MHA's Financial Report 2016/17 by Monmouthshire Housing Association

Monmouthshire Housing Association Limited

Annual Report & Financial Statements Reporting Period 31 March 2017 Welsh Government registration number: L144 Co-operative and Community Benefit Societies Act 2014 number: 30087R

Contents 4 8 14 38 40 44 48 50 54 56 60

Members, Executives & Advisors

Strategic Report

Board Report Statement of Board Membersâ&#x20AC;&#x2122; Responsibilities

Statement of Internal Control

Independent Auditorâ&#x20AC;&#x2122;s Report

Statement of Total Comprehensive Income

Statement of Financial Position

Statement of Changes in Reserves Consolidated Statement of Cash Flows

Notes to the Financial Statements

Monmouthshire Housing Association

Please contact the Corporate Services Team on 01495 761104 or corporateservices@ monmouthshirehousing.co.uk if you require this document in PDF, large print, another language, braille or audio format.

Annual Accounts 2016-17

Members, Executives & Advisors

Monmouthshire Housing Association

Annual Accounts 2016-17

The following people served on the Board during the year: Tenant Members

Ken Bucknall

Gary Witcombe

Sandra Flanagan

John Barrow

Sue White

Alan Wintle

Council Members

Peter Clarke

Ann Webb

Monmouthshire Housing Association

Independent Members

Andrew Martyn- Barry Gallagher Johns (Chair)

Lynnette Glover

Andy Jones

David Morris Director of Housing & Communities

Karen Tarbox Director of Property Services

Executive Officers

John Keegan Chief Executive

Steve Higginson Director of Resources & Deputy Chief Executive

Registered Office Nant Y Pia House, Mamhilad Technology Park, Mamhilad, Monmouthshire, NP4 0JJ

Independent Auditor Mazars LLP, 45 Church Street, Birmingham, B3 2RT

Principal Solicitors Trowers and Hamlin, 3 Bunhill Row, London, EC1Y 8YZ

Principal Bankers Barclays Bank Plc, 57 Frogmore Street, Abergavenny, NP7 5AT

Annual Accounts 2016-17

Strategic Report The Monmouthshire Housing Group consists of the parent, Monmouthshire Housing Association Limited, which is an RSL regulated by the Welsh Government, and registered as a charitable social landlord under the Co-operative and Community Benefit Societies Act 2014, and Capsel Limited which is a non-charitable subsidiary incorporated under the Companies Act 2006.

Monmouthshire Housing Association

Annual Accounts 2016-17

Vision & Objectives The significant development of the MHA business and its progress towards completion of its objectives are outlined in support of its vision for 2022 which is:

By 2022 MHA will be the top performing social enterprise in Wales providing quality homes and services, transforming people’s lives and giving them the confidence and support to realise their ambitions. We will create an environment where people can have a brilliant quality of life, in areas where they aspire to live and work.

To achieve the vision we have agreed the following objectives which can be summarised by the acronym LEEP, Landlord, Economic, Environmental and People targets.

Landlord

Economic

Environmental People

As a housing association, we will seek to optimise every opportunity to develop the types of homes and communities where people want to live and maximise the occupancy of our properties. We will directly support 600 tenants a year in order to improve their quality of life. By 2022, we will build 600 homes using our own resources and develop a form of accommodation specifically for older persons or downsizing. We aim to be in the upper quartile across all performance indicators.

By 2022, we aim to increase our turnover from diversified activities to £4m and increase the workforce to 270 employees. We will also endeavour to achieve efficiencies of 10% by maximising our use of technology and ensuring that the principles of value for money are embedded throughout the Group. We seek to maintain our financial strength, achieve the maximum score from the regulator and also covenant compliance from our funders.

We will seek to reduce our CO2 footprint by an additional 5% from 2017. We will target our vehicles in order to further reduce fuel consumption by 10% and introduce 2 electric pool cars. We will spend a further £2m improving the external environment on all estates in order to increase tenants’ satisfaction with their neighbourhoods.

Monmouthshire Housing Association

By 2022, we will create 200 work placements in order to help people into work, including 127 of our tenants. In addition, the Association will target training its own workforce and tenants by spending £1m on transforming lives and ambitions. We will embed a “Don’t Walk By” policy to support the health, wellbeing and safety of tenants.

New tenants Mr & Mrs Franklin moving into their new home at Gwaun-y-court, Caldicot.

Annual Accounts 2016-17

Finances & the Business Model

Future Prospects

The Association has an existing loan facility with Barclays Bank of £45m, of which £19.4m has been drawn (43% of the facility). This has helped to fund the achievement of the Welsh Housing Quality Standard and contribute to the funding of our development programme.

The Association’s register of key risks is reviewed annually by the Board and quarterly by the Audit Committee. In addition it is included in all Board papers in order to provide a context for discussions. At present, the main items of risk have been identified as welfare reform, the availability of land, the Supporting People contract, the redevelopment of older persons’ accommodation and future possible changes to government rent guidelines and policy.

Risk and uncertainty

The Association will continue to invest heavily in its planned improvements and development programme and a budget of £23m has been earmarked for the financial year to March 2018. The current business plan was approved by Barclays in the summer of 2017 and shows the Association’s ability to work within its peak debt limit. Cash flow continues to be strong and the Association managed to deliver its planned maintenance and development programmes without additional borrowing in the year to March 2017. Cash balances increased by £567k to £1.8m. Our gearing remains strong at 45% which is well below the Welsh Housing Association average of 68% (as at March 2016). The Association has recently acquired an upgraded version of its financial forecasting model. This enables the organisation to stress test the finances by changing single or multiple variables. This has been demonstrated to the Board and a number of scenarios discussed and modelled.

Analysis of Figures & Indicators In the main body of the Annual Report is a table of the key performance indicators which are discussed by the Board. These show strong performance in the management of rent arrears at 1.5% of rent receivable (target: 2.2%) and rent collection 101% of rent (target: 99%). There have been some improvements in the area of void properties where the Association lost 0.55% of rent receivable (target: 1.2%) and took on average 22 days in quarter 4 to repair and relet a routine void property rather than the 25 days which was the target. In terms of finance, the Association continues to perform well with an increase in reserves from £15.8m to £17m.

Welsh Government continue to provide an annual dowry of £2.6m which is vital to the funding of our planned repairs programme and the financial health of the organisation.

Performance in the Year The Association’s core turnover in the year increased by 3.6% compared to March 2016 (excluding property sales) and its underlying profitability remains strong. The rent increase was 2.6% in accordance with the guidelines of Welsh Government and the bad debts are less than 0.5%.

Monmouthshire Housing Association

Governance The regulatory opinion in September 2016 stated that “MHA has strong governance arrangements. The management is suitably experienced and works collaboratively and well with the Board. Board Members clearly understand their roles and responsibility, providing robust challenge and scrutiny. The Group can show high level satisfaction with landlord services.” Internal audit reports on Governance and Internal Regulation produced the conclusion that the Board could take substantial assurance from existing governance arrangements.

The Future The Association has a significant development programme scheduled for the next five years along with the further growth of our trading subsidiary (Capsel Limited) which will enable the undertaking of commercial works for the benefit of the Association. This will help MHA to combat the impact of the major welfare reforms being introduced. Board Members continue to monitor the impact of welfare reforms on the Association and the actions we have taken thus far to mitigate the impact of the changes being introduced.

We continue to benchmark our services against other RSLs in Wales and England and will seek to identify efficiency opportunities from any sector to bring into MHA’s own work processes. We have produced a Corporate Plan covering the next five years. Within that are a number of tasks we have outlined to achieve our vision by 2022.

The Strategic Report was approved by the Board on 20th September 2017.

............................................................................................

Signed by:

Steve Higginson

Position:

Deputy Chief Executive

The Association continues to review its rents and service charges and will be consulting with tenants and other stakeholders in 2017/18. Capsel Limited’s plan for the next three years is to focus on its core work streams to increase turnover and return to profitability. The Association and its trading subsidiary will continue to strive for excellence and will seek to achieve accreditations which will support our commitment to providing good quality, efficient services. The redevelopment of sheltered schemes has been a top priority in recent years. The Trevor Bowen Court development in Monmouth began in 2013/14 and was completed in the 2015/16 financial year. This development set the standard for subsequent MHA schemes at Brookside in Caldicot and St Cadocs in Raglan.

Annual Accounts 2016-17

Board Report This report aims to demonstrate the commitment and work which the Association has undertaken in order to move closer to achieving our vision through our objectives (LEEP). A summary has been prepared by each department to highlight this.

Monmouthshire Housing Association

Annual Accounts 2016-17

Planned Maintenance Since the completion of our Welsh Housing Quality Standard Programme in 2012/13, the focus on planned maintenance work has changed from internal work to improving the quality and appearance of the external condition of our properties. During the year our Building Services team and contractors carried out maintenance to over 700 homes which included: • Decoration to 541 properties including the communal areas, 216 flats completed by our subsidiary company Capsel; • Upgrade work to paths, gates, hard-standings, fencing and boundary walls to 319 properties; • Replacement roof covering to 156 homes; and • Installation of Photo Voltaic (PV) panels on 19 properties.

The second phase has also commenced to upgrade the internals; including new kitchens, bathrooms, electrical rewire, new radiators, internal doors, flooring and decoration.

The team also built extensions on another two existing bungalows at Rockfield Avenue, Monmouth.

Our own Building Services department has continued to upgrade and refurbish the internals of properties mainly where tenants have previously opted out of the work but have now either changed their minds or vacated the property. During the year over 120 properties in total were upgraded and the work included the refurbishment of 63 kitchens, 40 bathrooms and 49 wet rooms.

We carried out a garage/car port programme which included: • The demolition of 18 car ports, deemed unusable, to provide 13 new car ports and an additional car parking area; and • The demolition and renewal of 114 dilapidated garages. In the year we commenced the first phase of the refurbishment works to 6 blocks of flats (70 flats in total) in Oakley Close and Oakley Way, Caldicot. The works include the renewal of roof coverings, demolition of redundant chimneys, replacement wall-ties, concrete repairs, external wall insulation, replacement windows and the refurbishment of the balcony areas.

An architect was appointed to design the final appearance of the refurbishment scheme so that it would complement the proposed new development due later this year in Oakley Way. The residents were consulted and ultimately chose the final design for their particular block. The project was procured on Sell2Wales and SERS Energy Solutions Group (a Welsh principle contractor) was successfully appointed. Works commenced in November 2016 and were completed June 2017.

We are also consulting on the third phase to improve and re-design the external areas including storage sheds, garden boundaries, hard and soft landscaping.

In addition, our heating engineers replaced over 90 central heating boilers together with associated central heating upgrades. During the year, we invited tenants having internal work carried out on their homes to complete a “Your Views” tenants satisfaction survey form. The average satisfaction rating was 99% against a target of 98%.

