Annual report 2020-21

WICS annual report on performance, accountability and financial statements 2020-21

Published

This document may not be fully accessible

Financial statements

Statement of comprehensive net expenditure for the year ended 31 March 2021

 

Notes

Year ended

31 March 2021

£

Year ended

31 March 2020

£

Income

 

 

 

Income from activities

3.5.2

3,423,460

3,827,918

Expenditure

 

 

 

Staff costs

3.5.4

(2,489,919)

(2,282,581)

Depreciation

3.5.6

(29,162)

(45,510)

Other expenditure

3.5.5

(1,483,944)

(2,047,748)

 

 

(4,003,025)

(4,375,839)

Operating deficit

 

(579,565)

(547,921)

Interest receivable

 

1,171

6,006

Net deficit for the year after interest

 

(578,394)

(541,915)

 

Corporation tax receivable/(payable)

 

 

1,194

 

(1,141)

Net deficit for the year after tax

 

(577,200)

(543,056)

 

 

 

 

Other comprehensive net income

 

 

 

Actuarial (loss)/gain

3.5.12

(3,513,000)

561,000

Total comprehensive net (expenditure)/income for the year

 

 

(4,090,200)

 

17,94

All income and expenditure relate to continuing activities.

The notes form part of these financial statements.

Statement of financial position as at 31 March 2021

 

Notes

Year ended

31 March 2021

£

Year ended

 31 March 2020

£

Non-current assets

 

 

 

Property, plant and equipment

3.5.6

41,210

62,955

Total non-current assets

 

41,210

62,955

Current assets

 

 

 

Other receivables

3.5.7

144,067

390,074

Cash and cash equivalent

 

2,525,559

1,691,848

Total current assets

 

2,669,626

2,081,922

Current liabilities

 

 

 

Trade payables and other current liabilities

3.5.8

(1,663,363)

(272,174)

Total current liabilities

 

(1,663,363)

(272,174)

 

Non-current liabilities

 

 

 

Provisions

3.5.9

(69,700)

(62,730)

Total net assets, excluding pension liabilities

 

977,773

1,809,973

Pension scheme liability

 

(3,921,000)

(663,000)

Net assets

 

(2,943,227)

1,146,973

Equity

 

 

 

General reserve

 

(2,943,227)

1,146,973

The notes form part of these financial statements.

Statement of cashflows as at 31 March 2021

 

Notes

Year ended

31 March 2021

Year ended

 31 March 2020

Cash flows from operating activities

 

£

£

Operating deficit

 

(579,565)

(547,921)

Adjustments for non-cash items

 

 

 

Difference in pension costs compared to contributions

3.5.12

(267,000)

150,000

Depreciation on tangible non-current assets

3.5.6

29,162

45,510

Finance costs

 

12,000

28,000

Loss on disposal of fixed assets

3.5.6

2,179

-

Increase in provision

3.5.9

6,970

6,970

Movements in working capital

 

 

 

Decrease in other receivables

3.5.7

246,007

235,445

Increase/(decrease) in trade payables and other current liabilities

3.5.8

1,391,189

(284,253)

Net cash inflow/(outflow) from operating activities

 

840,942

(366,249)

Cash flows from investing activities

 

 

 

Purchase of property, plant and equipment

3.5.6

(9,596)

(18,915)

Net cash outflow from investing activities

 

(9,596)

(18,915)

Cash flows from financing activities

 

 

 

Interest received

 

1,171

6,006

Corporation tax receivable/(payable)

 

1,194

(1,141)

Net inflow from financing activities

 

2,365

4,865

Net increase/(decrease) in cash and cash equivalents

 

833,711

(380,299)

Cash as at 1 April

 

1,691,848

2,072,147

Cash as at 31 March

 

2,525,559

1,691,848

Net increase/(decrease) in cash and cash equivalents

 

833,711

(380,299)

The notes form part of these financial statements.

