THAMES VALLEY HOUSING BUSINESS AND FINANCIAL REVIEW 2011/2012
BUSINESS AND FINANCIAL REVIEW Year Ended 31 March 2012
CONTENTS Chair’s Message
1
Chief Executive’s Message
4
Board Members, Executive Management and Group Company Secretary
8
Business and Financial Review
10
Report of the Independent Auditors on the Financial Statements
32
Income and Expenditure Accounts Statement of Total Recognised Surpluses and Deficits Balance Sheets Consolidated Cash Flow Statement Notes on the Financial Statements
34
35 36 37 38
The Board of Thames Valley Housing Association Limited is pleased to present the audited consolidated financial statements of Thames Valley Housing Association Limited (“the Association”) and the Thames Valley Housing Association Group (“the Group”) for the year ended 31 March 2012.
2
BUSINESS AND FINANCIAL REVIEW Year Ended 31 March 2012
CHAIR’S MESSAGE This was the last year of our 3-year Corporate Plan for 2009-12 and we continued to make strong progress in achieving our strategic objectives. At the start of this Corporate Plan cycle, our core business comprised three main revenue streams; social rented housing, shared ownership and key worker accommodation. We identified the need to diversify, adding profit-making activities in order to cross-subsidise and enable continued growth in our core social housing business. During the year, we have made solid progress by adding two new business streams, market rent and a build for sale programme.
The period of this Corporate Plan has been dominated by the economic downturn following the financial crisis of 2008/9 and the subsequent changes in housing policy introduced by the new Government as part of its wider measures to deliver sustainable national finances. In our areas of operation house prices initially fell but have since risen and are now stable despite the wider economy being in recession. Shared ownership continues to help those with moderate incomes get onto the housing ladder in areas of high cost. Demand for shared ownership remains high, partly because few new homes are being built and mortgages are difficult to obtain for those with small deposits. The downturn in the economy and difficulty of entering home ownership combined with a sharp reduction in the number of social rented homes being built has led to increasing demand and unmet need for affordable housing. Local authority waiting lists for social housing continue to increase and homelessness acceptances continue to rise.
Our market rent business is targeted at the young professional “rentysomething” market segment. The service offer is designed to meet their expectations with distinctive branding as Fizzy Living and a strong online presence. A pipeline of schemes has been secured that work well for the London market, with the first one at Canning Town coming into management in August 2012. The market rent business has been kick-started with a £30M investment and discussions are underway with a variety of potential funders, both debt and equity, to extend the portfolio to the planned 1,000 units.
The continuing recession and pressures on household real incomes have impacted on our customers. For those shared owners remortgaging we are beginning to see rates rise. Rents in the private sector have continued to rise to around 40% of earnings in our area of operation. For those on benefit we are beginning to see policy changes impact on their incomes. Currently 60% of our social housing tenants are wholly or partly dependent on housing benefit and approximately 40% of our total rent income is covered by housing benefit. We are working with residents to help them understand how these changes will impact on their incomes and the housing options open to them.
The build for sale business has been undertaken with a strategic partner, Galliford Try. An initial £25 million has been committed to a joint venture vehicle, Opal Land LLP. This joint venture was formed to take forward our partnership, building on the key strengths of each organisation. The first development site has been secured in Blackfriars Road, near the South Bank, and the partnership is now considering additional investment opportunities. We operate across a wide area, with stock in 42 local authority areas. In order to deliver good value for money a programme of rationalisation has been undertaken with the housing management service in outlying areas outsourced to local providers. New developments this year have all been within our core areas of London, Surrey and Berkshire.
In contrast, the recession has resulted in good strategic land opportunities such as our recent purchases of land at Blagrove Lane (7.56 hectares) and Woods Farm (37.23 hectares) in Wokingham. These could enable the development of some 850 new homes, subject to planning permission.
1
BUSINESS AND FINANCIAL REVIEW Year Ended 31 March 2012
CENTRAL AND LOCAL GOVERNMENT
OUR BOARD
The advent of ‘smaller government’ has set aside much regulation and inspection from the TSA and Audit Commission. The new model of co-regulation, with customer involvement and feedback, is very much in line with our philosophy and we are preparing to take this forward in 2012/3.
Since our last report, 5 members have left the board. › Laure Duhot resigned in March 2012, having served on the board for the full 9 year term. She served on the Group Audit and Risk Committee, Group Treasury Committee and Group Investment Committee. She was Chair of the Group Investment Committee and Deputy Chair of the board for 2 years. › Steve Henson left the board in September 2011, having served as a resident board member for 6 years. › Dean Mayer served on the board for 4 years and retired due to pressure of work in September 2011. › Richard Stanley retired from the board in September 2011 having served on both TVHA and TVCHA Boards for the full 12 year term. › Jane Staveley resigned from the board in September 2011 after 10 years service, but remains Chair of the board of TVCHA, a role she has held for 3 years.
There has been significant change in the delivery mechanism for public subsidy in social housing with the Affordable Rent Programme. Grant rates for capital subsidy are reduced, whilst rents charged are higher. Housing Associations can set “Affordable Rents” under the programme of up to 80% of the local market rent. The localism agenda is beginning to take shape with Local Authorities determining their tenancy strategies of who they prioritise for housing and what rents they want Housing Associations to charge when building new homes. Local plans for new housing are beginning to be formed and consideration given to how community consultation will operate.
During the year, there were five new appointments to the board. › Geeta Nanda (Chief Executive) and Jack Stephen (Finance Director and Deputy Chief Executive) were appointed in April 2011, bringing two Executives on to the board. › Emma Cariaga joined the board in July 2011, and is Chair of the Group Investment Committee. She has extensive experience in investment and the property development industry. › Brian Hendon joined the board in September 2011 and also serves on the Thames Valley Charitable Housing Association Board and the Group Audit and Risk Committee. He brings much entrepreneurial experience of growing businesses in the commercial sector. › Ben Denton joined the Board in April 2012, and serves on the Group Investment Committee. Ben is experienced in both public and private sector investment and housing development. › Following Laure Duhot’s departure in March 2012, Peter Williams has temporarily stepped into the role of Deputy Chair, until a permanent appointment is made in the Autumn.
Such changes led to a gap in development last year which is reflected in a fall in the number of new housing starts over the year. There has been tension between the need to increase rents as a result of the reduction in subsidy and the desire of local authorities to keep rents affordable for those on their waiting lists. We have been addressing this tension with some creative solutions, working closely with our Local Authority partners. Local Authorities continue to operate with reduced budgets and are therefore very focused and positive about working with us to maximise the social housing outcomes achievable. Shared Ownership schemes are viewed particularly favourably where good affordability thresholds can be delivered.
2
BUSINESS AND FINANCIAL REVIEW Year Ended 31 March 2012
THE FUTURE The economy remains under pressure and economic growth is proving difficult to achieve. We are operating in an uncertain market and our next Corporate Plan reflects this background. We have been mindful to carefully evaluate risks in the property business cycle. The new business streams of market rent and building for sale are a good natural hedging combination. Demand for the market rent product is expected to remain strong whilst at the same time there are good opportunities to grow the pipeline of the build for sale programme. A rigorous commercial approach to scheme appraisal for the market rent and build for sale programmes has been adopted including ensuring that our core affordable housing business remains secure. By leveraging our expertise as a landlord and in sourcing quality schemes in new markets, we are securing our social purpose by continuing to deliver more affordable homes and quality services to our residents.
JOHN GARRITY Chair, Thames Valley Housing
3
BUSINESS AND FINANCIAL REVIEW Year Ended 31 March 2012
CHIEF EXECUTIVE’S MESSAGE GROWTH
SUSTAINABILITY AND COMMUNITY
At the end of an energetic 12 months I can report that the organisation is in good shape to meet the challenges ahead.
Good quality, secure homes are a key foundation on which people build successful, happy lives. Without the stability of a home, families and communities fail. As a social housing organisation, we remain very aware of and connected to the personal and social importance of affordable housing to individuals, families and communities. We look beyond the bricks and mortar.
Against a background of a radically different operating environment for Housing Associations, we provided new homes for 817 households during the year: 370 in social rented and 447 in shared ownership homes.
We are committed to sustainable development with the delivery of new homes in the year achieving code level 3, and some at code level 4. This approach has a very practical, immediate impact for customers, by way of much reduced energy bills.
We lead on a successful bid to HCA on behalf of a consortium of four registered providers to build 800 new homes between 2012 and 2015: 562 for affordable rent, the remainder for shared ownership. As part of our stock rationalisation programme, we disposed of 136 properties, achieving a surplus on disposal of £7.6m which has been re-invested in our development programme.
Within our existing stock we identified the lowest performing homes rated band E and funded the Energy Performance Certificate (EPC) initiative. We implemented planned programmes to improve energy performance by insulating wall cavities, topping up loft insulation and installing gas fired central heating to homes that previously had an all electric heating and hot water systems. We completed works to over 200 homes in 2011/12. In 2012/13 we will be offering to install solar hot water systems to 78 homes currently reliant on electric water heating.
Shared ownership continues to be extremely popular as the cost of buying outright remains out of reach for those with modest incomes and the rationalisation of mortgages continues. This year we exceeded our target for completions in our shared ownership schemes with 282 homes developed. I am particularly proud of our new “Fizzy Living” market rent project. It is truly innovative – from the Joint Venture partnership arrangements to secure the right skills and funding to the branded service offer with tight focus on delivering a first class product to the targeted market of 25 to 35 year olds.
CORPORATE SOCIAL RESPONSIBILITY As well as building new homes and delivering landlord services, we have an active Corporate Social Responsibility programme focused on enabling community projects and improving the work prospects for customers. We helped 15 residents into work and 15 into volunteering opportunitie, while 40 residents enrolled on training courses. Through our Community Chest Fund we awarded £50,000 to 24 community projects. This has leveraged an additional £269,000 in direct and in-kind funding for those schemes. The following are typical of the schemes.
Over the next year, we will start the development of our first homes for affordable rent while the last properties under the previous social rented programme are completed. The first two developments under the Fizzy Living brand will be completed in Epsom and Canning Town.
4
BUSINESS AND FINANCIAL REVIEW Year Ended 31 March 2012
Community Gardening Project at Millgate in West Wycombe The project was started by 8 year old Reeon Cook-Hardy who wanted to develop a community garden on his estate. Thames Valley Housing’s Resident Involvement Team helped Reeon to get his neighbours involved in the project, which proved a huge hit with both young and old alike. Reeon and his neighbours managed to build new raised beds and plant a variety of flowers and vegetables in their new garden.
Supporting recovering addicts Supporting people who have come off drugs is vital in ensuring that they stay clean and take their full place in the community. TVH donated money from its Community Chest Fund to Kairos, an organisation which trains former addicts as mentors for people trying to come off and stay off drugs and alcohol. These programmes are crucial in breaking the vicious cycle of addiction and crime and, ultimately, benefit everyone in the community.
5
BUSINESS AND FINANCIAL REVIEW Year Ended 31 March 2012
Community Work Skills Course 15 Thames Valley Housing residents undertook an accredited training course in Community Development Work Skills to help equip them oversee our community work and ensure that it meets the needs of our residents. The residents explored topics such as local democracy and community action as part of the course.
Skilled Up This is an innovative new project we helped fund from our Community Chest in partnership with Rushmoor Borough Council. Thames Valley Housing residents had the opportunity to work alongside skilled trades people on a regeneration projects in the borough to gain hands on work experience and learn new skills. Involvement in the project has led to two residents securing full time apprenticeships.
Lions Community Store Two Thames Valley Housing staff members volunteered their time to help out at the Lions Community Store in Woking. The project received funding to buy a new van from Thames Valley Housing’s Community Chest to enable them to collect and restore even more unwanted items of furniture that could be redistributed to in need families in Fleet and the surround areas.
6
BUSINESS AND FINANCIAL REVIEW Year Ended 31 March 2012
OUTLOOK Our Corporate Plan mission includes to modernise our brand and services. We will develop online services for residents to improve their access to services and improve communications.
Changes made to our estate services contract have led to a significant reduction in cost and an increase in satisfaction with services. Our repair service delivered in partnership with Mears continued to deliver improvements in satisfaction with 93% of tenants satisfied with the service overall. How we procure the repairs service will be reviewed over the next year as our partnering contract comes up for renewal.
The coming year will be tough as we work through the changes necessary to manage in the new operating environment but we have strong finances, great people and a clear vision of how we will continue to be a strong housing business with a social purpose.
The current economic environment presents significant challenges with future rental strains given benefit changes and related restrictions that will impact on the income of our residents. This will require careful management to ensure rent arrears are adequately controlled. Our community investment, financial inclusion and employment & training strategies will play a vital role in supporting residents to sustain their tenancies. As a significant regional provider and a leading national player in the intermediate market providing shared ownership, shared equity and key worker homes, we will help stimulate new ideas on the future of the sector. We have carried out research into the secondary shared ownership market and will review how we can simplify arrangements for these leaseholders.
Geeta Nanda CEO, Thames Valley Housing
We will modernise our brand to gain recognition for our strengths and achievements. The Localism Act devolves greater power to councils and neighbourhoods and so we will increase our engagement with local stakeholders and their wider local communities. We will seek to deliver further improvements in our housing services to residents. We will implement our financial inclusion strategy to help tenants sustain their tenancies through the forthcoming changes in the welfare benefits system. We will commence a review of our repairs service contract and consider options for delivery in the future. Improving leaseholder satisfaction levels will also be a key priority.
7
BUSINESS AND FINANCIAL REVIEW Year Ended 31 March 2012
BOARD MEMBERS AND EXECUTIVE MANAGEMENT BOARD MEMBERS
PROFILES OF CURRENT BOARD MEMBERS
John Garrity Chair Laure Duhot Deputy Chair (Resigned on 19 March 2012) Peter Williams Deputy Chair (Appointed Deputy Chair on 13 April 2012) Emma Cariaga (Appointed on 14 July 2011) Ben Denton (Appointed on 1 April 2012) Brian Hendon* (Appointed on 29 September 2011) Gerard McCormack* Dean Mayer (Resigned on 29 September 2011) Benita Mehra Geeta Nanda (Appointed on 1 April 2011) Jack Stephen (Appointed on 1 April 2011) Steve Henson (Resigned on 29 September 2011) Richard Stanley (Resigned on 29 September 2011) Jane Staveley (Resigned on 29 September 2011 but remains a member of the Board of TVCHA)
CHAIR JOHN GARRITY, MA (Hons), DipTP, MCIM, MAPM, MCIH, MRTPI has served on the Board for 10 years. Chair of the Group Remuneration & Nominations Committee and a member of the Group Investment Committee and Group Treasury Committee. John is Head of the Central Private Finance Unit at the Department for Communities and Local Government. He has extensive experience working for Local Authorities Housing Associations and the private sector. DEPUTY CHAIR PETER WILLIAMS, BA, MSc, PhD, FCIH, FRGS has served on the board for 8 years (6 years as Chair). A member of the Group Audit and Risk Committee and the Group Investment Committee. Director of the University of Cambridge Centre for Housing & Planning Research and a Housing Consultant. He is Executive Director of the Intermediary Mortgage Lenders Association and Chairman of Acadametrics, a house price consultancy. Extensive experience of home ownership and social housing. A former Board Member of the Housing Corporation and Housing for Wales and Chairman of the National Housing and Planning Advice Unit, and previously Deputy Director General of the Council of Mortgage Lenders and Professor of Housing at the University of Wales, Cardiff.