Monmouthshire Housing Association

The following are some of the comments received on the “Your Views” forms:

“All the work people were pleasant, helpful, thoughtful and precise. A fabulous job with no mess. I am overjoyed. I keep going in to look at it. It exceeded my expectations. Thank you all very, very much. One happy lady.” Caldicot “I would like to say that the team of men who were working in my home were respectful of both myself and my home, the work that they did was finished to a high standard thank you so much. The wet room will make a difference to my quality of life.” Abergavenny “The wet room has been a big improvement to the quality of my life and I am very happy with the overall work. Very polite workers. Thank you.” Magor

Annual Accounts 2016-17

WHQS Environmental

Building Services Report

St David’s Road

In 2016 the internal work force has changed its title to Building Services. This reflects the wider scope of work now undertaken and is a positive move away from the traditional DLO/DSO heading associated with local authorities.

The environmental work is continuing as we move to St David’s Road in Abergavenny. We have concentrated on the 4 communal garden areas and will also be working on the front of St David’s Close. We started at the rear of Block A which will be ready to use in time for the summer 2017. We have completely transformed this area which was originally an unsightly concrete jungle, with limited access, to a communal garden that incorporates a patio, grass and level areas that all tenants can access. Consultation with the residents highlighted the need to make the areas more user friendly and also safety concerns from our tenants in allowing children in the rear communal area. Planting areas have also been incorporated.

St David’s, Abergavenny - During St David’s, Abergavenny - After

In the financial year, two new build semidetached houses in Shirenewton were completed. This was a significant contract for the team and provided a valuable learning experience which will assist with future tenders and contracts. A successful joint tender was submitted for the construction of 2 bungalows with disabled adaptations on a former garage site at Poplars Close, Abergavenny. Capsel is the principal contractor and Building Services are providing the project management and some of the work packages using MHA trade operatives. All of the groundworks, foundations and main structure have been subcontracted to specialist companies with Building Services’ own staff being programmed to carry out work on the roof covering and the internal finishes, including all of the mechanical and electrical installations. The contract sum is £522,000 and work commenced in November 2016 and was completed in the summer of 2017. The efficient turnaround of void properties was again a priority throughout the year. The enhanced “gold” standard was rolled out to all voids from April 2016, following a trial period. The Building Services team had to adapt quickly to the increased workload. After some initial teething problems performance has consistently improved and the average turnaround time has now reduced to 22 days (the target is 25 days) for a standard void. The average cost for completing the work to a standard void is currently £3,159 but there were also a number of properties requiring a substantial amount of work costing over £10,000 to bring them up to a lettable standard, mainly due to tenant neglect or damage. The average cost is £3,474 for 256 voids in the year (2016: £3,910). Building Services have been working closely with the Housing and Communities team to create a smooth process which efficiently manages the voids and this

Monmouthshire Housing Association

has contributed to the improved performance throughout the year. Responsive repairs continue as a core work stream for the department and performance is closely monitored. Completing the job right first time is a key indicator and the team are currently achieving the target of 94%. Tenants are also keen to agree an appointment slot for a job to be carried out and over 95% are being both appointed and met. The total number of responsive repairs (including heating) completed in the financial year was 13,748, which represents a 3% reduction on the previous year. The average cost per repair was £132, a reduction of 12% on the previous year. Gas safety is a top priority to ensure the safety of our tenants and their family, visitors, neighbours and the general public. The team worked very hard to maintain performance on the annual gas servicing and achieved a rate of properties with a current gas safety certificate of 100% for the last 3 quarters. The management of the disabled adaptation programme was transferred over from Monmouthshire County Council in April 2016 and Building Services now works directly with the occupational therapists to provide a targeted service to the tenants of MHA. The work includes the installation of level access shower rooms, stair lifts and access adaptations. A further work stream under Safety at Home provides minor adaptations such as grab rails. This service was very popular throughout the year with a total of 91 jobs completed.

The Building Services element of the planned maintenance and improvement programme was again busy throughout the year, including the following: • New build extensions constructed to 2 bungalows in Rockfield Avenue, Monmouth providing significantly improved kitchen and bathroom facilities for the tenants; • 39 kitchen and 48 bathroom refurbishments to meet the Welsh Housing Quality Standard; • Re-roofing programme on 42 individual properties throughout the county; • The replacement of 145 boilers including both gas and oil-fired units; and • The completion of 596 periodic electrical installation tests as part of a 5 year revolving programme. Work was also completed for external clients including Monmouthshire County Council, Torfaen County Borough Council, Bristol Charities, Abbeyfields Society Wales and Charter Housing Association.

Annual Accounts 2016-17

Development

Old School Close, Caldicot

The feasibility, pre-contract and construction work for another five schemes, which will deliver a total of 63 new homes, commenced during 2016/17, with target completion dates for 2017/18.

The former West End School site was converted into 8 flats, 8 houses and 1 bungalow.

The projects were:

Cae Mawr and Green Lane, Caldicot

• Old Hereford Road and Park Crescent, Abergavenny – 9 x 2 bed flats, 3 x1 bed elderly flats, 5 x 1 bed specially adapted flats and 6 x 1bed 2 person flats. • Poplars Close, Abergavenny – 2 disabled bungalows • St Cadocs Court, Raglan – 7 x 2 bed houses and 3 x 3 bed houses. • Ty Freeman, Gwehelog – 2 x 2 bed houses. • Brookside, Caldicot – 2 x 2 bed 3 person bungalow, 4 x 1 bed 2 person flat, 6 x 3 bed 5 person houses, 13 x 2 bed 4 person houses. In addition MHA has secured a section 106 agreement at Wonastow Road, Monmouth, which will deliver an additional 102 homes during the period 2017/18 – 2019/20.

Mynydd Bach, Shirenewton 2 x 2 bed houses. The former garage site was converted into 4 flats and 1 specially adapted bungalow.

Green Lane - Before Green Lane - After

Exploratory and feasibility work for other sites has also been carried out in 2016/17 and some of these will come forward for development in 2017/18, subject to land purchases and/or planning permission. The contract values on completed development work for 2016/17 totalled £2.9m. MHA has set itself a challenging target of building 600 new homes by 2022. Based on the experience gained within MHA and its successes to date, MHA has expanded its Development team and has identified a number of opportunities that will help MHA realise this objective. During 2016/17 Monmouthshire Housing Association completed the following new developments:

Monmouthshire Housing Association

Old School Close - Before

Old School Close - After Mynydd Bach

Annual Accounts 2016-17

Housing & Communities New homes, new team MHA took the decision to frontload its housing management service as part of the Housing and Communities directorate re-order to support tenancy sustainment. The aim was to help reduce starter tenants’ tenancy failure and build up their resilience through setting up a team that offers a concentrated tenancy commencement service and manages voids efficiently. The team is dedicated to managing tenancy ends and delivering a full housing management service exclusively for starter tenants to improve tenancy sustainability and void management; from the pre-tenancy conversations through to the nine month visit, the team works to support people moving into their new home and also ensures a smooth transition for those moving on as well as managing decants. The New Homes team take a needs-based approach to working with housing applicants; finding out about their household requirements and risks, incorporating a rent-first culture right from the start, and giving tenants continuity of staff in their first year of tenancy. The team builds more resilient and successful tenancies and communities by investing in a preventative, one-stop approach to housing management, developing positive relationships with tenants and linking to other professionals and services. By overhauling procedures and introducing a new model of working the team is already seeing positive outcomes; • starter tenant arrears at March 2017 are two thirds lower than they were in May 2016 and below the MHA average; • over 50 referrals have been made to specialist services on behalf of tenants; and • starter tenancies ending during 2016/17 are less than half of the 2017/18 figure. This is an impressive start from a team that did not exist a year ago.

New Homes have also made significant changes to our end of tenancy process, ensuring tenants and next of kin are fully informed of their responsibilities and supported through what can be stressful periods of change. New Homes complete pre-void inspections in 75% of ending tenancies and have overhauled their written materials and booklets and now make most of our information available to view online, including some great animations explaining tenancy rights and conditions on the MHA ‘I am a new tenant’ web page. New Homes staff are creative, committed and confident; they are positive about their new roles and the difference they can make to people embarking on new tenancies. The team has already been featured in a good practice article in Welsh Housing Quarterly magazine. The New Homes team is looking forward to taking the starter tenancy service onwards and upwards in 2017/18 and so far the results speak for themselves.

Neighbourhood Services Hoarding and cluttering have come to many people’s attention via programmes on the television. Residents in Monmouthshire are not exempt. MHA is successfully working with residents to resolve where this is impacting seriously on their lives and/or presents a risk. This could include fire, environmental or structural risks involving visits from Fire Officers, Environmental Health Building Surveyors and Social Services. These cases are often complex, lengthy and time consuming. Encouraging the hoarder or clutterer to engage can be difficult, with relationships often having to be built before support agencies can be introduced to address complex multiple vulnerabilities. Whilst we have had successes, it is recognised that this is a specialist area. MHA is in the process of working with partner agencies including other RSLs and Health to access specific funding to enable us together to tackle what can be a very debilitating and isolating condition as effectively as possible.

Monmouthshire Housing Association

Service Design

Community Safety Team

We are committed to ensuring that our services remain fit for purpose and can meet the future needs of both our customers and our business. This year, we have focused on the implementation of the rent management service review, this has included making 56 service changes to enable us to absorb and meet the challenges posed by welfare reform. In the next year, we will be looking at the service design of our estate management service and have already received constructive feedback from the tenant Service Testing Team and Scrutiny Panel.

The Community Safety and Neighbourhood Teams have between them dealt with 343 complaints about anti-social behaviour between April 2016 and March 2017. The main category of complaint received has been noise nuisance. The Community Safety Team have been exploring different ways of dealing with this including noise monitoring technology, awareness raising, mediation and a number of support mechanisms for victims as well as enforcement action.

Rent First The Housing and Communities restructure created a specialist Income Recovery team, which has responsibility for collecting current and former tenant arrears, recharges and service charges. The Income team are a one stop shop for income-related enquiries and can provide low level benefits advice, as well as enable tenants to access support services. These include MHA’s Money Wise and Work and Skills Wise teams. The team are also crucial in our preparation for future welfare reforms, including the LHA cap and the roll-out of full service Universal Credit. Since the introduction of the specialist team, our rent arrears performance has remained strong and has put us in a positive position for the future. The team recently held an internal “Rent First” campaign to enable their colleagues to have conversations about rent with tenants.

The team provided support to nearly 70 victims of domestic abuse, helping direct them to the most appropriate support agency for their needs and providing security and reassurance by making their homes feel safer through use of alarms, CCTV and lighting. The team has been working with a number of partner landlords to develop a readily accessible bank of knowledge to enable front-line staff to support victims of domestic abuse more effectively. This will be made available to other support agencies and landlords to support their work and improve the service to victims. The team has dealt with a number of complex cases during the past year which have been challenging due to the nature of the behaviour exhibited, the impact on others, the vulnerability of those involved and the number of agencies involved. Effective partnership working in these cases has meant that a range of legal powers and support have be used and aside from one case where all attempts to curb behaviour failed and the tenant was evicted, action taken has put an end to the anti-social behaviour and tenancies sustained. Referrals made to MHA’s tenancy coaches has enabled a higher level of support to be put in place for those involved in the most difficult cases.

