Report and Financial Statements 2021/22

Meet our team 01

Board Members

Stephen Stringer – Chair

Stephen Stringer joined the Company as Board Chair in 2016. During his career as a Government advisor he worked in the housing and regeneration sectors as well as being responsible for the governance and oversight of a range of Government organisations. His board experience includes roles as Chair of Islington and Shoreditch Housing Association and member of the Metropolitan Support Trust.

Angela and her family moved to Aylesbury in 1995 and in 2013 Angela became a local Member of the Buckinghamshire County Council. In 2020, Angela was elected onto the new unitary council as Deputy Leader and Cabinet Member Adult Social Care.

Barbara Richardson

Barbara has worked in the housing and property sector since 1995 at Senior Director and board level and has extensive experience in site identification, land acquisition, planning, project management and sales, property services, and strategic asset management. Barbara is Chair of both subsidiary company boards.

Executive Directors, Advisors and Bankers

Board,

Angela Macpherson – Councillor Board Member

Board Members (continued)

David Keeling

David is an Independent Housing Consultant, specialising in affordable housing development and asset management. From 2000, David held the roles of Executive Director of Development, and latterly Chief Operating Officer, at Bedfordshire Pilgrims Housing Association, and more recently Executive Director of Development and Sales at Cross Keys Homes. David has served on several Housing Association Boards in London and the Homes Counties. He chairs the company’s Development & Assets Committee. .

Stephen Bright

Stephen trained as a Chartered Accountant and is a member of the Association of Corporate Treasurers and the Chartered Institute of Taxation. He has previous experience on the board of charities and a social housing provider and was previously Chair of the Audit Committee for an NHS acute trust. Stephen retired to Buckinghamshire after 35 years at board level in Retail Banks and Insurance companies in the UK and Europe. Stephen is chair of the company’s Audit & Risk Committee.

Kelly Webster

Kelly joined the board as a resident member in 2017. She has worked in accountancy firms since 1994 and is a Company Director and an Associate Member of the Chartered Institute of Credit Management. Kelly has lived in the Vale for 20 years and was previously a leaseholder of the company. Kelly chairs the company’s Remuneration and Selection Committee.

Executive Directors, Advisors and Bankers

Board,

Board Members

Jules Blundell-Thompson

Jules is a resident Board Member who was appointed to the Board in 2013. Jules was born in Aylesbury and having lived in the Vale for many years, he is regularly involved with the Buckingham Community Pantomime and is a keen local sportsman.

Olivia Clymer

Olivia’s early career was spent with the Environment Agency which subsequently led to roles in related areas in both the public and private sector. She has served as a housing association board member for nine years.

Susan Ralphs

Sue was appointed to the Board in 2019. She is a Chartered Accountant and has been in senior management for 25 years. Sue currently lives in Oxford working as a Consultant, a Coach and is also on the Board of a charitable foundation.

John Balshaw (to September 2021)

John was appointed to the Board as a resident Board member in 2012. John is a retired Company Director and former Trustee of a local Charity. John retired from the board at the AGM in 2021.

Board, Executive Directors, Advisors and Bankers

Board Members

Steven Lambert – Vice Chair & Councillor Board Member (to March 2022)

Steven grew up in South London on a Peabody Trust estate. He has lived in Aylesbury since 2002 and has served as a Councillor in Buckinghamshire since 2007. Steven retired from the Parent Company Board in March 2022, but will continue as an independent member for the subsidiary companies.

Nicola Gilham (to April 2022)

Nicola joined the Board in 2019 and is a qualified chartered accountant. Nicola is non-Executive Director for a number of social enterprises, plus the Buckinghamshire Healthcare NHS Trust. Nicola resigned from the board at the start of April 2022 due to increasing work commitments.

Sue Fogden (from January 2022)

Sue was appointed to the Board in 2022. She is a Chartered Surveyor with a wealth of experience in both private and public sectors. As well as being a surveyor, Sue is a Law graduate and a RICS Evaluative Mediator.

Board, Executive Directors, Advisors and Bankers

Executive Management Team

Matthew Applegate – Chief Executive

Matthew Applegate has been Chief Executive of the Company since its formation in 2006. He has worked within the housing sector for around 30 years and previously held a variety of senior executive roles, non-executive Board member and Committee Chair roles at other Housing Associations. He is a member of the Chartered Institute of Housing and is also a qualified accountant.

Dean Gill – Executive Director of Operations

Dean Gill joined the Company in 2010 and leads a number of teams in the Operations directorate. Dean has over 30 years of experience working with Housing Associations, Local Authorities, ALMOs and a number of related private sector businesses. Dean began his career as an apprentice Carpenter and Joiner before progressing into surveying and then management roles.

Julie Porter – Executive Director of Development

Julie Porter joined the Company in 2020 to lead our programme of developing new homes. She has worked in housing development in a number of roles over 20 years, starting as a graduate trainee with a private housebuilder and going on to work for a number of regional and national housing associations, leading a wide range of teams including new business, asset management, planned maintenance, leasehold, sales and marketing, as well as development delivery. She is a Fellow of the Royal Institution of Chartered Surveyors and has a degree in Land Management.

Board, Executive Directors, Advisors and Bankers

Executive Management Team and Company Secretary

Izabela Falinska – Executive Director of Finance & Resources (from 10 May 2021)

Izabela Falinska joined the Company in 2021 and her responsibilities include finance, IT and governance. Her focus is to ensure that the Company maintains strong governance and strong financial metrics, with ample potential for growth. Previously Izabela held the position of Director of Finance Services at Stonewater Limited where she was responsible for the amalgamation of finance functions and financial systems following the merger of 3 organisations.

Linda Foster – Executive Director of Finance & Resources (to 31 July 2021)

Linda Foster joined the Company at transfer in 2006. Linda qualified as a chartered accountant and then embarked on a career in housing. Linda retired from the Company at the end of July 2021.

Company Secretary – Claire Taylor

Claire Taylor joined the Company in 2019 and took over from Linda Foster as the Company Secretary in September 2020. Claire is also responsible for teams covering the governance, IT and health & safety compliance of the company.

Executive Directors, Advisors and Bankers

Board,

Office, Advisors and Bankers

Registered office

Fairfax House, 69 Buckingham Street,

Aylesbury, Buckinghamshire

HP20 2NJ

Registered numbers

Fairhive - 8826 from 1st April 2022

VAHT & Fairhive - Regulator of Social Housing L4473

VAHT - Company number 05438914 until 31st March 2022

VAHT - Charity Commission 1114504 until 31st March 2022

Auditors

BDO LLP

2 City Place

Beehive Ring Road

Gatwick

West Sussex RH6 0PA

Bankers Barclays Bank Plc

Social Housing Team

27th Floor

1 Churchill Place

London, E14 5HP

Solicitors

Trowers & Hamlins LLP

3 Bunhill Row

London

EC1Y 8YZ

Devonshires Solicitors LLP

First Floor, No 1 Whitehall Riverside, Whitehall Road

Leeds

LS1 4BN

90.6%

"The Company’s principal activities are the management, improvement and

affordable housing and the

housing related

Reportofthe Directors 03

The Board of Fairhive Homes Limited is pleased to present its report together with the audited consolidated financial statements.

Fairhive Homes Limited (‘the Group’) comprises Fairhive Homes Limited (“the Company”) and its subsidiaries Fairfax Housing Limited and Fairfax Design & Build Limited. Fairfax Design & Build Limited started its operations during the financial year ended 31 March 2022 and Fairfax Housing Limited has remained dormant since incorporation.

Activities

The Company was formed to receive the transfer of Aylesbury Vale District Council’s housing stock. This transfer took place in July 2006 and at 31 March 2022 the company managed 7,922 homes (2021: 7,765).

The Company’s principal activities are the management, improvement and development of affordable housing and the provision of housing related services.

The Company operates two key business streams:

• the provision of general needs housing for rent and shared ownership and

• the provision of supported housing for people who need additional support to maintain their independence (Independent Living).

The Company invests in the housing stock to meet a quality standard which exceeds the Decent Homes Standard through an ongoing programme of planned and cyclical works. The Company is also committed to supporting its communities so they can be sustainable in the longer term.

Business Review

This was the second year of the corporate strategy ‘Bigger, Better, Bolder and Beyond’, launched in July 2020. Details of the Company’s performance for the year are set out in the Operating and Financial Review and Strategic Report that follows this Report of the Directors.

The Bigger, Better, Bolder and Beyond strategy is based around the themes of providing more homes for people in housing need, making sure services match the needs of current and future customers, investing in homes and communities, reducing environmental impact, improving sustainability and embracing new opportunities and innovative ideas.

The Company continued to support our residents and deliver against our strategy, despite a number of external challenges facing the housing sector. These include continued impact of the COVID-19 pandemic and the ongoing financial uncertainties related to cost of living and increased supplier costs resulting from lagging Brexit impacts and the energy cost crisis.

We responded to unprecedented times caused by the COVID-19 pandemic by adapting our services and ways of working, reviewing our plans and assessing how we can support our residents and communities. We invested in technology, mobile working and ensured that we put our colleagues and customers health and wellbeing first.

The Company’s financial position remained strong and robust.

The Board has strengthened further its focus on Health & Safety matters to ensure the homes it provides are safe, with statutory obligations met and up to date fire risk assessments in place. During the Coronavirus pandemic, fire risk assessments continued to be undertaken and all required fire risk assessments were completed in year. The Company has one leased high rise building. The programme of updating and replacing fire and smoke detectors has continued and carbon monoxide detectors are also provided in homes. The provision of statutory services during the COVID-19 pandemic has continued in line with government advice. The Company participated in the Regulator of Social Housing’s Coronavirus Operational Response Survey, as well as the Housemark COVID-19 monitoring.

On 1 April 2022, the Company converted from a private company limited by guarantee and registered charity with the Charities Commission to a CBS registered under the Cooperative and Community Benefit Societies Act 2014.

