03 Annual Accounts 2016-17

Financial Statements

Statement of Comprehensive Net Expenditure for the year ended 31 March 2017
Administration costs
	Note	£'000 Staff Costs	£'000 Other Cost	£'000 Income	2016-17 £'000 Total	2015-16 £'000 Total
Staff costs	2	13,302			13,302	12,916
Other administration costs	3		4,685		4,685	4,988
Total administration costs					17,987	17,904
Programme costs
Staff costs	2	4,875			4,875	5,168
Other programme costs	4		1,677,955		1,677,955	1,664,528
Income	5			(5,645)	(5,645)	(22,117)
Total programme costs					1,677,185	1,647,579
Total		18,177	1,682,640	(5,645)	1,695,172	1,665,483
Net operating costs for the year ended 31 March 2017					1,695,172	1,665,483

Other Comprehensive Net Expenditure
Items that will not be reclassified to net operating costs:
	Note	2016-17 £'000	2015-16 £'000
Net (gain)/loss on:
–revaluation of property, plant and equipment	6	(715,636)	281,146
–revaluation of intangibles		0	0
		(715,636)	281,146
Items that may be reclassified subsequently to net operating costs:
Net (gain)/loss on:
–revaluation of assets held for sale	8	0	0
Total comprehensive net expenditure for the year ended 31 March 2017		979,536	1,946,629

All income and expenditure is derived from continuing activities.

Statement of Financial Position as at 31 March 2017
Non-current assets
	Note	£'000	31 March 2017 £'000	£'000	31 March 2016 £'000
Property, plant & equipment	6	19,931,009		18,827,990
Intangible assets	7	86		30
Financial assets	9	191,664		149,904
Other receivables	10	15,665		30,665
Total non-current assets			20,138,424		19,008,589
Current assets
Assets held for sale	8	0		204
Financial assets	9	4,077		3,754
Trade and other receivables	10	51,674		49,858
Cash & cash equivalents		0		0
Total current assets			55,751		53,816
Total assets			20,194,175		19,062,405
Current liabilities
Trade and other payables	11	(177,908)		(170,384)
Provisions	12	(34,122)		(33,722)
Total current liabilities			(212,030)		(204,106)
Total assets less current liabilities			19,982,145		18,858,299
Non-current liabilities
Other payables and financial liabilities	11	(1,106,505)		(777,427)
Provisions	12	(49,893)		(49,300)
Total non-current liabilities			(1,156,398)		(826,727)
Assets less liabilities			18,825,747		18,031,572
Taxpayers' equity
General fund	SoCTE		10,608,165		10,385,288
Revaluation reserve	SoCTE		8,217,582		7,646,284
Total taxpayers' equity			18,825,747		18,031,572

Roy Brannen
Chief Executive
21 August 2017

The notes below form part of these accounts.

Cash Flow Statement for the year ended 31 March 2017
(A) Cash flows from operating activities
	Note	2016-17 £'000	2015-16 £'000
Net operating cost	SoCNE	(1,695,172)	(1,665,483)
Adjustments for non-cash transactions	3/4	80,155	94,397
Decrease/(increase) in trade and other receivables	13	13,389	54,962
Adjustment for the revaluation element of assets held for sale	8	0	0
Increase/(decrease) in trade and other payables	13	2,066	(21,146)
Increase/(decrease) in provisions	13	993	(16,604)
Adjustment for interest element of PFI contracts	4	29,236	29,989
Net cash outflow from operating activities		(1,569,333)	(1,523,885)
(B) Cash flows from investing activities
Purchase of property, plant and equipment	6	(591,565)	(557,363)
Purchase of intangible assets	7	(63)	(30)
Roads Developer Contribution		0	0
Transfer of assets held for sale to property, plant and equipment	6/8	(106)	132
Disposal of property, plant and equipment	6	74	1,464
Impairment of property, plant and equipment		0	0
Increase/(decrease) in capital accruals	13	5,439	(23,549)
Voted loans	9	(42,082)	(49,944)
Net cash outflow from investing activities		(628,303)	(629,290)
(C) Cash flows from financing activities
Funding from the Scottish Government	SoCTE	(5,539,501)	1,553,259
Inter Entity transfers		7,437,275	400,101
Capital element of payments – finance leases and On Balance Sheet PFI contracts	13	329,098	229,804
Interest element of PFI contracts	4	(29,236)	(29,989)
Net Financing		2,197,636	2,153,175
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 2017
	Note	General Fund £'000	Revaluation Reserve £'000	Total Reserves £'000
Balance at 31 March 2015		9,521,496	8,027,542	17,549,038
Changes in taxpayers' equity for 2015-16
Net gain/(loss) on revaluation of property, plant and equipment	6	0	(281,146)	(281,146)
Non-current assets adjustments		0	0	0
Roads trunkings/de-trunkings	6	514,452	0	514,452
Roads historic value adjustment	6	(38,692)	0	(38,692)
Transfers to Scottish Government	6	(139)	0	(139)
Realised element of the revaluation reserve		100,112	(100,112)	0
Inter Entity transfers		400,101	0	400,101
Non-cash charges – auditors remuneration	3	182	0	182
Net operating costs for the year	SoCNE	(1,665,483)	0	(1,665,483)
Total recognised income and expense for 2015-16		(689,467)	(381,258)	(1,070,725)
Funding from Scottish Government		1,553,259	0	1,553,259
Balance at 31 March 2016		10,385,288	7,646,284	18,031,572
Changes in taxpayers' equity for 2016-17
Net gain/(loss) on revaluation of property, plant and equipment	6	0	715,636	715,636
Non-current assets adjustments		108	0	108
Roads trunkings/de-trunkings	6	(44)	0	(44)
Roads historic value adjustment	6	(124,167)	0	(124,167)
Transfers to Scottish Government	6	(131)	0	(131)
Realised element of the revaluation reserve		144,338	(144,338)	0
Inter Entity transfers		7,437,275	0	7,437,275
Non-cash charges - auditors remuneration	3	171	0	171
Net operating costs for the year	SoCNE	(1,695,172)	0	(1,695,172)
Total recognised income and expense for 2016-17		5,762,378	571,298	6,333,676
Funding from Scottish Government		(5,539,501)	0	(5,539,501)
Balance at 31 March 2017		10,608,165	8,217,582	18,825,747

Notes to the Accounts

1. Statement of Accounting Policies

The accounts have been prepared in compliance with the principles and disclosure requirements of the Government Financial Reporting Manual (FRem). The particular accounting policies applied by Transport Scotland are described below. The accounts are prepared using, 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. Changes in accounting policies which do not give rise to a prior year adjustment are reported in the relevant note. There is the possibility that there may be outcomes within the next financial year that differ from those made this year and consequently these may require a material adjustment to the carrying amount of an affected asset or liability.