Annual Accounts 2016-17

Money Wise Stats MHA’s inclusion services offer proactive help and support to tenants to alleviate short term and long term poverty issues. The Money Wise service deals with immediate poverty issues such as offering advice in relation to debt, benefit, food and fuel poverty.

The Money Wise Service:

Helped gain in:

£95,808

489 tenants in 2016 -2017.

£87,393

Worked with

Money Wise Debt: Identified:

Total:

£340,597

£23,906

£229,438 Managed:

£165,593

£450 £4,117 £3,512 £280 Fuel Poverty WWA Water Meter Energy & Gas Switch Utility Gas Write off WHD

Attendance Allowance Pension Credit Carers Allowance CSA Payments Child Benefit Benevolent Fund Personal Independence Payments DAF DAF Appeal Job Seeker’s Allowance Income Support Child Tax Credits Employment Support Allowance ESA Appeal ESA Backdate Working Tax Credits CTB Housing Benefit DHP

Welfare Benefits

£15,547

£43,027 £8,541

£35,535 £24,601 £5,795 £19,948 £2,240

£4,774 £900 £5,555 £3,010 £7,848

£20,011 £6,968 £6,458 £2,756 £2,152 £300

Assisted with writing off:

Monmouthshire Housing Association

Arrears: Arrears at the start of Money Wise intervention:

£173,078

Arrears at the End of Money Wise intervention:

£120,213 Difference:

£52,865

Work & Skills Wise Stats MHA’s inclusion services offer proactive help and support to tenants to alleviate short-term and long-term poverty issues. The Work & Skills Wise service addresses long-term poverty and aims to help tenants find and retain employment.

Work & Skills Wise Service has:

170

Supported tenants through internally funded projects

12 participants

13 service users

120 service users

engaged on our EU funded project Monmouthshire Employment Pathway

engagement with our DWP funded project Pathway to Careers

continue to be supported through our in work support.

26 people have been

supported with selfemployment – via Pop Up Business school

2 tenants are now

20 tenants have

18 qualifications

£3,959

been supported into Volunteering

have been gained

self-employed and trading

A total of people gained employment this financial year

tenants have received computer in the community laptops

of bursaries awarded by MHA

Annual Accounts 2016-17

Case Study #1 When my daughter moved back home with me in 2012 I found myself in a situation where I needed to secure larger accommodation as I lived in a 1 bedroom property. I approached Monmouthshire Housing Association and applied for rehousing. Shortly afterward I was offered the tenancy of a 2 bedroom home for myself and my daughter. When I went to view and sign for the property my biggest concern was getting enough money together for new carpets. I was given a pack by my new housing officer which contained some useful advice and information on the Credit Union. I had never heard of them before and I was unsure that I would qualify for a loan as I had a history of previous credit problems, I was long term unemployed and on benefits. I contacted their Abergavenny branch and went in to fill out an application and to check my eligibility. I was assisted by a very friendly lady who was very understanding towards my current situation. I needed to prove my benefits and have a bank statement as proof of address. The process was extremely quick I was completely honest about my previous credit problems and they put my application forward for consideration. Within a few days I received a telephone call to say that my application was successful and I could order my carpets. I was completely overjoyed. I went back to the office and signed the paperwork and the money was in my account the same day. There were no extortionate interest rates unlike some doorstep loan companies, and they even encouraged me to save alongside my repayments, so that by the time I had paid my loan off I had a lump sum, almost a bonus for all my hard work of never missing a payment! The best thing was that they were able to take the money directly from my benefit making sure I never missed a payment and repairing my credit score. That was 4 years ago and I have had a further 2 loans since the first time. I donâ&#x20AC;&#x2122;t currently have any outstanding loans with them. However, I have become so used to that amount being deducted that I have continued to pay it but now itâ&#x20AC;&#x2122;s my own savings account. I am going on a hot holiday this year. I never imagined that I could ever save anything but the Credit Union has really helped me balance my finances. I would recommend to anyone rather than payday loans or doorstep lenders.Â

Monmouthshire Housing Association

Case Study #2 “It gives me a real lift every week. I’m learning new things, but of course it’s the social element, the companionship, which makes this group so special.” Tenant B is secretary of the popular Coffee and Computers group based in Raglan. Coffee and Computers is a weekly social group helping people living in and around Raglan to get online and learn how to use the web. The group is led by volunteer tutors who are on hand to help people get to grips with using their laptops and tablets in an informal setting over a cup of tea or coffee. The group meet weekly at the Raglan Fellowship Centre and after four years of being coordinated by MHA, in October this year Coffee and Computers formed its own charter and has become selfsufficient. This means the group funds itself through sponsorship and grants and has its own management structure. Tenant B explains: “I originally joined Coffee and Computers after my grandchildren encouraged me to get a tablet and stay in touch with my family online. I use email and Facebook and I love my tablet – I find using the apps easy. I really enjoy the Raglan Hub Facebook page too. There’s always new things on there – historic photos of Raglan, local people, news and information. I use Raglan Hub to keep up to date with what’s happening locally. But it’s the social side of things that really makes our group so special. We share life’s ups and downs. We sometimes go over to the pub after we meet and we had a Christmas lunch together recently. For many members it’s the only opportunity they get to go out and meet people each week. There aren’t many social groups available locally and many members live alone too, so the companionship element is vital. I’m now the secretary of the group and I enjoy the responsibility of it. MHA have been so supportive of the group over the years and they’ve empowered us to become self-sufficient. Coffee and Computers has a bright future!”

Annual Accounts 2016-17

Building Great Communities We understand the importance of investing in our communities. Our main focus is on improving health and wellbeing amongst our tenants. We do this in a number of ways such as running specific projects and arranging events and activities.

West End Flying Start With a donation from a contractor, MHA was able to install a multi activity slide which is loved and enjoyed by many of the children who attend the centre.

Sport in your Community MHA partnered with Newport Live to use the Road to Rio van, which was filled with a range of Olympic themed sports equipment. This enabled MHA to run free activity sessions across Monmouthshire and engage with over 450 children. The sessions inspired sports participation, with many children trying new activities as well as encouraging a healthier balanced lifestyle.

West End Flying Start Road to Rio Event

MHA is proud to recognise the fantastic work undertaken by volunteers in our communities by holding its annual â&#x20AC;&#x2DC;Making a Difference Awardsâ&#x20AC;&#x2122;. The awards recognise individuals, groups, learning and achievements. Rewarding those making a difference showcases the positive impact tenants and residents from social housing can have on a wider community and help break down stereotypes.

Monmouthshire Housing Association

Making A Difference Awards 2016

Annual Accounts 2016-17

Run by parents, Ziggies is an afterschool club that promotes physical literacy in children aged 3 to 8 through movement, crafts and story time. Now running in Monmouthshire and Blaenau Gwent. During 2016/17 6 schools were involved providing learning through play to between 10 & 40 children each session with 3 more schools set to take part.

Dads Can trip to watch Newport Gwent Dragons Ziggies Dads Can is a Big Lottery funded project that supports fathers, living in Monmouthshire and Newport, to be the best dad they can be. During the year: • 7 dads gained employment • 51 dads have become involved through digital networks & peer support • 7 gained an informal qualification and 5 gained a formal qualification • 34 dads and their families attended an organised trip or activity • 5 were put into work placements

Monmouthshire Housing Association

Annual Accounts 2016-17

Facilities & Compliance Health Safety and Environmental We have concentrated on making our processes more robust to ensure legal compliance and also to achieve best practice. The BS 18001 (Health & Safety), ISO 14001 & Green Dragon (Environmental) standards evaluate our approach and management of Health, Safety and Environmental in the workplace and how we aim to control the risks effectively. We are subject to twice yearly audits which are carried out by an external auditor to verify whether our processes are meeting the requirements of each standard. During the 2016/17 financial year Monmouthshire Housing Group have: • maintained the BS 18001 accreditation; • maintained the environmental accreditations Green Dragon level 5 and ISO 14001; • reduced fuel consumption of the building services van fleet achieving a 14% reduction against 2015 figures; and • ensured that the fire safety management system is monitored closely and fire safety across the estate continues to improve.

Statutory contracts (fire, lifts and water safety management etc.) We carried out a tender exercise for the above contracts and now have a single contractor for each area as opposed to multiple contracts. As a consequence we have achieved cost savings and better contract management control.

Photo Voltaic (PV) Solar Panels A prompt and effective PV maintenance service is in place to ensure our systems are working to their optimum to ensure tenants benefit from the free electricity generated.

Pool Car The pool car was launched in May 2016. The main driver of the introduction of the car was the environmental benefits. It reduces the impact on the environment and is more economical to run as it switches between electric and petrol. It also further improves Monmouthshire Housing Group’s green credentials. The introduction of a pool car is one of our key environmental objectives however this also links into our corporate objective to reduce fuel usage. It projects a professional image of Monmouthshire Housing Group as branded vehicles will be used as opposed to personal cars. It will complement our current van stock and raise visibility across the estate. The pool car has been widely promoted and proved very popular. A small cost saving has been achieved and we are now looking to lease two electric vehicles during the forthcoming financial year which links into our corporate objectives.

Corporate Services MHA complies with the requirements of the Welsh Language (Wales) Measure 2011 and has an approved Welsh Language Strategy which is regularly monitored and our progress against the strategy is reported to, and approved by the Welsh Language Commissioner. MHA is awaiting the regulatory framework in respect of the Welsh Language and how it is to be applied to the sector in Wales. MHA has successfully run several training programmes of Welsh language courses for its staff in recent years and will continue to offer support in the learning of the Welsh language throughout 2016/17.

Monmouthshire Housing Association

Pool Car

Annual Accounts 2016-17

Staff Development

Equal Opportunities

In 2016/17 MHA spent over £100,000 (2015/16 >£100,000) on training its staff and Board Members which equates to almost 1,000 training days. This highlights our commitment to ensure our staff have the appropriate skills and knowledge to deliver high quality services to our customers.

“Leading Diversity by 2020”

Awards

MHA has signed up to the Chartered Institute of Housing’s (CIH) Equality and Diversity Charter, to create a truly equal and diverse UK housing sector by 2020. In recognition of this, we have an Action Plan to achieve the challenges in the CIH’s Charter, and will annually publish the makeup of our Board membership and workforce.

In 2016 we were awarded the Platinum Corporate Health Standard which reflects how we support the health and wellbeing of our staff and our Corporate Social responsibilities regarding wellbeing of our communities.

