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Report and Accountsof the Lighthouse Service

for the Year Ended31 March 2010

Table of ContentsTable of Contents

Directors of the Lighthouse BoardOffice and AdvisersExecutive Chairman’s ReviewDirectors’ Report and Management Commentary:

- Nature, Objectives and Strategy of the Business- Current Developments and Performance- Resources- Risks and Uncertainties- Relationships- Financial Position

Remuneration ReportStatement of Accounting Officer’s responsibilitiesExecutive Chairman’s Statement on Internal ControlNet Expenditure Account for the Year Ended 31st March 2010Statement of Financial Position as at 31st March 2010Statement of Cash Flows for the Year Ended 31st March 2010Statement of Changes in Reserves for the Year Ended 31st March 2010Notes to the AccountsFive Year SummaryAppendix A – Letter of Comfort

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Directors of The Lighthouse Board:Directors of The Lighthouse Board:

Rear Admiral Sir J M de Halpert KCVO CB FRIN* Executive ChairmanCaptain D C Glass (retired 21st May 2009)* Director of Navigational RequirementsCaptain R H Barker (appointed 21st May 2009)* Director of Navigational RequirementsCommodore S J Scorer* FCMI Director of OperationsJ S Wedge, CPFA MBA BA (Econ) Hons** Director of Finance and Support ServicesCaptain N R Pryke, MCIT FNI* Deputy Chairman and Non - ExecutiveF C Bourne*** Non – ExecutiveD A Coltman*** Non – ExecutiveM Gladwyn*** Non – ExecutiveJ D Price Secretary

* - Member of the Corporation of Trinity House** - Associate Member of the Corporation of Trinity House*** - Nominees of the Secretary of State for Transport (DfT) and Associate Member of the Corporation of Trinity House

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Office and AdvisersOffice and Advisers

Principal Office Corporation of Trinity HouseTrinity HouseTower HillLondonEC3N 4DH

Auditors of the GeneralLighthouse Fund Comptroller & Auditor General

National Audit Office157 -197 Buckingham Palace RoadVictoriaLondonSW1W 9SP

Bankers Lloyds TSB230 High StreetDovercourtEssexCO12 3TA

Solicitors Norton Rose3 More London Riverside,LondonSE1 2AQ

Actuaries Hymans Robertson LLP30 Waterloo StreetGlasgowG2 6DB

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Executive Chairman’s ReviewExecutive Chairman’s Review

The 2009/10 year has been dominated by eventsand activity triggered by the first rise in Light Duesfor 16 years. The increases were introduced in twostages on 1st July 2009 and 1st April 2010. Theincreases were not well received by the shippingcommunity and resulted in a number of debates inParliament and the lobbying of Ministers on theissue. On 14th May 2009, Lord Berkeley’s MarineNavigation Aids Bill received its First Reading in theHouse of Lords, although it failed to make anyfurther progress in the 2008/09 ParliamentarySession. The Bill proposed replacing the General

Lighthouse Authorities (GLAs) with a new Marine Navigation AidsCommission. An adjournment debate on ‘Light Dues, Lightships andLighthouses’ was held in Westminster Hall on 2nd June 2009. Lord Berkeleytabled a motion of regret against the Light Dues increases in the House ofLords, which was debated on 9th July 2009. The Leader of the Oppositionsigned an Early Day Motion on 15th October 2009 calling for the revocationof the Light Dues increase. This led to a debate in Parliament at theDelegated Legislation Committee. On 19 November 2009, Lord Berkeleyre-introduced his Marine Navigation Aids Bill and it received its SecondReading on 5th February 2010. However, it made no further progress dueto the prorogue of the 2009/10 Parliamentary Session.

All of these events required considerable skill and effort to presentauthoritative arguments against these proposals, answer ParliamentaryQuestions and brief Ministers, Lords and MPs as required, many of whomhave wished to visit Trinity House. I am pleased to report that in all ofthese parliamentary debates, Trinity House has received significant praisefor the first class job it is doing. It has been well recognized that theefficiencies that Trinity House has made in recent years have been a majorreason why Light Dues have remained low and have been steadily reducedover the last 16 years.

However, the pressure applied by the ship owners through these debatesin Parliament and direct lobbying of the Department for Transport (DfT)led to the setting up of a review of the General Lighthouse Authorities.This review was carried out by W.S. Atkins Limited. It took six months tocomplete and the final report was published on 15th March 2010. Thereport is over 200 pages long and contains 52 recommendations, whichaim to improve the operational efficiency of the General LighthouseAuthorities and the framework in which we operate. The report is wideranging but, while identifying improvements, shows that we are anefficient, cost effective organization providing the world’s mariners with avery high level of service in our waters.

Trinity House staff have played a key role throughout the W.S. Atkins reviewin providing information and advice to the consultants. This has beenparticularly important in shaping the consultants’ views about navigationmatters, synergies and efficiencies and Light Dues. Directors also carriedout a series of staff ‘road shows’ to inform all staff of the outcome of theW.S. Atkins review.

Meanwhile the General Lighthouse Authorities continue to operate in linewith the document '2020 The Vision'. Endorsed by the DfT it is acomprehensive strategy for marine navigation around the UK and theRepublic of Ireland until 2020. It is currently the primary strategicdocument for the General Lighthouse Authorities, together with the GeneralLighthouse Authorities’ RadioNavigation Plan and Visual Aids to NavigationPlan. Key points include the retention of a mix of visual and electronicaids; the realisation of the potential of AIS and the development of aterrestrial RadioNavigation back up, enhanced Loran (eLoran). This yearhas seen work continue on the General Lighthouse Authorities’ futurestrategy beyond 2020 to 2025. It is planned to launch a new document‘2025 & Beyond’ in 2010, following extensive consultation with a widerange of stakeholders.

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Trinity House has also continued to operate successfully as the followingachievements demonstrate. During the year Trinity House has:

• Continued the maintenance of AtoN availability above IALAstandards.

• Completed a comprehensive AtoN Review.• Modernised Bishop Rock lighthouse.• Developed and implemented a new strategy for lightvessels.• Deployed new buoyage at the Lands End Traffic Separation Scheme.• Opened to the public, the refurbished Lizard Lighthouse Heritage

Centre, with an official opening by HRH The Princess Royal.• Refurbished the Harwich Pier.• Let a new 5 year helicopter contract.• Retained ISO 9001:2008 and ISO 14001:2004 quality and

environmental standards.• Achieved the highest RoSPA Health and Safety standard, diamond

level.• Fostered high levels of staff motivation, illustrated by the 67% staffengagement score achieved in the last staff survey.• Achieved £1.7 million income from commercial work.• Taken part in the international emergency response exercise,

MANCHEX.• Maintained high standards of corporate governance and strong

financial controls as evidenced by reports from internal auditors.• Generated value for money savings of £847,000.• Met all financial targets, including containing operating costs belowthe rate of inflation.

The coming year promises to be a challenging one. Implementation of theW.S. Atkins review and the C-Mar Fleet Review will be a key part of ouractivity in the next year. The post General Election scene is likely to includethe requirement for public service organizations such as Trinity House tomake financial savings. In this regard, we have already complied with theGovernment required savings target to reduce the cost of back officefunctions.

I am also pleased to be able to report that Internal Audit have providedassurance that Trinity House’s current risk management, control andgovernance arrangements are “adequate and effective”.

Trinity House has come through a difficult and challenging year with itsreputation enhanced. This is of great credit to all the staff who have workedso diligently at Trinity House. We are well placed to take the organizationforward with confidence that we can build on the outstanding work of thelast twelve months.

Sir Jeremy de HalpertExecutive Chairman of the Lighthouse Board

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Directors' Report andDirectors' Report andManagement CommentaryManagement Commentary

Nature, Objectives and Strategy of theNature, Objectives and Strategy of theBusinessBusiness

Statutory BackgroundUnder Section 193 of the Merchant Shipping Act 1995 the Corporation ofTrinity House is appointed as the GLA for England and Wales, the ChannelIslands and the adjacent seas and islands, and under Section 195 is vestedwith the responsibility for the superintendence and management of alllighthouses, buoys and beacons within its area. Trinity House has variouspowers and responsibilities in connection with the provision, maintenance,alteration, inspection and control of lighthouses, buoys and beacons underSection 198 and Section 199 of the 1995 Act. Trinity House also hasresponsibilities within the area for the marking and removal of wrecksunder Sections 252 and 253 of the 1995 Act, where such area does not liewithin or near an approach to a harbour or conservancy authority. TrinityHouse is currently responsible under Section 193(5) of the MerchantShipping Act 1995 for Europa Point Lighthouse in Gibraltar. TheCorporation discharges the responsibilities of the DfT at SombreroLighthouse (Anguilla). Trinity House meets residual pension liabilities inrespect of former employees of the Imperial Lighthouse Service in the WestIndies, Sri Lanka and the Falkland Islands.

The Merchant Shipping and Maritime Security Act 1997 gives Trinity Housethe powers to establish contracts to exploit spare capacity in its assets.The GLA (Beacons: Maritime Differential Correction Systems) Order 1997came into force on 12 January 1998 and states that the definition of'Beacon' in the Merchant Shipping Act includes equipment for a DifferentialGlobal Positioning System. The GLA (Beacons: Automatic IdentificationSystem) Order 2006 came into force on 20 July 2006 and states that thedefinition of ‘Beacon’ in the Merchant Shipping Act includes equipmentprovided for broadcasts in the frequency range 156.025 - 162.025 MHz

where such equipment forms part of a system for providing information -

(a) to ships about the type, position and functioning of aids to thenavigation of ships; or

(b) to assist the GLAs in the efficient provision of aids to navigation of ships.

Trinity House is currently pursuing a number of changes to its powersthrough the proposed Marine Navigation Bill.

These Accounts are prepared by Trinity House in respect of its function asthe GLA for England and Wales in accordance with a directive made by theDfT under the powers of the Secretary of State contained in Section 218of the Merchant Shipping Act 1995. The accounts are subsequentlyconsolidated to form part of the General Lighthouse Fund (GLF) Accounts,which are prepared pursuant to Section 211 of the Merchant Shipping Act1995.

Corporate Governance

The Corporation established a constitution and terms of reference for theLighthouse Board on 4 June 1984 and this has since been updated andamended, the last occasion being on 23 November 2009. This constitutionsets out the make up of the Board and its proceedings. The Board generallymeets on eight occasions each year. It reviews and updates its policies,receives reports from Executive Directors and Committees and monitorsperformance against sanctioned expenditure and against previous trends.The Board formally reviews and approves the Strategic Plan, CorporatePlan and the Annual Report and Accounts.

The Board works to a 'Code of Best Practice', which was updated inSeptember 2007 to ensure it continues to follow current best practice. Itsets out the responsibilities of Directors, the observance of public servicevalues and the Board's relationship with the DfT. The Code is underpinnedby the seven principles as set out in the report on Standards in Public Life(The Nolan Report).

The Board has also adopted the requirement to comply with the Code ofBest Practice as set out by the Committee on Corporate Governance (TheCombined Code) as required for companies listed on the London Stock

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Exchange. The Board has in place specific arrangements to fulfill theproposals of the Turnbull Report, using the ICAEW guidance document'Implementing Turnbull: A Boardroom Briefing'. This includes a full analysisof the significant business risks to produce and continually up-date the RiskSchedule. This Schedule identifies the means by which these risks arecontrolled and who is accountable for managing each significant risk.Internal Audit include a full review of that risk analysis and the internalcontrol function in their Annual Report. Internal Audit now base theirprogramme of audit work on the Risk Schedule and the set ofDirectorate/Departmental Risk Registers, which sit beneath it.

Based on these processes and the confirmation in successive AnnualInternal Audit Reports that 'work to date has not identified any significantweaknesses in risk management, control and governance frameworks', theBoard considers it has complied with the Combined Code for the whole ofthe accounting period.

In December 2000 HM Treasury issued an instruction that requirescompliance with guidance on Corporate Governance in the Public Sector.This guidance was broadly based on the Turnbull Report and Trinity Housewas therefore able to comply with the requirements. One specificrequirement is the publication of a separate 'Statement on Internal Control'within this Report and Accounts. This statement is set out on pages 27-29and has been signed by the Executive Chairman and is in accordance withthe current guidance issued by HM Treasury.

The Trinity House Executive Chairman combines the role of Chairman andChief Executive. The Board considers this provides the most efficient andeffective use of resources without compromising the basic principles ofgood governance. Although the Combined Code advocates separation ofthese two roles, there are further checks and balances, not available tolisted companies, provided by the trustee actions of the Secretary of Statefor Transport as exercised by Ports Division of DfT and through theSecretary of State’s nominees on the Lighthouse Board.

A register of interests that includes details of company directorships orother significant interests held by Board members and senior managers,which may conflict with their management responsibilities, is maintained.The register is advertised on the Trinity House website and is open to the

public. Access can be obtained by contacting the Board Secretary at TowerHill, London.

The following sub-committees of the Board are established to co-ordinatekey activities:

a) Executive Committee

The Board delegates the management of its day-to-day activities to theExecutive Directors, each of whom has responsibility for a specific area.The Executive Directors meet on a regular basis (usually monthly) toexchange views and information on the activities within each of theirdirectorates. They collectively review policies and procedures prior to theirsubmission to the Board in order to maintain a consistent approach acrossthe Service. They also action and monitor policies once the Board hasapproved them. The Executive Committee in turn delegates theoperational execution of many of its policies to its managers, and meetsquarterly with all the senior managers to review policies and plans.

Membership of the Executive Committee is as follows:

Rear Admiral Sir J M de HalpertCaptain R BarkerCommodore S J ScorerJ S WedgeS Basker

b) Audit Committee

The Audit Committee is established to monitor and review managementcontrols, the financial stewardship of the funds at the Board's disposal, riskand corporate governance issues including Public Interest Disclosure Act(whistle-blowing) matters and the systems of internal control. It does thisby reviewing various sources of data including individual Internal AuditReports, National Audit Office (NAO) reports and other information on thevarious aspects of the operation. The Committee meets with the Head ofInternal Audit to review their Annual Report and discuss any aspects oftheir commentary regarding the Service's overall internal control system.The Committee also meets with the NAO to review the Annual Accountsand to discuss any observations raised by the Auditors in their Management

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Letter.

Membership of the Audit Committee is:-

F C Bourne (Chairman)M J Gladwyn (Deputy Chairman)Captain N R Pryke

The following also attend meetings:

Rear Admiral Sir Jeremy de HalpertJ S WedgeJ D PriceNAO and Internal Audit

The membership and operation of the Audit Committee, is in line with theAudit Committee Handbook originally issued by HM Treasury in March 2007and updated in 2009. The Audit Committee approved revised Terms ofReference, based on this guidance, in March 2010 for submission to theBoard in May 2010. The distinction between 'Members' and 'Attendees'operates in accordance with the Handbook. Consequently, the membershipof the Committee consists of non-executive directors only. The Secretaryto the Board attends meetings and takes the minutes, in accordance withthe Handbook's advice.

c) Remuneration Committee

This Committee assesses Directors’ remuneration and comprises three non-executive Directors, who have no personal financial interest other than asnon-executives in the matters to be decided, no potential conflicts ofinterest arising from cross-directorships and no day-to-day involvement inthe running of the Service. The Committee operates under Terms ofReference drawn from the Code of Best Practice prepared by the StudyGroup on Directors' Remuneration (The Greenbury Code). The Committeeconsults the Executive Chairman about its proposals other than in relationto the Chairman's own remuneration and has access to professional advicefrom inside and outside sources. The Committee consults the DfT inrelation to the performance of the Executive Chairman as regards hisresponsibilities acting as Accounting Officer.

