Cordia Annual Report 2011 - 2012

Annual Report 2011/12

Chair’s Introduction 3

Managing Director’s statement 4

Finance Director’s statement 5

Care Services 6

Facilities Management 10

Encore Hospitality Services 14

Support 18

Members’ report and financial statements 20

Contents

2

3

I’m delighted to introduce this annual report, the third reported by Cordia (Services) LLP.

I have been the Chair of Cordia since May 2012. During my initial tenure I have been impressed by the service provided by the organisation. Our focus on staff, customers and efficiency is what underpins our operation. In the report provided by each of the Heads of Service you will see the importance attached to these aspects of our work.

In a challenging year we still managed to provide important services to the people of Glasgow whilst ensuring financial prudence. This has set us up for moving into the future with continued optimism.

There are a number of new initiatives in the pipeline for the coming year. I hope you take the time to read the reports from the directorate and management team and that you find them interesting.

Best regards

Bill Butler (Cllr)Chair of the Cordia (Services) LLP Board

Chair’s Introduction

Cordia Annual Report 2011/12

4

Managing Director’s statement

This is the first annual report produced since I have taken up the position of Managing Director on a full time basis.

I’m delighted to be able to report that the organisation is in such good shape as we move forward into, what will undoubtedly be, a more challenging period for us. My senior team go into details in the coming pages and show the real difference that Cordia makes to the lives of Glaswegians across all age groups.

My own focus in the financial year was the restructuring of the organisation to make it better ready to address future challenges. Our principal customers are looking for saving year on year and we need to be sure we can react positively to these changes through the way we are set up to operate.

In operations there has been lots happening. In home care the introduction and rollout of the reablement service is changing the way we deliver care in Glasgow. This new service really puts service users at the centre of their own care. In facilities management we have seen schools transformed with the introduction of new service concepts such as huts in the play ground area of some secondary schools and in Encore, growth through new contracts has really seen this area of the business strengthen and develop.

I am looking forward to the coming years, and especially to the challenges and excitement around the 2014 Commonwealth Games. Myself and my senior management team are working hard to ensure Cordia is a confident and important member of the council family as we face the future with optimism.

Regards

David MelvinManaging Director

5

Finance Director’s statement

I’m delighted to present the financial report for the financial year 2011/12.

In the year ended 31 March 2012, Cordia generated a profit available for discretionary distribution to members of £3.19 million. This result includes the adjustments required in respect of FRS 17 `retirement benefits’ totalling £2.6 million. The FRS 17 adjustment is shown as a transfer between the pension reserve and other reserves within the Reconciliation of Movement on Members’ Funds.

The underlying pre-FRS 17 results demonstrate that the partnership operated to the agreed business plan for the year. The partnership is pleased to report an underlying surplus of £3.9 million before accounting for £1.0 million of employee restructuring costs and the issue of a £2.3 million credit to the LLP’s principal customer. This surplus exceeded the budgeted surplus of £2.6 million by 50%.

No distribution was made to members for the period. Net current assets were £850,000 and total net assets

distributable to members were £18.14 million. This is as a result of the pension asset in the Strathclyde Pension Fund of £17.1 million.

Our turnover reduced by £3.7 million in the financial year principally due to a £2.3 million credit issued to Glasgow City Council, and a reduction in income from homecare services of £1.5 million. This was caused by a reduction in demand from Glasgow City Council because of internal budget pressures.

Underlying profitability improved in the year by 15% compared to 2010/11. During the year we incurred severance and other restructuring costs of approximately £1.0 million. These costs were for voluntary severance and payments made to staff for reducing contracted payroll commitments in care services and in catering operations, this allowed us to re-align our staff capacity. In care services, there was a continuing amendment to service provision from the company’s main customer leading to a staffing over-capacity. In FM, business remodelling and a change in service provision resulted in surplus posts.

New revenue growth was strong with over £3.4 million in new business achieved, including two new income streams, these were the provision of a fully managed stair lift installation and maintenance service and a new service providing translation and interpreting services, Cordia Linguistics.

I’m delighted that Cordia performed so strongly in the financial period and this is particularly pleasing in the context of a difficult trading environment and a reduction in service provision requests from our principal customer.

Andy ClarkFinance Director

6

Care Services

7


Care ServicesCordia is the largest home care provider in Scotland and delivers a range of services on behalf of Glasgow City Council’s Social Work Services. Over 6,300 Glaswegians receive support from our home care staff on a daily or weekly basis. We also manage the community alarm service and over 14,000 Glaswegians receive this service. We also provide services to support families that have addiction issues.

In the financial year 2011/12, radical changes have been noted across our home care services. The reablement service is now complete and this sees all new hospital discharges and clients having amended care plans based on a six-week programme that aims to increase independence and reduce long term care visits. Over 440 staff have been trained and are now working in this important service. Personalisation brought new challenges for the division. This service saw nearly 600 service users with disabilities being given the opportunity to choose both their care services and care provider, this had a potential loss of business of £5.4 million per annum to Cordia. We are delighted that, through our hard work to retain them, the majority of these service users have stayed with Cordia.

Cordia’s home care service retained its grading of 4 from the Care Inspectorate for our Care at Home Service 2011/12 and this is an important achievement. During the financial year we also reduced our home care payroll by approximately £4 million. In EquipU, our assistive technologies service, the partnership continues to go from strength to strength and Cordia in 2011/12 embarked on a number of new commercial initiatives. Principally, this has been the development of a pan-Ayrshire model to help partners in that area create a single joint store service. We are now delivering a managed stair lift service this has demonstrated significant savings to the six EquipU local authorities, including a 22% procurement saving and 42% product recycling levels. This service has reached a turnover of £3.9 million.

Transport and Support Service (TASS) continued to flourish in the reported year with 60,000 journeys been made in support of children in care in Glasgow. Cordia Community Alarm Services supports nearly 14,000 service users to live independently at home and handles 370,000 calls a year. During the year, we retained our TSA European accreditation. There are many challenges ahead, however we are confident that we will continue to develop to ensure that the service continues to grow.