Monmouthshire Housing Association

Sexual orientation Ethnic group Disability status Gender Marital status Religion Nationality

Board Members Largest group Not stated 58% Heterosexual 33%

Workforce Minority Largest group Not group stated 9% 89% Heterosexual 4%

Minority group 7%

75% White British 42% No disabilities 67% Male 50% Married/Civil partner 42% Christian 33% Welsh

25% 33% 0% 33%

0% 25% 33% 17%

0% 4% 0% 4%

4% 6% 49% 44%

33% 0%

25% 67%

4% 1%

52% 41%

96% White 90% No disabilities 51% Male 52% Married/Civil partner 44% Christian 58% Welsh

Annual Accounts 2016-17

Board Performance Indicators Description:

2017

2016

Actual

Target

Actual

Target

0.55% 1.49% 101%

1.2% 2.2% 98.8%

1.6% 0.84% 99.02%

1.2% 1.8% 98.7%

5.8 3.27

8 3.3

12 3.77

8 3.3

94% 34.7 100%

94% 25 100%

94% 34.14 99.39%

94% 20 100%

88%

Met 91.6%

88%

RENTS % rent loss due to void % rent arrears - current % rent collected STAFFING Annual Staff Turnover (voluntary) Overall Sickness Level REPAIRS % Repairs completed Right First Time Re-let time (days) Standard lets % properties with Landlord Gas Certificate MISCELLANEOUS Loan Covenant Overall Satisfaction with Services from MHA

Met *

*The customer satisfaction survey is being conducted this year. Target set at 90% remains ambitious (and within upper quartile benchmarking) to ensure we maintain a high level of satisfaction with core services and retain focus through diversity of activity. The results are to follow.

Monmouthshire Housing Association

Annual Accounts 2016-17

Statement of Board Membersâ&#x20AC;&#x2122; Responsibilities The Board are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Monmouthshire Housing Association

Housing Association legislation requires the Board to prepare financial statements for each financial year. Under that legislation the Board have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under Housing Association legislation the Board must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Association and of the surplus or deficit of the Group and Association for that period. In preparing these financial statements, the Board are required to:

The Board are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Association’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and Association and enable them to ensure that the financial statements comply with Housing Association legislation, the Co-operative and Community Benefit Societies Act 2014 and the Accounting Requirements for Registered Social Landlords General Determination (Wales) 2015. They are also responsible for safeguarding the assets of the Group and Association and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

• Select suitable accounting policies and then apply them consistently; • make judgments and accounting estimates that are reasonable and prudent; • state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Association will continue in business.

The Board are responsible for the maintenance and integrity of the corporate and financial information included on the Association’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Disclosure of information to the auditor • Each of the Board members at the date of approval of this report has confirmed that: • As far as the Board members are aware, there is no relevant audit information of which the Group’s auditor is unaware; and • The Board members have taken all the steps that they ought to have taken as Board members in order to make themselves aware of any relevant audit information and to establish that the Group’s auditor is aware of that information

Annual Accounts 2016-17

Statement of Internal Control In accordance with the terms of reference and the best practice referred to in the Welsh Governmentâ&#x20AC;&#x2122;s Housing Association Circular RSL 02/10 Internal controls and reporting, the Deputy Chief Executive on behalf of the Audit Committee presents an annual report to the Board covering the period from 1 April 2016 to 31 March 2017.

Monmouthshire Housing Association

Annual Accounts 2016-17

Statement of Internal Control The purpose of this report is to record an assessment of the adequacy and effectiveness of the Association’s system of internal control during this period. The Association’s systems are designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable, and not absolute, assurance against material misstatement or loss, regarding the safeguarding of assets, the maintenance of proper accounting records, the reliability of financial information and the management of risks, any of which could adversely affect the Association’s ability to achieve its Business Plan objectives. The following mechanisms constitute the key elements of the framework designed and implemented by management to provide effective internal control: • Procedure manuals for staff; • Performance management information presented to SMT, Committees and Board; • An Anti-Fraud, Theft and Corruption policy; • An established programme of internal audit activities derived from an assessment of key business risks; • An established programme of external audit activities from an assessment of the key financial risks; • The Audit Committee review and monitor reports from management, from Internal Audit and from External Audit to provide reasonable assurance that control procedures are in place and being followed; • Monitoring of the control system by the Audit Committee, the Internal Auditors and External Auditors and management; • Health and safety management system in place; • MHA have the following accreditations - ISO 14001 – Environmental, ISO 9001 – Quality, BS 18001 – Health & Safety, Green Dragon Level 5 – Environmental – regular external audits are carried out to ensure MHA comply with the standards;

• Standing orders and financial regulations setting out clearly the system of delegation; • A defined business and strategic planning process including the preparation of annual budgets, rolling five year corporate plans, a 30 year financial forecasting model and the production and review of monthly management accounts. These are supported by specific operational/directorate action plans and a process for the monitoring of results against budgets; • Regular reporting of financial results and other performance indicators against budgets and other appropriate internal and external targets; • A board approved treasury policy and annual treasury strategy, which is reported against as part of the management accounting information; • A cross departmental Housing Programme Board set up to oversee and monitor developments and the Asset Management Strategy; • Asset and liability register maintained; • Clearly defined corporate and directorate management responsibilities and reporting structures ensuring that experienced and suitably qualified staff take responsibility for important business decisions; • Careful staff recruitment, appropriate training and individual performance monitoring systems; • A member of MHA Board to sit on Capsel’s Board; • Capsel to consider opportunities which MHA cannot take part in; and • All material opportunities within the Group to be subject to viability and social value assessments

Monmouthshire Housing Association

Risk Management Framework

MHA has a Risk Management Policy in place which clearly outlines MHAâ&#x20AC;&#x2122;s approach to risk Management and defines roles and responsibilities throughout the organisation.

The Company Secretary maintains the register of detected frauds. There are no frauds to report in the period covered by this report.

The Corporate Risk Register is regularly reviewed by managers and SMT and presented at each Audit Committee. A Corporate Risk Dashboard summarising the main risks and movements in trends is presented and discussed at every Board and Committee meeting. The Association continues to maintain or put in place a number of procedures designed to mitigate risks facing the Association. These include specific delegated authorities to managers and staff, insurances, performance management reporting, contract procurement processes and an annual self-certification of risks and how they are controlled by the Senior Management Team. As part of the Corporate Planning Cycle Board reviewed their appetite for risk. The appetite statement is communicated to SMT, Managers and Staff and the Corporate Objectives were set in line with the reviewed appetite. MHA is continually developing its risk management framework and we are currently working with each service to develop service risk registers.

Adequacy and Effectiveness of the Associations Internal Control System The Deputy Chief Executive has reviewed the adequacy and effectiveness of the Associationâ&#x20AC;&#x2122;s internal control and risk management systems for the period 1 April 2016 to the date the annual accounts for 2016/17 are approved and confirms that they are operating effectively. The Board Report, Statement of Membersâ&#x20AC;&#x2122; Responsibilities and the Statement of Internal Control were approved by the Board on 20th September 2017.

............................................................................................

Signed by: Steve Higginson Position: Deputy Chief Executive

Over the coming year we will also be mapping and further developing our assurance framework which will enable us to clearly see and identify areas of concern and underlying issues

Annual Accounts 2016-17

Independent Auditorâ&#x20AC;&#x2122;s Report Independent auditorâ&#x20AC;&#x2122;s report to the members of Monmouthshire Housing Association Limited.

Monmouthshire Housing Association

Annual Accounts 2016-17

Independent Auditor’s Report We have audited the financial statements of Monmouthshire Housing Association Limited for the year ended 31st March 2017 which comprise the Group and the parent association’s Statements of Comprehensive Income, the Group and the parent association’s Statements of Financial Position, the Group and the parent association’s Statements of Changes in Reserves, the Group Statement of Cash Flows, and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”.

Respective responsibilities of The Board and auditor As explained more fully in the Statement of the Board’s Responsibilities set out on page 21, the Board is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors. This report is made solely to the parent association’s members, as a body, in accordance with Part 7 of the Co-operative and Community Benefit Societies Act 2014 and the Housing and Regeneration Act 2008. Our audit work has been undertaken so that we might state to the parent association’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the parent association and the parent association’s members as a body for our audit work, for this report, or for the opinions we have formed. We have reviewed the Board’s statement on the association’s compliance with the Welsh Government circular RSL 02/10 ‘Internal controls and reporting’. We are not required to express an opinion on the effectiveness of the association’s system of internal control.

Monmouthshire Housing Association

Scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s website at www.frc.org.uk/ auditscopeukprivate.

Opinion on the financial statements In our opinion the financial statements: • Give a true and fair view of the state of the Group and parent association’s affairs as at 31st March 2017 and of the Group and parent association’s surplus for the year then ended; • Have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and • Have been prepared in accordance with the requirements of the Co-operative and Community Benefit Societies Act 2014, the Co-operative and Community Benefit Societies (Group Accounts) Regulations 1969, the Housing and Regeneration Act 2008 and the Accounting Requirements for Registered Social Landlords General Determination (Wales) 2015. Opinion on other matters prescribed by the Welsh Government circular RSL 02/10 ‘Internal controls and reporting’ In our opinion, with respect to the Board’s statement on internal control:

Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Co-operative and Community Benefit Societies Act 2014 requires us to report to you if, in our opinion; • The parent entity has not kept proper books of account; or • A satisfactory system of control over transactions has not been maintained; or • The financial statements are not in agreement with the books of account; or • We have not received all the information and explanations we require for our audit.

Mazars LLP Chartered Accountants and Statutory Auditor 45 Church Street Birmingham B3 2RT Date:

• The Board has provided the disclosures required by the Welsh Government circular RSL 02/10 ‘Internal controls and reporting’; and • The statement is not inconsistent with the information of which we are aware from our audit work on the financial statements.

Annual Accounts 2016-17

Statement of Total Comprehensive Income

Monmouthshire Housing Association

Group

Association

2017

2016

2017

2016

Notes

£’000

Turnover

20,803

20,663

20,252

19,535

Operating expenditure

(18,200) ------------

(18,571) ------------

(17,571) ------------

(17,745) ------------

2,603

2,092

2,681

1,790

Operating surplus Gain/(loss) on disposal of property, plant and equipment

975

1,192

1,044

1,192

Interest receivable

104

111

Interest and financing costs

(886)

(879)

(886)

(879)

------------

Surplus / (deficit) before tax

2,694

2,410

2,943

2,214

Taxation

(38)

------------

2,694

2,372

2,943

2,176

(1,733)

(1,049)

(1,733)

(1,049)

------------

961 ======

1,323 ======

1,210 ======

1,127 ======

Surplus for the year Other comprehensive income for the year Actuarial loss in respect of pension schemes Total comprehensive income for the year

There were no recognised gains or losses in either the current or prior years except those reported in the Statement of Comprehensive Income. The notes on pages 60 to 91 form part of these financial statements.

