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					HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010




                            Annual Report
                             & Accounts




                                         The Accountable Officer authorised

                                       These financial statements for issue on

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HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010

Annual Report

Background and Directors’ Report

Accounts direction
The Accounts have been prepared in accordance with a Direction given by the Scottish
Ministers in pursuance of the Public Finance and Accountability (Scotland) Act 2000.

History and statutory background
Historic Scotland is an agency of the Scottish Government. An independent review of its
functions and structure in 2003-04 confirmed Historic Scotland’s status as an executive
agency. The agency is headed by the chief executive who is directly accountable to the
Scottish Ministers.

The main acts under which the agency operates are The Historic Buildings and Ancient
Monuments Act 1953, The Ancient Monuments and Archaeological Act 1979, The Planning
(Listed Buildings and Conservation Areas) (Scotland) Act 1997, The Environmental
Assessment (Scotland) Act 2005 and The Environmental Impact Assessment (Scotland)
Regulations 1999.

Principal activities

The agency’s principal activities are to protect, present and promote Scotland’s historic
environment, which includes ancient monuments and archaeological sites; historic buildings,
parks and gardens; and designed landscapes. There were no significant changes in areas of
activity during 2009-10.

Historic Scotland contributes towards many of the national outcomes of the Scottish
Government but in particular to the national outcome ‘We value and enjoy our built and
natural environment and protect it and enhance it for future generations.’

The directors
The directors and senior management of the agency during 2009-10 were:

Ruth Parsons                Interim Chief Executive (from 05/10/09)      chairman
John Graham                 Chief Executive (to 30/09/09)
Peter Bromley               Director, Properties in Care
Lucy Blackburn              Director, Policy
Malcolm Cooper              Chief Inspector
David Mitchell              Director, Technical Conservation Group
Brian O’Neil                Director, Human Resources
Linda Ellison               Interim Director, Finance (from 24/11/09)
Laura Petrie                Director, Finance (to 30/11/09)
Pat Connor                  Head of Communications and Media (from 01/04/09)




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David McGibbon              non-executive director
Marc Ellington              non-executive director
John Lennon                 non-executive director
Raymond Young               non-executive director
Ann-Marie Stannard          non-executive director
Robert A Stewart            non-executive director

The directors of properties in care, policy and the chief inspector are members of the Senior
Civil Service, and their remuneration is determined under the terms of Section 5.3.6 of the
Civil Service Management Code. The other board members have their remuneration
determined under Historic Scotland's own arrangements which are negotiated separately and
which are consistent with the agency's own business needs and Government policy on Civil
Service pay.

Additional information on salary and pension entitlements can be found in the Remuneration
Report.

The following appointments or other significant interests are held by directors and senior
management of the Agency:

              • David McGibbon is a deputy chairman of David MacBrayne Limited and
                chairs the group’s audit committee. He is also the chairman of pension
                trustees for the Caledonian MacBrayne group pension scheme.

             •   Marc Ellington is a member of the Board of Management of Banff and
                 Buchan College of Further Education, a trustee of the National Galleries of
                 Scotland, serves on the Council of the National Trust for Scotland and is the
                 Project Director of the Scottish Traditional Skills Training Centre. He is also
                 employed on a professional basis as a consultant to a wide range of companies
                 and organisations involved in built heritage conservation, restoration and
                 management.

             •   Raymond Young was chair of both the Rural Housing Service (to 28/02/10)
                 and Architecture and Design Scotland (to 31/03/10). He is also a Member of
                 the Iona Community. Raymond Young is a visiting professor in the
                 Department of Architecture at the University of Strathclyde.

             •   Professor John Lennon is professor and director of the Moffat Centre for
                 Travel and Tourism Business Development, Glasgow Caledonian University
                 and founding chair of Tourism Knowledge Scotland. He is also an
                 independant specialist policy advisor to VisitScotland.

             •   Ann-Marie Stannard is Director of an Edinburgh based theatre company,
                 Strangetown and partner of a Scottish based management consultancy firm,
                 Company Growth Ltd, based in Stirling.




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             •   Bob Stewart is the Director of Environmental Services with Moray Council.
                 He has been a trustee of the Elgin Fund since 1979. He is a fellow of the
                 Royal Town Planning Institute and a member of the Chartered Management
                 Institute.

None of the other directors held any company directorships or other significant interests
which may have conflicted with their management responsibilities during the year.

Pensions
As civil servants, employees of Historic Scotland are members of the Principal Civil Service
Pension Scheme. Details of the scheme can be found in Note 6 to the Accounts and the
Remuneration Report.

Charitable donations
There were no charitable donations exceeding £200 in aggregate.

Supplier payment policy
The agency complies with the Confederation of British Industry’s Prompt Payers Code,
where payment is made within 30 days of receipt of invoices
In addition, the First Minister told Parliament in October 2008 that "this Government will
aspire to the 10 day target of paying the bills of small businesses around Scotland." Historic
Scotland aspires to achieve this target for all companies.
For goods and services completed to the satisfaction of the agency 94% of invoices for goods
and services from suppliers were paid within the 30 day credit period in 2009-10. (97% in
2008-09.) and 76% were paid within the 10 day period in 2009-10 (72% of invoices for
goods and services from suppliers within the 10 day credit period from December 2008 to
April 2009).

Important events occurring after the year end
There were no material events occurring after the year end which had a bearing on the
accounts.

Auditors
The accounts are audited by Lorna Meahan, Audit Scotland, who is appointed by the Auditor
General for Scotland. Further details on audit remuneration can be found in Note 26 to the
Accounts.

Employment recruitment
Recruitment campaigns undertaken by Historic Scotland were carried out on the basis of fair
and open competition, selection on merit and in accordance with the guidance laid down by
the Civil Service Commissioners. The agency’s recruitment/selection records are subject to
regular scrutiny by internal auditors and the auditors of the Civil Service Commissioners.
Details of recruitment in 2008-09 and 2009-10 are as follows:




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Pay Band                    Number of Posts           Male                       Female
                            2009-10      2008-09      2009-10      2008-09       2009-10       2008-09
Up to £15,259               49           54           25           31            24            23
£16,778 - £19,484           28           12           15           8             13            4
£20,458 - £27,340           14           10           6            2             8             8
£28,707 - £33,697           8            4            5            3             3             1
£35,381 - £41,002           5            3            2            1             3             2
Over £43,052                2            1            1            0             1             1
Total                       106          84           54           45            52            39
%                           100%         100%         51%          54%           49%           46%

Employees with disabilities
Historic Scotland is committed to equality of opportunity for all its employees. We recognise
that people with disabilities have the same range of skills and qualities as non-disabled
people. It is important that full advantage is taken of these skills so that every person is given
the opportunity to make the fullest contribution in line with their abilities. Applications from
people with disabilities for employment or promotion are given full and fair consideration.
Where an employee becomes disabled, Historic Scotland will re-train and re-deploy wherever
applicable.

Having carried out a Data Cleansing exercise with current employees, the average number of
self declared disabled people employed in the year was 14, this is a significant increase to last
year’s number (2008-09: 3).

Equal opportunities and diversity
Historic Scotland is committed to equality of opportunity for all its employees and customers,
and to treating every member of staff and every customer with dignity and respect. It is the
agency’s policy to ensure that all staff are able to work in an environment free from
discrimination, harassment and bullying.

As an agency of the Scottish Government, Historic Scotland fully subscribes to the
Government’s Race Equality Scheme, Disability Scheme and the Gender Equality Scheme.
As an organisation, we continue to develop structures and systems to ensure that equal
opportunities becomes an integral part of our thinking and behaviour.

Sickness Absence
Historic Scotland accepts that employees will be prevented from attending work due to
illness or injury from time to time. Although the Agency recognises that employees need to
be properly supported during absences, our priority is to meet our operational objectives. As
a result, we take distinct steps to balance the needs of the individual with the needs of the
Agency and to effectively manage sickness absence. To achieve this balance, we take a
positive and pro-active approach to attendance management including:

    •   Advising all employees and line managers of their roles and responsibilities through
        appropriate training, guidance and support;

    •   Monitoring and analysing absence and providing useful Management Information;




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    •   Supporting employees with regular short term absence to improve their level of
        attendance; and

    •   Assisting employees on long term absence to return to work successfully at the
        earliest opportunity via individually tailored return to work plans.

In 2009-10, an average of 8.7 days were lost per staff year. (9.15 in 2008-09)

Employee consultation
The agency is committed to effective employee communications, which it maintains through
all staff notices, the staff newsletter and briefing sessions. The Partnership Board provides
the means for representatives of staff and management to discuss matters of concern or
mutual interest. It has delegated detailed consideration of partnership issues to an Industrial
and Employee Relations Group.

Disclosure of relevant audit information
As Accountable Officer, I am not aware of any relevant audit information of which our
auditors are unaware. I have taken all necessary steps to ensure that I myself am aware of
any relevant audit information and to establish that the auditors are also aware of this
information.




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Management Commentary
Review of the business

Historic Scotland’s aim is to care for, protect and enhance the historic environment. In
delivering its responsibilities the agency makes a significant contribution to the national
outcomes described in the Scottish Government’s National Performance Framework.
Through the management and presentation of Scotland’s historic assets the agency
contributes to tourism income, maintains and promotes specialist skills, leads on academic
research, and applies innovation in new technologies. The growth in education work with
school children, and the breadth of working relationships within local communities also
ensures that Historic Scotland makes a meaningful contribution beyond national outcome 12
“We value and enjoy our built and natural environment and protect and enhance it for future
generations” which is a key outcome for the agency.

Historic Scotland is responsible on behalf of Scottish Ministers for 345 historic sites, of
which 78 are staffed. The agency continued to care for and maintain these sites and ensure
they were effectively presented to visitors. Commercial operations generated approximately
one third of the required funding for the agency. The year began in a period of economic
uncertainty, but due to Homecoming 2009, new flights into Edinburgh from European
destinations and the comparative weakness of the pound, income was greater than
anticipated. Visitor numbers in 2009-10 were 6% up on the previous year. This resulted in
an increase in commercial income from £23.8 million in 2008-09 to £27.0 million in 2009-
10.

The activity around Homecoming 2009 was particularly important, with Historic Scotland
contributing in several key-note events and promotions. Links with partner organisations,
including the National Trust for Scotland, Historic Houses Association, VisitScotland and
other local and national stakeholders remain strong.

Work continued on the £12m project to restore the Renaissance palace at Stirling Castle
which is scheduled to open in 2011.

Historic Scotland awards grants for the repair of outstanding buildings, for repairs and
maintenance within conservation area based regeneration schemes, and to assist voluntary
organisations promoting the historic environment. This budget is continually under pressure
due to the number of eligible buildings and the cost of repair. This year grants of
£14,850,660 were offered to 57 projects. Grants were also awarded to support the
archaeology and conservation of ancient monuments throughout Scotland. In 2009-10, a total
of 132 projects received £1,898,000.

Historic Scotland exercises Scottish Ministers’ responsibility for designating features of the
historic environment which need special protection or management, and considering certain
categories of development proposals affecting designated sites. 2,041 listed building and
conservation area consent (LBC/CAC) notifications and 238 scheduled monument consent
(SMC) applications were processed in 2009-10. Four LBC/CAC notifications were called in
for Scottish Ministers’ own determination during the course of the year and no applications
for SMC were refused.