8

Cordia’s reablement service is operated in partnership with Glasgow City Council and NHS Greater Glasgow and Clyde. Reablement works with service users for up to six weeks to help them regain both the skills and confidence required to live as independently as possible in their own home.

In order to deliver reablement, Cordia worked with 440 members of staff who had volunteered to undertake additional training. The roll out of the reablement service began in October 2011.

Reablement is available across Glasgow and has so far helped 1,777 service users, totalling 60,728 hours of service completed by our reablement staff.

Our staff work with each service user and an occupational therapist to create a care plan which details achievable targets. The reablement staff then implement this plan over a maximum of six weeks to ensure the service user can carry out tasks on their own.

Christina Byres is a service user who has enjoyed the benefits of reablement. She says: “The carers come in with me when I make my breakfast and then my lunch and see that everything is alright. They watch what I’m doing and I think they are absolutely wonderful. It has made my life so much easier.”

A short promotional DVD of this service is available on request.

CARE SERVICES

Key facts: ■ Partnership working

between three agencies

■ Rolled out across the whole of Glasgow

■ 440 staff members involved

■ Approx 1800 service users

CASE STUDY: REABLEMENT

9

CASE STUDY: EquipUThis year marked the 10th anniversary of our successful EquipU partnership. EquipU partners with 12 local authorities and two NHS Trusts to support those organisations in providing assistive technology to people in their local communities. Since its inception, EquipU has continued to develop and innovate to become the largest and most successful service of its kind in the UK.

From our base in Baillieston, EquipU delivers, installs, maintains and recycles a whole host of assistive technologies including stairlifts, hoists, beds, bath lifts and walking frames. The service provides the necessary equipment for people to remain in their own environment and live a more enabled lifestyle.

EquipU delivers its service to 57,000 people a year, with an annual turnover of £11.7 million. In the financial year 2011/12, the foundations for further growth have been laid. This includes serving an additional six local authorities, the Ayrshire and Arran NHS Trust and care homes across the partnership.

Key facts: ■ Working across Scotland in

partnership with 12 local authorities and two health boards

■ Wide range of assistive technology service provision

■ 1,200 users

■ 42% product recycling

■ 57,000 deliveries


10

Facilities Management

11

The division performed well adjusting resources across Glasgow to ensure a smooth transition of services to reflect Glasgow City Council’s “Tomorrow’s Council” initiative. It is still a challenge to deliver a catering service in schools that pupils want to use considering the parameters of legislation, budgets and resources, however, close partnership working with Education Services has seen market penetration in primary schools grow to 65% - an increase of 2% on last year. Free meal uptake also showed an annual increase of 2%. A new menu was introduced into schools in April 2011 that proved to be a significant contributor to this increase. Further investment has been made in secondary schools to encourage young people to use the school meals service. Initiatives such as bespoke service points and café style outlets have seen an early return on this investment. Market

penetration in secondary schools has increased by 3% year on year and the focus on free school meals has been intensified to improve uptake. Janitorial, school crossing patrol services, building and window cleaning also performed well this year. Investment in new cleaning equipment proved good value with performance improving both in standards and with a reduction in cleaning hours being achieved. Close partnership working with Glasgow Life and ACCESS achieved effective monitoring throughout the city that recognised Cordia provided a strong service provision. Catering and cleaning services within social work locations also performed well serving around one million meals in the year to customers in homes for the elderly, day centres and lunch clubs. Cordia was the lead organisation in a consortium bid of 12 local authorities to compete for the Strathclyde

Police tender for cleaning and janitorial services. This bid was successful with Cordia managing the services in Glasgow with an annual turnover of £1.8 million. The year 2012/13 will see further rationalisation of Council buildings that will mean sourcing alternative employment for approx 85 cleaning employees. Work will intensify regarding Social Work’s new ‘Homes for Life’ which will see us planning resources and budgets to deliver quality catering and cleaning services in the first of five new 120 bedded care homes. Budget pressures will also continue to be present with all FM services being reviewed to establish if any efficiency savings can be made without impacting on front line services.


Facilities ManagementFacilities management provides a wide range of services that support schools, public buildings and homes for the elderly. Our services are designed to support the effective operation of these premises and include the provision of a range of catering, cleaning and other support services on a daily basis.

12

CASE STUDY: SCHOLARS’ CAFEThis concept originated from an idea to have a high street style café outlet located within a secondary school. We identified space in Knightswood Secondary School and brought the idea to life. We consulted with staff and pupils on the layout, design and artwork of the Scholar’s Café before designing and building the bespoke outlet.

Scholar’s Café has been a huge success and is extremely popular among pupils; meal uptake has

risen by 31% and the project repaid itself in full within 12 months.

We continue to review items for sale at the café and identify new products which appeal to the pupils while conforming to legislation. We work closely with suppliers to deliver this.

There has been a great deal of interest from head teachers in Glasgow and school catering colleagues from local authorities

across Scotland who see this project as innovative and a positive move away from the old school meals culture. More recently Scholar’s Café won a UK-wide Educatering Award for Innovation.

Moving forward we are currently reviewing all secondary schools with the aim to put in alternative sale points. Currently planned is an internet café in King’s Park Secondary School.

Key facts: ■ First café style operation in a

Glasgow school

■ Pupil-centred design

■ 31% uptake in service

■ Winner of the UK Educatering Award for Innovation 2012

“Scholar’s Café has been a huge success and extremely popular among pupils; meal uptake has risen by 31% and the project repaid itself in full within 12 months”.

FACILITIES MANAGEMENT

13

Cordia invested £100,000 in facilities management cleaning equipment. Our building cleaning service operates in all Glasgow schools, Glasgow Life buildings, ACCESS managed buildings, offices and the city’s police stations.

Our overhaul of our cleaning equipment began with managers reviewing their facilities. This allowed us to identify what was needed. In turn we were able to provide a bespoke cleaning service that was relevant to the nature of the environment. Not only did we invest in new equipment but also in new technology. This included ride-on cleaners which are predominantly used in new-build schools due to the large areas in their open-plan design. Police stations now use steam cleaners for cells and more agile scrubber/driers for smaller areas.

