Revision of Tolls – Sandbanks Ferry

Item 10

Council Meeting – 20 March 2018 Revision of tolls – Sandbanks Ferry

1. Purpose of report

To obtain approval for the Leader of the Council to write to the Secretary of State regarding the proposed increases to the tolls for the Sandbanks Ferry.

2. Key issues

2.1 The ferry between Studland and Poole (known as the Sandbanks Ferry) is operated by the Bournemouth – Swanage Motor Road and Ferry Company. They have advertised on their website and in local newspapers their application to the Secretary of State for Transport to increase the ferry tolls.

2.2 Appendix 1 contains a copy of the notification and the proposed tolls. It should be noted that the advertised current schedule is not the current toll, but the toll from the 1 April 2018, which is misleading. It is the company’s intention to phase the proposed increases up to April 2021. A breakdown of how the proposed phased increases would be applied can be found on the last page of Appendix 1. The current and proposed tolls are reproduced in section 5 below.

2.3 In the accompanying paperwork found in Appendices 2 and 3 to support the application the Ferry Company state; “In order to maintain the high standards of service achieved under the present ownership, the Directors are advised that it will be necessary to be in a position to replace the ferry in approximately 9 years.” It goes on to say “it is projected that the replacement cost of the ferry in 2026 will be £10.669m”.

2.4 The application also advises; “The ferry replacement reserve at 31 March 2017 was £1.931m. Therefore, to be in a position to bring the ferry replacement reserve to the projected amount of £10.669m to replace the ferry in 2026, total transfers per annum will need to average £970,841. This will not be possible in some of the years if a reasonable level of dividend is also to be paid. The shortfall in the ferry replacement reserve would have to be found by seeking additional funding at the time the ferry is replaced.”

2.5 In their application the company advise that the Ferry Act 1986 recognises that the operation of the ferry should provide a ‘reasonable return’ to the Company’s owners and Appendix 3 contains forecasted profit and loss as well as forecast dividends assuming no toll increase and proposed toll increases. The anticipated dividends represent 5% return for the shareholders, which may be considered to be on the high side in the light of prevailing interest rates.

2.6 While it is accepted that some level of fare increase is needed in order to fund the replacement ferry and maintain this important transport link while trying to pay shareholders a dividend, it should be noted all the proposed fare increases are substantially above the current rate of inflation with pedestrian charges set to double and some vehicle charges set to increase by over one third, in three years.

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3. Recommendation

Council approve that the Leader of the Council write to the Secretary of State for Transport objecting to the proposed toll increases for the Sandbank Ferry and requesting the increases are closer to inflation with some of the cost of the new ferry financed by reduced dividends.

4. Policy issues

4.1 How will this affect the environment, social issues and the local economy?

The Sandbanks Ferry provides an important transport link between south Purbeck and the Poole/Bournemouth conurbation for employment and for visitors to the area. The loss of the ferry would have a significant adverse impact on employment opportunities and the local economy generally. The amount of the toll charged affects the level of ferry use and the number of journeys made on the A351 road – a low charge is likely to increase use of the ferry and reduce road congestion, whereas a high charge will encourage use of the road.

4.2 Implications

4.2.1 Resources

There are no immediate resource implications for the Council arising from the proposals to increase the tolls.

4.2.2 Equalities

There are no equality issues arising from the proposals.

5. Further information

5.1 Consultations are normally considered by Policy Group before Council, however in this particular case there was insufficient time for this to happen before the closing date for responses, which is 2 April 2018.

5.2 The table below breaks down the current toll and proposed tolls.

Proposed Toll Maximum Toll Chargeable (not Chargeable (to Current toll implemented CLASS OF TRAFFIC be implemented £ until FYE 31 1 April 2018) March 2022) £ £ Pedestrian (Sandbanks to 1.00 1.00 2.00 Shell Bay) Pedestrian (Shell Bay to Nil Nil Nil Sandbanks) Pedal or motor cycle 1.00 1.00 2.00 Passenger vehicle  17 4.30 4.50 6.00 persons (car)

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Passenger vehicles > 17 8.60 9.00 12.00 persons (coach) Goods vehicles  3,500kg 8.60 9.00 12.00 (cars) Goods vehicles > 3,500kg & 8.60 9.00 12.00  20,000kg (trucks)

5.3 The table in Appendix 3 page 27 shows the traffic volumes using the ferry. It can been seen even in the winter months car passengers still equate to around 40,000 transactions a month suggesting the ferry is used by local residents travelling to and from work.

5.4 The ferry company sell books of tickets in multiples of 10 and 50 that gives just over a 20% discount on a the main toll. These are normally used by local residents who use the ferry frequently, normally to travel to work in Poole and Bournemouth. While the proposed increase for cars in 2018 is below inflation the next few years see an increase of 11% to 17%. Businesses in Studland and Swanage particularly those of a seasonal nature are reliant on workers from Poole and Bournemouth to travel into the area to fill positons. The proposed increases may present them with additional difficulties in recruiting staff.

5.5 The UK current rate of inflation as of December 2018 was 3%. All of the proposed increases with the exception of books of tickets from April 2018 are all above 3%. In April 2018 the proposed increase for a passenger vehicle is 20%. A full breakdown of the percentage increases can be found on the final page of Appendix 1.

5.6 Appendix 4 is the Annual Report and Financial Statements for the year ended 31 March 2017. This explains the company’s current financial position.

Appendices:

1 - Notification and application to the Secretary of State 2 - Business case to support application to increase toll charges 3 - Financial forecasts to support business case 4 - The Bournemouth-Motor Road and Ferry Company Annual Report and Financial Statements for the year ended 31 March 2017

Background papers:

There are none.

For further information contact:

Rebecca Kirk – General Manager Public Health and Housing 3 Item 10, Appendix 1 (CM - 20.03.18)

1 Item 10, Appendix 1 (CM - 20.03.18)

2 Item 10, Appendix 1 (CM - 20.03.18)

3 Item 10, Appendix 1 (CM - 20.03.18)

4 Item 10, Appendix 2 (CM - 20.03.18)

The Bournemouth-Swanage Motor Road and Ferry Company

(Incorporated by Act of Parliament 31 July 1923)

Application to Increase Certain Toll Charges

January 2018

Item 10, Appendix 2 (CM - 20.03.18)

Contents PAGE NO

1 Background and History of the Company 3 - 4

2 General Notes Regarding This Application 5 - 6

3 Reasons for the Application 7 - 8

4 Conclusion 9

APPENDICES

1 Assumptions Within the Forecasts 10 - 12

2 Forecast Profit and Loss Accounts for the 9 years to 31 March 2026 2.1 Assuming no proposed increase in toll charges 13 2.2 Assuming an increase in toll charges 14

3 Forecast Year End Balance Sheets for the 9 years to 31 March 2026 3.1 Assuming no proposed increase in toll charges 15 3.2 Assuming an increase in toll charges 16

4 Forecast Dividends and Return On Investment 4.1 Assuming no proposed increase in toll charges 17 4.2 Assuming an increase in toll charges 18

5 Comparisons With Industry Averages 5.1 Data Table 19 5.2 Graph of PBT/Shareholders' Funds vs. SIC 6120 Averages 20 5.3 Graph of PBT/Shareholders' Funds vs. SIC 6110 Averages 21 5.4 Graph of trends: 2013 to 2017 actuals and 2018 to 2026 forecast assuming no proposed increase in toll charges 22 5.5 Graph of Trends: 2013 to 2017 actuals and 2018 to 2026 forecast assuming an increase in toll charges 23

6 Summary of Costs for the 6 Years from April 2011 to March 2017: 24

7 Monthly Traffic Volumes for the 6 Years from April 2011 to March 2017: 7.1 By Category 25 7.2 Averages 26 7.3 Graphical Representation 27

8 Income Workings for the 9 Years to 31 March 2026 assuming toll increases 28

9 Forecast Cash Flow Analysis for the 9 years to 31 March 2026 9.1 Assuming no proposed increase in toll charges 29 9.2 Assuming an increase in toll charges 30

10 Financial Statements for the year ended 31 March 2017 31

11 Acts of Parliament 52

Item 10, Appendix 2 (CM - 20.03.18) 1 BACKGROUND AND HISTORY OF THE COMPANY

1.1 The Company was set up under the provisions of The Bournemouth-Swanage Motor Road And Ferry Act 1923. This Act established a legal obligation to provide and maintain a more direct means of transport between Swanage and Bournemouth than had existed before that time.

1.2 Subsequent Acts in 1928, 1956 and 1986 changed and modified provisions governing the Company's powers, its ability to raise finance, regulate its business in general and to collect tolls for the maintenance and improvement of the undertaking.

1.3 Toll charges are currently regulated by the Transport Charges & c (Miscellaneous Provisions) Act, 1954, as amended by The Bournemouth-Swanage Motor Road And Ferry Act 1986 to provide for the day-to- day running costs of the company, items of capital replacement, and a reasonable return on the investment.

1.4 History

1.4.1 The Company, established by The Bournemouth-Swanage Motor Road and Ferry Act 1923, began operating the present service in July 1926. The Toll Schedule and Charges permitted then were as agreed by Parliament and formed part of the 1923 Act.

1.4.2 There was a proposal to replace the ferry, or Floating Bridge, with a fixed bridge of steel girder construction in 1929. However, the Private Bill necessary failed to win the support of Parliament and was consequently not proceeded with either then or since.

1.4.3 A larger, diesel-electric powered vessel replaced the steam-driven ferry in 1958. This vessel was itself replaced by an even larger, diesel-hydraulic powered craft, the "Bramble Bush Bay" (currently in service) in January 1994.

1.4.4 Originally the Company's shares were quoted on the London Stock Exchange; this ceased when a property company acquired a majority shareholding in the early 1960's and the Company became an asset of the parent company. In 1983 the Company was purchased by Silvermist Properties (Residential Developments) Limited (formerly called Silvermist Properties (Chelmsford) Limited), (SMP). In 1995 the Group was restructured to give a much clearer division of its activities with the Ferry Company and SMP becoming direct subsidiaries of a new holding company, Fairacres Group Limited.

1.4.5 When taken over by SMP the whole of the ferry undertaking was in a badly run down condition, having been grossly neglected for many years by its previous owners.

1.4.6 An indication of the poor condition and inadequate management of the operation may be gauged by the fact that a Closure Notice had been served on the Company by the Health & Safety Executive, the reason for this being the rectification and repair of dangerous and unsafe equipment and the installation of proper fire-fighting and life-saving apparatus. In the view of the Health & Safety Executive, the ferry was unsafe for both the staff and the public and was not permitted to operate until the various matters had been attended to and the dangerous faults corrected.

1.4.7 The foregoing illustrates the very low level of care and maintenance that had been applied to the ferry by its previous owners. The same neglect had also affected all the Company's premises and other facilities.

Item 10, Appendix 2 (CM - 20.03.18) 1.4.8 Since 1983 there has been a huge investment in the undertaking. This has ranged from replacing vermin-infested timber huts, the then offices of the undertaking, with purpose designed conventional brick buildings, providing a supply of both mains electricity and water, all of which had to be brought to site over a distance of some three miles, and the provision of proper sanitation and heating. Concurrently and subsequently to the above-mentioned works, the slipways at North and South Haven were widened (to accommodate a larger vessel), new tollbooths were constructed, complete with traffic barriers, an automated toll collection system and a roundabout at the ferry end of the road allowing safer turning of vehicles. The number of crossings within the framework of the various operating hours has increased under the current ownership, as have the number of operating hours, thereby compounding the effect to give a better service. The high point of this almost continuous investment and improvement programme was the placing of the order for the new ferry "Bramble Bush Bay" in 1992 and culminated in a complete rebuild of both slipways in 2008.

1.4.9 Since 1983, and aside from the original purchase price, the present owners have ploughed back over £7.5million into the Company. The main items of investment are as itemised in the previous paragraphs. This investment secured the future of the Company, it has reversed the gross neglect and mismanagement of earlier years, it will ensure a first class service for present and future users and, not least, it has secured the employment locally of 27 permanent staff and an additional 6 seasonal employees.

Item 10, Appendix 2 (CM - 20.03.18) 2 GENERAL NOTES REGARDING THIS APPLICATION

2.1 There are two sets of projections included in the appendices to this application. The first set shows the next nine years on the basis that no increase in tolls is made other than the approved increase due on 1 April 2018. The second shows the next nine years assuming that this application is successful and toll charges are increased in addition to the approved increase. The two scenarios have been included so that the necessity for an increase in tolls can be clearly demonstrated.

2.2 The suggested toll increases are set out in Appendix 8 and are summarised below.

Current toll Maximum Toll Proposed Toll CLASS OF TRAFFIC £ Chargeable (to Chargeable (not be implemented implemented 1 April 2018) until FYE 31 March 2022) £ £

Pedestrian (Sandbanks to Shell Bay) 1.00 1.00 2.00

Pedestrian (Shell Bay to Sandbanks) Nil Nil Nil

Pedal or motor cycle 1.00 1.00 2.00

Passenger vehicle  17 persons (car) 4.30 4.50 6.00

Passenger vehicles > 17 persons (coach) 8.60 9.00 12.00

Goods vehicles  3,500kg (cars) 8.60 9.00 12.00

Goods vehicles > 3,500kg &  20,000kg (trucks) 8.60 9.00 12.00

2.3 The cost of ticket books are currently discounted by between 10% and 25.58% depending on the class of traffic compared to cash tolls. As set out in Appendix 8, the Directors have phased the cash toll increases for all classes of traffic across each year. In the case of bulk tickets for motor cars and goods vehicles the rates of discount will remain (by up to 27.66%) until 2021 to mitigate the effect of increases in base price, thus keeping the annual increases roughly in line with the RPI rate in appendix 1, section 1.2.1.