Membership of the Remuneration Committee is:-

D A Coltman (Chairman)F C BourneM Gladwyn

d) Executive Remuneration Committee

In February 2004 the Board established an Executive RemunerationCommittee to determine fair remuneration for staff below Director leveland ensure that staff of the right quality are attracted, retained andmotivated, within budgetary constraints and public sector pay guidancepolicy. The Committee operates under Terms of Reference that directlysupport the Remuneration Committee. The Committee consults theExecutive Chairman, the DfT and other GLAs as and when appropriate andbeneficial to ensure decisions are consistent and reflect best practice.

Membership of the Executive Remuneration Committee is:

J S Wedge (Chairman)Captain R BarkerCommodore S J Scorer

e) Examiners’ Committee

The Examiners' Committee is appointed to review all requirements for theService's provision of AtoN and in particular to review any proposedchanges thereto, establishment of new Aids and discontinuance of others.The Committee is comprised of all the Elder Brethren who are 'MarinerAssistants' of the Corporation so some members are not otherwiseemployed directly by the Lighthouse Service. They can bring the relevantindependent view and experience necessary for the deliberations of thisCommittee. An Examiner is always on call to give decisions regardingcasualties at sea and the investigation and marking of wrecks.

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Membership of the Examiners’ Committee is: -

Captain R Barker (Chairman from 21st May 2009)Rear Admiral Sir Jeremy de HalpertCaptain D C Glass (Chairman up to the 21st May 2009)Commodore S J ScorerCaptain N R PrykeCaptain N D SquireCaptain R M WoodmanCaptain Nick DodsonCommodore P J Melson (Advisory Member)Captain D P Richards (Advisory Member)

Vision Statement

Trinity House’s vision statement is:

During the last few years Trinity House has subjected itself to a majorculture change in that it has transformed itself from a very labour intensive,traditional organisation to a multi-skilled and highly automated service well-equipped for the challenges of the 21st Century.

This change has involved some major initiatives:-

• Automation of all lighthouses;• Automation of all lightvessels;• Solarisation of all lighted buoys;• Solarisation of most lighthouses and lightvessel stations;• A reduction in the number of lightvessel stations;• A reduction in the tender fleet from 9 to 2 major vessels;• A reduction from 5 launches to one RIV;• A major re-organisation following the Business Process Review (BPR)

resulting in 31% fewer staff;• A reduction from 5 depots to 1 main depot at Harwich with

outstations at Swansea and St Just;

• The development of multi-skilled technicians;• A state of the art central control and monitoring centre at our maindepot;• Increasing use of modern business systems and communications;• The implementation of differential GPS;• The establishment on behalf of the three GLAs of a trial eLoran

service from Anthorn in Cumbria;• The creation of a commercial business arm to exploit spare capacityin our assets.

This resulted in a reduction in the Trinity House workforce (ie excludingLightdues and Tri GLA staff) from around 1500 staff at the start of theautomation programme to around 284 staff by the end of this year. Theseconsiderable efficiencies have made a significant contribution to reducingLight Dues in the last 16 years.

The review of the GLA’s by W.S. Atkins, which was completed in March2010, makes 52 recommendations that offer further opportunities forefficiencies and modernization, that are captured in our latest strategicobjectives.

Strategic Objectives

The following are our main strategic objectives:

• Justify the provision of eLoran services from a UK transmitter basedon an eLoran Strategy and associated business case by October 2010(S.Basker).• Continue to maintain AtoN availability to IALA standards by March

2011 (J. de Halpert).• Ensure that Examiners’ decisions on navigational requirements,

aimed at mitigating risk to safe navigation, are developed into AtoNsolutions suitable for development and delivery by Operations andsubstantiated by risk assessment incorporating appropriate vesseltraffic analysis and user consultation by March 2011 (R.Barker).• Ensure full safety and operational standards are maintained, and tobudget by March 2011 (J. de Halpert).• Deliver AIS as an AtoN as defined by the navigational requirement

by March 2011 (J. Scorer).

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To deliver a reliable, efficient and cost effectiveTo deliver a reliable, efficient and cost effective'AIDS TO NAVIGATION SERVICE''AIDS TO NAVIGATION SERVICE'

for the benefit and safety of all mariners.for the benefit and safety of all mariners.

• Produce and implement a Maintenance Overhead Reduction Planincluding a capital investment projection by March 2011 (J Scorer).

• Produce and implement a fully costed AtoN Casualty Reduction Planby March 2011 (J Scorer).• Retain certification to ISM, ROSPA and ISO9001 and 14001

standards and give consideration to the introduction of theOccupational Health & Safety (OHSAS) 18001 standard by March2011 (J. de Halpert).

• Implement the 2010/11 Environmental Plan ensuring that theorganisation’s “carbon footprint” is reduced by March 2011 (J. deHalpert).

• Achieve greater synergy and efficiency between the GLAs throughthe chairmanship of the GLA Joint Strategic Board (JSB) and IGCCommittees by March 2011 (J. de Halpert).

• Implement - reporting to the JSB - the recommendations arisingfrom the Assessment of the Provision of Marine Aids to Navigationaround the UK and Ireland by the agreed timescales as they affect

Trinity House by March 2011 (J. de Halpert).• Promote the GLA amendments to the Merchant Shipping Acts

through the Marine Navigation Bill together with the adoption of theIMO Wreck Removal Convention in a manner which will allow theGLAs to operate effectively by March 2011 (J. de Halpert).• Ensure as far as is practically possible that Light Dues are set by DfT

at an appropriate level to cover budgetary requirements andmaintain reserves by March 2011 (J.Wedge).

• Seek efficiency savings and endeavour to keep expenditure increasescontained within the rate of inflation during the life of the 2010/13

Corporate Plan by March 2013 (J.Wedge).• Support the introduction and augmentation of GPS, Galileo and

GLONASS by December 2016 (S.Basker).

Current Developments andCurrent Developments andPerformancePerformance

Aids to Navigation

Trinity House has carried out a comprehensive AtoN review, during theyear, using a risk analysis approach that was accepted as best practice byNLB and CIL. This will ensure that a common AtoN tapestry exists acrosseach of the GLAs. The review takes into account off-shore renewableenergy developments; the impact of new technology on AtoN provisionand the revised IALA Maritime Buoyage System. Implementing this reviewwill be a key piece of work for 2010 onwards.

The modernization of Bishop Rock was completed in the early part of 2010.Coquet lantern roof ventilator was successfully lifted and repaired by FieldOperation Technicians saving considerable amounts of money incomparison with using an outside contractor. A project to repair thefoundations of Needles Lighthouse has started.

A new strategy for lightvessels was agreed and implemented during theyear, retaining two more seaworthy lightvessels than originally planned.This reflected the increased safety of navigation risk presented by theemerging offshore renewable energy infrastructure.

Following IMO’s acceptance of a northward extension of the Lands EndTraffic Separation scheme, from 1st July 2009 an additional high focal planelighted buoy, equipped with a racon, named ‘Bann Shoal’ was deployed.

Detailed testing of Ericon and Phalcon racons has been carried out.

e-Navigation

A comprehensive GPS jamming trial was undertaken at Newcastle-upon-Tyne using THV Galatea. The trials successfully demonstrated thevulnerability of shipboard navigational equipment to a loss of GPS and theneed for eLoran as a way of providing resilient positioning, navigation andtiming for e-Navigation.

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The re-capitalisation of the DGPS infrastructure has continued throughoutthe year. This is a tri-GLA project, delivered by VT Communications Ltd.

The largest and most complex set of eLoran trials were conducted in theOrkney area and eLoran monitors were installed on all main GLA vessels.External funding options for eLoran, including obtaining funding from EUINTERREG, are being pursued.

IALA

Trinity House continues to play a major role in IALA, providing papers andleading key committees. Key areas of work include the development of anew Maritime Buoyage System and the introduction of the first stage ofthe International Waterways Risk Assessment Program (IWRAP),quantitative assessment tool.

AIS Infrastructure

The tri-GLA project to deploy AIS units as Aids to Navigation on variousstations continues. Some technical issues with the ATONIS units remainto be resolved in 2010.

The tri-GLA project to develop software by ICAN Marine to analyse AIStraffic date continues. Trinity House has carried on successfully using itsestablished software supplied by Anatec. This has provided invaluable shiprouting data through-out the year which has informed the AtoN Reviewand provided information to W.S. Atkins for use in their review of the GLAs.A detailed and quantitative assessment can now be made to ensure themost cost effective response can be made for new wrecks or obstructionsand also for the analysis of existing Aids to Navigation.

Racons

Detailed testing of Ericon and Phalcon racons has been carried out.Together with the other GLAs trials are being carried out to ascertain howthe deployment of racons will be affected by new technology radar whichis under development by several manufacturers.

Lighthouse Estate

The refurbished Lizard Lighthouse Heritage Centre was officially openedon 13th July 2009 by HRH The Princess Royal. The project received muchpositive press coverage and was a credit to all concerned.

A major project to improve the Harwich Pier was completed on time andwithin budget.

A decision was made in January 2010 to offer for sale on the open market,the former TH Penzance depot. Negotiations will also continue in parallel,with Cornwall Council, who wished to acquire the site for development.

Work was completed at St Just to provide a new storage facility.

The period ahead will see implementation of the estates issues arising fromthe 2010 AtoN Review.

Helicopter Contract

A new helicopter contract was let. This is designed to meet the 140 flyingdays and 40 days spare time, requirements for helicopter service. Thecontract was awarded to Police Aviation Services (PAS) and is due to startin December 2010.

Emergency Response

A report on the Trinity House business continuity exercise PHOENIX wasreviewed and implemented during the year. Trinity House also participatedin a major international exercise, MANCHEX, to test UK and FrenchMaritime Rescue Services, following a disaster in the Dover Straits. Bothexercises provided practical experience of handling emergencies andidentified potential improvements in business continuity plans.

Work will be completed in the year ahead to launch a new BusinessContinuity and Emergency Response Plan.

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Co-ordinated Fleet Management

Proposals were developed to adopt and implement co-ordinated GLA fleetmanagement, following the recommendations of the C-MAR fleet review.The General Lighthouse Authorities’ proposals will lead to greateroperational efficiency and reduced running costs for the management ofthe GLA fleet.

Fleet Review

Further information has been provided to DfT to support the C-MAR reviewrecommendations that THV Patricia should be replaced by a medium sizedaids to navigation tender (MANT). A positive decision by DfT is importantto protect Trinity House’s ability to carry out its statutory duties.

Quality and Environment

Trinity House continues to retain ISO 9001:2008 and ISO 14001:2004certification. Regular six monthly surveillance audits carried out by theexternal auditors, ABS, confirm that Trinity House maintains high qualityenvironmental standards.

Health and Safety

Following the RoSPA verification audit, it was confirmed that Trinity Househad achieved ROSPA QSA Award Level 5 (Diamond Level), the highest levelobtainable. Trinity House scored 92% when compared against thisstandard. Trinity House put in place detailed contingency plans to preparefor a flu pandemic during this year. Whilst the impact of the flu virus wasless serious then predicted, the plans will be useful in the future, if thisthreat reappears.

Marketing

This has been a relatively good year for Marketing with commercial incomeexceeding the £1.5 million target, despite the effects of the economicdownturn. A comprehensive review of the Trinity House Marketing Strategywas carried out and presented to the Board in September 2009.

KPIs

Trinity House led the development of KPIs and benchmarking data that canbe used to review GLA performance. A detailed KPI schedule and otherbenchmarking data were provided to the GLA Review consultants, W.S.Atkins. This information will provide objective measurement, benchmarkingand monitoring of Trinity House’s performance.

Procurement

Trinity House has continued to lead on a number of tri-GLA procurementexercises during the year. These include the procurement of chain, shacklesand associated mooring components; a GLA standardized buoy paintsystem; and the GLA insurance contract tender. These joint GLAprocurement exercises yield significant savings by bulk buying. Forexample, the GLA insurance contract tender realized £60,000 in premiumsavings. Trinity House has also undertaken a european tender to rationalizeits suppliers of painting services. In addition, value for money savings of£847,000 have been realized by smarter procurement during the year.

IT

The IT Strategy was reviewed by the Board early in the year. It emphasizesthe quality, reliability and availability of IT systems along with theimportance of ensuring business benefits and value for money. The currentIT Strategy has now entered the last of its three years with over 75% ofall projects completed and the remainder in progress. A new IT Strategyto cover the period 2011/14 will be compiled during 2010. There has beena focus on information security with initiatives to encrypt laptops; maintainand update an Information Asset Register and embed the cycle ofInformation Asset Owners reporting on the information assets under theircontrol. Other projects have included implementing phase 2 of MMIS andServer and Storage Virtualisation. Implementation of the new Stock andProcurement system will take place during 2010 following a detailed EUprocurement exercise. Online system availability during 2009/10 was99.86%, well above the target of 97%. The target for resolving 90% of ITSupport Calls within agreed SLAs was also exceeded with a 97.95% successrate.

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Employees

The annual pay remit was approved on time by DfT and successfullynegotiated with the unions. This included the provision to “buy out”overtime rights from a group of managerial staff, which was subsequentlyimplemented, saving £45,000 per annum and achieving a cultural changein working practices. The organisations strict zero tolerance approachtowards drugs and alcohol abuse was reinforced during the year. Reviewsof the Finance, Procurement, Marine, Engineering and Marketingdepartments have been carried out during the year. These reviews will leadto a new, revised staff structure that will also take into account theimplications of the fleet review and the AtoN review. The rest of theorganisation will be reviewed at a departmental level on an internal basisduring 2011/12. Trinity House has continued to invest in the training anddevelopment of its staff, with a focus on management and leadershipdevelopment. The annual appraisal round produced high quality reviewsfrom managers with well thought out staff development proposals.

Triennial Risk Management Review

Trinity House led the GLAs’ triennial risk management review, therecommendations of which were approved by the Lights FinanceCommittee on 26th November 2009 and will be implemented in the periodahead. External consultant Willis Ltd, who were employed as part of thereview to provide independent advice and to test the effectiveness androbustness of the GLAs’ risk management arrangements, concluded thatthe GLAs had implemented structured approaches to managing risk andcontinue to apply robust internal controls.

Performance Indicators

The core business of Trinity House is; "To deliver a reliable, efficient andcost effective AtoN service for the benefit and safety of all mariners". TheBoard measures its performance against this objective by the use ofdifferent indicators, which together show both the effectiveness and theeconomic cost of the service provided.

Availability of Differential Global Positioning System(DGPS)

Assuming overlapping coverage, the GLA DGPS Service availability wasequal to or better than 99.9% in all areas for the year 2009/2010. IALArecommends presentation of DGPS Service availability taken over a twoyear period. Again assuming overlapping coverage, the GLA DGPS Serviceavailability was equal to or better than 99.93% in all areas for the two yearperiod 2008/2010 . The availability of the GLA DGPS service is therefore99.93% and within the target availability criteria of 99.8%.

Aids to Navigation (AtoN) Availability

Availability of AtoN is the prime factor in any measurement to demonstratecompliance with our statutory responsibilities. The standards against whichwe measure are those recommended as the minima by IALA. The figuresshown below reproduced in accordance with those standards, show threeyear rolling averages under the various categories of aids and against theminimum availability required for each category. It can be seen that in allthree categories our service has exceeded those minima in all yearscovered by the review. We consider this to be a major achievement andindeed a significant contribution towards the ongoing safety of all mariners.

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Trinity House Lighthouse ServiceTrinity House Lighthouse Service

Aids to Navigation Availability - Three year rolling averages for financial years

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AtoN Type

LightsRaconsLightsFog SignalsLights

Category

11233

IALA Min

99.8%99.8%99.0%97.0%97.0%

2005/2006

99.8399.9599.8699.9099.80

2006/2007

99.8399.9599.8999.9199.81

2007/2008

99.8799.9099.9299.8799.81

2008/2009

99.9399.9199.9599.9099.80

2009/2010

99.9599.9099.9599.8699.78

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Running Costs

Set out below is an analysis of our operating costs over the last 10 years showing the trend of costs both in cash terms and on the basis of constant prices, havingtaken account of inflation. Running costs have fallen in constant price terms from £19,537k in 2000/01 to £17,145k in 2009/10 a reduction of 12.2%.

