80UC Connect 5.404%

TIDM80UC

RNS Number : 3846W

Connect M77/GSO

31 July 2018

Click on, or paste the following link into your web browser, to view the associated PDF document.

http://www.rns-pdf.londonstockexchange.com/rns/3846W_1-2018-7-31.pdf

Registered number

04698798

CONNECT M77/GSO PLC

Annual Report and Financial Statements

For the Year Ended

31 March 2018

CONNECT M77/GSO PLC

Annual Report and Financial Statements

Contents

Page

   Strategic report                                                                   1 - 3 
   Directors' Report                                                                 4 - 5 
   Directors' Responsibilities Statement                                       6 
   Independent auditor's report                                               7 - 9 
   Profit and loss account                                                           10 
   Balance Sheet                                                                        11 
   Statements of changes in equity                                            12 
   Notes to the financial statements                                    13 - 24 

CONNECT M77/GSO PLC

Strategic Report

for the year ended 31 March 2018

TheDirectors,inpreparingthisStrategicReport,havecompliedwiths414CoftheCompaniesAct 2006.

Strategic Review

TheCompanyisincorporatedinGreatBritain,registeredinEnglandandWalesanddomiciledinthe United Kingdom.

On7May2003ConnectM77/GSOplcsignedacontractwithEastRenfrewshireCouncil(onbehalf oftheScottishGovernmentfortheM77andSouthLanarkshireCouncilandEastRenfrewshire CouncilfortheGlasgowSouthernOrbital(GSO))todesign,build,financeandoperate(DBFO)the M77fromFenwicktoMalletsheughandtheGSOfromMalletsheughtoPhilipshill,EastKilbrideand sectionsoftheA726andtomaintainthese

roadsunderalicenceovera32yearperiodaswellas modifycertainsectionsoftheA77.InaccordancewiththeconcessionagreementtheCompany

is responsibleforoperatingtheroadstogetherwithcarryingoutalloftheroutineandmajorlifecycle maintenance for the life of the concession.

ThenewroadsectionswereopenedtothepublicinApril2005andthefinalcompletioncertificate was issued in September 2005.

TherehavebeennochangestotheCompany'sactivitiesintheyearunderreviewandnoneare currently contemplated.

Review of business

Theresultsfortheyeararesetoutonpage9.ThelossfortheyearbeforetaxationwasGBP(33,000) (2017:GBP(61,000))andthenetliabilitiespositionasat31March2018isGBP28,809,000(2017: GBP29,095,000) for the Company.

Key Performance Indicators

TheCompanyhassetspecificbusinessobjectives,whicharemonitoredusinganumberofkey performance indicators ("KPIs"). The relevant KPIs for this report are detailed below:

   2018             2017 
   GBP '000           GBP '000 

(Loss)/profit after taxation (32) 42

Net liabilities (29,127) (29,095)

CONNECT M77/GSO PLC

Strategic Report

for the year ended 31 March 2018

Key Performance Indicators (continued)

   DespitetheCompanyshowingnet    liabilities,theCompany'sprojections,takingaccountof reasonablypossiblecounterpartyperformance,showthattheCompanyexpectstobeableto continuetooperatefortheforeseeablefuture.Accordingly,theycontinuetoadoptthegoingconcern basis in preparing the annual report and financial statements. 

Principal Risks and Uncertainties

TheCompanyrecognisesthateffectiveriskmanagementisfundamentaltoachievingitsbusiness objectivesinordertomeetitscommitmentsinfulfillingthePFIcontractandindeliveringasafeand efficientservice.Riskmanagementcontributestothesuccessofthebusinessbyidentifying

opportunitiesandanticipatingrisks   inordertoimprovebusinessperformanceandfulfilour contractualobligations.TheFinancialrisksaredescribedindetailinnote13oftheFinancial Statements. 

Credit and cash flow risk

TherelevantfinancialriskstotheCompanyarecreditandcashflowrisks,whicharisefromits primaryclient, EastRenfrewshireCouncil.Thecreditandcashflowrisksarenotconsidered significant as the client is a government organisation.

Interest rate risk

ThefinancialriskmanagementobjectiveoftheCompanyistoensurethatfinancialrisksare mitigatedbytheuseoffinancialinstrumentswheretheycannotbeaddressedbymeansof contractualprovisions.Therearenoderivatives,risk ismitigatedthroughafixedrateloan instrument. Financial instruments are not used for speculative purposes.

Liquidity risk

TheCompany'sliquidityriskisprincipallymanagedthroughfinancingtheCompanybymeansoflong- termborrowings, withanamortisationprofilethatmatchestheexpectedavailabilityoffundsfromthe Companyoperatingactivities.Inaddition, theCompanymaintainsreservebankaccountstoprovide short-term liquidity against future debt service and other expenditure requirements.

TheCompanyhasanetliabilitypositionwhichiscausedbytherolledupsubordinateddebtinterest andprincipalamountsduetotheshareholders.Thisdoesnotcauseanissueforgoingconcern sincetheshareholdershavewaivedtheirrightstoreceiveinterestfortheyearto31/03/2019.As suchtheCompanyhastherequiredfundstomeetdebtobligationsastheyfalldueforthefollowing year.

CONNECT M77/GSO PLC

Strategic Report

for the year ended 31 March 2018

Principal Risks and Uncertainties (continued)

Contractual relationships

   TheCompanyoperateswithinacontractualrelationshipwith     itsprimarycustomer,East 
RenfrewshireCouncil.Asignificant    impairmentofthisrelationshipcouldhaveadirectand detrimentaleffectontheCompany'sresultsandcouldultimatelyresultinterminationofthe concession. 

TomanagethisrisktheCompanyhasregularmeetingswithEastRenfrewshireCouncilincluding discussions on performance, project progress, future plans and customer requirements.

The Directors do not believe that the Company is exposed to any significant Financial Risk. The

Company's principal activity as detailed above is low risk as all relationships with the customer,

funders and sub-contractors within the Company in which it sits are determined by the terms of the respective contracts.

