Corporate report

Annual report of HM Land Registry 2016 to 2017: financial statements

Updated 12 September 2017

Applies to England and Wales

Financial statements

Statement of comprehensive income for the year ended 31 March 2017

		2016/17	2015/16
	Notes	£’000	£’000
Income – continuing operations	2	311,425	295,372
Cost of service	2	(226,959)	(238,591)
Gross surplus		84,466	56,781
Administrative expenses	2	(15,036)	(15,593)
Operating surplus		69,430	41,188
Loss on disposal of non-current assets		(4)	(431)
Investment income – interest receivable	5	1,336	1,774
Finance costs	6	(682)	(702)
Amortisation and depreciation of e-service systems	8.1, 9.1	(3,427)	(3,469)
Restructure and reorganisation costs	3.2	(425)	(1,458)
Local Land Charges revenue costs	3.3	(1,592)	(2,265)
Surplus for the financial year		64,636	34,637
Dividend payable	7	(18,896)	(13,584)
Retained surplus/(loss) for the financial year		45,740	21,053
Gain/(Loss) on revaluation of property, plant and equipment		2,965	(7,817)
Comprehensive surplus/(loss) for the financial year		48,705	13,236

The notes to the financial statements are an integral part of these accounts.

Statement of financial position as at 31 March 2017

		2016/17		2015/16
	Notes	£’000	£’000	£’000	£’000
Non-current assets
Property, plant and equipment	8	53,593		56,675
Investment property	8.4	4,920		6,800
Intangible assets	9	8,607		4,370
Other receivables	11.2	1,341		1,437
Total non-current assets			68,461		69,282
Current assets
Inventories	10	4,049		4,745
Trade and other receivables	11.1	9,597		12,791
Cash and cash equivalents	12	489,926		443,871
Total current assets			503,572		461,407
Non-current assets classified as held for sale	8.3		6,982		–
Total assets			579,015		530,689
Current liabilities
Trade and other payables	13.1	56,016		51,580
Obligations under finance leases	13.1, 14.1	194		284
Short-term provisions	16.1	6,393		8,116
			62,603		59,980
Indemnity Fund	16.2		85,100		84,800
Total current liabilities			147,703		144,780
Non-current assets plus net current assets			431,312		385,909
Non-current liabilities
Obligations under finance leases	13.2, 14.1	4,736		4,931
Long-term provisions	16.1	4,309		7,416
Total non-current liabilities			9,045		12,347
Net assets			422,267		373,562
Capital and reserves
Public Dividend Capital			61,545		61,545
Revaluation reserve			19,200		16,268
Income and expenditure account			341,522		295,749
			422,267		373,562

The notes to the financial statements are an integral part of these accounts.

Graham Farrant
Chief Executive and Chief Land Registrar
July 2017

Statement of changes in reserves for the year ended 31 March 2017

	Public Dividend Capital	Revaluation reserve	I&E reserve	Total reserves
	£’000	£’000	£’000	£’000
Balance at 31 March 2015	61,545	31,474	267,307	360,326
Changes in reserves 2015/16
Revaluation reserve
Transfer to retained earnings	–	(17)	7,389	7,372
Revaluation of non-current assets	–	(7,372)	–	(7,372)
Comprehensive loss	–	(7,817)	21,053	13,236
Balance at 31 March 2016	61,545	16,268	295,749	373,562
Changes in reserves 2016/17
Revaluation reserve
Transfer to retained earnings	–	(33)	33	–
Comprehensive surplus	–	2,965	45,740	48,705
Balance at 31 March 2017	61,545	19,200	341,522	422,267

The notes to the financial statements are an integral part of these accounts.

Cash flow statement for the year ended 31 March 2017

		2016/17	2015/16
	Notes	£’000	£’000
Net cash inflow from operating activities	19.1	71,066	55,673
Investing activities
Purchase of tangible assets		(2,595)	(4,091)
Purchase of intangible assets		(8,202)	(355)
Proceeds on disposal of tangible assets		–	9,314
Interest received		1,729	1,618
Net cash inflow from investing activities		(9,068)	6,486
Financing activities
Dividends paid		(14,977)	(14,717)
Repayments of capital element of obligations under finance leases		(284)	(621)
Interest elements of obligations under finance leases		(682)	(702)
Net cash outflow from financing activities		(15,943)	(16,040)
Net increase/(decrease) in cash and cash equivalents	19.2	46,055	46,119
Cash and cash equivalents at beginning of year	19.2	443,871	397,752
Cash and cash equivalents at end of year	12	489,926	443,871

The notes to the financial statements are an integral part of these accounts.

Notes to the financial statements

1. Statement of accounting policies

1.1 Basis of preparation

These financial statements have been prepared in accordance with the Government Financial Reporting Manual (FReM) 2016/17 and comply with the Accounts Direction given by HM Treasury in accordance with section 4 (6) (a) of the Government Trading Funds Act 1973. The accounting policies contained in the FReM follow International Financial Reporting Standards (IFRS) as adapted or interpreted for the public sector context. Where the FReM permits a choice of accounting policy, the accounting policy that has been judged to be the most appropriate to the particular circumstances of HM Land Registry for the purposes of giving a true and fair view has been selected. HM Land Registry’s accounting policies have been applied consistently in dealing with items considered material in relation to the financial statements.

These financial statements have been prepared on a going concern basis. Management is of the opinion that a going concern basis is appropriate as we are legally obliged under the Land Registration Act 2002 to provide statutory services relating to land registration and there are sufficient reserves to support the business going forwards.

IFRS 9 Financial Instruments and IFRS 15 Revenue from contracts with customers are effective from 2018/19; their application in the public sector context has yet to be interpreted by the FReM. IFRS 16 Leases has been issued but is not effective until periods commencing 1 January 2019. These accounting standards are not expected to have a material impact on HM Land Registry.

1.2 Accounting convention

The financial statements have been prepared under the historical cost convention modified for the revaluation of property, plant and equipment, investment property, assets held for sale, intangible assets and, where material, inventories to fair value as determined by the relevant accounting standard.

1.3 Estimation techniques

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The estimates and judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are:

• Note 8 – impairment of non-current assets
• Note 9 – impairment of intangibles
• Note 16.1 – early retirement, early severance and other provisions
• Note 16.2 – estimated provision for indemnity claims

1.4 Fee income

Income from fees and charges is recognised in the financial statements of the financial year in which the service is delivered. Income is recognised net of any refunds for transactions that are not completed or on transactions where erroneous information is provided by customers.