We liaised with all our stakeholders including residents, suppliers, lenders and pension providers to ensure relevant consents and regulatory changes have been put in place. We received the registration certificate from the Financial Conduct Authority confirming our registration number 8826 on the Mutual Societies portal. New Rules have been accepted by the Financial Conduct Authority and the NHF Code of Governance 2020 has been adopted. Compliance assessments against the NHF Code of Governance 2015 for the year ended 31 March 2022 and 2020 since 1st April 2022, together with Regulatory of Social Housing standards have been conducted with full compliance assured. The timing of conversion was arranged to coincide with our financial year end, providing a clean cut off between regulatory requirements noting specifically the earlier date for filing of statutory accounts. The change to a Community Benefit Society was primarily driven by the removal of administrative burden for land and other transactions and consequent financial saving and there are some changes which we could also make with regards to our Governance Framework. The way we provide services to our residents, manage our business and comply with legislation and regulation remains the same and internal controls remain robust.

Resident and community engagement

Our resident engagement framework ensures that we continue to provide opportunities for residents to be involved in the work of the company and the delivery of services they receive. As the COVID-19 pandemic ran into its second year, we continued to provide ways for residents to volunteer, including the Resident Forum, which meets regularly to discuss service delivery and review performance. We continued to hold scrutiny projects via a number of Task and Finish sub groups, with residents presenting their recommendations to Board members; this was well received by both parties.

Resident and community engagement (continued)

We also started a number of community grow projects in Aylesbury, providing green spaces for residents to plant and grow their own produce and to help to address social isolation and building community relationships, we held consultations and planting days. We joined forces with Bucks Council and put on activities in their ‘play around the parishes’ events contributing to youth activity during the summer holidays. To support residents with the impact of Covid19 the company delivered mental health awareness training in partnership with Bucks Mind, access to Outplacement First for residents to gain employment support (an online platform), provided “Scam Awareness” training at a time when scams had significantly increased.

We worked closely with HACT to pilot a project to record and measure social value of a number of activities and projects across the organisation, the results of which will be ready in Q1 of 2022/23.

We continued to ensure residents had opportunities to shape the way they receive services; digital opportunities for engagement continued to grow on last year’s success, which included our joint project with “We are Digital” where we were able to support 53 residents with 1-1 digital training. As part of our training programme we were able to deliver 316 hours’ worth of training.

Employee engagement

We have a well-established Employee Consultative Committee (ECC) which meets regularly throughout the year and is a key mechanism to maintaining strong employee relations. Key employment related policies and changes to the business are consulted on with this group and their views are taken into account before any changes are taken forward. We actively listen and respond to the views of all of our employees. For example, we carry out a twice yearly employee engagement survey to understand the latest position on employee satisfaction with our organisation being a great place to work. The survey also gathers insight into employee wellbeing. It is encouraging that our sickness and turnover results are both in the upper quartile for our sector.

Listening to the views of our employees is important to the success of our business. To aid this, the process also includes an opportunity for employees to make suggestions on what further improvements could be made.

Employee engagement (continued)

We maintain our strong commitment to Equality, Diversity and Inclusion. We have partnered with Talkback to create an internship in IT for an employee with autism. On the back of recently achieving Disability Confident Level 2 in recognition of our good practices in recruiting and retaining people with a disability, we are now progressing to achieve Disability Confident Level 3 over the next 18 months.

We also made significant progress in continuing to reduce our gender pay gap. Over a 4 year period, our mean pay gap has decreased from 13% in 2018 to women earning more than men in both 2021 and 2020.

The median pay gap measure is the most important we report on so it is encouraging that our median pay gap has decreased to -1.97% in favour of women in 2021 vs 5.9% in favour of men in 2017. This is a 7.87% improving swing over a 4 year period. This is very favourable in comparison to the UK median pay gap of 15.4%. A key reason for this achievement is that many more women now occupy our upper middle quartile pay band, 48.0% in 2021 vs 33.0% in 2020 and 28.0% in 2019.

Supplier and other business relationships

The Company has a collaborative approach to working with its supply chain, which include placements for our younger residents to learn about the supplier’s industry, what it’s like in a working environment, teamwork and networking. Partnership working is in place with many organisations such as Local Authorities and the Citizen Advice Bureau to ensure residents are provided with support and welfare advice which includes aspects such as sustaining their tenancy.

A number of long term supply contracts are in place, which enable all partners to focus on mutually agreed performance indicators, designed to deliver value for money for our residents. Where possible, we include social value opportunities which benefit our residents such as work experience and CV workshops. During the pandemic many of these opportunities were restricted but they are planned to recommence in the 2022/23 financial year.

Furthermore, we recently employed an External Partnership Manager to ensure we have better communication with key stakeholders such as local MPs, councillors and to enhance the strategic relationships we have with both our suppliers and partners

Supplier and other business relationships (continued)

As part of our ongoing desire to improve we have begun working with our resident forum and resident engagement team to assess how we can best utilise residents within the procurement process. The proposals are expected to be defined and implemented in the 2022/23 financial year.

Board Directors and Executive Directors

The Board Directors are set out on pages 3-6. Board Members are drawn from a wide background bringing together professional, commercial and local experience. At the year-end the Parent Board of Directors comprised one tenant, one person nominated by the former Vale of Aylesbury District Council (now Buckinghamshire Council) and nine independent members. During the year one resident Board Member retired and another moved home outside of the portfolio and remains on the board as an independent member.

In June 2021, an independent board member was appointed solely to the subsidiary boards. In March 2022, one council member retired from the Parent Board but remains a serving independent director of the subsidiary boards.

The Executive Directors are the Chief Executive and the other members of the company’s Executive Management Team. There are currently four Executive Directors as set out on pages 7-8.

The Company has liability insurance policies for its Board Directors, Company Secretary and Executive Directors when acting for the Company.

Service contracts

The Chief Executive and Executive Directors are employed on essentially the same terms as other employees.

Pensions

The Executive Directors are members of defined benefit schemes either with the Social Housing Pension or the Buckinghamshire County Council Pension Funds. They participate in the schemes on the same terms as other eligible staff of that scheme. The company contributes to these schemes on behalf of its employees.

Board Directors and Executive Directors (continued)

Other benefits

The Executive Directors are entitled to other benefits such as a car allowance and health care insurance. Details of the Executive Directors’ remuneration are included in note 11 to the financial statements.

Regulatory compliance

A review of compliance with the regulatory standards of the Regulator of Social Housing has been undertaken and the organisation complies with the Governance and Financial Viability Standard. During the year the regulator refreshed its assessment of the Company's compliance with the Governance and Viability Standard, including a Stability Check, and in December 2021 confirmed that the Company has retained the regulator’s top ratings for governance and viability; G1 and V1 respectively.

National Housing Federation (NHF) Code of Governance

As a member of the NHF, the Company has adopted the NHF’s 2020 “Code of governance, Promoting board excellence for housing associations” since 1 April 2022. Compliance Assessments have been conducted against the 2015 Code for the year ended 31 March 2022 and the 2020 Code since 1 April 2022. The Company complies with the Code.

Governance matters to highlight are as follows:

During the year the Board resolved to convert the Company to a charitable registered society under the Co-operative and Community Benefit Societies Act 2014. While addressing the New Rules the NHF Code of Governance 2020 was incorporated for compliance going forward. The conversion was completed on 1st April 2022 with a simultaneous name change to Fairhive Homes Limited (registration number 8826).

Fundraising statement

Although we do not undertake fundraising from the general public, the legislation defines fund raising as “soliciting or otherwise procuring money or other property for charitable purposes”. Such amounts receivable would be presented in our accounts as donations received. In relation to the above we confirm that if funds were held, they would be managed internally, without involvement of third parties. We have received no complaints in relation to fundraising activities. Our terms of employment require colleagues to behave reasonably at all times; as we do not approach individuals for funds, we do not consider it necessary to design specific procedures to monitor such activities.

Donations

During the year a total of £13,975 of donations were made (2021: £8,522). Donations were made to beneficiaries including: Samaritans (£500) and Brackley Food Bank (£100). Youth Concern was the employees chosen charity for the year, and was awarded £850. In addition donations were made through the Home Starter Fund. There were no political donations (2021: nil)

Thriving Communities Fund

As part of the strategy ‘Bigger, Better, Bolder and Beyond’, the grant fund was created to improve the lives of communities in areas in which the Company operates. The grants are given from three primary streams:

Springboard grants of up to £300 to support residents with opportunities for wellbeing, education, training or employment,

Community Micro-grants of up to £3,000 for small projects within the community and

Community Project Grants of up to £10,000 to provide funding for large scale initiatives within the local community.

During 2021/22, £136,000 was awarded as follows:

£6,300 of Springboard grants

£21,000 of Micro-grants

£108,700 of Project Grants

Given the impact of Covid-19 and the energy crisis, the Company also made additional donations of £89,000 to six food banks and Bucks Mind. The grants have been recognised in the Statement of comprehensive income.

Going concern

The Company has long term debt facilities in place including £100 million of undrawn facilities at 31 March 2022 (2021: £92 million) which provides adequate resource to finance the Company’s committed development programme, reinvestment and the Company’s day to day operations. The Board has reviewed cash flow forecasts and has also carried out stress testing of its business plan. The outcome of the stress testing demonstrated that there is sufficient headroom on gearing and interest covenants and peak debts are within available funds. The Board has a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future, being a period of at least twelve months after the date on which the report and financial statements are signed. For this reason, it continues to adopt the going concern basis in the financial statements.

Internal Controls Assurance

The Board acknowledges its overall responsibility for establishing and maintaining the whole system of internal control and for reviewing its effectiveness.

The system of internal control is designed to manage, rather than eliminate, the risk of failure to achieve business objectives, and to provide reasonable, and not absolute, assurance against material misstatement or loss.

The process for identifying, evaluating and managing the significant risks faced by the company is ongoing and has been in place throughout the period from 1 April 2021 to the date of approval of this report and financial statements.