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Following completion of a thematic study of Scotland’s post-war architecture Historic
Scotland held a conference entitled Scotland: Building for the Future. Michael Russell MSP
then Minister for Culture, External Affairs and the Constitution attended the event and
launched a book of the same title, produced by Historic Scotland which featured essays on
Scotland’s post-war architecture.

During the year a scheduling resurvey of 15 parishes in Renfrewshire, East Renfrewshire and
Inverclyde was also successfully completed.

In March 2010, the Marine (Scotland) Bill received Royal Assent, becoming the Marine
(Scotland) Act. The Agency’s contribution ensured that there is now improved protection for
marine historic monuments.

Historic Scotland has taken a number of steps to improve the efficiency of the planning
process for planning applicants. In its role as a consultation authority the Agency contributed
to the implementation of the Scotland-wide e-Planning System, and by introducing a new
Casework Management System the Agency has enabled electronic communication with
planning authorities. A joint working agreement with planning authorities to support wider
planning modernisation has been established and 16 councils have become signatories to the
agreement. A scheme was also piloted to remove the duty of planning authorities to notify
Scottish Ministers on certain types of listed building consent applications. Other ongoing
business improvement work included a stakeholder survey of members of the public whose
property had been listed or scheduled.

The successful Building Scotland project came to fruition with the launch by the Minister for
Culture of a hardback publication (with foreword by Alex Salmond), a two-day conference
and a touring exhibition. The Minister also launched the Scottish Archive of Building Skills,
an online resource that provides free public access to archive film of traditional building
skills in action dating as far back as 1919.

The Agency’s partnership with Glasgow School of Art has been formalised this year and
named The Centre for Digital Documentation and Visualisation. The Centre will be
responsible for delivering the ambitious Scottish Ten project which will see all five World
Heritage sites in Scotland scanned and digitally documented, as well as an additional five
international sites.

Performance against key performance targets

The agency exceeded the target to raise £24 million of earned income in 2009-10 and
achieved £27.034 million. This reflected an upturn in tourism over the previous year.

There are two efficiency targets for 2009-10:
   • To achieve an efficiency of 2% of HS non-grant expenditure and;
   • To make a contribution of £2m towards the overall Efficient Government (EG) saving
       within the Permanent Secretary/First Minister Portfolio.
Both of these efficiency targets were achieved.

The Agency met or exceeded all but two of the remaining performance targets. The key
performance targets for 2009-10 that were not achieved are:



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    •   The target relating to performance rating from visitor feedback was 96%. Historic
        Scotland achieved 94.9%.
    •   And the target relating to masonry bursary awards was only partially achieved. The
        target was to award 125 short term placements in 2009-10, 95 short term bursary
        placements were granted. Long term bursary placements exceeded target for the same
        period.

Position at end of year

The Historic Scotland budget is approved by the Scottish Parliament and covers both revenue
and capital expenditure. Scottish Government funding for the year was £49.053 million and
the agency achieved a final outturn of £49.447 million. The overspend of £0.394 million
resulted from pressure on grants and additional costs associated with emergency maintenance
and higher than usual utility costs during the exceptionally cold winter.

Indication of likely future developments

Pressure on central government budgets has led to Historic Scotland returning £0.344 million
of budget to the Scottish Government as savings for 2010-11.              This is based on the
assumption that the existing levels of visitors will continue, however, the effect on tourism of
the air disruption relating to the ash cloud is of concern. The visitor numbers for 2010-11 are
currently lower than expected.

The Historic Environment (Amendment) (Scotland) Bill was introduced into the Scottish
Parliament in May 2010. The Bill is the result of a major piece of work over the last two
years which has involved staff and disciplines across the Agency and a broad range of
stakeholders. The Bill amends the Historic Building and Ancient Monuments Act 1953, The
Ancient Monuments and Archaeological Areas Act 1979 and The Planning (Listed Buildings
and Conservation Areas) (Scotland) Act 1997. The Bill process is expected to complete
towards the end of the year.

A new Human Resources and payroll system will be introduced in 2010-11. The system
which has been selected following a tender assessment process should provide improved
standards of management information and is expected to deliver efficiencies.

Historic Scotland is undertaking an overtime review to establish: how much overtime is
worked; to simplify overtime rules and rates; and to ensure that the agency is meeting its
health and safety obligations. Staff and the Trade Union Alliance are being consulted on the
proposals.

A strategic review of health and safety was agreed in 2009-10 and is now underway.

IT Review

The agency has initiated a review of its IT systems and resources with the aim of establishing
an Information Systems Strategy which reflects business need and ensures that the annual
investment in maintaining and developing technology provides value for money and is
focussed appropriately on business critical systems.




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Research and development activities

Historic Scotland’s Technical Conservation Group has developed a new website and
Knowledge Base which will provide a wealth of information and technical resource material
to the public when it is launched later this year (2010).

Risks and uncertainties

Historic Scotland continues to monitor and identify key risks which it faces.

Significant risks include:
   • Reduced income due to falling visitor numbers.
   • Demand Pressure on the grants budget.

Personal Data Related Incidents

Section 417 of the Companies Act 2006 requires that organisations report on personal data
related incidents. In 2009-10, we had 3 reported losses of sensitive data:

        a member of staff’s bank account information was lost in the internal mail.
        an encrypted data stick was lost. This is not seen as a data security risk.
        a vulnerable website was exposed by a vigilant member of staff. The data related to
        contractor information and there is no evidence of a loss of personal data.
.
Environmental matters and social and community issues
Historic Scotland’s core work of protecting and enhancing the historic environment makes a
significant contribution to sustainable development and regeneration. The agency participates
in the Green Tourism Business Scheme, under which it holds 38 gold, 26 silver and 2 bronze
awards.

Historic Scotland’s extensive education programme attracted over 90,000 free educational
visits to it’s sites. This was their best result to date. The quality of visitor services and
education continued to achieve over 90% satisfaction. and a number of innovative
community relationships at sites; including Whithorn and Kinneil, developing well. We also
began the introduction of wider use of Gaelic across the estate, with key publications at
Edinburgh Castle, Glasgow Cathedral and Arnol Black House amongst others.

Staff Relations

Management and the Trade Union Alliance (TUA) of Historic Scotland are committed to
working in a spirit of trust, openness and integrity as partners in all matters relating to the
general welfare, terms, conditions and working practices of staff.

The partnership will promote openness through discussion and sharing of information to
reach, where possible, a common view to achieve its goals in an organisation that works
together, learns from others, makes best use of resources, and values its people. It is the
shared aim of both partners to provide a public service that earns respect and trust, is open, in
touch and responsive, and promotes the interests of Scotland and its historic environment.




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A revised flexible working system was launched this year which recognised the importance
of employees achieving a balance between work and home commitments and this policy
provides an objective, consistent and transparent process for the consideration of applications
in line with the requirements of individuals and the agency.

Audit Committee

Historic Scotland’s audit committee supports the accountable officer in monitoring and
reviewing corporate governance, risk and control systems within the agency. Membership of
the audit committee comprises non-executive and independent external members, helping to
ensure the objectivity of the committee. The chairman of the audit committee, David
McGibbon and Ann-Marie Stannard are members of the Historic Scotland Board. Members
during the year to 31 March 2010 were:

David McGibbon     chairman
Rosalyn Marshall
Ann-Marie Stannard
Sheila Terry

The independent external members are Sheila Terry and Rosalyn Marshall.

Sheila Terry is a planning consultant and member of the Royal Town Planning Institute
(RTPI). She was formerly Head of Planning & Transportation for Falkirk Council prior to
her retirement in June 2007 and a non-executive director of Historic Scotland until 31st
January 2009. She is a Non- Executive Director of Registers of Scotland, a Trustee of New
Lanark Trust, a Director of Planning Aid for Scotland and a member of the RTPI/Heriot Watt
Joint Partnership Board.

Rosalyn Marshall is Vice Principal (Resources & Development) at Queen Margaret
University, Edinburgh. A qualified accountant, she has extensive senior management
experience in both the public and private sector and is a former member of the Accounts
Commission for Scotland.




RUTH PARSONS
chief executive
date




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Historic Scotland remuneration report

Part 1: Unaudited Information

Remuneration policy

Historic Scotland’s chief executive and the directors of properties in care, policy and the
chief inspector are members of the Senior Civil Service.

The remuneration of senior civil servants is set by the Prime Minister following independent
advice from the Review Body on Senior Salaries.

In reaching its recommendations, the Review Body has regard to the following
considerations:
    • the need to recruit, retain and motivate suitably able and qualified people to exercise
        their different responsibilities;
    • regional/local variations in labour markets and their effects on the recruitment and
        retention of staff;
    • Government policies for improving the public services including the requirement on
        departments to meet the output targets for the delivery of departmental services;
    • the funds available to departments as set out in the Government’s departmental
        expenditure limits;
    • the Government’s inflation target.

The Review Body takes account of the evidence it receives about wider economic
considerations and the affordability of its recommendations.

Further information about the work of the Review Body can be found at www.ome.uk.com.

The remuneration of Historic Scotland’s non-executive directors is set by Scottish Ministers
taking into account their roles and responsibilities and remuneration levels in comparable
organisations.

Service Contracts

Civil service appointments are made in accordance with the Civil Service Commissioners’
Recruitment Code. The Code requires appointments to be on merit on the basis of fair and
open competition, but also includes the circumstances when appointments may be made
otherwise.

Unless otherwise stated below, the officials covered by this report hold appointments which
are open-ended. Early termination, other than for misconduct, would result in the individual
receiving compensation as set out in the Civil Service Compensation Scheme.

Further information about the work of the Civil Service Commissioners can be found at
www.civilservicecommissioners.gov.uk




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Part 2: Audited Information

Salaries


Salary and pension entitlements of the Historic Scotland Management Board members were
as follows:
Name and title                                             2009-10                                      2008-09
                                               Salary          Benefits in Kind          Salary               Benefits in Kind
                                                £000           (to nearest £100)          £000               (to nearest £100)
John Graham **                                 70-75                      -              95-100                      -
Chief Executive                           (95-100 full year
(Retired on 30/09/2009)                      equivalent)
Ruth Parsons                                   35-40                      -                 -                        -
Interim Chief Executive                   (90-95 full year
(From 05/10/2009)                            equivalent)
Peter Bromley                                  70-75                      -               75-80                      -
Director, Properties in care
Laura Petrie                                   40-45                      -               55-60                      -
Director, Finance                         (60-65 full year
(to 30/11/2009)                              equivalent)
Linda Ellison                                  15-20                      -                 -                        -
Interim Director of Finance               (50-55 full year
(From 24/11/2009)                            equivalent)
Brian O’Neil                                   60-65                      -               55-60                      -
Director, Human Resources
Malcolm Cooper                                 75-80                      -               75-80                      -
Chief Inspector
David Mitchell                                 50-55                      -               25-30                      -
Director, Technical Conservation Group                                               (50-55 full year
(From 22/09/08)                                                                        equivalent)
Lucy Blackburn                                 50-55                      -               45-50                      -
Director, Policy                          (70-75 full year                           (70-75 full year
                                             equivalent)                               equivalent)
Pat Connor                                     40-45                      -                 -                        -
Head of Communications and Media
(from 01/04/09)
Ingval Maxwell                                    -                       -               25-30                      -
Director, Technical Conservation Group                                               (65-70 full year
(To 31/08/08)                                                                          equivalent)
non-executive directors
David McGibbon *                                0-5                       -                0-5                       -
Marc Ellington *                                0-5                       -                0-5                       -
John Lennon *                                   0-5                       -                0-5                       -
Ann-Marie Stannard *                            0-5                       -                0-5                       -
Raymond Young *                                 0-5                       -                0-5                       -
Robert Stewart *                                0-5                       -                0-5                       -
Sheila Terry* (until 31/01/09)                    -                       -                0-5                       -
* David McGibbon and Marc Ellington were re-appointed on a three year contract commencing on 01 February 2008.
 Professor John Lennon, Ann Marie Stannard and Raymond Young were appointed on three year contracts commencing 1 April 2007.
  Subsequent to the year end these 3 Non-Executive Directors were re-appointed.
 Robert Stewart was appointed on a three year contract commencing 16 February 2009.
** John Graham retired from his position as chief executive and departed from Historic Scotland on 30/09/2009. By agreement with Scottish
   Government he was paid £21,992.23 in lieu of notice. This cost was covered by the Scottish Government.



