annual report and accounts aithisg bhliadhnail agus cunntasan...aithisg bhliadhnail agus cunntasan...
TRANSCRIPT
Annual Report and AccountsAithisg Bhliadhnail agus Cunntasan
2018/19
1
Contents
Performance ReportForeword
About SNH
Performance summary
Financial highlights
Facts and figures for 2018/19
How we supported the Scottish Government’s National Performance Framework in 2018/19
Risks and uncertainties
Performance analysis
Performance against National Performance Framework Indicators
Performance against key deliverables
Performance against our 2018/19 corporate & business plans
Financial, environmental and social summary
Nature Conservation Orders
Accountability ReportCorporate Governance Report
Remuneration & Staff Report
Parliamentary Accountability Disclosures
Independent Auditor’s Report
Primary Financial Statements and Notes Statement of Comprehensive Net Expenditure
Statement of Financial Position
Statement of Cash Flows
Statement of Changes in Taxpayer’s Equity
Notes to the Accounts
Accounts Direction
2
4
6
10
11
13
14
17
18
19
36
42
45
53
64
65
70
71
72
73
74
95Front cover: The Peatland Action Team on a site visit to the blanket bogs above Cromar, Loch Lomond. Inside cover: Sphagnum moss, Forsinard Flows National Nature Reserve.
2
Performance Report
Foreword
Welcome to our annual report and accounts for 2018/19 in support of Connecting People and Nature, our corporate plan covering the period 2018 to 2022. This report highlights the changes we have made during 2018/19 to structure our work around four outcomes to ensure that our core purpose is aligned with the Scottish Government’s priorities and delivers on them. This annual report summarises our performance for the year.
Scottish Natural Heritage is Scotland’s nature agency. We work to improve our natural environment in Scotland and inspire everyone to care more about it, so that all nature in Scotland – our key habitats and landscapes, all our green space and our native species – is maintained, is enhanced and brings us benefits. It is the job of all of us to achieve a balance in the sensitive management of our natural world in order to maintain and enhance biodiversity.
The first year of this corporate plan period required our people and teams to embrace change and to rise to the challenge of developing new areas of work that support and deliver our new outcomes.
That ambition was set out in Making Connections: Year 1, our business plan for 2018/19. This laid out our programme of work for this first year, and included 21 commitments that our Board prioritised.
Through this programme we have invested in Scotland’s nature, people and places. We assisted in awarding around £12m of funding to protect and enhance nature through the Agri-Environment Climate Scheme (AECS); invested over £7m through Peatland Action to restore 5,800ha of peatland and led on the development of 54km of new and improved routes as part of the National Walking and Cycling Network to encourage sustainable travel.
2
3
This year also marks a change in the way we approach funding for nature. To ensure we get the greatest value for money, and target our money towards projects that deliver on our outcomes, we are channelling resources through challenge funds. This year we launched the Outdoor Learning in Nature Fund with a budget of £600k, opened the Natural Cultural and Heritage Fund to deliver £5m of investment in the Highlands and Islands and initiated phase 2 of the Green Infrastructure Fund which will continue to deliver £15m worth of projects in our cities and larger towns. We also announced the £2m Biodiversity Challenge Fund, which will open for applications in May 2019.
Our investment in nature has contributed to an increase in Scotland’s natural capital which is now estimated at £273b.
We have had a successful start to Connecting People and Nature during 2018/19. We have achieved 18 out of 21 business plan commitments: from increasing young people’s volunteering and enjoyment of the outdoors, to leading the on-going delivery of the Scottish Biodiversity Strategy; from achieving a more active and targeted approach to deer management, to pursuing new ways to diversify our core funding so that we can maintain our investment in nature. We missed other commitments, and have plans in place to complete them early in 2019/20.
The success of this year’s programme of work reflects the hard work of our people. They exemplify the passion, inspiration and expertise of the whole organisation. Our people are our richest asset and we congratulate and thank them for the progress and many achievements they have made during 2018/19.
Mike CantlayChair
Francesca OsowskaChief Executive
4
About SNH
Scottish Natural Heritage (SNH) is a non-departmental public body accountable to Scottish Ministers and the Scottish Parliament. Our statutory purpose is to:
– secure the conservation and enhancement of nature and landscapes – foster understanding and facilitate enjoyment of nature and landscapes – advise on the sustainable use and management of nature and landscapes – further the conservation, control and sustainable management of deer
in Scotland
We work in partnership, by cooperation, negotiation and consensus, with all relevant interests in Scotland, including public, private and voluntary organisations and individuals. We operate in a devolved manner, delegating decision-making to the local level, helping our organisation to be accessible, sensitive and responsive to local needs and circumstances. We operate in an open and accountable manner in all our activities.
Our organisational values help us achieve our goals, setting out how we work with colleagues and partners:
– We communicate clearly and honestly
– We listen to and respect the views of others and treat everyone with dignity and respect
– We encourage people to deliver their best
– We do what we say we will do
– We take the initiative and are willing to adapt
– We work together and learn from one another
Our 2018-22 corporate plan sets out four outcomes to help create a greener, healthier and more prosperous country for Scotland’s people. In support of delivery of the Corporate Plan we are now structured around these four outcomes. We plan, organise and allocate resources to achieve these outcomes through a set of activities.
We measure the impact of our actions on these outcomes through a set of indicators. Alongside these indicators, our Business Plan for 2018/19 identified 21 priority areas, or what we called ‘commitments’, to support delivery of our outcomes. This report details our performance against our indicators and commitments as well as information on how we supported the Scottish Government’s National Performance Framework (NPF).
Our Annual Report for 2018/19 is presented in three parts:
– the performance report – which provides information on our main objectives, strategies and principal risks, and details our performance during the year
– the accountability report – which includes key statements and reports that detail how SNH meet accountability requirements and demonstrate compliance with good corporate governance
– the primary financial statements – which comprise the annual accounts for 2018/19.
‘Green fingers’ help to build a demonstration Green Wall at our Conference Centre in Battleby. Green Walls in urban areas can help improve air quality, reduce urban heat effect and promote biodiversity in cities.
5
6
Performance summary
We have summarised our progress against our corporate plan through the performance of our four outcomes and their 2018/19 commitments.
1. Making places better for some of Scotland’s most deprived communities by opening funding for seven Green Infrastructure projects this year to improve the quality, quantity and accessibility of well-managed green infrastructure in urban areas.
2. Increase the number of households with access to quality greenspace close to where people live, particularly in the most disadvantaged areas by influencing the design of places.
3. Connect more people with nature by increasing participation, volunteering for nature and enjoyment of the outdoors through campaigns targeting young people in the Year of Young People.
4. Provide tangible benefits to the lives of people living in the Central Belt by restoring, transforming and improving access to quality natural environments by continuing to support the Central Scotland Green Network and delivering the EcoCo Life Project.
5. Provide greater opportunities for people to connect with nature by working towards the establishment of the first urban nature reserve.
6. Lead ongoing delivery of the Scottish Biodiversity Strategy and associated Route Map to 2020 and develop the evidence base to inform our thinking post 2020. Maintain momentum towards a national ecological network.
7. Connect more people with the marine and coastal environment by developing a more engaging and inclusive approach to monitoring, management and communications.
8. Enhance stewardship of the environment through clearer priorities for land and sea, including protected areas, in light of EU Exit.
9. Restore Peatlands for climate change, flood management and biodiversity benefits.
10. Ensure that our Protected Areas make a positive contribution to the state of nature in Scotland.
Outcome 1: More people across Scotland are enjoying and benefiting from nature
Outcome 2: The health and resilience of Scotland’s nature is improved
7
11. Refresh and re-position our planning and development services so that they are more widely recognised as making a positive contribution to inclusive and sustainable economic growth.
12. Progress our new more active and targeted approach to enhanced deer services.
13. Lead the development of common ground solutions for sustainable wildlife management, particularly in the uplands.
14. Maintaining the role as Delivery Partner to Scottish Government Rural Payments and Inspections Directorate (SGRPID) for the Scottish Rural Development Programme.
15. Encourage innovation and investment in natural capital through our membership of the Scottish Forum on Natural Capital.
16. Increase the reach, visibility and influence of our communications to promote the impact of our work and help people to become better connected with nature.
17. Ensure we have plans in place so that we continue to operate effectively and legally as we exit the EU.
18. Pursue actions to diversify our core funding so that we can maintain our investment in nature.
19. Develop a workforce for the future by investing in priority skills for development.
20. Work in collaboration with communities and stakeholders to pursue a sustainable future for Kinloch Castle.
21. Develop and implement an outcome based approach for the management and delivery of our work.
Outcome 3: There is more investment in the management of Scotland’s natural capital to improve prosperity and wellbeing
Outcome 4: We have transformed how we work
Achieved/on-trackPlanned progress not fully achieved but recoverable in 2019/20
8
Restore peatlands for climate change, flood management and biodiversity benefits.
The Peatlands Restoration project continues into 2019/20 and we are putting in place mitigation activity to increase contractor confidence and operational capacity, which will increase the likelihood of achieving a full spend in 2019/20.
Refresh and re-position our planning and development services so that they are more widely recognised as making a positive contribution to inclusive and sustainable economic growth.
Delivery of our planning service is being refreshed and re-positioned to allow us to take action to address capacity issues. We are changing the way we deliver our service to reduce demand and increase efficiency.
Develop a workforce for the future by investing in priority skills for development.
Developing a workforce for the future will be addressed through our new Organisational Development Framework which will be delivered in early 2019/20.
Commentary on slippage:
9.
11.
19.
To contribute to the Scottish Government’s target of net zero emissions we are planning to replace our vehicle fleet with electric vehicles by 2026.
9
10
Financial Highlights
Net spend is split across the four outcomes which achieve our corporate plan objectives.
Segmental information (financial statement note 3) provides more detail about costs incurred across the four outcomes.
SNH receives Grant in Aid (GIA) from the Scottish Government to finance the majority of its activities. External funding (financial statement note 5) and income from activities (financial statement note 6) provide opportunities to undertake collaborative projects and share services.
GIA received in 2018/19 was £51.598m (financial statement note 4).
Details showing the out-turn against budgets are shown in the Financial, environmental and social summary section of the annual report.
Staff costs were £27.253m, 50% of our total Departmental Expenditure Limit (DEL) budget. SNH is an advisory organisation and our staff are key in delivering our outcomes.(financial statement note 8).
Operating costs (financial statement note 12) represent a range of expenditure incurred to accomplish our goals, including grants, research, managing national nature reserves (NNRs) and management agreements.
Other costs (financial statement note 11) represent the running costs of the organisation to support the delivery of outcomes.
More people across Scotland are enjoying and benefiting from nature
The health and resilience of Scotland’s nature is improved
There is more investment in the management of Scotland’s natural capital to improve prosperity and wellbeing
We have transformed how we work
Grant in Aid
Income from Activities
External Funding
EU funding
Staff Costs
Other Costs
Operating Costs
Capital
Spend by Outcome
Income and
Financing
Expenditure
11
Facts and figures for 2018/19
Launched the Marine Protected Areas Monitoring
and Management Project in Scotland. Part of a €6.4m project, it will capture data to help cross-border management of a number of protected coastal environments in the Western Isles, Northern Ireland and the Republic
of Ireland.
Launched a new Biodiversity Challenge Fund due
to commence in 2019/20. The funds will be used for projects that will improve habitats, safeguard species and encourage increased
access to nature.
Restored over 5,800ha of peatland to both
benefit nature and mitigate climate change.
Led development of 54km of new and improved walking
and cycling routes. As part of the National Walking and Cycling Network the new routes will help to promote active travel with its associated health benefits, as well as helping to address climate
change.
Introduced a new organisational structure to help improve decision making for delivery of our Corporate Plan. We also started work on a new Organisational Development
Framework that will increase leadership capability and enable a more resilient workforce for delivering our ambition for Scotland’s nature
and landscapes.
Released more resources for nature by making
nearly £1.7m of efficiency savings. We
achieved this by reducing our overhead costs and sharing services with other public
organisations.
Led Phases 1 and 2 of a £37.5m Green Infrastructure
Strategic Intervention Programme, helping to improve Scotland’s urban environment. It will increase and enhance greenspace, particularly in areas of deprivation, creating opportunities for local people to benefit from
nature.
Launched a new Outdoor Learning in Nature Challenge
Fund that will support more young people from the most deprived and disadvantaged backgrounds to have regular and progressive outdoor learning
experiences.
Provided data for the first Natural Capital Account
for Scotland using information from our Natural Capital Index. This highlighted that Scotland’s natural capital is worth
an estimated £273b.
Supported work for the beaver to be given
European Protected Species status, building
on our involvement in earlier reintroduction trials.
Directly assisted in awarding some £12m of funding under the Agri-environment & Climate Scheme and the Increasing Public Access schemes.
These schemes promote land management practices which protect and enhance nature and biodiversity and support new and upgraded
paths for public use.
12
13
How we supported the Scottish Government’s National Performance Framework in 2018/19
The Scottish Government’s National Performance Framework (NPF) was revised in 2018. Eleven National outcomes were identified to achieve its purpose. We have a direct role in supporting five of these and make an indirect contribution to the remainder.
We have a direct role in contributing to the following national outcomes:
We are healthy and
active
We are open, connected and make a positive
contribution internationally
We are well educated, skilled and
able to contribute to society
We have thriving and innovative
businesses, with quality jobs and fair
work for everyone
We have a globally
competitive, entrepreneurial,
inclusive and sustainable economy
We live in communities that are inclusive,
empowered, resilient and safe
We grow up loved, safe and
respected so that we realise our full
potential
We tackle poverty by sharing
opportunities, wealth and power more
equally
We are creative and our vibrant and diverse cultures are
expressed and enjoyed widely
We respect, protect and
fulfil human rights and live free from
discrimination
We value, enjoy, protect and enhance
our environment
Scottish Government’sPurpose
To focus on creating a more successful country with
opportunities for all of Scotland to flourish through increased
wellbeing and sustainable and inclusive economic growth
Volunteers help translocate water voles in Easterhouse. SNH supported the University of Glasgow and Glasgow City Council with a project to conserve this rare species.
14
Risks and uncertainties
The principal risks and uncertainties faced by SNH are often out of our direct control. For example, the risks associated with climate change are significant and include the impacts on habitats and species, the overall health of our network of protected areas, as well as new threats such as plant pathogens and invasive species. We seek to mitigate these risks through our Climate Change Action Plan and adaptation and mitigation principles.
At the time of writing this Report, it is uncertain what type of withdrawal agreement will be reached for the UK’s departure from the European Union. There are risks that any disruption could have a negative impact on our business operations and our staff. Through close engagement with the Scottish Government and our partners, and through clear and open communications with staff and stakeholders, we will seek to mitigate the risks as much as possible.
From a financial management perspective, we are investigating opportunities for increasing the diversification of our funding to help reduce our reliance on our grant-in-aid. This will help us sustain our resources in the face of budgetary pressures and also help us to generate new additional investment in Scotland’s nature.
The knowledge and expertise of our staff in providing advice and leading work to deliver our corporate plan is critical. In times of constrained resources there are challenges in maintaining access to the range of skills, expertise and knowledge we need. As part of the introduction of a new organisational development framework we are developing a more strategic approach to workforce planning to ensure that we have the right people with the right skills to deliver our corporate priorities.
All risks identified at the corporate level are reviewed by our Senior Leadership Team and reported to our Audit and Risk Committee on a quarterly basis. The Board also reviews on a quarterly basis the high-rated corporate risks. Papers presented to the Board are available on request.
Through our Outdoor Learning in Nature Challenge Fund we have supported a number of projects to encourage more children to enjoy and learn about the outdoors in their local area.
15
16
Performance analysis
Giant Hogweed, an invasive non-native species, is being tackled as part of a four-year partnership project to support Scotland’s biodiversity.
17
Performance against National Performance Framework Indicators
During 2018/19, the Scottish Government identified 81 national indicators to track progress towards achieving the 11 national outcomes. We were responsible for leading reporting on three of these indicators and we also contributed to a further three.
2016 2017 2018 2019
2014 2015 2016 2017
2014 2015 2016 2017 2014 2015 2016 201760
80
100100
80
60
45
47
49
51
53
5555
53
51
49
47
45
100.0
107.5
115.0
122.5
130.0130
122.5
115
107.5
100
60
62
64
66
68
70
2014 2015 2016 2017
70
68
66
64
62
60
99.00
99.75
100.50
101.25
102.00102
101.25
100.5
99.75
99
50
65
80
95
110
2012 2013 2014 2015
110
95
80
65
50
Protected nature sitesPercentage of natural features on protected nature sites found to be in favourable condition.
Visits to the outdoorsPercentage of adults making one or more visits to the outdoors per week
BiodiversityIndex of abundance of terrestrial breeding birds (1994 = 100)
Access to local green and blue spacePercentage of adults who live within a 5 minute walk of their nearest local green or blue space
Natural CapitalIncrease the stock of natural capital (2000 = 100)
Scotland’s carbon footprintGreenhouse gas footprint in million tonnes of carbon dioxide equivalent
Lead reporting on:
Contributed to:
2016 80.4
2017 80.3
2018 79.7
2019 78.9
2014 48
2015 49
2016 49
2017 52
2014 119.5
2015 121.9
2016 110.3
2017 119
2014 68.6
2015 67.2
2016 65.4
2017 64.7
2014 99.8
2015 100.6
2016 101.3
2017 101.9
2012 91.6
2013 94.8
2014 76.5
2015 76.5
Source of data https://nationalperformance.gov.scot/measuring-progress/national-indicator-performance
Performance maintainingPerformance improving
18
Performance against key deliverables
As well as reporting on our contribution towards the National Performance Framework, we also monitor and report on our performance towards achieving our key deliverables. These are specific objectives which we aim to complete over one or more years.
A total of 50 key deliverables contributed toward achieving our 21 Commitments. By year end, 44 either were achieved or remained on-track (88% of total). A further five experienced minor slippage and are expected to be back on-track by early 2019/20.
The remaining one, concerning our target for delivering favourable condition on protected nature sites, missed its planned target for 2018/19 and a more targeted approach to improving the conditions of features on protected nature sites is planned for 2019/20.
Number achieved
Number on-track
Number slippedJust one mile from the centre of Glasgow is the Claypits nature reserve. Through our Green Infrastructure Strategic Intervention Fund an all-abilities path has been developed as part of a partnership project, supporting our work on connecting people and nature.
