Archived decisions

Notes to Consolidated Balance Sheet (continued)

2c

Fixed assets held at 31 March

2004

2005

Land

Total land holding (acres)

16,610

16,780

Buildings

Area of all buildings (million sq. metres)

1.7

1.7

Floor area of net usable office space

49

49

(000s sq.metres)

Number of buildings

Nursery schools

2

2

Primary schools

437

434

Secondary schools

71

71

Special schools

29

28

Activities centres

5

5

Magistrates' courts and office

11

11

Print works

1

1

Stores warehouses

2

2

Central and area offices

56

60

Waste disposal sites and recycling centres

28

28

Libraries

54

54

Museums

19

19

Countryside sites

83

84

Record Office

1

1

Arts Centres

4

4

Social Services - residential homes

52

52

Social Services - day centres

33

33

County road length (km)

8,538

8,517

Vehicles and plant

Hampshire Transport Management

77

52

The reduction in 2005 is due to the policy of replacing owned

vehicles with leased vehicles.

Community assets not accounted for in the balance sheet comprise:

Museum exhibits, Pieces of art, Historic records held by County Records,

Historic monuments

42

2d

Capital financing

Capital spending on fixed assets and deferred charges totalled £208.4m

(£155.7m in 2003/04). It was financed as follows:

2003/04

2004/05

£'000

£'000

Capital receipts

16,508

18,469

Grants and other income

45,414

83,366

Loans

53,176

82,358

Revenue

- Main contribution

25,985

12,450

- Reserves

11,902

11,795

Creditors

2,725

-

155,710

208,438

Commitments for major contracts entered into up to 31 March 2005

are estimated at £29.5m. This comprises £8m for highways

and £21.5 for buildings.

2e

Leases

At 31 March 2005 there were no outstanding obligations on finance leases.

Some vehicles, items of equipment and property are financed under

operational leases. The annual sum payable on these is £5.4m. The future

obligations under operational leases are £29.7m and their profile is as

follows:

Operational leases

Paid

Payable

expires

expires

expires

in

in

in that

in second to

in over

2004/05

2005/06

year

fifth year

five years

£'000

£'000

£'000

£'000

£'000

Other land and buildings

3,321

3,321

425

1,477

1,419

Vehicles plant and

2,132

2,829

637

2,039

153

equipment

5,453

6,150

1,062

3,516

1,572

43

3

Deferred charges

Movements in the value of deferred charges during the year were as follows:

2003/04

2004/05

£'000

£'000

Balance at 1 April

2,663

2,068

Expenditure

11,610

14,444

Transfer from assets under construction

1,912

2,633

Less:

amounts written off to capital financing account

-14,117

-19,145

Balance at 31 March

2,068

-

Deferred charges represent expenditure that has been capitalised but

does not add to the value of assets controlled by the County Council.

The expenditure in the year and the transfer from assets under construction

includes grants to third parties and capital payments on foundation

schools. The balance at the beginning of the year represents

expenditure incurred in 1996/97 and 1997/98 on local government

reorganisation, both of which were being written off over seven

years starting in 2000/01 and 2001/02 respectively, but have been

written off in full in 2004/05.

4

Long-term debtors

31 March

2004

2005

£'000

£'000

Car loans to staff

998

919

Transferred debt

52,602

49,939

Other

542

363

54,142

51,221

Transferred debt represents amounts of capital advances due to be repaid

following statutory transfers of former services to independent bodies.

£44.1m remains to be repaid by the cities of Portsmouth and Southampton,

£2.7m by the Higher Education Funding Council, and £3.2m by the

Hampshire Police Authority.

44

5

Stocks and work in progress

31 March

2004

2005

£'000

£'000

Stocks

Catering stock

302

323

County Supplies general

981

917

Recreation and Heritage sales stocks

195

247

Other

295

253

1,773

1,740

Work in progress

Highway rechargeable works

722

1,217

Other

41

74

763

1,291

Total stocks and work in progress

2,536

3,031

Closing stock valuations have been assessed using the latest

purchase price. This is not in accordance with SSAP 9,

which requires stock to be valued at lesser of original purchase

price or current value but the differences in the valuations are

not material.

