Quarter 4 Financial Monitoring Report for period ending 31 March 2024
Purpose
A detailed paper was presented for consideration and scrutiny at the Audit and Risk Committee on 14th May 2024. The paper was recommended for submission to the Board for approval.
Actual results for quarter 4 (1 April 2023 to 31 March 2024) show that SEPA delivered an almost break-even position for revenue with a £0.2m (0.2%) underspend against income of £97.0m. The prior year comparator was a revenue underspend of £1.9m (1.9%) on £90.4m. Prior year underspend was due to additional pre-cyber debt recovery.
The capital results are an underspend of £0.85m from £6.2m budget, this is unchanged from previously reported and detail on the underspend will be provided later in the report. The prior year comparator was a capital underspend of £19k.
Final accounts work is ongoing, and these figures should be considered draft as they may be subject to change following final year-end adjustments and/or external audit adjustments.
It should also be noted that the balance sheet and depreciation figures will change when the annual accounts work in relation fixed assets and pension valuation adjustments is completed.
Recommendations: The Board is asked to consider the contents of this report and approve.
Author: Ian Bryce, Deputy Head of Finance.
Corporate Leadership Team Sponsor: Angela Milloy, Chief Officer, Finance, Modernisation, and Digital.
Date: 20 May 2024.
Draft income and expenditure account 2023-24
Table 1 - 01 April 2023 to 31 March 2024 - full year forecast outturn versus annual budget.
| Description | Actual £'000 | Budget £'000 | Var. £'000 | 2022-23 Outturn Actual £'000 |
| Grant in Aid | 45,444 | 45,444 | 0 | 40,610 |
| Charging schemes | 48,872 | 48,937 | (65) | 44,511 |
| Other income | 2,727 | 2,520 | 207 | 5,274 |
| Total income | 97,043 | 96,901 | 142 | 90,395 |
| Description | Actual £'000 | Budget £'000 | Var. £'000 | 2022-23 Outturn Actual £'000 |
| Staff costs | 67,853 | 68,342 | 489 | 62,786 |
| Other staff costs | 1,055 | 512 | (543) | 756 |
| Transport costs | 1,497 | 1,287 | (210) | 1,048 |
| Supplies & services | 16,703 | 17,298 | 595 | 14,653 |
| Property costs | 4,557 | 4,255 | (303) | 3,990 |
| Depreciation/impairment | 5,190 | 5,207 | 17 | 5,295 |
| Total operating costs | 96,855 | 96,901 | 45 | 88,528 |
| Operating surplus/ (deficit) | 188 | 0 | 188 | 1,867 |
1. Draft net results (£188k revenue underspend)
1.1. The 2023-2024 budget was set net of £3m savings by reductions in staff costs (£2.7m) and supplies and services (£0.3m). These savings have been met in full.
1.2. Net results for the full year show an underspend of £0.2m, this is due to an increase in income of £0.15m and a saving in expenditure of £0.05m.
2. Draft total income (£97m on budget)
2.1. Total income for the full year is forecast at £97.0m which is £0.1m more than full year budget. This is mainly due to increases relating to subsistence charges and bank interest offset by reduced charging income due to the paused Deposit Return Scheme.
3. Draft total expenditure (£96.9m on budget)
3.1. Full year operating costs are £96.9m, £45k or 0.05% less 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 £2.7m and these savings have been achieved and accounted for in Table 1 above.
Staff cost highlights
3.3. The staff cost highlights are:
• Savings have been used to fund the estimated cost of the voluntary severance scheme, which are included in the outturn at £2.1m. Recurring savings are circa £1.1m.
• Other staff costs overspend of £0.5m 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 underspend of £0.6m, the most significant variance of which relates to less bad debt being written off (£0.35m) due to the recovery of historic debt. Other significant variances are reported against consultancy and partnership contributions. The balance of movements in the remaining accounts within supplies and services net each other out.
Property costs
3.5. The full year forecast is currently showing a (£0.3m) overspend largely due to increased utility costs with the largest increase against electricity due to higher levels of usage and increased tariffs.
Depreciation/impairment
3.6. It should be noted that depreciation and impairments are currently reporting a small underspend, but this will change as the year end work on impairments is ongoing. When completed, this work will impact on the depreciation outturn reported in Table 1 above.
4. Draft capital
Table 2 - Draft capital expenditure
| Year End Outturn | Budget 2023-24 | Budget 2022-23 |
| Capital GiA | 6,200 | 4,535 |
| Capital Area | Outturn 2023-24 | Outturn 2022-23 | 2023-24 Main spend types by function |
| Compliance | 59 | 0 | Intelligence & investigation system |
| Circular Economy | 36 | 209 | New radiation equipment |
| Chemistry | 1,163 | 491 | Aberdeen lab refurb & equipment replacement |
| Ecology | 130 | 73 | Sir John Murray Refit |
| Environmental Quality | 102 | 94 | Making data available & bathing water signage |
| Facilities | 529 | 192 | Vehicle replacement programme (lease & purchase) |
| Hydrology | 1,647 | 1,852 | Flood mapping & defences/ gauging stations |
| Information systems | 1,682 | 1,643 | Digital workstreams & web refresh |
| Capital outturn | 5,348 | 4,554 | |
| (Over)/ underspend | 852 | (19) |
4.1. SEPA’s capital budget provided by Scottish Government for the year was £6.2m. The outturn is forecasting a capital spend of £5.35m. The underspend of £0.85m is due to several factors including the pause of the Deposit Return Scheme which impacted on SEPA’s digitalisation programme, the decision not to progress the Stirling Office project and Scottish Government’s decision in December to reduce the approval threshold for capital projects from £250k to £100k. This change in process halted the contract awards of three projects totalling £0.5m as retrospective approval had to be sought.
4.2. To optimise future capital budgets, SEPA’s capital working group met recently to implement future 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 increased training provision delivered by Finance and Procurement.
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 £4.8m have been raised this year of which £2.25m have been paid.
6. Draft statement of financial position
6.1. The statement of financial position is tabled below. The figures will change upon completion of annual accounts work in relation to fixed assets and pension valuation adjustments.
Table 3 - Draft statement of financial position.
| Statement of Financial Position 31 March | Year to 31.03.24 £'000 | Year to 31.03.23 £'000 |
| Non current assets | ||
| Property, plant, and equipment | 46,058 | 42,962 |
| Intangible assets | 2,793 | 2,390 |
| Assets under construction | 2,930 | 1,167 |
| Employee retirement benefits | 1,501 | 1,501 |
| Total non current assets | 53,282 | 48,020 |
| Current assets | ||
| Trade and other receivables | 4,594 | 3,806 |
| Cash and cash equivalents | 899 | 829 |
| Total current assets | 5,493 | 4,635 |
| Total non current and current assets | 58,775 | 52,655 |
| Current liabilities | ||
| Trade and other payables | (10,140) | (10,069) |
| Provisions | (5,484) | (555) |
| Total current liabilities | (15,624) | (10,624) |
| Total assets less current liabilities | 43,151 | 42,031 |
| Non current liabilities | ||
| Provisions for liabilities and charges >1 year | (5,325) | (5,325) |
| Future lease payments | (8,984) | (8,928) |
| Total non-current liabilities | (14,309) | (14,253) |
| Total assets less total liabilities | 28,842 | 27,778 |
| Taxpayers' equity and other reserves | ||
| General fund | 10,511 | 9,359 |
| Revaluation reserve | 18,331 | 18,419 |
| Total tax payers equity | 28,842 | 27,778 |