Key elements of the control framework include:

Regular reporting to the Board on key business objectives, risks, outcomes and performance targets within the Board approved Business Planning, Risk and Control Framework;

Board approved Governance Framework including terms of reference for Boards and delegated authorities for the Committees for Audit & Risk, Development & Assets and Remuneration & Selection, and Board approved Task and Finish Groups; A Health & Safety Working Group that meets regularly and provides assurance to the Board and senior management on Health & Safety risks, their control and mitigation;

clearly defined management responsibilities for the identification, evaluation and control of significant risks;

Internal Controls Assurance (continued)

strategic and business planning processes, with detailed financial budgets; recruitment, training and development policies for all staff; preparation of reports to the Board for approval of significant new initiatives and commitments, highlighting the risks and financial implications; a risk based approach to treasury management which is subject to review on an annual basis;

Board approved confidential reporting (whistle blowing) policy; Board approved anti-fraud and corruption policy and code of conduct, covering prevention, detection and reporting of fraud; and clearly defined policies and procedures on safeguarding and modern day slavery.

A fraud register is maintained and is available for review by the Audit & Risk Committee at each of its meetings. Fraud is a standing item on the Audit & Risk Committee agenda.

The Board accepts ultimate responsibility for the system of internal control and it has delegated authority to the Audit & Risk Committee to regularly review the effectiveness of the system of internal control. The Board receives minutes of all Audit & Risk Committee meetings and an annual report from the Audit & Risk Committee.

The means by which the Audit & Risk Committee reviews the effectiveness of the system of internal control include considering internal audit reports, risk management reports, management assurances and the external auditors’ audit findings report.

The Audit & Risk Committee has received the Chief Executive’s annual review of the effectiveness of the system of internal control for the company, and the annual report of the internal auditor, and has reported its findings to the Board.

Statement of the responsibilities of the Board for the report and financial statements

The Board is responsible for preparing the Report of the Directors, Operating and Financial Review and Strategic Report and financial statements in accordance with applicable law and regulations.

Company law in the United Kingdom requires the Board to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law, including FRS 102, the financial reporting framework applicable in the UK and Republic of Ireland). Under company law, the Board members must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the surplus or deficit of the Company for that period.

Statement of the responsibilities of the Board for the report and financial statements (continued)

In preparing these financial statements the Board is required to:

select suitable accounting policies and apply them consistently; make judgements and accounting estimates that are reasonable and prudent; state whether applicable UK Accounting Standards and the Housing SORP 2018: Statement of Recommended Practice Accounting by Registered Housing Providers, have been followed, subject to any material departures disclosed and explained in the financial statements and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Board is responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and which disclose with reasonable accuracy at any time the financial position of the Company and enable it to ensure that the financial statements comply with the Companies Act 2006, the Housing and Regeneration Act 2008 and the Housing Direction for Registered Providers of Social Housing Act 2019. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Statement of the responsibilities of the Board for the report and financial statements (continued)

In so far as each of the Directors is aware:

there is no relevant audit information of which the company auditor is unaware; and the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information.

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

BDO LLP were appointed as the Company’s external auditors for 2021/22 on 28 September 2021.

Annual General Meeting (AGM)

The annual general meeting will be held on 22 September 2022

The report of the Board was approved by the Board on 4 August 2022 and signed on its behalf by

Stephen Stringer

Chair of the Board

4 August 2022

04

Operatingand financialreview (OFR)andStrategic report

Objectives and strategy

The Company’s five year corporate strategy “Bigger, Better, Bolder and Beyond” covering the period from 2020 to 2025 is designed to help build on prior successes by meeting the needs of our customers now and into the future. The strategy is based around the following themes:

deliver more homes; be a great landlord; support our residents and local communities; do more to protect the environment;

We recognise that being adaptable is necessary in today’s world to ensure we are able to meet future challenges; the environment in which we work can change rapidly and the company seeks to be flexible and introduce new ways for its services to be accessed, engage effectively with its residents and provide more homes across all affordable housing tenures.

Five key objectives support this strategy:

Increase housing supply for people in need

We are determined to continue to develop more homes for those in housing need at rents which are affordable and shared ownership for those who want to start owning their own home. We aim to expand the area we operate in to help widen our offer and affordability. We will work with partners to help facilitate Fairfax Homes Limited build houses for sale. In addition, we will reduce our carbon footprint by using sustainable materials and minimising our construction waste. And by making the best use of technology, we’ll leave a legacy of well-built homes with great design and style.

Provide services that meet customer needs

Rising customer expectations, together with the digitalisation of services, means our residents want more choice and opportunity to have their say in the way services are run. By listening to, and acting on, resident feedback, we can improve services.

Run an efficient and effective business

As technology and innovation moves quickly, the Company continues to update IT systems to provide the flexibility and efficiency that our residents and employees need. The working environment and the expectations of employees and customers are changing. We will meet these challenges by continually reviewing our processes and considering how services are delivered.Strong leadership and management are important to us. We’ll make sure we have people with the right skills and resources in the right place at the right time.

Reduce environmental impact and improve sustainability

We will make sure that new and existing homes are adapted, where possible, to prevent unnecessary impact on our environment. Working towards reducing our environmental impact and improving our sustainability, we will give preference to partners who are working towards zero carbon, whilst using the most economical construction methods.

Invest in homes and communities

We will promote social inclusion and tenancy sustainment and improve estate environments, thereby providing strong, sustainable communities. Working with partners we will provide support to vulnerable residents, helping to reduce social isolation and assisting with independent living. Effective asset management will ensure that we consider low performing properties for sale. The proceeds from these properties will be used to deliver against the Company’s strategic priorities.

A number of projects were set up to deliver the strategic objectives. These included enhancing residents engagement, improving data quality, environmental improvements projects and enhancing residents access to on line services. The projects are supported by a suite of quantitative and qualitative measures which are monitored quarterly by the Executive Management Team (EMT), with updates reported to the Board twice a year.

Year two of our strategy was the most ambitious for us with the largest number of projects aimed at improving our services due for delivery.We have been able to conclude the predominance of these projects successfully including improving digital options for residents and baselining our environmental strategy.

As a Company, we are committed to providing services that represent value for money (VfM) for residents whilst delivering continuous improvement in the quality and range of homes and services. During the year, direct provision services continued to be affected by Covid-19 restrictions, and this is reflected in our KPI reporting. Our values, strategic goals, the economic environment and increasing demand for our services place an ongoing emphasis on value for money. Our capacity to achieve future growth is partly affected by our ability to achieve increased operational efficiencies, without compromising the service provided to our residents and other stakeholders.

During the last financial year, despite the impact of the pandemic, our overall customer satisfaction rating remained high at 90.6% (2021: 89.9%), we have maintained our upper quartile performance with high levels of service continuing to be targeted in the future.

The surplus for the year is £7.5 million; £3.1 million lower than the previous year due to increased property expenditure for catch up repairs and investment works. The surplus will be used to support the Company’s development programme and investment in the maintenance of existing homes and services.

During the year the Company invested £36.1 million on developing and acquiring new affordable housing. We completed 178 homes, with a further 217 properties under construction at year end. It is planned that 192 homes will be completed in the next year.

Our strategic goals are underpinned by the effective management of key resources and driving continual improvement in services, and value for money improvement is a key focus.

This review highlights our performance through a range of value for money metrics before summarising some of the company’s future VfM plans for improvement.

Monitoring and assurance

We regularly monitor progress towards our strategic goals, and performance against our regulatory and self-imposed performance measures. This enables us to implement corrective action to keep us on course and address any blockers to success that may arise. Value for Money is built into our strategic objectives and monitored closely by our Board and Executive Management Team.

We have a number of processes in place for monitoring our KPI and VfM performance and to understand the costs of delivering specific services in order to provide assurance for the Board on VfM delivery which include:

The setting of targets annually for Key Performance Indicators (KPIs) and VfM metrics that are supported by a monthly update to senior management on performance against the targeted KPI, with a quarterly update to the Board.

A quarterly KPI review to ensure that the performance information reported remains focused on continuous business improvement

Benchmarking the Company’s performance against a peer group of approximately 28 similar sized registered providers, making use of Housemark data.

Detailed monthly management reporting that highlights financial performance compared to budget.

Regular reporting to senior management on the in-house value for money savings made across efficiency, economy, effectiveness and social value.

Regular reporting to senior management and annually to the Board of the company’s VfM performance against plan

Regular reporting to senior management and the Board of the company’s progress against the delivery of its strategies. A suite of additional metrics for monitoring COVID-19 impact continued to be provided on a monthly basis to EMT.

The Company’s decision making process requires new initiatives to be properly evaluated and fully considered at appropriate levels. To be successful, initiatives should be aligned with the corporate objectives and meet customers’ expectations. As value for money is built into our strategic objectives, it is therefore considered per initiative.

Value for Money Performance

The Company defines VfM as “the relationship between effectiveness, efficiency and economy”. VfM is high when there is a good balance between all three – relatively low costs, high productivity and successful outcomes. We also include social impact within value for money and consider what the initiative, or procurement can do to benefit our residents and community.

Our VfM performance and achievements for the year are summarised below through a suite of metrics and trend analysis. These areas tie into our strategic goals, and are compared to our peer group to understand how our performance rates against others. Areas for improvement are noted together with some of our future plans to deliver these.

The Company looks to embed VfM in all its activities and has a culture of continued improvement to enhance processes and systems which in turn makes our staff more efficient and provides a better service to our residents.

The value for money metrics are embedded within the quarterly reporting to the Board to provide regular and timely evidence of VfM progress.

Value for Money Metrics

As a registered provider of affordable housing, we are regulated by the Regulator of Social Housing (RSH). The RSH requires organisations to report on certain metrics as standard, and these are then compared across peer groups, and the sector.

The Value for Money Metrics as defined by the regulator are set out in the following table and compared with the 2021/22 target for the year under review, the previous years’ results and the median performance of the benchmark group against which the company measures itself. The target for 2021/22 is also shown.