1.1 Accounting Convention

The accounts have been prepared under the historical cost convention, modified by the revaluation of non-current assets and intangible assets to fair value. New or amended accounting standards that are considered relevant and their anticipated impact on the accounts are as follows:

IFRS 16 – Leases replaces IAS 17, however FRAB is still considering applicability within the FReM. This would effectively eliminate accounting for operating leases and recognise 'right of use' assets specified to operators in contracts for the provision of services.
Other standards issued but not yet effective, including IFRS7, IAS1, IAS16, IAS39 and IFRS 11, have minimal relevance to Transport Scotland and are not considered likely to impact the Agency.

1.2 Trunkings/Detrunkings

The accounts reflect ownership and responsibility to maintain the trunk road network. Transfers of the responsibility for maintaining sections of the trunk road network to/from the Local Authority network are referred to as 'de-trunkings' or 'trunkings' respectively and are treated as transfers to/from other Government Departments at nil consideration through the General Fund.

1.3 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). Title to the freehold land and buildings shown in the accounts of Transport Scotland is held by Scottish Ministers.

1.4 Capitalisation Policy

The trunk road network is recognised as a single infrastructure asset in accordance with FReM. However it comprises four distinct elements that are accounted for differently: Land; Road Pavement; Structures; and Communications.

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 Authority Asset Valuation System (RAAVS). Expenditure that does not replace or enhance service potential will be expensed as a charge to the Statement of Comprehensive Net Expenditure. 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.

Other non-current assets are capitalised where expenditure exceeds the following thresholds:

Land & Buildings - £10,000

Leasehold Improvements - £10,000

Information & Communication Technology (ICT) - £25,000

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 project, such as a major relocation exercise.

Valuation

Land is held at current market values, as 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 five year rolling programme, with indexation applied in the intervening years.

Other items of property, plant and equipment are held at current value in existing use. Since 1 April 2007 these assets have not been re-valued, as the movement in their relevant indices was considered to be negligible and the economic lives of the assets so short that the impact of any adjustment was not considered significant.

Infrastructure Assets – the road network

The road network is held at its depreciated replacement cost based on service potential and classed as a specialist asset for which a market valuation is not available. Land is valued at rates supplied by the VOA.

The road pavement, structures and communications elements are valued using agreed rates determined to identify the gross replacement cost of applicable types of road, structure or communications 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. However special structures, which tend to be one off by their nature, are valued using specific costs that are updated to current prices.

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 re-valued 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 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 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

The annual depreciation charge for the road surface is determined by the annual condition variance.

Structures and communications assets are depreciated on a straight line basis over the expected useful lives above.

Non-Infrastructure Assets

With the exception of surplus land and properties awaiting sale, 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
Plant and Machinery	5

1.6 Assets Held For Sale

A property is derecognised and held for sale when:

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 we expect 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 £25,000 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

Financial instruments are measured in accordance with IAS32, IAS39, and IFRS7, as interpreted and adapted by the Government Financial Reporting Manual (FReM). The extent of the financial instruments disclosures included in the Annual Report and Accounts reflects Transport Scotland's financial risk exposure.

1.9 Other Infrastructure Expenditure

Other infrastructure expenditure is differentiated between capital and resource. The resource expenditure relates to infrastructure expenditure that is not capital in nature, or expenditure that is capital in nature but the asset created or enhanced is reflected by external bodies. Such expenditure includes the grant and Regulated Asset Base charges paid to Network Rail.

1.10 Operating Income

Operating income relates to operating activities and 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. 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. Administration costs reflect the costs of running the Agency and include staff costs as well as accommodation, services and supplies. Programme costs reflect the costs of operating, maintaining, managing and improving the road, rail, aviation and maritime infrastructure for which we have responsibility, as well as those incurred in delivering transport policies, such as concessionary fares, and grants and subsidies to contribute to the provision of rail, 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.

1.14 Private Finance Transactions (PFI/PPP/NPD)

Private finance transactions that meet the definition of service concession arrangements are accounted for in accordance with IPSAS 32. We have three such existing operational PFI schemes and two Non Profit Distributing (NPD) schemes currently under construction (see Note 16 for more details). The private sector operator is contractually obliged to provide the services related to the infrastructure that they construct, which is recognised as a non-current asset. The unitary charge payments comprise service charges, repayment of capital and interest and are accounted for as such.

1.15 Leases

At their inception, leases are classified as operating or finance leases, based on the allocation of the risks and rewards of ownership of the underlying assets. Land and buildings elements are separately accounted for where applicable.

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. Where the arrangement includes incentives, such as rent-free periods, the value is recognised 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.

1.16 Provisions

Legal and constructive obligations that are of uncertain timing or amount are provided for in the Statement of Financial Position at 31 March 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 provisions 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 disclosed 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. Transport Scotland is part of the Scottish Government VAT registration and any outstanding VAT balances are accounted for by the Scottish Government.

1.19 Segmental Reporting

Segmental reporting identifies components of expenditure that are regularly reviewed by the Senior Management Team in order to manage 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 employees render service that increases their entitlement to these benefits. As a result an accrual has been made for leave earned but not taken.

1.23 Critical Accounting Estimates

Critical accounting estimates are used in the calculation of the valuations for the road network, for the recognition and valuation of provisions, for the Concessionary Travel Scheme and for the Private Finance arrangements. These are detailed in the section on Significant Accounting Policies contained within the Performance Report.

