1
BBBRRROOOXXXBBBOOOUUURRRNNNEEE HHHOOOUUUSSSIIINNNGGG AAASSSSSSOOOCCCIIIAAATTTIIIOOONNN LLLIIIMMMIIITTTEEEDDD
RRReeepppooorrrttt aaannnddd FFFiiinnnaaannnccciiiaaalll SSStttaaattteeemmmeeennntttsss
YYYeeeaaarrr eeennndddeeeddd 333111sssttt MMMaaarrrccchhh 222000000888
2
CCCooonnnttteeennntttsss PPPaaagggeee
Board Members, Executive Directors, Advisors and Bankers 3
Report of the Board 4
Independent Auditors’ Report to the Members of Broxbourne Housing Association Limited
8
Income and Expenditure Account 9
Statement of Total Recognised Surpluses and Deficits 9
Reconciliation of movements in the Association’s Funds 9
Balance Sheet 10
Cash Flow Statement 11
Notes to the Financial Statements 12 - 29
3
BBooaarrdd MMeemmbbeerrss,, EExxeeccuuttiivvee DDiirreeccttoorrss,, AAddvviissoorrss aanndd BBaannkkeerrss
BBBoooaaarrrddd
Chair Derek Hawes Vice Chair Eric Xuereb Other Members Malcolm Aitken from 2 July 2007
Bob Bick to 12 May 2008
Keith Carpenter to 12 May 2008
Liz Clayton
Mike Curtis
Stewart Heath from 3 September 2007
Alan McCole to 16 May 2007
Christine Mitchell
David Nutt
Kevin Parker
Paulette Rose to 3 September 2007
Frank Wallder
EEExxxeeecccuuutttiiivvveee DDDiiirrreeeccctttooorrrsss
Chief Executive John Giesen Director of Resources Paul Williams Director of Business Services
Ken Goodsell from 26 November 2007
Director of Development and Property Services
Steven Tarry
Ken Goodsell to 25 November 2007 Director of Housing Services Simon Walton from 26 November 2007
John Giesen To 25 November 2007 Secretary
Ken Goodsell From 26 November 2007
RRReeegggiiisssttteeerrreeeddd OOOffffffiiiccceee
Scania House 17 Amwell Street Hoddesdon Hertfordshire EN11 8TS
RRReeegggiiisssttteeerrreeeddd
NNNuuummmbbbeeerrr
Registered with the Financial Services Authority (FSA) as an Industrial and Provident Society with charitable rules and objectives. FSA Registration number: 29876R Registered with the Housing Corporation. Registration number: L4455
AAAuuudddiiitttooorrrsss
Beever and Struthers Chartered Accountants St George’s House 215-219 Chester Road Manchester M15 4JE
SSSooollliiiccciiitttooorrrsss
Winckworth Sherwood 35 Great Peter Street London SW1P 3LR
BBBaaannnkkkeeerrrsss
Lloyds TSB Bank Plc Public and Community Sector 3
rd Floor
25 Gresham Street London EC2 7HN
4
RReeppoorrtt ooff tthhee BBooaarrdd
The Board presents its report and the Association’s audited financial statements for the year to 31 March 2008. PPPrrriiinnnccciiipppaaalll AAAcccttt iiivvviiittt iiieeesss
Broxbourne Housing Association Limited (‘the Association’) is a non-profit registered social landlord administered by a voluntary board. The Association’s principal activities relate to the delivery of promises made under the Transfer Agreement with the Borough of Broxbourne and the development and management of affordable general needs, sheltered, shared ownership and supported social housing for those in necessitous circumstances. BBBuuusssiiinnneeessssss RRReeevvviiieeewww
The Association has developed higher level corporate strategic objectives that are reflected in the Strategic Plan and the Business Plan, supported by a long term financial plan and annual budget. The Association operated within the constraints of the aforementioned during the year to 31 March 2008. HHHooouuusssiiinnnggg ppprrrooopppeeerrrtttyyy aaasssssseeetttsss
Details of the Association’s fixed assets are shown in notes 10 and 11 to the financial statements. RRReeessseeerrrvvveeesss
After the transfer of the surplus for the year of £3,816k (£5,325k: 2007) at the year end, the Association’s reserves amounted to £9,141k (£5,325k: 2007). DDDooonnnaaattt iiiooonnnsss
The Association made no political donations during the period, but made charitable donations totalling £500 in lieu of sending Christmas cards. PPPooosssttt bbbaaalllaaannnccceee ssshhheeeeeettt eeevvveeennntttsss
The Board considers that there have been no events since the year end that have had a material or significant effect on the Association’s financial position. PPPaaayyymmmeeennnttt ooofff cccrrreeedddiiitttooorrrsss
In line with government guidance, the Association’s policy is to pay purchase invoices within 30 days of receipt, or earlier if agreed with the supplier. This policy was adhered to throughout the year, except in instances where a debt was disputed. FFFiiinnnaaannnccciiiaaalll iiinnnssstttrrruuummmeeennntttsss
Throughout the year, the Association operated within the constraints of its Treasury Management Policy. Analysis and detail of debt structure is contained within note 15. EEEmmmpppllloooyyyeeeeeesss
The strength of the Association lies in the quality of all its employees: in particular, the Association’s ability to meet its objectives and commitments to tenants, in an efficient and effective manner, depends on employees’ contribution. During the year, all contracts of employment and terms and conditions of employment were independently reviewed and a performance management system introduced. This ensures that the objectives of individuals are in harmony with corporate and departmental targets, and that individual performance is closely monitored. The Association shares information on its objectives, progress and activities through a series of regular meetings involving Board members, the senior management and staff. The Association participates in the ‘positive about disabled people’ scheme in recruiting new staff, and is committed to the embedding of its equalities and diversity policies amongst its employees. HHHeeeaaalllttthhh aaannnddd sssaaafffeeetttyyy
The Board is aware of its responsibilities on all matters relating to health and safety. The Association has prepared detailed health and safety policies and provides staff training and education on health and safety matters.
5
RReeppoorrtt ooff tthhee BBooaarrdd ((ccoonnttiinnuueedd))
BBBoooaaarrrddd mmmeeemmmbbbeeerrrsss aaannnddd eeexxxeeecccuuuttt iiivvveee dddiiirrreeeccctttooorrrsss
The present Board members and the executive directors of the Association are set out on page 3. The Board members are drawn from a wide background, bringing together professional, commercial and local experience. The executive team comprise the Chief Executive and the four other executive directors. Following a reorganisation during the year to 31 March 2008, a new directorate of Business Services has been established and a new Director of Housing Services appointed. This has enabled the Association to better deliver its services and to promote the continuous improvement of processes and service delivery. The executive directors hold no interest in the Association’s shares and act as executives within the authority delegated by the Board. Group insurance policies indemnify Board members and officers against liability when acting for the Association. SSSeeerrrvvviiiccceee cccooonnntttrrraaaccctttsss
During the year, new service contracts were negotiated for the Chief Executive and the other executive directors, with notice periods ranging from three to six months. These contracts are not in the same form as the new service contracts for other staff negotiated during the year. PPPeeennnsssiiiooonnnsss
The executive directors are members of either the Social Housing Pension Scheme or the Hertfordshire County Council Pension Fund, both defined benefit final salary pension schemes. They participate in the schemes on the same terms as all other eligible staff and the Association contributes to the scheme on behalf of its employees. OOOttthhheeerrr bbbeeennneeefff iii tttsss
The executive directors are entitled to other benefits including the provision of a transport allowance. Details of executive director remuneration packages are included in note 9 to the audited financial statements. NNNHHHFFF CCCooodddeee ooofff GGGooovvveeerrrnnnaaannnccceee
The Board are pleased to report that the Association complies with the principal recommendations of the NHF Code of Governance (revised 2004). There are no material governance issues to report over the period. The external auditors undertook £600 (£4k: 2007) of non-audit work for the Association during the period. This was in respect of tax advice on benefits in kind. TTTeeennnaaannnttt IIInnnvvvooolllvvveeemmmeeennnttt
The Association actively encourages tenant involvement in decision-making by promoting mechanisms of tenant involvement. The Association has four tenant Board members and clear reporting arrangements between tenant groups and the Board. CCCooommmppplllaaaiiinnntttsss
The Association has a clear and simple complaints policy issued to all tenants. During the year, the Association received 60 complaints which were investigated in accordance with established procedures. Over half the complaints were in relation to caretaking and responsive repairs. IIInnnttteeerrrnnnaaalll cccooonnntttrrrooolllsss aaassssssuuurrraaannnccceee
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 indentifying, evaluating and managing the significant risks faced by the Association was on-going throughout the year and beyond the date of approval of the annual report and financial statements.
