Income and Expenditure Account and Statement of Financial Activities For the year ended 31 March 2006 Income and Expenditure Account Restated Notes Operating Designated Restricted Total Total Fund Funds Funds 2006 2005 2006 2006 2006 £ £ £ £ £ Incoming resources From Charitable Activities   Supported Living 5,761,910 -  -  5,761,910 5,458,535   Housing Provision -  -  203,134 203,134 180,091   Respite service 226,998 -  -  226,998 232,075 Other incoming resources 25,683 65,332 -  91,015 119,937                     Total incoming resources 6,014,591 65,332 203,134 6,283,057 5,990,638           Resources expended Charitable Activities  Supported Living 2 & 3 5,910,189 -  -  5,910,189 5,365,398  Housing Provision 2 & 3 -  -  323,188 323,188 210,338  Respite service 2 & 3 223,788 -  -  223,788 216,335 Governance costs 2 & 3 31,177 -  -  31,177 33,386                     Total resources expended 6,165,154 -  323,188 6,488,342 5,825,457                     Net incoming/outgoing resources before transfers (150,563) 65,332 (120,054) (205,285) 165,181           Transfers between funds 11 150,563 (200,912) 50,349 -  -                      Net incoming resources before other recognised gains & losses -  (135,580) (69,705) (205,285) 165,181                     Actuarial (Losses)/gains on defined benefit pension scheme 13 -  (174,000) -  (174,000) -  Unrealised Gains/(Losses) on invest ments 16 -  9,008 -  9,008 -                      Net movement in funds 4 -  (300,572) (69,705) (370,277) 165,181                     Fund Balances as at 31 March 2005 81,134 3,050,952 239,069 3,351,155 3,732,974           Fund Balances as at 31 March 2006 81,134 3,351,524 169,364 2,980,878 3,898,155           There were no recognised gains or losses for 2006 or 2005 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   2006     2005         Restated £ £ £ £ Fixed assets Tangible assets 7 2,133,044     2,180,194   Investments 355,705 214,517 Total Fixed Assets 2,488,749 2,394,711 Current assets Debtors 8 541,772 192,243 Cash at bank and in hand 1,100,871 1,746,699 Total Current Assets 1,642,643 1,938,942           Creditors: Amounts falling due within one year 9 (337,915)     (325,224)       Net current assets 1,304,728 1,613,718 Total assets less current liabilities 3,793,477 4,008,429 Creditors: Amounts falling due after more than one year 10 (102,599) (110,274) Net assets excluding pension liability 3,690,878 3,898,155 Defined benefit pension scheme liability 13 (710,000) (547,000) Net assets including pension liability 2,980,878 3,351,155     Funds Unrestricted 81,134 81,134 Designated 2,730,380 3,030,952 Total Unrestricted 2,811,514 Restricted 169,364 239,069               2,980,878 3,351,155     The financial statements were approved by the executive board on 7th September 2005 and signed on its behalf by Liz Foy (Director) and Linda Headland (Secretary) The notes below form part of these financial statements Cashflow Statement Notes 2006 2005 £ £ £ £ Net cash (outflow)/inflow from operating activities 1 (505,423) 213,793 Returns on investments and servicing of finance Interest paid (6,637) (6,995) Interest received 65,332 82,677                 Net cash inflow/(outflow) from returns on investments and servicing of finance 58,695 75,682 Capital expenditure Payments to acquire tangible fixed assets (57,912) (300,273)                 Net cash (outflow)/inflow from investing activities (57,912) (300,273)                 Decrease in cash 2 (504,640) (10,798)                 Notes to the cashflow statement 1. Net cash (outflow)/inflow from operating activities £ £     (Deficit)/Surplus for year (370,277) 165,181     Depreciation charge 84,848 111,754     Loss on disposal of tangible assets 20,214 -      Actuarial loss on pension 163,000 -      Interest received (net) (65,332) (82,677)     Interest paid (net) 6,637 6,995     (Increase)/Decrease in Debtors (349,529) 10,790     Increase in creditors 5,016 1,750             Net cash Inflow/(outflow) from operating activities (505,423) 213,793             2. Change in net liquid resources     Net funds at 1 April 2005 1,961,216 1,972,014             Decrease in cash (504,640) (10,798)                 Net funds at 31 March 2006 1,456,576 1,961,216     The notes below form part of these financial statements Notes to the Financial Statements   1. Accounting policies   The principal accounting policies adopted in the preparation of the financial statements are set out below   (a) Basis of preparation of financial statements   The financial statements have been prepared under the historical cost convention as modified by the revaluation of investments and in accordance with the Statement of Recommended Practice: Accounting and Reporting by Charities (SORP 2005) issued in March 2005, applicable UK Accounting Standards and the Companies Act 1985.   