Notes to the Consolidated Balance Sheet

1. Movement of fixed assets during the year

	Intangible Assets £000	Land and Buildings £000	Vehicles Plant & Equipment £000	Infra-structure £000	Community Assets £000	Non-Operational Assets £000	Total £000
Net Book value as at 31March 2004	0	522,427	2,148	124,079	8,838	8,583	666,075
Additions	194	33,601	4,238	20,971	1,487	1,265	61,756
Disposals	0	(1,507)	(32)	0	0	0	(1,539)
Transfers between asset categories	0	2,544	0	0	(159)	(2,385)	0
Impairment	0	(149)	0	0	0	0	(149)
Revaluations and restatements	0	21,067	100	0	4	745	21,916
Expenditure not increasing value	0	(20,002)	(2,599)	0	0	0	(22,601)
Book value as at 31March 2005	194	557,981	3,855	145,050	10,170	8,208	725,458
Less: Depreciation this year	0	(8,580)	(711)	(3,463)	0	0	(12,754)
Less: Writing down leased assets	0	(52)	0	0	0	0	(52)
Net book value as at 31March 2005	194	549,349	3,144	141,587	10,170	8,208	712,652

The table below breaks down the non-operational assets

	Investment Properties £000	Assets Under Construction £000	Assets held for Disposal £000	Total £000
Net Book value as at 31March 2004	2,837	3,970	1,776	8,583
Additions	0	1265	0	1265
Disposals	0	0	0	0
Transfers between asset categories	9	(2,394)	0	(2,385)
Impairment	0	0	0	0
Revaluations and restatements	237	334	174	745
Expenditure not increasing value	0	0	0	0
Book value as at 31March 2005	3,083	3,175	1,950	8,208
Less: Depreciation this year	0	0	0	0
Less: Writing down leased assets	0	0	0	0
Net book value as at 31March 2005	3,083	3,175	1,950	8,208

2.Valuations of fixed assets carried at current value

The following statement shows the progress of the Council’s rolling programme for the revaluation of fixed assets. The basis for valuation is set out in the statement of accounting policies in note 4. These values differ from note 1 above as these represent the gross values of the Fixed Assets as at the last revaluation whereas note 1 includes depreciation.

	Land and Buildings £000	Infra-Structure £000	Community Assets £000	Vehicles,Plant & Equipment £000	Non-Operational Assets £000	Total £000
Valued at historical cost Valued at current value in: Current Year Previous Years	0 225,213 330,468	138,535 0 0	8,683 0 0	2,188 0 0	0 1,765 3,279	149,406 226,978 333,747
Total	555,681	138,535	8,683	2,188	5,044	710,131

3.Foundation, church and other schools

Foundation schools remain vested in the Governing Bodies of the individual Foundation School, therefore these assets have not been included in the consolidated balance sheet. In this authority, there are four Foundation Schools with a fixed asset valuation of £14.220m as at 31 March 2005.

Church and other schools, which are not owned by the authority have not been included in the balance sheet, and therefore no capital charges will have been applied to the accounts.

4.Deferred charges

	£000
Balance at 31 March 2004 Net Expenditure Amount charged to Revenue Account Amount written off to capital financing account	1,324 545 (545) (1,324)
Balance at 31 March 2005	0

5.Financing of capital expenditure on fixed assets and deferred charges during the year

	£000
Opening Capital Financing Requirement Total Capital Expenditure Financed by: Usable Capital Receipts Government Grants & Contributions from external bodies Reserves Revenue Funding	273,541 62,301 (5,568) (31,555) (666) (346)
Closing Capital Financing Requirement (excluding transferred debt)	297,707
Increase in underlying need to borrow Supported by government financial assistance Unsupported by government financial assistance	23,738 428
Increase in Capital Financing Requirement	24,166

6. Leased assets

The County Council has acquired industrial properties in the past, by means of finance leases. The capital value of assets acquired under such agreements, less accumulated depreciation, is as follows:

	Capital Value £000	Accumulated Depreciation £000	Net Value at 31 March 2005 £000
Land and buildings	1,291	852	439