0 1 2 3 4 5 6
1 Provide funding for 7 Green Infrastructure projects
2 Increase the no. of households with access to quality greenspace
3 Increase participation, volunteering for nature and enjoyment of outdoors
4 Improve access to quality natural environments for people in the Central Belt
5 Establish the first urban nature reserve
6 Lead delivery of the SBS and associated Route Map to 2020
7 Monitoring & management of the marine & coastal environment
8 Enhance the stewardship of the environment in light of EU Exit
9 Restore Peatlands
10 Protected Areas make a positive contribution to the state of nature
11 Planning & development service contributing to economic growth
12 Progress our new approach to enhanced deer services
13 Lead solutions for sustainable wildlife management
14 Maintain our role as delivery partner for the SRDP
15 Encourage innovation and investment in natural capital
16 Increase the reach and influence of our communications
17 Ensure plans in place as we exit the EU
18 Pursue actions to diversify our core funding
19 Develop a workforce by investing in priority skills for development
20 Work for a sustainable future for Kinloch Castle
21 Develop and implement an outcome based approach
0 1 2 3 4 5 6
19
Performance against our 2018/19 corporate and business plans
20
Outcome 1: More people across Scotland are enjoying and benefiting from nature
Corporate Plan indicator of success:More people are getting outdoors, feeling healthier as a result of their experience of nature, volunteering and championing nature
In the first year of Connecting People and Nature we are establishing a baseline to measure our progress in support of this outcome using data from the most recent surveys with the general public.
We seek to improve these trends through our work on the National Walking and Cycling Network, the Outdoor Learning in Nature Fund, the Green Infrastructure Fund (GIF), the Central Scotland Green Network, promotion of the Scottish Outdoor Access Code, and providing opportunities for people to connect with nature at our suite of National Nature Reserves.
8% of all volunteering in Scotland was in support of nature.
52% of adults visited the outdoors in 2017.
29% of people agreed that their outdoor visits help them de-stress, relax and unwind.
54% of people agree that nature matters to them.
21
The more people enjoy and benefit from nature the more likely they are to champion it. This in turn helps investment in and improvement of nature across Scotland. We made places better by continuing to deliver the European Regional Development Fund (ERDF) Green Infrastructure Strategic Intervention. We secured approval for a second phase taking the total value of the fund to £37.5m by 2022. This will enable us to continue to fund around 20 major projects in total, as well as 14 Green Infrastructure Community Engagement projects, helping to transform some of Scotland’s most deprived areas by giving people access to greenspace and by engaging communities to effect change at the grass roots level. We promoted GIF at the EU week of Regions and Cities in Brussels, and Ministers visited GIF projects in October and December.
We improved access to high-quality greenspace, establishing a dedicated placemaking team to ensure our efforts across Scotland were targeted and effective. We took part in the launch of the Vacant and Derelict Land Initiative, led by Scottish Land Commission and SEPA, and are now engaged in work to realise the value of vacant and derelict land and create new opportunities for green infrastructure and community-led projects that bring people closer to nature. We supported eight landscape partnerships to deliver hundreds of projects to connect people and nature from Shetland to Ayrshire.
We increased participation, volunteering for nature and enjoyment of the outdoors. The first ReRoute panel’s recommendations were launched in partnership with Young Scot at the Royal Highland Show. The ReRoute 2 panel has been recruited, developed its work plan and set up five groups to deliver the ReRoute 1 report recommendations. We completed improvements on 16 of Scotland’s Great Trails to continue building the National Walking and Cycling Network, delivering over 54km of new routes, and published a mid-term review of progress and benefits on nature.scot. We are set to exceed the 2020 target of 100 schools engaged in learning in local greenspace thanks to the Outdoor Learning in Nature Challenge Fund, supporting over 20 bids to allow more young people from the most deprived and disadvantaged backgrounds to have regular, frequent, structured and progressive outdoor learning experiences. Four Green Health Partnerships focus on the physical and mental health benefits of these place-based approaches. They are building momentum and creating more effective links with the health sector, including formal referral and social prescribing pathways.
In addition to some of the work outlined above, we have restored, transformed and improved access to quality natural environments for people in the Central Belt, especially through the EcoCoLIFE project (see case study). We continued to support the Central Scotland Green Network Trust, developed all of the planned strategic routes, and in June 2018, the Cabinet Secretary launched our report on Maximising the benefits of green infrastructure in social housing in Glasgow.
National nature reserves are at the heart of connecting people and nature. Highlights from this year include Beinn Eighe becoming the UK's first Genetic Conservation Unit. We are working towards completing a Learning Pavilion at Tentsmuir and we are providing access opportunities for people with more severe disabilities using Pony Axe S on east coast NNRs.
People with severe disabilities are given the opportunity to explore the Forvie NNR through our work with Pony Axe S.
22
Outcome 1: Case study – EcoCo LIFE project
The EcoCo LIFE project is a £2.3m (€3.1m) project funded by the LIFE programme, the EU’s funding instrument for the environment and climate action. This SNH led partnership project started in 2014 and successfully concluded during 2019. EcoCo’s principal aim was the implementation of an integrated network of habitats to improve ecological coherence across the Central Scotland Green Network (CSGN).
During its five year programme, EcoCo delivered a range of habitat creation and restoration projects across 12 management zones that included raised bogs, intertidal wetlands, industrial brownfield sites, river floodplains and freshwater wetlands.
One such project in the Garnock valley was led by Scottish Wildlife Trust and restored 17ha of wetland habitat at Garnock Floods, a low-lying floodplain pasture with shallow pools and marsh. The project completely overhauled the water management system by installing a series of sluices and ditches to control water levels. Re-wetting the floodplain has increased the amount of wetland habitat, creating better conditions for migrant, wintering and breeding wading birds. It has also re-connected a series of wetland habitats along the Garnock Valley. The project installed a viewing hide and interpretation boards to encourage and inform visitors. Results of the water management work were immediate and we expect even better results from summer 2019 and beyond.
Aerial view sluice construction Viewing hide
EcoCoLife Management Zones
23
Another successful project, the Carnwath Cluster, is situated in South Lanarkshire and was led by Butterfly Conservation Scotland. The project restored 30ha of raised bog as a demonstration project in order to encourage other landowners to consider peatland restoration. It comprised 650ha of lowland and intermediate bog across five areas. Restoration measures included ditch-blocking, cell-bunding, tree removal, and scrub and heather cutting. The project used ‘the bog squad’ team of conservation volunteers and worked with children from Braehead Primary School who are now using Braehead Moss Site of Special Scientific Interest as an outdoor classroom.
The launch of the Carnwath cluster with Aileen Campbell MSP
Braehead Moss restored peat bog and boardwalk
EcoCo’s legacy has been to further strengthen the case for increased landscape scale conservation planning and implementation by working closely with partner organisations across Scotland, the UK and Europe. The final act of the project was to develop and test an enhanced Ecological Coherence Protocol – A Practitioners’ Guide, which has been adopted for the RSPB-led Inner Forth Futures project.Learn much more at www.ecocolife.scot.
The EcoCoLife project was a consortium of seven partners led by SNH, 50% funded through the Life financial instrument of the EU. The partners were:
nature.scot
24
Outcome 2: The health and resilience of Scotland’s nature is improved
Corporate Plan indicator of success:Scotland’s nature is healthier and more resilient
In the first year of Connecting People and Nature we are establishing a baseline to measure our progress in support of this outcome using data from the ecosystem health indicators.
Ecosystem health is a measure of the status of ecosystems through a combination of three inter-related elements: condition, function and resilience. Examples of the current state of some of the relevant indictors are displayed here.
We seek to influence these figures through our work on: the Scottish Biodiversity Strategy; the Pollinator Strategy; peatland restoration; targeted species and habitat restoration projects; and, the management of both terrestrial and marine protected nature sites.
Condition indicators
19% – the increase in abundance of terrestrial breeding birds since 1994.
78.9% – the percentage of 5,355 features on protected nature sites in favourable or recovering condition.
Functional indicators
10.3% – the total area of available heathland habitat which species can move between, based upon their dispersal abilities and the nature of the intervening land.
Resilience indicators
183 – the total number of non-native invasive species which have been identified in Scotland that have a negative ecological or human impact.
25
We led the ongoing delivery of the Scottish Biodiversity Strategy and associated Route Map. We were delighted with the announcement of the £2m Biodiversity Challenge Fund in September. The fund was launched in February and has been very successful with 57 expressions of interest amounting to 3.5 times the funds available. The Fund is targeted at our most at-risk habitats and species, including mammals and birds, to connect existing nature reserves and protected areas and tackle invasive species, helping Scotland to make progress on more of the international Aichi Targets. Scotland’s Biodiversity Progress to 2020 Aichi Targets, published in May, led the way for the UK on reporting against the Aichi Targets, and we held the third Annual Biodiversity Stakeholder event in June 2018, opened by the Cabinet Secretary. To help deliver the Scottish Pollinator Strategy, we are rolling out five further pollinator trails on our NNRs.
We have connected more people with the marine and coastal environment. Some of the benefits of working with the fisheries sector are described in the case study. We were excited by the launch of the €6.4m EU Interreg Marine Protected Areas Monitoring and Management (MarPAMM) project in December. The project in Scotland is now fully underway and is taking forward an ambitious co-production approach to management planning in the Western Isles and work elsewhere to support the cross-border management of Marine Protected Areas.
We enhanced stewardship of the environment through clearer priorities for land and sea in the light of EU exit. We advised the Scottish Government on Statutory Instruments and potential changes to Natura and other legislation so that Scotland is able to continue protecting, maintaining and enhancing nature after EU exit. We drafted conservation advice packages for terrestrial Natura sites and are on target to submit these to the European Commission by March 2020. Working with Marine Scotland, we are continuing to progress Marine Protected Areas, including completing the Loch Carron Marine Protected Area. We published a feasibility study for a marine Natural Capital Asset Index for Scotland.
We restored peatlands for climate change, flood management, and biodiversity benefit, including over 5,800ha through PeatlandACTION, more than any previous year. We completed feasibility studies on an additional c. 75,000ha to determine future demand.
We ensured that our protected areas make a positive contribution to and improve the state of nature in Scotland, maximising their value as a resource for people. We negotiated 50 new or renewed management agreements covering over 13,000ha (contributing to a total of c.400 management agreements), over 250 new Agri-environment Climate Scheme and 70 Forest Grant Scheme contracts to improve the condition of protected areas. Despite this, a number of off-site factors such as climate change and grazing pressures affecting upland features, woodlands, freshwaters, waders and seabirds have led to the Delivering Favourable Condition Indicator slipping to 79.2%. We are moving to an ecosystems approach to better address the pressures on protected areas in a wider context.
The oystercatcher is one of our terrestrial breeding birds that we monitor as part of the NPF Biodiversity-related Indicator.
26
Outcome 2: Case study – Connecting more people with the marine and coastal environment
SNH is committed to connecting more people with the marine and coastal environment. In 2018/19 we worked with a range of partners on two exciting new projects funded through the European Maritime and Fisheries Fund (EMFF).
– engaging the fishing industry in marine environmental survey and monitoring
– understanding and reducing animal entanglement in Scottish waters
The first project is being undertaken in partnership with Marine Scotland and will run to 2020. Fishing vessels gather scientific evidence on the distribution and extent of Scotland’s fantastic marine life and whether or not fisheries management measures are proving effective. A summary of work completed in 2018 is available online at https://www2.gov.scot/Resource/0054/00542176.pdf.
The first drop-down camera survey of 2019 was completed in Loch Alsh and the Inner Sound in March and coincided with Blue Planet UK divers collecting amazing footage of vast shoals of herring in the water. The highlight of the survey was recording extensive mats of herring spawn on maerl beds off the Wester Ross coast.
Guided by local fishers’ knowledge, the surveys have led to a number of new records of some of our most important and biologically diverse seabed habitats such as flame shell beds, maerl beds and horse mussel beds.
Scottish inshore waters provide world-class fishing grounds and are also a habitat for large marine animals, including whales, basking sharks and turtles. Unfortunately these animals sometimes become entangled in fishing gear and the consequences can have serious welfare, conservation and economic implications.
We are pleased to be working as part of the Scottish Entanglement Alliance to get a better understanding of the issue and to reduce the risk. The partnership comprises the Scottish Creel Fishermen’s Federation, the Scottish Marine Animal Stranding Scheme (SMASS), Whale and Dolphin Conservation, the Hebridean Whale and Dolphin Trust, and British Divers Marine Life Rescue and SNH.
The EMFF drop-down camera system used to record information on seabed habitats and species.
27
Capturing fishers’ knowledge will lead to a better understanding of these events among the Scottish fishing fleet, and create opportunities to involve them in developing solutions. There are also opportunities to become directly involved in entanglement research and disentanglement efforts, and to learn from other entanglement mitigation work from elsewhere in the world.
Collaborative projects like these provide great opportunities to develop relationships between regulators, fishing interests, conservation interests and scientists; encouraging co-operation and a shared understanding. Working in partnership to gather scientific data increases environmental awareness and builds trust and confidence in marine nature conservation processes.
A mat of herring spawn on a shallow maerl bed to the north of Loch Torridon.
Flame shells - in March 2019 SNH divers followed up on 2018 EMFF video footage and observations provided by local scallop divers of several previously unreported flame shell beds - a Priority Marine Feature in Scottish waters.
28
Outcome 3: There is more investment in the management of Scotland’s natural capital to improve prosperity and wellbeing
Corporate Plan indicator of success:Measures of improved prosperity and wellbeing are associated with an increase in investment in natural capital
Key Messages:
1. Natural capital contributes to Scotland’s prosperity.
2. Scotland’s natural capital is now in an ‘increasing’ state with the index increasing over 2% in the last 3 years.
3. All habitat types are improving and increasing their contribution to human wellbeing.
4. Future threats to Scotland’s natural capital involve invasive non-native species and climate change.
Natural Capital Asset Index
NCAI 2000 to 2017 by type of habitat
95
97
99
101
103
105
2000 2005 2010 2015
Inde
x (2
00+
100)
90
95
100
105
110
2000 2005 2010 2015
Inde
x (2
000=
100)
Woodland
Inland surface waters
Coastal
Grasslands
Overall trend
Mires, bogs, fens
Heathland
Agriculture and cultivates
The overall NCAI is a composite index which tracks changes in the cpacity of Scotland's terrestrial ecosystems. More information can be found atwww.nature.scot/professional-advice/planning-and-development/valuing-our-environment/natural-capital-asset-index
29
We set out five commitments this year in support of this outcome. We progressed our more targeted approach to the use of our regulatory powers to secure enhanced deer management plans and actions in the five Section 7 control agreement areas, in two deer management groups (DMGs), and have used our range of powers including Section 10 to prevent damage by deer around Flanders Moss. We worked with eight DMGs to complete another extensive deer census across approximately 450,000ha (15%) of the open deer range. We also continued to work constructively with the Association of Deer Management Groups (ADMG) to update the assessment of their performance, which will be a key measure of progress on upland deer management in our 2019 report.
Our licensing service is a key tool in our work to develop solutions for wildlife management that balance different interests. This is illustrated in the accompanying case study on the Scottish Beaver Management Framework. We have also used licences to advance the delivery and understanding of adaptive approaches to the management of other species, for example the development of solutions for resident geese in the Western Isles and Orkney, and to develop techniques to reduce conflict between sea eagles and farming in the west and north of Scotland.
We published our new service statement ‘Planning for Great Places’. We also updated our balancing duties guidance to place greater emphasis on the importance of understanding other interests so that they can be better recognised in our regulatory advice and decisions, strengthening our delivery of the Scottish Regulator’s Strategic Code. We also continued to invest significant resources in helping enable good development and make progress towards Scotland’s renewable energy targets, with significant input to offshore Windfarm licensing. In all, we advised on 752 planning applications and 263 marine licensing consultations. We also advised on 133 Forest Design Plan consultations. In over 85% of cases we were able to provide supporting advice or had no comment, and in less than 1% we were unable to resolve any remaining objections. We publish further information in our annual Planning Performance Report, which is submitted to Scottish Ministers.
Scotland’s Rural Development Programme funds economic, environmental and social measures to benefit rural Scotland. SNH is a delivery partner for the Agri-Environment Climate Scheme of the programme. Our role in this scheme is focused on helping land managers improve their management of protected areas and vulnerable species, restoring peatland and improving public access arrangements across Scotland. This year the total value awarded was just under £38m. SNH led the assessment on approximately £12m of these awards. We continued to work with the Scottish Government and stakeholders to develop a new agriculture and wider land use policy and support framework for Scotland in anticipation of the UK’s exit from the EU.
Finally, the first Natural Capital Account for Scotland provided an estimated value of £273b. This drew heavily on the data underlying the Natural Capital Index, which SNH publishes and annually updates. Information about this is highlighted on the opposite page.
We have worked with a number of Deer Management Groups across Scotland to help complete an extensive deer census.
30
Outcome 3: Case study – Beaver Project
On 1 May 2019, beavers became a protected species in Scotland. This follows the ministerial intention to allow beaver populations in Tayside and Argyll to expand their range naturally, following an absence of the species from Scotland of more than 400 years.
This decision acknowledges the many benefits that beavers can and will bring to Scotland. These are multi-faceted, from delivering biodiversity gains to natural flood management and the provision of broader ecosystem services.
However, sometimes this ecosystem creator can have significant, and less positive, impacts on other interests. As a result we have had to develop approaches that will achieve the broader aims of expansion of the Scottish beaver population and the good that this will bring, while at the same time recognising that in some circumstances their impacts and the beavers themselves will need to be managed.
SNH published a management framework which sets out the suite of policy, guidance and actions that are needed to take this work forward. The framework has four main elements as follows:
1. Management Guidance and Policy – including guidance for land-managers, ecological and legal definitions, translocation and lethal control guidance and how we will assess conservation status of beaver populations.
2. Management Actions – how we will provide advice and help implement action on the ground including via the Scottish Beaver Mitigation Scheme which will install and trial a range of mitigation techniques to inform future approaches.
3. Monitoring, Survey and Research - how we will monitor beaver populations and their impacts (positive and negative) and identify the gaps in our knowledge and research needed to fill those gaps.
4. The Benefits of Beavers - how we can promote, facilitate and demonstrate the many benefits that beavers can provide.
The management framework has been developed in close consultation with the Scottish Beaver Forum. SNH chairs the Forum, which is formed of stakeholders from a range of interests groups, from conservation to agriculture to forestry and fisheries.
The formal protection of a reintroduced and previously extinct species coupled with the implementation of a framework to manage that species, including by lethal means, is a sensitive issue that needs to be handled carefully. However, through close work with the Scottish Government and the Forum members we have developed a balanced, pragmatic and adaptive approach through the management framework. The framework is helping provide the Scottish Government, and some of the sectors most affected by beaver activity, with the reassurances necessary to enable protection to be afforded.
