 | 9,249 | |
| Concessionary travel schemes | 175,576 | 189,573 | |
| Other public transport | |||
| Major public transport projects - rail | 74,722 | 166,089 | |
| Transport information | 1,163 | 1,022 | |
| Strategic projects review | 2,647 | 1,290 | |
| Ferry services in Scotland | 107,369 | 101,295 | |
| Air services in Scotland | 33,067 | 36,017 | |
| Bus services in Scotland | 62,932 | 64,413 | |
| Other transport directorate programmes | 34,514 | 34,598 | |
| Central government grants to local authorities | 41,080 | 39,907 | |
| Non-cash items | |||
| Depreciation | 7/8 | 43,857 | 92,885 |
| Total other programme costs | 1,523,602 | 1,632,296 | |
* The Rail infrastructure in Scotland capital figure of £257,688k was paid directly to Network Rail
** The Rail infrastructure in Scotland resource figure of £126,000k was paid to Network Rail via DfT
*** Payments to Scotrail Franchise in 2010/11 totalled £290,201k as per Note 17. This included depreciation costs totalling £79k which are included within the Depreciation charges (under non-cash items) as required by the International Financial Reporting Standards (IFRS).
| 2010-11 | 2009-10 | ||
|---|---|---|---|
| note | £'000 | £'000 | |
| Programme income | |||
| Interest receivable - loans | (2,199) | (2,096) | |
| Rental income - land & properties | (344) | (162) | |
| Sale of land and property | (80) | (23) | |
| (2,623) | (2,281) | ||
| Operating income | |||
| Release from donated asset reserve | SCITE | (77) | (77) |
| (77) | (77) | ||
| Total operating income | (2,700) | (2,358) | |
Operating income principally arises from:
- interest receivable from loans to Caledonian Maritime Asssets Limited (CMAL);
- rental income from land and properties acquired for road schemes and now surplus to requirements; and
- sale of land and property which is surplus to the requirements of the road or rail scheme.
| 2010-11 | Road Network | Land | Buildings | IT | Leasehold Improvements | Assets under Construction | Total |
|---|---|---|---|---|---|---|---|
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Cost or Valuation | |||||||
| At 1st April 2010 | 17,317,126 | 1,450 | 1,198 | 4,170 | 4,167 | 580,971 | 17,909,082 |
| Detrunkings | (29,334) | 0 | 0 | 0 | 0 | 0 | (29,334) |
| Capital additions | 36,830 | 0 | 0 | 118 | 0 | 223,351 | 260,299 |
| Disposals | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Revaluation | 1,124,050 | 116 | 169 | 0 | 0 | 0 | 1,124,335 |
| Current valuation adjustments | (50,177) | 0 | 0 | 0 | 0 | 0 | (50,177) |
| Historic valuation adjustments | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Transfers and reclassifications | 0 | 835 | 1,860 | (35) | (2,659) | 0 | 1 |
| Transfers to assets held for sale | 0 | (432) | 0 | 0 | 0 | (5) | (437) |
| Balance at 31st March 2011 | 18,398,495 | 1,969 | 3,227 | 4,253 | 1,508 | 804,317 | 19,213,769 |
| Depreciation | |||||||
| At 1st April 2010 | 2,527,459 | 0 | 5 | 2,586 | 1,540 | 0 | 2,531,590 |
| Detrunkings | (29,334) | 0 | 0 | 0 | 0 | 0 | (29,334) |
| Charge for the year | 43,353 | 0 | 182 | 590 | 249 | 0 | 44,374 |
| Disposals | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Revaluation | 183,480 | 0 | 45 | 0 | 0 | 0 | 183,525 |
| Current valuation adjustments | (19,293) | 0 | 0 | 0 | 0 | 0 | (19,293) |
| Historic valuation adjustments | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Transfers and reclassifications | 0 | 0 | 652 | (24) | (626) | 0 | 2 |
| Balance at 31st March 2011 | 2,705,665 | 0 | 884 | 3,152 | 1,163 | 0 | 2,710,864 |
| Net Book Value at 31st March 2011 | 15,692,830 | 1,969 | 2,343 | 1,101 | 345 | 804,317 | 16,502,905 |
| Net Book Value at 31st March 2010 | 14,789,667 | 1,450 | 1,193 | 1,584 | 2,627 | 580,971 | 15,377,492 |
| Asset Financing | |||||||
| Owned | 15,131,471 | 1,969 | 2,343 | 1,101 | 345 | 804,317 | 15,941,546 |
| Finance Leased | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| On Balance Sheet PFI | 561,359 | 0 | 0 | 0 | 0 | 0 | 561,359 |
| Net Book Value at 31st March 2011 | 15,692,830 | 1,969 | 2,343 | 1,101 | 345 | 804,317 | 16,502,905 |