Certain services require receipt of payment upon application resulting in payments being received for services not yet delivered within the financial year being reported. These amounts are reported as ‘fees received in advance’ and disclosed within current liabilities. Fees are recognised once the register has been fully updated following receipt of an application.

1.5 Operating segments

HM Land Registry’s operating segments are organised around the services it provides and are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (CODM). The three main business segments are registration of title, Land Charges and Agricultural Credits and commercial income. This is based on the group’s internal organisation and management structure, and is the primary way in which the CODM is provided with financial information. The CODM of HM Land Registry is Graham Farrant, Chief Executive and Chief Land Registrar.

Local Land Charges

Following the passing of the Infrastructure Act 2015, HM Land Registry has been given the responsibility for registering Local Land Charges. In preparing for the provision of the service, related expenditure is either being expensed as incurred or capitalised if it meets the criteria for intangible assets under IAS 38.

1.6 Employee benefits

The cost of providing employee benefits is recognised in the period in which HM Land Registry receives services from its employees, rather than when it is paid or payable. Short-term employee benefits are recognised as an expense in the period in which the employee renders the service. Performance payments are recognised only when there is a legal or constructive obligation to pay them and the costs can be reliably estimated. Termination benefits are recognised when it can be demonstrated that there is an irreversible agreement to terminate the employment of employee(s) before the schemes’ retirement date or as a result of an offer to encourage voluntary redundancy.

1.7 Pensions

HM Land Registry employees are civil servants who are entitled to be members of the Principal Civil Service Pension Scheme (PCSPS) or the Civil Servant and Other Pension Scheme (CSOPS)–known as ‘alpha’. These are unfunded multi-employer defined benefit schemes, but HM Land Registry is unable to identify its share of the underlying assets and liabilities on a reasonable and consistent basis. HM Land Registry has therefore accounted for contributions and payments to these schemes under International Accounting Standards (IAS) 19 as if they were defined contribution schemes. Liability for the payment of future benefits is a charge on the PCSPS or alpha scheme.

1.8 Property, plant and equipment

Freehold and leasehold land and buildings are professionally valued by external, independent property valuers having appropriate recognised professional qualifications and recent experience in the location and category of the properties being valued. Cushman & Wakefield, RICS registered valuers, carried out a desktop valuation in February 2017.

HM Land Registry is required by the FReM to disclose non-current assets in the statement of financial position at fair value. For assets in use the FReM requires valuation at existing use as an asset’s fair value, rather than market value required by IFRS 13. Details of FReM adaptations which continue to apply for 2016/17 can be found on GOV.UK (search for ‘Financial Reporting Manual 2016/17’).

For short life non-property assets historical cost is used as an approximation to the fair value of the asset. Freehold land and buildings and leasehold buildings are included at revaluation less accumulated depreciation and impairment losses. All other tangible non-current assets are included at historical cost less accumulated depreciation and impairment losses.

Assets in the course of construction are not depreciated. For other assets the depreciation charge is calculated so as to allocate the cost or revalued amount, less the estimated residual value, of non-current assets systematically over their remaining useful lives using the straight-line method.

Other property, plant and equipment includes IT and office equipment and machinery. HM Land Registry capitalises expenditure over £1,000 for an individual asset. Where appropriate, individual assets falling below the minimum value for capitalisation are grouped. It is HM Land Registry’s policy not to capitalise expenditure on fixtures and fittings, principally office furniture, as they are not considered material.

Asset lives are reviewed at the end of each financial year.

The following asset depreciation rates are used.

Freehold land	nil
Freehold buildings	Estimated useful life
Leasehold buildings	Period of the lease or estimated useful life
Telecommunications equipment	Five years
Office equipment	Five years
Computers: mainframe PCs	Five years Five years*
Structured cabling	Ten years
Plant and heavy machinery	Ten years

*Following a review of HM Land Registry’s asset replacement policy the asset life for desktop PCs has been updated from three years to five years. This is to reflect the increased reliability and therefore life of the assets.

Non-current assets classified as held for sale are carried at fair value less costs to sell and are not depreciated. HM Land Registry classifies a non-current asset as held for sale if its carrying amount will be recovered principally through a sales transaction rather than through continuing use. To qualify the asset must be available for immediate sale in its present condition and the sale must be highly probable.

1.9 Impairment of non-current assets

Impairment reviews are undertaken at each year end and if there are indications that the asset has suffered an impairment loss a charge is reflected in the statement of comprehensive income in the year in which it occurs. If the asset is carried at a revalued amount, the impairment loss is treated as a revaluation decrease, to the extent of the revaluation reserve that relates to the asset, with any excess in the statement of comprehensive income. If any such indication exists the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. The recoverable amount is the higher of fair value less costs to sell and value in use.

1.10 Intangible assets

Software licences

Separately acquired intangible assets are shown at historical cost. The costs incurred to acquire and bring these assets to use are capitalised. These include contractors’ charges, materials, directly attributable labour and directly attributable overhead costs.

Software licences are included at cost less accumulated amortisation. They are amortised on a straight line basis at a rate of:

• Mainframe: five years
• PCs: five years*

*Following a review of HM Land Registry’s asset replacement policy the asset life for desktop PCs has been updated from three years to five years. This is to reflect the increased reliability and therefore life of the assets.

Software development costs

In accordance with IAS 38, expenditure incurred on developing new IT infrastructure (covering third party costs and the direct costs of in-house staff effort) can be capitalised. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by HM Land Registry are recognised as intangible assets when the following criteria are met:

• it is technically feasible to complete the software product so that it will be available for use
• management intends to complete the software product and use or sell it
• there is an ability to use or sell the software product
• it can be demonstrated how the software product will generate probable future economic benefit
• adequate technical, financial and other resources to complete the development and to use or sell the software product are available
• the expenditure attributable to the software product during its development can be reliably measured

Directly attributable costs that are capitalised as part of the software product include the software development employee costs and an appropriate portion of relevant overheads. Other development expenditures that does not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.

All research expenditure is written off as incurred.

HM Land Registry portal, e-security and Business Gateway

HM Land Registry developed three systems to deliver e-services. The cost of developing the IT systems (HM Land Registry portal, e-security and Business Gateway) have been capitalised as intangible assets on the statement of financial position. These assets have been amortised over eight years, which was the expected useful life of the systems. The life was determined with reference to the useful lives of other similar assets in use in HM Land Registry.