Beavers benefit nature through the creation of habitats such as ponds and wetlands and can help with natural flood management.
31
32
Outcome 4: We have transformed how we work
Corporate Plan indicator of success:We are increasing the reach, visibility and influence of our communications
– 17,000 followers
– 23% increase since 2017
– Over 17,000 page likes
0
5000
10000
15000
20000
2017 2018 2019
20,000
15,000
10,000
5,000
0
0
100000
200000
300000
400000
500000
600000
2017 2018 2019
600,000
500,000
400,000
300,000
200,000
100,000
0
– 13,000 followers
– 60% increase since 2017
– Over 565,000 monthly impressions
0
200000
400000
600000
800000
10000001,000,000
800,000
600,000
400,000
200,000
0March September March2018 2018 2019
– 867,000 webpage views in last 6 months of 2018/19
– 38% increase in page view since March 2018
www
Followers
Followers
Pages liked
Monthly by impressions
Total views over previous 6 months
33
We have continued to make progress on our journey to transform how we work this year. We have some really important messages about nature to share with people, and recognise that there is more that we need to do to get these messages across. We invested heavily in gearing up our communications; strengthening our team, developing new, digital skills and more importantly looking at how we engage with people in a way that enables a genuine two-way dialogue and greater collaboration. We have pulled all of this work together into a new communications strategy that will drive these relationships and connections.
We’ve also been improving our resilience to respond to changes and uncertainty in our operating environment. The decision to leave the European Union has massive implications for the laws and regulations that support nature and the environment in Scotland. We have helped the Scottish Government to make sure that all those regulations were successfully translated into Scottish and UK law before the 29 March deadline. Whatever happens in the future with EU exit, Scotland’s environmental legislation is ready.
We recognise that there are increasing pressures on public funding in Scotland. We also passionately believe in the importance of our nature and the benefits it can deliver for our economy, health and wellbeing. We are strengthening the links between our day to day activities and the outcomes in our corporate plan Connecting People and Nature. We are making sure our efforts and resources are focused on the highest priority areas of our work, that our staff have the right skills, equipment and access to information to be flexible and agile in the way we work, and that we seek out new sources of income to support innovation.
Our work to diversify funding for nature has already brought us into new relationships with business areas, where we are looking at how we can join-up corporate social responsibility aspirations with our desire to invest in protecting and enhancing nature. We have also made a successful application to the GovTech Catalyst Challenge fund and been awarded up to £1.25m to develop an online platform which will allow land managers, developers and the public to access data and advice about protected areas so that decisions about land use are better informed.
The adoption of new technologies, and developing the skills to use them effectively, are critical to delivering innovative and cost effective solutions to many of the challenges that face our natural environment. The following case study shows one example of this; our use of Earth observation techniques to map and assess the extent and severity of damage caused by wildfires.
During 2018 our CEO cycled more than 1300 miles, visiting as many of our staff as possible at over 35 locations. As well as raising funds for charity, ‘Cycle for Nature’ allowed Francesca to promote SNH’s work and highlight what we are doing to connect people and nature.
34
Images reveal the extent of wildfire damage on the Isle of Rum during the prolonged dry spring of 2018.
Outcome 4: Case study – Harnessing new technologies – wildfire mapping
Wildfires can cause significant damage to biodiversity, agricultural, forestry, recreational and sporting interests, and can threaten infrastructure, property, and life. They release carbon dioxide and damage the capacity of peatlands to store carbon, and the smoke affects human health. As a result of climate change the number and severity of wildfires are predicted to increase.
SNH needs to map the extent and severity of burnt areas, especially where they have impacted upon protected sites. Sentinel 2 satellites, recently launched by the European Space Agency, are making this more achievable and cost-effective. Imagery is captured every 2 to 3 days in Scotland – weather permitting!
The prolonged dry spring and summer in 2018 contributed to a series of fires; two of the more significant were on Rum and in northern Sutherland.
For Rum there were good quality images from Sentinel 2 both just before and after the fire on 4th and 5th April 2018. We were able to analyse the satellite data to understand the extent and severity of the burnt area. The satellites capture data at many different wavelengths, not all of which are visible to the naked eye. The two images below show data captured by the satellites, and these can be used to identify the extent of the damaged area. In addition to these visible bands, others, such as infrared, provide vital information about water content and vegetation structure. We were able to use combinations of these different wavelengths within the satellite imagery to develop methods for mapping the severity of the burn and assess the impact of the fire. Fortunately we found that the fire had a low to medium impact over more than 90% of the burnt area.
We have now produced a report on the Rum fire which showed that the satellite impact assessment has been a helpful tool to highlight impacts and inform future management decisions. The development of these assessment methods has potential for wider application across Scotland.
For Sutherland there was significant cloud cover preventing the Sentinel 2 satellites from capturing images. However, for the first time in Scotland SNH triggered the Copernicus Emergency Management Service (EMS). The European Space Agency commissioned commercial satellites to capture the area of interest, and the EMS then supplied maps and imagery of the affected areas for SNH to use. This has been a useful learning process for the Scottish Government and the UK as a whole so that EMS activations can be triggered more smoothly for future events, for example large-scale flooding.
In future SNH aims to combine different resolutions of imagery, analysis methods and ground data to better map the extent of fires across the country. This knowledge will help inform future policy decisions on land management and burning practices as well as informing the Fire Danger Rating System, targeting prevention activity, recovery management and building resilience - all essential to help mitigate and adapt to climate change.
35
36
Financial, environmental and social summary Financial performance
Budget and cash funding
Each year a budget is agreed with Scottish Government (known as Departmental Expenditure Limit or DEL). This is to cover cash costs, accrued expenditure (capital and operating), net of income from other sources and non-cash costs of depreciation, amortisation and certain impairments. To allow resources to be allocated to other Scottish Government priority areas of work, we were given Scottish Government approval to underspend on certain cash costs during the year.
The budget allocations by Scottish Government and budget revisions during 2018/19 are shown in the table below:
Budget category Per Budget Act In-year budget revisions
Final budget for 2018/19
£000 £000 £000
Resource DEL 43,727 8,006 51,733
Non-cash Resource DEL
1,900 - 1,900
Total Resource DEL 45,627 8,006 53,633
Capital DEL 880 - 880
Total DEL budget 46,507 8,006 54,513
Included within the Budget Act figure for Resource DEL of £43.727m was a ring-fenced amount payable to JNCC of £1.054m.
The in-year budget revisions of £8.006m related to:
– an additional £8.400m to fund peatland restoration (ring-fenced);
– an additional £0.307m to fund work relating to prepare for EU Brexit (ring-fenced);
– an additional £0.754m to fund a variety of other initiatives;
– less SNH’s contribution of £1.455m to support Scotland’s Rural Development Programme
A budget of £0.158m relating to Annually Managed Expenditure (AME) was also provided. In the context of SNH operations, this provides budget cover for any new provisions, certain changes relating to existing provisions and also revaluation gains and losses where they relate to changes in asset values from volatile markets. In 2018/19, revaluation gains of £0.131m, resulting from the 5 yearly valuations of land and buildings, are included within the AME expenditure.
The financial statements showing the results for the year start on page 69.
37
We are required to manage our out-turn within the Scottish Government budget limits:
– For 2018/19, the DEL budget limit was £54.513m with an approved underspend of £0.143m. SNH incurred £52.872m (page 38) net expenditure against this limit, which resulted in an underspend of £1.498m (2017/18: £2.555m underspend). This is analysed as follows:
• Underspend of £0.325m against Resource DEL non-ring-fenced budget of £43.333m
• Underspend of £1.139m against Resource DEL ring-fenced Peatland Action budget of £8.400m – this was due to a combination of weather related delays in winter and early spring and contractor availability
• Underspend of £0.038m against Resource DEL non-cash budget (depreciation and amortisation) of £1.900m
• Overspend of £0.004m against Capital DEL budget of £0.880m
– The out-turn against the AME budget was an underspend of £0.332m. This was due to revaulation gains from the 5 yearly revaluations of property, plant and equipment that took place in 2018/19, being higher than anticipated.
Our cash budget allocation was £52.613m (resource and capital DEL) and we drew down £51.598m of this. The remaining balance of £1.015m included an underspend approved by Scottish Government of £0.143m and estimated underspends relating to ring-fenced projects of £0.872m. Of this £0.872m, £0.800m related to the Peatland restoration project not drawn down in recognition of a forecast reduction in Peatland restoration delivery.
38
Out-turn for 2018/19
The final out-turn against budget for 2018/19 is shown in the table below:
Out-turn
£000
Budget
£000
Approved Underspend*
£000
(Under)/ Overspend
£000
Net expenditure per accountsExpenditure/income adjustments for budget purposesOperating cash costsOperating non-cash costsResource DEL costsCapital DEL costs
51,775(1,649)
50,1261,862
51,7331,900
143 (1,464)(38)
51,988 53,633 143 (1,502)
884 880 4
Out-turn against DEL Budget 52,872 54,513 143 (1,498)
AME related provision movements (43)
Impairments on land and buildings (131)
Out-turn against AME Budget (174) 158 - (332)
* Approval to underspend by £0.143m was given by Scottish Government and this has been discounted from the out-turn arising against SNH’s DEL budget allocation at the end of the financial year.
Budget out-turn notes
Operating cash cost adjustments £000
– depreciation and amortisation (1,862)
– AME revaluation losses 131
– expenditure shown in provisions 51
– release of early retirement pension provision (11)
– decrease in provisions 4
– income funding purchase of capital assets 63
– capital grant in kind (25)
(1,649)
Operating non-cash costs
– depreciation and amortisation 1,862
– DEL revaluation losses -
1,862
Capital additions
– property, plant and equipment and intangible assets 966
– Income funding purchase of capital assets (63)
– capital grant in kind 25
– net book value of asset disposals (44)
884
Income from operating activities during the year was £3.050m (2017/18: £2.350m). The increase was due primarily to an increase in funding or various projects from the Heritage Lottery Fund.
Significant capital asset additions during the year included:
– Information system infrastructure £0.235m
– Vehicle fleet replacement £0.200m
– NNR education and visitor pavilion £0.167m
39
SNH had net current liabilities of £0.283m at 31 March 2019 (2017/18: £0.944m). The decrease is due to higher levels of cash and cash equivalents offset by higher trade and other payables at 31 March 2019.
In 2018/19, SNH’s expenditure relating to its relocation to Great Glen House in Inverness in 2006, which was funded in part by the Scottish Government, was a charge to the relocation provision for early retirement (note 23) of £0.024m (2017/18: £0.050m). This provision expired at 31 March 2019.
Best value
We continue to deliver best value in line with the duty set out in the Scottish Public Finance Manual (SPFM) issued by Scottish Ministers.
We do this through:
– our corporate plan and business plan, which clearly articulate our commitments, our leadership role and how we manage our resources
– performance management – our performance is tracked throughout the year and reported quarterly to our Senior Leadership Team and Board
– our governance and accountability, reflected in our management structure, policies and leadership, which set out clear lines of responsibility and reporting, as well as the robust systems we use for decision-making, budget and risk management
– how we manage our resources – undertaking reviews of our fixed assets, maximising efficiencies for procurement of goods and services, and making the best use of our people
– our approach to partnership working, which underpins much of what we do, involving building positive, mutually beneficial relationships with many other bodies
– building sustainability into how we operate – through our procurement practice, the greening of our offices, sharing accommodation with other organisations, and our approach to travel and how we use energy
Social inclusion
SNH’s vision is that by 2030 Scotland is recognised as a world leader in looking after and improving nature. Everyone is involved; everyone benefits. Scotland is greener, healthier and more prosperous. One of our outcomes is that more people across Scotland are enjoying and benefiting from nature. Social inclusion is at the core of what we do.
In delivering our outcomes we ensure that we focus on equitable treatment of all having consideration of the principles of dignity, fairness and respect. SNH published findings from the 2017/18 Scotland’s People and Nature Survey (SPANS) on participation in outdoor recreation. A special interest report Participation in Outdoor Recreation; Under-represented Groups is available on the SNH website.
Our project work and external funding contribute to reducing inequalities through place-making, and through supporting increasing participation in outdoor recreation, volunteering and learning in these key groups. In line with the requirements of the Community Empowerment (Scotland) Act 2015 we continue to work to secure a higher profile for the environment in a number of local outcome improvement plans (LOIPs).
We deliver this work through Outcome 1 and, as highlighted earlier this includes our work on the ERDF Green Infrastructure Strategic Intervention project in a number of Scotland’s most deprived areas; the Learning in Local Greenspace project to support schools in deprived areas to get pupils learning outdoors; and
40
the holding of a second application round for our Outdoor Learning in Nature fund which aims to support more young people (3 – 26 years) from the most deprived and disadvantaged backgrounds, to have regular and progressive outdoor learning experiences. We also continued to work with four Local Green Health Partnerships in Lanarkshire, North Ayrshire, Dundee and Highland to help deliver the health outcomes sought in LOIPs and supported a number of wheelchair users to access our national nature reserves with Pony Axe S, a company that gets people in wheelchairs to wild places that would otherwise be inaccessible. See this short video clip for more information.
Many of the projects we grant aided during 2018/19 were an important part of our contribution to fairness, equality and social inclusion for the people of Scotland. We focused on projects that benefit people from the following groups: disabled people; young people; people in poor health; people with low incomes or in areas of deprivation; and black/minority ethnic communities.
The Year of Young People in 2018 provided a particular focus on our work with young people, which has reaped many benefits. The ReRoute project, a partnership between Young Scot and SNH, continued. It is made up of a group of volunteers aged 13-24 from across Scotland who work collaboratively with SNH staff to explore ways to engage young people in biodiversity and nature. The Insight ReRoute Recommendations Report launched in June 2018 highlights some of the project outputs. ReRoute members have attended SNH Leaders’ Forum and Board meetings, enabling them to give input to the development of our work. We also worked with Young Scot and a design agency to enlist the help of 16 volunteers, aged between 12 and19 who identified as female, with a variety of backgrounds and experiences. They participated in workshops to explore issues around the fact that during the teenage years physical activity in females falls further than it does for males. The product was our #GirlsGetOot campaign which created animations to inspire and encourage young women to get outside and enjoy all of the benefits that Scotland's green spaces offer for health and well-being.
We have also worked with Young Scot to gather and understand young people’s views on long distance routes within the National Walking and Cycling Network. Through adopting a co-design approach, up to 50 young people, aged between16 and 26, have explored specific barriers to using the network of long-distance paths and routes known as ‘Scotland’s Great Trails’ and developed recommendations that will address these barriers.
We continued our college, school and volunteer placement schemes, giving opportunities to young people to develop new skills. Our graduate placement scheme continued and we offered 15 placements in 2018/19.
Sustainable development and carbon management
In 2018/19 our emissions were 1,073 tonnes CO₂1. This is 3% lower than the previous year. This reduction takes into account a change in conversion factors notably greener sources of electricity such as renewables.
We have a range of on-going initiatives across the organisation, including sharing our buildings with other public organisations, reducing reliance on paper by rolling out laptops to all our staff, encouraging the use of public transport and choosing sustainable goods and services.
We are also continuing to replace our petrol and diesel car fleet with electric vehicles and plan to have this completed by 2026. This is ahead of the Scottish Government’s target to phase out the need for new petrol and diesel cars and vans by 2032. The cars have zero emissions although there is the carbon impact of electricity to charge them. During the year we travelled approximately 30,000 miles by electric vehicles.
1 Data relates to figure available in May 2019. Final figure will be published in the Scottish Government’s Climate Change Duties Report.
41
During the year we took part in many green challenges and initiatives to encourage our staff, raise awareness and show our support and commitment to the offsetting of greenhouse gases caused by human activities. In September we took part in the ‘Love to Ride’ challenge and achieved third place in our category, with more than 8,000 miles cycled. In March we participated in Sustrans’ Scottish Workplace Journey Challenge. The aim of the challenge is to get as many people as possible commuting to work by walking, cycling, public transport and lift-sharing. We won runner-up for second highest staff participation this year. We also joined millions of people from across the globe in switching off the lights of our business premises for one hour as part of WWF Earth Hour.
We remain committed to making further reductions in the future, as well as advising and supporting other organisations in their own efforts to do the same. SNH’s work to reduce its own carbon emissions is part of its larger goal of reducing carbon emissions and improving the environment across Scotland. The organisation plays a lead role in restoring peatlands to reduce emissions nationally, and protecting habitats and species at risk from climate change.
Personal data related incidents
SNH had no significant data-related security incidents during 2018/19.
We continue to work on alignment of ISO27001:13. We initiated a review of progress in late 2018/19 and this will be completed during 2019/20. We achieved our Cyber Essentials Plus certification in November 2018. We will continue to adopt best practice for information security, review our mitigation strategy and work closely with our colleagues across the sector. We do this to ensure that we continually improve the way we manage our sensitive systems and information.
Supplier payment policy
Our ambition is to comply with the Government’s Better Payment Practice Code. We therefore aim to pay invoices within 10 days from the receipt of goods and services or the presentation of a valid invoice, whichever is later – the target is 95%.
In 2018/19, 93% of invoices were paid within the 10-day target (2017/18: 96%). We made payments totalling £64.53 during the year for compensation under the Late Payment of Commercial Debts Regulation 2013 (2017/18: none).
42
Nature Conservation Orders made during the year to 31 March 2019
The Nature Conservation (Scotland) Act 2004 (2004 Act) came into force on 29 November 2004. The provisions of Section 23(1) ensured that all Nature Conservation Orders (NCOs) and Special Nature Conservation Orders in place before that date continued in force as NCOs under the 2004 Act. It remains our view that these orders should be used only as a matter of last resort when there is a direct threat to the natural features of an SSSI and/or a European site.
At the end of March 2019, there were five NCOs in force, with another four Amendment Orders, giving an overall total of nine orders in force.