6
RReeppoorrtt ooff tthhee BBooaarrdd ((ccoonnttiinnuueedd))
In meeting its responsibilities, the Board has adopted a risk-based approach to internal controls which are embedded within the normal management and governance process. This approach includes the evaluation of the nature and extent of risks to which the Association is exposed and is consistent with Turnbull principles as incorporated in the Housing Corporation’s circular R2-25/01: Internal Controls Assurance as replaced by circular 07/07.
IIInnnttteeerrrnnnaaalll cccooonnntttrrrooolllsss aaassssssuuurrraaannnccceee (((cccooonnnttt iiinnnuuueeeddd)))
Key elements of the control framework include:
•••••••••••• Board approved terms of reference and delegated authorities for audit, resources, operations and development committees;
•••• Clearly defined management responsibilities for the identification, evaluation and control of significant risks;
•••• Sound strategic and business planning processes, with detailed financial budgets and longer term forecasts;
•••• Formal recruitment, retention, training and development policies for all staff;
•••• Established authorisation appraisal procedures for all significant new initiatives and commitments;
•••• A sound approach to treasury management which is subject to external review on an ongoing basis;
•••• Regular reporting to the appropriate committee on key business objectives, targets and outcomes; and
•••• Board approved whistle blowing and anti-theft and corruption policies. The Board cannot delegate ultimate responsibility for the system of internal control, but it can, and has, delegated authority to the audit committee to regularly review the effectiveness of the system of internal control. The Board receives quarterly reports from the Audit Committee together with minutes of Audit Committee meetings. The Audit Committee has received the Chief Executive’s Annual Review of the effectiveness of the system of internal control for the Association, and the Annual Report of the internal auditor, and has reported its findings to the Board. GGGoooiiinnnggg cccooonnnccceeerrrnnn
After making enquiries, the Board has a reasonable expectation that the Association has adequate resources and funding facilities to continue in operational existence for the foreseeable future, being a period of 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.
SSttaatteemmeenntt ooff RReessppoonnssiibbiilliittiieess ooff tthhee BBooaarrdd SSStttaaattteeemmmeeennnttt ooofff ttthhheee rrreeessspppooonnnsssiiibbbiii lll iii ttt iiieeesss ooofff ttthhheee BBBoooaaarrrddd fffooorrr ttthhheee rrreeepppooorrrttt aaannnddd fff iiinnnaaannnccciiiaaalll ssstttaaattteeemmmeeennntttsss
The Board is responsible for preparing the report and financial statements in accordance with applicable law and United Kingdom Generally Accepted Accounting Practice. The Industrial and Provident Societies Acts and registered social landlord legislation in the United Kingdom require the board to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Association at the end of the year and of the surplus or deficit of the Association for the year then ended. In preparing those financial statements the Board is required to:
•••• Select suitable accounting policies and apply them consistently;
•••• Make judgements and estimates that are reasonable and prudent; and
•••• Follow applicable United Kingdom Accounting Standards and the Statement of Recommended Practice: “Accounting by Registered Social Landlords” (Update 2005), subject to any material departures disclosed and explained in the financial statements.
The Board is responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the group and Association to enable it to ensure that the financial statements comply with the Industrial and Provident Societies Acts 1965 to 2002, paragraph 16 of Schedule 1 to the Housing Act 1996 and the Accounting Requirements for Registered Social Landlords General Determination 2006. It is also responsible for safeguarding the assets of the Association and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
7
RReeppoorrtt ooff tthhee BBooaarrdd ((ccoonnttiinnuueedd))
SSttaatteemmeenntt ooff RReessppoonnssiibbiilliittiieess ooff tthhee BBooaarrdd ((ccoonnttiinnuueedd)) The Board is responsible for ensuring that the Report of the Board is prepared in accordance with the Statement of Recommended Practice: “Accounting by Registered Social Landlords” (Update 2005). The Board is responsible for the maintenance and integrity of the corporate and financial information on the Association’s website. Legislation in the United Kingdom governing the preparation and dissemination of the financial statements and other information included in annual reports may differ from legislation in other jurisdictions.
We certify that there is no relevant audit information of which the Association’s auditors are 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 auditors are aware of that information. AAAnnnnnnuuuaaalll GGGeeennneeerrraaalll MMMeeeeeettt iiinnnggg
The annual general meeting will be held on 8 September 2008 at Scania House, Hoddesdon. EEExxxttteeerrrnnnaaalll aaauuudddiiitttooorrrsss
A resolution to re-appoint Beever and Struthers will be proposed at the forthcoming annual general meeting. The report of the Board was approved by the Board on 8 September 2008 and signed on its behalf by: ……………………………………………………………………………… Derek Hawes Chairman of the Board of Broxbourne Housing Association Ltd Dated: 8 September 2008
8
IInnddeeppeennddeenntt AAuuddiittoorrss’’ RReeppoorrtt ttoo tthhee MMeemmbbeerrss ooff BBrrooxxbboouurrnnee HHoouussiinngg AAssssoocciiaattiioonn LLiimmiitteedd
We have audited the financial statements on pages 9 to 29 for the year ended 31 March 2008. These financial statements have been prepared under the historical cost convention and the accounting policies set out therein. This Report is made solely to the Association’s members, as a body, in accordance with Section 9 of the Friendly and Industrial and Provident Societies Act 1968. Our audit work has been undertaken so that we might state to the Association’s members those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Association and the Association’s members as a body, for our audit work, for this Report, or for the opinions we have formed. RRReeessspppeeecccttt iiivvveee RRReeessspppooonnnsssiiibbbiii lll iii ttt iiieeesss ooofff ttthhheee BBBoooaaarrrddd aaannnddd AAAuuudddiiitttooorrrsss
The Board’s responsibilities for preparing the Report of the Board and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out in the Statement of the Board’s responsibilities. Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Industrial and Provident Societies Acts 1965 to 2002, Schedule 1 of the Housing Act 1996 (as amended by the Housing Act 2004) and the Accounting Requirements for Registered Social Landlords General Determination 2006. We also report to you if the Association has not kept proper accounting records, if the Association has not maintained satisfactory control over its transactions, and if we have not received all the information and explanations, which are necessary for the purpose of the audit. We read information contained in the Report of the Board and consider whether it is consistent with the audited financial statements. We consider the implications for our report if we become aware of any apparent mis-statement or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information. BBBaaasssiiisss ooofff OOOpppiiinnniiiooonnn
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, or evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements and of whether the accounting policies are appropriate to the Association’s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material mis-statement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. OOOpppiiinnniiiooonnn
In our opinion:
•••• The financial statements give a true and fair view, in accordance with the United Kingdom Generally Accepted Accounting Practice, of the state of affairs of the Association as at 31 March 2008 and of its surplus for the period there ended;
•••• The financial statements have been properly prepared in accordance with the Industrial and Provident Societies Acts 1965 to 2002, Schedule 1 of the Housing Act 1996 (as amended by the Housing Act 2004) and the Accounting Requirements for Registered Social Landlords General Determination 2006; and
•••• The information given in the report of the Board is not inconsistent with the financial statements. BEEVER AND STRUTHERS Chartered Accountants and Registered Auditors St Georges House 215-219 Chester Road Manchester M15 4JE
Date: 8 September 2008
9
IInnccoommee aanndd EExxppeennddiittuurree AAccccoouunntt FFoorr tthhee yyeeaarr eennddeedd 3311 MMaarrcchh 22000088
NNoottee 22000088
PPeerriioodd ffrroomm 2233 JJaannuuaarryy 22000066 ttoo 3311
MMaarrcchh 22000077
£’000 £’000
TTuurrnnoovveerr:: CCoonnttiinnuuiinngg aaccttiivviittiieess 3 15,645 17,750
Operating costs 3 (10,506) (11,158)
OOppeerraattiinngg ssuurrpplluuss:: CCoonnttiinnuuiinngg aaccttiivviittiieess 5,139 6,592
Surplus on sale of fixed assets – housing properties
5 265 572
Interest receivable and other income 6 148 111 Interest payable and similar charges 7 (1,854) (2,009)
SSuurrpplluuss oonn oorrddiinnaarryy aaccttiivviittiieess bbeeffoorree ttaaxxaattiioonn
3,698 5,266
Tax on surplus on ordinary activities - -
SSuurrpplluuss ffoorr ffiinnaanncciiaall yyeeaarr 3,698 5,266
The Association’s results all relate to continuing activities. Historical costs surpluses and deficits were identical to those shown in the income and expenditure account.