Local Land Charges

HM Land Registry has commenced the building and development of a computerised register to hold the Local Land Charges data currently held by 326 local authorities. Two development costs have been identified, a database to hold the information, and the data itself which needs to be cleansed, digitalised and migrated to this database. Under IAS 38, costs attributable to these two activities are treated as an Intangible asset, and on commencement of the register service these components will be amortised over their useful life.

1.11 Investment property

Investment property is measured at fair value. Any gain or loss on disposal (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised in profit or loss. When investment property that was previously classified as property, plant and equipment is sold, any related amount included in the revaluation reserve is transferred to retained earnings (see note 1.8 for details of valuers).

1.12 Inventories

Work-in-progress is stated at the lower of cost and net realisable value. Cost includes internal costs of staff and directly attributable overheads in preparing completion of registration for the customer. Net realisable value is based on the fee that is charged to the customer less further costs expected to be incurred in completing the services. The costs associated with work-in-progress are derived from estimates and assumptions based on historical experience and other factors which are considered to be relevant. These estimates and underlying assumptions are reviewed on a regular basis.

1.13 Trade receivables

Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for irrecoverable amounts. These impairment provisions are recorded in administrative expenses within the statement of comprehensive income. The carrying amount of trade receivables is deemed to be an approximation of fair value.

If collection of amounts receivable is expected in one year or less they are classified as current assets.

1.14 Cash and cash equivalents

Cash represents cash-in-hand, cash held with the Government Banking Service (GBS), cash on deposit with the National Loans Fund and in commercial bank accounts. The commercial bank and GBS deposits are immediately available funds. National Loans Fund deposits are short-term investments of three months or less and cannot be repaid until maturity of the loan.

1.15 Trade payables

Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not they are presented as non-current liabilities. Trade payables are stated at their nominal value. The carrying amount of trade payables is deemed to be an approximation of fair value.

1.16 Provisions

HM Land Registry provides for legal and constructive obligations that are of uncertain timing or amount at the statement of financial position date, on the basis of management’s best estimate of the expenditure required to settle the obligation at the statement of financial position date. If the effect of discounting is material, provisions are discounted to the expected present value of their future cash flows using a risk-free discount rate. Where appropriate this is supported by independent professional advice. Provisions are charged to the statement of comprehensive income and recorded as liabilities in the statement of financial position. (Further details, including sensitivities, are given in note 16.)

1.17 Indemnity Fund

Schedule 8 to the Land Registration Act 2002 requires HM Land Registry to indemnify third parties against loss caused by mistakes in the register, mistakes in search results and loss of documents by HM Land Registry. Most of HM Land Registry’s indemnity claims arise as a result of mistakes in the register, and some of these mistakes are the result of forgery of documents such as charges. Indeed fraud/forgery usually accounts for the largest share of indemnity payments, and this year is no exception. Under Schedule 8 to the Act, HM Land Registry has statutory rights to recover these payments from third parties, where it is the case that third parties are at fault, either wholly or partly, for the loss.

As at the current accounting date, future claim payments are uncertain in timing and amount. The Indemnity Fund is established on the basis of the best estimate of the expenditure required to settle the obligation. The Indemnity Fund is determined after considering actuarial estimates of the cost of claims reported but not settled, as well as claims incurred but not reported. The estimated cost of claims includes expenses incurred in settling these claims.

The carrying amount of the Indemnity Fund is derived from critical judgements, estimates Registry, supported by its independent actuaries Lane, Clark & Peacock LLP.

After the accounting date, a further review of claims received by HM Land Registry (up to the date the Accounting Officer approves the Annual Report and Accounts) is made to see if the indemnity fund is still appropriately valued. Provided in these accounts are the likely settlement values of current and future claims against the Indemnity Fund. Further details of the Indemnity Fund are shown in note 16.2 of this report.

1.18 Contingent liabilities

Where appropriate, liabilities that have only a possible chance of crystallising and do not meet the provisions criteria have been classified as contingent liabilities. This includes, but is not limited to, claims for losses arising from errors, or fraud in relation to HM Land Registry’s statutory responsibility as insurer of titles in England and Wales (see note 18.1).

1.19 Finance leases

Where HM Land Registry retains all the risks and rewards of ownership of an asset subject to a lease, the lease is treated as a finance lease. Future instalments payable under finance leases, net of finance charges, are included in liabilities with the corresponding asset values recorded in non-current assets and depreciated over the shorter of their estimated useful lives or their lease terms. Lease payments are apportioned between the finance element, which is charged to the statement of comprehensive income as interest, and the capital element, which reduces the outstanding obligation for future instalments.

1.20 VAT

HM Land Registry accounts for VAT on its statutory activities under HM Treasury’s Taxing and Contracting Out of Services Directions. For non-statutory activity, which is business activity, VAT is charged and recovered according to commercial VAT rules. Irrecoverable VAT is charged to the relevant expenditure category or included in the capitalised purchase costs of non-current assets. Where output tax is charged or input tax is recoverable the amounts are stated net of VAT.

1.21 Treasury dividend

HM Land Registry is required to pay the Treasury an annual dividend being 3.5% of the average capital employed during the financial year plus the latest inflation estimate for the year, provided by ONS (see note 21). HM Land Registry considers it sufficient to calculate this figure using an annual average. There is no material impact of calculating this figure using an alternative method, eg monthly average.

1.22 Prior period re-statements

Under IAS 8 Accounting policies changes in accounting estimates and errors, adjustments to prior periods are required for changes to accounting policies or to correct prior period errors, arising from omissions, or misstatements.

There have been no prior period re-statements in 2016/17.

2. Business segments

International Financial Reporting Standard 8 (IFRS 8) – Operating segments reporting requires analysis of income and expenditure by principal business activities.

There are three separate areas for statutory services carried out by HM Land Registry: registration of title; registration of Land Charges and registration of mortgages made under the Agricultural Credits Act 1928. For operational purposes, HM Land Registry combines delivery of these latter two services and this is reflected in this segmental analysis.

HM Land Registry also provides a range of commercial services which is shown separately as a business segment.

Detailed in the table below is the income from statutory fees and commercial charges, the cost of service and the net surplus for each of the business segments. The cost of service and administrative expenses are allocated and apportioned on an appropriate basis for the service.

