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b. Analysis of investments
Listed investments
United Kingdom
For 2003
Market Value: 65,501
Cost: 60,949
For 2002
Market Value: 57,561
Cost: 64,929
Listed investments
Overseas
For 2003
Market Value: 8,639
Cost: 8,758
For 2002
Market value: 8,046
Cost: 9,990
So, summing listed investments:United Kingdom and overseas
For 2003:
Market Value: 74,140
Cost: 69,707
For 2002:
Market Value: 65,607
Cost: 74,919
Unit Trusts
For 2003
Market Value: 28,135
Cost: 28,348
For 2002
Market Value: 26,335
Cost: 30,844
Unlisted investments
For 2003
Market value: 51
Cost: 19
For 2002
Market value: 33
Cost: 19
Cash deposits
For 2003
Market Value: 4,907
Cost: 4,907
For 2002
Market value: 4,054
Cost: 4,054
Investment in subsidiaries
For 2003
Market Value: 504
Cost: 504
For 2002
Market Value: 492
Cost: 504
So, summing all investments:For 2003:
Market Value: 107,737
Cost: 103,485
For 2002:
Market Value: 96,521
Cost: 110,340
The market value of listed investments is the mid-market price quoted on a recognised
Stock Exchange, the value of unit trusts is the mid-bid and offer price of the units and
the value of unlisted investments is as determined by Council, all as at close of
business at the year end.
Included in unit trusts are two holdings representing more than 5% of the total value
of investments, one a holding of £11.9m (in 2002 £9.8m) in the Merrill Lynch
33KWS – Overseas Fund, and the other amounting to £6.6m (in 2002 £8.0m) in
Charinco. Also the combined equity holding in Vodafone Group, £5.9m (in 2002 not
applicable), is more than 5% of the total value of investments.
9.
Debtors
Tax recoverable
For 2003: 36
For 2002: 86
Other debtors
For 2003: 904
For 2002: 1,416
Due from subsidiary companies
Loan to Trading Company
For 2003: 167
For 2002: 333
Due from subsidiary companies
Other debts
For 2003: 91
For 2002: 47
Pension cost prepayments
For 2003: 425
For 2002: 637
Accrued legacy income
For 2003: 3,254
For 2002: 3,890
Other prepayments
For 2003: 87
For 2002: 118
So, summing debtors
For 2003: 4,964
For 2002: 6,527
Included in other debtors are amounts falling due after more than one year. They
include non-interest bearing equity loans to employees for housing assistance
amounting to £0.1m (in 2002 £0.2m) and a loan of £0.2m (in 2002 £0.2m) repayable
over 20 years to The Worcestershire Association for the Blind for the development of
a resource centre.
The loan to the Trading Company was for £500,000 repayable over three years.
Interest is payable annually at 2% above base rate. The loan is secured by way of a
fixed and floating charge debenture.
During the year an adjustment has been made to transfer £100,000 from other
prepayments to leasehold properties in respect of a building grant for a resource
centre in Bristol and also to transfer £409,000 from other debtors to leasehold
properties in respect of a grant for a resource centre in Leeds.
The pension cost prepayment includes £0.2m to be amortised from 2005 onwards.
10.
Long term Liabilities
Liabilities expiring in more than one year are an accrual for unfunded pension
contributions for seven retired members of staff.
11.
Fund Balances
As at 31 December 1998 funds were designated by Guide Dogs for specific purposes,
full details of which are mentioned in the Report of the Council.
Movements on funds during the year are as follows:
Designated funds
Fixed assets
At 1 January 2003: 22,074
Incoming funds: nil
Funds used: nil
Unrealised gains: nil
Transfer: minus 797
At 31 December 2003: 21,277
Designated funds
New initiatives
At 1 January 2003: 5,000
Incoming funds: nil
Funds used: minus 199
Unrealised gains: nil
Transfer: nil
At 31 December 2003: 4,801
Designated funds
Ophthalmic research grants
At 1 January 2003: 2,421
Incoming funds: nil
Funds used: minus 603
Unrealised gains: nil
Transfer: nil
At 31 December 2003: 1,818
So, summing these designated funds:At 1 January 2003: 29,495
Incoming funds: nil
Funds used: minus 802
Unrealised gains: nil
Transfer: minus 797
At 31 December 2003: 27,896
General funds
At 1 January 2003: 93,543
Incoming funds: 38,970
Funds used: minus 43,137
Unrealised gains: 13,444
Transfer: 557
At 31 December 2003: 103,377
So, total unrestricted funds:
At 1 January 2003: 123,038
Incoming funds: 38,970
Funds used: minus 43,939
Unrealised gains: 13,444
Transfer: minus 240
At 31 December 2003: 131,273
Restricted funds
At 1 January 2003: 9
Incoming funds: 5,739
Funds used: minus 5,510
Unrealised gains: nil
Transfer: 158
At 31 December 2003: 396
Endowment funds
At 1 January 2003: nil
Incoming funds: 38
Funds used: nil
Unrealised gains: nil
Transfer: 82
At 31 December 2003: 120
So, total funds:At 1 January 2003: 123,047
Incoming funds: 44,747
Funds used: minus 49,449
Unrealised gains: 13,444
Transfer: nil
At 31 December 2003: 131,789
Funds used comprise resources expended of £51,016,000 and realised gains on
investments of £1,567,000 as shown in the Statement of Financial Activities for the
year ended 31 December 2003, and mentioned earlier on this tape.
