Archived decisions

Contact: Adrian Thorne, ext 6409 email: [email protected]

David Evans, tel 01489 576387 email: [email protected]

1. Summary

1.1 The final accounts of the Harbour Authority for the year ended 31 March 2005 are being presented to the River Hamble Harbour Management Committee for consideration and the River Hamble Harbour Board for approval.

1.2 This report compares the River Hamble income and expenditure at 31 March 2005 with the revised 2004/05 budget.

1.3 Negotiations have been undertaken with The Crown Estate to agree prior year funding and to agree principles for 2004/05 in relation to the Partnership. The details are highlighted later in the report (paragraph 4.3) and the financial implications are included within the accounts.

1.4 In summary, the Harbour Undertaking and Management of Moorings has surplus income of £5,103 to add to reserves. A large part of this surplus was due to no demands being made against the uncommitted budgetary pressures budget. There have also been savings in premises, office and transport running costs as well as environmental areas.

This has been partly offset by incurring the full cost of CCTV to date within the revenue account as opposed to utilising reserves as previously planned.

Additional one off income has also been negotiated with The Crown Estate as part of the funding negotiations.

1.5 The Visitor Centre Partnership shows a net expenditure of £30,889. This broadly equates to the cost of the Solent School of Yachting building which became solely the responsibility of the Harbour Authority from 1 April 2004.

2. Corporate Strategy

2.1 This report supports Aims 2 and 5 of the Corporate Strategy (Stewardship of the Environment and Improving Services).

3. Harbour Undertaking and Management of the Moorings 2004/05

3.1 Appendix 1 shows total expenditure of £489,241 compared with a full year revised budget of £495,700. Expenditure was underspent by £6,459.

3.2 Income of £494,344 compared with the full year revised budget of £495,700. Income was reduced by £1,356.

3.3 The net income was £5,103 and the main factors are detailed below.

3.4 The Employees outturn, which was broadly in line with the Revised Budget, included:

	Outturn 2004/05	Revised Budget 2004/05	Under/(over) spend 2004/05
	£	£	£
Salaries	264,727	264,500	(227)
Training (see note i)	2,413	1,000	(1,413)
Staff Advertising and Interview Expenses (see note ii)	1,215	1,600	385
Other Employee Expenses (see note iii)	20	400	380
TOTAL	268,375	267,500	(875)

(i) Training costs were £1,413 overspent. This was due in part to Health and Safety facilities management training. In addition, a large number of staff required First Aid refresher training.

(ii) The majority of the costs under staff advertising and interview expenses related to Marine Enforcement assistance with the Marine Director interviews.

(iii) The £20 incurred on other employee expenses was an administration charge incurred for making an urgent payroll payment to a member of staff.

3.5 The Premises outturn was £2,447 underspent. Details are shown below:

	Outturn 2004/05	Revised Budget 2004/05	Under/(over) spend 2004/05
	£	£	£
Repairs and Maintenance (See notes i)	260	1,500	1,240
Electricity (See ii)	743	1,000	257
Gas	400	400	0
Rent/Rates (See iii)	11,154	11,200	46
Contribution to visitor centre rent	9,000	9,000	0
Water/Sewerage (See ii)	148	400	252
Fixtures, Fittings and Repairs	7	700	693
Cleaning	91	200	109
Burglar Alarms/Security (See iv)	399	300	(99)
Refuse	251	200	(51)
TOTAL	22,453	24,900	2,447

(i) The repairs and maintenance budget was anticipated to be required for health and safety modifications. Few of these were required during 2004/05.

(ii) Electricity and water and sewerage charges were less than anticipated.

(iii) Rates totalling £11,149 were paid to Fareham (£2,690) and Eastleigh (£8,459) Borough Councils.

£5 was paid to D Olley for the rental of the site of the office.

(iv) Security payments were paid to SECOM Plc. The overspend related to locksmith costs.