	Statutory		Non-statutory	2016/17	Statutory		Non-statutory	2015/16
	Registration of title	Land Charges and Agricultural Credits	Commercial income	Total	Registration of title	Land Charges and Agricultural Credits	Commercial income	Total
	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000
Income	299,591	6,267	5,567	311,425	284,196	6,193	4,983	295,372
Cost of service	(222,578)	(1,398)	(2,983)	(226,959)	(233,892)	(1,483)	(3,216)	(238,591)
Administrative expenses	(14,662)	(31)	(343)	(15,036)	(15,228)	(33)	(332)	(15,593)
Operating surplus	62,351	4,838	2,241	69,430	35,076	4,677	1,435	41,188

The surplus for registration of title has increased by £27.2m compared with the prior year. This is due to a combination of higher income due to increased volumes (in line with original budget) and lower levels of deferred income.

The surplus for the year on commercial income of £2.2m is higher than expected.

Revenues were higher than the baseline forecast (£0.8m) due to the continued buoyancy in the housing market and significant income from government infrastructure projects.

Local Land Charges revenue costs are currently shown in note 3.3 Local Land Charges will become an operating segment once HM Land Registry runs a live service.

3. Operating surplus

3.1 Operating surplus is stated after charging

	2016/17	2015/16
	£’000	£’000
Staff costs (see note 4.1	179,485	168,173
Provision for indemnity costs (see note 16.2)	300	11,200
IT services	14,460	14,901
Hire of machinery	4,948	5,302
Auditor’s remuneration – audit fee	65	65
Depreciation of tangible non-current assets – owned	4,048	4,682
Depreciation of tangible non-current assets – leased	299	547
Amortisation of intangible assets	349	338
Impairment in value of non-current assets	(584)	6,466
Charge for operating leases – buildings	1,021	1,361
Miscellaneous income	(2,708)	(2,842)

3.2 Restructure and reorganisation costs

				2016/17				2015/16
	Early retirement £’000	Early severance £’000	ATP (see note 1) £’000	Total £’000	Early retirement £’000	Early severance £’000	ATP £’000	Total £’000
Costs incurred in year	270	154	1	425	282	–	1,176	1,458
	270	154	1	425	282	–	1,176	1,458

Note 1: Accelerated Transformation Programme.

3.3 Local Land Charges

	2016/17	2015/16
	£’000	£’000
Revenue costs incurred in year	1,592	2,265
	1,592	2,265

The Infrastructure Act 2015 passed to HM Land Registry the responsibility for maintaining a register of Local Land Charges and we are in the process of developing this statutory service as a new business segment. This will be shown as a separate segment when HM Land Registry runs Local Land Charges as a live service. Revenue costs related to the development of this service are recorded separately and shown in the table above. Capital costs are shown in note 9 under Assets under development.

4 Employee information

4.1 Staff costs

				2016/17				2015/16
	Permanent staff	Apprentices	Others	Total	Permanent staff	Apprentices	Others	Total
	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000
Salaries	130,386	5,433	4,312	140,131	124,291	2,118	7,640	134,049
Social security costs	13,401	109	223	13,733	9,337	169	151	9,657
Other pension costs	24,285	949	387	25,621	23,669	424	374	24,467
Total staff costs	168,072	6,491	4,922	179,485	157,297	2,711	8,165	168,173

4.2 Staff numbers

Average number of persons employed (full-time equivalent) by HM Land Registry during the year was made up as follows.

				2016/17				2015/16
	Permanent staff	Apprentices	Others	Total	Permanent staff	Apprentices	Others	Total
Senior management	7	–	–	7	7	–	1	8
Operational	3,239	256	83	3,578	3,310	99	26	3,435
Administration	257	6	12	275	222	–	8	230
IT	385	4	31	420	344	–	18	362
	3,888	266	126	4,280	3,883	99	53	4,035

4.3 Salary and pension entitlements

The salary and pension entitlements of the Chief Executive and the directors of HM Land Registry are included in the Remuneration and staff report.

4.4 Pensions

The Principal Civil Service Pension Scheme (PCSPS) and the Civil Servant and Other Pension Scheme (CSOPS)–known as ‘alpha’ are unfunded multi-employer defined benefit schemes but HM Land Registry is unable to identify its share of the underlying assets and liabilities. The scheme actuary valued the scheme as at 31 March 2012. You can find details in the resource accounts of the Cabinet Office: Civil Superannuation.

For 2016/17, employers’ contributions of £25.7m were payable to the PCSPS and CSOPS (2015/16: £24.4m) at one of four rates in the range 20% to 24.5% of pensionable earnings, based on salary bands. The scheme actuary reviews employer contributions usually every four years following a full scheme valuation. The contribution rates are set to meet the cost of the benefits accruing during 2016/17 to be paid when the member retires and not the benefits paid during this period to existing pensioners.

Employees can opt to open a partnership pension account, a stakeholder pension with an employer contribution.

HM Land Registry contributions of £181,344 were paid to one or more of the panel of three appointed stakeholder pension providers (2015/16: £146,842).Employer contributions are age-related and range from 3% to 12.5% of pensionable earnings up to 30 September 2015 and from 8% to 14.75% of pensionable earnings from 1 October 2015. HM Land Registry also match employee contributions up to 3% of pensionable earnings. In addition, HM Land Registry contributions of £4,358, 0.5% of pensionable pay were payable to the PCSPS to cover the cost of the future provision of lump sum benefits on death in service or ill health retirement of these employees (2015/16: £3,534).

Any contributions due to the partnership pension providers at the statement of financial position date or contributions pre-paid at that date were not material.

Six individuals retired early during the year on ill-health grounds. The total additional accrued pension liabilities in the year amounted to £13,875 (2015/16: £39,830).

Further information relating to pension arrangements can be found in the Remuneration and staff report and note 1.7.

5. Investment income

	2016/17	2015/16
	£’000	£’000
Interest on bank deposits	1,336	1,774

6. Finance costs

	2016/17	2015/16
	£’000	£’000
Interest on obligations under finance leases	682	702

7. Dividend payable

	2016/17	2015/16
	£’000	£’000
Dividend payable	18,896	13,584

In March 2017 an interim payment of £11.9m was made in respect of the ordinary dividend.

See note 1.21 for the accounting policy relating to dividend payments.