| 2009-10 | Restated Road Network | Land | Buildings | IT | Leasehold Improvements | Assets under Construction | Restated Total |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Cost or Valuation | |||||||
| At 1st April 2009 | 16,438,310 | 178 | 1,155 | 4,074 | 4,062 | 351,202 | 16,798,981 |
| Detrunkings | (6,630) | 0 | 0 | 0 | 0 | 0 | (6,630) |
| Capital additions | 30,991 | 1,272 | 0 | 119 | 0 | 276,617 | 308,999 |
| Disposals | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Revaluation | 851,245 | 0 | 43 | 0 | 110 | 0 | 851,398 |
| Current valuation adjustments | (68,861) | 0 | 0 | 0 | 0 | 0 | (68,861) |
| Historic valuation adjustments | 25,223 | 0 | 0 | (23) | (5) | 0 | 25,195 |
| Transfers and reclassifications | 46,848 | 0 | 0 | 0 | 0 | (46,848) | 0 |
| Balances at 31st March 2010 | 17,317,126 | 1,450 | 1,198 | 4,170 | 4,167 | 580,971 | 17,909,082 |
| Depreciation | |||||||
| At 1st April 2009 | 2,299,142 | 0 | 4 | 1,952 | 1,073 | 0 | 2,302,171 |
| Detrunkings | (1,110) | 0 | 0 | 0 | 0 | 0 | (1,110) |
| Charge for the year | 92,310 | 0 | 1 | 643 | 415 | 0 | 93,369 |
| Disposals | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Revaluation | 146,874 | 0 | 0 | 0 | 36 | 0 | 146,910 |
| Current valuation adjustments | 67,162 | 0 | 0 | 7 | 0 | 0 | 67,169 |
| Historic valuation adjustments | (76,919) | 0 | 0 | (16) | 16 | 0 | (76,919) |
| Transfers and reclassifications | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Balances at 31st March 2010 | 2,527,459 | 0 | 5 | 2,586 | 1,540 | 0 | 2,531,590 |
| Net Book Value at 31st March 2010 | 14,789,667 | 1,450 | 1,193 | 1,584 | 2,627 | 580,971 | 15,377,492 |
| Net Book Value at 1st April 2009 | 14,139,168 | 178 | 1,151 | 2,122 | 2,989 | 351,202 | 14,496,810 |
| Asset Financing | |||||||
| Owned | 14,431,910 | 1,450 | 1,193 | 1,584 | 2,627 | 580,971 | 15,019,735 |
| Finance Leased | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| On Balance Sheet PFI | 357,757 | 0 | 0 | 0 | 0 | 0 | 357,757 |
| Net Book Value at 31st March 2010 | 14,789,667 | 1,450 | 1,193 | 1,584 | 2,627 | 580,971 | 15,377,492 |
Detrunkings reflect transfer of road assets to local authorities, with the corresponding entry flowing through the General Fund (SCITE), and the write-off of capitalised maintenance expenditure not reflected in valuation transactions.
EC Harris LLP (RICS Regulated) carries out an annual valuation of the trunk road network.
Revaluation is based on Baxter's indexation for all road network assets apart from land. Land is valued at market rates based on information supplied by the Valuation Office Agency. All revaluation movement is reflected through the revaluation reserve (SCITE).
| 2010-11 | Software Licences |
|---|---|
| £'000 | |
| At replacement cost or valuation | |
| At 1st April 2010 | 96 |
| Capital additions | 17 |
| Disposals | 0 |
| Historic valuation adjustments | 0 |
| Transfers and reclassifications | (2) |
| Balance at 31st March 2011 | 111 |
| Accumulated Amortisation | |
| At 1st April 2010 | (83) |
| Charge for the year | (16) |
| Revaluations | 0 |
| Disposals | 0 |
| Historic valuation adjustments | 0 |
| Transfers and reclassifications | 2 |
| Balance at 31st March 2011 | (97) |
| Net Book Value at 31st March 2011 | 14 |
| 2009-10 | Software Licences |
| £'000 | |
| At replacement cost or valuation | |
| At 1st April 2009 | 53 |
| Capital additions | 0 |
| Disposals | 0 |
| Historic valuation adjustments | 43 |
| Transfers and reclassifications | 0 |
| Balance at 31st March 2010 | 96 |
| Accumulated Amortisation | |
| At 1st April 2009 | (53) |
| Charge for the year | (14) |
| Revaluations | 0 |
| Disposals | 0 |
| Historic valuation adjustments | (16) |
| Transfers and reclassifications | 0 |
| Balance at 31st March 2010 | (83) |
| Net Book Value at 31st March 2010 | 13 |
Purchased computer software licences are capitalised as intangible non-current assets where expenditure of £1,000 or more is incurred. These are valued at historic cost and amortised on a straight line basis over the expected life of the asset.