Annual Accounts 2016-17

Statement of Financial Position

Monmouthshire Housing Association

Annual Accounts 2016-17

Statement of Financial Position Registered number: 30087R Group

Notes

Association

2017

2016

2017

2016

£’000

Intangible fixed assets

192

188

Housing properties

66,552

59,172

63,316

55,615

Other property, plant and equipment

4,097

4,207

4,097

4,207

-------------

70,841

63,463

67,601

59,906

Total Fixed Assets Current assets Inventories

154

137

146

137

Debtors

2,036

2,479

5,464

5,648

1,840

1,237

1,772

1,205

(5,369)

(4,139)

(5,302)

(3,721)

-------------

(1,339)

(286)

2,080

3,269

-------------

69,502

63,177

69,681

63,175

Cash and cash equivalents Current Liabilities Creditors: amounts falling due within one year

Net current (liabilities) / assets Total assets less net current assets Non-current liabilities Creditors: amount falling due after more than one year

(44,560)

(41,304)

(44,560)

(41,404)

Provision for liabilities and charges

(171)

(409)

(171)

(409)

Pension Fund

(7,904)

(5,526)

(7,904)

(5,526)

-------------

16,867 =======

15,938 =======

17,046 =======

15,836 =======

Pension Reserve

(7,904)

(5,526)

(7,904)

(5,526)

Revenue Reserve

24,771

21,464

24,950

21,362

-------------

16,867 =======

15,938 =======

17,046 =======

15,836 =======

Net assets

Capital and Reserves Share capital

Total Reserves

The notes on pages 60 to 91 form part of these financial statements

Monmouthshire Housing Association

Registered number: 30087R

The financial statements of Monmouthshire Housing Association Limited Group were approved by the Board and signed on its behalf by:

………………………………………….. Andrew Martyn-Johns

…………………………………………..

Peter Clarke

Chair Vice Chair

………………………………………….. Steve Higginson Company secretary

Date …………………………………..

Annual Accounts 2016-17

Statement of Changes in Reserves

Monmouthshire Housing Association

Consolidated Called up

Revenue

share capital

Reserve

£’000

As at 1st April 2015

Other comprehensive income

Association Total

Called up

Revenue

Total

share capital

Reserve

£’000

14,615

14,709

-------------

Total comprehensive income

14,615

14,709

Transfer between reserves

Actuarial loss in respect of pension schemes

(1,049)

Surplus / (deficit) for the year

2,372

2,176

-------------

As at 31 March 2016

15,938

15,836

Prior year adjustment

(32)

-------------

As at 31 March 2016 (restated)

15,906

15,836

Surplus for the year

2,694

2,943

Transfer between reserves

Actuarial loss in respect of pension schemes

(1,733)

-------------

=======

16,867 =======

=======

17,046 =======

As at 31st March 2017

The revenue reserve represents the accumulated surplus of the Group and Association. The financial statements of Capsel Ltd for the year 2015/16 have been restated to incorporate the impact of an inter-company recharge from Monmouthshire Housing Association Ltd to Capsel Ltd. This related to work undertaken in the financial year 2015/16 which was not accrued for in Capsel’s financial statements. This resulted in increasing cost of sales by £32k and the profit of £10k becoming a loss of £23k for the financial year ended 31 March 2016.

Annual Accounts 2016-17

Statement of Cash Flows

Monmouthshire Housing Association

Annual Accounts 2016-17

Statement of Cash Flows Group

Association

2017

2016

2017

2016

Notes

£’000

6,780

3,160

6,765

3,110

(10,620)

(9,419)

(10,776)

(9,373)

Proceeds from sale of property, plant and equipment

1,186

2,549

1,219

2,549

Grants received

4,166

4,738

4,166

4,738

104

-------------

(5,267)

(2,126)

(5,288)

(2,026)

Interest paid

(886)

(880)

(886)

(880)

Taxation paid

(25)

-------------

(911)

(880)

(911)

(880)

-------------

603

154

567

204

1,237

1,083

1,205

1,001

-------------

1,840

1,237

1,772

1,205

Net cash generated from operating activities Cash flows from investing activities Purchase of property, plant and equipment

Interest received Net cash flows from investing activities Cash flows from financing activities

Net cash flows from financing activities Net increase/ (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year

Monmouthshire Housing Association

Free cash flow for the reporting period ended 31 March 2017 Group

Net cash generated from operating activities

Interest paid Interest received Taxation paid Component replacements Purchase of other replacement fixed assets Component replacements grant received Free cash generated/(consumed before loan repayments)

Association

2017

2016

2017

2016

£’000

6,780

3,160

6,765

3,110

(886)

(880)

(911)

(880)

104

(25)

(5,279)

(3,895)

(5,279)

(3,895)

(26)

(149)

(26)

(149)

2,600

-------------

3,165

842

3,229

846

-------------

Annual Accounts 2016-17

Notes to the Financial Statements

Monmouthshire Housing Association

1. Registration of the Association Monmouthshire Housing Association Limited (the ’Association’) is a registered society under the Cooperative and Community Benefit Societies Act 2014, incorporated and domiciled in the United Kingdom. The address of the registered office is Nant Y Pia House, Mamhilad Technology Park, Mamhilad, Pontypool, Monmouthshire, NP4 0JJ. The main activities of the Association and its subsidiaries are the provision of affordable homes for rent for people in housing need.

2. Principle Accounting policies and Basis of Accounting The financial statements have been prepared under the historical cost convention in accordance with Financial Reporting Standard 102 (FRS 102) issued by the Financial Reporting Council and comply with the Statement of Recommended Practice for registered social housing providers 2014 (SORP), the Housing and Regeneration Act 2008 and the Accounting Requirements for Registered Social Landlords General Determination (Wales) 2015. Monmouthshire Housing Association Group is a public benefit entity, as defined in FRS 102, and applies the relevant paragraph prefixed ‘PBE’ in FRS 102.

Basis of Consolidation The Group financial statements consolidate the financial statements of the Association and its subsidiary undertaking drawn up to 31 March each year. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Property, plant & equipment – housing properties Housing properties, held at cost less depreciation, were transferred from Monmouthshire County Council at no cost and were subject to a nil valuation based on an independent report using the basis of existing use value for social housing. Housing properties are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes the cost of acquiring land and buildings and directly attributable development costs. Capitalisation ceases when substantially all the activities that are necessary to get the asset ready for use are complete. Depreciation is charged so as to write down the net book value of housing properties to their estimated residual value, on a straight line basis, over their useful economic lives. Freehold land is not depreciated. Houses Flats New build 150 years 110 years Purchased 100 years 80 years Major components of housing properties, which have significantly different patterns of consumption of economic benefits, are treated as separate assets and depreciated over their expected useful economic lives at the following annual rates: Structure 80 – 150 years Roofs 50 Years Doors and Windows 30 Years Kitchens 15 Years Bathrooms 25 Years Heating Systems 15 Years Other works 20 Years Photovoltaic panels 22 Years Properties held on long leases are depreciated over their estimated useful economic lives or the lease duration if shorter.

Annual Accounts 2016-17

Improvements

Intangible assets

Where there are improvements to housing properties that are expected to provide incremental future benefits, these are capitalised and added to the carrying amount of the property. Any works to housing properties which do not replace a component or result in an incremental future benefit are charged as expenditure in the Statement of Comprehensive Income.

Software purchased and developed, or developed in house, is an intangible asset. Cost is measured initially at acquisition cost or costs incurred to develop the asset. Development expenditure incurred on an individual project is capitalised only if specific criteria are met including that the asset created will probably generate future economic benefits. These assets will be amortised over 3 - 5 years.

Leaseholders

Impairment of social housing properties

Where the rights and obligations for improving a housing property reside with the leaseholder or tenant, any works to improve such properties incurred by the Association is recharged to the leaseholder and recognised in surplus or deficit in the Statement of Comprehensive Income along with the corresponding income from the leaseholder or tenant.

Non-housing property, plant and equipment Non-housing property, plant and equipment is stated at historic cost less accumulated depreciation and any provision for impairment. Depreciation is provided on all non-housing property, plant and equipment, other than investment properties and freehold land, at rates calculated to write off the cost or valuation, less estimated residual value, of each asset on a straight-line basis over its expected useful life, as follows:

Other fixed assets Head Office (building & furniture) 5 â&#x20AC;&#x201C; 100 Years Computer equipment 3 â&#x20AC;&#x201C; 10 Years

Properties held for their social benefit are not held solely for the cash inflows they generate and are held for their service potential. An assessment is made at each reporting date as to whether an indicator of impairment exists. If such an indicator exists, an impairment assessment is carried out and an estimate of the recoverable amount of the asset is made. Where the carrying amount of the asset exceeds its recoverable amount, an impairment loss is recognised in surplus or deficit in the Statement of Comprehensive Income. The recoverable amount of an asset is the higher of its value in use and fair value less costs to sell. Where assets are held for their service potential, value in use is determined by the present value of the assetâ&#x20AC;&#x2122;s remaining service potential plus the net amount expected to be received from its disposal. Depreciated replacement cost is taken as a suitable measurement model. An impairment loss is reversed if the reasons for the impairment loss have ceased to apply and included in surplus or deficit in the Statement of Comprehensive Income.

Monmouthshire Housing Association

Social Housing Grant and other Donation or acquisition of land Government Grants or other asset at below market Where grants are received from government value agencies such as the Welsh Government, local authorities, devolved government agencies, health authorities and the European Commission which meet the definition of government grants they are recognised when there is reasonable assurance that the conditions attached to them will be complied with and that the grant will be received.

Where a donation of land and/or other assets is received or acquired at below market value from a government source, this is accounted for as a non-monetary government grant. The difference between the fair value of the asset donated or acquired and the consideration paid for the asset is recognised as a government grant and included in the Statement of Financial Position as a liability.

Government grants are recognised using the accrual model and are classified either as a grant relating to revenue or a grant relating to assets. Grants relating to revenue are recognised in income on a systematic basis over the period in which related costs for which the grant is intended to compensate are recognised. Where a grant is receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support, with no future related costs, it is recognised as revenue in the period in which it becomes receivable.

Where a donation of land and/or other assets is received or acquired at below their market value from a third party that does not meet the definition of a government source, the transaction is recognised as an asset in the Statement of Financial Position at fair value, taking account of any restrictions on the use of the asset and income equivalent to the difference between any amounts paid or payable for the asset and the fair value of the asset is recognised in surplus and deficit in the Statement of Comprehensive Income as a donation when future performance-related conditions are met.

Grants relating to assets are recognised in income on a systematic basis over the expected useful life of the asset. Grants received for housing properties are recognised in income over the expected useful life of the housing property structure. Where a grant is received specifically for components of a housing property, the grant is recognised in income over the expected useful life of the component.

Leased assets At inception the Group assesses agreements that transfer the right to use assets. The assessment considers whether the arrangement is, or contains, a lease based on the substance of the arrangement.

Grants received from non-government sources are recognised as revenue using the performance model.

Annual Accounts 2016-17

Finance leased assets

Interest payable

Leases of assets that transfer substantially all the risks and rewards incidental to ownership are classified as finance leases.

Borrowing costs are interest and other costs incurred in connection with the borrowing of funds. Borrowing costs are calculated using the effective interest rate, which is the rate that exactly discounts estimated future cash payments or receipts through the expected life of a financial instrument and is determined on the basis of the carrying amount of the financial liability at initial recognition. Under the effective interest method, the amortised cost of a financial liability is the present value of future cash payments discounted at the effective interest rate and the interest expense in a period equals the carrying amount of the financial liability at the beginning of a period multiplied by the effective interest rate for the period.