Statement of changes in equity for the year ended 31 March 2021

 

£

Balance at 1 April 2019

1,129,029

Total comprehensive net income for the year 2019-20

17,944

Balance as at 31 March 2020

1,146,973

Total comprehensive net expenditure for the year 2020-21

(4,090,200)

Balance as at 31 March 2021

(2,943,227)

The general reserve is analysed in note 3.5.10

All notes form part of these financial statements.

The Accountable Officer authorised the financial statements for issue on 2 December 2021. The financial statements were approved by the Board on 2 December 2021.

Notes to the financial statements

3.5.1 Accounting policies

The financial statements are prepared in a form determined by Scottish Ministers, in accordance with the Water Industry Act 1999, as amended by the Water Industry (Scotland) Act 2002 and the Water Services etc. (Scotland) Act 2005.

The financial statements are prepared as required by the Accounts Direction issued by Scottish Ministers and prepared in accordance with the FReM issued by HM Treasury.

The accounting policies contained in the FReM apply International Financial Reporting Standards (IFRS) as adapted or interpreted for the public-sector context. Where the FReM permits a choice of accounting policy, the accounting policy which is judged to be most appropriate to the circumstances of WICS for the purpose of giving a true and fair view has been selected.  The policies adopted are described below.  They have been applied consistently in dealing with items that are considered material in relation to the financial statements.

The preparation of the financial statements in conformity with the FReM requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed below in “Critical accounting estimates and key judgements”.

The Board and Chief Executive have considered the budget for 2021-22, including the statutory contribution from Scottish Water and Licensed Provider levies, and consider that WICS has adequate resources to continue in operational existence for the foreseeable future. The financial statements are therefore prepared on a going concern basis.

(i) Accounting Convention

These financial statements have been prepared under the historical cost convention modified to take account of the revaluation of property, plant and equipment and intangible assets.

(ii) Critical accounting estimates and key judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. WICS makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

The present value of the pension obligations depends on several factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost/ (income) for pensions include the discount rate. Any changes in these assumptions will impact the carrying amount of pension obligations.

WICS determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, WICS considers the interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability.

Other key assumptions for pension obligations are based in part on current market conditions.  Additional information is disclosed in note 3.5.12.

(iii) Newly Adopted IFRS

In these financial statements, there are no adopted IFRSs which are effective for the first time which have had a material effect on the financial statements therefore there has been no restatement of comparatives.

(iv) Adopted IFRS not yet applied

IFRS 16 “Leases”, has been issued but has not been applied in these financial statements.  IFRS 16 supersedes IAS 17 Leases and is being applied by HM Treasury in the Government Financial Reporting Manual (FReM) from 1 April 2022. IFRS 16 introduces a single lessee accounting model that results in a more faithful representation of a lessee’s assets and liabilities and provides enhanced disclosures to improve transparency of reporting on capital employed.

Under IFRS 16, lessees are required to recognise assets and liabilities for leases with a term of more than 12 months, unless the underlying asset is of low value. While no standard definition of ‘low value’ has been mandated, WICS has elected to utilise the capitalisation threshold of £5,000 to determine the assets to be disclosed. 

WICS expects that its existing finance leases will continue to be classified as leases. All existing operating leases will fall within the scope of IFRS 16 under the ‘grandfathering’ rules mandated in the FReM for the initial transition to IFRS 16. In future years new contracts and contract renegotiations will be reviewed for consideration under IFRS 16 as implicitly identified right-of-use assets.  Assets recognised under IFRS 16 will be held on the Statement of Financial Position as (i) right of-use assets which represent the Board’s right to use the underlying leased assets; and (ii) lease liabilities which represent the obligation to make lease payments.

The bringing of leased assets onto the Statement of Financial Position will require depreciation and interest to be charged on the right-of-use asset and lease liability, respectively. Cash repayments will also be recognised in the Statement of Cash Flows, as required by IAS 7.

The impact of the initial application of the standard as adopted by the FReM cannot be reasonably estimated for inclusion in these accounts.

(v) Furniture and fittings and information technology

Furniture and fittings and information technology are recorded in the financial statements at depreciated replacement cost because their fair market value is not readily available.