*Members of the Group Audit and Risk Committee
EXECUTIVE MANAGEMENT Geeta Nanda Jack Stephen Mark Alnutt John Baldwin Jayne Hilditch Patricia Etter
Chief Executive Finance Director/ Deputy Chief Executive Development Director Housing and Neighbourhood Services Director Corporate Services Director (Appointed on 31 October 2011) Secretary
EMMA CARIAGA, BSc (Hons.), DipTp. Chair of the Group Investment Committee. Emma is Development Director at Land Securities plc and a board member of the Housing Forum, Planning Committee Member of the British Property Federation and Residential Council Member of the Urban Land Institute. BEN DENTON, MRICS, BSC (Hons), Dip BA joined the Board in April 2012. He is a member of the Group Investment Committee. Ben is the Strategic Director – Housing, Regeneration and Worklessness at Westminster City Council. Prior to this he worked for First Base Limited. Ben is a director of two affordable housing providers in central London and the London Apprenticeship Company.
8
BUSINESS AND FINANCIAL REVIEW Year Ended 31 March 2012
PROFILES OF EXECUTIVE MANAGEMENT BRIAN HENDON, FCA has served on the Board for 2 years. Brian is an Interim Non Executive Director of Royal Berkshire NHS Foundation Trust and also holds positions as Non Executive Chairman in various private sector companies. Brian is a Chartered Accountant and has worked in the USA and UK in various Finance Director and Managing Director roles.
CHIEF EXECUTIVE GEETA NANDA, BSc, PG Dip Housing, CIH FINANCE DIRECTOR & DEPUTY CHIEF EXECUTIVE JACK STEPHEN, MA (Hons) CA HOUSING & NEIGHBOURHOOD SERVICES DIRECTOR JOHN BALDWIN, BA MICH joined Thames Valley Housing in 2008. Has worked in the housing sector for over 20 years with roles including policy, supported housing and general needs. Was Assistant Director for Westside Housing and Director of Housing Management at Notting Hill Housing. Served as a committee member for Threshold Housing Advice and is a member of the Guildford Local Strategic Partnership.
GERARD MCCORMACK, LLB, CA has served on the Board for 12 years and retires in September 2012. He is Chair of the Group Audit & Risk Committee and of the Group Treasury Committee, and a Member of the Group Investment Committee. With experience as Group Finance Director of publicly quoted companies in the Construction & Building sector, he now provides strategic and finance advice to SME’s and is a Director of one of the largest Academy sponsors in England.
DEVELOPMENT DIRECTOR MARK ALLNUTT BA (Hons) joined Thames Valley Housing in 2008. Has worked in the housing sector for over 15 years, and in private sector organisations in insurance and construction. Was Assistant Director of Development at Sovereign Housing Group.
BENITA MEHRA, BSc, MSc, MBA, CIET has served on the Board for 5 years and is a member of the Group Investment Committee. A Chartered Engineer with experience in construction, maintenance and asset management having worked for BAA for 17 years. The owner of a property development company, and acts as an interim manager for the NHS.
CORPORATE SERVICES DIRECTOR JAYNE HILDITCH, BSc, CIPFA, joined Thames Valley Housing in 2011. Has worked in the housing sector for 20 years, initially in finance roles at Winchester District Housing Association and Servite Houses, and Corporate Services Director at Notting Hill Housing. Chief Operating Officer for a leading online job board.
GEETA NANDA, BSc, PG Dip Housing, CIH, Chief Executive joined Thames Valley Housing in 2008. Has worked in the housing sector for over 25 years in housing associations, local government and research. Previously Group Director of Operations at Notting Hill Housing Association. Has served on the Boards of several housing organisations and is currently a Trustee of SCOPE. Chair of the NHF South East Regional Committee. JACK STEPHEN, MA (Hons) CA, Finance Director and Deputy Chief Executive joined Thames Valley Housing in 1994 having previously held positions of Finance Director, Financial Controller and Treasurer with banks and other international companies. Previously on the Board of a housing organisation and currently Chair of the Sector’s SORP Working Party. Chair of Trustees of a Supporting People Charity.
9
BUSINESS AND FINANCIAL REVIEW Year Ended 31 March 2012
CORPORATE GOVERNANCE The Board is responsible for the leadership of the Group and ensuring where appropriate risks are taken they are properly managed. The Board ensures that the Group has the necessary financial and staff resources to deliver its objectives and sets ethical and health and safety standards. The Board has complied with the National Housing Federation’s Code, “Excellence in Governance: Code for Members” and adopted it as the Group’s code of governance. In 2010 the Board resolved to reduce Board Member’s maximum term of office from 12 to 9 years, thus complying with the Code of Governance. However, 2010-2014 is a period of transition while some Board Members remain on the Board for a period longer than the 9 year maximum term of office in order to avoid the loss of leadership and essential skills on the Board. The Board has adopted a revised Group Code of Conduct, which reflects the requirements set out in the National Housing Federation’s Code, “Excellence in Standards of Conduct: Code for Members”.
The Board receives annual reports in accordance with the Codes. During the year, the Board held 7 principal Board Meetings. Minutes of the Audit and Risk, Remuneration and Nomination, and Investment committees were sent to the Board. All Non Executive Board Members are subject to re-election every three years, and are appraised annually. Board members are remunerated at levels consistent with the scale of activities and sector norms. Board members are provided with regular detailed briefings on the Group’s business and have access to a suite of key performance information. Board Members are encouraged to undertake further training including attendance at sector based seminars and conferences. New Board Members have a tailored induction programme. The number of principal Board and Committee meetings attended by each current director during the financial year was as follows;
Board Meetings (7 meetings)
Audit & Risk Committee (5 meetings)
Remuneration & Nomination Committee (3 meetings)
Group Investment Committee (5 meetings)
Emma Cariaga
5/7
NA
NA
4/5
Ben Denton
NA
NA
NA
1/2
John Garrity
7/7
NA
3/3
5/5
Brian Hendon
4/4
5/5
NA
NA
Benita Mehra
7/7
NA
NA
4/5
Gerard McCormack 5/7
5/5
NA
0/5
Geeta Nanda
7/7
4/5
3/3
5/5
Jack Stephen
7/7
5/5
NA
4/5
Peter Williams
5/7
5/5
NA
3/5
10
BUSINESS AND FINANCIAL REVIEW Year Ended 31 March 2012
BOARD COMMITTEES Group Remuneration And Nominations Committee The Group Remuneration and Nominations Committee oversees the appointment of new board members. In addition it acts as a Remuneration Committee determining annual pay awards, staff related policies and Board remuneration for all Group companies. The members of the Committee are the Chairs and Deputy Chairs of TVHA and TVCHA. The Committee meets at least twice a year. Group Treasury Committee Members are chosen from TVHA and TVCHA, for their expertise in treasury management and meet as and when required. The Committee exercises delegated powers to consider and recommend the Group Treasury Strategy and approve borrowings, loans, derivative transactions and investments. Group Investment Committee The Group Investment Committee considers and makes investment decisions which otherwise would require Board approval and fall outside of the authority delegated to the Executive Directors. Members are chosen for their expertise in inter alia investment and development, and meet when required. Group Audit And Risk Committee The Group Audit and Risk Committee has responsibility for reviewing the Group’s risk management systems, monitoring the integrity of the financial statements and providing oversight of the internal and external audit process. The Committee meets at least four times per year. On at least one occasion each year, the Committee meets with the external and internal auditors without the presence of staff.
11
BUSINESS AND FINANCIAL REVIEW Year Ended 31 March 2012
THE GROUP’S VISION, VALUES AND PRINCIPAL ACTIVITIES VISION
PRINCIPAL ACTIVITIES
To be a leading provider of homes, creating communities where people are proud to live. To provide modern services and housing products that our customers value. To collaborate openly with partners to deliver growth and impact.
The principal activities of the Group are:
VALUES The Association has five core values which are embedded in everything it does. › To value and respect others’ individuality and culture › To inspire people to make things better › To be open and take responsibility for what we do › To respond to the aspirations of our customers › To flourish in a transparent environment of trust and integrity
› The management and development of social housing for people who cannot afford to purchase their own homes outright or rent a home in the private sector › Working with Local Authorities to help create communities To achieve its social purpose the Group also has significant activities in: › The development and management of a portfolio of market rented properties in London and the South East › The development of housing for outright sale The management and development of social housing is carried out by TVH and TCHA. Both associations are Registered Providers and development partners to the Homes and Communities Agency (HCA), and have preferred partner status with a number of local authorities. During the year TVHA set up three further subsidiaries, Fizzy Enterprises LLP, TVH Fizzy Holdings Limited and Fizzy Living Epsom LLP, to develop and manage a portfolio of market rent properties in London and the South East under the Fizzy Living brand. The development of housing for outright sale is achieved through Opal Land LLP; a 50% owned joint venture with Galliford Try.
12
BUSINESS AND FINANCIAL REVIEW Year Ended 31 March 2012
HOW WE PERFORMED AGAINST OUR STRATEGIC OBJECTIVES FOR THE YEAR Last year we identified three strategic objectives: Objective 1 Provide high quality services to all our residents Objective 2 Achieve sustainable growth Objective 3 Build our social business Our performance towards achieving these objectives was as follows;
OBJECTIVE 1 PROVIDE HIGH QUALITY SERVICES TO ALL OUR RESIDENTS BY: Improving Customer Satisfaction General Needs Resident satisfaction improved from 72% to 79% during the year, whilst leaseholder satisfaction declined from 46% to 44%. A re-organisation of housing services commenced, for implementation in 2012/13 with the aim of improving service whilst reducing costs. This was a successful year for our Commercial Housing Accommodation. Rent arrears at Year End were Nil (target: 3.0%), and property voids were better than targeted at just 3% against a target of 5.5%. Resident satisfaction was high at 86% (target: 72%). We launched a Financial Inclusion Strategy last year setting out how we support residents to maximise their income and maintain rental payments. In the year we published our second Annual Report for Residents with the involvement of residents, including a report on our progress in meeting our published “customer service pledge”.
Improving the quality of services and homes Our planned and cyclical maintenance programmes delivered improvements to over 810 general needs homes. All of our housing stock meets the Decent Homes Standard. Improvements to the repairs and estate services partnering contracts were implemented. Efficiency savings in reactive repairs to our properties were achieved in the year. An appointment texting facility was implemented and our repairs operatives are arranging follow on appointments for residents while they are in their homes. Our targeted response times for emergency routine repairs, of 97% and 94% respectively, were achieved and 97% of repair appointments made were kept. 100% of gas appliances were inspected in the year. New cleaning and grounds services providers are providing improved services at lower costs and with improving levels of resident satisfaction. New estate services contracts commenced with expected savings of £330k per annum.
13
BUSINESS AND FINANCIAL REVIEW Year Ended 31 March 2012
Listening to residents and acting on their views, putting them at the centre of service delivery The number of resident estate inspectors increased to 95. Focus groups on indebtedness were held with struggling singles and families. Residents were consulted and involved in every stage of the re-procurement of our estates services. Contributing to and improving our local communities We have assisted the personal development of residents in a number of ways including a Community Investment Strategy, a Training Centre where increasing numbers of residents receive training, and a Priority Neighbourhoods Strategy. We aim to support residents to get into employment by
identifying barriers to employment and working together to reduce and eliminate these. We also support residents to get training and skills to prepare them for work or to move up in work. Working in partnership with a range of other organisations, last year we supported 112 residents get closer to the job market or directly into work of which: › › › ›
17 moved into work 7 young people achieved apprenticeships 17 were engaged in volunteering 71 received training
Supporting residents into work Twenty year old Blake Murphy from Hounslow got a job with the Heathrow Academy thanks to TVH’s Into Work project. The 20 year-old Hounslow resident is now a fulltime ramp agent at Heathrow Airport. TVH encouraged Blake to apply to the Academy and after passing a test he had a month’s part-time work before being offered a full-time job doing baggage handling, loading and offloading planes. He’s one of a number of residents to benefit from TVH’s employment support, which includes help with confidence, CVs and interview technique.
14
BUSINESS AND FINANCIAL REVIEW Year Ended 31 March 2012
We also contributed significantly last year to the growth and development of our communities. Funded from our surpluses, we welcome applications for investments which: › Improve our residents life chances through training, capacity building, active citizenship and access to employment; or › Support initiatives to tackle residents’ priorities, or › Help our residents play an active role in their communities; or › Encourage young people to play a part in their communities and engaging in constructive activities; or › Increase access to projects and services which benefit the community. In 2011/12, we invested £50,000 in 24 projects, securing a further £258,000 in funding from partners. This helped over 5,000 households in
12 local authority areas. In addition, we completed our Investment Programme in Rushmoor, developing projects such as a summer youth programme which offered young people free activities throughout the school holidays. A series of successful workshops also allowed residents to discussand explore solutions to local community tensions. In 2012/13 we intend to: › Engage 150 young people in community investment projects › Deliver 10 environmental projects, including new infrastructure projects for sustainable food growing › Develop new projects in health and sport › Train 5 Community Champions who will lead and deliver community projects › Identify new Community Investment Priority Areas and agree our approach and methodology for the next three years.
Summer in da Boro Rushmoor Providing positive activities and helping young people to reach their full potential is a key objective of Thames Valley Housing’s Community Investment Strategy. We have worked with our partners in Rushmoor to initiate a brand new free summer youth programme for 5 – 19 year olds that offered everything from basketball to street dance. All the activities proved a huge hit with local young people with over 400 individual young people taking part in the project.
15
BUSINESS AND FINANCIAL REVIEW Year Ended 31 March 2012
OBJECTIVE 2 ACHIEVE SUBTAINABLE GROWTH BY: Providing a range of quality affordable homes The Group has continued significant growth through an ongoing programme for delivering new social housing homes. The programme focused this year on the production of new Social Rented Homes and the construction and sale of Low Cost Home Ownership Homes (LCHO). › 85 units of social rented homes were completed in the year with 370 units were under construction at year end › 130 low cost home ownership properties were also completed with 32% sales of first tranche equities. 192 units were under construction at year end.
The Group has also contracted with the HCA to deliver over the next three years, a programme of Affordable Rent Homes. 800 homes will be produced, 400 for the Group and 400 for a consortium of five other Registered Providers. The consortium is led by the Group. Being innovative and creative in current market conditions, to enable the development of new housing products We continue to prioritise the purchase of land either directly or as options to purchase. Looking forward this activity will continue to be focussed on South and South West London, Surrey and Berkshire. The Group remains one of two bidders for the Woking non-HRA Housing PFI which comprises 224 new affordable homes. The final bid submission is July 2012.
High quality, sustainable homes Pine Court in Addlestone provided 39 new homes for social rent, including 11 houses for families. They were built by a TVH-led partnership with Wates Living Space and Runnymede Borough Council. Built to code level 3 for Sustainable Homes, the homes are 25% more energy efficient than those built to standard regulations and include solar thermal collector panels, and sustainable urban drainage systems.
An ambitious new community in Woking If our bid is successful, we will build 224 new homes as part of the Woking PFI. 75% will be houses and 50%, 3 bedroom family homes, entirely for social rent. The environmental credentials of the new homes – Code for Sustainable Homes Level 4 – combined with an extensive and ambitious public realm, allotments, and a permanent, full-time, on-site management presence will deliver a truly sustainable neighbourhood.
16
BUSINESS AND FINANCIAL REVIEW Year Ended 31 March 2012
By year end the Group had signed two contracts for the purchase by its subsidiary, Fizzy Enterprises, of 140 units of new build apartments for market rent. The units are in Epsom, (part of the redevelopment of the station) and in Canning Town, (part of the Vermillion redevelopment of the town centre).
A pipeline of additional blocks of new build apartments is being assembled with the initial objective of delivering 1000 apartments in Fizzy Enterprises. We are currently sourcing external capital and debt for Fizzy Enterprises.
Market rent for young professional Fizzy Enterprises is responding to the need for high quality, well-managed rented homes for young professionals who are not entitled to social housing and cannot afford a mortgage. Fizzy Epsom will provide 138 apartments, all in an easily commutable location; one of the key requirements of a Fizzy home. The high quality Management Service will make a Fizzy home simple and stress-free to live in, a second key feature of the Fizzy experience.