As required by Section 28 of the 2004 Act (as amended by Regulation 9 of the Conservation (Natural Habitats, &c.) Amendment (Scotland) Regulations 2004), we report that during 2018/19:
– no new NCOs were made
– no existing NCOs were amended
– no existing NCOs were revoked
More information on NCOs can be found on our website at www.nature.scot/professional-advice/safeguarding-protected-areas-and-species/protected-areas/conservation-orders/nature-conservation-order
Francesca OsowskaChief Executive and Accountable Officer 29 July 2019
43
Accountability ReportThe accountability report includes key statements and reports that allow SNH to meet accountability requirements and demonstrate compliance with good corporate governance
44
45
Corporate Governance ReportDirectors’ Report
Information relating to membership of the Board, the Senior Leadership Team and the auditors of Scottish Natural Heritage
SNH Board and Committees
SNH has a non-executive Board, which is supported by the Scientific Advisory Committee (SAC), the Protected Areas Committee (PAC) and the Audit and Risk Committee (ARC). Members of the PAC and ARC committees are appointed by the SNH Board. The Chair of SAC is appointed by the SNH Board and all other SAC members are recruited by open recruitment. SNH Board Members are appointed by Scottish Ministers initially through a process of open competition for a 3 year period. Consecutive terms up to a maximum of 8 years may be approved by Scottish Ministers based on an annual review of performance. The membership of the Board at 31 March 2019 was as follows:
The full biographies for our Board members can be found on our website at this link: https://www.nature.scot/about-snh/who-we-are/our-board
SNH aims to be an open and accountable organisation. There were seven SNH Board meetings, three Scientific Advisory Committee meetings, three Protected Area Committee meetings and five Audit & Risk Committee meetings held in 2018/19 and included open sessions, which the public were welcome to attend. All agendas and open session minutes of Board meetings can be viewed and downloaded from the SNH website. Board papers are available, at the discretion of the meeting chair, on request.
A register of interests is available on the SNH website https://www.nature.scot/about-snh/who-we-are/our-board/role-our-board
Board members have a corporate responsibility for ensuring that SNH fulfils its statutory duties and the aims and objectives set by the Scottish Ministers, and for promoting the efficient and effective use of staff and other resources in accordance with the principles of Best Value.
The Chair is responsible to the Scottish Ministers, on behalf of the Board, for ensuring that SNH’s policies and actions support delivery of its statutory functions and the wider strategic policies of the Scottish Ministers and that SNH’s affairs are conducted with probity. The Chair shares with other Board members the corporate responsibilities set out above for the SNH Board and, in particular, for ensuring that SNH fulfils the aims and objectives set by the Scottish Ministers.
A Common carder bee feeds from a knapweed flower head. Bees are an important pollinator and a vital part of our biodiversity.
Appointed to SNH Board Term Date at which current term of appointment ends
Mike Cantlay (Chair) 15 May 2017 1st 14 May 2020
Angus Campbell (Deputy Chair) 1 April 2013 3rd 31 March 2021
Cath Denholm (Deputy Chair) 1 April 2016 2nd 31 March 2022
Kate Broughton 1 April 2016 2nd 31 March 2022
Robert Furness 1 April 2013 3rd 31 March 2021
Ian Gillies 1 April 2013 3rd 31 March 2021
Jackie Hyland 1 April 2016 2nd 31 March 2022
Aoife Martin 1 April 2016 2nd 31 March 2022
Susan Murray 1 April 2016 2nd 31 March 2022
46
In addition, the Chair will ensure that all members of the Board, when taking up office, are fully briefed on the terms of their appointment and on their duties, rights and responsibilities. He will advise the Scottish Ministers of the needs of SNH when Board vacancies arise, with a view to ensuring a proper balance of professional and financial expertise; he will also assess the performance of individual Board Members on an annual basis.
Senior Leadership Team
The responsibilities of our Senior Leadership Team, which served during 1 April 2018 and 31 March 2019, are set out below. Full biographies can be found on our website https://www.nature.scot/about-snh/who-we-are/senior-leadership-team.
Francesca OsowskaChief Executive
Francesca has overall responsibility for managing the organisation, including oversight of delivery of our undertakings to Scottish Government and the outcomes of our Corporate Plan, and ensuring that Scottish Natural Heritage operates efficiently and effectively.
Nick Halfhide Director, Sustainable Growth
Nick is responsible for overseeing Natural Resource Management, Wildlife Management, Sustainable Coasts & Seas and Supporting Good Development. He also oversees the operational and advisory activities at our local offices.
Jane MacdonaldDirector, Business Services and Transformation
Jane keeps our Chief Executive and Senior Leadership Team informed so that they can make sound strategic decisions by drawing on our business planning, allocations, budget management and reporting activies to produce timely and accurate management information.
Sally ThomasDirector, People and Nature
Sally is responsible for Placemaking for People and Nature, Managing Nature Reserves, Biodiversity & Geodiversity, Marine Ecosystems and Protected Areas & Surveillance. She also maintains an oversight of science across our four outcomes.
47
Auditors
SNH’s accounts are audited by Audit Scotland, which is appointed by the Auditor General for Scotland. The costs relating to their statutory audit work in respect of the financial year were £0.057m (2017/18: £0.056m). No other fees for non-audit related services were paid to them.
Alan HampsonHead of Business Services and Transformation
Alan is responsible for effectively integrating our business planning, allocations, budget management and reporting activities, so the Chief Executive and Senior Leadership Team are given timely and accurate management information and intelligence on the implementation of the corporate and business plans.
Ross JohnsonHead of Sustainable Growth
Working alongside the Director of Sustainable Growth, Ross is responsible for maintaining an overview of the work of the operational areas to help them achieve their contributions to SNH's business plan.
Alison ShieldsHead of External Affairs
Alison is the strategic lead on our media and communications work and stakeholder engagement. She also oversees the work of the Executive Office team who lead on the support to our Chair, Board members and our Chief Executive
Eileen StuartHead of People and Nature
Eileen manages issues ranging from habitats to landscape and recreation to designated sites. She is also the strategic lead for Biodiversity, Climate Change, Placemaking & Community Planning.
48
Statement of Accountable Officer’s Responsibilities
SNH’s Framework Document agreed with its sponsoring Scottish Government Directorate, sets out the roles and responsibilities of Scottish Ministers, the sponsoring team in the Directorate, the SNH Board, the Chair of SNH and SNH’s Accountable Officer. It includes the following points:
SNH’s Accountable Officer
Under Section 10 of the Natural Heritage (Scotland) Act 1991, SNH is required to prepare annual accounts for each financial year in the form of and on the basis determined by Scottish Ministers. The annual accounts are prepared on an accruals basis and must give a true and fair view of the state of affairs of SNH as at the end of the financial year, and of the income and expenditure, recognised gains and losses, and cash flows for the financial year. In preparing the annual accounts, the Accountable Officer is required to comply with the requirements of the Financial Reporting Manual 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 annual accounts
– prepare the accounts on a going concern basis– confirm that the Annual Report and Accounts as a whole is fair, balanced and
understandable and take personal responsibility for the Annual Report and Accounts and the judgements required for determining that it is fair, balanced and understandable.
In addition, the Accountable Officer is responsible for safeguarding the assets falling within the stewardship of SNH, taking all such reasonable steps to prevent and detect fraud and other irregularities and ensuring that appropriate records are kept.
The Principal Accountable Officer of the Scottish Government appointed the Chief Executive as the Accountable Officer for SNH in accordance with sections 14 and 15 of the Public Finance and Accountability (Scotland) Act 2000. As Accountable Officer, the Chief Executive is responsible to Scottish Ministers.
The Chief Executive’s relevant responsibilities, as Accountable Officer for SNH, are set out in the Accountable Officers’ Memorandum issued by the Principal Accountable Officer for the Scottish Government. The Accountable Officer has responsibility for the propriety and regularity of the public finances, for which they are answerable to the Scottish Parliament.
Disclosure of Audit Information to the Auditors
So far as the Accountable Officer is aware, there is no relevant audit information of which SNH’s auditors are unaware. The Accountable Officer has taken all possible steps to ensure they are aware of any relevant audit information and to establish that SNH’s auditors are aware of that information.
49
Governance StatementScope of Responsibility
As Accountable Officer, I have responsibility for maintaining sound systems of internal management control. These support the achievement of the organisation’s policies, aims and objectives, set by the Scottish Ministers, whilst safeguarding the public funds and assets for which I am personally responsible.
My responsibilities are assigned to me in the Scottish Public Finance Manual and by the Scottish Parliament under Section 15 of the Public Finance and Accountability (Scotland) Act 2000 for ensuring:
– the propriety and regularity of financial transactions under my control and for the economic, efficient and effective use of resources provided to SNH
– that arrangements have been made to secure best value and for signing SNH’s annual accounts
– that effective management systems are in place within SNH and that risks are identified, assessed and managed appropriately
The Scottish Public Finance Manual is issued by Scottish Ministers to guide the Scottish Government and other relevant bodies on the proper handling and reporting of public funds. It sets out the relevant statutory, parliamentary and administrative requirements, emphasises the need for economy, efficiency and effectiveness and promotes good practice and high standards of propriety.
SNH aims for the highest standards in corporate governance, and we follow the Cabinet Office Guidance on Codes of Practice for Public Bodies.
SNH’s governance framework
SNH is a non-departmental public body, established by the Natural Heritage (Scotland) Act 1991. We receive most of our funding as grant-in-aid from the Scottish Government. Our framework document outlines the administrative and financial structure within which SNH works.
The governance framework comprises the systems, processes, culture and values which direct and control SNH. We use the framework to monitor how well we achieve our strategic objectives and results.
The system of internal control is a significant part of the governance framework and is designed to manage risk to a reasonable level. It is designed to manage, rather than eliminate, the risk of failure to achieve the organisation’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 a continuous process designed to identify the principal risks to SNH achieving its policies, aims and objectives, to evaluate the nature and extent of those risks and to manage them efficiently, effectively and economically. For information risks, our Director of Business Services and Transformation fulfils the role of Senior Information Risk Owner (SIRO). As SIRO, she takes overall ownership of the organisation’s Information Risk Policy, acts as champion for information risk to the board and provides written advice to the Accountable Officer on the content of the organisation’s Governance Statement relating to information risk.
Our governance structure operates at four levels: Scottish Government, Board, Senior Leadership Team and staff.
50
The role of the SNH Board is to effectively lead, direct, support and guide the organisation and ensure that we implement the policies and priorities of Ministers and the Scottish Government. The Board is supported by the Audit and Risk Committee (ARC), which has a key role in promoting the development of SNH’s arrangements for corporate governance, including risk management, and advising the board as appropriate. Other board committees are the Scientific Advisory Committee and Protected Areas Committee. The roles and responsibilities and ways of working of the Board and Committees are available on our website. Our formal board meetings and some committee meetings are open to the public to attend. All agendas and minutes of Board meetings can be viewed and downloaded from our website including terms of reference for each of our Committees, meeting Board commitment to openness and transparency. Board papers are available, at the discretion of the meeting chair, on request.
Board Meetings attended by members in the year from 1 April 2018 to 31 March 2019
Name Number of meetings attended in year
Mike Cantlay (Chair) 7 (7 possible)
Angus Campbell (Deputy Chair) 6 (7 possible)
Cath Denholm (Deputy Chair) 4 (7 possible)
Kate Broughton 5 (7 possible)
Robert Furness 6 (7 possible)
Ian Gillies 6 (7 possible)
Jackie Hyland 6 (7 possible)
Aoife Martin 5 (7 possible)
Susan Murray 7 (7 possible)
Audit and Risk Committee meetings attended by members in the year from 1 April 2018 to 31 March 2019
Name Number of meetings attended in year
Kate Broughton (Chair) 5 (5 possible)
Cath Denholm 5 (5 possible)
Jackie Hyland 4 (5 possible)
Susan Murray 5 (5 possible)
Scientific Advisory Committee meetings attended by members in the year from 1 April 2018 to 31 March 2019
Name Number of meetings attended in year
Robert Furness (Chair) 3 (3 possible)
Dan Haydon 2 (3 possible)
Jackie Hyland 3 (3 possible)
Neil Metcalfe 3 (3 possible)
Aileen Mill 2 (3 possible)
Ruth Mitchell 3 (3 possible)
Martin Price 3 (3 possible)
Jeremy Wilson 2 (3 possible)
51
The Scientific Advisory Committee is chaired by Professor Robert Furness who is a member of the Board. Jackie Hyland attends SAC as a Board observer and the additional 6 members are independent and recruited on an open and transparent basis. Each term of appointment is for 3 years, and depending on satisfactory performance, a further term may be offered.
Protected Areas Committee meetings attended by members in the year from 1 April 2018 to 31 March 2019
Name Number of meetings attended in year
Aoife Martin (Chair) 3 (3 possible)
Angus Campbell 2 (3 possible)
Robert Furness 3 (3 possible)
Ian Gillies 3 (3 possible)
The Senior Leadership Team operates between the SNH Board and the staff. It is responsible for the operational management of SNH and for developing, in partnership with the SNH Board, the policies and strategies of SNH.
Details of our work priorities and funding are set out in our budget allocation and monitoring letter, corporate plan and business plans. We have robust governance arrangements in place to provide clarity and accountability in the way we manage the organisation and deliver our work. SNH’s Risk Management Strategy ensures that we properly manage the risks to achieve the organisation’s priorities. The strategy also supports decision-making.
Standards of behaviour support our good governance policies and ensure we achieve the highest possible standards in all that we do. The Code of Conduct for Board and Committee Members sets out the principles they are expected to uphold in carrying out their duties. Our employee Standards of Conduct Policy and our Whistleblowing Policy encourage staff to raise serious concerns about wrongdoing or alleged impropriety. The policy is consistent with, and makes explicit references to, the Public Interest Disclosure Act 1998.
Assurance
As Accountable Officer, I review the effectiveness of the governance framework, including the internal control systems. My review requires assurances from the following groups and individuals:
– SNH managers, who agree and measure the effectiveness of controls and also regularly monitor and report on performance, finance and risk for the senior leadership team, ARC and the Board.
– The work of internal auditors, who submit regular reports to our ARC. These include the Head of Internal Audit’s independent and objective opinion on the adequacy and effectiveness of SNH’s internal control systems, together with recommendations for improvement.
– The ARC, which oversees the work of internal auditors, considers and comments on other matters within its terms of reference, and provides me with appropriate assurance. The ARC reports to the SNH Board.
– An assurance by the Director of Business Services and Transformation (as the organisation's fraud risk owner) on the adequacy of the organisation's fraud detection protocols, together with any recommendations for improvement.
– An assurance by the organisation's Senior Information Risk Owner (SIRO) on the adequacy of the organisation's information and security management protocols, together with any recommendations for improvement.
– Comments made by Audit Scotland, our external auditors, in their management letter and other reports.
52
SNH has a suite of policies and practices aimed at enabling and encouraging excellence in our staff and managing their performance. The Board and ARC also conducts individual and collective self-assessment of performance.
Review of Effectiveness and Conclusion
Our Corporate Risk Register contains 17 risks – 4 of which are rated high. None of these risks have materialised into issues during the year. The controls we have in place in mitigation of these risks are working well and as a result these have had no significant impact on SNH during the year. The risk associated with Financial Sustainability continues to be closely monitored, as it will be across the wider public sector. We undertake detailed scenario planning in order that the impact of budgetary movements is identified and understood – this and the wider controls we have in place give us confidence that we can adapt in a fragile financial climate.
We have had no significant data-related security incidents during 2018/19 and we continue to work on alignment of ISO27001:13. The formal assessment was initiated during the latter part of the year and is expected to conclude during 2019/20. We will continue to adopt best practice for information security, review our mitigation strategy and work closely with our colleagues across the sector. Achieving Cyber Essentials Plus certification in November 2018 demonstrates our commitment in this area.
We adopted a new delivery model for dealing with FOI requests which has increased our effectiveness in response rates which with other improvements ensure that we continually improve the way we manage our sensitive systems and information.
The effectiveness of our governance is monitored through quarterly reporting against agreed Governance Tables led by senior managers. I am satisfied that the majority of key business controls were operating effectively during the year.
While no critical risk materialised, due to our management practices, there are a small number of areas which have been identified as requiring further closer monitoring going forward. This includes our Health, Safety and Wellbeing performance measures, the monitoring of which has not been as complete as we would have hoped. The particular areas however do not give cause for concern and the monitoring regime for 2019/20 is being reassessed. Our Project Management processes have improved over the year and while all major change projects are managed and supported through our Project Hub, we are working through a back log of training to increase the capacity and capability of project management across all areas. Finally, due to resource pressures, our programme of Business Continuity testing slipped during the year. We were however able to get back on track into the new financial year. I recognise the potential that this may expose the organisation to reputational damage – however I am satisfied that the risk that this would occur is very small and can be tolerated.
SNH continued to respond to resource challenges in 2018/19 alongside an ongoing process of internal change. Throughout this period, I am confident that SNH’s governance system was effective and our internal control processes operated to a high standard.
53
Remuneration and Staff Report The Remuneration and Staff Report is subject to audit except for the Remuneration Policy and Employment Contracts, Employee Involvement and Sickness Absence sections which are reviewed by Audit Scotland for consistency with the audited accounts.
Remuneration Policy
The remuneration, allowances and expenses paid to Board Members comply with specific guidance issued by Scottish Ministers. SNH does not have a remuneration committee.
For all other staff, SNH submits a pay remit to the Scottish Government Environment and Forestry Directorate for approval (normally annually, unless a multi-year deal has been agreed), which is within the terms and conditions set out in the Scottish Government’s Public Sector Pay Guidance. On approval of the pay remit, a pay settlement is negotiated with the relevant Trade Unions. Annual salaries are paid in accordance with the standard SNH staff pay agreement. Performance is monitored and reviewed through SNH’s staff appraisal arrangements. Increases in staff salary and any exceptional performance awards, if earned, are based on managers’ assessment of individual performances. Exceptional performance awards have been suspended for the present, this being a condition in the Scottish Government Public Sector Pay Guidance.
The Chief Executive’s salary is reviewed each year by the Chair, in consultation with the Board, with a view to progression and re-valorisation in line with the increase agreed by the Scottish Government Remuneration Committee and Ministers and as governed by any further conditions set out in the Scottish Government Pay Guidance for Senior Staff. The Chief Executive’s contract provides for a notice period of six months. The terms and conditions of the Chief Executive’s performance bonus are subject to a separate approval exercise.
Employment Contracts
SNH is committed to ensuring a fair, transparent and consistent approach to filling vacant posts. Appointments are made on merit following a fair selection process within defined policy.
The senior staff covered in this report, SNH’s Senior Leadership Team, hold appointments which are open-ended. Their contracts, other than for the Chief Executive as noted above, provide for a notice period of three months. Early termination, other than for misconduct, would result in the individual receiving compensation as set out in the Civil Service Compensation Scheme.
At 31 March 2019 the Board consisted of 9 Members, including the Chair. SNH Board Members are appointed by Scottish Ministers initially through a process of open competition for a 3 year period. Consecutive terms up to a maximum of 8 years may be approved by Scottish Ministers based on an annual review of performance.
Chair and Board Members
The Chair, Mike Cantlay was appointed on 15 May 2017. The appointment is on a non-pensionable part-time basis and his total remuneration, in his capacity as Chair, for the full year to 31 March 2019 was £41,693 (2017/18: £35,337 part year).
