Transport Scotland Annual Accounts 2012-13

Statement of Comprehensive Net Expenditure for the year ended 31 March 2013
					2012-13	2011-12
		£'000	£'000	£'000	£'000	£'000
	note	Staff Costs	Other Cost	Income	Total	Total
Administration costs
Staff costs	2	11,902			11,902	13,461
Other administration costs	3		4,934		4,934	4,807
Total administration costs					16,836	18,268
Programme costs
Staff costs	2	5,640			5,640	4,282
Other programme costs	4		1,649,407		1,649,407	1,537,435
Income	5			(2,750)	(2,750)	(2,662)
Total programme costs					1,652,297	1,539,055
Total		17,542	1,654,341	(2,750)	1,669,133	1,557,323
Net operating costs for the year ended 31 March 2013					1,669,133	1,557,323

Other Comprehensive Net Expenditure
		2012-13	2011-12
		£'000	£'000
	note
Net (gain)/loss on revaluation of property, plant and equipment	6	(433,126)	(306,129)
Net (gain)/loss on revaluation of intangibles		0	0
Net (gain)/loss on revaluation of available for sale financial assets		0	0
Total comprehensive net expenditure for the year ended 31 March 2013		1,236,007	1,251,194

All income and expenditure is derived from continuing activities.

Statement of Financial Position as at 31 March 2013
			31 March		31 March		31 March
			2013		2012		2011
	note	£'000	£'000	£'000	£'000	£'000	£'000
Non-current assets
Property, plant & equipment	6	18,002,170		17,420,710		16,502,905
Intangible assets	7	235		358		14
Financial assets	9	86,944		79,362		75,320
Other receivables	10	100,000		50,971		971
Total non-current assets			18,189,349		17,551,401		16,579,210
Current assets
Assets held for sale	8	174		312		442
Financial assets	9	3,018		3,018		2,038
Trade and other receivables	10	57,936		27,097		95,779
Cash & cash equivalents		0		0		0
Total current assets			61,128		30,427		98,259
Total assets			18,250,477		17,581,828		16,677,469
Current liabilities
Provisions	12	(55,041)		(28,584)		(32,025)
Trade payables	11	(24,689)		(30)		(38,804)
Other payables	11	(167,572)		(127,095)		(142,237)
Financial liabilities	11	(9,066)		(8,674)		(4,710)
Total current liabilities			(256,368)		(164,383)		(217,776)
Total assets less current liabilities			17,994,109		17,417,445		16,459,693
Non-current liabilities
Provisions	12	(70,938)		(31,714)		(43,822)
Other payables	11	(2,917)		(3,215)		(13,325)
Financial liabilties	11	(451,935)		(460,625)		(195,164)
Total non-current liabilities			(525,790)		(495,554)		(252,311)
Assets less liabilities			17,468,319		16,921,891		16,207,382
Taxpayers' equity
General fund	SoCTE		8,773,367		8,672,755		8,264,375
Donated asset reserve	SoCTE		0		0		0
Revaluation reserve	SoCTE		8,694,952		8,249,136		7,943,007
Total taxpayers' equity			17,468,319		16,921,891		16,207,382

David Middleton
Chief Executive
7 August 2013

The notes form part of these accounts

Cash Flow Statement for the year ended 31 March 2013
		2012-13	2011-12
	note	£'000	£'000
(A) Cash flows from operating activities
Net operating cost	SoCNE	(1,669,133)	(1,557,323)
Adjustments for non-cash transactions	3/4	151,568	63,507
Decrease / (Increase) in trade and other receivables	13	(79,730)	18,812
Adjustment for the revaluation element of Assets Held For Sale		85	0
Increase / (Decrease) trade and other payables	13	64,838	(64,026)
Increase / (Decrease) in provisions	13	65,681	(15,549)
Adjustment for the interest element of the PFI contract	4	31,948	27,250
Net cash outflow from operating activities		(1,434,743)	(1,527,329)
(B) Cash flows from investing activities
Purchase of property, plant and equipment	6	(369,843)	(492,510)
Purchase of intangible assets	7	0	(350)
Transfer of assets held for sale to property, plant and equipment	6/8	(158)	0
Disposal of property, plant and equipment	6	220	49
Impairment of property, plant and equipment		505	0
Voted loans	9	(7,582)	(5,022)
Net cash outflow from investing activities		(376,858)	(497,833)
(C) Cash flows from financing activities
Funding from the Scottish Government	SoCTE	1,851,847	1,782,987
Capital element of payments in respect of finance leases and on balance sheet PFI contracts	13	(8,298)	269,425
Interest element of the PFI contracts	4	(31,948)	(27,250)
Net Financing		1,811,601	2,025,162
Net Increase/ (Decrease) in cash and cash equivalents in the period		0	0
Cash and cash equivalents at the beginning of the period		0	0
Cash and cash equivalents at the end of the period		0	0