6

Debtors

31 March

2004

2005

£'000

£'000

Government departments

13,162

8,832

Other local authorities

5,629

6,316

Sundry debtors

24,874

34,772

43,665

49,920

7

Short term investments

Surplus cash balances are lent to borrowers on the County Council's approved

list. The increase in the level of short term investments in 2004/05 was mainly the

result of the pooling of surplus Pension Fund, Police and Fire Authority cash for

treasury management purposes and the increased sums lent by those bodies to the

County Council.

45

8

Cash in hand

31 March

2004

2005

£'000

£'000

The balance shown comprises:

Schools' local bank accounts

8,625

5,873

Petty cash

794

830

9,419

6,703

Schools' local bank accounts include the balances held by 21 schools (26 in

2004/05) which have elected to have separate bank accounts. Petty cash

consists of 914 imprest accounts (922 in 2003/04) for minor day-to-day

expenses which are held by establishments, including schools across the

whole County.

9

Deposits

31 March

2004

2005

£'000

£'000

NHS Nursing care contribution

8,338

20,666

Other capital deposits and unapplied contributions

989

1,639

Other

731

724

10,058

23,029

10

Creditors

31 March

2004

2005

£'000

£'000

Inland Revenue and Government departments

24,357

25,017

Other local authorities

6,722

6,613

Sundry creditors

68,671

88,845

99,750

120,475

The County Council's policy is to pay business creditors within 30 days

of the date shown on the invoice.

11

Receipts in advance

31 March

2004

2005

£'000

£'000

Education Standards Fund and devolved capital grants

22,894

21,329

Other receipts and contributions

12,577

13,986

35,471

35,315

46

12

Borrowing repayable within one year

31 March

2004

2005

£'000

£'000

Long-term borrowing repayable within one year

8,000

4,000

Temporary deposits by Hampshire Pension Fund,

82,511

108,712

Hampshire Police Authority, and Hampshire Fire Authority.

Other short term borrowing

4,977

4,830

95,488

117,542

13

Cash overdrawn

This is the ledger balance of the main bank account and is almost entirely

represented by payments drawn but not presented at the bank by the end

of the year. The actual bank balance is managed on a daily basis to very

modest limits, usually less than £100,000.

14

Long-term borrowing

Outstanding 31 March

Range of interest

Source of loan

2004

2005

rates payable

£'000

£'000

3.8%-9.875%

Public Works Loan Board

184,000

207,000

2.7%-5%

Lender's option/borrower's

24,000

36,000

option loans

208,000

243,000

An analysis of loans by maturity is:

Maturing between 1 and 2 years

4,000

8,000

Maturing between 2 and 5 years

20,000

16,000

Maturing between 5 and 10 years

21,000

29,000

Maturing in 10 or more years

163,000

190,000

208,000

243,000

47

15

Government grants and contributions deferred

2003/04

2004/05

£'000

£'000

Balance at 1 April

174,046

209,753

Financing of expenditure in the year

45,414

83,365

Release of grants resulting from the

-9,707

-13,114

depreciation and disposal of assets

Balance at 31 March

209,753

280,004

This account contains external grants and contributions that have been

used to finance capital expenditure. It will be adjusted for depreciation

(written down) to offset depreciation charges generated by the relevant

assets, and when these assets are sold.

16

Developers' contributions

Developers' contributions arise mainly as a result of agreements under

Section 278 of the Highways Act 1980. If a development derives special

benefit from highway works, developers can be required to contribute

towards the costs.

48

17

Provisions

31 March

2004

2005

£'000

£'000

Insurance claims

9,634

5,313

Contract terminations

75

67

Grant loss

-

1,200

Part-time pensions

1,250

1,100

Other

29

29

10,988

7,709

The insurance provision represents an assessment of the likely cost of liability

claims known to the County Council at 31 March 2005. The risks

Covered are:

Liabilities

Employer's liability, Public liability and professional indemnity upto

an aggregate loss of £14m in any one year. Should this limit ever

be exceeded the maximum liability for anyone claim would be £5m.