Benchmarks throughout the report are shown for a peer group of 28 housing associations based in the East, South East, South West and London regions with 5,000 to 10,000 stock units.

The Company reinvested its previous surplus over the year to improve services and homes for our residents, and in particular provided additional welfare support to residents during the pandemic and associated lockdowns.We were also able to begin work on more development projects during the year. Although the development programme continued to be impacted by the pandemic, the development schemes progressed during the year and the New Supply % delivered was only slightly below the target for the year. It is planned that there will be an increase in development in the next five years and this metric is expected to exceed 3.5% by 2024.

Value for Money Metrics (continued)

Value for Money Metrics (continued)

We have previously incorporated two subsidiaries to support the delivery of more housing for our communities and reinvest the profits from sale into existing housing stock and development plans. Fairfax Design & Build Limited began trading in the year under review.

Reinvestment was below target as it was anticipated that 205 additional units would be completed during the year, whereas 178 units were completed with the remainder completing in 2022/23.

The Social Housing Cost per unit was impacted during the year by an increase in the operating costs. This increased expenditure was to remain complaint with changes in regulations, catch-up on some of the works deferred from last financial year as a result of the pandemic, to enhance health and safety and increased void works. Increased spending is expected to continue in the following year. The operating margin has also decreased compared to target.

Key Performance Indicators (KPI) metrics

In addition to the VfM metrics provided by our regulator, we also measure the following as part of our suite of key performance metrics. These metrics are common across the housing sector and as such, we are able to benchmark our performance against our peer group to understand how well we provide for our residents.

The additional VfM performance measures which are shown in the table below are also compared with the 2021/22 target, the previous years’ results and the upper quartile performance of the benchmark group. The target for 2022/23 is also shown. The targets for 2022/23 were set to reflect the continued impact of Covid-19, as well as other external factors such as the cost of living crisis on performance moving forward.

KPI Performance Metrics (continued)

KPI Performance Metrics (continued)

The VfM KPI performance reflects the operational difficulties experienced in year in increased costs due to supply chains and inflationary uplift, ongoing access difficulties, planned works being postponed to accommodate business and resident need as pandemic restrictions applied, as well as the financial impact of the pandemic and cost of living on our residents.

KPI Performance Metrics (continued)

Despite these challenges, we are proud that our customer satisfaction results remain in upper quartile performance either on or above our own targets. We are improving our understanding of how our residents feel about the services we deliver and in-year we have been triangulating feedback from residents in their satisfaction surveys with the areas of complaints and insurance claims to begin baselining the key thematic areas to improve in the coming years.

Calendar days to re-let increased as a direct result of high covid-19 sickness levels within the operational teams

We were able to start addressing the voids backlog from the first year of the pandemic in quarter 3 through focused procurement and a full complement in the lettings team. The days to re-let improved nearly 10 days in quarter 4 as a result. Consequently, a reduction in rent loss is already seen as more voids are returned, however the true positive impact of these measures may only be realised in the new financial

Social value activities

We continue to invest heavily in the local community. During the course of the year, our social value activities included employee support for a local charity via a variety of fundraising activities, using our Thriving Communities Fund to support our residents, and the continuation of the SPARK initiative.

In order to continue supporting our residents during the pandemic, we switched to digital engagement channels and launched IMPACT which is a resident engagement portal to reach and support a wider selection of our residents. Allied to this, we have embraced digital channels for communications which in turn gives rise to savings which can be reinvested in our residents’ homes.

Social value activities (continued)

Our “Spark” initiative continued during 2021/22. “Spark” is about helping to build brighter futures and is focussed on building skills and providing experiences, bringing together our most popular initiatives under one umbrella which includes:

apprenticeships, traineeships and work experience;

“Tuition Plus”, support for residents’ children taking the 11 plus exam. Tuition Plus has continued throughout the Covid-19 pandemic and lessons have been moved online. Face to face lessons have now resumed;

“Learn Grow Develop”, our resident training programme; and “Job Club”, supporting people back into work through our Community Hub. At a recent Job Fair, many local companies attended to explain to visitors the job opportunities they have, including Bucks Fire Service, Adecco, Royal Air Force, Thames Valley Police and many others. Pleasingly, we managed to secure new jobs for six people who are now working for local companies.

In order to increase the awareness of employees and residents, a mapping exercise has begun to help understand the baseline for the Company’s environmental footprint across its stock and office. This is with a view to future improvement of the environmental sustainability of the way we work.

We have been working on a pilot project with HACT to record and measure the social value of a number of projects and business areas during 2021/22. The project is now moving into its second year and developing processes for the organisation. This will help to cement the work that we do that makes us ‘more than a landlord’.

Future value for money plans

The Bigger, Better, Bolder and Beyond corporate strategy covers the period from 2020 to 2025 and is designed to ensure the Company can evolve to meet the challenges ahead, whilst continuing to place our residents and staff at the centre of all we do. The strategy supports the provision of safe, secure homes where our customers will feel part of a community. During the year, the strategy was reviewed and some delivery dates extended to ensure we remain realistic in our capacity to deliver on our aspirations.

Future value for money plans (continued)

The strategy was designed by our Board and Executive Management Team. All employees were involved in considering actions and residents helped to ensure that services were appropriately tailored.

Offering real value for money, whilst continually improving the services provided is the driving force behind the being “Better” agenda. We have used our corporate strategies to identify key value for money plans to focus on in the coming years.

Delivery of an ambitious development plan, reviewed in light of continuing pandemic restrictions, and seeking to deliver 612 new homes in the three year period to 2025.

Use of commercial subsidiaries to build stock and sell open to market units will provide additional funding for development of social rented and affordable units. Increased use of digital channels to support our residents, and increase the opportunities they have to engage with us. Digital upskilling opportunities will continue so we can support our residents with this move. Continuation of agile working practices to suit the Company and the workforce in the future, ensuring flexibility as far as possible in how our staff work at the Company.

Continued investment in apprenticeships across the Company to help develop skills in our communities

Continuing Thriving Communities Fund with a budget of £250,000 for 2022/23

Continue to work to understand our environmental footprint in both our stock and offices and identifying improvements that can be made to support our environmental strategy, as well as enabling residents to proactively improve the carbon footprint of their homes via small simple steps.

Streamlined Energy and Carbon Reporting (SECR)

A summary of the energy and carbon used by the Company during the year is set out below. It has been compiled using the Shift methodology and has been verified by Shift. During the year, Electricity and Transport fuel energy usage for the Company reduced as less travel was required and office remained closed during the year as a result of the pandemic. The gas usage increased for the Company as the number of properties increased and more people continued working from home. The photovoltaic (PV) array at the Fairfax House office feeds into the general supply and contributes up to 10% of electricity used in the summer and just under 5% in the winter. In October 2019 we were awarded the Shift Silver status for our environmental and climate change work.

Key for Table

tCO2e – tonnes CO2 equivalent.

Scope 1 Refers to direct business greenhouse gas emissions, from equipment the Company owns

Scope 2 Covers indirect emissions from elements like electricity, which a firm needs, but which comes from sources the Company does not control, such as power stations

Scope 3 Covers emissions that are a consequence of the Company’s actions, which occur at sources which we don’t control, such as the Company’s housing stock.

Streamlined Energy and Carbon Reporting (SECR) (continued)

Section 172 statement

The section 172 statement sets out the Board’s approach to fulfilling the section 172 requirements of the Companies Act 2006.

how the directors have engaged with key stakeholders during the year to understand the underlying issues; how they have understood the issues relevant to key decisions and the need to be fair to everyone in the organisation and balance this with consequences of any decision in the long term; and the outcomes and key decisions made in the year.

Under section 172, directors have a duty to promote the success of the company for the benefit of the members as a whole and, in doing so, they should have regard to (amongst other matters) specified areas that relate, by-and-large, to wider stakeholder interests. These areas are discussed below.

Likely consequence of any decision in the long term

The Company runs a long term business that provides homes and therefore security for our customers whilst generating surpluses that allow us to invest, along with new borrowings, into new social housing. We monitor closely the impact of our development programme on the long-term business plan. The Business plan is updated on a regular basis and considered by the board. We operate a five year strategic plan, the latest one is covering the period from 2020 to 2025. It sets out targets both operational and financial, that address our charitable objectives and ensures that we continue to meet them. The board regularly reviews key performance indicators.

Employee engagement

This is considered on pages 14 to 15.

Foster business relationships with suppliers, customers and other

The Company works in collaboration with a variety of national, regional and local suppliers, housing and development sector partners and voluntary and charitable organisations.

Our engagement with suppliers promotes fair and open competition, and where possible we will work with local providers, and build long-term relationships. We work closely with unitary authority and the councils in the areas in which we are based and value highly their support.

Section 172 statement (continued)

We engage with our customers in multiple ways, and have a well-attended resident forum. During the year, the resident forum continued via digital platforms. More details can be found on pages 13 to 14.

We utilise STAR (Survey of Tenants and Residents) surveys to understand customer feedback and enable more precise sector benchmarking. The STAR surveys cover seven core questions, from satisfaction with the quality of the home, through to value for money. These surveys represent a retrospective look at the service received by our residents, so we also monitor transactional survey responses for repairs to understand the quality of work received by our residents, and address any concerns or comments as quickly as possible.

We aim to deal with complaints promptly so we can learn as a business and resolve the issue for the customer. We have created a Residents Complaints Forum to review the service from the user perspective, so we can continuously learn from our complaint handling. During the year, we selfassessed against the Housing Ombudsman’s new Code. The areas of focus for improving our residents’ complaint experience include adherence to timescales and lessons learnt. We amended our complaint process to reflect the Housing Ombudsman’s definition of a complaint, the complaint stages and timeframes.

