Quarter 1 Financial Monitoring Report for period ending 30 June 2024
A detailed paper was presented for consideration and scrutiny at the Audit and Risk Committee on 30 July 2024. The paper was recommended for submission to the Board for approval.
Since the time of the Audit and Risk Committee recommending this paper for approval to the Board, Scottish Government have issued new guidance on practical steps to review our spending. SEPA will continue to review any spend to ensure that it is ‘essential or business critical’ prior to approval. Business critical refers to work where legal obligations would be breached or failure to spend would cause significant economic damage.
Actual results for quarter 1 (1 April 2024 to 30 June 2024) show that SEPA is forecasting a break-even position in revenue at the year end.
In line with Scottish Government Draft Savings Commission 12/08/24, £1m of capital programme has been deferred from the 2024-2025 capital programme.
A capital summary showing the revised £5.4m budget is forecasting an overspend of £0.3m for the financial year ended 31st March 2025, the Capital Working Group are closely monitoring the programme to ensure a balanced budget is achieved.
The Board is asked to consider the contents of this report and approve.
Ian Bryce, Deputy Head of Finance; Rosaleen Burke, Head of Finance.
Angela Milloy, Chief Officer, Finance, Modernisation, and Digital.
Date: (July 2024) 16 September 2024
Table 1 - 01 April 2024 to 30 June 2024 - full year forecast outturn versus annual budget
| Description | Actual £'000 (Year to date) | Budget £'000 (Year to date) | Var. £'000 (Year to date) | Forecast £'000 (Full year) | Budget £'000 (Full year) | Var. £'000 (Full year) |
|---|---|---|---|---|---|---|
| Grant in Aid | 11,000 | 11,000 | 0 | 47,353 | 47,353 | 0 |
| Charging Schemes | 45,612 | 45,600 | 12 | 53,129 | 52,879 | 250 |
| Other incomes | 398 | 188 | 210 | 2,707 | 2,683 | 24 |
| Total income | 57,010 | 56,788 | 222 | 103,189 | 102,915 | 274 |
| Staff costs | 16,897 | 17,626 | 729 | 71,806 | 72,169 | 363 |
| Other staff costs | 230 | 108 | (122) | 720 | 443 | (277) |
| Transport costs | 204 | 212 | 8 | 1,174 | 1,153 | (21) |
| Supplies and services | 5,330 | 4,877 | (453) | 18,754 | 18,403 | (351) |
| Property costs | 1,644 | 1,805 | 161 | 4,455 | 4,467 | 12 |
| Depreciation/impairment | 1,570 | 1,570 | 0 | 6,280 | 6,280 | 0 |
| Total operating costs | 25,875 | 26,198 | 323 | 103,189 | 102,915 | (274) |
| Operating surplus/ (Deficit) | 31,135 | 30,590 | 545 | 0 | 0 | 0 |
1. Net results - Balanced budget
1.1. The 2024-2025 budget was set net of £3.5m vacancy savings in staff costs. These savings are forecast to be met in full.
1.2. Net results for the full year report a balanced budget, which includes an increase in income of £0.27m offset by increased expenditure of £0.27m.
2. Total income - £103.2m
2.1. Total income for the full year is forecast at £103.2m which is £0.27m more than full year budget. This is mainly due to increases relating to charging schemes and bank interest.
3. Total expenditure - £103.2m
3.1. Full year operating costs are £103.2m, £0.2m or 0.02% more than budget. Table 1 above shows actuals against budget for the year by expenditure type.
Staff costs and other staff costs
3.2. This financial year, portfolios were required to meet the budgeted vacancy savings target of £3.5m and these savings have been forecast to be achieved and accounted for in Table 1 above.
3.3. Other staff costs overspend of £0.3m due to temporary workers and recruitment costs should be viewed together with savings from staff costs.
Supplies and services
3.4. The full year forecast is reporting an overspend of £0.35m, the most significant variance of which relates to software maintenance spend on cloud support and logistics contract to facilitate home working.