The automated nature of our new equipment has reduced cleaning hours which has allowed us to cut staffing costs significantly. The investment has also provided an improvement in cleaning standards creating an all-round better service for both Cordia and our customer.

The less hours and reduction in manual work not only saves money in employee costs for the business but also reduces the threat of health and safety risks.

Key facts: ■ Over 1800 frontline cleaning staff

■ Emergency cleaning for fire and flood

■ Most cleaners work unsociable hours


CASE STUDY: CLEANING EQUIPMENT

14

Encore Hospitality Services

15


Encore Hospitality Services had a challenging trading year. The impact of the recession on public consumer confidence and the reduction in corporate hospitality hit the division hard. The new acquisitions of the Glasgow Royal Concert Hall, the Old Fruit Market and City Halls helped to ease the financial challenges. The Riverside Museum (which replaced the Transport Museum) opened this year and Encore Hospitality Services opened a restaurant and a coffee shop which have traded extremely well. We were successful in our tender bid to retain the catering contract at Glasgow Caledonian University for a four-year period starting in January 2012. This contract has a value of £11 million throughout its term. There will be an option to extend the contract for a further three years. The Bean Machine coffee shop concept was successfully launched this year. We now have a

number of sites trading throughout Glasgow with more in the pipeline for 2013. The World Pipe Band Championships have committed to Encore Hospitality Services for another two years to deliver public bar and VIP hospitality services. The Glasgow Warriors rugby club (based at Scotstoun Stadium) have also extended their contract for the provision of public and VIP catering at home games and for staff and player catering throughout the year. As we move forward, there are many exciting opportunities that will help to transform the commercial base of the division as a trading unit for 2013. These include the opening of the Commonwealth Pool at Tollcross and the opening of a tearoom in the Botanic Gardens. Strategically, the Glasgow 2014 Commonwealth Games will provide a major source of growth in 2013/2014

Encore Hospitality ServicesEncore provides event catering and public and staff catering across Glasgow. This includes providing catering to all Glasgow museums including event services to those hiring museums for corporate banqueting events. We also provided public catering for 3.5 million visitors annually. Encore also has a number of important private contracts including all catering and hospitality services for Glasgow Caledonian University.

16

CASE STUDY: THE TEAROOM AT THE BOTANICSThe Botanic Gardens, in Glasgow’s West End, is home to remarkable glass houses and an extensive collection of tropical and temperate plants. The horticultural and botanical attraction is visited by over one million visitors every year. The gardens, however, had no seated public catering facilities prior to the opening of this facility. This represented a good business opportunity for Encore who negotiated the conversion of the old visitor centre into a classic tea

room with a garden terrace and outdoor seating and performance area.

The visitor centre was fully refurbished and the external terrace landscaped to create an outdoor dining area capable of seating 100 people. The project saw a significant investment in disabled facilities and multi-purpose toilets that ensure accessability for all users.

In addition to the seated dining areas, the plan also allowed for the provision of a high quality mobile unit offering Fairtrade and organic food on a ‘grab and go’ basis.

Both operations launched successfully in March 2012. A projected annual turnover of £0.5 million is anticipated and the venture has created 12 new jobs.

“A projected annual turnover of £500,000 is anticipated and the venture has created 12 new jobs.”.

ENCORE HOSPITALITY SERVICES

Key Facts: ■ Launched March 2012

■ £500,000 turnover

■ Created 12 jobs

■ 20% of capital budget on accessability modifications

17

Cordia Annual Report 2011/12CASE STUDY: ENCORE AT GCUEncore caters to over 19,000 staff members and students at Glasgow Caledonian University (GCU) and is the longest serving university caterer in the UK. The most recent GCU contract was won in November 2011 and ensures another four years at GCU with an optional three year extension.

The projected turnover for this contract is £11 million over the initial four year term.

There are several outlets for students on campus; the main refectory, café roots, the saltire café, the Govan Mbeki fairtrade café, and the learning café. Staff have two outlets; the staff dining room and the conservatory social space.

One of the key aims for Encore at GCU was to develop a green strategy which continues to be implemented across campus. In January 2012, we helped achieve Gold in the Green Tourism Awards and have also been awarded Fairtrade status. Vending machines use “vent sense” reducing CO2 emissions by 75,000kg, reducing costs by £14,000 and helping to make our vending operation carbon neutral.

Encore currently recycles all food waste products. Our total waste recycling stands at 87%. In 2011 we worked in partnership with GCU to create a herb garden on campus which supplies 50% of our herbs. We also created vegetable plots at the halls of residence where students grow and harvest vegetables for use in our kitchens.

In the UK-wide student barometer, Encore was voted number one for student catering in 2011 and 2012.

Key facts: ■ 19,000 potential customers base

■ Seven year potential

■ Focus on a green agenda – food waste recycling is 87%

■ Winner of best campus caterer in Scotland 2012

18

Support

19

In 2011/2012, human resource activity in Cordia continued to grow. Our attendance management strategy was fully implemented and continues topromote the importance of the health and wellbeing of our staff and the positive effect that has on our business. During the year there was a reduction in services provided throughout Cordia leading to an overall downsizing of the workforce - this was successfully achieved without the need for compulsory redundancies.

Our Blair Court HQ has had its lease extended securing this office for a further 10 years. The introduction of the self-financing wage award for 2010/11 was agreed and supported by 96% of staff, a major achievement in challenging times.

In Cordia Learning, our framework agreement to provide training to the Clyde Valley authorities has continued to be successful. Our commitment to health and safety has seen the development of

15 new management standards currently being implemented. Over 300 staff were trained in the “Glasgow Welcomes” programme and this will assist with our Glasgow 2014 preparation. Cordia Learning joined forces with a private management training company to deliver the “Essential Management Skills Programme” to Cordia managers during the year and we have launched the “Cordia Routeway” for supervisory staff.