Operating Costs in Cash and Constant PricesOperating Costs in Cash and Constant Prices

15

Operating CostsVariance %

Operating Costs(Constant Prices)

Variance %Average RPI

2000/01

19,5375.1%

19,537

-166.4

2006/07

21,219-0.6%18,285

-3.1%193.1

2005/06

21,341-5.4%18,869

-8.3%188.2

2004/05

22,5682.6%

20,577

-0.2%182.5

2003/04

22,0027.7%

20,626

5.5%177.5

2002/03

20,4230.3%

19,542

-1.2%173.9

2001/02

20,3654.2%

19,782

1.3%171.3

2007/08

21,014-1.0%16,763

-8.3%208.6

2009/10

22,232-5.8%17,145

-6.2%215.8

2008/09

23,60412.3%18,285

9.1%214.8

Light Dues

Following a consultation exercise in early 2009 light dues were increased on 1st July 2009 from 35p per Net Registered Tonnage (NRT) to 39p per NRT with anincreased voyage cap from 7 per year to 9 on a rolling month basis. The rate was further increased from 1st April 2010 to 41p per NRT and the tonnage cap to40,000 NRT (from 35,000 NRT). The increase on 1st July 2009 was the first increase since 1st April 1993, RPI having increased over that period by 52%.

16

ResourcesResources

Staff

The most important resource that Trinity House has at its disposal ispeople. There is a comprehensive staff Training Plan that aims to give staffthe skills and knowledge required to perform efficiently. Staff areencouraged to develop through the performance review and developmentsystem. In addition, skills gaps are identified through a careful strategicanalysis and organization-wide development initiatives introduced as aresult. For example, Trinity House has invested in leadership developmentand team working over the last three years following a needs analysisexercise.

The structure of the organisation is based around three main directorates:Operations, Finance & Support Services and Navigation. There is also asmall Secretariat supporting the Executive Chairman. Trinity House isresponsible for two Inter-GLA Functions: Research & RadioNavigation andLight Dues collection. The budgeted distribution of staff numbers is shownin the table below.

OperationsFinance & Support ServicesNavigationSecretariatTotal Trinity House

Inter GLA Research & Radio NavigationLight Dues

Total

Research and Development is undertaken on behalf of the three GLAs bythe Research and RadioNavigation department based at Trinity House. Thisdepartment carries out work assessing and tracking advances in technologyand market testing new products which have the possibility of providingmore efficient and cost effective methods of providing Lighthouse Servicerequirements. It also participates in international forums such as IALA.Trinity House is also responsible for the collection of Light Dues on behalfof the three GLAs. This is achieved using an internet based collectionsystem, developed by Trinity House. Light dues collectors in each port, whoare all members of the Institute of Chartered Shipbrokers, use the systemto collect light dues from ships entering UK ports.

Sickness Absence

Sickness absence during the last two years was:

Total number of days lostdue to sickness

Average number of days lostper employee

Equal Opportunities

Trinity House is an equal opportunity employer. All key HR processes suchas appraisal, disciplinary or staff selection are designed to ensure thatdiversity issues in terms of gender, age, race, disability, sexual orientationor religion are fully considered.

17

2009/10

212488

16284

145

303

2008/09

212488

16284

145

303

2009/2010

2044

6.49

2008/2009

2064

6.50

Disabled Employees

The policy of the Board towards the employment of disabled people is thata disability is no bar to recruitment or advancement. The nature of theduties at lighthouses imposes some limitations on the employment ofdisabled staff. A Genuine Occupational Qualification covers these posts.

Employee Involvement

The provision of information to, and in consultation with, employees iseffected using a variety of communication mechanisms including jointcommittees covering all staff groups. Employees are informed of mattersof concern to them; they are consulted frequently and regularly so thataccount may be taken of their interests. Directors make presentations toall staff on important matters. During 2009/10, Directors presented theresults of the W.S. Atkins review of the GLAs to all staff via a series ofroadshows. In addition, Trinity House introduced Staff Surveys 3 years ago.The results and emerging action points are frequently discussed at theemployee forum meetings so that staff have a clear understanding of andinput to how Trinity house is continually developing the workingenvironment. A follow up staff survey later in 2010 will provide morevaluable benchmarking data.

Physical Assets

In addition to staff, Trinity House has a number of physical assets, whichare essential to providing its service. These are detailed in note 24 to theaccounts. The mariner is becoming increasingly more reliant on globalnavigation satellite systems (GNSS) for position fixing. If the Loran Systemin Europe can be upgraded to eLoran and adopted as the terrestrial radionavigation service as backup to GNSS for safety of life at sea (SOLAS)Convention vessels, then the number of physical assets required for safenavigation is likely to reduce.

Branding

We have continued to develop the Trinity House brand to ensure that bothbusiness and the public understand and appreciate who Trinity House isand what we do. The simplification of the brand in 2005 has facilitated an

easier understanding by all and enabled it to be displayed in all suitablelocations. The brand is now exhibited on all Trinity House vessels,lighthouses and on our website.

Licences, Patents and Trademarks

Trinity House did not hold any registered patents or trademarks in 2009/10.The Service did not exploit any of its intellectual property rights, includingcopyright, commercially during the year. Trinity House grants licences toa number of third parties to open some of its Lighthouses to the public,from which it derives an income based on a percentage of revenue fromticket sales. Such arrangements are in place at Alderney, Anvil Point,Flamborough Head, Lizard, Longstone, Nash Point, Portland Bill, StCatherines, South Stack, Southwold and Start Point Lighthouses.

Environment

Trinity House is totally committed to the protection of a sustainableenvironment and is fully attuned to the Government's initiatives for a moreproactive approach to this matter. Trinity House is continually reviewingall environmental issues affecting the coastline in which Trinity Houseoperates. Trinity House has placed high on the agenda the potential useof renewable energy sources, such as solar power, and continues toresearch other sources, such as wave, wind and tidal flow. As part of thecommitment to this important issue, environmental objectives are includedin operational plans. Trinity House has gained accreditation to theinternationally recognised Environmental Standard ISO 14001 in 2000 andachieved re-certification in 2003, 2006 and 2009. Trinity House producesan environmental plan containing key environmental targets andobjectives, including the reduction in our carbon footprint.

18

Risks and uncertaintiesRisks and uncertainties

Trinity House's approach to risk takes account of its unique ring-fencedfunding regime and the limited resources therefore available to financeloss. Its overall risk management strategy, which aims to ensure effectiveinternal control, is:

• To identify significant risks against key organisational aims andobjectives and to assign ownership of those risks in a schedule ofsignificant business risks.

• To evaluate the significance of the risks in terms of probability andimpact using recognised standards.

• To respond to those risks through risk management controls.• To review and report to the Board and Audit Committee regularly onthose risks.• To embed risk management as an intrinsic part of its organisationalprocesses by adopting a structured, hierarchical approach to riskmanagement.• The Statement on Internal Control (page 26) emphasises the

importance that Trinity House attaches to risk management and theregular review of risks.

RelationshipsRelationships

The marine community is consulted formally each year at the Trinity HouseUsers Consultative Committee (THUCC). This is organised to inform theplans that are developed to aid the navigation of mariners. It also providesusers with the opportunity to raise any relevant issues. Trinity House isalso influential in relation to international marine navigation with its closelinks to IALA. Strong links have been formed through the radio andresearch group with international marine authorities particularly in relationto the development of e-Loran and radio navigation services worldwide.Trinity House has strong links with the other GLAs. There is a well-established inter-GLA consultation framework. At the top level the ChiefExecutives and Chairmen will meet at least twice per annum at the JointChairmans Group (JCG). From April 2010 this will become the JointStrategic Board. Senior Managers and Directors form the GLAs Inter-GLACommittees (IGCs), which are based around professional specialisms suchas Finance and Engineering. There is an enduring relationship amongst the

Marine Departments where a Memorandum of Understanding for Inter-GLAShip Support ensures adequate coverage for response to wrecks andcasualties around all coasts.

Relationships with the DfT and ship-owners are managed through formaland informal meetings and a joint DfT/GLA Framework Document. Theformal meetings include an annual "Bi-Lateral" meeting between TrinityHouse, DfT and Ship Owners through the Lights Advisory CommitteeChairman, representatives to debate the Trinity House Corporate Plan andan annual Lights Finance Committee (LFC) with all three GLAs, DfT andship owners representatives which discusses all of the GLAs’ CorporatePlans.

Trinity House is member of the key national committees underpinningmaritime safety. At the Maritime and Coastguard Agency (MCA) these arethe UK Safety of Navigation Committee (UKSON), the Port Marine SafetySteering Group (PMSG) Marine Safety Information Committee (MSI), UKCommunications Committee, UKCOM plus other smaller groups. They arealso founder members of the Nautical Offshore Renewable Energy LiaisonCommittee (NOREL) which leads on all maritime safety issues in theoffshore field.

Apart from these set piece meetings DfT officials and ship owners haveregular contact with Trinity House. Their representatives are involved inlarge scale projects, such as the building of new ships, from the beginningof each project.

Financial PositionFinancial Position

Source of Finance

Trinity House is financed by advances made by the DfT from the GLF whoseprincipal income is from Light Dues levied on shipping using ports in theUnited Kingdom and the Republic of Ireland. These advances, based onthe annual cash requirements of Trinity House, finance both the revenueand capital expenditure and are credited in the Income and ExpenditureAccount in the Accounts. In addition, Trinity House has sundry receipts inthe form of buoy rentals, property rents, contractual services, a grant,European Union funding and the proceeds from the sale of assets

19

Operating Results

The operating results for the year are set out in the Net ExpenditureAccount and show a surplus of £9,257k for 2009/10 (£8,050k 2008/09).Net expenditure deficit after interest of £2,080k was transferred to theGeneral Reserve (2008/09 £5,444k).

For 2009/10 Trinity House’s performance against the cash limits set by DfTcan be summarised as follows:

Running costsExpenditure on behalfof all GLAsOther cost i.e. Pensions& Ships LeaseCapital expenditureWreck removalOther costs (on behalf of DfT)Sombrero (on behalf of DfT)

Total

Actuals vs. Budget Analysis

Overall, there is a budget underspend of £4,168m (10%). Running costsare underspent by 5% which is mainly attributable to only having 90% ofour budget sanctioned for the first three months of the financial year. Thedelay was caused by the uncertainty surrounding the setting of the LightDues rate.

Cash drawdowns, Cash flow and Liquidity

The cash drawdown was below budget for the reasons provided in theActual v Budget commentary above, and accruals for 2009/10 do not draw

cash until 2010/11. Funds not drawn down remain in the GLF. Funds areonly drawn down based on the profile of cash required for the followingweek, thus liquidity is all handled within the GLF and not within the TrinityHouse accounts.

Main Financial Events

Light Dues were increased on 1st July 2009 for the first time since 1st April1993, see page 18 for more details.

The DfT only sanctioned 90% of the budget during the first three monthsof the year resulting in delays in starting both revenue and capital projects,causing underspends in both of these areas.

Expenditure on Tangible Non-Current Assets

During the year to 31 March 2010 expenditure on non-current assets was:

Work in ProgressLandBuildingsTenders & CraftLightvesselsBuoys & BeaconsPlant & MachineryComputer Equipment

Total

20

ActualExpenditure

£000’s

22,7072,605

8,682

3,893-

3313

38,221

CashLimits£000’s

23,4902,948

9,400

4,2621,626

2933

42,022

Variance£000’s

(783)(343)

(718)

(369)(1,626)

38-

(3,801)

2009/10£000’s

382-

1,707561145461398224

3,878

2008/09£000’s

1,619-

862422226353637127

4,246

The Accounts Direction provides that non-current assets shall be stated athistoric cost less depreciation. Trinity House has obtained independentvaluations of the various depot buildings by Mr R E Weston BSc (Est Man.)FRICS on behalf of Whydrow Chartered Surveyors as at 31 March 2010.The valuation of the Penzance depot was carried by Mr S A Sly BSc (Hons)MRICS on behalf of Charerwood Ltd in accordance the Practice Statementsand Guidance Notes set out in RICS Appraisal and Valuation Standards 6thEdition January 2008 (as amended), published by the Royal Institute ofChartered Surveyors. Certain sites are deemed obsolete for operationaluse, and are therefore surplus to requirement, and have been revalued atopen market value. Details are as follows;

Old HarwichPenzance

Trinity House London is owned by the Corporation, and is not an asset ofthe GLF.

Going Concern

The statement of financial position at 31 March 2010 shows net liabilitiesof £118.936m. This reflects the inclusion of pension liabilities falling due infuture years that may only be met by advances from the GLF. The Secretaryof State issued a letter of comfort in 2001 to the effect that in the unlikelyevent of insufficient money being available from the GLF to pay pensionliabilities the Department would request funds from Parliament to makethe necessary payments. This letter is shown in Appendix 1.

Advances for 2010/11, taking into account the amounts required to meetthe Board's liabilities falling due in that year, have already been included inthe GLF forecasts for that year. DfT have officially sanctioned the 2010/11budget in a letter dated 2nd March 2010. It has accordingly beenconsidered appropriate to adopt the going concern basis for the preparationof these financial statements.

Accounting Policies

The Accounting Policies are reviewed each year in accordance with IAS8 -Accounting Policies, Changes in Accounting Estimates and Errors. Thisreview is carried out at the tri-GLA Accounts Format Working Group eachyear and at internal meetings, chaired by the Director of Finance andSupport Services. No Accounting Policies have altered since last year.

Payment of Creditors Policy

Trinity House seeks to adopt the conventions within the British StandardsBS 7890, "Methods for achieving good payment performance in commercialtransactions" which are reflected within the Trinity House's internalpractices. Payment of all creditors' accounts are arranged by the datestipulated within the contract or other agreed terms of credit. Exceptionsto this are as follows:

1. Payment within a shorter timescale where a discount may be available;2. Where there is a genuine dispute in respect of the invoice concerned.In all cases the suppliers are immediately informed of the details of thequery and that the payment will be withheld pending resolution.

21

Market Valueas at 31/3/10

£

630,000475,000

Net Book Valueas at 31/3/10

£

630,000475,000

Difference£

-

-

Suppliers are informed of our policy via a supplementary notice withincontracts and are asked to provide any comments on this issue to theDirector of Finance & Support Services. The average credit taken fromTrade Payables during the year was 17 days.

Events after the Year End

Following failure of factory acceptance testing, the GLAs have given noticeto AB Pharos Marine Limited that the contract for the supply of AIS AtoNUnits has been terminated. Under the contract the GLAs are entitled toreturn all Units within their possession to Pharos Marine. The GLAs havesubmitted a breakdown of consequential losses as a result of breach ofcontract by Pharos Marine and negotiations between the GLAs and PharosMarine are ongoing to reach an agreeable conclusion. The current valueof the Trinity House share of work in progress in respect of this contract asat the 31 March 2010 is £204,739. No adjustments have been made withinthe 31 March 2010 Accounts in respect of this event.

Audit

The accounting records of Trinity House are examined by the UKComptroller and Auditor General prior to consolidation in the Accounts ofthe GLF. The GLF Accounts are formally certified by the UK Comptrollerand Auditor General under the terms of Section 211 of the MerchantShipping Act 1995. There is no provision for a separate audit certificate tobe appended to these Accounts.

So far as the Executive Chairman acting in the role of the AccountingOfficer is aware, there is no relevant audit information of which TrinityHouse auditors are unaware. The Accounting Officer has taken all thesteps that he ought to have taken to make himself aware of the relevantaudit information and to establish that the Trinity House auditors are awareof that information.