2.4 The Directors have obtained an independent professional estimate of the replacement cost of the ferry. Allowing for actual inflationary increases to date and assumed inflation rates for the future (Appendix 1, Section 1.21), the forecast cost will be £10.669m in 2026. This is when the Directors are advised they should be in a position to replace the ferry.

2.5 Section 3.1 of this application shows that, in order to be in a position to replace the ferry in 2026; the Company would have to transfer an average £970,841 per annum to the ferry replacement reserve over the next 9 years. The required value of the ferry replacement reserve at 31 March 2026 should be the projected replacement cost of the ferry of £10.669m. In both scenarios (with or without a toll increase), transfers are made to the replacement reserve after paying out a reasonable level of dividend to the shareholders (see section 3.3). Based on the projections and the proposed increase in tolls, the 31 March 2026 target will not be met. The projected shortfall will be £961k at 31 March 2026. In these circumstances therefore the shortfall would have to be found by seeking additional funding at the time the ferry is replaced.

Item 10, Appendix 2 (CM - 20.03.18) 2.6 Dividends proposed for the nine year period are set to increase by no more than 2.99% per annum, which is less than the forecast rate of inflation. If the increase applied for is approved, the dividend increase has been factored in to maintain actual dividends as a percentage of total net assets at below 5.2%.

2.7 A factor affecting the operation every other year is the major refit work carried out to the ferry in order to maintain the high standards of service provided by the operation. As a result, the vessel is out of action for between five and seven weeks and there is a corresponding drop in income in the financial year concerned. A further impact on profits is the cost of this refit, which has averaged in excess of £330k for the last six years. The last refit was in the financial year ended 31 March 2017. Therefore, in the financial years ending 31 March 2019, 2021, 2023 and 2025 lower levels of income (and hence profits) are forecast than in the financial years ending 31 March 2018, 2020, 2022 and 2024 and 2026.

Future refits will involve a major refit every four years in the financial years ending 31 March 2019 and 2023. A mini refit will be scheduled in the financial years ending 31 March 2021 and 2025.

The estimated costs of a full refit as at 31 March 2017 is £500k and a mini refit £250k. The ferry is expected to be out of service for six weeks during a full refit and two weeks during a mini refit.

Item 10, Appendix 2 (CM - 20.03.18) 3 REASONS FOR THE APPLICATION

3.1 Replacing the Ferry

3.1.1 In order to maintain the high standards of service achieved under the present ownership, the Directors are advised that it will be necessary to be in a position to replace the ferry in approximately 9 years.

3.1.2 It is projected that the replacement cost of the ferry in 2026 will be £10.669m (see section 2.4).

3.1.3 The ferry replacement reserve at 31 March 2017 was £1.931m. Therefore, order to be in a position to bring the ferry replacement reserve to the projected amount of £10.669m to replace the ferry in 2026, total transfers per annum will need to average £970,841. This will not be possible in some of the years if a reasonable level of dividend is also to be paid. The shortfall in the ferry replacement reserve would have to be found by seeking additional funding at the time the ferry is replaced.

3.1.4 It is the Directors’ responsibility to ensure that the owners receive a satisfactory level of return for their investment in the company (see section 3.3). The application of the dividend policy set out in section 2.6 goes some way toward this; however it does mean that the target replacement reserve for the ferry will not be met (see section 2.5). As can be seen from Appendix 4.2, the proposed dividends represent an average return of between 4.5% and 5.2% of the Company’s net asset value if the application is approved.

3.2 Shortfall in Cash Vs the Value of the Ferry Replacement Reserve

3.2.1 An examination of the projected balance sheets of the company at each financial year end show that appropriate investments (represented by the cash funds on hand) do not match the value of the Ferry Replacement Reserve. As at 31 March 2017, cash on hand in the balance sheet was £1.553m compared to the replacement reserve value of £1.931m. This is a shortfall of £378k.

3.2.2 A shortfall will arise as the company’s cash on hand will fluctuate dependent upon the daily working capital requirements of the business. In addition, the transfer to the Ferry Replacement Reserve is an appropriation of profit and not a cash transfer (the cash available being the profit for the year adjusted for non revenue amounts such as corporation tax paid; dividends paid; fixed assets bought and sold; and changes to debtors, creditors and stocks).

3.2.3 If this application is successful, the forecast cash on hand will rise to £9.613m at 31 March 2026 (see Appendix 9.2). This is a cash deficit of £94k compared to the projected value of the ferry replacement reserve at that time of £9.708m but significantly below the expected cost of replacing the ferry of £10.669m in 2026.

3.3 Ongoing Ability to Provide a Reasonable Return on the Investment

3.3.1 The Ferry Company's 1986 Act recognises that the operation of the ferry service should provide “reasonable return” to the Company’s owners.

3.3.2 As there are no set guidelines, what constitutes “reasonable” will always be subjective. Registered investment advisor Ibbotson and Associates analyse long-term performance of stocks, bonds, treasury bills and inflation. Arithmetic average annual return on 100% bonds investments, which would be deemed low-risk, is calculated at 6.1%. It is the Directors’ belief that, bearing in mind the Company’s assets are not as readily convertible into cash, along with the business risks attached to running such an operation, a higher return on investment should be expected than that achievable through investing in bonds.

Item 10, Appendix 2 (CM - 20.03.18) 3.3.3 The tables at Appendix 4.1 and 4.2 show the forecast returns on investment and dividends for the next nine years.

3.3.4 Appendix 4.1 shows the situation if no toll increase is granted. The average return on investment (Profits After Tax as a percentage of Total Net Assets) for the forecast period covering the financial years ending 31 March 2018 to 2026 would be 5.85%

3.3.5 Conversely, Appendix 4.2, demonstrates that if tolls are increased, the average return on investment rises to 8.85%

3.3.6 From the owners’ perspective, dividends received represent their true return on investment, and the above rates of return without a toll increase are less than that achievable through investment markets.

3.3.7 It is quite clear from these statistics that, in order for the operation to provide a reasonable return to its owners in future, an increase in toll charges is necessary.

3.3.8 A further way to assess whether the Company’s return on investment is reasonable is by way of comparison with other companies in similar industries.

3.3.9 Using data from www.riskdisk.com, Appendix 5.1 compares the Company’s actual and forecast returns with other companies in similar industries. While riskdisk.com gives five different ratios that are relevant to measuring returns, the closest of these to the financially accepted measure of “return on investment” is Profit before Tax as a percentage of Shareholder’s Funds.

3.3.10 When compared to the companies within SIC code 6110 ‘Passenger Sea and Coastal Water Transport’ (see Appendix 5.3), the return achieved by the company has not met the median point. Even with a toll increase, the return is only forecast to reach the current median point in one of the next nine years and this is only during a non-refit year.

3.3.11 The graph at Appendix 5.2, comparing the Company’s data with the companies within SIC code 6120 ‘Inland Water Transport’, shows the Company’s return to be below the median point. Again even with a toll increase, the return is forecast to only reach the median point in one of the next nine years.

3.3.12 While other ratio comparisons have not been summarised graphically, the data table at Appendix 5.1 shows that the Company’s Profit Before Tax as a percentage of Sales is much more favourable than other companies in similar industries. It also shows that the company’s Sales as a percentage of Total Assets is much lower than these companies. This would suggest that the Company is more effective at controlling its costs and generating profits from the resources it purchases. At the same time, it requires a much larger investment to generate revenue than other companies in similar industries.

3.3.13 Appendix 5.4 shows in graphical form all five ratios covering actual data from 2013 to 2017, and forecast data from 2018 to 2026, assuming no toll increase, showing little improvement. Appendix 5.5 shows the same ratios but for the forecast data assuming an increase in the toll rates and a slowly increasing trend can be seen across this time period, for all the ratios.

Item 10, Appendix 2 (CM - 20.03.18) 4 CONCLUSION

4.1 If this application should be successful, the Directors will phase the increases such that the maximum allowable toll will not come into effect until 1 April 2021.

4.2 The Directors cannot predict future traffic volumes but have assumed them to remain static in the forecasts based on the last six years’ traffic volume data (see Appendix 7.3 which shows the historic trend to be fairly constant).

4.3 The Company has two main objectives:

 From a public service point of view, to be able to provide and maintain a safe, reliable and cost effective ferry service.

 To provide a reasonable return on the investment.

4.4 To realise the first objective, it is necessary to replace the ferry when needed and for the new ferry to be of a more modern and efficient design than the present with a lower environmental impact. This is achieved through the owners’ on-going reinvestment in the ferry company and the value of the ferry service itself.

4.5 Using the ferry has an environmental impact and saves money for motorists. On the assumption that the average motor vehicle journey is from Bournemouth to Swanage, a saving of 12 miles is achieved by using the ferry. Based on HMRC approved mile rates of 45p/mile the average cost saved using the ferry is £5.40. In an average non refit year, there are 788,000 motor vehicle crossings saving around 9.456m miles equivalent to saving £4.255m motoring costs. The corresponding CO2 impact on the environment has not been calculated.

4.6 This application clearly demonstrates that, in the medium to long term, the Company cannot provide for the future replacement of the ferry and generate a reasonable return if tolls are not increased.

4.7 A common perception may be that this operation is a low risk business. From an investor’s perspective, this may well be the case when it is compared to certain other businesses and industries. But this does not mean it is risk-free. Moreover the current owners manage the risk through responsible ownership and on-going re-investment.

4.8 In view of the foregoing, the Directors feel that this application for an increase in toll charges is therefore fair and reasonable.

Item 10, Appendix 2 (CM - 20.03.18) APPENDIX 1: ASSUMPTIONS WITHIN THE FORECASTS

1 PROFIT AND LOSS ACCOUNT FORECASTS

1.1 Income

1.1.1 The income projections have been based on actual income for the year to 31 March 2017 (“the base year”). As this was a mini refit year, the ferry was out of service for 2 weeks. Therefore the base income figures are stated by annualising the 31 March 2017 actual amounts as if there was no refit.

1.1.2 Appendix 8 provides details of the phased toll increase, as well as the rate of discounts applicable to books of tickets. The forecast income for each passenger category has been arrived at by dividing the total income for that category by the present toll and multiplying it by the new toll. For refit years, income has also been decreased as noted in point 1.1.5 below.

1.1.3 The maximum chargeable cash tolls for passenger vehicles, goods vehicles and cycles have been phased in across five years. In the case of bulk tickets for motor cars and goods vehicles the rates of discounts will increase (by up to 27.66%) until 2026 to mitigate the effect of increases in base price, thus keeping the annual increases roughly in line with the RPI rate in appendix 1.2.1. below.

1.1.4 The proposed maximum toll rates detailed in section 2.2 (page 5) are the maximum toll rates being applied for in this application.

1.1.5 Appendix 7.1 shows the actual monthly traffic volumes for the six years to 31 March 2017. Averages have been calculated of the three financial years to 31 March in this period in which a refit occurred (i.e. 2013, 2015 and 2017) and the three non-refit years (2012, 2014 and 2016) – see Appendix 7.2. This data was then used to calculate how monthly traffic volumes differed for an average refit year compared to an average non-refit year (also shown in Appendix 7.2). This data showed the pattern of income across a refit or a non-refit year. It was used to arrive at the annual income figures, whereby forecast monthly income in a non-refit year was increased by the average percentages calculated. For a mini refit year it is assumed the reduction in traffic volumes during the refit period will be one third that in a major refit year.

1.1.6 Appendix 8 gives detailed workings regarding current and proposed tolls by class, as well as forecast income by class and also by category of passenger, before taking account of fluctuations arising in non- refit years.

1.2 Expenditure

1.2.1 In general, expenditure has been forecast using the base year figures, and increased by 3.6% per annum. This is reasonable bearing in mind the most recent data obtained from HM Treasury’s website (Forecasts for the UK Economy: A comparison of independent forecasts, June 2017). In this report, the average forecast RPI (from 20 forecasts) was 3.9% for 2017 and 3.3% for 2018, with the highest being 4.9% for 2017. The 3.6 % used is in line with the average of the 2017 and 2018 RPI averages and so, considering recent press reports, is likely to be an accurate prediction of future RPI. The Summary Profit and Loss accounts (Appendices 2.1 and 2.2) show the rate of increase for each expense in the column “Annual Increase”.

1.2.2 Ferry Harbour Dues increase every 5 years, at a rate of 3.6% per annum compounded. The next increase is due in the year ended 31 March 2023.

Item 10, Appendix 2 (CM - 20.03.18) 1.2.3 The base cost for ferry repairs and maintenance (excluding the cost of refits) has been arrived at by taking an average of the annual costs incurred in each of the last five financial years and increasing this figure by 3.6% per annum compounded to arrive at future projected costs.

1.2.4 The costs of the most recent ferry refits were £587k in the financial year ended 31 March 2013, £654k in 2015 and £215k in 2017. The cost of a refit includes the costs of removing the ferry from the chains, towage to and from the ship repair yard, classification survey fees, docking and mooring charges and professional fees. With the introduction of a new pattern of ferry refits, it is calculated that the base cost of a major refit is £500k and a mini refit £250k. These amounts have been increased by 3.6% per annum compounded to arrive at future refit costs for the financial years ending 31 March 2019 and biennially thereafter.

