Annual Report and Accounts 2007/08 - nature.scot Annual Report... · 1 Contents 2 Chairman’s...

Annual Report and Accounts 2007/08

Scottish Natural Heritagewww.snh.org.uk

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www.snh.org.uk 1

Contents

2 Chairman’s Preface

3 Aim, Operating Principles

4 Chief Executive’s Report

12 Performance on Scottish

Government Key Targets

16 Site Designations

17 Grants

18 Nature Conservation Orders

19 Environmental Management

Programme

20 Customer Care Standards

21 Communications

23 Management Team

25 SNH Board

27 Structures

28 SNH Offi ces

31 Annual Accounts

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2 Annual report and accounts 2007/2008

Ask anyone living in or visiting Scotland what they value most about this

country, and pretty much everyone will include some reference to scenery

or wildlife in their answer. As the public body tasked with looking after

Scotland’s nature and landscapes on everyone’s behalf, we appreciate

the importance of this vital asset. If 2007/08 is remembered as anything

in the annals of SNH history, I hope that it will be as a turning point as we

work to become better known and build stronger relationships with the

Scottish people.

This has certainly been a year of fundamental strategic change for

SNH. The result is a new strategic approach that puts the Scottish

people at the heart of our raison d’etre, and redefi nes all that we do in

terms of ultimate benefi ts to them. Alongside that has been a thorough

overhaul of the way in which we relate to those who use our services,

and to those who pay for them. That is as it should be – we run a public

service.

But while the strategists have been doing their ‘thinking’ the

tacticians have been busy delivering real results on the ground, and this

has been a year of exceptionally hard work by everyone involved. As a

result, even more of Scotland’s species and habitats are in good heart,

even more people are getting out and fi nding ways of enjoying them, and

Scotland is (in all senses of the word) a richer country for it.

Andrew Thin, ChairmanScottish Natural Heritage

Preface


www.snh.org.uk 3

Our Aim

Scotland’s Natural Heritage is a local, national and

global asset. We promote its care and improvement,

its responsible enjoyment, its greater understanding

and appreciation, and its sustainable use, now and

for future generations.

Operating Principles

We work in partnership, by co-operation, negotiation

and consensus, where possible with all relevant

interests in Scotland: public, private and voluntary

organisations and individuals. We operate in a

devolved manner, delegating decision making to

the local level within the organisation to encourage

and assist SNH to be accessible, sensitive and

responsible to local needs and circumstances. We

operate in an open and accountable manner in all our

activities.

Key Target Status

Biodiversity Achieved

Site Condition Missed

Natura Achieved

Access to the Countryside Achieved

Landscape Achieved

Economic Achieved

Marine Achieved

Scottish Rural Development Programme Achieved

Effi cient Government Achieved

A summary of our key achievements is detailed on pages 12–15.


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Chief Executive’s Report

This year was one of marked success for SNH: we

substantially completed the programme of work laid

down in our Corporate Plan for 2005–08, achieving

92% of the targets that we set ourselves. We also

refreshed our Corporate Strategy to show the vital

role the natural heritage has to play in delivering

the Government’s National Outcomes. This report

describes SNH’s achievements in 2007/08. It is

impossible for any annual report to recount every

project and local success, but I hope that this

document captures the scope and demonstrates the

value of our work, and conveys the passion that the

staff, management, and board bring to it.

SNH’s 2005-08 Corporate Plan set out our work under four themes: Caring

for the Natural World, Enriching People’s Lives, Promoting Sustainable

Use, and Delivering the Strategy. It included work securing the conservation of habitats and species, our responsibilities for the identifi cation, designation and condition of sites selected for their value to the natural heritage, the promotion of outdoor access and recreation, and the sustainable management of the landscapes that surround us.

Although the main focus of our work is rural, our contribution extends well beyond that. For example, we continued to support the improvement of urban environments through greenspace projects across urban Scotland. We also made possible a range of community projects and volunteering opportunities, and our work on making the outdoors more accessible contributed to the improvement of the nation’s health and well-being. We created new opportunities for business and supported economic regeneration through backing many innovative projects, while promoting and helping to safeguard one of the greatest assets of the Scottish tourism industry. This asset, Scotland’s nature and landscapes, is also an essential part of Scottish identity – a source of national pride and individual enjoyment. To help to maintain this asset we offered advice to government and others, helping to guide policy, major development and community initiatives. We achieved all of this on resources of £71m, through partnership working and with the help of signifi cant effi ciency gains, which exceeded the effi ciency target set for us by government. We increasingly worked in close collaboration with other Government bodies with related responsibilities, helping to establish Scotland’s Environment and Rural Services (SEARS). In particular we played a full part in the huge effort required to implement the new Scottish Rural Development Programme (SRDP).


www.snh.org.uk 5

Caring for the Natural World

One activity that takes up a signifi cant part of our

time and resources is supporting the management

of the unique selection of Scotland’s fi nest natural

areas that are designated as Sites of Special

Scientifi c Interest (SSSIs). These are special for their

plants, animals or habitats, their rocks or landforms,

or a combination of natural features. Together they

form a network of the best examples of natural

features throughout Scotland, and support a wider

network across Great Britain and the European

Union. In total they cover 1,036,000 hectares or

12.9% of Scotland. We committed 29% of our

resources and 23% of our staff time to improving

their condition.

Many Scottish SSSIs are of European importance, and in recent years we have been completing the work needed to identify and designate a series of European Natura sites across Scotland. These sites fall into two types: Special Protection Areas (SPAs) are important for wild birds, while Special Areas of Conservation (SACs) are important for natural habitats and other species. For both types of site we aid Government by identifying possible sites and then consulting over these on their behalf. We also notify interested parties when Ministers confi rm selected sites. In 2007/08 we took forward proposals for eight terrestrial SPAs and over 30 marine extensions to existing sites for seabirds, resulting in three new sites being confi rmed and others reaching an advanced stage. We also progressed proposals for a small number of SACs.

A key target for SNH is to bring these features into favourable condition or recovery towards favourable condition. We have a programme of site condition monitoring to determine the results: this is an objective assessment of each feature by specialists. The information gathered allows us to address management problems on sites. The key target was to bring 80% of features into good or improving shape by March 2008, as a milestone towards achieving the target of 95% of features in favourable condition by 2010. Unfortunately, and despite signifi cant effort, we were unable to fully meet this target, reaching 77.5% of features in either in favourable or favourable recovering condition. But this in itself was a major achievement, refl ecting our investment in Natural Care Management Schemes over the last seven years. These schemes reward land managers for looking after the environmental interest of their land. They are entirely voluntary and take-up has not always been as high or as fast as we would have liked. One major factor affecting this has been the uncertainty surrounding the future of agriculture and of public fi nancial support for it. We are hoping that with the introduction of Rural Development Contracts (RDCs) within the SRDP we shall now see a surge of interest that will propel us towards the 2010 target.

National Nature Reserves (NNRs) are places where nature is given priority and are a showcase to welcome people to visit some of Scotland’s fi nest natural spectacles. Last year we declared three new NNRs: The Flows, Invereshie & Inshriach, and Glenmore, bringing the total of NNRs in Scotland to 65. NNRs cover approximately 133,000 hectares, ranging from wide expanses of mountain scenery to ancient woodlands and from remote islands to lowland lochs. Part of the purpose of NNRs is to provide areas where people can enjoy and better understand our superb natural heritage, and thereby they make a major contribution to tourism. SNH has continued work to raise standards for visitors on all of Scotland’s NNRs to enhance their role as showcases of Scotland’s unique natural heritage, with extra work going into 16 “Spotlight” NNRs.



The Government, along with other European countries, has committed itself to halting the loss of biological diversity or “biodiversity” by 2010. SNH contributes to halting this loss through our very active support of both the UK Habitat and Species Actions and the Scottish Biodiversity Strategy (SBS). We also facilitated a range of biodiversity projects through more than £2.7m of grant funding. In many cases this involved working with the voluntary sector in Scotland: we renewed our framework agreements with the Scottish Wildlife Trust and National Trust for Scotland, and refreshed a set of area-wide agreements with the Royal Society for the Protection of Birds (RSPB). In addition we maintained our efforts to increase public access to environmental information, and launched new features of SNHi (our web-based information service) at the Scottish Parliament in October 2007. We continue to take our responsibilities under the Freedom of Information Act seriously, and we drew praise from the Scottish Information Commissioner for our open, proactive approach to data release.

Our fl agship Species Action Framework is a fi ve-year programme of work at an estimated cost of £5m, focused on key species issues in Scotland. After consulting widely over priorities, we launched a series of projects covering 32 species including red squirrels, red deer and hen harriers. We were all the more pleased at our success in mounting such a major initiative because it was entirely funded out of our programme of effi ciency savings.

Two projects merit special mention for their work in securing the biodiversity of the machair of the Western Isles, and particularly their native wader populations. The Mink Project and the Uist Wader Project (UWP) aimed to remove introduced species that were threatening breeding birds on the islands. In the case of the mink project, the objective was to eradicate mink (which originate from North America) from Harris. The UWP sought to remove hedgehogs from the islands: although these much-loved animals are native to Scotland they were not historically present in the Western Isles, and they act as voracious predators of the eggs of ground-breeding birds, including the internationally important wader species on the machair. Both projects secured signifi cant success at reducing predation – only four hedgehogs were found on North Uist and attention is now being focused on Benbecula. Happily, we were able to address earlier public concerns about the project when new scientifi c research demonstrated that, contrary to previous advice, relocation of the captured animals to mainland Scotland was a humane option. We also advised Government on an application to reintroduce the European beaver to Scotland; something that is now scheduled to happen on a pilot basis in autumn 2008.

Scotland’s landscapes are the aspect of the country’s natural heritage that is perhaps closest to many people’s hearts. Yet, for all their renown, they have not always been treated with the care that they deserve. The European Landscape Convention (ratifi ed by the UK in 2006) sets out a new, forward-looking agenda for landscape, which emphasises its strong cultural elements and the contribution that all landscapes – not just those that are most widely cherished – can make to the quality of people’s lives. To help us to convert this thinking into a programme of practical action we continued to support the work of the Scottish Landscape Forum, an independent forum for all those with a stake in Scotland’s landscapes.


www.snh.org.uk 7

Enriching People’s Lives

Since the Land Reform Act of 2003, Scotland has

been fortunate to have one of the most progressive

legal frameworks for access in the world. A key

component, helping to defi ne the responsible

conduct that lies at the heart of the new access

regime, is the Scottish Outdoor Access Code

(SOAC), which SNH has a duty to promote. In only

a few years SNH has raised awareness of the Code

to nearly 60% amongst the adult population, notably

through a set of successful media campaigns. We

also promote countryside recreation, in pursuit of

our key target to increase participation rates, as

measured by the number of adults who make at least

one visit per week to the outdoors for leisure and

recreation purposes. We continued to support path

networks and other projects, spending over £2m in

grants.

We continued to support Greenspace Scotland, an organisation dedicated to promoting the regenerative value of natural areas in our towns and cities. Having helped to establish it, we were delighted when Government accepted our case that its current core support should come directly from them.

One of our goals is to promote opportunities for community involvement in looking after the natural heritage “close to home” and SNH supported a wide range of local projects to the tune of more than £1.1m though our Attractive Places to Live grants scheme.

One of the challenges facing SNH is the sheer extent of our customer base. As well as being accountable to Ministers and the Scottish Parliament, we provide services to many in the community, including farmers and land managers, local authorities’ offi cers and elected members, developers, researchers, and the public – as users and enjoyers of the countryside, and particular groups such as schools or those with special needs. In recognition of the fact that we have not always handled this wide and varied clientele as well as we might, we undertook a radical review of the way we communicate. This revealed considerable strengths, such as good local press relations, our valued range of publications, and successful campaigns such as the SOAC. But it also identifi ed the need to raise the organisation’s public profi le and, especially, to convey more clearly and simply what we are trying to do and our role in helping others to look after and derive benefi t from the natural heritage. The result of the year’s work on a new communications strategy will be felt in 2008/09.

In 2007/08, we continued to take customer relations very seriously, supporting internal training and working hard to raise our performance standards. One particular focus of our effort was equalities legislation, where we initiated a project designed to fi nd out more about the barriers that inhibit some people from taking advantage of all that Scotland’s natural heritage has to offer. We also continued to support formal and professional education, preparing teaching materials for our website, launching the Teaching Space website and hosting 16 Sharing Good Practice events. We held a Great Glen House open day for the public at our Inverness headquarters and a number of Gaelic workshops were held for primary schools in the central belt. As part of the Highland Year of Culture we mounted a new exhibition on the Highland Naturalists in Great Glen House: our Green Machine toured Scotland; and we commissioned artists for an Environmental Arts project. We also forged a close relationship with the very prominent national BBC and Big Lottery Breathing Places campaign.



Promoting Sustainable Use

These days few can be unaware of the need for

humans to adjust their behaviour if they are to

have a future on this planet, not least on this

relatively crowded island. One of SNH’s statutory

responsibilities is to help foster more sustainable use

of the natural heritage, so that Scotland’s people and

visitors can still gain greater benefi ts from it without

prejudicing the well-being of future generations.

We are committed to making a contribution to

understanding the effects of climate change and how

we might help wildlife to adapt.

One critical area is tourism: we have no doubt that, responsibly undertaken, tourism development can bring greater economic prosperity without harming nature. As a founder member we continued to support the Scottish Tourism Strategy Implementation Group. A tangible way of expressing our commitment to sustainable tourism was by developing the Scottish Marine Wildlife Watching Code. This is a code which helps set industry standards for marine wildlife operators.

One mechanism that has been fundamental to the quest for more sustainable development is the town and country planning system. To assist in this task SNH commented upon 3000 town and country planning cases. In every instance our aim was to help the decision-making body to avoid unnecessary or unjustifi ed damage to the natural heritage; wherever practicable we also suggested ways in which environmental and other objectives could be pursued in tandem. Only rarely did we object outright to development proposals. Similar goals guided our contributions to the preparation of development plans, where we hope that in the medium to long term the incorporation of appropriate environmental policies will reduce the need for SNH’s case-by-case input.

Over recent years the number of cases on which we have been consulted has increased signifi cantly, partly as a result of the growing number of major public infrastructure projects, partly owing to the buoyancy of the housing market, and partly due to the volume of renewables casework. We exceeded our performance standards for reply, responding to 91% of consultations within our published timescale. Prompted by this growing demand on our limited resources and by the impending reforms to the system being introduced by the Planning etc. (Scotland) Act 2006, we commissioned an independent review of our planning work by Heriot Watt University. The report confi rmed the importance of SNH’s role within the planning system, fi nding that overall, planning authorities value highly the objective and comprehensive advice that we provide. The review did, however, identify several ways in which SNH’s efforts could be more sharply focused and in which the responsibility for safeguarding and enhancing the environment could be more widely shared among relevant bodies, including the planning authorities themselves. Action to implement many of the fi ndings is already in hand.

Renewable energy projects continued to provide much of SNH’s most testing casework. In principle we support the exploitation of low-carbon forms of energy because of the part that they can play in combating climate change. But no form of renewables development is without its impacts on the natural heritage and windfarms in particular have the potential to transform the character of much of Scotland’s countryside. Their location in upland and often remote settings can also present dangers to rare wildlife. SNH worked hard, as it had done previously, to resolve these dilemmas and greatly welcomed the more strategically planned approach to windfarm development now being promoted through SPP6 (Scottish Planning Policy). This, we hope, will reduce the number of proposals that become a source of local controversy and end up in public inquiries, with their associated heavy demands on resources.


www.snh.org.uk 9

Similarly, we believe that the Strategic Environmental Assessment (SEA) process, properly conducted, can cost-effectively anticipate and avert such confl icts further down the line. SEAs involve a review of public sector plans and strategies to assess their environmental impact and we play a major role as a statutory consultee. We responded to 223 consultations and for only nine (4%) did we fail to meet agreed timescales (and even these by only a few days). The planning review confi rmed that the organisation was viewed as a source of authoritative comment, citing SEAs as an example. We also play a signifi cant role in helping the Scottish Environmental Protection Agency (SEPA) deliver the requirements of the Water Framework Directive. Work has focused on collaborating with SEPA to develop provisions for small water bodies and to improve data on SSSI and Natura sites in unfavourable condition.

Over the year we worked in partnership with the Scottish Government, the Deer Commission for Scotland (DCS) and Forestry Commission Scotland (FCS), to promote the environmentally sustainable management of wild deer to deer managers and other relevant interests. These efforts are also a major means of achieving favourable condition of Scotland’s protected sites. We also contributed actively to the preparation of the new Wild Deer Strategy, led by DCS. Following Ministers’ announcements of their intention to carry this collaboration to a stage further by merging SNH and DCS, we are now planning to integrate the activities of the two bodies.

Increasingly our work calls for much closer co-operation with other rural agencies in Scotland. This was especially true in 2007/08 of the preparations for the SRDP. The SRDP provides a single integrated mechanism to fund land management and measures designed to deliver environmental and other public benefi ts. SNH is playing a major role, not only in assessing conservation proposals but also in helping to design and deliver the programme as a whole.