SSttaatteemmeenntt ooff TToottaall RReeccooggnniisseedd SSuurrpplluusseess FFoorr tthhee yyeeaarr eennddeedd 3311 MMaarrcchh 22000088
22000088
PPeerriioodd ffrroomm 2233 JJaannuuaarryy 22000066 ttoo 3311
MMaarrcchh 22000077
£’000 £’000
SSuurrpplluuss ffoorr tthhee ffiinnaanncciiaall yyeeaarr:: 3,698 5,266
Pension schemes: Actuarial Gains/Losses 118 697 Pension schemes: Deficit inherited at transfer - (638)
TToottaall rreeccooggnniisseedd ssuurrpplluuss ffoorr tthhee yyeeaarr 3,816 5,325
RReeccoonncciilliiaattiioonn ooff mmoovveemmeennttss iinn tthhee AAssssoocciiaattiioonn’’ss ffuunnddss
22000088
PPeerriioodd ffrroomm 2233 JJaannuuaarryy 22000066 ttoo 3311
MMaarrcchh 22000077
£’000 £’000
OOppeenniinngg ttoottaall ffuunnddss:: 5,325 -
Total recognised surpluses and deficits relating to the year:
3,816 5,325
CClloossiinngg TToottaall ffuunnddss:: 9,141 5,325
TThhee nnootteess oonn ppaaggeess 1122--2299 ffoorrmm aann iinntteeggrraall ppaarrtt ooff tthheessee aaccccoouunnttss
10
BBaallaannccee SShheeeett aatt 3311 MMaarrcchh 22000088
NNoottee 22000088 22000077
£’000 £’000
TTaannggiibbllee ffiixxeedd aasssseettss
Housing properties 10 54,291 43,686 Social Housing Grant 10 - - Other grants 10 (668) (348) Other tangible fixed assets 11 2,051 1,674
TToottaall 55,674 45,012
CCuurrrreenntt aasssseettss
Debtors & Prepayments 12 1,652 2,061 Cash at bank and in hand 21 211 1,437
TToottaall 1,863 3,498
CCrreeddiittoorrss:: aammoouunnttss ffaalllliinngg dduuee wwiitthhiinn oonnee yyeeaarr
13 (5,582) (5,695)
NNeett ccuurrrreenntt ((lliiaabbiilliittiieess)) (3,719) (2,197)
NNeett aasssseettss eexxcclluuddiinngg ppeennssiioonn aasssseett:: 51,955 42,815
Pension asset 26 189 13
NNeett aasssseettss iinncclluuddiinngg ppeennssiioonn aasssseett 52,144 42,828
CCrreeddiittoorrss:: aammoouunnttss ffaalllliinngg dduuee aafftteerr mmoorree tthhaann oonnee yyeeaarr
14 43,003 37,503
CCaappiittaall aanndd rreesseerrvveess
Non equity share capital 24 - - Revenue reserve 16 9,141 5,325 Designated reserves 16 - -
CCoonnssoolliiddaatteedd ffuunnddss 9,141 5,325
52,144 42,828
The financial statements were approved by the Board on 8 September 2008 and signed on its behalf by: …………………….... Derek Hawes Chairman of Board
…………………….... Board Member
…………………….... Ken Goodsell Secretary
…………………….... Paul Williams Director of Resources TThhee nnootteess oonn ppaaggeess 1122--2299 ffoorrmm aann iinntteeggrraall ppaarrtt ooff tthheessee aaccccoouunnttss
11
CCaasshh FFllooww SSttaatteemmeenntt ffoorr tthhee yyeeaarr eennddeedd 3311 MMaarrcchh 22000088
NNoottee 22000088
22000077 ((1155 mmoonntthh ppeerriioodd))
£’000 £’000
NNeett ccaasshh iinnffllooww ffrroomm ooppeerraattiinngg aaccttiivviittiieess:: 19 5,729 10,508
RReettuurrnnss oonn iinnvveessttmmeennttss aanndd sseerrvviicciinngg ooff ffiinnaanncceess
Interest received 6 148 111 Interest paid 7 (1,854) (2,009)
CCaappiittaall eexxppeennddiittuurree
Improvements 10 (7,535) (6,407) Purchase and construction of housing properties
10 (3,069) (37,449)
Social Housing Grant – received 10 - - Other capital grants – received 10 319 518 Purchase of other fixed assets 11 (728) (1,902) Sales of housing properties 5 265 572 Social Housing Grant – repaid - - Other capital grants – repaid - - Loss on sale of other fixed assets (1) (8)
TToottaall (10,749) (44,676)
FFiinnaanncciinngg::
Loans received 21 5,500 38,003 Housing loans repaid - (500)
TToottaall 5,500 37,503
((DDeeccrreeaassee))//IInnccrreeaassee iinn ccaasshh 20 (1,226) 1,437
TThhee nnootteess oonn ppaaggeess 1122--2299 ffoorrmm aann iinntteeggrraall ppaarrtt ooff tthheessee aaccccoouunnttss
12
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
111... LLLeeegggaaalll SSStttaaatttuuusss The Association is registered with the Financial Services Authority as an Industrial and Provident Society with charitable rules and objectives. It is also registered with the Housing Corporation as a social landlord.
222... AAAccccccooouuunnntttiiinnnggg PPPooollliiiccciiieeesss BBBaaasssiiisss ooofff aaaccccccooouuunnnttt iiinnnggg
The financial statements of the Association are prepared in accordance with applicable accounting standards and the Statement of Recommended Practice: accounting by Registered Social Landlords, update 2005, and comply with the Accounting Requirements for Registered Social Landlords General Determination 2006. TTTuuurrrnnnooovvveeerrr
Turnover comprises rental income receivable in the year, other services included at the invoiced value (excluding VAT) of goods and services supplied in the year and revenue grants receivable in the year. VVVaaallluuueee AAAddddddeeeddd TTTaaaxxx
The Association 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 Association and not recoverable from HM Revenue and Customs. The balance of VAT payable or recoverable at the year end is included as a current liability or asset. The Association operates a VAT shelter arrangement, agreed at transfer with HM Revenue and Customs. This facilitates the full recovery of VAT on expenditure falling within the agreed definition of “improvements” to property. 50% of VAT recoveries under the shelter arrangement are reimbursed to the Borough of Broxbourne. IIInnnttteeerrreeesssttt pppaaayyyaaabbbllleee
Interest is capitalised on borrowings to finance new developments to the extent that it accrues in respect of the period of development. The interest charge is calculated on new borrowings financing the development programme after deduction of interest on associated capital grants. Other interest payable is charged to the income and expenditure account in the year. DDDeeerrriiivvvaaattt iiivvveeesss
The Association did not use derivatives during the year as part of its treasury operations. PPPeeennnsssiiiooonnnsss
The Association participates in two funded multi-employer defined benefit schemes, the Social Housing Pension Scheme (‘SHPS’) and the Hertfordshire County Council Pension Fund (‘HCCPF’). For the SHPS, it has not been possible to identify the share of underlying assets and liabilities belonging to individual participating employers. The income and expenditure charge represents the employer contribution payable to the scheme for the accounting period. For the HCCPF, 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 charges in fair value of the assets and liabilities, are recognised in the accounting period in which they arise. The operating costs, finance costs and expected return on assets are recognised in the income and expenditure account with any other changes in fair value of assets and liabilities being recognised in the statement of total recognised surpluses and deficits. SSSuuuppppppooorrrttteeeddd hhhooouuusssiiinnnggg mmmaaannnaaagggeeeddd bbbyyy aaagggeeennnccciiieeesss
Income and expenditure in respect of supported housing projects depends on the nature of the partnership arrangements between the Association and its managing agents and on whether the Association carries the financial risk. Where the Association holds the support contract with the Supporting People Administering Authority and carries the financial risk, all of the project’s income and expenditure is included in the Association’s income and expenditure account (see note 3).