The continued development of the SPARK information systems programme has seen us provide more up to date and relevant information to allow managers to make informed decisions in a speedy fashion. This has led to increased exposure in areas such as staff absence and holidays. This work increases at a pace and will result in the development of real-time meaningful dashboards over the coming financial year. ICT support and infrastructure saw the introduction of a program of server virtualisation and rationalisation. This programme greatly increases the

reliability of our underlying architecture ensuring that systems are less likely to be unavailable – the new infrastructure also makes business growth easier to support.

The marketing team has grown significantly during the reported period with the addition of a new graphic designer and a journalist to help manage our increased PR activities and social networking development. During the period, a more strategic alignment with the needs of customers has seen mechanisms be put in place for reporting in Glasgow Life and Glasgow Caledonian University.

Cordia’s procurement team continue to implement contracts which ensure best value to all areas of Cordia. We have put in place procurement strategies which engage local small businesses, resulting in a sustainable model which is mindful of the impact our decisions have on the local economy and the environment.


SupportSupport services provides finance, HR, ICT, procurement, marketing and training services to the operation. These services are designed to ensure that operational colleagues have access to people and resources that allow them to concentrate on frontline service delivery.

20

Cordia (Services) LLP Members’ report and financial statements Registered number S0302144 For the year ended 31 March 2012

21

Members’ report and financial statements

Cordia (Services) LLP Members’ report and financial statementsRegistered number S0302144

For the year ended 31 March 2012

Members’ report The members present their annual report and audited financial statements for the year ended 31 March 2012. Principal ActivityThe principal activities of Cordia (Services) LLP are catering services, facilities management (FM) and care services. These financial statements are the fourth statutory financial statements for Cordia (Services) LLP and represent the results of the year of trading from 1 April 2011 until 31 March 2012. The partnership provides a complex and varied range of services and employs 7,085 staff. Designated MembersCordia (Services) LLP had two members during the period, Glasgow City Council and GCC LLP Investments Ltd both of whom are designated members. Members CapitalCurrent policy is not to make repayment of members’ capital. No additional members’ contributions to capital were made and no cash drawings were made against members’ capital.

Business Review Business StructureCordia (Services) LLP provides care services to its sister organisation Cordia (Care) LLP. Cordia (Contracts) LLP is a subsidiary of Cordia (Services) LLP. In the reported financial year, Cordia (Contracts) LLP engaged in limited trading activities principally in the areas of catering, training and development and ICT. All other business was transacted through Cordia (Services) LLP. The overall business structure remained consistent in 2011/2012. Financial Results for the PeriodIn the year ended 31 March 2012, Cordia (Services) LLP generated a profit available for discretionary distribution to members of £3.19 million. This result includes the adjustments required in respect of FRS 17 ‘retirement benefits’ totalling £2.60 million. The FRS 17 adjustment is shown as a transfer between the pension reserve and other reserves within the Reconciliation of Movement on Members’ Funds. The underlying, pre-FRS 17 results of Cordia (Services) LLP demonstrate that the partnership operated to the agreed business plan for the year. The partnership is pleased to report an underlying surplus of in excess of £3.9 million before accounting for £1.0 million of employee restructuring costs and the issue of a £2.3 million bulk credit to the LLP’s principal customer. This surplus exceeds the budgeted surplus of £2.6 million. The underlying surplus is 50% better than target. No distribution was made to members for the period. Net current assets were £850,000 and total net assets distributable to members were £18.14 million. This is as a result of the pension asset in the Strathclyde Pension Fund of £ 17.1 million.

22

Members’ report (continued)

During the year, changes in the economic climate had a negative affect on the pension fund assets, with actuarial losses of £9.2 million. Cordia (Services) LLP’s financial statements have been prepared on a going concern basis. Cordia (Services) LLP showed a net business reduction of £3.7 million in the reported financial year principally due to a £2.3 million credit on charges to GCC, and a reduction in income from homecare services of £1.5 million. This was caused by a reduction in demand from our principal customer because of internal budget pressures. Underlying profitability improved in the year by 15% compared to 2010/11 and was 50% better than targeted.

Cordia (Services) LLP incurred severance and other restructuring costs of approximately £1.0 million. These costs were principally for redundancies and payments made to staff reducing contracted payroll commitments in catering operations and the principal reason was business remodelling delivering a change in service provision which resulted in surplus posts. New revenue growth remained strong with over £3.4 million in new business achieved and this was in two new income streams, provision of a fully managed stair lift installation and maintenance service and a new service providing translation and interpreting services, Cordia Linguistics. Overall, Cordia (Services) LLP performed strongly in the financial period and this is particularly pleasing in the context of a difficult trading environment and a reduction in service provision requests from principal customers. Administrative ExpensesDepreciation is included at a value of £23,000 .

Care DivisionThis was again a challenging year for this division performed well considering the pressures that were outwith its direct operational control. The underlying segmental profit was £1.2 million before severance costs and the allocation of the bulk credit to GCC. This was £0.3 million less than targeted. The changing nature of the requirements of home care services for Cordia’s key customer Glasgow City Council Social Work Services meant that key service times for client continue to move to meet the demands for the service. An analysis of duties and realignment of staff has seen this challenge being addressed and the division has been resized to meet future demand as it moves into financial year 2012/13. The division has also worked closely with GCC to meet their service demands for service reform in the areas of reablement and personalisation for clients. Efficiencies in operations and the stringent management of staff costs have seen the ongoing payroll reduce by over £4 million. Within the financial year, the division extended its operation to include the procurement, installation, removal and maintenance of stairlifts for six local authorities, and this generated £3 million of turnover in the financial year. The division continues to demonstrate effective partnership working in the EquipU area of operation despite a challenging financial environment for local authorities and health authorities. This service provides a framework for the integrated assessment and provision of equipment to the elderly and those who are vulnerable or infirm in NHS Greater Glasgow and Clyde and six local authorities around the West of Scotland. During the financial year £7.6 million growth was achieved. The continuing development of new business and the remodelling of the division has been successful and enabled it to offset losses in the traditional home care provision which has reduced due to budget pressures from its principal client.