1.2.5 Major repairs to the slipways were carried out in the financial year ended 31 March 2015. Due to the major repairs, it has been assumed that only future annual slipways repairs and maintenance will arise, with no exceptional costs. The base cost for slipway annual repairs has been arrived at by taking an average of the annual costs incurred in each of the last five financial years (excluding the exceptional costs for the year ended 31 March 2015) and increasing this figure by 3.6% per annum compounded to arrive at future projected costs.

1.2.6 Depreciation has been calculated in accordance with the Company’s accounting policy for depreciation, as recorded in its audited financial statements. No additions have been included and hence only the buildings and their revaluations will be subject to depreciation after financial year ending 31 March 2019.

1.3 Other Income

1.3.1 Other Income has been calculated using a base figure of £35,451, from financial year ended 31 March 2017, increased by 3.6% per annum.

1.4 Dividends

1.4.1 £3,675 of the dividend declared relates to non-equity preference shares.

1.4.2 Dividends on equity shares have been calculated using a base figure of 43p per share, from the financial year ended 31 March 2017 dividends. Dividends have been increased at a maximum rate of 2.99% which is below the RPI rate in 1.2.1.

1.5 Calculation of Transfers to the Ferry Replacement Reserve

1.5.1 The Directors are advised that it will be prudent to be in a position to replace the ferry in approximately 9 years.

1.5.2 Allowing for cost rises over the next 9 years, it is projected that the replacement cost of the ferry in 2026 will be £10.669m.

1.5.3 Therefore, with the value of the Ferry Replacement Reserve at 31 March 2017 standing at £1.931m, the Company would have to transfer £8.738m (an average of £971k per annum) over the next 9 years to be on target to replace the ferry in 2026. This will not be possible in some of the years if a reasonable level of dividend is to be paid to the owners and given the commitment of biennial re-fit expenditure to maintain the quality and safety of the service.

Item 10, Appendix 2 (CM - 20.03.18) 1.5.4 The calculations at the foot of Appendices 2.1 and 2.2 show the transfers made to this Reserve and the resulting cumulative shortfall or surplus. The opening shortfall is £5.366m.

2 CASH FLOW

2.1 Corporation tax is paid quarterly. The payments are based on the estimated profits for the financial year. The first payment in respect of a given financial year is seven months after the start of that year.

2.2 Dividends are paid in the financial year in which they are declared and relate to.

3 BALANCE SHEET FORECASTS

3.1 Fixed Assets

3.1.1 It is the Company’s policy to revalue its fixed assets periodically. The last revaluation was on 31 March 2015. The forecasts are based on that last revaluation, as the directors are of the opinion that the current valuation is not dissimilar to the last valuation.

3.2 Deferred Tax

3.2.1 Deferred tax has not been calculated for future years as any change does not affect cash and is assumed to be immaterial in the context of total net assets.

3.3 Reserves

3.3.1 The Directors do not consider the ferry replacement reserve to be a distributable reserve, although in years where the company has a deficit on the profit and loss account after dividends, a transfer out of the ferry replacement reserve to the profit and loss account is required.

3.3.2 A proportion of the depreciation charge for the ferry relates to the revaluation noted above. In order that distributable reserves are not affected by this revaluation, this proportion of the depreciation charge is written back from the Revaluation Reserve (thereby reducing its value) to the Profit and Loss Reserve. For the nine years shown in these forecasts, this amount is approximately £133k per annum until the ferry is fully depreciated.

Item 10, Appendix 3 (CM - 20.03.18)

The Bournemouth-Swanage Motor Road & Ferry Co. Inc. Appendix 2.1 inflation rate 3.60% Forecast Profit & Loss Accounts for the 9 years to 31 March 2026 (Assuming NO proposed increase in Toll Charges)

Annual 31 March 31 March 31 March 31 March 31 March 31 March 31 March 31 March 31 March increase 2018 2019 2020 2021 2022 2023 2024 2025 2026 (%) £ £ £ £ £ £ £ £ £

SALES

) Class A (Foot passenger) 8 99,764 92,173 99,764 97,234 99,764 92,173 99,764 97,234 99,764 & 1 Class B/C (Bikes & motorcycles) s 132,653 126,454 132,653 130,587 132,653 126,454 132,653 130,587 132,653 e ic d Class F (car) n 2,856,014 2,676,551 2,978,941 2,878,144 2,978,941 2,676,551 2,978,941 2,878,144 2,978,941 e p p Class G (Truck) ex. VAT (A 83,529 76,533 87,371 83,758 87,371 76,533 87,371 83,758 87,371 Coach & Bus 6,779 6,417 7,071 6,853 7,071 6,417 7,071 6,853 7,071 Total Sales 3,178,739 2,978,128 3,305,800 3,196,576 3,305,800 2,978,128 3,305,800 3,196,576 3,305,800

DIRECT COSTS Ferry Harbour Dues (Appendix 1) 3.6% 1,272 1,272 1,272 1,272 1,272 1,518 1,518 1,518 1,518 Ferry Wages (incl. Er's NIC) 3.6% 734,865 761,320 788,727 817,122 846,538 877,013 908,586 941,295 975,182 Ferry repairs & maintenance - regular 3.6% 147,413 152,720 158,218 163,914 169,814 175,928 182,261 188,823 195,620 Ferry repairs & maintenance - refit costs (Appendix 1) 3.6% - 536,648 - 287,991 - 618,199 - 331,755 - Ferry consumable stores 3.6% 62,977 65,245 67,593 70,027 72,548 75,159 77,865 80,668 83,572 Ferry insurance 3.6% 33,487 34,692 35,941 37,235 38,575 39,964 41,403 42,893 44,437 Slipways repairs & maintenance - regular (Appendix 1) 3.6% 24,003 24,867 25,762 26,690 27,651 28,646 29,677 30,746 31,853 Road repairs & maintenance - regular 3.6% 5,845 6,056 6,274 6,499 6,733 6,976 7,227 7,487 7,757 Buildings repairs & maintenance 3.6% 8,175 8,469 8,774 9,090 9,417 9,756 10,108 10,472 10,849 Depreciation (Appendix 1) 162,685 159,998 159,900 159,900 159,900 159,900 159,900 159,900 159,900 Total Direct Costs 1,180,722 1,751,286 1,252,462 1,579,739 1,332,449 1,993,060 1,418,545 1,795,557 1,510,687

OVERHEADS Wages & salaries 3.6% 118,844 123,122 127,554 132,146 136,904 141,832 146,938 152,228 157,708 Staff pension costs 3.6% 35,945 37,239 38,580 39,969 41,407 42,898 44,442 46,042 47,700 Rates 3.6% 103,341 107,061 110,915 114,908 119,045 123,331 127,771 132,370 137,136 Management charges 3.6% 144,651 149,858 155,253 160,842 166,633 172,631 178,846 185,285 191,955 Insurance 3.6% 18,370 19,032 19,717 20,427 21,162 21,924 22,713 23,531 24,378 Light & heat 3.6% 6,488 6,722 6,964 7,215 7,474 7,744 8,022 8,311 8,610 Tickets 3.6% 3,825 3,963 4,105 4,253 4,406 4,565 4,729 4,899 5,076 Printing, postage and stationery 3.6% 6,120 6,340 6,568 6,805 7,050 7,303 7,566 7,839 8,121 Advertising 3.6% 47 48 50 52 54 56 58 60 62 Telephone 3.6% 3,404 3,527 3,654 3,785 3,922 4,063 4,209 4,361 4,518 Motor running expenses 3.6% 4,866 5,041 5,223 5,411 5,606 5,807 6,016 6,233 6,457 Legal and professional fees 3.6% 11,573 11,990 12,421 12,869 13,332 13,812 14,309 14,824 15,358 Audit 3.6% 13,287 13,765 14,261 14,774 15,306 15,857 16,428 17,019 17,632 Bank charges 3.6% 10,435 10,810 11,199 11,603 12,020 12,453 12,901 13,366 13,847 Sundry expenses 3.6% 29,728 30,798 31,907 33,056 34,246 35,478 36,756 38,079 39,450 Total Overheads 510,923 529,317 548,372 568,114 588,566 609,754 631,705 654,447 678,007

Other income 3.6% 36,727 38,049 39,419 40,838 42,308 43,832 45,410 47,044 48,738 Operating profit 1,523,820 735,575 1,544,385 1,089,561 1,427,093 419,146 1,300,959 793,617 1,165,843

Interest received ------

Profit Before Tax (PBT) 1,523,820 735,575 1,544,385 1,089,561 1,427,093 419,146 1,300,959 793,617 1,165,843

Tax Rate 19% 19% 19% 17% 17% 17% 17% 17% 17% Corporation Tax (320,436) (170,159) (323,814) (212,408) (269,789) (98,438) (248,346) (162,098) (225,376)

Profit After Tax (PAT) 1,203,384 565,416 1,220,571 877,153 1,157,304 320,708 1,052,613 631,519 940,467

Transfer write-back from Replacement Reserve for buildings revaluation 18,530 18,530 18,530 18,530 18,530 18,530 18,530 18,530 18,530 Transfer (to)/from Replacement Reserve (470,039) 189,679 (442,856) (75,948) (331,739) 529,217 (177,458) 269,736 (12,242)

Dividends (751,875) (773,625) (796,245) (819,735) (844,095) (868,455) (893,685) (919,785) (946,755)

Net profit retained ------

Replacement Reserve: Balance b/f 1,931,434 2,537,187 2,483,222 3,061,792 3,273,454 3,740,907 3,347,404 3,660,576 3,526,554 (A) Transfer as above 470,039 (189,679) 442,856 75,948 331,739 (529,217) 177,458 (269,736) 12,242 (B) Transfer write-back from Revaluation Reserve for ferry revaluation 135,714 135,714 135,714 135,714 135,714 135,714 135,714 135,714 135,714 Balance c/f 2,537,187 2,483,222 3,061,792 3,273,454 3,740,907 3,347,404 3,660,576 3,526,554 3,674,510

Calculation of transfers to Replacement Reserve Shortfall/(surplus) b/f 5,365,574 5,134,486 5,563,118 5,359,214 5,522,217 5,429,430 6,197,599 6,259,093 6,767,780 Required transfer 374,666 374,666 374,666 374,666 374,666 374,666 374,666 374,666 374,666 Actual transfer (= A + B above) (605,753) 53,965 (578,570) (211,662) (467,453) 393,503 (313,172) 134,022 (147,956) Shortfall/(surplus) c/f 5,134,486 5,563,118 5,359,214 5,522,217 5,429,430 6,197,599 6,259,093 6,767,780 6,994,490

13 Item 10, Appendix 3 (CM - 20.03.18)

The Bournemouth-Swanage Motor Road & Ferry Co. Inc. Appendix 2.2 inflation rate 3.60% Forecast Profit & Loss Accounts for the 9 years to 31 March 2026 (Assuming an Increase in Toll Charges)

Annual 31 March 31 March 31 March 31 March 31 March 31 March 31 March 31 March 31 March increase 2018 2019 2020 2021 2022 2023 2024 2025 2026 (%) £ £ £ £ £ £ £ £ £

SALES ) Class A (Foot passenger) 8 99,764 92,173 119,562 145,562 198,851 184,347 199,528 194,468 199,528 & 1 Class B/C (Bikes & motorcycles) s 132,653 126,454 158,169 193,977 260,889 252,908 265,306 261,173 265,306 e ic d Class F (car) n 2,856,014 2,676,551 3,101,867 3,220,362 3,966,532 3,689,113 4,105,900 3,966,971 4,105,900 e p p Class G (Truck) ex. VAT (A 83,529 76,533 91,213 93,176 116,493 102,580 117,107 112,265 117,107 Coach & Bus 6,779 6,417 7,363 7,618 9,408 8,633 9,512 9,219 9,512 Total Sales 3,178,739 2,978,128 3,478,174 3,660,695 4,552,173 4,237,581 4,697,352 4,544,095 4,697,352

DIRECT COSTS Ferry Harbour Dues (Appendix 1) 3.6% 1,272 1,272 1,272 1,272 1,272 1,518 1,518 1,518 1,518 Ferry Wages (incl. Er's NIC) 3.6% 734,865 761,320 788,727 817,122 846,538 877,013 908,586 941,295 975,182 Ferry repairs & maintenance - regular 3.6% 147,413 152,720 158,218 163,914 169,814 175,928 182,261 188,823 195,620 Ferry repairs & maintenance - refit costs (Appendix 1) 3.6% - 536,648 - 287,991 - 618,199 - 331,755 - Ferry consumable stores 3.6% 62,977 65,245 67,593 70,027 72,548 75,159 77,865 80,668 83,572 Ferry insurance 3.6% 33,487 34,692 35,941 37,235 38,575 39,964 41,403 42,893 44,437 Slipways repairs & maintenance - regular (Appendix 1) 3.6% 24,003 24,867 25,762 26,690 27,651 28,646 29,677 30,746 31,853 Road repairs & maintenance - regular 3.6% 5,845 6,056 6,274 6,499 6,733 6,976 7,227 7,487 7,757 Road repairs & maintenance - exceptional (Appendix 1) 3.6% ------Buildings repairs & maintenance 3.6% 8,175 8,469 8,774 9,090 9,417 9,756 10,108 10,472 10,849 Depreciation (Appendix 1) 162,685 159,998 159,900 159,900 159,900 159,900 159,900 159,900 159,900 Total Direct Costs 1,180,722 1,751,286 1,252,462 1,579,739 1,332,449 1,993,060 1,418,545 1,795,557 1,510,687