Our contribution to marine issues has particularly focused on new proposed Scottish and UK marine legislation and the Government’s proposal to create a new Marine Management Organisation to support more integrated management. We have supported this through our contributions to the work of the Sustainable Seas Task Force, an area of work that we expect to continue at a high level through 2008/09.

1Wind farm, Dun Law,Soutra Hill.

1



Delivering the Strategy

How we deliver our services is as important for our

customers and our public accountability as what we

do, and we must constantly strive to provide good

value for money. We believe that our achievement

within the Effi cient Government Initiative proved both

our determination and our capacity to improve the

effi ciency of our operations. Within three years we

succeeded in saving over £2m per annum, money

that was ploughed back into new nature-based

initiatives including our Species Action Framework

and improved visitor provisions on NNRs.

The SEARS initiative, launched by Ministers in June 2008, laid down a simple challenge for all working in the sector on rural issues: could we come up with plans to work more closely together to deliver a better service to our customers at no extra cost? Doing so required innovation, enterprise, collaboration, and determination. It required us to embark on new projects, which have indeed delivered results, such as a shared approach to handling customer enquiries and maintaining accurate contact details. We have worked to improve collaboration on external communications and training and we have continued with co-location projects in Golspie and with FCS, moving our Edinburgh-based functions into their Silvan House building.

We have continued to discharge the actions resulting from the performance, fi nance and management review conducted on behalf of Government in 2005. Our major internal change initiative, the SNH Development Programme, delivered a number of key objectives. We replaced three Area Boards with a network of Local Advisers, reducing the numbers from 26 to 16. We restructured the organisation to improve its ability to work in an integrated manner and enhance its customer focus by making points of contact clearer – goals that were confi rmed by subsequent survey. We also continued to make signifi cant improvements to business operations and improve our people management through the introduction of a new human resources database. The Development Programme is one of the tools which SNH uses to deliver continuous improvement to achieve Best Value. We have worked closely with Audit Scotland who praised our approach to Best Value. We are now working to implement the Audit Scotland toolkits, in particular the fi nancial management toolkit which will allow an assessment of SNH’s performance against the Best Value Use of Resources criterion.

As an environmental body, we are particularly anxious to lead by example in our internal environmental management. To this end we introduced a new Environmental Management Programme addressing six key areas and delivery supported by all management units. Further information on this can be found on page 19.


www.snh.org.uk 11

Conclusions

2007/08 has been a testing year for SNH. We adjusted to changing government priorities. We developed new ways of working, collaborating with SEARS partners to deliver major projects such as SRDP, co-location and SEARS itself. I believe that we have more than risen to the challenge. We have delivered far more with our resources than we originally planned, and we have achieved this without undue damage to our existing programme, through a combination of effi ciency savings and reprioritisation. This has allowed us to contribute to exciting developments in the marine environment, to begin work on the Species Action Framework, make signifi cant progress on our NNR Standards Project, review our communications work and support the SRDP and SEARS. We have maintained a high level of service while pressing ahead with internal change and transformation. Overall, we look forward to working within the Scottish Government’s performance framework, Scotland Performs, to contribute even more to the well-being of the Scottish people.

Ian JardineChief Executive

2Passengers sea watching from the Oban to Lochboisdale ferry.

2



Key Target 1: Achieved

Support Scottish Ministers commitment

to halt biodiversity losses by 2010 by

taking a lead role in the implementation

of the Scottish Biodiversity Strategy

and by defi ning objectives which will

optimise the effectiveness of actions by

SNH and others.

SNH’s aim was to co-ordinate the development of the Scottish Biodiversity Strategy Implementation Plans for 2008–10 and the public consultation on those plans; to ensure that we took the appropriate action to initiate the plans for which we are the lead public body; and then to establish a system to track progress against the plans. We also aimed to commission research on the implications for Scotland of the 2005 biodiversity reporting round and on the achievability of UK Biodiversity Action Plan targets for priority habitats and species.

We led the development of the fi ve implementation plans – Rural Land Use, Urban, Local, Marine & Information, and Communication & Education, and took them through a public consultation. The set of targets and actions from the fi nal plans are now to be integrated with actions for UK priority species and habitats and managed via a new set of working groups, supported by our Biodiversity Implementation Team. The two research projects were completed under contract by the Macaulay Institute and fi nal reports prepared. Both projects identifi ed work that could be undertaken to help achieve this target.

Key Target 2: Missed

Bring 80% of the special features on

Scotland’s nationally important nature

sites into favourable condition by March

2008 and 95% by 2010. Demonstrate

progress by producing a summary

report of the fi rst six-year cycle of site

condition monitoring.

Our quarterly milestones for this target were to bring an increasing percentage of special features on sites into favourable condition. Favourable condition means both those features in good condition, and those in “unfavourable – recovering” condition – these are features where management action has been taken that should improve their health over time. The second aim of this target was to publish the report on the fi rst cycle of site condition monitoring.

Features assessed as being in favourable or recovering condition totalled 77.5%, an increase of 6% since April 2005. The task of raising the proportion yet further is likely to prove still more challenging, for reasons including complexities of tenure and uncertainties over the management required to achieve the desired outcome. The newly launched Rural Development Contracts (RDC) will become the main means of funding the management of designated sites in the years ahead, replacing not only SNH’s own Natural Care schemes and management agreements, but also agri-environment schemes run by other bodies, such as the Rural Stewardship Scheme and Scottish Forestry Grant Scheme.

Around 6% of the natural features at issue are not susceptible to on-site action of this kind. These include sea bird colonies, the condition of several of which were assessed as unfavourable, probably owing to a lack of food out at sea. Such shortages are most probably the result of climate change and, in some cases, over-fi shing.

The second part of the key target was to publish the fi rst cycle report. Good progress has been made with this and it is expected that it will be launched on the web in late summer/early autumn 2008, with details of management measures taken up to the end of March 2008.

Performance on Scottish Government Key Targets

In 2007/08 we reported to the Scottish Government on our performance through

nine key targets, agreed with them and drawn from our Corporate Plan. We

missed one target, but achieved the other eight targets.


www.snh.org.uk 13

Key Target 3:Achieved

Complete current programme of Natura

designations and implementation of the

provisions of the Nature Conservation

(Scotland) Act 2004; secure, by 2008,

substantial progress in extending

Natura 2000 protection to Scotland’s

marine environment.

Our aim was to secure the classifi cation of one Special Protection Area (SPA); complete consultation on four terrestrial SPAs; and agree with the Scottish Government the selection criteria for marine SPAs and Special Areas of Conservation (SACs) before fi nalising the arrangements and initiating public consultation on them (see page 20 for a description of what the various protected areas are).

The Oa on Islay was classifi ed as an SPA on 2 April 2007. Consultation reports on Colonsay and South Oronsay, and Strathcarnaig, were submitted to the Scottish Government; these sites, plus Renfrewshire Heights, were classifi ed on 17 December 2007. Discussions were undertaken with the Scottish Government on Marine SPA extensions. The fi rst tranche of draft Departmental Briefs were submitted to Scottish Government in early 2008 for comment prior to consultation. First drafts of cases for additional marine SACs were discussed with Scottish Government offi cers.


Promote understanding of the Scottish

Outdoor Access Code and improve

public access to, and enjoyment of, the

countryside, measured by increasing

participation rates.

Our aim was to develop, run and monitor a mass media advertising campaign to promote the Scottish Outdoor Access Code; to publish the 2006 Scottish Recreation survey report, which gives us the participation rates; and to plan a three-year education programme.

TV advertising campaigns were run in July/August 2007 and March 2008 to raise awareness of the Scottish Outdoor Access Code. Awareness levels among the Scottish adult population rose to 67% by March 2008 – the highest level achieved so far. Our research shows that awareness levels rise during each campaign and drop off slightly between each wave, indicating the need for sustained effort. We also ran a targeted campaign on responsible camping and commissioned a review of the access education programme to make recommendations for future promotional and educational activities. We organised the second Scottish Outdoor Access Festival to promote participation and encourage responsible behaviour. This ran from 28 April to 6 May 2007, publicising 279 events across Scotland. The Scottish Recreation Survey yielded data throughout the year, completing the fourth full calendar year of continuous surveying. It indicated that 44% of the adult population in Scotland made at least one trip each week to the outdoors for leisure and recreation purposes during 2007, the same level as 2006.

1Key Target 2Condition of designated sites by special feature.

1

Condition of designated sites by special feature

0 200 400 600 800 1000 1200 1400 1600

Birds

Coast

Earth sciences

Fish

Freshwater habitats

Invertebrates

Lowland grassland

Lowland heath

Mammals (except marine)

Marine (including marine mammals)

Non-vascular plants

Reptiles & amphibians

Upland habitat

Vascular plants

Wetlands

Woodland

Number of Sites

Favourable/

unfavourable –

recovering

Unfavourable


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2Key Target 4Combined awareness of Code.

2

Combined awareness of Code

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Jul-0

3

Oct-03

Jan-

04

Apr-0

4

Jul-0

4

Oct-04

Jan-

05

Apr-0

5

Jul-0

5

Oct-05

Jan-

06

Apr-0

6

Jul-0

6

Oct-06

Jan-

07

Apr-0

7

Jul-0

7

Oct-07

Jan-

08

Pro

po

rtio

n o

f S

co

ttis

h a

du

lt p

op

ula

tio

n a

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of

Co

de

YesNoDon't know


Improve the framework for the care of

Scotland’s landscapes.

Our aim was to raise awareness of the quality and diversity of Scotland’s landscapes, to promote their better care and to provide advice and help the Scottish Government to take action relating to the European Landscape Convention, National Scenic Areas, Scottish Planning Policy 14, and Rural Development Contracts.

SNH continued to support the Scottish Landscape Forum as a means of facilitating discussion, preparing advice and promoting action for Scotland’s landscapes. The Forum’s report, which was submitted to Government in March 2007, contained a set of recommendations for giving effect to the principles of the European Landscape Convention. Pending a response, we continued to promote the Convention by supporting a seminar of international experts, and the Government-led review of European experience in implementing it.

We continue to work with Government on revitalising the National Scenic Area designation, offering advice on the secondary legislation and guidance implementing its new statutory basis. We held a seminar for key stakeholders in October, which confi rmed support for the designation but highlighted severe constraints on the resources available to local authorities to prepare and implement the management strategies called for by the

provisions in the Planning etc. (Scotland) Act 2006. In the meantime we are undertaking an assessment of the special qualities of these outstanding landscapes.

Planning policy guidance issued by Government has traditionally been one of the main means of promoting landscape care. SNH contributed suggestions for the landscape content of the new SPP14, which is due to replace the existing document in 2009. We similarly advised on the landscape content of the consultative draft National Planning Framework 2.

Previous Scottish agri-environment schemes have not catered well for landscape interests. Together with colleagues from other relevant bodies, we attempted to remedy this by devising a set of measures for inclusion in the SRDP. We were particularly keen to see appropriate regional and local priorities identifi ed in this programme as a means of reinforcing local distinctiveness.


Increase and secure greater

recognition for the contribution of the

natural heritage to the rural economy.

Our aim was to raise awareness of the fundamental role played by the natural heritage in underpinning many elements of the rural economy, and to help through the appropriate use of SNH resources of both time and


creo

www.snh.org.uk 15

money to increase its contribution. To this end, we commissioned research, with other public bodies, to investigate the relationship in greater depth. Meantime we kept track of the effort that we ourselves devoted to work directed towards rural economic development and our communications activities in the same fi eld.

SNH spent almost 5000 days of staff time working on activities that benefi t the rural economy, and more than £12m on grants and management agreements that have a direct positive impact on the rural economy (or will bring indirect benefi ts via increased future rural tourism spend). There were also 22 publications and 709 press references that highlighted the contribution of the natural heritage to the economy.


Contribute to policy initiatives in

the marine environment including

proposals for a Coastal & Marine

National Park, implementing the

recommendations from the Advisory

Group on Marine and Coastal Strategy

work and developing a marine

monitoring and assessment strategy.

Our aim was to work with key partners to infl uence the Scottish Government in developing Scottish marine and coastal policy.

We contributed to the drafting of a Marine Bill by the Scottish Government and; actively participated in working groups to develop policy and initiatives relating to Marine Spatial Planning, Marine Consents, and Marine Nature Conservation in Scotland. We also contributed to the preparation of an interim report on the state of Scotland’s seas.


Integrate SNH’s relevant biodiversity,

site management, landscape, access

and education measures into Land

Management Contracts and participate

in regional liaison and prioritisation.

Our aim was to play a full part in the design and implementation of the Scottish Rural Development Programme (SRDP), and in particular to ensure that the Rural Development Contracts (RDC) component of the programme contained an adequate set of measures to cover natural heritage interests.

All these tasks were successfully accomplished. Suitable measures were devised in time; we were a major

contributor to the design of the SRDP delivery plan; we assessed the staffi ng requirements and trained the relevant people within SNH. SNH teams across the country have forged close links with their counterparts in the other public bodies involved in delivering the programme, notably SGRPID (Scottish Government Rural Payments & Inspections Directorate) and FCS. Some uncertainties remain about the amount of staff time that will be required to implement the programme but we have identifi ed areas of activity to scale back should the drawdown prove higher than expected.


Support the Effi cient Government

Initiative by seeking Best Value in all

SNH operations.

Our aim was to meet SNH’s EGI target of realising recurring savings of £2m a year by March 2008; to reinvest these savings in projects providing natural heritage gain; and to document the gain and report progress to our Management Team and the Scottish Government EGI team.

Key projects within 2007/08 were the Species Action Framework (£800,000), the NNR Spotlight programme (£500,000), transitional funding for Greenspace (£150,000), and initiative funding for joint working on deer with the Deer Commission (£150,000). At the end of the fi nancial year, only a small amount of money (0.035% of £2m) remained unspent; the documentation was prepared and is available for inspection. The EGI programme will now be closed down as it is being replaced by the Effi cient Government Programme, with a target to deliver 2% per annum ongoing cash effi ciency savings.

3Walking in Birnam Glen, Tayside and Clackmannanshire Area.

3



Protected Area Designation Description SNH Role

International

Natura Natura 2000 is a European network of protected sites designated under the 1992 EC Habitats Directive and the 1979 EC Birds Directive. The network is made up of two types of site: SPAs and SACs

SNH provides advice on the identifi cation of sites and the monitoring of their condition

Special ProtectionAreas (SPA)

Special Areas ofConservation (SAC)

The 144 SPAs designated under the Birds Directive, support signifi cant numbers of wild birds and their habitatsThe 238 SACs designated under the Habitats Directive, support rare, endangered or vulnerable natural habitats and species of plants or animals (other than birds)

Ramsar The 51 Scottish Ramsar sites are wetlands of international importance designated under the Ramsar Convention. All but four are also Natura 2000 sites

National

Site of Special Scientifi c Interest (SSSI)

1455 SSSIs represent the best of Scotland’s natural heritage. They are ‘special’ for their plants, animals or habitats, their rocks or landforms, or a combination of these

SNH lead

National Parks National Parks have been established for the Cairngorm area and for Loch Lomond and the Trossachs to deliver better management of some of Scotland’s most special areas of outstanding natural and cultural heritage

SNH work with Park Authorities on Park management

National Nature Reserves (NNR) 65 sites special for their wildlife and earth sciences, which are open to everyone to visit and enjoy

SNH declare, manage and work with others who manage NNRs

National Scenic Areas (NSA) 40 nationally important areas of outstanding natural beauty. They include some of Scotland’s fi nest landscapes, from the Solway to Shetland, the Borders to the Hebrides

SNH lead working in partnership with local authorities and other public bodies

Local

Local Nature Reserves (LNR) Places with special local natural interest, set up to protect nature, for people to enjoy and appreciate

Local authorities lead, but SNH awards the designation and supports subsequent management

Regional Parks and Country Parks Natural areas for public recreation and of landscape importance

Local authorities

Site Designations

Further information can be found at www.snh.org.uk/snhi - look at Fact and Figures


creo

www.snh.org.uk 17

Grants

We provide grants to a wide range of organisations

to help us achieve our aims for the natural heritage.

In the last year we awarded grants totalling £12.4

million, which attracted a further £49.5 million in

additional funding to support natural heritage causes.

In all, 541 grants were awarded in the past year. The value of these has ranged from more than £600,000 over 3 years to BTCV Scotland (British Trust for Conservation Volunteers) to £185 for a community wildlife garden in Oldmeldrum.

The range of projects supported help to deliver the outcomes that SNH seeks for the natural heritage. One example is COAST Hebrides: following severe storms, there was wide concern about coastal erosion and the impact of severe weather on the fragile, low-lying coastline of the Uists. This project coordinates volunteers, through “Coastal Care Groups”, to help with work to stabilise the dune systems. A grant of £16,000 was awarded for this three-year project.

The Nadair Trust works with local communities in Argyll and the Islands to help them make best use of their rich natural and cultural resources. A short fi lm and publication was commissioned to raise awareness of the heritage of Scotland’s sea kingdom and SNH was able to provide support of £4,500 for this project, which was also supported by the Heritage Lottery Fund. Another grant of £643 was given towards an event to promote the Scottish Outdoor Access Code and best practice in responsible access to a wide spectrum of local land managers and recreation groups as part of the Scottish Outdoor Access Festival.