Statement of Changes in Taxpayers' Equity for the year ended 31 March 2013
	note	General Fund	Revaluation Reserve	Total Reserves
		£'000	£'000	£'000
Balance at 31 March 2011		8,264,375	7,943,007	16,207,382
Changes in taxpayers' equity for 2011-12
Net gain on revaluation of property, plant and equipment	6	0	306,129	306,129
Non-current assets adjustments		45,852	0	45,852
Roads transfer from local authority		136,676	0	136,676
Realised element of the revaluation reserve		0	0	0
Non-cash charges - auditors remuneration	3	188	0	188
Net operating cost for the year	SoCNE	(1,557,323)	0	(1,557,323)
Total recognised income and expense for 2011-12		(1,374,607)	306,129	(1,068,478)
Funding from Scottish Government		1,782,987	0	1,782,987
Balance at 31 March 2012		8,672,755	8,249,136	16,921,891
Changes in taxpayers' equity for 2012-13
Net gain on revaluation of property, plant and equipment	6	0	433,126	433,126
Non-current assets adjustments	6	0	(132,378)	(132,378)
Roads transfer from local authority	6	62,786	0	62,786
Realised element of the revaluation reserve		(145,068)	145,068	0
Non-cash charges - auditors remuneration	3	180	0	180
Net operating cost for the year	SoCNE	(1,669,133)	0	(1,669,133)
Total recognised income and expense for 2012-13		(1,751,235)	445,816	(1,305,419)
Funding from Scottish Government		1,851,847	0	1,851,847
Balance at 31 March 2013		8,773,367	8,694,952	17,468,319

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 90) these accounts have been prepared in compliance with the principles and disclosure requirements of the Government Financial Reporting Manual, which follows Generally 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

In accordance with 2012-13 Financial Reporting Manual (FReM) Para 2.1.4 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.

A number of new accounting standards have been issued or amendments made to existing standards, but have not yet been applied in these financial statements. The standards that are considered relevant and the anticipated impact on the consolidated accounts are as follows:

IAS 1 - Presentation of financial statements (Other Comprehensive Income). Mandatory for accounting periods commencing on or after 1 July 2012. The adoption of this standard may result in presentational changes to the accounts.
IAS19 - Post-employment benefits (pensions). Mandatory for accounting periods commencing on or after 1 January 2013. The adoption of this standard may result in presentational and disclosure changes to the accounts.
IFRS 9 - Financial Instruments. Mandatory for accounting periods commencing on or after 1 January 2015. The adoption of this standard could change the classification and measurement of financial assets. The impact on the accounts has not been determined, and the full IFRS has not yet been issued.
IFRS 10 - Consolidated Financial Statements
IFRS 11 - Joint Arrangements
IFRS 12 - Disclosure of Interests in Other Entities
IAS 27 - Separate Financial Statements
IAS 28 - Investments in Associated and Joint Ventures
Mandatory for accounting periods commencing on or after 1 January 2013. The adoption of these standards affects the consolidation and reporting of subsidiaries, associated and joint ventures. The impact on the consolidated accounts has not been determined
IFRS 13 - Fair Value Measurement. Mandatory for accounting periods commencing on or after 1 January 2013. The adoption of this standard could change the measurement techniques used when determining fair value. The impact on the consolidated accounts has not been determined.

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 policies or from the correction of fundamental 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. The effects of any such adjustments on prior year comparatives are also separately disclosed in the notes to the accounts.

1.4 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 1.6)

Non-infrastructure assets include land and buildings, information & technology equipment and software licences. Title to the freehold land and buildings shown in the accounts of Transport Scotland is held by Scottish Ministers.

Capitalisation Policy

The trunk road network is recognised as a single infrastructure asset in accordance with FReM Para 6.2.10. 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 the service potential 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.

In accordance with International Accounting Standard 16 expenditure that comprises the cost of the Non-Current Asset 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 building assets are transferred to the land and buildings category where it is not currently possible to market them for sale or to Assets Held for Sale where they are being marketed for sale. Assets Held for Sale are stated 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 is held at current market values assessed by the Valuation Office Agency (VOA). A revaluation exercise was carried out at 31 March 2013 on buildings and dwellings as part of the Scottish Government 5 year rolling programme.

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

In accordance with FReM 2012-13 Para 6.2.11 the road network is held at its depreciated replacement cost based on service potential and classed as a specialist assets for which market valuations are not available. Land is valued by rates supplied by the 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 provide 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. Historic Valuation adjustments in respect of minor corrections to prior year measurements and valuations of the road network are separately identified in the Statement of Changes in Taxpayers' Equity and Property Plant and Equipment note and not treated as prior year adjustments.

Assets Under Construction

Road building schemes in the course of construction are capitalised at actual cost with no indexation.

Land and Buildings

Land and buildings released from road schemes and now deemed surplus to requirements are transferred to, and accounted for, as Assets Held For Sale (see Note 1.6).

Information Technology

Information technology assets are stated at historical cost with no indexation applied.

1.5 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 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

1.6 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.

1.7 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.

1.8 Financial Instruments

Transport Scotland measures and presents financial instruments in accordance with IAS32, 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.

1.9 Other Infrastructure Expenditure

Other 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 either CMAL, HIAL, Network Rail or other external body 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.

1.10 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.