Property

Buildings owned by the County Council and those leased to

the County Council where the lease allows for loss or damage

as a result of fire, lightning, explosion and for schools only

major storm and flood.

Contents owned by the County Council for loss or damage

as a result of fire, lightning, explosion and theft. All risk cover

for IT equipment in computer suite, cash on premises and

in transit (limits depending on location).

Additional Cover

Personal accident of staff on duty

Fidelity guarantee

Vessels

Council departments currently continue to perform services on a

contract basis where functions have been transferred from the Council.

The contract termination provision recognises that the Council is

likely to incur certain costs when these arrangements eventually end.

A House of Lords' decision provides the opportunity for some

part-time employees to claim retrospective membership of the

Pension Fund. The provision covers the potential liability of

the County Council for retrospective employers' contributions.

18

Fixed Asset Restatement Account

The Fixed Asset Restatement Account was created to allow assets

to be maintained in the accounts at current value. The reserve is written

down by the net book value of assets being disposed of. It is also

debited or credited with deficits or surpluses when revaluations are

made.

49

19

Capital Financing Account

The Capital Financing Account contains:

¨ the amounts that were required by law to be set aside from capital

receipts for the repayment of external loans (applied to the disposal

of most assets until 1 September 1998)

¨ the amount of capital expenditure financed from revenue and capital

receipts

¨ the statutory amount required to provide for the repayment of

external loans less the amounts included for depreciation and

writing down of deferred charges.

20

Earmarked reserves

31 March

2004

2005

£'000

£'000

Schools

28,343

30,753

Capital

8,402

3,615

Insurance

6,094

6,635

Designated underspending

2,822

4,356

On-street parking

210

-

Delayed hospital discharge

-

-

Grant equalisation

13,068

20,925

Job evaluation implementation

4,000

4,750

Trading accounts

3,211

4,084

Invest-to-save

89

328

Other

267

265

66,506

75,711

Schools reserves represent the net underspending on budgets

managed by governors of schools at 31 March 2004, as

adjusted for advances made under the school balances loan scheme.

They are not available to the County Council when managing the

finances of the authority.

21

Other balances

The other balances figure is largely internal recharges within the County

Council which are not yet finalised and which will be carried forward to

2005/06.

50

22

Trust funds

The Council acts as sole trustee for 29 trust funds (29 in 2003/04) and as

administrator for 14 other trust funds (14 in 2003/04). They include

educational prize funds, funds for the financing of improvements in

education, social services and museum establishments, and musical

and sports scholarship funds. The trusts are mainly invested in specialist

pooled funds for charities and cash held on deposit with the County

Council.

Balance at

Balance at

31 March

Income

Expenditure

31 March

2004

2005

£'000

£'000

£'000

£'000

Sole trustee funds

Educational trusts

Butlocks Heath/Netley Abbey School

395

21

24

392

Dayas Music Scholarship

78

5

3

80

Michael Austin Harlick Memorial

241

15

9

247

Shipton Bellinger School House

41

1

1

41

Spitfire Mitchell Memorial

165

9

0

174

Other

135

8

7

136

Total

1055

59

44

1070

Social services trusts

Hampshire Mentally Handicapped

Persons Holiday Organisation

36

1

0

37

Hampshire Old Industrial and

Reformatory Schools

59

4

3

60

Other

14

1

0

15

Total

109

6

3

112

Museums Trusts

Allen Curtis Museum Trust

24

3

3

24

The Flora Twort Trust

41

3

3

41

Red House Museum Trust

50

4

4

50

Total

115

10

10

115

Libraries Trust

Julian Davies Foundation

1

0

0

1

Total - sole trustee trusts

1280

75

57

1298

Administrator Funds

The Eggars Grammar School

Alton Site Foundation

3042

142

747

2,437

Hillier Arboretum trust

36

12

12

36

Other

23

1

0

24

Social services trusts

5

0

0

5

Total administrator trusts

3106

155

759

2502

Total trust funds

4386

230

816

3800

51

23

Contingent liabilities

The County Council self insures and therefore handles all its own

liability claims. The liabilities are uncertain but to cover them a

provision is maintained for known liability claims, assessed at £5.3m

at 31 March 2005 (see note 17).