Depreciation is charged on cost less estimated residual value on a straight-line basis over the expected useful lives of up to a maximum of:

  • furniture and fittings: 10 years, which is not more than the lease term of the building in which the furniture and fittings are located; and 
  • information technology: 4 years.

WICS considers that all the assets in these categories have short useful lives and the depreciation rates provide a realistic reflection of consumption and reduction in carrying value.  The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

(vi) Financial assets

Classification

WICS classifies its financial assets as ‘loans and receivables’.  WICS does not hold any financial assets that would be classified as ‘available for sale’ or ‘held-to-maturity’. The classification depends on the purpose for which the financial assets were acquired and is determined at initial recognition.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date which are classified as non-current assets. Loans and receivables comprise other receivables and cash and cash equivalents.

Recognition and measurement

Financial assets are recognised when WICS becomes party to the contractual provisions of the financial instrument.  Financial assets are no longer recognised when the rights to receive cash flows from the asset have expired or WICS has transferred substantially all risks and rewards of ownership.

Loans and receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.  A provision for impairment of loans and receivables is established when there is objective evidence that WICS will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the loan and receivable is impaired. The carrying amount of the asset is reduced using a provision account and the amount of the loss is recognised in the comprehensive statement of income and expenditure. When a loan or receivable is uncollectible it is written off against the provision account.  Subsequent recoveries of amounts previously written off are credited in the comprehensive statement of income and expenditure.

(vii) Financial liabilities

Classification

WICS classifies its financial liabilities on initial recognition as other financial liabilities.  Other financial liabilities are included in current liabilities, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current liabilities. WICS’ other financial liabilities comprise trade and other payables in the balance sheet.

Recognition and measurement

Financial liabilities are recognised when WICS becomes party to the contractual provisions of the financial instrument.  A financial liability is removed from the balance sheet when it is extinguished, that is when the obligation is discharged, cancelled, or expired.  Other financial liabilities are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

(viii) Cash and cash equivalents

Cash and cash equivalents include cash in hand and deposits held at call with banks.

(ix) Provisions

Provisions are recognised when WICS has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.

Where there are several similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax interest rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as an interest expense.

(x) Income and expenditure

Funding is by way of a statutory contribution paid by Scottish Water, as directed by Scottish Ministers. Licensing activity is funded by a levy charged to Licensed Providers. Income is also received from the beneficiaries of support provided by WICS in relation to Hydro Nation activities.

Purchases of goods and services are recorded as expenditure when the goods or services are received rather than when payments are made.

All income and expenditure is recognised in the statement of comprehensive net expenditure in the period to which it relates.

(xi) Value added tax

Most of the activities of WICS are outside the scope of Value Added Tax (VAT) and, in general, WICS is not required to declare output tax to HMRC on the income that it receives.  Correspondingly, WICS is not entitled to recover VAT that it incurs on costs (input tax) in relation to these activities that fall outside the scope of VAT.  Such irrecoverable VAT is charged to the relevant expenditure category or included in the capitalised purchase cost of fixed assets. 

(xii) Operating Leases

In line with IAS17, leases where most of the risks and rewards of ownership of the asset remain with the lessor are classified as operating leases. Operating lease payments are recognised in the comprehensive statement of income and expenditure on a straight-line basis over the lease term. The benefit of any lease incentive is recognised as a reduction in rental expense on a straight-line basis over the life of the lease.

(xiii) Employee benefits

Employees of WICS are members of the Local Government Pension Scheme (the Scheme) administered by Falkirk Council.  The Scheme is a tax approved, defined benefit occupational pension scheme and the scheme regulations are made under the Public Service Pension Schemes Act 2013 and, in the case of the Scheme (Transitional Provisions and Savings) (Scotland) Regulations 2014, under the Superannuation Act 1972. The Scheme is contracted out of the State Second Pension scheme and meets the government’s standards under the automatic enrolment provisions of the Pensions Act 2008.