3.6 The transport outturn was £4,095 underspent. This variation was made up of items detailed as follows:

	Outturn 2004/05	Revised Budget 2004/05	Under/(over) spend 2004/05
	£	£	£
Repairs and Maintenance (See note i)	3,514	5,000	1,486
Vehicle Running (See ii)	3,519	6,000	2,481
Tools (See iii)	945	1,600	655
Car Allowances/ Staff Travel (See iv)	3,132	2,600	(532)
Insurance	1,295	1,300	5
TOTAL	12,405	16,500	4,095

(i) Repairs and Maintenance covers the ongoing repair and maintenance of the boats. Costs incurred included engine servicing, propeller replacement, lift out/lift in of launches and antifouling.

(ii) Vehicle running is predominately fuel costs. Savings have occurred from newer, more economical engines and economical speeds used during patrols.

(iii) Tool costs also covers chandlery such as rope and fenders.

(iv) Car allowances also includes staff travel i.e. rail, mileage and parking costs. These costs increased as a result of the wider role undertaken by the Marine Director.

3.7 Office expenses were £6,214 underspent. The breakdown is as follows:

	Outturn 2004/05	Revised Budget 2004/05	Under/(over) spend 2004/05
	£	£	£
Equipment (See Note i)	1,822	1,800	(22)
First Aid Supplies/Health and Safety (See ii)	473	1,200	727
Printing and Stationery (see note iii)	3,193	3,500	307
Catering/General (See iv)	564	800	236
Protective Clothing (see note v)	3,558	3,500	(58)
IT Charges (See note vi)	7,245	10,000	2,755
Postage (see note vii)	2,977	2,500	(477)
Telephones (see note viii)	(727)	2,400	3,127
Promotional Events/ Publicity/Publications (see note ix)	681	300	(381)
TOTAL	19,786	26,000	6,214

(i) Equipment costs (£1,822) included furniture, photographic equipment and printer cartridges.

(ii) First Aid Supplies/Health and Safety costs (£473) included fire extinguishers. It covered servicing of extinguishers and the purchase of a new one to fulfil Fire Officer requirements. The underspend was due to less top up being required to first aid supplies during the financial year.

(iii) Printing and stationery costs (£3,193) include photocopy rental as well as County Supplies and Hampshire Printing services.

(iv) Catering/general costs of £564 related to refreshments for meetings held (£259), the supply of water coolers (£155) and general costs e.g. boat removal (£150).

(v) Protective clothing (£3,558) was used to provide uniforms and safety wear for the staff.

(vi) The additional IT costs anticipated in the budget revision did not materialise giving rise to £2,755 underspend.

IT costs included Hampshire Public Services Network (HPSN) charges and IT 2000 charges (including dial up). Costs were also incurred for the installation of new equipment.

(vii) Postage was £477 overspent. This related to franking machine costs and an unanticipated increase in routine postage requirements.

(viii) No charge was made for telephones during 2004/05. HPSN charges were included within IT costs.

Telephones showed a negative expense of £727 because a creditor was set up in 2003/04 for blue tooth headsets and handsets. These sets were not required and the creditor was subsequently reversed.

(ix) Promotional Events/Publicity and Publications was £381 overspent. This reflected an unbudgeted contribution made to the Hamble Directory of £300.

3.8 Environmental maintenance is a reactive budget to fund signage, cutting back of foliage and educational material. It was £1,578 underspent due to minimal tree clearance, path maintenance and signage being required.

3.9 Public Jetties and navigational safety was also underspent (£945) and included costs for the repair and maintenance of the jetties. Spend was contained on smaller maintenance jobs for the Harbour Master's jetty as it needs complete replacement. Any further spend now would not be economical and would not add to the life of the jetty. Major repairs will still be required however, and the funding of this work will be appraised during the current financial year.

3.10 Navigational aids is another reactive budget and was underspent by £409. Expenditure was incurred on the replacement of lights.