Impact of operations on the community and the environment

The impact of our operations on the community and environment are widespread and varied, with highlights of our achievements noted below. In 2021/22 we have:

Delivered 178 new energy efficient properties. Housed 437 households in our new and existing properties. Supported on average, 723 residents with welfare calls. Our work to identify and support residents in or at risk of rent arrears was especially important during the year under review as the pandemic and cost of living increases have impacted our residents financial lives significantly and our rent arrears decreased slightly to 2.44% Provided 23,606 repairs taking an average of 22.20 days to complete. During the year under review, we focused on reducing the outstanding non-emergency repairs resulting from the pandemic restrictions as well as flexing our operations to focus on emergency and out of hours only during lockdowns.

Maintain a reputation for high standards of business conduct

As a charity our reputation for high standards is essential to how we work. To ensure we meet the highest standards we have policies on fraud and anti-bribery in place. The organisation has a confidential reporting (whistleblowing) policy encouraging colleagues to raise issues of malpractice or irregularities which are investigated independently under the Public Interest Disclosure Act. The Audit & Risk Committee also receives reports if issues are raised.

Need to act fairly as between members of the company

This disclosure is relevant to those companies with multiple classes of shares, or minority of dissenting shareholder groups. The Company is limited by guarantee without share capital and no payment of dividends is made. In the event of the charity being wound up the liability in respect of the guarantee is limited to £1 per member.

Risks and uncertainties

The main risks to the operations of the Company and to our obligations as social landlords are regularly considered and reviewed by the Executive Management Team, Audit & Risk Committee and Board.

A Risk Management Framework is maintained which sets out our approach to risk, and how it is controlled and monitored. The risk appetite is set and reviewed annually by Board in November.

The Audit & Risk Committee has a range of responsibilities surrounding risk management and it reviews the Strategic Risk Map at each of its meetings as well as receiving assurance on the adequacy and effectiveness of controls. The Audit & Risk Committee also receive two detailed risk reviews on key risks per meeting.

Risks and uncertainties (continued)

The Board receive reports on risk management with focus on the highest rated risks. The reporting mechanism from Committees to the Board include a key issues summary together with the minutes.

The Board key risks are comprised of those outside of appetite or, if within appetite, which are highest graded on the risk map.

A summary of those risks is as follows.

Risk Examples of key controls in place

Failure to deliver the planned development programme that meets our planned contribution to housing need, achieving compliance with relevant standards within agreed resources

Development and Assets Committee monitor programme and specific risk map Approved development plan aligned with Business Plan which is regularly monitored

Actions to strengthen mitigation in year

Development team monitored construction programmes from developers and contractors and request regular updates to monitor effects of external forces (such as Brexit and Covid-19) (if any) on delivery

Where impacts have been felt, these were reported via EMT and DAC.

Failure to provide a quality of accommodation that meets relevant standards, including the Decent Homes Standard, and produces the planned financial and social returns, within agreed resources

Stock condition data maintained and regularly updatedtargeted 100% surveyed every 5 years Asset Management framework in place 30 year funded investment programme aligned with business plan

Business Planning & Control Framework Business Plan approved by Board and funders

Full compliance with Decent Homes was achieved in 2021/22 Where investment works were delayed as a consequence of Covid or where budget adjustments have been required to accommodate works such as fire door replacements, emergency lighting and increases to component costs, these will be re-phased over future years and the business plan updated accordingly.

Failure to ensure financial viability and to maintain loan covenants

Regular update of business plan and assumptions

Stress testing with identified mitigations

Risk Management Framework

Quarterly treasury reporting introduced and Board training on treasury obligations undertaken

Risk

Failure to effectively monitor, anticipate and respond to the financial impact of changes in the external environment and change in government

Examples of key controls in place

Scenario /Stress testing within business planning is in place and refreshed to reflect current risks

Membership of key sector organisations Treasury strategyupdated annually

Actions to strengthen mitigation in year

Stress testing scenarios received and reviewed from independent risk consultant.

Board training on stress testing undertaken

Failure to comply with data protection legislation

Access controls and protocols. System security and network controls Network system penetration testing & Social Engineering testing.

Implementation of new risk detection software to assist in preventing phishing, malware and ransomware attacks

Ongoing training of staff for data protection in an agile work world.

Failure to maintain a Finance service that meets the needs of the business, within agreed resources

Policies /procedures /system checks

Qualified Staff Internal Controls Assurance Report

Restructure of the finance team in year to ensure requirements are met

Failure to comply with health and safety obligations as a landlord, employer, developer and provider of care / support services

Health & Safety Framework and Policy Health & Safety Working Group Safe Contractor award

Completion of recommendations from external H&S Governance review

Full gap analysis against statutory and regulatory requirements for monitoring and reporting is underway

The replacement of existing fire doors with fire doors compliant with latest fire safety standards is not concluded effectively

Failure to prevent or recover quickly and effectively from disasters affecting the ICT infrastructure or data.

Ongoing survey programme of fire doors in place together with FRAs for blocks. Regular liaison with fire service

Disaster recovery plan

Security access systems in place.

Full replacement programme for fire doors now underway and progress report provided to EMT monthly and quarterly update to DAC

Risks and uncertainties

Risk Examples of key controls in place Actions to strengthen mitigation in year

Cost of employer's pension contributions significantly greater than planned.

The new pension strategy is being implemented and consultation with employees is being undertaken

At the meeting in July 2021 the Board agreed a timeline of activity for the creation of new pension strategy.

Failure to raise additional finance at planned costs to provide working capital and meet new business plan commitments

Business plan variable interest costs are conservative Regular monitoring of loan covenant. Regular forecasting of cash flows and funding requirements Regular updating of business plan.

New funds realised in year and further applications to be considered.

Failure to achieve the planned surplus from shared ownership sales, including first-tranche sales, and staircasing.

Prudent valuation based on current market values (at appraisal) Independent RICS valuation pre-contract. Included in Stress Testing to assess impact

Appointment of dedicated sales manager

Sales rates reforecast in the light of current COVID-19 situation and market forecasts.

Subsidiary company exposes social housing assets to commercial risk and / or significantly impacts on core services.

Financial exposure capped at level agreed by the Board Business Planning. Governance structure approved by the Board.

Board of Fairfax Design & Build Limited receives regular update on the results and activities

Minutes and matters arising from Fairfax Design & Build Limited’s board are submitted to the Board of Fairhive Homes Limited

Financial Position

The Company has prepared financial statements for the year to 31 March 2022 under the financial reporting standard (FRS 102).

The Company’s Statement of comprehensive income on page 54 shows a surplus of £7.5 million for the year (2021: £10.6 million). This financial performance is within the business plan parameters and the lender’s covenants have been met. The turnover for the year was £58.5 million (2021: £49.0 million).

The Statement of financial position is shown on page 56. The Company has loan facilities in place which cover all the committed development in the business plan, reinvestment and day to day operations. Further finance is expected to be required within the next one to two years to support the planned growth in development activity over the next five years.

Accounting policies

The Company’s principal accounting policies are set out on pages 59 to 68 of the notes to the financial statements and have been approved by the Board. The policies that are most critical to the financial results relate to accounting for housing properties and include housing property depreciation. As required by the financial reporting standard the accounting policies provide information in relation to critical judgements and estimates.

Shops and garages previously accounted for as Investment properties have been reclassified as fixed assets housing properties. Their intended use has always been social purpose and not as investment properties. Shops were not standalone properties, but part of the original social housing schemes developed by the local authority to create a community for the residents. They were an integral part of the social housing schemes as were garages which were intended for use by the social residents.

A prior year adjustment has been recognised transferring assets at their revalued amount during the SORP implementation in 2016. This resulted in restating assets at their revalued amount in 2016. That adjustment reduced the overall level of reserves, although it did not directly impact reported performance in the current or prior year.

Financial Position (continued)

Housing properties

At 31 March 2022 the Company managed 7,922 (2021: 7,765) housing properties. Housing properties were carried in the statement of financial position at 31 March 2022 at net book value of £366.3 million (2021: £337.9 million).

Reserves

After transfer of the surplus for the year of £7.5 million (2021: £10.6 million), the actuarial gain on the pension schemes of £4.3 million (2021: loss of £5.3 million) and other adjustments at the year end, the reserves amount to £183.2 million (2021: £171.4 million).

Pension costs

The Company participates in four pension schemes: two of the schemes are closed to new members and two remain open. The schemes open to new entrants are with the Social Housing Pension Scheme (SHPS) and comprise a Career Average Revalued Earnings (CARE) structure an defined contribution scheme which is used for pension auto-enrolment. The two closed to new entrants are a final salary pension scheme with SHPS and a CARE scheme with Buckinghamshir County Council Pension Fund. The Company ha contributed to the defined benefit schemes in accordance with levels set by the actuaries, of between 13% and 23.1%. The actuaries continue review these levels. The Company contributes 6 to the defined contribution scheme.

Capital structure and treasury policy

At 31 March 2022 the Company has loan facilities arranged and available amounting to £293 million. This funding was completed in December 2020. It included a deferred private placement of £55 million which was drawn in October 2021.

Financial Position (continued)

Capital structure and treasury policy (continued)

The funding comprises £68m of fixed loan debt with Barclays, £100m of revolving credit facilities and £125 million of capital market debt. The capital market funds include a 35 year, £70m facility and a 30 year facility for £55m. The revolving credit facilities are provided by two lenders, Handelsbanken and Nationwide Building Society and these are repayable between 2025 and 2030. The remaining Barclays facility is repayable from 2022 to 2031.

Of the loan facilities, at 31 March 2022 the Company had drawn £193 million and had £100 million of undrawn revolving credit facilities available.

The Company is risk averse with respect to its treasury policy and endeavours to have a mix of fixed and variable interest rates for its drawn funds. The policy is to review the proposed mix annually. At 31 March 2022, 100% of borrowings were at fixed rates of interest ranging from 2.40% to 6.14%.

The Company borrows and invests only in sterling.