Future Developments

TheDirectorsexpectthegenerallevelofactivitytoremainstableintheforthcomingyear.There havebeennootherchangestotheCompany'sactivitiesintheyearunderreviewandnoothersare currently contemplated.

   This report was approved by the board on   July 2018 and signed by its order. 

Patrick McCarthy

Company Secretary

CONNECT M77/GSO PLC

Registered number:04698798

Directors' Report

for the year ended 31 March 2018

TheDirectorspresenttheirannualreporttogetherwiththeauditedfinancialstatementsofthe Company for the year ended 31 March 2018.

The following information has been disclosed in the Strategic Report:

1. Principal Activity and Business Review

2. Key Performance Indicators

3. Principal Risks and Uncertainties

4. Indication of likely future developments in the business

Theauditedfinancialstatementsfortheyearended31March2018aresetoutonpages9to24. The profit for the year after taxation was GBP286,000 (2017: profit GBP42,000).

ThedirectorsdeclaredandpaiddividendsofGBPnil(2017:GBPnil).TheDirectorsexpecttheCompanyto continue its operations for the foreseeable future.

TheCompany'sforecastsandprojections,takingaccountofreasonablepossiblechangesintrading performance, showthattheCompanyhasadequateresourcestocontinueinoperationalexistence fortheforeseeablefuture.Accordingly, theDirectorscontinuetoadoptthegoingconcernbasisin preparingthefinancialstatements.Furtherinformationisprovidedinnote1tothefinancial statements.

Directors

The following persons served as directors throughout the year and up to the date of this report:

D. W. Bowler

M. P. Mageean

M. J. Edwards

   D. G. Blanchard             (appointed on 20/06/17) 

Directors' Indemnities

The Company has made qualifying third party indemnity provisions for the benefit of its Directors which remain

in   force at the date of this report. 

Each of the persons who is a Director at the date of approval of this report confirms that:

(i)sofarastheDirectorisaware,thereisnorelevantauditinformationofwhichtheCompany's auditor is unaware; and

(ii)theDirectorhastakenallthestepsthatheoughttohavetakenasaDirectorinordertomake himselfawareofanyrelevantauditinformationandtoestablishthattheCompany'sauditorisaware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies Act 2006.

Pursuant to Section 487 of the Companies Act 2006, the auditor will be deemed to be reappointed

and KPMG LLP will therefore continue in office.

CONNECT M77/GSO PLC

Registered number:04698798

Directors' Report

for the year ended 31 March 2018

   This report was approved by the board on    July 2018 and signed by its order. 

Patrick McCarthy

Company Secretary

CONNECT M77/GSO PLC

Statement of Directors' responsibilities in respect of the Stategic Report, the Directors' Report and the Financial Statements

ThedirectorsareresponsibleforpreparingtheStrategicReport,theDirectors'Reportandthe financial statements in accordance with applicable law and regulations.

Companylawrequiresthedirectorstopreparefinancialstatementsforeachfinancialyear.Under thatlawtheyhaveelectedtopreparethefinancialstatementsinaccordancewithUKaccounting standardsandapplicablelaw(UKGenerallyAcceptedAccountingPractice),includingFRS102 The Financial Reporting Standard applicable in the UK and Republic of Ireland.

Undercompanylawthedirectorsmustnotapprovethefinancialstatementsunlesstheyare satisfiedthattheygiveatrueandfairviewofthestateofaffairsofthecompanyandoftheprofitor lossofthecompanyforthatperiod.Inpreparingthesefinancialstatements,thedirectorsare required to:

--

--

--

--

--

select suitable accounting policies and then apply them consistently; make judgements and estimates that are reasonable and prudent;

statewhetherapplicableUKaccountingstandardshavebeenfollowed,subjecttoanymaterial departures disclosed and explained in the financial statements;

assessthecompany'sabilitytocontinueasagoingconcern,disclosing,asapplicable,matters related to going concern; and

usethegoingconcernbasisofaccountingunlesstheyeitherintendtoliquidatethecompanyor to cease operations, or have no realistic alternative but to do so.

Thedirectorsareresponsibleforkeepingadequateaccountingrecordsthataresufficienttoshow andexplainthecompany'stransactionsanddisclosewithreasonableaccuracyatanytimethe financialpositionofthecompanyandenablethemtoensurethatthefinancialstatementscomply withtheCompaniesAct2006.Theyareresponsibleforsuchinternalcontrolastheydetermineis necessarytoenablethepreparationoffinancialstatementsthatarefreefrommaterial misstatement, whetherduetofraudorerror,andhavegeneralresponsibilityfortakingsuchsteps asarereasonablyopentothemtosafeguardtheassetsofthecompanyandtopreventanddetect fraud and other irregularities.

CONNECT M77/GSO PLC

Independent auditor's report

to the members of CONNECT M77/GSO PLC

   1      Our opinion is unmodified 

WehaveauditedthefinancialstatementsofM77/GSOPlc("theCompany")fortheyearended31March2018which comprisetheProfitandLossAccount,theBalanceSheet,theStatementofChangesinEquityandtherelatednotes, including the accounting policies in note 1.

In our opinion the financial statements:

give a true and fair view of the state of Company's affairs as at 31 March 2018 and of its loss for the year then ended;

--

--

havebeenproperlypreparedinaccordancewithUKaccountingstandards,includingFRS102TheFinancialReporting Standard applicable in the UK and Republic of Ireland; and

have been prepared in accordance with the requirements of the Companies Act 2006.

Basis of opinion

WeconductedourauditinaccordancewithInternationalStandardsonAuditing(UK)("ISAs(UK)")andapplicablelaw.Our responsibilitiesaredescribedbelow.Webelievethattheauditevidencewehaveobtainedisasufficientandappropriate basis for our opinion. Our audit opinion is consistent with our report to the audit committee.

Wewereappointedasauditorbythedirectorson17October2016.Theperiodoftotaluninterruptedengagementisforthe2 financialyearsended31March2018.Wehavefulfilledourethicalresponsibilitiesunder,andweremainindependentofthe Groupinaccordancewith,UKethicalrequirementsincludingtheFRCEthicalStandardasappliedtopublicinterestentities. No non-audit services prohibited by that standard were provided.

