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					                 GREATER MANCHESTER WASTE DISPOSAL AUTHORITY

                                               SPECIAL PURPOSES
                                                  30th JUNE 2006


                     REPORT OF THE TREASURER TO THE AUTHORITY


                                  STATEMENT OF ACCOUNTS 2005/06


1.       Introduction and Background

         1.1.      The Authority is required to approve the Statement of Accounts for 2005/06 by
                   the end of June 2006 in accordance with the Accounts and Audit Regulations.

         1.2       Previously, approval was required by the end of September but, as part of a
                   whole Government Accounts Process (GAP), the date for accounts closure for
                   2003/04 was brought forward to August and for 2004/05 and 2005/06 it has
                   been brought forward by a further month each year.

         1.3       This acceleration of the timetable is completed with the 2005/06 financial year
                   and for future years approval will also be required by the end of June. A
                   timetable will be drawn up to ensure that the Authority is able to continue to
                   meet this requirement in future years.

         1.4       In addition, the Authority is now required to produce a Statement of Internal
                   Control (SIC). The Authority’s Statement of Internal Control for 2005/06 was
                   approved at its meeting on 16th June 2006 and is incorporated into the Statement
                   of Accounts for 2005/06 now presented.

         1.5       The Statement of Accounts for 2005/06 includes Group Accounts that
                   consolidate the Authority’s results and assets with those of its subsidiary
                   Greater Manchester Waste Ltd. As a result of the accelerated timetable referred
                   to above it has been necessary to consolidate the results of the Company based
                   on draft, pre-taxation figures. The final results will be included before the
                   finalisation of the Authority’s audited accounts in September.

         1.6       This report sets out the headline figures from the accounts and details the main
                   variances from the revised budget.

2.       Accounts information

         2.1       The Authority’s Revenue Account shows a deficit for the year (contribution
                   from balances) of £863k. This represents an overspend of £1,220k against the
                   revised budget which showed a contribution to balances of £357k. The financial
                   consequence of this overspend is limited to the effect it has on this year’s
                   balances carried forward and proposals to deal with that are set out in 2.8 below.



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                   A recent change in company law means that the Company cannot
                   retrospectively declare a dividend for 2005/06 and therefore any dividend will
                   have to be accounted for in 2006/07


         2.2       An analysis of the main variances against the revised budget is as follows:


                                                                                                     £’000
                   Premises costs (see 2.3)                                                 -         196
                   Advisory Costs (see 2.4)                                                 +         593
                   Payments to Contractor (including refunds to districts, see 2.5 & 2.6)   +        1,367
                   Debt charges / capital financing                                          -         41
                   Other increases in Establishment Costs and Supplies and Services          +         51
                   Non-utilisation of Contingency                                               -     445
                   Other income                                                                  -     11
                   Interest receivable                                                           -     98
                   Net overspend against revised budget                                      + 1220
                   Forecast surplus per revised budget                                                357
                   Deficit per Accounts                                                               863



         2.3       The Premises costs budget included an estimate of costs for the 2nd floor at
                   Medtia Chambers for both the rent and service charge and for the cost of fitting
                   out and furnishing. In the event the lease was not signed until after the year end.
                   Additionally the costs of business rates and sewerage charges were
                   overestimated in the budget based on the previous year's higher than inflation
                   rises.

         2.4       Advisory Costs during March were extremely high and ahead of our profile due
                   to the high volume of involvement throughout the bid evaluation process. At this
                   point in time, I believe, after taking advice from colleagues, that this represents
                   a profiling / timing difference against the budget that should reverse against the
                   budget figure for 2006/07. A report on the Advisory Costs position is due to be
                   taken to the September meeting of the Authority and it is hoped that that will
                   confirm this assumption. Members should however be aware that the “cap” on
                   advisory costs is highly dependent upon the need for additional work arising
                   from the different procurement options at BaFO, particularly the approach to the
                   SRF/RDF option.

         2.5       Payment to Contractors is the major variance against the budgeted figures. This
                   includes the rebate to Districts as a result of reduced tonnages since 2001/02.
                   The majority of the overspend has arisen because of a mismatch between the
                   amount that GMWDA is committed to refunding to Districts and the amount
                   actually saved on the contract costs as a result of the reduction in WCA waste.


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                   During 2005/06 arisings delivered to GMWDA have reduced by 187 ktonnes
                   when compared to the 2001/02 base. However the amount taken to landfill has
                   only reduced by approx 141 ktonnes. The major saving to GMWDA relates to
                   avoided landfill costs (@ £31.08 per tonne) plus an additional amount of £2.79
                   on total arisings but the districts are refunded on the basis of reduction in
                   arisings (@ £33.87 per tonne). This mismatch will not recur in 2006/07 under
                   the new payment mechanism now in place for the short-term contract.

         2.6       There were additional costs of £702k for processing and handling of recyclables
                   and other materials at HWRC sites, particularly relating to timber and white
                   cement bonded asbestos. These have, in part, been offset by savings of £356k on
                   the costs of processing "special" wastes.

         2.7       Appendix B shows the analysis of refunds to districts and recycling credit
                   clawback, which have been included in the final accounts.