7. Capital commitments

The County Council allocates and controls its available resources for capital expenditure via a rolling three year capital programme. The extent to which expenditure will be incurred in future years for schemes in the various annual programmes is as follows:

	2005/06 £000	2006/07 and later £000
2004/05 and earlier year schemes	28,484	5,328

Major contracts entered into during 2004/05 and earlier, where significant payments remain to be made to contractors, include:

	£000
Schools Ashby Ivanhoe College – Science Block Coalville Castle Rock High – Replacement Wigston Bushloe High – Replacement South Wigston High - Sports Hall Roads Rearsby Bypass Community Services Ratby Library - Replacement	983 8,732 11,072 2,242 573 260

8.Details of assets owned by the County Council

31 March 2004		31 March 2005
4,621 ha 1 226 50 7 3 1 5 6 1 3 10 6 1 3 6 3 4 1 4,261 km 8 14 1 4 1 84 74 61 229 2 18 52 3 1 1 2 6	Land This figure excludes highways land Number of properties held by services – Education Nursery school Primary schools Secondary schools (excl 4 foundation schools) Special schools Outdoor pursuits centres Teachers centres Free standing youth and community centres Client and Technical Support offices and depots Common playing fields Social Services Children’s homes and hostels Homes for the elderly Homes for adults with learning difficulties Homes for the recovering mentally ill Day nurseries and family centres Day centres for people with learning difficulties Day centres for the physically handicapped Local offices Training Centres Highways & Transport Principal and other roads Highways/DLO depots Waste Disposal Household refuse & recycling sites and transfer stations (domestic and trade) Other Properties County Hall Administrative offices Castle House County Farms School Caretakers’ Houses Properties acquired in advance of future developments and properties awaiting disposal Industrial units Travellers sites Community Assets Country Parks Libraries and Information Libraries Heritage Services Museums Record Office Resources Centre Regulatory Services Offices for the Registration of Births, Deaths and Marriages Magistrates Courts	4,619 ha 1 226 50 6 3 1 5 7 1 3 10 6 1 3 7 2 5 0 4,279 km 8 14 1 4 1 82 67 66 228 2 18 52 3 1 1 2 6

9. Deferred premium

This represents the premiums payable upon the premature repayment of debt. This sum is charged to the revenue account over the lifetime of the replacement debt.

	£000
Balance at 31 March 2004 Premiums paid Amounts charged to revenue account	6,516 333 (211)
Balance at 31 March 2005	6,638

10. Related business, companies and consortia

a) The County Council is a member of the Eastern Shires Purchasing Organisation (ESPO) involved in the negotiation of contracts for supplies to its members and the provision of a central warehouse for the supply of items in common use. During 2004/05 a net surplus of £0.7m (2003/04 £0.8m) was reported on income, net of cost of sales, of £11.1m (2003/04 £10.4m). Turnover between LCC and ESPO totalled £49m in respect of stores issues, direct orders ands period contracts.

b)The County Council is a constituent member of Leicester, Leicestershire and Rutland Combined Fire Authority. During 2004/05 the estimated turnover is £29.1m (2003/4 actual turnover £25.2m).

11. Debtors

	31 March 2004 £000	31 March 2005 £000
Long Term Debtors (amounts falling due after one year) Accommodation charges at Elderly Persons Homes Car loans to employees Outstanding debt relating to transferred services (e.g. Unitary Authority, Higher Education establishments, Police) Other long term debtors Less: Provision for bad debts	939 190 51,271 115 (248)	1,229 119 48,963 112 (148)
Total	52,267	50,275
Current Debtors Government departments: Customs and Excise Other government departments Sundry debtors Less: Provision for bad debts	3,964 1,199 27,090 (1,606)	3,595 1,205 26,886 (677)
Total	30,647	31,009

12. Stocks and work in progress

	31 March 2004 £000	31 March 2005 £000
Stocks Highways Client and Technical Support Service Museums Catering Other items	498 65 49 43 31	462 75 37 54 31
Sub Total	686	659
Work in Progress Highways	40	29
Total	726	688

13. Investments

Surplus cash balances are invested in short term deposits with a range of banks and other financial institutions. Included within this amount is £2.714m which is invested on behalf of ESPO and £1.37m on behalf of residents in care homes.