13
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
222... AAAccccccooouuunnntttiiinnnggg PPPooollliiiccciiieeesss (((cccooonnntttiiinnnuuueeeddd))) HHHooouuusssiiinnnggg ppprrrooopppeeerrrttt iiieeesss
Housing properties are principally properties available for rent and are stated at cost. Cost includes the cost of acquiring land and buildings, development costs, interest charges incurred during the development period and expenditure incurred in respect of capitalised improvements. Improvements are works which either fall within the definition of the VAT shelter works or result in an increase in the net rental income, such as a reduction in future maintenance costs, or result in a significant extension of the useful economic life of the property in the business. Only the direct overhead costs associated with new developments or improvements are capitalised. Shared ownership properties are included in housing properties at cost, less the first tranche sale proceeds and any provisions needed for depreciation or impairment. DDDooonnnaaattteeeddd lllaaannnddd
Land donated by local authorities and others, if applicable, is added to cost at the market value of the land at the time of the donation. SSSoooccciiiaaalll HHHooouuusssiiinnnggg GGGrrraaannnttt
Social Housing Grant (SHG) is receivable from the Housing Corporation and is utilised to reduce the capital costs of housing properties, including land costs. SHG due from the Housing Corporation or received in advance is included as a current asset or liability. SHG received in respect of revenue expenditure is credited to the income and expenditure account in the same period as the expenditure to which it relates. SHG is subordinated to the repayment of loans by agreement with the Housing Corporation. SHG released on sale of a property may be repayable but is normally available to be recycled and is credited to a Recycled Capital Grant Fund and included in the balance sheet creditors. OOOttthhheeerrr gggrrraaannntttsss
Other grants are receivable from local authorities and other organisations. Capital grants are utilised to reduce the capital costs of housing properties, including land costs. Grants in respect of revenue expenditure are credited to the income and expenditure account in the same period as the expenditure to which they relate. DDDeeeppprrreeeccciiiaaattt iiiooonnn ooofff hhhooouuusssiiinnnggg ppprrrooopppeeerrrttt iiieeesss
Freehold land is not depreciated. Depreciation of buildings is not considered appropriate to charge during the first five years of the Association’s operation, over which period the majority of works associated with the transfer improvements programme will have been completed. A property depreciation policy will commence after the first five years of operation. Properties held on leases are amortised over the life of the lease or their estimated useful economic lives in the business, if shorter. IIImmmpppaaaiiirrrmmmeeennnttt
Where there is evidence of impairment, fixed assets are written down to their recoverable amount. Any such write down is charged to operating surplus. OOOttthhheeerrr fff iiixxxeeeddd tttaaannngggiiibbbllleee aaasssssseeetttsss
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. A full year’s depreciation is charged in the year of acquisition of the asset. No depreciation is charged in the year of disposal. The principal annual rates used for other assets are: Freehold buildings 2% Long leasehold property over life of lease Furniture, fixtures & fittings 10% Computers & Office equipment 20% Motor vehicles 20% Plant & equipment 10%
14
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
222... AAAccccccooouuunnntttiiinnnggg PPPooollliiiccciiieeesss (((cccooonnntttiiinnnuuueeeddd)))
LLLeeeaaassseeeddd aaasssssseeetttsss
Assets held under finance leases are included in the balance sheet and depreciated in accordance with the Association’s normal accounting policies. The present value of future rentals is shown as a liability. The interest element of rental obligations is charged to the income and expenditure account over the period of the lease in proportion to the balance of capital repayments outstanding. Rentals payable under operating leases are charged to the income and expenditure account on a straight-line basis over the lease term. LLLiiiqqquuuiiiddd rrreeesssooouuurrrccceeesss Liquid resources are readily disposable current asset investments. They may include deposits, held for more than 24 hours, that can only be withdrawn without penalty on maturity or by giving notice of more than one working day. RRReeessseeerrrvvveeesss
The Association may, when appropriate, establish restricted reserves for specific purposes where their use is subject to external restrictions and designated reserves where reserves are earmarked for a particular purpose. CCCooorrrpppooorrraaattt iiiooonnn tttaaaxxxaaattt iiiooonnn Broxbourne Housing is registered with the Financial Services Authority (FSA) as an association with charitable interests and therefore has no taxation liability for corporation tax.
333... TTTuuurrrnnnooovvveeerrr,,, cccooosssttt ooofff sssaaallleeesss,,, ooopppeeerrraaatttiiinnnggg cccooossstttsss aaannnddd ooopppeeerrraaatttiiinnnggg sssuuurrrpppllluuusss Continuing activities
TTuurrnnoovveerr CCoosstt ooff ssaallee
OOppeerraattiinngg ccoossttss
OOppeerraattiinngg ssuurrpplluuss
TToottaall OOppeerraattiinngg SSuurrpplluuss
22000077 ((1155 MMoonntthhss))
£’000 £’000 £’000 £’000 £’000
SSoocciiaall hhoouussiinngg lleettttiinnggss 14,670 - (9,612) 5,058 6,503
OOtthheerr ssoocciiaall hhoouussiinngg aaccttiivviittiieess
Supporting people contract income
338 - (338) - -
Development costs not capitalised
- - - - -
Management services 44 - (40) 4 2 Other 113 - (96) 17 16
TToottaall 495 - (474) 21 18
NNoonn--ssoocciiaall hhoouussiinngg aaccttiivviittiieess
Lettings - - - - - Development for sale - - - - - Other 480 - (420) 60 71
TToottaall 480 - (420) 60 71
15,645 - (10,506) 5,139 6,592
15
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
333... TTTuuurrrnnnooovvveeerrr,,, cccooosssttt ooofff sssaaallleeesss,,, ooopppeeerrraaatttiiinnnggg cccooossstttsss aaannnddd ooopppeeerrraaatttiiinnnggg sssuuurrrpppllluuusss
(((cccooonnntttiiinnnuuueeeddd)))
Particulars of income and
expenditure from social housing
lettings
GGeenneerraall HHoouussiinngg
SShheelltteerreedd HHoouussiinngg
LLeeaasseehhoolldd SShhaarreedd
OOwwnneerrsshhiipp TToottaall 22000088
TToottaall 22000077 ((1155 MMoonntthhss))
£’000 £’000 £’000 £’000 £’000 £’000
TTuurrnnoovveerr ffrroomm ssoocciiaall hhoouussiinngg lleettttiinnggss::
Rent receivable net of voids and identifiable service charges
12,166 1,403 - 280 13,849 15,848
Charges for support services
- - - - - -
Service charges receivable
569 - 252 - 821 863
NNeett rreennttaall iinnccoommee 12,735 1,403 252 280 14,670 16,711
Other Housing Corporation revenue grants
- - - - - 2
Other revenue grants
- - - - - -
TTuurrnnoovveerr ffrroomm ssoocciiaall hhoouussiinngg lleettttiinnggss
12,735 1,403 252 280 14,670 16,713
EExxppeennddiittuurree oonn ssoocciiaall hhoouussiinngg lleettttiinnggss::
Management services
(3,315) (376) (252) (280) (4,223) (4,243)
Routine maintenance
(2,748) (312) - - (3,060) (5,137)
Planned maintenance
(1,556) (177) - - (1,733) (75)
Major repairs expenditure
- - - - - -
Bad debts & provisions
(68) (7) - - (75) (225)
Property lease charges
- - - - - -
Other costs (468) (53) - - (521) (530)
OOppeerraattiinngg ccoossttss oonn ssoocciiaall hhoouussiinngg lleettttiinnggss
(8,155) (925) (252) (280) (9,612) (10,210)
OOppeerraattiinngg ssuurrpplluuss oonn ssoocciiaall hhoouussiinngg lleettttiinnggss
4,580 478 - - 5,058 6,503
VVooiidd lloosssseess:: 195 - - 1 196 161
16
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
333... TTTuuurrrnnnooovvveeerrr,,, cccooosssttt ooofff sssaaallleeesss,,, ooopppeeerrraaatttiiinnnggg cccooossstttsss aaannnddd ooopppeeerrraaatttiiinnnggg sssuuurrrpppllluuusss
(((cccooonnntttiiinnnuuueeeddd))) AAAccccccooommmmmmooodddaaattt iiiooonnn iiinnn mmmaaannnaaagggeeemmmeeennnttt aaannnddd dddeeevvveeelllooopppmmmeeennnttt
At the end of the year accommodation in management for each class of accommodation was as follows:
22000088 22000077
Social Housing No. No.