8. Property, plant and equipment

8.1 Cost or valuation

	Property			Plant and equipment
	Freehold		Leasehold	Assets under construction	IT-related assets	Other plant and equipment	Total
	Land	Buildings	Buildings
	£’000	£’000	£’000	£’000	£’000	£’000	£’000
At 1 April 2016	9,085	48,968	12,172	468	68,444	4,413	143,550
Additions	–	–	–	464	2,200	–	2,664
Assets brought into use	–	–	–	(932)	841	–	(91)
Revaluation in year	170	(1,314)	480	–	–	–	(664)
Reclassification of assets	–	1,930	(50)	–	9	–	1,889
Impairment	–	(34)	(139)	–	–	–	(173)
Disposals	–	–	–	–	(428)	–	(428)
Tfr to asset held for sale	(550)	(1,745)	–	–	–	–	(2,295)
At 31 March 2017	8,705	47,805	12,463	–	71,066	4,413	144,452
Accumulated depreciation and impairment
At 1 April 2016	–	16,208	5,215	–	62,140	3,312	86,875
Provided during the year	–	1,490	713	–	2,896	197	5,296
Current cost revaluation	–	(474)	(475)	–	–	–	(949)
Reclassification of assets	–	–	–	–	5	–	5
Disposals	–	–	–	–	(424)	–	(424)
Tfr to asset held for sale	–	56	–	–	–	–	56
At 31 March 2017	–	17,280	5,453	–	64,617	3,509	90,859
Carrying amount at 31 March 2017	8,705	30,525	7,010	–	6,449	904	53,593

8.2 Cost or valuation

	Property			Plant and equipment
	Freehold		Leasehold	Assets under construction	IT-related assets	Other plant and equipment	Total
	Land	Buildings	Buildings
	£’000	£’000	£’000	£’000	£’000	£’000	£’000
At 1 April 2015	13,811	56,342	25,643	–	65,514	4,412	165,722
Additions	–	–	–	770	4,223	22	5,015
Assets brought into use	–	–	–	(302)	302	–	–
Revaluation in year	(3,666)	128	(310)	–	–	–	(3,848)
Reclassification of assets	(335)	(5,665)	(800)	–	(1)	(21)	(6,822)
Impairment	(725)	(1,837)	(2,902)	–	–	–	(5,464)
Disposals	–	–	(9,459)	–	(1,594)	–	(11,053)
At 31 March 2016	9,085	48,968	12,172	468	68,444	4,413	143,550
Accumulated depreciation and impairment
At 1 April 2015	–	15,235	7,665	–	59,442	3,118	85,460
Provided during the year	–	1,497	910	–	3,861	215	6,483
Current cost revaluation	–	(524)	(686)	–	–	–	(1,210)
Reclassification of assets	–	–	–	–	(1)	(21)	(22)
Disposals	–	–	(2,674)	–	(1,162)	–	(3,836)
At 31 March 2016	–	16,208	5,215	–	62,140	3,312	86,874
Carrying amount at 31 March 2016	9,085	32,760	6,957	468	6,304	1,101	56,675

See:

• note 1.8 for details of the property, plant and equipment accounting policy
• note 1.9 for details of the impairment accounting policy
• note 8.4 for details of investment property

The carrying amount of land and buildings at market value is £38.3m.

The net amount of finance leases at the end of the year was £0.0m (2015/16: £0.1m). In the year an impairment of £0.1m was charged to these finance lease assets.

8.3 Non-current assets classified as held for sale

	2016/17	2015/16
	£’000	£’000
At 1 April	–	–
Transfers from non-current assets (note 8)	2,351	–
Revaluation Reserve	3,629	–
Reversal of Impairment	1,002	–
At 31 March	6,982	–

Parkside Court, Telford, Leicester Nursery and Chalfont Drive, Nottingham, southern plot, have been transferred from non-current assets to non-current assets classified as held for sale.

Parkside Court, Telford, is expected to be sold, with HM Land Registry relocating its offices to an alternative location in the Telford area. Leicester Nursery and Chalfont Drive, southern plot, are surplus to HM Land Registry requirements and are due to be transferred to the Homes & Communities Agency for potential housing redevelopment. Under IFRS 8, none of these assets held for sale represents a closure of an operating segment.

8.4 Investment property

	2016/17	2015/16
	£’000	£’000
At 1 April	6,800	–
Reclassification of assets	(1,880)	6,800
At 31 March	4,920	6,800

Investment property comprises a number of properties that are leased to third parties either in part or whole. The leases have different non-cancellable periods with current break option points ranging from six months to eight years. One lease has an annual rent review period, two are five yearly and one has none. Increases are linked to market rent based on comparables. None have an automatic right of renewal. Further information about these leases is included in note 14.2.

The fair value of investment property was determined by external, independent property valuers, having appropriate recognised professional qualifications and recent experience in the location and category of the property being valued. The independent valuers provide the fair value of HM Land Registry’s investment properties annually (see note 1.8 for details of valuers).

The fair value of investment properties are all Level 3 on the fair value hierarchy, because they are valued by reference to valuation techniques using inputs that are not based on observable market data.

There were no transfers between Level 2 and Level 3 fair value disclosures during the year.

Each investment property is measured based upon active market prices adjusted where necessary for any difference in nature, location or condition of each specific property. The active market price is the market rent taking into account any expected or anticipated periods of non-occupancy by a future tenant.

9. Intangible assets

9.1 Cost or valuation

	E-security	Portal	Business Gateway	Assets under development	Software licences	Total
	£’000	£’000	£’000	£’000	£’000	£’000
At 1 April 2016	9,691	15,967	1,766	–	42,647	70,071
Additions	–	–	–	6,834	1,091	7,925
Assets brought into use	–	–	–	–	92	92
Reclassification	–	–	–	–	(9)	9
Disposals	–	–	–	–	(162)	(162)
At 31 March 2017	9,691	15,967	1,766	6,834	43,659	77,917
Amortisation
At 1 April 2016	8,478	13,971	1,547	–	41,705	65,701
Charge for the year	1,213	1,996	219	–	349	3,777
Reclassification of assets	–	–	–	–	(6)	(6)
Disposals	–	–	–		(162)	(162)
At 31 March 2017	9,691	15,967	1,766	–	41,886	69,310
Carrying amount at 31 March 2017	–	–	–	6,834	1,773	8,607

9.2 Cost or valuation

	£’000	£’000	£’000	£’000	£’000	£’000
At 1 April 2015	9,691	15,967	1,766	–	42,120	69,544
Additions	–	–	–	–	543	543
Reclassification	–	–	–	–	2	2
Disposals	–	–	–	–	(18)	(18)
At 31 March 2016	9,691	15,967	1,766	–	42,647	70,071
Amortisation
At 1 April 2015	7,268	11,976	1,326	–	41,384	61,954
Charge for the year	1,210	1,995	221	–	336	3,762
Reclassification of assets	–	–	–	–	3	3
Disposals	–	–	–	–	(18)	(18)
At 31 March 2016	8,478	13,971	1,547	–	41,705	65,701
Carrying amount at 31 March 2016	1,213	1,996	219	–	942	4,370

See note 1.10 for details of the intangible assets accounting policy.