54
Other SNH Board Members’ remuneration covers membership of the Board and is non-pensionable. Angus Campbell and Cath Denholm both received additional remuneration due to their responsibilities as Depute Chair of the SNH Board and as an SNH appointed member of JNCC and its trading subsidiary JNCC Support Co.
Board Members do not receive any bonus payments and details of their remuneration and taxable allowances are shown below.
In addition to remuneration Angus Campbell received taxable allowances in 2018/19 as show above (2017/18: £nil).
Key:
1 = SNH Board2 = Scientific Advisory Committee3 = Audit and Risk Management Committee4 = Protected Areas Committee5 = SNH’s appointed member of the JNCC and it’s trading subsidiary
JNCC Support Co.
Chief Executive
SNH’s Chief Executive, Francesca Osowska was appointed on 1 October 2017. In 2018/19 Francesca Osowska’s total remuneration as Chief Executive for the year to 31 March 2019 was £113,102 (2017/18: £55,742 part year).
Bonuses continue to be suspended, this being a condition of the Scottish Government Public Sector Pay Guidance. Under the terms of their contracts, all pay increases (excluding performance related bonus) are pensionable. The Chief Executive’s salary is ‘progression based’ and is included above on this basis. Francesca Osowska received a total pay award increase of 1.45% for 2018/19 (2017/18: n/a) comprising progression and cost of living increases. This was effective from 1 April 2018.
Francesca Osowska is an ordinary member of the Civil Service Pension Scheme. She paid a percentage of her pensionable salary into the Alpha scheme.
Board MemberKey Remuneration
Taxable Allowances Total
2018-19£
2018-19£
2018-19£
2017-18£
Mike Cantlay, Chair SNH Board 1 41,693 – 41,693 35,337
Sue Walker, Acting Chair SNH Board 1,3 – – – 6,620
41,693 – 41,693 41,957
Angus Campbell, Depute Chair SNH Board 1,4 20,009 1,032 21,041 8,917
Cath Denholm, Depute Chair of SNH Board 1,3,5 20,009 – 20,009 8,916
Sue Walker, Depute Chair SNH Board 1,3,5 – – – 18,754
Kate Broughton, Chair of Audit & Risk Committee
1,3 9,095 – 9,095 8,917
Robert Furness, Chair of Scientific Advisory Committee
1,2,4 9,095 – 9,095 8,916
Ian Gillies 1,4 9,095 – 9,095 8,917
Jackie Hyland 1,2,3 9,095 – 9,095 8,917
Aoife Martin, Chair of Protected Areas Committee
1,4 9,094 – 9,094 8,917
Susan Murray 1,3 9,094 – 9,094 8,916
94,586 1,032 95,618 90,087
55
Senior Leadership Team Salaries and Pension Benefits
The salary and pension entitlements of SNH’s Senior Leadership Team for the full year in 2018/19 were as follows:
Pensionable service used to calculate accrued pension at 31 March 2019 represents years of service payable from SNH’s pension scheme, including any added year or transfers.
BasicSalary
2018-19
Bonus2018-19
Pensionable remuneration
total 2018-19
AccruedPension
Benefits1 2018-19
Total 2018-19
£000 £000 £000 £000 £000
Francesca Osowska – Chief Executive
110-115 – 110-115 83 195-200
Jane Macdonald – Director of Business Services and Transformation
70-75 – 70-75 44 115-120
Alan Hampson – Head of Business Services and Transformation
60-65 – 60-65 45 105-110
Nick Halfhide – Director of Sustainable Growth
75-80 – 75-80 31 110-115
Ross Johnston – Head of Sustainable Growth
65-70 – 65-70 50 115-120
Sally Thomas – Director of People and Nature
70-75 – 70-75 83 155-160
Eileen Stuart – Head of People and Nature
65-70 – 65-70 21 90-95
Alison Shields – Head of External Affairs
65-70 – 65-70 – 65-70
1 The value of pension benefits accrued during 2018/19 is calculated as: (the real increase in pension multiplied by 20) plus (the real increase in any lump sum) less (the contributions made by the individual). The real increases exclude increases due to inflation or any increase or decreases due to a transfer of pension rights.
56
The salary and pension entitlements of SNH’s Senior Leadership Team in 2017/18 are shown below.
BasicSalary
2017-18
Bonus2017-18
Pensionable remuneration
total 2017-18
AccruedPension Benefits
2017-181
Total 2017-18
£000 £000 £000 £000 £000
Francesca Osowska – Chief Executive: from1 October 20172
55-60 – 55-60 58 110-115
Iain Jardine – Chief Executive: 1 April to 30 July 20173
35-40 – 35-40 6 40-45
Joe Moore – Acting Chief Executive: 1 August to 30 September 2017Director of Corporate Services: 1 April to 31 July 2017 Director: 1 October to 18 November 2017 (retirement date)4
50-55 – 50-55 6 60-65
Jane Macdonald – Director of Corporate Services: from 1 November 2017 Head of Corporate Services: 1 April to 31 October 2017
65-70 – 65-70 43 105-110
Alan Hampson – Head of Corporate Services: from 1 December 20175
20-25 – 20-25 15 30-35
Nick Halfhide – Director of Operations
75-80 – 75-80 26 100-105
Ross Johnston – Head of Operations
60-65 – 60-65 38 100-105
Sally Thomas – Director of Policy and Advice: from 2 September 20176
40-45 – 40-45 36 75-80
Andrew Bachell – Director of Policy & Advice: 1 April to 14 June 20177
15-20 – 15-20 2 15-20
Eileen Stuart – Head of Policy & Advice
65-70 – 65-70 26 90-95
Alison Shields – Head of External Affairs: from 18 December 20178
15-20 – 15-20 – 15-20
1 The value of pension benefits accrued during 2017/18 is calculated as: (the real increase in pension multiplied by 20) plus (the real increase in any lump sum) less (the contributions made by the individual). The real increases exclude increases due to inflation or any increase or decreases due to a transfer of pension rights.
2 Full year salary £110k-£115k3 Full year salary £110k-£115k4 Full year salary £75-£80k5 Full year salary £60-£65k6 Full year salary £65-£70k7 Full year salary £75-£80k
8 Full year salary £65-£70k
57
Total accrued pension at pension age as at 31 March 2019 and
related lump sum (unless stated)
Real increase in pension and
related lump sum at pension age
CETV at 31 March 2019
(unless stated)
CETV at 31 March
20178(unless stated)
Real increase in CETV
£000 £000 £000 £000 £000
Francesca Osowska
35-40 plus lump sum of 80-85
2.5-5 plus lump sum of 2.5-5
641 508 50
Jane Macdonald 15-20 0-2.5 261 202 29
Alan Hampson 20-25 plus lump sum of 60-65
0-2.5 plus lump sum of 5-7.5
467 379 44
Nick Halfhide 35-40 0-2.5 542 458 15
Ross Johnston 25-30 2.5-5 496 406 37
Sally Thomas 25-30 plus lump sum of 30-35
2.5-5 plus lump sum of 2.5-5
599 466 84
Eileen Stuart 20-25 plus lump sum of 65-70
0-2.5 plus lump sum of 0
490 427 11
Alison Shields n/a n/a n/a n/a n/a
Senior Leadership Team’s Total Pension Benefits
Alison Shields does not participate in the Civil Service pension arrangements. She contributes to a partnership pension arrangement and therefore there are no additional pension benefits disclosures required other than the pension contributions payable in the year which was £14,572 (2017/18: £3,500 – part year).
Civil Service Pensions
Pension benefits are provided through the Civil Service pension arrangements. From 1 April 2015 a new pension scheme for civil servants was introduced – the Civil Servants and Others Pension Scheme or Alpha, which provides benefits on a career average basis with a normal pension age equal to the member’s State Pension Age (or 65 if higher). From that date all newly appointed staff and the majority of those already in service, joined Alpha. Prior to that date, staff participated in the Principal Civil Service Pension Scheme (PCSPS). The PCSPS has four sections: three providing benefits on a final salary basis (classic, premium or classic plus) with a normal pension age of 60; and one providing benefits on a whole career basis (nuvos) with a normal pension age of 65.
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, nuvos and alpha are increased annually in line with Pensions Increase legislation. Existing members of the PCSPS, who were within 10 years of their normal pension age on 1 April 2012, remained in the PCSPS after 1 April 2015. Those who were between 10 years and 13 years and 5 months from their normal pension age on 1 April 2012 have or will switch into alpha sometime between 1 June 2015 and 1 February 2022. All members who switch to Alpha have their PCSPS benefits ‘banked’, with those with earlier benefits in one of the final salary sections of the PCSPS having those benefits based on their final salary when they leave Alpha. The pension figures quoted for officials show pension earned in PCSPS or Alpha – as appropriate. Where the official has benefits in both the PCSPS and alpha the figure quoted is the combined value of their benefits in the two schemes. 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).
58
Employee contributions are salary-related and range between 4.6% and 8.05% of pensionable earnings for members. 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 initial 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 Pensions Increase legislation. Benefits in alpha build up in a similar way to nuvos, except that the accrual rate is 2.32%. 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 8% and 14.75% (depending on the age of the member) into a stakeholder pension product chosen by the employee from a panel of 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 0.5% 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, 65 for members of nuvos, and the higher of 65 or State Pension Age for members of Alpha. (The pension figures quoted for officials show pension earned in PCSPS or Alpha – as appropriate. Where the official has benefits in both the PCSPS and alpha the figure quoted is the combined value of their benefits in the two schemes, but note that part of that pension may be payable from different ages.)
Further details about the Civil Service pension arrangements can be found at the website www.civilservicepensionscheme.org.uk. The last valuation of the pension scheme took place as at 31 March 2016 (published February 2019). The next valuation of the scheme will be as at 31 March 2020.
For 2018/19, employer’s contributions of £4.229m (2017/18: £4.016m) were paid to the PCSPS and other pension providers. These contributions were payable at one of four rates ranging from 20.0% to 24.5% (2017/18: 20.0% to 24.5%) of pensionable pay, based on salary bands. The contribution rates reflect benefits as they are accrued, not when the costs are actually incurred, and reflect past experience of the scheme. From 1 April 2019 employer’s contribution rates will increase to a range from 26.6% to 34.1%. The scheme actuary reviews employer contributions usually every four years following a full scheme valuation.
59
Cash Equivalent Transfer Value (CETV)
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 in accordance with The Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 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.
Fair Pay disclosure
Public sector bodies are required to disclose the relationship between the remuneration of the highest paid director in their organisation and the median remuneration of the organisation’s workforce. Total remuneration includes salary, non-consolidated performance related pay, benefits in kind as well as any severance payments. It does not include employer pension contributions or the cash equivalent transfer value of pensions.
The midpoint of the banded remuneration of the highest paid director in SNH in 2018/19 was £112,500 (2017/18: £112,500). This was 3.28 times (*2017/18: 3.38) the median remuneration of the workforce, which was £34,263 (*2017/18: £33,265).
In 2018/19, remuneration (excluding the highest paid director) ranged from £617 to £113,102 (2017/18: £1,120 to £111,483). SNH employs seasonal part-time workers which are reflected in the remuneration ranges shown above. In 2018/19 no employees (2017/18: nil) received remuneration in excess of the highest paid director.
2018-19 2017-18*
Band of highest paid director’s total remuneration £110k - £115k £110k - £115k
Median total remuneration £34,263 £33,265
Ratio 3.28 3.38
*2017-18 comparatives have been restated due to an error in the calculations (median total remuneration and ratio previously shown as £30,745 and 3.66 respectively)
60
Staff ReportAverage number of employees
The average number of full-time equivalent (FTE) persons employed during the year by occupational group was:
Senior management represents members of Senior Leadership Team.
Staff Costs (including board members)
2018-19 2017-18*
£000 £000
Salaries:
Chairman 42 42
Board members 95 90
Other committee members 16 15
Senior Leadership Team:
– permanent contracts 538 499
– fixed term contracts 69 19
All other staff:
– permanent contracts 17,834 17,096
– fixed term contracts 2,476 1,893
21,070 19,654
Social security costs 2,057 1,930
Pension costs 4,229 4,016
Apprenticeship levy 89 83
Severance and other costs – 42
Total staff costs 27,455 25,725
Agency staff costs 65 35
Less: Recoveries in respect of outward secondments and joint contract agreements (257) (251)
Total net employment costs 27,253 25,509
There were no salaries capitalised against projects in 2018/19 (2017/18: £nil). The increase in staff costs in 2018/19 is due primarily to increased costs of fixed term contracts and to pay award and incremental increases.
There were no severance and other costs incurred in 2018/19 (2017/18: £0.042m) *Agency staff costs have been restated in accordance with the current year’s presentation.
Permanent Other 2018-19 2017-18
Number Number Number Number
Senior management 7 1 8 8
Operational, professional and managerial 420 54 474 464
Administration and support 88 20 108 112
Estate workers, manual and domestic 26 5 31 28
541 80 621 612
61
Pension Costs
SNH makes pension contributions for employees to PCSPS, which is a multi-employer defined benefit pension scheme and Alpha, a scheme which provides benefits on a career average basis (note 2.12). SNH is unable to identify its share of the underlying assets and liabilities and therefore any liability for future benefits is a charge on the PCSPS, which prepares its own scheme statements. A breakdown of pension costs payable for year is as follows:
2018-19 2017-18
£000 £000
Accruing superannuation liability charges (ASLCs)
4,154 3,952
Stakeholder partner pension contributions
64 54
4,218 4,006
Annual pension costs 11 10
Total pension costs 4,229 4,016
Equality and Diversity
We are committed to supporting and promoting diversity in SNH – on our Board, Committees, Senior Leadership Team and in our workforce. We have made significant progress towards the achievement of our Equality Outcomes since the publishing of our third Equality Report in April 2017. We have reviewed our pay structure, increased women in senior leadership roles and the number of women being promoted, all of which have helped us to successfully reduce our gender pay gap from 15.01% in 2017 to 10.95% in 2019. Our CEO has made a pledge to the First Ministers National Advisory Council for Women & Girls to continue to work towards reducing the pay gap.
The achievement of a number of employee awards in 2018/19 has helped us to ensure that we are promoting best practice in our workplace. The introduction of employee networks has helped increase employee voice and been fundamental in refreshing our equalities outcomes beyond 2019.
We have just published our fourth Equality Report and refreshed our equality outcomes for 2019-2023. Our refreshed outcomes ensure that work continues to improve the diversity of our workforce, in particular by increasing the number of young people, people from black, Asian and minority ethnic (BAME) communities and people with disabilities. We will also aim to develop a more age-inclusive culture that fosters positive intergenerational relations within a more diverse and inclusive workforce. Our equality outcomes and activity are being integrated into our Organisational Development Framework which will support SNH to transform the way we work and deliver our corporate plan priorities.
Further information on our progress towards our equality outcomes 2013-2019 and our refreshed outcomes 2019-2021 can be found on the SNH website: https://www.nature.scot/snh-equality-report-2019
62
At 31 March 2019 SNH employed the following number of persons (note this is not FTE):
Category Male Female Total
Board 4 5 9
Senior Leadership Team 3 5 8
Employees 301 418 719
Total 2018/19 308 428 736
Total 2017/18 308 422 730
Total 2016/17 318 422 740
Total 2015/16 347 445 792
Total 2014/15 329 423 752
Employee Involvement
SNH held a number of staff conferences in March and April 2019. The staff conferences were led by our staff, giving them the opportunity to showcase some of the fantastic work that they are involved in to fellow colleagues. There was also an opportunity for all staff to get an update on our emerging priorities, to help build a sense of purpose and direction, to celebrate success and also to meet colleagues, including making new connections.
SNH continues to work very constructively in partnership with the recognised trade unions through the Consultation and Negotiation Committee (CNC) and the Partnership. Work this year has focused on improving employee wellbeing and developing our policies to better support the organisation, a particular focus being dignity and respect at work. Under the Trade Union Act 2016, there is a requirement for public sector employers to report annually on paid time provided to TUS representatives for trade union duties and activities:
Number of employees who were relevant union officials during 2018/19 22
Full-time equivalent employee number 2.41 FTE
Percentage of time spent on facility time No of staff
0% –
1%-50% 21
51%-99% –
100% 1
Percentage of pay bill spent on facility time 0.4%
Time spend on paid trade union activities as a percentage of total paid facility time hours 67.78%
We have now achieved Carer Positive engaged status and Level 2 ‘Positive About Disability’ Scheme accreditation. We hope to achieve our Healthy Working Lives bronze level shortly and begin working towards our silver level accreditation.
We continue to develop our wellbeing package in response to continuing concerns raised in the People Survey around resources and workload.
In 2018 we set up a number of networks to improve engagement with employees. Our CEO launched our Women’s Network in June 2018. The Network has provided a mechanism for all staff to feel empowered to raise issues. Our Young Employee Network focuses on mentoring and career paths and our Carers Network explores further opportunities to promote good practice in this area and support our aging workforce.
63
Our Mental Health online Forum, “Thrive”, has provided a platform for employees to share mental health stories and support one another. Our Mental Health Champions provide an additional layer of support to employees. The outputs from all our networks will feed through to our Senior Leadership Team and will inform our Organisational Development Framework activities.
Sickness Absence
The average number of staff sick days per headcount has decreased since 2017/18 – from 6.8 days to 5.6 days.
This compares very favourably with the statistics detailed in the CIPD Health and Well-Being Report published in April 2019 for UK public sector, which reported an average level of absence of 8.4 days per employee (days across all sectors).
We continue to proactively manage sickness in the organisation, and the Health and Safety Committee monitors sickness levels and reasons for sickness on a quarterly basis. SNH’s Board receives Quarterly Performance Reports detailing sickness absence information. SNH also has in place an Employee Assistance Programme which is available to all employees by telephone through a helpline, as well as an online service.
Number and cost of exit packages
Exit package cost band
Number of departures
agreed2018-19
Cost of exit packages
2018-19
Number of departures
agreed2017-18
Cost of exit packages
2017-18
£000 £000
<£10,000 – – – –
£10,000 to £25,000 – – 2 42
£25,000 to £50,000 – – – –
£50,000 to £100,000 – – – –
Total number/cost of exit packages – – 2 42
64
Parliamentary Accountability DisclosuresLosses and special payments
The following losses are included in the statement of comprehensive net expenditure:
2018-19 2017-18
£000 £000
Losses of assets, stores and equipment, including cash losses
8 9
Fruitless payments and constructive losses
1 1
Claims waived or abandoned – –
Special payments 2 –
11 10
Gifts
No gifts were made during the year.
