Other Operating Expenditure includes all levies payable and gains and losses generated from in-year disposals of non-current assets.

This note consolidates all non-specific grants and contributions receivable that cannot be identified to particular service expenditure, and therefore cannot be credited to the gross income amount relevant to the service area. All capital grants and contributions are credited to non-specific grant income even if service-specific. This Note also identifies the Council's proportion of Council Tax and Business Rates used to fund in year business/service activities including those activities within the Business Rate Retention Scheme.

* Restated

13.1 Grants and Contributions Credited to Net Cost of Services

* Restated

13.2 Grants credited to Taxation and Non-specific Grant Income

*Restated

** An element of Local Restrictions Support Grant received in 2020/21 was not fully spent and was returned to Government in 2022/23.

The Council has received a number of grants and contributions that have yet to be recognised as income as they have conditions attached to them that will require the monies or property to be returned to the giver. The balances at the year-end are as follows:

13.3 Grants Receipts in Advance - Capital

13.4 Grants Receipts in Advance - Revenue

14.1 Movements Excluding Infrastructure

* Leisure centres held under Public Private Partnerships are included within Other Land & Buildings in the note, but are also shown in a separate column for ease of reference.

14.2 Movements in Infrastructure

In accordance with the Local Authorities (Capital Finance and Accounting) (England) (Amendment) Regulations 2022 paragraph 3(a), the Council has made a choice that where we replace a component of an infrastructure asset, for the purposes of determining the carrying amount to be derecognised in respect of that component we determine the relevant amount as nil. The reason for making this choice, allowable by the above statutory provision, is that in some cases the historic information held on previously recognised infrastructure may not be sufficiently detailed to prove the judgement that the components being replaced are fully depreciation or that any remaining balance would not be material.

In accordance with the temporary relief offered by the ‘Update to the Code and Specifications for Future Codes For Infrastructure Assets November 2022’ this note does not include disclosure of gross cost and accumulated depreciation for infrastructure assets because historical reporting practices and resultant information deficits mean that this would not faithfully represent the asset position to the users of the financial statements. The Council has chosen not to disclose this information as the previously reported practices and resultant information deficits mean that gross cost and accumulated depreciation are not measured accurately and would not provide the basis for the users of the financial statements to take economic or other decisions relating to infrastructure assets.

14.3 Net Book Value of Property, Plant & Equipment

Schools

Following the implementation in the 2014/15 Code of IFRS 10, Consolidated Financial Statements, and its implications for schools accounts, the Council reviewed its treatment of school assets, in particular those of voluntary aided schools. The review established that control rested with the relevant Diocesan Boards and that the schools used the assets under licence or other similar arrangements that did not cede any interest in the assets to the schools. As a consequence, voluntary aided schools remain off Balance Sheet.

Depreciation

PPE Assets, other than land, community assets and assets under construction are depreciated over their useful economic lives. Assets are being depreciated using the straight-line method over the following periods:

• other land and buildings 0 to 50 years
• infrastructure up to 40 years
• motor vehicles and equipment up to 10 years

Equipment is depreciated on the basis of its ongoing value to the Council which can range from 1 to 10 years depending on the nature of the equipment.

Capital expenditure does not attract capital charges until the following year. From 1 April 2015 depreciation estimates are based on opening balances.

14.4 Capital Commitments

Revaluations

The Council carries out a rolling programme that ensures that all property assets are revalued at their current value over a 5 year period. In addition to the planned revaluation rolling programme, all properties valued at over £1m and any other properties subject to a significant change during the year are revalued. All valuations were carried out by external valuers Wilkes Head and Eve.

All Surplus assets were also revalued to Fair Value, highest and best use in accordance with IFRS 13.

The Valuer has arrived at their opinion of Current Value and Fair Value from referring to recent comparable market transactions and are of the view that there are no assets within the portfolio that should be classed at Level 3 in the Fair Value hierarchy.

For Specialised properties, the Current Value has been derived using Depreciated Replacement Cost methodology.

PPE analysis showing those assets held at cost and those at valuation subdivided by the last revaluation date as of 31 March 2024.

14.5 Balances by valuation date at 31 March 2024

14.6 Assets Held For Sale

Museum Collection

Approximately 21,000 items within the Council’s museum collection have been valued for insurance purposes and reported in the Balance Sheet. The insurance valuation is updated annually.

Historic Buildings

The Council owns two Grade 1 listed historic buildings, Danson House and Hall Place. These buildings are valued on a replacement cost basis. Due to their specialist nature, the assessment of their replacement cost is undertaken by a specialist consultant on a three yearly cycle, the last assessment being in March 2024.  This year an external valuer called BCH carried out the valuation.

Danson House is currently being used by the Registrar Service and so is classified as an Operational Heritage Asset and its value included within Operational Property, Plant and Equipment (note 14).

Historic Structures and Monuments

The Council owns two Grade 2 listed clocktowers in Bexley Heath and Crayford. These buildings are valued regularly on a replacement cost basis.

Five Arches Bridge is also owned by the Council, this structure is all that remains of the Foots Cray Estate and has historical significance. It is valued on a replacement cost basis.

