Statement of Accounts 2014/15 City and County of Swansea ● Dinas a Sir Abertawe CONTENTS Introduction 3 Explanatory Foreword 4 Movement in Reserves Statement 11 Group Movement in Reserves Statement 14 Comprehensive Income and Expenditure Statement 16 Group Income and Expenditure Statement 18 Balance Sheet 20 Group Balance Sheet 22 Cash Flow Statement 24 Group Cash Flow Statement 25 Notes to the Accounts & Significant Accounting Policies (including 26 notes to the Group Financial Statements) Housing Revenue Account Income and Expenditure Statement 132 Movement on the HRA Balance 134 Notes to the Housing Revenue Account 136 Asset Structure 140 City & County of Swansea Pension Fund 143 Head of Finance and Delivery Certificate and Statement of 181 Responsibilities for the Statement of Accounts Auditor's Report to the City and County of Swansea 182 Annual Governance Statement 185 Glossary of Terms 201 2 INTRODUCTION The City and County of Swansea is located on the South Wales Coast and is one of twenty two current unitary local authorities providing local government services in Wales. The area of the Authority includes the Gower peninsula, designated as Britain’s first area of outstanding natural beauty . Approximately 240,300 people live within the boundaries of the Authority of which: - 41,500 are aged under 16 - 52,400 are of pensionable age - 21,300 are aged 75 years and over The County has a mixed agricultural and industrial economy. The City sits at the mouth of the River Tawe, from which its Welsh name, Abertawe, derives. This Statement of Accounts is one of a number of publications, which include the revenue and capital budgets, produced to comply with the law and designed to provide information about the Authority's financial affairs. Copies of these accounts can be obtained from: The Head of Finance and Delivery City and County of Swansea Civic Centre Swansea SA1 3SN 3 EXPLANATORY FOREWORD The main elements of this Statement of Accounts comprise:- ∗ The Movement in Reserves Statement which shows the movement in the year on the different reserves held by the Authority, analysed into ‘usable reserves’ (i.e. those that can be applied to fund expenditure or reduce local taxation) and other reserves. ∗ The Comprehensive Income and Expenditure Statement, which shows the income from, and spending on, Authority services for the year. It also shows how much money we get from the Welsh Government, business ratepayers and Council taxpayers together with the net deficit / surplus for the year. ∗ The Balance Sheet, showing a snapshot of the Authority’s financial position at the 31st March 2015. ∗ The Cash Flow Statement, which shows transactions for the year on a cash basis rather than on an accruals basis. ∗ The notes to the accounts, incorporating the main accounting policies which show the basis on which we have prepared the accounts and the accounting principles the Authority has adopted. The notes also offer further analysis of items appearing in the main financial statements. ∗ The Housing Revenue Account (HRA) Income and Expenditure Statement, which shows income from, and spending on, Council housing for the year. This account is stated separately as required by statute although the overall results are incorporated into the Authority’s Comprehensive Income and Expenditure Statement. ∗ The Group Accounts, which show the consolidated accounts of the Authority and its group companies. ∗ The Pension Fund accounts, which show all contributions received and benefits paid for the year together with a snapshot of the financial position of the fund at the year end. ∗ The Certificate and Statement of Responsibilities of the Head of Finance and Delivery who is the responsible officer for the production of the statement. ∗ The Annual Governance Statement, which gives an indication of the arrangements for and effectiveness of internal control procedures within the Authority. ∗ The auditor’s opinion and certificate relating to the Statement of Accounts. 4 EXPLANATORY FOREWORD We incur two main types of expenditure – revenue expenditure and capital expenditure . Revenue expenditure covers spending on the day to day costs of our services such as staff salaries and wages, maintenance of buildings and general supplies and equipment. This expenditure is paid for by the income we receive from Council taxpayers, business ratepayers, the fees and charges made for certain services, and by the grants we receive from Government. Capital expenditure covers spending on assets such as roads, redevelopment and the major renovation of buildings. These assets will provide benefits to the community for several years and the expenditure is largely financed by borrowing, capital grants and the sale of fixed assets. Amounts borrowed for capital purposes are repaid in part each year as part of our revenue expenditure. During 2014/15 the Authority made use of a capitalisation directive totalling £10.1 million which allows the Authority to treat as capital expenditure sums incurred in setting equal pay claims which would otherwise been charged directly to revenue. Sources of borrowing utilised include the Public Works Loan Board (PWLB) and capital markets. The PWLB is a Government agency which provides longer-term loans to local authorities. 