3.11 Central Support Charges Services was underspent by £3,349. The breakdown is shown below:

	Outturn 2004/05	Revised Budget 2004/05	Under/(over) spend 2004/05
	£	£	£
Devolved Finance Unit	11,400	11,400	0
Central Finance	5,063	5,000	(63)
Chief Executive Committee & Legal (See i)	7,588	11,000	3,412
TOTAL	24,051	27,400	3,349

(i) Legal work is demand led and less input than expected was required.

3.12 Other Services was underspent by £8,313. The breakdown is shown below:

	Outturn 2004/05	Revised Budget 2004/05	Under/(over) spend 2004/05
	£	£	£
Legal Expenses (See note i)	0	4,000	4,000
Subscriptions/Memberships/Licences (See ii)	1,712	1,800	88
SMS/Designated Person (See iii)	3,375	7,600	4,225
TOTAL	5,087	13,400	8,313

(i) Legal costs are demand led and are therefore an estimate is included in the budget to cover any need that arises for external legal advice. No costs were incurred against a budget of £4,000 because no external legal advice was required.

(ii) Subscriptions/Memberships/Licences included the British Ports Association subscription and radio licences.

(iii) Designated Persons was underspent by £4,225. An element of these costs is ad hoc in nature and reflects the work undertaken during the course of this financial year.

3.13 The Budgetary Pressure breakdown is shown below:

	Outturn 2004/05	Revised Budget 2004/05	Under/(over) spend 2004/05
	£	£	£
Harbour Revision Order (See note i)	5,359	5,500	141
Harbour Management System (See note i)	14,361	14,300	(61)
Non EU Port Waste (catering) (See ii)	0	2,000	2,000
Boat Replacement Fund	21,501	22,100	599
Uncommitted (See iii)	0	10,900	10,900
TOTAL	41,221	54,800	13,579

(i) Harbour Revision Order and Harbour Management System were in line with the budget.

Harbour Revision Order covered the cost of a survey relating to the Governance of the river. This piece of work is now complete.

The Harbour Management System is now paid in full and is in live operation.

(ii) The revised budget reflected £2,000 to cover the cost of a new EU directive covering port food waste. The river has not had to meet any costs to date relating to this directive. There is a budget within Port Waste Management Plan for 2005/06 for this cost as it is an ongoing requirement and costs may be incurred.

(iii) The uncommitted budget was to cover unforeseen pressures. No cost benefit analysis have been presented to bid to make use of these funds.

3.14 Oil Pollution Response Plan costs included the £2,570 annual subscription and costs relating to training. The £538 overspend related to a two-day Oil Spill Management Refresher Course for the Harbourmaster. This course was not anticipated but was necessary because it had been identified as out of date during the Oil Spill Response Audit.

3.15 Port Waste Management was underspent by £977. The budget, which is demand led, was set up to cover:-

(i) sewage pump out facilities,

(ii) Parts and emergency call out,

(iii) Emptying of battery cage, and

(iv) Large river rubbish removal.

Only pump costs were incurred in the financial year.

3.16 Estuary Management Plan was slightly underspent (£135). The breakdown of the £1,000 budget is:-

(i) Student Fund Contribution £600

(ii) Meetings £100

(iii) Student Fund Presentation £50

(iv) Education Group Meetings £250

The underspend was as a result of the Education Group meetings taking place on site, saving the cost of hiring a room.

3.17 Hydrographic consultancy was in line with budget and covers the cost of ABP carrying out hydrographic surveys on two sheets of soundings on the River each year (nine sheets altogether, which are surveyed on a rolling programme).

3.18 Dredging plan work has been completed but not yet charged to the River Hamble. Adjustments have been made to reflect both the cost of this work, and an estimated recharge to other partners, so that the net figure is included in the accounts.