Other income 3.6% 36,727 38,049 39,419 40,838 42,308 43,832 45,410 47,044 48,738 Operating profit 1,523,820 735,575 1,716,759 1,553,680 2,673,467 1,678,598 2,692,512 2,141,136 2,557,396

Interest received ------

Profit Before Tax 1,523,820 735,575 1,716,759 1,553,680 2,673,467 1,678,598 2,692,512 2,141,136 2,557,396

Rate 19% 19% 19% 17% 17% 17% 17% 17% 17% Corporation Tax (320,436) (170,159) (356,565) (291,309) (481,672) (312,545) (484,910) (391,176) (461,940)

Profit After Tax (PAT) 1,203,384 565,416 1,360,194 1,262,372 2,191,794 1,366,054 2,207,602 1,749,960 2,095,456

Transfer write-back from Replacement Reserve for buildings revaluation 18,530 18,530 18,530 18,530 18,530 18,530 18,530 18,530 18,530 Transfer to Replacement Reserve (470,039) 189,679 (582,479) (461,167) (1,366,229) (516,129) (1,332,447) (848,705) (1,167,231)

Dividends (751,875) (773,625) (796,245) (819,735) (844,095) (868,455) (893,685) (919,785) (946,755)

Net profit retained ------

Replacement Reserve: Balance b/f 1,931,434 2,537,187 2,483,223 3,201,416 3,798,297 5,300,240 5,952,083 7,420,244 8,404,663 (A) Transfer as above 470,039 (189,679) 582,479 461,167 1,366,229 516,129 1,332,447 848,705 1,167,231 (B) Transfer write-back from Revaluation Reserve 135,714 135,714 135,714 135,714 135,714 135,714 135,714 135,714 135,714 Balance c/f 2,537,187 2,483,223 3,201,416 3,798,297 5,300,240 5,952,083 7,420,244 8,404,663 9,707,608

Calculation of transfers to Replacement Reserve Shortfall/(surplus) b/f 5,365,574 5,134,486 5,563,117 5,219,589 4,997,374 3,870,097 3,592,920 2,499,425 1,889,671 Required transfer 374,666 374,666 374,666 374,666 374,666 374,666 374,666 374,666 374,666 Actual transfer (= A + B above) (605,753) 53,965 (718,193) (596,881) (1,501,943) (651,843) (1,468,161) (984,419) (1,302,945) Shortfall/(surplus) c/f 5,134,486 5,563,117 5,219,589 4,997,374 3,870,097 3,592,920 2,499,425 1,889,671 961,392

14 The Bournemouth-Swanage Motor Road & Ferry Co. Inc. Appendix 3.1 Forecast Year End Balance Sheets for the 9 Years to 31 March 2026 (Assuming No proposed increase in Toll Charges)

31 March 31 March 31 March 31 March 31 March 31 March 31 March 31 March 31 March 2018 2019 2020 2021 2022 2023 2024 2025 2026 £ £ £ £ £ £ £ £ £

Fixed Assets 13,486,621 13,326,623 13,166,723 13,006,823 12,846,923 12,687,023 12,527,123 12,367,223 12,207,323

Current Assets Other debtors 35,889 37,181 38,520 39,906 41,343 42,831 44,373 45,971 47,626 Stocks 220,129 220,129 220,129 220,129 220,129 220,129 220,129 220,129 220,129 Trade debtors 6,357 5,956 6,612 6,393 6,612 5,956 6,612 6,393 6,612 Stocks & Debtors 262,376 263,266 265,260 266,428 268,084 268,917 271,114 272,493 274,366 Cash at Bank 2,276,853 2,173,079 2,758,137 2,996,590 3,442,252 2,997,852 3,305,071 3,208,514 3,350,174 2,539,229 2,436,345 3,023,397 3,263,018 3,710,336 3,266,768 3,576,185 3,481,006 3,624,540

Creditors: Amounts Falling Due Within One Year Trade Creditors and Accruals 57,930 59,028 60,166 61,344 62,565 63,830 65,140 66,498 67,904 Corporation Tax 301,068 245,298 246,987 268,111 241,099 184,114 173,392 205,222 193,737 358,998 304,326 307,152 329,455 303,664 247,943 238,532 271,720 261,641

Net Current Assets 2,180,231 2,132,019 2,716,245 2,933,563 3,406,672 3,018,825 3,337,653 3,209,287 3,362,899

Total Assets Less Current Liabilities 15,666,851 15,458,642 15,882,968 15,940,386 16,253,595 15,705,848 15,864,776 15,576,510 15,570,222

Provisions For Liabilities & Charges Deferred Tax (659,484) (659,484) (659,484) (659,484) (659,484) (659,484) (659,484) (659,484) (659,484)

15,007,367 14,799,158 15,223,484 15,280,902 15,594,111 15,046,364 15,205,292 14,917,026 14,910,738 (CM - 20.03.18) Item 10, Appendix 3 Capital & Reserves Called Up Share Capital 61,000 61,000 61,000 61,000 61,000 61,000 61,000 61,000 61,000 Revaluation Reserve 12,409,180 12,254,936 12,100,692 11,946,448 11,792,204 11,637,960 11,483,716 11,329,472 11,175,228 Ferry Replacement Reserve 2,537,187 2,483,222 3,061,792 3,273,454 3,740,907 3,347,404 3,660,576 3,526,554 3,674,510 Profit & Loss Account ------

Shareholders' Funds 15,007,367 14,799,158 15,223,484 15,280,902 15,594,111 15,046,364 15,205,292 14,917,026 14,910,738

15 The Bournemouth-Swanage Motor Road & Ferry Co. Inc. Appendix 3.2 Forecast Year End Balance Sheets for the 9 Years to 31 March 2026 (Assuming an Increase in Toll Charges)

31 March 31 March 31 March 31 March 31 March 31 March 31 March 31 March 31 March 2018 2019 2020 2021 2022 2023 2024 2025 2026 £ £ £ £ £ £ £ £ £

Fixed Assets 13,486,621 13,326,623 13,166,723 13,006,823 12,846,923 12,687,023 12,527,123 12,367,223 12,207,323

Current Assets Other debtors 35,889 37,181 38,520 39,906 41,343 42,831 44,373 45,971 47,626 Stocks 220,129 220,129 220,129 220,129 220,129 220,129 220,129 220,129 220,129 Trade debtors 6,357 5,956 6,956 7,321 9,104 8,475 9,395 9,088 9,395 Stocks & Debtors 262,376 263,266 265,605 267,357 270,576 271,435 273,897 275,188 277,149 Cash at Bank 2,276,853 2,173,080 2,913,792 3,576,330 5,144,484 5,813,007 7,287,291 8,316,748 9,613,309 2,539,229 2,436,346 3,179,397 3,843,687 5,415,061 6,084,442 7,561,188 8,591,936 9,890,459

Creditors: Amounts Falling Due Within One Year Trade Creditors and Accruals 57,930 59,028 60,166 61,344 62,565 63,830 65,140 66,498 67,904 Corporation Tax 301,068 245,297 263,362 323,937 386,490 397,109 398,727 438,043 426,558 358,998 304,326 323,528 385,281 449,056 460,938 463,868 504,541 494,462

Net Current Assets 2,180,231 2,132,020 2,855,869 3,458,406 4,966,005 5,623,504 7,097,320 8,087,396 9,395,996

Total Assets Less Current Liabilities 15,666,851 15,458,643 16,022,592 16,465,229 17,812,928 18,310,527 19,624,443 20,454,619 21,603,319

Provisions For Liabilities & Charges Deferred Tax (659,484) (659,484) (659,484) (659,484) (659,484) (659,484) (659,484) (659,484) (659,483)

15,007,367 14,799,159 15,363,108 15,805,745 17,153,444 17,651,043 18,964,959 19,795,135 20,943,836 (CM - 20.03.18) Item 10, Appendix 3

Capital & Reserves Called Up Share Capital 61,000 61,000 61,000 61,000 61,000 61,000 61,000 61,000 61,000 Revaluation Reserve 12,409,180 12,254,936 12,100,692 11,946,448 11,792,204 11,637,960 11,483,716 11,329,472 11,175,228 Ferry Replacement Reserve 2,537,187 2,483,223 3,201,416 3,798,297 5,300,240 5,952,083 7,420,244 8,404,663 9,707,608 Profit & Loss Account ------

Shareholders' Funds 15,007,367 14,799,159 15,363,108 15,805,745 17,153,444 17,651,043 18,964,960 19,795,135 20,943,836

16 The Bournemouth-Swanage Motor Road & Ferry Co. Inc. Appendix 4.1 Forecast Dividends and Return on Investment (Assuming No proposed increase in Toll Charges)

Year ending 31 March: 2012 2013 2014 2015 2016 2017 Previous years: Dividends on equity shares 626,400 661,200 696,000 713,400 730,800 748,200

Total net assets ("NA's") 12,437,116 11,850,409 11,909,853 15,025,332 14,198,837 14,555,858

Turnover 2,950,812 2,494,611 2,908,635 2,636,546 3,057,547 3,056,480

Actual dividends as a %age of total NA's 5.0% 5.6% 5.8% 4.7% 5.1% 5.1%

Actual dividends as a %age of turnover 21.2% 26.5% 23.9% 27.1% 23.9% 24.5%

2018 2019 2020 2021 2022 2023 2024 2025 2026 Forecast: Total net assets 15,007,367 14,799,158 15,223,484 15,280,902 15,594,111 15,046,364 15,205,292 14,917,026 14,910,738

Turnover 3,178,739 2,978,128 3,305,800 3,196,576 3,305,800 2,978,128 3,305,800 3,196,576 3,305,800

Profit after tax 1,203,384 565,416 1,220,571 877,153 1,157,304 320,708 1,052,613 631,519 940,467

Return on Investment 8.0% 3.8% 8.0% 5.7% 7.4% 2.1% 6.9% 4.2% 6.3% (CM - 20.03.18) Item 10, Appendix 3 Forecast dividends 751,875 773,625 796,245 819,735 844,095 868,455 893,685 919,785 946,755

Forecast dividends as a %age of total NA's 5.0% 5.2% 5.2% 5.4% 5.4% 5.8% 5.9% 6.2% 6.3%

Forecast dividends as a %age of turnover 23.7% 26.0% 24.1% 25.6% 25.5% 29.2% 27.0% 28.8% 28.6%

17 The Bournemouth-Swanage Motor Road & Ferry Co. Inc. Appendix 4.2 Forecast Dividends and Return on Investment (Assuming increase in Toll Charges)

Year ending 31 March: 2012 2013 2014 2015 2016 2017 Previous years: Dividends on equity shares 626,400 661,200 696,000 713,400 730,800 748,200

Total net assets ("NA's") 12,437,116 11,850,409 11,909,853 15,025,332 14,198,837 14,555,858

Turnover 2,950,812 2,494,611 2,908,635 2,636,546 3,057,547 3,056,480

Actual dividends as a %age of total NA's 5.0% 5.6% 5.8% 4.7% 5.1% 5.1%

Actual dividends as a %age of turnover 21.2% 26.5% 23.9% 27.1% 23.9% 24.5%

2018 2019 2020 2021 2022 2023 2024 2025 2026 Forecast: Total net assets 15,007,367 14,799,159 15,363,108 15,805,745 17,153,444 17,651,043 18,964,960 19,795,135 20,943,836

Turnover 3,178,739 2,978,128 3,478,174 3,660,695 4,552,173 4,237,581 4,697,352 4,544,095 4,697,352

Profit after tax 1,203,384 565,416 1,360,194 1,262,372 2,191,794 1,366,054 2,207,602 1,749,960 2,095,456

Return on Investment 8.0% 3.8% 8.9% 8.0% 12.8% 7.7% 11.6% 8.8% 10.0% (CM - 20.03.18) Item 10, Appendix 3 Forecast dividends 751,875 773,625 796,245 819,735 844,095 868,455 893,685 919,785 946,755

Forecast dividends as a %age of total NA's 5.0% 5.2% 5.2% 5.2% 4.9% 4.9% 4.7% 4.6% 4.5%

Forecast dividends as a %age of turnover 23.7% 26.0% 22.9% 22.4% 18.5% 20.5% 19.0% 20.2% 20.2%

18 The Bournemouth-Swanage Motor Road & Ferry Co. Inc. Appendix 5.1 Comparisons With Industry Averages - Data Table

The Bournemouth-Swanage Motor Road & Ferry Co. Inc. Industry Averages (SIC 6120)*** Industry Averages (SIC 6110)**** (Actual) (Forecast - with no proposed toll increase) (Source: www.riskdisk.com) (Source: www.riskdisk.com) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Lower Median Upper Lower Median Upper Ratios % % % % % % % % % % % % % % % % % % % %