Cashflow

Cash inflows and outflows during the year are shown in the Statement of Cash flow on page 57. The net cash generated from operating activities for the year to 31 March 2022 was £19.2 million (2021: £20.9 million). Net cash outflow from investment activities was £31.6 million (2021: £26.2m) mainly due to £36.1 million spend on construction and acquisition of housing properties and capitalised works to existing properties less £3.1m proceeds from sale of fixed assets. Net cash inflow from financing activities was £41 million (2021: £4.2m). As a result, there was a net increase in cash of £28.6 million (2021: net decrease of £1.1 million).

Future developments

Our ambitious development aspiration is to provide approximately 612 new homes by 2024/25. Projections show a steady increase in the number of new affordable homes over the next three years. It is planned that up to £10 million will be invested in our new subsidiary, Fairfax Housing Limited, for the development of new homes for market sale; this is with a view to providing subsidy towards the provision of affordable housing. A proportion of the housing to be delivered will be shared ownership; this, along with grant funding from Homes England and Buckinghamshire Council, increases our capacity to deliver more social rented and affordable rented homes that are needed in our area.

The Company is considering a transfer of engagement of approximately 500 units from Buckinghamshire Housing Association (BHA), a neighbouring Housing Association and Community Benefit Society with strategic objectives, culture and ethos much in alignment with Fairhive. The transfer has been approved in principle by the board and will be subject to a successful outcome of due diligence

Statement of compliance

In preparing this Operating and Financial Review and Strategic Report, the Board has followed the principles set out in the Statement of Recommended Practice: Accounting by Registered Social Housing Providers.

In approving the Operating and Financial Review, the Directors are also approving the Strategic Report in their capacity as directors of the company.

The Operating and Financial Review and the Strategic Report were approved by the Board on 4 August 2022 and signed on its behalf by:

Stephen Stringer Chair of the Board

4 August 2022

Independent Auditor's Report 05

Independent auditor's report to the members of Fairhive Homes Limited

Opinion on the financial statements

In our opinion, the financial statements:

give a true and fair view of the state of the Company’s affairs as at 31 March 2022 and of the Company’s incoming resources and application of resources, including its income and expenditure, for the year then ended; have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and have been properly prepared in accordance with the requirements of the Companies Act 2006, the Housing and Regeneration Act 2008 and the Accounting Direction for Private Registered Providers of Social Housing 2019

We have audited the financial statements of Fairhive Homes Limited (“the Company”) for the year ended 31 March 2022, which comprise the statement of comprehensive income, the statement of changes in reserves, the statement of financial position, the cash flow statement and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 the Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independent auditor's report to the members of Fairhive Homes Limited (continued) Independence

We remain independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the board members’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the board with respect to going concern are described in the relevant sections of this report.

Other information

The board are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information including the Report of the Directors, the Operating and Financial Review and Strategic Report and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information we are required to report that fact. We have nothing to report in this regard.

Other Companies Act 2006 reporting

In our opinion, based on the work undertaken in the course of the audit:

the information given in the Operating and Financial Review and Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and the Operating and Financial Review and Strategic Report and Report of the Directors have been prepared in accordance with applicable legal requirements.

Independent auditor's report to the members of Fairhive Homes Limited (continued)

In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Operating and Financial Review and Strategic Report and Report of the Directors.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches not visited by us; or

the Company’s financial statements are not in agreement with the accounting records and returns; or certain disclosures of board directors’ remuneration specified by law are not made; or

we have not received all the information and explanations we require for our audit.

Responsibilities of the board

As explained more fully in the board members’ responsibilities statement set out on page twenty one, the board is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the board members determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the board are responsible for assessing the Trust’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the board either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Independent auditor's report to the members of Fairhive Homes Limited (continued)

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Extent to which the audit was capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Based on our understanding of the Company and the industry in which it operates, we identified that the principal laws and regulations that directly affect the financial statements to be the Companies Act 2006, Charities Act 2011 and relevant Tax Legislation. We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.

In addition, the Company is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation. We identified the following areas as those most likely to have such an effect: Employment Law, Data Protection and Health and Safety Legislation. Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the Board and other management and inspection of regulatory and legal correspondence if any.

Independent auditor's report to the members of Fairhive Homes Limited (continued)

Extent to which the audit was capable of detecting irregularities, including fraud (continued)

Audit procedures capable of detecting irregularities including fraud performed by the engagement team included:

performing analytical procedures to identify unusual or unexpected relationships that may indicate risks of material misstatement due to fraud. Areas of identified risk are then tested substantively; discussions with management, including consideration of known or suspected instances of non-compliance with laws and regulations and fraud; reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing correspondence with HMRC and relevant regulators to identify any actual or potential frauds or any potential weaknesses in internal control which could result in fraud susceptibility; reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations; reviewing items included in the fraud register; challenging assumptions made by management in their significant accounting estimates, in particular in relation to the recoverable amount of assets and the assumptions used in determining the defined benefit obligation; carrying out detailed testing, on a sample basis, of revenue transactions and balances agreeing to appropriate documentary evidence to verify the completeness, existence and accuracy of the reported financial statements; and in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments.

Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.

Independent auditor's report to the members of Fairhive Homes Limited (continued)

Extent to which the audit was capable of detecting irregularities, including fraud (continued)

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Use of our report

This report is made solely to the members of the Company, as a body, in accordance with in accordance with the Housing and Regeneration Act 2008 and Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’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 Company and the members as a body, for our audit work, for this report, or for the opinions we have formed.

Laurence Elliott (Senior Statutory Auditor) For and on behalf of BDO LLP Statutory Auditors

London, United Kingdom

Date: ....................

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

Consolidated Financial Statements 06

Consolidated and association statement of comprehensive income:

Consolidated and association statement of changes in reserves

The accompanying notes on pages 58 to 104 form part of these financial statements.

Consolidated and Association Statement of Financial Position

For the year ended 31 March 2022

The financial statements were approved and authorised for issue by the Board on 4 August 2022 and signed on its behalf by:

Stephen Stringer

Stephen Bright Claire Taylor Chair of the Board Board Member Company Secretary

The accompanying notes on pages 58 to 104 form part of these financial statements.

Consolidated statement of cashflow

For the year ended 31 March 2022

The accompanying notes on pages 58 to 104 part of these financial statements.

Notes to the financial statements 07

1. Legal status

The Company is incorporated in England. The financial statements are prepared under historic cost convention modified for revaluation of investment properties. The functional and presentational currency used is pound sterling.

On 1 April 2022, the Company converted from a private company limited by guarantee and registered charity with the Charities Commission to a Community Benefit Society registered under the Co-operative and Community Benefit Societies Act 2014.

The Company has two subsidiaries; Fairfax Housing Limited and Fairfax Design & Build Limited. Both companies are registered under the Companies Act. Fairfax Design & Build Limited started its operations during the year and Fairfax Housing Limited remained dormant during the year.

2. Accounting policies

Basis of accounting

The financial statements of the Company are prepared in accordance with UK Generally Accepted Accounting Principles (UK GAAP) including Financial Reporting Standard 102 (FRS 102) and the Housing SORP 2018: Statement of Recommended Practice for Registered Social Housing Providers and comply with the Accounting Direction for Private Registered Providers of Social Housing 2019.

Basis of consolidation

The consolidated financial statements present the results of Fairhive Homes Limited and its subsidiaries (“The Group”) as if they formed a single entity.

Uniform accounting policies have been adopted across the Group, and intercompany transactions and balances between have therefore been eliminated in full.

Going concern

The Company’s business activities, its current financial position and factors likely to affect its future development are set out within the Report of the Directors

The Company has in place long and medium term debt facilities which provide adequate resources to finance the committed development programme, reinvestment and the Company’s day to day operations.

The Board has reviewed cash flow forecasts and considered downside scenarios which allow for the potential impact of Brexit and falling house prices and delays in timing of sales as well as increased arrears, voids and bad debts.

Having considered the forecast cash flow and scenario analysis the Board concluded that the Company has sufficient headroom on liquidity and will operate well within its loan covenants requirements including the risk trigger level set by the Board.

As a result, the Board is satisfied that that there is reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future, being a period of at least twelve months after the date on which the report and financial statements are signed. For this reason, it continues to adopt the going concern basis in the financial statements.

2. Accounting policies (continued)

Significant judgements and estimates

Preparation of the financial statements requires management to make significant judgements and estimates. The items in the financial statements where these judgements and estimates have been made are set out below.

Significant management judgements

The following are the significant management judgements made in applying the accounting policies that have the most significant effect on the financial statements.

Capitalisation of property development costs

Distinguishing the point at which a project is more likely than not to continue, allowing capitalisation of associated development costs requires judgement. After capitalisation management monitors the asset and considers whether changes indicate that impairment is required.

Categorisation of housing properties

The categorisation of housing properties as investment properties or property, plant and equipment based on the use of the asset requires judgement.

Financial Instruments

The company have reviewed its funding agreements and have concluded that they meet the conditions of a basic financial instrument under section 11.9 of FRS102 inasmuch that they are contractual payments to the holder (lender), assessed in sterling in which the debt instrument is denoted and are either a positive fixed rate or a positive variable rate.

Estimation uncertainty

Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may be substantially different.

Useful lives of depreciable assets

Management reviews its estimate of the useful lives of depreciable assets at each reporting date based on the expected utility of the assets. Uncertainties in these estimates relate to technological obsolescence that may change the utility of certain software and IT equipment and changes to decent homes standards which may require more frequent replacement of key components.

2. Accounting policies (continued)

Significant judgements and estimates (continued)

Defined benefit obligation (DBO)

Management’s estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses, as analysed in Note 13 Pension schemes

The sensitivity analysis disclosed in note 13 Pension schemes sets out the impact of a small change in the discount rates and mortality assumptions on the defined benefit obligation and projected service costs.

Allocation of value to land, structure and components

Value is split between components, land and structure: the land value is allocated first, then the component value and the remainder is allocated to structure. Value has been attributed to land and components based on cost.