   2      Key audit matters: our assessment of material misstatement 

Keyauditmattersarethosemattersthat,inourprofessionaljudgment,wereofmostsignificanceintheauditofthefinancial statementsandincludethemostsignificantassessedrisksofmaterialmisstatement(whetherornotduetofraud)identified byus, includingthosewhichhadthegreatesteffecton:theoverallauditstrategy;theallocationofresourcesintheaudit;and directingtheeffortsoftheengagementteam.Wesummarisebelowthekeyauditmatters,indecreasingorderofaudit significance, inarrivingatourauditopinionabove,togetherwithourkeyauditprocedurestoaddressthosemattersand,as requiredforpublicinterestentities,ourresultsfromthoseprocedures.Thesematterswereaddressed,andourresultsare basedonproceduresundertaken,inthecontextof,andsolelyforthepurposeof,ourauditofthefinancialstatementsasa whole, andinformingouropinionthereon,andconsequentlyareincidentaltothatopinion,andwedonotprovideaseparate opinion on these matters.

Service and income recognition

(GBP2,380; 2017: GBP2,245k)

Refer to page 13 (accounting policy) and page 15 (financial disclosures).

The risk

Theamountofservicerevenuerecognisediscalculatedviaamark-upbeingappliedtocostsincurredduringtheyear.The mark-upisdeterminedfromalongtermfinancialmodelwhichactsasalongtermforecastoftherevenuesandcoststobe incurredontheproject.Asignificantportionoftheserviceprovisionandtheassociatedperformancerisk,areoutsourcedto subcontractorswithcostscontractuallyagreedoverthelifeofthecontract.Lifecyclereplacementriskremainswiththe Company and is a significant estimate.

Afraudriskexistsasmanagementcouldmanipulatetheamountofrevenuerecognisedeitherthroughamendingthefuture forecastassumptions,particularlythroughthelifecyclecostswhichareakeyestimate(seenote7fordetails)andhence changethemark-upappliedtothecostsonwhichrevenueisrecognisedorbyapplyingthemark-uptocostswhicharenot related to the provision of the services under the concession contract.

Our response

Our procedures included:

Servicerevenuerecalculation:Werecalculatedservicerevenuebaseduponthecostsincurredwhichrelateto

provisionofservicesundertheconcessioncontractusingthemark-updeterminedinthefinancialforecastsand

compared this to the amounts recorded.

Comparingforecasts:Wechallengedtheappropriatenessofcostestimatesandassessedwhetherornotestimates

showedanyevidenceofmanagementbias.Ourchallengewasbaseduponourassessmentofhistoricalaccuracyofthe

Company'sforecaststhroughcomparisonofcurrentyearactualcosts,asampleofwhichhavebeenverifiedtosupplier

invoices,versusprioryearforecast,comparisonofforecastcostestimatesincurrentyearversustheprioryearand

expectations based on our knowledge of the Company and experience of the industry in which it operates.

CONNECT M77/GSO PLC

Independent auditor's report

to the members of CONNECT M77/GSO PLC

3 Our application of materiality an an overview of the scope of our audit

MaterialityforthestatutoryfinancialstatementsasawholewassetatGBP720,000(2017:GBP750,000)determinedwithreference to a benchmark of total assets, of which it represents 0.5% (2017: 0.5%).

WeagreedtoreporttotheAuditCommitteeanycorrectedoruncorrectedidentifiedmisstatementsexceedingGBP36,000(2017: GBP38,000), in addition to other identified misstatements that warranted reporting on qualitative grounds.

Our audit of the company was undertaken to the materiality level set out above and was performed at our offices in London.

4 We have nothing to report on going concern

Wearerequiredtoreporttoyouifwehaveconcludedthattheuseofthegoingconcernbasisofaccountingisinappropriate orthereisanundisclosedmaterialuncertaintythatmaycastsignificantdoubtovertheuseofthatbasisforaperiodofatleast twelve months from the date of approval of the financial statements. We have nothing to report in these respects.

5 We have nothing to report on the strategic report and the directors report

Thedirectorsareresponsibleforthestrategicreportandthedirectors'report.Ouropiniononthefinancialstatementsdoes not cover those reports and we do not express an audit opinion thereon.

Ourresponsibilityistoreadthestrategicreportandthedirectors'reportand,indoingso,considerwhether,basedonour financialstatementsauditwork, theinformationthereinismateriallymisstatedorinconsistentwiththefinancialstatementsor our audit knowledge. Based solely on that work:

we have not identified material misstatements in those reports;

inouropiniontheinformationgiveninthestrategicreportandthedirectors'reportforthefinancialyearisconsistentwith

the financial statements; and

in our opinion those reports have been prepared in accordance with the Companies Act 2006.

6 We have nothing to report on the other matters on which we are required to report by exception

Under the Companies Act 2006, we are required to report to you if, in our opinion:

adequateaccountingrecordshavenotbeenkeptbytheCompany,orreturnsadequateforouraudithavenotbeen

received from branches not visited by us; or

we have not received all the information and explanations we require for our audit. We have nothing to report in these respects.

7 Respective responsibilities Directors' responsibilities

Asexplainedmorefullyintheirstatementsetoutonpage6,theDirectorsareresponsiblefor:thepreparationofthefinancial statementsincludingbeingsatisfiedthattheygiveatrueandfairview;suchinternalcontrolastheydetermineisnecessaryto enablethepreparationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror; assessingtheCompany'sabilitytocontinueasagoingconcern,disclosing,asapplicable,mattersrelatedtogoingconcern; andusingthegoingconcernbasisofaccountingunlesstheyeitherintendtoliquidatetheCompanyortoceaseoperations,or have no realistic alternative but to do so.