| 2010-11 | Interests in Nationalised Industries & Limited Companies | Voted Loans | Total |
|---|---|---|---|
| £'000 | £'000 | £'000 | |
| Balance at 1 April 2010 | 20,550 | 46,006 | 66,556 |
| Add element reported within current assets | 0 | 2,038 | 2,038 |
| Advances and acquisitions | |||
| Cash advances | 0 | 10,802 | 10,802 |
| Repayments and disposals | 0 | (2,038) | (2,038) |
| Balance at 31 March 2011 | 20,550 | 56,808 | 77,358 |
| Loans repayable within 12 months transferred to current assets | 0 | (2,038) | (2,038) |
| Balance at 31 March 2011 | 20,550 | 54,770 | 75,320 |
| 2009-10 | Interests in Nationalised Industries & Limited Companies | Voted Loans | Total |
| £'000 | £'000 | £'000 | |
| Balance at 1 April 2009 | 20,550 | 41,268 | 61,818 |
| Add element reported within current assets | 0 | 2,040 | 2,040 |
| Advances and acquisitions | |||
| Cash advances | 0 | 6,798 | 6,798 |
| Repayments and disposals | 0 | (2,062) | (2,062) |
| Balance at 31 March 2010 | 20,550 | 48,044 | 68,594 |
| Loans repayable within 12 months transferred to current assets | 0 | (2,038) | (2,038) |
| Balance at 31 March 2010 | 20,550 | 46,006 | 66,556 |
Investments have been measured and presented in accordance with IAS32, IAS39 and IFRS7 as modified by the FReM (see note 1.10).
As at 31 March 2011, the Scottish Ministers, represented by Transport Scotland, are the sole shareholder in Caledonian Maritime Assets Limited, David MacBrayne Limited and the Highlands and Islands Airports Limited. The Scottish Ministers hold the following investments:
| Caledonian Maritime Assets Limited | 1,500,000 ordinary shares of £10 each |
| David MacBrayne Limited | 5,500,002 ordinary shares of £1 each |
| Highlands and Islands Airports Limited | 50,000 ordinary shares of £1 each |
These organisations are operated and managed independently of the Scottish Government, and do not fall within the Departmental Accounting boundary. The companies publish an annual report and accounts. The net assets and results of the above bodies are summarised below.
| Highlands and Islands Airports Ltd | Caledonian Maritime Assets Ltd | David MacBrayne Ltd | |
|---|---|---|---|
| £m | £m | £m | |
| Net assets as at 31 March 2011 | 1.9 | 77.3 | 20.7 |
| Turnover | 34.9 | 15.8 | 179.9 |
| Profit/(Loss) for the financial year | (2.3) | (5.0) | (1.1) |
Caledonian Maritime Asset Limited results are in draft as their accounts are yet to be published.
Highlands and Islands Airports Limited (HIAL)
The Scottish Ministers are the sole shareholders in HIAL. The company's purpose is to maintain the safe operation of its airports to support economic and social development in the Highland and Islands. HIAL currently operates 10 airports in the Highlands and Islands of Scotland. In December 2007, HIAL assumed responsibility for the operation of Dundee Airport and now operates it via a wholly owned subsidiary company, Dundee Airport.
Caledonian Maritime Assets Limited (CMAL)
Following a restructure of the Caledonian MacBrayne group in 2006, Caledonian MacBrayne Limited became known as Caledonian Maritime Assets Limited (CMAL) and CalMac Ferries Limited (CFL) was incorporated.
CFL took over operation of the Clyde & Hebrides Ferry Services as successor to Caledonian MacBrayne Limited. CMAL retained ownership of all vessels and ports, which it leases to the operator of the Clyde & Hebrides Ferry services (currently CFL). CMAL remains wholly owned by Scottish Ministers.
David MacBrayne Limited
Scottish Ministers previously owned 2 shares of £1 in a dormant company, David MacBrayne Limited. In the course of the restructuring of the Caledonian MacBrayne group in 2006, Scottish Ministers' shareholding in David MacBrayne Limited was increased by 5,500,000 shares to 5,500,002 ordinary shares of £1. David MacBrayne Limited is now the holding company for the ferry operating companies CalMac Ferries Limited, Cowal Ferries Limited and NorthLink Ferries Limited and for the dormant company Rathlin Ferries Limited.
Other Interests
Voted Loans
Transport Scotland provides loans to Caledonian Maritime Assets Limited to be used for the construction of new shipping and to Independent Harbour Trusts and Caledonian Maritime Assets Limited for harbour improvements.