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Salary

 ‘Salary’ includes gross salary; performance pay or bonuses and overtime. Amounts relate to
Historic Scotland employment only and do not include any other earnings from positions
elsewhere in the civil service.

Benefits in kind

The monetary value of benefits in kind covers any benefits provided by the employer and
treated by HM Revenue and Customs as a taxable emolument. In 2009/10 this value was £nil
(2008/09 £nil).

Pension Benefits
Name and title                 Accrued pension at    Real increase in     CETV at   CETV at 31/03/09   Real increase in     Employer
                                pension age as at   pension and related   31/3/10                          CETV           contribution to
                               31/3/10 and related lump sum at pension                                                      partnership
                                   lump sum                age                                                            pension account



                                     £’000                £’000            £’000         £’000              £’000          Nearest £100
John Graham                             -                    -               -           1,066                -                  -
Chief Executive
(retired on 30/09/2009)
Ruth Parsons                       30-35 plus           0-2.5 plus          532           502                19                 Nil
Interim Chief Executive         90-95 lump sum        2.5-5 lump sum
(from 05/10/2009)
Peter Bromley                      20-25 plus           0-2.5 plus          495           442                24                 Nil
Director, Properties in care    70-75 lump sum        2.5-5 lump sum
Laura Petrie                            -                    -               -            127                 -                  -
Director, Finance
(to 30/11/2009)
Linda Ellison**
Interim Director, Finance             N/A                  N/A             N/A            N/A               N/A                N/A
(from 24/11/2009)
Brian O’Neil                       30-35 plus           0-2.5 plus          758           690                32                 Nil
Director, Human resources      95-100 lump sum        2.5-5 lump sum
Malcolm Cooper                     20-25 plus           0-2.5 plus          393           350                21                 Nil
Chief Inspector                 60-65 lump sum        2.5-5 lump sum
David Mitchell*                       5-10                0-2.5             86            68                 12                 Nil
Director, Technical
Conservation Group


Lucy Blackburn                     15-20 plus           0-2.5 plus          224           202                 8                 Nil
Director, Policy                45-50 lump sum        0-2.5 lump sum
Pat Connor                         10-15 plus           0-2.5 plus          310           268                25                 Nil
Head of Communications          40-45 lump sum        2.5-5 lump sum
and Media (from 01/04/09)


* Opted for Premium.
** Not a member of the Civil service pension scheme




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Civil Service Pensions

Pension benefits are provided through the Civil Service pension arrangements. From 30 July
2007, civil servants may be in one of four defined benefit schemes; either a final salary
scheme (classic, premium or classic plus); or a whole career scheme (nuvos). These
statutory arrangements are unfunded with the cost of benefits met by monies voted by
Parliament each year. Pensions payable under classic, premium, classic plus and nuvos are
increased annually in line with changes in the Retail Price Index (RPI). Members joining
from October 2002 may opt for either the appropriate defined benefit arrangement or a
‘money purchase’ stakeholder pension with an employer contribution (partnership pension
account).

Employee contributions are set at the rate of 1.5% of pensionable earnings for classic and
3.5% for premium, classic plus and nuvos. Benefits in classic accrue at the rate of 1/80th of
final pensionable earnings for each year of service. In addition, a lump sum equivalent to
three years pension is payable on retirement. For premium, benefits accrue at the rate of
1/60th of final pensionable earnings for each year of service. Unlike classic, there is no
automatic lump sum. Classic plus is essentially a hybrid with benefits for service before 1
October 2002 calculated broadly as per classic and benefits for service from October 2002
worked out as in premium. In nuvos a member builds up a pension based on his pensionable
earnings during their period of scheme membership. At the end of the scheme year (31
March) the member’s earned pension account is credited with 2.3% of their pensionable
earnings in that scheme year and the accrued pension is uprated in line with RPI.
In all cases members may opt to give up (commute) pension for a lump sum up to the limits
set by the Finance Act 2004.

The partnership pension account is a stakeholder pension arrangement. The employer
makes a basic contribution of between 3% and 12.5% (depending on the age of the member)
into a stakeholder pension product chosen by the employee from a panel of three providers.
The employee does not have to contribute but where they do make contributions, the
employer will match these up to a limit of 3% of pensionable salary (in addition to the
employer’s basic contribution). Employers also contribute a further 0.8% of pensionable
salary to cover the cost of centrally-provided risk benefit cover (death in service and ill health
retirement).

The accrued pension quoted is the pension the member is entitled to receive when they reach
pension age, or immediately on ceasing to be an active member of the scheme if they are
already at or over pension age. Pension age is 60 for members of classic, premium and
classic plus and 65 for members of nuvos.

Further details about the Civil Service pension arrangements can be found at the website
www.civilservice-pensions.gov.uk




                                               14
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010



Cash Equivalent Transfer Values

A Cash Equivalent Transfer Value (CETV) is the actuarially assessed capitalised value of the
pension scheme benefits accrued by a member at a particular point in time. The benefits
valued are the member’s accrued benefits and any contingent spouse’s pension payable from
the scheme. A CETV is a payment made by a pension scheme or arrangement to secure
pension benefits in another pension scheme or arrangement when the member leaves a
scheme and chooses to transfer the benefits accrued in their former scheme. The pension
figures shown relate to the benefits that the individual has accrued as a consequence of their
total membership of the pension scheme, not just their service in a senior capacity to which
disclosure applies.

The figures include the value of any pension benefit in another scheme or arrangement which
the member has transferred to the Civil Service pension arrangements. They also include any
additional pension benefit accrued to the member as a result of their buying additional
pension benefits at their own cost. CETVs are worked out within the guidelines and
framework prescribed by the Institute and Faculty of Actuaries and do not take account of
any actual or potential reduction to benefits resulting from Lifetime Allowance Tax which
may be due when pension benefits are taken.

Real increase in CETV

This reflects the increase in CETV that is funded by the employer. It does not include the
increase in accrued pension due to inflation, contributions paid by the employee (including
the value of any benefits transferred from another pension scheme or arrangement) and uses
common market valuation factors for the start and end of the period.

Compensation for loss of office

Mr John Graham left under Flexible Early Retirement Terms on 30th September 2009. He
received immediate payment of his pension and associated lump sum. As per agreement with
the Scottish Government and Civil Service Pensions the pension and associated lump sum is
based on his 2004 salary with year on year inflation increases. The associated monthly Early
Retirement costs are being covered by the Scottish Government.




RUTH PARSONS
chief executive
date




                                             15
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010



Statement of agency’s and chief executive’s responsibilities

Under section 19 of the Public Finance and Accountability (Scotland) Act 2000 the Scottish
Ministers have directed Historic Scotland to prepare a statement of accounts for each
financial year in conformity with the accounts direction on page 53 of these financial
statements, detailing the resources acquired, held, or disposed of during the year and the use
of resources by the agency during the year.

The accounts are prepared on an accruals basis and must give a true and fair view of the
agency’s state of affairs at the year end and of its income and expenditure, recognised gains
and losses and cash flows for the financial year.

The principal accountable officer of the Scottish Government appointed the chief executive
of Historic Scotland as the accountable officer for the agency. As accountable officer, the
chief executive is responsible to the Scottish Ministers.

In preparing the accounts the accountable officer is required to comply with the Scottish
Public Finance Manual (SPFM), and in particular to:

        •    observe the accounts direction issued by Scottish Ministers, including the relevant
             accounting and disclosure requirements, and apply suitable accounting policies on
             a consistent basis;

        •    make judgements and estimates on a reasonable basis;

        •    state whether applicable accounting standards, as set out in the Government
             Financial Reporting Manual, have been followed, and disclose and explain any
             material departures in the financial statements;

        •    prepare the financial statements on a going concern basis, unless it is
             inappropriate to presume that the agency will continue in operation.

The responsibilities of the accountable officer, including responsibility for the propriety and
regularity of the public finances for which the accountable officer is answerable, for keeping
proper records and for safeguarding the agency’s assets, are set out in the Memorandum to
accountable officers from the principal accountable officer.




                                               16
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010



Statement on Internal Control
for the year ended 31 March 2010

Scope of responsibility
As accountable officer, I have responsibility for maintaining a sound system of internal
control that supports the achievement of Historic Scotland’s policies, aims and objectives, set
by the Scottish Ministers, whilst safeguarding the public funds and assets for which I am
personally responsible, in accordance with the responsibilities assigned to me.

As accountable officer, I am personally answerable to the Scottish Parliament in accordance
with section 15 of the Public Finance and Accountability (Scotland) Act 2000. I am
responsible for the propriety and regularity of financial transactions under my control and for
the economical, efficient and effective use of resources provided to the agency, for ensuring
that arrangements have been made to secure best value and for signing the agency’s annual
accounts. I am also responsible for providing the necessary assurances to the principal
accountable officer to enable them to sign the Statement on Internal Control contained within
the Scottish Government consolidated accounts. I have responsibility for ensuring that
effective management systems are in place within the agency and that all risks are identified,
assessed and managed appropriately.

The Scottish Public Finance Manual (SPFM) is issued by the Scottish Ministers to provide
guidance to the Scottish Government and other relevant bodies on the proper handling of
public funds. It is mainly designed to ensure compliance with statutory and parliamentary
requirements, promote value for money and high standards of propriety, and secure effective
accountability and good systems of internal control.

Purpose of the system of internal control
The system of internal control is designed to manage rather than eliminate the risk of failure
to achieve the agency’s policies, aims and objectives. It can therefore only provide
reasonable, and not absolute, assurance of effectiveness.

The system of internal control is based on an ongoing process designed to identify the
principal risks to the achievement of the agency’s policies, aims and objectives; to evaluate
the nature and extent of those risks and to manage them efficiently, effectively and
economically.

The process within Historic Scotland accords with the SPFM and has been in place for the
year ended 31 March 2010 and up to the date of approval of the annual report and accounts
and accords with guidance from the Scottish Ministers.

Risk and control framework
All bodies subject to the requirements of the SPFM must operate a risk management strategy
in accordance with relevant guidance issued by the Scottish Ministers. The general principles
for a successful risk management strategy are set out in the SPFM.