General Housing 3,009 3,009 Supported Housing 400 402 Shared Ownership 127 130 Leaseholders 644 637
TTToootttaaalll ooowwwnnneeeddd 4,180 4,178
Accommodation managed for others
75 75
TToottaall mmaannaaggeedd 4,255 4,253
The Association manages accommodation for Swan Housing Association and Maidenhead Housing Association, registered social landlords operating in the Borough of Broxbourne.
444... OOOpppeeerrraaatttiiinnnggg SSSuuurrrpppllluuusss This is arrived at after charging/ (crediting):
22000088
22000077 ((1155 MMoonntthhss))
£’000 £’000
Depreciation of other tangible fixed assets
342 229
Deficit on disposal of other tangible fixed assets
1 7
OOOpppeeerrraaattt iiinnnggg llleeeaaassseee rrreeennntttaaalllsss:::
Land and buildings 171 121 Office equipment and computers 5 4
AAuuddiittoorrss’’ rreemmuunneerraattiioonn ((iinncclluuddiinngg VVAATT))::
For audit services 37 24
Tax compliance 1 -
Tax advisory - - For non-audit services
Other - 4
555... SSSuuurrrpppllluuusss ooonnn sssaaallleee ooofff fffiiixxxeeeddd aaasssssseeetttsss ––– hhhooouuusssiiinnnggg ppprrrooopppeeerrrtttiiieeesss
22000088
22000077 ((1155 MMoonntthhss))
£’000 £’000
Disposal Proceeds 2,241 3,661
Carrying value of fixed assets (1,976) (3,089)
265 572
666... IIInnnttteeerrreeesssttt rrreeeccceeeiiivvvaaabbbllleee aaannnddd ooottthhheeerrr iiinnncccooommmeee
22000088
22000077 ((1155 MMoonntthhss))
£’000 £’000
Interest receivable and similar income
64 52
Other interest earned – Pension Schemes
84 59
148 111
17
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
777... IIInnnttteeerrreeesssttt pppaaayyyaaabbbllleee aaannnddd sssiiimmmiiilllaaarrr ccchhhaaarrrgggeeesss
22000088 22000077
((1155 MMoonntthhss))
£’000 £’000
Loans and bank overdrafts 1,929 2,009
Interest payable capitalised on development
(75) -
1,854 2,009
888... EEEmmmpppllloooyyyeeeeee IIInnnfffooorrrmmmaaatttiiiooonnn Average monthly number of employees:
22000088 22000077
((1155 MMoonntthhss))
No. No.
Resources/Administration/CEO * 16 16 Development 16 15
Housing/Business Services 74 67
106 98
Average monthly number of employees expressed in full time equivalents:
22000088 22000077
((1155 MMoonntthhss))
No. No.
Resources/Administration/CEO * 15.0 15 Development 15.5 14 Housing/Business Services 62.5 55 93 84
Employee costs: 22000088 22000077
((1155 MMoonntthhss))
£’000 £’000
Wages and salaries 1,868 2,301 Social security costs 149 65 Other pension costs 328 116
2,345 2,482
* Highest paid Director included. The Associations employees are members of the Hertfordshire County Council Pension Fund (HCCPF) or of the Social Housing Pension Scheme (SHPS). Further information on each scheme is given on pages 24 to 29.
999... BBBoooaaarrrddd MMMeeemmmbbbeeerrrsss aaannnddd EEExxxeeecccuuutttiiivvveee DDDiiirrreeeccctttooorrrsss
BBaassiicc ssaallaarryy ££’’000000
BBeenneeffiittss iinn kkiinndd ££’’000000
PPeennssiioonn CCoonnttrriibbuuttiioonnss
££’’000000
22000088 TToottaall ££’’000000
22000077 TToottaall ((1155 MMoonntthhss))
££’’000000
Chief Executive and Directors 356 - 69 425 348
None of the Board members received emoluments. The emoluments of the highest paid Director, the Chief Executive, excluding pension contributions, was £87,780 (£90,000 15 month period to 31 March 2007). The Chief Executive is a member of the Hertfordshire County council Pension Scheme. He is an ordinary member of the pension scheme and no enhanced or special terms apply. The Association does not make any further contribution to an individual pension arrangement for the Chief Executive.
18
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
111000... TTTaaannngggiiibbbllleee FFFiiixxxeeeddd AAAsssssseeetttsss ––– HHHooouuusssiiinnnggg PPPrrrooopppeeerrrtttiiieeesss
SSoocciiaall hhoouussiinngg pprrooppeerrttiieess hheelldd
ffoorr lleettttiinngg
CCoommpplleetteedd sshhaarreedd oowwnneerrsshhiipp
hhoouussiinngg pprrooppeerrttiieess
HHoouussiinngg pprrooppeerrttiieess uunnddeerr
ccoonnssttrruuccttiioonn TToottaall
£’000 £’000 £’000 £’000
CCCooosssttt At 1 April 2007 42,493 1,193 - 43,686 Additions during period
467 100 2,805 3,372
Improvements 7,535 - - 7,535 Interest Capitalised - 75 75 Schemes completed in year
- - - -
Disposals (194) (183) - (377) AAAttt 333111 MMMaaarrrccchhh 222000000888 50,301 1,110 2,880 54,291
DDDeeeppprrreeeccciiiaaattt iiiooonnn aaannnddd
iiimmmpppaaaiiirrrmmmeeennnttt
At 1 April 2007 - - - - Charged in year - - - - Released on disposal
- - - -
AAAttt 333111 MMMaaarrrccchhh 222000000888 - - - -
DDDeeeppprrreeeccciiiaaattteeeddd cccooosssttt
AAAttt 333111 MMMaaarrrccchhh 222000000888 50,301 1,110 2,880 54,291
SSSoooccciiiaaalll HHHooouuusssiiinnnggg
GGGrrraaannnttt
At 1 April 2007 - - - - Additions - - - - Schemes completed in year
- - - -
Disposals - - - - AAAttt 333111 MMMaaarrrccchhh 222000000888 - - - -
OOOttthhheeerrr GGGrrraaannntttsss At 1 April 2007 (197) (151) - (348) Additions (320) - - (320) Schemes completed in year
- - - -
Disposals - - - - AAAttt 333111 MMMaaarrrccchhh 222000000888 (517) (151) - (668)
NNNeeettt bbbooooookkk vvvaaallluuueee At 1 April 2007 42,296 1,042 - 43,338 AAAttt 333111 MMMaaarrrccchhh 222000000888 49,784 959 2,880 53,623
Expenditure on works to existing properties
22000088 PPeerriioodd ttoo 3311 MMaarrcchh 22000077
((1155 mmoonntthhss))
£’000 £’000
Amounts capitalised 7,535 6,407 Amounts charged to income and expenditure account
4,792 5,212
TTToootttaaalll 12,327 11,619
19
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
111000... TTTaaannngggiiibbbllleee FFFiiixxxeeeddd AAAsssssseeetttsss ––– HHHooouuusssiiinnnggg PPPrrrooopppeeerrrtttiiieeesss (((cccooonnntttiiinnnuuueeeddd)))
Social Housing Grant 22000088 22000077
£’000 £’000
Total accumulated SHG receivable at 31 March 2008 was:
- --
Capital Grants - -- Revenue Grants - --
TTToootttaaalll - --
Housing properties book value, net of depreciation and grants plus offices net book value (note 11) comprises
22000088
22000077
£’000 £’000
Freehold land and buildings 53,623 43,338 Long leasehold land and buildings 996 1,014 Short leasehold land and buildings - - TTToootttaaalll 54,619 44,352
111111... TTTaaannngggiiibbbllleee FFFiiixxxeeeddd AAAsssssseeetttsss --- OOOttthhheeerrr
LLeeaasseehhoolldd ooffffiicceess
FFuurrnniittuurree,, FFiixxttuurreess && FFiittttiinnggss
CCoommppuutteerrss && OOffffiiccee eeqquuiippmmeenntt
MMoottoorr vveehhiicclleess
PPllaanntt && EEqquuiippmmeenntt
TToottaall
£’000 £’000 £’000 £’000 £’000 £’000
CCoosstt::
At 1 April 2007 1,067 38 745 42 10 1,902 Additions 37 102 531 18 39 727 Disposals - - - (10) - (10)
AAtt 3311 MMaarrcchh 22000088
1,104 140 1,276 50 49 2,619
DDeepprreecciiaattiioonn
At 1 April 2007 (53) (4) (154) (16) (1) (228) Charged in year (55) (14) (255) (13) (5) (342) Released on disposal
- - - 2 - 2
AAtt 3311 MMaarrcchh 22000088
(108) (18) (409) (27) (6) (568)
NNNeeettt bbbooooookkk vvvaaallluuueee