17
BUSINESS AND FINANCIAL REVIEW Year Ended 31 March 2012
Developing our own brand of homes The proportion of Group design led schemes was maintained at 50% of total Social Housing development. A new design brief has been fully implemented.
During the year the Group’s joint venture subsidiary, Opal Land LLP signed its first contract for a major development of build for sale properties in Southwark. Opal Land LLP is a 50% owned joint venture with Galliford Try.
Rationalising our areas of operation enabling further growth in our core area Management and ownership arrangements for our housing stock in non-core areas have been rationalised. We have put in place outsourced management in some instances and disposed of housing stock where appropriate. A number of units of Housing Stock were sold in Hammersmith, Fulham and Kensington and Chelsea. The sales proceeds have all been reinvested in new social housing.
Generating profits through Private Sale Thames Valley Housing is taking positive steps to expand its commercial activities in order to generate a profit which can be used to subsidise the provision of affordable homes. The first project is already underway – with Linden Homes; Galliford Try’s residential arm. The partnership has purchased a site on Blackfriars Road in Southwark and is seeking planning approval to develop a building of luxury residential apartments, with retail/ restaurant units at ground level.
18
BUSINESS AND FINANCIAL REVIEW Year Ended 31 March 2012
OBJECTIVE 3 BUILDING OUR SOCIAL BUSINESS BY: Maintaining financial capacity to fund our objectives Fully committed and secure loan finance is in place to cover all of our current and projected funding requirements for the next three years. Ensuring we are effectively governed and accountable New Board Members have been recruited during the year to ensure we had skills in development, finance, business, housing management and customer services and a Board development programme was implemented. This brought new Board members up to speed with the challenges facing housing associations into the future and ensured members were briefed on changes in regulation, accounting standards and welfare reform. Regular briefings on all areas of our business such as the land market, our community investment strategy, and procuring estate services, ensure Board members can affectively review how we are performing. Delivering value for money Value for Money efficiency savings of approximately ÂŁ1.8m were achieved in 2011/12. To improve efficiency and reduced costs, reorganisation of housing services was implemented in the year which will have full effect in 2012/13. Enhancing our use of technology to improve customer services and maximise efficiency Implementations of new housing management and geographic information ICT systems were completed in the year.
19
BUSINESS AND FINANCIAL REVIEW Year Ended 31 March 2012
OUR STRATEGIC OBJECTIVES FOR NEXT YEAR Next year will be the first of our new Corporate Plan for 2012/15. Our plan focuses on the following five strategic objectives: Objective 1 Deliver high quality and efficient customer service Our emphasis will be on performing better and more efficiently in areas of most importance to residents. Current customer satisfaction is benchmarked high.
Objective 2 Increase support services for residents The current economic environment presents significant risks to rent collection given changes to the State’s benefit system and the wider economic pressures on our residents’ income. This will require careful management to ensure rent arrears are robustly yet sensitively controlled. Our community investment, financial inclusion and employment & training strategies will provide support to assist residents to sustain their tenancies.
Objective 3 Grow and diversify the business
Objective 4 Be innovators within the housing sector As a significant regional provider and a leading national player in the intermediate market providing shared ownership, shared equity and key worker homes, we will develop new ideas on the future of the sector. We will modernise our brand to gain recognition for our strengths and achievements. The Localism Act devolves greater power to councils and neighbourhoods and so we will increase engagement with local stakeholders and wider local communities.
Objective 5 Maintain organisational capability Governance arrangements will develop to encompass the new commercial subsidiary boards. Staff development will increase commercial skills, and our people plan will reflect the changing environment in which we work. We will retain our balance sheet strength and ensure our IT systems support improvement in services and efficiency.
This will involve commercial initiatives, using the profits generated to cross subsidise our social housing. Our market rental business, Fizzy Living, will build a quality market rent product for the 25 – 35 year old age group who are increasingly unable to buy and where renting more securely from a good landlord is important. We will also expand our investment in our joint venture with Galliford Try. Growth opportunities through merger, stock transfers or stock swaps will be pursued and the performance of our housing assets reviewed to establish how much they can utilised for further growth.
20
BUSINESS AND FINANCIAL REVIEW Year Ended 31 March 2012
OUR PRINCIPAL RISKS AND HOW THEY ARE MANAGED The Board received regular risk management reports from the Chief Executive throughout the year. These reports were also considered in detail by the Group Audit and Risk Committee and used to decide the year’s internal audit programme. The Internal Control section of this report sets out the Group’s overall framework for internal control, setting the context for the identification, control and monitoring of the principal risks faced by the Group. The principal risks to the Group at this time and how they are controlled are as follows: RISK
CONTROLS
New affordable rent development programme Risk of schemes under new affordable rent regime with fixed-term tenancies not proving financially viable.
ff Business plan modelling to ensure sufficient headroom on gearing. ff Reduced exposure by limited development programme. ff Clear exit strategy which includes use of fixed-term tenancies so that we retain the option of selling schemes. ff Programme limited to mainly one and two bed properties. ff Rents set at below Local Housing Allowance caps to ensure affordability.
Joint venture and private sector initiatives These initiatives present an increased commercial exposure to market rent and sales
ff ff ff ff
Resident satisfaction levels fail to improve
ff Monthly surveys have been instigated to track satisfaction. ff Resident-led audits are undertaken on services, and these are used to inform action plans. ff Improved procedures for appointing and monitoring estate management companies. ff A re-organisation of housing services is being implemented to improve satisfaction and reduce costs.
Implementation of International financial reporting standards Potential adverse impact on balance sheet, Income & Expenditure & business plan.
ff Prediction of possible changes and their impact on lender covenants. ff Advisors retained to undertake an impact assessment. ff Financial impact assessed in the business plan
Business plan modelling to ensure sufficient headroom on gearing. Professional advice on commercial exposure. Intensive Executive and Board scrutiny. Effective exit strategies.
21
BUSINESS AND FINANCIAL REVIEW Year Ended 31 March 2012
Potential increased funding costs/ lender difficulties Potential increased funding costs due to Basle 3 and banks limiting exposure to the social market.
ff New treasury strategy to manage interest rate exposures. ff Business Plan models potential increased finance costs.
Changed welfare benefits regime Adverse impact of Welfare Benefit restrictions on ability to maintain rent collection levels
ff Improved procedures for rent collection and money advice ff Roll out financial inclusion strategy for residents
Insolvency of developers or contractors Could put the development programme, housing services or the sales programme at risk.
ff Full credit analysis performed. ff Appropriate bonds, warranties and guarantees are secured. ff Parent company guarantees are sought to mitigate risk of contractor insolvency. ff The financial position of the main contractors is checked every 6 months.
OUR STAFF The knowledge, skills, and abilities of our staff are key to our ability to deliver our strategy and objectives. Our core values remain the “passport” for staff to work at Thames Valley Housing, and are reinforced through our induction and performance management systems. Our Investors in People Gold Award is recognition of the high standards we expect of ourselves and our commitment to training.
During the year, we restructured our Training Centre, bringing on board three partner Housing Associations and setting it up as a separate social enterprise, “Academy 4 Housing”. It is accredited by City and Guilds and the Chartered Institute of Housing to provide professional qualifications and we now contract with Academy 4 Housing for these services for our staff and residents.
THE ENVIRONMENT AND SUSTAINABILITY The Group recognises its responsibilities to society and the environment and is committed to being a best practice exemplar organisation, having integrated sustainability into its undertakings and business decisions. Our Group has embedded a commitment to sustainability within the purpose and core values of its planning and business processes. The 2010/11 Sustainability Strategy addressed the environmental impact of our new developments of our existing building stock and of our internal operations.
Last year was the second year of the renewed sustainability strategy which is targeted at four core objectives: 1. Development of new homes 2. Existing building stock 3. Internal operations 4. Sustainable communities Our Group has embedded a commitment to sustainability within the purpose and core values of its planning and business processes. The 2010/11 Sustainability Strategy addressed the environmental impact of our new developments, of our existing building stock and of our internal operations.
22
BUSINESS AND FINANCIAL REVIEW Year Ended 31 March 2012
BENCHMARKING & PERFORMANCE Competitiveness is achieved by the targeted delivery of top quartile service outcomes at a cost that measures within the upper quartile (i.e. lowest cost) in comparison to our benchmark group which comprises 50 housing associations and ALMOS in London and the South East. The Board annually reviews performance against this aim as an integral part of determining whether the Group is meeting wider national efficiency expectations.
The Group’s performance management framework is linked to strategic Performance Indicators which are cascaded down through management and staff appraisal targets. Areas of weakness have been reported to the Board throughout the year as part of our drive for continuous improvement and action incorporated into Directorate plans.
EQUALITY AND DIVERSITY The Group is committed to promoting equality and celebrating diversity. It has adopted the strategy of a whole organisational approach to equality and diversity. The Group believes that no person should suffer disadvantage by reason of their race, or because of their religion or faith, gender, sexuality, marital or civil partnership status, pregnancy or
maternity, age, or disability. We collect details of the characteristics of our residents and carry out a customer profiling to tailor our services to the needs of all categories of our residents. We work with a number of specialist organisations that offer support to our residents and the wider community.
HEALTH AND SAFETY With health and safety of vital concern to us, we have committed to a stretching Health and Safety target, and employ an external firm of Health and Safety specialists. Last year there were 6 reported incidents of minor accidents, with no RIDDOR accidents (Reporting of Injuries, Diseases and Dangerous Occurrences Regulations).
Our Health and Safety Index is annually agreed and reviewed by the Board. The index measures safety across a number of key areas throughout the Group, last year scoring 95% (2010/11: 98.5%).
VALUE FOR MONEY Strategic Context Value for Money (VfM) is included as a Corporate Plan goal. The goal is delivered by annual and longer-term projects, each of which is the responsibility of a director or senior manager. Achievement is monitored through the Executive and reported to the Board. During the year:
› Efficiency savings of approximately £1.8m were achieved; › A corporate procurement strategy was approved, cost savings are expected in 2012/13 › A review of costs and benchmarking informed a review of our housing services, which will result in lower costs in 2012/13
23
BUSINESS AND FINANCIAL REVIEW Year Ended 31 March 2012
FINANCIAL REVIEW Overview and headline results The year has seen a consistently strong financial performance by the Group, delivering a net surplus of £17.6m, more than double the previous year’s figure of £8.5m. The Group has adopted this year, the new requirements of the Statement of Recommended Practice: Accounting by Registered Social Providers Update 2010 (SORP 2010). The only material financial change arising from SORP 2010 relates to our property assets and how we account for their depreciation and major repair costs. Implementation of SORP 2010 has resulted in a prior period reduction of reserves and an increase in the year’s surplus. Brought forward reserves have been reduced by £9.8m resulting from an increased cumulative depreciation charge on housing properties. The surplus for the year has improved by £2.8m due to capitalisation of major repair costs and a reduction in the depreciation charge for the year.
Income and Expenditure 2012
2011
£’000
£’000
84,583
72,960
Cost of Sales
(19,949)
(17,085)
Operating Costs
(37,012)
(35,681)
Operating Surplus
27,622
20,194
Operating Surplus as a percentage of Turnover
32.6%
27.7%
Surplus on Sale of Fixed Assets
11,694
6,762
(21,679)
(18,483)
Surplus
17,637
8,473
Surplus as a percentage of Turnover
20.9%
11.6%
Turnover
Interest Payable
Operating Surplus has improved to £27.6m from £20.2m in the previous year as Turnover increased by £11.6m to £84.6m, but costs increased by only £4.2m. The sale of first tranches of Shared Ownership properties contributed £8.7m of the increased Turnover, with Cost of Sales £6.1m higher, resulting in profit of £2.6m compared with £0.8m the previous year. The improvement was achieved through higher volumes of sales (282 compared with 227 in the prior year), and increased profit margin (13.9% compared with 8%). The operating surplus generated by our Social Housing increased by £3.2 million from £24m to £27.2m. Turnover increased by £4.8m. Operating Costs increased by £1.6m, resulting in an increased surplus of £3.2m. As a consequence the Operating Margin has increased from 27% to 32.%. The increase in operating costs was largely driven by maintenance costs increasing by £1.5m from £5.2m to £6.7m as the number and average cost of repairs increased. Our Commercial Housing (Student, Market Rent and NHS accommodation) returned an operating surplus of £0.8m, slightly lower than the previous year’s surplus of £0.9m due to cyclical replacement of fittings in the Student and NHS accommodation, which were expensed rather than capitalised. Surplus on Sale of Fixed Assets increased from £6.8m to £11.7m. 136 properties in Hounslow, Kensington & Chelsea and Fulham were sold, completing a programme of 250 property sales commenced in 2011. Interest payable increased from £18.5m to £21.7m after capitalisation of £1.7m of interest (2011:£3.5million).
Taxation No tax arises as taxable surpluses in TVHA are offset by Gift Aid payments to TVCHA.
24
BUSINESS AND FINANCIAL REVIEW Year Ended 31 March 2012
Balance Sheet
2011/12 Housing Tenure by type 2012
2011
£’000
£’000
998,249
944,965
(400,379)
(390,027)
(37,503)
(31,026)
560,367
523,912
87,142
92,663
(72,005)
(76,829)
(470,772)
(468,038)
Stock & Work in Progress
18,559
27,689
Cash
58,377
67,038
Other
(11,735)
(15,369)
169,933
151,066
Reserves
169,933
151,066
Revaluation Surpluses
270,603
238,411
Housing Properties at Cost Social Housing Grant Depreciation
Homebuy Equity Loans Grant on Homebuy Equity Loans Debt
Housing Properties at cost increased by £53m to £998m from £945m, driven by completed developments of 102 Social Rent, 113 Student and 55 Shared Ownership properties. The Group owns, manages and administers 14,639 homes in total.
Rented & Other Housing • General Ownership • Shared Key Worker • Key Worker Loans • Leaseholder NHS • Student Accommodation •
36% 27% 16% 11% 7% 3%
Social Housing Grant increased by £10.4m to £400.4m from £390m, as new Grant was secured for the development programme. Investment in Market Rent Property commenced with investments of £16.1m across two developments in Epsom and Canning Town comprising a total of 140 units. Contracts were signed on a development in Southwark where £2.9m was invested in the build for sale Joint Venture with Galliford Try. Depreciation has increased by £6.4m from £31.1m to £37.5m largely due to SORP 2010. Sales of Shared Ownership properties have reduced the level of investment in Work in Progress, from £27.7m to £18.6m. Secure funding lines with existing lenders have enabled the retention of £58.3m of cash. A minimum of six month’s cash outflow is held as part of treasury policy, and the Group has secured finance for all of its planned expansion over the next 3 years.
25
BUSINESS AND FINANCIAL REVIEW Year Ended 31 March 2012
TREASURY
A further £68m is available from agreed facilities with lenders.
The Group is financed by a combination of revenue reserves, long-term loan facilities and social housing grant from Government.
Revenue Reserves increased to £169.9m from £151.1m. Properties are held at cost but the existing use value of the property portfolio is used for Gearing calculations by our lenders. Property values increased to £270.6m in excess of cost, £32.1m higher than the previous year surplus of £238.4m.
Cashflow A summary of the cashflow for the year is set out in the table below. 2012
2011
£’000
£’000
36,068
32,549
(23,540)
(21,753)
20,339
12,497
(55,116)
(61,607)
Social Housing Grant Received
8,506
26,593
Other
2,348
2,225
Loans Received
5,753
33,010
Operating Cashflow Interest Paid Property Sales Construction of Housing Properties
Loans Repaid
(3,019)
(2,288)
(Decrease)/Increase in Cash
(8,661)
21,226
Group priorities are to ensure that there is sufficient liquidity to fund operations for a minimum of one year, reduction in the impact of adverse movements in interest rates, ensuring loan covenants are comfortably met, and ranking the preservation of capital rather than financial returns when making investment decisions.