2. Staff Numbers and Costs

Staff costs comprise:
Administration:
	Permanently Employed Staff £'000	2016-17 Others £'000	Total £'000	Permanently Employed Staff £'000	2015-16 Others £'000	Total £'000
Wages and salaries costs	9,749	362	10,111	9,587	421	10,008
Social security costs	1,065	0	1,065	813	0	813
Other pension costs	2,057	0	2,057	1,987	0	1,987
Early retirement costs	69	0	69	108	0	108
	12,940	362	13,302	12,495	421	12,916
Programme:
Wages and salaries costs	3,051	854	3,905	3,384	729	4,113
Social security costs	332	0	332	308	0	308
Other pension costs	638	0	638	747	0	747
	4,021	854	4,875	4,439	729	5,168
Total staff costs to be charged to Comprehensive Net Expenditure	16,961	1,216	18,177	16,934	1,150	18,084

The costs of staff employed on the design, procurement and management of capital projects undertaken by Transport Scotland have been charged to capital expenditure in respect of the projects identified in the year. These have been identified in the table below along with prior year figures to reflect costs similarly capitalised in that year. These costs are included with the project costs in Note 4. The cost of early retirements in the table above, include the costs in year and also continuing payments in relation to previous years packages.

Staff costs comprise:
Capitalised Programme:
	Permanently Employed Staff £'000	2016-17 Others £'000	Total £'000	Permanently Employed Staff £'000	2015-16 Others £'000	Total £'000
Wages and salaries costs	2,933	6	2,939	2,456	48	2,504
Social security costs	300	0	300	198	0	198
Other pension costs	599	0	599	487	0	487
	3,832	6	3,838	3,141	48	3,189
Total staff costs charged to capital expenditure	3,832	6	3,838	3,141	48	3,189
Total Staff Costs	20,793	1,222	22,015	20,075	1,198	21,273

Permanent employed staff are civil servants who have an employment contract with Transport Scotland, others are agency staff.

Wages and 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 allowances to the extent that it is subject to UK taxation. The payment of legitimate expenses is not part of salary.

Pension Costs

The Principal Civil Service Pension Scheme (PCSPS) is an unfunded multi-employer defined benefit scheme and as a result Transport Scotland is unable to identify its share of the underlying liabilities. The scheme is therefore accounted for as a defined contribution scheme. The scheme Actuary valued the scheme liabilities at 31 March 2012. Details can be found in the resource accounts of the Cabinet Office at www.civilservicepensionscheme.org.uk.

Pension benefits are provided through the Civil Service pension arrangements. From 1 April 2015 civil servants may be in one of five defined benefit schemes; either a final salary scheme (Classic, Premium or Classic Plus); or a whole career scheme (Nuvos or Alpha). These statutory arrangements are unfunded with the cost of benefits met by monies voted by Parliament each year. Pensions payable are increased annually in line with pensions increase legislation. Members joining from October 2002 may opt for either the appropriate defined benefit arrangement or a 'money purchase' stakeholder pension with an employer contribution (Partnership Pension account).

From 1 April 2015, employee contributions are salary-related and range between 1.5% and 8.05% of pensionable earnings for Classic and 4.6% and 8.05% for Premium, Classic Plus, Nuvos and Alpha. Benefits in Classic accrue at the rate 1/80th of final pensionable earnings for each year of service. In addition, a lump sum equivalent to three years initial pension is payable on retirement. For Premium, benefits accrue at the rate of 1/60th of final pensionable earnings for each year of service, but unlike Classic, there is no automatic lump sum. Classic Plus is essentially a hybrid with benefits for service before 1 October 2002 calculated broadly as per Classic and benefits for service from October 2002 worked out as in Premium. In Nuvos and Alpha members build up a pension based on pensionable earnings during their period of scheme membership. At the end of the scheme year (31 March) the member's earned pension account is credited with 2.3% of their pensionable earnings in that scheme year and the accrued pension is uprated in line with pensions increase legislation. In all cases members may opt to give up (commute) pension for a lump sum up to the limits set by the Finance Act 2004.

The Partnership Pension account is a stakeholder pension arrangement. From October 2015, the employer makes a basic contribution of between 8% and 14.75% (depending on the age of the member) into a stakeholder pension product chosen by the employee from a panel of three providers. The employee does not have to contribute, but where they the employer will match these up to a limit of 3% of pensionable salary (in addition to the employer's basic contribution). Employers also contribute a further 0.5% of pensionable salary to cover the cost of centrally provided risk benefit cover (death in service and ill health retirement).

The accrued pension quoted is the pension the member is entitled to receive when they reach pension age, or immediately on ceasing to be an active member of the scheme if they are already at or over pension age. Pension age is 60 for members of Classic, Premium and Classic Plus and 65 for members of Nuvos. Pension age in Alpha is linked to the members state pension age.

Further details about the Civil Service pension arrangements can be found at:
www.civilservicepensionscheme.org.uk.

New career average pension arrangements were introduced on 1 April 2015 and the majority of Classic, Premium, Classic Plus and Nuvos members joined the new scheme. Further details of this new scheme are available at http://www.civilservicepensionscheme.org.uk/members/the-new-pension-scheme-alpha/.

For 2016-17, employers' contributions of £3,294k (2015-16, £3,221k) were payable to the PCSPS at one of four rates in the range 20% to 24.5% of pensionable pay, based on salary bands. The scheme 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 2016-17 to be paid when the member retires, and not the benefits paid during this period to existing pensioners.

Average numbers of persons employed
	Permanent Staff	2016-17 Others	Total	Permanent Staff	2015-16 Others	Total
Trunk roads major projects	69	10	79	72	7	79
Trunk road maintenance	114	9	123	133	13	146
Rail	55	3	58	54	3	57
Finance and other	61	4	65	47	2	49
Aviation, maritime, freight & canals	29	0	29	28	1	29
Transport policy	44	3	47	43	1	44
Total average staff numbers	373	29	402	377	27	404

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

3. Other Administration Costs

Non-cash items
	Note	2016-17 £'000	2015-16 £'000
Rentals under operating leases		1,212	1,221
Accommodation		789	1,240
Office costs and supplies		1,310	1,170
Hospitality		40	40
Travel		407	457
Training		86	104
Consultancy		53	32
Depreciation	6/7	617	542
Auditors' remuneration and expenses – external	22	171	182
Total administration costs		4,685	4,988

4. Programme Costs

Other programme expenditure
	Note	2016-17 £'000	2015-16 £'000
Roads
Capital maintenance		103,138	67,630
Current maintenance		101,556	102,122
Other		0	0
PFI interest charges		29,236	29,989
PFI service charges		43,928	50,333
Rail
ScotRail franchise*		265,870	314,874
Rail infrastructure in Scotland**		463,588	446,972
Other		1,664	249
Concessionary travel
Smartcard applications		1,055	1,224
Concessionary travel schemes		193,398	193,520
Other public transport
Major public transport projects – rail		6,189	3,439
Transport information		1,010	964
Ferry services in Scotland		188,801	166,845
Air services in Scotland		38,542	48,293
Bus services in Scotland		54,444	56,239
Other transport directorate		65,598	43,651
Scottish Futures Fund Projects		18,890	14,550
Central Government grants to Local Authorities		21,681	29,961
Non-cash items
Depreciation	6/7	79,367	93,673
Total other programme costs		1,677,955	1,664,528

*Payments to Abellio(£247m) and Serco (£19m) totalled £266m.
**The Rail infrastructure in Scotland capital figure of £464m was paid directly to Network Rail.

