CONTENTS
Explanatory Foreword 2
Statement of Accounting Policies 3
Consolidated Revenue Account 5
Housing Revenue Account 12
Collection Fund 13
Consolidated Balance Sheet 15
Cash Flow Statement 26
Statement of Movements in Reserves 28
Pension Fund 30
Statement of Responsibilities for the Statement of
Accounts 45
EXPLANATORY FOREWORD
The Council’s Accounts for 2001-02 are set out on pages 3 to 45.
This foreword provides a brief description of the financial events affecting the Council in 2001-02 and the Council’s financial position generally.
Budget
A summarised comparison of actual income and expenditure with the original budget for 2001-02 is set out below:
Original Actual Difference
Ł’000s Ł’000s Ł’000s
Gross expenditure 192,824 197,464 4,640
Income 64,107 72,024 (7,917)
__________ __________ __________
Net Operating Expenditure 128,717 125,440 (3,277)
Less: Revenue Support Grant (52,344) (52,344) 0
Non-Domestic Rates (36,068) (36,068) 0
Council Tax (39,841) (39,841) 0
__________ __________ __________
Net balance before appropriations 464 (2,813) (3,277)
Net appropriations & adjustments (64) 2,689 2,753
__________ __________ __________
Change in General Fund Balance 400 (124) (524)
Balance brought forward (2,202) (2,361) (159)
__________ __________ __________
Balance carried forward (1,802) (2,485) (683)
__________ __________ __________
Note
The Council originally set a net revenue budget of Ł128,653,066 for 2001-02 (including parish precepts), which necessitated a 4.2% Council Tax increase and a withdrawal of Ł400,000 from the General Fund. The estimated balance on the General Fund at year-end was Ł1,802,400.
The estimate was revised to Ł128,788,766 and provided a contingency for potential overspends relating to Social Services and Waste Management. The withdrawal from the General Fund was increased to Ł535,700 and the estimated balance on the General Fund at year-end was revised to Ł1,825,200.
At the end of the year, pro-active debt management coupled with continuing low levels of interest rates contributed to an actual net expenditure of Ł128,128,599 which resulted in a contribution of Ł124,466 to the General Fund. The General Fund balance at 31st March 2002 is Ł2,485,371.
The Council budgeted to spend Ł25.0 million on capital projects in 2001-02, in line with estimated resources. Final capital expenditure amounted to Ł19.4 million, (including Single Regeneration Budget expenditure). It has been possible on this occasion to carry forward to 2002/03 sufficient resources to finance the resulting slippage.
STATEMENT OF ACCOUNTING POLICIES
1. General
The accounts have been prepared in accordance with the Code of Practice on Local Authority Accounting, issued by the Chartered Institute of Public Finance and Accountancy (CIPFA), and with guidance notes issued by CIPFA on the application of accounting standards (SSAPs) to Local Authorities.
2. Fixed Assets
Expenditure on the acquisition, creation or enhancement of fixed assets is capitalised on an accruals basis. This expenditure is classified as fixed assets provided that the fixed asset yields benefits to the authority and to the services it provides for a period of more than one year.
Fixed assets are recorded in the accounts at the lower of current replacement cost or realisable value in existing use, with the exception of certain community assets which are included at a nominal valuation and infrastructure assets which are valued at historical cost. Assets are revalued on a rolling five year programme. Current Asset values used in the accounts are based upon the certification by the Property Services Manager as at 31 March 2002.
Where a fixed asset is included in the balance sheet at current value, the difference between that value and its previous valuation in the balance sheet is credited or debited to the fixed asset restatement reserve.
The Authority does not hold in the balance sheet any assets to which finance lease liabilities apply.
Assets are depreciated over their useful economic lives, using the straight line method having regard to the anticipated life of each individual asset as contained in the asset register. Fixed Assets other than non-depreciable land are reviewed for impairment at the end of each reporting period in accordance with FRS11.
3. Basis of Charges for Capital
In addition to depreciation (see above) service departments are charged for the cost of capital employed based upon the values of the assets which they employ.
4. Capital Receipts
The usable part of capital receipts from the disposal of assets are held unapplied until they are used to finance capital expenditure. A proportion of certain receipts are set aside to pay for the repayment of debt or to be used in respect of credit approvals. Interest earned on the capital receipts balance is credited to the Summary Revenue Account.
5. Grants
Capital Grants received in respect of infrastructure are credited to the Capital Financing Reserve. Revenue grants are shown as income to the Authority in the current year.
6. Deferred Charges
Expenditure is generally financed and written off in the year in which it is incurred. Deferred Charges relating to the funding of the costs of local government reorganisation by the application of Supplementary Credit Approval (SCA) are charged to revenue account over a period of seven years commencing four years from the application of each SCA.
7. Debtors and Creditors
The accounts of the Council, including capital accounts, are maintained on an accruals basis in accordance with SSAP2. Transactions are included in the financial year to which they relate, regardless of whether the cash has actually been paid or received.
8. Stocks and Work in Progress
Stocks are valued at the lower of cost or net realisable value. Work in progress which will ultimately be charged to outside persons is included in the accounts at the lower of cost price or net realisable value.
9. Overheads
All costs of management and administration have been fully allocated to services. The main bases of allocation used are as follows:
Staff time: Accountancy, legal, personnel, estates, audit and best value support
Floor area: County Hall accommodation
Actual use: Printing, telephones, computing, exchequer and business support services
These bases are gradually being replaced where appropriate by negotiated agreements between providers of support services and their service department ‘clients’, covering service and charge levels.
10. Provisions
A provision is an amount set aside in the accounts for a liability where the authority has a present obligation (legal or constructive) arising from a past event, where it is probable that a transfer of economic benefits will be required to settle the obligation and where a reliable estimate can be made of the amount of the obligation.
11. Reserves
Numerous reserves are maintained in respect of the financing of future capital and revenue expenditure, and of other known future liabilities. Under the scheme for local management of schools, each school has a reserve for use in future years. Reserves include earmarked reserves set aside for specific policy purposes and balances which represent resources set aside for contingency purposes.
12. Pensions
Following an actuarial valuation of the Pensions Fund as at 31 March 1998, the Council’s contribution to the Fund was increased from 8% to 8.5% with effect from 1 April 1999, to 9% with effect from 1 April 2000 and to 9.5% with effect from 1 April 2001. This takes into account the actuary’s view of the Fund’s liabilities and assets and various changes in benefits and in the funding of index linking of pensions. The valuation reflected the return to the funding of 100% of liabilities.
Teachers’ and fire-fighters’ pension liabilities are not covered by the Fund. In the case of teachers, a payment is made to the Department of Education and Science notional fund, while fire-fighters’ pensions are charged directly to revenue.
13. Investments
Investments are shown in the Consolidated Balance Sheet at cost. Pension Fund investments are shown at market value on 31 March 2002. Pension Fund investments held in foreign currencies are shown at market value translated into the equivalent sterling rate ruling at 31 March 2002.
CONSOLIDATED REVENUE ACCOUNT
2001-02 2001-02 2001-02 2000-01
Gross Gross Net Net
Expenditure Income Expenditure Expenditure
Ł Ł Ł Ł
Education Services 75,668,675 8,829,193 66,839,482 63,843,649
Social Services 37,998,792 12,582,991 25,415,801 24,870,264
Cultural, Environmental & Planning Services 30,736,572 10,872,605 19,863,967 18,348,011
Highways, Roads & Transport 9,695,064 3,363,068 6,331,996 5,547,239
Fire Services 5,838,760 192,732 5,646,028 4,979,251
Housing Services (including Benefits) 37,812,030 33,926,023 3,886,007 2,746,689
Court Services (note 18) 668,396 0 668,396 832,976
Central Services 3,277,482 2,860,359 417,123
723,630
Corporate & Democratic Core 3,433,157 15,798 3,417,359 3,226,446
Unapportionable Central Overheads 489,922 0 489,922 399,826
____________ ____________ ____________ ____________
Net Cost of General Fund Services 205,618,850 72,642,769 132,976,081 125,517,981
Housing Revenue Account 0 76,095 (76,095)
(88,016)
____________ ____________ ____________ ____________
Net Cost of Services 205,618,850 72,718,864 132,899,986 125,429,965
Amounts due to precepting authorities 456,861 436,006
Transfer to Provisions & Reserves in lieu of
interest (note 1) 867,978 942,400
Transfer from asset management revenue a/c (note 8) (7,284,797) (6,168,993)
Interest receivable (1,500,485) (1,695,139)
____________ ____________
Net Operating Expenditure 125,439,543 118,944,239
HRA surplus transferred to HRA balances 76,095 88,016
Contributions to reserves (note 2) 2,556,656 2,109,895
Loss on Council Tax Subsidy 56,305 125,808
____________ ____________
and local taxpayers 128,128,599 121,267,958
Sources of Finance
Council
Taxpayers (39,840,803) (38,121,440)
Central
Government Grants (52,344,294) (46,562,793)
Non-Domestic
rate income (36,067,968) (36,572,320)
____________ ____________
Net general fund (Surplus)/deficit (124,466) 11,405
Balance on general fund brought forward (2,360,905) (2,372,310)
____________ ____________
Balance on general fund carried forward (2,485,371) (2,360,905)
____________ ____________
NOTES TO THE CONSOLIDATED REVENUE ACCOUNT
1. Interest on Internal Balances
Interest on various funds is credited to the General Fund and is then appropriated to the various provisions and reserves concerned as a ‘Transfer in lieu of interest’.
2. Transfer to and from Reserves
These transfers include unspent budgets in 2001-02 which are committed against 2002-2003 and unspent budgets in 2000-01 which were applied in 2001-02.
3. Section 137 Expenditure
The Local Government Act 2000 amended the provisions of Section 137 of the Local Government Act 1972. Actual expenditure in 2001/02 amounted to Ł4,400 and was in respect of a contribution to RELATE. (Ł4,400 in 2000/01).
4. Agency Services
Under various statutory powers an authority may agree with other local authorities, water companies and government departments to do work on their behalf. This Council did not carry out any significant agency work during 2001-02.
