Income and Expenditure Account and Statement of Financial Activities For the year ended 31 March 2005 Income and Expenditure Account Notes Operating Designated Restricted Total Total Fund Funds Funds 2005 2004 2005 2005 2005 £ £ £ £ £ Incoming resources From Operating Activities   Users' fees 12,632 -  -  12,632 12,340   Contract income 5,677,979 -  -  5,677,979 5,402,812   Other grants -  -  -  -  -  Other income 37,259 82,677 180,091 300,027 218,033                     Total incoming resources 5,727,870 82,677 180,091 5,990,638 5,633,185           Less resources expended Activities in futherance of objectives  Direct charitable expenditure 2 5,137,414 -  210,338 5,347,752 4,693,383  Management and administration 3 477,705 -  -  477,705 438,580                     Total resources expended 5,615,119 -  210,338 5,825,457 5,131,963                     Surplus/(Defecit) for the year 112,751 82,677 (30,247) 165,181 501,222           Other transfers 10 (112,751) 112,751 -  -  -            Net incoming resources after transfers 4 -  195,428 (30,247) 165,181 501,222           Fund Balances as at 31 March 2004 81,134 3,382,524 269,316 3,732,974 3,231,752           Fund Balances as at 31 March 2005 81,134 3,577,952 239,069 3,898,155 3,732,974           There were no recognised gains or losses for 2005 or 2004 other than those included in the Income and Expenditure Account and the Statement of Financial Activities. All activities relate only to continuing operations. The notes below form part of these financial statements Balance Sheet Notes Total Total 2005 2004 £ £ Fixed assets Tangible assets 7 2,180,194 1,991,675 Investments 219,277 Current assets Debtors 8 192,243 203,033 Cash at bank and in hand 1,741,939 1,972,014         2,153,459 2,175,047     Creditors: Amounts falling due within one year 9 (435,498) (433,748)     Net current assets 1,717,961 1,741,299     Total assets less current liabilities 3,898,155 3,732,974     Net assets 3,898,155 3,732,974     Funds 10 Unrestricted 81,134 81,134 Designated 3,577,952 3,382,524 Restricted 239,069 269,316         3,898,155 3,732,974     The financial statements were approved by the executive board on 8th September 2005 and signed on its behalf by Ian Gray (Director) and Linda Headland (Secretary) The notes below form part of these financial statements Cashflow Statement Notes 2005 2004 £ £ £ £ Net cash inflow from operating activities 1 213,793 862,058 Returns on investments and servicing of finance Interest paid (6,995) (6,481) Interest received 82,677 35,479                 Net cash inflow from returns on investments and servicing of finance 75,682 28,998 Capital expenditure Payments to acquire tangible fixed assets (300,273) (110,951) Receipts from sales of tangible fixed assets -  1,388                 Net cash (outflow) from investing activities (300,273) (109,563)                 Increase/(Decrease) in cash 2 (10,798) 781,493                 Notes to the cashflow statement 1. Net cash (outflow)/inflow from operating activities     Surplus/(Deficit) for year 165,181 501,222     Depreciation charge 111,754 110,163     Interest received (net) (82,677) (35,479)     Interest paid (net) 6,995 6,481     Decrease/(Increase) in Debtors 10,790 245,001     Increase in creditors 1,750 34,670             Net cash Inflow/(outflow) from operating activities 213,793 862,058             2. Change in net liquid resources     Net funds at 1 April 2004 1,972,014 1,190,521             Increase/(Decrease) in cash (10,798) 781,493                 Net funds at 31 March 2005 1,961,216 1,972,014     The notes below form part of these financial statements Notes to the Financial Statements   1. Accounting policies   (a) Basis of preparation of financial statements   The financial statements have been prepared under the historical cost convention in accordance with applicable accounting standards and Statement of Recommended Practice - Accounting and Reporting by Charities (SORP 2000).   (b) Income and expenditure   Owing to the special nature of the business of the company and in the interests of presenting the results clearly to the members, it is considered inappropriate to adhere to the profit and loss format described under Section 228 of the Companies Act 1985. A statement of financial activities has been prepared in a form which is considered to give the members a true and fair view of the results for the year and which also complies with the requirements of Section 228 of the Act and Statement of Recommended Practice - Accounting and Reporting by Charities.   (c) Depreciation of tangible fixed assets   Depreciation is provided on tangible fixed assets at rates calculated to write off the cost or valuation, less estimated residual value, of each asset evenly over its expected useful life, as follows:   Heritable buildings 50 years Leasehold improvements As per remaining number of years in lease Furniture and furnishings 5 years Office equipment (purchased after 1 April 2004) 3 years Office equipment (purchased prior to 1 April 2004) 4 years   Where Furniture and Fittings in tenancies are purchased through housing benefit income, these assets will be expensed in year of purchase.   (d) Interest receivable   This is interest receivable on interest bearing deposits.   (e) Grants receivable   Revenue grants are recognised in the statement of financial activities (Sofa) in the accounting period to which they relate and are intended to meet revenue expenditure.   (f) Pensions   The company encourages employees to take up a pension scheme and pays contributions towards a number of schemes.   Defined Benefit Schemes   The company contributes to two defined benefit pension schemes : Lothian Government Superannuation Scheme ( LGSS ) and the NHS Superannuation Scheme for Scotland ( NHSS ). Both schemes provide benefits based on final pensionable pay. The assets of the schemes are held separately by their administrators ( LGSS - City of Edinburgh Council and NHSS - Scottish Public Pensions Agency) either with a mixture of insurance companies and managed funds ( LGSS) or directly in gilts ( NHSS).   Contributions to the LGSS scheme are charged to the income and expenditure account so as to spread the cost of the pensions over employees working lives with the company. The contributions are determined by qualified actuaries.   The NHSS scheme is a multi-employer scheme where the assets and liabilities applicable to each employer cannot be separately identified. It is therefore accounted for as a defined contribution scheme.   Defined Contribution Schemes   There are two main schemes operating in the company: the Group Personal Pension Scheme, and other Personal Pensions set up by each employee independent of the company. Contributions to the schemes are charged to the income and expenditure account in the period in which contributions become payable.   (g) Operating lease commitments   Rentals payable under operating leases are charged to the statement of financial activities.   (h) Unrestricted funds   Surplus revenue funds held within unrestricted funds are carried forward to meet the cost of future activities of both a capital and revenue nature.   Commitments for specific activities and needs in the future are dealt with by making allocations to designated funds.   (i) Taxation   The company has charitable status and is therefore exempt from taxation under Section 505 of the Corporation Taxes Act 1968.   (j) Allocation of expenditure   Whenever possible, expenses are attributed to the category to which they relate. Where this is not possible, expenses are allocated on the basis of time spent by staff on each activity.   2. Direct charitable expenditure 2005 2004     £ £     Staff costs 4,682,426 4,149,281 Accommodation costs 109,118 216,706 Other costs 345,870 251,967 Property Management Costs 210,338 75,429         5,347,752 4,693,383       3. Management and administration of the charity 2005 2004     £ £     Staff costs 343,764 338,023 Office costs 71,454 44,482 Accommodation costs 29,663 28,678 Audit and other professional costs 12,203 13,007 Other costs 20,621 14,390         477,705 438,580       4. Net incoming resources are stated after charging 2005 2004     £ £     Depreciation of tangible fixed assets 111,754 110,163 Auditors' remuneration 6,629 6,436 Operating lease rentals:   Land and buildings 30,867 26,146   Other 2,673 2,673       5. Employees 2005 2004     The average weekly number of employees (whole time equivalents) was:-   Direct Charitable staff 200 185   Managerial and Administrative staff 13 14 213 199   Staff costs during the year amounted to: 2005 2004     Wages and salaries 4,196,003 3,907,977 Social security costs 332,676 306,636 Other pension costs 205,896 204,842         4,734,575 4,419,455         None of the employees emoluments were in excess of £50,000   6. Executive Board Members     None of the Executive Board members received any remuneration for their services as members of the Board, expenses for travel to attend board meetings totalled £0 (2004 - £0). Drew Morris is a partner in the Edinburgh office of the company's solicitors, Anderson Strathern, who were paid £5,229 in the year for legal services provided by the solicitors on a normal commercial basis.   