At 1 April 2007 1,014 34 591 26 9 1,674 AAAttt 333111 MMMaaarrrccchhh
222000000888 996 122 867 23 43 2,051
20
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
111222... DDDeeebbbtttooorrrsss
22000088 22000077
£’000 £’000
DDDuuueee wwwiiittthhhiiinnn ooonnneee yyyeeeaaarrr:::
Rent and service charges receivable 839 701 Less: Provision for bad debt and doubtful debts
(279) (218)
560 483
Social Housing Grant receivable - - Other capital grants receivable - - Revenue grants receivable - - Other debtors 338 588 Prepayments and accrued income 754 990 1,092 1,578
1,652 2,061
111333... CCCrrreeedddiiitttooorrrsss::: AAAmmmooouuunnntttsss FFFaaalllllliiinnnggg DDDuuueee WWWiiittthhhiiinnn OOOnnneee YYYeeeaaarrr
22000088 22000077
£’000 £’000
Loan debt (Note 15) - - Trade creditors 2,196 1,896 Rent and service charges received in advance
166 119
Other taxation and social security - 50 Other creditors 1,991 2,765 Accruals and deferred income 1,229 865 5,582 5,695
111444... CCCrrreeedddiiitttooorrrsss::: AAAmmmooouuunnntttsss FFFaaalllllliiinnnggg DDDuuueee AAAfffttteeerrr MMMooorrreee TTThhhaaannn OOOnnneee YYYeeeaaarrr
22000088 22000077
£’000 £’000
Debt (Note 15) 43,003 37,503 43,003 37,503
111555... DDDeeebbbttt AAAnnnaaalllyyysssiiisss
22000088 22000077
£’000 £’000
DDDuuueee:::
Within one year - - Between one and two years - - Between two and five years - - After five years 43,003 37,503 43,003 37,503
The bank loans are secured by a floating charge over the assets of the Association and by fixed charges on individual properties.
The bank loans are repaid in quarterly instalments at fixed rates of interest ranging from 4.2836% to 4.5878%. £8,003k of the loans is on the basis of a floating libor rate.
At 31 March 2008 the Association had undrawn loan facilities of £25,997k.
21
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
111666... RRReeessseeerrrvvveeesss
RReevveennuuee RReesseerrvvee SShhaarreedd OOwwnneerrsshhiipp
DDeessiiggnnaatteedd RReesseerrvvee TToottaall
£’000 £’000 £’000
AAAttt 111 AAAppprrriii lll 222000000777 5,325 - 5,325
Transfer between reserves
- - -
Surplus for the year 3,698 - 3,698 Pension gains/(losses) 118 - 118 AAAttt 333111 MMMaaarrrccchhh 222000000888 9,141 - 9,141
111777... FFFiiinnnaaannnccciiiaaalll CCCooommmmmmiiitttmmmeeennntttsss
Capital expenditure commitments were as follows:
22000088 22000077
£’000 £’000
CCCaaapppiiitttaaalll eeexxxpppeeennndddiiitttuuurrreee:::
Expenditure contracted for but not provided in the accounts
2,646 15
Expenditure authorised by the Board, but not contracted
8,791 -
11,437 15
Expenditure contracted for but not provided in the accounts is in respect of the Turners Hill development. Expenditure authorised by the Board but not contracted is in respect of the remaining developments which are built into the Business Plan to commence during 2008/09. The Association expects that these commitments will be financed internally from cash generated from trading and the Abbey Financial Markets facility.
111888... CCCooommmmmmiiitttmmmeeennntttsss uuunnndddeeerrr OOOpppeeerrraaatttiiinnnggg LLLeeeaaassseeesss
At 31 March 2008 the company had annual commitments under non-cancellable operating leases as set out below
22000088 22000077
Land & Buildings £’000
Other Items £’000
Land & Buildings £’000
Other Items £’000
OOOpppeeerrraaattt iiinnnggg llleeeaaassseeesss
wwwhhhiiiccchhh eeexxxpppiiirrreee:::
Within 1 year - 4,931 - -
Within 2 to 5 years - - - 4,931
After more than 5 years
108,300 - 108,300 -
TTToootttaaalll 108,300 4,931 108,300 4,931
22
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
111999... RRReeecccooonnnccciiillliiiaaatttiiiooonnn ooofff OOOpppeeerrraaatttiiinnnggg SSSuuurrrpppllluuusss tttooo NNNeeettt CCCaaassshhh IIInnnffflllooowww fffrrrooommm
OOOpppeeerrraaatttiiinnnggg AAAccctttiiivvviiitttiiieeesss
22000088 22000077
£’000 £’000
OOOpppeeerrraaattt iiinnnggg sssuuurrrpppllluuusss 5,139 6,592
Depreciation of tangible fixed assets 343 228 Pension schemes: Actuarial gains 118 59 Pension adjustment 13 3 Deficit on disposal of tangible fixed assets
(1) (8)
5,612 6,874
WWWooorrrkkkiiinnnggg cccaaapppiiitttaaalll mmmooovvveeemmmeeennntttsss
Decrease/(increase) in Debtors 409 (2,061) Decrease/(increase) in Pension Creditor
(179) -
Decrease/(increase) in Creditors (113) 5,695 117 3,634
NNNeeettt cccaaassshhh iiinnnfff lllooowww fffrrrooommm ooopppeeerrraaattt iiinnnggg
aaacccttt iiivvviiittt iiieeesss 5,729 10,508
222000... RRReeecccooonnnccciiillliiiaaatttiiiooonnn ooofff NNNeeettt CCCaaassshhh FFFlllooowww tttooo MMMooovvveeemmmeeennnttt iiinnn NNNeeettt DDDeeebbbttt
22000088 22000077
£’000 £’000
(Decrease)/increase in cash (1,226) 1,437 Cash flow from (decrease) in liquid resources
- -
Cash inflow from increase in debt and lease finance
(5,500) (37,503)
IIInnncccrrreeeaaassseee iiinnn nnneeettt dddeeebbbttt fffrrrooommm cccaaassshhh
fff lllooowwwsss (6,726) (36,066)
Change in market value of investments
- -
(6,726) (36,066)
TTToootttaaalll ccchhhaaannngggeeesss iiinnn nnneeettt dddeeebbbttt fffooorrr
pppeeerrriiioooddd:::
Net debt at 1 April 2007 (36,066) -
Net debt at 31 March 2008 (42,792) (36,066)
222111... AAAnnnaaalllyyysssiiisss ooofff NNNeeettt DDDeeebbbttt
11 AApprriill 22000077 CCaasshh FFllooww 3311 MMaarrcchh 22000088
£’000 £’000 £’000
Cash at bank and in hand
1,437 (1,226) 211
Bank overdraft - - - CCChhhaaannngggeeesss iiinnn cccaaassshhh 1,437 (1,226) 211
Current asset investment
- - -
Loans (37,503) (5,500) (43,003) Finance leases - - - CCChhhaaannngggeeesss iiinnn dddeeebbbttt (37,503) (5,500) (43,003)
CCChhhaaannngggeeesss iiinnn nnneeettt dddeeebbbttt (36,066) (6,726) (42,792)
23
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
222222... FFFiiinnnaaannnccciiiaaalll AAAsssssseeetttsss aaannnddd LLLiiiaaabbbiiillliiitttiiieeesss BBBooorrrrrrooowwwiiinnnggg fffaaaccciii lll iii ttt iiieeesss
The Association has undrawn committed borrowing facilities. The facilities available at 31 March 2008 in respect of which all conditions precedent had been met were as follows: 22000088 22000077
£’000 £’000
Expiring in one year or less 11,215 5,147 Expiring in more than one year but not more than two years
9,965 5,340
Expiring in more than two years 4,817 21,010
25,997 31,497
In January 2006, the Association secured a loan facility of £69m to fund the transfer cost of former Borough of Broxbourne housing stock and future improvements to the same. At 31 March 2008, £25,997k of this loan was undrawn. The balance of the undrawn loan will be primarily applied towards funding contracted property improvements agreed with the Borough of Broxbourne. Future draw downs of the loan are conditional on the Association continuing to meet the covenants and requirements as set out in its Loan Agreement with Abbey Financials. The amounts listed above represent projected loan draw downs in the Association’s approved business plan in force at 31 March 2008.