5. Publicity
As required by Section 5 of the Local Government Act 1986 the total amount spent on publicity in the year including recruitment advertising, was Ł553,581 (Ł456,572 in 2000-01).
6. Local Authority Goods and Services Act 1970
Services provided to other public bodies under the powers provided by this Act were as follows:
2001-02 2000-01
Ł Ł
Provision of Administrative, Professional and
Technical Services 75,006 72,797
Hire 568 1,448
Works Relating to Land and Buildings 1,909 11,588
_________ _________
77,483 85,833
_________ _________
The services were provided to the Riverside Centre, South Wight and Medina Housing Associations, SCOPAC, Isle of Wight Youth Trust, the Probation Service, Parish Councils, Magistrates Court, Citizens Advice Bureau, West Wight Regeneration Scheme, Local Government Association, SEEDA and bodies connected with Coastal Management.
In no case did this work represent a material proportion of the activity of the Isle of Wight Council departments concerned.
7. Building Regulations Charging Account 2001-02
The Local Authority Building Control Regulations require the disclosure of information regarding the setting of charges for the administration of the building control function. However, certain activities performed by the Building Control Section cannot be charged for, such as providing general advice and liaising with other statutory authorities. The statement below shows the total cost of operating the building control section divided between the chargeable and non-chargeable activities.
Non Total
Chargeable Chargeable Building
Control
2001-02 2001-02 2001-02
Ł Ł Ł
Expenditure
Employee expenses 217,821 80,946 298,767
Premises 3,350 0 3,350
Transport 15,784 5,262 21,046
Supplies and Services 16,917 4,541 21,458
Central and support service charges 80,604 32,058 112,662
__________ __________ __________
Total Expenditure 334,476 122,807 457,283
__________ __________ __________
Income
Building Regulation charges 338,766 0 338,766
Miscellaneous income 0 2,954 2,954
__________ __________ __________
Total Income 338,766 2,954 341,720
__________ __________ __________
Surplus/(Deficit) for Year 4,290 (119,853) (115,563)
8. Asset Management Revenue Account
The Asset Management Revenue account receives the charges to service departments for the use of capital assets and meets the cost of debt redemption and interest paid on external borrowing. The balance on the account as at 31st March 2002 is transferred to the Consolidated Revenue Account.
Ł
Expenditure
Provision for Depreciation 3,963,078
Less: Excess over Minimum Revenue Provision (1,873,940)
External Interest 5,269,313
____________
7,358,451
Income
Capital Charges to Services (14,643,248)
____________
Excess of capital charges over MRP & interest (7,284,797)
____________
9. Government Grants
Central Government and European Community revenue grants towards specific services were received during the year totalling Ł47,956,379. These are included as income offsetting service expenditure in the revenue account.
10. Operating Leases
Operating lease payments totalling Ł398,837 were made during the year. As at 31 March 2002 future commitments on these leases amounted to Ł394,872 repayable within one year and Ł2,565,292 repayable thereafter.
11. Associated Companies
The Council has interest in ten associated companies. Their net assets individually or jointly are not material to the accounts in 2001-02. The accounts of these companies have therefore not been consolidated into the financial statements of the Council.
Islecare 97 Ltd runs and manages residential homes and properties. It is a company limited by shares in which the Council has a 19% holding. The net assets of the company are not material to the Council. The company is not influenced or regulated.
Island 2000 Ltd coordinates and runs projects which preserve and enhance the landscape of the Island by utilising Landfill Tax credits. It is a company limited by guarantee in which the Council holds 33% of the voting rights. It is an influenced company, but not regulated.
Hampshire and Wight Trust for Maritime Archaeology is a registered charity established to preserve maritime archaeology sites in the Solent. It is a company limited by guarantee in which the Council holds 10% of the voting rights. The net assets of the company are not material to the Council. It is not an influenced company or regulated.
The Isle of Wight Development Board Ltd was established to promote the economic development of the Island. It is a company limited by guarantee in which the Council has 100% of voting rights. It is a controlled company under the Local Government and Housing Act 1989. The net assets of the company are not material to the Council.
OSEL Enterprises Ltd provides employment for people with learning difficulties. It is a registered charity and a company limited by guarantee in which the Council has no voting rights. Over 33% of the company’s income is derived from contracts with the Council. It is an influenced company not regulated.
Riverside Centre Ltd operates the multi-purpose Centre at Newport Quay. It is a company limited by guarantee in which the Council has a minority interest. A large proportion of the centre’s income comes from the Council and it is therefore an influenced company not regulated.
The Island Partnership advises the Council on economic matters. It is a company limited by guarantee in which the Council has 25% voting rights. It is not an influenced company or regulated.
Island Youth Water Activities (Isle of Wight) Ltd operates the Cowes Watersports Centre. It is a company limited by guarantee in which the Council controls 33% of the voting rights. Approximately 50% of the company’s income comes from the Council. It is an influenced regulated company.
The Tourism Partnership provides an advisory service to the Council and the Southern Tourist Board. It is a company limited by guarantee in which the Council controls 50% of the voting rights. It is an influenced regulated company.
Associated
Companies (cont)
Cowes Town Waterfront Trust owns the freehold of Cowes Marina. It is a company limited by guarantee in which the Council currently controls 25% of the voting rights. The net assets of the company are not material to the Council’s accounts. It is an influenced company not regulated.
12. Pension Costs - Local Government Pension Scheme
This defined benefit statutory scheme covers non-uniformed, non-teaching council employees. The Fund is administered by the Isle of Wight Council in accordance with the Local Government Pension Scheme Regulations 1997 as amended. It is funded to cover 100% of pension liabilities on an actuarial basis. The latest formal valuation for funding purposes was as at 31 March 2001, with the next formal valuation due as at 31 March 2004. Basic fund contributions were:
2001-02 2000-01
Ł Ł
Basic Contributions 3,327,519 2,817,227
(as a % of pensionable pay) 9.50 9.00
The capital cost of discretionary increases in pension payments are: Ł Ł
(a) approved in the year 502,169 294,022
(b) in earlier years for which payments are still being made 9,045,833 8,511,828
In accordance with Financial Reporting Standard No.17 – Retirement Benefits (FRS17) the Council is required to disclose certain information concerning assets, liabilities, income and expenditure related to pension schemes for its employees. Disclosures relating to assets and liabilities are shown in Note 49 to the Consolidated Balance Sheet.
13. Pension Costs - Teachers
The Teachers’ scheme is operated by the Department for Education on the basis of a ‘notional fund’. Contributions were as follows:
2001-02 2000-01
Ł Ł
Basic Contribution 2,303,779 2,036,527
(as a % of pensionable pay ) 7.40 7.40
Enhanced years payments 302,902 266,200
14. Pension Costs - Fire-fighters
This scheme operates on an unfunded, or ‘pay-as-you-go’ basis. Pension costs are set out below, together with an estimate of the full annual cost of funding the liabilities involved, and the cost of spreading the accrued unfunded liability over 40 years, as required by SSAP 24.
2001-02 2000-01
Ł Ł
Charged to Revenue Account 1,011,344 760,304
(as a % of pensionable pay) 64.24 48.93
Full cost (per annum) 432,965 427,309
(as a % of pensionable pay) 27.50 27.50
Accrued liability spread over 40 years (per annum) 838,627 697,118
(as a % of pensionable pay) 53.27 44.86
15. Disclosure of Employees’ Emoluments
The number of officers, teachers and other staff whose remuneration, excluding pension contributions, exceeded Ł40,000 were:-
Remuneration Band 2001-02 2000-01
Number of Employees Number of Employees
Total Left during Total Left during
year year
Ł40,000 to Ł49,999 49 0 30 0
Ł50,000 to Ł59,999 11 3 8 1
Ł60,000 to Ł69,999 2 0 2 0
Ł70,000 to Ł79,999 2 0 2 0
Ł80,000 to Ł89,999 1 0 0 0
Ł90,000 to Ł99,999 1 0 1 0
16. Members’ Allowances
The total amount of members’ allowances paid in the year were Ł385,043 (Ł376,283 in 2000-01). This includes basic and special responsibility allowances.
17. Trading Operations
The Best Value Accounting Code of Practice sets out categories of trading operations which authorities should consider disclosing and detailing in a note to the Consolidated Revenue Account. For the financial year ending 31st March 2002, all such activities are included in the total cost of the relevant services and are therefore consolidated into the net cost of services. These operations are not considered to be material and therefore no separate disclosure has been made.
18. Comparatives with Preceding Financial Year
With effect from 1st April 2001, the Isle of Wight Council ceased to be the accounting body for the Probation Service. In 2000-01 the net cost of the Probation Service was Ł189,412 and this is included under Court Services. In 2001-02 Court Services represents the costs of the Magistrates’ and Coroners’ Court Services only.
19. Related Parties Transactions
The 1998 statutory Code of Practice on Local Authority Accounting requires that all local authorities should disclose material transactions with related parties.
For the purposes of the Code, related parties to Isle of Wight Council are deemed to be:
Central Government and other Public Bodies
Any joint venture partners of Isle of Wight Council
Any subsidiary company or associated companies of Isle of Wight Council
Elected members
Chief Officers
The Council’s pension fund
During the year, transactions with related parties arose as follows:-
Payments
Ł’000s
Environmental Agency Southern Region:-
Land Drainage Precept 419
Southern Sea Fisheries Precept 57
Osel Enterprises Ltd 327
Riverside Centre Ltd 256
Island Youth Water Activities (IW) Ltd 49
_______
1,108
_______
For elected members and chief officers, related parties also include:
Members of close family
Members of same household
Companies, partnerships, trusts or other entities in which close family or members of the same household have a controlling interest.
A transaction is deemed to be:
A transfer of assets (including cash) or liabilities
Performance of services, irrespective of whether a charge is made
Provision of a loan
Provision of a guarantee
Elected members and Chief Officers were requested to disclose any related party transactions.
There are eleven relevant and material disclosures from members and Chief Officers. The total value of these disclosures is Ł283,993. Three members have not responded to requests for information.