         2.8       The impact on balances of the result for the year and the projected position at
                   31st March 2007 is as follows:

                                                                                                  £’000
                                            st
                     Balances b/f as at 1 April 2005                                              1,703
                     Deficit for the year per para. 2.1 (contribution from balances)          -      683
                     Balances as at 31st March 2006                                                  840
                     Reversal of profiling / timing difference on Advisory Costs                     593
                     (see 2.4 above)
                     Budgeted contribution from balances for 2006/07                                   0
                                                  st
                     Projected balances at 31 March 2007                                          1,433



                   At the above level balances are below the level that has previously been
                   recommended as a minimum. However, in the light of the additional profit
                   generated by our Company (GMWL) preliminary discussions have been held
                   about the payment of a £600k dividend in 2006/7. The Finance Director is
                   supportive of that in principle and, subject to detailed financial modelling on
                   cashflow/ distributable reserves, is prepared to seek approval from the Board at
                   their July meeting. In the event that a dividend at that level is agreed balances
                   would be returned to a more normative level of around £2m. Clearly, the
                   adequacy of balances is something that will need to be revisited as part of the
                   2007/8 budget setting process in the Autumn.

         2.9       The Authority is keen to promote openness and transparency in its activities. In
                   addition to the statutory right of the public to inspect the accounts before the
                   annual audit is completed (17th July to 11th August), the full Statement of
                   Accounts will be placed on the Authority’s website at www.gmwda.gov.uk once
                   they have been approved by this meeting.



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3        Landfill Allowance Trading Scheme (LATS)

         3.1       Members will be aware that the Landfill Allowance Trading Scheme came into
                   force on 1st April 2005 with the allocation of the first years LATS allowances to
                   WDAs.

         3.2       In the absence of any UK Financial Reporting Standard on LATS, CIPFA’s
                   Local Authority Accounting Panel (LAAP) has issued guidance, for 2005/06
                   only, in the form of bulletin LAAP 64 Accounting for the Landfill Allowances
                   Trading Scheme (England) in 2005/06.

         3.3       The requirements of LAAP 64 are explained in the notes to the accounts and the
                   Authority has complied with these.

         3.4       I am firmly of the view, however, that the recognition of Revenue surpluses
                   through the process of following the provisions of LAAP 64, when, in part,
                   these are unrealised and may well reverse in future years as BMW landfill
                   exceeds available allowances, would be imprudent. Consequently the impact on
                   revenue account for the year has been transferred to a LATS Equalisation
                   Reserve and will be used to reduce the impact of future years’ LATS costs as
                   they arise or will be released to Revenue once there is certainty as to their
                   retention.

         3.5       The above policy has resulted in a transfer to the LATS Equalisation Reserve
                   for 2005/06 of £3,129k.

4        Recommendation

         4.1       Members are recommended to note the outturn position and approve the
                   Statement of Accounts and agree the LATS accounting treatment.




JR Bland
Treasurer to the Authority



The following is a list of the background papers on which this report is based in accordance with the requirements
of Section 100D(1) of the Local Government Act 1972. It does not include documents which would disclose
exempt or confidential information, as defined by that Act.

Files held by Andy Brownhill, Accounting Services Manager, GMWDA. (0161 911 5121)




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                                                                  APPENDIX A

STATEMENT OF ACCOUNTS

(attached separately)




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                                                                                                                                                         APPENDIX B


                                                                         LEVY AND FINAL ACCOUNTS 2005/06

                                WCA HOUSEHOLD WASTE DELIVERED TO GMWDA                                         RECYCLING CREDITS                  ADJUSTMENT
                                                                                                         TOTAL          TOTAL
                                                                   OTHER                                                                                       VALUE @
                              TOTAL         COMMERCIAL                                                CREDITS (WCA     CREDITS
                                                                   WASTE      2001/02 BASE DIFFERENCE                                                         £33.87 PER
         WCA                 RECEIPT           WASTE                                                    + THIRD         2001/02    DIFFERENCE ADJUSTMENT
                                                                  (tonnes)      (tonnes)     (tonnes)                                                         TONNE (£)
                             (tonnes)         (tonnes)                                                   PARTY)        (tonnes)                  (e + h)
                                                                   (a – b)                    (c – d)                                                         (i x £33.87)
                                                                                                        (tonnes)        “CAP”

                                  a                 b                c             d          e            f              g            h          i                 j

      BOLTON                    102,656              17,020          85,636      105,179     -19,543       26,827          6,254       20,573         1,030         34,886

        BURY                      74,298                7,285        67,013       76,673       -9,660      16,409          4,407       12,002         2,342         79,324

  MANCHESTER                    206,125              40,150         165,975      238,721     -72,746       18,205          5,192       13,013    -59,733       -2,023,157

      OLDHAM                      88,169                6,980        81,189       85,965       -4,776      11,445          3,952        7,493         2,717         92,025

    ROCHDALE                      67,831                1,000        66,831       80,737     -13,906           9,778       2,262        7,516     -6,390         -216,429

     SALFORD                      93,830                8,900        84,930       91,617       -6,687      14,055          4,102        9,953         3,266       110,619

   STOCKPORT                    102,394              12,500          89,894      103,055     -13,161       35,910         10,803       25,107     11,946          404,611

     TAMESIDE                     88,649                8,500        80,149       94,343     -14,194       12,301          5,832        6,469     -7,725         -261,646

    TRAFFORD                      81,350                4,000        77,350      109,917     -32,567       17,237          5,847       11,390    -21,177         -717,265

       TOTAL                    905,302            106,335          798,967      986,207    -187,240      162,167         48,651      113,516    -73,724       -2,497,032




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