SNH also seeks benefi cial outcomes for people. The Energiser Project is a motivational project developed by Momentum Scotland for individuals who are suffering or recovering from mental health problems and socially and fi nancially disadvantaged, which precludes them from enjoying what would be considered everyday outdoor or countryside activities and pursuits. Through a grant of £90,000 to the project over three years, they are given the opportunity to explore their local outdoors to provide experiences and activities to which they would not normally have access.

Another example is the £4,700 grant to a community organic garden project in Campbeltown: a walled garden that had become overgrown and run down was revitalised, creating habitats for wildlife and providing opportunities for people to learn about the natural heritage.

Scheme Value

£000

Attractive places to live 1,032,000

Enjoying Scotland’s outdoors 983,000

Involving people 2,851,000

Paths and routes 1,461,000

Rural land use 753,000

Special places 2,145,000

Supporting biodiversity 2,817,000

Waters for life 332,000

12,373,000 Total Eligible costs against which grant has been awarded = 61,892,000

Funding attracted (grant against eligible costs) = 49,519,000


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As well as supporting individual projects, SNH works with partners to secure shared outcomes. In 2007/08 this included support for BTCV Scotland. BTCV’s objectives for encouraging and supporting volunteering are closely aligned with the outcomes SNH seeks. Over the next three years our Concordat and grant agreement with BTCV aims to encourage over 12,000 new volunteers to get involved in caring for nature, improve more than 1200 places, including greenspaces in Scotland’s most deprived neighbourhoods, and ensure that volunteering improves the health and well-being of individuals and communities across Scotland.

Nature Conservation Orders made during year to 31 March 2008

The Nature Conservation (Scotland) Act 2004 (2004

Act) came into force on 29 November 2004. The

provisions of Section 23(1) ensured that all Nature

Conservation Orders (NCOs) and Special Nature

Conservation Orders (SNCOs) in place before that

date continued in force.

At the end of March 2008 there were 18 NCOs in force, with a further fi ve Amendment Orders, giving an overall total of 23 Orders in force.

It remains our view that these Orders should be used only as a matter of last resort where there is a direct threat to the natural features of an SSSI and/or a European site.

As required by Section 28 of the 2004 Act (as amended by Regulation 9 of the Conservation (Natural Habitats, &c.) Amendment (Scotland) Regulations 2004) we report that during 2007/08:

– No new NCOs were made.– No existing NCOs were amended.

The previous Muirkirk Uplands (No.2) NCO 2001 and the Muirkirk Uplands (No.2) (Amendment) NCO 2001 were both revoked.


www.snh.org.uk 19

Environmental Management ProgrammeFor 2007/08, SNH set no corporate environmental management targets, focusing instead on devolving responsibility for local targets to Area and Offi ce Managers, and on embedding sustainability into corporate processes such as Procurement, Property Management and Human Resources. We introduced a new Environmental Management Programme in April 2007, with three key policy aims

Key Aim 1 – We shall manage our resources more

sustainably

– Most offi ces have a Green Offi ce Plan, with locally meaningful annual local targets.

– Detailed travel planning has been done for the Edinburgh offi ce move and the new Golspie offi ce.

– Biodiversity assessment programme of SNH offi ces begun.– Waste production fell by 11%; recycling rose by 5%, to an average

of 60%.– Work vehicle mileages fell by 8% and £430,000 was saved by using

videoconferencing instead of travelling.– Paper use continues to fall.– Gas and oil use fell, but electricity use went up.

Key Aim 2 – We shall reduce the CO² emissions from

our own operations

– 35 tonnes of CO² saved by using videoconferencing instead of travelling to meetings.

– Numbers of fl ights fell, but more sustainable methods of transport, such as train journeys, went up.

– Travel-related CO² fell by 4%, but electricity use went up.

Key Aim 3 – We shall make our corporate processes

and programmes more sustainable

– The SNH People Strategy includes sustainable behaviours expected of staff – especially in recruitment, induction and competencies.

– All property projects now include appropriate sustainability criteria.– All procurement contracts over £10,000 now must include detailed

sustainability criteria.

We have worked very closely with Scottish Government and other public bodies to promote good environmental management practice across the public sector.

Further information can be found at:www.snh.org.uk/about/greening/ab-gr-02.asp



Customer Care Standards

We achieved or partly achieved a total of 11 (of 12)

customer care measures for the year ended 2007/08.

Technical problems encountered with the website

monitoring tool and the licence to run it prevented us

collecting the data for that measure.

Both corporate targets for grants offered and grants paid were met this year, compared with only achieving the grants offered target last year. Closer working between the Grants team, Finance and Customer Relations is keeping the focus on delivering an improved service to our customers.

Customer care: Numerical performance measures Target (green) Within

Standards

We will answer telephone calls promptly – (standard set to 12 second average ring time, expressed as average pick-up time/in seconds.)

12 seconds 6 seconds

We will minimise occasions when you cannot contact us by phone – (standard set to >90% of calls answered)

90% 93%

Our website is a popular and trusted source of information. (The target is 15% growth on the previous year, same quarter, expressed as the % this standard has been met or exceeded)

100% NA

We will despatch all publications – within fi ve working days of request (or payment, if priced)

80% 94%

We will make a decision on grants – (less than £10,000) – within 20 working days following receipt of a valid application

80% 88%

We will make a decision on grants – (£10,000 or more) – within 40 working days following the deadline

80% 92%

We will pay grants – within 30 working days of a valid claim

95% 95%

We will respond to consultations – within statutory or other offi cial time scales

80% 91%

We will respond to parliamentary questions and other requests from MPs and MSPs – to the required timescales

100% 97%

We will respond to new licence applications and renewals – within 20 working days

80% 100%

We will investigate and respond to complaints – within 20 working days of receipt

80% 86%

We will respond to requests for information – within 20 days

100% 96%

Achieved

Partly Achieved

Missed


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www.snh.org.uk 21

Communications

At SNH, communication is central to everything that

we do. Constantly improving how we communicate

with our audiences and with each other will help

everyone gain a better understanding of who we

are, what we do and why we do it. This will then

put us in a much better position to make our work

more relevant to the people of Scotland and get

more people enjoying, appreciating and looking after

nature and landscapes in Scotland.

Our renewed focus on communications refl ects our priorities and the need to work with our partners in the Scottish Government and other public body partners (such as those that make up Scotland’s Environmental and Rural Services (SEARS)). It also refl ects the fi ndings of the Government’s strategic review report (all public bodies are reviewed on a fi ve-yearly basis), which called for us to engage more and to be more consistent in what we say.

Over the past nine months we have been reviewing our work and developing a new communications strategy.

The key objectives of the strategy are:

– to improve the effectiveness of our communications through the four core principles of rationalisation, focus, cohesion and integration;

– to raise awareness, understanding and appreciation of who we are, what we do, why we do it, and the value we deliver to the people of Scotland;

– to raise awareness of issues affecting Scotland’s nature and get more people involved in enjoying, supporting and looking after Scotland’s nature;

– to deliver much better internal communications as part of a dynamic and collaborative corporate culture.

The strategy is based on four key principles:

Rationalisation

We shall “do less, but do it better…” by reducing the volume of communications, making best use of resources and focusing on priority activities that demonstrably support the Corporate Strategy and the core remit of SNH.

Focus

We shall focus on communications activities that reach the most important audiences with the right message, through the most effective medium. This means applying suffi cient resources to priority activities, working collaboratively with our partners and reducing, or stopping altogether, communications activities of a lower priority.

Cohesion

We shall have a more cohesive approach to our presentation and message. We shall also ensure that our communications refl ect our Corporate Strategy and support the objectives of both the Scottish Government and our SEARS partners.



Integration

We shall ensure that effective communications are an integral part of operations in SNH, by having communications as one of the core programmes of work at SNH and by making communication planning a requirement for major projects and initiatives. We shall also make effective communications a core competency for all staff (particularly managers of people, projects and programmes).

Our new approach to communications will be seen initially through a more distinctive style, better consistency in what we say and how we say it, and a new quarterly magazine that celebrates Scotland’s nature and landscapes and shows the benefi ts that can be gained by looking after these better. We shall also redevelop our website so that information about our work and about Scotland’s nature and landscapes is even more accessible. By the end of 2009/10, we will have reviewed our written communications with the aim of improving letter style and tone of voice, reinforcing the recommendations in our recent planning review.


www.snh.org.uk 23

Management Team

Ian Jardine: Chief Executive

Ian joined the Nature Conservancy Council for Scotland in 1991 as Regional Director for the Northeast and continued in that role with the formation of SNH in 1992. Following re-organisation in 1997 he moved to become Director of Strategy and Operations (East), responsible for all of SNH’s operational activities in the East of Scotland where he was responsible nationally for SNH’s policies on protected areas (National Parks, NNRs, and SSSIs, among others). Ian represented SNH (and UK) on the Council of Eurosite, an international conservation body from 1999 to 2002 and he was elected as President of Eurosite in 2007. He was appointed Chief Executive of SNH in 2002.

Colin Galbraith: Director, Policy & Advice

Colin joined SNH from the Joint Nature Conservation Committee (JNCC) in 1997 as Head of Advisory Services. In 2001 he became Director of Scientifi c and Advisory Services with responsibility for the development of SNH’s scientifi c base, including its research programme and the delivery of advice on the natural heritage. Following restructuring in April 2007, Colin became Director of Policy & Advice with strategic responsibilities for JNCC, National Parks, the Species Action Framework, energy and renewables, climate change, coastal and marine ecosystems and biodiversity. At an operational level, Colin is responsible for Terrestrial Ecosystems, Coastal and Marine Ecosystems, Statutory Framework, Quality of Life, Sustainable Use, and Evidence Base, Research & Monitoring. He is also the UK Scientifi c representative to the Convention on Migratory Species (a United Nations’ Convention with 108 member countries), and is Deputy Chairman of its Scientifi c Council, having chaired it from 1999 to 2005.

Joe Moore: Director, Corporate Services

Joe joined SNH in September 2005 from Scottish Water where he was General Manager for Operations in the Northwest of Scotland. Joe has responsibilities for a wide remit including Human Resources, Information Systems, Property, Fleet, Procurement, Internal Audit and Finance. Joe’s strategic responsibilities include Best Value and Asset Management. Joe is a member of the Institute of Management and a chartered member of the Institute of Civil Engineers. Through his chairmanship at the Scottish Council for Development and Industry, he also sits on the Board of the Structure Fund Partnership, on the UHI (University of the Highlands and Islands) Foundation and on the SEPA North Area Advisory Group for River Basin Planning.

Andrew Bachell: Director, Strategy &

Communications (until December 2007)

Andrew worked with both SNH’s predecessors from 1981 to 1992 and was SNH Area Manager, East Grampian (1992–94). After a spell in the voluntary sector he rejoined SNH in 2002 as Director of Strategy & Operations with strategic responsibilities for access, education, publications, greenspace and the National Strategy Unit. Following restructuring of the organisation in April 2007, Andrew became Director of Strategy & Communications and responsible for SNH’s Corporate Strategy; corporate planning and performance, communication, learning and education, government liaison, and information management. Andrew has left SNH for the National Trust for Scotland, for a one year period initially, as Director of Conservation Services and Projects.



John Thomson: Director, Operations South

(until December 2007); Director, Strategy &

Communications (from December 2007)

John began his career in HM Treasury and worked in a variety of Government departments and agencies before joining SNH as Director of Policy in 1992. From 1997 to 2007 he headed up SNH’s operations in the west of Scotland, a diverse area stretching from Coll and Tiree to the Solway. He also continued to lead its work on a wide range of policy topics, including sustainable development, land and water use, and landscape and planning issues. When SNH restructured in April 2007 he became Director of Operations (South), adding Forth & Borders and Tayside & Clackmannanshire to his operational portfolio. In December 2007 he moved again to the post of Director of Strategy & Communications, in which role he is responsible for SNH’s Corporate Strategy, corporate planning and performance management, and communications and external relations, as well as for its contribution to improving the Scottish economy.

Susan Davies: Director, Operations North

(permanent appointment from September 2007)

Susan joined SNH in 2000, from JNCC, initially as a Unit Manager within Advisory Services and then as Head of Advisory Services. In January 2006 she took on the role of Acting Director of Strategy and Operations (North). Her strategic responsibilities in 2006/07 included biodiversity and protected areas. As Director of Operations North, her operational responsibilities include the Grampian Area Team and strategic responsibilities now include Natura, managed sites (especially NNRs, site condition targets and natural care), deer issues and tourism.

Jeff Watson: Director, Operations North

Jeff joined the Nature Conservancy Council for Scotland in 1981 and held a range of posts including Assistant Regional Offi cer for Ross & Cromarty and Head of Land Management, the latter post seeing transition into SNH in 1992. In 1997 Jeff was permanently appointed Regional Director for Northwest Scotland with responsibility for local delivery of SNH work across the Highlands, Western Isles, Orkney and Shetland (following restructuring in 2007 to also include Grampian) as well as having responsibility for biodiversity, species protection and the marine and freshwater environments. In August 2007 Jeff was honoured by the RSPB and awarded the RSPB Conservation medal. Sadly, in September 2007, Jeff lost his long battle with cancer.

Roddy Fairley: Director, Operations South

(from December 2007)

Roddy fi rst worked for the Nature Conservancy Council in 1977 at Tentsmuir NNR. From 1984 he worked for the Countryside Commission for Scotland, acting as their Head of Policy prior to its merger with the Nature Conservancy Council for Scotland to form SNH in 1992. In SNH he has variously been Head of Corporate Planning, Area Manager for Argyll & Stirling and Area Manager for Strathclyde & Ayrshire. Outside SNH, he has been a board member and has chaired Reforesting Scotland (to 2007), and is a Director of the Central Scotland Forest, the Paths for All Partnership and the Cairnhead Community Forest Trust. He is a member of the South Scotland Regional Forestry Forum and the Strathclyde European Partnership Programme Monitoring Committee. As Director of Operations for South Scotland, he also has strategic responsibilities for SNH’s grant programmes, its access and recreation work and its contribution to health and community well-being.


www.snh.org.uk 25

SNH Board 2007/08

Andrew Thin is Chairman of SNH, having formerly been the Convener of the Cairngorms National Park, Chairman of the John Muir Trust, member of SNH’s North Areas Board, and member of Crofters Commission Board. He is a member of the JNCC Committee and a Director of JNCC Ltd. He is an experienced mountaineer and enthusiastic amateur naturalist. Mr Thin does not hold any other Ministerial appointments.

Amanda Bryan was Chair of the SNH North Areas Board until 31 March 2007. She is a consultant who, trading as Aigas Associates, specialises in rural and community development in the Highlands and Islands. She was Chair of BBC Scotland’s Scottish Rural Affairs and Agriculture Advisory Committee from 2001 to 2006 and a former Development Manager with Ross and Cromarty Enterprise. Ms Bryan does not hold any other Ministerial appointments.

Andrew Campbell OBE is a farmer by profession with a long record of service with the National Farmers Union Scotland (NFUS) at an area level. He chaired the Farming & Wildlife Advisory Group whilst doing considerable conservation work on his own farm. He served as Convener/Leader of Dumfries & Galloway Council during the foot and mouth disease outbreak. He is also the Vice President of the Convention of Scottish Local Authorities (COSLA) and acts as their rural affairs spokesman. Mr Campbell does not hold any other Ministerial appointments.

David Crawley is a former senior civil servant with wide experience of Government and European affairs. After joining the Scottish Offi ce in 1972 he worked in many different areas of Scottish public policy, in particular as Head of Food and Agriculture Group from 1999 to 2002. He is currently Chair of the Audit Committee of the Wales Offi ce and a Commissioner of Queen Victoria School, Dunblane. He is an SNH member of the UK JNCC, a trustee of the Kinloch Castle Trust and is the Chairman of the Central Scotland Forest Trust. Mr Crawley does not hold any other Ministerial appointments.

Michelle Francis is a member of SNH’s Audit & Risk Management Committee and was, until 31 March 2007, Chairman of SNH’s East Areas Board. She is a freelance consultant specialising in environmental and sustainability management for business, in particular in the transport sector. She is also a Senior Associate to consulting fi rm Arthur D. Little. She was previously Head of Environment for Network Rail, covering the whole of the UK, and prior to that Environment Manager for Railtrack in Scotland. She is a member of the Multiple Sclerosis Society Strategic Advisory Board and sits on the Royal Zoological Society of Scotland’s Council. Mrs Francis does not hold any other Ministerial appointments.

Keith Geddes CBE is Deputy Chairman of the SNH Board. Keith chairs Greenspace Scotland. He has extensive experience in local government, having been, until May 1999, Leader of the City of Edinburgh Council and President of COSLA. He is also a former member of the Scottish Arts Council, Scottish Enterprise and Livingston Development Corporation. He is currently a member of the Accounts Commission and works as Policy Director with Pagoda Public Relations. Mr Geddes does not hold any other Ministerial appointments.

James Hunter CBE is Director of the UHI Centre for History, Director of Highland Birchwoods, and Vice Chairman of Highland 2007. He formerly chaired Highlands and Islands Enterprise. He is an extensively published author. He was the fi rst director of the Scottish Crofters Union (now the Scottish Crofting Foundation), which he helped establish. Professor Hunter does not hold any other Ministerial appointments.