Profit Before Tax/Sales 7.5 36.6 1.8 41.0 40.7 47.9 24.7 46.7 34.1 43.2 14.1 39.4 24.8 35.3 (1.3) 4.3 18.3 0.3 15.5 49.1 PBT/Capital Employed 1.6 8.9 0.3 8.3 8.2 9.7 4.8 9.7 6.8 8.8 2.7 8.2 5.1 7.5 (8.3) 7.3 12.9 - 0.7 3.4 PBT/Total Assets 1.5 8.7 0.3 8.1 8.0 9.5 4.7 9.5 6.7 8.6 2.6 8.1 5.0 7.4 (1.5) 3.4 12.7 (0.1) 4.2 9.4 PBT/Shareholders' Funds 1.6 8.9 0.3 8.8 8.5 10.2 5.0 10.1 7.1 9.2 2.8 8.6 5.3 7.8 - 14.7 45.7 (0.4) 14.5 71.3

Sales/Total Assets 20.6 23.8 17.3 19.8 19.8 19.8 18.9 20.4 19.6 20.0 18.7 20.5 20.2 20.9 33.8 102.7 291.4 16.3 63 124.1

(Actual) (Forecast - with no proposed toll increase) £000's £000's £000's £000's £000's £000's £000's £000's £000's £000's £000's £000's £000's £000's Sales 2,495 2,909 2,637 3,058 3,056 3,179 2,978 3,306 3,197 3,306 2,978 3,306 3,197 3,306 PBT 187 1,064 48 1,253 1,244 1,524 736 1,544 1,090 1,427 419 1,301 794 1,166 Capital Employed* 11,954 11,989 15,079 15,040 15,250 15,667 15,459 15,883 15,940 16,254 15,706 15,865 15,577 15,570 Total Assets** 12,100 12,246 15,242 15,409 15,463 16,026 15,763 16,190 16,270 16,557 15,954 16,103 15,848 15,832 Shareholders' Funds 11,850 11,910 15,025 14,199 14,556 15,007 14,799 15,223 15,281 15,594 15,046 15,205 14,917 14,911 (Actual) (Forecast - with increase) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Ratios % % % % % % % % % % % % % %

Profit Before Tax/Sales 7.5 36.6 1.8 41.0 40.7 47.9 24.7 49.4 42.4 58.7 39.6 57.3 47.1 54.4 PBT/Capital Employed 1.6 8.9 0.3 8.3 8.2 9.7 4.8 10.7 9.4 15.0 9.2 13.7 10.5 11.8 PBT/Total Assets 1.5 8.7 0.3 8.1 8.0 9.5 4.7 10.5 9.2 14.6 8.9 13.4 10.2 11.6 PBT/Shareholders' Funds 1.6 8.9 0.3 8.8 8.5 10.2 5.0 11.2 9.8 15.6 9.5 14.2 10.8 12.2

Sales/Total Assets 20.6 23.8 17.3 19.8 19.8 19.8 18.9 21.3 21.7 24.9 22.6 23.4 21.7 21.3

(Actual) (Forecast - with increase) £000's £000's £000's £000's £000's £000's £000's £000's £000's £000's £000's £000's £000's £000's Sales 2,495 2,909 2,637 3,058 3,056 3,179 2,978 3,478 3,661 4,552 4,238 4,697 4,544 4,697 PBT 187 1,064 48 1,253 1,244 1,524 736 1,717 1,554 2,673 1,679 2,693 2,141 2,557 Capital Employed* 11,954 11,989 15,079 15,040 15,250 15,667 15,459 16,023 16,465 17,813 18,311 19,624 20,455 21,603

Total Assets** 12,100 12,246 15,242 15,409 15,463 16,026 15,763 16,346 16,851 18,262 18,771 20,088 20,959 22,098 (CM - 20.03.18) Item 10, Appendix 3 Shareholders' Funds 11,850 11,910 15,025 14,199 14,556 15,007 14,799 15,363 15,806 17,153 17,651 18,965 19,795 20,944

* Capital Employed = Total Assets Less Current Liabilities ** Total Assets = Fixed Assets plus Current Assets ***SIC 6120 = 'Inland Water Transport' ****SIC 6110 = 'Passenger Sea & Coastal Water Transport'

19 Appendix 5.2 - PBT/Shareholders' Funds vs. SIC 6120 (Inland Water Transport) Averages

50.0

45.0

40.0

35.0

30.0 No toll increase

% 25.0 Lower

20.0 Median

Upper 15.0

With toll 10.0 increase (CM - 20.03.18) Item 10, Appendix 3

5.0

- 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Year

20 Appendix 5.3 - PBT/Shareholders' Funds vs. SIC 6110 (Passenger Sea & Coastal Water Transport) Averages

80.0

70.0

60.0

50.0 No toll increase

40.0 Lower % Median 30.0

Upper 20.0 With toll increase 10.0

- 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

(10.0) (CM - 20.03.18) Item 10, Appendix 3 Year

21 Appendix 5.4: Trends - 2013 to 2017 (actual) and 2018 to 2026 (forecast) assuming no proposed increase in toll charges

60.0

50.0

40.0

Profit Before Tax/Sales

PBT/Capital Employed

% 30.0

PBT/Total Assets

Sales/Total Assets 20.0 PBT/Shareholders' Funds

10.0 (CM - 20.03.18) Item 10, Appendix 3

- 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Year

22 Appendix 5.5: Trends - 2013 to 2017 (actual) and 2017 to 2026 (forecast) assuming an increase in toll charges

70.0

60.0

50.0

40.0 Profit Before Tax/Sales

% PBT/Capital Employed

30.0 PBT/Total Assets

Sales/Total Assets

20.0 PBT/Shareholders' Funds

10.0 (CM - 20.03.18) Item 10, Appendix 3

- 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Year

23 The Bournemouth-Swanage Motor Road & Ferry Co. Inc. Appendix 6 Summary of Costs for the 5 Years from 2013 to 2017 (excluding Depreciation) Average annual Total increase / 31 March 31 March 31 March 31 March 31 March increase / (decrease) 2013 2014 2015 2016 2017 (decrease) from 2013 to 2017 £ £ £ £ £ (%) (%) DIRECT COSTS Ferry Harbour Dues 1,150 1,150 1,150 1,150 1,272 2.6% 10.6% Direct Wages 632,459 689,256 633,506 684,950 709,329 2.9% 12.2% Ferry repairs & maintenance - day to day 191,242 89,930 227,399 88,100 143,920 (6.9%) (24.7%) Ferry repairs & maintenance - refits 587,635 50,485 653,764 799 215,125 Ferry consumable stores 88,318 88,314 71,328 57,391 60,789 (8.9%) (31.2%) Ferry insurance 48,692 43,018 45,837 42,356 32,323 (9.7%) (33.6%) Slipways repairs & maintenance - regular 14,840 7,765 130,034 58,193 11,879 (5.4%) (20.0%) 23,169 Average excluding 31 March 2015 Road repairs & maintenance 18,076 12,526 5,329 104,489 5,642 (25.3%) (68.8%) Buildings repairs & maintenance 13,299 8,358 10,741 19,864 7,891 (12.2%) (40.7%)

Total Direct Costs 1,595,711 990,802 1,779,088 1,057,292 1,188,170 (7.1%) (25.5%)

OVERHEADS Wages & salaries 113,792 113,427 116,096 120,472 114,714 0.2% 0.8% Staff pension costs 39,795 40,545 36,425 34,848 34,696 (3.4%) (12.8%) Rates 91,948 91,114 96,748 98,999 99,750 2.1% 8.5% Insurance 16,515 15,719 12,731 20,347 17,732 1.8% 7.4% Light & heat 5,259 6,515 6,138 5,799 6,263 4.5% 19.1% Tickets 5,961 5,747 3,922 5,498 3,692 (11.3%) (38.1%) Printing, postage and stationery 6,345 4,670 4,570 4,235 5,907 (1.8%) (6.9%) Advertising 258 40 401 45 45 (35.4%) (82.6%) Telephone 2,166 2,169 2,794 2,814 3,286 11.0% 51.7% Motor running expenses 7,247 4,467 7,187 3,636 4,697 (10.3%) (35.2%) Legal and professional fees 1,005 11,536 13,188 25,229 11,171 82.6% 1011.5% Audit fees 13,125 12,625 12,875 12,575 12,825 (0.6%) (2.3%) Management charges 157,835 159,893 134,067 118,931 127,396 (5.2%) (19.3%) Bank charges 2,067 5,765 7,151 8,692 10,072 48.6% 387.3% Sundry expenses 6,552 20,657 23,348 28,753 28,695 44.7% 338.0% (CM - 20.03.18) Item 10, Appendix 3

Total Overheads 469,870 494,889 477,641 490,873 480,941 0.6% 2.4%

Grand Total 2,065,581 1,485,691 2,256,729 1,548,165 1,669,111 (5.2%) (19.2%)

24 Item 10, Appendix 3 (CM - 20.03.18)

The Bournemouth-Swanage Motor Road & Ferry Co. Inc. Appendix 7.1 Categories: Monthly Traffic Volumes By Category for the 6 Years from April 2011 to March 2017 Class A (Foot passenger) Class B/C (Bikes & motorcycles) Class F (car) Class G (Truck) Coach & Bus

A B/C F G COACH A B/C F G COACH

2011-12 April 23,050 16,428 75,694 185 984 2014-15 April 11,092 10,328 67,541 191 842 May 12,982 10,155 66,919 147 1,431 May 13,509 13,011 73,135 213 1,062 June 14,575 9,133 72,179 179 1,434 June 18,260 17,011 77,257 199 1,391 July 18,628 11,961 84,813 175 1,643 July 19,672 15,362 84,487 196 1,355 August 23,324 13,329 94,390 171 2,115 August 20,012 15,407 94,415 171 1,571 Sept 15,309 8,627 76,059 193 1,316 Sept 12,561 12,455 76,411 192 1,201 Oct 16,425 10,002 72,499 247 868 Oct 9,076 7,113 60,826 140 862 Nov 5,828 5,290 47,854 153 801 Nov 3,202 1,121 5,181 6 36 Dec 6,308 4,122 56,793 129 733 Dec 5,946 2,445 22,684 26 206 Jan '12 8,564 5,825 48,802 159 806 Jan '15 7,142 4,717 46,001 102 739 Feb 7,649 4,883 51,428 138 798 Feb 8,994 5,796 47,714 105 693 Mar 12,906 10,095 65,496 164 884 Mar 7,844 6,851 57,589 143 806 165,548 109,850 812,926 2,040 13,813 137,310 111,617 713,241 1,684 10,764

2012-13 April 12,818 8,202 64,602 166 834 2015-16 April 14,289 12,955 69,134 132 853 May 15,287 11,343 70,186 165 1,332 May 13,230 11,880 69,380 138 1,074 June 13,496 8,019 71,368 158 1,431 June 16,448 15,541 72,849 132 1,366 July 19,967 11,259 80,671 141 1,727 July 16,525 14,074 84,040 147 1,483 August 24,358 14,322 91,651 164 2,082 August 17,036 15,158 86,901 139 1,525 Sept 17,755 11,395 72,813 118 1,163 Sept 13,596 11,854 68,320 134 1,149 Oct 10,200 6,477 58,454 137 885 Oct 11,577 9,081 61,226 131 867 Nov 1,886 976 9,328 14 103 Nov 4,830 4,030 41,358 98 739 Dec 3,032 1,135 16,220 39 161 Dec 5,976 4,208 45,254 93 693 Jan '13 8,112 4,420 40,444 123 721 Jan '16 7,134 4,089 42,485 90 710 Feb 6,534 4,087 45,874 115 704 Feb 6,514 4,457 45,973 98 696 Mar 6,973 4,701 51,953 165 835 Mar 11,695 8,067 57,865 143 810 140,418 86,336 673,564 1,505 11,978 138,850 115,394 744,785 1,475 11,965

2013-14 April 7,365 7,999 65,685 183 841 2016-17 April 13,155 10,608 58,072 141 824 May 14,228 12,849 70,058 164 1,076 May 18,212 15,517 66,766 123 973 June 16,844 13,845 73,522 150 1,437 June 10,682 12,075 66,433 128 1,390 July 25,455 16,796 91,036 191 1,455 July 15,166 16,534 83,061 162 1,482 August 21,898 16,806 97,175 191 1,565 August 19,626 17,301 88,699 158 1,622 Sept 12,584 9,450 71,321 123 1,108 Sept 9,528 11,808 67,085 120 1,183 Oct 9,525 6,450 61,198 161 883 Oct 10,256 9,683 59,734 117 856 Nov 6,782 5,513 47,614 134 793 Nov 3,442 4,003 20,870 49 372 Dec 6,880 4,299 45,144 112 707 Dec 9,415 5,471 45,197 82 715 Jan '14 6,026 4,357 42,130 88 737 Jan '17 9,837 5,255 42,671 92 727 Feb 6,070 3,962 41,459 88 677 Feb 9,024 5,477 46,669 103 680 Mar 11,152 9,071 59,095 156 801 Mar 8,958 9,225 55,265 140 793 144,809 111,397 765,437 1,741 12,080 137,301 122,957 700,522 1,415 11,617