The incoming resources and resources expended for the year ended 31st March 2005 have been reclassified in order to comply with SORP 2005.   (b) Prior period adjustment   The company policy for calculating the cost of retirement benefits was changed during the year to take full account of 'FRS 17 - Retirement Benefits'. The trustees consider that the new policy provides a fairer presentation of the results and of the financial position of the company as it ensures the financial statements reflect at fair value the assets and liabilities arising from the retirement benefit obligations and any related funding.   The comparative figures in the primary statements and notes have been restated to reflect the new policy. The effects of the change in policy are summarised below:   Balance Sheet     £ Net assets at 31 March 2005 3,898,155 Creation of FRS 17 liability (547,000) Net assets at 31 March 2005 restated 3,351,155   (c) Incoming resources   All incoming resources are included in the statement of financial activities when the charity is entitled to the income and the amount can be quantified with reasonable accuracy. The following specific policies are applied to particular categories of income The majority of income relates to local authority contracts and is recognised as the work is undertaken Investment income is included when receivable Revenue grants are recognised in the accounting period to which they relate and are matched to expenditure   (d) Resources expended   Expenditure is recognised when a legal or constructive obligation arises. Charitable activities include expenditure on staff salaries and staffing related costs such as training, occupational health and office accommodation. It includes both the direct costs and the support costs relating to these activities Support costs include central functions which have been allocated to activities. Whenever possible, support costs are attributed to the activity to which they relate. The costs of functions which support more than one of the charity's activities have been allocated to those activities based on the income for each activity. Income is a reasonable guide to the level of support activity required from human resources, finance & IT services. Governance costs relate to the general running of the charity and include the operations of the Board and addressing constitutional, audit and other statutory matters.   (e) Depreciation of tangible fixed assets   Tangible fixed assets costing more than £250 are capitalised including any incidental expenses of acquisition. 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. All furniture & fittings in ELCAP tenancies were gifted to tenants on 31st March 2006. The only furniture & fittings now included in the balance sheet relate to the respite service or office accommodation. (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).   The company operates a defined benefit scheme in respect of its employees. The assets of the scheme are held in external funds managed by professional investment managers.   In accordance with 'FRS 17 - Retirement benefits', the operating and financing costs of pension and post retirement schemes (determined by a qualified actuary) are recognised separately in Statement of Financial Activities. Service costs are systematically spread over the service lives of the employees and financing costs are recognised in the period in which they arise.   The difference between the actual and expected returns on assets during the year, including changes in the actuarial assumptions, are also recognised in the Statement of Financial Activities.   The LGSS is closed to new entrants.   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) Funds structure   Unrestricted funds are available for use at the discretion of the trustees in the furtherance of the general objectives of the charity. Designated funds are unrestricted funds earmarked by the Board for specific activities and needs in the future. The Property Equity fund, Contingency and Change funds are all designated funds.   Restricted funds are subjected to restrictions on their expenditure imposed by the donor or funder. The Property Management fund is a restricted fund since rental income, mostly funded by housing benefit, is used to fund property refurbishment & maintenance.   The Operating fund represents the accumulated surpluses and deficits in the Statement of Financial Activities, after transfers to/from the designated funds   (i) Taxation   The company has charitable status and is therefore exempt from taxation under Section 505 of the Corporation Taxes Act 1968. The company is not registered for value added tax (VAT) and accordingly expenditure includes VAT where applicable.   (j) Investments   The investment in corporate bonds is shown at market value. Gains and losses are recognised in the year in which they arise.   