HOUSING REVENUE ACCOUNT
2001-02 2000-01
Ł Ł Ł
Income
Gross Rental Income 0 (110,707)
Item 8 Determination (note 23) (76,095) (854,410)
Other Income 0 (1,021)
Total Income (76,095) (966,138)
Expenditure
Temporary Accommodation (note 20) 0 2,002
Rent Rebates (note 21) 0 8,759
Surplus on Notional HRA (note 23) 0 797,352
Total Expenditure 0 878,122
(Surplus)/deficit for year (76,095) (88,016)
HRA balance brought forward 76,095 164,111
HRA balance carried forward 0 76,095
NOTES TO HOUSING REVENUE ACCOUNT
20. Temporary Accommodation
These costs relate to the provision of Council owned bed and breakfast accommodation and a small number of other temporary accommodation units.
21. Rent Rebates
Financial assistance is given to tenants under Housing Benefit regulations. Rebates granted form part of the overall calculation of Housing subsidy, to which the Council has no current entitlement.
22. Rent Arrears
As at 31st March 2002, rent arrears amounted to Ł3,749 and an equivalent provision has been made in the accounts. (Ł3,525 as at 31st March 2001).
23. Notional HRA and Item 8
Determination
These transfers between the HRA and General Fund are in accordance with Government determinations. A transfer from the General Fund was made in the year to offset the previously accumulated deficit.
24. The Housing Revenue Account (Isle
of Wight) Direction 2001
On the 30th March 2001 the Council was granted a direction permitting it to account for HRA properties outside the HRA with effect from 1st April 2001. The Secretary of State has consented to the closure of the Housing Revenue Account with effect from 31st March 2002.
THE COLLECTION FUND
2001-02 2000-01
Ł Ł Ł
Income
Council Tax (note 26) 36,735,668 34,726,563
Transfers from General Fund:-
Council Tax Benefits 6,073,471 5,945,856
Contribution re: Discretionary Relief 66,591 54,119
____________ ____________
6,140,062 5,999,975
Income collectable from business ratepayers (note 25) 21,313,087 18,715,269
___________ _ ____________
64,188,817 59,441,807
___________ _ ____________
Expenditure
Isle of Wight Council Precept 39,840,803 38,121,440
Police Precept 2,935,860 2,734,248
Business Rate:-
Payment to National Pool 21,195,401 18,172,550
Costs of Collection 256,793 257,363
____________ ____________
21,452,194 18,429,913
Provision for Bad Debts 9,923 432,627
Adjustment of previous years’ community charge (416) (2,316)
____________ ____________
64,238,364 59,715,912
____________ ____________
Collection Fund Balance at 31st March 2001-02 2000-01
Ł Ł
Balance on Fund at start of year (109,095) (383,200)
Deficit for Year 49,547 274,105
____________ ____________
Balance on Fund Carried Forward (59,548) (109,095)
____________ ____________
NOTES TO THE COLLECTION FUND
25. The total non-domestic rateable value at 31 March 2002 was Ł56,865,946 and the non-domestic rate multiplier for the year was 43.0p.
26. The following details the number of properties in each valuation band of the tax base for 2001-02:-
A B C D E F G H
6,456 13,045 13,463 10,769 5,717 2,490 1,175 73
These equated to 49,875.3 Band D equivalent properties and after making a 0.8% allowance for non- collection and changes in the valuation list, a tax base of 49,476.0 was approved.
27. The following precepts were made on the fund in 2001-02:-
Ł
Isle of Wight Council 39,840,803
Police 2,935,860
____________
Total 42,776,663
____________
CONSOLIDATED BALANCE SHEET
31 March 2001 31
March 2002
Ł Ł Ł
Net
Fixed Assets (note 28)
157,157,520 Land
and Buildings 172,213,148
28,459,054 Infrastructure 33,930,744
6,951,971 Vehicles,
Plant, Furniture & Equipment 7,373,053
1,660,079 Community
Assets 2,949,605
____________ ____________
194,228,624 216,466,550
1,328,582 Deferred Charges (note 28) 1,037,439
68,770 Investments
(note 31) 46,536
1,352,209 Long
Term Debtors (note 29) 966,726 __________
___________ _ ____________
196,978,185 Total
Long Term Assets 218,517,251
____________ ____________
Current
Assets
632,060 Stock
& Work in Progress (note 30) 751,081
8,929,037 Debtors
& Payments in Advance (note 32) 7,633,136
21,700,000 Temporary
Advances (note 34) 25,100,000
898,042 Cash
in bank and in hand 1,588,819
_ ___________ ____________
32,159,139 35,073,036
Current
Liabilities
15,703,300 Creditors
& Receipts in Advance (note 33) 14,962,929
582,813 External
Borrowing repayable within one year (note 35) 628,601
2,549,141 Bank
Overdraft 3,769,047
_ ___________ ____________
18,835,254 19,360,577
_ ___________ ____________
13,323,885 Net Current Assets/(Liabilities) 15,712,459
_ ___________ ____________
Long
Term Liabilities
86,497,472 External
Borrowing repayable in more than one year (note 35) 96,496,508
622,758 Deferred
Credits (note 40) 240,748
7,399,173 Provisions
(note 38) 7,039,996
_ ___________ ____________
94,519,403 103,777,252
____________ ____________
115,782,667 Total Net Assets 130,452,458
____________ ____________
Financed
By
13,358,422 Earmarked
Reserves (note 39) 16,352,942
67,453,221 Fixed
Asset Restatement Reserve (note 41) 77,056,360
29,360,582 Capital
Financing Reserve (note 42) 34,100,377
737,521 Capital
Receipts Unapplied (note 36) 0
2,479,016 Capital
Grants Unapplied (note 37) 397,860
2,360,905 General
Fund Balance 2,485,371
(76,095) Housing Revenue Account 0
109,095 Surplus
on Collection Fund
59,548
____________ ____________
115,782,667 Total Reserves 130,452,458
____________ ____________
NOTES TO THE CONSOLIDATED BALANCE SHEET
28. Fixed Assets
Movement in fixed assets were as follows:
Balance at 1 April 157,157,520 28,459,054 6,951,971 1,660,079 194,228,624
Depreciation (1,942,999) (1,081,600) (458,816) (25,431) (3,508,846)
Disposals (525,750) 0 0 (45,000) (570,750)
Revalued in year 8,898,889 0 0 1,275,000 10,173,889
Balance at 31 March 172,213,148 33,930,744 7,373,053 2,949,605 216,466,550
The main items of capital expenditure were:-
Ł
Road Improvements 5,218,574
Sandown Dinosaur Museum 1,231,757
Carisbrooke High School Development 854,489
Lake Middle School – Extension 837,492
Lynbottom Tip – Phase 3 685,327
Northwood Primary School – Alterations & extensions 434,753
Love Lane Primary School – Replace Classroom Block 404,385
In addition, major contracts had been entered into with the following outstanding sums at 31 March 2002:-
Ł
Sandown /Shanklin Cliff Stabilisation (Revenue) 483,827
Kitbridge Middle School – Phase 1 Extension 428,817
Forelands Middle School – Improve Circulation 368,169
Lynbottom Tip – Phase 3 329,924
Deferred Charges
During the financial years 1994-95 and 1995-96 a total of Ł2,022,794 was charged to capital account in respect of revenue costs associated with Local Government Reorganisation. This was financed by the application of Supplementary Credit Approvals (SCAs) issued by the Department of the Environment. Under regulations relating to local government reorganisation the deferred charges will be charged to the Revenue Account over a period of seven years, commencing four years from the application of each SCA. The first charge to revenue was made in the 1998-99 financial year in respect of SCA applied in 1994-95.
Movement in Deferred Charges
Balance at Expenditure Written out Balance at
1 April in year in year 31 March
Ł Ł Ł Ł
Improvement Grants 0 1,151,180 (1,151,180) 0
Housing Association Grant 0 801,097 (801,097) 0
Reorganisation Costs 1,328,582 0 (291,143) 1,037,439
Single Regeneration Budgets 0 803,545 (803,545) 0
Other Expenditure 0 475,409 (475,409) 0
Total 1,328,582 3,231,231 (3,522,374) 1,037,439 __________ __________ __________ __________
Capital Expenditure in 2001-02 was financed as follows:-
Credit Approvals 10,377,704
Government Grant 6,998,379
Accrued Expenditure unfinanced 116,382
Total 19,374,864
Information on Fixed Assets
An analysis of fixed assets at 31 March is:
2002 2001
Libraries 11 11
Museums 4 3
Tourist Information Centres 4 4
Allotment sites 21 21
Park areas & amenity sites 210 210
Theatres 2 2
Shanklin Lift 1 1
Leisure Centres 2 2
Schools * 51 51
with a - sports centre 3 3
- theatre 1 1
- swimming pool 1 1
Other Educational properties * 20 20
Fire Stations 10 10
Crematorium 1 1
Courts 1 1
Cemeteries 12 12
Cemetery Lodges 0 2
Guildhall 1 1
Waste Derived Fuel Plant 1 1
Refuse Disposal Sites 2 2
Toilet Blocks 81 81
Car Parks 78 78
Harbours 2 2
Residential Homes for the Elderly 4 4
Resource Centres for the Elderly 2 2
Group Homes 7 8
Family Centre 1 1
Day/Community Centres 12 12
Other Social Services Properties 20 20
Hostels 1 1
Highways Depots and Other Premises 10 10
Chain Ferry and Terminals 1 1
Smallholdings 0 2
Industrial Estates 8 8
Council Dwellings 5 5
Garage Sites 3 3
County Hall 1 1
Other Office Premises 22 22
Other Premises & Land Sites 37 37
Vehicles and Major Plant - owned 85 114
- leased 109 108
Roads and Bridges (Km) 797.3 797.3
Cycleways (km) 36.3 13.5
Coastal Defences (km) 41 41
* Excluding church schools not owned by Isle of Wight Council.