5. Operating Income

Programme income
	2016-17 £'000	2015-16 £'000
Interest receivable - loans	(4,709)	(3,878)
Rental income - land & properties	(24)	(10)
Other income	(153)	(196)
European Structural Fund (ESF) Income	(419)
Ports income	(14)	10
Profit on disposal of land	(326)	(543)
Borders roof tax income	0	(17,500)
Total operating income	(5,645)	(22,117)

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; and
ESF funding.

6. Property, Plant and Equipment

2016-17	Road Network £'000	Land £'000	Buildings £'000	Transport £'000	IT £'000	Leasehold Improvements £'000	Assets under Construction £'000	Total £'000
Cost or Valuation
At 1 April 2016	20,777,298	6,535	10,725	62	4,609	1,507	1,690,593	22,491,329
Detrunkings	(59)	0	0	0	0	0	0	(59)
Additions	11,998	0	0	131	0	0	579,436	591,565
Disposals	0	(74)	0	0	0	0	0	(74)
Revaluation	870,259	214	347	0	0	0	0	870,820
Current valuation adjustments	0	0	0	0	0	0	0	0
Historic valuation adjustments	(132,689)	0	0	0	0	0	0	(132,689)
Transfers and reclassifications	15,138	0	0	(131)	0	0	(15,138)	(131)
Transfers (to)/from assets held for sale	0	106	0	0	0	0	0	106
Balance at 31 March 2017	21,541,945	6,781	11,072	62	4,609	1,507	2,254,891	23,820,867
Depreciation
At 1 April 2016	3,654,611	0	2,772	41	4,539	1,376	0	3,663,339
Detrunkings	(15)	0	0	0	0	0	0	(15)
Charge for the year	79,300	0	472	12	63	25	0	79,872
Disposals	0	0	0	0	0	0	0	0
Revaluation	155,080	0	104	0	0	0	0	155,184
Current valuation adjustments	0	0	0	0	0	0	0	0
Historic valuation adjustments	(8,522)	0	0	0	0	0	0	(8,522)
Transfers and reclassifications	0	0	0	0	0	0	0	0
Balance at 31 March 2017	3,880,454	0	3,348	53	4,602	1,401	0	3,889,858
Net Book Value at 31 March 2017	17,661,491	6,781	7,724	9	7	106	2,254,891	19,931,009
Net Book Value at 31 March 2016	17,122,687	6,535	7,953	21	70	131	1,690,593	18,827,990
Asset Financing
Owned	15,252,141	6,781	7,514	9	7	0	1,558,880	16,825,332
Finance leased	0	0	0	0	0	0	0	0
On Balance Sheet PFI	2,409,350	0	0	0	0	0	696,011	3,105,361
Donated	0	0	210	0	0	106	0	316
Net Book Value at 31 March 2017	17,661,491	6,781	7,724	9	7	106	2,254,891	19,931,009

Detrunkings reflect the transfer of road assets to Local Authority control, with the corresponding entry flowing through the General Fund (SoCTE). Transfers and reclassifications include roads and associated land and buildings, which have transferred from Local Authority control as a result of the trunking of those particular sections of the road network.
Atkins (RICS Regulated) carry out an annual valuation of the trunk road network.
Revaluation is based on Baxter's indexation for all road network assets with the exception of 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).

6. Property, Plant and Equipment

2015-16	Road Network £'000	Land £'000	Buildings £'000	Transport £'000	IT £'000	Leasehold Improvements £'000	Assets under Construction £'000	Total £'000
Cost or Valuation
At 1 April 2015	20,164,262	8,155	10,589	154	4,609	1,507	1,158,350	21,347,626
Detrunkings	0	0	0	0	0	0	0	0
Additions	14,101	0	0	47	0	0	543,216	557,364
Disposals	0	(1,464)	0	0	0	0	0	(1,464)
Revaluation	(357,351)	(24)	136	0	0	0	0	(357,239)
Current valuation adjustments	0	0	0	0	0	0	0	0
Historic valuation adjustments	(44,406)	0	0	0	0	0	0	(44,406)
Transfers and reclassifications	1,000,692	0	0	(139)	0	0	(10,973)	989,580
Transfers (to)/from assets held for sale	0	(132)	0	0	0	0	0	(132)
Balances at 31 March 2016	20,777,298	6,535	10,725	62	4,609	1,507	1,690,593	22,491,329
Depreciation
At 1 April 2015	3,167,550	0	2,273	29	4,461	1,349	0	3,175,662
Detrunkings	0	0	0	0	0	0	0	0
Charge for the year	93,600	0	465	12	78	27	0	94,182
Disposals	0	0	0	0	0	0	0	0
Revaluation	(76,093)	0	34	0	0	0	0	(76,059)
Current valuation adjustments	0	0	0	0	0	0	0	0
Historic valuation adjustments	(5,714)	0	0	0	0	0	0	(5,714)
Transfers and reclassifications	475,268	0	0	0	0	0	0	475,268
Balances at 31 March 2016	3,654,611	0	2,772	41	4,539	1,376	0	3,663,339
Net Book Value at 31 March 2016	17,122,687	6,535	7,953	21	70	131	1,690,593	18,827,990
Net Book Value at 31 March 2015	16,996,712	8,155	8,316	125	148	158	1,158,350	18,171,964
Asset Financing
Owned	14,772,377	6,535	7,658	21	70	(1)	1,334,850	16,121,510
Finance Leased	0	0	0	0	0	0	0	0
On Balance Sheet PFI	2,350,310	0	0	0	0	0	355,743	2,706,053
Donated	0	0	295	0	0	132	0	427
Net Book Value at 31 March 2016	17,122,687	6,535	7,953	21	70	131	1,690,593	18,827,990