2. Expenditure     Direct Support Total Total     Costs Costs 2006 2005                 £ £ £ £             Supported Living     5,523,397 386,792 5,910,189 5,365,398 Housing Provision     316,892 6,296 323,188 210,338 Respite Services     205,579 18,209 223,788 216,335 Property Management Costs       31,177 31,177 33,386                 6,045,868 442,474 6,488,342 5,825,427               3. Support Costs allocation             Supported Respite Housing Governance Total Total Living Services Provision   2006 2005             £ £ £ £ £ £             Staff costs 281,714 13,479 6,296 21,120 322,609 339,227 General office costs 98,864 4,730     103,594 104,952 Internal & external Audit       10,007 10,007 12,865 Professional fees 6,214     50 6,264 304             386,792 18,209 6,296 31,177 442,474 456,482               4. Net incoming resources are stated after charging 2006 2005     £ £     Depreciation of tangible fixed assets 84,848 111,754 Fees paid to auditors for external audit 5,951 6,629 Operating lease rentals:   Land and buildings 30,867 30,867   Other 2,673 2,673       5. Employees 2006 2005     The average weekly number of employees (whole time equivalents) was:-   Supported living 230 206   Respite service 7 7   Governance -  -    Housing Provision -  -    Staff costs during the year amounted to: 2006 2005     £ £     Wages and salaries 4,793,308 4,196,003 Social security costs 381,601 332,676 Other pension costs 189,813 205,896         5,364,722 4,734,575         None of the employees emoluments were in excess of £60,000. 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 (2005 - £0)   6. Related Parties     The Board made a policy decision to include service users on the Board of Trustees in order to influence the development of person centered services. Three people, Sylvia Archibald, Donald Todd and Allan Sinclair were co-opted onto the Board in April 2006. These 3 people are supported by ELCAP. There are also two trustees, Tony Sabine and Ann Steadman, who are parents of service users supported by ELCAP. The trustees are not remunerated as trustees     The support contract for each of the three service-user Trustees and the relatives of the two parents/ trustees is assessed independently of ELCAP by local authority care managers and is consistent with all other service users. The cash value of these services is not disclosed in accordance with section 229 of the code of practice issued by the Accounting Standards Board, which includes in 'Disclosures not required': (f) 'the provision of services to a related party (including a charity trustee or person connected with a charity trustee) where the related party receives the services as part of a wider beneficiary class, and on the same terms as other members of the class …'     Drew Morris is an executive board member and a partner in the Edinburgh office of the company's solicitors, Anderson Strathern, who were paid £19 in the year for legal services provided by the solicitors on a normal commercial basis. Drew Morris does not directly work on any ELCAP business.   7. Tangible fixed assets     Cost or valuation Heritable Leasehold Furniture & Office Total Land and Improvements Furnishings Equipment Buildings   £ £ £ £ £   At 1 April 2005 2,541,444 55,501 354,185 254,063 3,205,193   Additions 46,282 -  1,467 10,163 57,912   Disposals -  -  (311,468) -  (311,468)             At 31 March 2006 2,587,726 55,501 44,184 264,226 2,951,637             Depreciation   At 1 April 2005 433,071 43,848 328,886 219,194 1,024,999   Charge for year 50,349 11,364 3,551 19,584 84,848   Disposals -  -  (291,254) -  (291,254)             At 31 March 2006 483,420 55,212 41,183 238,778 818,593             Net book value   At 31 March 2006 2,104,306 289 3,001 25,448 2,133,044   At 31 March 2005 2,108,373 11,653 25,299 34,869 2,180,194     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 2006 was £112,132 (2005 - £140,134).     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 2006 amounted to £102,599 (2005 - £110,274)   8. Debtors 2006 2005     £ £     Amounts falling due within one year Debtors 521,171 176,778 Provision for doubtful debts (20,406) (1,504) Prepayments and accrued income 27,102 16,719 Other debtors 13,905 250         541,772 192,243       9. Creditors: Amounts falling due within one year 2006 2005     £ £     Trade creditors 61,816 85,261 Tax and Social Security 142,957 122,891 Income in advance 9,795 9,795 Accruals and sundry creditors 123,347 107,277 Bank loans and overdrafts 102,599 110,274         337,915 325,224       10. Creditors: Amounts falling due after more than one year 2006 2005     £ £     Loans 102,599 110,274         102,599 110,274       11. Operating Fund, Balance Incoming Resources Transfers Gains and Balance at Designated and at 1 April Resources Expended