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CX 06 72 Annual Report Doc 05 to 06 CX/06/72 Farms Estate Committee 24 July 2006 THE COUNTY FARMS ESTATE – ANNUAL REPORT 2005/2006 Joint Report of the Chief Executive and the Director of Finance, IT & Trading Recommendations: that the report be noted. Introduction This is the fifteenth annual report of the County Farms Estate and the fourth year of the second ten year Estate Management Strategy and Finance Plan. Following the recommendations of the Best Value Review, performance indicators for the Estate were developed and monitored throughout the last financial year. These indicators are referred to as Headline Measures and are included in this report. For the third year, the wider aims and objectives of the estate - intended to support a sustainable rural economy in Devon and achieve some of the corporate objectives - are identified as additional Headline Measures. This report is divided into the following sections: Meetings of the Farms Estate Committee 2005/2006 and other occasions The Farms Estate Committee met on 26 July, 22 November 2005, 10 January and 14 March 2006. In addition to the usual financial and management matters other issues discussed by Committee included: • Feasibility Study and Business Plan for the infrastructure upgrade required at Dungeons Farm, Cullompton following amalgamation in 2007. • Community Development Initiatives – an update paper. • Replacement dwelling at Higher Bradaford Farm, Virginstow. • Policy update paper on offering tenants first consideration to purchase the Freehold of their tenanted farm. • Revised policy paper on Bicton Agricultural College Student Bursaries. An interview panel met on one occasion during the year in order to interview new entrants for Parks Farm, Crediton. The farm was let from Lady Day 2006. The new full Committee had one special induction meeting and day of estate visits to receive a briefing on the Estate Management Strategy and Plan 2002-2012 and to visit a sample of farms. Visits were made to the Parishes of Drewsteignton, Cullompton and Kentisbeare. The Chairman and Principal Land Agent also visited the Parishes of Ermington, Broadhempston and Denbury to undertake new tenant monitoring visits, and Drewsteignton as part of an assessment for a tenancy extension request. Representatives of the Committee attended the Tenants Association AGM where a workshop was held and a presentation was received from Laurence Gould Partnership Ltd on opportunities in the dairy sector. Representatives were also invited to the Tenants’ Association farm walk at East Catkill Farm, Rose Ash. West Devon Agri-Bip gave a guided tour and presentation on organic farming and soil management planning for cross compliance. Financial Performance and Indicators The financial performance of the Estate is again analysed in four areas, namely income, expenditure, capital receipts and capital investment. The Estate revenue budget outturn statement for the year ending 31 March 2006 is appended (Appendix A). Income • Rental income from the Estate in 2005/06 was £801,500, a decrease of £15,074 (1.8% down on the previous year). Also slightly down on the projected rental income of £804,035 for this fourth year of the Estate Finance Plan 2002 to 2012. The difference can be attributed to the uncertainty in market rents following CAP reform. • Other income from de minimus receipts, leasing milk quota, wayleaves and easements, and telecommunication masts came to £81,793. Although a decrease on the previous year (18%), was higher than the projected revenue income target of £60,116 for the fourth year of the finance plan. This over recovery can largely be attributed to the delivery of £17,639 of de minimis receipts. Expenditure • The cost of a number of farm improvements and restructuring schemes was again met by an allocation from the Estate’s revenue budget. An expenditure of £45,634 on 14 schemes (including 5 boreholes) in 2005/06 compared to £74,668 on six schemes in 2004/05. A number of other schemes of a minor nature were also revenue funded, in the sum of £16,560. • There was an overall spend of £257,944 on repair and maintenance of which 27% (£54,536) was planned maintenance and 73% (£203,451) was unforeseen and reactive work. The corporate target rates of planned to unforeseen work is 70:30. • The backlog maintenance liability rose again at the year end to £1,800,000. • In line with corporate compliance commitments, the revenue budget funded the making safe of various redundant buildings worthy of retention and/or with some future development potential at a cost of £7,926. £8,374 was spent on the licensed removal of Asbestos and £9,254 was spent on Health and Safety improvements to include fencing around slurry stores, slurry ramp barriers