The designated fund for fixed assets represents the value of assets in use in the
running of Guide Dogs.
The ophthalmic research fund is specifically set aside for grants to medical
institutions (please refer to Note 4).
12.
Commitments
Obligations under leases
At 31 December 2003 annual commitments are as follows:
For leases of properties expiring –
Within one year
For 2003: 64
For 2002: 10
For leases of properties expiring –
Between two and five years
For 2003: 299
For 2002: 267
For leases of properties expiring –
Over five years
For 2003: 58
For 2002: 3
So summing for all leases:For 2003: 421
For 2002: 280
13.
Legacies
There are some legacies which have been notified to the Association at 31 December
2003 for which the amount receivable cannot be ascertained. These financial
statements include payments received on account but not any estimates for future
amounts receivable. There is estimated to be £14.6 million of residuary legacies due
at the year end.
14.
Subsidiaries
The Association holds the whole of the issued share capital of The Guide Dogs for the
Blind Association (Trading Company) Limited, GDBA Community Care Services
Limited, Guide Dogs Limited, Guide Dogs UK Limited and GDBA (Pension Fund
Trustees) Limited.
The turnover of The Guide Dogs for the Blind Association (Trading Company)
Limited during the year was £1.5m (in 2002 £1.3m) and its operating profit was
£425,000 (in 2002 £17,000). £420,000 was paid to the Association under Deed of
Covenant for 2003 (in 2002 £12,000 paid in the year reduced to £11,000 after tax
computation). The turnover of GDBA Community Care Services Limited was £569
(in 2002 £7,000) and resulted in nil profit for the year (in 2002 £25,000 profit). Guide
Dogs UK Limited commenced trading in the year and had a turnover of £188,000 (in
2002 nil). Guide Dogs Limited was dormant for the year and GDBA (Pension Fund
Trustees) Limited acts as a trustee for the pension scheme and does not carry on a
business.
Transactions with subsidiaries during the year were as follows:
The Guide Dogs for the Blind Association (Trading Company) Limited
Charge for management expenses
For 2003: 115
For 2002: 110
The Guide Dogs for the Blind Association (Trading Company) Limited
Purchases
For 2003: 664
For 2002: 651
The Guide Dogs for the Blind Association (Trading Company) Limited
Interest paid on loan
For 2003: 16
For 2002: 27
The Guide Dogs for the Blind Association (Trading Company) Limited
Deed of covenant receivable
For 2003: 420
For 2002: 12
GDBA Community Care Services Limited
Charge for salary costs
For 2003: 1
For 2002: 7
GDBA Community Care Services Limited
Gift aided profit
For 2003: nil
For 2002: 2
Guide Dogs UK Limited
Purchases
For 2003: 188
For 2002: nil
The investment of the Association in subsidiaries amounting to £504,000 (in 2002
£492,000) is represented by net assets as follows:
Tangible fixed assets
For 2003: 32
For 2002: 52
Stocks
For 2003: 175
For 2002: 315
Due from the Association
For 2003: 38
For 2002: 25
Debtors
For 2003: 80
For 2002: 53
Bank balances
For 2003: 711
For 2002: 555
So, summing these figures:For 2003: 1,036
For 2002: 1,000
Creditors
For 2003: 275
For 2002: 169
Due to the Association
For 2003: 257
For 2002: 339
And summing creditors and amounts due to the Association:For 2003: 532
For 2002: 508
So, net assets:For 2003: 504
For 2002: 492
The Association holds a total share capital of £504,000 (in 2002 £504,000) in its
subsidiaries.
15.
Pensions Costs
Other pension costs in Note 6 of these notes to the Financial Statements for the year
ended 31 December 2003 have been determined under SSAP 24 (Accounting for
Pension Costs).