Executive Chairman

Sir Jeremy de Halpert

22

Remuneration ReportRemuneration Report

Remuneration Strategy

Trinity House operates a remuneration strategy based on spot rate salariesinformed by job evaluation and market testing. Trinity House uses the Hayjob evaluation methodology which provides a sound, tried and testedapproach to job evaluation that ensures consistency and fairness acrossjob groups and directorates. It also enables us to benchmark with externalcomparators to ensure our salary rates remain competitive. We aim to paywithin the mid to upper quartile of the market in order to attract and retainquality staff in often highly specialist, technical roles.

Competency frameworks have been developed for all administrativepositions and the lower level technical posts. These frameworks allowemployees to develop their skills and progress internally, thus facilitatingsuccession planning. Reward based purely on length of service is avoided,as progression within the competency frameworks is dependent upon theachievement of various qualifications and skill levels. Trinity House markettests all positions against local and national pay markets as appropriateand undertakes an equal pay audit throughout the service every two yearsto ensure our pay rates remain competitive.

Trinity House operates a performance related pay system to incentivisestaff. The current system is designed to increase staff awareness andunderstanding of corporate level objectives and ensure that personalobjectives link to departmental and strategic objectives. An annual staffbonus is linked to the appraisal cycle. Every individual's performance andachievements are assessed in relation to objectives, behavioural andtechnical competencies. Bonus allocation is determined by individualperformance and organisational level success against the year's corporatestrategic objectives.

This approach to pay policy ensures TH complies with age discriminationpolicy and rewards performance and competence as opposed to longservice.

The creation of long-term effectiveness depends on the talents,contribution and commitment of the Executive Chairman and Directors;

their success depends on the Board's ability to attract and retain staff of ahigh quality. It is essential that the remuneration structure should becompetitive with those of comparable organisations. The remunerationstrategy seeks to balance the fixed cost element with variable reward,providing the opportunity for variable remuneration in the form of theperformance-based bonuses. The remuneration of the Directors and theirpension entitlements are shown below:

Remuneration of Directors

J M de HalpertJ S WedgeD C Glass*R Barker**J S ScorerM J GladwynD A ColtmanN R Pryke***F C Bourne

The emoluments of Board Members (excluding the Executive Chairman)comprise:

FeesSalariesPerformance PayBenefits in kind

Benefits represent travel and subsistence expenses (including tax),relocation expenses, gym membership and reimbursement of subscriptionsto professional bodies.

23

2009/2010Salary inc

PerformancePay £000’s

115-120105-110

10-1580-85

100-10510-1515-2020-2510-15

2008/2009Salary inc

PerformancePay £000’s

115-12095-10085-90

-95-100

5-105-10

15-205-10

2009/2010Benefits

£

-2,229

-101153173

4,942820284

2008/2009Benefits

£

-2,824

258-

14870

3,160935225

2009/2010£000’s

50364352

2008/2009£000’s

45248373

* Retired 21 May 2009. Full year equivalent salary including performancepay £75k - £80k.

** Director with effect from 11 May 2009. Full year equivalent salaryincluding performance pay £80k - £85k.

*** N R Pryke receives remuneration as a Non Executive Director and anExaminer, his salary also includes payments of £6,369.20 made by TrinityHouse on behalf of The Corporation of Trinity House, which weresubsequently re-charged.

The Executive Chairman's only emolument is a salary of £119,637(2008/2009- £116,169) which included a performance related element of£16,750 (2008/2009 - £15,484).

Non-Executive Directors are employed on fixed term contracts for a periodof 3 or 4 years, the term may be extended where appropriate.

Non -Executive Director Contract Start Expiry DateCaptain N R Pryke 25 January 2005 31 January 2011(Contract renewed in 2008 for further 3 years)M Gladwyn* 1 September 2007 31 August 2013D A Coltman 23 October 2001 22 October 2010(Contract renewed in 2007 for further 3 years)F C Bourne* 20 July 2006 19 July 2012

* Reappointed after year end.

Pensions

All Executive Board Members of Trinity House (including the ExecutiveChairman) are ordinary members of the Trinity House Lighthouse ServicePension scheme. They are entitled to compensation for permanent loss ofoffice under the terms of the Trinity House Lighthouse Servicecompensation scheme which operates by analogy to the Civil Servicecompensation scheme. Their contracts are ongoing until the age of 65,subject to satisfactory performance and require a twelve month writtennotice period.

24

a £000’sRealIncreasein pension

b £000’sRealIncreasein lump sum

c £000’sAccruedPension

d £000’sAccruedLump Sum

e £000’sCashEquivalentTransfer Value at31 March 2009

f £000’sCashEquivalentTransfer Value at31 March 2010

g £000’sReal increasein CashEquivalentTransfer Value

J.deHalpert

0 - 2.5

-

15-20

-

257

299

39

R. Barker

0 - 2.5

-

5-10

-

61

95

29

S JScorer

0 - 2.5

-

0-5

-

47

84

30

J.Wedge

0 - 2.5

5-7.5

20-25

70-75

404

468

36

Rows e and f of the above table show the Cash Equivalent Transfer Value(CETV) of the director's pension benefits accrued at the beginning and endof the reporting period. A CETV is the actuarially assessed capitalised valueof the pension scheme benefits accrued by a member at a particular pointin time. The benefits valued are the member's accrued benefits and anycontingent spouse's pension payable from the scheme. It is a paymentmade by a pension scheme or arrangement to secure pension benefits inanother pension scheme or arrangement when the member leaves ascheme and chooses to transfer the pension benefits they have accrued intheir former scheme. The pension figures shown relate to the benefits thatthe individual has accrued as a consequence of their total membership ofthe Trinity House pension scheme, not just their service in a senior capacityto which the disclosure applies.

The figures include the value of any pension benefit in another scheme orarrangement which the individual has transferred to the Trinity HouseLighthouse Service pension scheme. They also include any additionalpension benefit accrued to the member as a result of their purchasingadditional pension benefits at their own cost. CETVs are calculated withinthe guidelines and framework prescribed by the Institute and Faculty ofActuaries and do not take account of any actual or potential reduction tobenefits resulting from Lifetime Allowance Tax which may be due whenpension benefits are drawn.

Row g reflects the real increase in the value of the CETV. It takes accountof the increase in accrued pension due to inflation and contributions paidby the director and is calculated using common market valuation factorsfor the start and end of the period.

Note 19 contains further information on pensions for all staff.

Statement of Accounting Officer’sStatement of Accounting Officer’sresponsibilitiesresponsibilities

Under section 218(1) of the Merchant Shipping Act 1995 the Secretary ofState for Transport, with the consent of HM Treasury, has directed TrinityHouse to prepare for each financial year a statement of accounts in theform and on the basis set out in the Accounts Direction. The accounts areprepared on an accruals basis and must give a true and fair view of thestate of affairs of Trinity House and of income and expenditure, and cashflows for the financial year.

In preparing the accounts, the Accounting Officer is required to complywith the requirements of the Government Financial Reporting Manual andin particular to:

• observe the Accounts Direction issued by the Secretary of State forTransport including the relevant accounting and disclosurerequirements, and apply suitable accounting policies on a consistentbasis;• make judgements and estimates on a reasonable basis;• state whether applicable accounting standards as set out in the

Government Financial Reporting Manual have been followed, anddisclose and explain any material departures in the accounts; and

• prepare the accounts on a going concern basis.

The Accounting Officer of the Department for Transport has designatedthe Executive Chairman as Accounting Officer of Trinity House. Theresponsibilities of an Accounting Officer, including responsibility for thepropriety and regularity of the funds allocated to Trinity House in itscapacity as a General Lighthouse Authority under the control of theAccounting Officer, for keeping proper records and for safeguarding theassets of Trinity House, in its capacity as a General Lighthouse Authorityare set out in the Framework Document between the Department forTransport and the General Lighthouse Authorities and HM Treasury’sManaging Public Money.

25

Executive Chairman's StatementExecutive Chairman's Statementon Internal Controlon Internal Control

Scope of Responsibility

Acting in the role of Accounting Officer, I have responsibility for maintaininga sound system of internal control that supports the achievement of TrinityHouse’s policies, aims and objectives, whilst safeguarding the GLA fundsand assets for which I am personally responsible, in accordance with theresponsibilities assigned to me in Managing Public Money. Theseresponsibilities were formally set out in a letter dated 4th February 2010to me from Robert Devereux, Principal Accounting Officer of theDepartment for Transport.

The details of the operating arrangements the DfT has agreed with TrinityHouse are contained in the "Framework Document" (incorporating theFinancial Memorandum and Management Statement) dated 1 August 2008.

In practice the DfT work closely with Trinity House to manage risk. Thereis a regular flow of reporting information from Trinity House to the DfT,including management accounts, Board reports and business cases. TheDfT are involved at an early stage in key decisions. They are invited toparticipate in larger projects e.g. DfT were represented on the Fleet ReviewSteering Group in 2009.

The Purpose of the System of Internal Control

The System of Internal Control is designed to manage risk to a reasonablelevel rather than to eliminate all risk of failure to achieve policies, aims andobjectives; it can therefore only provide reasonable and not absoluteassurance of effectiveness. The system of internal control is based on anongoing process designed to identify and prioritise the risks to theachievement of Trinity House policies, aims and objectives, to evaluate thelikelihood of those risks being realised and the impact should they berealised, and to manage them efficiently, effectively and economically. Itaccords with Treasury guidance. The system of internal control has beenin place in Trinity House for the year ended 31 March 2010 and up to thedate of approval of the Annual Report and Accounts.

Capacity to Handle Risk

Trinity House has in the past year regularly updated its Schedule ofsignificant business risks. This is in line with the ICAEW publication"Implementing Turnbull: A Boardroom Briefing". The Trinity House RiskSchedule divides the significant risks into four main categories:

• Strategic Risks• Financial Risks• Operational Risks• Hazard Risks

The Schedule cross-references the risks identified to existing organisationalcontrols and policies e.g. Business Continuity & Emergency Responsepolicy.

The Board first approved the revised Risk Schedule in July 2003. A Directoris responsible for managing each risk. The process of embedding the riskmanagement approach into the organisation has included:

• Development and regular review of Directorate/Departmental riskregisters with the involvement of managers and staff.

• Internal Audit deriving their Audit Plan from the Risk Schedule andregisters.• Seminars with National Audit Office/Internal Audit and Trinity Housemanagers to discuss risk management.• Workshops with other staff to reinforce awareness of risk

management and fraud.• Publication of the Risk Schedule and Directorate/Departmental riskregisters to all staff.• Putting risk management in job descriptions and as part of the

induction process.• Including risk registers on team meeting agendas.

Trinity House also leads the GLAs’ triennial risk management review, themost recent of which was completed in October 2009. This contains therisk management policy and strategy for the GLAs. It was approved bythe Trinity House Board and the Lights Finance Committee in November2009. This review includes the analysis of all main risks facing the GLAs

26

supported by third party assurance from a firm of independent riskconsultants and draws on best practice guidance from the UK RiskManagement Standard, prepared by the Institute of Risk Management,Association of Insurance and Risk Managers and the National Forum forRisk Management in the Public Sector. A further triennial review will becarried out in 2012.

The Risk and Control Framework

The Board and Audit Committee review the Risk Schedule every sixmonths. Prior to submission to these meetings each accountable Directorundertakes a review of the risks that they are responsible for managing.This includes the information risks. The review of risks includes anevaluation of the probability of the risk event occurring and the impact thatthe occurrence would have both before and after controls have been putin place. Directors will determine whether the risks have altered from thevery high, high, medium, low, or very low probability and impact categoriesthat they have previously been allocated. They also consider whetheradditional controls should be applied to reduce the residual risk further.Management of risk is an ongoing feature of work at Trinity House. It isembedded into working practices through key polices and procedures suchas the:

• Utilisation of a robust project management methodology based onPRINCE 2;

• Project Risk Registers for key service projects; and• Information Risk Policy and associated security procedures.

Trinity House maintains an Information Asset Register, with each assetassigned an Information Asset Owner. The Information Asset Owners carryout an annual review of information security risks using the Cabinet Officeguidance. The outcome of this review is reported to the Board by theSenior Information Risk Owner (SIRO). The following work has beencarried out this year in relation to Information Security:

• Staff Awareness sessions on Information Security carried out acrossthe service, usually at Departmental Team Meetings. The CPNI DVDwas used as a prompt for discussions and Q&A;• Mandated use of encrypted USB storage devices;• Laptops encrypted with Full Disk encryption software;

• ISO270001 Gap Analysis conducted, with draft results reporting apositive position;

• The cycle of regular risk assessments, update of the InformationAsset Register and IAO Annual Assurance Reports has now bedded

in; and• Information Security is a standing agenda item on IT Department

Management and Team meetings.

External stakeholders are involved in managing risks through the joint usersconsultative groups; navigation user consultation procedures; bilateralmeetings with industry representatives and the Lights Finance Committee.These provide stakeholders with the opportunity to comment on theCorporate Plan, budget and AtoNs that Trinity House provides. Stakeholderscomment on the full range of risks including Strategic, Financial,Operational and Hazard Risks.

The key changes to the risk profile of Trinity House during the year ended31 March 2010 were:

• The increased risk of a change in Government policy in terms of theorganisation’s statutory undertaking as a General LighthouseAuthority as a result of the Marine Navigation Aids Bill and the DfT-led W.S. Atkins Review. This was mitigated as required by settingout the organisation’s track record of business efficiencies andhighlighting the costs and ineffectiveness of alternative models.• There was an increased risk to operational effectiveness caused bythe DfT’s decision to sanction only 90% of the budget at the start ofthe financial year.• The increased risk of a lack of resources following the cumulative

effects of the reduction in Light Dues in 2006. This risk subsequentlyeased with the Government’s decision to raise Light Dues, although

the risk of reductions in funding remains due to likely restrictions onpublic spending in the years ahead.• An increase in the risks associated with change management as a

result of the introduction of co-ordinated management of the GLAfleet and implementation of the recommendations from the DfT-led

Assessment of the Provision of Aids to Navigation in the UK andIreland. These risks are being mitigated by ensuring a structuredapproach to both initiatives through the newly formed tri-GLA Joint

Strategic Board.

27

• The increased risk of significant short-term staff absence due topandemic flu. This risk was mitigated by the preparation ofDepartmental contingency plans and has since eased due to theimpact of the H1N1 virus being less severe than originally anticipatedby Government health advisors.

Review of Effectiveness

Acting in the role of Accounting Officer, I have responsibility for reviewingthe effectiveness of the system of internal control. My review of theeffectiveness of the system of internal control is informed by the work ofthe internal auditors, Executive Directors and Senior Managers withinTrinity House who have responsibility for the development andmaintenance of the internal control framework, and comments made bythe external auditors in their management letter and other reports. I havebeen advised on the implications of the result of my review of theeffectiveness of the system of internal control by the Board and the AuditCommittee and a plan to address weaknesses and ensure continuousimprovement of the system is in place.

The key elements of the ongoing review of the system of internal controlare:

• The Trinity House Lighthouse Board which meets eight times a yearto decide policy, provide strategic direction and review progress. TheBoard receives Audit Committee minutes and reports covering areassuch as risk management. The Board also formally reviews its owneffectiveness and that of the Audit Committee on an annual basis.• An Executive Directors' meeting each month which leads to the

implementation of plans and reviews progress and performance. Riskmanagement is formally reviewed by Directors and Senior Managers

on a six-monthly basis but in practice is considered as part of thecontrol of all key projects and activities.• The Audit Committee which operates in line with the "Audit

Committee Handbook". The Chairman of the Audit Committeeregularly reports to the Board at each meeting.

• Internal Audit, who provide regular reports that give an independentopinion on the adequacy and effectiveness of the system of internal

control. The Head of Internal Audit produces an Annual Report,which gives his opinion on the effectiveness of internal control.

• External Audit who independently audit Trinity House accounts andsummarise their findings in the management letter.• The monthly analysis of the management accounts and work plansby the Executive Directors and Senior Managers.