7. Intangible Assets

At replacement cost or valuation
	2016-17 £'000	2015-16 £'000
At 1 April	491	461
Additions	63	30
Disposals	0	0
Balance at 31 March	554	491
Accumulated Amortisation
At 1 April	461	461
Charge for the year	7	0
Revaluations	0	0
Disposals	0	0
Balance at 31 March	468	461
Net Book Value at 31 March	86	30

Purchased computer software licences are capitalised as intangible non-current assets where expenditure of £25,000 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

	2016-17 £'000	2015-16 £'000
Balance at 1 April	204	76
Transfers to non-current assets	(106)	0
Transfers from non-current assets	0	132
Disposals	(98)	(4)
Change arising on revaluation	0	0
Balance at 31 March	0	204

The above land assets have been presented for sale by Transport Scotland with an expected completion date 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 held for sale are not subject to depreciation or amortisation.

9. Financial Assets

2016-17	Interests in Nationalised Industries & Limited Companies £'000	Voted Loans £'000	Other Funds £'000	Total £'000
Balance at 1 April 2016	20,550	104,176	25,178	149,904
Add element reported within current assets	0	3,754	0	3,754
Advances and repayments
Cash advances	0	28,726	17,286	46,012
Repayments	0	(3,929)	0	(3,929)
Balance at 31 March 2017	20,550	132,727	42,464	195,741
Loans repayable within 12 months transferred to current assets	0	(4,077)	0	(4,077)
Balance at 31 March 2017	20,550	128,650	42,464	191,664

2015-16	Interests in Nationalised Industries & Limited Companies £'000	Voted Loans £'000	Other Funds £'000	Total £'000
Balance at 1 April 2015	20,550	66,770	12,627	99,947
Add element reported within current assets	0	3,767	0	3,767
Advances and repayments
Cash advances	0	41,160	12,551	53,711
Repayments	0	(3,767)	0	(3,767)
Balance at 31 March 2016	20,550	107,930	25,178	153,658
Loans repayable within 12 months transferred to current assets	0	(3,754)	0	(3,754)
Balance at 31 March 2016	20,550	104,176	25,178	149,904

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 Scottish Ministers, represented by Transport Scotland, are the sole shareholder in Caledonian Maritime Assets Ltd, David MacBrayne Ltd, Highlands and Islands Airports Ltd and TS Prestwick HoldCo Ltd. Scottish Ministers hold the following share investments:

Caledonian Maritime Assets Ltd	1,500,000 ordinary shares of £10 each
David MacBrayne Ltd	5,500,002 ordinary shares of £1 each
Highlands and Islands Airports Ltd	50,000 ordinary shares of £1 each
TS Prestwick Holdco Ltd	1 ordinary share of £1

These organisations are operated and managed independently of the Scottish Government, and do not fall within the Departmental Accounting boundary. The companies all publish an annual report and accounts. The net assets and results of the above bodies are summarised below.

	Prestwick HoldCo Ltd £m	Highlands and Islands Airports Ltd £m	Caledonian Maritime Assets Ltd £m	David MacBrayne Ltd £m
Net assets/(liabilities) as at 31 March	(26.9)	(27.9)	57.4	18.9
Turnover	11.7	22.1	35.8	199.0
Profit/(loss) for the financial year	(9.0)	(0.9)	5.4	5.1

All results are draft and subject to audit with final accounts yet to be published.

Highlands and Islands Airports Limited (HIAL)

Scottish Ministers are the sole shareholder 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 and also Dundee, which it assumed responsibility for in December 2007 and now operates via a wholly owned subsidiary company, Dundee Airport Ltd.

Caledonian Maritime Assets Limited (CMAL)

Following a restructure of the Caledonian MacBrayne Group in 2006, Caledonian MacBrayne Ltd became known as Caledonian Maritime Assets Ltd (CMAL) and CalMac Ferries Ltd (CFL) was incorporated. CFL took over operation of the Clyde & Hebrides Ferry Services as successor to Caledonian MacBrayne Ltd. 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 two shares of £1 in a dormant company, David MacBrayne Ltd. In the course of the restructuring of the Caledonian MacBrayne Group in 2006, Scottish Ministers' shareholding in David MacBrayne Ltd was increased by 5,500,000 shares to 5,500,002 ordinary shares of £1. David MacBrayne Ltd is now the holding company for the ferry operating companies CalMac Ferries Ltd, Argyll Ferries Ltd and Northlink Ferries Ltd, and for the dormant companies Cowal Ferries Ltd and Rathlin Ferries Ltd.

TS Prestwick HoldCo Limited

In 2013 Transport Scotland purchased the entire share capital of Prestwick Aviation Holdings Ltd, the holding company of subsidiaries who own and operate Glasgow Prestwick Airport, through a company set up for this specific purpose – TS Prestwick Holdco Ltd. Subsequently Transport Scotland advanced loan funding to the Group to cover the cash deficit arising from its operating deficit and capital expenditure.

Voted Loans

Transport Scotland provides loans to CMAL to be used for the construction of new shipping.

Other Funds

These represent loans that Transport Scotland provide to Prestwick Airport as noted above, and to the Energy Savings Trust to fund energy efficient transport initiatives.

In respect of IFRS12, it should be noted that both HIAL and David MacBrayne are classed as Non Departmental Public Bodies (NDPB's), and are treated in accordance with the HM Treasury Consolidated Budgeting guidance which can be found at https://www.gov.uk/government/publications/consolidated-budgeting-guidance-2015-to-2016.

Transport Scotland has taken account of these bodies forecast expenditure within its budget.

Scottish Canals is currently classed as an NDPB, however HM Treasury have agreed not to apply the budgeting or accounting impact of this until the Office of National Statistics (ONS) complete a planned forthcoming classification after which they will review the position.

CMAL and Prestwick Airport are classed as Public Corporations and are not included in the accounting or budgetary boundary.