Debt restructuring Over the past two years all debt and loan facilities have been moved out of TVHA into TVCHA, so as to leave the Group parent TVHA with both no debt and no group loan covenants while ensuring that TVCHA had capacity to fund its development programme for the next three years. By 31 March 2012, all debt and loan facilities had been transferred to TVCHA. TVHA now has no debt, has £105m of revenue reserves and is totally un-geared. TVHA will continue to develop shared ownership for the foreseeable future. This development will be financed by its reserves.
Loan structure At 31 March 2012 there were drawn loans totalling £476 million and un-utilised loan facilities of £68 million all of this in TVCHA. All un-drawn loans are committed facilities of which £48 million is fully secured and available for drawing within 48 hours. Cash held at the year end totalled £45 million (£14m in TVHA, £31m in TVCHA), leaving net group debt at £430 million (2011: £408 million).
Operating Cashflow has increased from £32.5m to £36.1m as Turnover increased more than costs, improving the operating margin. Cashflow from Property Sales (first tranches of Shared Ownership properties and Sales of Fixed Assets) increased by £7.8m from £12.5m to £20.3m. Expenditure on Construction of Housing Properties reduced by £6.5m from £61.6m to £55.1m.
26
BUSINESS AND FINANCIAL REVIEW Year Ended 31 March 2012
Drawn loans by lender
Debt repayment profile
Barclays Bank is the main lender to TVCHA with drawn loans totalling £218m. The remaining loan debt has been provided by various banks and building societies, bond issues and the European Investment Bank.
The weighted average duration of drawn debt is 17 years. The Group’s treasury strategy is to ensure that refinance risk is minimised. Capital repayments as a percentage of total committed facilities in any one year are never more than 9% and do not start to become significant until 2019. An analysis of the capital repayment profile is shown below.
Capital repayment - £m
250
200
150
100
50
0
• Barclays • HBOS BS • Newcastle Abbey • Nationwide • Dexia • Housing Association Finance • THFC • European Investment Bank •
46% 15% 10% 8% 6% 5% 4% 3% 3%
Within one Year
Between one and five years
Between five and ten years
Between ten and twenty years
Greater than twenty years
Cash management The Group retained significant cash balances throughout the year, protecting the business from extreme market shocks. Given the ongoing global difficulties being encountered by banks, particularly in Europe, we have adopted a very prudent approach to financial liquidity. Our current cash management strategy requires us to hold cash equivalent to six months net cash requirement. We have also tightened our credit requirements in our cash investment operations. Our very conservative investment parameters require that cash may be only invested short term with AAA rated money market funds and repurchase agreements.
27
BUSINESS AND FINANCIAL REVIEW Year Ended 31 March 2012
Currency risk
Surplus assets for future debt security
The Group borrows and invests surplus cash only in sterling and does not have currency risk.
There are currently 1,283 unsecured completed housing properties in TVCHA not required for charging to existing debt facilities. These are sufficient to secure an additional £64m of future new debt on an asset cover ratio of 1.25%.
Interest rate management At the financial year end, 91% of debt was fixed (2011: 92%). We project that this fixed percentage will drop to 82% by April 2013. The fixed rate element of debt is achieved largely through the use of embedded swaps with a small amount of index linked bonds. We have no exposure to derivative margin calls. Cost of borrowing in the year was 4.83% (2011: 4.87%).
In addition, the current development programme will complete over the next two years approximately 467 new properties funded by existing already charged debt. These 467 properties will be surplus security available for charging sometime in the future and would secure a further £25m of new debt for TVCHA.
Loan covenant compliance
Future funding options
There are now no Group loan covenant requirements, all debt is in TVCHA and lenders have no recourse to TVHA. Loan covenants are primarily determined by interest cover, gearing ratios and asset cover, based on property asset values.
At 31 March 2012, £112.9m of finance was available to the Group, comprising of £68m un-drawn facilities in TVCHA and £45m of cash; this is sufficient funding over the next 4 years, to March 2016 for all committed and pipeline developments and the contractually committed affordable rent programme. We are currently working on options to fund planned growth in the subsequent years from 2016 onwards.
Covenants are monitored continuously and were comfortably met throughout the year and at the year end for all loan facilities.
We are also considering a number of offers from third parties of equity and debt finance of TVHA’s expansion into market rent properties. All funding of market rent properties has so far been achieved through the use of TVHA’s cash surpluses.
80%
250%
70%
Going concern
60% 50%
150%
40% 100%
Gearing
Interest cover
200%
30% 20%
50%
10% 0%
0%
2010/11
2011/12
interest cover • Actual interest cover requirement • Minimum Actual gearing • Maximum gearing requirement •
28
The Board is satisfied that no material or significant exposures exist other than as reflected in these financial statements and that the Group has adequate resources to continue operations for the foreseeable future. For this reason the going concern basis has continued to be used in preparing the financial statements.
BUSINESS AND FINANCIAL REVIEW Year Ended 31 March 2012
INTERNAL CONTROL The Board has overall responsibility for establishing and maintaining the whole system of internal control and for reviewing its effectiveness. This applies to all organisations within the Group. The Board recognises that no system of internal control can provide absolute assurance or eliminate all risk. The system of internal control is designed to manage risk and to provide reasonable assurance that key business objectives and expected outcomes will be achieved. It also exists to give reasonable assurance about the preparation and reliability of financial and operational information and the safeguarding of each Association’s assets and interests. In meeting its responsibilities, the Board has adopted a risk-based approach to internal controls which are embedded within the normal management and governance process. This approach includes the regular evaluation of the nature and extent of risks to which the Group is exposed and is consistent with the Tenant Services Authority’s Governance and Financial Viability standard. Regular management reporting on control issues and risk provides assurance to successive layers of management and to the Board. The arrangements include rigorous procedures, monitored by the Group Audit and Risk Committee, for ensuring that corrective action is taken in relation to any significant control and risk issues. The internal control framework and risk management process are subject to regular review by Internal Audit which is responsible for providing independent assurance to the Board via the Group Audit and Risk Committee. The Group Audit and Risk Committee and the Group’s Boards consider internal control and risk at their meetings during the year. The Internal Audit function is externally resourced and reports directly to the Group Audit and Risk Committee. The Internal Audit Programme is built from the risk identification process.
As part of the system of internal control the Group has a strategy and policy on fraud covering prevention, detection and reporting of fraud and the recovery of assets which meets the Tenant Services Authority requirements. The Group has a Money Laundering Officer. The Board has received the Executive Directors’ annual report on internal controls assurance, including arrangements for managing fraud; the annual review of the effectiveness of the system of internal control from the Group Audit and Risk Committee; and the annual Health & Safety Report and has taken account of any changes needed to maintain the effectiveness of the risk management and control process. The Board confirms that there is an ongoing process for identifying, evaluating and managing significant risks faced by the Group. This process has been in place throughout the year under review, up to the date of the annual report, and is regularly reviewed by the Board. No significant failings or weaknesses were identified and there were no reported cases of fraud recorded in the fraud register. The process adopted by the Board in reviewing the effectiveness of the system of internal control, together with some of the key elements of the control framework includes: • Identification and evaluation of key risks Management responsibility has been clearly defined for the identification, evaluation and control of significant risks. There is a formal and ongoing process of management review in each area of each Association’s activities. Through a regular reporting framework, this process is co-ordinated by the Executive, Investment Management and Health & Safety Groups which regularly consider reports on significant risks facing each Association. The Chief Executive is responsible for reporting to the Board any significant changes affecting key risks. The Group Audit and Risk Committee has a responsibility for reviewing changes affecting key risks and ensuring that appropriate disaster recovery and contingency plans are in place and are tested regularly.
29
BUSINESS AND FINANCIAL REVIEW Year Ended 31 March 2012
• Monitoring and corrective action A process of control self-assessment and regular management reporting on control issues provides hierarchical assurance to successive levels of management and to the Boards. This includes a rigorous procedure for ensuring that corrective action is taken in relation to any significant control issues, particularly those with a material impact on the financial statements. The Group Audit and Risk Committee has responsibility for reviewing each Association’s risk management systems. A performance monitoring unit oversees the production of a monthly reporting suite which covers key performance indicators used to monitor performance against the business plan. Performance outcomes are given a traffic light assessment and management responses are formally recorded for required control action. • Control environment and control procedures The Board retains responsibility for a defined range of issues covering strategic, operational, financial and compliance issues including treasury strategy and new investment projects. The Group follows risk-averse policies to shield it from adverse movements in interest rates. The Board disseminates its requirements to all employees through the Group’s policies with regard to the quality, integrity and ethics of its employees. It is supported by a framework of policies and procedures with which all employees must comply. These cover issues such as delegated authority, segregation of duties, accounting, treasury management, health and safety, data and asset protection, fraud prevention and detection and money laundering. The Group Audit and Risk Committee receives and considers internal audit reports which include recommendations to strengthen the control environment. The Group Audit and Risk Committee receives twice a year a risk management review report from the Chief Executive. The Board of each Association also receives regular risk management review reports each year.
The Group Audit and Risk Committee reviews the proportionality, independence and appropriateness of the Group’s whistleblowing policy and follow up action. It also receives reports on the entries in the gifts and hospitality register, any instance of fraud or suspected instances of money laundering. The Group has set up procedures to review and record instances covered by the Bribery Act 2010 and has put in place a training programme for Board Members and staff. Regular reports are received by the Group Audit and Risk Committee. • Information and financial reporting systems Financial reporting procedures include for each Association detailed budgets for the year ahead with a monthly reporting cycle that identifies variances and forecasts for subsequent years with a comprehensive Business Plan for the next 5 and 30 years. These are reviewed and approved by the Boards. The Boards also regularly review key performance indicators to assess progress towards the achievement of key business objectives, targets and outcomes.
30
BUSINESS AND FINANCIAL REVIEW Year Ended 31 March 2012
STATEMENT OF BOARD RESPONSIBILITIES The Board is responsible for preparing financial statements in accordance with applicable law and United Kingdom Generally Accepted Accounting Practice for each financial year, which gives a true and fair view of the state of affairs of the Association and the Group and of the surplus or deficit for that period. In preparing those financial statements, the Board is required to: ff
Select suitable accounting policies and then apply them consistently;
ff
Make judgements and estimates that are reasonable and prudent;
ff
State whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
ff
Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Association and the Group will continue in business.
The Board is responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Association and the Group and to enable it to ensure that the financial statements comply with the Industrial & Provident Societies Acts 1965 to 2002, the Industrial & Provident Societies (Group Accounts) Regulations 1969, the Housing and Regeneration Act 2008 and the Accounting Requirements for Registered Providers General Determination 2006. It has general responsibility for taking reasonable steps to safeguard the assets of the Association and to prevent and detect fraud and other irregularities.
SHARE CAPITAL The non executive Board members of TVHA and TVCHA each hold one fully paid share of £1 in the Association which carries no rights to dividends or other income. The Secretary and Executive Officers hold no interest in the Association’s share capital.
AUDITORS
All the current Board Members have taken all of the steps that they ought to have taken to make themselves aware of information needed by the Association’s auditors for the purpose of their audit and to establish that the auditors are aware of that information. The Board is not aware of any relevant audit information of which the auditors are unaware. A resolution to reappoint BDO LLP as auditors to Thames Valley Housing Association Limited will be proposed at the next Annual General Meeting. BY ORDER OF THE BOARD
JOHN GARRITY Chair Date: 29 August 2012
31
REPORT OF THE INDEPENDENT AUDITORS ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
To The Members Of Thames Valley Housing Association Limited We have audited the financial statements of Thames Valley Housing Association Limited for the year ended 31 March 2012 which comprise the consolidated and association income and expenditure accounts, the consolidated and association balance sheets, the consolidated statement of total recognised surpluses and deficits, the consolidated note of historical cost surpluses and deficits, the consolidated cash flow statement, 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). This report is made solely to the association’s members, as a body, in accordance with the Housing and Regeneration Act 2008 and section 9 of the Friendly and Industrial and Provident Societies Act 1968. Our audit work has been undertaken so that we might state to the 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 association and the association’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of the board and auditors As explained more fully in the statement of board member responsibilities, the board members are 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 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 (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided on the APB’s website at www.frc.org.uk/apb/scope/private.cfm.
Opinion on financial statements In our opinion the financial statements: ff give a true and fair view of the state of the group’s and parent association’s affairs as at 31 March 2012 and of the group’s and parent association’s surplus for the year then ended; ff have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and ff have been prepared in accordance with the requirements of the Industrial and Provident Societies Acts 1965 to 2002, the Industrial and Provident Societies (Group Accounts) Regulations 1969, the Housing and Regeneration Act 2008 and the Accounting Requirements for Registered Social Landlords General Determination 2006.
Matters on which we are required to report by exception We have nothing to report in respect of the following matters where we are required to report to you if, in our opinion: ff the information given in the Report of the Board for the financial year for which the financial statements are prepared is not consistent with the financial statements; ff adequate accounting records have not been kept by the parent association, or returns adequate for our audit have not been received from branches not visited by us; or
32
REPORT OF THE INDEPENDENT AUDITORS ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
ff a satisfactory system of control has not been maintained over transactions; or ff the parent association financial statements are not in agreement with the accounting records and returns; or ff we have not received all the information and explanations we require for our audit.
BDO LLP, statutory auditor Gatwick, West Sussex United Kingdom Date: 29 August 2012 BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
33
INCOME AND EXPENDITURE ACCOUNTS Year Ended 31 March 2012
Group Note
2012
Association 2011
2012
Restated
2011 Restated
£’000
£’000
£’000
£’000
TURNOVER
2
84,583
72,960
46,274
40,359
Cost Of Sales
2
(19,949)
(17,085)
(19,949)
(17,085)
Operating Costs
2
(37,012)
(35,681)
(17,950)
(18,088)
27,622
20,194
8,375
5,186
OPERATING SURPLUS Surplus On Sale Of Fixed Assets
4
11,694
6,762
71,244
2,067
Interest Receivable
7
1,133
328
571
94
Interest Payable
8
(22,812)
(18,811)
SURPLUS ON ORDINARY ACTIVITIES BEFORE TAX
9
17,637
8,473
Charitable Donation Paid
28
-
-
Tax On Surplus On Ordinary Activities
10
-
-
-
-
REPORTED SURPLUS ON ORDINARY ACTIVITIES
22
17,637
8,473
41,222
55
34
(6,383) 73,807 (32,585)
(7,292) 55 -
INCOME AND EXPENDITURE ACCOUNTS Year Ended 31 March 2012
STATEMENTS OF TOTAL RECOGNISED SURPLUSES AND DEFICITS Group Note
REPORTED SURPLUS ON ORDINARY ACTIVITIES Unrealised Surplus/(Deficit) On Revaluation Of Investment Properties
17,637
13
Total surpluses recognised for the year Prior Year Adjustment
2012
1,230 18,867
33
(9,831)
Total surpluses recognised since the last annual financial statements
9,036
Association 2011
2012
2011
Restated
Restated
£’000
£’000
8,473
(39) 8,434
41,222
(10) 41,212
55
(39) 16
833
42,045
All amounts relate to continuing activities. There is no difference between the results disclosed in the Income and Expenditure accounts and those on an unmodified historical cost basis. The notes on pages 38 to 72 form part of these financial statements. The comparatives for the year ended 31 March 2011 have been restated as the group has adopted component accounting in accordance with the Statement of Recommended Practice (SORP) Accounting by Registered Social Housing Providers updated in 2010. We have also changed our accounting policy in relation to the treatment of depreciation of low cost Home Ownership properties. Further details can be found in Note 33 to these financial statements.