Remote Contingent Liabilities
There are no remote contingent liabilities to disclose.
Francesca OsowskaChief Executive and Accountable Officer29 July 2019
65
Independent auditor’s report to the members of Scottish Natural Heritage, the Auditor General for Scotland and the Scottish Parliament Report on the audit of the financial statements
Opinion on financial statements
I have audited the financial statements in the annual report and accounts of Scottish Natural Heritage for the year ended 31 March 2019 under the Natural Heritage (Scotland) Act 1991. The financial statements comprise the Statement of Comprehensive Net Expenditure, the Statement of Financial Position, the Statement of Cash Flows, the Statement of Changes in Taxpayers’ Equity and notes to the accounts, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union, and as interpreted and adapted by the 2018/19 Government Financial Reporting Manual (the 2018/19 FReM).
In my opinion the accompanying financial statements: – give a true and fair view in accordance with the Natural Heritage (Scotland) Act
1991 and directions made thereunder by the Scottish Ministers of the state of the body's affairs as at 31 March 2019 and of its net expenditure for the year then ended;
– have been properly prepared in accordance with IFRSs as adopted by the European Union, as interpreted and adapted by the 2018/19 FReM; and
– have been prepared in accordance with the requirements of the Natural Heritage (Scotland) Act 1991 and directions made thereunder by the Scottish Ministers.
Basis for opinion
I conducted my audit in accordance with applicable law and International Standards on Auditing (UK) (ISAs (UK)), as required by the Code of Audit Practice approved by the Auditor General for Scotland. My responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of my report. I was appointed by the Auditor General on 18 July 2016. The period of total uninterrupted appointment is three years. I am independent of the body in accordance with the ethical requirements that are relevant to my audit of the financial statements in the UK including the Financial Reporting Council’s Ethical Standard, and I have fulfilled my other ethical responsibilities in accordance with these requirements. Non-audit services prohibited by the Ethical Standard were not provided to the body. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.
66
Conclusions relating to going concern basis of accounting
I have nothing to report in respect of the following matters in relation to which the ISAs (UK) require me to report to you where: – the use of the going concern basis of accounting in the preparation of the
financial statements is not appropriate; or – the body has not disclosed in the financial statements any identified material
uncertainties that may cast significant doubt about its ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.
Risks of material misstatement
I have reported in a separate Annual Audit Report, which is available from the Audit Scotland website, the most significant assessed risks of material misstatement that I identified and my conclusions thereon.
Responsibilities of the Accountable Officer for the financial statements As explained more fully in the Statement of Accountable Officer’s Responsibilities, the Accountable Officer is responsible for the preparation of financial statements that give a true and fair view in accordance with the financial reporting framework, and for such internal control as the Accountable Officer determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Accountable Officer is responsible for assessing the body's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless deemed inappropriate.
Auditor’s responsibilities for the audit of the financial statements
My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, intentional omissions, misrepresentations, or the override of internal control. The capability of the audit to detect fraud and other irregularities depends on factors such as the skilfulness of the perpetrator, the frequency and extent of manipulation, the degree of collusion involved, the relative size of individual amounts manipulated, and the seniority of those individuals involved. I therefore design and perform audit procedures which respond to the assessed risks of material misstatement due to fraud.
A further description of the auditor’s responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website www.frc.org.uk/auditorsresponsibilities. This description forms part of my auditor’s report.
67
Other information in the annual report and accounts The Accountable Officer is responsible for the other information in the annual report and accounts. The other information comprises the information other than the financial statements, the audited part of the Remuneration and Staff Report, and my auditor’s report thereon. My opinion on the financial statements does not cover the other information and I do not express any form of assurance conclusion thereon except on matters prescribed by the Auditor General for Scotland to the extent explicitly stated later in this report.
In connection with my audit of the financial statements, my responsibility is to read all the other information in the annual report and accounts and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the audit or otherwise appears to be materially misstated. If I identify such material inconsistencies or apparent material misstatements, I am required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact. I have nothing to report in this regard.
Report on regularity of expenditure and income
Opinion on regularity
In my opinion in all material respects the expenditure and income in the financial statements were incurred or applied in accordance with any applicable enactments and guidance issued by the Scottish Ministers.
Responsibilities for regularity
The Accountable Officer is responsible for ensuring the regularity of expenditure and income. I am responsible for expressing an opinion on the regularity of expenditure and income in accordance with the Public Finance and Accountability (Scotland) Act 2000.
Report on other requirements
Opinions on matters prescribed by the Auditor General for Scotland In my opinion, the audited part of the Remuneration and Staff Report has been properly prepared in accordance with the Natural Heritage (Scotland) Act 1991 and directions made thereunder by the Scottish Ministers.
In my opinion, based on the work undertaken in the course of the audit: – the information given in the Performance Report for the financial year for which
the financial statements are prepared is consistent with the financial statements and that report has been prepared in accordance with the Natural Heritage (Scotland) Act 1991 and directions made thereunder by the Scottish Ministers; and
– the information given in the Governance Statement for the financial year for which the financial statements are prepared is consistent with the financial statements and that report has been prepared in accordance with the Natural Heritage (Scotland) Act 1991 and directions made thereunder by the Scottish Ministers.
68
Matters on which I am required to report by exception
I am required by the Auditor General for Scotland to report to you if, in my opinion: – adequate accounting records have not been kept; or – the financial statements and the audited part of the Remuneration and Staff
Report are not in agreement with the accounting records; or – I have not received all the information and explanations I require for my audit.
I have nothing to report in respect of these matters.
Conclusions on wider scope responsibilities
In addition to my responsibilities for the annual report and accounts, my conclusions on the wider scope responsibilities specified in the Code of Audit Practice are set out in my Annual Audit Report.
Use of my report
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 120 of the Code of Audit Practice, I do not undertake to have responsibilities to members or officers, in their individual capacities, or to third parties.
Maggie Bruce CA Senior Audit Manager Audit Scotland 1st Floor, Room F03 The Green House Beechwood Business Park North Inverness IV2 3BL
29 July 2019
69
Primary Financial Statements and Notes The Statements of Comprehensive Net Expenditure, Financial Position, Cash Flows and Changes in Taxpayers’ Equity, as well as details of accounting Policies and supporting notes
The outturn against the DEL and AME budgets is shown on pages 36-41
70
Statement of Comprehensive Net Expenditure for the year ended 31 March 2019
Note 2018-19 2017-18 *
£000 £000
Income
External funding 5 (1,163) (666)
Income from activities 6 (1,206) (1,240)
EU funding (681) (444)
Income from operating activities (3,050) (2,350)
(Profit)/Loss on disposal of assets 7 (13) (5)
Total income (3,063) (2,355)
Expenditure
Staff costs 8 27,253 25,509
Other costs 11 7,686 7,364
Operating costs 12 18,160 14,484
Capital grant in kind 13 25 –
Decrease in provisions 21,22 & 23 (4) –
Depreciation of property, plant and equipment 14 1,697 1,594
Amortisation of intangible assets 16 165 188
Revaluation losses on property, plant and equipment 15 (131) (357)
Total operating expenditure 54.851 48,782
Net operating expenditure 51.788 46,427
Interest receivable 9 (13) (4)
Net expenditure 51,755 46,423
Other Comprehensive Expenditure
Net gain on revaluation of property, plant and equipment 14 & 15 (1,515) (321)
Total Comprehensive Expenditure for the year ended 31 March 2019 50,260 46,102
All income and expenditure is derived solely from continuing operations and is attributable to the taxpayer
* Revaluation movements in 2017-18 have been restated in accordance with current year's presentation
The notes on pages 74 to 94 form part of these accounts
71
Statement of Financial Position as at 31 March 2019
Note 2018-19 2017-18
£000 £000ASSETSNon-current assets
Heritage assets 13 873 873Property, plant and equipment 14 25,064 24,200Intangible assets 16 307 463
Total non-current assets 26,244 25,536
Current assets
Trade and other receivables 18 1,609 1,464Cash and cash equivalents 19 5,965 4,195
Total current assets 7,574 5,659
Assets classified as held for sale 17 – –
7,574 5,659
Total assets 33,818 31,195
LIABILITIESCurrent liabilitiesTrade and other payables 20 (7,809) (6,512)Provision for dilapidations and other provisions 21 (44) (53)Provision for payments of pensions to early retirements 22 (4) (11)Provisions for relocation liabilities and charges 23 – (27)
Total current liabilities (7,857) (6,603)
Total assets less current liabilities 25,961 24,592
Non-current liabilitiesTrade payables 20 (26) (35)Provision for dilapidations and other provisions 21 (20) (27)Provision for payments of pensions to early retirements 22 (4) (8)Total non-current liabilities (50) (70)
Assets less liabilities 25,911 24,522
TAXPAYERS’ EQUITYGeneral reserve 22,034 21,881Revaluation reserve 3,877 2,580Bequest reserve – 61
Total taxpayers’ equity 25,911 24,522
Francesca Osowska Chief Executive and Accountable Officer29 July 2019 The Accountable Officer authorised these financial statements for issue on 29 July 2019
The notes on pages 74 to 94 form part of these accounts
72
Statement of Cash Flows for the year ended 31 March 2019
Note 2018-19 2017-18
£000 £000
Operating activities
Net operating expenditure (51,788) (46,427)
Adjustment for items not involving the movement of cash
Non-cash:
Depreciation of property, plant and equipment 1,697 1,594
Amortisation of intangible assets 165 188
Revaluation losses on property, plant and equipment (131) (357)
Profit on disposal of non-current assets (13) (5)
Capital grant in kind 25 –
Working capital adjustments:
(Increase) decrease in trade and other receivables (145) 172
Increase in trade and other payables 1,354 775
Movements in provisions (55) (74)
Net cash outflow from operating activities (48,891) (44,134)
Cash flows from investing activities
Payments to acquire heritage assets 13 – (2)
Payments to acquire property, plant and equipment 14 (1,019) (1,006)
Payments to acquire intangible assets 16 (12) (43)
Receipts from sales of non-current assets 7 57 142
Interest received 9 13 4
Net cash outflow from investing activities (961) (905)
Cash flows from financing activities
Grant-in-aid funding from Scottish Government 4 51,598 46,882
Other cash funding from Scottish Government 4 24 50
Net cash inflow from financing activities 51,622 46,932
Increase in cash and cash equivalents in the year 1,770 1,893
Cash and cash equivalents at 1 April 2018 19 4,195 2,302
Cash and cash equivalents at 31 March 2019 19 5,965 4,195
Net movement in cash and cash equivalents 1,770 1,893
Revaluation movements in 2017-18 have been restated in accordance with current year's presentation
The notes on pages 74 to 94 form part of these accounts
73
Statement of Changes in Taxpayers’ Equity for the year ended 31 March 2019
NoteGeneral
Reserve*
AssetRevaluation
ReserveBequest Reserve
£000 £000 £000
Balance at 31 March 2017 21,382 2,247 63
Changes in taxpayers’ equity for 2017-18
Net cost for the year (excluding asset impairment) (46,423) – –
Revaluation reserve movement 81 (81) –
Revaluation gains 14 – 321 –
Net indexation movement (93) 93 –
Bequest reserve movement 2 – (2)
Total recognised income and expense for 2017-18 (46,433) 333 (2)
Resource DEL grant-in-aid 4 45,682 – –
Capital DEL grant-in-aid 4 1,200 – –
Other cash funding received from Scottish Government 4 50 – –
46,932 – –
Balance at 31 March 2018 21,881 2,580 61
Changes in taxpayers’ equity for 2018-19
Net cost for the year (51,775) – –
Revaluation reserve movement 218 (218) –
Revaluation gains 14 – 1,515 –
Capitalisation of land not previously recognised 27
Bequest reserve movement 61 – (61)
Total recognised income and expense for 2018-19 (51,469) 1,297 (61)
Resource DEL grant-in-aid 4 50,718 – –
Capital DEL grant-in-aid 4 880 – –
Other cash funding received from Scottish Government 4 24 – –
51,622 – –
Balance at 31 March 2019 22,034 3,877 –
The General Reserve serves as the chief operating fund. The General Reserve is used to account for all financial resources except those required to be accounted for in the other reserves. The Revaluation Reserve records the unrealised gains or losses on revaluation of assets.
The notes on pages 74 to 94 form part of these accounts
74
Notes to the Accounts1. Basis of accounts
These financial statements have been prepared in accordance with EU adopted International Financial Reporting Standards (IFRS) as adopted and interpreted by the 2018/19 Government Financial Reporting Manual (FReM) issued by HM Treasury and the Accounts Direction issued by Scottish Ministers. The direction is reproduced as an appendix to the accounts.
The Board and Accountable Officer have considered the budget and associated grant in aid allocation for 2019/20 and consider that SNH has adequate resources to continue in operational existence in the foreseeable future. The accounts are therefore prepared on a going concern basis. An assessment of liquidity risk is shown in note 29 and the budget allocation for 2019/20 can be seen at https://www.nature.scot/about-snh/our-work/how-our-work-funded
The accounts have been prepared under the historical cost convention, modified to account for the revaluation of property, plant and equipment.
2. Accounting Policies
Where the FReM permits a choice of accounting policy, the accounting policy which is judged to be most appropriate to the particular circumstances of Scottish Natural Heritage (SNH) for the purpose of giving a true and fair view has been selected. The particular policies adopted by SNH are described below. They have been applied consistently in dealing with items that are considered material to the accounts.
2.1 Property, plant and equipment
The threshold for capitalising assets is £10,000 for land and buildings, including improvements; £1,000 for information technology hardware and £5,000 for all other categories.
On initial recognition, property, plant and equipment are measured at cost including any costs such as installation directly attributable to bringing them into working condition. All property, plant and equipment are reviewed annually for impairment and are carried at fair value. Land and buildings are stated at their fair value based on the valuation policy noted below. Infrastructure assets are valued at depreciated replacement cost which is considered a reasonable proxy of fair value. Assets under construction are carried at cost and are transferred to the appropriate property, plant and equipment category when completed and ready for use, with impairment reviews being undertaken in accordance with the stated policy note shown below. No depreciation is charged until the asset is operational. Vehicles, other equipment and furniture, fixtures and fittings are valued at depreciated replacement cost using published indices. Information technology equipment is valued at depreciated historic cost which is considered a reasonable proxy of fair value due to the short-life of the assets.
Depreciation is provided on a straight-line basis on all property, plant and equipment (other than freehold land) at rates calculated to write down the cost or valuation of each asset over its estimated useful life.
Land Not depreciated
Freehold buildings 10 to 50 years as determined by Valuation Office Agency
Infrastructure assets 7 to 50 years depending on the nature of the asset
Leasehold buildings including improvements 50 years or period of lease whichever is shorter
Information technology equipment 4 years
Other equipment 7 years
Vehicles 5 years
Furniture, fixtures and fittings are expensed when purchased
In line with the SPFM, regular professional valuations of land and property (which includes buildings, dwellings and infrastructure assets) are carried out. Full valuations are undertaken every 5 years with interim reviews of 25% of the land and property portfolio undertaken in each of the intervening four years. A full valuation was undertaken in the current year by District Valuers of the Valuation Office Agency, following the principles set out in the Appraisal and Valuation Manual of the Royal Institution of Chartered Surveyors, and acting in the capacity of External Valuers. Vehicles and other equipment are valued using published indices each year.
75
2.2 Intangible assets
Expenditure on intangible assets, which includes purchased computer software licences and internally developed software, has a threshold for capitalisation of £1,000. When capitalising internally generated intangible assets such as software, only directly attributable costs including staff costs and staff-related costs, are included where it is deemed that the asset will generate future economic benefits in the way of savings or improvements to internal processes.
FReM directs users to value intangible assets at fair value of the asset rather than cost and recommends depreciated replacement cost as an appropriate method. However, SNH does not currently index software on the basis that assets have a short useful life, costs are unlikely to fluctuate significantly over that life, and that the asset may not be replaceable like for like due to technological advances. Applying indexation to the original cost would also not give a reliable estimation of the replacement cost of the asset. Intangible assets are therefore carried at depreciated historical cost less any impairment.Intangible assets are amortised over 4 years.
2.3 Non-current assets classified as held for sale
SNH classify a non-current asset as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met when the asset is actively being marketed by management, it is available for immediate sale in its present condition, the sale is considered to be highly probable and is expected to qualify for recognition as a completed sale within one year from the date of classification.
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. Depreciation or amortisation for such assets is not charged from the date they are classified as an asset held for sale.
2.4 Heritage assets
FReM section 7.1.31 provides a definition of a heritage asset as ‘a tangible asset with historical, artistic, scientific, technological, geophysical or environmental qualities that is held and maintained principally for its contribution to knowledge and culture’. They are those that are intended to be preserved in trust for future generations because of their cultural, environmental or historical associations’. SNH’s heritage assets are held by SNH in pursuit of its overall objectives in relation to the maintenance of the natural heritage and clearly fall within the Accounting Standards Board’s definition.
International Accounting Standard 16 – Property, Plant and Equipment requires us, where practicable, to value our Heritage Assets and report these on the Statement of Financial Position. Within SNH we have identified two types of Heritage Assets which are accounted for as follows:
Heritage Land
On its creation in 1992, SNH took over stewardship of land, either in the form of ownership or through leasehold interest, from the Nature Conservancy Council for Scotland. These are held in support of our primary objective to look after all of Scotland’s nature and landscapes, across all of Scotland for everyone.
These holdings at 31 March 2019 extended to 41,767 hectares. This land is owned or leased by SNH and managed as or associated with the management of national nature reserves (NNR) or SNH nature reserves (NR) or sites of special scientific interest (SSSI). Due to the diverse nature of these assets, that the land is held with the long term objective of the realisation of non-monetary public benefits and the lack of a comparable valuation basis, we do not recognise these assets in the Statement of Financial Position unless cost information is available.
Acquisitions are made by purchase, donation or exchange. If land no longer meets the requirements of our policies for ownership, it will be considered for disposal within the wider public sector or to any other appropriate body. We will also consider asset transfer requests by community transfer bodies for any of our heritage land properties. When a sale takes place the land will be recognised as an asset addition and disposed of at the agreed sale value.
Expenditure which is required to maintain and preserve owned and leased heritage land is recognised in the Statement of Comprehensive Net Expenditure when it is incurred.
Further information on heritage land is given in note 13.1.
76
Antiques and Works of Art
The items that form the collection of antiquities within Kinloch Castle on the Isle of Rum are reported in the Statement of Financial Position at auction based valuation. The collection was acquired by donation at the time the castle itself was bequeathed in 1957, initially to the Nature Conservancy and subsequently to SNH via the Nature Conservancy Council.