The Scheme is accounted for on a defined benefit basis under IAS 19.  Assets and liabilities of the Scheme are held separately from those of WICS.  The Scheme’s assets are measured using market values and the Scheme’s liabilities are measured using a projected unit method and discounted at the current rate of return on a high-quality corporate bond of equivalent term and currency to the liability.  Contributions to the Scheme are calculated to spread the cost of pensions over employees’ working lives.  The contributions are determined by an actuary based on triennial valuations using the Age Attained Method.  The actuaries also review the progress of the Scheme in each of the intervening years.  Variations from regular cost are spread over the expected average remaining working lifetime of members of the Scheme after making allowances for future withdrawals.

The expected cost of providing staff pensions to employees contributing to the Scheme is recognised in the statement of comprehensive expenditure on a systematic basis over the expected average remaining lives of members of the funds in accordance with IAS 19 and recognises retirement benefits as the benefits are earned and not when they are due to be paid.  The statement of comprehensive expenditure also includes the net impact of returns on the Scheme’s assets and interest on the Scheme’s liabilities, which is disclosed (net) as other finance income or interest payable.  A pension scheme asset is recognised on the balance sheet only to the extent the surplus may be recovered by reduced further contributions or to the extent that the trustees have agreed a refund from the scheme at the balance sheet date.  A pension scheme liability is recognised to the extent that WICS has a legal or constructive obligation to settle the liability.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in the statement of comprehensive net expenditure in the period in which they arise.

Past-service costs are recognised immediately in income and expenditure, unless the changes to the pension plan are conditional on the employees remaining in service for a specified period (the vesting period). In this case, the past-service costs are amortised on a straight-line basis over the vesting period.

(xiv) Termination benefits

Termination benefits are payable when employment is terminated before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. WICS recognises termination benefits when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy.

(xv) Segmental reporting

Operating segments are identified based on internal reports about components of WICS that are regularly reviewed by the chief operating decision makers in order to allocate resources to the segments and assess their performance.

3.5.2 INCOME

 

Year ended

31 March 2021

Year ended

31 March 2020

 

£

£

Scottish Water statutory contribution

1,234,100

2,179,608

Levy on licensed providers

1,314,642

1,584,645

Hydro Nation income

874,718

63,665

 

3,423,460

3,827,918

3.5.3 ANALYSIS OF NET EXPENDITURE BY SEGMENT

The purpose of activity reporting is to analyse costs by income stream, allowing for a better understanding of how (and against which activities) resources are being deployed. A summary of the full year report is detailed below. The reporting format changed during the year, with Hydro Nation activities being reported as a separate category. Income and expenditure associated with Hydro Nation during 2019-20 was included within Network Regulation and overheads.

 

Contribution to overheads by activity

Year ended

31 March 2021

Year ended

31 March 2020

 

£

£

Network Regulation

(275,640)

(122,506)

Retail

1,017,789

1,150,767

Hydro Nation

391,679

-

Total contribution to overheads

1,133,828

1,028,261

Overheads

(1,711,028)

(1,571,317)

Deficit for the year

(577,200)

(543,056)

3.5.4 STAFF RELATED COSTS

 

 

Year ended

31 March 2021

Year ended

31 March 2020

 

£

£

Wages and salaries

1,807,968

1,612,541

Social security costs

211,925

180,122

Pension costs

470,026

489,918

Staff costs per statement of comprehensive net expenditure

2,489,919

2,282,581

The cash contributions made to the pension scheme are disclosed in note 3.5.12.1.

3.5.5 OTHER EXPENDITURE

 

 

Year ended

31 March 2021

Year ended

31 March 2020

 

£

£

Travel and subsistence

283

263,971

Office accommodation

192,929

131,938

General operating costs

353,621

421,199

Regulation and licensing costs

687,268

1,075,295

Recruitment

28,491

44,959

Information technology

198,087

53,526

Finance charges

23,265

56,860

 

1,483,944

2,047,748

The operating costs for the year are stated after charging the external audit fee of £13,670 (2019-20: £13,340) and, within office accommodation, an operating lease rental of £139,650 (2019-20: £49,175).