Finance leases are capitalised at commencement of the lease as assets at the fair value of the leased asset or, if lower, the present value of the minimum lease payments calculated using the interest rate implicit in the lease. Assets are depreciated over the shorter of the lease term and the estimated useful life of the asset. Assets are assessed for impairment at each reporting date. The capital element of lease obligations is recorded as a liability on inception of the arrangement. Lease payments are apportioned between capital repayment and finance charge, using the effective interest rate method, to produce a constant rate of charge on the balance of the capital repayments outstanding.

Operating leased assets Leases that do not transfer all the risks and rewards of ownership are classified as operating leases. Payments under operating leases are charged to surplus or deficit in the Statement of Comprehensive Income on a straight-line basis over the period of the lease.

Properties for outright sale Properties developed for outright sale and land held for sale are measured at the lower of cost and estimated selling price less costs to complete and sell. Cost includes materials, direct labour and an attributable proportion of overheads based on normal levels of activity.

Monmouthshire Housing Association

Taxation

Pensions

Current tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted by the Statement of Financial Position date.

Multi-employer defined benefit pension scheme â&#x20AC;&#x201C; Social Housing Pension Scheme

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the Statement of Financial Position date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the Statement of Financial Position date. Timing differences are differences between the Groupâ&#x20AC;&#x2122;s taxable surpluses and its results as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised in the financial statements. Unrelieved tax losses and other deferred tax assets are recognised only to the extent that, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the Statement of Financial Position date that are expected to apply to the reversal of the timing difference. Deferred tax relating to property, plant and equipment measured using the revaluation model and investment property is measured using the tax rates and allowances that apply to sale of the asset.

The Group participates in an industry wide multi-employer defined benefit pension scheme where the scheme assets and liabilities cannot be separately identified for each employer. This is accounted for as a defined contribution scheme as there is insufficient information available to account for the scheme as defined benefit. For this multi-employer scheme, there is a contractual agreement between the scheme and the Group that determines how the deficit will be funded and a liability is recognised in the Statement of Financial Position and the resulting expense in surplus or deficit in the Statement of Comprehensive Income for the present value of the contributions payable that arise from the agreement to the extent that they relate to the deficit. The Group has obligations to pay pension benefits to certain employees. The cost of these benefits and the present value of the obligation depend on a number of factors, including; life expectancy, salary increases, asset valuations and the discount rate on corporate bonds. Management estimates these factors in determining the net pension obligation in the balance sheet. The assumptions reflect historical experience and current trends.

Accounting for VAT The majority of the Associations business is exempt from VAT. MHA currently operates under a vat shelter scheme agreed with HMRC to recover amounts where applicable. In the accounts amounts are generally shown gross with VAT costs incurred however any taxable income and associated costs will be shown net.

Annual Accounts 2016-17

Local Government Pension Scheme The Group participates in a local government pension scheme which is a multi-employer scheme where it is possible for individual employers as admitted bodies to identify their share of the assets and liabilities of the pension scheme. For this scheme, the amounts charged to operating surplus are the costs arising from employee services rendered during the period and the cost of plan introductions, benefit changes, settlements and curtailments. They are included as part of staff costs. The net interest cost on the net defined benefit liability is charged to revenue and included within finance costs. Re-measurement comprising actuarial gains and losses and the return on scheme assets (excluding amounts included in net interest on the net defined benefit liability) are recognised immediately in other comprehensive income. Defined benefit schemes are funded with the assets of the scheme, held separately from those of the Group, in separate trustee administered funds. Pension scheme assets are measured at fair value and liabilities are measured on an actuarial basis using the projected unit credit method. The actuarial valuations are obtained at least triennially and are updated at each Statement of Financial Position date.

Turnover Turnover represents rent and service charges receivable (net of rent and service charge losses from voids) and disposal proceeds of current assets, such as properties developed for outright sale or shared ownership, first tranche sales at completion together with revenue grants from local authorities and the Welsh Government and charitable fees and donations. Service charge income is recognised when expenditure is incurred as this is considered to be the point at which the service has been performed and the revenue recognition criteria met.

Financial Instruments Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument.

Financial assets carried at amortised cost Financial assets comprise rent and service charge arrears, other debtors, prepayments and cash and cash equivalents. Where the effect of discounting is material, financial assets are measured at amortised cost using the effective interest method. A financial asset is derecognised when the contractual rights to cash flows expire, or when the financial asset and all substantial risks and reward are transferred.

Financial liabilities carried at amortised cost These financial liabilities include trade and other payables and interest bearing loans and borrowings. Non-current debt instruments which meet the necessary conditions in FRS 102, are initially recognised at the transaction value adjusted for any directly attributable transaction cost and subsequently measured at amortised cost using the effective interest method, with interestrelated charges recognised as an expense in finance costs in the Statement of Comprehensive Income. Discounting is omitted where the effect of discounting is immaterial. A financial liability is derecognised only when the contractual obligation is extinguished, that is, when the obligation is discharged, cancelled or expires.

Cash and cash equivalents Cash and cash equivalents comprise cash in hand and demand deposits, together with other short term, highly liquid investments that are readily convertible into known amounts of cash and are subject to an insignificant risk of changes in value.

Monmouthshire Housing Association

Provisions Provision is made for home loss payments to tenants prior to the forthcoming demolition and redevelopment of a number of properties. These provisions require managementâ&#x20AC;&#x2122;s best estimate of the costs that will be incurred based on legislative and contractual requirements. In addition, the timing of the cash flows and the discount rates used to establish net present value of the obligations require managementâ&#x20AC;&#x2122;s judgement. A provision has been made for redundancy and early retirement costs following the closure of the Safe Hands project.

Impairment of social housing properties The Group have to make an assessment as to whether an indicator of impairment exists. In making the judgement, management considered the detailed criteria set out in the SORP.

Estimation uncertainty The preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. Any estimates and underlying assumptions are reviewed on an ongoing basis and any revisions to accounting estimates would be recognised in the period in which the estimate is revised and in any future periods affected. There are no material estimates to report in the period.

Annual Accounts 2016-17

3. Particulars of turnover, operating costs and operating surplus Group 2017

Social Housing lettings Non Social Housing activities Total

2016

Turnover

Operating Costs

Operating Surplus

Turnover

Operating Costs

Operating Surplus

£’000

20,252

(17,571)

2,681

19,535

(17,745)

1,790

551

(629)

(78)

1,128

(826)

302

-------------

20,803

(18,200)

2,603

20,663

(18,571)

2,092

Association 2017

Social Housing lettings Non Social Housing activities Total

2016

Turnover

Operating Costs

Operating Surplus

Turnover

Operating Costs

Operating Surplus

£’000

20,252

(17,571)

2,681

19,535

(17,745)

1,790

-------------

20,252

(17,571)

2,681

19,535

(17,745)

1,790

Monmouthshire Housing Association

3a. Particulars of income and expenditure from social housing lettings – Group and Association General Needs

Supported Housing

2017 Total

Total

£’000

17,492

16,909

116

165

Income from support services

281

331

Amortised government grants

1,266

1,110

Other Income

1,097

1,020

-------------

19,971

281

20,252

19,535

(183)

(247)

Management

(6,795)

(290)

(7,085)

(6,359)

Routine maintenance

(5,010)

(6,525)

(997)

(817)

Rents receivable Service charge income

2016

Expenditure Service charge costs

Major repairs expenditure

(54)

(81)

Depreciation of housing properties

(3,023)

(2,804)

Other costs

(1,219)

(912)

-------------

(17,281)

(290)

(17,571)

(17,745)

2,690

(9)

2,681

1,790

-------------

120

315

Bad Debts

Operating surplus social housing lettings Void losses

Annual Accounts 2016-17

4. Surplus on disposal of property, plant and equipment Group

Association

2017

2016

2017

2016

£’000

Housing properties - sales proceeds

1,252

2,816

1,219

5,017

Cost of sales

(278)

(1,624)

(175)

(3,825)

-------------

975 =======

1,192 =======

1,044 =======

1,192 =======

Surplus

During the year MHA disposed of 5 properties, generating £420k surplus, under the associations asset management strategy as they were uneconomical to repair and a further 6 properties under the Right to Buy scheme generating a surplus of £624k. Capsel suffered a loss on disposal of £69k from disposal of assets relating to discontinued operations.

5. Interest and finance costs Group

Association

2017

2016

2017

2016

£’000

Bank interest receivable

Other Interest receivable

103

106

-------------

2 =======

5 =======

104 =======

111 =======

Other interest receivable includes money received from Capsel in relation to the Photovoltaic panel lease.

6. Other finance income Group

Bank loans and overdrafts Total

Association

2017

2016

2017

2016

£’000

886

879

886

879

-------------

886 =======

879 =======

886 =======

879 =======

Monmouthshire Housing Association

7. Surplus for the year Group

Association

2017

2016

2017

2016

£’000

3,295

2,998

3,094

3,011

(1,266)

(1,110)

(1,266)

(1,110)

(975)

(1,192)

(1,044)

(1,192)

Statutory audit

Other professional fees

Operating lease rentals

33 =======

23 =======

33 =======

23 =======

Depreciation of property, plant and equipment Amortised government grant Gain on disposal of fixed assets Audit fees:

8. Employee Information Group

Association

2017

2016

2017

2016

£’000

5,941

6,192

5,625

5,973

Social security costs

558

409

537

392

Pension costs

640

610

640

610

-------------

7,139 =======

7,211 =======

6,802 =======

6,975 =======

Wages and salaries

Total

Annual Accounts 2016-17

9. Directors Remuneration and Transactions Group

Salaries Social security costs Pension costs Total

Association

2017

2016

2017

2016

£’000

352

320

352

320

-------------

444 =======

394 =======

444 =======

394 =======

Board members receive no remuneration and are paid travel expenses at the existing HMRC approved rate of 45 pence per mile. Directors are defined as members of the Board, the Chief Executive and any other person who is a member of the executive management team. 114 =======

Remuneration of the highest paid director, excluding pension contributions

109 =======

The Chief Executive is an ordinary member of the pension scheme. No additional contributions to any pension scheme have been made and there were no special or enhanced terms which applied. The employer’s contribution to the pension scheme on behalf of the Chief Executive in the year was £15k (2016:£14k) The number of directors who received emoluments (excluding pension contributions) in the following range was: Group

Association

2017

2016

2017

2016

£50,000-£59,999

£60,000-£69,999

£70,000-£79,999

£80,000-£89,999

£90,000-£99,999

£100,000-£109,999

£110,000-£119,999

-------------

4 =======

3 =======

4 =======

3 =======

Salary band (£)

During 2015/16, one director left and the role was filled 2 months later. In addition another, director worked part time until January 2016 before returning to full time work.

Monmouthshire Housing Association

10. Tax on surplus on ordinary activities

Current tax on surplus on ordinary activities

Group

Association

2016

£’000

38 =======

The standard rate of tax applied to the reported surplus is 20% (2016 - 20%). The differences between the total tax charge shown above and the amount calculated by applying the standard rate of UK corporation tax to the surplus is as follows: Group

Association

2016

£’000

2,410

2,214

290

Utilisation of tax losses not previously recognised

Capital allowances in excess of depreciation

Adjustment in respect of previous periods

(21)

-------------

38 =======

Surplus before tax Surplus on taxable activities Tax on ordinary activities at standard rate of UK corporation tax (20%) Effects of:

Group Relief

In 2015/16 the surplus on taxable activities was the result of open market properties sales. The Association did not undertake any open market activities in 2016/17 and no taxable income arose in the year.