10. Trade Receivables and Other Assets

10a Analysis by classification	As at 31/03/17 £'000	As at 31/03/16 £'000
Amounts falling due within one year:
Trade and other receivables
Trade and other receivables	414	1,562
Damage claims	1,320	1,398
Prepayments and accrued income	49,940	46,898
	51,674	49,858
Amounts falling due after more than one year:
Prepayments and other receivables	15,665	30,665
	15,665	30,665

10b Intra-Government balances	As at 31/03/17 £'000	As at 31/03/16 £'000
Amounts falling due within one year:
Intra-Government balances
Other Central Government bodies	0	1,279
Local Authorities	0	30
Public corporations and trading funds	4,161	1,921
	4,161	3,230
Balances with bodies external to Government	47,513	46,628
Total receivables	51,674	49,858
Amounts falling due after more than one year:
Intra-Government balances
Other Central Government bodies	0	0
Local Authorities	15,665	15,665
Public corporations and trading funds	0	0
	15,665	15,665
Balances with bodies external to Government	0	15,000
Total receivables	15,665	30,665

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

	As at 31/03/17 £'000	As at 31/03/16 £'000
At 1 April	0	0
Charge for the year	0	0
Unused amount released	0	0
Utilised during the year	0	0
At 31 March	0	0

11. Trade Payables and Other Liabilities

11a Analysis by classification	As at 31/03/17 £'000	As at 31/03/16 £'000
Amounts falling due within one year:
Trade and other payables
Trade payables	5,319	1,216
Accruals	150,272	153,216
Other payables	10,064	4,710
Financial liabilities - PFI	11,980	11,171
Deferred income	273	71
	177,908	170,384
Amounts falling due after more than one year:
Other payables	1,845	1,056
Financial liabilities - PFI	1,104,660	776,371
	1,106,505	777,427

11b Intra-Government balances	As at 31/03/17 £'000	As at 31/03/16 £'000
Amounts falling due within one year:
Intra-Government balances
Other Central Government bodies	26,354	858
Local Authorities	12,489	14,314
Public corporations and trading funds	279	(11)
	39,122	15,161
Balances with bodies external to Government	138,786	155,223
Total payables	177,908	170,384
Amounts falling due after more than one year:
Intra-Government balances
Other Central Government bodies	0	0
Local Authorities	0	0
Public corporations and trading funds	0	0
	0	0
Balances with bodies external to Government	1,106,505	777,427
Total payables	1,106,505	777,427

12. Provisions for Liabilities and Charges

12a Provisions for liabilities and charges	Land and Property Acquisition £'000	Major Projects £'000	Other £'000	Total £'000
2016-17
Balance as at 1 April 2016	72,141	5,271	5,610	83,022
Provided in year	0	0	38	38
Provisions not required written back	0	(145)	(1)	(146)
Provisions utilised in year	(275)	(149)	(108)	(532)
Discount amortised	1,653	(24)	4	1,633
Balance as at 31 March 2017	73,519	4,953	5,543	84,015
2015-16
Balance as at 1 April 2015	90,350	8,253	1,023	99,626
Provided in year	0	0	5,023	5,023
Provisions not required written back	(1,376)	0	(59)	(1,435)
Provisions utilised in year	(16,227)	(2,767)	(356)	(19,350)
Discount amortised	(606)	(215)	(21)	(842)
Balance as at 31 March 2016	72,141	5,271	5,610	83,022

12b Analysis of expected timing of discounted flows	Land and Property Acquisition £'000	Major Projects £'000	Other £'000	Total £'000
In the remainder of the period to 2018	24,156	4,500	5,466	34,122
Between 2019 and 2022	49,363	453	77	49,893
Between 2023 and 2027	0	0	0	0
Thereafter	0	0	0	0
Balance as at 31 March 2017	73,519	4,953	5,543	84,015
In the remainder of the period to 2017	24,431	3,818	5,473	33,722
Between 2018 and 2021	47,710	1,453	137	49,300
Between 2022 and 2026	0	0	0	0
Thereafter	0	0	0	0
Balance as at 31 March 2016	72,141	5,271	5,610	83,022

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, it is often 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 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 VOA are reviewed bi-annually.

Major Projects

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

Other

Transport Scotland agreed to meet the additional costs of benefits payable to specific employees who retired 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

Receivables
	Note	As at 31/03/17 £'000	As at 31/03/16 £'000	2016-17 Net Movement £'000	2015-16 Net Movement £'000
Due within one year	8/10	51,674	50,063	(1,611)	47,173
Due after more than one year	10	15,665	30,665	15,000	7,787
Net (increase)/decrease		67,339	80,728	13,389	54,960
Payables
Due within one year	11	177,908	170,383	7,525	(43,847)
Due after more than one year	11	1,106,505	777,427	329,078	228,955
		1,284,413	947,810	336,603	185,108
Less: Lease and PFI creditors included in above	11	1,116,640	787,542	329,098	229,804
Less: Capital accruals included in the above		7,720	2,281	5,439	(23,549)
Net increase/(decrease)		160,053	157,987	2,066	(21,147)
Provisions	12	84,015	83,022	993	(16,604)
Net increase/(decrease)		84,015	83,022	993	(16,604)
Net movement increase/(decrease)		311,407	321,737	(10,330)	(92,711)

14. Capital Commitments

Transport Scotland's capital commitments relate to future payments on major road schemes currently under construction. The main works contracts have been awarded and the loans agreed. These commitments have not been reflected elsewhere in the accounts.

	As at 31/03/17 £'000	As at 31/03/16 £'000
Property, plant and equipment	3,059,367	770,609
Total contracted capital commitments for which no provision has been made	3,059,367	770,609

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 31/03/17 £'000	As at 31/03/16 £'000
Land & buildings
Due within 1 year	1,290	1,444
Due after 1 year but not more than 5 years	3,869	5,159
Commitments thereafter	0	0
	5,159	6,603

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 (A74M) – the contract covers the design, construction and financing of 28.3km of new motorway, as well as the operation and maintenance of 90km of existing 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 motorway and 9km local road to 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 motorway and associated roads, junctions, structures and associated works and their on-going maintenance for a period of 30 years. Unitary charge payments commenced in September 2011 and will cease in September 2041.

Under IPSAS 32, the substance of these PFI contracts is that of a finance lease, with the asset being recognised. Payments under PFI contracts comprise two elements; imputed finance lease charges and services charges.

We have also entered into the following contracts for the design, build, finance and maintenance of assets yet to be completed.