35
BALANCE SHEETS Year Ended 31 March 2012
Group 2012
Note
Association 2012
£’000
2011 Restated £’000
£’000
2011 Restated £’000
14,968
318,185
FIXED ASSETS Housing Properties At Cost
11
998,249
944,965
Social Housing Grant
11
(400,379)
(390,027)
(5,961)
(97,674)
Depreciation
11
(37,503)
(31,026)
(1,254)
(2,962)
560,367
523,912
7,753
217,549
Investments in Joint Venture and Associate
28
3,051
-
100
-
Other Fixed Assets
13
9,925
6,569
3,995
5,776
Homebuy Equity Loans Advanced
14
87,142
92,663
-
92,663
Grant Received On Homebuy Equity Loans
14
(72,005)
(76,829)
-
(76,829)
588,480
546,315
11,848
239,159
15
18,559
27,689
52,889
26,649
Amounts Receivable Within One Year
16
7,397
7,750
46,744
5,293
Amounts Receivable After One Year
16
CURRENT ASSETS Stock And Work In Progress Debtors:
Cash At Bank And In Hand
779
378
779
378
58,377
67,038
13,519
12,876
85,112
102,855
113,931
45,196
CREDITORS Amounts Falling Due Within One Year
17
(23,769)
(21,585)
61,343
81,270
104,194
(42,015)
649,823
627,585
116,042
197,144
17
479,890
476,519
11,298
133,612
Non-Equity Share Capital
21
-
-
-
-
Revenue Reserve
22
168,477
150,840
104,536
63,314
Investment Property Revaluation Reserve
22
1,456
226
208
218
649,823
627,585
116,042
197,144
NET CURRENT ASSETS/(LIABILITIES) TOTAL ASSETS LESS CURRENT LIABILITIES
(9,737)
(87,211)
CREDITORS Amounts Falling Due After More Than One Year CAPITAL AND RESERVES
These financial statements were approved and authorised for issue by the Board on 29 August 2012 and signed on its behalf by:
John Garrity Gerard McCormack Jack Stephen Chair Chair, Group Audit & Risk Committee Finance Director The notes on the pages 34 to 72 form part of these financial statements
36
Patricia Etter Company Secretary
CONSOLIDATED CASH FLOW STATEMENT Year Ended 31 March 2012
2012 Note NET CASH INFLOW FROM OPERATING ACTIVITIES
£’000
23
£’000
2011 Restated £’000
36,068
£’000 32,549
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest Received
1,133
Interest Paid
328
(24,673)
(22,081) (23,540)
(21,753)
12,528
10,796
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Proceeds From Sales Of Low Cost Home Ownership/ Subsequent Tranches And Right To Buy/Acquire Construction And Purchase Of Housing Properties
20,399
12,497
(55,116)
(61,607)
Purchase Of Other Fixed Assets
(3,233)
(1,446)
Social Housing Grant Received
8,506
26,593
-
204
Homebuy Grants Received Homebuy Loans Advanced
(425)
Homebuy Loans Redeemed
-
5,946
3,467
NET CASH OUTFLOW FROM CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
(23,923)
(20,292)
CASH OUTFLOW BEFORE FINANCING
(11,395)
(9,496)
FINANCING Loans Received
5,753
Loans Repaid
33,010
(3,019)
(2,288)
NET CASH INFLOW FROM FINANCING
23
2,734
30,722
(DECREASE)/INCREASE IN CASH IN THE YEAR
23
(8,661)
21,226
The notes on pages 38 to 72 form part of these financial statements.
37
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
1. PRINCIPAL ACCOUNTING POLICIES The financial statements have been prepared under the historical cost convention, as modified by the revaluation of investment properties, and in accordance with: ff The Industrial and Provident Societies Acts 1965 to 2002. ff The Industrial and Provident Societies (Group Accounts) Regulations 1969. ff The Accounting Requirements for Registered Social Landlords General Determination 2006. ff Applicable Accounting Standards with special regard to the Statement of Recommended Practice; Accounting by Registered Social Housing Providers Update 2010. Joint Ventures Joint Ventures are accounted for in accordance with Financial Reporting Standard 9 ‘Associates and Joint Ventures’ in the consolidated financial statement using the ‘Gross Equity’ method, and in the Association’s individual financial statements as a current asset investment shown at cost. Investments in Subsidiaries Investments in subsidiaries are shown at cost. Basis of Consolidation The consolidated accounts comprise the financial statements of Thames Valley Housing Association Limited and its subsidiary undertakings Thames Valley Charitable Housing Association Limited, TVH Fizzy Holding Limited, Fizzy Enterprises LLP and Fizzy Epsom LLP. Intra-group transactions are eliminated on consolidation. The consolidated financial statements have been prepared in accordance with FRS2 “Accounting for Subsidiary Undertakings”.
Housing Properties Housing properties in the course of construction are stated at cost, and included in fixed assets. Properties under construction are transferred to completed housing properties when they are ready for letting. If housing properties are being developed on behalf of other associations outside the Group under agency arrangements, the costs concerned are dealt with under current assets as properties held for resale. Completed housing properties are stated at cost. Separate disclosure of a valuation of the housing properties based on Existing Use Value for Social Housing (EUV-SH) is also provided in note 12 on the financial statements. Housing properties are subject to annual impairment reviews. This has been done on a portfolio basis in accordance with the way these properties are managed. If housing properties have suffered impairment, the fall in value to the recoverable amount is recognised in the income and expenditure account after deducting any related Social Housing Grant. Shared Ownership Properties Shared Ownership properties are split proportionately between current and fixed assets based on the element relating to expected first tranche sales. The first tranche proportion is classed as a current asset and related sales proceeds included in turnover. The remaining element is classed as a fixed asset and included in housing properties as cost, less any provisions needed for impairment. Shared Ownership Properties are not depreciated.
Turnover Turnover represents rental income receivable (after deducting lost rent from void properties available for letting), first tranche sales of Low Cost Home Ownership housing properties developed for sale, service charges receivable, income from Homebuy activities, revenue grants from the HCA and proceeds from the sale of land and property.
38
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
Market Rented Properties Market rented properties held as investments are revalued annually. Any excess deficit over cost is realised through the income and expenditure account to the extent that this represents a permanent diminution in value of the property. No depreciation is provided in respect of Market Rented Properties. Pre-Contract Costs Pre-contract costs are recognised as an asset only if they are directly attributable to specific contracts, can be separately identified, measured reliably and when there is virtual certainty that a contract will be obtained and is expected to result in future net cash inflows. Social Housing Grant Social Housing Grant (SHG) is a capital grant made towards the cost of acquiring and/or building housing for rent or sale. SHG is repayable unless formally abated or waived although it can be recycled (see Recycled Capital Grant Fund below). On the occurrence of certain relevant events, primarily following the sale of property, the SHG repayable or to be recycled will be restricted to the net proceeds of sale where appropriate. In recognition of this, the HCA’s right to recover SHG is subordinated to loans from external lenders. SHG which is received in advance of total development costs being incurred is shown as a current liability. SHG received in respect of revenue expenditure is credited to the income and expenditure account in the same period as the income is received. Homebuy Equity Loans Loans advanced by the Association are disclosed in the tangible fixed asset section of the balance sheet with the associated SHG.
The Association has advanced two types of Homebuy Equity Loans; “Open Market Homebuy” and “MyChoice Homebuy”. Under Open Market Homebuy the Association received Social Housing Grant (SHG) representing a percentage of the open market purchase price of a property in order to advance interest free loans of the same amount to a homebuyer. The homebuyer met the balance of the purchase price from a combination of personal mortgage and their own resources. Under MyChoice Homebuy the Association also issued a loan representing a percentage of the open market purchase price of the properties. 50% of this loan is funded from the Association’s own resources and the balance is funded by SHG. In the event that the property is sold, the Association recovers the equivalent loaned percentage value of the property at the time of the sale. The SHG becomes recyclable when the loans are repaid up to the amount of the original grant and to the extent the proceeds permit. The Association is able to retain any surplus proceeds less sale costs attributable to the equivalent loaned percentage share of the value of the property. If there is a fall in the value of the property the shortfall of proceeds is offset against the SHG. In the case of Open Market Homebuy, the Association can suffer no capital loss whereas in the case of MyChoice Homebuy, the Association could incur a loss if the shortfall exceeds the abated grant. Capitalisation of Interest and Development Costs Interest on the Group’s borrowings attributable to development schemes is capitalised in housing properties up to the date of practical completion of each scheme. The interest (after deduction of interest on Social Housing Grant received in advance) is on borrowings deemed to be financing schemes. Other costs that are directly attributable to bringing housing properties to practical completion are capitalised.
39
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
Expenditure On Completed Properties As a result of adopting SORP 2010, the accounting treatment of housing properties has changed. Previously housing properties were split between land and structure only, with depreciation charged over 125 years on completed properties (excluding land and grant).
Stock and Work in Progress Under shared ownership arrangements, the Association sells a long leasehold interest in Low Cost Home Ownership housing units, the “first tranche� at a lease premium from 25% to 75% of Open Market Value. The part owner of a low cost home has the right to purchase further proportions up to 100% at the then current valuation.
Under SORP 2010, housing properties have been split between their land and structure costs and a specific set of major components which require periodic replacement. Replacement or refurbishment of such components is capitalised, and depreciated over the estimated useful economic lives of the components (excluding land and grant) at the following rates:
Low Cost Home Ownership property costs are split between current and fixed assets based on the first tranche proportion. Following this treatment the first tranche proportion is accounted for as a current asset and included in stock and work in progress. The remaining element of the Low Cost Home Ownership property is accounted for as a fixed asset. Any subsequent tranche sale is treated as a part disposal of a fixed asset and the transaction is disclosed in the income and expenditure account after the operating result as a surplus or deficit on sale of fixed assets.
Boilers Kitchens Lifts Common parts Bathrooms Electrics and Plumbing Windows Doors Roofs Structure
15 years 20 years 20 years 25 years 30 years 30 years 30 years 40 years 80 years 125 years
Other Fixed Asset For all other fixed assets depreciation is charged on a straight-line basis over the expected useful economic lives of the assets to write off the cost less estimated residual values at the following annual rates: Office furniture and equipment
25%
Computer Hardware
33%
Computer Software
14%
Key workers and Student Accommodation furnishing and equipment
25%
Leasehold Improvements
Over the lease period
Under Right to Buy and Right to Acquire arrangements the Group sells properties to qualifying tenants. Surpluses and deficits arising are included in the surplus on sale of fixed assets in the income and expenditure account. Stock and work in progress includes properties developed on behalf of the subsidiary undertaking and other Registered Providers of Social Housing under grant agency arrangements. Where properties have been developed on behalf of the subsidiary undertaking, these assets are shown within stock and work in progress in the Association’s accounts but transferred to fixed assets on consolidation. Stock and work in progress is stated at the lower of cost and net realisable value (NRV). NRV is based on the actual or estimated selling price less all further costs to completion and to be incurred in marketing, selling and distribution. Assessing NRV requires use of estimation techniques. In making this assessment, management considers publicly available information and internal forecasts of future sales activity. In respect of Low Cost Home Ownership properties the cost figure shown within stock and work in progress is that apportioned to the first tranche sales element of the asset, based initially on scheme appraisals and updated where necessary.
40
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
Land Where land has been acquired it is held within current assets and carried at the lower of cost and net realisable value. Any write downs to net realisable value are included in cost of sales. Deferred Taxation No deferred tax arises as taxable surpluses are offset by regular gift aid payments. Recycled Capital Grant Fund and Disposal Proceeds Fund Following certain relevant events, primarily the sale of dwellings, the Homes and Communities Agency (HCA) can direct the Group to recycle Social Housing Grant (SHG) or to repay the recoverable capital grant back to the HCA. Where the grant is recycled the recoverable capital grant is credited to a Recycled Capital Grant Fund where it can remain for up to three years. Where the sale of dwellings arises under the Right to Acquire, the proceeds after deducting appropriate costs are credited to a Disposal Proceeds Fund, where it can remain for up to three years. These funds are included as creditors due within one year or due after more than one year as appropriate to the circumstances.
Provisions The Group only provides for legal or contractual liabilities and constructive obligations which exist at the balance sheet date. The provisions are assessed at each Balance Sheet date in order to ensure that they are measured at the current best estimate at the balance sheet date of the expenditure required to settle the obligation. Operating Leases Rentals payable under operating leases are charged to the Income and Expenditure account on a straight line basis over the term of the lease. VAT A large proportion of the Group’s turnover comprises rental income which is exempt for VAT purposes and gives rise to a partial exemption claim. Expenditure is therefore shown inclusive of VAT. Recoverable VAT arising from partially exempt activities is credited to the income and expenditure account and is included under Other Social Housing Activities in Note 2.
Pension Costs The Association participates in the industry-wide, multi-employer Social Housing Pension Scheme which is a defined benefit pension scheme. Retirement benefits to employees of the Association are funded by contributions from the Association and employees participating in the scheme. Payments are made to a fund administered by the Pensions Trust, an independent trust providing superannuation benefits for employees of a number of organisations. These payments are made in accordance with periodic calculations by consulting actuaries and are based on pension costs applicable across the various participating employers taken as a whole. The expected cost to the Association of pension contributions is charged to the income and expenditure account so as to spread the cost of pensions over the service lives of employees.
41
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
2. TURNOVER, COST OF SALES, OPERATING COSTS AND OPERATING RESULTS – GROUP 2012 Turnover
2011 Restated
Cost of Operating Operating Sales Costs Surplus
Turnover
Cost of Operating Operating Sales Costs Surplus/ (Deficit) £’000 £’000 £’000
£’000
£’000
Social Housing Lettings (Note 3)
56,275
-
1st Tranche Low Cost Home Ownership Sales
23,108
(19,706)
-
-
(243)
-
(243)
-
577
1,093
-
135
423
-
(422)
Stock Provision*
£’000
£’000
£’000
(29,038)
27,237
51,476
3,402
14,374
(13,573)
-
801
-
(1,799)
-
(1,799)
-
1,093
-
(27,435)
24,041
Income from Homebuy Loans
577
-
Right to Buy Leaseholder Activities
427
-
(292)
Group Operating and Policy Costs
-
-
(4,554)
(4,554)
-
-
(3,720)
(3,720)
Property Development Costs
-
-
(624)
(624)
-
-
(402)
(402)
-
-
1,497
-
1,921 778
Property developed for other Registered providers Other Social Housing Activities**
-
(1,713)
1
-
1,717
-
4
(681)
816
1,419
-
(2,123)
(704)
-
(1,325)
596
1,805
-
(1,381)
424
-
(498)
280
653
-
(198)
455
(37,012)
27,622
72,960
(35,681)
20,194
Non social housing activities: Student Accommodation Market Renting***
84,583
(19,949)
(17,085)
* A provision of £243k (2010/11: £1,799k) has been made in the accounts for the potential losses on certain future first tranche sales, reducing the stock to the lower of cost and net realisable value. ** This Includes Social Housing Grant taken to income of £528k (2010/11: £840k). A £198k reversal of impairment charges has been credited to Operating Costs in 2012 (2011: £999k impairment charge). *** Operating Costs in 2012 include £314k initial operating cost expenditure for the Fizzy Living ventures.
