Shareholder Executive

British Waterways

Purpose

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. 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

Vision

To promote a modern, integrated, sustainable 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.

Objectives (reviewed 2004/5)

• 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.

The Strategic Steer recently 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.

The Government broadly favours the first as a priority, especially as this has a strong linkage with the delivery of many public policy priorities such as regeneration, sustainable landscapes and communities and public health. But a balance must be struck with the other two, as all are clearly important.

Financial Performance

£m	2008	2007	2006
Turnover	219	189	191
Operating Profit	(4)	5	0
Profit/(Loss) for the year	(3)	3	3
Net Cash flow	11	(11)	13
Net Operating Assets	634	630	526
RONA	(0.6)%	0.8%	0.1%
Shareholders' Funds	478	427	473
Dividends	-	-	-

1 2006 results are as restated in the 2007 accounts.

Commentary

British Waterways made strong progress in 2007-8, through significant increases in commercial and property income and third party contributions to regeneration supporting projects that will deliver £7bn of regeneration.

Trading income, excluding grant funding, grew 4.3% to £90.2m. Growth was supported by increases to property income portfolio, new agreements signed with gas providers, and higher boat licence and mooring income. Government grant funding was consistent with the previous year. Across the commercial property portfolio, the investment return was 11.1% over the year.

The business was further supported by a 100% increase in third-party contributions to £61m, made by local authorities and RDAs, to enable project implementation such as Bow Back Rivers for the 2012 Olympic Games, the Liverpool Canal Link and at Gloucester Docks.

The business continued to manage costs effectively to deliver capital expenditure. In particular, an unforeseen breach of the Monmouthshire and Brecon Canal, the rectification works for which will continue into 2009, demanded reprioritisation of resources from some minor works. However, work to implement minimum safety standards was completed successfully.

Overall, British Waterways continues to refine its management approach, and continues to look at ways of securing requisite levels of ongoing infrastructure investment.