| 10a Analysis by classification | as at 31/03/11 | as at 31/03/10 | as at 1/04/09 |
|---|---|---|---|
| £'000 | £'000 | £'000 | |
| Amounts falling due within one year: | |||
| Trade and other receivables | |||
| Trade and other receivables | 2,451 | 934 | 1,463 |
| Damage claims | 327 | 0 | 2,372 |
| Other assets | 442 | 666 | 425 |
| Prepayments and accrued income | 93,001 | 59,905 | 59,059 |
| 96,221 | 61,505 | 63,319 | |
| Amounts falling due after more than one year: | |||
| Other receivables | 971 | 3,259 | 3,768 |
| 971 | 3,259 | 3,768 | |
| Trade receivables are shown net of a provision for impairment as follows: | |||
| as at 31/03/11 £'000 |
as at 31/03/10 £'000 |
as at 1/04/09 £'000 |
|
| At 1 April | 404 | 404 | 0 |
| Charge for the year | 93 | 0 | 404 |
| Unused amount released | 390 | 0 | 0 |
| Utilised during the year | 0 | 0 | 0 |
| At 31 March | 106 | 404 | 404 |
| 10b Intra-government balances | as at 31/03/11 | as at 31/03/10 | as at 1/04/09 |
| £'000 | £'000 | £'000 | |
| Amounts falling due within one year: | |||
| Intra-government balances | |||
| Other central government bodies | 102 | 100 | 20 |
| Local authorities | 44,394 | 34,672 | 26,806 |
| Public corporations and trading funds | 6,614 | 5,603 | 6,864 |
| 51,110 | 40,375 | 33,690 | |
| Balances with bodies external to government | 45,111 | 21,130 | 29,629 |
| Total receivables | 96,221 | 61,505 | 63,319 |
| Amounts falling due after more than one year: | |||
| Intra-government balances | |||
| Other central government bodies | 0 | 0 | 0 |
| Local authorities | 0 | 0 | 0 |
| Public corporations and trading funds | 0 | 0 | 0 |
| 0 | 0 | 0 | |
| Balances with bodies external to government | 971 | 3,259 | 3,768 |
| Total receivables | 971 | 3,259 | 3,768 |
Trade receivables are shown net of a provision for impairment as follows:
| 11a Analysis by classification | as at 31/03/11 | as at 31/03/10 | as at 1/04/09 |
|---|---|---|---|
| £'000 | £'000 | £'000 | |
| Amounts falling due within one year: | |||
| Trade payables | 38,804 | 9,014 | 8,599 |
| Other payables | 142,237 | 184,719 | 116,313 |
| Financial liabilities - PFI | 4,710 | 4,377 | 4,068 |
| 185,751 | 198,110 | 128,980 | |
| Amounts falling due after more than one year: | |||
| Other payables | 13,325 | 9,189 | 11,266 |
| Financial liabilities - PFI | 195,164 | 199,875 | 204,251 |
| 208,489 | 209,064 | 215,517 | |
| 11b Intra-government balances | as at 31/03/11 | as at 31/03/10 | as at 1/04/09 |
| £'000 | £'000 | £'000 | |
| Amounts falling due within one year: | |||
| Intra-government balances | |||
| Other central government bodies | 1,228 | 1,632 | 27,323 |
| Local authorities | 34,062 | 37,603 | 20,047 |
| Public corporations and trading funds | 11,977 | 8,628 | 1,575 |
| 47,267 | 47,863 | 48,945 | |
| Balances with bodies external to government | 138,484 | 150,247 | 80,034 |
| Total payables | 185,751 | 198,110 | 128,979 |
| Amounts falling due after more than one year: | |||
| Intra-government balances | |||
| Other central government bodies | 0 | 0 | |
| Local authorities | 128,397 | 120,695 | 77,464 |
| Public corporations and trading funds | 0 | 0 | |
| 128,397 | 120,695 | 77,464 | |
| Balances with bodies external to government | 80,093 | 88,369 | 138,053 |
| Total payables | 208,490 | 209,064 | 215,517 |
| 12a Provisions for liabilities and charges | Land and Property Acquisition | Major Projects | Other | Total |
|---|---|---|---|---|
| 2010-11 | £'000 | £'000 | £'000 | £'000 |
| Balance as at 1 April 2010 | 40,370 | 18,731 | 10,112 | 69,213 |
| Provided in year | 15,572 | 0 | 2,101 | 17,673 |
| Provisions not required written back | 145 | 0 | (2,988) | (2,843) |
| Provisions utilised in year | (4,641) | (1,883) | (1,672) | (8,196) |
| Balance as at 31 March 2011 | 51,446 | 16,848 | 7,553 | 75,847 |
| 2009-10 | ||||
| Balance as at 1 April 2009 | 60,380 | 4,482 | 6,658 | 71,520 |
| Provided in year | 57,077 | 16,131 | 13,562 | 86,770 |
| Provisions not required written back | (1,480) | (800) | 0 | (2,280) |
| Provisions utilised in year | (75,607) | (1,082) | (10,108) | (86,797) |
| Balance as at 31 March 2010 | 40,370 | 18,731 | 10,112 | 69,213 |
| Balance as at 1 April 2009 | 60,380 | 4,482 | 6,658 | 71,520 |
| 12b Analysis of expected timing of discounted flows | Land and Property Acquisition | Major Projects | Other | Total |
| £'000 | £'000 | £'000 | £'000 | |
| In the remainder of the period to 2012 | 20,220 | 10,371 | 1,434 | 32,025 |
| Between 2013 and 2016 | 31,226 | 6,477 | 6,119 | 43,822 |
| Between 2017 and 2021 | 0 | 0 | 0 | |
| Thereafter | 0 | 0 | 0 | 0 |
| Balance as at 31 March 2011 | 51,446 | 16,848 | 7,553 | 75,847 |
| In the remainder of the period to 2011 | 21,609 | 2,689 | 7,016 | 31,314 |
| Between 2012 and 2015 | 9,380 | 9,226 | 1,772 | 20,378 |
| Between 2016 and 2020 | 9,381 | 6,816 | 1,324 | 17,521 |
| Thereafter | 0 | 0 | 0 | 0 |
| Balance as at 31 March 2010 | 40,370 | 18,731 | 10,112 | 69,213 |
Land and Property Acquisition
Land and property acquisition provision relates primarily to the estimates made of the likely compensation payable in respect of planning blight, discretionary and compulsory acquisition of property for property owners arising from physical construction of a road or rail scheme. When land is acquired by compulsory purchase procedures, it is not known when compensation settlements will be made. A provision for the estimated total cost of land acquired is created when it is expected that a General Vesting Declaration (GVD) will be published in the near future. It may take several years from the announcement of a scheme to completion and final settlement of all liabilities. The estimates provided by the Valuation Office Agency (VOA) are reviewed bi-annually.