29. Long Term Debtors
Long term debtors consist mainly of mortgages to private householders and loans to employees for car purchase. These loans are repayable over varying periods, interest being charged at nationally determined rates. At 31 March 2002 the balance amounted to Ł966,726.
30. Stocks and Work-in-Progress
31 March 31 March
2002 2001
Ł Ł
Works-in-Progress 122,028 88,895
Stocks 629,053 543,165
__________ __________
Balance at end of year 751,081 632,060
__________ __________
31. Investments
These comprise Ł15,930 in Government Stocks (2000-01 Ł15,930) and an equity holding of Ł30,606 in the former Wiltshire County Council based Consortium for Purchasing and Distribution (CPD), of which the Council is a member. Wiltshire County Council sold their interest in November 1995 to CPD Ltd which is a private sector company. Under the terms of the sale, the equity holding is being repaid by instalments over a seven year period commencing in April 1999.
32. Debtors and Payments in Advance
31 March 31 March
2002 2001 Ł Ł
Ł Ł
Government Departments 1,463,499 3,002,214
Local Taxpayers 1,726,991 1,911,879
Other Organisations and Individuals 6,024,101 5,603,194
__________ __________
9,214,591 10,517,287
less Provision for Bad Debts (1,581,455) (1,588,250)
__________ __________
Balance at end of year 7,633,136 8,929,037
__________ __________
The Provision for Bad Debts is reviewed annually and is a cumulative figure to cover all outstanding debtors.
33. Creditors and Receipts in Advance
31 March 31 March
2002 2001
Ł Ł
Government Departments 3,363,531 3,592,823
Local Taxpayers 1,374,786 1,299,879
Other Organisations & Individuals 10,224,612 10,810,598
__________ __________
Balance at end of year 14,962,929 15,703,300 __________ __________
__________ __________
34. Temporary Advances
The amount shown at 31 March 2002 principally involved the temporary investment of surplus cash flows and internal funds.
35. External Borrowing
31 March 31 March
2002 2001
Ł Ł
Repayable in 1-2 years 1,500,983 962
Repayable in 2-5 years 1,189,005 2,688,934
Repayable in 5-10 years 8,005,576 8,005,526
Repayable in more than 10 years 85,800,944 75,802,050
____________ ____________
Repayable in more than one year 96,496,508 86,497,472
Repayable within one year 628,601 582,813
____________ ____________
Total External Borrowing 97,125,109 87,080,285
____________ ____________
Of which, Public Works Loan Board (PWLB) 85,495,666 80,496,478
36. Useable Capital Receipts
Capital Receipts are generated mainly from the sale of fixed assets and are used to support the Council’s capital investment programme. All accumulated receipts were utilised in the year.
31 March 31 March
2002 2001
Ł Ł
Balance at beginning of year 737,521 2,217,507
Sale of Capital Assets 1,144,878 1,787,390
__________ __________
1,882,399 4,004,897
Less: Applied to capital (1,882,399) (3,267,376)
__________ __________
Balance at end of year 0 737,521
__________ __________
37. Capital Grants
Capital Grants towards the cost of capital projects are generally applied as expenditure is incurred.
31 March 31 March
2002 2001
Ł Ł
Balance at beginning of year 2,479,016 2,701,212
Capital Grants Received 4,917,223 3,872,588
____________ ____________
7,396,239 6,573,800
Less: Applied to Capital (6,998,379) (4,094,784)
____________ ____________
Balance at end of year 397,860 2,479,016
____________ ____________
38. Provisions
Balance Receipts Payments Balance
1 April 31 March
Ł Ł Ł Ł
Insurance Liabilities Fund 6,738,350 408,543 725,022 6,421,871
Redundancy Fund 344,868 35,489 0 380,357
Holiday Pay Provision 90,298 4,294 0 94,592
Magistrates’ Court Liabilities 15,000 0 0 15,000
Claims Against Highways Authority 33,157 1,577 0 34,734
Waste Management Contract Claims 177,500 93,442 177,500 93,442
__________ __________ __________ __________
Balance at end of year 7,399,173 543,345 902,522 7,039,996
__________ __________ __________ __________
39. Earmarked Reserves
Balance Contributions Payments Balance
1 April 31 March
Ł Ł Ł Ł
Capital Slippage Reserve 661,374 1,027,563 0 1,688,937
Repairs & Renewals Funds 3,458,837 733,716 1,153,433 3,039,120
General Earmarked Reserves 1,961,418 2,355,302 1,930,414 2,386,306
School Delegated Balances 2,527,045 846,273 1,077,823 2,295,495
General Insurance Reserves 2,550,789 1,046,312 309,000 3,288,101
Other Reserves 2,198,959 2,424,208 968,184 3,654,983
__________ __________ __________ __________
Balance at end of year 13,358,422 8,433,374 5,438,854 16,352,942
__________ __________ __________ __________
The Capital Slippage Reserve provides a source of finance for capital projects in future years. In particular, it allows financing resources associated with delayed projects to be carried forward until the related expenditure is incurred.
The Repairs and Renewals Funds include a central contingency to meet significant items of unforeseen expenditure, together with service specific funds for equipment renewal.
General
Earmarked Reserves provide finance for past underspendings which represent a
commitment against future years’ budgets.
School balances represent cumulative underspendings by delegated budget holders under Schemes for Financing Schools. The law requires that these underspendings are carried forward, for future use by the school concerned.
The General Insurance Reserves provide the means to take additional categories of insurance risk in-house in the future and to meet various contingencies.
40. Deferred Credits
This item principally comprises outstanding amounts on mortgages made to private householders (former Council tenants) and other sundry loans.
41. Fixed Asset Restatement Reserve
Changes to asset values on revaluation or disposal are transferred to this reserve. It is not available to finance expenditure.
42. Capital Financing Reserve
The Local Government and Housing Act 1989 provides for certain sums to be ‘set aside’ for the redemption of debt or for financing new capital expenditure for which borrowing would otherwise have been required. Each year, the Council is required to set aside a proportion of its credit limit at the start of the year, plus Government prescribed proportions of the proceeds of asset sales. This reserve is not available to finance Capital Expenditure.
31
March 31 March
2002 2001
Ł Ł
Balance as at 1 April 2001 29,360,582 28,214,852
Minimum Revenue Provision Adjustment (1,873,940) (1,264,451)
Financing of Deferred Charges (3,522,372) (4,470,849)
Set Aside Receipts 801,097 1,167,850
Useable Receipts Applied 1,882,399 3,267,376
Capital Grants Applied 6,998,379 4,094,784
Loan Repayment Applied 0 (1,648,980)
Depreciation adjustment 454,232 0
____________ ____________
Balance at end of year 34,100,377 29,360,582
____________ ____________
43. Provision for Credit Liabilities (Memorandum Account)
The Local Government and Housing Act 1989 requires that the Council set aside annually a specified minimum sum (Minimum Revenue Provision) from Revenue Account to a Provision for Credit Liabilities (PCL). The PCL can be used for the repayment of external loan debt or in lieu of any use of Credit Approvals.
Ł
Balance as at 1 April 2001 1,100,349
Minimum Revenue Provision 1,797,995
Housing Association Grant 801,097
____________
3,699,441
Applied in Year 377,704
____________
Balance as at 31 March 2002 3,321,737
____________
44. Government Grants
Capital Grants of Ł6,998,379 relating to capital investment have been credited to the Capital Financing Reserve. These principally relate to Education, Single Regeneration Budget and Millennium Commission Schemes.
45. Trust Funds and Other Balances
The Council holds a number of small trust funds and balances on behalf of others which are not included in the Consolidated Balance Sheet. These include cash held in safekeeping for residents of old peoples’ homes and amenities funds set up to provide facilities at particular establishments from the proceeds of fund raising and bequests.
31 March 31 March
2002 2001
Ł Ł
Trust Funds Etc 117,957 115,993
Cash in Safekeeping 6,075 6,075
Amenity Funds 71,239 69,502
__________ __________
195,271 191,570
__________ __________
47. Contingent Liabilities
The Council has indemnified the South Wight Housing Association in respect of the cost of any defects that would have led to a reduction in the transfer valuation of the former South Wight Borough Council housing stock, had a full survey been made on an individual property basis. The potential liability has not been quantified.
Impairment of Fixed Assets as recognised by Financial Reporting Standard (FRS) 11 has occurred in respect of significant landslips, the final costs of which are currently being evaluated.
The Council is the guarantor of rent for two buildings currently operated by the Isle of Wight Partnership.
The Council could face a potential cost of up to Ł500,000 of claims in respect of charges made before 1st April 2000 under Section 117 of the Mental Health Act.
There are a number of other legal claims and Ombudsman cases with a potential total liability of up to Ł230,000.
The promotion of the Isle of Wight Music Festival in June 2002 incurred an estimated net loss of approximately Ł300,000, for which there was no budget provision in the 2002/03 estimates.
In accordance with Financial Reporting Standard No.17 - Retirement Benefits (FRS17) the Council is required to disclose certain information concerning assets, liabilities, income and expenditure related to pension schemes for its employees. As explained in Note 12 of the Statement of Accounting Policies, the Council participates in three formal schemes. The Local Government Pension Scheme Fund is administered the Council, but the teachers’ and fire-fighters’ pension liabilities are not covered by this Fund. The incorporation of FRS 17 requirements for Local Authorities is being phased in over the next three financial years and this disclosure meets the transitional requirements.
The Council’s assets and liabilities at 31 March 2002 amounted to:
Ł000’s
__________
Net Pension Liability (19,537)
__________
Liabilities have been assessed on the actuarial basis using the projected unit method, which assesses the future liabilities of the fund discounted to their present value. The actuarial valuation of the Isle of Wight Pension Fund is based on the position as at 31 March 2002 and has been assessed by Hymans Robertson, an independent firm of actuaries. The main assumptions used in their calculations are:
Assets are valued at fair value, principally market value for investments, and consist of the following categories:
Assets (Whole Fund) Long Term Fund Value at Expected
Return 31 March 2002 Return
%
Ł000’s Ł000’s
per annum per annum
Total 170,120 12,008
__________ __________
If the net pension liability position reported above persists, this will in due course raise the long term cost of pensions.