The office accommodation lease arrived at the ten-year break point on 14 March 2021. The break option was not invoked and WICS is now obligated to fulfil the full term of the lease – a further 5 years to 14 March 2026. The value of the 15-year lease has been recalculated, and an adjustment has been made at the end of the year to account for this on a straight-line basis.

At the end of the financial year, we were in discussions with another public body to sub-lease the office for an initial 2.5-year period.

Finance charges principally relate to the net interest cost of the pension scheme for the year (see note 3.5.12.3).

Services categorised under regulation and licensing costs are provided by external consultants.

3.5.6 PROPERTY, PLANT AND EQUIPMENT

 

Information technology

Furniture and fittings

Total

Cost

£

£

£

At 31 March 2020

179,665

274,011

453,676

Additions

9,595

-

9,595

Disposals

(72,199)

-

(72,199)

At 31 March 2021

117,061

274,011

391,072

Depreciation

 

 

 

At 31 March 2020

128,510

262,211

390,721

Charge for the year

25,859

3,303

29,162

Eliminated on disposals

(70,021)

-

(70,021)

At 31 March 2021

84,348

265,514

349,862

Net book value at 31 March 2021

32,713

8,497

41,210

Net book value at 31 March 2020

51,155

11,800

62,956

 

Information technology

Furniture and fittings

Total

Cost

£

£

£

At 31 March 2019

163,732

271,029

434,761

Additions

15,933

2,982

18,915

At 31 March 2020

179,665

274,011

453,676

Depreciation

 

 

 

At 31 March 2019

101,737

243,474

345,211

Charge for the year

26,773

18,737

45,510

At 31 March 2020

128,510

262,211

390,721

Net book value at 31 March 2020

51,155

11,800

62,955

Net book value at 31 March 2019

61,995

27,555

89,550

3.5.7 OTHER RECEIVABLES

 

 

Year ended

31 March 2021

Year ended

31 March 2020

Current receivables

£

£

Prepayments

12,682

197,748

Other receivables

131,385

192,326

Total other receivables

144,067

390,074

 

 

Year ended

31 March 2021

Year ended

31 March 2020

Intra-government receivables

£

£

Central Government

1,143

-

Local Authorities

-

13,065

Bodies external to government

142,924

377,009

Total other receivables

144,067

390,074

3.5.8 Current liabilities

 

 

Year ended

31 March 2021

Year ended

31 March 2020

Current payables

£

£

Trade payables

27,747

40,274

Taxation and Social Security

59,768

52,301

Accruals

1,530,781

142,097

Pension

45,067

37,502

Total current liabilities

1,663,363

272,174

 

 

Year ended

31 March 2021

Year ended

31 March 2020

Intra-government payables

£

£

Local Authorities

60,658

48,599

Central Government

59,837

52,301

Bodies external to government

1,542,868

171,274

Total current liabilities

1,663,363

272,174

3.5.9 PROVISIONS FOR LIABILITIES AND CHARGES

 

 

Year ended

31 March 2021

Year ended

31 March 2020

 

£

£

Balance at 1 April 2020

62,730

55,760

Provided in the year

6,970

6,970

Balance at 31 March 2021

69,700

62,730

The provision for dilapidation costs relates to WICS’ contractual duty to repair leasehold property on termination of the lease. Provision is made for the estimated costs of fully repairing leasehold properties at the balance sheet date.

