Occupancy expenditure was £2.1m (2020/21: £2.3m), a decrease of 8.7% from the previous year. Last year included a comprehensive update to the valuation of the dilapidation provision. This year there has been a slight reduction in value to account for the increase in the rate of inflation.
Depreciation and amortisation costs for the year were £0.9m (2020/21: £1.0m), which is a slight reduction compared with the previous year. We expect costs to increase in this area with a number of development projects reaching completion in 2022, including the website and other system and IT infrastructure projects.
At the end of the 2021/22 financial year, the value of investments had increased by a further £0.48m, net of costs (2020/21: £0.74m increase). This followed the original phased investment of £15m that started in 2020. This has resulted in a current rate of return for the period of 3%, which is down 2% when compared to last year but remains in line with the target rate. The favourable movement is mainly attributed to the performance of equities. There are a wide range of external factors that continue to affect the market and cause a lot of volatility around returns. More than a third of our portfolio is made up of equities, and overall the investment continues to perform well.
Overall, the actual result for the financial year was a surplus position of £2.5m (2020/21: £0.9m). The original budget expectation agreed by our Council for the year was a surplus of £0.8m.
The higher-than-expected surplus is largely due to the:
continued impact of the pandemic
adjustments to timelines after reprioritising our plans, and
delays to recruitment with the challenges presented by the very competitive market
As we move forward to the next year and beyond, we expect expenditure to increase as our activities go back to expected levels and we enter the implementation phase of work on a number of key priorities.
Development will continue against the strategic plan and vision. We will continue to invest in updating our technology and systems, and we will continue to embed the new ways of working. This will include appropriately resourcing work and bringing in people with new skill sets to support the changing scale and scope of pharmacy regulation.