14.Creditors

	31 March 2004 £000	31 March 2005 £000
Government departments: Inland Revenue Other government departments Sundry creditors	5,075 9,023 46,010	5,597 9,663 48,513
Total	60,108	63,773

15. Operating Leases outstanding

The council has a liability to make payments during 2005/06 of the following:

	Total £000
Operating Leases which expire: Within 1 year 2 to 5 years Over 5 years	284 1,655 43
Total	1,982

As at 31 March 2005, the County Council has a total commitment to meet operating lease rental payments of £4,471,000.

16. Long term borrowing

	Total Outstanding at 31 March 2004 £000	Total Outstanding at 31 March 2005 £000
Lender Public Works Loan Board Banks and building societies	221,330 32,750	217,511 62,600
Total	254,080	280,111
Analysis of maturity of these loans: Maturing - Between 1 and 2 years Between 2 and 5 years Between 5 and 10 years Between 10 and 15 years More than 15 years	150 10,450 150 6,836 236,494	150 10,450 0 2,000 267,511
Total	254,080	280,111

17. Grants and contributions deferred

	£000	£000
Balance at 31 March 2004 Grants and contributions received to finance capital expenditure Transfer from Capital Contributions unapplied Write off to Capital Financing Account – income received on assets not increasing value Release to Revenue Account	23,428 8,127 (16,868) (555)	29,372
Balance at 31 March 2005		43,504

18. Provisions - Movements during the year

	Balance at 31 March 2004 £000	Reclassification £000	Income £000	Expenditure £000	Balance at 31 March 2005 £000
Employment Tribunal Insurance RSG Amending Report Magistrates Courts Restructuring Leased Car Social Services Mental Health Refunds Other	0 4,072 0 481 0 391 349	0 0 0 0 461 0 (149)	4,500 1,907 1,200 19 1,108 0 329	0 (2,262) 0 (47) (1,117) (333) (360)	4,500 3,717 1,200 453 452 58 169
Total	5,293	312	9,063	(4,119)	10,549

Employment Tribunal

In December 2004 an Employment Tribunal held that the County Council had failed to consult Unison under the Trade Union and Labour Relations (Consolidation) Act 1992. The Employment Tribunal made a protective award against the County Council in respect of those groups of staff who were either downgraded or were previously in receipt of bonus or enhancements.

The County Council has received legal advice that there are grounds to appeal against the original judgement and have appealed to the Employment Appeal Tribunal.

A provision of £4.5m has been made to meet the estimated costs of this case. There is, however, uncertainty around the basis of calculating the protective award. The provision is based on a ‘worst case’ interpretation of the legislation. The award would be considerably less under the alternative interpretation.

RSG Amending Report

The government has indicated that a reduction will be made to the council’s 2004/05 R.S.G, in 2006/07 arising from amendments to the population of some major cities.

Insurance

The insurance policies held by the County Council require a significant level of self insurance, the level of this being recommended by independent advisers. The monies set aside for self insurance are split between a provision representing outstanding, unsettled claims at 31 March 2005 and a reserve to meet future claims. The provision is expected to be used within the next seven years.

Magistrates Courts

Formed from Capital grants and Revenue monies to finance the restructuring of the Leicestershire Magistrates Courts Service, a part of the HM Court Service in the future.

Social Services Mental Health: Refunds

Provides for refunds to people with mental health difficulties, who have been charged for residential and nursing care, for which a legal judgement has been made to repay the levy charged.