Patrick Hunter Blair is a former Director of Policy and Standards for the Forest Service in Northern Ireland. He was founding chairman of the Northern Ireland Native Woodland Group. He was also Northern Ireland representative on the UK Native Woodland Habitat Action Co-ordinating Group until 2004. An experienced land manager in both the public and private sector, he now owns and manages a small estate in south Ayrshire. He is a fellow of the Institute of Chartered Foresters; a director of the Kinloch Castle Trust, and Forward Scotland; a director of the Scottish Woodfuels Group; and a member of the South Scotland Forestry Forum and the River Girvan District Salmon Fishery Board. He is a member of SNH’s Audit & Risk Management Committee. Mr Hunter Blair does not hold any other Ministerial appointments.

David Mackay OBE is a member of the North Region Board of SEPA and was previously director of the region before retiring. He has particular skills in marine science and is Chairman of the Sea Trout Group and a past president of the Scottish Anglers National Association. He was a founder Chairman of the Moray Firth Partnership and is a past member of the Scottish Coastal Forum. He is currently a member of the Grampian Regional Forest Forum. He is a member of SNH’s Audit & Risk Management Committee. Dr Mackay does not hold any other Ministerial appointments.

Joan Mitchell served as a councillor in Dumfries and Galloway from 1994 to 2007, including deputy leader (1997/2003) and Chair of Planning and Environment (2003/2006). A partner in a family farming business, her main interests have been in rural development and countryside affairs. She formerly chaired Dumfries and Galloway Tourist Board (2001/2003) and Dumfries and Galloway Access Forum (2003/2007). She is currently a director of Southern Upland Partnership, and Chair of Dumfries and Galloway Area Tourism Partnership, and is also involved with the South of Scotland Regional Forestry Forum. Mrs Mitchell does not hold any other Ministerial appointments.

Julia Sturrock OBE was a teacher of English from 1976 to 1995. She was also a councillor in Dundee from 1988 to 2007. Her responsibilities included being convener of the Protective Services Forum at COSLA (1995/1999), Leader of the Council (1999/2003), and Convener of Environmental Services and Sustainability (2003/2007). She was a member of SEPA’s East Board for nine years and a member of Forward Scotland. She is a trustee of the Kinloch Castle Trust, chaired the Dundee Furniture Project and Sustain Dundee Environmental Trust for four years, worked as an assistant to an MSP and was Vice Chair of the Dundee Solar City Project and Chair of the Recycling Institute. She is currently a board member of the International Resource and Recycling Institute, SERA (Socialist Environment Resources Association) and Keep Scotland Beautiful. In January 2008, she became a member of SEPA’s main board. Ms Sturrock does not hold any other Ministerial appointments.

Phil Thomas is Chairman of SNH’s Audit & Risk Management Committee. He is Director of Artilus Ltd, a multi disciplinary consultancy he established in 1999. He is also presently: Chairman of the Scottish Aquaculture Code of Good Practice Management Committee; a board member of Quality Meat Scotland and Chairman of its R&D Committee; a member of the British Pig Health and Welfare Council; and a member of the Scottish Advisory Committee of Linking Environment and Farming. He held scientifi c appointments at the University of Leeds, Hannah Research Institute, West of Scotland Agricultural College and University of Glasgow before serving as Principal and Chief Executive of the Scottish Agricultural College. Professor Thomas does not hold any other Ministerial appointments.

These profi les are condensed versions: the full profi les can be accessed through the SNH website www.snh.org.uk


www.snh.org.uk 27

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Argyll and Stirling

Area Manager: Angus Laing, Operations Manager (Stirling): Zoe KempThe Beta Centre, Innovation Park, University of Stirling, Stirling FK9 4NF t: 01786 450362 f: 01786 451974 e: [email protected]

Operations Manager: (Argyll): Andrew CampbellGlencruitten Road, Oban, Argyll PA34 4DN t: 01631 567228 f: 01631 567229

Area Offi cer: Stan Phillips1 Kilmory Industrial Estate, Kilmory, Lochgilphead, Argyll PA31 8RR t: 01546 603611 f: 01546 602298

Area Offi cer: Rae McKenzieMain Street, Bowmore, Isle of Islay, Argyll PA43 7JJ t: 01496 810711 f: 01496 810665

Area Offi cer: Elizabeth PryorBallochyle, Sandbank, Dunoon PA23 8RD t: 01369 705377 f: 01369 705788

Strathclyde and Ayrshire

Area Manager: Ross Johnston, Operations Manager: Arthur KellerCaspian House, Mariner Court, Clydebank Business Park, Clydebank G81 2NRt: 0141 951 4488 f: 0141 951 8948 e: [email protected]

Operations Manager: Maggie Botham30 Hope Street, Lanark ML11 7NE t: 01555 665928 f: 01555 661966

Operations Manager: Dorothy Simpson19 Wellington Square, Ayr KA7 1EZ t: 01292 261392 f: 01292 269493

Dumfries and Galloway

Area Manager: Chris Miles, Operations Manager: Lynn WalkerCarmont House, The Crichton, Bankend Road, Dumfries DG1 4ZF t: 01387 247010 f: 01387 259247 e: [email protected]

Area Offi cers: Andrew Bielinski/Alastair ClarkHolmpark Industrial Estate, New Galloway Road, Newton Stewart, Wigtownshire DG8 6BF t: 01671 401075 f: 01671 401078

Reserve Manager: Kevin CarterCairnsmore of Fleet NNR Reserve Offi ce, Dromore Farm, Gatehouse of Fleet, Castle Douglas DG7 2BP t: 01557 814435 f: 01557 815044

Reserve Manager: Alan SteelCaerlaverock NNR Reserve Offi ce, Hollands Farm Road, Caerlaverock, Dumfries DG1 4RSt: 01387 770275 f: 01387 770084

Northern Isles

Area Manager: John UttleyGround Floor, Stewart Building, Alexandra Wharf, Lerwick, Shetland ZE1 0LL t: 01595 693345 f: 01595 692565 e: [email protected]

Area Offi cer: Gail Churchill54–56 Junction Road, Kirkwall, Orkney KW15 1AW t: 01856 875302 f: 01856 876372

East Highland

Area Manager: George HoggFodderty Way, Dingwall Business Park, Dingwall IV15 9XB t: 01349 865333 f: 01349 865609 e: [email protected]

Operations Manager: John Mackenzie Achantoul, Aviemore, Inverness-shire PH22 1QD t: 01479 810477 f: 01479 811363

Reserves Offi cer: Rory RichardsonCreag Meagaidh NNR, Aberarder, Kinlochlaggan, by Newtonmore, Inverness-shire PH20 1BX t/f: 01528 544265

North Highland

Area Manager: Lesley Cranna, Operations Manager: David Mackay Main Street, Golspie, Sutherland KW10 6TGt: 01408 633602 f: 01408 633071 e: [email protected]

Area Offi cer: Sue Agnew17 Pulteney Street, Ullapool, Ross-shire IV26 2UP t: 01854 613418 f: 01854 613419

Offi ces


www.snh.org.uk 29

West Highland

Area Manager: Kristin Scott, Operations Manager: Fraser SymondsThe Governor’s House, The Parade, Fort William, Inverness-shire PH33 6BAt: 01397 704716 f: 01397 700303 e: [email protected]

Area Offi cer: Alex TurnerBridge Road, Portree, Isle of Skye IV51 9ER t: 01478 613329 f: 01478 613470

Reserves Manager: Eoghain MacleanAnancaun, Kinlochewe, by Achnasheen, Ross-shire IV22 2PA t: 01445 760254 f: 01445 760301

Western Isles

Area Manager: David Maclennan32 Francis Street, Stornoway, Isle of Lewis HS1 2ND t: 01851 705258 f: 01851 704900 e: [email protected]

Area Offi cer: Johanne FergusonStilligarry, Isle of South Uist HS8 5RS t: 01870 620238 f: 01870 620350

Reserve ManagerThe Reserve Offi ce, The White House, Isle of Rum PH43 4RR t: 01687 462026 f: 01687 462805

Kinloch Castle, Isle of Rum t: 01687 462037

Tayside and Clackmannanshire

Area Manager: Philip Gaskell, Operations Manager: Neale TaylorBattleby, Redgorton, Perth PH1 3EW t: 01738 444177 f: 01738 458616 e: [email protected]

Area Offi cer: Shona HillWest Lodge, Airlie, by Kirriemuir, Angus DD8 5NP t: 01575 530333 f: 01575 530220

Reserve Manager: Paul BrooksLoch Leven Laboratory, The Pier, Loch Leven, Kinross KY13 8UF t: 01577 864439 f: 01577 865166

Forth and Borders

Area Manager: Iain Rennick, Operations Manager: Janice WinningLaundry House, Dalkeith Country Park, Dalkeith, Midlothian EH22 2NA t: 0131 654 2466 f: 0131 654 2477e: [email protected]

Acting Operations Manager: Caroline Gallacher46 Crossgate, Cupar, Fife KY15 5HS t: 01334 654038 f: 01334 656924

Operations Manager: Andrew PanterAnderson’s Chambers, Market Street, Galashiels TD1 3AF t: 01896 756652 f: 01896 750427

Area Offi cer (Falkirk): Katrina MarshallThe Beta Centre, Innovation Park, University of Stirling, Stirling FK9 4NF t: 01786 450362 f: 01786 451974

Reserve Manager: Tom CunninghamFetterdale Offi ce, Tentsmuir Forest, by Tayport, Fife DD6 9PF t: 01382 553704

Grampian

Area Manager: David Bale, Operations Manager: Ewen Cameron16/17 Rubislaw Terrace, Aberdeen AB10 1XE t: 01224 642863 f: 01224 643347 e: [email protected]

Area Offi cer: Jennifer Heatley32 Reidhaven Street, Elgin, Morayshire IV30 1QH t: 01343 541551 f: 01343 546406

Area Offi cer: Annabel DrysdaleForvie NNR, Stevenson Forvie Centre, Little Collieston Croft, Collieston, Ellon, Aberdeenshire AB41 8RU t/f: 01358 751330

Area Offi cer: Andrew TurnerSt Cyrus NNR, The Old Lifeboat Station, Nether Warburton, St Cyrus, Montrose DD10 0AQ t/f: 01674 830736

Area Offi cer: Catriona ReidMuir of Dinnet NNR, Burn O’Vat Visitor Centre, Dinnet, Aboyne, Aberdeenshire AB34 5HB. t/f: 013398 81667



Portree

West Highland

Stornoway

Fort William

Northern Isles(Orkney)

Aberdeen

Aviemore

Kirkwall

Inverness

Dingwall

GolspieWestern Isles

North Highland

East Highland

Forth and Borders

Airlie

Battleby

Cupar

Stirling

Edinburgh

Galashiels

Kinlochewe

South Uist

Elgin

Clydebank

Bowmore

Oban

Ayr

Lanark

Lochgilphead

Argyll and Stirling

Strathclydeand Ayrshire

Dumfries and Galloway

Ullapool

NewtonStewart

Dunoon

Northern Isles(Shetland)

Lerwick

Tayside andClackmannanshire

Grampian

Dalkeith

Dumfries

CreagMeagaidh

SNH Corporate Office

Area/Other offices

Forvie

Cairnsmore of Fleet

Kinross

St Cyrus

DinnetRum(administered byWestern Isles)

Caerlaverock

Operations North

Operations South


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www.snh.org.uk 31

Annual AccountsAudited Financial Accounts for the year

ended 31 March 2008



Contents

33 Management Commentary

40 Remuneration Report

45 Statement of Board

and Accountable Offi cer’s

responsibilities

47 Statement on Internal control

50 Independent Auditor’s Report

53 Operating Cost Statement

53 Statement of Recognised

Gains and Losses

54 Balance Sheet

55 Cash Flow Statement

56 Notes to the accounts

73 Accounts Direction

Authorised for Issue 29 July 2008


www.snh.org.uk 33

Management Commentary

Basis of Accounts

These accounts have been prepared in accordance with the Accounts Direction issued by Scottish Ministers under section 10(3) of the Natural Heritage (Scotland) Act 1991. The direction is reproduced as an appendix to the accounts.

Statutory Background

Scottish Natural Heritage (SNH) is a Non-Departmental Public Body, which was established in April 1992.

Principal Activities

SNH’s principal activities involve working with people to secure the conservation, enhancement, understanding and enjoyment of Scotland’s natural heritage. The corporate strategy defi nes four elements of SNH’s remit as:

– Caring for the natural world;– Enriching people’s lives;– Promoting sustainable use; and– Delivering the strategy.

We have delivered this strategy in a variety of ways including: operating a suite of National Nature Reserves, undertaking an annual research programme, offering grants and management agreements and co-funding the Joint Nature Conservation Committee (JNCC).

SNH Board and Management Team

SNH has a Board, which is supported by a Scientifi c Advisory Committee, Local Advisers, an SSSI Committee and an Audit & Risk Management Committee (ARMC). Members of these committees are appointed by the SNH Board. SNH Board Members are normally appointed for three years, with some appointments extended for a further three-year term. Members may be appointed for a third or subsequent term of offi ce through a process of open competition. The membership of the Board at 31 March 2008 was as follows:

Appointed to SNH Board Term

Andrew Thin (Chairman) 1 August 2006 1st

Amanda Bryan 1 April 2004 2nd

Andrew Campbell 1 August 2006 1st

David Crawley 1 August 2006 1st

Michelle Francis 1 April 2005 1st

Keith Geddes (Deputy Chairman) 1 April 2001 3rd

James Hunter 1 April 2004 2nd

Patrick Hunter Blair 1 April 2007 1st

David Mackay 1 April 2007 1st

Joan Mitchell 1 April 2007 1st

Julia Sturrock 1 August 2006 1st

Phil Thomas 1 April 2005 1st


creo


Through a process of open competition, Ministers appointed Keith Geddes to the Board from 1 April 2007 for a third term. Also reappointed for a further three years were two existing members: Amanda Bryan and James Hunter. Ministers then appointed Keith Geddes to be Deputy Chairman in June 2007. This appointment ends on 31 July 2009. From 1 April 2008, Ministers reappointed two existing members for a further three years: Michelle Francis and Phil Thomas.

SNH aims to be an open and accountable organisation. The six meetings of the SNH Board in 2007/08 included open sessions, which the public were welcome to attend. Agendas, Board papers and minutes are published on the SNH website.

Details of the Management Team who served between 1 April 2007 and 31 March 2008 are set out in the remuneration report commencing on page 40.

Financial Overview

Key Performance Targets

An analysis of SNH’s key performance targets is presented at the beginning of the Annual Report.

More detail on our two key fi nancial performance targets can be found in Note 25 to these accounts. Both targets have been achieved.

Results for the Year

The results for the year are contained within the attached accounts which have been prepared in accordance with the Government Financial Reporting Manual (FReM).

SNH operated within its resource budgets and cash grant-in-aid funding limits approved by its sponsoring department, Scottish Government Rural Directorate (SGRD). The out-turn for the year is shown in the table below:

The out-turn shown in the operating cost statement of £66.809m has been adjusted for the gain on disposals of fi xed assets of £0.062m to arrive at the out-turn reported above of £66.871m.

During the year, SNH sold Ardconnel Terrace and Fraser Darling House in Inverness. Proceeds arising from these properties and other fi xed asset disposals were £1.236m and with the agreement of Scottish Government, these were used to fund fi xed asset additions in 2007/08.

Funding sources, other than grant-in-aid and sale proceeds noted above, amounted to £1.491m (2006/07: £3.214m). The main reason for the decrease related to the completion of the Fresh Futures project in 2006/07.

Resource Budget

Budget Out-turn Variance

£000 £000 £000

Operating Expenditure 63,815 63,440 375

Depreciation 2,503 2,473 30

Cost of Capital 949 958 (9)

Operating Costs 67,267 66,871 396

Capital 4,166 3,931 235


creo

www.snh.org.uk 35

Signifi cant fi xed asset additions during the year included:

– Golspie Co-location £0.652m– Battleby Redevelopment, Perth £0.576m– Rum Infrastructure £0.431m– Information Systems Upgrades £0.448m

SNH had net current liabilities of £3.1m at 31 March 2008 (2006/07: £2.5m). The increase arose primarily from an increase in trade creditors at the year-end, offset by an increase in cash at bank.

In 2007/08, SNH’s expenditure on relocation, which was fully funded by the Scottish Government, was:

– charge to provision for redundancy etc. £0.7m– operating expenditure £0.1m

Valuation of Land and Buildings

No valuations, other than by indexation, were carried out in 2007/08. The results of the indexation has been refl ected in these accounts.

Activities in the fi eld of Research and Development

SNH spent £4.9m on research in the year. This was delivered through a new Research and Development Strategy, published in March 2007, which is structured around fi ve themes:

– Involving Scotland’s People; – Climate Change; – Sustainable Management;– Scotland’s Natural Diversity; and,– Reporting and Data.

The programme provides:

– baseline information, against which to measure environmental changes, trends and impacts;

– information required for the evaluation, conservation, enhancement and enjoyment of the natural heritage and for its management in a sustainable manner;

– advance warning of environmental change, improving the ability to model and make predictions about future events;

– an understanding of the pressures, state and likely responses of the natural heritage;

– information to underpin policy development; and,– information to promote sustainable management and understanding of the

natural heritage.