1.11 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, rail, aviation and maritime infrastructure in Scotland for which Transport Scotland has responsibility, 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.

1.12 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.

1.13 Pensions

Past and present employees are mainly covered by the provisions of the Principal Civil Service Pension Scheme (PCSPS), more details of which can be found in note 2. 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.

1.14 Private Finance Initiative (PFI) Transactions

PFI transactions are accounted for in accordance with the FReM Para 6.2.48. PFI contracts that meet the definition of service concession arrangements are accounted for in accordance with SIC29 Service Concession Arrangements.

Transport Scotland currently has 3 existing completed PFI schemes (see note 16 for more details). In each case these assets are examples of service concessions under SIC29. 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).

1.15 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.

1.16 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 2013 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.

Major Projects

Major projects provision relates to compensation claims made in respect of work done under the projects that have not yet been fully settled.

1.17 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 out with 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.

1.18 VAT

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.

1.19 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 accountable officer who is deemed to be the chief operating decision maker in order to manage their financial performance.

1.20 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.

1.21 Trade Payables

Trade payables are valued at their carrying amount.

1.22 Employee Benefits

A short term 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. Staff Numbers and Costs

Staff costs comprise:

	2012-13			2011-12
	Permanently Employed Staff	Others	Total	Permanently Employed Staff	Others	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Administration:
Wages and salaries costs	8,518	605	9,123	9,491	553	10,044
Social security costs	705	0	705	788	0	788
Other pension costs	1,621	0	1,621	1,843	0	1,843
Early Retiral Costs	453	0	453	786	0	786
	11,297	605	11,902	12,908	553	13,461
Programme:-
Wages and salaries costs	4,295	88	4,383	3,274	61	3,335
Social security costs	377	0	377	283	0	283
Other pension costs	880	0	880	664	0	664
	5,552	88	5,640	4,221	61	4,282
Total staff costs	16,849	693	17,542	17,129	614	17,743

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.

Within Transport Scotland 7 staff accepted voluntary exit under the Civil Service Compensation Scheme rules in 2012-13 compared to 18 in 2011-12. No staff retired early on ill-health grounds.

Reporting of Civil Service and other compensation scheme - exit packages

	2012-13			2011-12
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	0	0	0	1	1
£10,000 to £25,000	0	0	0	0	7	7
£25,000 to £50,000	0	6	6	0	6	6
£50,000 to £100,000	0	1	1	0	3	3
£100,000 to £150,000	0	0	0	0	1	1
£150,000 to £200,000	0	0	0	0	0	0
over £200,000	0	0	0	0	0	0
Total Number of exit packages	0	7	7	0	18	18
Total Resource cost (£'000)	£0	£273	£273	£0	£695	£695

Early Retiral costs include 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. As a result this scheme is accounted for as a defined contribution scheme. 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 (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 2012-13, employers' contributions of £1,621k 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 2010-11). 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 2012-13 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.

Average numbers of persons employed:

	2012-13			2011-12
	Permanent Staff	Others	Total	Permanent Staff	Others	Total
Trunk roads major projects	71	1	72	84	1	85
Trunk road maintenance	117	5	122	110	5	115
Rail	61	1	62	64	2	66
Finance and other	56	4	60	73	3	76
Aviation, maritime, freight & canals	26	0	26	25	0	25
Transport policy	38	1	39	45	0	45
Total average staff numbers	369	12	381	401	11	412

The above figures exclude Consultants, in post and not in post.

3. Other Administration Costs

		2012-13	2011-12
	note	£'000	£'000
Rentals under operating leases		1,220	1,207
Accommodation		1,560	1,189
Office costs and supplies		1,009	1,198
Hospitality		42	40
Travel		436	484
Training		88	77
Consultancy		24	8
Non-cash items
Depreciation	6/7	326	378
Loss on disposal of Non Current Assets		49	38
Prior year depreciation adjustment		0	0
Auditors remuneration and expenses - external	22	180	188
Total administration costs		4,934	4,807

4. Programme Costs

		2012-13	2011-12
	note	£'000	£'000
Other programme expenditure
Roads
Capital maintenance		82,223	54,627
Current maintenance		102,421	100,126
Forth Replacement Crossing		0	0
Other		865	348
PFI Interest charges		31,948	27,250
PFI service charges		25,018	26,375
Rail
ScotRail franchise		452,520	305,318
Rail infrastructure in Scotland capital		293,021	281,786
Rail Infrastructure in Scotland resource			120,100
Other		2,859	952
Concessionary travel
Smartcard applications		2,028	2,956
Concessionary travel schemes		190,045	183,439
Other public transport
Major public transport projects - rail		34,205	68,763
Transport information		510	1,635
Strategic projects review		903	983
Ferry services in Scotland		115,519	119,109
Air services in Scotland		30,929	33,807
Bus services in Scotland		64,987	60,728
Other transport directorate programmes		43,278	43,485
Scottish Futures Fund Projects		2,138
Central government grants to local authorities		22,929	42,706
Non-cash items
Depreciation	6/7	151,061	62,942
Total other programme costs		1,649,407	1,537,435

* The Rail infrastructure in Scotland capital figure of £293,021k was paid directly to Network Rail

** There has been a re-classification of expenditure and all infrastructure expenditure is now classed as Capital

*** Payments to Scotrail Franchise in 2012-13 totalled £452,531k as per note 17.

This included depreciation costs totalling £13k which are included within the Depreciation charges (under non-cash items) as required by the International Financial Reporting Standards (IFRS).

