Report and financial statements

Transcription

1 (a company limited by guarantee) Registered number SC Charity number SC O27450

2 Contents Reference and administrative information 1 Directors report 2 Statement of directors responsibilities 5 Independent auditors report to the trustees and members of Edinburgh Leisure 6 Statement of financial activities (incorporating an income and expenditure account) 8 Balance sheet 9 Cash flow statement 10 Notes 11

3 Reference and administrative information Directors Robert Yates (Chair) (resigned 30 June 2010) Charles Winstanley (Chair) (appointed 5 July 2010) Councillor Deirdre Brock (Vice Chair) Douglas Adamson Nick Bennett Councillor Ronald Cairns Councillor Paul Godzik (resigned 14 June 2010) Dr Cathy Higginson (appointed 11 June 2010) Shelley Hunter (resigned 14 June 2010) Richard Jeffrey Ray Jones (appointed 1 February 2010) Councillor Gordon Munro (appointed 16 June 2010) Dr Colin Mumford Mike Sibbald Alexander Sutherland Councillor Marjorie Thomas Councillor Iain Whyte John Wilson (resigned 5 August 2010) Chief Executive Keith Jackson (resigned 30 June 2010) John Comiskey (interim effective 1 September 2010) Secretary Registered office Auditors Solicitors Bankers Charity number John Comiskey Vantage Point Edinburgh EH11 4 DF Henderson Loggie 34 Melville Street Edinburgh EH3 7HA Shepherd & Wedderburn 1 Exchange Crescent Conference Square Edinburgh EH3 8UL Royal Bank of Scotland 36 St Andrew Square Edinburgh EH2 2YB SCO27450 Company number SC

4 Directors report Edinburgh Leisure The directors of the company are pleased to present their annual report and the audited financial statements for the year ended. Structure, Governance and Management Charitable status Edinburgh Leisure is a company limited by guarantee, governed by its memorandum and articles of association, and does not have a share capital. Each member has undertaken to contribute an amount not exceeding one pound towards any deficit arising in the event of the company being wound up. The company has charitable status under Section 505 of the Income and Corporation Taxes Act 1988 and the Scottish Charity Number is SC Directors Edinburgh Leisure s board consists of fifteen directors. Seven are co-opted from business, the leisure industry, and the professions. One is nominated from Clubsport Edinburgh, one is a nominated union representative and five are nominated elected members of the City of Edinburgh Council. There is also one Director specifically appointed to represent users. The seven co-opted members and the one user representative are appointed for a period of four years. A list of current directors, including those who served during the year, can be found on page 1. Policies and procedures for induction and training of directors An induction process is in place for new directors. This covers the strategic and operational issues affecting the company. The ongoing training needs of directors are considered by the board from time to time. Organisation Structure The Board of Directors meets every two months with directors and senior management present. Decisions are taken to set the overall strategy for the business as well as to monitor its activities. Senior management are charged with the task of implementing these decisions. Risk The major strategic, business and operational risks that the organisation faces have been identified and are reviewed by the board periodically. Systems have been established and are regularly reviewed. These are strengthened as required to ensure that the necessary steps are taken to lessen these risks. Objectives and activities Principal activity The principal activity of the company is the provision of recreation and leisure facilities on behalf of The City of Edinburgh Council in accordance with the following charitable objectives to: Provide or assist in the provision of, facilities for recreation or other leisure time occupation in the interests of social welfare for the general public and in particular in connection with the local authority area of The City of Edinburgh as defined in the Local Government etc (Scotland) Act 1994 with the object of improving the conditions of life for the Community; Provide facilities for persons who by reason of their youth, infirmity or disability, poverty or social and economic circumstances may need special facilities; and Promote good health among the Community through health education directed to the part which healthy eating and standards of nutrition together with exercise play in the maintenance of good health. 2