Major Projects
Major projects provision relates to capital projects that we are engaged in but have not paid the full expenditure incurred in year.
Other
Transport Scotland was created as an executive agency of the Scottish Government in January 2006 resulting in the creation of migration liabilities relating to staff moving or travelling from Edinburgh to Glasgow. It is Transport Scotland's policy to recognise such liabilities at the point at which we announce and are, in practical terms, committed to, the creation of the agency.
Other provisions relate to Damage Claims and to the early retirement of Transport Scotland staff. Damage Claims relate principally to the estimated cost of repairing vehicular damage to the Trunk Road Network. If the cost of the repairs is below a pre-defined threshold, the operating company responsible for the maintenance of the trunk road has to pursue recovery of the cost with the third party. If the cost of the repairs is above the threshold, the operating company charges Transport Scotland and it is the responsibility of Transport Scotland to pursue the recovery of these costs from those responsible.
Transport Scotland is required to meet the additional agreed cost of benefits payable to those employees who retire early until they reach the age of 60 at which point the liability is assumed by the PCSPS. The cost of these benefits is provided in full when the employee retires.
| as at 31/03/11 | as at 31/03/10 | 2010-11 Net Movement | Restated 2009-10 Net Movement | ||
|---|---|---|---|---|---|
| note | £'000 | £'000 | £'000 | £'000 | |
| Receivables | |||||
| Due within one year | 10 | 96,221 | 61,505 | (34,716) | 1,814 |
| Due after more than one year | 10 | 971 | 3,259 | 2,288 | 509 |
| Net decrease/(increase) | 97,192 | 64,764 | (32,428) | 2,323 | |
| Payables | |||||
| Due within one year | 11 | 185,751 | 198,110 | (12,359) | 69,130 |
| Due after more than one year | 11 | 208,489 | 209,064 | (575) | (6,453) |
| 394,240 | 407,174 | (12,934) | 62,677 | ||
| Less: Lease and PFI creditors included in above | 11 | 199,874 | 204,251 | (4,377) | (5,312) |
| Net (decrease)/increase | 194,366 | 202,923 | (8,557) | 67,989 | |
| Provision | 12 | 75,847 | 69,213 | 6,634 | (2,307) |
| Net (decrease)/increase | 75,847 | 69,213 | 6,634 | (2,307) | |
| Net movement (decrease)/increase | 367,405 | 336,900 | (34,351) | 68,005 | |
Transport Scotland's capital commitments relate to future payments on major road schemes currently under construction and loans to Caledonian Maritime Assets Limited to fund capital assets relating to ferries. The main works contracts have been awarded and the loans agreed. These commitments have not been reflected elsewhere in the accounts.
| Capital Commitments | as at 31/03/11 | as at 31/03/10 |
|---|---|---|
| £'000 | £'000 | |
| Property, plant and equipment | 345,000 | 282,500 |
| Total contracted capital commitments for which no provision has been made | 345,000 | 282,500 |
| Investments | 1,050 | 9,600 |
| Total authorised but not contracted capital commitments for which no provision has been made | 1,050 | 9,600 |
Commitments under operating leases to pay rentals during the year following the year of these accounts are given in the table below, analysed according to the period in which the lease expires.
| Obligations under operating leases comprise: | as at 31/03/11 | as at 31/03/10 |
|---|---|---|
| £'000 | £'000 | |
| Land & buildings | ||
| Due within 1 year | 1,450 | 1,450 |
| Due after 1 year but not more than 5 years | 5,775 | 5,782 |
| Commitments thereafter | 6,603 | 8,048 |
| 13,828 | 15,280 |
16. Commitments under PFI Contracts
16a On Balance Sheet (SoFP)
Transport Scotland has entered into the following PFI contracts for the design, build, finance and maintenance of assets reflected on the Statement of Financial Position:
i. M6 (M74) - the contract covers the design, construction and financing of 28.3km of new Scottish motorway along this route, as well as the operation and maintenance of 90km of new and existing Scottish motorway. Payments are made under a shadow toll regime. The toll period began in July 1997 and expires in July 2027.
ii. M77 - the contract is a Public Private Partnership (PPP) entered into with East Renfrewshire and South Lanarkshire Councils. The project covers the design, construction, financing and operation of 15km of new Scottish motorway and new 9km local link road between the new motorway and the A726 trunk road. Payments are made under a shadow toll regime. The toll period began in April 2005 and expires in April 2035.
