Note 1 -Impact on Funding

The revenue expenditure relates to the services element of the PPP Scheme, adjusted for the prevailing rate of RPI. In order to account for both the service charge and the capitalisation of the residual interest, it is necessary to split the unitary payment. The basis for the split is the net present value of the residual interest. The underlying value of the residual interest is driven by the effects of indexation, revaluation and impairment, which do not result in flows of cash. The unitary payment is uplifted by the RPI, which does result in an outflow of cash. The effect of RPI therefore impacts on funding. The capital expenditure relates to the addition to net assets each year, the relation to the cash requirement is shown below:

Fig 2 - funding streams