5. Operating Income

	2012-13	2011-12
	£'000	£'000
Programme income
Interest receivable - loans	(2,726)	(2,418)
Rental income - land & properties	(6)	(234)
Sale of land and property	0	0
Ports income	(18)	(10)
Total operating income	(2,750)	(2,662)

Operating income principally arises from:

interest receivable from loans to Caledonian Maritime Assets Limited (CMAL);
rental income from land and properties acquired for road schemes and now surplus to requirements;
sale of land and property which is surplus to the requirements of the road or rail scheme;
port income fees for authorising works to ports and harbours.

6. Property, Plant and Equipment

2012-13	Road Network	Land	Buildings	Transport	IT	Leasehold Improvements	Assets under Construction	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Cost or Valuation
At 1 April 2012	20,208,866	4,948	5,047	0	4,602	1,508	263,390	20,488,361
Detrunkings	0	0	0	0	0	0	0	0
Capital additions	12,102	0	0	31	0	0	357,710	369,843
Disposals	0	(220)	0	0	0	0	0	(220)
Revaluation	339,493	(274)	1,300	0	0	0	0	340,519
Current valuation adjustments	82,030	0	0	0	0	0	0	82,030
Historic valuation adjustments	(182,063)	1,207	(1,712)	0	0	0	0	(182,568)
Transfers and reclassifications	124,799	0	5,579	0	0	0	(67,593)	62,785
Transfers from assets held for sale	0	158	0	0	0	0	0	158
Balance at 31 March 2013	20,585,227	5,819	10,214	31	4,602	1,508	553,507	21,160,908
Depreciation
At 1 April 2012	3,061,623	0	1,108	0	3,652	1,268	0	3,067,651
Detrunkings	0	0	0	0	0	0	0	0
Charge for the year	150,470	0	199	5	564	26	0	151,264
Disposals	0	0	0	0	0	0	0	0
Revaluation	5,688	0	(10)	0	0	0	0	5,678
Current valuation adjustments	(19,022)	0	0	0	0	0	0	(19,022)
Historic valuation adjustments	(49,685)	0	0	0	0	0	0	(49,685)
Transfers and reclassifications	2,852	0	0	0	0	0	0	2,852
Balance at 31 March 2013	3,151,926	0	1,297	5	4,216	1,294	0	3,158,738
Net Book Value at 31 March 2013	17,433,301	5,819	8,917	26	386	214	553,507	18,002,170
Net Book Value at 31 March 2012	17,147,243	4,948	3,939	0	950	240	263,390	17,420,710
Asset Financing
Owned	15,988,602	5,819	8,262	26	386	214	553,507	16,556,816
Finance Leased	0	0	0	0	0	0	0	0
On Balance Sheet PFI	1,444,699	0	0	0	0	0	0	1,444,699
Donated	0	0	655	0	0	0	0	655
Net Book Value at 31 March 2013	17,433,301	5,819	8,917	26	386	214	553,507	18,002,170

6. Property, Plant and Equipment

2011-12	Road Network	Land	Buildings	Transport	IT	Leasehold Improvements	Assets under Construction	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Cost or Valuation
At 1 April 2011	18,398,495	1,969	3,227	0	4,253	1,508	804,317	19,213,769
Detrunkings	0	0	0	0	0	0	0	0
Capital additions	294,684	0	0	0	360	0	197,466	492,510
Disposals	0	(44)	0	0	(11)	0	0	(55)
Revaluation	967,373	130	120	0	0	0	0	967,623
Current valuation adjustments	(373,287)	0	0	0	0	0	0	(373,287)
Historic valuation adjustments	51,125	0	0	0	0	0	0	51,125
Transfers and reclassifications	870,476	2,893	1,700	0	0	0	(738,393)	136,676
Transfers to assets held for sale	0	0	0	0	0	0	0	0
Balances at 31 March 2012	20,208,866	4,948	5,047	0	4,602	1,508	263,390	20,488,361
Depreciation
At 1 April 2011	2,705,665	0	884	0	3,152	1,163	0	2,710,864
Detrunkings	0	0	0	0	0	0	0	0
Charge for the year	62,518	0	185	0	506	105	0	63,314
Disposals	0	0	0	0	(6)	0	0	(6)
Revaluation	182,101	0	39	0	0	0	0	182,140
Current valuation adjustments	106,066	0	0	0	0	0	0	106,066
Historic valuation adjustments	5,273	0	0	0	0	0	0	5,273
Transfers and reclassifications	0	0	0	0	0	0	0	0
Balances at 31 March 2012	3,061,623	0	1,108	0	3,652	1,268	0	3,067,651
Net Book Value at 31 March 2012	17,147,243	4,948	3,939	0	950	240	263,390	17,420,710
Net Book Value at 1 April 2011	15,692,830	1,969	2,343	0	1,101	345	804,317	16,502,905
Asset Financing
Owned	15,710,658	4,948	3,126	0	950	240	263,390	15,983,312
Finance Leased	0	0	0	0	0	0	0	0
On Balance Sheet PFI	1,436,585	0	0	0	0	0	0	1,436,585
Donated	0	0	813	0	0	0	0	813
Net Book Value at 31 March 2012	17,147,243	4,948	3,939	0	950	240	263,390	17,420,710

Detrunkings reflect transfer of road assets to local authorities, with the corresponding entry flowing through the General Fund (SoCTE).