2001-02 2000-01
Revenue Activities Ł Ł Ł
Cash
Outflows
Cash
paid to and on behalf of employees 86,987,773 78,447,924
Other
operating cash payments 107,512,960 94,590,478
____________ ____________
194,500,733 173,038,402
Cash
Inflows
Rents (673,096) (714,063)
Council
Tax Income (37,029,913) (35,074,840)
Non-Domestic
Rate Income (36,067,968) (37,080,454)
Revenue
Support Grant (52,344,294) (46,562,793)
Other
Government Grants (47,956,379) (40,937,789)
Cash
Received for Goods and Services (24,686,390) (25,916,347)
___________ ____________
Revenue Activities Cash Flow (note 51) (4,257,307) (13,247,884)
Servicing of Finance
Interest
paid 5,269,313 5,638,109
Interest
Received (1,500,485) (1,695,139)
____________ ____________
(488,479) (9,304,914)
Capital Activities
Cash
Outflows
Purchases
of Fixed Assets
16,143,633 11,924,495
Other
Capitalised Expenditure 3,231,231 4,111,196
Cash
Inflows
Sale
of Fixed Assets (1,144,878) (1,787,390)
Capital
Grants Received (4,917,223) (3,872,588)
____________
____________
(6,062,101) (5,659,978)
____________ ____________
13,312,763 10,375,713
____________ ____________
Net Cash (Inflow)/Outflow Before Financing 12,824,284 1,070,799
Financing
Repayments
of Amounts Borrowed & Temporary Advances 799 5,027,873
New
Loans Raised (10,000,000) (8,700,000)
____________ ____________
(9,999,201) (3,672,127)
____________ ____________
(Increase)/Reduction in cash and cash equivalents (note
52) 2,825,083 (2,601,328)
Note 50
The cash flow statement summarises the inflows and
outflows of cash arising from transactions with third parties for revenue and
capital purposes. Reconciliation to the
Consolidated Revenue Account surplus and the Consolidated Balance Sheet cash
figure is provided in Notes 51 and 52.
Note 51
2001-02 2000-01
Ł Ł
General Fund movement as per Consolidated Revenue
Account (124,466) 11,405
Increase/(reduction)
in Stock and Work in Progress 119,021 17,240
Increase/(reduction)
in Debtors (1,295,901) 1,018,163
(Increase)/reduction
in Creditors 740,371 (3,650,136)
Transfers
to/(from) Reserves & other non-cash transactions 72,496 (6,701,586)
Interest
Payments (5,269,313) (5,638,109)
Interest
Receipts 1,500,485 1,695,139
____________ ____________
Revenue Activities Net Cash Flow (4,257,307) (13,247,884)
____________ ____________
Note 52
2001-02 2000-01
Consolidated Balance Sheet Movements Ł Ł
(Increase)/Reduction
in Bank Overdrawn (1,219,906) 707,216
Increase/(Reduction)
in Cash in Hand 690,777 363,583
(Increase)/Reduction
in Short Term Loans (45,788) (2,322,127)
Increase/(Reduction)
in Bank Advances 3,400,000 (1,350,000)
____________ ____________
(Increase)/Reduction in Cash and Cash Equivalents 2,825,083 (2,601,328)
____________ ____________
STATEMENT OF TOTAL MOVEMENTS ON RESERVES
2001-02 2000-01
Ł Ł
Surplus/(deficit) for the year:
General
Fund 124,466 (11,405)
Housing
Revenue Account 76,095 88,016
add back Movements on specific revenue reserves 2,944,973 2,275,162
__________ __________
Total Increase/(decrease) in revenue resources 3,145,534 2,351,773
Increase/(decrease) in usable capital receipts (737,521) (1,479,986)
Increase/(decrease) in unapplied capital grants &
contributions (2,081,156) (222,196)
__________ __________
Total Increase/(decrease) in realised capital
resources (note 1) (2,818,677) (1,702,182)
Gains/(losses) on revaluation of fixed assets 10,173,889 456,790
Impairment losses on fixed assets due to general
changes in prices 0 0
__________ 10,173,889 __________
Total Increase/(decrease) in unrealised value of fixed
assets (note 2) 456,790
Value of assets sold, disposed of or decommissioned
(note 3) (570,750) (678,000)
Capital receipts set aside 2,683,496 4,435,226
Revenue resources set aside (1,419,708) (2,913,431)
Movement on Government Grants Deferred 3,476,007 (376,065)
__________ __________
__________ __________
Notes to the Statement of
Total Movements on Reserves
Usable
capital Unapplied
Ł Ł
1. Movements in realised capital resources
Amounts applied to finance new capital investment in
2001/02 (1,882,399) (6,998,379)
Total increase/(decrease) in realised capital
resources in 2001/02 (737,521) (2,081,156)
Fixed
asset
restatement
reserve
Ł
2. Movements
in unrealised value of fixed assets
3. Value
of assets sold, disposed of or decommissioned
4. Movements
in amounts set aside to
Fund Account for year ended
31 March 2002
2001-02 2000-01
Ł Ł Ł
Contributions and Benefits
Contributions receivable:
From Employers (3,833,371) (3,303,474)
From Employees or Members (2,370,187) (2,140,751)
Transfers in (1,229,163) (1,889,275)
Other Income (2,885) (5,760)
____________ _________
(7,435,606)
(7,339,260)
Benefits Payable
Pensions 7,251,588 6,657,737
Lump Sums (including
retirement & death benefits) 1,231,579 1,236,711
Payments to and on account of leavers:-
Refunds of
contributions 33,129 15,445
Transfers out 460,705 409,243
Administrative and other expenses 301,269 295,610
____________ ____________
9,278,270 8,614,746
____________ ____________
Sub Total: net withdrawals from dealings with members (1,842,664) (1,275,486)
____________ ____________
Returns on Investments
Investment income (see
analysis below) 5,245,321 5,882,745
Change in market value of investments (realised &
unrealised) (9,583,566) (15,757,575)
Investment management expenses (285,258) (290,860)
____________ ____________
Sub total - Net returns on investments (4,623,503)
(10,165,690)
____________ ____________
Net increase (decrease) in the fund during the year (6,466,167)
(11,441,176)
Opening Net assets of the scheme 176,586,061 188,027,237
____________ ____________
Closing Net assets of the scheme 170,119,894 176,586,061
____________ ____________
Analysis of Investment Income:
Fixed Interest 552,995 1,244,074
Equities 3,234,482 3,104,216
Index Linked 111,070 153,313
Unit Trusts - Property 495,075 417,607
- Other 332,452 256,203
Interest 519,247 707,332
____________ ____________ ____________
5,245,321 5,882,745
____________ ____________
ISLE OF WIGHT COUNCIL PENSION
FUND
Net Assets Statement as at 31
March 2002
2001-02 2000-01 Ł Ł Ł
Investments at market value:
Fixed Interest 22,666,519 26,923,217
Equities 108,416,763 107,237,877
Index Linked 3,670,562 4,724,232
Unit Trusts – Property 9,881,405 7,898,297
Unit Trusts – Other 19,106,968 18,415,431
____________ ____________
163,742,217
165,199,054
- Isle of Wight Council 243,264 (16,985)
Other net assets:
Debtors - Government 18,757 17,368
- admitted
bodies 73,666 59,767
- interest 25,029 48,847
- security
sales 691,727 748,649
- dividends 697,069 740,395
- other 80,518 67,501
1,586,766 1,682,527
Less:
Creditors - security purchases (1,615,553) (431,078)
- other (89,846) (124,759)
__________ ____________
(1,705,399) (555,837)
____________ ____________
Net Assets 170,119,894 176,586,061
___________ _ ___________ _
ISLE OF WIGHT COUNCIL PENSION FUND
1. Operation and Membership
The Fund is administered by the Council to provide retirement benefits for the majority of local government employees throughout the Isle of Wight, with the exception of Teachers and Fire-fighters. Membership of the Local Government Scheme is available to most employees between the ages of 16 and 65.
Employees have a right to ‘opt out’ of the Scheme and rely on alternative schemes such as the State Earnings Related Scheme (SERPS) or a Personal Pension Scheme.
In addition to the employees of the Isle of Wight Council, some of the employees of the following bodies participate in the Fund.
Cowes Harbour Commissioners
Yarmouth (IW) Harbour Commissioners
St Catherines School Ltd
Trustees of Carisbrooke Castle Museum
IW Society for the Blind
Isle of Wight Magistrates’ Courts Committee
Isle of Wight Rural Community Council
South Wight Housing Association Ltd
Medina Housing Association Ltd
The Quarr Group (formerly Island Group 90 Ltd)
Isle of Wight College
Riverside Centre Ltd
Osel Enterprises Ltd
Planet Ice (IOW) Ltd
Island 2000 Trust Ltd
Atlantic Housing Group Ltd
At 31 March 2002
|
|
Council |
Other |
Total |
|
Number of Contributors |
3,874 |
280 |
4,154 |
|
Ł2,116,196 |
Ł253,991 |
Ł2,370,187 |
|
|
Ł7,467,821 |
Ł1,015,347 |
Ł8,483,168 |
Contributions to the Fund by employees were made at 6% pensionable pay. However, employees who hold lower rate rights are entitled to make contributions at 5% of pensionable pay.
The rate at which the employers contribute to the Fund is determined by the actuarial valuations of the Fund (See Note 7)
There
were 2,073 pensions in payment from the Fund in
respect of former employees and their dependants and 1,462 former employees who
have entitlement to preserved benefits.
During 2001-02, 1,266 purchases and 765 sales of investments took place following broad guidelines accepted by an investment panel which comprised Councillors Mrs Lawson, Barry, Bowker, Harris, Mundy, Pearson, Sutton and the Strategic Director for Finance and Information and County Treasurer.
The cost of purchases amounted to Ł90,294,365 and the net proceeds received from the sales totalled Ł84,193,094. The Funds managing agents for the period were Schroder Investment Management (UK) Ltd.