CONNECT M77/GSO PLC

Independent auditor's report

to the members of CONNECT M77/GSO PLC

Auditor's responsibilities

Ourobjectivesaretoobtainreasonableassuranceaboutwhetherthefinancialstatementsasawholearefreefrommaterial misstatement,whetherduetofraudorotherirregularities(seebelow),orerror,andtoissueouropinioninanauditor'sreport. Reasonableassuranceisahighlevelofassurance,butdoesnotguaranteethatanauditconductedinaccordancewithISAs (UK)willalwaysdetectamaterialmisstatementwhenitexists.Misstatementscanarisefromfraud,otherirregularitiesor errorandareconsideredmaterialif,individuallyorinaggregate,theycouldreasonablybeexpectedtoinfluencetheeconomic decisions of users taken on the basis of the financial statements.

A fuller description of our responsibilities is provided on the FRC's website at www.frc.org.uk/auditorsresponsibilities.

Irregularities - ability to detect

Weidentifiedareasoflawsandregulationsthatcouldreasonablybeexpectedtohaveamaterialeffectonthefinancial statementsfromoursectorexperience,throughdiscussionwiththedirectorsandothermanagement(asrequiredbyauditing standards).

Wehadregardtolawsandregulationsinareasthatdirectlyaffectthefinancialstatementsincludingfinancialreporting (includingrelatedcompanylegislation)andtaxationlegislation.Weconsideredtheextentofcompliancewiththoselawsand regulations as part of our procedures on the related financial statements items.

Inadditionweconsideredtheimpactoflawsandregulationsinthespecificareasofhealthandsafety,regulatorycapitaland liquidityandcertainaspectsofcompanylegislationrecognisingthefinancialandregulatednatureofthecompany'sactivities anditslegalform.Withtheexceptionofanyknownorpossiblenon-compliance,andasrequiredbyauditingstandards,our workinrespectofthesewaslimitedtoenquiryofthedirectorsandothermanagementandinspectionofregulatoryandlegal correspondence.Weconsideredtheeffectofanyknownorpossiblenon-complianceintheseareasaspartofourprocedures on the related financial statements items.

Wecommunicatedidentifiedlawsandregulationsthroughoutourteamandremainedalerttoanyindicationsofnon- compliance throughout the audit.

Aswithanyaudit,thereremainedahigherriskofnon-detectionofnon-compliancewithrelevantlawsandregulations (irregularities)/irregularities,asthesemayinvolvecollusion,forgery,intentionalomissions,misrepresentations, ortheoverride of internal controls.

8 The purpose of our audit work and to whom we owe our responsibilities

ThisreportismadesolelytotheCompany'smembers,asabody,inaccordancewithChapter3ofPart16oftheCompanies Act2006.OurauditworkhasbeenundertakensothatwemightstatetotheCompany'smembersthosemattersweare requiredtostatetotheminanauditor'sreportandfornootherpurpose.Tothefullestextentpermittedbylaw,wedonot acceptorassumeresponsibilitytoanyoneotherthantheCompanyandtheCompany'smembers,asabody,forouraudit work, for this report, or for the opinions we have formed.

Tom Eve (Senior Statutory Auditor)

for and on behalf of KPMG LLP, Statutory Auditor Chartered Accountants

15 Canada Square

London

E14 5GL

July 2018

CONNECT M77/GSO PLC

Profit and Loss Account

for the year ended 31 March 2018

   Notes                   2018                     2017 
   GBP '000                  GBP '000 

Turnover 2 2,380 2,245

Cost of sales (1,992) (1,902)

Gross profit 388 343

Administrative expenses (281) (240)

Operating profit 3 107 103

Interest receivable and similar income 4 9,610 9,718 Interest payable and other expenses 5 (9,750) (9,882)

(Loss) before taxation (33) (61)

Tax on (loss)

   6                         1                      103 

(Loss)/profit for the financial year (32) 42

TherewerenoitemsrecognisedinOtherComprehensiveIncomeineitheryearotherthanthe reportedprofit/(loss)shownabove;consequentlynoseparatestatementofothercomprehensive income is presented.

CONNECT M77/GSO PLC Balance Sheet

as at 31 March 2018

Current assets

   Financial asset: amounts falling due within one year                      7                   1,073 

1,265 Debtors: due within one year 8 148 117 Investments: due within one year 9 16,867 15,944 Cash and cash equivalents 3,009 3,030

   21,097                                20,356 

Non-current assets

Financial asset: amounts falling due after one year 7 122,820 124,002

   122,820                              124,002 

Total Assets 143,917 144,358

Current liabilities

Creditors: due within in one year 10 (6,366) (5,080) Total current liabilities (6,366) (5,080)

Non-current liabilities

Creditors: due after one year 11 (165,126) (166,816) Deferred tax liability 11 (1,552) (1,557) Total non-current liabilities (166,678) (168,373)

Total liabilities (173,044) (173,453) Net Liabilities (29,127) (29,095)

Capital and reserves

Called up share capital 13 50 50 Profit and loss account (29,177) (29,145)

Shareholders' deficit (29,127) (29,095)

These financial statements for Connect M77/GSO plc, company registration number 04698798, were approved by the

Board of Directors and authorised for issue on    July 2018 and signed on its behalf by: 

David Blanchard

Director

   Approved by the board on    July 2018 

CONNECT M77/GSO PLC

Statements of Changes in Equity for the year ended 31 March 2018

Proift and

Loss

   account                Total 
   GBP '000               GBP '000               GBP '000 

At 31 March 2016 50 (29,187) (29,137)

Profit for the year - 42 42

At 31 March 2017 50 (29,145) (29,095)

(Loss) for the year - (32) (32)

At 31 March 2018 50 (29,177) (29,127)

Connect M77 GSO PLC

Notes to the Financial Statements

For the year ended 31 March 2018

1 Accounting policies

   a)     Basis of preparation 

ThesefinancialstatementshavebeenpreparedinaccordancewithFRS102TheFinancialReporting StandardapplicableintheUKandRepublicofIreland("FRS102")andtherequirementsoftheCompanies Act 2006. The amendments issued to FRS 102 in July 2015 have been applied.

Thefinancialstatementsarepreparedinsterling,whichisthefunctionalcurrencyoftheCompany.Monetary amounts in these financial statements are rounded to the nearest GBP'000.

TheCompany'sparentundertaking,ConnectM77/GSOHoldingsLimitedincludestheCompanyinits consolidatedfinancialstatements.TheconsolidatedfinancialstatementsofConnectM77/GSOHoldings Limited are available to the public and may be obtained from the address in note 15.