Averages 12/14/16 (NON-REFIT YRS) Averages 13/15/17 (REFIT YRS) April 14,901 12,461 70,171 167 893 April 12,355 9,713 63,405 166 833 May 13,480 11,628 68,786 150 1,194 May 15,669 13,290 70,029 167 1,122 June 15,956 12,840 72,850 154 1,412 June 14,146 12,368 71,686 162 1,404 July 20,203 14,277 86,630 171 1,527 July 18,268 14,385 82,740 166 1,521 August 20,753 15,098 92,822 167 1,735 August 21,332 15,677 91,588 164 1,758 Sept 13,830 9,977 71,900 150 1,191 Sept 13,281 11,886 72,103 143 1,182 Oct 12,509 8,511 64,974 180 873 Oct 9,844 7,758 59,671 131 868 Nov 5,813 4,944 45,609 128 778 Nov 2,843 2,033 11,793 23 170 Dec 6,388 4,210 49,064 111 711 Dec 6,131 3,017 28,034 49 361 Jan 7,241 4,757 44,472 112 751 Jan 8,364 4,797 43,039 106 729 Feb 6,744 4,434 46,287 108 724 Feb 8,184 5,120 46,752 108 692 Mar 11,918 9,078 60,819 154 832 Mar 7,925 6,926 54,936 149 811

25 Item 10, Appendix 3 (CM - 20.03.18)

The Bournemouth-Swanage Motor Road & Ferry Co. Inc. Appendix 7.2 Monthly Traffic Volume Averages for the 6 Years from April 2011 to March 2017

Average of Non-Refit years (FY 2012, 2014, 2016) (No. of crossings) Total April May June July August September October November December January February March

Class A (Foot passenger) 149,736 14,901 13,480 15,956 20,203 20,753 13,830 12,509 5,813 6,388 7,241 6,744 11,918 Class B/C (Bikes & motorcycles) 112,214 12,461 11,628 12,840 14,277 15,098 9,977 8,511 4,944 4,210 4,757 4,434 9,078 Class F (car) 774,383 70,171 68,786 72,850 86,630 92,822 71,900 64,974 45,609 49,064 44,472 46,287 60,819 Class G (Truck) 1,752 167 150 154 171 167 150 180 128 111 112 108 154 Coach & Bus 12,619 893 1,194 1,412 1,527 1,735 1,191 873 778 711 751 724 832

1,050,703 98,592 95,237 103,211 122,807 130,574 97,048 87,047 57,272 60,484 57,334 58,297 82,800

Average of Refit years (FY 2013, 2015, 2017) (No. of crossings)

Class A (Foot passenger) 138,343 12,355 15,669 14,146 18,268 21,332 13,281 9,844 2,843 6,131 8,364 8,184 7,925 Class B/C (Bikes & motorcycles) 106,970 9,713 13,290 12,368 14,385 15,677 11,886 7,758 2,033 3,017 4,797 5,120 6,926 Class F (car) 695,776 63,405 70,029 71,686 82,740 91,588 72,103 59,671 11,793 28,034 43,039 46,752 54,936 Class G (Truck) 1,535 166 167 162 166 164 143 131 23 49 106 108 149 Coach & Bus 11,453 833 1,122 1,404 1,521 1,758 1,182 868 170 361 729 692 811

954,076 86,472 100,278 99,766 117,081 130,520 98,596 78,272 16,863 37,591 57,034 60,856 70,747

Average of Non-Refit years (FY 2012, 2014, 2016) (No. of crossings as a percentage of total) Total April May June July August September October November December January February March

Class A (Foot passenger) 100.0% 9.95% 9.00% 10.66% 13.49% 13.86% 9.24% 8.35% 3.88% 4.27% 4.84% 4.50% 7.96% Class B/C (Bikes & motorcycles) 100.0% 11.10% 10.36% 11.44% 12.72% 13.45% 8.89% 7.58% 4.41% 3.75% 4.24% 3.95% 8.09% Class F (car) 100.0% 9.06% 8.88% 9.41% 11.19% 11.99% 9.28% 8.39% 5.89% 6.34% 5.74% 5.98% 7.85% Class G (Truck) 100.0% 9.51% 8.54% 8.77% 9.76% 9.53% 8.56% 10.25% 7.32% 6.35% 6.41% 6.16% 8.81% Coach & Bus 100.0% 7.07% 9.46% 11.19% 12.10% 13.75% 9.44% 6.92% 6.16% 5.63% 5.95% 5.73% 6.59%

Average of Refit years (FY 2013, 2015, 2017) (No. of crossings as a percentage of total)

Class A (Foot passenger) 100.0% 8.93% 11.33% 10.23% 13.21% 15.42% 9.60% 7.12% 2.06% 4.43% 6.05% 5.92% 5.73% Class B/C (Bikes & motorcycles) 100.0% 9.08% 12.42% 11.56% 13.45% 14.66% 11.11% 7.25% 1.90% 2.82% 4.48% 4.79% 6.47% Class F (car) 100.0% 9.11% 10.06% 10.30% 11.89% 13.16% 10.36% 8.58% 1.69% 4.03% 6.19% 6.72% 7.90% Class G (Truck) 100.0% 10.82% 10.88% 10.53% 10.84% 10.71% 9.34% 8.56% 1.50% 3.19% 6.89% 7.02% 9.73% Coach & Bus 100.0% 7.28% 9.80% 12.26% 13.28% 15.35% 10.32% 7.58% 1.49% 3.15% 6.37% 6.04% 7.08%

Average non-refit year activity is (higher)/lower than an average MAJOR refit year:

Class A (Foot passenger) (7.6%) (17.1%) 16.2% (11.3%) (9.6%) 2.8% (4.0%) (21.3%) (51.1%) (4.0%) 15.5% 21.3% (33.5%) Class B/C (Bikes & motorcycles) (4.7%) (22.1%) 14.3% (3.7%) 0.8% 3.8% 19.1% (8.9%) (58.9%) (28.3%) 0.8% 15.5% (23.7%) Class F (car) (10.2%) (9.6%) 1.8% (1.6%) (4.5%) (1.3%) 0.3% (8.2%) (74.1%) (42.9%) (3.2%) 1.0% (9.7%) Class G (Truck) (12.4%) (0.4%) 11.6% 5.2% (2.7%) (1.6%) (4.4%) (26.9%) (82.1%) (56.0%) (5.9%) (0.3%) (3.2%) Coach & Bus (9.2%) (6.6%) (6.0%) (0.6%) (0.4%) 1.3% (0.7%) (0.6%) (78.1%) (49.3%) (2.9%) (4.3%) (2.4%)

26 Appendix 7.3 - Traffic Volumes April 2011 to March 2017

120,000

100,000

Class A (Foot passenger)

80,000 Class B/C (Bikes & motorcycles) Class F (Car) T ransactions Class G (Truck)

Coach & Bus 60,000

40,000

20,000 (CM - 20.03.18) Item 10, Appendix 3

27 The Bournemouth-Swanage Motor Road & Ferry Co. Inc. Appendix 8 Income Workings for the 9 Years to 31 March 2026 (Assuming Tolls Increase)

Current & Proposed Tolls Current Current ApprovedApprovedProposed Proposed Proposed ProposedProposed Proposed ProposedProposed Proposed Proposed ProposedProposed Proposed Proposed Tolls toll discount toll discount toll discount toll discount toll discount toll discount toll discount toll discount toll discount 31 March 31 March 31 March 31 March 31 March 31 March 31 March 31 March 31 March £ £ £ £ £ £ £ £ £ £ £ £ £ £ £ £ £ £ 2018 2019 2020 2021 2022 2023 2024 2025 2026 Effective from: 1/4/17 1/4/18 1/4/19 1/4/20 1/4/21 1/4/22 1/4/23 1/4/24 1/4/25 £ £ £ £ £ £ £ £

Class 1 Pedestrian 1.00 1.00 1.20 1.50 2.00 2.00 2.00 2.00 2.00 1.00 1.00 1.20 1.50 2.00 2.00 2.00 2.00 2.00 Class 2 Pedal or Motor Cycle 1.00 1.00 1.20 1.50 2.00 2.00 2.00 2.00 2.00 1.00 1.00 1.20 1.50 2.00 2.00 2.00 2.00 2.00 Class 3 Passenger vehicle < 16 persons (Cars) 4.30 4.50 4.70 5.00 6.00 6.00 6.00 6.00 6.00 4.30 4.50 4.70 5.00 6.00 6.00 6.00 6.00 6.00 Class 4 Passenger vehicle > 16 persons (Coaches) 8.60 9.00 9.40 10.00 12.00 12.00 12.00 12.00 12.00 8.60 9.00 9.40 10.00 12.00 12.00 12.00 12.00 12.00 Class 5 Goods vehicle < 3,500kgs (Cars) 4.30 4.50 4.70 5.00 6.00 6.00 6.00 6.00 6.00 4.30 4.50 4.70 5.00 6.00 6.00 6.00 6.00 6.00 Class 6 Goods vehicle 3,500kgs - 20,000kgs (Trucks) 8.60 9.00 9.40 10.00 12.00 12.00 12.00 12.00 12.00 8.60 9.00 9.40 10.00 12.00 12.00 12.00 12.00 12.00 Class 7 Book of 50 tickets for Pedestrians 45.00 10.00% 45.00 10.00% 50.00 16.67% 60.00 20.00% 73.00 27.00% 90.00 10.00% 90.00 10.00% 90.00 10.00% 90.00 10.00% 45.00 45.00 50.00 60.00 73.00 90.00 90.00 90.00 90.00 Class 7b Book of 100 tickets for Pedestrians 85.00 15.00% 85.00 15.00% 95.00 20.83% 114.00 24.00% 139.00 30.50% 170.00 15.00% 170.00 15.00% 170.00 15.00% 170.00 15.00% 85.00 85.00 95.00 114.00 139.00 170.00 170.00 170.00 170.00 Class 9 Book of 50 tickets for cycles 45.00 10.00% 45.00 10.00% 50.00 16.67% 60.00 20.00% 73.00 27.00% 90.00 10.00% 90.00 10.00% 90.00 10.00% 90.00 10.00% 45.00 45.00 50.00 60.00 73.00 90.00 90.00 90.00 90.00 Class 9b Book of 100 tickets for cycles 85.00 15.00% 85.00 15.00% 95.00 20.83% 114.00 24.00% 139.00 30.50% 170.00 15.00% 170.00 15.00% 170.00 15.00% 170.00 15.00% 85.00 85.00 95.00 114.00 139.00 170.00 170.00 170.00 170.00 Class 10 Book of 10 tickets for Motor Cars 34.00 20.93% 35.00 22.22% 36.00 23.40% 40.00 20.00% 46.00 23.33% 54.00 10.00% 54.00 10.00% 54.00 10.00% 54.00 10.00% 34.00 35.00 36.00 40.00 46.00 54.00 54.00 54.00 54.00 Class 11 Book of 50 tickets for Motor Cars 160.00 25.58% 165.00 26.67% 170.00 27.66% 190.00 24.00% 220.00 26.67% 255.00 15.00% 255.00 15.00% 255.00 15.00% 255.00 15.00% 160.00 165.00 170.00 190.00 220.00 255.00 255.00 255.00 255.00 Class 12 Book of 10 tickets for Goods Vehicles (Trucks) 68.00 20.93% 70.00 22.22% 72.00 23.40% 80.00 20.00% 92.00 23.33% 108.00 10.00% 108.00 10.00% 108.00 10.00% 108.00 10.00% 68.00 70.00 72.00 80.00 92.00 108.00 108.00 108.00 108.00 Class 13 Book of 50 tickets for Goods Vehicles (Trucks) 320.00 25.58% 330.00 26.67% 340.00 27.66% 380.00 24.00% 440.00 26.67% 510.00 15.00% 510.00 15.00% 510.00 15.00% 510.00 15.00% 320.00 330.00 340.00 380.00 440.00 510.00 510.00 510.00 510.00 Class 14 Book of 10 tickets for Buses & Coaches 72.00 16.28% 72.00 20.00% 72.00 23.40% 80.00 20.00% 92.00 23.33% 108.00 10.00% 108.00 10.00% 108.00 10.00% 108.00 10.00% 72.00 72.00 72.00 80.00 92.00 108.00 108.00 108.00 108.00 Class 15 Book of 50 tickets for Buses & Coaches 340.00 20.93% 340.00 24.44% 340.00 27.66% 380.00 24.00% 440.00 26.67% 510.00 15.00% 510.00 15.00% 510.00 15.00% 510.00 15.00% 340.00 340.00 340.00 380.00 440.00 510.00 510.00 510.00 510.00

Income by Class Annualised' Income (as mini refit year) Category Y/E 31/3/17 designation Pro rata increase (before allowing for decreases in refit years) £ £ £ £ £ £ £ £ £ £ Class 1 Pedestrian 97,930 A 97,930 97,930 117,516 146,895 195,860 195,860 195,860 195,860 195,860 Class 2 Pedal or Motor Cycle 120,711 B 120,711 120,711 144,853 181,067 241,422 241,422 241,422 241,422 241,422 Class 3 Passenger vehicle < 16 persons (Cars) 2,233,158 F 2,233,158 2,337,026 2,440,894 2,596,695 3,116,034 3,116,034 3,116,034 3,116,034 3,116,034 Class 4 Passenger vehicle > 16 persons (Coaches) 6,276 C 6,276 6,568 6,860 7,298 8,757 8,757 8,757 8,757 8,757 Class 5 Goods vehicle < 3,500kgs (Cars) 6,531 F 6,531 6,835 7,139 7,594 9,113 9,113 9,113 9,113 9,113 Class 6 Goods vehicle 3,500kgs - 20,000kgs (Trucks) 80,729 G 80,729 84,484 88,239 93,871 112,645 112,645 112,645 112,645 112,645 Class 7 Book of 50 tickets for Pedestrians 596 A 596 596 662 795 967 1,192 1,192 1,192 1,192 Class 7b Book of 100 tickets for Pedestrians 1,238 A 1,238 1,238 1,384 1,660 2,024 2,476 2,476 2,476 2,476 Class 9 Book of 50 tickets for cycles 4,706 B 4,706 4,706 5,229 6,275 7,634 9,412 9,412 9,412 9,412 Class 9b Book of 100 tickets for cycles 7,236 B 7,236 7,236 8,087 9,705 11,833 14,472 14,472 14,472 14,472 Class 10 Book of 10 tickets for Motor Cars 274,845 F 274,845 282,929 291,012 323,347 371,849 436,519 436,519 436,519 436,519 Class 11 Book of 50/100 tickets for Motor Cars 341,480 F 341,480 352,151 362,823 405,508 469,535 544,234 544,234 544,234 544,234 Class 12 Book of 10 tickets for Goods Vehicles (Trucks) 114 G 114 117 121 134 154 181 181 181 181 Class 13 Book of 50 tickets for Goods Vehicles (Trucks) 2,686 G 2,686 2,770 2,854 3,190 3,693 4,281 4,281 4,281 4,281 Class 14 Book of 10 tickets for Buses & Coaches - C ------Class 15 Book of 50 tickets for Buses & Coaches 503 C 503 503 503 562 651 755 755 755 755