The M8, M73, M74 Motorway Improvements Project will upgrade the A8 Baillieston to Newhouse, complete the M8 between Glasgow and Edinburgh, and include improvements to the M74 Raith Interchange and the widening of other key sections of the M8, M73 and M74. The NPD contract also incorporates the management, operation and maintenance of this section of the motorway for the next 30 years. The unitary charge payments will become committed after construction completion in 2017 and will cease in 2047.

AWPR/B-T – the project will construct a new dual carriageway around the City of Aberdeen and upgrade the road between Balmedie and Tipperty to dual carriageway. The NPD contract also incorporates the management, operation and maintenance of these roads for the next 30 years. The unitary charge payments will become committed in phases from Autumn 2016 until after construction completion in 2018 and will cease in 2048.

Imputed finance lease obligations under PFI contracts comprise:
	As at 31/03/17 £'000	As at 31/03/16 £'000	As at 31/03/15 £'000
Rentals due within 1 year	40,407	40,407	40,407
Rentals due within 2 to 5 years	161,627	161,627	161,627
Rentals due thereafter	1,276,003	976,141	776,325
	1,478,037	1,178,175	978,359
Less: Interest element (finance cost)	(361,397)	(390,633)	(420,622)
Total capital cost	1,116,640	787,542	557,737
Imputed service charge obligations under PFI contracts comprise:
Service charge due within 1 year	55,284	52,831	54,995
Service charge due within 2 to 5 years	178,612	194,441	206,619
Service charge due thereafter	314,155	348,791	394,262
Total service charge	548,051	596,063	655,876

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 Abellio ScotRail Ltd and Serco Caledonian Sleeper Ltd under the Franchise Agreements.

Network Rail – Control Period 4 ran from April 2009 to March 2014. The Determination for the current control period, CP5 from April 2014 to March 2019, was set by the Office of Rail and Road for the Deed of Grant and track access charges and is reflected below.

The total amount charged to the Statement of Comprehensive Net Expenditure in respect of these schemes reflects the cessation of the First ScotRail franchise on 31 March 2015 and the commencement on 1 April 2015 of the Abellio ScotRail and Serco Caledonian Sleeper franchises.

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

	2016-17 £'000	2015-16 £'000
Network Rail	463,588	446,972
First ScotRail	0	0
Abellio ScotRail	249,677	293,478
Serco Caledonian Sleeper Limited	19,085	21,207
Total	732,350	761,657

Following expiry of the contract with First Group, further contracts from April 2015 were awarded to Abellio for the ScotRail franchise, and to Serco for the Caledonian Sleeper franchise. Amounts due under these contracts in future years, analysed between those periods where the commitment falls are:

	Network Rail Deed of Grant £'000	Abellio ScotRail £'000	Serco Caledonian Sleeper Limited £'000	Total £'000
Expiry within 0-12 months	425,446	291,437	22,664	739,547
Expiry within 1 to 2 years	335,610	379,981	27,207	742,798
Expiry within 2 to 5 years	1,726,406	1,371,180	78,300	3,175,886
Total	2,487,462	2,042,598	128,171	4,658,231

18. Financial Instruments

18a Financial Instruments by Category

2016-17	Assets at Fair Value through Profit & Loss £'000	Loans & Receivables £'000	Total £'000
Assets per statement of financial position
Trade and other receivables excluding prepayments, reimbursements of provisions and VAT recoverable	0	217,302	217,302
Balance as at 31 March 2017	0	217,302	217,302

Liabilities per statement of financial position
	Note	Assets at Fair Value through Profit & Loss £'000	Other Financial Liabilities £'000	Total £'000
PFI liabilities	16	0	1,116,640	1,116,640
Trade and other payables excluding statutory liabilities (VAT, income tax and social security)		0	200,499	200,499
Balance as at 31 March 2017		0	1,317,139	1,317,139

2015-16	Assets at Fair Value through Profit & Loss £'000	Loans & Receivables £'000	Total £'000
Assets per statement of financial position
Trade and other receivables excluding prepayments, reimbursements of provisions and VAT recoverable	0	174,207	174,207
Balance as at 31 March 2016	0	174,207	174,207

Liabilities per statement of financial position
	Note	Assets at Fair Value through Profit & Loss £'000	Other Financial Liabilities £'000	Total £'000
PFI liabilities	16	0	787,542	787,542
Trade and other payables excluding statutory liabilities (VAT, income tax and social security)		0	158,598	158,598
Balance as at 31 March 2016		0	946,140	946,140

18b Financial Risk Factors

Exposure to Risk

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 many other business entities. A high level review of risk management is now considered at each meeting of the Audit and Risk Committee.

The table below analyses financial liabilities into relevant maturity groupings based on the remaining period at the Statement of Financial Position date to the contractual maturity date. The amounts disclosed 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.

2016-17	Carrying value £'000	0-12 months £'000	1-2 years £'000	2-5 years £'000	5-10 years £'000	>10 years £'000
Non-derivative liabilities	1,116,640	11,980	12,850	44,449	98,693	948,668
Derivative liabilities	0	0	0	0	0	0
Total financial liabilities	1,116,640	11,980	12,850	44,449	98,693	948,668

2015-16	Carrying value £'000	0-12 months £'000	1-2 years £'000	2-5 years £'000	5-10 years £'000	>10 years £'000
Non-derivative liabilities	732,395	288,972	11,623	36,001	79,774	316,025
Derivative liabilities	0	0	0	0	0	0
Total financial liabilities	732,395	288,972	11,623	36,001	79,774	316,025

Cash Flow and Fair Value Interest Rate Risk

Transport Scotland's loans to CMAL accrue interest at the rate set for the National Loans Fund and those to Prestwick at the rate specified by the European Commission.

Income, expenditure and cash flows are dependent on 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 in to and, as such, the related income, expenditure and cash flows are substantially independent of changes in market interest rates.

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 process of recovering the expenses awarded by the Court of Session is now in the hands of the Accountant in Bankruptcy.

Transport Scotland successfully defended a legal challenge in respect of the procurement of the Northern Isles Ferry Service. The legal judgement was confirmed in March 2016. The process of recovering the expenses awarded by the Court of Session is continuing.