                                              17
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010




An agency risk register is in operation which details the most significant risks for the agency
as a whole. This register is reviewed quarterly. In addition, each group within the agency
has compiled a register of risks specific to their area which is regularly reviewed by the
group. The results of each review are presented quarterly to the Historic Scotland Board and
are also reviewed quarterly by the Historic Scotland Audit Committee. The risk management
strategy will be reviewed during 2010-11 to ensure that it continues to provide effective
assurance on the business.

Historic Scotland’s Audit Committee receive reports from the director of finance, Internal
Audit and Audit Scotland concerning internal control issues and recommendations and are
notified of actions to be taken to address any issues or weaknesses identified. The audit
committee also consider the adequacy of arrangements for the assessment and management
of risk and the adequacy of arrangements for corporate governance.

More generally, Historic Scotland is committed to best value and a process of continuous
improvement: developing systems in response to any relevant reviews and developments in
best practice in this area. However the Agency’s programme of information risk
management including business continuity planning did not progress in line with plans and
this was mainly attributable to changes in senior management posts in the third quarter of the
year. Progress was resumed by the year end, and in the period to 31 March and up to the
signing of the accounts the organisation has:

        been active in managing information risk. A draft information risk policy is now in
        place and controls have been established to manage the loss of any sensitive data.
        continued to work on business continuity planning. The Agency has implemented
        server virtualisation technologies in partnership with the Scottish Government which
        will deliver a major element of the disaster recovery strategy; and arrangements are in
        place to test business continuity response plans during 2010-11.
        followed the recommended prioritised approach to PCI DSS (The Payment Card
        Industry Data Security Standard) compliance. The agency is fully compliant with
        milestones 1 to 3 of the standard and 95% compliant with milestone 4. Plans are in
        place to ensure that the Agency fully satisfies the standard.
        progressed the work on data handling. Those systems identified as high risk have
        been prioritised and system security policies developed to address identified risks.
        Work is continuing to ensure that appropriate security policies are established for the
        remaining systems.
        rolled out a programme of training to ensure that all members of staff understand the
        importance of protecting the information that they deal with in the course of their
        work.

Review of effectiveness
As accountable officer, I have responsibility for reviewing the effectiveness of the system of
internal control. My review is informed by:

   •    the managers within the agency who have responsibility for the development and
        maintenance of the internal control framework;




                                              18
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010



   •    the work of the internal auditors, who submit to the agency’s audit committee regular
        reports which include the Head of Internal Audit’s independent and objective opinion
        on the adequacy and effectiveness of the agency’s systems of internal control together
        with recommendations for improvement;
   •    the audit committee which oversees the work of the internal auditors; and
   •    comments made by the external auditors in their management letter and other reports.



Appropriate action is in place to address any weaknesses identified and to ensure the
continuous improvement of the system.




RUTH PARSONS
chief executive
date




                                              19
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010



Independent auditor’s report to Historic Scotland, the Auditor General for Scotland
and the Scottish Parliament

I have audited the financial statements of Historic Scotland for the year ended 31 March 2010
under the Public Finance and Accountability (Scotland) Act 2000. These comprise the
Operating Cost Statement, Statement of Financial Position, the Cash Flow Statement,
Statement of Changes in Taxpayers’ Equity and the related notes. These financial statements
have been prepared under the accounting policies set out within them. I have also audited the
information in the Remuneration Report that is described in that report as having been
audited.

This report is made solely to the parties to whom it is addressed in accordance with the Public
Finance and Accountability (Scotland) Act 2000 and for no other purpose. In accordance
with paragraph 123 of the Code of Audit Practice approved by the Auditor General for
Scotland, I do not undertake to have responsibilities to members or officers, in their
individual capacities, or to third parties.

Respective responsibilities of the Agency, Chief Executive and Auditor

The Agency and Chief Executive are responsible for preparing the Annual Report, which
includes the Remuneration Report, and the financial statements in accordance with the Public
Finance and Accountability (Scotland) Act 2000 and directions made thereunder by the
Scottish Ministers. The Chief Executive is also responsible for ensuring the regularity of
expenditure and receipts. These responsibilities are set out in the Statement of Agency’s and
Chief Executive’s Responsibilities.

My responsibility is to audit the financial statements and the part of the Remuneration Report
to be audited in accordance with relevant legal and regulatory requirements and with
International Standards on Auditing (UK and Ireland) as required by the Code of Audit
Practice approved by the Auditor General for Scotland.

I report to you my opinion as to whether the financial statements give a true and fair view and
whether the financial statements and the part of the Remuneration Report to be audited have
been properly prepared in accordance with the Public Finance and Accountability (Scotland)
Act 2000 and directions made thereunder by the Scottish Ministers. I report to you whether
in my opinion, the information which comprises the Directors Report, and the sections of the
Management Commentary, Performance against Key Performance Targets and Position at
End of Year, included in the Annual Report, are consistent with the financial statements. I
also report whether in all material respects

    the expenditure and receipts shown in the financial statements were incurred or applied in
    accordance with any applicable enactments and guidance issued by the Scottish Ministers,
    the Budget (Scotland) Act covering the financial year and sections 4 to 7 of the Public
    Finance and Accountability (Scotland) Act 2000; and
    the sums paid out of the Scottish Consolidated Fund for the purpose of meeting the
    expenditure shown in the financial statements were applied in accordance with section 65
    of the Scotland Act 1998.




                                              20
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010

In addition, I report to you, if in my opinion, the Agency has not kept proper accounting
records, if I have not received all the information and explanations I require for my audit, or
if information specified by relevant authorities regarding remuneration and other transactions
is not disclosed.
I review whether the Statement on Internal Control reflects the Agency’s compliance with
Scottish Government guidance and I report if, in my opinion, it does not. I am not required to
consider whether this statement covers all risks and controls or to form an opinion on the
effectiveness of the Agency’s corporate governance procedures or its risk and control
procedures.

I read the other information contained in the Annual Report and consider whether it is
consistent with the audited financial statements. This other information comprises only the
Background, and the sections of the Management Commentary, Review of the business,
Indication of likely future developments, IT review, Research and development activities,
Risks and uncertainties, Personal Data Related Incidents, Environmental matters and social
and community issues, Staff Relations and Audit Committee and the unaudited part of the
Remuneration Report. I consider the implications for my report if I become aware of any
apparent misstatements or material inconsistencies with the financial statements. My
responsibilities do not extend to any other information.

Basis of audit opinion

I conducted my audit in accordance with the Public Finance and Accountability (Scotland)
Act 2000 and International Standards on Auditing (UK and Ireland) issued by the Auditing
Practices Board as required by the Code of Audit Practice approved by the Auditor General
for Scotland. My audit includes examination, on a test basis, of evidence relevant to the
amounts, disclosures and regularity of expenditure and receipts included in the financial
statements and the part of the Remuneration Report to be audited. It also includes an
assessment of the significant estimates and judgements made by the Agency and Chief
Executive in the preparation of the financial statements, and of whether the accounting
policies are most appropriate to the agency’s circumstances, consistently applied and
adequately disclosed.

I planned and performed my audit so as to obtain all the information and explanations which I
considered necessary in order to provide me with sufficient evidence to give reasonable
assurance that the financial statements and the part of the Remuneration Report to be audited
are free from material misstatement, whether caused by fraud or error, and that in all material
respects the expenditure and receipts shown in the financial statements were incurred or
applied in accordance with any applicable enactments and guidance issued by the Scottish
Ministers. In forming my opinion I also evaluated the overall adequacy of the presentation of
information in the financial statements and the part of the Remuneration Report to be audited.




                                              21
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010




Opinion

Financial statements

In my opinion

    the financial statements give a true and fair view, in accordance with the Public Finance
    and Accountability (Scotland) Act 2000 and directions made thereunder by the Scottish
    Ministers, of the state of affairs of Historic Scotland as at 31 March 2010 and of the net
    operating cost, changes in taxpayers’ equity, and cash flows for the year then ended;
    the financial statements and the part of the Remuneration Report to be audited have been
    properly prepared in accordance with the Public Finance and Accountability (Scotland)
    Act 2000 and directions made thereunder by the Scottish Ministers; and
    information which comprises only the Directors Report, and the sections of the
    Management Commentary, Performance against Key Performance Targets and Position at
    End of Year, included in the Annual Report are consistent with the financial statements.

Regularity

In my opinion in all material respects

    the expenditure and receipts shown in the financial statements were incurred or applied in
    accordance with any applicable enactments and guidance issued by the Scottish Ministers,
    the Budget (Scotland) Act covering the financial year and sections 4 to 7 of the Public
    Finance and Accountability (Scotland) Act 2000; and
    the sums paid out of the Scottish Consolidated Fund for the purpose of meeting the
    expenditure shown in the financial statements were applied in accordance with section 65
    of the Scotland Act 1998.

Signature                                                            Lorna Meahan CA
                                                                     Audit Scotland
                                                                     Osborne House
                                                                     1/5 Osborne Terrace
                                                                     Edinburgh
Date                                                                 EH12 5HG




                                               22
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010




Operating Cost Statement
For the year ended 31 March 2010

                                                      Note     2009/10    2008/09
                                                                  £000       £000

Income

Income from properties in care                             3    27,034     23,780
Other income                                               4     1,271      1,195
                                                                28,305     24,975

Expenditure

Protection – external built heritage                    7       25,728     24,518
Protection – properties in care                         8       17,818     17,895
Presentation of properties                              9       24,006     21,898
Central services                                       10        6,758      6,753
Depreciation and impairment charges                    12        1,574      1,151
                                                                75,884     72,215


Operating deficit                                              (47,579)   (47,240)

Interest on capital                                    26        (644)      (676)

Net operating cost before Scottish Government
funding                                                        (48,223)   (47,916)



The notes on pages 28 to 52 form part of these accounts.




                                             23
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010

Statement of Financial Position as at 31 March 2010

                                      Note           2009/10      2008/09   1 April
                                                                              2008
                                                           £000     £000      £000

Non-current assets

Property, plant and equipment          12             28,601       27,879   27,766
Intangible assets                      13                319          247      104
Total non-current assets                              28,920       28,126   27,870

Current assets

Assets classified as held for sale                         -            -        -
Inventories                            14              1,525        1,534    1,594
Trade and other receivables            15              5,358        5,000    3,183
Cash and cash equivalents              16              4,290        3,933    5,606
Total current assets                                  11,173       10,467   10,383

Total Assets                                          40,093       38,593   38,253

Current Liabilities
Trade and other payables               17             12,898       12,507   12,284
Total current liabilities                             12,898       12,507   12,284

Non-current assets plus/less net
current assets/liabilities                            27,195       26,086   25,969

Non-current liabilities
Other payables                         17                648         293       133
Provisions                             18                600         587       543
Total non-current liabilities                          1,248         880       676

Assets less liabilities                               25,947       25,206   25,293


Taxpayers’ equity
General fund                                          12,435       12,356   13,180
Revaluation reserve                                   12,719       12,257   11,820
Donated asset reserve                                    793          593      293
Total taxpayers’ equity                               25,947       25,206   25,293




RUTH PARSONS
chief executive
date
The notes on pages 28 to 52 form part of these accounts.