3,178,739 3,178,739 3,305,800 3,478,174 3,784,595 4,552,173 4,697,352 4,697,352 4,697,352 4,697,352

Income By Category Class A (Foot passenger) A 99,764 99,764 119,562 149,350 198,851 199,528 199,528 199,528 199,528 Class B/C (Bikes & motorcycles) B 132,653 132,653 158,169 197,046 260,889 265,306 265,306 265,306 265,306 Class F (Car) F 2,856,014 2,978,941 3,101,867 3,333,144 3,966,532 4,105,900 4,105,900 4,105,900 4,105,900 Class G (Truck) G 83,529 87,371 91,213 97,195 116,493 117,107 117,107 117,107 117,107

Coach & Bus C 6,779 7,071 7,363 7,860 9,408 9,512 9,512 9,512 9,512 (CM - 20.03.18) Item 10, Appendix 3

3,178,739 3,305,800 3,478,174 3,784,595 4,552,173 4,697,352 4,697,352 4,697,352 4,697,352

28 The Bournemouth-Swanage Motor Road & Ferry Co. Inc. Appendix 9.1 Cash Flow Analysis - Assuming No Increase in Toll Charges

Actual Forecast 31 March 31 March 31 March 31 March 31 March 31 March 31 March 31 March 31 March 31 March 31 March 31 March 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 £ £ £ £ £ £ £ £ £ £ £ £

Operating Profit/(Loss) [Profit Before Interest & Tax] 45,863 1,252,988 1,244,072 1,523,820 735,575 1,544,385 1,089,561 1,427,093 419,146 1,300,959 793,617 1,165,843 Depreciation of tangible assets 386,792 313,888 178,748 162,685 159,998 159,900 159,900 159,900 159,900 159,900 159,900 159,900 Decrease (Increase) in stocks & debtors 44,024 (69,062) 34,639 (2,270) (891) (1,994) (1,168) (1,655) (833) (2,197) (1,379) (1,873) Increase (Decrease) in creditors due within one year (94,080) 192,500 (156,434) 111,556 (54,672) 2,826 22,303 (25,792) (55,720) (9,411) 33,187 (10,079) Net Cash Inflow From Operating Activities 382,599 1,690,314 1,301,025 1,795,792 840,010 1,705,117 1,270,596 1,559,547 522,493 1,449,250 985,325 1,313,791

Interest received 2,113 451 7 ------Interest paid ------Dividend paid (717,075) (734,475) (751,875) (751,875) (773,625) (796,245) (819,735) (844,095) (868,455) (893,685) (919,785) (946,755) Corporation tax paid (86,672) (249,715) (281,699) (320,436) (170,159) (323,814) (212,408) (269,789) (98,438) (248,346) (162,098) (225,376) Payments to acquire tangible fixed assets - (10,354) (116,049) ------

Net Cash Inflow (Outflow) (419,035) 696,221 151,409 723,481 (103,774) 585,058 238,453 445,663 (444,400) 307,219 (96,558) 141,660

Opening Cash at Bank & In Hand 1,124,777 705,742 1,401,963 1,553,372 2,276,853 2,173,079 2,758,137 2,996,590 3,442,252 2,997,852 3,305,071 3,208,514

Closing Cash at Bank & In Hand 705,742 1,401,963 1,553,372 2,276,853 2,173,079 2,758,137 2,996,590 3,442,252 2,997,852 3,305,071 3,208,514 3,350,174 (CM - 20.03.18) Item 10, Appendix 3

29 The Bournemouth-Swanage Motor Road & Ferry Co. Inc. Appendix 9.2 Cash Flow Analysis - Assuming An Increase in Toll Charges

Operating Profit [Profit Before Interest & Tax] 45,863 1,252,988 1,244,072 1,523,820 735,575 1,716,759 1,553,680 2,673,467 1,678,598 2,692,512 2,141,136 2,557,396 Depreciation of tangible assets 386,792 313,888 178,748 162,685 159,998 159,900 159,900 159,900 159,900 159,900 159,900 159,900 Decrease (Increase) in stocks & debtors 44,024 (69,062) 34,639 (2,270) (891) (2,339) (1,752) (3,220) (859) (2,461) (1,291) (1,961) Increase (Decrease) in creditors due within one year (94,080) 192,500 (156,434) 111,556 (54,671) 19,202 61,753 63,774 11,883 2,929 40,673 (10,078) Net Cash Inflow From Operating Activities 382,599 1,690,314 1,301,025 1,795,792 840,010 1,893,523 1,773,582 2,893,921 1,849,522 2,852,879 2,340,419 2,705,256

Interest received 2,113 451 7 ------Interest paid ------Dividend paid (717,075) (734,475) (751,875) (751,875) (773,625) (796,245) (819,735) (844,095) (868,455) (893,685) (919,785) (946,755) Corporation tax paid (86,672) (249,715) (281,699) (320,436) (170,159) (356,565) (291,309) (481,672) (312,545) (484,910) (391,176) (461,940) Payments to acquire tangible fixed assets - (10,354) (116,049) ------

Net Cash Inflow (Outflow) (419,035) 696,221 151,409 723,481 (103,773) 740,713 662,538 1,568,154 668,522 1,474,284 1,029,457 1,296,561

Opening Cash at Bank & In Hand 1,124,777 705,742 1,401,963 1,553,372 2,276,853 2,173,080 2,913,792 3,576,330 5,144,484 5,813,007 7,287,291 8,316,748

Closing Cash at Bank & In Hand 705,742 1,401,963 1,553,372 2,276,853 2,173,080 2,913,792 3,576,330 5,144,484 5,813,007 7,287,291 8,316,748 9,613,309 (CM - 20.03.18) Item 10, Appendix 3

30 Item 10, Appendix 4 (CM - 20.03.18)

Incorporated by The Bournemouth-Swanage Motor Road and Ferry Act 31 July 1923

THE BOURNEMOUTH-SWANAGE MOTOR ROAD & FERRY COMPANY

ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2017

J Item 10, Appendix 4 (CM - 20.03.18) THE BOURNEMOUTH-SWANAGE MOTOR ROAD & FERRY COMPANY

COMPANY INFORMATION

Directors GR Kean MPR Kean Mrs TA Nicol

Secretary Mrs TA Nicol

Incorporated by Act of 31 July 1923 Parliament

Head office Fairacres Stock Lane Ingatestone Essex CM49QL

Auditors Rickard Luckin Limited Aquila House Waterloo Lane Chelmsford Essex CM11BN

Business address Ferry Office Shell Bay Studland Swanage Dorset BH193BA

Bankers Handelsbanken Greenwood House 91-99 New London Road Chelmsford Essex CM2OPP I Item 10, AppendixI 4 (CM - 20.03.18) THE BOURNEMOUTH-SWANAGE MOTOR ROAD & FERRY COMPANY

CONTENTS

Page

Directors' report 1-2

Independent auditor's report 3-4

Profit and loss account

Balance sheet

Statement of changes in equity

Notes to the financial statements -15 Item 10, Appendix 4 (CM - 20.03.18) THE BOURNEMOUTH-SWANAGE MOTOR ROAD & FERRY COMPANY

DIRECTORS' REPORT FOR THE YEAR ENDED 31 MARCH 2017

The directors present their ninety third report and financial statements for the year ended 31 March 2017.

Principal activities The principal activity of the company continued to be that of the operation, under statute, of a motor driven chain ferry.

Directors No director held any beneficial interest in the share capital of the company. In order to qualify each of the directors holds one hundred shares on trust for the holding company. The directors' interests in the holding company, Fairacres Group Limited, are disclosed in the directors' report of that company.

GR Kean MPR Kean . Mrs TA Nicol

Results and dividends The results for the year are set out in the profit and loss account on page 5. Both the level of the business and the year end financial position were in line with expectations.

Ordinary dividends were paid amounting to £748,200. The directors do not recommend payment of a final dividend.

Directors' insurance . A directors' indemnity insurance policy exists in the form of a combined insurance policy across the group.

Financial instruments

Liquidity risk The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.

Interest rate risk The company has no interest bearing financial instruments and as such the directors do not consider that they are exposed directly to interest rate risk.

Credit risk All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary.

Auditor In accordance with the company's constitution, a resolution proposing that Rickard Luckin Limited be re appointed as auditors of the company will be put at a General Meeting. Item 10, Appendix 4 (CM - 20.03.18) THE BOURNEMOUTH-SWANAGE MOTOR ROAD & FERRY COMPANY

DIRECTORS1 REPORT (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2017

Statement of directors' responsibilities The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently; • make judgements and accounting estimates that are reasonable and prudent; • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Statement of disclosure to auditor So far as the directors are aware,

(a) there is no relevant audit information of which the company's auditors are unaware, and

(b) they have taken all the steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that the company's auditors are aware of that information. i This report has been prepared in accordance with the provisions applicable to companies entitled to the small companies exemption.

By order of the board

Mrs TA Nicol Secretary

2v -^ />-) Item 10, Appendix 4 (CM - 20.03.18) THE BOURNEMOUTH-SWANAGE MOTOR ROAD & FERRY COMPANY

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF THE BOURNEMOUTH-SWANAGE MOTOR ROAD & FERRY COMPANY

We have audited the financial statements of The Bournemouth-Swanage Motor Road & Ferry Company for the year ended 31 March 2017 set out on pages 5 to 15. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102.

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditor As explained more fully in the Directors' Responsibilities Statement set out on pages 1 - 2, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements In our opinion the financial statements: • give a true and fair view of the state of the company's affairs as at 31 March 2017 and of its profit for the year then ended; , • have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and • have been prepared in accordance with the requirements of the Bournemouth-Swanage Motor Road & Ferry Co Acts 1923-1986 and the Companies Act 2006.

Opinion on other matters prescribed by the Companies Act 2006 In our opinion, based on the work undertaken in the course of our audit, the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements, and the Directors' Report has been prepared in accordance with applicable legal requirements. Item 10, Appendix 4 (CM - 20.03.18) THE BOURNEMOUTH-SWANAGE MOTOR ROAD & FERRY COMPANY

INDEPENDENT AUDITOR'S REPORT (CONTINUED) TO THE MEMBERS OF THE BOURNEMOUTH-SWANAGE MOTOR ROAD & FERRY COMPANY

Matters on which we are required to report by exception In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Directors' Report.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or • the financial statements are not in agreement with the accounting records and returns; or • certain disclosures of directors' remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit; or • the directors were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies' exemption in preparing the Directors' Report and take advantage of the small companies exemption from the requirement to prepare a Strategic Report.

Janis Osborne (Senior Statutory Auditor) for and on behalf of Rickard Luckin Limited

Chartered Accountants Statutory Auditor Aquila House Waterloo Lane Chelmsford Essex CM11BN Item 10, Appendix 4 (CM - 20.03.18) THE BOURNEMOUTH-SWANAGE MOTOR ROAD & FERRY COMPANY

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2017

2017 2016 Notes £ £

Turnover 3,056,480 3,057,547 Cost of sales (1,366,918) (1,371,180)

Gross profit 1,689,562 1,686,367

Administrative expenses (480,941) (490,873) Other operating income 35,451 57,494

Operating profit 1,244,072 1,252,988

Interest receivable and similar income 7 451

Profit before taxation 1,244,079 1,253,439

Taxation 3 (281,699) 1 (230,715)

Profit for the financial year 962,380 1,022,724 Item 10, Appendix 4 (CM - 20.03.18) THE BOURNEMOUTH-SWANAGE MOTOR ROAD & FERRY COMPANY

BALANCE SHEET AS AT 31 MARCH 2017

2017 2016 Notes £ £ £ £

Fixed assets Tangible assets 13,649,306 13,712,005

Current assets Stocks 220,129 259,946 Debtors 39,977 34,799 Cash at bank and in hand 1,553,372 1,401,963

1,813,478 1,696,708 Creditors: amounts falling due within one year (212,464) (368,898)

Net current assets 1,601,014 1,327,810

Total assets less current liabilities 15,250,320 15,039,815

Creditors: amounts falling due after more than one year (34,978) (34,978)

Provisions for liabilities (659,484) (806,000)

Net assets 14,555,858 14,198,837

Capital and reserves Called up share capital 10 61,000 61,000 Revaluation reserve 12,563,424 12,571,152 Other reserves 11 1,931,434 1,566,685

Total equity 14,555,858 14,198,837

These financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies' regime.

