Shareholder Executive

British Waterways

Purpose

British Waterways exists to manage, maintain and develop its network of waterways and docks for the wider public benefit.

Legal Status and Ownership

British Waterways is a statutory corporation established under the Transport Act 1962, as amended by the Transport Act 1968. It operates and maintains waterways in England, Scotland and Wales.Whilst the majority of its revenues are earned from its activities, it also receives funding from Defra and the Scottish Government. British Waterways is led by a Non-Executive Board: two of the directors are appointed by the Scottish Government, and Defra appoints the remainder.

British Waterways is charged with the duty to break even over a number of years with all revenue surpluses reinvested in the waterways.

Government's Objectives

The Government’s vision for inland waterways (as set out in Waterways for Tomorrow) is to promote a modern, integrated, sustainable waterways system. Government looks to navigation authorities to protect and conserve the waterways whilst encouraging their best and innovative use, maximising opportunities for leisure, recreation, education and freight transport.

The Government’s objectives for British Waterways are:

• to ensure the structural integrity of the operational asset base and to deliver safe, efficient and effective operation for leisure and commercial users on a ‘use and prospects of use’ basis
• as custodian of publicly-owned inland waterways, to make them accessible and attractive to the wider public
• as a public corporation, to operate the business in a commercial, cost effective and open manner, having proper regard for public policy and corporate social responsibility and the need to make an appropriate return on assets
• British Waterways to be open and accountable with regard to its strategic plans and operational activity, engaging with a wide range of stakeholders with particular attention to those who have a special interest in the inland waterways.

Further, the Strategic Steer agreed with British Waterways outlines Government’s priorities in England and Wales:

• maintaining the network in satisfactory order
• achieving shared Government/company longer term vision of moving towards greater self sufficiency through the growth of commercial business and other funding sources
• delivering a range of additional public benefits that are not indivisible from maintaining the network.

Financial Performance

£m	2009	2008	2007
Turnover	223	219	189
Operating Profit1	6	(2)	(0)
Profit/(Loss) for the year2	(73)	36	47
Net Cash flow	24	11	(11)
Net Operating Assets	539	634	630
RONA	1.0%	(0.2)%	0.1%
Shareholders' Funds	379	478	427
Dividends	-	-	-

Notes

¹ Operating profit stated before profit on sale of assets, revaluation of properties and JV profits/losses.
² Profit/(loss) for the year is pre transfer from/(to) capital reserves.

Commentary

Under the backdrop of the most challenging economic conditions for many decades, British Waterways made progress in 2008-09, maintaining a stable performance across its business, and supporting projects that will deliver £10bn of regeneration.

Group revenues increased by 2% to £223.3m (2007-08: £219.1m), supported by an 11% increase in commercial income from utilities and higher boat licence revenues. Excluding one-off premiums, property income fell 2% due to property disposals made.Waterway maintenance expenditure was held at levels consistent with 2007-08, although expenditure on third party funded projects fell by 26%.The £23.5m Three Mills Lock project was completed in London.

British Waterways had to reduce the values of its property portfolio and joint venture investments reflecting market conditions by 12%, although long term investments continue to yield consistent rental income. Defra brought forward grant-in-aid by £5m to enable some earlier than planned network maintenance.

Measures were taken during the course of the year to restructure the organisation to further improve efficiencies and lower costs by up to £10m annually.

A detailed study on the future of British Waterways’ property portfolio was conducted for HM Treasury’s Operational Efficiency Programme.This concluded that greater clarity of the current funding model for British Waterways would be yielded by setting up a property subsidiary to manage the portfolio.