                                             24
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010



Statement of Cash Flows for the year ended 31 March 2010

                                                           Note   2009/10    2008/09
                                                                     £000       £000
Cash flows from operating activities

Net operating cost before Scottish Government funding             (48,223)   (47,916)

Adjustments for non-cash items
Notional charges                                            26        803        914
Depreciation on property, plant and equipment and           12      1,574      1,151
amortisation of intangible assets
(Gain)/loss on disposal of property, plant and equipment              (22)       (16)
Movements in working capital
(Increase)/decrease in inventories                          14          9         60
(Increase)/decrease in trade and other receivables          15        235        132
Increase/(decrease) in trade payables                       17        746        383
Movements in provisions
Increase/(decrease) in provisions                           18         13         44

Net cash outflow from operating activities                        (44,865)   (45,248)

Cash flows from investing activities

Purchase of property, plant and equipment                   12     (1,320)     (754)
Purchase of intangible assets                               13       (121)         -
Proceeds of disposal of property, plant and equipment                   27        16
Proceeds of disposal of intangibles                                      -         -
Net cash outflow from investing activities                         (1,414)     (738)

Cash flows from financing activities

Scottish Government funding for year                               47,229      46,261
Movement on Scottish Government (receivable)/payable                (593)     (1,948)
Scottish Government cash funding for year                          46,636      44,313

Net increase/(decrease) in cash and cash equivalents                  357     (1,673)

Cash and cash equivalents as at 1 April 2009                16      3,933      5,606
Cash and cash equivalents as at 31 March 2010               16      4,290      3,933


The notes on pages 28 to 52 form part of these accounts.




                                             25
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010



Statement of Changes in Taxpayers’ Equity for the year ended 31 March 2010

                                              Note        General       Revaluation      Donated         Total
                                                          Fund          Reserve          Asset           Reserves
                                                                                         Reserve
                                                          £’000         £’000            £’000           £’000

Balance at 31 March 2009                                    12,356              12,257         593           25,206
Prior year adjustments for changes in
accounting policy and material errors
Restated balance at 1 April 2009                            12,356              12,257         593           25,206


Changes in taxpayers’ equity for 2009-10
Net gain/(loss) on revaluation of property,                                       694                            694
plant and equipment
Receipt of donated assets                                                                      206               206
Release of reserves to the operating cost
statement                                                                                          (6)            (6)
Non-cash charges – Cost of Capital            26                  644                                            644
Non-cash charges – auditor’s remuneration     26                   80                                             80
Non-cash charges – Departmental overhead      26                   79                                             79
Non-cash charges – adjustment of property,
plant and equipment                                                38                                               38
Transfers between reserves – Realised                             232            (232)                               -
element of revaluation reserve
Transfers between reserves – donated asset
Net operating Cost for the year                            (48,223)                                         (48,223)
Total Recognised income and expense for
2009-10                                                    (34,794)             12,719         793          (21,282)

Funding from the Scottish Government                        47,229                   -           -           47,229
Balance at 31 March 2010                                    12,435              12,719         793           25,947

The notes on pages 28 to 52 form part of these accounts.




                                                     26
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010



Statement of Changes in Taxpayers’ Equity for the year ended 31 March 2009

                                              Note        General       Revaluation      Donated        Total
                                                          Fund          Reserve          Asset          Reserves
                                                                                         Reserve
                                                          £’000         £’000            £’000          £’000

Balance at 31 March 2008 (UK GAAP)                          13,508              11,820         293          25,621
Adjustments for IFRS                                         (328)                                           (328)
Restated balance at 1 April 2008 (IFRS)                     13,180              11,820         293          25,293

Changes in taxpayers’ equity for 2008-09
Net gain/(loss) on revaluation of property,                                       544                            544
plant and equipment
Receipt of donated assets                                                                      215               215
Release of reserves to the operating cost                                                       (4)               (4)
statement
Non-cash charges – Cost of Capital            26               676                                                676
Non-cash charges – auditor’s remuneration     26                78                                                 78
Non-cash charges – Departmental overhead      26               160                                                160
Non-cash charges – adjustment of property,                   (101)                                              (101)
plant and equipment
Transfers between reserves – Realised                             129            (129)                              -
element of revaluation reserve
Transfers between reserves – Impairment                        (22)                22                               -
reversal
Transfers between reserves – donated asset                     (89)                                89             -
Net operating Cost for the year                            (47,916)                                        (47,916)
Total Recognised income and expense for
2008-09                                                    (33,905)             12,257         593         (21,055)

Funding from the Scottish Government                        46,261                   -           -          46,261
Balance at 31 March 2009 (IFRS)                             12,356              12,257         593          25,206

The notes on pages 28 to 52 form part of these accounts.




                                                     27
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010



Notes to the accounts

1. Statement of accounting policies

The financial statements have been prepared in accordance with the 2009-10 Government
Financial Reporting Manual (FReM) issued by HM Treasury. The accounting policies
contained in the manual follow generally accepted accounting practices (GAAP) as defined in
International Financial Reporting Standards (IFRS) as adopted by the European Union and
the Companies Act 2006 to the extent that it is meaningful and appropriate in the public
sector context. The accounting policies adopted are described below. They have been
applied consistently in dealing with items considered material in relation to the accounts.

(a)     Accounting convention
These accounts have been prepared under the historical cost convention modified to account
for the revaluation of property, plant and equipment, intangible assets and, where material,
current asset investments and inventories to fair value as determined by the relevant
accounting standard.

(b)    Income and expenditure
Income which includes receipts from visitor admission charges, retail sales and subscriptions
is accounted for net of Value Added Tax. Income from the Friends of Historic Scotland is
accounted for on a cash basis net of Value Added Tax. Expenditure is shown net of Value
Added Tax where it is recoverable.

(c)    Grants payable
Grants are paid to individuals and bodies by the agency in accordance with its statutory
powers and duties. They are accounted for in the period in which the underlying activity, to
which the grant relates, is carried out. Any element of a grant where the offer has been made
but the underlying activity falls outwith the accounting period is quantified in capital
commitments.

(d)     Property, Plant and Equipment (PPE)
All of the feuhold property comprising the non-monument estate is the subject of a 5 year
rolling programme of professional valuations in accordance with International Accounting
Standard 16. Approximately 20% of the estate is valued each year by District Valuers (DV)
of the Valuation Office acting in the capacity of External Valuers. For this report valuations
have been prepared by DVs as at 31 March 2010 on the undernoted basis in accordance with
the Appraisal and Valuation Manual of the Royal Institution of Chartered Surveyors. These
valuations are updated annually by Historic Scotland using appropriate indices and, following
valuation, the remaining life may be restated.

Plant and machinery, which would normally be regarded as an integral part of the properties
and essential for their effective use, have been included in the valuations.

With four exceptions all of the non-monument properties are regarded by Historic Scotland
as operational and have been stated at fair value based, on the Market Value, on the
assumption that the property is sold as part of the continuing enterprise in occupation. Three
assets have been defined as specialised properties and have been valued on the basis of
Depreciated Replacement Cost. One asset is leased to a third party and has been valued on
the basis of Open Market Value


                                             28
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010



Residential properties have been valued on the assumption that they are subject to assured
tenancies in terms of the Housing (Scotland) Act 1988.

The sources of information and assumptions made in producing the various valuations are set
out in the Valuation Certificate which is not published in the Annual Report and Accounts.

The valuation figures incorporated in the Annual Report and Accounts are the aggregate of
separate valuations of parts of the portfolio, not a valuation or apportioned valuation of the
portfolio valued as a whole.

The feuhold property comprising the monument estate is not included in the rolling
programme of valuations as it would be impossible to obtain a reliable valuation for these,
and Historic Scotland has included these at nil value.

Expenditure of a capital nature incurred in pursuance of the agency's commercial activities on
works integral to the fabric of the historic sites is initially identified as assets under
construction within the Property, Plant and Equipment note. Thereafter it is transferred to the
relevant asset category. Similar works of a non-commercial nature are written off in the year
of expenditure.

Land related to operational assets is capitalised where it can be clearly separated from the
heritage asset.

Depreciated historic cost has been used as a proxy for the current value of motor vehicles and
plant and machinery. All of the assets in these categories have

        1.       low values and short useful economic lives which realistically reflect the
                 life of the asset and;
        2.       A depreciation charge which provides a realistic reflection of
                 Consumption.

Computer equipment is stated at Depreciated historic cost. Multiple purchases of identical
assets may be grouped to meet the capitalisation threshold.

Works of art which are new works and have only recently been completed have been
included at cost. Once the assets reach more than five years of age, they will be subject to
professional valuation and their value will be amended accordingly.

Additions to collections purchased during the year, which are defined as non-operational
heritage assets, have been capitalised at purchase price.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate
asset, as appropriate, only when it is probable that future benefits associated with the item
will flow to Historic Scotland and the cost of the item can be measured reliably. The carrying
amount of the replaced part is derecognised. All other repairs and maintenance are charged to
the operating cost statement during the financial year in which they are incurred.




                                                29
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010




The capitalisation thresholds for the principal categories of assets are: -

        Land                                      £10,000
        Buildings and dwellings                   £10,000
        Plant and motor vehicles                   £5,000
        Office equipment                           £5,000
        Computer equipment                         £1,000
        Development costs                          £5,000
        Antiques and works of art                  £5,000
               (non-heritage)

(e)    Depreciation
Depreciation is provided on property, plant and equipment, excluding historical assets and
archives, on a straight line basis at rates sufficient to write down their cost over their
estimated useful lives. The depreciation periods for the principal categories of assets are: -

        Land                                     Not depreciated
        Buildings and dwellings                  On an individual basis not exceeding 60
                                                 years
        Plant and motor vehicles                 5 years
        Office equipment                         5 years
        Computer equipment                       3 years
        Development costs                        On an individual basis not exceeding 7
                                                 years
        Antiques and works of art                Up to 60 years
              (non-heritage)

Assets in the course of construction are not depreciated until the asset is brought into use.
Archives, which comprise maps, plans, photographs and books, are not depreciated, as the
annual costs incurred in their maintenance and updating are sufficient to maintain their value.

Additions to historic collections are not depreciated as the length of their anticipated useful
economic life is such that depreciation is not considered to be material.

(f)    Assets Held for Sale
A property is derecognised and held for sale under IFRS 5 when all the following
requirements are met:

    •   It is available for immediate sale.
    •   A plan is in place, supported by management, and steps have been taken to conclude
        sale.
    •   It is actively marketed and there is an expectation that the sale will be made in less
        than 12 months.




                                                30
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010



Assets held for sale include assets where Historic Scotland intends and expects to sell within
one year from the date of classification of held for sale. Assets classified as held for sale are
measured at the lower of their carrying amounts immediately prior to their classification as
held for sale and their fair value less costs to sell. Assets classified as held for sale are not
subject to depreciation or amortisation.

(g)      Donated assets
Donated property, plant and equipment assets are capitalised at their current value on receipt,
and this value is credited to the donated asset reserve. Subsequent revaluations are also taken
to this reserve. Each year an amount equal to the depreciation charge on the asset is released
from the donated asset reserve to the operating cost statement.

(h)    Intangible assets
Intangible assets are valued initially at cost and subsequently at fair value using the
revaluation model.

Where an active market does not exist, income generating assets are valued at the lower of
depreciated replacement cost and value in use. Non income generating assets are carried at
depreciated replacement cost. These valuation methods are considered to be a proxy for fair
value.