losses 31 March Restricted Reserves 2005 2006 Restated             £ £ £ £ £ £             Property Equity 2,180,194 -  -  (47,150) -  2,133,044 Contingency 1,054,998 65,332 -  -  -  1,120,330 Change 342,760 -  -  (153,762) (1,992) 187,006 Pension (547,000) -  -  -  (163,000) (710,000)   Total Designated 3,030,952 65,332 -  (200,912) (164,992) 2,730,380   Property Management 239,069 203,134 (323,188) 50,349   169,364   Total Restricted 239,069 203,134 (323,188) 50,349 -  169,364   Total Reserves 3,270,021 268,466 (323,188) (150,563) (164,992) 2,899,744   Operating Fund 81,134 6,014,591 (6,165,154) 150,563   81,134   3,351,155 6,283,057 (6,488,342) -  (164,992) 2,980,878   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 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.   The Operating Fund is required to maintain the normal cash flow for operational activities. The fund is represented by current assets.   The Pension Reserve reflects the net pension liability.   12. Commitments     Annual commitment of operating leases expiring 2006 2005     £ £     Within one year -  3,000 Within two to five years -  -  After more than five years 12,000 12,000   Capital commitments 2006 2005   £ £   Authorised but not contracted for: -  -        Authorised and contracted for: 7,908 54,130       13. Pension Costs   Defined Benefit Schemes   LGSS   As explained in the Accounting Policies, ELCAP participates in a defined benefit pension scheme.   A valuation of the pension fund is carried out triennially. Liabilities are valued on an actuarial basis using the projected unit method, which assess the future liabilities of the fund discounted to their present value.   The most recent valuation of the fund was at 31 March 2006, by Hymans Robertson, independent actuaries.   The main assumptions used in the calculations are:   Assumptions as at 31 Mar 2006 31 Mar 2005 31Mar 2004 % p.a. % p.a. % p.a. Price Increases 3.1% 2.9% 2.9% Salary Increases 4.6% 4.4% 4.4% Pension Increases 3.1% 2.9% 2.9% Discount Rate 4.9% 5.4% 5.5%   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 7.4% 2,610 7.7% 1,640 7.7% 1,380 Bonds 4.6% 190 4.8% 140 5.1% 100 Property 5.5% 340 5.7% 200 6.5% 130 Cash 4.6% 50 4.8% 80 4.0% 20 Total Market Value of Assets 3,180 2,062 1,635   Present Value of Scheme of Liabilities 3,890 2,609 2,182 Net Pension liability (710) (547) (547)   The charity's pension charge for the year includes the following components:   31 Mar 2006 31 Mar 2005 £000 £000 Service Cost (A) 171 192 Expected Return on Employer Assets 154 130 Interest on Pension Scheme Liabilities (146) (127) Net Return (B) 8 3 Net Revenue Account Cost (A)-(B) 163 189   Analysis of Amount in statement of Financial Activities (Sofa)   Year Ended Year Ended 31 Mar 2006 31 Mar 2005 £000 £000 Actual Return Less Expected Return on Pension Scheme Assets 492 59 Experience Gains and Losses Arising on Scheme Liabilities (111) 1 Changes in Financial Assumptions Underlying the Present Value of the Scheme Liabilities (555) (60) Actuarial Gain/ (Loss) in Pension Plan recognised in SOFA (174) -   Movement in Deficit During the Year   Year to Year to 31 Mar 2006 31 Mar 2005 £000 £000 Deficit at Beginning of the Year (547) (547) Current Service Cost (171) (192) Employer Contributions 174 189 Net Return on Assets 8 3 Actuarial Gains/(Losses) (174) - Deficit at End of Year (710) (547)   History of Experience Gains and Losses   Year to   Year to   31 March 31 March 2006 2005 £000 % Scheme £000 % Scheme of assets of assets Difference Between the Expected and Actual Return on Assets 492 15.5% 59 2.9% Experience Gains/(Losses) on Liabilities 111 (2.8%) 1 0.0% Total Amount Recognised in Sofa (174) (4.5%) - -   The pension charge for the period was £171,000 (2005 - £192,000). The contribution of the company was 18.9% (2005 - 18%). The employees' contribution has been 6% (2005- 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 £7,781 (2005 - £12,204). The charge for the year was £25,582 but a refund of £16,802 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% (2005 - 14%). 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 £3,838 (2005 - £3,382).   Outstanding contributions at the balance sheet date were £612 (2005 - £505)   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 £2,567 (2005- £3,035).   Outstanding contributions at the balance sheet date were £359 (2005 - £408)   14. Membership 2006 2005     At 1 April 2005 107 100 New members 7 7 Resignations (7) -         At 31 March 2006 107 107       15. Company limited by guarantee   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. (2005 - 107 members).   16. Investments   Listed Listed 2006 2005     £000 £000     Market Value at 01/04/05 220 -     Additions /(disposals) 133 214     Unrealised gain /(loss) on revaluation 3 6         Market Value at 31/03/06 356 220