5 Directors report (continued) Objectives The objectives of the company are: To contribute to the health and wellbeing of the people of Edinburgh; To encourage participation and pathways for development in sports and physical activities through the provision of an inclusive leisure service; To increase participation in sports and physical activities for children and young people including those with disabilities; To increase participation in sports and physical activities by the 50 years plus group; To provide an effective and efficient facility infrastructure for the delivery of quality services; To be recognised as an employer of choice; To maintain a firm financial base; and To be recognised and valued as the leisure organisation in Edinburgh providing quality experiences and expertise in sports and physical activity. Review of activities and performance 2009/10 has been a challenging year for Edinburgh Leisure with the planned closure for refurbishment of the Royal Commonwealth Pool, the difficult decision to cease operation of our remaining four crèche facilities, the re-opening of the Craiglockhart Leisure Centre and the relocation of the company s Head Office. This period of internal change was also set against a background of recession and economic uncertainty. The Royal Commonwealth Pool (RCP) represented 14% (585k visits) of total Edinburgh Leisure user visits and employed around 100 people in 2008/9. The closure at the end of the first quarter of 2009/10 therefore represented an enormous management challenge to Edinburgh Leisure and dominates all year on year usage and financial comparisons. The closure of our four remaining crèche facilities (Drumbrae, Ainslie Park, Portobello and Gracemount) was announced in November 2009 and became effective at the end of March This most difficult of decisions was taken in response to a funding gap for 2010/11 onwards which resulted from a reduction in the anticipated future service payments from the City of Edinburgh Council. Despite this challenging operating environment, 2009/10 was a good year in terms of operating performance. All key financial and usage targets were exceeded and the company recovered from two years of operating deficits to record a small operating surplus. In addition we also recorded our lowest ever staff and customer accident numbers and saw improvements in both staff turnover and staff absence levels. The headline number of visits for 2009/10 to Edinburgh Leisure managed facilities was 3.90 million, a 6% decrease in absolute terms from 2008/09 but a 6% increase if the impact of the RCP is excluded. Likewise, use by children and young people and older adults also decreased in headline terms (by 12.3% and 3.2% respectively) but both exceeded their targets which took into account the closure of the RCP. Operating income of 15.9 million is a decrease of 1.7% against 2008/9 but was on target and an increase of over 1m (9%) if the RCP is excluded from the calculation. The underlying year-end surplus of 154k, has not been easily achieved, and has required significant improvement in underlying income generation in the majority of services and the careful management of costs. The core activity areas of health & fitness (gyms) and swimming both outperformed compared to expectations and helped offset income shortfalls in both our dry coaching activities and events income, which has been severely impacted by the recession. Edinburgh Leisure continues to refocus it s asset investment strategy towards a planned rather than reactive approach, investing an additional 0.5m in 2009/10 into a long term lifecycle maintenance programme. 3

6 Directors report (continued) Review of activities and performance (continued) Net income for the year The results for the year are shown on page 8. The surplus on unrestricted funds was 614,000. This however included a 460,000 non-cash accounting gain arising from the difference between the revenue account pension charge when calculated under FRS17 and the actual employer cash contributions made to the pension fund during the year. As such, the underlying result for the year to was a surplus on unrestricted funds of 154,000 compared to a planned surplus of 138,000. The actuarial loss on The Lothian Pension Fund of 5,464,000 (2009: 2,776,000), which is included in the result for the year, will be addressed over a considerable time period and does not impact Edinburgh Leisure s underlying activities. Reserves policy It is the intention of the board to accumulate a reserve fund to allow the company some protection against future adverse economic conditions. Having considered the risks to which the company is exposed the board has set a reserves target of 8% of operational income, plus 300,000. At general reserves, shown in the balance sheet as unrestricted funds, amount to 1,484,000. This equates to a shortfall of 87,000 when compared to the reserves target. The 5-year projections contained within the 2010/11 business plan demonstrate that this shortfall will be reduced to zero by 31 March The unrestricted reserve of 1,484,000 is not a free reserve as it is backed up by long term assets rather than cash reserves. Employees The company maintains a policy of regularly providing all employees and, where represented, trade unions with information on the company s performance. It is the company s policy to give full consideration to applications for employment from disabled persons, bearing in mind their particular aptitudes and abilities. All disabled persons employed by the company have the opportunity for training, development and career progression. Approval of the directors annual report So far as each director is aware, there is no relevant audit information of which the auditors are unaware. Each director has taken the appropriate steps as a director to make themselves aware of such information and to establish that the auditors are aware of it. [ ] Chair [ 2010] 4