A total of £3.4m of amortisation has been charged to amortisation and depreciation of e-service systems.

The e-security, portal and Business Gateway assets have all been fully depreciated in year.

Assets under development relate to the capitalisation of Local Land Charges costs.

10. Inventories

	2016/17	2015/16
	£’000	£’000
Work-in-progress	4,049	4,745
	4,049	4,745

11. Trade and other receivables

11.1 Current

	2016/17	2015/16
	£’000	£’000
Trade receivables	2,096	2,263
Other receivables	3,946	6,285
Prepayments and accrued income	3,555	4,243
	9,597	12,791

The average credit period taken on provision of services is three days. No interest is charged on the receivables.

An allowance has been made for estimated irrecoverable amounts from the provision of services and this allowance has been determined by reference to past default experience.

11.2 Non-current

	2016/17	2015/16
	£’000	£’000
Other receivables	281	302
Prepayments	1,060	1,135
	1,341	1,437

The carrying amount of trade and other receivables is deemed to be an approximation of their fair value.

12. Cash at bank and in hand

	2016/17	2015/16
	£’000	£’000
Government Banking Service	63,526	46,764
Commercial banks and cash-in-hand	16,488	16,681
National Loans Fund	409,912	380,426
	489,926	443,871

HM Land Registry’s financial assets are bank balances and cash and trade and other receivables, which represent the maximum exposure to credit risk in relation to financial assets. The credit risk is primarily attributable to trade and other receivables and is spread over a large number of customers. The amounts presented in the statement of financial position are net of allowances for doubtful receivables, estimated by management based on past experience and an assessment of the current economic climate. The credit risk on liquid funds is limited because HM Land Registry’s bank balances are in the main held with the Government Banking Service and the National Loans Fund.

13. Trade and other payables

13.1 Current

	2016/17	2015/16
	£’000	£’000
Trade payables	757	1,701
Taxation and social security	3,462	2,823
Other payables	2,891	2,777
Accruals	19,772	20,115
Net obligations under finance leases – buildings	188	165
Net obligations under finance leases – computer equipment	7	119
Deferred income – fees received in advance	22,234	21,183
Dividend payable	6,899	2,981
	56,210	51,864

Trade and other payables principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade purchases is five days. The carrying amount of trade payables is deemed to be an approximation of their fair value.

13.2 Non-current

	2016/17	2015/16
	£’000	£’000
Net obligations under finance leases – buildings	4,736	4,924
Net obligations under finance leases – computer equipment	–	7
	4,736	4,931

14 Obligations under leases

14.1 Finance leases

	Minimum lease payments	Present value of minimum lease payments
	2016/17	2015/16	2016/17	2015/16
	£’000	£’000	£’000	£’000
Amounts payable under finance leases
Within one year	853	966	194	284
In the second to fifth years inclusive	3,384	3,320	1,037	899
After five years	5,922	6,839	3,699	4,032
	10,159	11,125	4,930	5,215
Less future finance charges	(5,228)	(5,910)
Present value of lease obligations	4,931	5,215
Less amount due for settlement within 12 months (shown under current liabilities)			(194)	(284)
Amount due for settlement after 12 months			4,736	4,931

14.2 Operating leases

Leases as lessee

	2016/17	2015/16
	£’000	£’000
Minimum lease payments under operating leases recognised in the year	1,021	1,426
Income from tenants	–	(65)
	1,021	1,361

At the statement of financial position date HM Land Registry had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

	2016/17	2015/16
	£’000	£’000
Within one year	6	–
In the second to fifth years inclusive	283	–
After five years	1,380	1,021
Income due from tenants	–	–
	1,669	1,021

Operating lease payments represent rentals payable by HM Land Registry for land and buildings, including the Nottingham and Peterborough local offices.

Leases as lessor

HM Land Registry leases out investment properties (see note 8.4).

At 31 March 2017 the future minimum lease payments under non-cancellable leases are receivable as follows: operating leases, which fall due as follows:

	2016/17	2015/16
	£’000	£’000
Within one year	–	–
In the second to fifth years inclusive	28	18
After five years	353	349
	381	367

During the year investment property rental income of £0.37m was included within miscellaneous income (see note 3.1). This follows the treatment of previous years when the properties were let under memorandum of terms of occupation (MOTO) to other public sector organisations.

The investment properties are now let on commercial terms. As this is not part of HM Land Registry’s core business, and the values are immaterial, the rental income continues to be treated as miscellaneous income and netted off expenditure.

15. Loans

HM Land Registry had no loans during the financial year ending 31 March 2017.

16. Provisions for liabilities and charges

16.1 Early release schemes and other

	Early retirement	Early severance	Progression pay buy out	Other	Total	Early retirement	Early severance	Progression pay buy out	Other	Total
					2016/17					2015/16
	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000
At 1 April	13,683	–	–	1,849	15,532	18,005	2,272	845	361	21,483
Revaluation of provision	270	–	–	200	470	228	–	–	1,848	2,076
Provision utilised in the year	(3,966)	–	–	(607)	(4,573)	(4,550)	(2,242)	(831)	(86)	(7,709)
Provision written back unused	–	–	–	(727)	(727)	–	(30)	(14)	(274)	(318)
At 31 March	9,987	–	–	715	10,702	13,683	–	–	1,849	15,532
Included in current liabilities					6,393					8,116
Included in non-current liabilities					4,309					7,416
					10,702					15,532

The early retirement provision (ERP) gives retirement benefits to certain employees. These benefits conform to the rules of the Principal Civil Service Pension Scheme (PCSPS). HM Land Registry bears the cost of these benefits until the normal retirement age of the employees retired under the scheme. Total payments in the year amounted to £4m in 2016/17, of which £4m had been provided for within the ERP provision in the 2016/17 accounts. The total pension liability up to normal retiring age in respect of each employee is charged to the statement of comprehensive income in the year in which the employee takes early retirement and a provision for future pension payments is created. Pension and related benefit payments to the retired employee until normal retiring age are then charged annually against the provision.