42
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
2. TURNOVER, COST OF SALES, OPERATING COSTS AND OPERATING RESULTS – ASSOCIATION 2012 Turnover
2011 Restated
Cost of Operating Operating Sales Costs Surplus
Turnover
£’000
£’000
Social Housing Lettings (Note 3)
11,550
-
1st Tranche Low Cost Home Ownership Sales
23,108
(19,706)
-
-
(243)
-
(243)
-
372
Stock Provision* Income from Homebuy Loans
£’000
£’000
£’000
(4,022)
7,528
14,007
3,402
14,374
(13,573)
-
801
-
(1,799)
-
(1,799)
-
1,093
372
-
-
-
(3,615)
1,801
-
Property Development Costs
-
Property developed for other Registered providers Other Social Housing Activities**
Group Operating and Policy Costs Development services to subsidiary
Non social housing activities: Market Renting
Cost of Operating Operating Sales Costs Surplus/ (Deficit) £’000 £’000 £’000
-
(5,371)
8,636
1,093
-
(3,615)
-
-
(3,720)
(3,720)
(1,801)
-
1,350
-
(1,350)
-
-
(625)
(625)
-
-
(402)
(402)
-
-
-
-
1,717
(1,713)
-
4
8,775
-
(7,752)
1,023
7,215
-
(7,063)
152
668
-
(135)
533
603
-
(182)
421
(17,950)
8,375
40,359
(18,088)
5,186
46,274
(19,949)
(17,085)
*A provision of £243k (2010/11: £1,799k) has been made in the accounts for the potential losses on certain future first tranche sales, reducing the stock to the lower of cost and net realisable value. **This includes Social Housing Grant taken in income of £258k (2010/11: 343k). A £198k reversal of impairment charges has been credited to Operating Costs in 2012 (2011: £999k impairment charge).
43
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
3. INCOME FROM AND EXPENDITURE ON SOCIAL HOUSING LETTINGS – GROUP
Rents Receivable Service Charges Receivable
General Low Cost Key Worker Supported Needs Home Accommodation Housing Housing Ownership £’000 £’000 £’000 £’000 27,920 12,992 7,167 180
Total 2012 £’000 48,259
Total 2011 Restated £’000 43,548
2,841
3,429
1,670
76
8,016
7,928
30,761
16,421
8,837
256
56,275
51,476
Management
3,343
1,023
759
3
5,128
4,398
Services
4,071
3,180
1,641
46
8,938
8,635
Routine Maintenance
5,503
427
715
97
6,742
5,239
Net Rental Income Expenditure On Social Housing Lettings
Gas Servicing Contract
793
1
66
-
860
1,014
Major Repairs Expenditure
361
155
204
12
732
261
Rent Losses From Bad Debts
237
110
(95)
9
261
480
5,033
-
1,102
-
6,135
7,104
Depreciation Of Housing Properties Other Costs
171
7
64
-
242
304
Operating Costs On Social Housing Lettings
19,512
4,903
4,456
167
29,038
27,435
Operating Surplus On Social Housing Lettings
11,249
11,518
4,381
89
27,237
24,041
96
2
130
-
228
236
Amounts Expensed To The Income And Expenditure Account
733
261
Amounts Capitalised In Fixed Asset Housing Properties
2,402
3,624
3,135
3,885
Rent Losses from voids Expenditure On Works To Existing Properties
44
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
3. INCOME FROM AND EXPENDITURE ON SOCIAL HOUSING LETTINGS – ASSOCIATION
Rents Receivable Service Charges Receivable
General Low Cost Key Worker Needs Home Accommodation Housing Ownership £’000 £’000 £’000 1,033 7,250 910
Total 2012 £’000 9,193
Total 2011 Restated £’000 10,836
82
2,000
275
2,357
3,171
1,115
9,250
1,185
11,550
14,007
134
472
188
794
1,053
73
1,937
203
2,213
3,168
Routine Maintenance
166
40
129
335
382
Major Repairs Expenditure
349
26
17
392
251
27
(32)
(12)
Net Rental Income Expenditure On Social Housing Lettings Management Services
Rent Losses From Bad Debts
(7)
Depreciation Of Housing Properties
91
-
207
298
506
-
2
-
2
2
Operating Costs On Social Housing Lettings
806
2,504
712
4,022
5,371
Operating Surplus On Social Housing Lettings
309
6,746
473
7,528
8,636
5
-
32
37
84
392
266
-
111
392
377
Other Costs
Void Losses
9
Expenditure On Works To Existing Properties Amounts Expensed To The Income And Expenditure Account Amounts Capitalised In Fixed Asset Housing Properties
45
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
4. SURPLUS ON SALE OF FIXED ASSETS 2012
Group
£’000
2011 Restated £’000
8,150
12,962
11,532
-
Completed Housing Properties And Other Fixed Assets Proceeds Of Sale Proceeds Of Sale to other Housing Associations Attributable Net Book Value
(3,563)
Attributable Net Book Value to other Housing Associations
(3,927)
Abated Grant
Incidental Selling Costs And Attributable Overheads
Association
-
2
171
12,194
7,398
(500)
Surplus On Sale Of Fixed Assets
(5,735)
(636)
11,694
6,762
2012 £’000
2011 Restated £’000
3,550
5,143
278,818
-
Completed Housing Properties And Other Fixed Assets Proceeds Of Sale Proceeds Of Sale To Subsidiary Undertaking Attributable Net Book Value Attributable Net Book Value: Subsidiary Undertaking
(2,534)
(2,817)
(208,340)
-
Attributable Net Book Value to other Housing Associations Abated Grant
Incidental Selling Costs And Attributable Overheads
-
159
71,496
2,443
(252) 71,244
Surplus On Sale Of Fixed Assets
46
(42)
2
(376) 2,067
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
5. DIRECTORS’ RENUMERATION AND EXPENSES – GROUP AND ASSOCIATION For the purpose of this note, the Directors are the Board Members (Non-Executive Directors) and the Executive Officers as shown on pages 9 and 10. 2012 £’000
2011 £’000
Aggregate Emoluments And Expenses Payable To The Executive Officers (Including Pension Contributions And Benefits In Kind)
619
595
Aggregate Emoluments And Expenses Payable To The Non-Executive Directors:
54
53
151
158
Emoluments Payable To The Highest Paid Director,(excluding pension contributions) were as follows; -Salary including benefits in kind
The Chief Executive is a member of the SHPS Pension Scheme and no special arrangements apply. No further contributions are made in respect of any other pension arrangements of the Chief Executive. 2012 £’000
2011 £’000
- Group
5
7
- Association
2
3
2012 £
2011 £
12,000
10,000
8,000
6,000
4,000
8,000
10,000
10,000
Dean Mayer
2,000
4,000
Benita Mehra
6,000
6,000
Richard Stanley
3,000
6,000
-
3,000
Emma Cariaga
2,833
-
Brian Hendon
6,000
-
Total Expenses Reimbursed To The Directors Not Chargeable To United Kingdom Income Tax:
Individual Emoluments Paid To Non-Executive Directors Thames Valley Housing Association Limited John Garrity
Chair
Laure Duhot
Deputy Chair
Peter Williams Gerard McCormack
Chair of Group Audit & Risk Committee
Martin Taylor
Non-Executive Directors remuneration constituted less than 0.1% of turnover.
47
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
6. EMPLOYEE INFORMATION The average number of employees (including Executive Officers) of the Group expressed in full time equivalents during the year was: 2012 2011 Number Number Employees 204 212 Employee Costs (For The Above Persons)
£’000
£’000
Wages And Salaries
8,388
8,086
Social Security Costs
738
700
Pension Costs (See Note 24)
756
735
9,882
9,521
Capitalised salaries
(419) 9,463
(462) 9,059
7. INTEREST RECEIVABLE Group
Interest Receivable On Bank Deposits
Association
2012 £’000
2011 £’000
2012 £’000
2011 £’000
1,133
328
571
94
8. INTEREST PAYABLE Group
Association
2012 £’000
2011 £’000
2012 £’000
2011 £’000
On Bank Loans, Overdrafts And Other Loans Repayable Wholly Or Partly In More Than 5 Years
24,430
22,284
4.095
6,127
Interest Payable To Subsidiary Undertaking
-
-
2,975
3,327
43
65
43
63
24,473
22,349
7,113
9,517
(1,661)
(3,538)
22,812
18,811
Interest Payable And Accrued To The Recycled Capital Grant Fund And Disposal Proceeds Fund
Interest capitalised in housing property costs
(730) 6,383
(2,225) 7,292
Interest was capitalised at an average rate of 4.83% on both the Group and Association’s borrowing required to finance housing property developments (2010/11: 4.87% Group and Association).
48
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
9. SURPLUS ON ORDINARY ACTIVITIES BEFORE TAX Group 2012
Association
Note
£’000
2011 Restated £’000
2012 £’000
2011 Restated £’000
11, 13
8,072
4,681
1,310
2,365
773
450
773
450
64
5
64
5
In Their Capacity As External Auditors
64
61
32
41
In Their Capacity As Tax Advisers
21
41
21
41
Is Stated After Charging: Depreciation Operating Lease Charges: Land And Buildings Other Auditors’ Remuneration:
Auditors’ remuneration is inclusive of VAT and related expenses.
10. TAXATION No charge to corporation tax arises on the results for the year (2010/11: £nil). The current tax charge of nil for the year is lower than the standard rate of corporation tax in the United Kingdom of 26% (2010/11: 28%). The differences are explained below. Group
Surplus Per Accounts Surplus At Standard Rate Of Corporation Tax Of 26%
Association
2012 £’000
2011 £’000
2012 £’000
2011 £’000
17,637
8,473
41,222
55
4,586
2,372
10,718
15
9
294
9
294
Effects Of: Expenses and Provisions Not Deductible For Tax Purposes Differences Between Chargeable Gain And Surplus On Disposal
(2,841)
Depreciation In Excess Of Capital Allowances
(370)
(18,324)
340
138
340
Gift Aid
-
-
5,460
Trading Losses Arising
-
-
1,825
Other Timing Differences
-
-
Charitable Income
(2,094) -
49
(2,434) -
(28)
(238) 138 (209) -
-
-
-
-
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
11. TANGIBLE FIXED ASSETS – HOUSING PROPERTIES – GROUP KEY WORKER & STUDENT HOUSING PROPERTIES LOW COST HOME INTERMEDIATE ACCOMMODATION OWNERSHIP RENTED £’000 £’000 £’000 £’000 £’000 £’000 £’000 Under Completed Under Completed Properties Completed Completed Held For Construction Properties Construction Properties Under Properties Letting Held for Construction Letting
At 1 April 2011 Prior Period Adjustment At 1 April 2011 Restated Additions at cost -new developments -works to existing properties Reclassification Schemes Completed Transfer to Current Assets Disposal: Staircasing Sales Costs of Components written off At 31 March 2012
65,732 (91) 65,641
32,445 32,445
501,702 8,785 510,487
17,262 17,262
(7)
1,491
-
40,055
465 33,675 (114) 99,660
(261) (33,675) -
4,695 18,843 (1,264) -
41 (18,843) (604) -
-
(1,037) 531,724
37,911
293,002 (3,892) 289,110 3,928 261 13,168 (1,064) (5,626) 299,777
£’000 Total
20,156 (5,671) 14,485
15,520 15 15,535
945.819 (854) 944.965
17,087
3,459
62,085
(41) (13,168) (8,201) -
21 -
9,109 (11,133) (5,626)
10,162
19,015
(1,151) 998,249
Less Social Housing Grant At 1 April 2011 Prior Period Adjustment At 1 April 2011 Restated
-
-
260,132 382 260,514
20,487 20,487
99,678 (4,051) 95,627
6,833 6,833
6,422 144 6,566
393,552 (3,525) 390,027
Social Housing Grant Received Reclassification Schemes Completed Transfer to Current Assets Disposal: Staircasing Sales At 31 March 2012
-
-
1,983 11,035 (897) (158) 272,477
8,293 2 (11,035) 17,747
(1,015) 4,667 (2,024) 97,255
2,126 (4,667) 4,292
2,133 (91) 8,608
13,520 2 (897) (2,273) 400,379
Less Depreciation: At 1 April 2011 Prior Period Adjustment
3,297 3,098
-
5,379 18,000
-
3,178 (3,178)
834 -
96 322
12,784 18,242
At 1 April 2011Restated
6,395
-
23,379
-
-
834
418
31,026
Charge for year Transfer to current assets Impairment Eliminated on Disposals At 31 March 2012
1,702 (36) 8,061
-
5,033 (29) (220) 28,163
-
-
(198) 636
228 (3) 643
6,963 (29) (198) (259) 37,503
Net Book Value At 31 March 2012
91,599
-
231,084
20,164
202,522
5,234
9,764
560,367
At 31 March 2011 Restated
59,246
32,445
226,594
(3,225)
193,483
6,818
8,551
523,912
50
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
11. TANGIBLE FIXED ASSETS – HOUSING PROPERTIES – ASSOCIATION KEY WORKER & STUDENT HOUSING PROPERTIES LOW COST HOME INTERMEDIATE ACCOMMODATION OWNERSHIP RENTED £’000 £’000 £’000 £’000 £’000 £’000 £’000 Under Completed Under Completed Properties Completed Completed Held For Construction Properties Construction Properties Under Properties Letting Held for Construction Letting
At 1 April 2011 Prior Period Adjustment At 1 April 2011 Restated Additions at cost -new developments -works to existing properties Reclassification Schemes Completed Transfer to Subsidiary Transfer to Current Assets Disposal: Staircasing Sales At 31 March 2012
16,634 (5) 16,629 1 69 1,345 (18,044) -
1,113 1,113 50 (1,345) 182 -
16,353 3,788 20,141 40 (20,181) -
1,760
254,174 (3,892) 250,282 -
41
3,732 13,168 - (223,224) (1,801) (40,880) (2,541) 537
Less Social Housing Grant At 1 April 2011 Prior Period Adjustment At 1 April 2011 Restated
-
-
5,697 3,983 9,680
Social Housing Grant Received Schemes Completed Transfer to Subsidiary Transfer to Current Assets Disposal: Staircasing Sales At 31 March 2012
-
-
1,117 (10,797) -
Less Depreciation: At 1 April 2011 Prior Period Adjustment At 1 April 2011Restated
340 819 1,159
-
115 435 550
-
Charge for year Transfer to Subsidiary Impairment At 31 March 2012
(1,159) -
-
91 (645) (4)
-
20,155 (5,671) 14,484
15,521 15 15,536
323,950 (5,765) 318,185
17,088
3,460
22,359
(41) (13,168) 1,183 (17,896) 1,650
-
78,647 (4,051) 74,596
6,832 6,832
432
(994) 4,667 (65,212) (12,158) (798) 101
2,126 (4,667) (3,072) 1,219
(432) -
£’000 Total
17 3,858 (6,232) (266,316) (60,577) (2,541) 12,781 14,968 6,422 144 6,566
97,598 76 97,674
2,008 (3,931) (2) 4,641
4,689 (79,940) (15,662) (800) 5,961
834 834
96 323 419
3,902 (940) 2,962
-
(4) (198) 632
207 626
298 (1,808) (198) 1,254
(201)
7,514
7,753
8,551
217,549
2,517 (2,517) -
Net Book Value At 31 March 2012
-
-
4
-
436
At 31 March 2011 Restated
15,470
1,113
9,911
-
175,686
51
6,818
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
11. TANGIBLE FIXED ASSETS – HOUSING PROPERTIES – ASSOCIATION (CONTINUED) Group 2012
Association
£’000
2011 Restated £’000
2012 £’000
2011 Restated £’000
Freeholds
380,532
347,095
498
151,820
Long Leaseholds
179,835
176,817
7,255
65,729
560,367
523,912
7,753
217,549
Net Book Value Of Housing Properties Comprise:
Group 2012
Association
£’000
2011 Restated £’000
2012 £’000
2011 Restated £’000
Capital Grants Received For Construction Of New Housing Units
400,379
390,026
5,961
97,674
Homebuy Grant Received And Recycled
72,005
76,829
-
76,829
472,384
466,855
17,369
16,934
Social Housing Grant Total Accumulated Social Housing Grant At 31 March Was:
Total Accumulated Grant At 31 March Accumulated Revenue Grant Received And Recognised Through The Income And Expenditure Account
174,503
11,387
11,129
Given the Group’s long held policy of capitalising the finance costs associated with carrying out development activity, it is not possible to disclose the aggregate amount of finance costs included in the cost of housing properties as required by FRS15. Component Accounting The group has adopted the Statement of Recommended Practice (SORP) Accounting by Registered Social Housing Providers Update 2010 at 31st March 2012. This has required the group to identify the major components which make up its housing property assets and depreciate these over individual useful economic lives. Prior period balances have been adjusted to reflect this change in accounting policy which has reduced the net book value of housing properties by £9.8K. Further details of this adjustment are provided in note 33.