Atkins LLP (RICS Regulated) carry 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 (SoCTE).

7. Intangible Assets

2012-13	Software Licences
	£'000
At replacement cost or valuation
At 1 April 2012	461
Capital additions	0
Disposals	0
Historic valuation adjustments	0
Transfers and reclassifications	0
Balance at 31 March 2013	461
Accumulated Amortisation
At 1 April 2012	103
Charge for the year	123
Revaluations	0
Disposals	0
Historic valuation adjustments	0
Transfers and reclassifications	0
Balance at 31 March 2013	226
Net Book Value at 31 March 2013	235

2011-12	Software Licences
	£'000
At replacement cost or valuation
At 1 April 2011	111
Capital additions	350
Disposals	0
Historic valuation adjustments	0
Transfers and reclassifications	0
Balance at 31 March 2012	461
Accumulated Amortisation
At 1 April 2011	97
Charge for the year	6
Revaluations	0
Disposals	0
Historic valuation adjustments	0
Transfers and reclassifications	0
Balance at 31 March 2012	103
Net Book Value at 31 March 2012	358

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.

8. Assets Held For Sale

The above assets have been presented for sale by Transport Scotland with the completion date for sale expected to be within 12 months. Assets classified as held for sale are measured at the lower of their carrying amount immediately prior to their classification as held for sale and their fair value less costs to sell.

Assets classified as held for sale are not subject to depreciation or amortisation.

2012-13	Land
	£'000
Balance at 1 April 2012	312
Transfers to Non-Current Assets	(158)
Transfers from Non-Current Assets	0
Disposals	(65)
Change arising on revaluation	85
Balance at 31 March 2013	174

2011-12	Land
	£'000
Balance at 1 April 2011	442
Transfers to Non-Current Assets	0
Transfers from Non-Current Assets	0
Disposals	(5)
Change arising on revaluation	(125)
Balance at 31 March 2012	312

9. Financial Assets

2012-13	Interests in Nationalised Industries & Limited Companies	Voted Loans	Total
	£'000	£'000	£'000
Balance at 1 April 2012	20,550	58,812	79,362
Add element reported within current assets	0	3,018	3,018
Advances and acquisitions
Cash advances	0	10,600	10,600
Repayments and disposals	0	(3,018)	(3,018)
Balance at 31 March 2013	20,550	69,412	89,962
Loans repayable within 12 months transferred to current assets	0	(3,018)	(3,018)
Balance at 31 March 2013	20,550	66,394	86,944

2011-12	Interests in Nationalised Industries & Limited Companies	Voted Loans	Total
	£'000	£'000	£'000
Balance at 1 April 2011	20,550	54,770	75,320
Add element reported within current assets	0	2,038	2,038
Advances and acquisitions
Cash advances	0	7,550	7,550
Repayments and disposals	0	(2,528)	(2,528)
Balance at 31 March 2012	20,550	61,830	82,380
Loans repayable within 12 months transferred to current assets	0	(3,018)	(3,018)
Balance at 31 March 2012	20,550	58,812	79,362

Financial Assets have been measured and presented in accordance with IAS32, IAS39 and IFRS7 as modified by the FReM (see note 1.8).

As at 31 March 2013, 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 2013	(11.4)	68.8	26.6
Turnover	18.0	22.2	157.8
Profit/(Loss) for the financial year	(0.4)	(4.1)	2.2

All results are draft as final accounts have yet to be published. The deficit in Caledonian Maritime Assets Limited relates to agreed additional expenditure from accumulated reserves.

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 11 airports; 10 in the Highlands and Islands of Scotland and Dundee Airport, which it assumed responsibility for in December 2007 and now operates via a wholly owned subsidiary company, Dundee Airport Limited.

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, Argyll Ferries Limited and NorthLink Ferries Limited and for the dormant companies Cowal Ferries Limited and 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, for harbour improvements and to Independent Harbour Trusts.

