Back to Meetings, agendas, and minutes

Quarter 2 financial monitoring report ending 30th September 2024

01 April 2024 to 30 September 2024 - full year forecast outturn v annual budget

Scottish Environment Protection Agency - Income and Expenditure Account 2024-2025

Description	Year to date (Actual £'000)	Year to date (Budget £'000)	Year to date (Var. £'000)	Full year (Forecast £'000)	Full year (Budget £'000)	Full year (Var. £'000)
Grant in Aid	12,500	12,500	0	47,709	47,709	0
Charging Schemes	47,479	47,712	(233)	52,984	52,879	105
Other income	562	578	(16)	2,680	2,680	0
Total Income	60,541	60,790	(249)	103,373	103,268	105
Staff Costs	33,980	35,353	1,373	70,831	71,565	734
Other Staff Costs	466	194	(272)	798	442	(356)
Transport Costs	273	444	171	936	974	38
Supplies and services	7,891	7,553	(338)	19,825	19,475	(350)
Property Costs	2,482	2,544	62	4,703	4,532	(171)
Depreciation/impairment	3,140	3,140	0	6,280	6,280	0
Total Operating costs	48,232	49,228	996	103,373	103,268	(105)
Operating surplus/(deficit)	12,309	11,562	747	0	0	0

1. Net results - balanced budget

1.1 Net results for the full year forecast a balanced budget, it should be noted that the 2024-2025 budget was set net of £3.5m savings in staff costs. These savings are forecast to be met in full.

1.2 At Q2 (period 01 April 2024 to 30 September 2024), the year-to-date variance of £0.75m is as a result of £1m lower than budgeted expenditure offset by £0.25m lower than budgeted charging income. The year-to-date underspend will be fully utilised on corporate priorities which support transformation, resulting in a break-even position by the year end.

1.3 Variances by accounting spend category will be explained in the remainder of the paper with the focus being on full year forecast.

2. Total income - £103.4m

2.1 Total income for the full year is forecast at £103.4m which is £0.1m more than full year budget. This is mainly due to net movements from budget of £0.1m increased charging fees mainly from water and waste schemes.

Table 2 - GiA budget allocation

Grant in Aid Budget Allocation	Resource Budget Cash	Resource Budget Non Cash	Total
Base Budget Allocation 2024-25	39,911	6,280	46,191

Budget Adjustments:

Grant in Aid Budget Allocation	Resource Budget Cash	Resource Budget Non Cash	Total
Waste water sampling	278	-	278
Cleaner Air	30	-	30
Water Environment Fund	1,210	-	1,210
Total Adjustments	1,518	0	1,518

2.2 SEPA’s revenue GiA is presented in Table 2 above at £47.7m. This is an increase of £1.5m since the budget was set. The table above provides a breakdown of confirmed in year budget adjustments, these will be fully offset by increased expenditure.

Charging Scheme income - £53.0m

2.3 Graph 2 shows charging scheme income by media. The full year income outturn is £53.0m, which is £0.1m more than budget. This results in a net positive variance which includes:

• Applications - £0.15m positive variance in the applications forecast. The increase in application income is mainly due to higher than budgeted applications from water, air and radioactive substances.
• Subsistence - £0.05m negative variance in the subsistence forecast mainly in relation to water licences.

Other income - £2.68m

2.4 The full year income outturn is £2.68m, which is balanced to budget. Payments from other agencies has reduced slightly but this has been offset by small increases against bank interest and legal income.

3 Total expenditure - £103.4m

3.1 Full year operating costs are £103.4m, £0.1m more than budget.

Staff costs and other staff costs

3.2 Budgeted staff costs represent 70% of total expenditure. The vacancy management level (which represents savings due to vacant posts) was set at 4% or £3.5m. These savings have been achieved and accounted for in the forecast outturn.

3.3 A forecast increase in vacancy savings is being offset by a forecast overspend in temporary workers and recruitment costs.

Transport costs

3.4 Transport costs are reporting a small overspend of £38k, underspends in trains £23k and mileage £32k are being offset by overspends in pool vehicles and leases £17k.

Supplies and services

3.5 The full year forecast is currently reporting an overspend of £0.35m. There are several offsetting variances, with the most significant being:

• Software maintenance (£0.16m) in relation to spend on enterprise cloud support and logistics contract to facilitate hybrid working.
• Professional Services (£0.13m) in relation to the lone worker contract and desktop valuations.
• Subcontracted work (£0.09m) mainly relates to ongoing projects in Environmental Quality.

Property costs

3.7 The full year forecast is currently reporting an overspend of £0.17m. The most significant of which relates to reactive maintenance property maintenance £0.15m.

4. Capital

Table 3 - Capital expenditure

Function	Budget £'000	Approval Projects £'000	Main areas of risk within function budgets
Permitting	60	25	Integrated Authorisation Framework Implementation planned for Q3 and Q4.
Enforcement	15	20	Enforcement Camera.
Energy and Materials	0	89	Materials Data Platform, Mostly internal staff costs.
Chemistry	1,733	1,913	Gas Chromatographers and Nutrients Analyser.
Ecology	500	335	Lab Reconfiguration and Sir John Murray Refit.
Environmental Quality	61	133	Bathing Water Signage and Recovery of SAGIS.
Info Systems	972	415	IS Infrastructure and Disaster Recovery Servers.
Info Systems (Digital)	1,783	1,290	IAF Implementation.
Workspaces	206	224	Fleet Replacement.
Hydrology	1,070	1,256	Gauging Stations, Data Loggers and Flood Mapping.
Budget Reduction	(1,000)	-	-
Totals	5,400	5,700	-

4.1 SEPA’s capital budget provided by Scottish Government for the year is £6.4m. After recent discussion with Scottish Government colleagues and in light of the current savings commissions, it has been agreed to defer the capital budget by £1m to a revised total of £5.4m. SEPA has approved £5.7m worth of projects which have all been assigned a confidence assessment. During this quarter £1.3m of Accountable Officer submissions to Scottish Government have been approved, with the most significant approval being £0.9m for the purchase of 2 Gas Chromatographers. Officers are currently assessing the returned tenders.

5. Statement of Financial Position

5.1 The Statement of Financial Position is tabled below. The figures are subject to audit and may change from the stated position below.

Table 4 - Statement of Financial Position period to 30 September 2024

Statement of Financial Position 30 September 2024	Year to 31 March 2024 £'000	Period to 30 September 2024 £'000
Non Current Assets
Property, plant and equipment	42,377	39,456
Intangible assets	2,402	2,183
Assets under construction	2,807	2,807
Employee retirement benefits	21,527	21,527
Total non current assets	69,113	65,973
Current assets
Trade and other receivables	4,189	4,796
Cash and cash equivalents	899	9,208
Total current assets	5,088	14,004
Total assets	74,201	79,977
Current liabilities
Trade and other payables	(11,206)	(4,921)
Provisions	(214)	(214)
Total current liabilities	(11,420)	(5,135)
Total assets less current liabilities	62,781	74,842
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	(13,903)	(13,903)
Total assets less total liabilities	48,878	60,939
Taxpayers' equity and other reserves
General fund	30,544	42,605
Revaluation reserve	18,334	18,334
Total tax payers equity	48,878	60,939

6. Recommendation

6.1 The Board is asked to approve SEPA's financial performance report for the period ending 30 September 2024.