3.5.10 NOTE TO THE STATEMENT OF CHANGES IN EQUITY

 

Note

Operations

    Pension

General Reserve

 

 

£

£

£

Balance at 1 April 2019

 

2,175,029

(1,046,000)

1,129,029

Changes in reserves 2019-20

 

 

 

 

Actuarial gains

 

-

(691,000)

(691,000)

Change in assumptions underlying the present value of the scheme liabilities

 

-

1,252,000

1,252,000

Net surplus/(deficit) for the year

 

(365,056)

(178,000)

(543,056)

Balance as at 31 March 2020

 

1,809,973

(663,000)

1,146,973

Changes in reserves 2020-21

 

 

 

 

Actuarial gains

3.5.12

-

1,616,000

1,616,000

Change in assumptions underlying the present value of the scheme liabilities

3.5.12

-

(5,129,000)

(5,129,000)

Net surplus/(deficit) for the year

 

(832,200)

255,000

(577,200)

Balance as at 31 March 2021

 

977,773

(3,921,000)

(2,943,227)

3.5.11 COMMITMENTS AND CONTINGENT LIABILITIES

(i) Capital commitments

There were no capital commitments at 31 March 2021 (2019-20: £nil).  

(ii) Commitments under operating leases

Total future minimum lease payments under operating leases are given in the table below for each of the stated periods. The amounts relate entirely to WICS’ office accommodation.

 

 

Year ended

31 March 2021

Year ended

31 March 2020

 

£

£

Not later than one year

20,441

49,176

Later than one year and not later than 5

340,110

49,176

Total at 31 March 2021

360,551

98,352

WICS did not trigger the ten-year break clause of the 15-year lease of the office building. Therefore, the lease commitment is for a further five years of rent.

(iii) Contingent liabilities

In 2018-19, WICS received grant income from the European Commission (EC) in relation to a project with the Romanian Public Services Regulatory Authority (ANRSC), totalling £905,645. During 2021-22, the EC undertook an audit of WICS’ expenditure on the project. At the time of this report, the EC has requested supplementary evidence for approximately £135k worth of WICS’ staff costs. WICS is sourcing this additional material and is content that this will not give rise to any liability to the EU.

3.5.12 PENSION

(i) Background

Some employees and former employees of WICS are members of the Local Government Superannuation Scheme administered by Falkirk Council.  This scheme is a defined benefit scheme. In the period WICS paid contributions totalling £717k (2019-20: £334k) into the Fund. Under the Superannuation Regulations, contributions are set to meet 100% of the overall liabilities of the Fund.  We have been advised that specific (minimum) rates for employer contributions in 2021-22 will be 29.4%.

In accordance with IAS 19 WICS commissioned the Fund’s actuaries to undertake a valuation as at 31 March 2021.  This calculation was based on rolling forward valuation data at 31 March 2020 (the last formal valuation) to 31 March 2021 based on several financial assumptions. 

The main financial assumptions used included:

Financial assumptions

Year ended 31 March 2021

%

Year ended 31 March 2020

%

Pension Increase Rate (CPI)

2.80

1.80

Salary Increase Rate

3.40

2.20

Discount rate

2.05

2.30

The average future life expectancies at age 65 are summarised below.

Financial assumptions

Males

Females

Current pensioners (years)

20.5

23.2

Future pensioners (years)

21.9

25.2

(ii) Change in the fair value of plan assets, defined benefit obligation and net liability for the year ended 31 March 2021

 

Assets

Obligations

Net (liability)/ asset

 

£(000)

£(000)

£(000)

Fair value of employer assets

7,187

-

7,187

Present value of funded liabilities

-

7,810

(7,810)

Present value of unfunded liabilities

-

40

(40)

Opening position as at 31 March 2020

7,187

7,850

(663)

Current service cost

-

450

(450)

Total service cost

-

450

(450)

Net interest

 

 

 

Interest income on plan assets

173

-

173

Interest cost on defined benefit obligation

-

185

(185)

Total net interest

173

185

(12)

Total defined benefit cost recognised in deficit

173

635

(462)

Cashflows

 

 

 

Participants’ contributions

117

117

-

Employer contributions

714

-

714

Estimated benefits paid

(147)

(147)

-

Estimated unfunded benefits paid

(3)

(3)

-

Estimated contributions in respect of unfunded benefits paid

            3

-

3

Expected closing position

8,044

8,452

(408)

Re-measurements

 

 

 

Change in financial assumptions

-

3,426

(3,426)

Change in demographic assumptions

-

87

(87)