Events after the balance sheet date

Deer Commission for Scotland

On 21 April, 2008 the Scottish Government announced its intention to merge the functions of the Deer Commission for Scotland (DCS) with SNH. The timetable for this merger is yet to be determined.

Sale of SNH Former Headquarters

Subsequent to year-end a bid was accepted for the sale of Hope Terrace in Edinburgh.



Future Developments

Within the Scottish Government’s National Performance Framework there are three National Outcomes that apply directly to SNH. These are:

– We value and enjoy our built and natural environment and protect it and enhance it for future generations.

– We reduce the local and global environmental impact of our consumption and production.

– Our public services are high quality, continually improving, effi cient and responsive to local people’s needs.

In 2008/09 SNH will publish a new Corporate Strategy which focuses on delivering these outcomes and our broader contribution to the framework as a whole. Five National Indicators and Targets form the core of SNH’s Scottish Government Key Targets for 2008/09:

– Improve public sector effi ciency through the generation of 2% cash releasing savings per annum.

– Reduce overall ecological footprint.– Increase to 95% the proportion of protected nature sites in favourable

condition.– Biodiversity: increase the index of abundance of terrestrial breeding

birds.– Increase the proportion of adults making one or more visits to the

outdoors per week.

1.Biodiversity: Support Scottish Ministers’ commitment to halt biodiversity Iosses by 2010 by taking a lead role in the implementation of the Scottish Biodiversity Strategy and by defi ning objectives which will optimise the effectiveness of actions by SNH and others.

2.Site Condition: Bring 95% of the special features on Scotland’s nationally important nature sites into favourable condition by 2010. Demonstrate progress by producing a summary report of the fi rst six-year cycle of Site Condition Monitoring.

3.Natura: Complete current programme of Natura designations and implementation of the provisions of the Nature Conservation (Scotland) Act 2004; secure, by 2008, substantial progress in extending Natura 2000 protection to Scotland’s marine environment.

4.Access to the Countryside: Promote understanding of the Scottish Outdoor Access Code and improve public access to, and enjoyment of, the countryside, measured by increasing participation rates.

5.Landscape: Improve the framework for care of Scotland’s landscapes.

6.Economic: Increase and secure greater recognition for the contribution of the natural heritage to the rural economy.

7.Marine: Contribute to policy initiatives in the marine environment and support development of marine Natura designations, sustainable fi sheries plan and spatial planning structures.

8.Scottish Rural Development Programme (SRDP): Integrate SNH’s relevant biodiversity, site management, landscape, access and education activity into SRDP measures and participate in regional liaison and prioritisation.

9.Effi ciency: Develop and implement an Effi ciency Plan to meet the requirement for 2% annually recurring effi ciencies.

Our Key Targets from Government for the year 2008/09 are:


www.snh.org.uk 37

Our priorities for the year (other than those indicated by the key targets) include:

– Identify ways in which we both demonstrate and further support economic development through our work and the many benefi ts that are derived from the natural heritage.

– Continue to support the voluntary sector ensuring that we secure Best Value, while enabling many national and local natural history organisations to manage habitat and facilities in Scotland and capture voluntary effort.

– Seek to heighten awareness of the contribution the natural heritage makes to health and well-being, through projects such as Greenspace Networks, our support for Paths for Health and other work.

– Implement the recommendations of the review of town and country planning casework, including taking advantage of the effi ciencies offered by “eplanning”.

– Gather more information and publicise what is happening to the natural environment as a result of climate change, and the contribution that nature can make to limiting and adapting to it.

– Explore further opportunities with the SEARS Programme for co-location and shared services (which has already yielded more than £200,000 savings) to help reduce operating costs and to deliver closer and more joined-up working, and improved services.

– Implement new arrangements resulting from the proposals for the dissolution of the Advisory Committee on SSSIs and the merger of SNH and DCS.

– Deliver clear and measurable outputs that demonstrate that we are also securing Best Value in supporting other organisations and further require our partners to do the same, so that those we fund show a similar level of effi ciency, focus on clear outputs and clarity of outcomes as we ourselves seek.

State Aids

In May 2001, the European Commission confi rmed to the Ministry of Agriculture, Fisheries and Food, acting on behalf of UK-wide interests, that new nature conservation management agreements entered into after January 2000 were notifi ed as approved State Aids. Retrospective notifi cation and approval of management agreements concluded before 1 January 2000 is still pending. In the meantime, Scottish Ministers have agreed that SNH should continue to make payments under these management agreements.

In 2005, the Commission raised some queries on the pre-2000 notifi cation. A UK response was submitted in May 2006. The annual payment commitment under pre-2000 management agreements continues to reduce annually with some agreements expiring during 2007/08. In view of this, Audit Scotland includes a qualifi ed regularity opinion from limitation in audit scope. However, materiality is reviewed annually in view of the reducing amount of payments made under non-notifi ed management agreements.

Supplier Payment Policy

SNH complies with the Government’s Better Payment Practice Code. Unless otherwise stated in the contract, we aim to pay within 30 days from the receipt of goods and services or the presentation of a valid invoice, whichever is the later. In 2007/08, 93% of invoices were paid within the due date (2006/07: 91%). One payment of £73 was made during the year for statutory interest under the Late Payment of Commercial Debts (Interest) Act 1998.



Sustainable Development

SNH operates an Environmental Management Programme designed to make its resource use more sustainable, to reduce the CO2 emissions from our own operations and to make our corporate processes more sustainable.

Internal management is matched by our outward-facing efforts to make more sustainable our work with partners and those we fund. SNH is developing a Climate Change Action Plan which will prioritise our work towards what can help Scotland’s natural heritage mitigate and adapt to the effects of climate change.

Best Value

SNH has embraced the Best Value approach and through initiatives such as the Development Programme has sought to ensure that a culture of continuous improvement is evident throughout the organisation. SNH completed a second round of self-auditing, the fi ndings of which are being built into 2008/09 programmes of work. The coming year will see SNH work with Audit Scotland to review specifi c areas of Best Value using the available toolkits and responding to any identifi ed areas for development.

Corporate Diversity

SNH wholeheartedly supports the principles of equality and diversity in employment and promoting and mainstreaming equality and diversity in all our activities and functions. SNH opposes all forms of unlawful or unfair discrimination.

We will take every possible step to ensure that individuals are treated equally and fairly and that decisions on recruitment, selection, training, promotion and career development are based on objective and job-related criteria. We will strive continually to improve our ability to meet the needs of all sectors of the community and to maintain a culture and philosophy which recognises and rewards individual achievement and merit, regardless of age, colour, disability, ethnic or national origin, gender, marital status, sexual orientation, religion or deeply held philosophical belief.

As part of our Diversity Programme we have published three equality schemes (Disability, Gender and Race) and these outline the actions SNH will take to achieve equality in all our activities.

Communication and Employee Involvement

SNH strives to build stronger, more collaborative and positive relationships with all of our target audiences, national and local, professional and public. During the year, our new Head of Communications led a full and comprehensive review of the way we communicate with our many audiences, covering all aspects of our communications activity and involving contributions from people from across Scotland and from all walks of life. This has resulted in the creation of a customer-focused Communication Strategy for SNH, which was approved by the Board and Management Team in March 2008 and will be rolled out in 2008/09.

We actively encourage employee involvement. Through the Whitley Council, we bring together representatives from Trade Unions and management with the aim of working in partnership. SNH’s intranet is an effective way to keep staff informed through bulletins, general news updates and management and staff notices. Our staff newspaper “Update” is posted monthly on the SNH intranet.


www.snh.org.uk 39

Auditors

SNH’s accounts are audited by Audit Scotland, which is appointed by the Auditor General for Scotland.

Disclosure of Audit Information to the Auditors

So far as the Accountable Offi cer is aware, there is no relevant audit information of which SNH’s auditors are unaware. The Accountable Offi cer has taken all the steps that he ought to have taken to make himself aware of any relevant audit information and to establish that SNH’s auditors are aware of that information.

Ian JardineChief Executive and Accountable Offi cer 28 July 2008



Remuneration ReportThe Remuneration Report is subject to audit except for the Remuneration Policy and Employment Contracts sections which are reviewed by Audit Scotland for consistency with the audited accounts.

Remuneration Policy

SNH does not have a remuneration committee. The remuneration, allowances and expenses paid to Board members (and any pension arrangements) comply with specific guidance issued by Scottish Ministers.

For all other staff, SNH submits a pay remit to SGRD for approval (normally annually, unless a multi-year deal has been agreed), which is within the terms and conditions set out in the Scottish Government’s Public Sector Pay Guidance. On approval of the pay remit, a pay settlement is negotiated. Annual salaries are paid in accordance with the standard SNH staff pay agreement. Performance is monitored and reviewed through SNH’s staff appraisal arrangements. Increases in staff salary and performance bonus, if awarded, are based on managers’ assessment of individual performances.

The Chief Executive’s salary is reviewed each year by the Chairman, in consultation with the Board, with a view to progression and re-valorisation in line with the increase agreed by the Scottish Government Remuneration Committee and Ministers. The terms and conditions of the Chief Executive’s performance bonus are subject to a separate approval exercise (see page 41).

Employment Contracts

SNH is committed to ensuring a fair, transparent and consistent approach to filling vacant posts. Appointments are made on merit following fair and open competition or through alternative mechanisms, within defined policy and procedure, following due consideration of the particular circumstances.

The senior staff covered in this report (SNH’s Management Team), hold appointments which are open ended until they reach the normal retiring age. Early termination, other than for misconduct, would result in the individual receiving compensation as set out in the Civil Service Compensation Scheme.

The Board consists of 12 members, including the Chairman. Board members are appointed by Scottish Ministers in the same way as the Chairman. Appointments are for a minimum of three years and recruitment is by open competition.

Chairman and Board Members

The Chairman, Andrew Thin, was appointed on 1 August 2006 on a non-pensionable part-time basis. His total emoluments for the year to 31 March 2008 were £45,419.

Andrew Thin is also an appointed member of JNCC and its trading subsidiary JNCC Support Co. He receives no remuneration from this appointment.

65038 Annual Report Text.indd 40 23/9/08 13:42:59

www.snh.org.uk 41

Chief Executive

SNH’s Chief Executive, Ian Jardine, was appointed on 1 April 2002 on a permanent basis with a six-month period of notice.

In 2007/08, his total emoluments amounted to £97,576 (2006/07: £97,505) comprising salary of £90,348 (2006/07: £89,454) and performance related bonus of £7,228 (2006/07: £8,051). Under the terms of his contract, all pay increases (excluding performance related bonus) are superannuable. On 1 April 2006 his salary became “progression based”. His emoluments, stated above, reflect the salary he was paid on this basis.

The performance bonus is determined in accordance with his contract of employment, which includes an entitlement to a bonus of up to 10% of his gross salary (8% has been awarded). The bonus is neither consolidated nor pensionable. It is tied to specified targets and objectives that are agreed between the Chief Executive and the Chairman, following consultation with the Board and having regard to the priorities set by Ministers. The Chairman in consultation with the Board determines the level of bonus and the Chairman’s recommendation is also passed to the Audit and Risk Management Committee for ratification.

The Chief Executive is an ordinary member of SNH’s pension scheme, which is non-contributory, and he contributed to the Widows Pension Scheme at the standard rate of 1.5%.

1 = SNH Board 2 = Scientific Advisory Committee 3 = Audit and Risk Management Committee

4 = SSSI Committee 5 = Co-ordinator Local Advisers 6 = JNCC representative

SNH Board Members’ emoluments (excluding the Chairman) cover membership of subsidiary Boards and Committees as indicated:

# Includes £1,106 relating to childcare payments

Differences in emoluments of individual Board members reflect committee responsibilities and number of days worked in the year. Board members do not receive any bonus payments. Major differences in emoluments between years reflect changing responsibilities of individual Board members.

Key:

Board Member Key Emoluments2007/08 2006/07

£ £

Keith Geddes, Deputy Chair SNH Board 1,4 19,734 19,539

Lady Isabel Glasgow, Chair West Areas Board, retired 31 March 2007 – 19,539

Professor Janet Sprent, Chair SAC, retired 31 March 2007 – 15,740

Amanda Bryan, Chair North Areas Board until 31 March 2007 # 1,4 9,330 22,291

Professor James Hunter, Chair Scientific Advisory Committee 1,2 12,126 8,142

Hugh Raven, retired 31 March 2007 – 8,142

Michelle Francis, Chair East Area Board until 31 March, 2007 1,3 9,046 20,354

Professor Philip Thomas, Chair Audit and Risk Management Committee 1,3 9,320 9,228

Andrew Campbell, Co-ordinator Local Advisers 1,5 12,335 5,428

David Crawley 1,6 10,965 5,428

Julie Sturrock 1 8,223 5,428

David Mackay 1,3 9,046 –

Joan Mitchell 1,4 8,223 –

Patrick Hunter Blair 1,3 9,046 –

117,394 139,259


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Management Team’s Salaries

The salary and pension entitlements of SNH’s management team in 2007/08 were as follows:

The total of salary and other emoluments includes basic salary, performance pay or bonus, overtime and any allowances subject to UK taxation.

Pensionable service used to calculate accrued pension as at 31 March 2008 represents years of service payable from SNH’s pension scheme, including any added years or transfers in.

Susan Davies received emoluments of housing allowance of £646.

Salary Other

Emoluments

Total Total

2007/08 2007/08 2007/08 2006/07

£000 £000 £000 £000

Ian Jardine – Chief Executive 90-95 5-10 95-100 95-100

John Thomson – Director of Strategy & Communications

70-75 – 70-75 65-70

Andrew Bachell – Director of Strategy & Communications to 2 December 2007

45-50 (60-65 full year

equivalent)

– 45-50

(60-65 full year

equivalent)

60-65

Jeff Watson – Director of Strategy & Operations (North) to 12 October 2007

35-40 (65-70 full year

equivalent)

– 35-40

(65-70 full year

equivalent)

60-65

Joe Moore – Director of Corporate Services

70-75 – 70-75 60-65

Colin Galbraith – Director of Policy and Advice

65-70 – 65-70 65-70

Susan Davies – Director of Operations (North)

55-60 0-5 55-60 50-55

Roddy Fairley – Director of Operations (South) from 11 December 2007

15-20 (55-60 full year

equivalent)

– 15-20

(55-60 full year

equivalent)

–


creo

www.snh.org.uk 43

Civil Service Pensions

Pension benefi ts are provided through the Principal Civil Service Pension Scheme (PCSPS). From 1 October 2002, staff may be in one of three statutory-based “fi nal salary” defi ned benefi t schemes (classic, premium and classic plus). Pensions payable under these schemes are increased annually in line with changes in the Retail Prices Index (RPI). New entrants after 1 October 2002 may choose between membership of the premium scheme or joining a “money purchase” stakeholder arrangement with a signifi cant employer contribution (partnership pension account).

As of 31 July 2007, new members of staff were unable to opt for the premium scheme unless they were previously members of the PCSPS, and meet certain qualifying conditions. New entrants who have not previously worked for a PCSPS employer have the choice of joining a new statutory-based defi ned benefi t scheme, nuvos, or opening a partnership pension account.

Employee contributions are set at the rate of 1.5% of pensionable earnings for classic and 3.5% for premium, classic plus and nuvos. Benefi ts in the classic scheme accrue at the rate of 1/80th of the pensionable salary for each year of service. In addition, a lump-sum equivalent to three years’ pension is payable on retirement. In the premium scheme, benefi ts accrue at the rate of 1/60th of fi nal pensionable earnings for each year of service. Unlike the classic scheme, there is no automatic lump sum (but members may give up (commute) some of their pension to provide a lump sum). The classic scheme plus is essentially a variation of the premium scheme, but with benefi ts in respect of service before 1 October 2002 calculated broadly as per the classic scheme. For the nuvos scheme, members will earn 2.3% of their pensionable earnings

Total accrued

pension and

related lump

sum at age 60 at

31 March 2008

(unless stated)

Real increase

in pension and

related lump

sum at age 60

CETV at 31

March 2008

(unless stated)

CETV at 31

March 2007*

Real increase in

CETV

£000 £000 £000 £000 £000

Ian Jardine 25-30 plus lump sum of 80-85

0-2.5 plus lump sum of 0-2.5

485 416 1

John Thomson 35-40 plus lump sum of 0-5

(2.5)-0 plus lump sum of 0-2.5

688 620 (19)

Andrew Bachell 10-15 plus lump sum of 30-35


210 174 8

Jeff Watson 20-25 plus lump sum of 65-70


446 440 9

Joe Moore 25-30 plus lump sum of 0-5


458 386 9

Colin Galbraith 15-20 plus lump sum of 50-55


325 272 9

Susan Davies 10-15 plus lump sum of 30-35


155 128 3

Roddy Fairley 15-20 plus lump sum of 45-50

0-2.5 plus lump sum of 2.5-5.0

308 249 21

* CETV – Cash Equivalent Transfer Value. The Cabinet Offi ce has updated the calculator for 2007/08 and these changes have also been applied to amend the previously stated CETV fi gures at 31 March 2007.