3.19 The original plan for the CCTV costs was to meet half of the £70,000 budget from revenue and the other half from reserves. As there was a surplus outturn of some significance, the full cost to date was met from revenue. No call will therefore be made on reserves in 2004/05.

3.20 There was additional Miscellaneous income of £4,156. This was, in the main, due to:

(i) £1,300 from the sale of the boat "Sunshine", and

(ii) £2,449 settlement from The Crown Estate for moving boats between moorings as necessary as a result of the pontoon work.

3.21 Harbour dues were £3,495 under budget. This was due to a delay in the J pile work and moorings being lifted.

3.22 Supervision income was generally in line with budget.

3.23 Crown Estate funding (income) was £2,875 under budget. This came about as part of the negotiations with The Crown Estate to settle the finances from prior years.

3.24 A surplus of £5,103 is transferred to reserves, which will slightly reduce the deficit.

4. Visitor Centre Partnership 2004/05

4.1 The Visitor Partnership came into being during 2000/01 when the Solent School of Yachting was obtained by the Harbour Authority. Since then, the deficit on the account has steadily increased and currently stands at £138,658. There are a number of factors which need to be considered when looking at the deficit:-

· No visitor income was allocated to the Partnership in the first year and a half of the Partnership. This income was allocated to the main Harbour Undertaking Account. The income which should have been allocated to the Partnership Account was £77,700.

· Also, no recharge was made for the first two and a half years for use of the Solent School of Yachting building by the Harbour Authority in line with our recharging since 2003/04. The recharge would have been £22,500.

· The full responsibility for the School of Yachting moved to the Harbour Authority with effect from 1 April 2004. The annual charge to the Partnership (£33,000) broadly equates to the deficit for 2004/05 (£30,889).

If these factors are taken into account, the net deficit for the Partnership would be £7,569 for the period 2000/01 to 2004/05.

Given the accounts have been signed off for the previous years it is recommended that part of the receipt from The Crown Estate be used to bring the Visitor Partnership Reserve to zero.

4.2 Appendix 2 shows the 2004/05 outturn and the revised budget figures for the Visitor Centre Partnership.

4.3 The Appendix 2 figures reflect the outcome of the discussions that have been held with The Crown Estate regarding the Partnership. In summary it has been agreed that:-

i) The profit/loss on the Partnership for 2002/03 and 2003/04 will be shared equally between The Crown Estate and the Harbour Authority.

ii) Net visitor income in 2004/05 was shared equally between The Crown Estate and the Harbour Authority. This included pontoon income, pile visitor income, Hamble berthing fees and Warsash berthing fees.

iii) An annual fee of £10,000 will be payable to the Harbour from The Crown Estate as a management fee.

iv) Net sub let income belongs to The Crown Estate and payment needs to be made to them for the years 2002/03, 2003/04 and 2004/05.

v) For each of the years in iv) above, The Crown Estate will pay the Harbour Authority a fee of £2,000 for collections of sub let income.

vi) Some one off payments have been made by The Crown Estate relating to work underway on pontoons.

vii) No payment to The Crown Estate for the 10% of visitor income on the Hamble Landing Stage and the Warsash Jetty has been reflected within these figures. This is superseded by the 50/50 spilt of income.

The lease payments on both is accounted for in full.

4.4 Expenditure was £73,695 against a budget of £87,200 giving an underspend of £13,505.

4.5 Income of £42,806 compares with a budget of £64,382 giving a shortfall of £21,576. This is analysed further in the notes below.

4.6 The net deficit was £30,889 for 2004/05 against a revised budgeted deficit of £22,818.

4.7 The Employees outturn included:

	Outturn 2004/05	Revised Budget 2004/05	Under/(over) spend 2004/05
	£	£	£
Salaries	21,066	25,000	3,934
Staff training	300	300	0
Other Employee Exp	0	100	100
Staff advertising and interview expenses	400	400	0
TOTAL	21,766	25,800	4,034

(i) The above costs are an allocation on the basis of resources used to service visitors.