23



Catering DivisionThe division performed strongly in a challenging economic environment. In schools catering, service remodelling around the use of production kitchens, addressing food costs and improving stock control all increased efficiencies. In the financial year reported, payroll reduced by £1.3 million and transport costs for meals was also reduced by £0.3 million through utilisation of vehicles. Cost of sales percentage relative to turnover improved by 1%. Market penetration of school meals during the period showed improvement. In primary schools 65% of pupils use the service, an improvement of 3% and 87% of free meal users participated, which is a 2% increase. In secondary schools 46%, up from 43%, of pupils use the service although free meal uptake fell to 56% from 60%. Encore Hospitality Services (Encore) performed well in the commercial market in a very difficult trading climate. With a budget of £10.3 million, Encore returned £0.9 million to Glasgow City Council and its arms length external organisations (ALEO)s. The catering division overall had an underlying profit of £1.4 million before restructuring costs and the allocation of the bulk credit to GCC, this was £ 1.1 million better than budgeted. Facilities Management DivisionThe main focus in this division was cost efficiencies. There was a 5% reduction in business because of a reduction in the number of properties in the business portfolio. This was due to rationalisation by the division’s main customer of its buildings. Despite this rationalisation the division performed well, income reduced by £1.5 million. The division had an underlying profit of £1.2 million before bulk discount was issued to GCC which was £0.5 million better than budgeted. This was achieved principally through payroll efficiencies.

Risk ManagementCordia (Services) LLP recognises the importance of the management of corporate risk and applies appropriate corporate governance to ensure it is successfully monitored and managed. The overall pressure on public finances continues to be the dominant risk to the LLP. Budget pressures and service reduction within Glasgow City Council has an effect as the LLP provides key services to this main client grouping. Cordia continues to monitor the change in business operation and address the mitigation of risk pro actively. Cash flow management procedures are in place to ensure that resources are managed effectively. This management of resources has ensured that the company has never been required to use its bank overdraft facilities. A risk register is maintained and is regularly reviewed by an audit committee which is chaired by an elected member of the Cordia (Services) LLP Board. The audit committee meets three times annually and reports findings to the Cordia (Services) LLP Board. An internal audit function also carries out regular audits of business functions and these are reported both to the audit committee and the Board. The business is subject to further enhanced governance procedures and it reports to Glasgow City Council’s professional standards and scrutiny committee twice yearly. Transactions with MembersNo remuneration of members occurred during the period. The members’ share in the profit or loss for the period is accounted for as an allocation of profits with unallocated profits and losses included within ‘other reserves’. Cordia (Services) LLP transacts with one of its members, Glasgow City Council, and a bulk credit was returned to the Council in the reported year.

24


Investment for New Business and GrowthIn this financial year investment has been made and work carried out to further develop the business environment for growth. The development of subsidiary LLP, Cordia (Contracts) LLP has ensured that opportunities for growth in diverse areas such as training and IT systems development can be facilitated, as well as the traditional core business areas of catering and care Commercial training activities include the LLP being a part of the framework agreement for Clyde Valley local authorities and this generated £114,000 on turnover in the year. Cordia secured the contract to operate GCC’s translation services and this service was integrated into the business during the year, generating £0.4 million of turnover. This is expected to grow to nearly £1 million in 2012/13. Investment will be made in the systems to allow the service to be marketed to other interested parties. Cordia has commenced discussions with strategic commercial partners to further develop the EquipU service and stair-lift installation service to new markets. Cordia has been successful in developing business through extending existing partnerships and this has been underpinned by its reputation of successfully managing large workforce contracts where budgets are tight and sound financial management and high-use of innovative technologies is required. Strategic development is two-fold; increasing business externally through Cordia (Contracts) LLP and extending partnerships with established customers. This strategy will continue into the next financial year. Brand development has been key to the success of Cordia in its third full year of trading. Continued investment in the Cordia brand has seen it become highly visible and established in the communities served by the LLP. This has been done with aggressively tight budgets. The Cordia name is now associated with the delivery of high quality services.

The Cordia Way, the LLP’s cultural change programme, has continued to develop in the current year, and has been re-launched as the Cordia Conversation. The programme helps staff feel engaged in the transition from a council department to an ALEO. To date, over 500 managers have been involved in projects and come up with ideas that will help further establish Cordia and reduce costs and increase resource efficiency. The Cordia Influencers programme has been launched which brings together 80 key managers in the business, recognising their ability to influence the cultural, business and communication ideals of Cordia. Forward planning and strategic opportunitiesCordia (Services) LLP continue to develop services in accordance with the contents of its business plan2012/2013. Opportunities exist to extend business across a number of sectors and activities and specifically:

• 2014 Commonwealth Games

• Glasgow City Council and its ALEOs

• Clyde valley local authorities

• University and college catering colleges

• Commercial catering contracts

• Commercial training provision contracts

• Commercial IT developments

Cordia (Services) LLP is an established LLP company. There is confidence in current positioning in a wide range of market places and this makes it ideally placed to continue growth in the above sectors. Cordia’s first managing director, Fergus Chambers, retired during 2011/12 and the members would like to take this opportunity to thank him for his contribution to the set up and initial success of Cordia.

25



Disclosure of information to auditorThe Members who held office at the date of approval of this Members’ report confirm that, so far as they are aware, there is no relevant audit information of which the Partnership’s auditor is unaware; and each Member has taken all the steps that they ought to have taken as a Member to make themselves aware of any relevant audit information and to establish that the Partnership’s auditor is aware of that information. AuditorPursuant to Section 487 of the Companies Act 2006, the auditor will be deemed to be reappointed and KPMG LLP will therefore continue in office. The financial statements were authorised for issue on 23 August 2012. Approved by the members and signed on 23 August 2012 by

David MelvinFor and on behalf ofGCC LLP Investments LimitedDesignated member

26

Statement of members’ responsibilities in respect of the Members’ Report and the financial statements

The members are responsible for preparing the Members’ Report and the LLP financial statements in accordance with applicable law and regulations. The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008 require the members to prepare financial statements for each financial year. Under that law the members have elected to prepare the LLP financial statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice). Under Regulation 8 of the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008 the members must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the LLP and of the profit or loss of the LLP for that period. In preparing these financial statements, the members are required to:

• select suitable accounting policies and then apply them consistently;

• make judgments and estimates that are reasonable and prudent;

• state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the LLP will continue in business.