5 EXPLANATORY FOREWORD Revenue spending in 2014/2015 £'m % Revenue support grant 241.8 33 Non domestic rates 76.4 10 Where our money Council tax (including 95.0 13 comes from Reduction Scheme) Other income (rents, fees 324.3 44 and charges, specific grants) 737.5 100 £'m % Employees 321.3 45 What we spend it Capital charges 33.0 4 on Running costs 346.1 47 Precepts/Levies 29.3 4 Reserve 7.8 0 transfers 737.5 100 £'m % Education & Children’s 285.9 39 Services Adult Social Services 101.1 14 Highways/transport 43.1 6 Culture & related services 42.6 6 Environmental and 34.7 5 And the regulatory services services it Planning services 20.4 3 provides Housing 169.7 23 Precepts/levies 29.3 4 Reserve transfers 7.8 0 Other 2.9 0 737.5 100 6 EXPLANATORY FOREWORD Authority services The revenue outturn position of the Authority for 2014/15 resulted in a decrease in expenditure on services of £1.6m compared to adjusted budget. In addition, the revenue outturn position reflects a further £4.073m of one off expenditure on an invest to save basis, that was met from the Authority's contingency fund primarily to fund early retirement and voluntary redundancy costs as the Authority seeks to reduce its operating costs and adjust to reducing grant levels. The net underspend on Services reflects forecast and known pressures within both Social Services and Education budgets which have been reflected in 2015/16 budget proposals. Other budget variations Other budget savings during the year arose from reductions in capital repayments and interest charges (£0.340m) and increased income from Council Tax (£1.192m), together with income derived from interest on tax refunds previously granted totalling £1.7m. Housing Revenue Account The Housing Revenue Account of the Authority is a ring fenced account dealing exclusively with income and expenditure arising from the Authority's housing stock. For 2014/15 there was a net increase in HRA reserves at year end of £3.168m (2013/14 net increase £0.009m). Details of the annual Revenue, Capital and HRA outturn reports can be found on the agenda of the Council's Cabinet for the meeting on 16th July 2015. 7 EXPLANATORY FOREWORD Capital spending in 2014/15 £'000 External borrowing 32,266 Government grants 26,545 Where our money comes from European grants 6,521 Other grants/contributions 1,728 Capital receipts 2,123 Revenue and reserves 18,084 Financing of previous years 1,484 88,751 £'000 What services we Corporate Services 11,209 spend it on Place Services 61,490 People Services 16,052 Some of the assets it 88,751 provided Corporate Services £'000 Place Services £'000 IT hardware and services 1,109 Highways and Transportation Capitalisation Directive 10,100 Street Lighting 3,485 People Services Highways Carriageways 4,607 Education Morfa Road 1,238 Morriston Comprehensive 4,271 Road Safety Traffic 1,009 Primary school extensions 1,395 Townhill Safe Routes In 515 (Newton, Glyncollen, Communities Penllergaer) Gowerton school rebuild 2,193 Bridges & Retaining Walls 819 Burlais school rebuild 5,941 Flying Start schemes 646 Economic Development Schools capital maintenance 3,151 Boulevard road works 3,859 Felindre infrastructure works 861 Place Services Swansea Market Roof works 1,149 Housing HRA BISF Houses 2,200 Other Services HRA Door/window renewals 1,732 Glyn Vivian refurbishment 2,647 HRA Adaptation works 3,007 Guildhall refurbishment 2,374 HRA Boiler replacements 2,645 Dylan Thomas Exhibition 747 HRA Weatherproofing 7,649 Other Buildings Capital 1,401 Maintenance HRA Security works 821 HRA Kitchens & Bathrooms 4,046 Housing Disabled Facilities 3,983 Grants Sandfields Renewal Area 110 Housing other grants/loans 1,355 8 EXPLANATORY FOREWORD The Authority maintains a number of provisions and reserves. Provisions are disclosed in Note 20 on pages 81 and 82. The information regarding reserves are disclosed in the Movement in Reserves Statement on pages 12 to 15 and Note 7 on page 60. Provisions are amounts included in the accounts as liabilities where there has been a past event which is likely to result in a financial liability but where there is uncertainty over timing and the precise value of the liability that has been incurred. It is therefore the Authority’s best estimate of the financial liability as at 31st March 2015. The Council holds Earmarked Reserves for specific purposes, together with a level of General Reserves which are available to support overall Council expenditure. However, due to the nature, size and complexity of the Council's operations, and in particular the potential for short term volatility in terms of elements of income and expenditure, it is prudent to maintain a level of General Reserves sufficient to meet anticipated and known financial risks.