A specialist external valuer, Bonhams Limited, carried out a full assessment of the collection of antiquities as at 31 March 2016. The valuations were undertaken on a basic auction level, including recent transaction information from sales where similar types of items are regularly purchased. Full valuations will be carried out every five years in accordance with the requirements in FReM. SNH reviews the inventory of antiques for accuracy on an annual basis.
The items forming the collection are deemed to have indeterminate lives; therefore it is deemed appropriate that no depreciation is charged.
Any expenditure which is required to preserve or prevent further deterioration of individual collection items will be recognised in the statement of comprehensive net expenditure when it is incurred.
2.5 Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise cash at banks and on hand.
2.6 Foreign currency exchange
Transactions denominated in foreign currencies are translated into sterling at the rates ruling at the dates of the transactions. Any outstanding monetary assets and liabilities at the year-end are translated into sterling at the rates ruling at 31 March. Translation differences are dealt with in the operating cost statement.
2.7 Provisions
Provisions are recognised when SNH has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The expense relating to any provisions is presented in the statement of comprehensive net expenditure net of any reimbursement. Pension related provisions are discounted where appropriate using the real rate set by HM Treasury of 0.29% (2017/18: 0.10%). Where discounting is used, the carrying amount of a provision increases in each year to reflect the passage of time. This change is recognised as a financial expense adjacent to interest but disclosed separately from other interest on the face of the statement of comprehensive net expenditure.
2.8 Taxation
SNH lost its charitable status from 1 April 2007 under the Charities and Trustees Investment (Scotland) Act 2005. However, HM Revenue & Customs (HMRC) has confirmed that SNH’s charitable status has been preserved for taxation purposes.
Revenues, expenses and assets are generally recognised inclusive of the amount of VAT except where, in limited circumstances, the VAT incurred on a purchase of assets or services is recoverable from HMRC. Receivables and payables are stated with the amount of VAT included.
The net amount of VAT recoverable from, or payable to, HMRC is included as part of receivables or payables in the statement of financial position.
2.9 Grant-in-aid
SNH receives Grant-in-aid from the Scottish Government to finance its net expenditure. Grant-in-aid is credited to the general reserve in the period in which it is received. The net cost of SNH is charged to this fund.
2.10 Funding from the European Commission
European Commission funding receivable is included in the Statement of Comprehensive Net Expenditure to match expenditure incurred to 31 March 2019 on approved projects.
77
2.11 Income and expenditure recognition
Income from activities and expenditure is accounted for in the year to which it relates and not when cash payments are made or received. Where income and expenditure has been recognised but cash has not been received or paid, a receivable or payable for the corresponding amount is recorded in the Statement of Financial Position.
2.12 Employee benefits
Pensions
The provision of the Principal Civil Service Pension Scheme (PCSPS) covers some present and past employees and is an unfunded, defined benefit, contributory public service occupational pension scheme. PCSPS is a multi-employer defined benefit scheme but SNH is unable to identify its share of the underlying assets and liabilities. Liability for payment of future benefits is a charge on the PCSPS which prepares its own scheme statements. The scheme actuary valued the PCSPS as at 31 March 2016. Further details on this can be found at Principal Civil Service Pension Scheme Actuarial Valuation: 31 March 2016 and the resource accounts of the Cabinet Office: Civil Superannuation.
Further information on pensions, including the changes that took effect from 1 April 2015 with the creation of the Alpha Pension scheme, is contained in the remuneration and staff report.
SNH recognises the expected cost of these elements on a systematic and rational basis over the period during which it benefits from employees’ services by payments to the PCSPS and Alpha of amounts calculated on an accruing basis. In respect of the defined contribution elements of the schemes, SNH recognises the contributions payable for the year.
Other employee benefits
A liability and an expense are recognised for accrued but unused annual leave and flexi leave balances at the 31 March, in accordance with the underlying policy. These costs are included in the amounts shown in the remuneration and staff report.
2.13 Operating leases
All SNH leases are leases where substantially all the risks and benefits of ownership of the asset have not transferred to SNH and are therefore classified as operating leases. Rentals payable are charged in the statement of comprehensive net expenditure on a straight line basis over the lease term. SNH recognises the aggregate benefit of incentives as a reduction of rental expense over the lease term, on a straight-line basis.
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception date: whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset.
2.14 Grants and management agreements
Grants and management agreements are accounted for in the financial year to which the underlying activity relates. SNH’s policy is to recover grants where the conditions attached to that grant have been materially breached and no acceptable alternative conditions or remedies can be implemented.
2.15 Research and development
Research and development expenditure, excluding certain IT projects, is charged to the operating cost statement. IT projects which lead to an intangible asset being created are included in the statement of financial position as additions to intangible fixed assets, and SNH’s operating costs reduced accordingly.
78
2.16 Impairment of non-financial assets
SNH assesses at each reporting date whether there is an indication that any assets may be impaired. This assessment is made through discussions with property colleagues to identify any events which have occurred that would indicate that impairment may have taken place and also from the formal or interim valuations undertaken in accordance with the policy at notes 2.1 and 2.4.
Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered to be impaired and is written down to its recoverable amount. Impairment losses are recognised in the statement of comprehensive net expenditure, except for assets previously re-valued where the revaluation was taken to the asset revaluation reserve. In this case the impairment is recognised in the asset revaluation reserve up to the amount of any previous revaluation.
2.17 Interest income
Interest income is recognised as interest accrues using the effective interest rate and is included in the statement of comprehensive net expenditure as non-operating income.
2.18 Financial instruments
SNH does not hold any complex financial instruments. The only financial instruments included in the accounts are receivables, cash and cash equivalents and payables (notes 18, 19 and 20). Trade and other receivables are recognised initially at fair value (which is defined as the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale) less any impairment for any amounts assessed as irrecoverable. An impairment of debt for irrecoverable amounts is made where there is evidence that SNH will be unable to collect an amount due in accordance with agreed terms. Trade and other payables are recognised at fair value.
2.19 Accounting estimates and assumptions
Other than estimates and assumptions relating to provisions as stated in accounting policy at 2.7 above, no material estimates or judgements were made by SNH in preparing these accounts
2.20 Accounting standards issued but not yet effective
At the date of authorisation there were the following Accounting Standards issued, but not yet effective, which relate to SNH:
– IFRS 16: Leases – the implementation date for the public sector has been deferred from accounting periods beginning on or after 1 January 2019 to those beginning on or after 2020. This standard specifies how to recognise, measure, present and disclose leases. Adoption of this standard in 2020/21 will necessitate recognising a right to use asset category within property, plant and equipment representing SNH’s right to use the underlying leased asset and a lease liability representing SNH’s obligation to make lease payments for the asset as at 1 April 2020. Budget treatment of lease transactions is awaiting confirmation from HM Treasury. A review of leases will be undertaken in 2019/20 in order to comply with IFRS 16: Leases. This will result in changes to the accounting treatment and disclosures relating to lease arrangements.
79
3. Segment information
IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the organisation that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance. SNH reports segmental information based on the four outcomes agreed by Senior Leadership Team as effective areas of work to best achieve the organisations goals and objectives. The accounting policies of the reportable outcomes are the same as those accounting policies described in note 2.
During 2018/19 SNH delivered its Corporate Strategy through the following outcomes as set out in the Performance Report section of the annual report. The table presents management information, produced on an IFRS basis, on income, expenditure, net operating cost and capital additions relating to the operating segments for the year ended 31 March 2019.
Other assets and liabilities are not reported on a segmental basis as they do not form part of the regular review by management to make decisions about resources to be allocated to the segment or to assess its performance.
Outcome 1 Outcome 2 Outcome 3 Outcome 4 Total of operating segments
Year ended 31 March 2019 £000 £000 £000 £000 £000
Income
External funding (352) (148) (588) (75) (1,163)
Income from activities (212) (10) (5) (979) (1,206)
EU funding (198) (120) (363) – (681)
Profit on disposal of assets (1) – – (12) (13)
Total income (763) (278) (956) (1,066) (3,063)
Expenditure
Staff costs 3,177 4,385 8,623 11,068 27,253
Other costs 461 215 916 6,094 7,686
Operating costs 3,597 2,671 10,561 1,331 18,160
Capital grant in kind 25 – – – 25
Decrease in provisions – – – (4) (4)
Depreciation of property, plant and equipment
– – – 1,697 1,697
Amortisation of intangible assets – – – 165 165
Revaluation losses on property, plant and equipment
– – – (131) (131)
Total expenditure 7,260 7,271 20,100 20,220 54,851
Net operating costs 6,497 6,993 19,144 19,154 51,788
Interest receivable – – – (13) (13)
Net cost for the financial year 6,497 6,993 19,144 19,141 52,775
Capital additions (including non-operational asset additions)
311 21 34 627 993
Outcome 1 – more people from across Scotland are enjoying and benefiting from nature Outcome 2 – the health and resilience of Scotland’s nature is improved Outcome 3 – more investment in the management of Scotland’s natural capital to improve prosperity and wellbeing Outcome 4 – we have transformed how we work
80
3. Segment information (continued)
Outcome 1 Outcome 2 Outcome 3 Outcome 4 Total of operating segments
Year ended 31 March 2018 £000 £000 £000 £000 £000
Income
External funding (107) (148) (324) (87) (666)
Income from activities (150) (113) (12) (965) (1,240)
EU Funding (133) (25) (286) – (444)
Profit on disposal of non-current assets
– – – (5) (5)
Total income (390) (286) (622) (1,057) (2,355)
Expenditure
Staff costs 2,859 5,535 6,314 10,801 25,509
Other costs 529 248 731 5,856 7,364
Operating costs 4,014 3,095 6,008 1,367 14,484
Increase in provisions – – – – –
Depreciation of property, plant and equipment
– – – 1,594 1,594
Amortisation of intangible assets – – – 188 188
Revaluation losses on property, plant and equipment
– – – (357) (357)
Total expenditure 7,402 8,878 13,053 19,449 48,752
Net operating costs 7,012 8,592 12,431 18,392 46,427
Interest receivable – – – (4) (4)
Net cost for the financial year 7,012 8,592 12,431 18,388 46,423
Capital additions (including non-operational asset additions)
53 1 8 1,114 1,176
4. Cash grant-in-aid
Total cash grant-in-aid drawn down from the Scottish Government in 2018/19 was £51.598m (2017/18: £46.882m). This included ring-fenced cash grant-in-aid within SNH’s operating budget for a JNCC grant of £1.054m (2017/18: £1.087m) and Peatlands Action funding of £7.600m (2017/18: £3.316m).
2018-19 2017-18
£000 £000
Resource DEL grant-in-aid 50,718 45,682
Capital DEL grant-in-aid 880 1,200
51,598 46,882
Other cash funding 24 50
Scottish Government also provided cash funding of £0.024m (2017/18: £0.050m) to fund the relocation provision expenditure incurred during the year (note 23).
81
5. External funding
2018-19 2017-18
£000 £000
Partnership and other grant income 1,022 510
Other external funding 141 156
1,163 666 The increase in partnership and other grant income is partly due to increased level of funding in 2018/19 relating to projects funded partly by the Heritage Lottery Fund and income received towards the National Cycling and Walking Network. Other external funding includes contributions towards projects, donations, renewable tariff and incentive income.
6. Income from activities
2018-19 2017-18
£000 £000
Professional services 87 192
Managing resources 876 787
Other income from activities 243 261
1,206 1,240
Managing resources includes income derived from property and site use. Professional services are a demand driven activity and includes providing services to other public sector bodies; there has been less demand in 2018/19.
7. Profit on disposal of non-current assets
2018-19 2017-18
£000 £000
Profit on disposal of non-current assets 13 5
The total proceeds from the sale of property, plant and equipment were £0.057m (2017/18: £0.142m).
8. Staff costs
Staff costs for 2018/19 were £27.253m (2017/18: £25.509m). Further analysis of these costs is shown within the Accountability Report on page 43. The increase in staff costs are due a variety of reasons: impact of the 2018/19 pay award and an increase in staff numbers (9 FTE).
9. Interest receivable
2018-19 2017-18
£000 £000
Bank interest 13 4
82
10. Green Infrastructure Strategic Intervention
SNH leads on the Scottish Government’s Green Infrastructure Strategic Intervention (GISI), part of the 2014–2020 European Regional Development Fund (ERDF) Programme. The aim of the ERDF is to invest in communities to help them to grow economic activity and employment. SNH acts as an agent for Scottish Government (SG) in that the ultimate approval of claims comes from SG who only then forwards funding to SNH to enable the claim to be paid. The following activity took place during 2018/19:
2018-19 2017-18
£000 £000
Relating to third party claims
Claims paid out by SNH 47 –
Cash received from Scottish Government relating to claims 7 –
Amounts receivable from Scottish Government at 31 March 2019 40 –
SNH submits claims to SG for its own activities relating to its role as lead partner for GISI and these are reflected in the Statement of Net Comprehensive Expenditure and Statement of Financial Position.
11. Other costs
2018-19 2017-18
£000 £000
Staff related costs 435 396
Office and other accommodation 2,530 2,684
Travel 737 695
Communications 1,327 1,394
Supplies and services 1,282 1,392
Vehicle costs 338 290
Consultancy costs 980 457
Audit fee payable to Audit Scotland 57 56
7,686 7,364
The above costs include operating leases amounting to £0.679m (2017/18: £0.745m). The audit fee to Audit Scotland for the year was £56,980 (2017/18: £55,850).
83
12. Operating costs
2018-19 2017-18
£000 £000
Promotion 561 528
Research 3,574 3,721
Grants 8,408 4,426
Partnership funding 1,451 1,984
Management agreements 2,251 2,213
Managed sites 1,915 1,612
18,160 14,484 Operating costs include European Union funded expenditure amounting to £0.205m (2017/18: £0.324m). The grants figure of £8.408m includes ring-fenced funding to JNCC of £1.054m (2017/18: £1.087m) and the majority of the increase from 2017/18 to 2018/19 in grant expenditure relates to Peatland Action grants.
Grant and partnership funding expenditure of £9.859m (2017/18: £6.410m), comprises £2.789m grants made to the public sector and £7.070m to the private and third sectors.
13. Heritage assets
Heritage land Heritage building Antiques and works of art
Total heritage assets
Year ended 31 March 2019 £000 £000 £000 £000
Cost or valuation
At 1 April 2018 81 – 792 873
Additions – – – –
Recognition of non-operational assets
25 – – 25
Disposals – – – –
Disposals – capital grant (25) – – (25)
Reclassification – – – –
Revaluation gains – – – –
Revaluation losses – – – –
At 31 March 2019 81 – 792 873
Heritage land Heritage building Antiques and works of art
Total heritage assets
Year ended 31 March 2018 £000 £000 £000 £000
Cost or valuation
At 1 April 2017 79 – 792 871
Additions 2 – – 2
Disposals – – – –
Reclassification – – – –
Revaluation – – – –
Permanent diminution – – – –
At 31 March 2018 81 – 792 873
Details relating to the valuation of Heritage Assets can be found in accounting policy note 2.4.
84
13.1 Heritage land
At 31 March 2019 41,767 hectares (ha) of heritage land were either owned or leased by SNH. The majority of this land is managed as national nature reserves (NNR) – nationally important places where we encourage people to come and experience the best of Scotland’s nature. The remaining land is either associated with the NNR but not designated as such, or is managed as a site of special scientific interest or for other conservation purposes.
Five year summary of heritage land transactions
2018-19 2017-18 2016-17 2015-16 2014-15
ha ha ha ha ha
Holdings owned b/f 35,420 35,421 35,421 35,421 35,421
Holdings leased b/f 7,605 7,571 7,571 7,656 7,656
Adjustments (14) (1) – – –
Total Holdings b/f 43,011 42,991 42,992 43,077 43,077
Acquisitions
Land – owned – – – – –
Land – leased – 488 – – –
Total acquisitions – 488 – – –
Disposals
Land – owned (1,043) – – – –
Land – leased (201) (454) – (85) –
Total disposals (1,244) (454) – (85) –
Holdings owned c/f 34,363 35,420 35,421 35,421 35,421
Holdings leased c/f 7,404 7,605 7,571 7,571 7,656
Total holdings c/f 41,767 43,025 42,992 42,992 43,077
In March 2019 SNH concluded the sale of 1,043 ha of land at Loch Druidibeg to South Uist Estates Ltd for £1, thereby transferring the land into community ownership. This land was managed as a National Nature Reserve from 1958 to 2012.
The lease of 201 ha of land to SNH by Forestry Commission Scotland at the former Silver Flowe NNR was terminated in September 2018 following its dedeclaration as a NNR in May 2018.
There were no acquisitions of owned or leased heritage land by SNH in 2018/19.
SNH is working to register all of its land and property on the Land Register, as requested by the Scottish Government. Once completed, we will report the area of our landholding derived from the registered plans (“GIS area”) for all of our properties instead of the areas stated in the original property deeds (“documented area”) as is reported above. It is likely that there will be some change to the overall area figure as a result of this process.
85
SNH manages its heritage land through adherence to the following management objectives:
Management of the Natural Heritage
We manage our NNRs to maintain or restore their nature conservation interests to the best achievable condition. Our management on NNRs is informed by research, survey and monitoring. We use this information to better understand the nature conservation interests of the reserves, and develop new knowledge and skills to improve our management of wildlife habitats. We may use specialised management techniques to achieve our conservation aims, and our reserves allow us to demonstrate and share our knowledge and experience of these with others.
Management for People
Our visitors are important to us and our management is committed to raising the profile of NNRs and ensuring that they are accessible to as wide a range of people as possible. We want our visitors to know they are welcome; and to leave knowing more and appreciating the special nature conservation qualities each reserve has to offer.
Property Management
We strive to ensure that all of our property is well maintained, clean and safe. We comply with legislative requirements and are committed to reducing our environmental impact through sustainable initiatives.
13.2 Antiques and works of art The Kinloch Castle collection consists of paintings, furniture, ceramics and musical instruments of Victorian and Japanese origins. The collection is valued every five years as described in accounting policy note 2.4. The next valuation will take place in 2021.
The values of the items may reduce due to both the market and the overall condition of the assets. The valuation, when undertaken, is gauged on a basic auction level. Though it’s possible for the worth of the antiques to improve, we have been advised by the auctioneers that the value will likely reduce further over the next 10 years.
We continue to ensure that as much of the collection is made available to view through the castle as is practically possible via tours which are run by the community. Ultimately the future of the collection is linked to the future of the building itself, which is currently being explored.