222333... VVVAAATTT DDDeeevvveeelllooopppmmmeeennnttt AAAgggrrreeeeeemmmeeennnttt
The Association received the transfer of 3,500 properties from Broxbourne Borough Council on 23 January 2006. As part of the transfer, the Council made a commitment to the Association to have the properties refurbished and modernised and brought into a good state of repair. Immediately prior to the transfer, the Council contracted with the Association to carry out the refurbishment works on its behalf. The Council’s obligation to carry out the works is in effect matched by the Association’s obligations to bring the properties into a good state of repair. As a specific right of set off exists, a net basis has been adopted in respect of these obligations and neither the assets nor liabilities have been recognised. At transfer the gross values of the balances that had been offset were £64,175k, with VAT arising on the works totalling £11,231k. At 31 March 2008 the gross values of the balances that had been offset have been reduced to £54,297k (2007: £60,057k). VAT arising on the works during the period totalled. £1,009k (2007: £720k).
222444... NNNooonnn EEEqqquuuiiitttyyy SSShhhaaarrreee CCCaaapppiiitttaaalll
22000088 22000077
No. No.
SSShhhaaarrreeesss ooofff £££111 eeeaaaccchhh iiissssssuuueeeddd aaannnddd fffuuulll lllyyy
pppaaaiiiddd
At start of year 9 9 Issued during year 1 - AAAttt eeennnddd ooofff yyyeeeaaarrr 10 9
The shares provide members with the right to vote at general meetings, but do not provide any rights to dividends or distribution on winding up.
222555... RRReeelllaaattteeeddd PPPaaarrrtttyyy TTTrrraaannnsssaaaccctttiiiooonnnsss
The tenancies of Tenant Board members are on the same arrangements as for other tenants.
24
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
222666... PPPeeennnsssiiiooonnnsss SSSoooccciiiaaalll HHHooouuusssiiinnnggg PPPeeennnsssiiiooonnn SSSccchhheeemmmeee
Broxbourne Housing Association Limited participates in the Social Housing Pension Scheme (SHPS). The scheme is funded and is contracted out of the state scheme. This scheme is offered to new employees.
SHPS is a multi-employer defined benefit scheme. Employer participation in the Scheme is subject to adherence with the employer responsibilities and obligations as set out in the “SHPS House Policies and Rules Employer Guide”.
The scheme operated a single benefit structure, final salary with a 1/60th accrual rate, to March 2007.
From April 2007 there are three benefit structures available, namely:
•••• Final salary with a 1/60th accrual rate.
•••• Final salary with a 1/70th accrual rate.
•••• Career average revalued earnings with a 1/60th accrual rate.
An employer can elect to operate different benefit structures for their active members (as at the first day of April in any given year) and their new entrants. An open benefit structure is one which new entrants are able to join.
Broxbourne Housing Association Limited has elected to operate final salary with a 1/60th accrual rate
benefit structure for active members as at 23rd
January 2006 and the final salary within a 1/60th accrual
rate benefit structure for new entrants from 23rd
January 2006.
The Trustee commissions an actuarial valuation of the Scheme every three years. The main purpose of the valuation is to determine the financial position of the Scheme in order to determine the level of future contributions required, in respect of each benefit structure, so that the Scheme can meet its pension obligations as they fall due. From April 2007 the split of the total contribution rate between member and employer is set at individual employer level, subject to the employer paying no less than 50% of the total contribution rate.
The actuarial valuation assesses whether the Scheme’s assets at the valuation date are likely to be sufficient to pay the pension benefits accrued by members as at the valuation date. Asset values are calculated by reference to market levels. Accrued pension benefits are valued by discounting expected future benefit payments using a discount rate calculated by reference to the expected future investment returns.
During the accounting period Broxbourne Housing Association Limited paid contributions at the rate of 9.4%. Member contributions varied between 3.1% and 6.1% depending on their age.
As at 31 March 2008 there were six active members of the Scheme employed by Broxbourne Housing Association Limited. Broxbourne Housing Association Limited continues to offer membership of the Scheme to its employees.
It is not possible in the normal course of events to identify the share of underlying assets and liabilities belonging to individual participating employers. Accordingly, due to the nature of the Plan, the accounting charge for the period under FRS17 represents the employer contribution payable.
The last formal valuation of the Scheme was performed as at 30 September 2005 by a professionally qualified actuary using the Projected Unit Method. The market value of the Scheme’s assets at the valuation date was £1,278 million. The valuation revealed a shortfall of assets compared with the value of liabilities of £283 million, equivalent to a past service funding level of 82%.
The Scheme Actuary has prepared an Actuarial Report that provides an approximate update on the funding position of the Scheme as at 30
th September 2007. Such a report is required by legislation for
years in which a full actuarial valuation is not carried out. The funding update revealed an increase in the assets of the Scheme to £1,760 million, and indicated a decrease in the shortfall of assets compared to liabilities to approximately £209 million, equivalent to a past service funding level of 89%. Annual funding updates of the SHPS Scheme are carried out using approximate actuarial techniques rather than member by member calculations, and will therefore not produce the same results as a full actuarial valuation.
25
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
222666... PPPeeennnsssiiiooonnnsss (((cccooonnntttiiinnnuuueeeddd)))
However they will provide a good indication of the financial progress of the scheme since the last full valuation.
Since the contribution rates payable to the Scheme have been determined by reference to the last full actuarial valuation the following notes relate to the formal actuarial valuation as at 30
th September 2005.
The financial assumptions underlying the valuation as at 30th September 2005 were as follows:
%% pp..aa..
Investment return pre retirement 7.2 Investment return post retirement 4.8 Rate of salary increases to 30
th
September 2010 5.0
Rate of salary increases from 1st
October 2010 4.0
Rate of pension increases 2.5 Rate of price inflation 2.5
The valuation was carried out using the PA92C2025 mortality table for non-pensioners and PA92C2013 mortality table for pensioners. The table below illustrates the assumed life expectancy in years for pension scheme members at age 65 using these mortality assumptions:
Assumed life expectancy in years at age 65
MMaalleess FFeemmaalleess
Non-pensioners 20.4 23.3 Pensioners 19.4 22.4
The long-term joint contribution rates required from employers and members to meet the cost of future benefit accrual were assessed at:
Benefit structure LLoonngg--tteerrmm jjooiinntt ccoonnttrriibbuuttiioonn rraattee ((%% ooff ppeennssiioonnaabbllee ssaallaarriieess))
Final salary with a 1/60th accrual rate 17.6
Final salary with a 1/70th accrual rate 15.3
Career average revalued earnings with a 1/60
th accrual rate
14.1
The long-term joint contribution rates required from employers and members where contributions are set on an age related basis are:
Age UUnnddeerr 3300 3300 ttoo 4400 OOvveerr 4400
Benefit structure: Long-term joint contribution rate (as % of pensionable salaries)
Final salary with a 1/60th
accrual rate 16.1 17.1 18.1
Final salary with a 1/70th
accrual rate 13.8 14.8 15.8
Career average revalued earnings with a 1/60
th accrual rate
12.6 13.6 14.6
If an actuarial valuation reveals a shortfall of assets compared to liabilities the Trustee must prepare a recovery plan setting out the steps to be taken to make up the shortfall. Following consideration of the results of the actuarial valuation it was agreed that the shortfall of £283 million would be dealt with by the payment of deficit contributions of 4.4% of pensionable salaries with effect from 1
st April 2007. These deficit contributions are in addition to the long-term joint contribution rates
set out in the table above.