7 Statement of directors responsibilities The directors are responsible for preparing the annual report and financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). The financial statements are required by law to give a true and fair view of the state of affairs of the company and of the surplus or deficit of the company for that period. In preparing those statements, the directors are required to: Select suitable accounting policies and then apply them consistently; Make judgments and estimates that are reasonable and prudent; State whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the financial statements comply with the Companies Act 2006, the Charities and Trustee Investment (Scotland) Act 2005 and the Charities Accounts (Scotland) Regulations They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. They are also responsible for the maintenance and integrity of the corporate and financial information contained on the company s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. 5

8 Independent auditors report to the Trustees and Members of Edinburgh Leisure We have audited the financial statements of Edinburgh Leisure for the year ended which comprise the statement of financial activities, the balance sheet, the cashflow statements and the related notes. The financial statements have been prepared in accordance with the accounting policies set out therein. This report is made exclusively to the company s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and to the charity s trustees, as a body in accordance with Section 44(1)(c) of the Charities and Trustees Investment (Scotland) Act 2005 and Regulation 10 of the Charities Accounts (Scotland) Regulations Our audit work has been undertaken so that we might state to the company s members and the charity s trustees those matters we are required to state to them in an auditors report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the charity s members as a body and its trustees as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of trustees and auditors The trustees (who are also the directors of the company for the purposes of company law) responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) and for being satisfied that the financial statements give a true and fair view are set out in the Statement of Trustees Responsibilities. We have been appointed auditors under section 44(1)(c) of the Charities and Trustee Investment (Scotland) Act 2005 and under the Companies Act 2006 and report to you in accordance with those Acts. Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the financial statements give a true and fair view, have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice and have been prepared in accordance with the Companies Act 2006, the Charities and Trustee Investment (Scotland) Act 2005 and Regulation 8 of the Charities Accounts (Scotland) Regulations We also report to you whether, in our opinion, the information given in the Trustees Annual Report is consistent with those financial statements. We also report to you if, in our opinion, the charity has not kept adequate and proper accounting records, if the charity s financial statements are not in agreement with these accounting records, if we have not received all the information and explanations we required for our audit, or if certain disclosures of trustees remuneration specified by law are not made. We read the Trustees Annual Report and consider the implications for our report if we become aware of any apparent misstatements within it. 6

9 Independent auditors report to the Trustees and Members of Edinburgh Leisure (continued) Edinburgh Leisure Basis of audit opinion We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the trustees in the preparation of the financial statements, and of whether the accounting policies are appropriate to the charity s circumstances, consistently applied and adequately disclosed. Opinion In our opinion: the financial statements give a true and fair view of the state of the charity s affairs as at, and of its incoming resources and application of resources, including its income and expenditure, for the year then ended; the financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; the financial statements have been prepared in accordance with the Companies Act 2006, Charities Trustees Investment (Scotland) Act 2005 and regulation 8 of the Charities Accounts (Scotland) Regulations 2006; and the information given in the Trustees Annual Report is consistent with the financial statements. Janet Stevenson FCA (Senior Statutory Auditor) 2010 For and on behalf of Henderson Loggie Statutory Auditors (Eligible to act as an auditor in terms of section 1212 of the Companies Act 2006) 34 Melville Street Edinburgh EH3 7HA 7

10 Statement of financial activities (incorporating an income and expenditure account) For the year ended Unrestricted Restricted Total Total Notes Fund Fund Incoming resources Incoming resources from generated funds Investment Income Incoming resources from charitable activities Provision of leisure facilities 15, ,339 16,669 Contract with City of Edinburgh Council 8, ,089 8,264 Other Income Total incoming resources 24, ,583 25,481 Resources Expended Charitable activities Provision of leisure facilities 2 24, ,070 24,518 Governance Total resources expended 24, ,095 24,541 Net movement in funds and net income for the year 614 (126) Actuarial loss on Lothian Pension Fund 16 (5,464) - (5,464) (2,776) Net movement in funds (after actuarial loss on pension scheme) (4,850) (126) (4,976) (1,836) Fund balances brought forward at 1 April ,739 1,099 2,838 4,674 Fund balances carried forward at (3,111) 973 (2,138) 2,838 All of the above results are derived from continuing activities. All gains and losses recognised in the year are included above. 8