The Chairman, Andrew Thin, is not included in this table as SNH does not contribute to his pension.

Management Team’s Pension Benefi ts


creo


towards their pension each year that they are in the scheme. Their accumulated pension is increased by the RPI for that fi nancial year.

The partnership pension account is a stakeholder pension arrangement. The employer makes a basic contribution of between 3% and 12.5% (depending on the age of the member) into a stakeholder pension product chosen by the employee. The employee does not have to contribute but where they do make contributions, SNH will match these up to a limit of 3% of pensionable salary (in addition to the employer’s basic contribution). SNH also contributes a further 0.8% of pensionable salary to cover the cost of centrally provided risk benefi t cover (death in service and ill health retirement).

Further details about the PCSPS arrangements can be found at www.civilservice-pensions.gov.uk.

For 2007/08, employer’s contributions of £3,800,000 (2006/07: £3,759,000) were payable to the PCSPS. These contributions were payable at one of four rates ranging from 17.1% to 25.5% (2006/07: 17.1% to 26.5%) of pensionable pay, based on salary bands. The scheme’s Actuary reviews employer contributions every four years following a full valuation. The contribution rates refl ect benefi ts as they are accrued, not when the costs are actually incurred, and refl ect past experience of the scheme.

Cash Equivalent Transfer Value (CETV)

This is the actuarially assessed capitalised value of the pension scheme benefi ts accrued by a member at a particular point in time. The benefi ts valued are the members’ accrued benefi ts and any contingent spouse’s pension payable from the scheme. A CETV is a payment made by a pension scheme or arrangement to secure pension benefi ts in another pension scheme or arrangement when the member leaves a scheme and chooses to transfer the pension benefi ts accrued in their former scheme. The pension fi gures shown relate to the benefi ts that the individual has accrued as a consequence of their total membership of the pension scheme, not just their service in a senior capacity to which disclosure applies. The CETV fi gures include the value of any pension benefi t in another scheme or arrangement, which the individual has transferred to the Civil Service Pension arrangements and for which the Civil Service Vote has received a transfer payment commensurate with the additional pension liabilities being assumed. They also include any additional pension benefi t accrued to the member as a result of their purchasing additional years of pension service in the scheme at their own cost. CETVs are calculated within the guidelines and framework prescribed by the Institute and Faculty of Actuaries and do not take account of any actual or potential reduction to benefi ts resulting from Lifetime Allowance Tax which may be due when pension benefi ts are drawn.

Real Increase in CETV

This refl ects the increase in CETV effectively funded by the employer. It does not take account of the increase in accrued pension due to infl ation or contributions paid by the employee (including the value of any benefi ts transferred from another pension scheme or arrangement) and uses common market valuation factors for the start and end of the period.

Ian JardineChief Executive and Accountable Offi cer28 July 2008


www.snh.org.uk 45

Statement Of Board and Accountable Offi cer’s ResponsibilitiesSNH’s Management Statement and Financial Memorandum, with its sponsoring department, sets out the roles and responsibilities of Scottish Ministers, the sponsoring team in the department, the SNH Board, the Chairman of SNH and SNH’s Accountable Offi cer. It includes the following points.

The SNH Board

Board members have a corporate responsibility for ensuring that SNH fulfi ls its statutory duties and the aims and objectives set by the Scottish Ministers, and for promoting the effi cient and effective use of staff and other resources in accordance with the principles of Best Value.

The Chairman of SNH

The Chairman is responsible to the Scottish Ministers, on behalf of the Board, for ensuring that SNH’s policies and actions support delivery of its statutory functions and the wider strategic policies of the Scottish Ministers and that SNH’s affairs are conducted with probity. The Chairman shares with other Board members the corporate responsibilities set out above for the SNH Board and, in particular, for ensuring that SNH fulfi ls the aims and objectives set by the Scottish Ministers.

In addition, the Chairman will ensure that all members of the Board, when taking up offi ce, are fully briefed on the terms of their appointment and on their duties, rights and responsibilities. He will advise the Scottish Ministers of the needs of SNH when Board vacancies arise, with a view to ensuring a proper balance of professional and fi nancial expertise; he will also assess the performance of individual Board members on an annual basis.

SNH’s Accountable Offi cer

The Chief Executive of SNH is designated as the Accountable Offi cer by the Principal Accountable Offi cer of the Scottish Government in accordance with sections 14 and 15 of the Public Finance and Accountability (Scotland) Act 2000.

The Accountable Offi cer of SNH is personally responsible for safeguarding the public funds and assets (all funds and assets falling within the stewardship of SNH) for which he has charge; for ensuring propriety and regularity in the handling of those public funds; and for the day-to-day operations and management of SNH. He should act in accordance with the terms of the Management Statement and Financial Memorandum and within the terms of relevant guidance in the Scottish Public Finance Manual (SPFM) and other instructions and guidance issued by the Scottish Ministers – in particular the memorandum to Accountable Offi cers of Other Public Bodies (Annex 2 of the section on Accountability in the SPFM). In 2007/08 an internal review was undertaken of SNH’s compliance with SPFM and there were no areas where SNH fundamentally fails to comply.

The Accountable Offi cer has a duty to secure Best Value, which includes the concepts of good corporate governance and performance management. SNH continues to develop and document its approach to Best Value both through the SNH Development Programme but also through a desire for continuous improvement throughout the organisation.



Under section 10 of the Natural Heritage (Scotland) Act 1991, SNH is required to prepare a statement of accounts for each fi nancial year in conformity with a direction by Scottish Ministers, detailing the resources acquired, held or disposed of during the year and the use of resources by SNH during the year.

The accounts are prepared on an accruals basis and must give a true and fair view of SNH’s state of affairs and its income, expenditure, recognised gains and losses, and cash fl ows for the fi nancial year.

In preparing the accounts, the Accountable Offi cer is required to comply with the requirements of the Government Financial Reporting Manual and in particular to:

– observe the accounts direction issued by Scottish Ministers, including the relevant accounting and disclosure requirements, and apply suitable accounting policies on a consistent basis;

– make judgements and estimates on a reasonable basis;– state whether applicable accounting standards, as set out in the

Government Financial Reporting Manual, have been followed, and disclose and explain any material departures in the accounts; and

– prepare the accounts on a going concern basis.

The responsibilities of the Accountable Offi cer, including responsibility for the propriety and regularity of the public fi nances for which the Accountable Offi cer is answerable, for keeping proper records and for safeguarding SNH’s assets, are set out in the Accountable Offi cers’ Memorandum issued by the Principal Accountable Offi cer of the Scottish Government.


www.snh.org.uk 47

Statement On Internal Control

Scope of Responsibility

As Accountable Offi cer, I have responsibility for maintaining a sound system of internal control that supports the achievement of the organisation’s policies, aims and objectives set by the Scottish Ministers, whilst safeguarding the public funds and assets for which I am personally responsible, in accordance with the responsibilities assigned to me.

I am also personally answerable to the Scottish Parliament in accordance with section 15 of the Public Finance and Accountability (Scotland) Act 2000. I am responsible for the propriety and regularity of fi nancial transactions under my control and for the economical, effi cient and effective use of resources provided to SNH, for ensuring that arrangements have been made to secure Best Value and for signing SNH’s annual accounts. I am also responsible for providing the necessary assurances to the Principal Accountable Offi cer to enable them to sign the Statement of Internal Control contained within the Scottish Government consolidated accounts. I am responsible for ensuring that effective management systems are in place within SNH and that all risks are identifi ed, assessed and managed appropriately. The Scottish Public Finance Manual (SPFM) is issued by the Scottish Ministers to provide guidance to the Scottish Government and other relevant bodies on the proper handling of public funds. It is mainly designed to ensure compliance with statutory and parliamentary requirements, promote value for money and high standards of propriety, and secure effective accountability and good systems of internal control.

Purpose of the System of Internal Control

The system of internal control is designed to manage rather than eliminate the risk of failure to achieve the organisation’s policies, aims and objectives. It can therefore only provide reasonable and not absolute assurance of effectiveness.

The system of internal control is based on an ongoing process designed to identify the principal risks to the achievement of the organisation’s policies, aims and objectives; to evaluate the nature and extent of those risks and to manage them effi ciently, effectively and economically.

The process within the organisation accords with the SPFM and has been in place for the year ended 31 March 2008 and up to the date of approval of the Annual Report and Accounts and accords with guidance from the Scottish Ministers.

Risk and Control Framework

All bodies subject to the requirements of the SPFM must operate a risk management strategy in accordance with relevant guidance issued by the Scottish Ministers. The general principles for a successful risk management strategy are set out in the SPFM.

In SNH, all staff have responsibility for risk management by managing risks in their own areas of authority. The formal monitoring and reporting framework that is in place from a business unit level through to a corporate overview includes:

– A robust risk management prioritisation and monitoring system based on risk ranking, likelihood and controls.



– Regular review of the corporate risk register to evaluate risk and the appropriateness of controls. The register identifi es those who are responsible for managing risks (risk owners) and the risk areas for which they are responsible. These managers report every six months on how they are managing the risks in their areas of responsibility, including progress reports on key projects. SNH’s Management Team evaluates these reports, and risk updates are provided to SNH’s Audit and Risk Management Committee (ARMC). An annual risk report is also prepared for the SNH Board.

– Quarterly monitoring of delivery against Corporate Plan actions, measures and key targets.

– Embedding risk management in the daily decisions and activities undertaken by all staff. Risk awareness is included in employee induction and training programmes and assessed as part of the staff appraisal system. More generally, SNH is committed to a process of continuous development and improvement: updating systems in response to any relevant reviews and developments in best practice in this area. A record of changes is maintained which identifi es that arrangements for the ownership, control and monitoring of new risks are in place.

– During the period covering the year to 31 March 2008 and up to the signing of the accounts the organisation has commenced work on several projects that aim to improve SNH’s effi ciency and effectiveness. These are as follows.

– A new business planning tool which integrates both business planning reporting and risk management. As part of their routine progress reports, Unit Managers will be required additionally to review and update the risks to delivery of their contribution to corporate programme objectives. Programme Managers will use this information to assess, manage and report on the overall risk to the delivery of corporate programmes.

– A new Performance Management Project that aims to improve the quality, consistency and effectiveness of our people management practices, and to fi nd a modern replacement for the current appraisal system within SNH.

– An electronic people management system (iPeople) that will improve all aspects of staff management, including career development and day-to-day line management duties.

– An iExpenses system for payment of staff travel and subsistence claims. After a short introductory period the system was found to be operating well and a range of good controls were in place.

Review of Effectiveness

As Accountable Offi cer, I have responsibility for maintaining and reviewing the effectiveness of the system of internal control. My review is informed by:

– The managers within SNH who have responsibility for the development and maintenance of the internal control framework; for example, by producing Management Team Risk Reports, ARMC considerations and Board Risk Reports, Annual Risk Management Corporate Governance Reports, SNH Performance Monitoring Reports, Finance Reports and Fraud/Misconduct Reports.

– The work of the internal auditors, who submit regular reports to SNH’s ARMC, including the Head of Internal Audit’s independent and objective opinion on the adequacy and effectiveness of the organisation’s systems of internal control together with recommendations for improvement.

– The ARMC, which oversees the work of internal auditors and considers and comments on other matters within its terms of reference (the ARMC reports to the SNH Board).

– Comments made by the external auditors in their management letters and other reports.


www.snh.org.uk 49

During 2007/08, two audits – ‘Compliance with the IS User Policy’ and ‘Fixed Asset Register Checks’ – resulted in “weak assurances” being given. The issues under scrutiny in these reports are important but not business critical. Specifi c remedial actions have been identifi ed, responsibility for actions has been assigned and deadlines set: actions will be monitored by the Accountable Offi cer through the Internal Audit Team.

SNH’s performance against Scottish Government Key Targets is broadly on target, with anticipated delivery overall of eight of the nine targets. The exception to this is Key Target number 2, which was to bring 80% of the special features on Scotland’s nationally important nature sites into favourable condition by March 2008. SNH has achieved in the region of 77.5%, which is nonetheless a considerable achievement, and work is ongoing to improve on this.

The twice-yearly formal risk management reviews of SNH’s Risk Register by the Management Team confi rmed that appropriate action was in place to manage all identifi ed risks to the business. The management and level of treatment of risk during 2007/08 is therefore seen as appropriate.

SNH’s fraud response plan ensures that managers and staff have easy access to information on their responsibilities and obligations in the event of fraud being suspected, or identifi ed. There has been one formal fraud investigation into misuse of SNH’s telephones and other equipment during 2007/08. An investigation report compiled by the internal auditors has now been handed to senior managers for consideration of disciplinary action.

The Head of Internal Audit has prepared an annual report and assurance statement to the Chief Executive and Accountable Offi cer that includes an overall assessment of the adequacy and effectiveness of risk management, control and governance within SNH. The overall opinion is that the programme of internal audits in 2007/08 has offered “reasonable” assurance that SNH continues to have a broadly sound framework of risk management, internal control and corporate governance ensuring the effective and effi cient achievement of SNH’s objectives.

Ian JardineChief Executive and Accountable Offi cer28 July 2008



Independent Auditor’s Report

Independent auditor’s report to the members of

Scottish Natural Heritage, the Auditor General for

Scotland and the Scottish Parliament

I have audited the fi nancial statements of Scottish Natural Heritage for the year ended 31 March 2008 under the Natural Heritage (Scotland) Act 1991. These comprise the Operating Cost Statement and Statement of Recognised Gains and Losses, Balance Sheet, the Cash Flow Statement and the related notes. These fi nancial statements have been prepared under the accounting policies set out within them. I have also audited the information in the Remuneration Report that is described in that report as having been audited.

This report is made solely to the parties to whom it is addressed in accordance with the Public Finance and Accountability (Scotland) Act 2000 and for no other purpose. In accordance with paragraph 123 of the Code of Audit Practice approved by the Auditor General for Scotland, I do not undertake to have responsibilities to members or offi cers, in their individual capacities, or to third parties.

Respective responsibilities of the Board, Chief

Executive and auditor

The Board and Chief Executive are responsible for preparing the Annual Report, which includes the Remuneration Report, and the fi nancial statements in accordance with the Natural Heritage (Scotland) Act 1991 and directions made thereunder by the Scottish Ministers. The Chief Executive is also responsible for ensuring the regularity of expenditure and receipts. These responsibilities are set out in the Statement of Accountable Offi cer’s Responsibilities.

My responsibility is to audit the fi nancial statements and the part of the Remuneration Report to be audited in accordance with relevant legal and regulatory requirements and with International Standards on Auditing (UK and Ireland) as required by the Code of Audit Practice approved by the Auditor General for Scotland.

I report to you my opinion as to whether the fi nancial statements give a true and fair view and whether the fi nancial statements and the part of the Remuneration Report to be audited have been properly prepared in accordance with the Natural Heritage (Scotland) Act 1991 and directions made thereunder by the Scottish Ministers. I report to you whether, in my opinion, the information which comprises the Basis of Accounts, Statutory Background, Principal Activities, SNH Board and Management Team, Key Performance Targets, Results for the Year, Valuation of Land and Buildings, Activities in the Field of Research and Development, Events after the Balance Sheet Date, State Aids, Supplier Payment Policy, Best Value, Corporate Diversity, Communication and Employee Involvement, Auditors, and Disclosure of Information to the Auditors, included in the Annual Report, is consistent with the fi nancial statements. I also report whether in all material respects the expenditure and receipts shown in the fi nancial statements were incurred or applied in accordance with any applicable enactments and guidance issued by the Scottish Ministers.

In addition, I report to you if, in my opinion, the body has not kept proper accounting records, if I have not received all the information and explanations I require for my audit, or if information specifi ed by relevant authorities regarding remuneration and other transactions is not disclosed.

I review whether the Statement on Internal Control refl ects the body’s compliance with the Scottish Government’s guidance, and I report if, in my opinion, it does not. I am not required to consider whether this statement covers all risks and controls, or form an opinion on the effectiveness of the body’s corporate governance procedures or its risk and control procedures.

I read the other information contained in the Annual Report and consider whether it is consistent with the audited fi nancial statements. This other information comprises only Future Developments, Sustainable Development,


www.snh.org.uk 51

and the unaudited part of the Remuneration Report. I consider the implications for my report if I become aware of any apparent misstatements or material inconsistencies with the fi nancial statements. My responsibilities do not extend to any other information.

Basis of Audit Opinion

I conducted my audit in accordance with the Public Finance and Accountability (Scotland) Act 2000 and International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board as required by the Code of Audit Practice approved by the Auditor General for Scotland. My audit includes examination, on a test basis, of evidence relevant to the amounts, disclosures and regularity of expenditure and receipts included in the fi nancial statements and the part of the Remuneration Report to be audited. It also includes an assessment of the signifi cant estimates and judgements made by the Board and Chief Executive in the preparation of the fi nancial statements, and of whether the accounting policies are appropriate to the body’s circumstances, consistently applied and adequately disclosed.