Inthesefinancialstatements,thecompanyisconsideredtobeaqualifyingentity(forthepurposesofthis FRS)andhasappliedtheexemptionsavailableunderFRS102inrespectofthepreparationofaCashFlow Statement and related notes.

AstheconsolidatedfinancialstatementsofConnectM77/GSOHoldingsLimitedincludetheequivalent disclosures, theCompanyhasalsotakentheexemptionsunderFRS102availableinrespectofthefollowing disclosures:

--ThedisclosuresrequiredbyFRS102.11BasicFinancialInstrumentsandFRS102.12OtherFinancial InstrumentIssuesinrespectoffinancialinstrumentsnotfallingwithinthefairvalueaccountingrulesof Paragraph 36(4) of Schedule 1.

TheCompanyproposestocontinuetoadoptthereduceddisclosureframeworkofFRS102initsnext financial statements.

Theaccountingpoliciessetoutbelowhave,unlessotherwisestated,beenappliedconsistentlytoallperiods presented in these financial statements.

Thefinancialstatementshavebeenpreparedonthehistoricalcostconvention.Theprincipalaccounting policies adopted are set out below.

   b)     Going Concern 

Thecurrenteconomicconditionscreatesomegeneraluncertainty.TheDirectorshavereviewedthe Company'ssupplychainanddonotbelievethatanyspecificriskhasbeenidentified.TheDirectorshave alsoconsideredtheabilityoftheAuthoritytocontinuetopayunitaryfeesdueundertheconcessioncontract totheCompany'ssubsidiaryanddonotconsiderthistobeamaterialrisk.TheCompany'sforecastsand projections, takingaccountofreasonablypossiblecounterpartyperformance,showtheCompanyexpectsto beabletocontinuetooperateforthefulltermoftheconcession.DespitetheCompanyshowingnetliabilities theCompany'sprojections,takingaccountofreasonablypossiblecounterpartyperformance,showthatthe Companyexpectstobeabletocontinuetooperatefortheforeseeablefuture.Accordingly,theycontinueto adopt the going concern basis in preparing the annual report and financial statements.

CONNECT M77/GSO PLC

Notes to the Financial Statements for the year ended 31 March 2018

1 Accounting policies (continued)

   c)     Financial Asset and Service Revenue 

TheCompanyaccountsasafinancialassetinaccordancetoSection11ofFRS102forabasicfinancial instrument and is measured at amortised cost.

Intheoperationalphase,revenueisrecognisedbyallocatingaproportionoftotalunitaryincomereceivable overthelifeoftheprojecttoservicecostsbymeansofadeemedconstantrateofreturnonthesecosts. Revenueisrecognisedbyapplyinga5%mark-up%ontheoperationalcosts,representingthefairvalueof operational services.

d) Other Financial Assets

TheCompanyhaselectedtoapplytheprovisionsofSection11'BasicFinancialInstruments'andSection12 'OtherFinancialInstrumentsIssues'ofFRS102toallofitsfinancialinstruments.Financialassetsare recognisedintheCompany'sbalancesheetwhentheCompanybecomespartytothecontractualprovisions of the instrument.

Financialassetshavebeenclassifiedas'loansandreceivables',whichincludescashandcashequivalents. Theclassificationdependsonthenatureandpurposeofthefinancialassetsandisdeterminedatthetimeof recognition.

Basicfinancialassets,whichincludetradeandotherreceivablesandcashandbankbalances,areinitially measuredattransactionpriceincludingtransactioncostsandaresubsequentlycarriedatamortisedcost usingtheeffectiveinterestmethod,unlessthearrangementconstitutesafinancingtransaction,wherethe transactionismeasuredatthepresentvalueofthefuturereceiptsdiscountedatamarketrateofinterest. Other financial assets classified as fair value through profit or loss are measured at fair value.

Tradereceivablesandotherreceivablesthathavefixedordeterminablepaymentsthatarenotquotedinan

activemarketarealsoclassifiedas     'loansandreceivables'.Loansandreceivablesaremeasuredat amortisedcostusingtheeffectiveinterestratemethod,lessanyimpairment.Interestincomeisrecognisedby applyingtheeffectiveinterestrateexceptforshorttermreceivableswheretherecognitionofinterestwould be immaterial. 

Cashandcashequivalentscomprisecashonhand,demanddeposits,andothershorttermhighlyliquid investments, that are readily convertible into cash and are subject to an insignificant risk of change in value.

Financialassetsareimpairedwherethereisobjectiveevidencethatasaresultofoneormoreeventsthat haveoccurredaftertheinitialrecognitionofthefinancialasset,theestimatedfuturecashflowshavebeen impacted.Thecarryingamountofafinancialassetisreducedbytheimpairmentdirectlywiththeexceptionof tradereceivableswhichwouldbereducedthroughtheuseofanallowanceaccount,unlessitisconsidered that it is uncollectible.

TheCompanyderecognisesafinancialassetonlywhenthecontractualrightstoreceivethecashflowsfrom theassetexpire, orittransfersthefinancialassetandsubstantiallyalltheriskandrewardsofownershipof the asset to another entity.

CONNECT M77/GSO PLC

Notes to the Financial Statements for the year ended 31 March 2018

Accounting policies (continued)

e)Financial Liabilities

Financialliabilitiesandequityareclassifiedaccordingtothesubstanceofthecontractualarrangements enteredinto.Financialliabilities,includingborrowings,areinitiallymeasuredatfairvalue,netoftransaction costsandaresubsequentlymeasuredatamortisedcostusingtheeffectiveinterestratemethod,withinterest expenserecognisedonaneffectiveyieldbasis.TheCompanyderecognisesitsfinancialliabilitieswhenthe Company's obligations are discharged, cancelled or they expire.