11 Balance Sheet At Note Fixed Assets Tangible assets 6 4,559 4,576 Investments ,559 4,576 Current Assets Stocks Debtors 9 1, Cash in hand , Current Liabilities Creditors: amounts falling due in one year 10 (3,140) (2,566) Net current liabilities (1,797) (1,633) Total assets less current liabilities 2,762 2,943 Long term liabilities Creditors : amounts falling due in more than one year 11 (305) (514) Net assets excluding pension surplus 2,457 2,429 Pension (deficit)/surplus 16 (4,595) 409 Net (liabilities)/ assets including pension (deficit)/surplus (2,138) 2,838 Funds Unrestricted funds 1,484 1,330 Pension reserve 16 (4,595) 409 (3,111) 1,739 Restricted funds ,099 Total funds (2,138) 2,838 The financial statements were approved and authorised for issue by the Board on [ behalf by: 2010] and signed on its [ ] Chair 9

12 Cash flow statement for the year ended Note Net cash inflow from operating activities 14(a) 1,406 1,194 Returns on investments and servicing of finance Interest received Interest paid 2 (51) (50) Capital expenditure and financial investment Payments to acquire tangible fixed assets 6 (959) (797) Cash inflow before financing 14(b) Financing Repayment of finance leases 14(c) (214) (326) New finance leases entered into 14(c) 3 42 Lawn Tennis Association loan 14(c) (9) 120 EICA loan 14(c), 19 - (380) Increase/(decrease) in cash in the year 229 (29) 10

13 Notes (forming part of the financial statements) 1 Accounting policies Basis of accounting The financial statements have been prepared under the historical cost basis of accounting and in accordance with applicable accounting standards. The financial statements are set out so as to comply with the Statement of Recommended Practice: Accounting and Reporting by Charities approved by the Accounting Standards Board in April 2005, the Charities and Trustee Investment (Scotland) Act 2005 and the Companies Act The charity has availed itself of Paragraph 3(3) of Schedule 4 of the Companies Act and adapted the Companies Act formats to reflect the special nature of the charity s activities. These financial statements present information about the company as an individual undertaking, and not about its group, by virtue of s402 of the Companies Act Funds Funds are classified as either restricted funds or unrestricted funds, defined as follows: Restricted funds are funds subject to specific trusts, which may be declared by the donor or with their authority. Some are restricted income funds expendable at the discretion of the Board in furtherance of a particular activity, such as government grants for a specific centre, and funds raised for particular client groups or activities. Others are capital funds where the assets are required to be invested for long term use. Unrestricted funds are expendable at the discretion of the Board in furtherance of the objectives of Edinburgh Leisure. If part of the unrestricted funds is earmarked at the discretion of the Board for a particular project it is designated as a separate fund. This designation has an administrative purpose only, and does not legally restrict the Board s discretion to apply the fund. Incoming resources Activities for generating income are accounted for on an accruals basis. Income from the City of Edinburgh Council is accounted for on an accruals basis and is agreed in advance based on the level of service provided. Investment Income is accounted for on an accruals basis. Capital Grants received are accounted for on an accruals basis. If a functional fixed asset is acquired in full or in part from the proceeds of a grant it is included in the balance sheet at its full acquisition cost, with the relevant grant being recognised as income and held in restricted funds. Depreciation is then allocated to this fund over the useful life of the related asset. Resources Expended All expenditure is accounted for on an accruals basis. Where costs cannot be directly attributed to a cost heading, they have been allocated on a basis consistent with use of the resources. Leases Operating lease rentals are charged to the income and expenditure account on a straight line basis over the period of the lease. Assets held under finance leases are capitalised in the balance sheet and depreciated over their useful lives. The interest element of leasing payments is charged on a straight line basis to the statement of financial activities over the period of the lease. 11