Other experience

110

1,616

(1,506)

Return on assets excluding amounts included in net interest

1,506

-

1,506

Total re-measurements recognised in Other Comprehensive Income (OCI)

1,616

5,129

(3,513)

Fair value of employer assets

9,660

-

9,660

Present value of funded liabilities

-

13,539

(13,539)

Present value of unfunded liabilities

-

42

(42)

Closing position as at 31 March 2021

9,660

13,581

(3,921)

(iii) Change in the fair value of plan assets, defined benefit obligation and net liability for the year ended 31 March 2020

 

Assets

  Obligations

Net (liability)/ asset

 

£(000)

£(000)

£(000)

Fair value of employer assets

7,347

-

7,347

Present value of funded liabilities

-

8,346

(8,346)

Present value of unfunded liabilities

-

47

(47)

Opening position as at 31 March 2019

7,347

8,393

(1,046)

Service cost

 

 

 

Current service cost

-

465

(465)

Past service costs (including curtailments)

-

21

(21)

Total service cost

-

486

(486)

Net interest

 

 

 

Interest income on plan assets

188

-

188

Interest cost on defined benefit obligation

-

216

(216)

Total net interest

188

216

(28)

 

Assets

Obligations

Net (liability)/ asset

Total defined benefit cost recognised in deficit

188

702

(514)

Cashflows

     

Participants’ contributions

99

99

-

Employer contributions

334

-

334

Estimated benefits paid

(90)

(90)

-

Estimated unfunded benefits paid

(2)

(2)

-

Unfunded benefits paid

             2

-

2

Expected closing position

7,878

9,102

(1,224)

Re-measurements

 

 

 

Change in financial assumptions

-

(897)

897

Change in demographic assumptions

-

(304)

304

Other experience

-

(51)

51

Return on assets excluding amounts included in net interest

(691)

-

(691)

Total re-measurements recognised in Other Comprehensive Income (OCI)

(691)

(1,252)

561

Fair value of employer assets

7,187

-

7,187

Present value of funded liabilities

-

7,810

(7,810)

Present value of unfunded liabilities

-

40

(40)

Closing position as at 31 March 2020

7,187

7,850

(663)

(iv) Fair value of plan assets

The below asset values are at bid value as required under IAS19, for the period ended 31 March 2021.

Asset category

Quoted prices in active markets £(000)

Quoted prices not in active markets £(000)

Total £(000)

Percentage of total assets

Equity securities:

 

 

 

 

Consumer

721.3

-

721.3

7%

Manufacturing

519.2

-

519.2

5%

Energy and utilities

342.1

-

342.1

4%

Financial institutions

802.5

-

802.5

8%

Health and care

265.4

-

265.4

3%

Information technology

886.0

-

886.0

9%

Other

51.0

-

51.0

1%

Debt securities:

 

 

 

 

Corporate Bonds (investment grade)

-

-

-

0%

Corporate Bonds (non-investment grade)

-

-

-

0%

UK Government

135.8

-

135.8

1%

Other

-

-

-

0%

Private equity:

 

 

 

 

All

-

140.8

140.8

1%

Real estate:

 

 

 

 

UK property

-

534.7

534.7

6%

Overseas property

-

0.8

0.8

0%

Investment funds and unit trusts:

 

 

 

 

Equities

2,380.9

-

2,380.9

25%

Bonds

605.8

-

605.8

6%

Asset category Quoted prices in active markets £(000) Quoted prices not in active markets £(000) Total £(000) Percentage of total assets

Hedge funds

                                   -                                       -               -                         0%

Commodities

-

-

-

0%

Infrastructure

-

943.0

943.0

10%

Other

889.7

217.1

1,106.8

11%

Derivatives:

 

 

 

 

Inflation

-

-

-

0%

Interest rate

-

-

-

0%

Foreign exchange

-

-

-

0%

Other

-

-

-

0%

Cash and cash equivalents:

 

 

 

 

All

223.9

-

223.9

2%

Totals

7,824

1,836

9,660

100%

The asset value, at bid value, for the period ended 31 March 2020 are outlined in the table below.