Net realisable value of stock

Net realisable value is based on the estimated selling price less selling costs. Estimated selling prices were provided by external valuers and by reference to actual selling prices for completed developments. For schemes under construction, the estimated costs to completion are based on approved budget and forecast.

Rental and other trade receivables

The estimate for receivables relates to the recoverability of the balances outstanding at year end. A review is performed on outstanding debts to consider whether each debt is recoverable.

Investment in subsidiaries

Investments in subsidiaries are accounted for at cost less impairment in the individual financial statements

Value Added Tax

The Company charges Value Added Tax (VAT) on some of its income and is able to recover part of the VAT it incurs on expenditure. The financial statements include VAT to the extent that it is suffered by the Company and not recoverable from HM Revenue & Customs. The balance of VAT payable/recoverable at the year-end is included as a current liability/asset.

2. Accounting policies (continued)

Turnover and revenue recognition

Turnover comprises rental income receivable in the year, income from shared ownership first tranche sales, other services included at the invoiced value (excluding VAT where recoverable) of goods and services supplied in the year and grants receivable in the year.

Rental income is recognised from the point when properties under development reach practical completion or otherwise become available for letting, net of any voids. Income from first tranche sales is recognised at the point of legal completion of the sale. Revenue grants are recognised when the conditions for receipt of agreed grant funding have been met. Charges for support services funded under Supporting People are recognised as they fall due under the contractual arrangements with Administering Authorities.

Interest payable

Interest is capitalised on borrowings to finance developments to the extent that it accrues in respect of the period of development if it represents either:

a) interest on borrowings specifically financing the development programme after deduction of social housing grant received in advance; or

b) a fair amount of interest on borrowings of the Company as a whole after deduction of social housing grant received in advance to the extent that they can be deemed to be financing the development programme.

Other interest payable is charged to the statement of comprehensive income in the year.

Financial Instruments

Financial instruments which meet the criteria of a basic financial instruments as defined in Section 11 of FRS 102 are accounted for under an amortised historic cost model.

Basic financial instruments are recognised at amortised historic cost.

Debtors

Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

2. Accounting policies (continued)

Creditors

Short term trade creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

Employee benefits

Short-term employee benefits and contributions to defined contribution plans are recognised as an expense in the period in which they are incurred.

Pension costs

The company participates in two pension schemes; the Social Housing Pension Scheme (SHPS) and the Buckinghamshire County Council Pension Fund (BCCPF). Within the Social Housing Pension Scheme, the company operates three benefit structures: two defined benefit and one defined contribution. The BCCPF and the SHPS final salary structure are closed to new entrants. The benefit structures open to new entrants are SHPS Career Average Revalued Earnings and SHPS defined contribution scheme.

Social Housing Pension Scheme

The scheme assets are measured at fair value. Scheme liabilities are measured on an actuarial basis using the projected unit credit method and are discounted at appropriate high quality corporate bond rates.

The current service cost and costs from settlements and curtailments are charged against operating surplus. Past service costs are recognised in the current reporting period within the income and expenditure account. Interest is calculated on the net defined benefit liability. Re-measurements are reported in other comprehensive income. Please see note 13 for more details..

Buckinghamshire County Council Pension Fund

For the Buckinghamshire County Council Pension Fund (BCCPF), the operating costs of providing retirement benefits to participating employees are recognised in the accounting periods in which the benefits are earned. The related finance costs, expected return on assets and any other changes in fair value of the assets and liabilities, are recognised in the accounting period in which they arise.

2. Accounting policies (continued)

Pension costs (continued)

The current service cost and costs from settlements and curtailments are charged against operating surplus. Past service costs are recognised in the current reporting period within the income and expenditure account. Interest is calculated on the net defined benefit liability. Re-measurements are reported in other comprehensive income. Please see note 13 for more details.

Housing properties

Housing properties are properties available for rent, and properties subject to shared ownership leases.

The company applied a transitional relief available under FRS 102 to revalue housing properties transferred from the council in 2006 at the date of transition (1 April 2014) and to hold this value as ‘deemed cost’. Completed housing properties are stated at deemed cost less depreciation. All properties developed or purchased subsequent to transfer, are held at cost less depreciation. The cost is the cost of acquired properties, land, development costs, interest and improvements. Works to existing properties which replace a component that has been treated separately for depreciation purposes are capitalised as improvements.

Shared ownership properties are split proportionally 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, and the remaining element is classed as fixed asset and included in housing properties at cost, less any provisions needed for depreciation.

Shops and garages previously accounted for as investment properties have been reclassified and included in fixed assets housing properties. Shops are not standalone properties, but part of the original social housing schemes developed by the local authority to create a community for the residents. They were an integral part of the social housing schemes as were garages which were intended for use by the social housing residents.

2. Accounting policies (continued)

Government grants

Government grants include grants receivable from Homes England, local authorities, and other government organisations. Government grants received for housing properties are recognised in income over the useful life of the housing property structure and, where applicable, its individual components (excluding land) under the accruals model.

Grants relating to revenue are recognised in the statement of comprehensive income over the same period as the expenditure to which they relate once reasonable assurance has been gained that the entity will comply with the conditions and that the funds will be received.

Grants due from government organisations or received in advance are included as current assets or liabilities.

Government grants received for housing properties are subordinated to the repayment of loans by agreement with Homes England. Government grants released on sale of a property may be repayable but are normally available to be recycled and are credited to a Recycled Capital Grant Fund and included in the statement of financial position in creditors.

If there is no requirement to recycle or repay the grant on disposal of the asset, any unamortised grant remaining within creditors is released and recognised through the statement of comprehensive income. Where individual components are disposed of and this does not create a relevant event for recycling purposes, any grant which has been allocated to the component is released to the statement of comprehensive income. Upon disposal of the associated property, the Company is required to recycle these proceeds and recognise them as a liability.

Other grants

Grants received from non-government sources are recognised using the performance model. A grant which does not impose specified future performance conditions is recognised as revenue when the grant proceeds are received or receivable. A grant that imposes specified future performancerelated conditions on the company is recognised only when these conditions are met. A grant received before the revenue recognition criteria is satisfied is recognised as a liability.

2. Accounting policies (continued)

Depreciation of housing properties

The Company separately identifies the major components which comprise its housing properties, and charges depreciation, so as to write-down the cost of each component to its estimated residual value, on a straight line basis, over its estimated useful economic life. Freehold land is not depreciated.

The Company depreciates the major components of its housing properties over their expected useful lives on the following basis:

Structure

Roofs

Kitchens

Bathrooms

Central Heating

Boilers

Windows and Doors

Lifts

125 years

50 years

20 years

30 years

20 years

15 years

30 years

30 years

Leasehold properties are amortised over the life of the lease or their estimated useful economic lives in the business, if shorter.

Impairment

Housing properties are assessed annually for impairment indicators at an individual property level. Where indicators are identified an assessment for impairment is undertaken comparing the asset’s carrying amount to its recoverable amount. Where the carrying amount of an asset is deemed to exceed its recoverable amount, the asset is written down to its recoverable amount, this is likely to be the value in use of the asset based on its service potential. The resulting impairment loss is recognised as expenditure in the statement of comprehensive income. Where an asset is currently deemed not to be providing service potential to the Company, its recoverable amount is its fair value less costs to sell.

2. Accounting policies (continued)

Other tangible fixed assets

Depreciation is provided evenly on the cost of other tangible fixed assets, to write them down to their estimated residual values over their expected useful lives. No depreciation is provided on freehold land. Assets are depreciated over the periods shown below:

Freehold buildings - offices

Freehold premises improvement

Fixtures, fittings and equipment – Photovoltaic panels

Fixtures, fittings and equipment – other

Computer equipment

Computer software

Motor vehicles

50 years

10 to 20 years

25 years

5 to 10 years

4 years

2 to 4 years

4 years

Computer software, previously accounted for as Intangible assets has been reclassified and included in Other tangible fixed assets.

Leased assets

Rentals payable under operating leases are charged to the statement of comprehensive account on a straight line basis over the terms of the leases.

Loan finance issue costs

Issue costs of long and medium term finance are deducted from the amount of loan drawn down. This cost is charged to the statement of comprehensive income evenly over the period of the loan.

Properties for sale

Shared ownership first tranche sales, completed properties for outright sale and property under construction are valued at the lower of cost and net realisable value. Cost comprises materials, direct labour and direct development overheads. Net realisable value is based on estimated sales price after allowing for all further costs of completion and disposal.

2. Accounting policies (continued)

Provisions for liabilities

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value using a discount rate. The unwinding of the discount is recognised as a finance cost in the statement of comprehensive income in the period it arises.

The Company recognises a provision for annual leave accrued by employees as a result of services rendered in the current period, and which employees are entitled to carry forward and use within the next 12 months. The provision is measured at the salary cost payable for the period of absence.

Right to Buy

Under the terms of the transfer agreement, some of the proceeds from Right to Buy sales are shared with the Buckinghamshire Council (formally Aylesbury Vale District Council). On completion of a Right to Buy sale contract, the share of the proceeds receivable by the Company are credited to the statement of comprehensive income..

Reserves

The Company establishes restricted reserves for specific purposes where their use is subject to external restrictions

Revaluation reserve

The difference on transition to FRS 102 accounting between the fair value of social housing properties transferred from Aylesbury Vale District Council and the historical cost carrying value is credited to the revaluation reserve.

3a Turnover, cost of sales, operating costs and operating surplus

3a Turnover, cost of sales, operating costs and operating surplus (continued)

3b. Turnover, cost of sales, operating costs and operating surplus

3b. Turnover, cost of sales, operating costs and operating surplus (continued)

4b. Particulars of income and expenditure from social housing lettings

4a. Particulars of income and expenditure from social housing lettings

5. Accommodation in management and development –Group and Association

At the end of the year accommodation in management for each class of accommodation was as follows:

6. Operating surplus

This is arrived at after charging/(crediting):

7. Surplus on sale of fixed assets

8. Interest receivable and other income

9. Interest payable and financing costs

10. Employees - Group (FTE)

Headcount:

Employee costs:

the table below details the full time equivalent (FTE) number of staff and Directors whose remuneration for the year falls within each salary band (excluding pension contributions but including benefits in kind):

10. Employees - Group (FTE) (continued)

The Company’s employees are either members of the Buckinghamshire County Council Pension Fund (BCCPF), of the Social Housing Pension Schemes (SHPS), or have not joined a pension scheme. Further information on each scheme is shown in note 13.