SSAP 24 Disclosure
Guide Dogs operates a defined benefit pension scheme in the UK. The assets of the
scheme are held in trust administered funds. The pension cost relating to the scheme
is assessed in accordance with the advice of a qualified independent actuary using a
market-based valuation method.
The pension cost for the scheme was £7,601,000 which includes £4,354,000 in respect
of the amortisation of deficit, which will be spread over 9.5 years being the average
remaining service lives of the active members. A prepayment of £425,000 (in 2002
£638,000) has been included on the Balance Sheet.
The latest formal actuarial assessment of the scheme was as at 31 December 2002.
The valuation revealed an ongoing funding level of 67% and a market value of assets
of £54,591,000 (including the value of insured annuities and accumulated additional
voluntary contributions). The assumptions which have the most significant effect on
the results of the valuation are those relating to the rate of return on investments and
the rates of increase in salaries and pensions. The main assumptions used were a preretirement rate of return of 7.25% pa, a post-retirement rate of return of 5.25% pa and
salary increases at 3.5% pa.
The 2002 actuarial valuation also revealed that the funding level of the Scheme on the
Minimum Funding Requirement basis (as introduced under the Pensions Act 1995)
was 83% as at 31 December 2002, and that contributions payable by Guide Dogs in
accordance with the Scheme Actuary’s recommendation should be sufficient to ensure
that the Minimum Funding Requirement will be met by 26 February 2014.
Following the completion of the 2002 actuarial valuation, Guide Dogs paid a lump
sum to the Scheme in December 2003 amounting to £3,500,000 in order to reduce the
funding deficit which had arisen. This amount is included in the pension cost already
mentioned.
The next formal actuarial assessment of the scheme is due to be carried out no later
than as at 31 December 2005.
SSAP 24 is being replaced by FRS 17 (Retirement Benefits) and under transitional
requirements we include an additional disclosure note in line with the new standard.
FRS 17 disclosure
Guide Dogs operates a defined benefit scheme for all qualifying employees. The
assets of the scheme are held in a separately administered fund. The total cost of
retirement benefits for the charity was £4.6m (in 2002 £4.1m).
The scheme is subject to a triennial valuation by independent actuaries, the last
valuation being carried out as at 31 December 2002, using the projected unit method,
in which the actuarial liability makes allowances for projected earnings. The
following actuarial assumptions were applied in the valuation of the accrued liabilities
of the scheme.
Investment Returns (prior to retirement)
Investment Returns (after retirement)
Salary Growth
Pension Increase (for pensions built up after 6 April 1997)
7.25% pa
5.25% pa
3.50% pa
2.50% pa
At the last actuarial valuation date, the market value of the assets of the scheme was
£54,591,000 (including the value of insured annuities and accumulated additional
voluntary contributions) and this actuarial value was sufficient to cover 67% of the
benefits which had accrued to members, after allowing for expected future increases
in earnings. The employers’ contribution rate over the average remaining service
lives of the members takes account of the deficit disclosed by valuation (with due
allowance for the special employer contribution of £3.5m paid in December 2003).
In accordance with the requirements of Financial Reporting Standard 17 the full
actuarial valuation at 31 December 2002 was updated by a qualified independent
actuary at 31 December 2003. The major assumptions used for the purpose of
calculating the actuarial deficit were:
Discount rate
For 2003: 5.75% pa
For 2002: 6.1% pa
For 2001: 6.0% pa
Inflation assumption
For 2003: 3.0% pa
For 2002: 2.5% pa
For 2001: 2.5% pa
Rate of increase in salaries
For 2003: 3.5% pa
For 2002: 3.0% pa
For 2001: 4.0% pa
Rate of increase in pensions in payment (for pensions built up after 6 April 1997)
For 2003: 3.0% pa
For 2002: 2.5% pa
For 2001: 2.5% pa
The assets of the scheme (other than insured annuities and accumulated additional
voluntary contributions) are held with Deutsche Asset Management and ISIS Asset
Management.