Annual Accounts 2016-17

11. Intangible fixed assets Group

Association

Computer software

Website

Total

Computer software

Total

£’000

104

108

104

COST As at 1 April 2016 Additions Disposals

-------------

188 -------------

4 -------------

192 -------------

188 -------------

As at 1 April 2016

Amortised in the year

Eliminated on disposal

-------------

As at 31 March 2017

188 -------------

4 -------------

192 -------------

188 -------------

As at 31 March 2016

84 -------------

-------------

84 -------------

As at 31 March 2017

AMORTISATION

As at 31 March 2017

NET BOOK VALUE

Intangible fixed assets include software purchased and developed in house. Cost is measured initially at acquisition cost or costs incurred to develop the asset. Depreciation has not been charged as the asset is still being developed.

Monmouthshire Housing Association

12. Tangible Fixed Assets – Housing Properties (Group) Group Completed Properties

Under Construction

Total

£’000

70,088

3,242

73,330

Schemes completed in the year

3,322

(3,322)

Additions

6,330

4,564

10,894

Disposals

(323)

(21)

(344)

-------------

79,417 -------------

4,463 -------------

83,880 -------------

(14,158)

(3,225)

-------------

(17,328) -------------

-------------

(17,328) -------------

As at 31 March 2017

62,089 -------------

4,463 -------------

66,552 -------------

As at 31 March 2016

55,930 -------------

3,242 -------------

59,172 -------------

COST At beginning of year

At end of year

DEPRECIATION At 1 April 2016 Charge for the year Eliminated on disposal At end of year

NET BOOK VALUE

Annual Accounts 2016-17

12. Tangible fixed assets – Housing Properties (Association) Association Completed properties

Under Construction

Total

£’000

66,402

3,242

69,644

Schemes completed in the year

3,322

(3,322)

Additions

6,343

4,564

10,907

Disposals

(175)

(21)

(196)

-------------

75,892

4,463

80,355

-------------

(14,029)

(3,023)

-------------

(17,039)

-------------

58,853

4,463

63,316

-------------

52,373 -------------

3,242 -------------

55,615 -------------

COST At beginning of year

At end of year DEPRECIATION At 1 April 2016 Charge for the year Eliminated on disposal At end of year NET BOOK VALUE As at 31 March 2017 As at 31 March 2016

Freehold land and buildings with an Existing Use Value – Social Housing of £95.9m (2016: £91.7m) have been pledged to secure borrowings of the Association. The Association is not allowed to pledge these assets as security for other borrowings or sell them to another entity. Work to existing properties includes costs charged by contractors, external consultants, and related in-house supervision and administration costs which have been capitalised. Capitalisation of own costs totalled £1.226m (2016: £1.49m). This represents the element of the Group and Association’s planned replacement programme which is undertaken by the Association’s workforce. The balance of the programme is undertaken by contractors.

Analysis of work to existing properties:

2017 £’000

2016 £’000

Capitalised replacement of components

6,343

3,895

Charge to Statement of Comprehensive Income

4,247

4,462

Monmouthshire Housing Association

13. Property, Plant and equipment – other Group

Association

Freehold property

Fixtures & Fittings

Total

Freehold property

Fixtures & Fittings

Total

£’000

4,465

899

5,364

4,465

899

5,364

Cost of valuation At beginning of year Additions

Disposals

(66)

-------------

4,465 -------------

859 -------------

5,324 -------------

4,465 -------------

859 -------------

5,323 -------------

(406)

(751)

(1,157)

(406)

(751)

(1,156)

(42)

(29)

(71)

(42)

(29)

(71)

-------------

(448) -------------

(780) -------------

(1,227) -------------

(448) -------------

(780) -------------

(1,227) -------------

4,017

4,097

4,017

4,097

-------------

4,060 -------------

149 -------------

4,207 -------------

4,060 -------------

149 -------------

4,207 -------------

At end of year

Depreciation At 1 April 2016 Charge for the year Eliminated on disposal At end of year Net Book Value As at 31 March 2017 As at 31 March 2016

The disposal represents a reclassification from PPE to Intangible fixed assets as these were incorrectly classified in 2015/16. No depreciation has been charged to date on the asset.

14. Inventories Group 2017

2016

2017

2016

£’000

154

137

146

137

-------------

154 -------------

137 -------------

146 -------------

137 -------------

Raw materials and consumables Total

Association

Inventories are valued at the lower of cost or net realisable value.

Annual Accounts 2016-17

15. Debtors Group

Association

2017

2016

2017

2016

£’000

Rent arrears (gross)

1,009

911

1,009

911

Provision for bad debts

(316)

(320)

(316)

(320)

-------------

693

591

693

591

Loans to employees

Intercompany debtor

444

242

Net rental debtors

Other debtors

350

1,341

171

1,087

HMRC - Vat Refund

330

110

330

110

Prepayments and accrued income

613

320

551

320

-------------

2,002 -------------

2,437 -------------

2,205 -------------

2,425 -------------

Total

The Association has made a number of car loans to employees. The loans are for a period up to 5 years and the interest charged is a fixed rate of 6.1% APR – which is above the HMRC official rate. The following debtors are due after more than one year: Group

Association

2017

2016

2017

2016

£’000

3,225

3,181

-------------

Total falling due after more than one year

34 -------------

42 -------------

3,259 -------------

3,223 -------------

Total debtors

2,036 -------------

2,479 -------------

5,464 -------------

5,648 -------------

Other debtors (car loans) Finance lease

The finance lease debtor is with Capsel for PV panels. See note 24 for further details.

Monmouthshire Housing Association

16. Creditors – Amounts falling due within one year Group

Association

2017

2016

2017

2016

£’000

245

227

245

227

Other creditors

1240

651

1,080

106

Accrued interest

213

210

213

210

Accruals

231

712

231

643

1287

366

1,287

366

Taxation and national insurance

147

140

Retentions

107

154

107

154

Contractors - planned improvements

632

733

632

733

1253

1,085

1,253

1,221

Rents in advance

SHG in advance

Pensions Government grants Intercompany creditor

100

-------------

5,369 -------------

4,139 -------------

5,302 -------------

3,721 -------------

17. Creditors – Amounts falling due after more than one year Group

Association

2017

2016

2017

2016

£’000

Housing loans

19,400

Welsh Government dowry grant

16,630

15,355

16,630

15,355

8,465

6,424

8,465

6,424

156

-------------

44,560 -------------

41,304 -------------

44,560 -------------

41,404 -------------

Other government grants Social Housing Pension Scheme Other creditors

The loans are secured on those freehold properties which were transferred from the council in January 2008, Interest is payable at 4.54% (2016; 4.54%)

Annual Accounts 2016-17

17. Creditors – Amounts falling due after more than one year (continued) Analysis of debt repayments: Group Housing loans

Association

2017

2016

2017

2016

£’000

Between one and two years

Between two and five years

Due within:

In five years or more

Social Housing Pension Scheme

19,400

-------------

19,400 -------------

Group

Association

2017

2016

2017

2016

£’000

Less than one year

Between one and two years

Between two and five years

In five years or more

-------------

74 -------------

77 -------------

74 -------------

77 -------------

Due within:

Monmouthshire Housing Association

17a. Creditors – Government Grants Group and Association

Dowry Grant

SHG

Other Government Grants

£’000

Total £’000

Grant Received 21,300

9,115

237

30,652

2,600

2,002

4,602

-------------

23,900 -------------

11,117 -------------

237 -------------

35,254 -------------

As at 1 April 2016

4,880

2,724

7,652

Amortised

1,195

1,254

-------------

As at 31 March 2017

6,075 -------------

2,772 -------------

59 -------------

8,906 -------------

As at 31 March 2017

17,825

8,345

177

26,348

As at 31 March 2016

16,420

6,392

188

23,000

Less than one year

1,195

1,253

Between one and two years

1,195

1,253

Between two and five years

3,585

144

3,759

11,850

8,105

129

20,083

-------------

17,825 -------------

8,345 -------------

177 -------------

26,348 -------------

As at 1 April 2016 Received As at 31 March 2017 Amortisation

Written back

Due within:

In five years or more

18. Provisions – Group and Association 2017 £’000 Provision brought forward

409

Net movement in the year

(238) ------------171 -------------

Provision carried forward

Prior to the year ended 31 March 2016 the Association’s board agreed to demolish a number of properties. Each tenant was entitled to a home loss payment of £5,300 plus an additional payment of £2,000 towards removal and disturbance. In addition the Association’s board agreed to redevelop a number of properties at Oakley Way with the Association agreeing to pay any removal/disturbance costs over the next 12 months. The Association was notified of the closure of the Safe Hands project prior to the year ended 31 March 2017. A provision has been included for related costs which will be paid over the next 12 months.

Annual Accounts 2016-17

19. Defined benefit schemes SCHEME: Local Government Pension Scheme Monmouthshire Housing Association is an admitted member of the Greater Gwent (Torfaen) Pension Fund, which is part of the Local Government Pension Scheme (LGPS) – a funded defined benefit scheme based on final salary. The Association’s contributions in the year were 13.3% of pensionable salary (2016 – 13.3%) The schemes are funded schemes. The most recent actuarial valuations of scheme assets and the present value of the defined benefit obligation were carried out at 31 March 2017 by Douglas Green of Hymans Robertson LLP, a fellow of the Institute and Faculty of Actuaries. The present value of the defined benefit obligations, the related current service costs and the past service costs were measured using the projected unit credit method. 2017 2016 % p.a. % p.a. Pension increase rate 2.4% 2.2% Salary increase rate* 3.4% 3.7% Discount rate 2.6% 3.5%

The key assumptions used are:

Salary rate increases are assumed to be 1.5% p.a. until March 2017 reverting to the long term assumption shown thereafter. Mortality Life expectancy is based on the SAPA year of birth tables with improvements in line with the CMI2012 model assuming the rate of improvement will converge to a long term rate of 1.5%. Mortality loading were applied to the SAPS tables based on membership class. Based on these assumptions, the average future life expectancies at age 65 are summarised below: Males Females Current pensioners 23.0 years 25.4 years Future pensioners* 25.2 years 27.8 years *Figures assume members age 45 as at the last formal valuation date. Historic Mortality Life expectancies for the prior period are based on the SAPS tables. Mortality loadings were applied to the SAPS tables based on the membership class. The allowance for future improvements are shown below: Period ended Prospective pensioners Pensioners 31 March 2017

CMI 2012 tables with a 1.5% p.a. rate of long term improvements

CMI 2012 tables with a 1.5% p.a. rate of long term improvements.

Note that the mortality assumptions are identical to those used in the previous period.