IAS 37 Provisions, contingent liabilities and contingent assets requires that: “Where the time value of money is material, the amount of a provision should be the present value of the expenditures expected to be required to settle the obligation”.The discount factor applied to the early retirement provision over 10 years is 2%. The impact of unwinding of the discount in 2016/17 was £0.2m (2015/16: £0.2m).

16.2 Indemnity Fund

The Land Registration Act 2002 places a legal liability on HM Land Registry to indemnify for losses resulting from errors or omissions on the register of title. This includes errors resulting from frauds perpetrated by third parties. As a statutory insurer of titles in England and Wales, indemnity payments are not confined to mistakes made by HM Land Registry. HM Land Registry provides for these claims under its Indemnity Fund both for known claims and claims incurred but not reported (IBNR).

	Outstanding provision	IBNR provision	2016/17 Total	Outstanding provision	IBNR provision	2015/16 Total
	£’000	£’000	£’000	£’000	£’000	£’000
At 1 April	10,500	74,300	84,800	8,400	65,200	73,600
Provided in the year	6,738	–	6,738	8,135	–	8,135
Provisions utilised in the year	(6,738)	–	(6,738)	(8,135)	–	(8,135)
Claims revaluation	(2,500)	–	(2,500)	2,100	–	2,100
IBNR revaluation	–	2,800	2,800	–	9,100	9,100
At 31 March	8,000	77,100	85,100	10,500	74,300	84,800

Following the actuarial review by Lane Clark & Peacock LLP (LCP), the fund in respect of reported but not settled claims (Outstanding provision) has decreased in 2016/17 by £2.5m (2015/16: £2.1m increase). The provision for claims incurred but not reported (IBNR provision) has increased in 2016/17 by £2.8m (2015/16: £9.1m increase).

The reason for the £2.5m decrease in the outstanding claims provision was due to a movement in case estimates.

The main reasons for the £2.8m IBNR provision movement were: a change in the Treasury prescribed discount rates (increase – £2.1m); and changes to underlying projection assumptions including inflation (increase – £0.5m).

The Outstanding provision for claims received but not yet settled is an estimate and as it involves projecting future payments, the final amounts paid on these claims is uncertain. The main uncertainties are:

• the proportion of outstanding claims that will ultimately be paid
• the value of the payments made
• the effect of any legal judgements

The presence of large outstanding claims can add significantly to this uncertainty.

The IBNR provision is greater and inherently more uncertain than the Outstanding provision. Unlike the Outstanding provision, which is based on existing claims information, the IBNR provision covers potential claims that may be made as a result of errors that have already been introduced into the register as a result of day-to-day update activity (either through fraud and forgery or administrative error). The main uncertainties within the IBNR provision are:

• the number of unreported errors currently within the Register is unknown
• at what point in the future these errors will be discovered and claims made, and
• how much the cost of the corresponding claims will be

Claims can take many years to be reported and subsequently settled.

In estimating the IBNR provision, the actuaries project the number and timing of future claim reports and average claim sizes, using assumptions about claims settlement patterns, the expected effects of any known legal judgements and claims inflation. The resulting projected future claims cash flows are then discounted to a net present value at the accounting date using Treasury prescribed discount rates.

The assumptions used in the projections are based on analysis of historical claims data, allowance for recent trends and consideration of the potential effects of underlying factors such as the volume of HM Land Registry activity and numbers of registered titles. We provide input to the actuaries on these assumptions, based on the knowledge of the legal team that handles the claims.

Uncertainty in the provisions – sensitivity analysis

The value of the Indemnity Fund provisions are subject to future uncertain final settlement value, both for known claims and claims incurred but not reported (IBNR). The uncertainty in value of outstanding claims could lead to a variation in the proposed provision. A range of scenarios have been considered in respect of the assumptions on:

• the number of claims that will be received

• the average claim size

• the percentage of claim values paid on settlement (small and large)

• the proportion of claims that are ‘large’ (Outstanding and IBNR)

• the rate of inflation and expected discount rates

These scenarios have been considered in isolation and combination as shown in the tables below.

On the basis of this analysis work and in respect of the adverse scenarios:

• it is reasonably foreseeable that the value of liabilities could be about £0.6m (Outstanding provision) or £8m (IBNR provision) greater than expected

• it is unlikely, but possible, that the value of the liabilities could be about £1.5m (Outstanding provision) or £16m (IBNR provision) greater than expected

In respect of the favourable scenarios:

• it is reasonably foreseeable that the value of the liabilities could be about £7m (IBNR) lower than expected

By their nature, these figures are not precise and they can only illustrate the magnitude of uncertainty involved.

We have also considered extreme scenarios, where the value of liabilities is as much as £2.5m (Outstanding provision) or £55m (IBNR provision) greater than expected. The long-term open-ended nature of statutory indemnity means that these figures do not represent the maximum possible liability. However, we believe the likelihood of such scenarios to be small.

The degree of uncertainty at future accounting dates may be different from that illustrated here. This could be for a number of reasons, for example because the profile of claims has changed or because the outlook on future claim trends has changed.

At future accounting dates, it should be expected that:

• the outstanding provision will fluctuate depending on the volume of claims reported at the time, especially large claims
• all else being equal the IBNR provision will increase over time because of inflationary forces both the Outstanding provision and the IBNR provision will be particularly sensitive to the number and value of fraud and forgery claims as these are the most financially significant category of claims

The Indemnity Fund provision of £85.1m is our best estimate. However, the value of the Indemnity Fund provisions are subject to future uncertainty.