7. Tangible fixed assets     Cost or valuation Heritable Leasehold Furniture & Office Total Land and Improvements Furnishings Equipment Buildings   £ £ £ £ £   At 1 April 2004 2,263,839 54,649 353,765 232,667 2,904,920   Additions 277,605 852 420 21,396 300,273   Disposals -  -  -  -  -              At 31 March 2005 2,541,444 55,501 354,185 254,063 3,205,193             Depreciation   At 1 April 2004 382,242 32,484 307,556 190,963 913,245   Charge for year 50,829 11,364 21,330 28,231 111,754   Disposals -  -  -  -  -              At 31 March 2005 433,071 43,848 328,886 219,194 1,024,999             Net book value   At 31 March 2005 2,108,373 11,653 25,299 34,869 2,180,194   At 31 March 2004 1,881,597 22,165 46,209 41,704 1,991,675     It should be noted that there are some depreciating standard securities on some of the buildings in fixed assets which are repayable to Lothian Health Board if the buildings are sold and the money not reinvested in buildings with a similar residential purpose. The total amount of securities payable if all such buildings were sold at 31 March 2005 was £140,134 (2004 - £168,136).     The Royal Bank of Scotland and the Bank of Scotland hold standard securities over two properties as security for property loans. The sum due on the bank loans at 31 March 2005 amounted to £110,274 (2004 - £117,223)   8. Debtors 2005 2004     £ £     Amounts falling due within one year Debtors 176,778 144,871 Provision for doubtful debts (1,504) (1,504) Revenue Grants receivable -  -  Prepayments and accrued income 16,719 24,809 Other debtors 250 4,858         192,243 173,034     Amounts falling due after more than one year Loan to Edinvar Trust -  30,000         192,243 203,034       9. Creditors: Amounts falling due within one year 2005 2004     £ £     Trade creditors 85,261 48,244 Tax and Social Security 122,891 105,730 Revenue Grants receivable -  -  Income in advance 9,795 25,863 Accruals and sundry creditors 107,277 136,688 Bank loans and overdrafts 110,274 117,223         435,498 433,748       10. Operating Fund, Balance Incoming Resources Transfers Balance Designated and at 1 April Resources Expended at 31 March Restricted Reserves 2004 2005           £ £ £ £ £           Property Equity 1,991,675 -  -  188,519 2,180,194 Contingency 915,042 82,677 -  57,279 1,054,998 Restructuring 29,438 -  -  (29,438) -  Change 400,000 -  -  (57,240) 342,760 Development 46,369 -  -  (46,369) -    Total Designated 3,382,524 82,677 -  112,751 3,577,952   Furniture 62,496 89,932 (53,266) (99,162) -  Planned Maintenance 206,820 90,159 (157,072) (139,907) -  Property Management -  -  -  239,069 239,069   Total Restricted 269,316 180,091 (210,338) -  239,069   Total Reserves 3,651,840 262,768 (210,338) 112,751 3,817,021   Operating Fund 81,134 5,727,870 (5,615,119) (112,751) 81,134   3,732,974 5,990,638 (5,825,457) -  3,898,155   The Change Reserve is for funding the development of person centred services   The Property Equity Reserve represents the unfunded value of property. These funds are not available to meet ongoing revenue commitments.   The Contingency Reserve is for maintaining business operations in the event of a major contract termination or when unforeseen and substantial changes affect the normal business activities.   The Restructuring Reserve is for restructuring the business activities as a result of the transfers of activities to ELCAP. The Development Reserve is for committed and planned major capital projects and setting up new services. These reserves have now been fully utilised.   The Property Management Reserve represents income from housing benefit and tenants to fund major works of refurbishment, maintenance and other related property management costs for the ELCAP properties. This reserve is restricted and is not available to meet other commitments. This reserve replaces the Furniture Fund and the Planned Maintenance Fund.   The Operating Fund is required to maintain the normal cash flow for operational activities. The fund is represented by current assets.   