The Head of Internal Audit in his 2009/10 annual report, stated:

”In my opinion THLS’s arrangements for risk management, governance andcontrol processes have been adequate and effective in 2009/10.

This overall opinion is supported by my view in each of the following areas:

GovernanceTHLS’s corporate governance processes and arrangements continue todemonstrate a strong commitment to complying with best public sectorpractice and were found to be working effectively.

Risk ManagementThe organisations risk management arrangements are well established andwere found to be working effectively.

Internal ControlThe organisation’s internal control processes in the areas reviewed duringthe year were found to be working effectively with some minor controlweaknesses and areas for improvement identified.”

There have been no significant internal control problems in the year ended31 March 2010.

Therefore I can report that the System of Internal Control within TrinityHouse remains robust and effective, and complies with the best practiceprinciples set out in HM Treasury’s July 2005 Code of Good Practice forCorporate Governance in Central Government Departments as far as isappropriate.

Sir Jeremy de Halpert, Executive ChairmanDate:

28

29

Net Expenditure AccountNet Expenditure Accountfor the year ended 31 March 2010for the year ended 31 March 2010

ExpenditureStaff costsDepreciationAmortisationLoss on revaluationPension costOther expenditure

IncomeAdvances from the General Lighthouse FundOther incomeIncome on behalf of all GLAsGrant income

Net Expenditure

Cost of capitalInterest payable/receivableNet Expenditure after cost of capital charge and interest

Net Expenditure on behalf of DfTSombreroOther costsTotal

Net Expenditure on behalf of all General Lighthouse AuthoritiesStaff costsOther costsTotalReversal of cost of capital

Net Expenditure after interest

Note

45a5a5a

5a

6a6b1(l)

1(k), 5a7

5b5b

5c5c

2009/10£000's

11,0013,902

348195

1,96011,76229,168

36,0501,723

326326

38,425

(9,257)

(3,757)8,398

(4,616)

3331334

8551,7502,6053,757

2,080

2008/09£000's

11,2383,631

316-

2,65112,54930,385

36,5501,414

39774

38,435

(8,050)

(3,468)9,268

(2,250)

2360362

7813,0833,8643,468

5,444

30

Statement of Financial PositionStatement of Financial Positionas at 31 March 2010as at 31 March 2010

Non-Current AssetsProperty Plant & EquipmentIntangible AssetsTrade and Other ReceivablesTotal Non-Current Assets

Current AssetsInventoriesTrade and other receivablesOther current assetsFinancial assetsCash and cash equivalentsTotal Current Assets

Total Assets

Current LiabilitiesTrade and other payablesOther liabilitiesProvisions: current elementTotal Current Liabilities

Non Current Assets plus / less Net Current Assets / Liabilities

Non-Current LiabilitiesProvisionsPension liabilitiesOther payablesFinancial liabilitiesTotal Non-Current Liabilities

Assets less Liabilities

ReservesGeneral ReserveRevaluation ReserveCapital Grant Reserve

Total

Note

8912

1112

13

14

15

151914

2009/10£000's

51,696339100

52,135

2,2851,386

--

133,684

55,819

5,404-

6176,021

49,798

211151,62716,896

-168,734

(118,936)

(122,781)1,3002,545

(118,936)

2007/08£000's

52,856851300

54,007

1,7981,363

--

8684,029

58,036

4,026-

6534,679

53,357

640136,10419,160

-155,904

(102,547)

(107,478)2,6162,315

(102,547)

2008/09£000's

51,861650100

52,611

1,9931,278

--

1003,371

55,982

5,469-

4305,899

50,083

486127,48918,028

-146,003

(95,920)

(99,486)1,1102,456

(95,920)

31

The financial statements on pages 31 and 32 were approved by the Lighthouse Board on 16 September 2010,and signed on its behalf by:

The notes on pages 36 - 68 form part of these Accounts

32

Statement of Cash FlowsStatement of Cash Flowsfor the year 31 March 2010for the year 31 March 2010

Cash flows from operating activitiesNet deficit after interestPension benefits outflowCurrent service costDepreciationAmortisationLoss on revaluation of land and buildingsLoss/(Profit) on disposal of property, plant and equipmentLoss on disposal of intangibles(Increase)/Decrease in trade and other receivables(Increase) in inventories(Decrease)/Increase in trade payablesUse of provisions

Net cash outflow from operating activities

Cash flow from investing activitiesPurchase of property, plant and equipmentPurchase of intangible assetsProceeds of disposal of property, plant and equipmentProceeds of disposal of intangiblesRepayments from other bodies

Net cash outflow from investing activities

Cash flows from financing activitiesMovement in Government Grant ReservePension financing costInflow from new finance leaseCapital element of payments in respect of finance leases

Net cash flow from financing activities

Net cash flow from all activities

Net decrease in cash and cash equivalents in the periodCash and cash equivalents at the beginning of the periodCash and cash equivalents at the end of the period

2009/10£000's

(2,080)(6,512)

1,8793,902

3481954611

(108)(292)(255)(88)

(2,954)

(3,738)(15)

57--

(3,696)

897,556

0(1,082)

6,563

(87)

(87)10013

2008/09£000's

(5,444)(6,434)

2,6513,631

316-

(159)1585

(195)626

(316)

(5,224)

(3,644)(125)

539-

200

(3,030)

1418,323

6(984)

7,486

(768)

(768)868100

33

Statement of Changes in ReservesStatement of Changes in Reservesfor the year 31 March 2010for the year 31 March 2010

Balance at 1 April 2008

Changes in equity for 2008-2009Net gain/(loss) on revaluation of property, plant and equipmentRelease of reserves to the Net Expenditure AccountRetained Surplus/(Deficit)Total recognised Income and expense for 2008-2009

Balance at 31 March 2009

Changes in equity for 2009-2010Net gain/(loss) on revaluation of property, plant and equipmentRelease of reserves to the Net Expenditure AccountRetained Surplus/(Deficit)Total recognised Income and expense for 2009/2010

GeneralReserve£000’s

(107,478)

28113,155(5,444)7,992

(99,486)

-(21,215)(2,080)

(23,295)

(122,781)

RevaluationReserve£000’s

2,616

-(1,506)

-(1,506)

1,110

190--

190

1,300

Capital GrantReserve£000’s

2,315

-141

-141

2,456

-89-

89

2,545

TotalReserves£000’s

(102,547)

28111,790(5,444)6,627

(95,920)

190(21,126)(2,080)

(23,016)

(118,936)

1. Statement of Accounting Policies

These accounts have been prepared in accordance with the 2009/10government Financial Reporting Manual (FReM) issued by HM Treasury.The accounting policies contained in the FReM apply International FinancialReporting Standards (IFRS) as adapted or interpreted for the public sectorcontext.

Where the FReM permits a choice of accounting policy, the accountingpolicy which has been judged to be the most appropriate to the particularcircumstances of the GLA for the purpose of giving a true and fair view hasbeen selected. The particular policies adopted by Trinity House aredescribed below. They have been applied consistently in dealing with itemsconsidered material in relation to the accounts.

In addition, these accounts have been prepared in accordance with theAccounts Direction issued by the Secretary of State for Transport on 10thMarch 2003.

a) Accounting Convention

These accounts have been prepared under the historical cost convention.

b) Going Concern

The Statement of Financial Position at 31 March 2010 discloses netliabilities of £118,936,000. This reflects the inclusion of pension liabilitiesfalling due in future years. The Secretary of State for Transport, with theagreement of the Treasury, issued a letter of comfort on December 2001(appendix 1). The letter states that in the unlikely event of insufficientmoney being available from the General Lighthouse Fund to pay pensionliabilities, the Department for Transport will request funds from Parliament

to make the necessary payments.

It has accordingly been considered appropriate to adopt a going concernbasis for the preparation of these financial statements.

c) Intangible Assets and Amortisation

Computer software has been capitalised and is amortised on a straight-linebasis over the estimated useful economic life of between 3 to 5 yearsdependant on the expected operating life of the asset as determined bythe TH IT Support Manager.

Intangible licences have been capitalised and are amortised over the lifeof the licence.

Intangible Assets are shown at cost less amortisation. Amortisation iscalculated on a monthly basis and is commenced in the month after originalpurchase or when the asset is brought into use and is continued up to theend of the month prior to disposal.

d) Non-Current Assets and Depreciation

No-Current Assets are shown at cost less depreciation. Depreciation iscalculated on a monthly basis and is commenced in the month after originalpurchase or when the asset is brought into use and is continued up to theend of the month prior to sale. Assets in the course of construction are notdepreciated.

Book values have been retained in accordance with the Accounts Direction,and revaluations have only been undertaken for assets that are surplus torequirements. Surplus assets have been restated in the accounts at openmarket value.

34

Notes to the AccountsNotes to the Accountsfor the year 31 March 2010for the year 31 March 2010

Depreciation is charged on a straight-line basis having regard to theestimated operating lives as follows:

e) Inventories

Inventories of consumable stores at depots and fuel stocks in tenders arevalued at weighted average cost.

f) Research and Development

The Board co-operates with the other Lighthouse Authorities through theResearch and Radio Navigation (R&RNav) Policy Committee for majorresearch and development. Other direct expenditure on trial projects of aminor nature is charged to revenue as it is incurred. Work carried out byTrinity House on behalf of the General Lighthouse Authorities is notincluded in the net expenditure of Trinity House but charged to the Incomeand Expenditure Account as expenditure on behalf of all GLAs.

g) Leasing Commitments

Assets obtained under finance leases are capitalised in the Statement ofFinancial Position and depreciated as if owned. The interest element of therental obligation is charged to the Net Expenditure Account over the periodof the lease and represents a constant proportion of the balance of capitalrepayments outstanding at the beginning of the year. The capital elementof the future lease payments is stated separately under Payables, bothwithin one year and over one year.

Expenditure incurred in respect of operating leases is charged to the NetExpenditure Account as incurred.

Rentals received under operating leases are credited to income.

h) Foreign Currency Transactions

All transactions in a foreign currency have been converted to Sterlingimmediately on receipt and are therefore translated at the exchange rateruling at the date of the transaction. Trinity House held no foreign currencyaccounts as at 31 March 2010.

35

CATEGORIES DEPRECIATION LIVES

Land and BuildingsLand Not DepreciatedLighthouses (Building Structure) 50 yearsLighthouse Improvements 25 yearsOther Buildings 50 yearsTenders and Ancillary CraftTenders 25 yearsTenders (Dry Dock and Repair) 2.5 years (30 months)Launches 15 yearsWorkboats 10 yearsLightvesselsLightvessel (Hulls) 50 yearsLightvessel (Hull Conversions) 15 yearsLightvessel (Dry Dock and Repair) 5 yearsBuoys and BeaconsSteel Buoys and Beacons 25 yearsPlastic Buoys 10 yearsPlant and MachineryLighthouses and Lightvessels 15 yearsAutomation equipment 15 yearsRacons & Radio Beacons 15 yearsDepots and Workshops 10 yearsOffice Equipment 10 yearsVehicles 5 yearsComputers - Major systems 5 yearsComputers - Other 3 yearsAssets leased under a Finance Lease 25 years being the expected

useful life. (The primary leaseperiod is less than this but asecondary period sufficient tocover the balance is available).

i) Taxation

The Fund is exempt from Corporation Tax under the provisions of theMerchant Shipping Act 1995. The Authority is liable to account for VAT oncharges rendered for its services and is able to reclaim VAT on all costsunder the provisions of the Value Added Tax Act 1983.

j) Transactions on behalf of other GeneralLighthouse Authorities

The General Lighthouse Authorities generally account for all aspects of theirresponsibilities as statutory authorities. However, as a result of closeco-operation, the GLAs agree that it is either more economic or practicalfor one GLA to be responsible and account for the costs of particular areasof work. The costs incurred by Trinity House on behalf of other GLAs (whichare shown separately on the Net Expenditure Account) are detailed at note5c. Income received by Trinity House on behalf of all GLAs is recognisedwhen invoiced and is detailed at note 6b.

k) Notional Credit on Net Liabilities

The Net Expenditure Account includes a notional credit on Net Liabilitiesat 3.5% of the average net liabilities during the year. This amount isreversed before reaching net expenditure for the year.

l) Government Grants

Government Grants received in respect of revenue expenditure are heldon the Statement of Financial Position as deferred income and released tothe Net Expenditure Account in the year the expenditure to which the grantwas awarded is incurred.

Government Grants received in respect of eligible expenditure capitalisedin the Statement of Financial Position have been included in a Capital Grantreserve. This reserve will be released to the Net Expenditure Account byinstalments over the depreciation life of the related assets. Information onspecific Government Grants is detailed at note 20.

m) Provisions

Trinity House makes provisions for liabilities and charges in accordancewith IAS 37 Provisions, Contingent Liabilities, and Contingent Assets where,at the Statement of Financial Position date, a legal constructive liability (i.e.a present obligation from a past event) exists, the transfer of economicbenefits is probable and a reasonable estimate can be made.

n) Financial Instruments

Financial instruments are contractual arrangements that give rise to afinancial asset of one entity and a financial liability or equity instrument ofanother entity. Financial assets are typically cash or rights to receive cashor equity instruments in another entity. Financial liabilities are typicallyobligations to transfer cash. A contractual right to exchange financial assetsor liabilities with other entities will also be a financial asset or liability,depending on whether the conditions are potentially favourable or adverseto the reporting entity.

Financial AssetsTrinity House classifies its financial assets as loans and receivables. Loansand receivables are non-derivative financial assets with fixed ordeterminable payments that are not quoted in an active market and whichare not classified as available-for sale. Such assets are initially recognisedat fair value. Where material, they are subsequently measured at amortisedcost using the effective interest method.

Financial LiabilitiesFinancial liabilities are recognised initially at fair value and are subsequentlymeasured at amortised cost. Financial liabilities are derecognised whenextinguished.

36

Embedded derivativesSome hybrid contracts contain both a derivative and a non-derivativecomponent. In such cases, the derivative component is termed anembedded derivative. Where the economic characteristics and risks of theembedded derivatives are not closely related to those of the host contract,and the host contract itself is not carried at fair value through profit or loss,the embedded derivative is split out and reported at fair value with gainsand losses being recognised in the Net Expenditure Account. TrinityHouse has carried out a review of its contracts and has determined that,as at 31 March 2010, no contracts contained embedded derivatives.

Determining fair valueFair value is defined as the amount for which an asset is settled or a liabilityextinguished, between knowledgeable parties, in an arms lengthtransaction. This is generally taken to be the transaction value, unless,where material, the fair value needs to reflect the time value of money, inwhich case the fair value would be calculated from discounted cashflows.

o) Income

In accordance with the Merchant Shipping Act TH are permitted to sellsurplus capacity. Income from these activities is recognised in the periodto which it relates. Income received in advance of provision of services inrespect of contracts is deferred to match the related expenditure.

37

2. First-time adoption of IFRS

3. Analysis of Net Expenditure by Segment

The Trinity House Board consider the provision of Aids to Navigation to be its one and only business segment.