10. Trade Receivables and Other Assets

10a Analysis by classification	as at 31/03/13	as at 31/03/12	as at 31/03/11
	£'000	£'000	£'000
Amounts falling due within one year:
Trade and other receivables
Trade and other receivables	15,130	307	2,451
Damage claims	4,839	2,770	327
Prepayments and accrued income	37,967	24,020	93,001
	57,936	27,097	95,779
Amounts falling due after more than one year:
Other receivables	100,000	50,971	971
	100,000	50,971	971

Trade receivables are shown net of a provision for impairment as follows:

	as at 31/03/13	as at 31/03/12	as at 31/03/11
	£'000	£'000	£'000
At 1 April	13	107	404
Charge for the year	0	0	93
Unused amount released	0	(93)	(390)
Utilised during the year	(10)	(1)	0
At 31 March	3	13	107

10b Intra-government balances	as at 31/03/13	as at 31/03/12	as at 31/03/11
	£'000	£'000	£'000
Amounts falling due within one year:
Intra-government balances
Other central government bodies	0	107	102
Local authorities	393	580	44,394
Public corporations and trading funds	2,779	7,691	6,614
	3,172	8,378	51,110
Balances with bodies external to government	54,764	18,719	44,669
Total receivables	57,936	27,097	95,779
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	100,000	50,971	971
Total receivables	100,000	50,971	971

11. Trade Payables and Other Liabilities

11a Analysis by classification	as at 31/03/13	as at 31/03/12	as at 31/03/11
	£'000	£'000	£'000
Amounts falling due within one year:
Trade payables	24,689	30	38,804
Other payables	167,572	127,095	142,237
Financial liabilities - PFI	9,066	8,674	4,710
	201,327	135,799	185,751
Amounts falling due after more than one year:
Other payables	2,917	3,215	13,325
Financial liabilities - PFI	451,935	460,625	195,164
	454,852	463,840	208,489

11b Intra-government balances	as at 31/03/13	as at 31/03/12	as at 31/03/11
	£'000	£'000	£'000
Amounts falling due within one year:
Intra-government balances
Other central government bodies	112	2,818	1,228
Local authorities	25,346	42,024	34,062
Public corporations and trading funds	3,446	461	11,977
	28,904	45,303	47,267
Balances with bodies external to government	172,423	90,496	138,484
Total payables	201,327	135,799	185,751
Amounts falling due after more than one year:
Intra-government balances
Other central government bodies	0	0	0
Local authorities	113,215	115,905	128,397
Public corporations and trading funds	0	0	0
	113,215	115,905	128,397
Balances with bodies external to government	341,637	347,935	80,092
Total payables	454,852	463,840	208,489

12. Provisions for Liabilities and Charges

12a Provisions for liabilities and charges	Land and Property Acquisition	Major Projects	Other	Total
2012-13	£'000	£'000	£'000	£'000
Balance as at 1 April 2012	44,944	13,016	2,338	60,298
Provided in year	74,131	0	41	74,172
Provisions not required written back	0	0	(122)	(122)
Provisions utilised in year	(10,304)	(1,309)	(1,043)	(12,656)
Discount Amortised	3,872	417	(2)	4,287
Balance as at 31 March 2013	112,643	12,124	1,212	125,979
2011-12
Balance as at 1 April 2011	51,446	16,848	7,553	75,847
Provided in year	1,975	0	95	2,070
Provisions not required written back	0	(1,500)	(1,008)	(2,508)
Provisions utilised in year	(8,477)	(2,332)	(4,302)	(15,111)
Balance as at 31 March 2012	44,944	13,016	2,338	60,298
Balance as at 1 April 2011	51,446	16,848	7,553	75,847

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 2014	47,678	6,899	464	55,041
Between 2015 and 2018	64,965	5,025	686	70,676
Between 2019 and 2023	0	200	62	262
Thereafter	0	0	0	0
Balance as at 31 March 2013	112,643	12,124	1,212	125,979
In the remainder of the period to 2013	19,396	8,292	896	28,584
Between 2014 and 2017	19,533	4,125	1,051	24,709
Between 2018 and 2022	6,015	599	391	7,005
Thereafter	0	0	0	0
Balance as at 31 March 2012	44,944	13,016	2,338	60,298

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 from 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 compensation claims made in respect of work done under the projects that have not yet been fully settled.

Other

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.

13. Movement on Working Capital Balances

		as at 31/03/13	as at 31/03/12	2012-13 Net Movement	2011-12 Net Movement
	note	£’000	£’000	£’000	£’000
Receivables
Due within one year	8/10	58,110	27,409	(30,701)	68,812
Due after more than one year	10	100,000	50,971	(49,029)	(50,000)
Net decrease/(increase)		158,110	78,380	(79,730)	18,812
Payables
Due within one year	11	201,327	135,799	65,528	(49,952)
Due after more than one year	11	454,852	463,840	(8,988)	255,351
		656,179	599,639	56,540	205,399
Less: Lease and PFI creditors included in above	11	461,001	469,299	(8,298)	269,425
Net (decrease)/increase		195,178	130,340	64,838	(64,026)
Provisions	12	125,979	60,298	65,681	(15,549)
Net (decrease)/increase		125,979	60,298	65,681	(15,549)
Net movement (decrease)/increase		479,267	269,018	50,789	(60,763)

14. Capital Commitments

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 31/03/13	as at 31/03/12
	£'000	£'000
Property, plant and equipment	1,061,283	1,283,260
Total contracted capital commitments for which no provision has been made	1,061,283	1,283,260
Investments	3,993	13,800
Total authorised but not contracted capital commitments for which no provision has been made	3,993	13,800

15. Commitments under Operating Leases

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 31/03/13	as at 31/03/12
	£'000	£'000
Land & buildings
Due within 1 year	1,444	1,444
Due after 1 year but not more than 5 years	5,621	5,775
Commitments thereafter	3,869	5,159
	10,934	12,378

16. Commitments under PFI Contracts

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:

a) 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.

b) 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.

c) M80 - the contract covers the design, build and financing of approximately 18 km of dual two/three lane motorway, together with, but not limited to, associated slip roads, side roads, junctions, structures, culverts and associated works. The contract also incorporates the operation and maintenance of the new motorways, associated structures, and related elements for a period of 30 years after completion of the New Works. Unitary charge payments commenced in September 2011 and will cease in September 2041.