Transport and property costs
3.5. Both areas are forecasting small variances with no significant variance within these areas.
4. Capital
Table 2 - capital expenditure
| Function | Budget £'000 | Forecast £'000 | In progress £'000 | AO Req'd £'000 | AO approved £'000 | Main areas of risk within function budgets |
|---|---|---|---|---|---|---|
| Permitting | 60 | 25 | 0 | 0 | 0 | IAF Implementation planned for Q3 and Q4. |
| Enforcement | 15 | 20 | 20 | 0 | 0 | Enforcement camera. |
| Chemistry | 1,733 | 1,906 | 1,906 | 1,456 | 456 | Gas chromotographers and nutrients analyser. |
| Ecology | 500 | 270 | 270 | 120 | 0 | Lab reconfiguration. |
| Evn Quality | 61 | 61 | 61 | 0 | 0 | Bathing water signage. |
| Info systems (Digital) | 1,783 | 1,223 | 1,223 | 960 | 960 | IAF Implementation. |
| Workspaces | 206 | 222 | 222 | 150 | 150 | Fleet replacement. |
| Hydrology | 1,070 | 1,410 | 1,110 | 466 | 466 | Gauging stations, data loggers and flood mapping. |
| Budget reduction | (1,000) | |||||
| Totals | 5,400 | 5,706 | 5,131 | 3,252 | 2,032 |
4.1. SEPA’s capital budget provided by Scottish Government for the year was £6.4m. After recent discussions with Scottish Government colleagues, it has been agreed to reduce the capital budget by £1m to a revised total of £5.4m. There is a current forecast of £0.3m overspend, but the capital working group are closely monitoring the programme to ensure a balanced budget is achieved.
4.2. To optimise capital budgets, SEPA’s capital working group have agreed to implement further control measures. These include improved project planning by implementing new processes, earlier involvement with Procurement to determine the appropriate route to market, earlier submission of projects over £100k to Scottish Government and early identification of pipeline projects should they be required to fully utilise the budget.
5. Civil penalties
5.1. SEPA acts as an agent for the Scottish Government on the issuing and collection of civil penalties - we do not receive any additional grant for undertaking this work. As such, civil penalties income is not included in SEPA’s accounts. New actions totalling £2.4m have been raised this year.
6. Draft statement of financial position
6.1. The statement of financial position is tabled below. The figures are subject to audit and may change from the stated position. The large cash and trade receivables balances reflect the fact that invoices for annual subsistence fees were issued in April.
Table 3 - Draft Statement of financial position
| Draft Statement of Financial Position | Year to 31 March 2024 £'000 | 1st April 2024 - 30th June 2024 £'000 |
|---|---|---|
| Non current Assets | ||
| Property, plant, and equipment | 42,377 | 41,103 |
| Intangible assets | 2,402 | 2,106 |
| Assets under construction | 2,807 | 2,807 |
| Employee retirement benefits | 21,527 | 21,527 |
| Total non current assets | 69,113 | 67,543 |
| Current assets | ||
| Trade and other receivables | 4,189 | 16,555 |
| Cash and cash equivalents | 899 | 17,266 |
| Total current assets | 5,088 | 33,821 |
| Total assets | 74,201 | 101,364 |
| Current liabilities | ||
| Trade and other payables | (11,206) | (6,716) |
| Provisions | (214) | (214) |
| Total current liabilities | (11,420) | (6,930) |
| Total assets less current liabilities | 62,781 | 94,434 |
| Non current liabilities | ||
| Provisions for liabilities and charges >1 year | (6,022) | (6,022) |
| Future lease payments | (7,881) | (7,881) |
| Total non-current liabilities | (13,902) | (13,903) |
| Total Assets less total liabilities | 48,878 | 80,531 |
| Taxpayers' equity and other reserves | - | - |
| General fund | 30,544 | 62,197 |
| Revaluation reserve | 18,334 | 18,334 |
| Total tax payers equity | 48,878 | 80,531 |
7. Recommendation
7.1. The Board is asked to consider the contents of this report and approve.