38

Equity at 31 March 2008 under UK GAAPAdjustments for IAS 19

Equity at 1 April 2008 under IFRS

Net Expenditure for 2007-2008 under UK GAAPAdjustments for IAS 19Gain on sale of/disposal of fixed assets

Net Expenditure for 2007-2008 under IFRS

Equity at 31 March 2009 under UK GAAPAdjustments for IAS 19

Equity at 1 April 2009 under IFRS

Net Expenditure for 2008-2009 under UK GAAPAdjustments for IAS 19Gain on sale of/disposal of fixed assets

Net Expenditure for 2008-2009 under IFRS

GeneralFund£000’s

(107,361)(117)

(107,478)

GeneralFund£000’s

(99,308)(178)

(99,486)

RevaluationReserve£000’s

2,616

2,616

RevaluationReserve£000’s

1,110

1,110

Capital GrantReserve£000’s

2,315

2,315

£000’s6,881(117)1,165

7,929

Capital GrantReserve£000’s

2,456

2,456

£000’s7,967(61)144

8,050

4. Staff numbers and related costs

Staff costs comprise:

39

Wages and salariesSocial security costsOther pension costsRedundancy costs

Less recoveries in respect of outward secondmentsTotal net costs

Included in the above are:

Research and Development salariesLight Dues salariesStaff costs capitalised in fixed assets

Staff costs shown under expenditure of TH

2009/2010Total

£000’s11,161

880-

(6)12,035

-12,035

652203179

11,001

2009/2010Permanently

employed staff£000’s10,989

880-

(6)11,863

-11,863

652203179

10,829

2009/2010Others

£000’s172

---

172-

172

---

172

2008/2009Total

£000’s10,855

854-

38912,098

-12,098

58419779

11,238

Average number of persons employed

The average number of whole-time equivalent persons employedduring the year was as follows:

Directly employedOtherStaff engaged on capital projects

Total

2009/2010Total

304.68.06.4

319.0

2009/2010Permanent

Staff

304.6-

6.4

311.0

2009/2010Others

-8.0

-

8.0

2008/2009Total

312.26.72.8

321.7

5a. Other Expenditure

5.b Net Expenditure on behalf of DfT

40

Running costsRentals under operating leasesInterest chargesPFI service chargesResearch and Development expenditureNon-cash items:

DepreciationAmortisationLoss on revaluation of assets

Profit on disposal of assetLoss on disposal of property, plant and equipmentCost of Capital chargesProvision provided for in yearUnwinding of discount on provisions

Total

Note

7

1515

2009/2010£000’s

10,661818

8,404--

3,902348195

-56

(3,757)227

-

20,854

2008/2009£000’s

11,564818

9,304--

3,631316

-(144)

-(3,468)

311-

22,332

2008/2009£000’s

100126134

2

362

2009/2010£000’s

118135783

334

Use of DfT resources:Staff & accommodationAudit*Professional servicesSombrero

Total

* Audit fees are incurred on behalf of the GeneralLighthouse Fund and all three General LighthouseAuthorities.

5.c Net Expenditure On Behalf Of All General Lighthouse Authorities

6.a Income

41

2008/2009£000’s

(92)62144

911825

1,555

3,864

584197

781

2008/2009£000’s

255222357580

1,414

2009/2010£000’s

(37)66650

1,010916

-

2,605

652203

855

2009/2010£000’s

543245399536

1,723

VAT Refund re: GLF InvestmentLight Dues Collection CostsImperial Lighthouse Service PensionsResearch and DevelopmentSpecial Sanctioned R&D including Galileo & eLoranWreck Removal

Total

Salary Costs Included in the above

Research and DevelopmentLight Dues

Total

Buoy RentalProperty RentalTender HireSundry Receipts

Total

6.b Income on Behalf of All GLAs

7. Interest Payable/Receivable

42

2008/2009£000’s

27370

397

2008/2009£000’s

(14)(22)

8,323163818

9,268

2009/2010£000’s

84242

326

2009/2010£000’s

(5)(1)

7,556152696

8,398

Contributions towards Radio Navigation Projects ie GalileoTri GLA Tender Hire

Total

Loan interest receivableDeposit interest receivablePension interest payableInterest payable on Lease of THV ALERTInterest payable on Lease of THV GALATEA

Total

8. Property, plant and equipment

43

Cost or valuationAt 1 April 2009AdditionsDonationsDisposalsImpairmentsReclassificationsRevaluationsTransfers

At 31 March 2010

DepreciationAt 1 April 2009Charged in yearDisposalsImpairmentsReclassificationsRevaluations

At 31 March 2010

Net book value at 31 March 2009

Net book value at 31 March 2010

Asset financing:OwnedFinance LeasedOn-balance sheet PFI contracts

Net book value at 31 March 2010

Land

Ongoing

£000’s

936----

90--

1,026

4411----

55

892

971

971--

971

Buildings

Ongoing

£000’s

16,6971,707

-(40)

-220

-202

18,786

3,785430(15)

---

4,200

12,912

14,586

14,586--

14,586

Land

Surplus

£000’s

803----

(290)(188)

-

325

------

-

803

325

325--

325

Buildings

Surplus

£000’s

616----

(20)183

-

779

------

-

616

779

779--

779

L’vessels

£000’s

7,063145

-(2,092)

----

5,116

6,107223

(2,080)---

4,250

956

866

866--

866

Tenders& Craft

£000’s

37,536561

-(1,872)

----

36,225

16,5241,100

(1,847)---

15,777

21,012

20,448

1,56118,887

-

20,448

Buoys &Beacons

£000’s

5,126461

-(7)

---

455

6,035

1,808389(2)

---

2,195

3,318

3,840

3,840--

3,840

InformationTechnology

£000’s

2,106224

-(514)

----

1,816

1,635276

(502)---

1,409

471

407

407--

407

Plant &Machinery

£000’s

31,549398

-(637)

---

195

31,505

22,3691,473(613)

---

23,229

9,180

8,276

8,276--

8,276

Paymentson Account& Assetsunder

Construction£000’s

1,701382

-----

(885)

1,198

------

-

1,701

1,198

1,198--

1,198

Total

£000’s

104,1333,878

-(5,162)

--

(5)(33)

102,811

52,2723,902

(5,059)---

51,115

51,861

51,696

32,80918,887

-

51,696

44

Cost or valuationAt 1 April 2008AdditionsDonationsDisposalsImpairmentsReclassificationsRevaluationsTransfers

At 31 March 2009

DepreciationAt 1 April 2008Charged in yearDisposalsImpairmentsReclassificationsRevaluations

At 31 March 2009

Net book value at 31 March 2008

Net book value at 31 March 2009

Asset financing:OwnedFinance LeasedOn-balance sheet PFI contracts

Net book value at 31 March 2009

Land

Ongoing

£000’s

936-------

936

3311----

44

903

892

892--

892

Buildings

Ongoing

£000’s

16,343862

---

(508)--

16,697

3,397329

--

59-

3,785

12,946

12,912

12,912--

12,912

Land

Surplus

£000’s

803-------

803

------

-

803

803

803--

803

Buildings

Surplus

£000’s

1,694--

(360)-

508(1,226)

-

616

59---

(59)-

-

1,635

616

616--

616

L’vessels

£000’s

6,837226

------

7,063

5,833274

----

6,107

1,004

956

956--

956

Tenders& Craft

£000’s

37,114422

------

37,536

15,4601,064

----

16,524

21,654

21,012

1,27019,742

-

21,012

Buoys &Beacons

£000’s

4,791353

-(18)

---

5,126

1,516296(4)

---

1,808

3,275

3,318

3,318--

3,318

InformationTechnology

£000’s

2,026127

-(92)

---

45

2,106

1,469253(87)

---

1,635

557

471

471--

471

Plant &Machinery

£000’s

30,551637

-(193)

---

554

31,549

21,1571,404(192)

---

22,369

9,394

9,180

9,180--

9,180

Paymentson Account& Assetsunder

Construction£000’s

6851,619

-----

(603)

1,701

------

-

685

1,701

1,701--

1,701

Total

£000’s

101,7804,246

-(663)

--

(1,226)(4)

104,133

48,9243,631(283)

---

52,272

52,856

51,861

32,11919,742

-

51,861

The accounts direction provides that fixed assets shall be stated at historic cost less depreciation. Trinity House has obtained independent valuations of the variousHarwich depot buildings by Mr R E Weston BSc (Est.Man.) FRICS on behalf of Whybrow Chartered Surveyors as at 31 March 2010. For the Swansea depot the fullvaluations were carried out in March 2010 by Mr H Jones BSc MRICS on behalf of Cooke & Arkwright, Chartered Surveyors, details of operational depots are asfollows:

HarwichSwansea

Revalued Assets

The Miranda Building, 35/36 West Street and 7 Church Street, which all formed part of the old Harwich offices became surplus in 2005/06 and were revalued atOpen Market Value in that year. These values have been reviewed as at 31st March 2010 resulting in revaluations for the Miranda Building to £250,000 (2008/09£250,000), West Street to £250,000 (2008/2009 £100,000) and Church Street to £130,000 (2008/2009 £110,000)

The Mermaid Building which also formed part of the old Harwich offices, became surplus during 2006/2007 and was revalued at Open Market Value in that year.In February 2010 the building came back into operational use and its value was reviewed as at 31st March 2010 at £310,000 (2008/2009 £310,000)Mr R E WestonBSc (Est.Man.) FRICS on behalf of Whybrow Chartered Surveyors valued the land at £90,000 and the buildings at £220,000 which represents the reclassificationsin the above table. The land had previously carried most of the value, resulting in a revaluation loss of £194,478 reflected in the Net Expenditure Account, and arevaluation gain on the buildings of £220,000 which is held in the Capital Reserve.

The Penzance Depot became surplus in 2004/2005 and was revalued in that year at Open Market Value. A full valuation has been carried out as at 31st March 2010resulting in a revaluation to £475,000 (2008/2009 £650,000).

The valuation for the Penzance depot was carried out by Mr S A Sly BSc (Hons) MRICS on behalf of Charterwood Ltd in accordance the Practice Statements andGuidance Notes set out in the RICS Appraisal and Valuation Standards 6th Edition dated 1 January 2008 (as amended), published by the Royal Institution of CharteredSurveyors.

The valuations for all other surplus properties were carried out externally by Mr R E Weston BSc (Est. Man) FRICS on behalf of Whybrow Chartered surveyors as at31st March 2010, in accordance with the Practice Statements and Guidance Notes set out in the RICS Appraisal and Valuation Standards published by the RoyalInstitution of Chartered Surveyors. Reviews were undertaken for each of the sites.

45

Difference£

(5,346,820)(281,467)

Market values asat 31 March 2010

£

4,550,00070,000

Net Book Value asat 31 March 2010

£

9,896,820351,467

The Properties included at a valuation would have been included on a historical cost basis at:

CostDepreciation

Net book value

CostDepreciation

Net book value

Lighthouse Cottages included in Land and Buildings, Leased to Trinitas Services Ltd

Trinity House (TH) has entered into two agreements to lease 37 lighthouse cottages to Trinitas Services Ltd. With the automation of the lighthouses, TH disposedof all stand alone cottages, but retained cottages which were attached to or formed part of a lighthouse complex. It is considered that these Cottages which havebeen retained are 'day markers' or are necessary to retain for future operational requirements of the site ie to guarantee future access, and as such are consideredto continue to be an operational requirement of the service and have therefore been valued at historic cost less depreciation in line with all other assets.

Sale of Fixed Assets

A loss on the sale of fixed assets of £56,258 was incurred during the year. This relates mainly to disposal of a Helicopter refueling facility and a Phalcon Racon.

46

2009/2010Penzance£000’s

5(4)

1

2009/2010Miranda£000’s

75(61)

14

2009/2010West Street

£000’s

37(36)

1

2009/2010Church Street

£000’s

1-

1

2009/2010Penzance£000’s

5(4)

1

2009/2010Miranda£000’s

75(59)

16

2009/2010West Street

£000’s

37(36)

1

2009/2010Church Street

£000’s

1-

1

9. Intangible assets

* Transfers into intangible software are from tangible work in progress and relate to the software element of a number of Information Technology (IT) projects.

47

Cost or valuationsAt 1 April 2009AdditionsDonationsDisposalsImpairmentsRevaluationTransfers*At 31 March 2010

AmortisationAt 1 April 2009Charged in yearDisposalsImpairmentsRevaluationAt 31 March 2010

Net book value at 31 March 2010

Cost or valuationAt 1 April 2008AdditionsDonationsDisposalsImpairmentsRevaluationTransfers*At 31 March 2009

AmortisationAt 1 April 2008Charged in yearDisposalsImpairmentsRevaluationAt 31 March 2009

Net book value at 31 March 2009

Intangiblesoftware£000’s

1,40415-

(68)--

331,384

884340(57)

--

1,167

217

1,343125

-(68)

--4

1,404

629309(54)

--

884

520

IntangibleLicences£000’s

150------

150

208---28

122

150------

150

137---

20

130

Total£000’s

1,55415-

(68)--

331,534

904348(57)

--

1,195

339

1,493125

-(68)

--4

1,554

642316(54)

--

904

650

10. Financial Instruments

International Financial Reporting Standard 7 - Financial Instruments :Disclosures (IFRS 7) requires disclosure of the role which FinancialInstruments have had during the year in creating or changing the risks theAuthority faces in undertaking its activities. Because of the largely nontrading nature of the activities of TH and the method of funding from theGeneral Lighthouse Fund, the Authority is not exposed to the degree offinancial risk faced by other business entities. The Authority does haveborrowing powers under the Merchant Shipping Act 1995 but very limitedpowers to invest in surplus assets.

As permitted by IFRS 7, debtors and creditors which mature or becomepayable within 12 months of the Statement of Financial Position date havebeen omitted from the profile.

Liquidity Risk

The Authority relies primarily on advances from the General LighthouseFund for its cash requirements and is therefore not exposed to significantliquidity risks, although it is of course dependant indirectly on the liquidityof the General Lighthouse Fund.

Interest Rate Risk

Trinity House have three finance leases on THV Galatea, THV Alert andTHV Patricia; it is not considered that these present any exposure tointerest rate risk.

THV Patricia has expired its primary term and is now on a fixed peppercornrent. The interest rate for the finance lease for the THV Alert was fixedon 9th August 2006 and therefore poses no risk. The interest rate for thefinance lease for the THV Galatea was fixed on 24th December 2008 andtherefore poses no risk.

The Authority holds working funds in moneymarket accounts and istherefore exposed to interest rate fluctuations, although here again thesebalances are very small and so the risk is insignificant.

The rate of interest on the loan that has been made to Trinitas ServicesLtd is also fixed and therefore presents no risk against interest fluctuations.

Currency Risks

The Authority has no significant foreign currency transactions and is nottherefore exposed to any significant risk in terms of currency fluctuations.

Fair Values

Set out below is a comparison by category of the book values and fairvalues of the Authority's financial assets and liabilities as at 31 March 2010

Financial AssetsCash at Bank and in HandLoan to Trinitas Services Ltd

Financial LiabilitiesFinance Lease Obligations(MFT GALATEA/ RIV ALERT)

The fair value of the finance lease obligation for the THV Galatea and theTHV Alert is calculated as the net present value of future lease payments.