52

24

Related companies

The County Council exercises influence over The Hampshire

Buildings Preservation Trust Limited.

Hampshire Buildings Preservation Trust Limited is a

company limited by guarantee and not having share capital.

The Trust is mainly engaged in preserving buildings

of particular beauty or historical, architectural or constructional

interest, or ancient monuments in Hampshire. Originally the

Trust's Articles provided for the membership of the Board

to be 19 in number, of whom nine are appointed by the

County Council. However during 2002/03 the County

Council decided to reduce its influence

and now has only six members on the Board of

Management. As from December 2005 the board

will be reconstituted and the County Council will be able

to appoint only one member to the Board.

The County Council does not have a controlling or dominant influence

in any company under the terms of the Local Government and Housing

Act 1989. A dominant influence means that the company operates in

accordance with the Council's wishes.

You can obtain more details of the accounts of the above companies

from The County Treasurer, Hampshire County Council, The Castle,

Winchester, SO23 8UB.

25

Euro IT costs

No significant IT costs will be incurred if the euro is adopted, as new

financial and related business systems have been being introduced

that will already be fully euro-compliant.

53

26

Pensions

The County Council participates in two pension schemes:

a) the Teachers' Pension Scheme for teachers - this is an unfunded

defined benefit scheme. However it is not possible to attribute the

scheme liabilities to individual local authorities on a consistent

and reasonable basis, so that in accordance with FRS17, pension costs

are recorded as if the scheme was a defined contribution scheme.

b) the Local Government Pension Scheme (LGPS) for other

employees - this is a funded defined benefit scheme, administered

by the County Council. Employers and employees pay contributions

into a fund at a level estimated to balance pension liabilities with

investment assets. In 2004/05, pension assets and liabilities have

been included in the Consolidated Balance Sheet based on a

formal actuarial valuation for 31 March 2001.

An independent actuary (Hewitt, Bacon & Woodrow) assessed the

share of the assets and liabilities of the Hampshire Local Government

scheme attributable to the County Council and also the unfunded

benefits for teachers and LGPS members. The actuary estimated that

the following overall assets and liabilities for pension costs, should be

included in the balance sheet:

31 March

31 March

2004

2005

£m

£m

Estimated liabilities in the scheme

1,079.2

1,394.6

Estimated assets in the scheme

673.9

797.6

Net liability

405.3

597.0

54

Liabilities have been assessed on an actuarial basis using the projected

unit method. This estimates the pensions that will be payable in future

years, based on assumptions about mortality rates, salary levels etc.

The main assumptions are as follows:

2003/04

2004/05

% per year

% per year

Rate of discount for scheme liabilities

6.4

5.3

Rate of increase in salaries

4.4

4.4

Rate of increase in pensions in payment

2.9

2.9

Rate of increase in deferred pensions

2.9

2.9

Rate of inflation

2.9

2.9

Rate of return on equities

7.7

7.7

Rate of return on bonds

4.7

4.7

Rate of return on property

6.7

6.7

Rate of return on other assets

4.2

4.8

Average long term expected rate of return

6.9

6.9

Assets are valued at fair value, mainly market value for investments,

and consist of the following categories, by proportion:

31 March

31 March

2004

2005

%

%

Equities (shares)

69.8

69.0

Bonds

21.2

22.2

Property

3.7

4.0

Other assets

5.3

4.8

100.0

100.0

The movement in the net pension liability for the year is as follows:

31 March

31 March

2004

2005

£m

£m

Net deficit(-) at beginning of year

-452.7

-405.3

Movements in the year:

current service cost

-31.8

-46.2

past service cost

-1.7

-1.6

contributions

34.1

38.3

expected return on pension fund assets

37.5

47.0

interest on pension scheme liabilities

-62.3

-69.8

actuarial (loss)/gain

71.6

-159.4

Net deficit(-) at 31 March

-405.3

-597.0

55

27

Revenue Account Balance

The comparative figure has been re-stated to exclude £490,000 transferred to

Hampshire Fire and Rescue Authority on 1 April, as shown in the Consolidated

Revenue Account. This is now included in creditors.

56