14 Notes (continued) 1 Accounting policies (continued) Stocks Stocks of materials and consumables are stated at the lower of cost and net realisable value in the ordinary course of operating. Depreciation Assets are held at cost. Depreciation is provided on all tangible fixed assets at rates calculated to write off the cost less estimated residual value of each asset evenly over its expected useful life as follows: Leasehold improvements 5 years 25 years Plant and equipment Motor vehicles Furniture and fittings Computer equipment Finance Leases 3 to 5 years 4 years 5 years 3 to 5 years over the term of the lease The assets are reviewed annually for impairment. Assets purchased during the year with a value of 1,000 or more are reviewed for capitalisation. Taxation As a charity, the group is exempt from income tax by virtue of Section 505(1) Income and Corporation Taxes Act 1988 and from capital gains tax by virtue of Section 145 Capital Gains Tax Act Pensions Edinburgh Leisure is a member of the Lothian Pension Fund, a Local Government Pension Scheme, which provides benefits based on final pensionable pay. The scheme closed to new entrants as at 1 st April The expected cost to the company of pensions is charged to the income and expenditure account so as to spread the cost of pensions over the service lives of the employees. In accordance with FRS17 Retirement Benefits the operating and financing costs of pension and post retirement schemes (determined by a qualified actuary) are recognised separately in the Income and Expenditure Account and Statement of Financial Activities. Service costs are systematically spread over the service lives of the employees and financing costs are recognised in the period in which they arise. The difference between the actual and expected returns on assets during the year, including changes in the actuarial assumptions, is also recognised in the Statement of Financial Activities. All new employees, and those employees not currently members of the Lothian Pension Fund, are able to participate in a defined contribution scheme. Under this scheme, employees can choose how much they contribute to the scheme. Edinburgh Leisure matches the employees contributions, up to a maximum of 8%. 12

15 Notes (continued) 2 Costs of providing service Unrestricted Restricted Total Total Fund Fund Wages and salaries 12, ,363 12,660 Social security costs Employer pension contributions 1, ,380 1,047 FRS 17 pension adjustment (460) - (460) (452) Payments to self-employed coaches 1, ,273 1,280 Property costs 3, ,239 3,948 Supplies and services 4, ,194 3,778 Rental charges under operating leases Depreciation ,060 Finance lease costs , ,070 24,518 3 Governance Audit Fees Directors and Officers Indemnity Insurance

16 Notes (continued) 4 Staff numbers and costs The remuneration and associated costs of the company were: Wages and salaries 12,363 12,660 Social security costs Pension costs (note 16) ,036 14,092 Employees receiving salaries, plus benefits in kind, of more than 60,000 were in the following bands: 2010 Number 2009 Number 90, , ,000-90, ,000-70, No member of the Board received remuneration from Edinburgh Leisure other than Directors indemnity insurance and travel expenses. The average monthly full-time equivalent number of employees of the company during the year was: Number Number Dry facilities Wet centres Golf courses Administration Support The average monthly headcount number of employees of the company during the year was: Number Number Dry facilities Wet centres Golf courses Administration Support

17 Notes (continued) 5 Investment income Bank and other interest Tangible fixed assets Freehold Land & Buildings Leasehold Impmt`s Plant & equipment Motor vehicles Furniture & fittings Computer Equipment Finance Leases Total Cost At beginning of year 530 4,614 2, ,623 1,476 11,201 Additions Transfers 8 (8) Disposals - (11) (23) (34) At end of year 538 5,251 2, ,731 1,476 12,126 Depreciation At beginning of year 18 1,871 1, , ,625 Charge Transfers 1 (1) Disposals - (11) (23) (34) At end of year 29 2,263 2, ,506 1,150 7,567 Net book value At 31 March , ,559 At 31 March , ,576 7 Fixed asset investments Investment in subsidiary undertaking - - The company owns 100% of the ordinary share capital of Edinburgh Leisure Two Limited, a company registered in Scotland. The value of the investment is 2 (2009: 2). This company did not trade in the year. 15

18 Notes (continued) 8 Stock Stock Debtors Trade debtors City of Edinburgh Council Other Debtors Prepayments and accrued income , Creditors: amounts falling due within one year Bank Overdraft (unsecured) Trade creditors City of Edinburgh Council Social security costs and other taxes Other creditors and accruals 1, Utilities accrual Finance lease ,140 2,566 16