Under Regulation 6 of the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008, the members are responsible for keeping adequate accounting records that are sufficient to show and explain the LLP’s transactions and disclose with reasonable accuracy at any time the financial position of the LLP and enable them to ensure that its financial statements comply with those regulations. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the LLP and to prevent and detect fraud and other irregularities. The members are responsible for the maintenance and integrity of the corporate and financial information included on the LLP’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

27


KPMG LLP191 West George StreetGlasgowG2 2LJUnited Kingdom Independent auditor’s report to the members of Cordia (Services) LLP We have audited the financial statements of Cordia (Services) LLP for the year ended 31 March 2012 set out on pages 28 to 42. The financial reporting framework that has been applied in their preparation is applicable law and UK Accounting Standards (UK Generally Accepted Accounting Practice). This report is made solely to the members of the limited liability partnership (LLP), as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006, as required by Regulation 39 of the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008. Our audit work has been undertaken so that we might state to the LLP’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the LLP and the LLP’s members, as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of members and auditorAs explained more fully in the Members’ Responsibility Statement set out on page 26, the members are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit, and express an opinion on, the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.

Scope of the audit of the financial statementsA description of the scope of an audit of financial statements is provided on the APB’ s website at www.frc.org.uk/apb/scope/private.cfm. Opinion on financial statementsIn our opinion the financial statements:

• give a true and fair view of the state of affairs of the LLP as at 31 March 2012 and of its profit for the year then ended;

• have been properly prepared in accordance with UK Generally Accepted Accounting Practice; and

• have been prepared in accordance with the requirements of the Companies Act 2006 as applied to limited liability partnerships by the Limited Liability Partnerships (Accounts and Audit ) (Application of Companies Act 2006) Regulations 2008.

Matters on which we are required to report by exceptionWe have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

• the financial statements are not in agreement with the accounting records and returns; or

• we have not received all the information and explanations we require for our audit.

DJ Watt (Senior Statutory Auditor)for and on behalf of KPMG LLP, Statutory AuditorChartered Accountants 24 August 2012

28

Profit and Loss Accountfor the year ended 31 March 2012

Note

Yearended

31 March2012£000

Yearended

31 March2011£000

TurnoverCost of sales

2 142,295(127,511)

146,046(127,215)

Gross profitAdministrative expenses

3 14,784(14,729)

18,831(10,912)

Operating profitInterest receivable and similar income

46

553,137

7,9192,111

Profit on ordinary activities before and after taxation being profit for the financial year before members’ remuneration and profit sharesMembers’ remuneration charged as an expense 7

3,192-

10,030-

Profit for the financial year available for discretionary division among members 3,192 10,030

All of the LLP’s operations are classed as continuing. There is no difference between the profit on ordinary activities before taxation and the retained profit for the periodstated above and their historical cost equivalents. Statement of Total Recognised Gains and Lossesfor the year ended 31 March 2012

Note

Yearended

31 March2012£000

Yearended

31 March2011£000

Profit for the year available for discretionary division among membersActuarial (losses)/ gains on the pension scheme 1 April to 31 March 12

3,192(9,232)

10,03017,193

Total recognised gains and losses for the period (6,040) 27,223

29


Balance Sheet at 31 March 2012

Note2012£000

2011£000

Fixed assets 8 215 51

Current assetsStock and work in progressDebtorsCash at bank and in hand

910

7788,3877,592

8755,9075,951

Creditors: amounts falling due within one year 1116,757

(15,907)12,733

(12,277)

Net current assets 850 456

Total assets less current liabilities 1,065 507

Provisions for liabilities - Pension and similar obligations 12 17,073 23,671

Net assets attributable to members 18,138 24,178

Members’ other interestsMembers’ capital

Pension reserveOther reserves

1

17,0731,064

1

23,671506

Total Other Reserves 18,137 24,177

18,138 24,178 These financial statements were approved by the members on 23 August 2012 and were signed on its behalf by:

David Melvin ˜For and on behalf ofGCC LLP Investments LimitedDesignated member Company registered number: S0302144

30

Reconciliation of Movements in Members’ Funds for the year ended 31 March 2012

Members’capital

£000

Pensionreserve

£000

Otherreserves

£000

Total otherreserves

£000

Totalmembers’

interest£000

Balance at 1 April 2011 1 23,671 506 24,177 24,178

Profit for the year available for discretionary division among members - - 3,192 3,192 3,192

Actuarial gains/(losses) on the pension scheme - (9,232) - (9,232) (9,232)

Transfers to/(from) the pension reserve - 2,634 (2,634) - -

Balance at 31 March 2012 1 17,073 1,064 18,137 18,138

31


Notes(forming part of the financial statements)

1 Accounting policiesThe following accounting policies have been applied consistently in dealing with items which are considered material in relation to the Limited Liability Partnership’s financial statements. Basis of preparationThe financial statements have been prepared in accordance with applicable accounting standards under the historical cost accounting rules and in accordance with the Statement of Recommended Practice ‘accounting by limited liability partnerships’ (“LLP SORP”). The LLP’s financial statements are fully consolidated in the group financial statements prepared and published by Glasgow City Council. This entitles the LLP to use the exemption from the preparation of a cash flow statement as stated in Financial Reporting Standard 1 ‘cash flow statements’ (“FRS 1“). As the LLP is a wholly owned subsidiary of Glasgow City Council, the LLP has taken advantage of the exemption contained in Financial Reporting Standard 8 ‘related parties’ and has therefore not disclosed transactions or balances with entities which form part of the group as related parties. The LLP has taken advantage of the exemption allowed in s400 of the Companies Act 2006 to prepare group accounts incorporating the results of its subsidiary undertaking Cordia (Contracts) LLP, as the results of the LLP and its subsidiary are consolidated into its ultimate parent undertaking Glasgow City Council, details of which are provided in note 13. Group reconstructions, including the transfer of services to and from Glasgow City Council, are accounted for as mergers or demergers in line with the requirements of Financial Reporting Standard 6 “Acquisitions and Mergers”. Assets and liabilities are transferred at their stated value and are not subject to revaluation or fair valuation calculations.