48

Book Value£000’s

13100

18,029

Fair Value£000’s

13100

18,027

11. Inventories

12. Trade receivables and other current assets

Amounts included above that fall within the Whole of Government Accounting boundary are:

49

Consumable storesFuel oil

Total

Amounts falling due within one year:Trade receivablesOther receivablesInter GLA debtorsPrepayments and accrued incomeVAT recoverable

Total

Central GovernmentLocal AuthoritiesNHS TrustsPublic CorporationsBodies external to Government

Total

2008/2009£000’s

1,762231

1,993

2008/2009£000’s

284138131390335

1,278

2008/2009£000’s

335--

14929

1,278

2009/2010£000’s

1,976309

2,285

2009/2010£000’s

495362

-273256

1,386

2009/2010£000’s

25814-

301,084

1,386

13. Cash and cash equivalents

14. Trade payables and other current liabilities

50

Amounts falling due after more than one year:

Trinitas Loan

Total

Balance at 1 AprilNet change in cash and cash equivalent balancesBalance at 31 March

The following balances at 31 March were held at:Commercial banks and cash in handShort term investmentsBalance at 31 March

Amounts falling due within one year:

Other taxation and social securityTrade payablesOther payablesInter GLA payablesAccruals and deferred incomeCurrent part of finance leases

Total

2008/2009£000’s

100

100

2008/2009£000’s

868(768)100

100-

100

2008/2009£000’s

3698789613

3,0301,083

5,469

2009/2010£000’s

100

100

2009/2010£000’s

100(87)13

13-

13

2009/2010£000’s

3841,216

102-

2,5691,133

5,404

Amounts included above that fall within the Whole of Government Accounting boundary are:

51

Central GovernmentLocal AuthoritiesNHS TrustsPublic CorporationsBodies external to Government

Total

Amounts falling due after more than one year:Other payables, accruals and deferred incomeFinance leasesImputed finance lease element of on-balance sheet PFI contractsNLF loans

Total

2008/2009£000’s

369---

5,100

5,469

2008/2009£000’s

-18,028

--

18,028

2009/2010£000’s

384---

5,020

5,404

2009/2010£000’s

-16,896

--

16,896

15. Provisions for liabilities and charges

52

Balance at 1 April 2009Provided in the yearProvisions not required written backProvisions utilised in the yearUnwinding of discountBalance at 31 March 2010

Analysis of expected timing of discounted flows

In the remainder of the Spending Review period (to 2013)Between 2014 and 2018Between 2019 and 2023ThereafterBalance at 31 March 2010

Included in the amounts not expected to be called untilafter 2023 are:

Amounts not expected to be called until the periodbeginning 2063Amounts not expected to be called until the periodbeginning 2088

Redundancies£000’s(iii)

239-

(127)(46)

-66

Redundancies£000’s

66---

66

Redundancies£000’s

--

Litigation£000’s

(v)

-50---

50

Litigation£000’s

50---

50

Litigation£000’s

--

AnnualCompensation

Payments£000’s

(i)

534-

(94)--

440

AnnualCompensation

Payments£000’s

440---

440

AnnualCompensation

Payments£000’s

--

Orfordness£000’s(iv)

-100

---

100

Orfordness£000’s

100---

100

Orfordness£000’s

--

RestructuringProvision£000’s

(ii)

143-

(48)--

95

RestructuringProvision£000’s

95---

95

RestructuringProvision£000’s

--

MNOPF£000’s(vi)

-77---

77

MNOPF£000’s

77---

77

MNOPF£000’s

--

Total£000’s

916227

(269)(46)

-828

Total£000’s

828---

828

Total£000’s

--

The Board has provided for:

(i) Annual Compensation Payments - the actuarially calculated estimate for the future liabilities for ACPs that are compensation payments until Age 60 and receiptof normal pension benefits.

(ii) Restructuring Costs - the estimated redundancy costs as a result of restructuring the organisation. It is expected that 100% of the remaining balance will beutilised during 2010/11.

(iii) Redundancies - the estimated redundancy costs as a result of changing from the THV Mermaid to the new THV Galatea and redundancies as a result of a re-organisation within Operations, Planning and Asset Management. It is expected that 100% of the provision will be incurred in 2010/11.

(iv) Cost of removal of optic and mercury from Orfordness Lighthouse which is required no matter what the eventual outcome of this site.

(v) Potential litigation in respect of Asbestos claim, as advised by solicitors.

(vi) Additional contributions to the Merchant Navy Officers Pension Fund - provision for actuarially calculated estimate of additional contribution due to help meetthe deficit in the Fund.

53

16. Capital commitments

17. Commitments under leases

54

Contracted capital commitments at 31 March 2010 nototherwise included in these financial statements

Property, plant and equipmentIntangible assets

17.1 Operating leases

Obligations under operating leases comprise:LandNot later than one yearLater than one year and not later than five yearsLater than five years

BuildingsNot later than one yearLater than one year and not later than five yearsLater than five years

OtherNot later than one yearLater than one year and not later than five yearsLater than five years

2009/2010£000’s

1,602-

2009/2010£000’s

--

74

-81

401-

598

2008/2009£000’s

1,415-

2008/2009£000’s

--

79

--

10

103420

-

17.2 Finance Leases

Total future minimum lease payments under finance leases are given in the table below for each of the following periods.

Obligations under finance leases comprise:

BuildingsNot later than one yearLater than one year and not later than five yearsLater than five years

Less interest element

OtherNot later than one yearLater than one year and not later than five yearsLater than five years

Less interest element

18. Other financial commitments

Trinity House has entered into no non-cancellable contracts (which are not leases or PFI contracts), during the year (2008/09 Nil).

55

2009/2010£000’s

------

1,9489,740

12,07423,762(5,734)18,028

2008/2009£000’s

------

1,0834,858

13,17019,111(6,599)12,512

19. Pension Commitments

Trinity House Lighthouse Service Pension Scheme andTrinity House Lighthouse Service Compensation Scheme

The pension entitlement of the employees of Trinity House LighthouseService arises under an internally defined benefit pension scheme. Thepension benefits of the Scheme are determined by the Secretary of Stateunder Section 214 of the Merchant Shipping Act 1995. The Secretary ofState has determined that the rules of the Principal Civil Service PensionScheme shall apply. Compensation for premature loss of office isdetermined by the terms of the Trinity House Lighthouse ServiceCompensation Scheme, operated by direct analogy with the Civil ServiceCompensation Scheme.

The Pension Scheme falls within the definition of a "Public Service PensionScheme" in Section 1 of the Pension Schemes Act 1993 and is not requiredto be separately funded. Since 1st October 2002 the Scheme has beenmade up of the Classic and Premium arrangements. The Classicarrangement operates on a noncontributory basis with the exception ofcontributions made to the Spouses' Pension Scheme and in a number ofcases voluntary contributions made by employees for the purchase ofadded years of service. Members of the Premium arrangement are requiredto contribute 3.5% of pensionable elements of pay and may also makevoluntary contributions for the purchase of added years of service.

Employees joining after 1 October 2002 could opt instead to open apartnership pension account, a stakeholder pension with an employercontribution. Employer contributions of:

2009/2010 2008/2009£ £

Partner Pension Accounts 3,176 2,291

were paid to one or more of a panel of four appointed stakeholder pensionproviders. Employer contributions are age-related and range from 3% to12.5% of pensionable pay.

There were no contributions due to the partnership pension providers atthe end of the reporting period. There were no contributions that had beenprepaid at that date.

The pension liabilities of Trinity House Lighthouse Service, along with theother Lighthouse Authorities, are paid by the General Lighthouse Fund asthey fall due on the following basis:-

i) Payments to pensioners / spouses' / children for the financial year underreview.

ii) Lump sums paid to new pensioners and preserved lump sums cominginto effect during the year.

iii) Annual compensation payments paid to those members who are maderedundant in advance of normal retirement age (60).

iv) Accrued benefits due to employees who leave and who opt to have suchbenefits transferred to another scheme.

v) Injury benefits.

vi) Refunds of spouses' pension contributions at leaving and/or age 60.

Reduced by:-

vii) Contributions made by employees during the year in respect of thePremium arrangement or spouses and dependant relatives and addedyears for the Classic arrangement.

viii) Accrued benefits transferred from other pension schemes in respectof current members.

The General Lighthouse Authorities obtain professional actuarial valuationsat 3 yearly intervals and are updated each year for IAS26 purposes. Thelast valuation was completed in 2008, valued as at 31st March 2008.

56

The only differences between the full valuation and the IAS26 valuations are:

1) the IAS 26 valuation excludes the liabilities for Annual Compensation Payments (ACPs)2) the IAS 26 valuation prescribes the discount rate as the yield on "AA" rated long-term corporate bonds. For the best-estimate funding basis, the discount raterepresents the actuary's expectation of future investment returns from the assets notionally held by the scheme. As the Board does not operate a funded arrangement,there are no assets on which to base an estimate of future returns. Therefore, for the purpose of deriving a suitable discount rate, the actuary has assumed anotional portfolio that would reflect a common composition of assets in a defined benefit pension scheme.

The accumulated liability for the Trinity House Lighthouse Services Board in respect of all current employees was in the order of £31,330,000. The estimated liabilityfor pensions in payment and deferred pensions of former employees of the Trinity House Lighthouse Service Board was £111,530,000. The actuary used theProjected Unit Credit Method and a 'best estimated' approach of future experience ie one that includes no margin for caution. The valuation assumed an investmentreturn of 7.5% (pre-retirement) and 5.7% (post retirement), salary growth of 5.45%, price inflation of 3.60% and the rate of increase for pensions in payment anddeferred pensioners of 3.7%. The actuary also applied standard actuarial tables for mortality rates.

The actuary's updated estimate of the liability of ACPs at 31st March 2010 is £440,000

Active MembersDeferred PensionersPensionersTotal Liability at Projected Unit Method

Real Discount RateInflation RateDiscount RateSalary Growth RatePensions in Payment and Deferred Pensioners Growth Rate

57

31-Mar-10£000’s

37,17131,10083,356

151,627

1.80%2.75%4.60%3.75%2.75%

31-Mar-09£000’s

26,48422,85078,155

127,489

3.20%2.75%6.04%3.75%2.75%

Scheme Liability at 31 March 2009Current Service CostCurtailment LossesInterest on Pension Scheme Liability

Benefits PayablePensions or Annuities to retired employees and dependantsCommutations and lump sum benefits:On RetirementOn Early RetirementOn DeathInjury Benefits

Pension payments to and on account of leaversRefunds to members leaving serviceGroup Transfers to other schemesIndividual Transfers to other schemesClub Transfers out

Income received in respect of enhancementsEmployees:Purchase of added yearsWidows/Widowers pension Scheme (WPS) ContributionsEmployers:Bringing forward the payment of accrued lump sumsEnhancement to pensions on departureEnhancement to pensions on retirement

Pension transfers inGroup transfers in from other schemesIndividual transfers in from other schemesClub Transfers in

Actuarial Gains and LossesExperience gains and losses arising on scheme liabilitiesChanges in assumptions underlying the present value of scheme liabilities

Scheme liability at 31 March 2010

58

£000’s

127,489

9,435

(6,863)

351

21,215

151,627

£000’s

1,663216

7,556

(6,700)

(163)

260

91

21,215

£000’s

(6,241)

(363)(87)

-(9)

(3)-

(6)(154)

26234

---

-91-

(24,917)46,132

The "Experience Gains and Losses arising on the scheme liabilities" of (£24,197) and the total "Actuarial Losses" of £21,215,000represent (15.96%) and 13.99% respectively of the total scheme liability at 31st March 2010.

Opening BalanceClosing Balance

Operating CostFinancing CostsPension PaymentsStatement of Changes in Reserves

Experience Gains and Losses on Scheme Liability amountPercentage of the present value of Scheme LiabilitiesTotal amount recognised in the Statement of Changes in ReservesPercentage of the present value of Scheme Liabilities

59

£000’s

127,489151,627(24,138)

1,8797,556

(6,512)21,215

(24,138)

31 March 2010£000’s

-0.0%

(21,215)14.0%

31 March 2009£000’s

-0.0%

13,155-10.3%

31 March 2008£000’s

(2,156)1.6%

13,141-9.7%

31 March 2007£000’s

822-0.1%

(17,127)11.7%

The DfT has reported the contingent liability for the GLAs' pensions for inclusion in the Resource Account for 2009/2010 and a liability of £408.5m (the estimatedliability calculated at 31 March 2010) has been disclosed.

On 17 December 2001 the then DfT, Local Government and the Regions gave the GLAs a Letter of Comfort (see Appendix 1) in respect of contingent pensionliabilities. The Letter states that in the unlikely event of insufficient money being available from the GLF to pay pension liabilities, the Department will request fundsfrom Parliament to make the necessary payments.

In November 1998 it was agreed together with the DfT, the other GLAs and the Lights Advisory Committee that a full actuarial valuation would be completed at threeyearly intervals. Hymans Robertson LLP have been engaged to provide actuarial support and have completed the 2009/2010 valuation.

The principal revenue of the Fund is light dues which are fixed by the Secretary of State (Minister for the Marine for Republic of Ireland) by orders under Section205 of the Merchant Shipping Act 1995 (which are subject to negative resolution of Parliament). Subject to Parliamentary approval of such orders, the Secretaryof State will seek to ensure that annual revenues are maintained at a sufficient level to meet the Pension Schemes liabilities.

Merchant Navy Officers' Pension Fund

The Board is a Participating Employer of the Merchant Navy Officers' Pension Fund (MNOPF) which is a defined benefit scheme providing benefits based on finalpensionable salary. The MNOPF has a deficit of £557m identified in an actuarial valuation as at 31 March 2009. The rules of the MNOPF state that ParticipatingEmployers may be called to make lump sum payments to make up deficits. With effect from 8 June 2000 the rules were amended to state that an employer will notbe regarded as ceasing to be a Participating Employer as a result of ceasing to employ Active Members or other eligible employees. The MNOPF has made anapplication to the Court to obtain confirmation that the position that applies from 8 June 2000 also applied before. As a Participating Employer, the Board can berequired to contribute to the deficit. The hearing of this matter took place between 8th and 11th March 2005 and the judgement was handed down by Mr JusticePatten on 22nd March 2005. In general terms the judgement stated that the Trustees of the MNOPF are entitled to demand a contribution to meet the deficit in thePost 1978 section from all employers who ever participated in the Fund. This means that the burden will be spread over a large number of companies. It also meansthat the Trustees have the option of demanding from employers who have only ever participated in the Pre 1978 section to meet the deficit in the Post 1978 section.

TH made no contribution during either 2009/2010 or 2008/2009 towards the deficit identified by MNOPF but have made a provision for £77,186 in the 2009/2010accounts based on a letter of illustrative deficit contributions received from MNOPF dated 18th May 2010.

60

20. Government Grants

The Capital Grant Reserve represents deferred Government Grants analysed as follows:

Grants received from the UK GovernmentGrants received from the Irish GovernmentGrants received from the EUCapital Grant Reserve

21. Contingent liabilities disclosed under IAS 37

Trinity House has the following contingent liabilities:

Protection and Indemnity

The Authority's marine protection and indemnity risks are insured through The Standard Steamship Owners' Protection and Indemnity Association (London)Limited which is a member of the International Group of Protection and Indemnity Clubs.

The Club has adopted a conservative underwriting policy and concentrates on insuring vessels operating in European inland waterways, harbours and coastaltrades.

The mutual method of insuring these risks includes a re-insurance programme and the pooling arrangements of the International Group. However, in commonwith all members of International Group Clubs, the Authority could be liable for additional premium payments (Supplementary Calls) to cover any claims whichcannot be met from funds available. The Standard Club has closed the years up to and including 2007/2008 and there will be no Supplementary Calls for theseyears. The Club have advised the Board that it does not anticipate Supplementary Calls for the years 2008/2009 and 2009/2010. As a result the Board has

made no provision in the Accounts.

61

2009/2010£000’s

2,545--

2,545

2008/2009£000’s

2,456--

2,456

Merchant Navy Officers' Pension Fund (MNOPF)

A new actuarial valuation was carried out as at 31st March 2009 which hasresulted in further deficits upon which members have been called upon tocontribute. The Board have received illustrative deficit contributions duefor payment on 30th September 2010 in respect of the 2009 deficit andhave made provision for £77,186 accordingly (note 15). Any further liabilitywill be restricted to the additional deficit contributions sought in September2010 due to the deficit reported as at 31 March 2009 that cannot berecovered from other employers (eg liquidated companies, etc), who areunable to pay their share in September 2010 and needs to be recoveredfrom those remaining. The Board do not have reliable estimates of thisliability and have therefore made no further provision other than for theillustrative deficit contribution, but declare it as a contingent liability.

eLoran VT Contract

On 31st May 2007, a contract was signed for the provision of a UK andIrish Enhanced LORAN Signal-In-Space as part of a European EnhancedLORAN service. Broadcasting from Anthorn in Cumbria, the quarterly costto the GLAs of this service is £93,783. Provision of a new transmitter, whichis subject to approval from DfT will increase the future quarterly payment.