19b Contingent Liabilities disclosed under IAS37

As part of Transport Scotland's normal course of business, the Forestry Commission grants the right to use a forestry track as an emergency diversion route on the A83 Rest and Be Thankful on the understanding that Transport Scotland has the 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 considered unlikely that any liability will occur.

19c Possible Contingent Liabilities not required under IAS37 but included for parliamentary reporting and accountability purposes

The FReM 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 agreements (ScotRail and Caledonian Sleeper Rail Franchise Agreements) with indemnities to Abellio ScotRail Ltd and Serco Caledonian Sleeper Ltd commencing 1 April 2015.
Indemnity clauses 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 seven 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 the pension funds of Abellio ScotRail Ltd and Serco Caledonian Sleeper Ltd from 1 April 2015 in line with that provided to other train operators by the DfT.
Guarantee to Strathclyde Pension fund in relation to admission of Scottish Canals.

iii. Other contingent liabilities held by Transport Scotland:

Monklands Canal – maintenance of pipes under trunk roads.

There is a contingent liability in respect of any further payment required to the Lothian Pension Fund in respect of employees transferred from the Forth Estuary Transport Authority (in excess of the agreed settlement amount for the value of the cessation deficit if it subsequently exceeds the prudent basis on which it was calculated). This is considered to be a remote possibility due to the assumptions made in the calculation of the deficit payment. It is not possible to predict what any subsequent valuation of the pension deficit will be to inform any further contribution required by Transport Scotland.

Transport Scotland received advance payments from the Department for Transport, in relation to the Arc Atlantique Project, to improve the efficiency of the road network. As these monies are Pre-financing payments there is an outside risk that Transport Scotland could fail to meet all the obligations and requirements set out by the Grant Agreement and as such may be required to return part thereof or all these payments.

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 Ltd, CMAL, TS Prestwick HoldCo Ltd and HIAL are wholly owned subsidiaries of Transport Scotland with whom it also had various material transactions during the year.

Loans were advanced to and repaid by CMAL to fund vessel construction. Grants were paid to HIAL to subsidise its operating and capital expenditure and also to CMAL to fund agreed pier and harbour infrastructure projects. David MacBrayne Ltd is the parent company of Calmac Ferries Ltd, Argyll Ferries Ltd and Northlink Ferries Ltd who operated ferry services under contracts with Transport Scotland, and which Transport Scotland supported via the payment of subsidies. TS Prestwick Holdco Limited is the parent company of the group of subsidiaries who own and operate Glasgow Prestwick Airport. Transport Scotland advanced loan funding to the Group to cover the cash deficit arising from its operating deficit and capital expenditure.

Transport Scotland 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, Forth Estuary Transport Authority, Northern Isles Ferries, Cycling Scotland, Strathclyde Partnership for Transport and the Tay Road Bridge Joint Board 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

2016-17	Resource £'000	Net Investment £'000	Income £'000	Non Cash £'000	AME	ODEL £'000	Total £'000
Total continuing segments
Roads	90,677	115,215	(504)	79,300	0	73,164	357,852
Rail	267,534	470,331	0	0	0	0	737,865
Concessionary travel & bus services	250,483	(80)	(337)	67	0	0	250,133
Other public transport	18,999	0	0	0	0	0	18,999
Ferry services in Scotland	172,625	16,232	(3,978)	0	0	0	184,879
Air services in Scotland	28,210	10,332	(745)	0	0	0	37,797
Other transport directorate programmes	31,911	35,236	(82)	0	0	0	67,065
Scottish Futures Fund	48	18,845	0	0	0	0	18,893
Grants to Local Authorities	0	21,681	0	0	0	0	21,681
	860,487	687,792	(5,646)	79,367	0	73,164	1,695,164

2015-16	Resource £'000	Net Investment £'000	Income £'000	Non Cash £'000	AME	ODEL £'000	Total £'000
Total continuing segments
Roads	100,254	72,419	(728)	93,600	(1,035)	80,322	344,832
Rail	315,124	433,453	0	10	0	0	748,587
Concessionary travel & bus services	252,074	265	0	63	0	0	252,402
Other public transport	21,425	0	0	0	0	0	21,425
Ferry services in Scotland	160,026	6,869	(3,394)	0	0	0	163,501
Air services in Scotland	30,173	18,120	(494)	0	0	0	47,799
Other transport directorate programmes	25,486	16,940	0	0	0	0	42,426
Scottish Futures Fund	489	14,061	0	0	0	0	14,550
Grants to Local Authorities	0	29,961	0	0	0	0	29,961
	905,051	592,088	(4,616)	93,673	(1,035)	80,322	1,665,483

21b Business Segments – Capital Expenditure

2016-17	Trunk Road Maintenance £'000	Capital Projects £'000	Other Assets £'000	Voted Loans £'000	Total Capital Expenditure £'000
Total continuing segments
Roads	11,998	579,319	131	0	591,448
Rail	0	0	0	0	0
Other public transport	0	0	(35)	0	(35)
Ferry, aviation and other services in Scotland	0	0	0	42,083	42,083
	11,998	579,319	96	42,083	633,496

2015-16	Trunk Road Maintenance £'000	Capital Projects £'000	Other Assets £'000	Voted Loans £'000	Total Capital Expenditure £'000
Total continuing segments
Roads	14,101	541,752	42	0	555,895
Rail	0	0	0	0	0
Other public transport	0	0	30	0	30
Ferry, aviation and other services in Scotland	0	0	0	49,944	49,944
	14,101	541,752	72	49,944	605,869

22. Notional Charges

The following notional charges have been included in the accounts:

	Note	2016-17 £'000	2015-16 £'000
Auditors' remuneration	3	171	182
		171	182

23. Losses and Special Payments

	Number of cases	2016-17 £'000	2015-16 £'000
Total cash losses	21	484	68
Details of cases over £250,000	0	0	0
Including – claims abandoned	0	0	68
– 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 there has been a fatal injury. The costs are held in a debtor account until the recovery is successful. In 2015-16 a detailed review of the costs held in the debtor account identified those deemed recoverable, and the position is now reviewed on an on-going basis. Irrecoverable costs no longer being pursued amounted to £0.484m in respect of 21 cases and these have now been written off. No individual case exceeded £250,000.

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 Act could not be cancelled, costs have been incurred. These costs include 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 2016-17 (2015-16 £17,000), and £nil revenue generated (2015-16 £nil).