Ministry of Defence Police and Guarding Agency

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15. RECONCILIATION OF MOVEMENTS IN GOVERNMENT FUNDS MINISTRY OF DEFENCE POLICE AND GUARDING AGENCY ANNUAL REPORT 2006 2005 £'000 £'000 Government Funds as at 1 April 26,996 27,847 Revaluation Reserve Movements In Year (3,527) (2,483) General Fund Movement in Year 3,413 1,632 Government Funds as at 31 March 26,882 26,996 16. CAPITAL COMMITMENTS There were capital commitments of £NIL as at 31 March 2006. 17. OTHER FINANCIAL COMMITMENTS At 31 March 2006, the Agency was committed to making the following payments under non-cancellable operating leases in the year to 31 March 2007. These leases were in respect of office and radio equipment. Leases expiring: 2006 2005 £'000 £'000 Within 1 year 32 1,169 Within 1 to 5 years 2,470 873 After 5 years 2,014 1,025 18. CONTINGENT LIABILITIES No contingent liabilities have been identified at 31 March 2006. 19. RELATED PARTY TRANSACTIONS 4,516 3,067 The Ministry of Defence Police and Guarding Agency is an executive Agency of the Ministry of Defence. The Ministry of Defence is regarded as a related party. During the year, the Ministry of Defence Police and Guarding Agency had a significant number of material transactions with the Ministry of Defence and with other entities for which the Ministry of Defence is regarded as the parent department. These include the Army Base Repair Organisation and the Defence Science and Technology Laboratory. In addition, the Ministry of Defence Police and Guarding Agency has had a significant number of transactions with the Royal Mint and the Foreign and Commonwealth Office. During the year none of the Board Members, key management staff or other related parties has undertaken any material transactions with the Ministry of Defence Police and Guarding Agency. 57
MINISTRY OF DEFENCE POLICE AND GUARDING AGENCY ANNUAL REPORT Notes to the Accounts 20. POST BALANCE SHEET EVENTS On 1 April 2006 the Ministry of Defence transferred responsibility for accounting for fixed assets from the Ministry of Defence Police and Guarding Agency to other parts of the Ministry of Defence. Where the Agency retains the risks and rewards of ownership of these assets, they will continue to be accounted for on the Agency’s balance sheet in accordance with FRS5 and SSAP 21. In other cases, the costs of the use of these assets will be communicated to the Ministry of Defence Police and Guarding Agency by the asset owners and charged to the operating cost statement. Consequently, these centrally accounted for assets will not be included on the Agency’s balance sheet as they will be accounted for as operating leases under SSAP 21. There is no effect on the 2005-06 accounts as a result of this change, and as a result no adjustments have been made to these financial statements. 21. LOSSES AND SPECIAL PAYMENTS An historic balance emanating from a change in accounting systems at Defence Bills Agency has been written off. The Agency is content that no assets or cash have been lost or remain un-recovered and that this is a book-keeping loss. There were no other losses in 2005-06. 22. FINANCIAL INSTRUMENTS FRS 13, Derivatives and Other Financial Instruments, requires disclosure of the role which financial instruments have had during the period in creating or changing the risks an entity faces in undertaking its activities. Because of the largely non-trading nature of its activities and the way in which government Agencies are financed, the Agency is not exposed to the degree of financial risk faced by business entities. Moreover, financial instruments play a much more limited role in creating or changing risk than would be typical of the listed companies to which FRS 13 mainly applies. Financial assets and liabilities are generated by day-to-day operational activities and are not held to change the risks facing the Agency in undertaking its activities, or for trading. The fair values of all the Agency’s financial assets and liabilities approximate to their book values. In line with FRS 13, short term debtors and creditors (those which mature or become payable within 12 months from the balance sheet date) have been excluded from these disclosures. 23. NOTES TO THE CASH FLOW STATEMENT 58 Interest rate risk The Agency has no financial assets and liabilities on which interest is earned or paid, and is therefore not exposed to significant interest rate risk. Currency risk The Agency does not transact in foreign currencies and therefore is not exposed to foreign currency risk. Liquidity risk The Agency is not exposed to significant liquidity risk, as liquidity requirements are met by financing from the Ministry of Defence Resource Account, and it has no borrowing facilities. The Department’s resource requirements are voted annually by Parliament. Reconciliation of Net Operating Cost to Operating Cash Outflow 2005/2006 2004/2005 Notes £'000 £'000 Net Operating Cost 312,638 286,842 Depreciation 8 (5,447) (7,595) Impairment Arising from a Fall in Market Value of Fixed Assets 4 471 (345) Transfer of Tangible Fixed Assets (749) 24 (Loss)/Gain on Disposal of Tangible Fixed Assets 4 (199) (168) MOD Non-cash Transactions (Excluding movement in early retirement provision) 23a/c (27,358) (27,231) Adjustments for Movements in Working Capital other than Cash 23b 2,051 (1,163) Movements in Provisions for Liabilities and Charges 23c 424 33 Net Cash Outflow From Operating Activities 281,831 250,397
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