The contract covers a period from 31st May 2007 to 1st October 2022.The GLAs have reserved the right to terminate the contract, at their solediscretion at the end of the first phase, on or about 1st October 2010. Thisdecision date is currently delayed but as an example if they were toterminate on 1st October 2010 the GLAs will be liable for a cost of£1,139,130. If a new transmitter is installed a revised schedule will berequired.

At present, the Board do not envisage terminating the contract and havemade no provision in the Accounts.

Lighthouse Estate

As a result of regular surveys the Board recognise that there is a raiseddegree of risk at a number of stations that may demand a currentlyunquantified level of future investment. These stations are:

Beachy Head LighthouseIt is well recognised that the cliff at Beachy Head is only currently stable.The cliff will fall in the future and this fall could cause either or both of thefollowing:

Loss of the mains power supply - mitigation by the use of an installed dieselalternator set.Loss of use of the boat landing necessary to re-fuel the station.

The future of this station as an AtoN (Aid to Navigation) is subject to the2010 Navigation Aids review in which it is proposed to downgrade thenavigation light. Until then the cost to mitigate the risk is likely to bebetween £50k - £250k.

Nab Tower LighthouseStructural dilapidations have reached a point that has demanded thatstructural surveys be undertaken. The outcome of the surveys is likely tobe that the tower will require an investment of circa £3m to secure itsfuture as an AtoN, or £10m for complete removal. The Ministry of Defencehas a commitment to fund 50% of demolition costs. Consultancy work willbe undertaken during 2010/11 to determine the work to be completed.

Orfordness LighthouseBeach erosion at Orfordness has raised concern that the lighthouse, whichis of brick construction, will become unstable in the very near future (3-6years). This station as an AtoN is also subject to the 2010 Navigation Aidsreview, which is indicating the discontinuation of this station and anupgrade to the Southwold AtoN. Should this outcome not come to fruitionthen the cost would be in the region of £4m to maintain a navigational aidat the site. Otherwise the station will require either decommissioning ofthe lighthouse, leaving it to natural loss, or the controlled demolition of thestation. The cost of this is between £100k - £400k. Further consultation isto be undertaken to determine the future of this station. What is knownat this time is that the current structure is not suitable for long term usefor AtoN purposes and thus the removal of hazardous materials will haveto occur in conjunction with the discontinuation of any service. £100k hasbeen provided in the accounts to carry out the removal of the hazardousmaterials, no further provisions have been made until the outcome isknown and the Board therefore declare it as a contingent liability.

62

St Catherine’s LighthouseThis lighthouse is built on an unstable cliff on the southern side of the Isleof Wight. The risks to this station fall into the following headings:

• Risk of structural damage due to ground faults;• Risk of collapse due to cliff erosion;• Risk of collapse of the approach road due to ground faults; and• Risk of movement to the lighthouse sufficient to seize the rotation

of the optic.

The condition of the station is subject to continuous monitoring andsurveys, however it is likely that a new lighthouse would need to beestablished on land that would need to be acquired and the cost isexpected to be between £2m - £3m depending on the clearancerequirements of the original site. A review of the available data includingtilt and crack data shows little sign of movement since 2001, indicating aquiet period of movement, however it does not allow for large scale rapidmovements that might occur given the right climatic conditions. Monitoringtherefore remains ongoing.

Flamborough Head Fog Signal building & DGPS TowerThe tip of the promontory that is Flamborough Head has a substantial caveunderneath it. The cave roof has a known fault and should the roofcollapse, it is likely that the end of the promontory would also collapsetaking with it the DGPS mast and the ex Fog Signal station which housesthe DGPS equipment and diesel alternator equipment. Further to this thereis a loss of material from the top of the cliff on the North and South sideswhich is now adjacent to the TH boundary.

The cave is subject to annual condition surveys which monitor the roofcondition. However should it collapse it is considered that a new DGPSstation would need to be established on land that would need to beacquired. The cost is likely to be between £2m to £3m depending on theclearance requirements of the original site.

Hartland PointAnnual surveys are undertaken regarding two aspects of this station:• The sea defences are surveyed to ensure their integrity to arrest thesea erosion of the cliff on which the lighthouse is constructed; and

• The cliff above the access road and the access road, to instigateaction to mitigate against the loss of the road or loss of use of theroad. It is considered that the loss of the road is inevitable in 5to 10 years, which may also result in the loss of mains cable, water

supply and telephone link.

The future of this station as an AtoN is subject to the 2010 Navigation Aidsreview in which its future will be determined with a downgrade in the lightrange the most likely outcome. Before access and services are lost, theprovision of a solarised main light (from a separate or within the existingstructure) would need to be completed, leaving the remaining stationfacilities supplied by diesel, with future access via helicopter only. The costof these works is estimated to be in the region of £200k to £2m, however,due to the uncertain nature of these events the Board has made noprovision in the Accounts.

Royal SovereignA non-destructive structural survey performed in February 2009 estimatedthe remaining life of the structure to be 15 to 20 years provided thatareas of concrete degradation and corrosion to reinforcement wererepaired as soon as practicably possible. The main risk resided around thecondition of the post-tensioned tendons which are vital to ensure thestructural integrity of the concrete tower.

Destructive investigative works to fully establish the condition of thesetendons is currently out to tender and is programmed to be performed in2010.

Provided that these investigations show that the tendons are in aserviceable condition the structure could then remain in service for theperiod estimated during the structural survey provided a rigorousinspection/maintenance regime is established. The regime should beinitially based on an annual visual/photographic inspection with ropedaccess inspections as required to ensure the repairs remain effective; thecost for rope access would be £100k - £150k per inspection.

However, it must be noted that destructive investigative works coulddetermine that the tendons in the tower below the accommodation havebeen compromised. If this situation occurs it may be feasible to removethe accommodation and the upper tower without damaging the caisson

63

foundation and the lower tower. The retained structure could then be fittedwith a new capping slab and form a platform that could then be used toaccommodate an AtoN as required. The estimated cost for this work isanticipated to be of the order of £5m to £10m.

However, the only option may be to demolish the structure and replace it.The estimated cost of demolition is £4m - £6m.

The total cost of the above is therefore estimated at between £12.75m and£27.25m, however, due to the uncertain nature of these events the Boardhas made no provisions in the Accounts.

22. Related-party transactions

General Lighthouse Fund

The Fund is administered by the Department for Transport who sponsorthe three General Lighthouse Authorities. For this purpose each isconsidered to be a Non Departmental Public Body (NDPB).

The Authorities are regarded to be related parties. During the year therehave been various material transactions between the Fund and theAuthorities. The Board has received advances of £36,050,000 (2008/2009£36,500,000) from the General Lighthouse Fund and incurred expenditureof £2,605,000 (2008/2009 £3,864,000) on behalf of all three Authorities(see note 5c).

Neither the Secretary of State for Transport, any key officials withresponsibilities for the Fund or any of Trinity Lighthouse Service Boardmembers, key managerial staff or other related parties has undertaken anymaterial transactions with the Fund during the year.

Trinitas Services Ltd

Trinity House has entered into two agreements to lease 37 lighthousecottages to Trinitas Services Limited, a wholly owned subsidiary of theCorporation.

The first agreement provides for some 34 lighthouse cottages at 14locations to be leased to Trinitas for 25 years. Trinitas has refurbished thecottages and has a contract with Rural Retreats to let them as holidaycottages. At present 30 cottages are let under this agreement.

During 2006/2007 Trinity House refurbished a further 7 lighthouse cottagesat the Lizard, and entered into a second agreement to lease them toTrinitas Service Ltd (TSL) for 20 years commencing February 2002, withan effective possession date of 14th December 2006. TSL rents one of thecottages under an assured shorthold tenancy agreement and has enteredinto a contract with Cornish Cottages (previously known as MullionCottages) to let 6 of them as holiday cottages.

The investment in bringing the original cottages and the Lizard cottages tomaterial state together with the legal costs of the agreement was in theorder of £990,000.

The freehold interest in the properties remains with TH. The potential upliftin value at the end of the lease period arising from the refurbishments isuncertain. A ground rent is payable during the currency of each lease butthere is no premium.

In order to finance the refurbishments TH has made a loan facility availableto Trinitas Services Ltd up to £1,000,000. The maximum amount whichhad been drawn down was £600,000. The loan has a fixed interest rate of5% payable after three years.

Opening BalanceRepaid during yearClosing Balance

In the event of a default on the loan TH would have a claim against theassets of Trinitas Services Ltd. The loan was to refurbish and provide softfurnishings to property owned by TH and as the value is retained withinthe properties, the risk is considered low.

64

2009/2010£000’s

100-

100

2008/2009£000’s

300(200)100

Commodore J S Scorer, Director, F C Bourne, Non-Executive Director,Captain N R Pryke, Non-Executive Director are all appointed to the Boardof TSL as nominees of the Corporate Board responsible for Trinity HouseCharities. Rear Admiral J M de Halpert, Executive Chairman, on behalf ofthe Corporation of Trinity House, became a shareholder of TSL on 28 March2006.

Corporation of Trinity House

The Corporation of Trinity House owns Trinity House Tower Hill andprovides rent free accommodation for the use of TH. TH reimburses theCorporation for service charges in proportion to the floor area occupied.During 2009/2010 TH paid £266,281 to The Corporation of Trinity Housein respect of service charges incurred in using office space and facilities atTrinity House, London (£269,729 in 2008/2009).

Conversely, the Corporation of Trinity House reimburses TH for theprovision of services during the year. The Corporation paid £57,809 to THin respect of these services during the year (£101,440 in 2008/2009).

East of England Development Agency

In accordance with the accounts direction the East of England DevelopmentAgency (EEDA) is deemed to be a related party of TH since bothorganisations are sponsored by government departments.

The redevelopment of the Harwich depot was part funded by a grant fromthe East of England Development Agency. In the grant offer letter of 5March 2003 EEDA agreed to fund 29% of the eligible costs ofredevelopment up to a maximum of £2.5 million. Certain conditions wereattached to the grant such that it may be repayable if TH closes operationsin Harwich before 2013 or if the expected increase in employment at theHarwich depot is not achieved.

During 2006/2007 the project was deemed complete for EEDA purposesand TH received the final grant funding of £250,000 from EEDA(£1,148,507 in 2005/2006). TH are not expecting any further funding inrespect of this project.

Heritage Lottery Fund

In accordance with the accounts direction the Heritage lottery Fund (HLF)is deemed to be a related party of Trinity House since both organisationsare sponsored by government departments.

In March 2007 a grant of £394,000, or 61% of the total estimated projectcost of £649,752 was awarded to develop the Lizard Heritage Centre.

During 2009/2010 the project was deemed complete for HLF purposes andTH received the final grant funding of £179,646 from HLF (£214,354 in2008/2009). TH are not expecting any further funding in respect of thisproject.

23. Inter-GLA Transactions

Ships Agreement

The Commissioners of Irish Lights (CIL) provided the services of ILVGranuaile to Trinity House for 1 day under the terms of the Inter GLAShip Agreement dated 12 December 2000. Trinity House provided theservices of THV Patricia to CIL for 2.38 days during the year. TheCommissioners of Northern Lighthouses (NLB) did not receive/ provide theservice of any ship from/to Trinity House during the year. While there wasno transfer of funds between the GLAs in respect of this service,

the transaction would give rise to notional income of £19,105 (2008/2009- £nil) and notional expenditure of £7,909 (2008/2009 - £68,400).

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24. Further Information

Number of Non-Current Assets:

LighthousesLightvesselsLightfloatsBuoys *BeaconsTendersAncillary CraftLighthouse abroad

Total

Number of Non-Current Assets Deployed

LighthousesLightvesselsLightfloatsBuoys *BeaconsTendersAncillary CraftLighthouses abroad

Total

Trinity House operates the Lighthouse at Sombrero (Anguilla) on behalf of the DfT.

It owns and has full responsibility for Europa Point (Gibraltar).

*The number of Buoys deployed will always be less than owned due to the diversity of buoy range, buoys undergoing repairs & refurbishments, others being heldon tenders awaiting deployment and emergency wreck marking buoys held at various depots and forward storage areas.

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2009/2010

70122

68524391

806

6982

55122392

666

2008/2009

70122

68624381

806

6982

50419382

615

ExpenditureStaff costsDepreciationAmortisationLoss on revaluationPension costOther expenditure (including profit/loss on sale of Fixed Assets)Total

IncomeAdvances from the General Lighthouse FundOther incomeIncome on behalf of all GLA'sGrant IncomeTotal

Net ExpenditureCost of CapitalInterest payable/receivableNet Expenditure after cost of capital charge and interestNet Expenditure on behalf of DfTNet Expenditure on behalf of all General Lighthouse AuthoritiesReversal of Cost of CapitalNet Expenditure after interestProperty Plant and EquipmentIntangible AssetsTrade and other receivables becoming due after more than one yearNon Current Assets plus / less Net Current Assets / LiabilitiesAssets less LiabilitiesPurchase of Property Plant & EquipmentAverage No. of whole-time equivalent persons employed (inc. agency staff)

Figures for 2005/06 and 2006/07 are prepared under UK GAAP and have not been restated for International Reporting Standards. Other Income has been restatedto show gross income in 2005/06.

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Five Year SummaryFive Year Summary

2010£000’s

11,0013,902

348195

1,96011,76229,168

36,0501,723

326326

38,425

(9,257)(3,757)8,398

(4,616)334

2,6053,7572,08051,696

339100

49,798(118,936)

3,878319.0

2006£000’s

11,0544,003

--

1,5369,402

25,995

37,00071413328

37,875

(11,880)(3,080)

6,869(8,091)

3742,0763,080

(2,561)35,528

207320

36,086(92,409)

8,426343.0

2007£000’s

11,2714,192

105-

1,92710,53328,028

32,2001,059

141180

33,580

(5,552)(3,444)

7,775(1,221)

3801,9723,4444,57539,101

285300

38,820(113,142)

7,647331.0

2008£000’s

10,5333,805

466-

2,4319,651

26,886

32,9001,641

21253

34,815

(7,929)(3,773)

7,493(4,209)

2512,5363,7732,35152,856

851300

53,357(102,547)

20,500321.0

2009£000’s

11,2383,631

316-

2,65112,54930,385

36,5501,414

39774

38,435

(8,050)(3,468)

9,268(2,250)

3623,8643,4685,44451,861

650100

50,083(95,920)

4,246321.7

IFRS Accounts UK GAAP AccountsRestated

APPENDIX 1

THE DEPARTMENT FOR TRANSPORT, LOCAL GOVERNMENT AND THE REGIONS

LETTER OF COMFORT IN RESPECT OF GENERAL LIGHTHOUSE FUND PENSIONS, CONTINGENT LIABILITIES, TO BE GIVEN TO THE GENERAL LIGHT-HOUSE AUTHORITIES

The pensions in respect of the beneficiaries of the Pension Schemes of the General Lighthouse Authorities (GLAs) are safe. This is recognised by the fact that thepensions liability of the General Lighthouse Fund (GLF) is reported to Parliament annually as a contingent liability of the Department of Transport, Local Governmentand the Regions (DTLR). This is a form of early warning to Parliament that it may be asked to authorise expenditure on this item. Any liability which a GLA might notbe able to meet from its own resources (which in the GLA's case is the GLF) would fall to DTLR as the sponsor department.

DTLR has therefore already given the strongest public assurance that the pensions of the beneficiaries of the Pension Schemes of the GLAs will be paid by the inclusionof the liabilities of the GLF in their departmental contingent liability return to Parliament. Therefore in the unlikely event of insufficient money being available, DTLRwill request funds from Parliament to ensure that the pensions are paid to the beneficiaries of the Pensions Schemes of the GLAs. The pensions of the GLAs aretherefore assured by this Letter of Comfort.

Signed By:

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On behalf of the Secretary of State ForTransport, Local Government and the RegionsDate 17.12.2001

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Pictures front cover, from top to bottom: Strumble Head Lighthouse, Orfordness Lighthouse, St Anthony Lighthouse.