Statutory Background
The Scottish Tourist Board was established under the Development of Tourism Act 1969. The Board's principal functions under the 1969 Act are to encourage British people to take holidays in Scotland, to encourage the provision and improvement of tourist facilities and amenities in Scotland, and to advise Government and public bodies on matters relating to tourism in Scotland. The Tourism (Overseas Promotion) (Scotland) Act 1984 provides the authority for the Board to market Scotland overseas. The Scottish Tourist Board now trades under the name of VisitScotland.

Format of Accounts
The accounts and supplementary notes have been prepared in accordance with directions made by the Scottish Ministers in accordance with Section 6(1) of the Development of Tourism Act 1969. The most recent accounts direction is appended to the accounts.

Sources of Finance
During the year to 31 March 2002 the Board was mainly financed by the Scottish Ministers through the Scottish Executive Enterprise and Lifelong Learning Department. Provision is made in the supply estimates for Grant-in-Aid to the Board, covering some 94% of its planned current activities. Notwithstanding this, the Board makes every effort to maximise its income from other sources, principally commercial activities and joint ventures with the trade, public and private sector interests.

Results
The Board's Income and Expenditure Account for the year showed a surplus of £1,145,000 (last year surplus £1,049,000). An explanation for the surplus is included in the Review of Activities below.

The Board received £40,659,000 Grant-in-Aid from the Scottish Executive this year (last year £25,609,000). This figure includes £40,483,000 Grant-in-Aid, and capital grant of £176,000 received as deferred income (last year £408,000).

The Income and Expenditure relating to revenue-earning activities is fully detailed in note 4 of the accounts. During the year the level of assistance given by way of general purpose grants to Area Tourist Boards was £3,494,000 (last year £3,494,000).

Capital expenditure for the year to 31 March 2002 amounted to £176,000 (last year £408,000). This was expended principally on computer equipment and software for the Board including visitscotland.com, the Board's e-business initiative.

At 31 March 2002 the Balance Sheet shows cash at bank and in-hand of £5,340,000, net current assets of £2,275,000, and total net assets of £2,620,000. The relatively high level of cash at bank this year is due to the large value of invoices received in April 2002 relating primarily to marketing activity during the Spring campaign in March.

Payment of Creditors
The Board operates a prompt payment policy in line with the Better Payment Practice Code issued by the Better Payment Practice Group. The target for payment of invoices to creditors is within 30 days, and the Board achieved a success rate of 95% during the year.

Review of Activities
Following the outbreak of Foot and Mouth disease in Scotland in March 2001 the Board received additional funding during the year to assist with the recovery of the industry. Of the total of £11,900,000 additional Foot and Mouth funding, £10,510,000 was used in additional marketing activity, £850,000 was paid to Dumfries and Galloway Tourist Board, and £240,000 to the Scottish Borders Tourist Board. A further £300,000 was invested in tourism related environmental initiatives in these areas.

The restructuring recommended by the PricewaterhouseCoopers management review last year is nearing completion, with a new management team in place. The main cost associated with this process is the sum of £919,000 paid out in compensation to staff made redundant.

During the year the Board continued to invest in developing the major information technology initiative, visitscotland.com (previously known as Project Ossian), for the tourism industry. The total expenditure on visitscotland.com during the year was £1,528,000 including development, equipment and staff costs. A public private partnership joint venture company to promote and develop e-Business was established in May 2002.

As completion of the joint venture fell after the financial year end, the additional grant received for the Board's investment in the new company during the year of £1,250,000 will be carried forward to the new financial year. The surplus in the Board's Income and Expenditure Account of £1,145,000 relates mainly to this carry forward.

Board Members
Board Members who served during the year were:
Peter Lederer OBE (appointed Chairman 2 April 2001)
Donald Anderson
Pat Buchanan
Michael Cantlay
Donal Dowds
Brian Houston (appointed 12 June 2001)
Sheena Kitchin

Employee Involvement
The Scottish Tourist Board works in partnership with staff and the Public and Commercial Services Union. Regular formal and informal meetings take place on matters of mutual interest.

The Board is committed to the continued development of equal opportunities, and prohibits any discrimination over gender, race or national origin, religious belief, sexual orientation, disability or age. We take a proactive approach towards the recruitment, induction, training and development of employees.

Opportunities for employment, development and progression are based solely on ability, qualifications, skills and experience.

Auditors
The accounts of the Board are audited by an auditor appointed by the Auditor General for Scotland in accordance with Section 6(4) of the Development of Tourism Act 1969.

Philip Riddle
Chief Executive
Scottish Tourist Board
21 June 2002