Under IFRIC12 the substance of the PFI contract is that the Agency has a finance lease, with the asset being recognised as a non-current asset of the Agency. Payments under PFI contracts are comprised of two elements:
i. Imputed finance lease charges
ii. Services charges.
| as at 31/03/11 | as at 31/03/10 | |
|---|---|---|
| £'000 | £'000 | |
| Rentals due within 1 year | 19,326 | 19,326 |
| Rentals due within 2 to 5 years | 77,304 | 77,304 |
| Rentals due thereafter | 290,145 | 309,471 |
| 386,775 | 406,101 | |
| Less: Interest element (finance cost) | (186,901) | (201,850) |
| Total capital cost | 199,874 | 204,251 |
| as at 31/03/11 | as at 31/03/10 | |
|---|---|---|
| £'000 | £'000 | |
| Service charge due within 1 year | 23,304 | 22,691 |
| Service charge due within 2 to 5 years | 129,602 | 106,016 |
| Service charge due thereafter | 377,433 | 424,322 |
| Total service charge | 530,339 | 553,029 |
16b Off Balance Sheet (SoFP)
Transport Scotland does not have any commitments under PFI contracts in respect of assets that are not reflected in the Statement of Financial Position.
17. Other Financial Commitments - Rail
Transport Scotland is committed to pay an income stream to Network Rail in accordance with the Deed of Grant and to First Scotrail under the Franchise Agreement.
Network Rail - The current control period for Network Rail runs from April 2009 to March 2014.
First Scotrail - During 2008/09 Scottish Ministers extended the First Scotrail Franchise by 3 years to 2014.
| 2010-11 | 2009-10 | |
|---|---|---|
| £'000 | £'000 | |
| Network Rail | 383,688 | 366,969 |
| First Scotrail | 290,201 | 271,421 |
| Total | 673,889 | 638,390 |
| Network | First | ||
|---|---|---|---|
| Rail | Scotrail | Total | |
| £'000 | £'000 | £'000 | |
| Expiry within 0-12 months | 407,000 | 306,000 | 713,000 |
| Expiry within 1 to 2 years | 297,000 | 490,000 | 787,000 |
| Expiry within 2 to 5 years | 282,000 | 549,000 | 831,000 |
| Total | 986,000 | 1,345,000 | 2,331,000 |
18. Financial Instruments
| Assets per statement of financial position | Loans and Receivables | Assets at Fair Value through Profit and Loss | Available for Sale | Total | |
|---|---|---|---|---|---|
| note | £'000 | £'000 | £'000 | £'000 | |
| Trade and other receivables excluding prepayments, reimbursements of provisions and VAT recoverable. | 10 | 3,749 | 0 | 442 | 4,191 |
| Balance as at 31 March 2011 | 3,749 | 0 | 442 | 4,191 | |
| Liabilities per statement of financial position | Assets at Fair Value through Profit and Loss | Other Financial Liabilities | Total | ||
| note | £'000 | £'000 | £'000 | ||
| PFI liabilities | 11 | 0 | 199,874 | 199,874 | |
| Trade and other payables excluding statutory liabilities (VAT and income tax and social security) | 0 | 193,411 | 193,411 | ||
| Balance as at 31 March 2011 | 0 | 393,285 | 393,285 |
18b Financial Risk Factors
Exposure to Risk
Transport Scotland's activities expose it to a variety of financial risks:
i. Credit risk - the possibility that other parties might fail to pay amounts due.
ii. Liquidity risk - the possibility that Transport Scotland might not have funds available to meet its commitments to make payments.
iii. Market risk - the possibility that financial loss might arise as a result of changes in such measures as interest rates, stock market movements or foreign exchange rates.
Because of the largely non-trading nature of its activities and the way in which government departments are financed, Transport Scotland is not exposed to the degree of financial risk faced by business entities.
Risk management
A high level risk strategy has been put in place which provides a consistent approach to the implementation of risk management within Transport Scotland at a strategic, programme and project level. This is now considered at each meeting of the Audit and Risk Committee.
i. Credit Risk
Credit risk arises from cash and cash equivalents, deposits with banks and other institutions, as well as credit exposures to customers, including outstanding receivables and committed transactions.
For banks and other institutions, only independently rated parties with a minimum rating of 'A' are accepted. Customers are assessed, taking into account their financial position, past experience and other factors, with individual credit limits being set in accordance with internal ratings in accordance with parameters set by Transport Scotland. The utilisation of credit limits is regularly monitored.