Theeffectiveinterestratemethodisamethodofcalculatingamortisedcostsofthefinancialliabilitiesand allocatinginterestexpenseovertherelevantperiod.Theeffectiveinterestrateistheratethatexactly discounts the estimated future cash payments through the expected life of the financial liabilities.

f) Taxation

Currenttaxisprovidedatamountsexpectedtobepaidorrecoveredusingthetaxratesandlawsthathave beenenacted, orsubstantivelyenacted,bythebalancesheetdate.Deferredtaxisprovidedinfullontiming differenceswhichresultinanobligationatthebalancesheetdatetopaymoretax,orarighttopaylesstax, atafuturedate, atratesexpectedtoapplywhentheycrystallisebasedoncurrenttaxratesandlaw.Timing differencesarisefromtheinclusionofitemsofincomeandexpenditureintaxationcomputationsinperiods differentfromthoseinwhichtheyareincludedinfinancialstatements.Unrelievedtaxlossesandother deferredtaxassetsarerecognisedonlytotheextentthat,onthebasisofallavailableevidence,itcanbe regardedasmorelikelythannottherewillbesuitabletaxableprofitsfromwhichthefuturereversalofthe underlying timing differences can be deducted.

Deferredtaxismeasuredusingthetaxratesandlawsthathavebeenenactedorsubstantivelyenactedby the balance sheet date that are expected to apply to the reversal of the timing difference.

Whereitemsrecognisedinothercomprehensiveincomeorequityarechargeabletoordeductiblefortax purposes, theresultingcurrentordeferredtaxexpenseorincomeispresentedinthesamecomponentof comprehensive income or equity as the transaction or other event that resulted in the tax expense or income.

g) Finance Costs

Financecostsinrelationtothefixedrateseniorsecuredbondsandthesecuredloanstockarerecognised usingtheeffectiveinterestratemethodunderFRS102wherebyexpectedinterestoverthelifeoftheproject is spread and recognised in each period.

Finance assets and financial liabilities

FinancialassetsandfinancialliabilitiesarerecognisedintheCompany'sbalancesheetwhentheCompany becomes party to the contractual provisions of the instrument.

Financialassetshavebeenclassifiedas'loansandreceivables',whichincludescashandcashequivalents, based on the nature and purpose of the financial assets.

h) Fixed rate senior secured bonds

Seniorsecuredbondsareinitiallystatedattheamountofthenetproceedsafterdeductionofrelatedissue costs.Thecarryingamountisincreasedbythefinancecostinrespectoftheaccountingperiodandreduced by payments made in that period.

CONNECT M77/GSO PLC

Notes to the Financial Statements for the year ended 31 March 2018

1 Accounting policies (continued)

   i)              Critical accounting judgements and key sources of estimation uncertainty 

Critical judgements

IntheapplicationoftheCompany'saccountingpolicies,thedirectorsarerequiredtomakejudgements, estimatesandassumptionsaboutthecarryingamountofassetsandliabilitiesthatarenotreadilyapparent fromothersources.Theestimatesandassociatedassumptionsarebasedonhistoricalexperienceandother factors that are considered to be relevant. Actual results may differ from these estimates.

Key sources of estimation uncertainty

Theestimatesandunderlyingassumptionsarereviewedonanongoingbasis.Revisionstoaccounting estimatesarerecognisedintheperiodinwhichtheestimateisrevisedwheretherevisionaffectsonlythat period, orintheperiodoftherevisionandfutureperiodswheretherevisionaffectsbothcurrentandfuture periods.

Theestimatesandassumptionswhichhaveasignificantriskofcausingamaterialadjustmenttothecarrying amount of assets and liabilities are as follows.

Service concession arrangement

TheCompanyaccountsfortheprojectasaserviceconcessionarrangement.Thedirectorshaveusedtheir judgementinselectingtheappropriateaccountingbasisfortheconcession.Asthepaymentmechanismis nowbasedonafixedusuage, theDirectorsdeemeditsuitablefortheaccountingbasistobechangedfroma fixedassettoafinancialassetasat31stMarch2016.Thedirectorsusetheirjudgementinselectingthe appropriatefinancialassetratetobeappliedinordertoallocatetheincomereceivedbetweenrevenue,and capitalrepaymentofandinterestincomeonthefinancialasset;andalsotheservicemarginthatisusedto recogniseservicerevenue.Thedirectorshavealsousedtheirjudgementinassessingtheappropriateness ofthefuturemaintenancecoststhatareincludedintheCompany'sforecasts.Thedirectorswillcontinueto monitor the condition of the assets and undertake a regular review of maintenance spend.

2 Analysis of turnover

Turnover

Turnover by origin and destination

   2018                2017 
   GBP '000              GBP '000 

United Kingdom 2,380 2,245

   2,380               2,245 

All activities are from continuing operations in the United Kingdom.

CONNECT M77/GSO PLC

Notes to the Financial Statements for the year ended 31 March 2018

3 Operating Profit

Operating profit is stated after charging

   2018                2017 
   GBP '000              GBP '000 
   18                       13 

Fees payable to the Company's auditor for the audit of the Company's annual financial statements FeesTotal audit fees

   18                       13 

TheDirectorsreceivednosalary,feesorotherbenefitsintheperformanceoftheirdutiesinthecurrentand precedingyear.AllstaffcostsarebornebytheshareholdersofConnectM77/GSOHoldingsLimitedwho secondemployeestotheCompanyandchargerelatedservicecosts.TheCompanyhadnoemployees during the year (2017: none).

TheauditfeefortheCompanywasamountedtoGBP18,000payabletoKPMGLLP(2017:GBP13,000payableto KPMG LLP).