Sensitivity analysis

	Outstanding provision £m	2016/17 percentage movement increase %
Provided in these accounts (see note 16.2 – reasonably foreseeable value)	8	–
Impact of scenarios
Adverse but foreseeable scenarios
(1) Large claims assumed payment percentage increased from 60% to 70%	8.4	4.9
(2) Attritional claims paid are 5% greater than expected	8.6	7.8
(3) Treasury prescribed real discount rate reduces further by 0.5% pa	8.1	0.7
Possible but unlikely scenarios
(2) + (3)	8.7	8.5
(4) Large claims assumed payment increased from 60% to 100%	9.6	19.6
Extreme scenarios
(2) + (3) + (4)	10.3	28.2

	IBNR provision £m	2016/17 percentage movement increase %
Provided in these accounts (see note 16.2 – reasonably foreseeable value)	77.1	–
Impact of scenarios
Favourable but foreseeable scenarios
(1) Decrease in projected number of attritional IBNR claims (-10%)	73.2	-5.1
(2) Decrease in assumed attritional average claim size (-10%)	73.2	-5.1
(3) Decrease in assumed large average claim size (from £680k to £580k)	71.6	-7.1
(4) Decrease in projected number of large claims (from 6.5 to 5.5 per incident year)	71.8	-6.9
(5) Decrease in assumed future claims inflation (-1% pa)	70.0	-9.2
(6) Prescribed real discount rate on cashflows beyond 10 years increased by 1% pa	71.8	-6.9
Adverse but foreseeable scenarios
(1) Increase in projected number of attritional IBNR claims (+10%)	81.0	5.1
(2) Increase in assumed attritional average claim size (+10%)	81.0	5.1
(3) Increase in assumed large average claim size (from 680k to 780k)	82.6	7.1
(4) Increase in projected number of large claims (from 6.5 to 7.5 per incident year)	82.4	6.9
(5) Increase in assumed future claims inflation (+1%)	85.6	11.0
(6) Prescribed real discount rate on cash flows beyond 10 years reduced by a further 1% pa	84.0	9.0
Possible but unlikely scenarios
(1) + (2)	85.3	10.6
(1) + (5)	89.9	16.6
(7) Increase in assumed large average claim size (from £680k to £980k)	93.5	21.3
Extreme scenarios
(1) + (2) + (4) + (5) + (6) + (7)	133.9	73.7

17. Capital commitments

	2016/17	2015/16
	£’000	£’000
Capital expenditure	2,670	–
Contracted for but not provided in these accounts	2,670	–

• £2.5m relates to commitments for development of Local Land Charges for HM Land Registry.

18. Contingent liabilities

18.1 Indemnity

The Land Registration Act 2002 places a legal liability on HM Land Registry to indemnify for losses resulting from errors or omissions on the register of title. This includes errors resulting from frauds perpetrated by third parties. As a statutory insurer of titles in England and Wales, indemnity payments are not confined to mistakes made by HM Land Registry. HM Land Registry provides for these claims under its Indemnity Fund both for known claims and claims incurred but not reported (IBNR) (see note 16.2) based on the assumed likelihood that claims will be successful.

As at 31 March 2016, the value of pending indemnity claims made to HM Land Registry is shown below. Included in this total is an amount of £8m provided in the Indemnity Fund provision (see note 16.2).

Errors or omissions

	2016/17	2015/16
	£’000	£’000
Mistakes	7,290	10,337
Fraud and forgery	9,387	11,769
	16,677	22,106

19. Notes to the cash flow statement

19.1 Reconciliation of operating surplus to net cash inflow from operating activities

	2016/17	2015/16
	£’000	£’000
Operating surplus	69,430	41,188
Restructure and reorganisation costs	(425)	(1,458)
Local Land Charges revenue costs	(1,592)	(2,265)
Depreciation of property, plant and equipment	4,347	5,229
Amortisation of intangible assets	349	338
Impairment in value of non-current assets	(584)	6,466
Decrease in provisions	(4,831)	(5,952)
Decrease in inventories	696	(2,256)
(Increase)/decrease in receivables	2,652	(246)
Increase in payables	724	3,429
Increase in Indemnity Fund	300	11,200
Net cash inflow from operating activities	71,066	55,673

19.2 Reconciliation of net cash flow to movement in net cash

	2016/17	2015/16
	£’000	£’000
Net cash at start of period	443,871	397,752
Increase/(decrease) in cash in the period	46,055	46,119
Net cash at end of period	489,926	443,871

20. Related party disclosures

In accordance with IAS 24 Related party disclosures, as interpreted by the FReM, the following information is provided on related party transactions.

HM Land Registry is an executive agency, trading fund and government department. During the year it has had a number of material transactions with other government departments and other central government bodies. Most of these transactions have been with Ordnance Survey, HM Courts & Tribunals Service and the Department for Communities and Local Government.

None of the board members, or members of the key management staff or other related parties, have had any influence over any material transactions undertaken by HM Land Registry, except as mentioned below.

Steve Calder, Local Land Charges Programme Director, joined HM Land Registry on 1 November 2015 from PA Consulting where he was a partner. HM Land Registry currently has a contract with PA Consulting as planning and delivery partner on the Local Land Charges programme. The potential conflict of interest disclosed by the Local Land Charges Programme Director is, and has been from the outset, managed through strict controls within the programme itself and these are also articulated as limitations on the authority delegated within his letter of delegation.

Craig Lester, who joined the LRB as Assistant Chief Executive on 11 January 2016, was a non-executive director at Ordnance Survey prior to taking up his position at HM Land Registry. The contract for the provision of survey and data services with Ordnance Survey began in 2013 and will run until 2023. He was not a director at Ordnance Survey at the onset of this contract and therefore was not in a position to influence contract negotiations. He left HM Land Registry on 31 October 2016.

21. Corporate financial targets

	2016/17		2015/16
	Actual	Target	Actual	Target
	%	%	%	%
Percentage return on average capital employed	15.1	4.6	8.6	3.6

22. Financial instruments

International Financial Reporting Standard 7 Financial instruments: disclosures requires disclosure of the role financial instruments have had during the period in creating or changing the risks an entity faces in undertaking its activities.

HM Land Registry has no borrowings and relies primarily on income from statutory activities and is therefore not exposed to liquidity risks. Material deposits are held with the Government Banking Service and the National Loans Fund.

As all material assets and liabilities are denominated in sterling HM Land Registry is not exposed to currency risk.

23. Events after the reporting period

In accordance with the requirements of IAS 10 Events after the reporting period, events after the statement of financial position date are considered up to the date on which the accounts are authorised for issue. This is interpreted as the date of the certificate and report of the Comptroller and Auditor General.

Non-adjusting event after the reporting period

There are no non-adjusting events after the reporting period.