No credit limits were exceeded during the reporting period and no losses are expected from non-performance by any counterparties in relation to deposits.
ii Liquidity Risk
The Scottish Parliament makes provision for the use of resources by Transport Scotland for revenue and capital purposes in a Budget Act for each financial year. Resources and accruing resources may be used only for the purposes specified and up to the amounts specified in the Budget Act. The Act also specifies an overall cash authorisation to operate for the financial year. Transport Scotland is not, therefore, exposed to significant liquidity risks.
The table below analyses the financial liabilities into relevant maturity groupings based on the remaining period at the Statement of Financial Position to contractual maturity date. The amounts disclosed in the table are the contractual discounted cash flows. Balances due within 12 months are included at their carrying balances as the impact of discounting is not significant.
| Carrying value | 0-12 months | 1-2 years | 2-5 years | 5-10 years | >10 years | |
|---|---|---|---|---|---|---|
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Non-derivative liabilities | (392,321) | (184,303) | (120) | (12,732) | (56,763) | (138,403) |
| Derivative liabilities | 0 | 0 | 0 | 0 | 0 | 0 |
| Total financial liabilities | (392,321) | (184,303) | (120) | (12,732) | (56,763) | (138,403) |
iii Market Risk
Transport Scotland has no powers to borrow or invest surplus funds. Financial assets and liabilities are generated by day-to-day operational activities and are not held to manage the risks facing Transport Scotland in undertaking its activities.
- Cash Flow and Fair Value Interest Rate Risk:
Transport Scotland has no significant interest bearing assets or liabilities and, as such, income and expenditure cash flows are substantially independent of changes in market interest rates. - Foreign Currency Risk:
Transport Scotland is not directly exposed to foreign exchange rate risks. - Price Risk:
Transport Scotland is not exposed to equity security price risk.
18c Fair Value Estimation
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair value.
The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current HM Treasury interest rate that is available for similar financial instruments.
19. Contingent Liabilities
19a Contingent Liabilities disclosed under IAS37
Transport Scotland has a guarantee in place against funding received from European Union re TENS-T funding for GARL Project where there is an obligation for a period of 5 years, to require repayment of 50% of the total funding (€850,000 / £750,635) should it be considered that the monies were not used for the purposes agreed under the original application. This liability therefore runs out in July 2015 and would be based on the exchange rate at the time any repayment is made.
At present Transport Scotland has a possible obligation that relates to potential unoccupied lane charges on schemes that are still in construction. Some contracts contain a clause which charges contractors for the amount of time they occupy lanes during road works. (This is done to encourage completion of the works on time). If the contractor does not use all of the time they were allowed in the contract for lane occupations then they are repaid the amount not used. The schemes are the M74 completion and A96 Fochabers where it is estimated that at present there is a potential obligation of approximately £1.45million. This will be re-assessed at scheme completion in 2012 at which stage a provision will be created for all unused lane occupations.
19b Possible Contingent Liabilities not required under IAS37 but included for Parliamentary and accountability purposes
The Financial Reporting Manual states that where information about contingent liabilities is not required to be disclosed because the likelihood of a transfer of economic benefits is considered too remote, they should be disclosed separately for parliamentary reporting and accountability purposes.
i. Contracts held by Transport Scotland should include indemnity clauses where risk is either considered part of the normal course of business or is not quantifiable:
- Operating agreement (ScotRail Franchise Agreement) with indemnity dated 2004 to First ScotRail;
- Indemnity clause in roads contracts to compensate Network Rail for any damage or loss of access;
- Operating agreement with indemnity dated 2005 to tie Limited for the promotion of Edinburgh Airport Rail Link (EARL) project;
- EARL Blight liability agreement which exists until 2012 as per the EARL Act;
- Liability agreement for any issues caused by the GARL ground investigation work for the next 12 years; and
- GARL copyright infringement legal action case initially awarded in favour of Transport Scotland. Decision appealed with hearing in July 2011.
ii. Guarantees / Letters of Comfort issued by Transport Scotland on behalf of Scottish Ministers:
- S54 guarantees issued as part of rail rolling stock procurement process;
- Scottish Government underwriting First ScotRail pension fund in line with that provided to other train operators by DfT; and
- Letter of underwriting to Edinburgh Airport Limited (subsidiary of BAA) dated 2006 for the Edinburgh Airport Rail Link Project being promoted by tie Limited.
iii. Other contingent liabilities held by Transport Scotland:
- Monklands Canal - maintenance of pipes under trunk roads.
20. Related Party Transactions
Transport Scotland is an Executive Agency of the Scottish Government. The Scottish Government is regarded as a related party with which it had various material transactions during the year. David MacBrayne Limited, Caledonian Maritime Assets Limited (CMAL) and Highlands & Islands Airports Limited (HIAL) are wholly owned subsidiaries of Transport Scotland with whom it had various material transactions during the year, principally in relation to loans advanced to and repaid from CMAL and grants paid to HIAL. David MacBrayne Limited is also the parent company of Calmac Ferries Limited, Cowal Ferries Limited and Northlink Ferries Limited, with whom Transport Scotland also had material transactions, principally in relation to the payment of subsidies for the operation of ferry services. Transport Scotland also had significant transactions with Local Authorities and British Waterways during the year.