4.8 The Premises underspend of £980 is detailed below.

	Outturn 2004/05	Revised Budget 2004/05	Under/(over) spend 2004/05
	£	£	£
Electricity (note i)	80	300	220
Gas (note i)	79	200	121
Rent/Rates	3,693	3,700	7
Water/Sewage	137	200	63
Fixtures Fittings and Repairs (note ii)	0	500	500
Cleaning	731	800	69
Refuse	400	400	0
Alarms/Security	100	100	0
TOTAL	5,220	6,200	980

i) Electricity and gas costs were less than anticipated following reduced usage over recent months.

ii) There was no expenditure on fixtures fittings and repairs following reassignment of the lease.

4.9 Transport costs were in line with budget. Details are as follows:

	Outturn 2004/05	Revised Budget 2004/05	Under/(over) spend 2004/05
	£	£	£
Tools	300	300	0
Car Allowances/Staff Travel	300	300	0
TOTAL	600	600	0

4.10 Office expenses were £1,204 underspent and include:

	Outturn 2004/05	Revised Budget 2004/05	Under/(over) spend 2004/05
	£	£	£
Other Misc (inc mooring maint)	800	800	0
IT Charges	0	1,000	1,000
Credit Card Facilities	296	500	204
TOTAL	1,096	2,300	1,204

No IT Charges were allocated from the Harbour Undertaking.

4.11 Harbour dues (£4,200) and central support charges (£3,600) were an allocation from Harbour Undertaking.

4.12 There was an underspend on the Solent School of Yachting of £5,823. The budget was increased to allow for £6,000 Vail Williams fees. Within the financial year only £176 was paid.

4.13 Crown Estate rent paid was £1,464 less than budget as a result of the negotiations described in paragraph 4.3 vii.

4.14 Visitor income was £5,739 less than budget due to the restrictions imposed during the pontoon works. In addition £9,600 of income on the Warsash Jetty has been reported within a separate income line (see below). Agreement has been reached with The Crown Estate that 50% of visitor income is due to them (see paragraph 4.3 ii). The net figures are reflected here.

4.15 Non visitor income reflected a one off payment by The Crown Estate of £7,000 for loss of income during pontoon works. It also included £9,600 from Warsash Marine for use of the Warsash jetty. This had previously been reported under net visitor income.

4.16 Sub let income showed a negative income of £10,449. This was as a result of the negotiations with The Crown Estate that current and prior year sub let income be paid to them, and the River Hamble receive a fee of £2,000 per annum for collection services.

4.17 Management fee is part of the agreement reached with The Crown Estate and stands at £10,000 per annum, which is a £20,000 fee split equally between the Harbour Authority and The Crown Estate.

5. Reserves 2004/05

5.1 The effect of the above on reserves is detailed in Appendix 3.

5.2 The deficit balance at 31 March 2005 for the Harbour Undertaking was £97,894. This will be reduced in line with a three year plan to bring reserves back into credit.

5.3 Interest charged or received on reserve balances has been based on the average 7 day rate throughout the year, less 0.5%.

5.4 The deficit balance at 31 March 2005 for the Visitor Centre was £138,658.

5.5 During 2005/06 the Crown Estate Receipts will be utilised to eradicate the deficit on the Partnership Account.

5.6 The 3rd Capital receipt of £100,000 was received from The Crown Estate for the sale of the piles, giving a balance on the Capital Receipt Reserve of £311,420. This will reduce as a result of the transfer to eradicate the deficit on the Partnership Account.

5.7 A new reserve has been established for boat replacement and was funded from revenue.

Recommendations

1. That this report be noted by the Management Committee and approved by the Harbour Board.

2. That the recommendation of utilising part of the receipts from The Crown Estate to bring the Visitor Centre Partnership's deficit reserve balance of £138,658 be agreed by the Harbour Board.

9281/AT