Future economic benefit has been used as the criteria in assessing whether an intangible asset
meets the definition and recognition criteria of IAS 38 where assets do not generate income.
IAS 38 defines future economic benefit as ‘revenue from the sale of products or services, cost
savings or other benefits resulting from the use of the asset by the entity’.

(i)     Realised element on depreciation of revaluation reserve
Depreciation is charged to the operating cost statement on the revalued amount of the
relevant assets. An element of the depreciation arises from the increase in valuation and is in
excess of the depreciation that would be charged on the historic cost of the relevant assets.
The amount relating to this excess is the realised gain on revaluation and is transferred from
the revaluation reserve to the general fund.

(j)    Inventories
All inventories held are stated at the lower of cost and net realisable value.

(k)     Capital charge
A charge, reflecting the cost of capital utilised by the agency, is included in the operating
costs. The charge is calculated at the government’s standard rate of 3.5 per cent (2008/09:
3.5 per cent) on the average carrying amount of all assets less liabilities, except for donated
assets and cash balances with the Office of the Paymaster General, where the charge is nil.

(l)    Pension costs
Past and present employees of Historic Scotland are covered by the provisions of the
Principal Civil Service Pension Scheme which are described in the remuneration report. Full
superannuation costs are an expense of Historic Scotland at rates determined by HM
Treasury.




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(m)    Early departure costs
Historic Scotland is required to meet the additional costs of benefits beyond the normal
PCSPS benefits in respect of employees who retire early. The agency provides in full for
these costs when the early retirement has been agreed.

(n)    Leases
Where substantially all the risks and rewards of ownership of a leased property are borne by
the entity, it is recorded as a non-current asset and a corresponding creditor recorded in
respect of debt due to the lessor, with the interest element of the finance lease payment
charged to the operating cost statement. Rentals payable in respect of operating leases will be
charged to the operating cost statement on a straight line basis over the term of the lease.

(o)     Changes in accounting policy
These financial statements have been prepared under International Financial Reporting
Standards for the first time and the comparatives have been restated from UK Generally
Accepted Accounting Policy (UK GAAP) where required. The reconciliation to IFRS from
the previously published UK GAAP accounts is summarised at Note 2.

New Financial Instruments Standards FRS 25, FRS 26 and FRS 29 as interpreted and adapted
by the Government Financial Reporting Manual (FReM) were adopted under UK GAAP in
2009-10. Prior year comparatives were restated to reflect these standards. These standards are
identical to their equivalent IFRS standards, IAS 32, IAS 39 and IFRS 7. Therefore, the
financial statements have not been restated for financial instruments.

(p)   Changes in estimation techniques
There have been no material changes in estimation techniques which were introduced in
2009/10.




                                              32
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010



2. First Time adoption of IFRS

Explanation of the transition to IFRS

For all periods up to and including the year ended 31 March 2009, Historic Scotland prepared
its annual report and accounts in accordance with UK GAAP. For the year ended 31 March
2010, Historic Scotland is required to prepare its annual report and accounts in accordance
with International Financial Reporting Standards (IFRS) as interpreted by the IFReM.

IFRS 1 requires that where an entity adopted IFRS for the first time, comparative amounts
should be restated to reflect the new accounting policies, and that the date of transition to
IFRS is the beginning of the earliest comparative year reported in the financial statements.
For Historic Scotland applying IFRS from 2009-10, this means that the effective date of
transition to IFRS is 1 April 2008.

The IFRS also requires that accounting policies are applied retrospectively i.e as if the
transactions had always been accounted for under the new policy.

Reconciliation of Taxpayers’ equity from UK GAAP to IFRS as at 31 March 2008 and
31 March 2009

                                                     General    Revaluation      Donated
                                                       Fund        Reserve         Asset
                                                       £000           £000       Reserve
                                                                                    £000
 Taxpayers’ equity at 31 March 2008 under
 UK GAAP                                              13,508          11,820           293
 Adjustments for:
 IAS 19: Employee Benefits                              (328)

 Taxpayers’ equity at 1 April 2008 under IFRS         13,180          11,820           293


 Taxpayers’ equity at 31 March 2009 under
 UK GAAP                                              13,013          12,257           593
 Adjustments for:
 IAS 19: Employee Benefits                              (657)

 Taxpayers’ equity at 1 April 2009 under IFRS         12,356          12,257           593


                                                                               £000
 Net operating cost for 2008-09 under UK
 GAAP                                                                             (47,587)
 Adjustments for:
 IAS 19: Employee Benefits                                                           (329)
 Net operating cost for 2008-09 under IFRS                                        (47,916)




                                             33
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010



IAS 19 Employee benefit

IAS19 applies to the accounting for employee benefits, which states that the entity must
recognise the expected short term accumulating compensated absences. An exercise to cost
the amount of holiday entitlement owed to staff at the end of each financial year has been
carried out. To recognise the costs an accrual and/or prepayment has been reflected in the
Statement of Financial Position.


3. Income from properties in care

                                                                  2009/10       2008/09
                                                                     £000          £000

Admissions                                                         18,414         15,493
Turnover from retail sales                                          6,460          5,940
Functions                                                           1,185          1,332
Fees from hire of facilities                                          847            881
Rental Income                                                         128            134
                                                                   27,034         23,780


4. Other income

                                                                 2009/10        2008/09
                                                                    £000           £000

 Conservation work                                                      4             7
 General services provided                                             20            26
 Funding from the Heritage Lottery Fund                               350           448
 Partnership Funding                                                  397             -
 Gain/(loss) on disposal of property, plant and equipment              22            16
 Other                                                                295           285
 Grant Recoveries                                                     183           413
                                                                    1,271         1,195




                                             34
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010




5. Commercial trading account

                                                                     2009/10      2008/09
                                                                        £000         £000

Income from properties in care (note 3)                               27,034       23,780

Less Direct Costs
Cost of goods sold                                                     3,103        2,845
Visitor services                                                       8,388        8,401
Marketing                                                              2,704        2,305
Purchasing                                                             1,232        1,100
Functions and events                                                     341          374
Membership                                                               478          430
Interpretation                                                            73           37
Education                                                                252          219
Banking charges                                                          265          261
Direct expenditure on presentation of properties                      16,836       15,972

Accommodation                                                          2,371        2,646
Central services                                                       2,075        2,114
Depreciation                                                             876          485
Notional charges                                                         446          433
Total expenditure on presentation of properties                       22,604       21,650

Net profit                                                              4,430        2,130

This note complies with guidance in the Scottish Public Finance Manual which requires
disclosure of the income and expenditure relating to commercial activities.

Historic Scotland charges for admission and operates other commercial activities at its
properties in care. Commercial activities are required to make a contribution which supports
the costs of conservation and maintenance of these properties.

Direct expenditure on presentation of properties includes an apportionment of relevant
overheads.




                                            35
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010



6. Staff numbers and related costs

(i) Staff costs

Staff costs consist of:

                                                                      2009/10      2008/09
                                                                         £000         £000

Salaries and wages                                                     23,074       22,674
Social security costs                                                   1,586        1,585
Superannuation                                                          3,794        3,777
Early departure costs                                                     342            3
Agency/temporary staff costs                                              424          526
Total staff costs                                                      29,220       28,565

Less: Recoveries in respect of outward secondments                          -            -
Total net employment costs                                             29,220       28,565

The Principal Civil Service Pension Scheme (PCSPS) is an unfunded multi-employer defined
benefit scheme but Historic Scotland is unable to identify its share of the underlying assets
and liabilities. The scheme actuary valued the scheme as at 31 March 2007. You can find
details in the resource accounts of the Cabinet Office: Civil Superannuation
(www.civilservice-pensions.gov.uk).

For 2009-10, employers’ contributions of £ 3,742,807 were payable to the PCSPS
(2008-09 £3,680,518) at one of four rates in the range 16.7% to 24.3% of pensionable pay,
based on salary bands. The Scheme Actuary reviews employer contributions usually every
four years following a full scheme valuation. From 2010-11, the rates will be in the range
16.7% to 24.3%.

The contribution rates are set to meet the cost of the benefits accruing during 2009-10 to be
paid when the member retires and not the benefits paid during this period to existing
pensioners.

Employees can opt to open a partnership pension account, a stakeholder pension with an
employer contribution. Employers’ contributions of £ 50,992 were paid to one or more of the
panel of three appointed stakeholder pension providers. Employer contributions are age
related and range from 3% to 12.5% of pensionable pay. Employers also match employee
contributions up to 3% of pensionable pay. In addition, employer contributions of £3,633,
0.8% of pensionable pay, were payable to the PCSPS to cover the cost of the future provision
of lump sum benefits on death in service or ill health retirement of these employees.

Contributions due to the partnership pension providers at the balance sheet date were
£5,682. Contributions prepaid at that date were £nil

One individual retired early on ill-health grounds; the total additional accrued pension
liabilities in the year amounted to £1,609.




                                             36
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010




(ii) Average number of employees

The average number of whole-time equivalent persons employed during the year by
occupational group was:

                                                           2009/10   2008/09
                                                         Number of Number of
                                                         Employees Employees

Senior management                                                 8          7
Protection – external built heritage staff                      146        144
Protection – properties in care staff                           334        331
Presentation of properties staff                                421        432
Central services staff                                           91         90
Agency/temporary staff                                           19         22
                                                              1,019      1,026

7. Protection – external built heritage

                                                          2009/10     2008/09
                                                             £000        £000

Statutory protection                                        3,281       3,160
Grants                                                     15,502      13,767
Archaeology                                                 2,786       2,829
Policy                                                      1,213       1,602
Research                                                    2,946       3,160
                                                           25,728      24,518

8. Protection - properties in care

                                                          2009/10     2008/09
                                                             £000        £000

Major conservation                                            807         937
Conservation and routine maintenance                       13,632      13,931
Health and safety and disability access                     1,151         930
Utilities and factoring                                     2,228       2,097
                                                           17,818      17,895




                                             37
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010



9. Presentation of properties

                                                           2009/10    2008/09
                                                              £000       £000

Visitor services                                            12,331     10,863
Commercial operations                                        8,142      7,455
Access and understanding                                     3,533      3,580
                                                            24,006     21,898

10. Central services

                                                           2009/10    2008/09
                                                              £000       £000

Communications                                                 725        920
Information systems                                          1,164      1,178
Human resources                                              1,666      1,272
Training                                                       323        378
Finance                                                        941      1,039
Central and office services                                  1,939      1,966
                                                             6,758      6,753

The above costs include notional charges for departmental overhead and auditor’s
remuneration (see note 26).




                                      38
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010



11. Palace of Holyroodhouse costs

Historic Scotland is responsible for the upkeep and maintenance of the Palace of
Holyroodhouse. The costs involved are detailed below:

                                                                     2009/10   2008/09
                                                                        £000      £000

Employment costs                                                       1,310     1,284
Conservation and maintenance                                             207       277
Accommodation cost                                                       126       122
Capital expenditure                                                       18         -
Total expenditure incurred in support of the Palace of
Holyroodhouse                                                          1,661     1,683

Employment costs include both Historic Scotland staff and staff employed by the Royal
Household and recharged to Historic Scotland.