The financial statements were approved by the board of directors and authorised for issue or^^.f?...7../.T. and are signed on its behalf by:

MPR Kean Director Item 10, Appendix 4 (CM - 20.03.18) THE BOURNEMOUTH-SWANAGE MOTOR ROAD & FERRY COMPANY

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2017

Share Revaluation Other Profit and Total capital reserve reserves loss reserves Notes £

Balance at 1 April 2015 61,000 12,657,017 1,087,275 (13,704) 13,791,588

Year ended 31 March 2016: Profit for the year 1,022,724 1,022,724 Other comprehensive income: Tax relating to other comprehensive income 119,000 119,000

Total comprehensive income for the year 119,000 1,022,724 1,141,724 Dividends (734,475) (734,475) Transfers (204,865) 479,410 (274,545) -

Balance at 31 March 2016 61,000 12,571,152 1,566,685 14,198,837

Year ended 31 March 2017: Profit for the year 962,380 962,380 Other comprehensive income: Tax relating to other comprehensive income 146,516 146,516

Total comprehensive income for the year 146,516 - 962,380 1,108,896 Dividends (751,875) (751,875) Transfers (154,244) 364,749 (210,505) -

Balance at 31 March 2017 61,000 12,563,424 1,931,434 14,555,858

The revaluation reserve totalling £12,563,424 represents reserves generated from historic revaluations less the unwinding of associated depreciation and provision for deferred tax, and as such are non-distributable. Item 10, Appendix 4 (CM - 20.03.18) THE BOURNEMOUTH-SWANAGE MOTOR ROAD & FERRY COMPANY

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

1 Accounting policies

Company information The Bournemouth-Swanage Motor Road and Ferry Company Inc. is a company limited by shares incorporated under the Bournemouth-Swanage Motor Road and Ferry Company Act 31 July 1923.

1.1 Accounting convention These financial statements have been prepared in accordance with FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" ("FRS 102"), the Bournemouth-Swanage Motor Road and Ferry Acts 1923-1986 and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.

1.2 Turnover Turnover represents the consideration received or receivable for providing the ferry service, and is shown net of VAT and other sales related taxes. Turnover is generated entirely within the UK.

1.3 Tangible fixed assets Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

The company has adopted the transitional arrangements, included within FRS 102 and have chosen to "freeze" the valuation of land and buildings and the Motor Ferry as at the date of transition; 31st March 2014. No subsequent valuations are therefore included and the valuation at that date becomes the "deemed cost".

No depreciation is provided on freehold land.

Buildings with an estimated economic life in excess of 50 years are not depreciated. Other buildings are depreciated on a straight line basis over their remaining economic life. The non-depreciation of these assets is a departure from the general requirement of the Companies Act 2006 for all tangible assets to be depreciated. In the opinion of the directors this departure is necessary for the financial statements to give a true and fair view. It is estimated that the useful life of the land and buildings used in the business exceeds 50 years and that its residual value would not be less than its book value.

Other tangible fixed assets are stated at cost less depreciation. Depreciation is provided at rates calculated to write off the cost, less estimated residual value, of each asset over its expected useful life, as follows:

Motor Ferry 33 years Equipment and motor vehicles 5-10 years

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss. Item 10, Appendix 4 (CM - 20.03.18) THE BOURNEMOUTH-SWANAGE MOTOR ROAD & FERRY COMPANY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2017

1 Accounting policies (Continued)

The useful economic life of the Motor Ferry has been revised from 28 to 33 years during the current year. The directors feel this is an appropriate revision based on the current condition of the asset. The depreciation charge has been revised accordingly.

1.4 Impairment of fixed assets At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

1.5 Stocks Stocks are stated at cost as they are used solely for the purpose of the ferry re-fit and are not held for sale.

At each reporting date, an assessment is made for impairment.

1.6 Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts.

1.7 Financial instruments The company has elected to apply the provisions of Section 11 'Basic Financial Instruments' and Section 12 'Other Financial Instruments Issues' of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Classification of financial liabilities Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities. Item 10, Appendix 4 (CM - 20.03.18) THE BOURNEMOUTH-SWANAGE MOTOR ROAD & FERRY COMPANY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2017

1 Accounting policies (Continued)

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

1.8 Equity instruments Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

1.9 Taxation The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

In accordance with FRS 102 deferred tax is provided in respect of historically revalued assets as appropriate.

-10- Item 10, Appendix 4 (CM - 20.03.18) THE BOURNEMOUTH-SWANAGE MOTOR ROAD & FERRY COMPANY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2017

1 Accounting policies (Continued)

1.10 Employee benefits The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee's services are received.

1.11 Retirement benefits The company operates a defined contribution scheme for the benefit of its employees. Contributions payable are charged to the profit and loss account in the year they are payable.

1.12 Motor ferry replacement reserve An amount is set aside over a period of 33 years (previously 28 years) from 31 March 1993 to renew the motor ferry by the transfer of an estimated amount to the Motor Ferry Replacement Reserve, when sufficient funds are available. As this is an allocation of profit and loss reserves it may be necessary, in the future, to utilise part of the provision to fund substantial other items of expenditure.

2 Employees

The average monthly number of persons (including directors) employed by the company during the year was 43 (2016-40).

Taxation 2017 2016 £ £ Current tax UK corporation tax on profits for the current period 281,699 309,520 Adjustments in respect of prior periods (71,965) (148,740) Group tax relief 71,965 88,935

Total current tax 281,699 249,715

Deferred tax Origination and reversal of timing differences - (19,000)

Total tax charge 281,699 230,715

-11 - Item 10, Appendix 4 (CM - 20.03.18) THE BOURNEMOUTH-SWANAGE MOTOR ROAD & FERRY COMPANY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2017

Tangible fixed assets Land, roads & Buildings Motor Ferry Equipment Total slipways and motor vehicles £ £ £ £ Cost or valuation At 1 April 2016 11,520,000 860,354 1,900,000 155,595 Additions 8,971 107,078 116,049

At 31 March 2017 11,528,971 967,432 1,900,000 155,595

Depreciation and impairment

At 1 April 2016 - 47,222 542,858 133,864 723,944 Depreciation charged in the year 24,186 135,714 18,848 178,748

At 31 March 2017 - 71,408 678,572 152,712 902,692

Carrying amount At 31 March 2017 11,528,971 896,024 1,221,428 2,883

At 31 March 2016 11,520,000 813,132 1,357,142 21,731 13,712,005

The two and a half mile strip of land which is occupied for the ferry road is held in perpetuity under the terms of The Bournemouth-Swanage Motor Road and Ferry Act 1923. j

The land for the buildings, causeway and slipways is freehold. I

If revalued assets were stated on an historical cost basis rather than a fair value basis, the total amounts included would have been as follows:

On a historical cost basis fixed assets would have been included at:

Land, roads Buildings Motor Ferry Equipment Total and slipways and motor vehicles £ £ £ £ £

Cost 138,977 371,489 2,123,690 155,595 2,789,751 Accumulated depreciation based on historical cost 184,525 2,123,690 152,712 2,460,927

138,977 186,964 2,883 328,824

-12- Item 10, Appendix 4 (CM - 20.03.18) THE BOURNEMOUTH-SWANAGE MOTOR ROAD & FERRY COMPANY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2017

5 Debtors 2017 2016 Amounts falling due within one year: £ £

Trade debtors 5,335 5,359 Other debtors 34,642 29,440

39,977 34,799

6 Creditors: amounts falling due within one year 2017 2016 £ £

Trade creditors 5,750 6,082 Amounts due to group undertakings 13,984 11,382 Corporation tax 141,691 309,068 Other taxation and social security 15,800 16,182 Other creditors 35,239 26,184

212,464 368,898

7 Creditors: amounts falling due after more than one year 2017 2016 £ £

Other creditors 34,978 34,978

The preference shares comprise £35,000, 10.5% non-cumulative preference shares of £1 each less £22 calls in arrears. The preference shares carry no voting rights and rank in priority to the ordinary shares for repayment in the event of the company being wound up. The holders of the preference shares have no right to receive notice of or to be present or to vote at any General Meeting of the company.

On winding up, the preference shares confer the right to the return of the capital paid up or credited as paid up plus arrears of dividend, before any return of capital is made on any other shares. The holders of preference shares shall not then have the right to participate further in profits or assets.

8 Provisions for liabilities 2017 2016 £ £

Deferred tax liabilities 9 659,484 806,000

659,484 806,000

-13- Item 10, Appendix 4 (CM - 20.03.18) THE BOURNEMOUTH-SWANAGE MOTOR ROAD & FERRY COMPANY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2017

9 Deferred taxation

Liabilities Liabilities 2017 2016 Balances: £ £

Revaluations 659,484 806,000

2017 Movements in the year: £

Liability at 1 April 2016 806,000 Credit to other comprehensive income (146,516)

Liability at 31 March 2017 659,484

I 10 Called up share capital 2017 • 2016 £ £ Ordinary share capital Issued and fully paid 1,740,000 Ordinary of 5p each 87,000 87,000 Less: Discount of 50% on issue of 1,040,000 (26,000) (26,000)

' 61,000 61,000

11 Other reserves Transfers are made from the profit and loss account to the Motor Ferry Replacement Reserve, to the extent that reserves are available. In June 2008, the company obtained a professional estimate of the cost of building a diesel electric powered motor ferry to replace the company's existing vessel. The approximate cost was £6,179,500. If full provision for renewal had been made, based on this figure with an assumed inflation of 3% per annum, the Motor Ferry Replacement Reserve at the balance sheet date would have totalled £7,297,008 (2016: £6,947,389) based on a period of 33 years (2016: 28 years).

12 Financial commitments, guarantees and contingent liabilities

The company, together with four other group companies, has entered into a composite guarantee in respect of bank overdrafts of those companies. There is a right to set off incorporated within the cross guarantee. The net overdraft indebtness of the group companies to the bank at the year end date was £Nil (2016: £Nil)

The company, together with four other group companies, has also entered into a composite cross guarantee in repect of bank loans totalling, at the balance sheet date, £8,000,000 to Silvermist Properties (Chelmsford) Limited.

-14- Item 10, Appendix 4 (CM - 20.03.18) THE BOURNEMOUTH-SWANAGE MOTOR ROAD & FERRY COMPANY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2017

13 Capital commitments

Amounts contracted for but not provided in the financial statements: 2017 2016 £ £

Acquisition of tangible fixed assets 24,591 82,740

14 Related party transactions

The company has taken advantage of the exemption in the Financial Reporting Standard applicable in the UK and Republic of Ireland ("FRS 102") Section 1Ato disclose transactions with group companies on the grounds that it is a subsidiary that is wholly owned. .

At the year end the company owed its parent company £13,984 (2016: £11,382).

15 Parent company

The company is a wholly owned subsidiary of Fairacres Group Limited, a company registered in England. Details of the group and consolidated financial statements can be found at Companies House. That company is controlled by its directors.

-15- Item 10, Appendix 4 (CM - 20.03.18)

THE BOURNEMOUTH-SWANAGE MOTOR ROAD & FERRY COMPANY

MANAGEMENT INFORMATION

FOR THE YEAR ENDED 31 MARCH 2017

i Item 10, Appendix 4 (CM - 20.03.18) THE BOURNEMOUTH-SWANAGE MOTOR ROAD & FERRY COMPANY

DETAILED TRADING AND PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2017

2017 2016 £ £ £ £ Turnover Tolls 3,056,480 3,057,547

Cost of sales Ferry harbour dues 1,272 1,150 Ferry consumable stores 60,789 57,391 Ferry wages and salaries 709,329 684,950 Building repairs and maintenance 7,891 19,864 Slipway repairs & maintenance 11,879 58,193

Road repairs & maintenance 5,642 • 104,489 Ferry repairs & maintenance 359,045 88,899 Ferry insurance 32,323 42,356 Depreciation on freehold property 24,186 23,611 Depreciation on motor ferry 135,714 271,429 Depreciation on other equipment 18,848 18,848

(1,366,918) (1,371,180)

Gross profit 55.28% 1,689,562 55.15%

Other operating income Sundry income 35,451 57,494

Administrative expenses (480,941) (490,873)

Operating profit 1,244,072 1,252,988

Investment revenues Other interest received 451

451

Profit before taxation 40.70% 1,244,079 40.99% 1,253,439 Item 10, Appendix 4 (CM - 20.03.18) THE BOURNEMOUTH-SWANAGE MOTOR ROAD & FERRY COMPANY

SCHEDULE OF ADMINISTRATIVE EXPENSES FOR THE YEAR ENDED 31 MARCH 2017

2017 2016 £ £ Administrative expenses ' Wages and salaries 114,714 120,472 Staff pension costs defined contribution 34,696 34,848 Management charge 127,396 118,931 Rates 99,750 98,999 Tickets 3,692 5,498 Light and heat 6,263 5,799 Repairs and maintenance - 185 Insurance 17,732 20,347 Motor running expenses 4,697 3,636 Legal and professional fees 11,171 25,229 Audit fees 12,825 12,575 Bank charges 10,072 8,692 Bad and doubtful debts - 475 Printing, postage and stationery 5,907 4,235 Advertising 45 45 Telecommunications 3,286 2,814 Sundry expenses 28,695 28,093

480,941 490,873 i