Going concernThe LLP’s business activities, together with the factors likely to affect its future development, performance and position, are set out in the members’ report on page 1. The members have a reasonable expectation that the LLP has adequate resources to continue in operational existence for the foreseeable future thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements. Members’ remuneration and allocation of profitsMembers are not remunerated by the LLP. A member’s share in the profit or loss for the accounting period if accounted for as an allocation of profits. Unallocated profits and losses are included within ‘other reserves’. Members’ capitalThe capital requirements of the LLP are determined from time to time by the members. No interest is paid on capital. Value added taxThe LLP is registered for VAT purposes. Irrecoverable VAT is charged to the relevant expenditure category or included in the capitalised purchase cost of fixed assets. Where output tax is charged or input VAT is recoverable, the amounts are stated net of VAT. Fixed assetsIn accordance with parent company guidelines, assets purchased in excess of the de minimis level of £6,000 are included in the balance sheet as fixed assets. In line with the accounting policies of the parent organisation, depreciation is applied in the year from 1 April based on asset valuations as at 31 March of the previous financial year.

32

Notes (continued)

1 Accounting policies (continued)Depreciation is charged on a straight line basis and the useful life of an asset is deemed to be: LT. Systems 4 yearsPlant and Equipment 5 years Assets disposed of, or taken out of use will be fully written off in year of disposal or removal from use. TaxationTaxation on all partnership profits is solely the personal liability of individual members. Consequently neither taxation nor related deferred taxation arising in the LLP are accounted for in these financial statements. Income recognitionIncome is recognised in the accounting period to which it relates. Income from grants, contracts and other services rendered is included to the extent of the completion of the contract or service concerned. Income received in advance is included in the balance sheet within creditors: amounts falling due within one year. A bulk credit has been provided to Glasgow City Council and this has been accounted for as a reduction in turnover. StockStock is valued at the lower of cost and net realisable value in line with the requirements of statement of standard accounting practice 9 ‘stocks and long term contracts’ (“SSAP 9”).

Retirement benefitsAll existing and new members of staff have the option of joining the Strathclyde Pension Fund (“the Fund”). The Fund is a defined benefit pension scheme, providing benefits based on final pensionable pay, which is contracted out of the State Earnings-Related Pension Fund. Assets and liabilities of the Fund are held separately from those of the LLP. Fund assets are measured using market values. For quoted securities the current bid price is taken as market value. Fund liabilities are measured using a projected unit method and discounted at the current rate of return on a high quality corporate bond of equivalent term and currency to the liability. The pension scheme surplus (to the extent that it is recoverable) or deficit is recognised in full. The movement in the scheme surplus/deficit is split between operating charges, finance items and, in the statement of total recognised gains and losses, actuarial gains and losses. LeasesOperating lease rentals are charged to the Profit & Loss Account on a straight line basis over the period of the lease. 2 TurnoverTurnover represents the invoiced value of goods and services supplied under the principal activities of the LLP.

33


Notes (continued) 3 Gross profit The activities of the LLP are broken down as follows:

Care Catering Facilities Admin Total

Year ended

31 March2012£000

Yearended

31 March2011£000

Year ended

31 March2012£000

Year ended

31 March2011£000

Year ended

31 March2012£000

Year ended

31 March2011£000

Year ended

31 March2012£000

Year ended

31 March2011£000

Year ended

31 March2012£000

Year ended

31 March2011£000

Turnover

Total sales 84,575 84,299 31,930 34,581 25,460 26,960 330 206 142,295 146,046

Gross profit

Segment profit 117 2,796 82 1,769 46 2,224 (190) 1,130 55 6,789

Common administrative costs 1,130 1,130

Operating profit 55 7,919

Other interest receivable 44 23

Net interest 3,093 2,088

Profit 3,192 10,030 There is no internal reporting of assets or liabilities by business segment, hence no segmental disclosures are given.

34

Notes (continued) 4 Operating profit

Yearended

31 March2012£000

Yearended

31 March2011£000

Operating profit is stated after charging:Operating lease payments – land and buildings – vehiclesDepreciation and other amounts written off fixed assets

3641,097

23

5601,260

19

Auditor’s remuneration: Audit of these financial statements Tax services

283

283

5 Staff numbers and costs The average Full Time Equivalent number of persons employed by the LLP during the year, analysed by category, was as follows:

Number of employees (FTE)

Yearended

31 March2012

Yearended

31 March2012

Direct operatives 4,588 4,737

Administration 241 249

4,829 4,986

35


Notes (continued) Staff costs for the above persons were:

Yearended

31 March2012

£000

Yearended

31 March2011£000

Wages and salaries 95,138 103,201

Social security costs 5,767 6,514

Pension costs 7,107 (2,867)

108,012 106,848 6 Other interest receivable and similar income

Year ended 31 March 2012

£000

Year ended 31 March 2011

£000

Other interest receivable 44 23

Net return on pension assets/liabilities 3,093 2,088

3,137 2,111 7 Particulars of membersThe number of members of the Limited Liability Partnership for the year was two. No remuneration was paid to either member.