52
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
12. VALUATION DISCLOSURE For information purposes only, completed housing properties were revalued as at 31 March 2012 by Jones Lang LaSalle at Existing Value for Social Housing (EUV-SH) in accordance with the current edition of the Royal Institution of Chartered Surveyors’ (RICS) Appraisal and Valuation Standards. EUV-SH means that the properties are assumed to be managed and owned by a Registered Provider of Social Housing which is committed to the provision of rented accommodation let at affordable rents, and that vacant units would be re-let at affordable rents rather than sold on the open market. The valuation basis used for this disclosure is that recommended by the Statement of Recommended Practice “Accounting by Registered Social Landlords 2010”. The discount rate in the valuation was 5.5% excluding the effect of inflation. If housing properties had been stated at EUV-SH, the amounts disclosed in the balance sheet in respect of completed housing properties and the revaluation reserve would have been as follows: Group 2012
Association
£’000
2011 Restated £’000
Completed Housing Properties At Valuation
805,570
758,730
Revaluation Surplus/ (Deficit) – Housing Properties
270,603
238,411
2012 £’000
2011 Restated £’000
7,049
261,620
(901)
Based on the valuation conducted by Jones Lang LaSalle at 31 March 2012, the Group’s assets EUV-SH valuation is in excess of the carrying value of the properties.
53
52,002
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
13. OTHER FIXED ASSETS Group
Investment Property
(Valuation) Restated £’000
Leasehold Office Computer Key Worker & Office Furniture & Equipment Student Premises Equipment Accommodation Furnishings & Equipment (Cost) (Cost) (Cost) (Cost) £’000 £’000 £’000 £’000
Total
£’000
Cost Or Valuation At 1 April 2011
2,584
1,502
758
8,888
743
14,475
Additions
2,401
14
4
919
-
3,338
(128)
Disposals
-
-
-
Revaluation Surplus
1,230
-
-
-
-
-
1,230
(128)
At 31 March 2012
6,215
1,516
762
9,679
743
18,915
At 1 April 2011
-
1,494
618
5,246
548
7,906
Charge For Year
-
1
66
945
97
1,109
Disposals
-
-
-
At 31 March 2012
-
1,495
684
6,166
645
8,990
At 31 March 2012
6,215
21
78
3,513
98
9,925
At 31 March 2011
2,584
8
140
3,642
195
6,569
Depreciation
(25)
-
(25)
Net Book Value
54
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
13. OTHER FIXED ASSETS Association
Investment Property
Leasehold Office Computer Office Furniture & Equipment Premises Equipment
(Valuation) Restated £’000
(Cost) £’000
(Cost) £’000
(Cost) £’000
Key Worker & Student Accommodation Furnishings & Equipment (Cost) £’000
Total
1,984
1,502
757
8,888
154
13,285
-
15
1
919
-
935
-
(128)
Restated £’000
Cost Or Valuation At 1 April 2011 Additions Disposals
-
-
-
(128)
(1,592)
-
-
-
-
(1,592)
Revaluation Deficit
(10)
-
-
-
-
(10)
At 31 March 2012
382
1,517
758
9,679
154
12,490
At 1 April 2011
-
1,494
618
5,246
151
7,509
Charge For Year
-
1
66
945
-
1,012
Disposals
-
-
-
(26)
-
At 31 March 2012
-
1,495
684
6,165
151
8,495
At 31 March 2012
382
22
74
3,514
3
3,995
At 31 March 2011
1,984
8
139
3,642
3
5,776
Transfer to Subsidiary
Depreciation
(26)
Net Book Value
Investment properties were professionally revalued by Jones Lang LaSalle, Chartered Surveyors, on the basis of their Open Market Value as at 31 March 2012. These valuations were undertaken in accordance with the Appraisal and Valuation Standards published by RICS Valuation Standard PS5.1.
55
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
14. HOMEBUY EQUITY LOANS – GROUP MyChoice Homebuy
Total 2012
Total 2011
£’000
Open Market Homebuy £’000
£’000
£’000
39,236
53,427
92,663
96,671
425
-
425
806
Homebuy Equity Loans Advanced: Opening Balance As At 1 April Loans transferred to new property during The Year Loans Redeemed during The Year
(1,693)
(4,253)
(5,946)
(4,814)
At 31 March
37,968
49,174
87,142
92,663
23,402
53,427
76,829
80,619
380
-
380
-
Grant Received On Homebuy Equity Loans: Opening Balance As At 1 April Grant Transferred to new property during The Year Grant recycled in RCGF during the year
(951)
(4,253)
(5,204)
(3,790)
At 31 March
22,831
49,174
72,005
76,829
Homebuy Equity Loans Funded By The Group
15,137
-
15,137
15,834
MyChoice Homebuy
Total 2012
Total 2011
£’000
Open Market Homebuy £’000
£’000
£’000
39,236
53,427
92,663
96,671
303
-
303
806
14. HOMEBUY EQUITY LOANS – ASSOCIATION
Homebuy Equity Loans Advanced: Opening Balance As At 1 April Loans transferred to new property during The Year Loans Redeemed during The Year Transferred to Subsidiary At 31 March
(848)
(2,894)
(3,742)
(38,691)
(50,533)
(89,224)
(4,814) -
-
-
-
92,663
23,402
53,427
76,829
80,619
275
-
275
-
Grant Received On Homebuy Equity Loans: Opening Balance As At 1 April Grant Transferred to new property during The Year Grants transferred to RCGF during the year Transferred to Subsidiary
(495)
(2,894)
(3,389)
(3,790)
(23,182)
(50,533)
(73,715)
-
At 31 March
-
-
-
76,829
Homebuy Equity Loans Funded By The Association
-
-
-
15,834
56
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
15. STOCK AND WORK IN PROGRESS Group
First Tranche Low Cost Home Ownership £’000 6,274
£’000 -
6,259
5,385
-
-
12,533
5,385
641
18,559
27,689
Gross Cost: Completed
6,200
-
27,658
33,858
14,165
Gross Cost: WIP
6,259
5,385
7,387
19,031
12,560
-
-
-
-
12,459
5,385
35,045
52,889
Gross Cost: Completed Gross Cost: WIP Grant
Land
Developed for Other Associations
2012
2011 Restated
£’000 1,240
Total £’000 7,514
Total £’000 19,988
299
11,943
12,560
(898)
(898)
(4,859)
Association
Grant
(76) 26,649
The Association develops social housing for other housing associations and its subsidiary Thames Valley Charitable Housing Association. The cost net of grant of these developments is held as a current asset up to the point of transfer.
16. DEBTORS Group
Association
2012 £’000
2011 £’000
2012 £’000
2011 £’000
4,197
3,943
13
1,025
(2,287)
(2,156)
-
(382)
1,910
1,787
13
643
2,442
3,267
549
2,967
410
392
-
337
-
-
45,314
-
Prepayments
839
1,346
839
1,346
Secured Cash Deposit
651
609
-
-
1,145
349
29
-
7,397
7,750
46,744
5,293
779
378
779
378
779
378
779
378
Amounts Receivable Within One Year: Rent And Service Charges Provision For Bad Debts
Property Grants Receivable Amounts receivable from Leaseholders and Tenants Due From Subsidiaries and Associate
Other Debtors
Amounts Receivable After One Year Mortgages
57
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
17. CREDITORS Group
Association
2012 £’000
2011 £’000
2012 £’000
2011 £’000
Housing Loans (Note 18)
2,453
3,001
-
600
Trade Creditors
1,524
562
845
305
Loan Interest Due
3,079
2,836
-
610
Recycled Capital Grant Fund (Note 20)
5,836
595
5,836
595
Property Development Accruals and Retentions
2,217
4,842
639
4,546
-
-
-
1,065
Rent Received In Advance
1,825
1,607
51
428
Estate Costs Accruals (Including Major Repairs)
1,451
1,850
20
149
-
-
-
75,633
2,273
1,203
50
1,203
Staff Bonus Accrual
194
212
194
212
Disposal Proceeds Fund (Note 19)
148
18
-
-
VAT Payable
767
619
767
619
Grant received in advance
336
-
336
-
Amounts Falling Due Within One Year:
Bank Overdraft
Amount Due To Subsidiary Undertakings Leaseholder Sinking Funds
Other Creditors And Accruals
1,666
4,240
999
1,246
23,769
21,585
9,737
87,211
As part of the Group’s day-to-day treasury management, surplus cash is deposited with the Parent by the subsidiary undertakings at commercial interest rates and is shown above as amount due to subsidiary undertakings. Group
Association
2012 £’000
2011 £’000
2012 £’000
2011 £’000
468,319
465,037
-
122,610
273
422
-
-
Amounts Falling Due After More Than One Year: Housing Loans (Note 18) Disposal Proceeds Fund (Note 19) Recycled Capital Grant Fund (Note 20)
11,298
11,060
11,298
11,002
479,890
476,519
11,298
133,612
58
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
18. HOUSING LOANS Housing loans made at varying rates of interest by lending institutions are secured by specific charges on some of the Group’s housing properties and are repayable as follows: Group
Association
2012 £’000
2011 £’000
2012 £’000
2011 £’000
Housing Loans Repayable By Instalments 291,959
293,752
-
54,200
Between Two And Five Years
In Five Or More Years
8,117
8,117
-
1,800
Between One And Two Years
2,498
2,498
-
600
302,574
304,367
-
56,600
2,453
3,001
-
600
305,027
307,368
-
57,200
171,095
166,322
-
67,500
In One Year Or Less Housing Loans Not Repayable By Instalments In Five Or More Years Between Two And Five Years
-
-
-
-
Between One And Two Years
-
-
-
-
171,095
166,322
-
67,500
-
-
-
-
171,095
166,322
-
67,500
476,122
473,690
-
124,700
In One Year Or Less
Loan Issue Costs Total Housing Loans
(5,350) 470,772
(5,652) 468,038
-
(1,490) 123,210
19. DISPOSAL PROCEEDS FUND Group
At 1 April Social Housing Grant Recycled In The Year DPF Utilised On New Build Housing Properties
Association
2012 £’000
2011 £’000
2012 £’000
2011 £’000
440
453
-
-
-
272
-
-
(287)
-
-
(19)
DPF Utilised On Major Repairs And Works To Existing Properties
-
-
-
-
Interest Credited To The Fund
-
2
-
-
421
440
-
-
At 31 March Disclosed As: Creditors Falling Due Within One Year
148
18
-
-
Creditors Falling Due After More Than One Year
273
422
-
-
421
440
-
-
None of the above Disposal Proceeds Fund is due for repayment to the HCA.
59
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
20. RECYCLED CAPITAL GRANT FUND Group
At 1 April
Association
2012 £’000
2011 £’000
2012 £’000
2011 £’000
11,655
17,599
11,597
17,571
6,718
4,856
3,801
4,426
(1,280)
(10,863)
(1,272)
(3,585) (6,878)
Social Housing Grant Recycled In The Year RCGF Utilised On New Build Housing Properties Transfers With Properties Sold To Subsidiary Undertaking
-
-
2,966
41
63
42
63
17,134
11,655
17,134
11,597
Creditors Falling Due Within One Year
5,836
595
5,836
595
Creditors Falling Due After One Year
11,298
11,060
11,298
11,002
17,134
11,655
17,134
11,597
Interest Credited To The Fund At 31 March Disclosed As:
None of the above Recycled Capital Grant Fund is due for repayment to the HCA. £5,836k falling due within one year has been ear-marked against current development.
21. NON-EQUITY SHARE CAPITAL 2012 £’000
2011 £’000
At 1 April
9
10
Shares Issued During The Year
2
1
(5)
(2)
6
9
Shares Of £1 Each Issued And Fully Paid
Shares Cancelled During The Year At 31 March
The share capital of the Association consists of shares with a nominal value of £1 each which carries no rights to dividends or other income. Shares in issue are not capable of being repaid or transferred. Where a shareholder ceases to be a member, that person’s share is cancelled and the amount paid up thereon becomes the property of the Association. Therefore all shareholdings relate to non-equity interests; there are no equity interests in the Association.
60
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
22. RESERVES Revenue Reserve
Total 2012
Total 2011 Restated
£’000
Investment Property Revaluation Reserve £’000
£’000
£’000
150,840
226
151,066
149,692
-
-
-
17,637
-
17,637
Group At 1 April Prior Period Adjustment Surplus For The Year Revaluation Surplus/(Deficit)
(7,060) 8,473
-
1,230
1,230
168,477
1,456
169,933
151,066
63,314
218
63,532
62,960
-
-
-
556
Surplus For The Year
41,222
-
41,222
55
Revaluation Deficit
-
At 31 March
(39)
Association At 1 April Prior Period Adjustment
At 31 March
104,536
61
(10) 208
(10) 104,744
(39) 63,532
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
23. NOTES ON THE CONSOLIDATED CASH FLOW STATEMENT 2012 £’000
2011 £’000
27,622
20,194
Depreciation
7,499
8,581
Change In Stock And Work In Progress
4,008
4,887
Reconciliation Of Operating Surplus To Net Cash Inflow From Operating Activities Operating Surplus
Change In Debtors
(657)
(1,084)
Change In Creditors
(2,404)
(29)
Net Cash Inflow From Operating Activities
36,068
32,549
2012 £’000
2011 £’000
(Decrease)/Increase In Cash In The Year
(8,661)
21,226
Change In Net Debt Resulting From Cash Flows
(2,734)
(30,722)
Net Debt At 1 April
(401,000)
(391,504)
Net Debt At 31 March
(412,395)
(401,000)
Reconciliation Of Net Cash Inflow To Movement In Net Debt
At 1 April 2011
Cash Flow
Other Changes
£’000
£’000
£’000
At 31 March 2012 £’000
67,038
(8,661)
-
58,377
(465,037)
(5,743)
2,461
3,009
(2,461)
Analysis Of Changes In Net Debt Cash At Bank And In Hand Debt Due After One Year Debt Due Within One Year
(3,001)
Change In Net Debt
(401,000)
62
(11,395)
-
(468,319) (2,453) (412,395)
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
24. PENSION COSTS Social Housing Pension Scheme (SHPS) The Association participates in the Social Housing Pension Scheme (the Scheme). The Scheme is funded and is contracted-out of the State Pension scheme. The Association elected to operate the final salary structure with a 1/60th accrual rate for active members until 31 March 2007, the Career Average Revalued Earnings (CARE) with a 1/60th accrual rate benefit structure from 1 April 2007 to 31 March 2010 and the CARE with a 1/80th accrual rate for new entrants from 1 April 2010 During the accounting period, the Association paid contributions between the rates of 11.9% to 15%. Member contributions varied between 7.5% and 10.3%. As at 31 March 2012, there were a total of 113 active members of the Scheme employed by the Association. 67 were members of the 1/60th Final Salary structure; 29 were members of the 1/60th CARE structure and 17 were members of the 1/80th CARE structure. It is not possible in the normal course of events to identify on a consistent and reasonable basis the share of underlying assets and liabilities belonging to individual participating employers. This is because the Scheme is a multi-employer scheme where the Scheme assets are co-mingled for investment purposes, and benefits are paid from total Scheme assets. Accordingly, due to the nature of the Scheme, the accounting charge for the period under FRS17 represents the employer contribution payable. The Trustee commissions an actuarial valuation of the Scheme every three years. The main purpose of the valuation is to determine the financial position of the Scheme in order to address the level of future contributions required so that the Scheme can meet its pension obligations as they fall due.