War Memorials

There are eleven war memorials located across the borough. In addition, a memorial dedicated to the victims of an explosion at a local munitions factory in January 1924 is located at Erith Cemetery. The memorials are located in public spaces and are therefore accessible all year round.

The asset management of highways and parks structures which includes Crayford and Bexleyheath Clock Towers, Five Arches Bridge, Lesnes Abbey Ruins and the Council’s War Memorials, is the responsibility of the Deputy Director of Neighbourhoods. All capitalised building maintenance budgets are the responsibility of the Director of Finance and Corporate Services, in the Finance and Corporate Directorate. Priority criteria for works are reviewed and set each year to develop a programme of work targeting those assets most in need. The proposed work schedule is reported to the Cabinet Member for Resources for approval.

Civic Regalia

The Civic Regalia Collection has been valued for insurance purposes and reported in the Balance Sheet. The Head of Electoral and Members’ Services, is responsible for the upkeep of the Council’s Civic regalia. Repairs are undertaken on an ad-hoc basis as and when necessary and expenditure incurred would be charged to the Comprehensive Income and Expenditure Statement. The Council’s Civic Regalia is displayed at the Civic Offices, 2 Watling Street, Bexleyheath DA6 7AT.

Local Studies and Archive Centre

The Council’s local studies and archives collection forms a diverse mix of historical and cultural documents and includes newspapers from 1873 to the present; unique photographs, postcards and illustrations; books and journals on all aspects of Bexley, Kent and London; pamphlets; posters; local maps and plans from around the 18th Century to present; street and trade Directories and south-east London telephone directories from 1940 onwards.

The following items of income and expense have been accounted for in the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement.

There are no restrictions on the Council's ability to realise the value inherent in its investment property portfolio or on the Council's right to the remittance of income and the proceeds of disposal. The Council has no contractual obligations to purchase, construct or develop investment property or repairs, maintenance or enhancement.

The following table summarises the movement in the Fair Value of investment properties over the year.

Where an asset is valued to Fair Value, IFRS 13 requires the valuer to make additional disclosures regarding the valuation technique applied to measure the Fair Value and the nature of the inputs to that valuation technique, having regard to the Fair Value hierarchy prescribed within IFRS13.

It is confirmed that the valuation technique applied in respect of all Fair Value figures is the market approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets.

The inputs to this technique constitute Level 2 inputs in each instance. Level 2 inputs are inputs observable for the asset, either directly or indirectly. The inputs used took the form of analysed and weighted market evidence such as sales, rentals and yields in respect of comparable properties in the same or similar locations at or around the valuation date.

There are no restrictions on the Council's ability to realise the value inherent in its investment property or on the Council's right to the remittance of income and the proceeds of disposal. The Council has no contractual obligations to purchase, construct or develop investment property or repairs, maintenance or enhancement.

16.2 - Fair Value Hierarchy of Investment Properties

The Council accounts for its software as intangible assets, to the extent that the software is not an integral part of a particular IT system and accounted for as part of the hardware item of property, plant and equipment. The carrying amount of intangible assets includes both purchased licences and internally generated software and is amortised on a straight-line basis.

All software is given a finite useful life, based on assessments of the period that the software is expected to be of use to the Council. The useful lives assigned to the major software suites used by the Council are 5 years unless it is anticipated to be otherwise.

Accounting regulations require the “financial instruments” (investment, lending and borrowing of the Council) shown on the Balance Sheet to be further analysed into various defined categories. The investments, lending and borrowing disclosed in the Balance Sheet are made up of the following categories of “financial instruments”.

Level 1 are those where the Fair Values are derived from unadjusted quoted prices in active markets for identical assets or liabilities. These are reported at amortised cost.

Level 2 are those other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. They are reported at Fair Value through profit and loss.

Level 3 unobservable inputs for the asset or liability.

18.1 Financial Instruments - Balances

Some of the Council’s financial assets are measured at fair value on a recurring basis and are described in the following table, including the valuation techniques used to measure them.

* Restated

18.2 Financial Assets and Liabilities that are carried at Amortised cost for which Fair Value disclosures are required

The fair value of £191m is measured at the premature repayment rate. For other financial liabilities carried at amortised cost, carrying value are deemed to equate to their fair value.

For other financial assets carried at amortised cost, carrying values are deemed to equate to their fair value.

18.3 - Categories of Financial Assets and Liabilities

This note shows the adjustments made to impairment loss allowances as a result of the reclassification of financial assets and the change from the incurred losses model for calculations.

* Creditors figure in the above table (and in the Balance Sheet) include the PFI and Finance Lease liabilities that are shown separately from the rest of the creditors in the table in note 18.1. They are separated in note 18.1 because they fall into different categories of financial instrument (level 1 and level 2).

18.4 - Comprehensive Income and Expenditure Statement disclosures

The gains and losses recognised in the Comprehensive Income and Expenditure Statement in relation to financial instruments are made up of the following:

The in-year unrealised loss (£0.938m) resulted from the revaluation of the property pooled funds. The revenue impact of unrealised gains/losses is transferred out of the Comprehensive Income and Expenditure Statement and held in the Pooled Investment Fund Adjustment Account, in accordance with the IFRS9 statutory override.