Monmouthshire Housing Association

19. Defined benefit schemes (continued) Changes in the Fair Value of Plan Assets, Defined Benefit Obligation and Net Liability for year end 31 March 2017 Net (liability) / Assets

Obligations

/ asset

£000’s

19,092

Present value of funded liabilities

24,618

(24,618)

Present value of unfunded liabilities

19,092

24,618

(5,526)

Current service cost

1,032

(1,032)

Past service cost

Effect of settlements

1,032

(1,032)

676

877

(877)

Fair value of plan assets

Opening position as at 31 March 2016 Service cost

Total service cost Net interest Interest income on plan assets Interest cost on defined benefit obligation

Total net interest

Impact of asset ceiling on net interest

676

877

(201)

Total defined benefit cost recognised in surplus

676

1,909

(1,233)

Plan participants’ contributions

288

Employer contributions

588

588.00

(406)

(69)

337.00

Unfunded benefits paid

Effect of business combinations and disposals

20,238

26,409

(6,171)

Changes in demographic assumptions

(766)

766

Changes in financial assumptions

5,483

(5,483)

Other experience

1,342

(1,342)

4,326

Total remeasurements recognised in Other Comprehensive Income (OCI)

4,326

6,059

(1,733)

Fair value of plan assets

Cash flows

Contributions in respect of unfunded benefits Benefits paid

Expected closing position Remeasurements

Return on assets excluding amounts included in net interest Changes in asset ceiling

24,564

Present value of funded liabilities

32,468

(32,468)

Present value of unfunded liabilities**

24,564

32,468

(7,904)

Closing position as at 31 March 2017

* The current service cost includes an allowance for administration expenses of 0.4% of payroll ** For unfunded liabilities as at 31 March 2017, it is assumed that all unfunded pensions are payable for the remainder of the member’s life. It is further assumed that 90% of pensioners are married (or cohabiting) at death and that their spouse (cohabitee) will receive a pension of 50% of the member’s pension as at the date of the member’s death.

Annual Accounts 2016-17

19. Defined Benefit schemes (continued) Information about the Defined Benefit Obligation Liability split as at 31-Mar-17

Liability split as at 31-Mar-17

Weighted Average

£000’s

Duration

22,258.00

68.60%

23.80

Deferred members

3,337.00

10.20%

28.10

Pensioner members

6,873.00

21.20%

13.30

32,468.00

100%

65.20

Active members

Total

Please note that the above figures are for the funded obligations only and do not include any unfunded pensioner liabilities. The durations are as they stood at the date of the most recent actuarial valuation of the employer

SCHEME: The Pensions Trust – Social Housing Pension Scheme The Association participates in the scheme, a multi-employer scheme which provides benefits to some 500 non-associated employers. The scheme is a defined benefit scheme in the UK. It is not possible for the Association to obtain sufficient information to enable it to account for the scheme as a defined benefit scheme. Therefore it accounts for the scheme as a defined contribution scheme. The scheme is subject to the funding legislation outlined in the Pensions Act 2004 which came into force on December 2005. This, together with documents issued by the Pensions Regulator and Technical Actuarial Standards issued by the Financial Reporting Council, set out the framework for funding defined benefit occupational pension schemes in the UK. The scheme is classified as a ‘last-man standing arrangement.’ Therefore the Association is potentially liable for other participating employers’ obligations if those employers are unable to meet their share of the scheme deficit following withdrawal from the scheme. Participating employers are legally required to meet their share of the scheme deficit on an annuity purchase basis on withdrawal from the scheme. A full actuarial valuation for the scheme was carried out with an effective date of 30 September 2014. This actuarial valuation was certified on 23 November 2015 and showed assets of £3,123m, liabilities of £4,446m and a deficit of £1,323m. To eliminate this funding shortfall, the trustees and the participating employers have agreed that additional contributions will be paid, in combination from all employers, to the scheme as follows. A provision is recognised for the additional deficit contributions as set out below.

Monmouthshire Housing Association

19. Defined Benefit schemes (continued) Deficit contributions Tier 1 – From 1 April 2016 to 30 September 2020:

£40.6m per annum

Tier 2 – From 1 April 2016 to 30 September 2023:

£28.6m per annum (payable monthly and increasing by 4.7% each year on 1st April)

Tier 3 – From 1 April 2016 to 30 September 2026:

£32.7m per annum (payable monthly and increasing by 3.0% each year on 1st April)

Tier 4 – From 1 April 2016 to 30 September 2026:

£32.7m per annum (payable monthly and increasing by 3.0% each year on 1st April)

Note that the scheme’s previous valuation was carried out with an effective date of 30 September 2011; this valuation was certified on 17 December 2012 and showed assets of £2,062m, liabilities of £3,097m and a deficit of £1,035m. To eliminate this funding shortfall, payments consisted of the Tier 1, 2 & 3 deficit contributions. Where the scheme is in deficit and where the Association has agreed to a deficit funding arrangement, the Association recognises a liability for this obligation. The amount recognised is the net present value of the deficit reduction contributions payable under the agreement that relates to the deficit. The present value is calculated using the discount rate detailed in these disclosures. The unwinding of the discount rate is recognised as a finance cost.

Annual Accounts 2016-17

19. Defined Benefit schemes (continued) Present Value of provision

Present value of provision

2017

2016

(£’s)

73,743 -------------

76,804 -------------

2017

2016

(£’s)

76,804

29,395

1,502

541

(7,063)

(2,437)

2,500

(561)

49,866

-------------

73,743 -------------

76,804 -------------

2017

2016

(£’s)

Reconciliation of opening and closing provisions

Provision at the start the period Unwinding of the discount factor (interest expense) Deficit contribution made Re-measurements – impact of any change in assumptions Re-measurements – amendments to contribution schedule Provision at end of period

Income and Expenditure Impact Interest expense

1,502

541

Re-measurements – impact of any change in assumptions

2,500

(561)

49,866

-------------

4,002 -------------

49,846 -------------

2017

2016

% per annum

1.33 -------------

2.06 -------------

Re-measurements – amendments to contribution schedule

Assumptions Rate of discount

The discount rates shown are above the equivalent single discount rates which, when used to discount the future recovery plan contributions due, would give the same results as using a full AA corporate bond yield curve to discount the same recovery plan contributions.

Monmouthshire Housing Association

19. Defined Benefit schemes (continued) Deficit Contributions Schedule The following schedule details the deficit contributions agreed between the Association and the scheme at each year end period:

31 March 2017 (£s)

31 March 2016 (£s)

31 March 2015 (£s)

Year 1

7,275

7,063

2,437

Year 2

7,493

7,275

2,510

Year 3

7,718

7,493

2,586

Year 4

7,950

7,718

2,663

Year 5

8,188

7,950

2,743

Year 6

8,434

8,188

2,825

Year 7

8,687

8,434

2,910

Year 8

8,948

8,687

2,998

Year 9

9,216

8,948

3,087

Year 10

4,746

9,216

3,180

Year 11

4,746

3,276

Year 12

1,687

Year ending

The Association has commissioned a review of the current pension schemes and a number of options are being considered.

20. Share Capital – Group and Association

As at 1 April 2016 Issued during the year Shares cancelled during the year As at 31st March 2017

2017

2016

£’s

(8)

(1)

-------------

90 -------------

93 -------------

The shares provide members with the right to vote at general meetings but do not have a right to any dividend or distribution in a winding up, and are not redeemable.

Annual Accounts 2016-17

21. Statement of Cash Flows Group

Association

2017

2016

2017

2016

£’000

2,694

2,410

2,943

2,176

3,241

3,225

3,081

3,011

Decrease / (Increase) in inventories

(17)

1,183

(9)

1,183

Decrease / (Increase) in debtors

443

(2,195)

185

(2,020)

(Decrease) / Increase in creditors

4,890

(802)

5,174

(525)

(Decrease) / Increase in provision

(238)

409

(238)

409

Pension costs less contributions payable

645

530

645

530

Carrying amount of property, plant and equipment disposals

278

2,265

175

2,265

Proceeds from the sale of property, plant and equipment

(1,463)

(1,394)

Government grants utilised in the year

(4,602)

(4,738)

(4,602)

(4,738)

Interest payable

886

879

886

879

Interest received

(2)

(6)

(104)

(60)

Taxation paid

6,780 -------------

3,160 -------------

6,765 -------------

3,110 -------------

Cash flow from operating activities: Surplus for the year Adjustment for non-cash items: Depreciation of property, plant and equipment

Adjustments for investing or finance activities:

Net cash generated by operations

Monmouthshire Housing Association

22. Financial Commitments Capital commitments are as follows: Group

Contracted but not provided for Approved by the Directors but not contracted for

Association

2017

2016

2017

2016

£’000

6,504

580

6,504

580

7,879 =======

7,400 =======

7,879 =======

7,400 =======

The expenditure will be funded by a combination of Social Housing Grant and an existing loan facility of £45 million, of which the Association has drawn £19.4 million as at 31st March 2017.

Operating Leases The future minimum lease payments under non-cancellable opening leases are as follows: Group Payments due:Within one year between one and five years

Association

2017

2016

2017

2016

£’000

-------------

28 -------------

64 -------------

28 -------------

64 -------------

2017

2016

£’000

Housing accommodation at an affordable rent

3,562

3,545

Housing accommodation at intermediate rent

Supported housing accommodation

-------------

3,603 -------------

3,566 -------------

after five years

23. Housing Stock

Housing accommodation let at market rent Total

Annual Accounts 2016-17

24. Related party transactions Monmouthshire Housing Association’s board consists of 12 members split evenly between councillors, tenants and independent nominees. No board member can use their position to their advantage and they are only reimbursed with travel expenses at the appropriate HMRC rate. At the year end, the aggregate rent balance for tenant board members was an arrears balance of £131 (2016: £19). Capsel Limited is a non-charitable company which is 100% owned by Monmouthshire Housing Association Limited and any staff time and costs are recharges from the parent company. The recharge varies from 2% to 100% dependent on the level of involvement. For the year ending 31 March 2017 the total recharge was £85k (2016: £74k). During the year, Capsel Limited undertook £1.0 million (2016: £733k) of work for Monmouthshire Housing Association Limited and the year end inter group balances were: • Owed by Monmouthshire Housing Association to Capsel - £100k (2016: £nil) • Owed by Capsel to Monmouthshire Housing Association - £3.68 million (2016:£3.57 million)

25. Ultimate controlling party The ultimate controlling party of the Monmouthshire Housing Association Group is the Board. The Group prepare publicly available Annual Financial Statements; copies of which are available upon request from the registered office.

26. Investments - Association Capsel Limited is a company registered in the U.K. and is 100% owned by Monmouthshire Housing Association Limited. The primary activities of Capsel Limited are construction and repair of properties, renewable energy and property management.

27. Financial Instruments The carrying values of the group’s financial assets and liabilities are summarised by category below: 2017

2016

£’000

693

591

1,343

1,888

-------------

2,036 -------------

2,479 -------------

19,400

1,064

1,384

-------------

20,464 -------------

20,784 -------------

Financial Assets Measured at undiscounted amount receivable Rent arrears (see note 15) Other debtors

Financial liabilities Measured at amortised cost Loans payable (note 17) Measured at undiscounted amount payable Trade and other creditors

Monmouthshire Housing Association

Annual Accounts 2016-17

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