I planned and performed my audit so as to obtain all the information and explanations which I considered necessary in order to provide me with suffi cient evidence to give reasonable assurance that the fi nancial statements and the part of the Remuneration Report to be audited are free from material misstatement, whether caused by fraud or error, and that in all material respects the expenditure and receipts shown in the fi nancial statements were incurred or applied in accordance with any applicable enactments and guidance issued by the Scottish Ministers. In 2001, the European Commission confi rmed that UK nature conservation management agreements entered into after 1 January 2000 were allowable as state aid. However no ruling has been made regarding retrospective approval of management agreements entered into prior to 1 January 2000. During 2007/08 Scottish Natural Heritage spent approximately £1.4 million under pre-January 2000 agreements which, in the absence of European sanction, may be deemed irregular.

In forming my opinion I also evaluated the overall adequacy of the presentation of information in the fi nancial statements and the part of the Remuneration Report to be audited.

Opinion

Financial statements

In my opinion

• the fi nancial statements give a true and fair view, in accordance with the Natural Heritage (Scotland) Act 1991 and directions made thereunder by the Scottish Ministers, of the state of affairs of Scottish Natural Heritage as at 31 March 2008 and of the net operating cost, recognised gains and losses and cash fl ows for the year then ended;

• the fi nancial statements and the part of the Remuneration Report to be audited have been properly prepared in accordance with the Natural Heritage (Scotland) Act 1991 and directions made thereunder by the Scottish Ministers; and

• Information which comprises only the Basis of Accounts, Statutory Background, Principal Activities, SNH Board and Management Team, Key Performance Targets, Results for the Year, Valuation of Land and Buildings, Activities in the Field of Research and Development, Events after the Balance Sheet Date, State Aids, Supplier Payment Policy, Best Value, Corporate Diversity, Communication and Employee Involvement, Auditors, and Disclosure of Information to the Auditors, included in the Annual Report, is consistent with the fi nancial statements.



Qualifi ed regularity opinion arising from limitation in

audit scope

In my opinion, except for the limitation in scope of my work arising from uncertainty over the regularity of payments under management agreements entered into prior to 1 January 2000, in all material respects the expenditure and receipts shown in the fi nancial statements were incurred or applied in accordance with any applicable enactments and guidance issued by the Scottish Ministers.

Stephen O’Hagan CPFA

Audit Scotland7th Floor

Plaza TowerEast Kilbride

G74 1LW

Signature

29 July 2008


www.snh.org.uk 53

OPERATING COST STATEMENT FOR THE YEAR ENDED 31 MARCH 2008

Note 2007/08 2006/07

£000 £000

Income

External funding 3 (363) (2,232)

EU funding 3 (298) (368)

Income from activities 4 (830) (614)

Total income (1,491) (3,214)

Expenditure

Staff costs 6 25,918 25,974

Other costs 8 9,456 9,198

Programme costs 9 29,638 29,549

Provision for Edinburgh offi ce rationalisation 16 – 224

Provision for liabilities and charges 18 85 286

Depreciation charges 11 2,473 2,474

Impairment charges 11 – 2,924

Total expenditure 67,570 70,629

Net operating costs 66,079 67,415

Cost of capital charges 1.13 958 562

Interest receivable 5 (232) (229)

Transfer to bequest reserve 4 3

Net cost for the fi nancial year 66,809 67,751

All income and expenditure is derived solely from continuing operations.

STATEMENT OF RECOGNISED GAINS AND LOSSES FOR THE YEAR ENDED 31 MARCH 2008

Note 2007/08 2006/07

£000 £000

Net cost for the fi nancial year (66,809) (67,751)

Grant-in-aid received 2 63,389 66,865

Net gain on revaluation of tangible fi xed assets 11 648 2,121

Receipt of bequest/bequest interest to bequest reserve 19 4 13

Depreciation costs released from reserves 501 5,400

Add back cost of capital charge 19 958 562

Decrease in share of JNCC reserves 19 (22) (17)

Recognised (losses)/gains for the fi nancial year (1,331) 7,193

The notes on pages 56 to 72 form part of these accounts.


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BALANCE SHEET AS AT 31 MARCH 2008

Note 2007/08 2006/07

£000 £000

Fixed assets

Tangible assets 11 32,803 32,101

Intangible assets 11 318 123

33,121 32,224

Current assets

Stocks 12 14 20

Debtors 13 1,567 1,648

Cash at bank and in hand 14 2,135 1,545

3,716 3,213

Creditors: amounts falling due within one year 15 (6,853) (5,694)

Net current liabilities (3,137) (2,481)

Total assets less current liabilities 29,984 29,743

Provision for Edinburgh offi ce rationalisation 16 (117) (224)

Provision for early retirements 17 (95) (137)

Provisions for liabilities and charges 18 (1,868) (2,516)

Net assets 27,904 26,866

Financed by:

General reserve 19 20,563 19,653

Revaluation reserve 19 7,163 7,017

Share of JNCC 19 89 111

Bequest reserve 19 89 85

27,904 26,866

Ian Jardine

Chief Executive and Accountable Offi cer

28 July 2008



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www.snh.org.uk 55

CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2008

Note 2007/08 2006/07

£000 £000

Net cash outfl ow from operating activities 26.1 (62,738) (67,405)

Returns on investments and servicing of income:

Bank interest received 5 228 226

Interest received on bequest funds 5 4 3

232 229

Capital expenditure and fi nancial investment:

Payments to acquire tangible fi xed assets 11 (4,161) (20,084)

Payments to acquire intangible fi xed assets 11 (239) (80)

Funding to JNCC to acquire tangible and intangible fi xed assets 11 (9) (36)

(4,409) (20,200)

Receipts from sales of fi xed assets 1,236 19

(3,173) (20,181)

Net cash outfl ow before fi nancing (65,679) (87,357)

Financing:

Grant-in-aid received and applied to fund activities 2 66,269 86,581

Bequests received – 10

Increase/(decrease) in cash in the year 590 (766)

Reconciliation of net cash fl ow to movement in net funds

Increase/(decrease) in cash 590 (766)

Net funds at 1 April, 2007 1,545 2,311

Net funds at 31 March, 2008 26.2 2,135 1,545



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Notes to the Accounts

1 Statement of accounting policies

1.1 Basis of preparation

The accounts have been prepared in accordance with the 2007/08 Financial Reporting Manual (FReM) issued by HM Treasury and the Accounts Direction issued by Scottish Ministers. The accounting policies in the manual follow UK generally accepted accounting practice (UK GAAP) to the extent that it is meaningful and appropriate to the public sector. Where FReM permits a choice of accounting policy, the accounting policy has been selected, which has been judged to be the most appropriate to the particular circumstances of SNH for the purpose of giving a true and fair view. They have been applied consistently in dealing with items considered material in relation to the accounts.

The accounts have been prepared under the historical cost convention, modifi ed to account for the revaluation of fi xed assets at their value to the business by reference to their current costs.

1.2 Tangible fi xed assets

In line with the Scottish Public Finance Manual (SPFM), regular professional valuations of land and property, with the exception of IT assets, are carried out every fi ve years. Published indices are used in the intervening years. The last valuation was undertaken on 31 March 2006 for land and property by District Valuers of the Valuation Offi ce Agency following the principles set out in the Appraisal and Valuation Manual of the Royal Institution of Chartered Surveyors and acting in the capacity of External Valuers.

The threshold for capitalising assets is £10,000 for land and buildings, including improvements, £1,000 for IT and £5,000 for all other categories.

Tangible fi xed assets (with the exception of non-operational heritage assets and assets under construction) are valued at the lower of depreciated replacement cost or open market for existing use.

Depreciation is provided on a straight-line basis on all tangible fi xed assets (other than freehold land) at rates calculated to write down the cost or valuation of each asset to its residual value over its estimated useful life. Assets under construction are carried at cost and transferred to the appropriate fi xed asset category when completed and ready for use.

In 2006/07 the decision was made to re-life all furniture, fi xtures & fi ttings to a maximum of fi ve years at 31 March 2007. Thereafter the rate at which these assets, and any additions in the intervening period, are depreciated will reduce by one year until the net book value of this class of tangible asset is nil. After that date any additions will be expensed when purchased. This decision was made to bring SNH’s policy in line with the SPFM.

Land Not depreciated

Freehold buildings 10 to 50 years as determined by the Valuation Offi ce Agency

Leasehold buildings including improvements 50 years or period of lease whichever is shorter

Computer equipment 4 years

Other equipment 7 years

Vehicles 5 years

Furniture, fi xtures & fi ttings 4 years


www.snh.org.uk 57

1.3 Intangible fi xed assets

Purchased computer software licences are capitalised as intangible fi xed assets. These are valued at the lower of depreciated replacement cost or open market value for existing use and depreciated over four years.

Internally developed intangible assets are also capitalised where appropriate. These assets are valued at cost and include an element of own staff time that has been capitalised in line with the extant Financial Reporting Standards and are depreciated over four years.

1.4 Heritage assets

On its creation in 1992, SNH took over ownership of a suite of National Nature Reserves (NNRs) from the Nature Conservancy Council comprising land and some associated properties. These are treated as non-operational heritage assets where they are held in trust for the ongoing maintenance of the nation’s heritage. SNH does not value these non-operational heritage assets or include them in the accounts, unless they are used operationally in the day-to-day provision of services such as certain visitor facilities and offi ce accommodation. Detailed information on SNH’s holdings of NNRs is available in SNH’s publication, Facts & Figures.

The UK Accounting Standards Board (ASB) wishes to amend the way heritage assets are accounted for. Their proposal (contained in Financial Reporting Exposure Draft 40) was to include all heritage assets on the balance sheet rather than just those purchased since 2001. However, FRED 40 has been superseded by FRED 42, which takes into account concerns expressed by the accountancy profession. The main feature of the proposals in FRED 42 is that enhanced disclosures should apply to all entities that hold heritage assets. The ASB have requested comments on FRED 42 by October 2008.

1.5 Operating leases

Costs relating to operating leases are charged to the operating cost statement over the life of the lease.

1.6 Provisions

SNH is required to meet the additional cost of benefi ts beyond the normal PCSPS benefi ts in respect of employees who retire early. We provide for the present value of such future legal or constructive obligations at the balance sheet date on the basis of the best estimate required to settle that obligation. Notes 17 and 18 explain how we have provided for the future costs associated with management decisions on early severance or retirement of staff. Following the relocation of SNH’s corporate functions to Inverness, associated exit training costs and relocation incentive grants payable to staff who chose to move are also included.

In 2006/07 the need for a further provision was identifi ed. This meets the major costs payable in connection with the rationalisation of SNH’s Edinburgh offi ces where these had not been included as part of the main relocation provision. The amount provided is disclosed at Note 16.

1.7 Stocks

SNH does not hold material levels of stocks. SNH’s share of JNCC’s stocks is included in the balance sheet, stated at the lower of cost or net realisable value.



1.8 Taxation

Value Added Tax (VAT)

Irrecoverable VAT is charged to the operating cost statement and included under the heading relevant to the type of expenditure. Irrecoverable VAT on the purchase of an asset is included in the capitalised purchase cost of the asset.

Corporation tax

SNH lost its charitable status on 1 April 2007. Notwithstanding our loss of charitable status under the Charities and Trustees Investment (Scotland) Act 2005, HM Revenue & Customs have confi rmed to us that our charitable status has been preserved for corporation tax purposes.

1.9 Joint Nature Conservation Committee

The total budget for JNCC is set each year by Ministers of the Department for the Environment, Food and Rural Affairs (DEFRA) after consultation and in agreement with their English, Scottish, Welsh and Northern Irish colleagues.

The agreed percentage contributions are:

JNCC, whose accounts are audited by Moore Stephens is considered to be a JANE (Joint Arrangement Not an Entity) in accordance with the defi nition of FRS 9 Associates and Joint Ventures. Therefore, the proportionate share of JNCC income, expenditure, assets, provisions and reserves is incorporated in SNH’s fi nancial statements.

1.10 Grant-in-aid

SNH receives grant-in-aid from the Scottish Government to fi nance its net expenditure. Grant-in-aid is credited to the general reserve in the period in which it is received. The net cost of SNH is charged to this fund.

The grant-in-aid meets all costs except the depreciation element arising from the revaluation of fi xed assets. This depreciation is charged to the revaluation reserve.

1.11 Grants and management agreements

Grants and management agreements are generally accounted for as they are approved for payment. SNH’s policy is to recover grants where the conditions attached to that grant have been materially breached and no acceptable alternative conditions or remedies can be implemented.

1.12 Research and development

Research and development expenditure, excluding certain IT projects, is charged to the operating cost statement. IT projects which lead to an intangible asset being created are included in the balance sheet as additions to intangible fi xed assets, and SNH’s operating costs reduced accordingly.

Body 2007/08 (%) 2006/07 (%)

Natural England 37.31 56.22

Scottish Natural Heritage 21.96 25.87

Countryside Council for Wales 10.98 12.94

Department of the Environment (Northern Ireland) 5.49 4.97

DEFRA 24.26 –


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www.snh.org.uk 59

1.13 Interest on capital

A charge, refl ecting the cost of capital (CoC) used by SNH, is included in the operating cost statement. It is calculated at the Government’s standard rate of 3.5% in real terms on the average carrying amount of all assets less liabilities.

1.14 Pensions

The provisions of the Principal Civil Service Pension Scheme (PCSPS) cover present and past employees. This defi ned benefi t scheme is unfunded and non-contributory except in respect of dependants’ benefi ts. SNH recognises the expected cost of these elements on a systematic and rational basis over the period during which it benefi ts from employees’ services by payments to the PCSPS of amounts calculated on an accruing basis. Liability for payment of future benefi ts is a charge on the PCSPS. SNH recognises the contributions payable for the year in respect of the defi ned contribution scheme.

In accordance with the Government FReM, disclosure requirements arising from FRS 17 Retirement Benefi ts do not apply.

Further information on pensions is contained in the remuneration report and Note 6 to the accounts.

1.15 Operating leases

Rentals applicable to operating leases are charged to the operating cost statement as incurred.

1.16 Funding from the European Commission

Funding receivable for operating expenditure is included in the operating cost statement in respect of expenditure incurred to 31 March 2008 on approved projects.

1.17 Big Lottery Fund

In prior years, funding receivable from the Big Lottery Fund was included under the designation “Fresh Futures” in the operating cost statement to match the relevant expenditure incurred during the year. The fi nal programme ceased in 2006/07 and consequently no income has been received or expenditure incurred in 2007/08. The fi nal year’s income and expenditure was £1,707,000.

2. Grant-in-aid

Total cash grant-in-aid received in 2007/08 was £66.269m (2006/07: £86.581m). Grant-in-aid received for JNCC of £1.738m (2006/07: £1.805m) is ring-fenced within SNH’s operating budget. The grant-in-aid was provided in order to fund the following activities:

2007/08 2006/07

£000 £000

Opening balance sheet (1 Apr) 26,866 5,233

Closing balance sheet (31 Mar) 27,904 26,866

CoC at 3.5% of average 958 562

2007/08 2006/07

£000 £000

Operating grant-in-aid 63,389 66,865

Capital grant-in-aid 2,880 19,716

Total grant-in-aid received 66,269 86,581


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3. External funding

2007/08 2006/07

£000 £000

Grant income:

Fresh Futures – 1,707

EU funding 298 368

Other 101 189

Partnership income 125 260

Sponsorship income 12 1

Other external funding 125 75

661 2,600

There was no external funding received to purchase fi xed assets in 2007/08. EU funding is separately identifi ed in the operating cost statement. The total of all other external funding income is £363,000.

No funding is shown against Fresh Futures as the project was completed on 31 March 2007 (Note 1.17).

4. Income from activities

2007/08 2006/07

£000 £000

Professional services 180 148

Managing resources 478 356

Other income from activities 110 94

Profi t on disposal of fi xed assets 62 16

830 614

Profi t on disposal of fi xed assets relate to the sale of Ardconnel Terrace and Fraser Darling House in Inverness and other fi xed assets. The proceeds from these sales amounted to £1.236m and were used to fund the purchase of fi xed assets in 2007/08.

5. Interest receivable

2007/08 2006/07

£000 £000

Bank interest 228 226

Interest on bequest funds 4 3

232 229


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www.snh.org.uk 61

6.2 Pension costs

A breakdown of pension costs payable for the year is as follows:

Note 2007/08 2006/07

£000 £000

Accruing superannuation liability charges (ASLCs) 3,745 3,695

Other SNH pension costs 55 64

Net increase on early retirement provision 18 4 81

Total pension costs per Note 6.1 3,804 3,840

6. Staff costs (including Board members)

6.1 All employees

2007/08 2006/07

£000 £000

Salaries:

Chairman 45 41

Main Board members 117 139

Area and Advisory Board members 104 202

Management Team 467 510

All other staff 20,059 20,005

20,792 20,897

Social security costs 1,597 1,598

Pension costs 3,804 3,840

Redundancy costs 6 69

Total staff costs 26,199 26,404

Less: Recoveries in respect of outward

secondments (281) (430)

Total net employment costs 25,918 25,974

The total cost above does not include £223,000 (2006/07: £49,000) of salaries which was capitalised against various projects. The reduction in staff costs is primarily due to a combination of:

– reduction in the rate of employer contribution payable to the PCSPS; and,– the level of the annual pay progression and cost of living award.