18.5 Nature and extent of risks arising from Financial Instruments

Bexley Council is a Council defined by the Local Government Act 1972 as primarily providing statutory services to the local population on a not-for-profit basis. As such, few financial instruments are used by way of commercial business. However, the funding mechanism means that during the year, the Council may hold substantial assets and liabilities. The Council uses financial instruments to manage the risks arising from holding assets and liabilities; it does not use financial instruments for trading or speculative purposes.

The main risks covered are:

• Credit Risk - the possibility that other parties might fail to pay amounts due to the Council
• Liquidity Risk - the possibility that the Council might not have funds available to meet its commitments to make payments
• Market Risk - the possibility that financial loss might arise for the Council as a result of changes in such measures as interest rates or stock market movements
• Re-financing risk - the possibility that the Council might be requiring to renew a financial instrument on maturity at disadvantageous interest rates or terms

The Council’s overall risk management procedures focus on the unpredictability of financial markets and implementing restrictions to minimise these risks. The procedures for risk management are set out through a legal framework as described within the Local Government Act 2003 and the associated regulations.

Credit risk

Credit risk arises from deposits with banks and financial institutions, as well as credit exposures to the Council’s customers. This risk is minimised through the Annual Investment Strategy, which requires that deposits are only made with financial institutions that meet identified minimum credit criteria. The Annual Investment Strategy also imposes a maximum sum that may be invested with a financial institution/group. The Council has adopted the CIPFA Treasury Management Code of Practice.

The Council’s Treasury Management Strategy specifies that the two principles that underpin the Council’s Investment Strategy are that:

• investments should be restricted to relatively low-risk securities which do not suffer from significant changes in their capital value, and
• a balance should be sought between investment in securities that yield a variable or a fixed rate of interest. This provides an element of diversification in the Council’s investment portfolio and reduces the impact of changes in interest rates on the Council’s interest earnings

Short-term core cash was invested for periods of up to one year. No new long term investments were made during the year. The remaining investments met the Council’s approved lending criteria as laid out in its Treasury Management Strategy. The portfolio consists of longer-term investments in pooled property funds. The pooled investment vehicles (which do not have credit ratings) are part of the Council's longer-term investment strategy with the potential to earn higher returns than in fixed-term deposits. Fluctuations in the net asset value are expected over the life of these investments but the impact of the IFRS 9 Statutory override in 2020/21 means that they did not affect revenue. Current changes in capital value are not material and changing trends are currently being monitored by Bexley treasury management staff in consultation with the Council's financial advisors, Link Asset Services.

The following analysis summarises the Council’s potential maximum exposure to credit risk on loans, based on the 12-month loss model.

No credit limits were exceeded during the financial year and the council expects full repayment on the due date of deposits placed with its counterparts.

Liquidity Risk

The Council has a comprehensive cash flow management system that seeks to ensure that cash is available as needed. If unexpected movements happen, the Council has ready access to borrowings from the money markets and the Public Works Loans Board. There is no significant risk that it will be unable to raise finance to meet its commitments under financial instruments. Instead, the risk is that the Council will be bound to replenish a significant proportion of its borrowings at a time of unfavourable interest rates.

The Council sets limits on the proportion of its fixed-rate borrowing during specified periods. The strategy is to ensure that not more than 15% of loans are due to mature within any one year through a combination of careful planning of new loans taken out and (where it is economic to do so) making early repayments.

Market Risk

The Council is exposed to risk in terms of its exposure to interest rate movements on its borrowings and investments. Movements in interest rates have a complex impact on the Council. For instance, a rise in interest rates would have the following effects:

• borrowings at variable rates - the interest expense charged to the Comprehensive Income and Expenditure Statement will rise
• borrowings at fixed rates - the fair value of the liabilities borrowings will fall (no impact on revenue balances)
• investments at variable rates - the interest income credited to the Comprehensive Income and Expenditure Statement will rise
• investments at fixed rates - the fair value of the assets will fall (no impact on revenue balances)

Borrowings are not carried at fair value, so nominal gains and losses on fixed-rate borrowings would not impact on the Income and Expenditure Account. However, changes in interest payable and receivable on variable rate borrowings and investments will be posted to the Income and Expenditure Account and affect the General Fund Balance.

The Council has a number of strategies for managing interest rate risk. During periods of falling interest rates, and where economic circumstances make it favourable, fixed-rate loans will be repaid early to limit exposure to losses. The treasury management team has an active strategy for assessing interest rate exposure that feeds into the setting of the annual budget and which is used to update the budget during the year. This allows any adverse changes to be accommodated. The analysis will also advise whether new borrowing taken out is fixed or variable.

If interest rates had been 1% higher with all other variables held constant, the financial effect would be:

Foreign exchange risk

The Council has no financial assets or liabilities denominated in foreign currencies and thus has no exposure to loss arising from movements in the exchange rate.

20.1 Short Term Debtors

The total short term debtors is shown net of impairment loss provision of £33.491m (2022/23 £30.194m).

20.2 Long Term Debtors