86
La
nd£
00
0B
uild
ings
£0
00
Dw
ellin
gs£
00
0
Infr
astr
uctu
re
asse
ts£
00
0
Leas
ehol
d im
prov
emen
ts£
00
0
Info
rmat
ion
tech
nolo
gy£
00
0Ve
hicl
es£
00
0
Oth
er
equi
pmen
t£
00
0
Furn
iture
fixtu
res
&
fittin
gs£
00
0
Ass
ets
unde
r co
nstr
uctio
n£
00
0
Tota
l pr
oper
ty,
plan
t &
equi
pmen
t£
000
Cos
t or
valu
atio
n
At 1
Apr
il 20
182,
418
19,7
6052
840
61,
236
3,4
452,
410
1,91
51,
611
1233
,741
Add
ition
s–
87–
–24
246
212
81–
30
495
4
Cap
italis
atio
n of
land
not
pr
evio
usly
reco
gnis
ed2
––
––
––
––
–2
Dis
posa
ls–
(23)
––
(31)
(58
3)(2
64)
(411
)(2
4)–
(1,3
36)
Rec
lass
ifica
tion
–(6
1)76
–19
––
7–
(41)
–
Rev
alua
tion
gain
s49
171
19(1
88)
––
13–
––
64
Rev
alua
tion
loss
es(8
8)(5
10)
––
––
–(3
)–
–(6
01)
At 3
1 M
arch
201
92,
381
19,4
2462
321
81,
248
3,1
08
2,37
11,
589
1,58
727
532
,824
Dep
reci
atio
n
At 1
Apr
il 20
18–
(973
)(7
2)(2
99)
(1,0
52)
(2,3
88)
(1,4
66)
(1,6
80)
(1,6
11)
–(9
,541
)
Cha
rge
for y
ear
–(8
19)
(22)
(8)
(46)
(427
)(3
07)
(68)
––
(1,6
97)
Dis
posa
ls–
4–
–31
575
250
410
24–
1,29
4
Rec
lass
ifica
tion
–19
(19)
––
––
––
––
Bac
klog
––
––
––
(8)
––
–(8
)
Rev
alua
tion
gain
–1,
557
113
307
––
––
––
1,97
7
Rev
alua
tion
loss
es–
212
––
––
–3
––
215
At 3
1 M
arch
201
9–
––
–(1
,067
)(2
,240
)(1
,531
)(1
,33
5)(1
,587
)–
(7,7
60)
Net
Boo
k Va
lue
at 3
1 M
arch
201
92
,381
19,4
2462
321
818
186
884
025
4–
275
25,0
64
Net
Boo
k Va
lue
at 3
1 M
arch
201
82,
418
18,7
8745
610
718
41,
057
944
235
–12
24,2
00
14.
P
rope
rty,
pla
nt a
nd e
quip
men
t
Pur
chas
es o
f tot
al p
rope
rty,
pla
nt a
nd e
quip
men
t in
the
sche
dule
of £
0.95
4 (2
016/
17: £
1.13
1m)
appe
ar in
the
cash
flow
sta
tem
ent a
s £
1.01
9m a
fter a
djus
tmen
t for
ope
ning
an
d cl
osin
g pr
oper
ty, p
lant
and
equ
ipm
ent a
ccru
als
in tr
ade
and
othe
r pay
able
s.
87
The
nam
es a
nd q
ualifi
catio
ns o
f the
val
uers
, fre
quen
cy o
f val
uatio
ns, t
he d
ate
on w
hich
they
wer
e va
lued
and
the
prop
erty
, pla
nt a
nd e
quip
men
t tha
t is
subj
ect t
o re
valu
atio
n us
ing
indi
ces
can
be fo
und
in a
ccou
ntin
g po
licy
note
2.1
.
14.
P
rope
rty,
pla
nt a
nd e
quip
men
t (c
ontin
ued)
La
nd£
00
0B
uild
ings
£0
00
Dw
ellin
gs£
00
0
Infr
astr
uctu
re
asse
ts£
00
0
Leas
ehol
d im
prov
emen
ts£
00
0
Info
rmat
ion
tech
nolo
gy£
00
0Ve
hicl
es£
00
0
Oth
er
equi
pmen
t£
00
0
Furn
iture
fixtu
res
&
fittin
gs£
00
0
Ass
ets
unde
r co
nstr
uctio
n£
00
0
Tota
l pr
oper
ty,
plan
t &
equi
pmen
t£
000
Cos
t or
valu
atio
n
At 1
Apr
il 20
172,
33
820
,350
530
406
1,23
64,
015
2,3
542,
414
1,91
4–
35,5
57
Add
ition
s–
143
––
–56
036
749
–12
1,13
1
Dis
posa
ls(1
)(3
4)(3
)–
–(1
,130
)(3
26)
(592
)(3
03)
–(2
,389
)
Rec
lass
ifica
tion
––
––
––
––
––
–
Rev
alua
tion
gain
s8
5(3
13)
(1)
––
–15
44
––
(168
)
Rev
alua
tion
loss
es(4
)(3
86)
––
––
––
––
(390
)
At 3
1 M
arch
201
82,
418
19,7
6052
840
61,
236
3,4
452,
410
1,91
51,
611
1233
,741
Dep
reci
atio
n
At 1
Apr
il 20
17–
(1,4
97)
(58)
(29
0)(1
,00
6)(3
,10
8)(1
,494
)(2
,14
4)(1
,914
)–
(11,
511)
Cha
rge
for y
ear
–(7
64)
(21)
(8)
(46)
(40
5)(2
67)
(83)
––
(1,5
94)
Dis
posa
ls–
73
––
1,12
530
558
530
3–
2,3
29
Rec
lass
ifica
tion
––
––
––
––
––
–
Bac
klog
––
––
––
(10)
(38)
––
(48)
Rev
alua
tion
gain
s–
1,0
944
––
––
––
–1,
097
Rev
alua
tion
loss
es–
187
––
––
––
––
187
At 3
1 M
arch
201
8–
(973
)(7
2)(2
99)
(1,0
52)
(2,3
88)
(1,4
66)
(1,6
80)
(1,6
11)
–(9
,541
)
Net
Boo
k Va
lue
at 3
1 M
arch
201
82
,418
18,7
8745
610
718
41,
057
944
235
–12
24,2
00
Net
Boo
k Va
lue
at 3
1 M
arch
201
72,
33
818
,853
472
116
230
907
860
270
––
24,0
46
88
15. Revaluation gains
At 31 March 2019, the quinquennial review of land and property was undertaken by District Valuers of the Valuation Office Agency. This resulted in revaluation losses of £0.386m (2017/18: £0.203m) offset by balances within the revaluation reserve of £0.145m. In addition, prior year revaluation losses of £0.372m were reversed resulting in the revaluation gain of £0.131m (2017/18: £0.357m) as shown in the statement of comprehensive net expenditure.
16. Intangible assets
Purchases of total intangible assets in the schedule of £0.012m (2017/18: £0.043m) appears in the cash flow statement as £0.012m as there were no adjustments for opening and closing intangible asset accruals in trade and other payables.
Internally developed
software
Internally developed
software AUC Software
licencesTotal intangible
assets
£000 £000 £000 £000
Cost or valuation
At 1 April 2018 1,368 – 1,090 2,458
Additions – 3 9 12
Disposals (216) – (55) (271)
Reclassification – – – –
At 31 March 2019 1,152 3 1,044 2,199
Amortisation
At 31 March 2018 (1,095) – (900) (1,995)
Charge for year (79) – (86) (165)
Disposals 214 – 54 268
At 31 March 2019 (960) – (932) (1,892)
Net Book Value at 31 March 2019 192 3 112 307
Net Book Value at 31 March 2018 273 – 190 463
Internally developed
software
Internally developed
software AUC
Software licences
Total intangible assets
£000 £000 £000 £000
Cost or valuation
At 1 April 2017 1,750 115 1,303 3,168
Additions – 43 – 43
Disposals (540) – (213) (753)
Reclassification 158 (158) – –
At 31 March 2018 1,368 – 1,090 2,458
Amortisation
At 31 March 2017 (1,552) – (1,002) (2,554)
Charge for year (79) – (109) (188)
Disposals 536 – 211 747
At 31 March 2018 (1,095) – (900) (1,995)
Net Book Value at 31 March 2018 273 – 190 463
Net Book Value at 31 March 2017 198 115 301 614
89
17. Non-current assets classified as held for sale
2018-19 2017-18
£000 £000
Opening balance at 1 April 2018 – 70
Reclassification of assets during the year – –
Revaluation of assets during the year – –
Disposals during the year – (70)
Closing balance at 31 March 2019 – –
18. a) Trade and other receivables
2018-19 2017-18
£000 £000
Trade receivables 220 273
Other receivables 20 342
Prepayments and accrued income 428 405
Claims due from European funding sources 569 312
Other funding claims 372 132
1,609 1,464
Trade and other receivables falling due after one year – –
Trade and other receivables 1,609 1,464
Included within trade and other receivables is a bad debt impairment of £0.014m (2017/18: £0.014m).
b) Whole of Government Accounts trade and other receivable balances
2018-19 2017-18
£000 £000
Comprising balances with:
Other central government bodies 380 392
Local authorities 48 145
428 537
All other trade and other receivables 1,181 927
1,609 1,464
19. Cash and cash equivalents
2018-19 2017-18
£000 £000
Cash and cash equivalents 5,776 3,741
European Commission and partnership funds received in advance 189 393
Bequest funds – 61
5,965 4,195
Cash at bank earns interest at the floating interest rate linked to base rate within commercial bank accounts. No accounts are held with the Government Banking Services.
90
20. a) Trade and other payables
2018-19 2017-18
£000 £000
Trade payables 493 476
Accruals and deferred income 6,635 5,117
Other tax and social security 525 504
VAT payable 77 67
Project funds and deposits in advance 105 383
7,835 6,547
Trade and other payables falling due after one year (26) (35)
Trade and other payables falling due within one year 7,809 6,512
The increase in trade and other payables falling due within one year of £1.297m (2017/18: increase of £0.908m) is shown in the statement of cash flows as an increase of £1.354m (2017/18: increase of £0.775m) after adjustment for movements in property, plant and equipment and intangible asset payables (notes 14 and 16).
Payables falling due after more than one year relates to the accrual of a rent free period on the Silvan House lease in Edinburgh which is being amortised over the remainder of the lease term. During the year £0.009m (2017/18: £0.009m) has been released from the accrual.
b) Whole of Government Accounts trade and other payable balances due within one year
2018-19 2017-18
£000 £000
Comprising balances with:
Other central government bodies 1,801 1,301
Local authorities 130 71
1,931 1,372
All other trade and other payables 5,878 5,140
7,809 6,512
Re-stated to conform with current year's presentation
21. Provision for dilapidations, onerous leases and other provisions
2018-19 2017-18
£000 £000
Opening balance at 1 April 2018 80 80
Movement on provisions in the year – –
Use of provisions in the year (16) –
64 80
Closing balance at 31 March 2019 falling due within one year (44) (53)
Closing balance at 31 March 2019 falling due after one year 20 27
The provision relates to dilapidation provisions relating to two SNH offices. Due to the short term nature of these provisions, no discounting has been applied.
91
22. Provision for payment of pension to early retirees
2018-19 2017-18
£000 £000
Opening balance at 1 April 2018 19 42
Increase(decrease) to pensions payable to existing retirees (including impact of increase in discount rate) – –
Unwinding of discount on provisions – –
Expenditure in the year charged against the provision (11) (23)
8 19
Closing balance at 31 March 2019 falling due within one year (4) (11)
Closing balance at 31 March 2019 falling due after one year 4 8
At 31 March 2019 the provision included 1 (2017/18: 2) former employee in receipt of early retirement pensions. Full provision has been made for the costs of pension payments to the voluntary early retiree up to normal retirement age on the basis as described in accounting policy 2.7. Discounting is applied in accordance with the discount rate provided by HM Treasury which is 0.29% (2017/18: 0.10%).
23. Provisions for relocation liabilities and charges
2018-19 2017-18
£000 £000
Opening balance at 1 April 2018 27 77
Increase(decrease) to provisions (including impact of increase in discount rate)
(3) –
Expenditure in the year charged against the provision (24) (50)
– 27
Closing balance at 31 March 2019 falling due within one year – (27)
Closing balance at 31 March 2019 falling due after one year – –
24. Commitments due and receivable under operating leases
24.1 At 31 March 2019, SNH had the following future minimum lease payments under non-cancellable operating leases:
2018-19 2017-18
Land Buildings Other Total Land Buildings Other Total
£000 £000 £000 £000 £000 £000 £000 £000
Expiry within:
One year 37 608 41 686 39 612 42 693
Two to five years 149 1,367 56 1,572 146 1,513 12 1,671
After five years 187 209 27 423 221 256 29 506
373 2,184 124 2,681 406 2,381 83 2,870
92
24.2 At 31 March 2019, SNH expects to receive the following future minimum lease payments under non-cancellable MOTU’s and leases arising from co-location arrangements with other public sector bodies.
2018-19 2017-18
Buildings Land Total Buildings Land Total
£000 £000 £000 £000 £000 £000
Expiry within:
One year 458 13 471 390 9 399
Two to five years 985 52 1,037 1,052 37 1,089
After five years 933 236 1,169 1,132 174 1,306
2,376 301 2,677 2,574 220 2,794
25. Capital and other commitments
25.1 Capital
As at 31 March 2019 SNH had various commitments for spend under its future capital programme for 2019/20 totalling £0.977m (2017/18: £0.533m). This expenditure fell into the following categories:
2018-19 2017-18
Authorised and
contracted
Authorised but not
contracted
Total Authorised and
contracted
Authorised but not
contracted
Total
£000 £000 £000 £000 £000 £000
Property, plant and equipment 248 665 913 93 415 508
Intangible assets 64 – 64 – – –
Heritage assets – – – – 25 25
312 665 977 93 440 533
25.2 Management Agreements
Forward commitments to continuing annual payments, under leases and management agreements covering the years up to and including 31 March 2089 are as follows:
2018-19 2017-18
£000 £000
Payable within 1 year 393 483
Payable in 2-5 years 913 743
Payable after 5 years 1,959 1,995
3,265 3,221
25.3 Grants
Forward commitments on grants accepted or offered as at 31 March 2019 covering the years up to and including 31 March 2022 are as follows:
2018-19 2017-18
£000 £000
Payable within 1 year 2,382 3,756
Payable in 2-5 years 239 467
2,621 4,223
93
26. Contingent liabilities
A compensation claim has been lodged relating to a management agreement that was in place between 1987 and 2012. Negotiations are ongoing with the claimant and at this time it is not possible to determine the potential liability, if any, that will arise. There is also one further case under discussion where a claim for damages may be raised as a result of action taken in 2013, again at this time we are not in a position to determine any potential liability.
27. Events after reporting date
There are no events after the reporting date that requires adjustment or disclosure.
28. Related party transactions
SNH is a non-departmental public body sponsored by the Scottish Government Directorate for Environment and Forestry. The Directorate is regarded as a related party.
During the year, and in the normal course of business, SNH has had a number of material transactions with the Directorate and other entities for which the Directorate is regarded as the sponsor, viz;
– Scottish Environment Protection Agency– Loch Lomond and The Trossachs National Park Authority– Cairngorms National Park Authority– The Royal Botanic Garden Edinburgh
SNH has also had a number of transactions with other government departments, central government bodies, local government and other non-departmental public bodies including:
– Forest Enterprise Scotland– Department for Environment, Food & Rural Affairs
During the year no Board or Senior Leadership Team members have undertaken any material transactions with SNH.
29. Financial instruments
SNH resource requirements are met from Scottish Government via the annual grant-in-aid provision and from other income generated from activities. SNH has no power to borrow funds and all surplus funds are held in interest bearing deposit accounts. Other than financial assets and liabilities which are generated by day-to-day operational activities, SNH holds no financial instruments. Because of the nature of its activities and the way in which SNH is financed, SNH is not exposed to the degree of financial risk faced by business entities.
Floating interest rate (linked to base rate) Non interest bearing Total
£000 £000 £000
Trade and other receivables – 1,609 1,609
Cash at bank and in hand 5,965 – 5,965
Total financial assets 5,965 1,609 7,574
Trade and other payables – 7,835 7,835
Total financial liabilities – 7,835 7,835
Liquidity risk
Scottish Ministers make provision for SNH’s use of resources, for revenue and capital purposes, in its budget for each financial year. Resources and accruing resources may be used only for the purposes specified and up to the amounts specified in the budget. An overall cash authorisation is also agreed between SGEFD and SNH to operate for the financial year. SNH is not therefore exposed to significant liquidity risks.
94
Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices that could affect SNH are currency risk and interest rate risk.
SNH minimises currency rate risk (which is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign currency exchange rates) on EU funded projects, by identifying in the memorandum of agreement for the projects a mechanism for partners to agree how a shortfall or surplus will be handled. Any shortfall or surplus would be covered in proportion to the partner’s contributions to the overall project.
As noted above, SNH has no power to borrow and all surplus funds are held in interest bearing deposit accounts. SNH has no other investments and therefore there is limited exposure to interest rate risk.
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or contract, leading to a financial loss. SNH is exposed to credit risk from its operating activities (primarily for trade and other receivables) and foreign exchange transactions but the level of risk is not deemed significant.
Credit risk related to trade and other receivables is managed through procedures relating to the review of all new customers and the monitoring and follow up of outstanding balances. Credit risk relating to foreign exchange transactions is managed as noted above under currency rate risk.
Fair values
The fair value of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:Cash and cash equivalents, trade receivables, trade payables, and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
There is no difference between the book value and fair value for the cash and cash equivalents shown in note 19.
95
Appendix
SCOTTISH NATURAL HERITAGE
DIRECTION BY THE SCOTTISH MINISTERS
1. The Scottish Ministers, in pursuance of Section 10(3) of the Natural Heritage (Scotland) Act 1991, hereby give the following direction.
2. 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.
3. The accounts shall be prepared so as to give a true and fair view of the income and expenditure and cash flows for the financial year, and of the state of affairs as at the end of the financial year.
4. This direction shall be reproduced as an appendix to the statement of accounts. The Direction given on 2 October 2002 is hereby revoked.
I. R. Hooper (Head of Countryside and Natural Heritage Division)Signed by the authority of the Scottish Ministers
Dated 12 January 2006
96
www.nature.scot
All images ©SNH except for p22 ©Gill Smart/SWT (left), ©David Palmer/SWT (right); p23 ©David Hill/Butterfly Conservation Scotland (right); p31 ©Philip Price
ISBN: 978-1-78391-848-5
This publication is available as a pdf on the SNH website.
FSC Logo