Under SIC29, the substance of these PFI contracts 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; imputed finance lease charges and services charges.

Imputed finance lease obligations under PFI contracts comprise:

	as at 31/03/13	as at 31/03/12
	£'000	£'000
Rentals due within 1 year	40,407	39,618
Rentals due within 2 to 5 years	161,627	158,472
Rentals due thereafter	741,619	762,898
	943,653	960,988
Less: Interest element (finance cost)	(482,652)	(491,689)
Total capital cost	461,001	469,299

Imputed service charge obligations under PFI contracts comprise:

	as at 31/03/13	as at 31/03/12
	£'000	£'000
Service charge due within 1 year	27,743	35,875
Service charge due within 2 to 5 years	200,768	199,739
Service charge due thereafter	487,948	695,854
Total service charge	716,459	931,468

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 - the First Scotrail franchise has been extended to 31 March 2015.

The total amount charged to the Transport Scotland Statement of Comprehensive Net Expenditure in respect of these schemes is:

	2012-13	2011-12
	£'000	£'000
Network Rail	293,021	401,886
First Scotrail	452,531	305,329
Total	745,552	707,215

The amounts due under these contracts in the following year, analysed between those periods where the commitment expires are:

	Network	First
	Rail	Scotrail	Total
	£'000	£'000	£'000
Expiry within 0-12 months	289,000	486,100	775,100
Expiry within 1 to 2 years	0	498,000	498,000
Expiry within 2 to 5 years	0	0	0
Total	289,000	984,100	1,273,100

18. Financial Instruments

18a Financial Instruments by Category

Assets per statement of financial position		Assets at Fair Value through Profit and Loss	Loans and Receivables	Total
	note	£’000	£’000	£’000
Trade and other receivables excluding prepayments, reimbursements of provisions and VAT recoverable.		0	111,223	111,223
Balance as at 31 March 2013		0	111,223	111,223

Liabilities per statement of financial position		Assets at Fair Value through Profit and Loss	Other Financial Liabilities	Total
	note	£’000	£’000	£’000
PFI liabilities	16	0	461,001	461,001
Trade and other payables excluding statutory liabilities (VAT and income tax and social security)		0	191,415	191,415
Balance as at 31 March 2013		0	652,416	652,416

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.

Due to 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	652,595	198,517	11,861	33,569	74,335	334,313
Derivative liabilities	0	0	0	0	0	0
Total financial liabilities	652,595	198,517	11,861	33,569	74,335	334,313

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.

1. Cash Flow and Fair Value Interest Rate Risk:
Transport Scotland has loans to CMAL which accrue interest at the rate set for the National Loans Fund and its income and expenditure and cash flows are dependent of changes in market interest rates that affect this. Transport Scotland has interest bearing liabilities in respect of PFI schemes and minor lease rentals that are determined in the contracts entered and, as such, the related income, expenditure and cash flows are substantially independent of changes in market interest rates.

2. Foreign Currency Risk:
Transport Scotland is not directly exposed to foreign exchange rate risks.

3. 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 Assets disclosed under IAS37

Transport Scotland successfully defended an allegation of GARL copyright infringement, and a subsequent appeal which was dismissed in May 2012. The Diet of Taxation, to consider our account for the recovery of expenses incurred, took place on 13 June 2013 with the initial determination expected in September.

19b Contingent Liabilities disclosed under IAS37

Transport Scotland has a guarantee in place in relation to funding received by 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 / £734,443) should it be considered that the monies were not used for the purposes agreed under the original application. This liability runs out in July 2015 and would be based on the exchange rate at the time any repayment is made.

There is a claim from the contractor for White Cart Viaduct to recover alleged costs of up to £21 million from Transport Scotland. At adjudication for the first of the claim issues Transport Scotland were ordered to re-imburse the contractor approximately £1 million for liquidated damages, interest and adjudicators fees. Transport Scotland will continue to dispute this decision, which is only a part of the claim and considers that a final settlement (if any) between parties will be only a fraction of the £21 million. The Contingent Liability will remain until the final settlement is agreed

As part of Transport Scotland normal course of business the Forestry Commission granted Transport Scotland the right to use a forestry track as an emergency diversion route from the site of the latest landslide on the A83 at the Rest and Be Thankful on the understanding that Transport Scotland will have liability for any incidents that may occur whilst the track is being used for this purpose. The potential obligation is estimated at £5 million but it is not considered likely that any liability will occur.