These costs are disclosed within the agency’s accounts as follows:

                                                                     2009/10   2008/09
                                                                        £000      £000

Protection – properties in care (note 8)                               1,661     1,683
Other income (note 4)                                                      -         -
                                                                       1,661     1,683




                                             39
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010



12. Property, plant and equipment

(i)                            Land      Buildings    Dwellings      Motor     Computer         Plant &     Antiques &    Assets under           Total
                                              (Exc                 vehicles    equipment     Equipment     works of art   construction
                                         dwellings)                 (note a)                                   (note b)        (note c)
                               £000           £000        £000        £000         £000           £000            £000           £000            £000
Cost
At 1 April 2009               2,892         24,090        2,851       2,144        3,688          6,136          1,327             571         43,699
Additions during year              35          255                      264         592            278                             214          1,638
Transfer from AuC                                                                                                  242           (242)               -
Indexation                         89          871          92                                                                                  1,052
Disposals during year                          (39)        (48)       (276)        (264)          (192)                                         (819)
Transfers                                                                                                                                            -
Revaluation                       (45)       (611)          42                                                                                  (614)
At 31 March 2010              2,971         24,566        2,937       2,132        4,016          6,222          1,569             543         44,956


Accumulated depreciation
At 1 April 2009                   (23)      (6,074)       (134)     (1,450)      (3,132)        (4,962)           (45)                -       (15,820)
Charge for the year                          (445)         (64)       (274)        (377)          (142)           (60)                         (1,362)
Backlog depreciation               (1)       (264)          (5)                                                                                 (270)
Eliminated on disposal                          10           1          271         265            193                                            740
Revaluation                                    458          69                                                                                    527
Transfers                                                                                                                                            -
Impairments                   (150)            (20)                                                                                             (170)
At 31 March 2010              (174)         (6,335)       (133)     (1,453)      (3,244)        (4,911)          (105)                -       (16,355)


Net book value
at 31 March 2010              2,797         18,231        2,804         679         772           1,311          1,464             543         28,601


Net book value
at 31 March 2009              2,869         18,016        2,717         694         556           1,174          1,282             571         27,879




Notes:
a. A motor vehicle valued at £11,223 was donated to the agency on 23/01/2002 by the Royal Bank of Scotland. The net book value of the
asset at 31 March 2010 was £nil
b.Two Tapestries at Stirling Castle were partially donated by the Historic Scotland Foundation. The net book value of the donated assets at
31 March 2010 was £ 287,640. Also, includes 6 non-operational heritage assets (note 28)
c. £ 504,823 was donated by the Historic Scotland Foundation for Stirling Tapestries under construction.




                                                                   40
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010




(i)                               Land    Buildings    Dwellings        Motor    Computer         Plant &     Antiques &     Assets under        Total
                                               (Exc                  vehicles    equipment     Equipment      works of art   construction
                                          dwellings)                  (note a)                                    (note b)       (note c)
                                  £000         £000        £000          £000        £000            £000            £000           £000         £000
Cost
At 1 April 2008                   2,907      23,928        2,871        1,972        3,596          6,165           1,012            664       43,115
Additions during year                                                     290         115              53                            315          773
Transfer from AuC                                            48                                        45             315          (408)             -
Indexation                          (7)         (74)         (9)                                                                                  (90)
Disposals during year                         (110)                     (118)         (23)          (127)                                       (378)
Transfers                                        68         (68)                                                                                     -
Impairment Reverse                              140                                                                                               140
Revaluation                         (8)         138           9                                                                                   139
At 31 March 2009                  2,892      24,090        2,851        2,144        3,688          6,136           1,327            571       43,699


Accumulated depreciation
At 1 April 2008                       -      (6,195)       (124)      (1,326)      (2,756)         (4,919)           (29)               -     (15,349)
Charge for the year                           (495)         (61)        (241)        (398)          (170)            (16)                      (1,381)
Backlog depreciation                             23           1                                                                                    24
Eliminated on disposal                           10                       117          22             127                                         276
Revaluation                                     432          40                                                                                   472
Transfers                                       (10)         10                                                                                      -
Impairment Reverse                              161                                                                                               161
Impairments                        (23)                                                                                                           (23)
At 31 March 2009                   (23)      (6,074)       (134)      (1,450)      (3,132)         (4,962)           (45)               -     (15,820)


Net book value
at 31 March 2009                  2,869      18,016        2,717          694         556           1,174           1,282            571       27,879


Net book value
at 31 March 2008                  2,907      17,733        2,747          646         840           1,246             983            664       27,766
Notes:
a. A motor vehicle valued at £11,223 was donated to the agency on 23/01/2002 by the Royal Bank of Scotland. The net book value of the
asset at 31 March 2009 was £nil
b.Two Tapestries at Stirling Castle were partially donated by the Historic Scotland Foundation. The net book value of the donated assets at
31 March 2009 was £ 293,622. Also, includes 6 non-operational heritage assets (note 28)
c. £ 298,958 was donated by the Historic Scotland Foundation for Stirling Tapestries under construction.


(ii) Revaluations

The Valuation Office prepared valuations at 31 March 2010 where certain buildings were
valued either above or below the estimates used in the 2009/10 annual accounts. The useful
remaining life has also been re-assessed.

The total value of revalued assets is £ 5,008,700. The combined effect of the revaluations is a
decrease in the net book value of these properties of £ 256,889. This figure is also reflected
in the revaluation reserve. Due to impairment there will be an amount of £ 169,834 written
back to the income and expenditure account.




                                                                   41
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010



(iii) Depreciation and impairment charge

                                                                    2009/10    2008/09
                                                                       £000       £000

 Depreciation charge for the year                                     1,362      1,381
 Amortisation charge for the year (note 13)                              48          52
 Impairment charge                                                      170         23
 Impairment Reverse                                                        -     (301)
 Released from donated asset reserve                                     (6)        (4)
 Total charge for the year                                            1,574      1,151


13. Intangible assets

                                     Computer      Websites   Assets under       Total
                                      software        £000    Development        £000
                                       licences                       £000
                                          £000
 Cost
 Opening balance 1 April 2009              509          86             195         790
 Additions during year                      22           -              99         121
 Transfers from AuD                          -         213           (213)           -
 Disposals during year                    (17)           -               -        (17)
 Closing balance 31 March 2010             514         299              81         894

 Accumulated amortisation
 Opening balance 1 April 2009            (507)         (36)              -       (543)
 Charge for the year                       (5)         (43)              -        (48)
 Eliminated on disposal                     16            -              -          16
 Closing balance 31 March 2010           (496)         (79)              -       (575)

 Net book value
 at 31 March 2010                             18       220             81         319

 Net book value
 at 31 March 2009                              2        50            195         247




                                              42
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010




                                    Computer      Websites     Assets under            Total
                                     software        £000      Development             £000
                                      licences                         £000
                                         £000
 Cost
 Opening balance 1 April 2008             509             86             -               595
 Additions during year                      -              -           195               195
 Disposals during year                      -              -             -                 -
 Closing balance 31 March 2009            509             86           195               790

 Accumulated amortisation
 Opening balance 1 April 2008           (484)          (7)                  -          (491)
 Charge for the year                     (23)         (29)                  -           (52)
 Eliminated on disposal                     -            -                  -              -
 Closing balance 31 March 2009          (507)         (36)                  -          (543)

 Net book value
 at 31 March 2009                            2            50           195               247

 Net book value
 at 31 March 2008                          25             79                -            104

14. Inventories

The main categories of inventory are retail stocks held in monument shops and raw materials
and consumables held for building maintenance purposes.

                                                2009/10          2008/09        1 April 2008
                                                   £000             £000                £000

Retail                                            1,348             1,325             1,349
Raw materials and consumables                       177               209               245
                                                  1,525             1,534             1,594

15. Trade Receivables and other current assets

15(a) Amounts falling due within one year:
                                                2009/10          2008/09        1 April 2008
                                                   £000             £000                £000

Trade receivables                                   520               567               469
Other receivables                                    76                78                57
Balance with the Scottish Government              3,329             2,735               787
Prepayments and accrued income                      998             1,273             1,314
Recoverable VAT                                     435               331               538
                                                  5,358             4,984             3,165




                                             43
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010




15(b) Amounts falling due after more than one year

                                                   2009/10                2008/09       1 April 2008
                                                      £000                   £000               £000

Prepayments and accrued income                              -                  16                  18

15(c) Intra Governmental balances

                                     Receivables: amounts falling due       Receivables: Amounts falling due
                                                     within one year                after more than one year

                                   2009/10   2008/09    1 April 2008      2009/10    2008/09    1 April 2008
                                      £000      £000            £000         £000       £000            £000
Balances with other central
government bodies                    4,239      3,590            1,453          -           -              -
Balances with local authorities          5         26               25          -           -              -
Balances with NHS trusts                 -          -                -          -           -              -
Balances with public
corporations and trading funds           -          2               3           -           -              -
Balances with bodies external to
government                           1,114      1,366            1,684          -         16             18
                                     5,358      4,984            3,165          -         16             18



16. Cash and cash equivalents

                                                                2009/10      2008/09 1 April 2008
                                                                   £000         £000         £000

Balance at 1 April                                                3,933         5,606            3,071
Net Change in cash and cash equivalent balances                     357       (1,673)            2,535
Balance at 31 March                                               4,290         3,933            5,606

The following balances at 31 March were held at:

Paymaster account at the Bank of England                          3,960         3,624            4,994
Other bank accounts                                                  71           121              318
Cash in transit and money held at monuments                         259           188              294
Balance at 31 March                                               4,290         3,933            5,606




                                                 44
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010




17. Trade Payables and other liabilities

17(a) Amounts falling due within one year
                                                                 2009/10        2008/09 1 April 2008
                                                                    £000           £000         £000

Trade Payables                                                        662         2,909             2,876
Other taxation and social security                                    427           446               490
Other Payables                                                          3            25               104
Accruals and deferred income                                       11,806         9,127             8,814
                                                                   12,898        12,507            12,284


17(b) Amounts falling due after more than one year
                                                                 2009/10        2008/09 1 April 2008
                                                                    £000           £000         £000

Accruals and deferred income                                          648              293             133


17(c) Intra Governmental balances

                               Payables: amounts falling due within one      Payables: amounts falling due after
                                                                   year                    more than one year

                                 2009/10       2008/09      1 April 2008    2009/10     2008/09    1 April 2008
                                    £000          £000              £000       £000        £000            £000
 Balances with other central
 government bodies                    962          891              609            -           -               -
 Balances with local
 authorities                          999            94             203            -           -               -
 Balances with NHS trusts               -             -               -            -           -               -
 Balances with public
 corporations and trading
 funds                                 25               -            14            -           -               -
 Balances with bodies
 external to government            10,912       11,522           11,458         648          293             133
                                   12,898       12,507           12,284         648          293             133




                                                   45
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010

18. Provisions for liabilities and charges

                                                  Pension Compensation    Other          Total
                                                    costs    payments provisions
                                                    £000         £000      £000           £000

Opening balance at 1 April 2009                        29              88       470        587
Less net amount released during current year         (29)            (81)       (70)     (180)
Charge to current year income and expenditure        190                3          -       193

Closing balance at 31 March 2010                     190              10         400       600

Analysis of expected timing of any resulting outflows of economic benefits

Payable in 1 year                                     62              10         400       472
Payable between 2-5 yrs                              128               -           -       128
Payable between 6-10 yrs                               -               -           -         -
Thereafter                                             -               -           -         -
At 31 March 2010                                     190              10         400       600

                                                  Pension Compensation    Other          Total
                                                    costs    payments provisions
                                                    £000         £000      £000           £000

Opening balance at 1 April 2008                        77              66        400       543
Less net amount released during current year         (49)            (51)          -     (100)
Charge to current year income and expenditure           1              73         70       144
Closing balance at 31 March 2009                       29              88        470       587

Analysis of expected timing of any resulting outflows of economic benefits

Payable in 1 year                                      29             88         470       587
Payable between 2-5 yrs                                 -              -           -         -
Payable between 6-10 yrs                                -              -           -         -
Thereafter                                              -              -           -         -
At 31 March 2009                                       29             88         470       587

The provision for pension costs relates to the compensation element of the former Early
Retirement Package payable to officers who were over the age of 50 but below the age of 60.
On attaining the age of 60 the compensation element ceases.