19 Notes (continued) 11 Creditors: amounts falling due after more than one year Finance leases Lawn Tennis Association loan The maturity of obligations under finance leases is as follows: Within one year Within one to two years Within two to five years Less future finance charges (51) (105) The obligations under finance leases are secured over the assets to which they relate. 12 Restricted funds Capital Maintenance QHRC Other contribution EICA Total Balance as at 1 April ,099 Income Expenditure (363) (134) (346) - (10) (853) Balance at The Maintenance reserve represents money paid from the City of Edinburgh Council to Edinburgh Leisure specifically for the purpose of maintaining the fabric of the buildings. The QHRC reserve represents the Queensferry High Recreation Centre, which is managed on behalf of the school. It is required to operate on a break-even basis and any surplus or deficit carried forward as a reserve. The Other reserve represents a number of small funds received from external organisations for specific purposes. The Capital Contribution represents the notional value of equipment transferred into the company by the City of Edinburgh Council when the company was established. The EICA reserve represents grant funding received from Scottish Enterprise Edinburgh and Lothians (SEEL) for the installation of a new climbing wall at the Edinburgh International Climbing Arena. Sufficient resources are held to enable each fund to be applied in accordance with any restrictions. Transfers between funds are not performed. 17

20 Notes (continued) 13 Analysis of net assets between funds Unrestricted funds Restricted funds Total 000 Fund balances at are represented by: Tangible fixed assets 3, ,559 Current assets ,319 Current liabilities (3,116) - (3,116) Long term liabilities Pension deficit (305) (4,595) - - (305) (4,595) Total net (liabilities)/assets (3,111) 973 (2,138) 14 Notes to the cash flow statement (a) Reconciliation of net income/(expenditure) for the year to net cash inflow from operating activities Net Income for the year Retirement benefit scheme current service cost Losses on curtailments 30 8 Retirement benefit scheme contributions (1,380) (1,047) Retirement benefit scheme expected return on employer assets (1,633) (2,167) Retirement benefit scheme interest on scheme liabilities 1,663 1,882 Retirement benefit scheme past service cost Depreciation charge 976 1,059 Loss on disposal of assets - 78 Interest paid (53) (168) Interest received Decrease in stocks Increase in debtors (314) - Increase/(decrease) in creditors 689 (340) Net cash inflow from operating activities 1,406 1,194 (b) Reconciliation of net cash flow to movement in net debt Increase/(decrease) in cash in the year 229 (29) Change in net debt resulting from cash flows New finance leases (3) (42) Lawn Tennis Association Loan 9 (120) EICA Loan (note 19) Net Debt at start of year (804) (1,319) Net Debt at end of year (355) (804) 18

21 Notes (continued) 14 Notes to the cash flow statement (continued) (c) Analysis of net debt In the second to fifth years inclusive At beginning of year Cash flows Other non cash changes At end of year Cash at bank and in hand Bank overdrafts (104) (76) Finance leases due within one year (214) 214 (203) (203) Finance leases due after 1 year (394) (3) 203 (194) Lawn Tennis Association loan (120) 9 - (111) (804) (355) 15 Commitments a) Annual commitments under non-cancellable Land and operating leases are as follows: buildings Other Total Total Operating leases which expire: In the first year In the second to fifth years inclusive The land and buildings commitment represents the notional rent for Edinburgh Leisure s head office and the other commitment is for motor vehicles. b) Capital commitment Capital commitment at the end of the financial year for which no provision has been made, are as follows: Contracted Pension scheme Certain employees of the company are members of Lothian Pension Fund. Premiums in the year relating to those employees amounted to 1,380,000 (2009: 1,047,000). In the financial year to the employer contribution rate was 16.5%. The most recent actuarial valuation (31 March 2008) showed that the market value of Edinburgh Leisure s notional share of the scheme s assets was 28,381,000 and that the actuarial value for these assets represents 94% of the benefits that had accrued to members, after allowing for expected future increases in earnings. The fund is valued every three years by a professionally qualified independent actuary using the projected unit method, the rates of contribution payable being determined by the trustee on the advice of the actuaries. In the intervening years the actuaries review the progress of the scheme and prepare an interim valuation for the purposes of reporting under FRS 17. The value of the fund at was as follows: 19