At 31 March 2002 the number of individual holdings was as follows:
UK Equities 86
UK Government Securities 18
Non UK Government Securities 92
Cash Instrument 1
405
Net new money coming into the Fund in 2001-02, that is to say the surplus of contributions and investment income over benefit payments and expenses, amounted to Ł3,117,398 compared to Ł4,316,400 in 2000-01.
The net assets of the fund at 31 March 2002 totalled Ł170,119,894, a reduction of 3.66% on the 2000-01 valuation of Ł176,586,061.
Provided below is a list of the 10 largest investments at 31 March 2002 including the percentage of the total market value.
Stock |
Value |
% |
|
10,168,654 |
5.96 |
|
|
Schroder Exempt Property Units
GBP10 |
7,621,705 |
4.46 |
|
BP PLC Ordinary USD0.25 |
7,037,500 |
4.12 |
|
GlaxoSmithkline PLC Ordinary
25p |
6,230,618 |
3.65 |
|
Schroder Instl. Pacific Fund Income Units |
6,014,007 |
3.52 |
|
Vodafone Group PLC Ordinary USD0.10 (UK Listing) |
4,459,508 |
2.61 |
|
Schroder Instl UK Smaller Cos Fund Income Units |
4,395,468 |
2.57 |
|
HSBC Holdings PLC Ordinary USD0.50 (London) |
3,865,120 |
2.26 |
|
Shell Transport & Trading Company Ordinary 25p |
3,321,050 |
1.95 |
|
AstraZeneca Group PLC Ordinary USD0.25 |
2,963,950 |
1.74 |
Analysis of market value under the management of Schroder Investment Management (UK) Ltd at 31 March 2002:-
|
|
UK Ł |
Foreign Ł |
Total Ł |
|
Listed |
112,855,839 |
43,264,673 |
156,120,512 |
|
Unlisted |
7,621,705 |
0 |
7,621,705 |
|
Total |
120,477,544 |
43,264,673 |
163,742,217 |
Analysis of Market value at 31 March 2002 by Industrial Sector see Appendix A.
|
|
31
March 2002 |
31
March 2001 |
% Change |
|
FT Actuaries - All Share Index |
2557.40 |
2711.40 |
-5.67 |
|
FT Actuaries - World (ex-UK)
Index |
284.98 |
299.26 |
-4.77 |
2. Trustees Report
The Trustees of the Pension Fund are the members for the time being of the Investment Panel as named in Note 1 above.
The performance of the Fund under the management of Schroder Investment Management (UK) Ltd has remained marginally ahead of the median fund over ten complete years of their mandate.
The 2001/02 financial year saw an overall reduction in the funds value due to the difficult investment conditions affecting all pension funds. The value of the Fund at 31st March 2002 was Ł170,119,894 a fall of 3.66% on the 31st March 2001 valuation.
3. Investment Review (Produced by Schroder Investment Management (UK) Ltd)
|
|
1 Year |
3 Years |
|
|
% |
% p.a. |
|
Fund |
-1.7 |
1.4 |
|
Benchmark* |
-1.3 |
1.6 |
* WM Local authority median including property (last quarter based on index returns)
The following table shows the Fund’s asset allocation against the benchmark over the 12 months.
|
|
Fund |
Benchmark |
||
|
|
01.04.01 |
31.03.02 |
31.03.02 |
|
|
|
%
|
%
|
||
Equities Total |
71.3 |
74.7 |
73.4 |
|
|
UK |
50.8 |
49.4 |
49.3 |
|
|
North America |
2.8 |
6.2 |
6.5 |
|
|
Europe |
9.8 |
10.3 |
8.8 |
|
|
Japan |
2.4 |
2.8 |
3.1 |
|
|
Pacific Basin ex Japan |
3.3 |
3.5 |
3.4 |
|
|
Emerging Markets |
2.2 |
2.5 |
2.3 |
|
|
Other Assets Total |
28.7 |
25.3 |
26.6 |
|
|
UK Fixed Interest |
7.0 |
7.3 |
7.6 |
|
|
Overseas Fixed Interest |
8.3 |
6.0 |
4.5 |
|
|
UK Index Linked |
2.0 |
2.1 |
4.9 |
|
|
Overseas Index Linked |
0.6 |
0.0 |
0.0 |
|
|
Property |
4.5 |
5.8 |
4.6 |
|
|
Cash |
6.3 |
4.1 |
5.0 |
|
|
Total |
100.0 |
100.0 |
100.0 |
|
* WM Local Authority average including property
Investment Review (cont.)
At the start of the period, we increased the
weighting in Japan, as structural reforms appeared more likely following
Koizumi’s appointment as Prime Minister and strengthening economic growth would
benefit Japanese equities. In addition, exposure to the US was also increased
on the basis it would benefit earlier than most from monetary easing due to its
advanced position in the economic cycle.
Following the attacks of September 11th,
it was felt the events had accelerated the trough in equity markets and the
recovery could be steeper than expected. In order to take advantage, the Fund
was broadly positioned overweight equities and underweight bonds. At a regional
level, we favoured Western markets over Eastern, with Europe our most favoured
equity market as valuations were low and scope remained for further interest
rate cuts. At the turn of the New Year,
the Fund increased its exposure to UK bonds as it was felt that too great an
increase in interest rates have been priced into the market.
The past twelve months have seen poor performance for global equity
markets. Equities in 2001 had a weak
start as investors re-assessed the global outlook following the falls by
technology stocks in 2000. By the
beginning of the year under review decisive interest rate cuts were beginning
to have an effect and markets stabilised, although ongoing profit warnings and
sentiment kept returns in negative territory.
The third quarter of 2001 saw a return to falling markets. This was intensified in September when
terrorist attacks in the US brought markets sharply lower and made a likely US
recession a reality. In the fourth
quarter markets began to recover as US military action in Afghanistan
progressed strongly and oil prices fell.
However, this rally did not extend into the New Year, as markets fell
again in January due to fears over credit quality, dubious accounting practices
and off balance sheet financing in the wake of large corporate bankruptcies
such as Enron and Global Crossing.
Market performance improved towards the end of the first quarter of 2002
as positive economic news from around the world increased confidence of a
recovery in growth.
Bonds benefited from their perceived safe haven status for much of the
period in the face of equity market weakness. In the UK, the proposed abolition
of the Minimum Funding Requirement led to a sell-off in long-dated gilts and a
rally in corporate debt. The US attacks
prompted a move towards the safety of government bonds but this proved
short-lived and the introduction of FRS 17 again raised the profile of UK
corporate debt. The positive returns from the bond markets were capped mildly
at the end of 2001 as valuations fell following the signs of some recovery from
the equity market. 2002 saw bonds
produce positive returns again due to weaker equity markets and also less
threat of further interest rate cuts.
4. Actuary`s Report (Produced by Hymans Robertson.)
The 12 months ending March 2002 were a difficult period for financial markets. This reflected deteriorating economic fundamentals and a widespread reduction in business activity. Short-term interest rates were reduced to historically low levels in the UK, Europe, and US, as concerns about the state of the global economy escalated. The tragic events in New York and Washington in September inflicted an unexpected shock and, for a while, total “meltdown” seemed possible.
The major economic blocks, including those of the UK, US, Europe and Japan either courted or actually experienced recession during the period. Japan fared the worst, with the economy contracting for three consecutive quarters, despite the massive fiscal and monetary stimuli of recent years. The new Japanese Prime Minister has promised radical reform but, so far, there is little sign of a meaningful recovery.
In the UK, a strong service sector and robust consumer demand offset weakness in manufacturing. Economic growth slowed throughout 2001, and was static during the final quarter of the year and the first quarter of 2002.
The US economy also slowed dramatically and contracted during the quarter to the end of September 2001. A sharp recovery followed, but there are serious questions over whether this can be sustained. As in the UK, high consumer demand offset a weak corporate sector.
Actuary`s Report (cont.)
Against this background, major equity markets declined. The UK lost 3.1% whilst Europe (ex UK) fell by 7.1%. Japanese equities lost 20.7% as the economic outlook deteriorated. The US fell by a more modest 0.4%, having recovered from the dramatic fall following the terrorist attack in September. In contrast, Pacific (ex Japan) and Emerging markets fared well, up by 6.0% and 20.7% respectively.
The divergence in returns from the various UK equity sectors continued to be significant, as in the preceding year. Relative to the FTSE All Share Index, Basic Industries rose by 25.8% AND Resources by 13.1%. In contrast, Information Technology and Non Cyclical Services (including Telecommunications) lost 53.6% and 27.9% respectively, relative to the All Share Index. Significant losses in Telecom and Information Technology stocks were also experienced in US and European markets.
Bonds produced positive returns during the year, with Corporate Bonds outperforming UK conventional and Index Linked Gilts and overseas Bonds. On currency markets, Sterling appreciated against the Yen but was largely unchanged against the US Dollar and Euro.
5.1 The Local Government Pension Scheme is ‘contracted out’ of SERPS.
5.2 The Scheme is a ‘final salary scheme’. This means that benefits do not depend on investment performance, but generally on the level of salary during the last 12 months before retirement and the length of total Local Government service during which contributions have been paid in to the Fund.
5.3 The Isle of Wight Council Pension Scheme is an Exempt Approved Scheme under Chapter 1 Part X1V of the Income and Corporation Taxes Act 1988.
Income arising from deposits or investments held for the purpose of the scheme is exempt from tax. This exemption no longer entitles the pension fund to repayment of tax paid on UK dividends.
6.1 The accounts have been prepared in accordance with the Code of Practice on Local Authority Accounting issued in July 1987 by the Chartered Institute of Public Finance and Accountancy, and with the Statement of Recommended Practice No 1 issued by the Accounting Standards Committee. They do not take account of liabilities to pay pensions and other benefits in the future. The actuarial position of the Scheme which takes account of such liabilities is dealt with in Note 7.
6.2 Income and expenditure have been accounted for on an accruals basis for contributions, investment income and transfer values.