Compensation payments relate to claims for accidents to staff of Historic Scotland and
visitors to the monuments. It is expected that final settlement of these claims will be made
within 2010/11.

Other provisions relate to a dispute with a supplier. As at the 31 March 2010 the assessment
of costs due to be paid by Historic Scotland is £400k.




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HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010

19. Commitments under leases

Operating leases

Commitments under operating leases to pay rentals during the year following the year of
these accounts are given in the table below, analysed according to the period in which the
lease expires:

                                                                 2009/10          2008/09
                                                                    £000             £000

Operating leases which expire within one year                         80               123
In the second to fifth year inclusive                                168               156
In over five years                                                   769               762
                                                                   1,017             1,041

The majority of the operating leases are for properties.

Finance leases

There are no finance leases in operation.

20. Financial Instruments

As the cash requirements of the agency are met through the Scottish Government budgeting
process, financial instruments play a more limited role in creating risk than would apply to a
non-public sector body of a similar size. The majority of financial instruments relate to
contracts to buy non-financial items in line with the agency’s expected purchase and usage
requirements and the agency is therefore exposed to little credit, liquidity or market risk.

21. Contingent liabilities

There were no material contingent liabilities at 31 March 2010. (31 March 2009: nil).

22. Capital commitments

Historic Scotland is committed to expenditure resulting from works contracts and contractual
agreements offered and entered into under the Historic Buildings Repair Grants Scheme prior
to 31 March 2010. As at that date, these commitments totalled:

                                                                 2009/10          2008/09
                                                                    £000             £000

Capital commitments due within one year                           12,089             9,947
Due within two to five years inclusive                             4,700             5,068
Due after five years                                                   -                 -
                                                                  16,789            15,015




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HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010

Historic Scotland has also given indicative authorisations to grant applicants. While these do
not represent a firm offer of grant they reflect future potential offers and are an indication of
the pressure on grants which Historic Scotland faces. As at 31 March 2010, indicative
authorisations totalled:

                                                                   2009/10           2008/09
                                                                      £000              £000

Indicative authorisations                                           12,501             19,373

In addition to commitments under the Historic Buildings Repair Grants Scheme, the agency
has capital commitments in respect of building works on properties in its care. As at 31
March 2010, these commitments totalled:

                                                                   2009/10           2008/09
                                                                      £000              £000

Capital commitments due within one year                               5,622             5,444
Due within two to five years inclusive                                    -                 -
Due after five years                                                      -                 -
                                                                      5,622             5,444

23. Post balance sheet events

There are no material post balance sheet events that require to be adjusted in the accounts or
to be disclosed.

24. Related party transactions

Historic Scotland is an executive agency of the Scottish Government. During the year
Historic Scotland had a number of transactions with other government departments and
agencies.

The Historic Scotland Foundation is a charitable trust whose objectives are to promote and
advance the work of Historic Scotland. The trustees are independent of Historic Scotland.

The Historic Scotland Foundation is working with Historic Scotland on the Stirling
Tapestries Project. Historic Scotland received £ 205,956 from Historic Scotland Foundation
during 2009/10.

During the year Historic Scotland entered into a Limited Liability Partnership with Glasgow
School of Art to form The Centre for Digital Documentation and Visualisation (CDDV) LLP.
CDDV will deliver the digital documentation of the five Scottish World Heritage sites and
five international Heritage sites in a project known as the Scottish Ten.

As at the 31 March 2010 the balances were:

    •   Accruals and Deferred Income (Note 17) - Grant award of £206,150
    •   Trade Receivables (Note 15) - £16,500




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HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010

During the year Historic Scotland entered into the following material transaction with Ann-
Marie Stannard, non-executive director. She acted as an independent consultant on the
Scottish Ten Project. The value of these transactions within 2009/10 was £ 4,048.

25. Losses statement

Losses and special payments for the year total £ 158,000 (2008/09: £154,000).

There were no individual losses or special payments in excess of £250,000 which would
require separate disclosure.

26. Notional charges

The following notional expenditure charges have been included in the accounts:-

                                                                     2009/10        2008/09
                                                                        £000           £000

Interest charges                                                          644            676
Departmental overhead                                                      79            160
Auditor’s remuneration                                                     80             78
                                                                          803            914


A notional departmental overhead has been based on the usage of certain central services of
the Scottish Government.

Auditor’s remuneration is a notional charge, as notified to us by our auditor Audit Scotland,
in respect of audit work carried out during 2009/10. No other services were supplied by
Audit Scotland during the period ended 31 March 2010.

27. Segmental Analysis as at 31 March 2010

All Historic Scotland operations are in the UK and are currently organised into the following
operating divisions.

Policy Group - This group has four main areas of activity; international policy, national
policy, investment in the historic environment and development assessment. These teams
manage World Heritage Site nominations for Scotland and provide grants for bodies and
individuals repairing and maintaining the historic environment. They are also responsible for
sponsoring events and activities that promote and improve our understanding of the historic
environment. As a group they provide necessary support and funding to the voluntary sector.

Inspectorate – Historic Scotland’s Inspectorate is responsible for protecting and providing
advice on the management of the most important parts of Scotland’s historic environment,
including listed buildings, scheduled monuments, wreck sites and gardens and designed
landscapes. It also gives grant-aid for the conservation and repair of ancient monuments and
for rescue archaeology.




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HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010



Technical Conservation Group – The aim of the Technical Conservation Group is to
promote better technical understanding and care of the built environment, and to inform and
sustain the conservation, repair and maintenance of the built environment through
undertaking technical and scientific research, supporting the perpetuation and understanding
of traditional building skills, understanding and promoting the use and availability of
traditional building materials, providing specialist technical and scientific advice, providing
applied specialist conservation services and delivery of technical education and outreach
activity.

Properties in Care – The properties in care group (PIC) looks after over 300 buildings and
monuments on behalf of Scottish Ministers. PIC has a monument conservation unit plus
teams of architects and technicians to carry out care and maintenance tasks. Visitor Services
Business Development includes education, travel trade, retail, events, functions, catering,
membership and marketing. Other departments include Major Projects , joint capital projects
and Understanding & Access.

Central Services – Provides support and communication for the Agency both internally and
externally. It consists of the Chief Executive’s Group, Finance and Human Resources

These divisions are the basis on which Historic Scotland monitors its operations and upon
which decisions are made by the Board.

                         Policy       Inspectorate       Technical                     Properties in Care                   Central        Total
                         Group                           Conservation                                                       Services
                                                         Group
                                                                           Conservation    Visitor Services      Other
                                                                                              Business
                                                                                            Development
                           £000           £000               £000             £000             £000              £000         £000           £000


 PIC Estate Income                -                  -                 -               -             27,034             -              -     27,034
 Other Receipts               334                    -               587             199                 248         75           87          1,530
 Total Income                 334                    -               587             199             27,282          75           87         28,564


 Administration Costs       1,024            4,136               1,391           12,258               9,398       2,242        5,621         36,070
 Programme Current         15,635            1,897               1,630            4,501               3,185       1,953          887         29,688
 Heritage Capital                 -              54                    -               6              3,692         548                -      4,300
 Operational Capital              1              37                  313             536                 112        593          212          1,804
 Direct Costs of Sales            -                  -                 -               -              3,930             -              -      3,930
 Bad Debts                        -                  -                 -               -                    62          -              -           62


 Total Expenditure         16,660            6,124               3,334           17,301              20,379       5,336        6,720         75,854


 Net Operating Cost
 before Scottish
 Government funding       (16,326)          (6,124)            (2,747)         (17,102)               6,903      (5,261)      (6,633)       (47,290)




                                                                 50
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010




Reconciliations of the total segment measures to respective items included in the financial
statements are as follows:

                                                      Note                Total
                                                                          £000

 Segmental total Income                                                  28,564
 Donated Asset Income – Stirling Tapestries                               (205)
 Recharged Expense coded to other income                                   (54)
 Total Income as per Operating Cost Statement                            28,305

 Segmental total expenditure                                             75,854

 Depreciation                                          12                  1,574
 Notional Charges                                      26                    803
 Additions to Property, plant and equipment                              (1,649)
 Recharged expense in other income                                          (54)
 Total Expenditure as per Operating Cost
 Statement                                                               76,528

 Net Operating Cost before Scottish Government
 funding                                                                (48,223)




                                                 51
HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010



28. Non-operational heritage assets

Historic Scotland is responsible for over 300 monuments. The majority of these are treated
as non-operational heritage assets in that they are held primarily for the maintenance of the
nation’s heritage. Non-operational assets are not valued and are therefore not included in the
accounts. Excluded from these are those elements of buildings which are used for business
purposes such as visitor facilities, maintenance depots and occupied accommodation. Assets
treated as non-operational fall within the following categories:

There are thirty five Crown properties of which eight are buildings in good condition with the
structure essentially complete. These are:

Edinburgh Castle, Stirling Castle, Argyll’s Lodging, Blackness Castle, Dumbarton Castle,
Abbey Strand, Dunblane Cathedral and Glasgow Cathedral.

The remaining properties are archaeological sites, burial mounds, ruins, monuments or
statues. Significant sites within this category include:

Arbroath Abbey, Beauly Priory, Castle Semple Collegiate Church, Dunfermline Abbey
(Nave) and Palace, Holyrood Abbey, Linlithgow Palace, St Andrews Castle and Cathedral.

Crown property also includes artefacts, paintings and furnishings. Among these are the
Honours of Scotland and several paintings on display throughout the estate.

In addition to the above, many monuments which are cared for by Historic Scotland are not
owned by the agency but held under a guardianship arrangement. Title to the property
remains with the original owner.

A full list of properties can be found at Historic Scotland’s website –

www.historic-scotland.gov.uk




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HISTORIC SCOTLAND
ANNUAL ACCOUNTS 2009-2010




                                  HISTORIC SCOTLAND

                  DIRECTION BY THE SCOTTISH MINISTERS
in accordance with section 19(4) of the Public Finance and Accountability (Scotland)
Act 2000


1.      The statement of accounts for the financial year ended 31 March 2006 and subsequent
        years shall comply with the accounting principles and disclosure requirements of the
        edition of the Government Financial Reporting Manual (FReM) which is in force for
        the year for which the statement of accounts are prepared.

2.      The accounts shall be prepared so as to give a true and fair view of the income and
        expenditure, recognised gains and losses, and cash flows for the financial year, and of
        the state of affairs as at the end of the financial year.

3.      This direction shall be reproduced as an appendix to the statement of accounts. The
        direction given on 29 March 2001 is hereby revoked.




Signed by the authority of the Scottish Ministers

Dated 17 January 2006




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