11. Commitments     Operating leases expiring within: 2005 2004     £ £     1 - 2 Years 3,000 -  3 - 5 Years -  -  Greater than 5 years 12,000 5,291   Capital commitments 2005 2004   £ £   Authorised but not contracted for: -  -        Authorised and contracted for: 54,130 -        12. Pension Costs   Defined Benefit Schemes   LGSS   The most recent valuation of the pension scheme was at 23 March 2002 using the Projected Unit Method. The major assumptions used by the actuary were:   Assumptions as at 31 Mar 2005 31 Mar 2004 31Mar 2003 % p.a. % p.a. % p.a. Price Increases 2.9% 2.9% 2.5% Salary Increases 4.4% 4.4% 4.0% Pension Increases 2.9% 2.9% 2.5% Discount Rate 5.4% 5.5% 5.4%   31 Mar 2005 31 Mar 2004 31Mar 2003 Assets (Employer) Long Term Long Term Long Term Return Assets Return Assets Return Assets % p.a. £000 % p.a. £000 % p.a. £000 Equities 7.7% 1,643 7.7% 1,281 8.0% 821 Bonds 4.8% 138 5.1% 104 4.8% 100 Property 5.7% 197 6.5% 139 6.0% 122 Cash 4.8% 83 4.0% 111 4.0% 30 Total Market Value of Assets 2,061 1,635 1,072   Present Value of Scheme of Liabilities 2,609 2,182 1,707 Net Pension liability (547) (547) (635)   The charity's pension charge for the year includes the following components:   31 Mar 2005 31 Mar 2004 £000 £000 Service Cost 192 173 Past service Costs - - Curtailment and Settlements - - Decrease in Irrecoverable Surplus - - Total Operating Charge (A) 192 173   Expected Return on Employer Assets 130 87 Interest on Pension Scheme Liabilities (127) (98) Net Return (B) 3 (11) Net Revenue Account Cost (A)-(B) 189 184   Analysis of Amount in statement of Financial Activities (Sofa)   Year Ended Year Ended 31 Mar 2005 31 Mar 2004 £000 £000 Actual Return Less Expected Return on Pension Scheme Assets 59 242 Experience Gains and Losses Arising on Scheme Liabilities 1 (7) Changes in Financial Assumptions Underlying the Present Value of the Scheme Liabilities (60) (151) Actuarial Gain/ (Loss) in Pension Plan - 84 Increase/ (Decrease) in Irrecoverable Surplus from Membership Fall and Other Factors - - Actuarial Gain/ (Loss) Recognised in STRGL - 84   Movement in Surplus/Deficit During the Year   Year to Year to 31 Mar 2005 31 Mar 2004 £000 £000 Surplus /Deficit at Beginning of the Year (547) (635) Current Service Cost (192) (173) Employer Contributions 189 188 Net Return on Assets 3 (11) Actuarial Gains/(Losses) - 84 Surplus/(Deficit) at End of Year (547) (547)   History of Experience Gains and Losses   Year to   Year to   31 March 31 March 2005 2004 £000 % Scheme £000 % Scheme of assets of assets Difference Between the Expected and Actual Return on Assets 59 2.9% 242 (14.8%) Experience Gains/(Losses) on Liabilities 1 0.0% (7) (0.3%) Total Amount Recognised in Sofa - - (84) (84)   The pension charge for the period was £192,000 (2004-£173,000). The contribution of the company was 18% (2004 - 17.1%). The employees' contribution has been 6% (2004- 6%).   NHSS   Valuations are carried out every five years using the projected unit method. The most recent valuation was at 5 March 1999 for the period 1989/94. The assumptions which had the most significant effect on the results of the valuation are those relating to rate of return on investments, rates of increase of salaries and pensions, increases in early retirements and reductions for deaths in service.   It was assumed that investment returns would be 12.3% p.a. and that salary increases would be 4.4% p.a.   The pension charge for the period was £12,204 (2004 - £10,461). The charge for the year was £28,371 but a refund of £16,167 was received from NHSS. The most recent valuation showed the market value of the scheme's assets was £5,848m and that the actuarial value of these assets represented 86.2% of the benefits that had accrued to members, after allowing for expected future increases in earnings. The contribution of the company was 14% (2004 - 5.5%). The employees contribution has remained the same at 6%.   Defined Contribution Schemes   Group Personal Pension Scheme   This is a money purchase scheme which includes death in service benefit with no liability to the employer. The company contributes on a matched basis to the employees to a maximum of 6%. Total contributions to this scheme were £3,382 (2004 - £3,682).   Outstanding contributions at the balance sheet date were £505 (2004 - £485)   Other Personal Pensions   The company contributes on a matched basis to the employees contribution to a maximum of 6%. Total contributions to this scheme were £3,035 (2004- £3,142).   Outstanding contributions at the balance sheet date were £408 (2004 - £408)   13. Membership 2005 2004     At 1 April 2004 107 100 New members 5 7 Resignations (5) -         At 31 March 2005 107 107       14. Company limited by guarantee   14. Every member of the company undertakes to contribute such amount as may be required not exceeding £1 to the assets of the company in the event of its being wound up while they are a member or within one year after they cease to be a member of the company. At the balance sheet date there were 107 members. (2004 - 107 members).