6.3 Investments have been valued at the middle Stock Exchange quoted price on 31 March in each year. Investments held in foreign currencies are shown at market value translated into the equivalent sterling rate ruling at 31 March 2002.
6.4 Additional Voluntary Contributions (AVCs) separately invested for the benefit of individual members are not treated as part of the Scheme`s assets and income, and are not included in the accounts. Members receive details of their investment directly from the Providers.
These Contributions can be made via the Isle of Wight Council to Prudential Life and Pensions or the Nationwide Building Society to purchase enhanced pension benefits and in the case of the Prudential, term life cover.
Accounting
Policies (cont.)
During 2001-02 AVCs of Ł115,296 were separately invested with Prudential Life and Pensions. Of this amount, Ł10,262 was for the purchase of death in service cover. AVC`s invested with the Nationwide Building Society in 2001-02 amounted to Ł18,291.
6.5 Administration costs of Ł586,527 (2000-01 Ł586,470) have been charged directly to the Fund in 2001-02.
7. Actuarial Valuation at 31 March 1998
7.1 Regulations require an actuarial valuation to be undertaken every three years.
7.2 The actuarial valuation undertaken by Hymans Robertson at 31 March 1998 showed that the Common Rate of Contribution payable by each employing authority to the Fund with effect from 1 April 1999 should be 9% of pensionable pay.
As a result of the actuarial valuation the employers’ contributions to the fund changed with effect from 1 April 1999.
31 March
2000 2001 2002
Isle of Wight Council 8.5% 9.0% 9.5%
Isle of Wight Magistrates Court 9.5% 10.0% 10.5%
Isle of Wight College 9.5% 9.9% 10.4%
Yarmouth Harbour Commissioners 11.0% 11.0% 11.0%
Cowes Harbour Commissioners 11.0% 11.0% 11.0%
St Catherines School Ltd 11.0% 11.0% 11.0%
Trustees of Carisbrooke Castle Museum 11.0% 11.0% 11.0%
IW Society for the Blind 11.0% 11.0% 11.0%
Isle of Wight Rural Community Council 11.0% 11.0% 11.0%
South Wight Housing Association Ltd 11.2% 14.2% 17.2%
Medina Housing Association Ltd 11.8% 12.3% 12.8%
The Quarr Group (formerly Island Group 90 Ltd) 10.5% 10.5% 10.5%
Riverside Centre Ltd 9.0% 9.0% 9.0%
Osel Enterprises Ltd 9.0% 9.0% 9.0%
Planet Ice (IOW) Ltd 11.0% 11.0% 11.0%
Island 2000 Trust Ltd 11.0% 11.0% 11.0%
The following body was admitted into the scheme during the year ended 31 March 2002
7.3 The contribution rate, as described, is calculated to be sufficient to cover 100% of the Fund’s liabilities. It comprises a future service funding rate of 12.4% of pensionable pay, together with a reduction of 3.4% of pensionable pay to reflect the funding position of the Fund.
7.4 The market value of the Fund’s assets at the valuation date was Ł148.1 millions (at a smoothed market value which adjusts the market value of the assets in each of the major asset classes by considering the average market levels during the twelve months to the valuation date using appropriate market indices). This represented 106% of the Fund’s accrued liabilities, allowing for future pay increases.
Actuarial Valuation at 31
March 1998 (cont.)
7.5 The contribution rates have been calculated using the projected unit method and the main actuarial assumptions were as follows:-
Rate of investment return: Equities 7.2% p.a.
Bonds 6.7% p.a.
Rate of earnings increase (excluding an allowance for promotional increases): 4.9% p.a.
Rate of pension increases: 3.4% p.a.
8. Actuarial Valuation at 31 March 2001
8.1 The most recent actuarial valuation of the Fund was carried out by Hymans Robertson at 31 March 2001.
8.2 This valuation showed that the Common Rate of Contribution payable by each employing authority to the Fund with effect from 1 April 2002 should be 14% of pensionable pay.
As a result of this actuarial valuation the employers’ contributions to the fund changed with effect from 1 April 2002.
31 March
2003
2004 2005
Isle
of Wight Council 10.5% 12.0% 14.0%
Isle of Wight College 11.1% 11.8% 12.5%
Yarmouth Harbour Commissioners 12.3% 13.7% 15.0%
Cowes Harbour Commissioners 12.3% 13.7% 15.0%
St Catherines School Ltd 12.3% 13.7% 15.0%
Trustees of Carisbrooke Castle Museum 12.3% 13.7% 15.0%
IW Society for the Blind 12.3% 13.7% 15.0%
Isle of Wight Rural Community Council 12.3% 13.7% 15.0%
South Wight Housing Association Ltd 18.4% 19.6% 20.8%
Medina Housing Association Ltd 13.1% 13.4% 13.7%
The
Quarr Group (formerly Island Group 90 Ltd) 10.5% 10.5% 10.5%
Riverside Centre Ltd 11.0% 13.0% 15.0%
Osel Enterprises Ltd 11.0% 13.0% 15.0%
Planet Ice (IOW) Ltd 10.0% 10.0% 10.0%
Island 2000 Trust Ltd 10.0% 10.0% 10.0%
Atlantic
Housing Group Ltd* 12.0% 12.0% 12.0%
* contribution rate subject to confirmation rate from Hymans Robertson.
8.3 Actuarial Statement provided by Hymans Robertson. Date of Valuation 31 March 2001
In the actuaries opinion, the resources of the Scheme are likely in the normal course of events to meet the liabilities of the Scheme, as required by the Local Government Pension Scheme Regulations 1997. In giving this opinion it is assumed that the following amounts will be paid to the Scheme : -
Contributions by the members in accordance with the Regulations at the rate of 6% of pensionable pay for all members, except manual staff who joined before 1st April 1998 and contribute at the rate of 5% of pensionable pay.
Actuarial Valuation at 31 March 2001 (cont.)
8.4 Summary of Methods and Assumptions Used
The valuation method and assumptions are described in the valuation report dated January 2002.
The opinion on the security of the prospective rights is based on the projected unit valuation method. This assesses the cost of benefits accruing to existing members during the year following the valuation, allowing for future salary increases. The resulting contribution rate is adjusted to allow for any differences in the value of accrued liabilities (allowing for future salary increases) and the assessed value of assets.
The main long term actuarial assumptions are: -
|
Financial Assumptions |
Mar 2001 % p.a. |
Real %p.a. |
|
Investment Return Equities Bonds 75%Equities/25% Bonds Pay Increases Price Inflation/Pension Increases |
6.75% 5.75% 6.50% 4.30% 2.80% |
3.95% 2.95% 3.70% 1.50% - |
For liabilities which will accrue in respect of service after the valuation date the actuary have adopted a discount rate which is initially the expected return from the existing assets at current market conditions but which in the long term reverts to their longer term assumptions.
Assets of Ł190.9m were valued at their market value smoothed over 12 months to the valuation date.
The valuation showed that the value of the Fund as at 31 March 2001 fell short of the value of accrued liabilities by Ł5.5m. This represented 97% of the Fund’s accrued liabilities, allowing for future pay increases.
The next actuarial valuation is due with an effective date of 31 March 2004
9. Statement
of Investment Principles of the Isle of Wight Council Pension Fund:- see
appendix B
10. Notes to the Accounts
10.1 Capital Commitments: - There were no capital commitments as at 31 March 2002.
10.2 Contingencies: - There were no contingencies as at 31 March 2002.
10.3 Net Assets Statement:- There were no events subsequent to the Net Assets Statement at 31 March 2002
which would have a material effect on the Net Assets Statement as at that date.
10.4 No Members or Chief Officers have disclosed any Related Party Transactions with the Pension Fund.
10.5 Post
Balance Sheet Event:- There has been a significant fall in the value of the
Isle of Wight Council Pension Fund since 31st March 2002. If equity
holdings continue to perform badly this will in due course raise the long term
cost of pensions.
APPENDIX A
ANALYSIS OF MARKET VALUE AT 31 MARCH 2002 BY INDUSTRIAL SECTOR
|
|
U.K. Ł000's |
U.S.A Ł000's |
JAPAN Ł000's |
EUROPE Ł000's |
FAR EAST (Exc Japan) Ł000's |
EMERGING MARKETS Ł000's |
TOTAL Ł000's |
|
Mining Oil
and Gas Chemicals Construction
& Building Mtls Metals
& Other Materials Aerospace
& Defence Electronic
& Electrical Equip’t Engineering
& Machinery Automobiles Beverages Food
Producers & Processors Pharmaceuticals Tobacco Retailers,
General Leisure,
Entertainment & Hotels Media
& Photography Glass
& Ceramics Support
Services Transport Food
& Drug Retailers Telecommunications Electricity Gas
Distribution Water Banks Investment
Companies Life
Assurance Real
Estate I
T Hardware IT
Software & Computer Servs. Unit
Trusts Healthcare Household
Goods Insurance Miscellaneous
Financial Textiles Paper
& Pulp Rubber
Goods Precision
Machinery Miscellaneous
Manufacturing Services Communications Wholesale Securities Diversified
Industries Fixed
Interest - UK Govt Fixed
Interest – Non UK Govt Treasury
Index Linked Index
Linked – Non UK Govt Property
Unit Trusts Fixed
Interest - Other Totals |
1,666 11,923 2,316 4,106 1,629 52 608 1,942 582 9,393 810 2,806 2,272 3,653 2,264 1,688 1,264 7,948 886 381 467 11,879 499 3,023 2,090 767 230 6,780 336 7,033 5,465 3,638 33 9,881 10,169 120,478 |
657 287 232 655 623 202 397 703 320 130 455 101 215 1,116 404 1,307 1,560 208 560 510 10,642 |
124 99 82 101 1,044 144 201 391 22 28 210 104 408 217 105 200 145 177 152 88 41 376 262 72 4,792 |
1,614 388 396 300 123 708 697 631 1,418 263 73 404 447 1,377 233 3,078 184 970 196 1,621 621 1,483 307 17,532 |
6,014 6,014 |
4,284 4,284 |
1,666 14,319 2,803 4,583 689 1,984 2,458 1,375 898 2,143 1,610 11,201 1,073 3,531 2,345 4,377 28 2,711 2,028 1,264 9,780 1,090 828 467 16,073 683 3,023 2,090 2,141 1,734 19,107 1,560 829 2,596 615 200 145 177 152 88 41 376 262 72 307 7,033 5,465 3,638 33 9,881 10,169 163,742 |
N.B. Totals may need minor adjustment for
rounding.