19. Capital contributions unapplied

	£000	£000
Balance at 31 March 2004 Grants and Contributions received Interest Transfer to Grants Deferred	675 347 (8,127)	16,677
Balance at 31 March 2005		9,572

20. Reserves

General County Fund

The balance of the fund as at 31 March 2005, £33.762m, contains the following earmarked sums:

	£000
Delegated Funding for Schools Other Education establishments with devolved budgets Carry forward of underspendings across other services Carry forward of resources for funding of Capital	21,053 (106) 6,410 132
Earmarked Reserves at 31March 2005	27,489

Thus, the uncommitted balance is restricted to £6.273m.

Movements in other revenue reserves during the year

	Balance at 31 March 2004 £000	Appropriations From Revenue £000	Appropriations To Revenue / Capital £000	Balance at 31 March 2005 £000
Insurance Renewals of vehicles and equipment Industrial properties Central Maintenance Fund Job Evaluation Appeals Shire Grants Organisational Change Other	3,756 3,023 824 1,027 0 822 450 405	1,078 1,187 241 0 250 164 50 211	(152) (845) 0 (65) 0 (238) 0 (126)	4,682 3,365 1,065 962 250 748 500 490
TOTAL	10,307	3,181	(1,426)	12,062

Renewal of Vehicles and Equipment

Resources for the funding of replacement vehicles and equipment.

Industrial Properties

Surpluses arising on the provision of Industrial Properties are credited to this reserve which is used to finance future capital expenditure, including development of the Industrial Estate.

Property – Central Maintenance Fund

Provides for landlord repairs to the majority of the Council’s establishments. A rolling programme of works can thus be undertaken which spans financial years. The balance represents uncompleted orders.

Shire Grants

Grants awarded to statutory and voluntary organisations that remain to be claimed by the recipients

The net movement on revenue reserves does not equal the amount shown as ‘transfers to / from revenue reserves’ in the consolidated revenue account due to the method of accounting for self-insurance and the financing of capital expenditure.

21. Contingent Liabilities

a)Municipal Mutual Insurance Limited, the County Council’s former insurers, ceased writing insurance business in September 1992. They have made a scheme of arrangements with creditors in the event of the company becoming insolvent. Claims are currently being paid in full and it is hoped that the Company’s assets will enable all liabilities to be met. It should be noted that there is a contingent liability if the County Council is: a) unable to recover all of the outstanding claims in ensuing years, b) if a clawback arrangement has to be implemented.

b)Independent Insurance Company Limited, the County Council’s liability insurers for the period 1 November 1993 to 31 October 1998, went into provisional liquidation in June 2001. Claims to date, for this period have been financed from the Councils insurance reserve, however, further claims may arise in the future.

c)Projects that have been awarded lottery funds; if the assets provided are withdrawn from public use before the end of the agreed term, repayment of grant may be necessary.

d)In order to finance potential claims in respect of uninsured losses arising prior to Local Government Reorganisation in 1997, a contingent liabilities reserve was created in 1996/97 from which claims against the County Council could be financed.)

22. Self insurance

Provisions and reserves are operated to meet the self-insured deductibles for the following policies, however, stop loss insurance applies to fire and public/employers’ liability policies.

	Deductible per Claim £
Fire	500,000
Public/Employers’ liability	150,000
Fidelity guarantee	100,000

Apart from Museums, the Authority has no general insurance cover for the theft of contents from buildings. Similarly the Authority has no insurance cover against storm damage, floods, burst pipes, malicious damage, impact, earthquake and accidental damage. Schools, however, have the option to join a group self insurance scheme to cover the above risks.

23. Trust funds (excluded from the balance sheet)

The County Council acts as trustee and/or administrator for approximately 20 prize funds, endowments, scholarships and bequests. The original bequests are invested in either the Council’s trust fund pooling scheme or in a range of other direct external investments.

Trustees are nominated by Leicestershire County Council, Leicester City Council and the National Trust to the Bradgate Park and Swithland Wood charity. This is the largest Trust the County Council is involved with, and due to the timing of the production of Leicestershire County Council’s Statement of Accounts, the figures shown below are compiled on an estimated basis.

To the extent that income from these investments has not been utilised for prizes etc., the surplus funds are invested in short term deposits with various financial institutions.