The assets in the scheme (excluding the value of insured annuities and accumulated
additional voluntary contributions) and the expected rates of return were:
Equities
Expected long-term rate of return at 31 December 2003: 8.0% pa
Market value of assets at 31 December 2003: 56,100
Expected long-term rate of return at 31 December 2002: 7.25% pa
Market value of assets at 31 December 2002: 42,700
Bonds
Expected long-term rate of return at 31 December 2003: 5.0% pa
Market value of assets at 31 December 2003: 9,400
Expected long-term rate of return at 31 December 2002: 4.50% pa
Market value of assets at 31 December 2002: 10,900
Bank balance
Market value of assets at 31 December 2003: 3,600
Market value of assets at 31 December 2002: nil
So, total market value of assets:At 31 December 2003: 69,100
At 31 December 2002: 53,600
Present value of scheme liabilities
Market value of assets at 31 December 2003: minus 100,900
Market value of assets at 31 December 2002: minus 82,900
So, the deficit in the scheme:The market value of assets at 31 December 2003: minus 31,800
And the market value of assets at 31 December 2002: minus 29,300
The assets and liabilities of the Scheme at 31 December 2003, along with the
expected rates of return on Scheme assets are as follows:
Total market value of scheme assets
Expected Return for 2003: 7.6%
69,100
Expected Return for 2002: 7.0%
53,600
Present value of scheme liabilities
For 2003: minus 100,900
For 2002: minus 82,900
So the net pension scheme liabilities:For 2003: minus 31,800
For 2002: minus 29,300
During 2003, Guide Dogs continued to pay regular contributions at the rate of 25.3%
of scheme salaries, based upon the result of the actuarial valuation as at 31 December
1999. As a result of the actuarial valuation as at 31 December 2002, Guide Dogs paid
a special contribution of £3.5m in December 2003. It is intended that regular
additional contributions will be made to the scheme with effect from 1st January 2004.
The analysis of the amount which would be charged to net incoming resources is as
follows:
Current service cost
For 2003: 3,300
For 2002: 4,000
Past service cost
For 2003 and 2002: nil
So, the total operating charge:For 2003: 3,300
For 2002: 4,000
The projected unit valuation method has been used to arrive at the above service cost.
To produce a stable future contribution rate this valuation method assumes that the
average age of the scheme membership will remain broadly constant in future due to
the entry of new entrants to the scheme.
The analysis of the amount which would be credited to other finance income is as
follows:
Expected return on pension scheme assets
For 2003: 3,800
For 2002: 4,700
Interest on pension scheme liabilities
For 2003: minus 5,100
For 2002: minus 4,800
So, the net return:For 2003: minus 1,300
For 2002: minus 100
The analysis of the amount, which would be recognised in the statement of total
recognised gains and losses, is as follows:
Actual return less expected return on pension scheme assets
For 2003: 6,200
For 2002: minus 19,000
Experience gains and losses arising on the scheme liabilities
For 2003: 1,700
For 2002: minus 2,502
Changes in assumptions underlying the present value of the scheme liabilities
For 2003: minus 13,200
For 2002: 5,400
So, the actuarial loss:For 2003: minus 5,300
For 2002: minus 16,102
An analysis of the movement in surplus or deficit in the pension scheme and in
respect of the dependents’ pensions during the year is:
Deficit at beginning of the year
For 2003: minus 29,300
For 2002: minus 13,598
Contributions paid
For 2003: 7,400
For 2002: 4,500
Current service cost
For 2003: minus 3,300
For 2002: minus 4,000
Past service cost
For 2003 and 2002: nil
Pension finance cost
For 2003: minus 1,300
For 2002: minus 100
Actuarial loss
For 2003: minus 5,300
For 2002: minus 16,102
So, deficit at the year end:For 2003: minus 31,800
For 2002: minus 29,300
A history of experience gains and losses in the pension scheme is:
Gain or loss on assets
For 2003
% of assets/liabilities at end of year: 9.0%
6,200
For 2002
% of assets/liabilities at end of year: 35.4% minus 19,000
Experience gain or loss on liabilities
For 2003
% of assets/liabilities at end of year: 1.7% 1,700
For 2002
% of assets/liabilities at end of year: 3.0% minus 2,502
Loss or gain on change of assumptions
For 2003
% of assets/liabilities at end of year: minus 13.1% minus 13,200
For 2002
% of assets/liabilities at end of year: minus 6.5% 5,400
So, the total actuarial loss recognised in SOFA:For 2003
% of assets/liabilities at end of year: minus 5.3% minus 5,300
For 2002
% of assets/liabilities at end of year: 19.4% minus 16,102
If the above pension scheme liability had been recognised in the accounts, the net
assets and unrestricted fund would be as follows:
Net assets excluding pension scheme (liability)
For 2003: 131,789
For 2002: 123,047
Pension scheme (liability)
For 2003: minus 31,800
For 2002: minus 29,300
So, the net assets including pension scheme (liability):For 2003: 99,989
For 2002: 93,747
Unrestricted reserves, excluding pension scheme (liability)
For 2003: 131,273
For 2002: 123,038
Pension scheme (liability)
For 2003: minus 31,800
For 2002: minus 29,300
So, the unrestricted reserves including pension scheme (liability):For 2003: 99,473
For 2002: 93,738
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