APPENDIX
B
ISLE
OF WIGHT COUNCIL PENSION FUND
STATEMENT OF INVESTMENT PRINCIPLES
1. Introduction
1.1 This Statement of Investment Principles has been adopted by Isle of Wight Council (“the Council”) in relation to the investment of assets of the Council’s Pension Fund. It was agreed by the Investment Panel at their meeting on 26th May 2000.
1.2 Investments are monitored on a regular basis by the Pension Fund Investment Panel (the Panel) of the Council acting on the delegated authority of the Isle of Wight Council. Advice is received as required from professional advisers. In addition, the Panel formally review the performance of investments quarterly and the overall strategy on an annual basis.
1.3 In preparing this statement the Panel has taken professional advice from the investment practice of Hymans Robertson Actuaries and Consultants. Due account has been taken of the maturity profile of the Fund (in terms of the relative proportions of liabilities in respect of pensioners and active members), together with the level of disclosed surplus or deficit.
1.4 The Panel has agreed an asset allocation benchmark, a performance target and various controls on the Fund’s investments following an asset liability study. They reflect the Panel’s views on the appropriate balance between maximising the long-term return on investments and minimising short term volatility and risk. The benchmark reflects the position following the Actuarial Valuation of the Fund as at 31 March 1998. It is intended that strategy will be reviewed at least every three years following actuarial valuations of the Fund.
2.
Objectives
2.1 The primary objective of the Fund is as follows:
To provide for members pension and lump sum benefits on their retirement or for their dependants benefits on death before or after retirement, on a defined benefits basis.
In order that this primary objective can be achieved, the following funding and investment objectives have been agreed.
2.2 Funding Objectives - Ongoing Basis
To fund the Fund such as to target, in normal market conditions, that accrued benefits are fully covered by the actuarial value of the assets of the Fund and that an appropriate level of contributions is agreed by the administering authority to meet the cost of future benefits accruing. For employee members, benefits will be based on service completed but will take account of future salary increases.
The assumptions used for this test, corresponding with the assumptions used in the latest Actuarial Valuation, are shown in Annexe A and the liability mix is shown in Annexe B. This position will be reviewed at least at each triennial Actuarial Valuation.
3.
Investment Objectives
3.1 Funding Objectives
To achieve a return on Fund assets which is sufficient, over the long-term, to meet the funding objectives set out above on an ongoing basis. To achieve these objectives the following parameters have been agreed.
3.2 Choosing Investments
The Panel will ensure that one or more investment managers are appointed who are authorised according to appropriate Local Government Regulations to manage the assets of the Fund.
Details of the manager appointed to manage the Fund’s assets is summarised in Annexe C. The investment manager will be given full discretion over the choice of individual stocks and is expected to maintain a diversified portfolio.
3.3 Types of Investments to be held
The investment manager may invest in UK and overseas investments including equities, fixed and index linked bonds, cash and property, using pooled funds where agreed. At any time, the proportions held in each asset class will reflect the manager’s views relative to its benchmark and subject to certain control limits imposed by the Panel.
3.4 Balance between different kinds of investments
The performance benchmark adopted by the Panel has been based on consideration of the liability profile of the Fund; it is summarised in Annexe C. Within each major market the investment managers will hold a diversified portfolio of stocks or will invest in pooled funds to achieve this diversification. The policy implied by this benchmark will result in a significant weight being given to “real” as opposed to “monetary” assets which the Panel acknowledge as appropriate given the current liability profile and funding position of their Fund.
3.5 Risk
Currently the Panel has appointed Schroder Investment Management (UK) Limited as the sole investment manager. The adoption of an asset allocation benchmark (as described above) and the explicit monitoring of performance relative to a performance target, constrains the investment managers from deviating significantly from the intended approach, while permitting flexibility to manage the Fund in such a way as to enhance returns.
3.6 Expected return on investments
The majority of the Fund’s assets are managed on an active basis and are expected to outperform their respective benchmarks over the long term. The investment performance achieved by the Fund over the long term is expected to exceed the rate of return assumed by the Actuary in funding the Fund on an ongoing basis.
3.7 Realisation of investments
The majority of assets held by the Fund are quoted on major stock markets and may be realised quickly if required. Property investments, which are relatively illiquid, currently make up a modest proportion of the Fund’s assets.
3.8 Social, Environment & Ethical Considerations
The Panel recognises that social, environmental and ethical considerations are among the factors which can affect the financial return on investments.
Having discussed the matter, the Panel has decided that any policy on Socially Responsible Investments should not conflict with the Fund’s investment objective as set out in Section 2.1 above.
The Panel have requested that the manager continue to give due consideration to these factors, particularly in the areas of business sustainability and reputational risk, when deciding on the selection, retention and realisation of individual investments.
3.9 Exercise of Voting Rights
The Panel has delegated the exercise of voting rights to the investment manager on the basis that voting power will be exercised by the investment manager with the objective of preserving and enhancing long term shareholder value. Accordingly, the manager has produced written guidelines of its process and practice in this regard. The manager is encouraged to vote at extraordinary general meetings of companies. Voting actions are reported to the Panel on a regular basis and these actions are reviewed and discussed as appropriate.
3.10 Additional Voluntary Contributions (AVC’s)
Members have the opportunity to invest in AVC funds as detailed in Annexe D.
ANNEXES
A. Main Actuarial Assumptions as at 31 March 1998
|
|
Nominal % per annum |
Real
Return %
per annum |
|
|
RPI Inflation |
3.4 |
- |
|
|
Increases in pay (excl.
Increments) |
4.9 |
1.5 |
|
|
Investment returns * |
- equities - bonds |
7.2 6.7 |
3.8 3.3 |
* net of investment expenses
B. Liability Mix at 31 March 1998
|
|
Liability ŁM |
%
of Total Liabilities |
%
of Fund |
|||
|
50.3 |
|
36 |
|
34 |
|
|
|
Deferred pensioners |
14.5 |
|
10 |
|
10 |
|
|
Pensioners |
74.6 |
|
54 |
|
50 |
|
|
Total Liabilities |
139.4
|
|
100 |
|
94 |
|
|
Surplus |
8.7 |
|
6 |
|
6 |
|
|
Total fund (at actuarial
value) |
148.1 |
|
106 |
|
100 |
|
C. Investment Management Arrangements
Schroder Investment Management (UK) Limited were appointed to manage the Scheme assets with effect from November 1991. Their investment objective is to achieve upper quartile performance in the WM Local Authority Universe (including Property) over rolling 3 year periods, and to achieve returns of 3% per annum in excess of salary inflation and 4% per annum in excess of price inflation over rolling 10 year periods.
As at 31 December 1999 the Scheme assets and average local authority fund asset proportions were as follows:
|
|
Scheme
Assets % |
Average
Fund % |
|
UK Equities Overseas Equities |
53 21 |
53 22 |
|
Total Equity |
74 |
75 |
|
Index-linked Gilts Property |
3 4 |
4 3 |
|
Real assets |
81 |
82 |
|
UK Bonds Overseas Bonds Cash |
6 7 6 |
7 6 5 |
|
Monetary assets |
19 |
18 |
*Unweighted
D. AVC Arrangements
The Investment Panel have set up a number of options for members’ additional voluntary contributions (AVCs). The options are set out below. At retirement, the accumulated value of a member’s AVCs is used to purchase an annuity on the open market, or the member may elect to buy additional service in the scheme.
|
Provider |
Investment Vehicle |
|
Nationwide
Building Society |
Cash |
|
Prudential |
Discretionary Fund |
|
Prudential |
With Profits |
The cash option offers interest on deposits.
The Discretionary Fund is a vehicle which allows members to invest in a range of assets including equities, bonds and property.
The with profits vehicle is designed to provide smoothed medium to long term growth by investing in a range of assets including equities, bonds and property. The investment returns are distributed by way of reversionary and terminal bonuses.
The Panel has chosen the particular providers and investment vehicles taking into account past investment performance, charging structure, flexibility and the quality of administration.
The Panel review the AVC investment options on a regular basis.
THE
STATEMENT OF RESPONSIBILITIES FOR THE STATEMENT OF ACCOUNTS
The Authority’s responsibilities
The authority is required:
· to make arrangements for the proper administration of its financial affairs and to secure that one of its officers has the responsibility for the administration of those affairs. In this authority, that officer is the Strategic Director of Finance & Information & County Treasurer;
·
to manage its affairs to
secure economic, efficient and effective use of resources and safeguard its
assets.
·
to approve the statement
of accounts.
The Strategic Director of Finance & Information & County Treasurer’s responsibilities
The Strategic Director of Finance & Information & County Treasurer is responsible for the preparation of the authority’s statement of accounts in accordance with proper practices as set out in the CIPFA/LASAA Code of Practice on Local Authority Accounting in Great Britain (‘the Code of Practice’).
In preparing this statement of accounts, the Strategic Director of Finance & Information & County Treasurer has:
·
selected suitable
accounting policies and then applied them consistently;
·
made judgements and
estimates that are reasonable and prudent;
·
complied with the Code
of Practice.
The Strategic Director of Finance & Information & County Treasurer has also:
·
kept proper accounting
records which were up to date;
·
taken reasonable steps
for the prevention and detection of fraud and other irregularities.
I certify that the Statement of Accounts for the year ended 31 March 2002 required by the Accounts and Audit Regulations 1996 is set out on pages 5 to 44.
I further certify that the Statement of Accounts presents fairly the financial position of the Authority at 31 March 2002 and its income and expenditure for the year then ended.
Date....................................................... Signature...................................................................
JOHN
PULSFORD
Strategic
Director
Finance
& Information & County Treasurer