All interests declared by members of the Transport Scotland Board are of a minor nature and have no impact on the awarding of contracts and commissions.
21. Segmental Reporting
| 2010-11 | Resource | Net Investment | Income | Non Cash | AME | Total |
|---|---|---|---|---|---|---|
| Total continuing segments | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Roads | 129,403 | 78,340 | (501) | 80,189 | 4,742 | 292,173 |
| Rail | 416,687 | 332,695 | 0 | 0 | 0 | 749,382 |
| Concessionary travel | 239,897 | 9,199 | 0 | 411 | 0 | 249,507 |
| Other public transport | 29,192 | 12,970 | 0 | 0 | 0 | 42,162 |
| Ferry services in Scotland | 100,475 | 5,974 | (2,199) | 0 | 1,500 | 105,750 |
| Air services in Scotland | 25,684 | 7,000 | 0 | 0 | 0 | 32,684 |
| Other transport directorate programmes | 22,883 | 23,462 | 0 | 0 | 0 | 46,345 |
| Grants to local authorities | 0 | 29,127 | 0 | 0 | 0 | 29,127 |
| 964,221 | 498,767 | (2,700) | 80,600 | 6,242 | 1,547,130 | |
| 2009-10 | Resource | Net Investment | Income | Non Cash | AME | Total |
| Total continuing segments | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Roads | 153,235 | 101,669 | (185) | 87,772 | 5,604 | 348,095 |
| Rail | 400,633 | 238,300 | 0 | 0 | 0 | 638,933 |
| Concessionary travel | 190,244 | 10,163 | 0 | 0 | 0 | 200,407 |
| Other public transport | 32,123 | 159,943 | 0 | 0 | 0 | 192,066 |
| Ferry services in Scotland | 96,012 | 2,684 | (2,096) | 2,599 | 0 | 99,199 |
| Air services in Scotland | 26,137 | 5,956 | 0 | 3,924 | 0 | 36,017 |
| Other transport directorate programmes | 64,413 | 9,313 | 0 | (366) | 0 | 73,360 |
| Grants to local authorities | 5,199 | 39,907 | 0 | 0 | 20,452 | 65,558 |
| 967,996 | 567,935 | (2,281) | 93,929 | 26,056 | 1,653,635 |
| 2010-11 | Trunk Road Maintenance | Capital Projects | Other Assets | Voted Loans | Total Capital Expenditure |
|---|---|---|---|---|---|
| Total continuing segments | £'000 | £'000 | £'000 | £'000 | £'000 |
| Roads | 36,830 | 223,351 | 0 | 0 | 260,181 |
| Rail | 0 | 0 | 54 | 0 | 54 |
| Other public transport | 0 | 0 | 64 | 0 | 64 |
| Ferry services in Scotland | 0 | 0 | 0 | 8,762 | 8,762 |
| 36,830 | 223,351 | 118 | 8,762 | 269,061 | |
| 2009-10 | Trunk Road Maintenance | Capital Projects | Other Assets | Voted Loans | Total Capital Expenditure |
| Total continuing segments | £'000 | £'000 | £'000 | £'000 | £'000 |
| Roads | 50,958 | 258,019 | 0 | 0 | 308,977 |
| Ferry services in Scotland | 0 | 0 | 0 | 4,736 | 4,736 |
| 50,958 | 258,019 | 0 | 4,736 | 313,713 |
22. Notional Charges
| note | 2010-11 | 2009-10 | |
|---|---|---|---|
| Auditors remuneration | 4 | 198 | 207 |
| 198 | 207 |
The cost of capital charge is no longer required in accordance with Her Majesty's Treasury, under Clear Line of Sight - the Alignment Project. The impact of this is shown in Note 2
| 2010-11 | 2009-10 | ||
|---|---|---|---|
| number of cases | £'000 | £'000 | |
| Total cash losses | 31,396 | 2,355 | 0 |
| Details of cases over £250,000 | 0 | 0 | 0 |
| Including - claims abandoned | 31,396 | 2,355 | 0 |
| - active claims | 0 | 0 | 0 |
Where a road accident results in damage to the Trunk Road Network and the cost of repair is greater than £10,000 this cost is charged to Transport Scotland. Wherever possible these costs are recovered from the party responsible through their insurance company (except where the responsible party has been fatally injured) and are therefore held in a debtor account until recovery. In 2010-11 Transport Scotland undertook a review of the cases held in the debtor account. Those cases that are no longer being pursued because they are not assessed as likely to be recoverable amounted to £2,355k in respect of 31,396 cases and these have now been written off.
24. GARL Closedown Costs
Branchline works for Glasgow Airport Rail-Link (GARL) were cancelled in September 2009. However obligations under the GARL Act for certain mainline works were not cancelled. Where obligations under the GARL Act could not be cancelled, costs were incurred as a result. These costs included land and associated costs, BAA costs and associated compensation, contractor closedown costs and completion of advanced works, where completion was a more cost effective solution than cessation. There were no costs incurred in 2010-11 (2009-10, £12.5million).