4 Interest receivable and similar income 2018 2017

   GBP '000              GBP '000 

Interest on bank accounts and deposits 12 61

Finance income 9,598 9,657

   9,610              9,718 

5 Interest payable and other expenses 2018 2017

   GBP '000              GBP '000 

Secured bond interest 7,708 7,376

Secured loan stock interest 2,042 2,506

Total interest payable and similar charges 9,750 9,882

6Tax (charge)/credit on profit/(loss)

The tax (charge)/credit is based on the profit/(loss) for the year and comprises:

Current tax

Corporation tax due - - Corporation Tax charge in respect of previous years (4) - Total current tax (4) -

Deferred tax

Tax on current year losses deferred 6 12 Effect of changes in tax rate (1) 91 Total deferred tax 5 103

Total tax (charge)/credit on profit/(loss) 1 103

The difference between the total current tax shown above and the amount calculated by applying the

standard rate of UK corporation tax to the profit/(loss) before tax is as follows:

CONNECT M77/GSO PLC

Notes to the Financial Statements for the year ended 31 March 2018

6Tax (charge)/credit on profit/(loss) (continued)

(Loss) before tax

Tax on (loss) on ordinary activities at standard UK corporation tax rate of 19%

   2018                2017  GBP '000               GBP '000 
   (33)                  (61) 
   6                     12 

Effects of:

Adjustments to tax charge in respect of previous years (4) - Changes in tax rate (1) 91

   1                 103 

7Financial Asset 2018 2017

   GBP '000              GBP '000 

Opening balance 125,268 126,547

Service Income received in the year (14,078) (13,826)

Operating revenues 2,259 2,148

Lifecycle replacement costs 846 742

Notional interest 9,598 9,657

Closing Balance 123,893 125,268

Comprising:

Amounts falling due within one year 1,073 1,265 Amounts falling due after more than one year 122,820 124,002

   123,893          125,267 

CONNECT M77/GSO PLC

Notes to the Financial Statements for the year ended 31 March 2018

8Debtors

Due within one year:

Trade debtors 148 116

   148              116 
   9     Investments - due within one year 

Investmentsduewithinoneyearrepresentamountsheldondeposit>3monthswithafinancialinstitution whicharenotavailableforwithdrawalwithinthattimeand,inaccordancewiththeCompany'sfunding arrangements, are restricted and cannot be used to fund the on-going operations of the Company.

There are GBPnil amounts held on deposit > 3 months.

Restricted cash includes:

Debt Service Reserve: GBP8,509K (2017: GBP8,133K)

Tax Reserve: GBP8,358K (2017: GBP7,811K)

10Creditors: due within one year

   2018                2017 
   GBP '000              GBP '000 

Trade creditors

                               190                  101 Accruals 

1,705 1,538 VAT payable 205 184 Fixed rate guaranteed senior secured bonds 3,911 3,257 Corporation tax payable 355 -

   6,366                  5,080 

CONNECT M77/GSO PLC

Notes to the Financial Statements for the year ended 31 March 2018

11Creditors: due after more than one year

   2018                2017 
   GBP '000              GBP '000 

Fixed rate guaranteed senior secured bonds 126,504 130,236

   126,504          130,236 

Secured loan stock 14,865 14,865 Secured loan stock interest 23,757 21,715

   38,622           36,580 
   165,126         166,816 

Deferred taxation

   2018                2017 
   GBP '000              GBP '000 

Opening deferred tax asset/(liability)

            (1,557)            (1,660) Current year credit to the statement of comprehensive income 
                                   6                     12 Current year disallowed depreciation 

- - Utilisation of losses - - Effect of change in tax rate (1) 91 Closing deferred tax asset/(liability) (1,552) (1,557)

At 1 April2017 Movement in the year At 31March 2018

Trading losses 10 5 15 Capitalised Interest (1,567) - (1,567)

   (1,557)                    5               (1,552) 

CONNECT M77/GSO PLC

Notes to the Financial Statements for the year ended 31 March 2018

11Creditors: amounts falling due after more than one year (continued)

Fixedrateguaranteedseniorsecuredbondsdue2034ofGBP152,429,000wereissuedon7May2003.The bondshavebeenunconditionallyandirrevocablyguaranteedbySyncoraGuarantee(UK)Limited(formerly XL Capital Assurance (UK) Limited) for payment of principal and interest.

Interestonthebondsispayablesemi-annuallyinarrearson31Marchand30Septemberineachyearata fixed rate of 5.404% per annum commencing on 30 September 2003.

Unlesspreviouslyredeemedorpurchasedandcancelled,thebondswillmatureon31March2034andare subjecttoredemptioninpartfrom,andincluding,30September2006inaccordancewiththeamortisation schedule set out in the bonds offering circular.

Thesecuredloanstockbearsinterestat12.1%perannumandaccruesfromthedateoffinalcompletion.It isredeemableininstalmentsbetween2015and2035,orastheCompanyelects,butsubjecttocertain restrictionsinthecollateraldeed.ThesecuredloanstockissuedbytheCompanyisheldbytheCompany's immediateparentcompanies.TheCompany'simmediateparentcompanieshavewaivedtheirrightsto receive interest within 12 months for the years ending 31 March 2017 and 31 March 2018.

AllborrowingscontaineitherafixedorvaryingsecurityinterestovertheassetsoftheCompany,asdefined by an intercreditor agreement. The bonds have certain covenants attached.

FixedrateguaranteedseniorsecuredbondsarestatednetofunamortisedissuecostsofGBP2,172,000(2017: GBP2,351,000).TheCompanyincurredtotalissuecostsofGBP4,403,000inrespectofthefixedratebonds.These costs, togetherwiththeinterestexpense,areallocatedtotheprofitandlossamountoverthetermofthe bonds. Interest is calculated using the effective interest rate method.

TheCompanyhascommittedborrowingfacilitiesavailableofGBP167,294,000whichhavebeenfullydrawnas at 31 March 2018 (2017 - GBP167,294,000).

   2018                2017 
   GBP '000              GBP '000 

Fixed rate guaranteed senior secured bonds 132,587 135,844 Secured loan stock 14,865 14,865

   147,452          150,709 

The borrowings are paid as follows

   2018                2017 
   GBP '000              GBP '000 

Repayable within one year 3,911 3,257 Repayable between one and two years 4,344 3,911 Repayable between two and five years 15,880 14,458 Repayable after five years 123,317 129,083

   147,452          150,709 

CONNECT M77/GSO PLC

Notes to the Financial Statements for the year ended 31 March 2018

12 Financial instruments and derivatives

TheCompany'sfinancialinstrumentsareshowninthetablebelow.Themainpurposeofthesefinancial instrumentsistoraisefinancefortheconstructionandoperationoftheDBFOroads.TheCompanyhasnot enteredintoderivativetransactions.Itis,andhasbeenthroughouttheyearunderreview,theCompany's policythatnotradinginfinancialinstrumentsshallbeundertaken.Themainrisksarisingfromthe Company'sfinancialinstrumentsaremarket,creditandliquidityrisk.TheBoardreviewsandagreespolicies formanagingeachoftheserisksandtheyaresummarisedbelow.TheCompanyhasnoforeigncurrency transactions. All the Company's borrowings are denominated in sterling.