19c Possible Contingent Liabilities not required under IAS37 but included for parliamentary reporting 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;
Liability agreement for any issues caused by the GARL ground investigation work for the next 10 years.

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.

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. Loans were advanced to and repaid from CMAL and grants paid to HIAL and CMAL. David MacBrayne Limited is also the parent company of Calmac Ferries Limited, Argyll Ferries Limited and Northlink Ferries Limited who operated Ferry Services under contracts with Transport Scotland, which Transport Scotland supported by the payment of subsidies. Transport Scotland also paid grants to British Waterways Scotland, trading as Scottish Canals, for the operation and maintenance of Scottish canals and related infrastructure and capital grants for related investments during the year. Transport Scotland also had significant transactions with Local Authorities, Sustrans, the Energy Saving Trust, Loganair Limited, Forth Estuary Transport Authority, Northern Isles Ferries Limited, Cycling Scotland, Strathclyde Partnership for Transport, Tay Road Bridge Joint Board and Lothian Buses during the year, principally in relation to payment of grants to deliver specific transport objectives.

All interests declared by members of the Transport Scotland Senior Management Team are of a minor nature and have no impact on the awarding of contracts and commissions.

21. Segmental Reporting

21a Business Segments - Statement of Comprehensive Net Expenditure

2012-13	Resource	Net Investment	Income	Non Cash	AME	Total
Total continuing segments	£'000	£'000	£'000	£'000	£'000	£'000
Roads	94,802	94,213	(6)	150,470	56,966	396,445
Rail	454,726	328,871	0	13	0	783,610
Concessionary travel & Bus services	256,776	1,591	0	575	0	258,942
Other public transport	17,927	23,680	0	0	0	41,607
Ferry services in Scotland	114,283	1,263	(2,745)	0	0	112,801
Air services in Scotland	25,782	5,147	0	0	0	30,929
Other transport directorate programmes	19,732	0	0	0	0	19,732
Scottish Futures Trust	633	1,505	0	0	0	2,138
Grants to local authorities	0	22,929	0	0	0	22,929
	984,661	479,199	(2,751)	151,058	56,966	1,669,133

2011-12	Resource	Net Investment	Income	Non Cash	AME	Total
Total continuing segments	£'000	£'000	£'000	£'000	£'000	£'000
Roads	82,287	75,231	(234)	62,507	53,625	273,416
Rail	426,318	351,675	0	22	0	778,015
Concessionary travel & Bus services	243,754	2,956	0	413	0	247,123
Other public transport	20,421	23,064	0	0	0	43,485
Ferry services in Scotland	118,356	2,253	(2,428)	0	(1,500)	116,681
Air services in Scotland	25,107	8,700	0	0	0	33,807
Other transport directorate programmes	21,712	0	0	378		22,090
Scottish Futures Trust	0	0	0	0	0	0
Grants to local authorities	0	42,706	0	0	0	42,706
	937,955	506,585	(2,662)	63,320	52,125	1,557,323

21b Business Segments - Capital Expenditure

2012-13	Trunk Road Maintenance	Capital Projects	Other Assets	Voted Loans	Total Capital Expenditure
Total continuing segments	£'000	£'000	£'000	£'000	£'000
Roads	12,102	357,425	31	0	369,558
Rail	0	0	0	0	0
Other public transport	0	0	0	0	0
Ferry services in Scotland	0	0	0	7,582	7,582
	12,102	357,425	31	7,582	377,140

2011-12	Trunk Road Maintenance	Capital Projects	Other Assets	Voted Loans	Total Capital Expenditure
Total continuing segments	£'000	£'000	£'000	£'000	£'000
Roads	294,684	197,466	0	0	492,150
Rail	0	0	0	0	0
Other public transport	0	0	661	0	661
Ferry services in Scotland	0	0	0	5,022	5,022
	294,684	197,466	661	5,022	497,833

22. Notional Charges

The following notional charges have been included in the accounts:

	note	2012-13	2011-12
Auditors remuneration	3	180	188
		180	188

23. Losses and Special Payments

		2012-13	2011-12
	number of cases	£'000	£'000
Total cash losses	22	90	139
Details of cases over £250,000	0	0	0
Including - claims abandoned	22	90	139
- active claims	0	0	0

The costs of damage to the Trunk Road Network due to road accidents are charged to Transport Scotland as part of the road maintenance programme. These costs are recovered from the party responsible through their insurance company wherever possible, except where they have been fatally injured. The costs are held in a debtor account until the recovery is successful. Transport Scotland reviewed the costs held in the debtor account to identify those that are due to be or in the process of being recovered. The costs that are no longer being pursued because they are not assessed as likely to be recoverable amounted to £90k in respect of 22 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 branchline 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. In addition, in 2012-13, land which had been acquired for the cancelled project, was then deemed surplus to requirements and consequently was disposed of in year in accordance with Crichel Downs rules, which generated a net credit of £0.2 million.

Costs incurred in 2012-13 were £0.1 million (2011-12 £3.2 million), with revenues of £0.2 million generated (2011-12 nil).