On Tue, 26 Aug 2008 00:58:13 -0700 (PDT), David Cragg <[EMAIL PROTECTED]> wrote:
>I must admit I wonder if it was a joke article but if, as it said on the >analysis of >BW accounts given on narrowboatworld.com, BW really have gor nearly a >half billion pounds in the reserves and if they did put a few million more in >last >year while still spending the same as the previous year on the canals what on >earth are these reserves for and why can't they spend some of it on the cut >instead of pleading poverty? By using the term "Group Reserves" without qualifying or explaining it, the narrowboatworld writer has given quite a misleading impression. These reserves are not spare cash sitting in a Northern Rock account: they are working to finance the organisation. As the BW accounts explain: "Equity BWs status as a Public Corporation means that the company has neither share capital or share premium within its equity. The equity of the company comprises a number of individual reserves, the nature and purpose of each of which is outlined in Note 23." And in Note 23 we read that: "The realised capital reserve includes the value of profits arising from the sale of property and other property rights and the realisation of property revaluation gains of previous years, net of corporation tax. The investment property revaluation reserve includes unrealised gains on property valuation. The unrealised capital reserve includes the excess of the fair value of assets acquired on acquisition of a business over the fair value of the consideration paid. Capital contributions are from Defra to enable BW to repay National Loans Fund loans maturing before 2013 s they mature (see Note 22)." You will see from the Balance Sheet that the £477.8m of Capital and reserves balances the Net assets figure, which is the surplus of assets (current and non-current) over liabilities (also current and non-current). The largest of the non-current assets (£572.0m) is Investment property: "Investment properties Certain of the Groups properties are classified as investment properties, being held for long term investment and to earn rental income. Investment properties are measured initially at cost, including transaction costs, and thereafter are stated at fair value, which reflects market conditions at the Balance Sheet date. Transfers to, or from, investment property shall be made when, and only when, there is a change in use, evidenced by end of owner-occupation or commencement of owner-occupation. Gains or losses arising from changes in the fair values of investment properties are included in the income statement in the year in which they arise." bjg