Credit risk

TheCompany'sprincipalfinancialassetsarecashandshort-termdepositsandtradeandotherreceivables. Thecreditandcashflowrisksarenotconsideredsignificantastheclientisaquasi-governmental organisation.

Forcashandshort-termdeposits,onlyindependentlyratedcounterpartieswithaminimummediumterm seniordebtratingofatleastAfromStandard&PoorsandA3fromMoody'sareaccepted.Themaximum exposure to credit risk is the carrying value of the financial assets in the table above.

Interest rate risk

TheCompanyhasnoexposuretointerestrateriskasallitsborrowingsareatafixedrateofinterest.The fixedratebondshaveinterestpayableat5.404%perannumandthesecuredloanstockhasinterestpayable at12.1%perannum.InterestrateriskarisesontheCompany'scashandshorttermdeposits.A50basis pointincrease/decreaseintheinterestrateoneachtermdepositheldwouldleadtoanincrease/decreaseof GBP80,071 (2017: GBP94,444) in the Company's net interest receivable.

Liquidity risk

TheCompany'sliquidityriskisprincipallymanagedthroughfinancingtheCompanybymeansoflongterm borrowingswithanamortisingprofilethatmatchestheexpectedavailabilityoffundsfromtheCompany's operating activities.

Financial liabilities gross maturity

ThefollowingtabledetailstheCompany'sremainingcontractualmaturitiesforitsfinancialliabilities.The tablehasbeendrawnupbasedontheundiscountedcashflowsoffinancialliabilitiesbasedontheearliest dateonwhichtheCompanycanberequiredtomakepayments.Thetableincludesbothinterestand principal cash flows.

CONNECT M77/GSO PLC

Notes to the Financial Statements for the year ended 31 March 2018

12Financial instruments and derivatives (continued)

                   Non-derivative financial liabilities gross maturity                        Other 
     Other     Total nonderivative 
   Borrowings financial         liabilities 

liabilities

   2018                2018                2018 
   GBP '000              GBP '000              GBP '000 

Due on demand or within one year (11,251) - (11,251) Due within one to two years (11,459) - (11,459) Due within two to five years (35,625) - (35,625) Due after more than five years (190,892) - (190,892)

   (249,227)                     -   (249,227) 
   Other                                Other         Total 
   Borrowings     financial Non 

Liabilities derivative

liabilities

   2017                2017                2017 
   GBP '000              GBP '000              GBP '000 

Due on demand or within one year (10,789) (100) (10,889) Due within one to two years (11,251) - (11,251) Due within two to five years (35,029) - (35,029) Due after more than five years (202,947) - (202,947)

   (260,016)                 (100)      (260,116) 

Capital risk management

TheCompanymanagesitscapitaltoensureitsabilitytocontinueasagoingconcern,tomeetthe requirementsofitscollateraldeedandtomaintainanoptimalcapitalstructuretoreducethecostofcapital. ThecapitalstructureoftheCompanycomprisesequityattributabletoequityholdersconsistingofordinary sharecapitalandprofitandlossaccountasdisclosedinNote13andcashandcashequivalentsand borrowingsasdisclosedinNotes10,11and12.TheCompanyhascompliedwithcapitalrequirements imposedbythecollateraldeedthroughouttheyear.TherehavebeennochangesintheCompany's management of capital from previous years.

13Called-up share capital 2018 2017

   GBP '000              GBP '000 

Allotted, called-up and fully paid

42,500 class A ordinary shares of GBP1 each 43 43

7,500 class B ordinary shares of GBP1 each 7 7

   50                  50 

The shareholders' percentage holdings in the Company at 31 March 2018 are as follows:

Balfour Beatty Infrastructure Investments Limited Class A ordinary share 100%

Cricketdrift Limited Class B ordinary shares 100%

Both classes of equity rank 'pari passu' in respect of voting, dividends and other rights.

CONNECT M77/GSO PLC

Notes to the Financial Statements for the year ended 31 March 2018

14Capital commitments 2018 2017

   GBP '000              GBP '000 

Contracted but not provided for - 75

   -                     75 

15 Ultimate parent companies and controlling parties

TheCompany'simmediateparentcompanyisConnectM77HoldingsLimited,whichisincorporatedinGreat BritainandregisteredinEnglandandWales.Theultimateparentcompaniesandcontrollingpartiesare BalfourBeattyplcandBIIFLP(actingbyitsmanager,3iBIFMInvestmentsLtd)whichareincorporatedinthe UnitedKingdomandregisteredinEnglandandWales.Theregisteredofficesofthecontrollingpartiesare5 Churchill Place, Canary Wharf, London, E14 5HU and 16 Palace Street, London, SW1E 5JD respectively.

TheCompanyisawholly-ownedsubsidiaryofConnectM77HoldingsLimitedwhichisregisteredinEngland andWales.The largestandsmallestCompanyinwhichtheresultsofConnectM77/GSOplcare consolidatedisConnectM77/GSOHoldingsLimited, copiesofwhosefinancialstatementsareavailablefrom it's registered office; 350 Euston Road, London NW1 3AX.

16Related party transactions 2018 2017

   GBP '000              GBP '000 

Balfour Beatty Civil Engineering - operation and maintenance 2,765

2,734

Balfour Beatty Investments - staff secondment charges 162 136

   2,927             2,870 

Outstanding balances at the end of the year

Balfour Beatty Civil Engineering - operation and maintenance 139

146

Balfour Beatty Investments - staff secondment charges 926 764

   1,065                910 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

FR WGUPCMUPRGQG

(END) Dow Jones Newswires

July 31, 2018 13:32 ET (17:32 GMT)