and sight rails around silage clamps • 27% of the overall spend on repairs and maintenance was procured through the maintenance framework partnership of which 78% was reactive and unforeseen and 22% was planned work. Through ‘market testing’ a sample of work with other local construction firms, it proved more cost effective to procure 73 % of the overall spend through non framework contractors. Where market testing took place, cost savings were made on the majority of occasions. • A further £121,298 of additional corporate compliance money was spent on essential electrical systems upgrades across the estate to comply with the latest NIECC statutory standards and new building regulations. Note: 2005/06 was the second year of the new maintenance framework agreement Capital Receipts • Total Capital Receipts for the year 2005/06 returned £415,000 from the disposal of property declared permanently surplus to the requirements of the estate (an under-achievement of £828,750 on the target of £1,243,750 for 2005/06). The 16% top slice of the net Corporate capital receipt of £415,000 from the sale of two properties on the Estate added £66,400 to the Estate’s investment fund (otherwise known as the Estate’s Usable Capital Receipts Reserve). A change in policy redesignated the previous suspense account as a Capital Usable Receipts Reserve and included the previous 'IN/OUT' reserve. The total reserve stood at a £655,348 Surplus at the year’s end. Comparison with previous years is now difficult. However, the surplus is greater than the finance plan target at this stage. • At the year’s end there were eleven capital receipts for 2006/07 being actively worked on. Capital Investments • Capital investment from the suspense account amounted to £296,443 on five farm improvement schemes. • At the years end there was one uncompleted scheme: finishing works were outstanding. Financial Performance Indicators Headline Measure 4 (a) Net Revenue Profit The Corporate plan target net revenue position for the year ending 31 March 2006 was £226,300. Actual year end profit was £271,275 (an overachievement of 19.8%). The table below shows the net operational results over the last 10 years and the benchmark target of the Corporate plan. Net Operational Revenue Surplus Compared with Corporate Target 350,000 300,000 250,000 Net operational surplus 200,000 £ Corporate Target 150,000 100,000 50,000 0 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 Year (b) Revenue efficiency (%) The revenue efficiency saving target is 2.00%. The actual was an overachievement of 19.8% on the corporate budget. However, this was unusual, resulting from an underspend on direct management costs and small works. (c) Rate of Return The revenue rate of return (using the market value of the estate) target for the financial year 2005/06 was 0.59%. The actual was 0.73% (Revenue surplus ÷ Open Market Value with vacant possession). Headline measure 5 Total Running Costs. Total revenue costs (excluding management and including improvements) for 2005/2006. Target was £454,100. Actual costs were £398,748. This underspend arising from a temporarily reduced management structure and slippage on some planned schemes. Target Actual Target Actual Target Actual 03/04 03/04 04/05 04/05 05/06 05/06 Total revenue costs a) per farm £4,357 £4,561 £4,664 £5060 £4883 £4288 b) per hectare £101 £102 £100 £113.5 £108 £95 c) as a % of revenue 49% 50% 49% 53% 50% 45% Headline Measure 5(a): Revenue Performance Indicators 8000 7000 6000 Actual Revenue 5000 Costs / Farm 4000 Target Revenue £/farm 3000 2000 Costs / Farm 1000 0 /06 /07 /11 12 4/05 9/10 02/03 03/04 07/08 08/09 001/02 0 0 00 005 006 0 0 00 010 011/ 2 2 2 2 2 2 2 2 2 2 2 Year Headline Measure 5(b): Revenue Performance Indicators 120 100 80 Actual Revenue Costs / Ha 60 £/Ha Target Revenue 40 Costs / Ha 20 0 5 03 8/09 0/11 01/02 20 2002/ 2003/042004/02005/062006/072007/08200 2009/10201 2011/12 Year Headline Measure 5(c): Revenue Performance Indicators 54% 52% Actual Revenue 50% Costs as a % of 48% Revenue % 46% Target Revenue 44% Costs as a % of 42% Revenue 40% 08 11 03/04 06/07 09/10 2001/022002/0320 2004/052005/0620 2007/ 2008/0920 2010/ 2011/12 Year Headline measure 6 Restructuring rate of return against the annual asset value on a five year rolling average. Restructuring Rate of Return Target Actual Target Actual Target Actual 05/06 03/04 03/04 04/05 04/05 05/06 a) per annum 6.20% 8.74% 6.10% 20.24% 7.4% 2.78% b) five year average 8.40% 9.60% 7.70% 13.20% 7.6% 10.6% Note Total direct expenditure + Total Management and Suspense Account Costs / Asset Value of estate based on the rental value adjusted for Capital Receipt and the change in rental value from the previous year (£16,994,681).
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