Asset category

Quoted prices in active markets £(000)

Quoted prices not in active markets £(000)

Total £(000)

Percentage of total assets

Equity securities:

 

 

 

 

Consumer

466.8

-

466.8

6%

Manufacturing

426.2

-

426.2

6%

Energy and utilities

284.9

-

284.9

4%

Financial institutions

533.6

-

533.6

7%

Health and care

250.6

-

250.6

3%

  Asset category

Quoted prices in active markets £(000)

Quoted prices not in active markets £(000)

Total £(000)

Percentage of total assets

Information technology                                 575.6                                             -      575.6                           8%

 Other

25.5

-

25.5

0%

Debt securities:

 

 

 

 

Corporate Bonds (investment grade)

-

-

-

0%

Corporate Bonds (non-investment grade)

-

-

-

0%

UK Government

114.4

-

114.4

2%

Other

-

-

-

0%

Private equity:

 

 

 

 

All

-

160.8

160.8

2%

Real estate:

 

 

 

 

UK property

-

441.2

441.2

6%

Overseas property

-

1.8

1.8

0%

Investment funds and unit trusts:

 

 

 

 

Equities

1,463.0

-

1,463.0

20%

Bonds

375.9

-

375.9

5%

Hedge funds

-

-

-

0%

Commodities

-

-

-

0%

Infrastructure

-

818.6

818.6

11%

Other

683.4

140.0

823.4

11%

Derivatives:

 

 

 

 

Inflation

-

-

-

0%

Interest rate

-

-

-

0%

Foreign exchange

-

-

-

0%

   Asset

Quoted prices in active markets £(000)

Quoted prices in active markets £(000)

Total £(000)

Percentage of total assets

Other

                                    -   

                                          -               -                         0%

Cash and cash equivalents:

 

 

 

 

   All

424.7

-

424.7

6%

Totals

5,625

1,562

7,187

100%

(v) Projected defined benefit cost for the period to 31 March 2022

 

Assets

Obligations

Net (liability)/ asset

% of pay

Projected current service cost

-

768

(768)

(53.7%)

Total service cost

-

768

(768)

(53.7%)

Interest income on plan assets

202

-

202

14.1%

Interest cost on defined benefit obligation

-

286

(286)

(20.0%)

Total net interest cost

202

286

(84)

(5.9%)

Total included in income statement

202

1,054

(852)

(59.6%)

Employer’s contributions for the period to 31 March 2022 will be approximately £421,000.

(vi) Sensitivity analysis

The sensitivities regarding the principal assumptions used to measure the scheme liabilities are set out below.

 

 

Change in assumptions at 31 March 2021

Approximate % increase to Employer

Approximate monetary amount £(000)

0.1% decrease in Real Discount rate

2%

320

0.1% increase in the Salary Increase rate

0%

27

0.1% increase in the Pension Increase rate (CPI)

2%

290

1 year increase in member life expectancy

4%

543

3.5.13 RELATED PARTY TRANSACTIONS

As WICS is a non-departmental public body sponsored by the Scottish Government, the Scottish Government is regarded as a related party. There have been no transactions between WICS and the Scottish Government.

WICS has had transactions with other central and local government bodies: Scottish Water, Falkirk Council, Stirling Council and Audit Scotland.

A levy is received from each licensed provider to fund any licensing activity carried out by WICS Anglian Water and Business Stream are licensed providers. Through a Scottish Government framework agreement, Anglian Water, replaced by Business Stream in April 2020, provides WICS with water and wastewater services and are therefore considered as related parties.

Related party

Income (£)

Expenditure (£)

Year-end receivable (£)

Year-end payable (£)

Anglian Water

73,848

367

-

17,915

Scottish Water Business Stream

661,749

1,372

-

159,538

All Board members and Directors complete and update a register of interests on an annual basis.  During the year 2020-21, no Board Member, Director or other related party has undertaken any material transactions with WICS.

 

Was this information useful to you?