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9. Programme costs

2007/08 2006/07

£000 £000

Promotion 2,089 2,098

Research 4,873 4,757

Grants 9,595 9,211

Partnership funding 5,493 7,064

Management agreements 4,691 4,465

Managed sites 2,897 1,954

29,638 29,549

Grant expenditure comprises grants made to the public sector of £3,852,000 and £5,743,000 to the private sector.

7. Average number of employees

The average number of full time equivalent persons employed during the year by occupational group was:

2007/08 2006/07

Number Number

Senior management 6 8

Operational, professional and managerial 555 551

Administration and support 142 136

Estate workers, manual and domestic 41 30

744 725

As at 31 March 2008, 87% (2006/07: 91%) of SNH staff were on permanent contracts.

8. Other costs

2007/08 2006/07

£000 £000

Staff-related costs 1,244 1,578

Offi ce and other accommodation 3,463 2,537

Travel 798 900

Communications 1,506 1,572

Supplies and services 1,464 1,397

Vehicle costs 357 360

Consultancy costs 568 784

Audit fee payable to Audit Scotland 56 60

Audit fee payable to Tenon – 10

9,456 9,198

Audit fees paid to Audit Scotland for the year were £57,800, less a rebate of £1,600 relating to 2005/06.


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www.snh.org.uk 63

10. Joint Nature Conservation Committee

10.1 Ring fenced grant-in-aid for JNCC

2007/08 2006/07

£000 £000

Ring fenced grant-in-aid received 1,738 1,805

Less: applied as capital expenditure (9) (36)

Grant-in-aid included in operating cost statement 1,729 1,769

10.2 Contribution to JNCC expenditure

2007/08 2006/07

£000 £000

Expenditure:

Conservation support 733 825

Staff costs 1,008 1,086

Depreciation and impairment 22 29

Other operating costs 355 377

Notional costs 3 4

2,121 2,321

Less income:

EU funding (102) (187)

Income from activities (264) (315)

Released from capital asset fund (22) (30)

(388) (532)

Net operating cost 1,733 1,789

Interest receivable (5) (5)

Gain on sale of fi xed assets – (1)

Add back of notional costs (3) (4)

Retained surplus/(defi cit) for year 4 (10)

Net expenditure per operating cost statement 1,729 1,769

10.3 Reconciliation of movement in SNH’s share of JNCC reserves

2007/08 2006/07

£000 £000

Share of JNCC net reserves at 1 April 111 128

Movement in reserves position for year (Note 19) (22) (17)

Share of JNCC net reserves at 31 March 89 111


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11. F

ixed

assets

Purchases of total fi xed assets in the schedule of £

3,931,0

00 (20

06/07: £

19,716,0

00) appear in the cash fl ow

statement as £

4,409,0

00 after adjustm

ent for opening and closing fi xed asset creditors. The intangible assets are softw

are licences held by SN

H and JN

CC

. The revaluation and backlog fi gures are shown in the S

tatement of R

ecognised Gains and

Losses at their net value of £648

,00

0 (200

6/07: £2,121,0

00).

All fi gures £

00

0 C

ost or ValuationLand

Buildings

Dw

ellingsLeasehold

Improvem

entsInform

ation Technology

VehiclesO

ther E

quipment

Fixtures &

Fittings

Assets

Under

Construction

JNC

C

Total Tangible

Fixed A

ssetsS

oftware

LicencesJN

CC

Total Intangible

Fixed A

ssets

At 1 A

pril 2007

4,94023

,339

1,082

1,4778

,1242,30

55,302

2,013166

24248

,990

11740

157

Additions

–1,8

86214

–710

12010

6068

34

3,687

2395

244

Disposals

(651)(545)

––

(12)(3

38)

(66)(15)

–(6)

(1,63

3)–

––

Transfers–

223–

––

––

–(223)

––

––

–

Revaluation

774(293)

(16)–

–12

18271

–7

737–

(1)(1)

Perm

anent dim

inution–

––

––

––

––

(12)(12)

–(3)

(3)

At 31 M

arch 20

08

5,06

324,610

1,280

1,4778

,8222,099

5,4282,129

62623

551,769

356

41397

Depreciation

At 1 A

pril 2007

–(2,241)

(28)(8

42)(6

,535)

(1,878)(4,126)

(1,074)–

(165)(16

,889)

(17)(17)

(34)

Charge f or year

–(766)

(31)(87)

(802)

(191)(324)

(232)–

(16)(2,449)

(40)(6)

(46)

Disposals

–22

––

123

38

6615

–6

459–

––

Transfers–

––

––

––

––

––

––

–

Backlog

–107

1–

–(10)

(142)(3

8)–

–(82)

––

–

Revaluation

––

––

––

––

–(5)

(5)–

––

Perm

anent dim

inution–

––

––

––

––

––

–1

1

At 31 M

arch 20

08

–(2,878)

(58)(929)

(7,325)(1,741)

(4,526)(1,329)

–(18

0)(18

,966)(57)

(22)(79)

Net B

oo

k V

alu

e

at 3

1 M

arc

h

20

08

5,0

63

21,7

32

1,2

22

54

81,4

97

358

902

80

0626

55

32

,803

299

19

318

Net B

ook Value at 31 M

arch 20

07

4,94021,0

981,0

5463

51,589

4271,176

939166

7732,101

100

23123


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www.snh.org.uk 65

14. Cash at bank and in hand

2007/08 2006/07

£000 £000

Cash at bank and in hand 1,508 1,024

European Commission funds received in advance 478 324

Bequest funds 89 85

JNCC share 60 112

2,135 1,545

Interest of £4,000 (2006/07: £3,000) was received on bequest funds on deposit.

12. Stocks

2007/08 2006/07

£000 £000

Share of JNCC stock 14 20

13. Debtors

13.1 Trade and other debtors2007/08 2006/07

£000 £000

Trade debtors 235 298

Other debtors 408 323

Prepayments and accrued income 458 379

Claims due from European funding sources 259 373

Share of JNCC debtors 207 275

1,567 1,648

Smaller amounts falling due after more than one year are included in other debtors and amount to £60,145 (2006/07: £75,200). These relate primarily to interest-free loans to essential car users within SNH, under a scheme approved by HM Treasury, and approved housing advances for staff who have been permanently relocated.

13.2 Whole of Government Accounts debtor balances

2007/08 2006/07

£000 £000

Comprising balances with:

Other central government bodies 74 51

Local authorities 2 22

76 73

All other debtors 1,491 1,575

1,567 1,648


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16. Provision for Edinburgh offi ce rationalisation

2007/08 2006/07

£000 £000

Opening balance at 1 April 224 0

Increase to provision - 224

Charged to provision (107) -

Closing balance at 31 March 117 224

The requirement for the provision arose from the identifi cation of major costs associated with the rationalisation of SNH’s Edinburgh offi ces. The remaining balance relates to outstanding works, and is expected to be spent in 2008/09. No discounting has been applied.

15. Creditors

15.1 Creditors due within one year

2007/08 2006/07

£000 £000

Trade creditors 849 360

Accruals 4,750 4,043

Other tax and social security 528 513

Value Added Tax 3 45

Project funds in advance 457 337

Share of JNCC creditors 266 396

6,853 5,694

The increase in creditors of £1,159,000 (2006/07: decrease £2,610,000) is shown in the reconciliation of operating surplus to net cash fl ow (Note 26) as a increase of £1,636,000 (2006/07: decrease £2,127,000) after adjustment for movements in fi xed asset creditors (Note 11). The increase is due to a higher level of trade creditors and accruals at 31 March 2008 compared with prior year.

15.2 Whole of Government Accounts creditor balances due within one year

2007/08 2006/07

£000 £000

(Restated)

Comprising balances with:

Other central government bodies 675 713

Local authorities 219 111

Public corporations and trading funds 1 3

895 827

All other creditors 5,958 4,867

6,853 5,694

Prior year comparatives have been restated to conform with the current year’s presentation.


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www.snh.org.uk 67

17. Provision for payment of pension to early retirees

2007/08 2006/07

£000 £000

Opening balance at 1 April 137 158

Increase to provision for future pension costs (Note 6.2):

– Employees retiring during current year 3 35

– Increase to pensions payable to existing retirees 2 46

5 81

Expenditure in the year (47) (102)

Closing balance at 31 March 95 137

At 31 March 2008 there were four (2006/07: fi ve) former employees in receipt of early retirement pensions. Full provision has been made for the costs of pension payments to the remaining voluntary early retirees up to normal retirement age on the basis as described in Note 1.6.

18. Provisions for liabilities and charges

A provision has been made in full for employees leaving the organisation under early retirement or early severance terms, together with any associated exit training, following the relocation to Inverness. In addition, the provision includes the relocation incentive grant payable in two instalments to those staff relocating to Inverness. The provision represents the estimated future costs to SNH, discounted by the Treasury discount rate of 1.8 per cent in real terms, for both staff that have already left or moved and any staff that are known to be leaving or moving.

Redundancy Relocation

incentive, grants

and exit training

Total

2007/08

Total2006/07

£000 £000 £000 £000

Relocation provision

Opening balance at 1 April 1,867 649 2,516 5,911

Net changes to provision 25 60 85 286

Expenditure in the year (231) (502) (733) (3,681)

Closing balance at 31 March 1,661 207 1,868 2,516


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19. Reserves

General

Reserve

(Capital

asset

Fund and

I&E)

Revaluation

Reserve

Share

of JNCC

(note 10)

Bequest

Reserve

Total

2007/08

Total 2006/07

£000 £000 £000 £000 £000 £000

Balance at 1 April 19,653 7,017 111 85 26,866 5,233

Opening balance adjustment – – – – – 161

Operating grant-in-aid received (excluding JNCC)

63,380 – – – 63,380 66,865

Net cost for the year (excluding diminution)

(66,809) – (22) – (66,831) (64,845)

Add back cost of capital 958 – – – 958 562

Grant-in-aid received to purchase assets

2,880 – – – 2,880 19,680

Asset diminution – – – – – (2,924)

Release from revaluation reserve 501 (501) – – – –

Backlog depreciation – (82) – – (82) (389)

Revaluation gain – 729 – – 729 2,510

Bequest funds received – – – 4 4 13

Balance at 31 March 20,563 7,163 89 89 27,904 26,866

Of the above funds, £1,500 of bequest funds is restricted as to use. All other reserves are unrestricted. No bequests were received in 2007/08 (2006/07: £10,000). Bequest funds received include bank interest received during the year.

The release from the Revaluation Reserve in 2006/07 was £517,000.


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www.snh.org.uk 69

20. Commitments under operating leases

At 31 March 2008, SNH had the following annual commitments under operating leases:

2007/08 2006/07

Land Buildings Other Total Land Buildings Other Total

£000 £000 £000 £000 £000 £000 £000 £000

Expiry within:

One year 1 56 1 58 1 57 – 58

Two to fi ve years 2 268 23 293 1 331 1 333

After fi ve years 28 554 1 583 15 451 1 467

31 878 25 934 17 839 2 858

21.2 Management agreements

For management agreements concluded by 31 March 2008, commitments to continuing annual payments for 2008/09, under leases and management agreements, amount to £4,394,000 (2006/07: £4,177,000). Of this annual commitment, an estimated £909,000 (2006/07: £1,010,000) refers to agreements entered into before 1 January 2000. These agreements are currently awaiting notifi cation as approved State Aids.

21.3 Grants

Forward commitments on grant offers accepted as at 31 March 2008 covering the years up to and including 31 March 2012 are as follows:

2007/08 2006/07

£000 £000

Payable within one year 7,753 8,926

Payable in two to four years 3,771 4,229

11,524 13,155

22. Contingent liabilities

No material contingent liabilities exist at 31 March 2008 (2006/07: £nil).

21. Capital and other commitments

21.1 Capital

As at 31 March 2008 SNH had various commitments under its capital programme totalling £5,365,000 (2006/07: £5,183,000). This expenditure fell into the following categories:

2007/08 2006/07

£000 £000

Authorised and contracted 3,089 706

Authorised but not contracted 2,276 4,477

5,365 5,183


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24. Related party transactions

SNH is a non-departmental public body sponsored by SGRD. SGRD is regarded as a related party. During the year, SNH has had a number of material transactions with the department and with other entities for which SGRD is regarded as the parent department, viz:

– Scottish Environment Protection Agency;– Loch Lomond and The Trossachs National Park;– Cairngorms National Park Authority.

SNH also had a small number of transactions with other government departments, central government bodies, local government and other non-departmental public bodies.

During the year, SNH entered into the following material transactions (over £5,000):

Except as indicated, none of the Board members, Management Team or other related parties has undertaken any material transactions with SNH during the year.

23. Losses and special payments

The following losses and special payments are included in the operating cost statement:

2007/08 2006/07

£000 £000

Cash losses – –

Losses of assets, stores and equipment 20 1

Fruitless payments and constructive losses – 59

Claims waived or abandoned – 1

Special payments 13 27

33 88

In 2007/08, the main losses were due to property loss due to arson and legal costs relating to a personal injury claim.

Name Type of related party Transaction

Gordon Mann Local Advisor Managing Director of Crichton Development Company, which leases the fi rst fl oor of Carmont House to SNH. Total payments in 2007/08 amounted to £61,366


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26.1 Reconciliation of net operating costs to net cash outflow from operating activities

2007/08 2006/07

£000 £000

Net operating costs (66,079) (67,415)

Adjustment for items not involving the movement of cash:

Depreciation and impairment charge 2,473 5,398

Profit on sale of tangible fixed assets (62) (16)

JNCC reserves 4 (13)

Decrease in stock 6 5

Decrease/(increase) in debtors 81 (206)

Increase/(decrease) in revenue creditors 1,636 (2,127)

Decrease in provisions (797) (3,192)

Adjustment to opening reserves – 161

Net cash outflow from operating activities (62,738) (67,405)

25. Financial targets

SNH is required to operate within its capital and operating budgets for the year. These are set by its sponsoring department, SGRD. In 2007/08, both financial targets were achieved, as demonstrated in the table below.

2007/08 2006/07

Out-turn Budget Variance Out-turn Budget Variance

£000 £000 £000 £000 £000 £000

Capital:

Net additions 3,931 4,166 235 19,680 19,743 63

Operating:

Net costs per operating cost statement 66,809 67,267 458 67,751 67,987 236

Gain on disposals 62 – (62) – – –

Net 66,871 67,267 396 67,751 67,987 236

Total resource budget 70,802 71,433 631 87,431 87,730 299

The capital budget for 2007/08 was supplemented by the proceeds from the sale of SNH properties and other fixed assets of £1.236m.

26. Notes to statement of cash flows

Prior year comparatives have been restated to conform with the current year’s presentation.


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26.2 Analysis of net funds

At 31 March 2007 Cash fl ow At 31 March 2008

£000 £000 £000

Cash at bank and at hand 1,545 590 2,135

27. Financial instruments

FRS 13 Derivatives and Other Financial Instruments, requires disclosure of the role which fi nancial instruments have had during the period in creating or changing the risks an entity faces in undertaking its activities. Because of the nature of its activities and the way in which SNH is fi nanced, SNH is not exposed to the degree of fi nancial risk faced by business entities.

Liquidity risk

Scottish Ministers make provision for SNH’s use of resources, for revenue and capital purposes, in its budget for each fi nancial year. Resources and accruing resources may be used only for the purposes specifi ed and up to the amounts specifi ed in the budget. An overall cash authorisation is also agreed between SGRD and SNH to operate for the fi nancial year. SNH is not therefore exposed to signifi cant liquidity risks.

Foreign currency risk

SNH minimises exchange rate risk on EU-funded projects by identifying in the memo of agreement for the projects a mechanism for partners to agree how a shortfall or surplus will be handled. Any shortfall or surplus would be covered in proportion to the partner’s contributions to the overall project.

Interest-rate risk

SNH has no power to borrow and all surplus funds are held in interest bearing deposit accounts. The interest rates are fi xed for the duration of the banking contract at 0.5% below base rate. SNH has no other investments and therefore there is no exposure to interest rate risk.

Fair values

There is no difference between the book value and fair value for the cash at bank shown in the Note.


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Direction by The Scottish Ministers

1. The Scottish Ministers, in pursuance of Section 10(3) of the Natural Heritage (Scotland) Act 1991, hereby give the following direction.

2. The statement of accounts for the fi nancial year ended 31 March 2006, and subsequent years, shall comply with the accounting principles and disclosure requirements of the edition of the Government Financial Reporting Manual (FReM) which is in force for the year for which the statement of accounts are prepared.

3. The accounts shall be prepared so as to give a true and fair view of the income and expenditure and cash fl ows for the fi nancial year, and of the state of affairs as at the end of the fi nancial year.

4. This direction shall be reproduced as an appendix to the statement of accounts. The Direction given on 2 October 2002 is hereby revoked.

I. R. Hooper (Head of Countryside and Natural Heritage Division)Signed by the authority of the Scottish MinistersDated 12 January 2006


www.snh.org.uk 75



www.snh.org.uk

Cover photo: CapercalliePhotographer: Peter Cairns

Images: Lorne Gill/SNH, George Logan/SNH ISBN 978 1 85397 555 4

Printed by: JTCP0.350k0908Further copies available from: Publications Distribution,Scottish Natural Heritage, Battleby, Redgorton, Perth PH1 3EW

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