The Company paid contributions at the rate of 6.0% to 23.1% during the accounting period. Member contributions vary between 3.0% and 9.4%. The cost to the Company during the year was £1,064,000 for an average of 244 employees (2021: £1,058,000 for 266 employees).

The Company’s best estimate of contributions to be paid to the schemes for the next accounting period is £1,568,000.

11. Board Members and Executive Directors - Group

Emoluments payable to Executive Directors

For the purposes of this note, Executive Directors are defined Executive Officers of the Company i.e. Chief Executive, Executive Director of Finance & Resources, Executive Director of Operations and Executive Director of Development

11. Board Members and Executive Directors - Group (continued)

Emoluments payable to Executive Directors and board members (including pension contributions and benefits in kind)

The emoluments of the highest paid director, the Chief Executive, excluding pension contributions, were £197,554 (2021: £187,926).

The Chief Executive is a member of the Social Housing Pension Scheme. He is an ordinary member of the pension scheme and no enhanced or special terms apply. The Company does not make any further contribution to an individual pension arrangement for the Chief Executive.

11. Board Members and Executive Directors - Group (continued)

Emoluments payable to Board Members (gross salary excluding expenses) Non-executive board members are paid but are not members of the pension scheme. Their emoluments for the year are set out below:

In addition, board members have claimed the following expenses during the year:

12. Tax on surplus on ordinary activities

In 2021, a provision for tax of £96k was recognised in the Statement of comprehensive income in respect of the taxable surplus on land sales. This provision has been reversed in 2022 as no longer required.

13. Pensions

The Company participates in two pension schemes: the Social Housing Pension Scheme (SHPS) and the Buckinghamshire County Council Pension Fund (BCCPF). Accounting disclosures in relation to each of these are set out below.

13. Pensions (continued)

Social Housing Pension Scheme (SHPS)

The Company participates in the scheme, a multi-employer scheme which provides benefits to some 500 non-associated employers. The Scheme is a defined benefit scheme in the UK.

The most recent formal actuarial valuation was completed as at 30 September 2020, allowing for the different financial assumptions required under FRS 102 to 31 March 2021 by a qualified independent actuary.

Under the defined benefit pension accounting approach, the SHPS net deficit as at 1 April 2021 is £2,207,000 and £1,279,000 as at 31 March 2022.

The scheme is classified as a ‘last-man standing arrangement’. Therefore the Company is potentially liable for other participating employers’ obligations if those employers are unable to meet their share of the scheme deficit following withdrawal from the scheme. Participating employers are legally required to meet their share of the scheme deficit on an annuity purchase basis on withdrawal from the scheme.

Assumptions

The main financial assumptions used by the actuary were:

13. Pensions (continued)

Mortality assumptions

The assumed life expectancy from age 65:

13. Pensions (continued)

SHPS (continued)

13. Pensions (continued)

SHPS (continued)

The total return on the fund assets for the year to 31 March 2022 is £755,000 (2021: £476,000)

We have been notified by the Trustees of the SHPS Scheme that it has performed a review of the changes made to the Scheme's benefits over the years and the result is that there is uncertainty surrounding some of those changes. The Trustee has been advised to seek clarification from the Court on these items. This process is ongoing and the matter is unlikely to be resolved before the end of 2024 at the earliest. It is recognised that this is could potentially impact the value of Scheme Liabilities, but until Court directions are received it is not possible to calculate the impact of this issue, particularly on an individual employer basis, with any accuracy at this time. No adjustment has been made in these financial statements in respect of this potential issue.

13. Pensions (continued)

Buckinghamshire County Council Pension Fund (BCCPF)

The BCCPF is a multi-employer scheme, administered by Buckinghamshire County Council under the regulations governing the Local Government Pension Scheme, a defined benefit scheme. The most recent formal actuarial valuation was completed as at 31 March 2019.

The scheme is closed to new entrants. The employers’ contributions to the BCCPF by the Company for the year ended 31 March 2022 were £350,478 (2021: £391,440) at a contribution rate of 23.1% of pensionable salaries.

Assumptions

The main financial assumptions used by the actuary were:

Mortality assumptions

The assumed life expectancy from age 65:

13.

Pensions (continued)

Sensitivity analysis

The following table sets out the impact of a small change in the discount rates on the defined benefit obligation and projected service cost with a +/- 1 year age rating adjustment to the mortality assumption.

The total return on the fund assets for the year to 31 March 2022 is £2,151,000 (2021: £4,319,000).

14a. Tangible fixed assets housing properties – Group

14a. Tangible fixed assets housing properties – Association

14b. Tangible fixed assets housing properties – Group and Association

14b. Tangible fixed assets housing properties – Group and Association (continued)

Impairment:

The Group assessed its portfolio for indicators of impairment at the statement of financial position date. This is an annual process and includes looking at the changes in government policy, materially higher than anticipated development costs, reduction in house market prices for shared ownerships properties held for sale, changes for market demand for properties and the properties with the most voids throughout the year.

A review of existing portfolio for indicators of impairment resulted in nil charge to the Statement of comprehensive income (2021: nil).

Reclassification of shops and garages

Shops and garages previously accounted for as Investment properties have been reclassified as Tangible Fixed Assets Housing Properties and shown under prior year changes in reserves.Shops were not standalone properties, but part of the original social housing schemes developed by the local authority to create a community for the residents. They were an integral part of the social housing schemes as were garages which were intended for use by the social housing residents.

An adjustment of £5,500,000 has been posted to the Income and expenditure reserves to reverse historical revaluations since 2016.

15. Other tangible fixed assets - Group and Association

16. Investment in subsidiaries

The Company has two wholly owned subsidiaries: Fairfax Housing Limited and Fairfax Design & Build Limited. Fairfax Design & Build Limited started its operations during the financial year ended 31 March 2022. Fairfax Housing Limited remained dormant during the financial year ended 31 March 2022. The Company holds £1.00 share in each subsidiary and has the right to appoint members to the boards and thereby exercises control over them.

Both subsidiaries are non-regulated registered companies under the Companies Act 2006. The registered office is the same for all of the group entities. The Company is the ultimate parent undertaking.

18. Trade and other debtors

19. Creditors: amounts falling due within one year

20. Creditors: amounts falling due after more than one year

21. Recycled capital grant fund – Group and Association

The grants have been recycled into this fund, following property sales under the preserved Right to Acquire.

22. Deferred capital grant – Group and Association

23. Loans and borrowings

Security

The bank loans and private placements are secured by a fixed charge over the Company’s properties. In addition there is a floating charge over the assets of the Company in favour of the security trustee.

Terms of repayment and interest rates

The interest on long term loans and note purchase agreements are paid in quarterly instalments over the life of the loans. £68m of the loans are bullet payments and with our two note purchase agreements, one agreement is for 30 years which is repaid on a bullet payment basis, whereas the second agreement is for 35 years and is repaid on a phased basis. The loans are fully repaid between 2022 and 2035. The average cost of funding at 31 March 2022 is 3.62% (2021: 3.8%).

At 31 March 2022 the Company had undrawn loan facilities arranged and available of £100 million (2021: £92 million).

24. Capital commitments

The above commitments will be financed through borrowings which are available for draw down under existing arrangements.

25. Financial Instruments - Group

The Group’s financial instruments may be analysed as follows:

Borrowing facilities

The Group has undrawn committed borrowing facilities. The facilities available at 31 March in respect of which all conditions precedent have been met were £100 million (2021: £92 million).

26. Provisions for liabilities – Group and Association

The leave pay provision represents holiday balances accrued as a result of services rendered in the current period and which employees are entitled to carry forward. The provision is measured as the salary cost payable for the period of absence.

27. Contingent liabilities – Group and Association

The Group and the Company had no contingent liabilities at 31 March 2022 to disclose (2021: nil)

28. Share capital - Association

29. Related party disclosure – Association

29. Related party disclosure – Association (continued)

The Company transacts with Fairfax Design & Build Limited which provides design and build services. The Company provides staff services to Fairfax Design & Build Limited to manage various design and build projects. The Company also provides management services.

The Company receives design and build services from Fairfax Design & Build Limited and the recharge includes an admin fee based on 2% of the contract costs.

Board members:

During the year there were three tenant members of the Board: John Balshaw who retired in September 2021, Julian Blundell-Thompson and Kelly Webster. Their tenancies were on normal commercial terms and as such their position does not afford them any additional benefits compared with other tenants. Kelly Webster is no longer a leaseholder of the company.

During the year Councillors of Buckinghamshire Council; Steven Lambert and Angela Macpherson served on the Board. All transactions made with the Local Authority were made at arm’s length on normal commercial terms; members cannot use their position to their advantage. With effect from 31st March 2022, Steven Lambert retired from his post as Council Member on the Board of the parent company. He remains on the subsidiary boards as an independent director.

30. Post balance sheet events

During the latter part of the financial year the Board were invited to consider a transfer of engagement of approximately 500 units from Buckinghamshire Housing Association (BHA), a neighbouring Housing Association and Community Benefit Society with strategic objectives, culture and ethos much in alignment with Fairhive. Other Housing Associations were also invited and Fairhive was successful at this stage with an agreement in principle being made to proceed with due diligence. Due diligence has commenced and both Boards have yet to formally approve a transfer of engagement which will be subject to due diligence outcome. Should both Boards approve the transfer of engagement it is anticipated this will be completed during the year ending 31 March 2023 with BHA’s properties being incorporated into Fairhive's stock portfolio