Under regulations issued under the Charities Act 1993, trust fund accounts where annual income exceeds £10,000, require an independent examination.

The main trust funds are as follows:

TRUST FUNDS	Balance at 31 March 2004 £000	Income £000	Expenditure £000	Balance at31 March 2005 £000
Ashby Upper School lMary Smith Bequest *	48.7	5.5	5.5	48.7
Barrow-on-Soar Humphrey Perkins Endowment	15.9	0.9	0.1	16.7
Longwill Bequest No. 2	25.1	1.5	0.0	26.6
Kibworth High School Endowment	190.0	15.4	32.7	172.7
Melton Schools - Longwill Bequest No.1	11.5	1.3	0.4	12.4
Loughborough Art and Technical Colleges : Thomson Trust Loughborough Technical School **	18.7 248.4	1.0 11.4	0.0 0.0	19.7 259.8
Lutterworth Upper School Endowments	10.8	1.0	2.2	9.6
Nailstone Primary School Maynards Charity	17.9	0.8	0.7	18.0
Bradgate Park and Swithland Wood Charity *	504.1	696.8	688.9	512.0
Others	40.0	3.6	2.0	41.6
Total Trust Funds	1,131.1	739.2	732.5	1,137.8

* Not sole trustee. The authority administers the funds and is represented on the board of trustees.

** Management and custodianship of a new trust to be created will transfer to Loughborough College in the future.

24. Pension Assets and Liabilities

The underlying assets and liabilities of the County Council at 31^st March are as follows:

	31 March 2004 £000	31 March 2005 £000
Share of assets in County Council Fund Estimated liabilities in County Council Fund Funded Benefits Unfunded Benefits	511,670 (592,700) (31,533)	567,694 (735,184) (35,970)
Net pensions liability	(112,563)	(203,460)

The liability shows the underlying commitment that the authority has in the long run to pay retirement benefits. This liability of £203m has a substantial impact on the net worth of the authority as recorded in the balance sheet. Statutory arrangements, for funding the deficit will result in the deficit being made good by increased contributions by the employer over the remaining working life of employees as assessed by the actuary. It should be noted, however that the net liability is particularly sensitive to fluctuations in the stock market.

The FRS17 figures above incorporate staff of the Eastern Shires Purchasing Organisation (ESPO) whose staff are employed by Leicestershire County Council.

Assets in the County Council Pension Fund are valued at fair value, principally market value for investments, and consist of the following categories:

	Long-term rate of return expected	31 March 2004 £000	Long-term rate of return expected	31 March 2005 £000
Equity investments	7.7%	362,050	7.7%	408,162
Bonds	5.1%	90,770	4.8%	87,455
Property	6.5%	47,690	5.7%	56,186
Cash	4.0%	11,160	4.8%	15,891
		511,670		567,694

Liabilities are valued on an actuarial basis using the projected unit method, which assesses the future liabilities of the fund discounted to their present value. The valuations are based on a valuation as of 31^st March 2004 and updated for the following year, by Hymans Robertson the independent actuaries to the County Fund. The main assumptions used in the calculations are:

	31 March 2004	31 March 2005
Rate of inflation Rate of increases in salaries Rate of increase in pensions Rate for discounting scheme liabilities	2.9% 4.4% 2.9% 6.5%	2.9% 4.4% 2.9% 5.4%

The movement in the pension deficit for the year to 31 March 2005 is as follows:

	31 March 2004 £000	31 March 2005 £000
Net (deficit) at beginning of year	(178,250)	(112,563)
Adjustment to opening balance – reassessment of unfunded liabilities		(1,267)
Movement in year Current service costs Contributions Past service costs Impact of settlements and curtailments Finance income Actuarial gain / (loss)	(17,370) 16,396 (609) (200) (6,980) 74,450	(19,650) 18,596 (100) (500) 1,520 (89,496)
Net deficit at end of year	(112,563)	(203,460)

25. Euro Costs

Following the introduction of the Euro on 1 January 1999, it is unlikely that any significant costs will be incurred prior to a decision being made regarding United Kingdom membership of the Euro.