36

Notes (continued) 8 Fixed assets

ITSystems

Plant & Equipment

Total£000

CostAt 1 April 2011AdditionDisposals

109--

20187

-

129187

-

At 31 March 2012 109 207 316

DepreciationAt 1 April 2011Charge for the yearDisposals

7819

-4

7823

At 31 March 2012 97 4 101

Net book valueAt 31 March 2012 12 203 215

At 31 March 2011 31 20 51 9 Stock and work in progress

2012£000

2011£000

Raw materials and consumables 778 875 10 Debtors

2012£000

2011£000

Trade debtors 3,333 2,824

Amounts owed by group undertakings 3,789 86

Value added tax 390 94

Prepayments and accrued income 730 2,457

Other debtors 145 446

8,387 5,907

37


Notes (continued) 11 Creditors: amounts falling due within one year

2012£000

2011£000

Trade creditors 2,677 2,402

Amounts owed to group undertakings 4,954 2,810

Other taxation and social security 2,098 2,238

Other creditors 2,209 1,427

Accruals and deferred income 3,969 3,400

15,907 12,277 12 Pension costs The information disclosed below is in respect of the LLP’s share of assets and liabilities within the Strathclyde Pension Fund, in which it is a participating employer. The latest full actuarial valuation was carried out as at 31 March 2011.

2012£000

2011£000

Present value of funded defined benefit obligations (114,935) (99,792)

Fair value of plan assets 134,507 125,521

19,572 25,729

Present value of unfunded defined benefit obligations (2,499) (2,058)

Net asset 17,073 23,671

38

Notes (continued) 12 Pension costs (continued) Movements in present value of defined benefit obligation

2011£000

2010£000

At 1 April 101,850 110,911

Current service cost 6,216 7,469

Past service costs/(gains) 175 (9,758)

Interest cost 5,791 5,987

Curtailment 716 1,783

Actuarial losses/(gains) 2,731 (16,435)

Contributions by members 1,875 1,992

Benefits paid (171) (400)

Liabilities assumed in a business combination - 301

Estimated benefits paid (1,749) -

At 31 March 117,434 101,850 Movements in fair value of plan assets

2012£000

2011£000

At 1 April 125,521 107,586

Expected return on plan assets 8,884 8,075

Actuarial (losses)/gains (6,501) 758

Contributions by employer 6,477 6,887

Contributions by members 1,875 1,992

Benefits paid (1,749) -

Assets acquired in a business combination - 223

At 31 March 134,507 125,521

39


Notes (continued) 12 Pension costs (continued) Expenses recognised in the profit and loss account

2012£000

2011£000

Current service cost 6,216 7,469

Losses on settlements and curtailments 716 1,783

Past service cost/(gain) 175 (9,758)

Interest on defined benefit pension plan obligation 5,791 5,987

Expected return on defined benefit pension plan assets (8,884) (8,075)

At 31 March 4,014 (2,594)

The expense is recognised in the following line items in the profit and loss account:

2012£000

2011£000

Cost of sales 6,530 (426)

Administrative expenses 577 (80)

Other interest receivable and similar income (3,093) (2,088)

4,014 (2,594) The total amount recognised in the statement of total recognised gains and losses in respect of actuarial losses is £9,232,000 (2010-11: gains of £17,193,000). The cumulative actuarial losses recognised in the statement of total recognised gains and losses are £13,031 ,000 (2011: £3,799,000).

40

Notes (continued) 12 Pension costs (continued) The fair value of the plan assets and the return on those assets were as follows:

Fair value

2012£000

2011£000

Equities 103,571 96,651

Corporate bonds 14,796 16,318

Property 9,415 7,531

Other 6,725 5,021

134,507 125,521 Principal actuarial assumptions (expressed as weighted averages) at the year end were as follows:

2012%

2011%

Discount rate 4.8 5.5

Expected rate of return on plan assets 5.8 6.9

Future salary increases 4.8 5.1

Inflation/pension increase rate 2.5 2.8 In valuing the liabilities of the pension fund at 31 March 2012, mortality assumptions have been made as indicated below. The assumptions relating to longevity underlying the pension liabilities at the balance sheet date are based on standard actuarial mortality tables and include an allowance for future improvements in longevity. The assumptions are equivalent to expecting a 65 year old to live for a number of years as follows:

• Current pensioner aged 65: 21.0 years (male), 23.4 years (female)

• Future retiree upon reaching 65: 23.3 years (male), 25.3 years (female)

• Salary increases are expected to be 0% p.a. to 31 March 2013, 1% p.a. until 31 March 2015 and 4.8% p.a. thereafer

41


Notes (continued) 12 Pension costs (continued) History of plans The history of the plans for the current and prior periods is as follows:

2012 £000

2011 £000

2010£000

Present value of scheme liabilities (117,434) (101,850) (110,911)

Fair value of scheme assets 134,507 125,521 107,586

Net asset/(liability) 17,073 23,671 (3,325)

Experience adjustments2012

(£000/%)2011

(£000/%)2010

(£000/%)

Experience adjustments on scheme liabilities (as a percentage of scheme liabilities) 677 / 0.5% (528) / 0.5% (82) / 0.1%

Experience adjustments on scheme assets (as a percentage of scheme assets) (6,501) / 6.0% 758 / 0.6% 23,313 / 21.7% /

The LLP expects to contribute approximately £5,557,000 to its defined benefit plan in the next financial year. 13 Ultimate parent organisationThe LLP’s ultimate parent undertaking is Glasgow City Council, one of its designated members, as this is largest group into which the results of the LLP are consolidated. The consolidated group financial statements of Glasgow City Council may be obtained from its registered office at the City Chambers, Glasgow, G2 1DU.

42

Notes (continued) 14 Post balance sheet eventsThere were no post balance sheet events requiring adjustment or disclosure within the financial statements. 15 Operating lease commitmentsThe LLP has annual commitments under operating leases as follows:

For leases expiring:2012£000

2011£000

Within one year 445 631

Within two to five years 445 444

Over five years 309 -

1,199 1,075

www.cordia.co.uk

Cordia (Services) LLP, Blair Court, 100 Borron Street, Glasgow, G4 9XE. T: 0141 353 9000, F: 0141 353 9100, E: [email protected]

Date post:	19-Mar-2016
Category:	Documents
Upload:	craig-farquharson
View:	221 times
Download:	0 times

Cordia Annual Report 2011 - 2012

Documents