22 Notes (continued) 16 Pension Scheme (continued) Actuarial valuation Present value of funded liabilities (38,532) (23,694) Present value of unfunded liabilities (12) (10) Fair value of employer assets 33,949 24,113 Net asset (4,595) 409 Movement in present value of defined benefit obligation At start of year 23,704 26,988 Current service cost Interest cost 1,663 1,882 Contribution by members Past service costs Actuarial (gains) / losses 12,382 (5,793) Losses on curtailments 30 8 Benefits paid (579) (732) At end of year 38,544 23,704 Movement in fair value of employer assets At start of year 24,113 29,720 Expected return on assets 1,633 2,167 Contributions by members Contributions by the employer 1,380 1,047 Actuarial gains/(losses) 6,918 (8,569) Benefits paid (579) (731) At end of year 33,949 24,113 Expense recognised in the statement of financial activities Current service cost Interest cost 1,663 1,882 Expected return on employer assets (1,633) (2,167) Past service cost Losses/(Gains) on curtailments and settlements 30 8 At end of year The total amount recognised in the statement of financial activities in respect of actuarial gains and losses is a loss of 5,464,000 (2009: 2,776,000), calculated as follows: 20

23 Notes (continued) 16 Pension Scheme (continued) Actuarial (loss)/gain on movement in present value of defined benefit obligation (12,382) 5,793 Actuarial gain/(loss) on movement in fair value of employer assets 6,918 (8,569) Actuarial (loss)/gain on Lothian Pension Fund during year (5,464) (2,776) Fair value of employer assets and the return on those assets Expected return Value Expected return Value Equities 7.8% 26, % 19,050 Bonds 5.0% 2, % 2,653 Property 5.8% 3, % 2,410 Cash 4.8% 1, % - Company s share of scheme assets 33,949 24,113 Actual return on plan assets 8,551 (5,172) The expected rates of return on plan assets are determined by reference to relevant indices. The overall expected rate of return is calculated by weighting the individual rates in accordance with the anticipated balance in the Plan s investment portfolio. Principal actuarial assumptions (expressed as weighted averages) at the year end were as follows: % % Inflation/pension increase rate 3.8% 3.1% Salary increase rate 3.8% 4.6% Expected return on assets 7.3% 6.6% Discount rate 5.5% 6.9% The assumptions relating to longevity underlying the pension liabilities at the balance sheet date as based on standard actuarial marketing tables and include an allowance for future improvements in longevity. The assumptions are equivalent to expecting a 65 year old to live for a number of years as follows: Males Females Current pensioners 20.8 years 24.1 years Future pensioners 22.3 years 25.7 years 21

24 Notes (continued) 16 Pension Scheme (continued) History of the Plan The history of the plan for the current and prior periods is as follows: Present value of defined benefit obligation (38,544) (23,704) (26,988) (30,714) (30,530) Fair value of employer assets 33,949 24,113 29,720 29,080 25,800 (Deficit)/surplus (4,595) 409 2,732 (1,634) (4,730) Experience adjustments Experience gains/(losses) on liabilities (1) 2,777 1 (9) 1,862 Experience gains/(losses) on assets 6,918 (8,569) (2,960) 171 4,048 The charity expects to contribute approximately 1,109,000 to its defined benefit scheme in the next financial year. On 1 st April 2008 Edinburgh Leisure closed its defined benefit scheme to new members. All new employees, and those employees not currently members of the Lothian Pension Fund, are able to participate in a defined contribution scheme. Under this scheme, employees can choose how much they contribute to the scheme. Edinburgh Leisure matches the employees contributions, up to a maximum of 8% 17 Other income Edinburgh Leisure received an incentive to surrender the lease of its Head Office building at 54 Nicolson Street amounting to 102,000. This income has been used to defray the costs of moving to, and the notional rent for, its new Head Office at Vantage Point. 18 Related Party. Edinburgh Leisure is contracted to provide recreation and leisure services by the City of Edinburgh Council ( CEC ). In the year to CEC made a payment of 9,089,000 to the company and leased the facilities occupied by the company for a peppercorn rent. At CEC owed the company 247,000 and the company owed CEC 420,000 (including amounts due to the Lothian Pension Fund) in relation to normal trading activities. 19 Contingent Liability During the year ended 31 March 2008 Edinburgh Leisure received an interest-free loan of 380,000 from the City of Edinburgh Council in relation to the Edinburgh International Climbing Arena (EICA) Ratho which was subsequently reclassified as a contingent liability at 31 March On the contingent liability was reduced to 290,000 on the advice of the City of Edinburgh Council. 22

25 Notes (continued) 20 Post Balance Sheet Event On 2 July 2010 Glenogle Swim Centre re-opened following a full refurbishment at a total cost of 5.7 million. This project is being funded by the City of Edinburgh Council. 23