The last formal valuation of the Scheme was performed as at 30 September 2008 by a professionally qualified Actuary using the Projected Unit Method. The market value of the Scheme’s assets at the valuation date was £1,527 million. The valuation revealed a shortfall of assets compared with the value of liabilities of £663 million, equivalent to a past service funding level of 69.7%. The Scheme Actuary has prepared an Actuarial Report that provides an approximate update on the funding position of the Scheme as at 30 September 2010. Such a report is required by legislation for years in which a full actuarial valuation is not carried out. The funding update revealed an increase in the assets of the Scheme to £ 1,985 million and indicated a reduction in the shortfall of assets compared to liabilities to approximately £497 million, equivalent to a past service funding level of 80.0%. The Scheme’s 30 September 2011 valuation is currently in progress and will be finalised by 31 December 2012. The results of the 2011 valuation will be included in next year’s Disclosure Note. Growth Plan The Association participates in The Pensions Trust’s Growth Plan (the Plan). The Plan is funded and is not contracted-out of the State scheme. The Plan is a multi-employer pension plan. Contributions paid into the Plan up to and including September 2001 were converted to defined amounts of pension payable from Normal Retirement Date. From October 2001 contributions were invested in personal funds which have a capital guarantee and which are converted to pension on retirement, either within the Plan or by the purchase of an annuity. The rules of the Plan allow for the declaration of bonuses and/or investment credits if this is within the financial capacity of the Plan assessed on a prudent basis. Bonuses/investment credits are not guaranteed and are declared at the discretion of the Plan’s Trustee.
63
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
The Trustee commissions an actuarial valuation of the Plan every three years. The purpose of the actuarial valuation is to determine the funding position of the Plan by comparing the assets with the past service liabilities as at the valuation date. Asset values are calculated by reference to market levels. Accrued past service liabilities are valued by discounting expected future benefit payments using a discount rate calculated by reference to the expected future investment returns.
the valuation date was £742 million and the Plan’s Technical Provisions (i.e. past service liabilities) were £771 million. The valuation therefore revealed a shortfall of assets compared with the value of liabilities of £29 million, equivalent to a funding level of 96%. The financial assumptions underlying the valuation as at 30 September 2008 were as follows: % per annum Rate of return pre retirement
The rules of the Plan give the Trustee the power to require employers to pay additional contributions in order to ensure that the statutory funding objective under the Pensions Act 2004 is met. The statutory funding objective is that a pension scheme should have sufficient assets to meet its past service liabilities, known as Technical Provisions. If the actuarial valuation reveals a deficit, the Trustee will agree a recovery plan to eliminate the deficit over a specified period of time either by way of additional contributions from employers, investment returns or a combination of these. During the accounting period under review, members selected the level at which they make contributions. As at the balance sheet date there were 4 active members of the Plan employed by The Association. It is not possible in the normal course of events to identify on a reasonable and consistent basis the share of underlying assets and liabilities belonging to individual participating employers. The Plan is a multi-employer scheme, where the assets are comingled for investment purposes, and benefits are paid out of the Plan’s total assets. Accordingly, due to the nature of the Plan, the accounting charge for the period under FRS17 represents the employer contribution payable. The valuation results at 30 September 2008 were completed in 2009 and have been formalised. The valuation of the Plan was performed by a professionally qualified Actuary using the Projected Unit Method. The market value of the Plan’s assets at
7.6
Rate of return post retirement: - Active/Deferred
5.1
- Pensioners
5.6
- Bonuses on accrued benefit
0.0
- Rate of price inflation
3.2
In determining the investment return assumptions the Trustee considered advice from the Scheme Actuary relating to the probability of achieving particular levels of investment return. The Trustee has incorporated an element of prudence into the pre and post retirement investment return assumptions; such that there is a 60% expectation that the return will be in excess of that assumed and a 40% chance that the return will be lower than that assumed over the next 10 years. The preliminary triennial valuation results as at 30 September 2011 were received in March 2012 but, as the valuation will not be finalised until later this year, this disclosure note must still refer to the 2008 valuation results as the last completed valuation. The Scheme Actuary’s preliminary results for 30 September 2011 show that the Plan’s assets at that date were £780 million and the Plan’s Technical Provisions (i.e. past service liabilities) were £928 million. The valuation therefore revealed a shortfall of assets compared with the value of liabilities of £148 million, equivalent to a funding level of 84%. If an actuarial valuation reveals a shortfall of assets compared to liabilities, the Trustee must prepare a recovery plan setting out the steps to be taken to make up the shortfall.
64
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
The Pensions Regulator has the power under Part 3 of the Pensions Act 2004 to issue scheme funding directions where it believes that the actuarial valuation assumptions and/or recovery plan are inappropriate. For example, the Regulator could require that the Trustee strengthens the actuarial assumptions (which would increase the Plan liabilities and hence impact on the recovery plan) or impose a schedule of contributions on the Plan (which would effectively amend the terms of the recovery plan). A copy of the recovery plan in respect of the September 2008 valuation was forwarded to The Pensions Regulator on 18 December 2009, as is required by legislation. Following a change in legislation in September 2005 there is a potential debt on the employer that could be levied by the Trustee of the Plan and The Pensions Act 2011 has more recently altered the definition of Series 3 of the Growth Plan so that a liability arises to employers from membership of any Series except Series 4. (Our recent correspondence to all employers refers.) The debt is due in the event of the employer ceasing to participate in the Plan or the Plan winding up. The debt for the Plan as a whole is calculated by comparing the liabilities for the Plan (calculated on a buy-out basis i.e. the cost of securing benefits by purchasing annuity policies from an insurer, plus an allowance for expenses) with the assets of the Plan. If the liabilities exceed assets there is a buy-out debt. The leaving employer’s share of the buy-out debt is the proportion of the Plan’s liability attributable to employment with the leaving employer compared to the total amount of the Plan’s liabilities (relating to employment with all the currently participating employers). The leaving employer’s debt therefore includes a share of any ‘orphan’ liabilities in respect of previously participating employers. The amount of the debt therefore depends on many factors including total Plan liabilities, Plan investment performance, the liabilities in respect of current and former employees of the employer, financial conditions at the time of the cessation event and the insurance buy-out market. The amounts of debt can therefore be volatile over time.
65
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
25. CAPITAL COMMITMENTS Association
Subsidiary Undertakings £’000 £’000
Total 2012 £’000
Total 2011 £’000
Capital Expenditure That Has Been Contracted For But Has Not Been Provided For In The Financial Statements
38,394
9,174
47,568
67,494
Capital Expenditure That Has Been Authorised But Not Yet Contracted For
-
2,262
2,262
33,661
38,394
11,436
49,830
101,155
938
5,003
5,941
38,078
37,456
6,433
43,899
63,077
38,394
11,436
49,830
101,155
Subsidiary Undertakings £’000 £’000
Total 2012 £’000
Total 2011 £’000
3,994
-
3,994
7,933
-
-
-
5,495
3.994
13,428
The Group Expects To Finance The Above Commitments By: - Social Housing Grant Receivable - Loan Facilities, Low Cost Home Ownership First Tranche Sales, Low Cost Home Ownership Staircasing Sales And Other Cash Flows
26. FINANCIAL COMMITMENTS Association
In Respect Of Low Cost Home Ownership First Tranche Development: Contracted For But Not Provided For In The Financial Statements Authorised But Not Yet Contracted For
3,994
At the end of March 2012, the Group had £68m (2010/11: £73m) of committed and undrawn loan facilities.
27. COMMITMENTS UNDER OPERATING LEASES At 31 March 2012, the Group had annual commitments under non-cancellable operating leases as follows: 2012
2011
Land and Buildings £’000
Other
Other
£’000
Land and Buildings £’000
773
27
773
-
In Two to Five Years
-
27
-
5
After Five Years
-
-
-
-
773
54
773
5
£’000
Operating Leases Which Expire: Within One Year
66
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
28. RELATED PARTY TRANSACTIONS Board Members Where board members are tenants/leaseholders, their tenancies/leases are on normal commercial terms and are managed in line as with any other in the Group. They receive no favourable treatment in any respect for being members. Subsidiary Undertakings, Joint Venture and Associate Subsidiary
Status
Activity
Holding
Thames Valley Charitable Housing Association Limited
Registered in England and Wales under the Industrial and Provident Societies Act 1965
Housing Association
100%
TVHA Fizzy Holdings Ltd
Limited Company registered in England and Wales
Holding Company
100%
Fizzy Enterprises LLP
Limited Liability Partnership registered in England and Wales
Property Development and Rental
95%
Fizzy Epsom LLP
Limited Liability Partnership registered in England and Wales
Property Development and Rental
97.5%
Limited Liability Partnership registered in England and Wales
Development and Sale of residential accommodation
50%
Social Enterprise Company Limited by Guarantee in England and Wales
Training
25%
Joint Venture Opal Land LLP
Associate Academy 4 Housing
67
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
28. RELATED PARTY TRANSACTIONS - CONTINUED Transactions with Subsidiary Undertakings, Joint Ventures and Associate The following transactions with the subsidiary undertaking, Thames Valley Charitable Housing Association, are included in the Association’s financial statements. These transactions have been eliminated in the Group financial statements. Thames Valley Charitable Housing Association Limited Income
2012 £’000
2011 £’000
Management Costs
9,775
7,887
32,585
-
2,975
3,327
Transfer of Recycled Capital Grant Fund (from)/to subsidiary undertaking
(2,966)
6,878
Transfer of Assets to Thames Valley Charitable Housing Association Limited
2012 £’000
2011 £’000
Housing Properties
266,316
-
Housing Grants
(79,940)
-
Expenditure Charitable donations paid Interest payable (note 8) Balance Sheet Movements
Investment Properties
1,592
-
Home Equity Loans
89,224
-
Home Equity Grants
(73,715)
-
(124,250)
-
Bank Loans
At 31 March 2012, the amount due from the subsidiary undertakings was £45,314k (2010/11: due to the subsidiary undertaking : £75,633K). The following investments in Joint Ventures are included in Group’s financial statements:
Loan to Opal Land LLP by Thames Valley Charitable Housing Association Loan to Academy for Housing by Thames Valley Housing Association Limited
68
2012 £’000
2011 £’000
2,951
-
100
-
3,051
-
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
29. NUMBER OF HOMES OWNED, MANAGED OR ADMINISTERED BY THE GROUP 1 April 2011
General Needs
(Number)
Acquired or Completed (Number)
Disposal (Number)
31 March 2012 (Number)
5,497
102
(114)
5,485
Supported Housing Bedspaces
24
-
(5)
19
Sheltered Accommodation
38
-
(38)
-
1,627
-
-
1,627
463
-
-
463
3,994
113
(98)
4,009
657
55
(4)
708
29
-
-
29
Key Worker Accommodation Student Accommodation Low Cost Home Ownership Low Cost Home Ownership Leasehold (Managed Only) Market Rent Intermediate Rent
36
-
12,365
270
-
40
-
-
40
1,507
-
-
1,507
MyChoice Homebuy Key Worker
310
-
(11)
299
MyChoice Homebuy Non Key Worker
441
-
(24)
417
14,663
270
(294)
14,639
(259)
36 12,376
Homes Administered For: Open Market Homebuy Key Worker Open Market Homebuy Non Key Worker
31 March 2012 (Number)
31 March 2011 (Number)
370
453
-
-
192
223
562
676
Homes under construction General Needs Key Worker Accommodation Low Cost Home Ownership
69
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
30. ACCOMMODATION MANAGED BY OTHERS Number of Units of Accommodation 2012
2011
1
1
138
138
23
23
162
162
Managing Agent Ability Housing Kingfisher HVHS Housing Association Limited Royal Horticultural Society
31. LEGISLATIVE PROVISIONS Thames Valley Housing Association and its subsidiary undertaking are incorporated under the Industrial & Provident Societies Act 1965 and are Registered Providers of Social Housing registered with the Tenant Services Authority under the Housing and Regeneration Act 2008. Thames Valley Charitable Housing Association Limited is an exempt charity registered under charitable rules.
32. CONTINGENT LIABILITY At 31st March 2012 the group had a contingent liability of ÂŁ3.8 million in respect of grant released on disposal of components, which may be repayable on the sale of properties to which the component relate.
70
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
33. PRIOR PERIOD ADJUSTMENT In accordance with the Statement of Recommended Practice – Accounting by registered social housing providers – updated 2010, the Association has adopted new accounting policies from 1 April 2011. A prior period adjustment has been required in respect of the following items: 1) The adoption of component accounting has resulted in the capitalisation of major repairs which had previously been expensed, writing off the residual values of any components that have been replaced and expensing the additional depreciation arising as a consequence of the shorter component lives. This has resulted in a net prior period adjustment of £9.8m. 2) Land which had been acquired where it was unlikely that any scheme would proceed had previously been accounted for in fixed assets. This land is now accounted for as current assets and held at the lower of cost and net realisable value. This has resulted in a transfer from fixed to current assets and a provision against current assets. As a result, comparative figures for the year ended 31 March 2011 have been adjusted as follows: PRIOR PERIOD ADJUSTMENTS Income and Expenditure Account GROUP
ASSOCIATION
Prior year adjustment for 2010/11 £’000
Net Assets
As previously stated
11,244
637,416
(222)
Effect of the adoption of component accounting
(3,736)
(13,025)
(572)
(1,698)
965
3,194
849
2,531
8,473
627,585
55
197,144
Effect of the change in accounting policy in respect of LCHO and Market rented properties depreciation As restated
71
£’000
Surplus for the year £’000
Net Assets £’000 196,311
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
PRIOR PERIOD ADJUSTMENTS BALANCE SHEET GROUP Housing Property Cost £’000 At 31 March 2011 - As previously stated
947,968
Housing Housing Property Property Grant Depreciation £’000 £’000 (393,552)
Revenue Reserves £’000
(12,852)
160,672
(20,767)
(12,425)
Prior period adjustments: Adoption of component accounting Change in accounting policy in respect of LCHO and Market rented properties depreciation
4,817
3,525
-
-
2,525
2,525
Restatement of Land-banked sites
(5,671)
-
-
-
Reclassification of Market Rented Properties to Investment Properties
(2,149)
-
68
68
As restated
944,965
(390,027)
(31,026)
150,840
PRIOR PERIOD ADJUSTMENTS BALANCE SHEET ASSOCIATION Housing Property Cost £’000 At 31 March 2011 - As previously stated
325,541
Housing Housing Property Property Grant Depreciation £’000 £’000
Revenue Reserves £’000
(97,598)
(3,963)
62,483
(76)
(1,476)
(1,646)
Prior period adjustments: Adoption of component accounting
(94)
Change in accounting policy in respect of LCHO and Market rented properties depreciation
-
2,416
2,416
Restatement of Land-banked sites
(5,671)
-
-
-
-
Reclassification of Market Rented Properties to Investment Properties
(1,591)
-
61
61
As restated
318,185
72
(97,674)
(2,962)
63,314
NOTES ON THE FINANCIAL STATEMENTS Year Ended 31 March 2012
Thames Valley Housing Association Limited – Tenant Services Authority Registration No. L0514. Registered under the Industrial & Provident Societies Act 1965 (17375R) The Group comprises: • Thames Valley Charitable Housing Association Limited • TVH Fizzy Holdings Ltd • Fizzy Enterprises LLP • Fizzy Epsom LLP • Opal Land LLP (50% Joint Venture) Registered Office 52 London Road Twickenham Middlesex TW1 3RP
73
Š Thames Valley Housing Association 2012. No part of this publication can be reproduced without the permission from Thames Valley Housing Association. We care about the environment This Financial Review is printed in the UK with biodegradable vegetable based inks on 9 Lives offset, FSC certified paper with 100% recylced content, helping to reduce the amount of waste that goes to landfill.
Premier House, 52 London Road, Twickenham, TW1 3RP Tel: 020 8607 0607 Email: info@tvha.co.uk Fax: 020 8607 9923 Web: www.tvha.co.uk