With effect from 1st April 2008 the employer and employee contribution rates for Broxbourne Housing
Association Limited will be 4.1% to 6.1% an 12.0% of pensionable salaried respectively.
26
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
222666... PPPeeennnsssiiiooonnnsss (((cccooonnntttiiinnnuuueeeddd))) Employers that participate in the Scheme on a non-contributory basis pay a joint contribution rate (i.e. a combined employer and employee rate). Employers that have closed the Scheme to new entrants are required to pay an additional employer contribution loading of 3.0% to reflect the higher costs of a closed arrangement. A small number of employers are required to contribute at a different rate to reflect the amortisation of a surplus or deficit on the transfer of assets and past service liabilities from another pension scheme into the SHPS Scheme. Employers joining the Scheme after 1
st October 2002, (including Broxbourne Housing Association Limited)
that do not transfer any past service liabilities to the Scheme pay contributions at the ongoing future service contribution rate. This rate is reviewed at each valuation and applies until the second valuation after the date of joining the Scheme, at which point the standard major employer contribution rate is payable. Contribution rates are changed on the 1
st April that falls 18 months after the valuation date.
If the valuation assumptions are borne out in practice this pattern of contributions should be sufficient to eliminate the past service deficit by 30
th September 2020.
A copy of the recovery plan, setting out the level of deficit contributions payable and the period for which they will be payable, must be sent to the Pensions Regulator. The Regulator has the power under Part 3 of the pensions Act 2004 to issue funding directions where it believes that the actuarial valuation assumptions and/or recovery plan are inappropriate. For example the Regulator could require that the Trustee strengthens the actuarial assumptions (which would increase the scheme liabilities and hence impact on the recover plan) or impose a schedule of contributions on the Scheme (which would effectively amend the terms of the recovery plan). The Regulator has review the recovery plan for the SHPS Scheme and confirmed that, in respect of the September 2005 actuarial valuation, it does not propose to issue any scheme funding directions under Part 3 of the Pensions Act 2004. The next full actuarial valuation will be carried out as at 30
th September 2008.
As a result of pension scheme legislation there is a potential debt on the employer that could be levied by the Trustee of the Scheme. The debt is due in the event of the employer ceasing to participate in the Scheme or the Scheme winding up. The debt for the Scheme as a whole is calculated by comparing the liabilities for the Scheme (calculated on a buyout basis, i.e. the cost of securing benefits by purchasing annuity policies from an insurer, plus an allowance for expenses) with the assets of the Scheme. If the liabilities exceed assets there is a buyout debt. The leaving employer’s share of the buyout is the proportion of the Scheme’s liability attributable to employment with the leaving employer compared to the total amount of the Scheme’s liabilities (relating to employment with all currently participating employers). The leaving employer’s debt therefore includes a share of any ‘orphan’ liabilities in respect of previously participating employers. The amount of the debt therefore depends on many factors including total Scheme liabilities, Scheme investment performance, the liabilities in respect of current and former employees of the employer, financial conditions at the time of the cessation event and the insurance buyout market. The amounts of debt can therefore be volatile over time. Broxbourne Housing Association Limited has been notified by the Pensions Trust of the estimated employer debt on withdrawal from the Social Housing Pension Scheme based on the financial position of the Scheme as at 31
st March 2007. As of this date the estimated employer debt for Broxbourne Housing
Association was £37,000.
27
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
222666... PPPeeennnsssiiiooonnnsss (((cccooonnntttiiinnnuuueeeddd)))
HHHeeerrrtttfffooorrrdddssshhhiii rrreee CCCooouuunnntttyyy CCCooouuunnnccciii lll PPPeeennnsssiiiooonnn FFFuuunnnddd
The HCCPF is a multi-employer scheme, administered by Hertfordshire County Council under the regulations governing the Local Government Pension Scheme (LGPS), a defined benefit scheme. The most recent formal actuarial valuation was completed as at March 2007. Broxbourne Housing Association Limited participates in the LGPS. On 31
st March 2008 there were 61
employees in the LGPS. This scheme is no longer offered to new employees to Broxbourne Housing Association. A full actuarial valuation was carried out at 31
st March 2007. The major assumptions used by
the actuary were: Assumptions as at: 3311 MMaarrcchh 22000088 3311 MMaarrcchh 22000077 2233 JJaannuuaarryy 22000066
% p.a. % p.a. % p.a.
Price increases 3.6 3.2 3.0 Salary increases 5.1 4.7 4.5 Pensions increases 3.6 3.2 3.0 Discount rate 6.9 5.4 4.5
Assets (Employer)
LLoonngg--tteerrmm rreettuurrnnss aatt 3311 MMaarrcchh
22000088
AAsssseettss aatt 3311 MMaarrcchh
22000088
LLoonngg--tteerrmm rreettuurrnnss aatt 3311 MMaarrcchh
22000077
AAsssseettss aatt 3311 MMaarrcchh
22000077
LLoonngg--tteerrmm rreettuurrnnss aatt 2233 JJaannuuaarryy 22000066
AAsssseettss aatt 2233 JJaannuuaarryy
22000066
% p.a. £’000 % p.a. £’000 % p.a. £’000
Equities 7.7 3,065 7.8 3,409 7.3 2,734 Bonds 5.7 550 4.9 523 4.3 497 Property 5.7 223 5.8 268 5.3 202 Cash 4.8 347 4.9 294 4.4 250 TTToootttaaalll 7.1 4,185 7.2 4,575 6.6 3,683
Net Pension asset as at:
3311 MMaarrcchh 22000088 3311 MMaarrcchh 22000077 2233 JJaannuuaarryy 22000066
£’000 £’000 £’000
EEEsssttt iiimmmaaattteeeddd EEEmmmpppllloooyyyeeerrr
AAAsssssseeetttsss 4,185 4,575 3,683
Present value of scheme liabilities
3,996 4,562 4,321
Present value of unfunded liabilities
- - -
TTToootttaaalll vvvaaallluuueee ooofff
lll iiiaaabbbiii lll iii ttt iiieeesss 3,996 4,562 4,321
NNNooonnn PPPeeennnsssiiiooonnn AAAsssssseeettt 189 13 (638)
YYeeaarr ttoo 3311 MMaarrcchh 22000088 PPeerriioodd ttoo 3311 MMaarrcchh 22000077 Amount charged to operating profit
£’000 (% of Payroll) £’000 (% of Payroll)
Service cost 284 19.8 413 23.6 Past service cost - - - - Curtailment & settlements
- - - -
Decrease in irrecoverable surplus
- - - -
TTToootttaaalll OOOpppeeerrraaattt iiinnnggg
CCChhhaaarrrgggeee 284 19.8 413 23.6
28
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
222666... PPPeeennnsssiiiooonnnsss (((cccooonnntttiiinnnuuueeeddd)))
HHHeeerrrtttfffooorrrdddssshhhiii rrreee CCCooouuunnntttyyy CCCooouuunnnccciii lll PPPeeennnsssiiiooonnn FFFuuunnnddd (((cccooonnnttt iiinnnuuueeeddd)))
YYeeaarr ttoo 3311 MMaarrcchh 22000088 PPeerriioodd ttoo 3311 MMaarrcchh 22000077 Amount credited to other finance income
£’000 (% of Payroll) £’000 (% of Payroll)
Expected return on employer assets
338 23.6 304 20.6
Interest on pension scheme liabilities
(254) (17.8) (245) (16.8)
NNNeeettt RRReeetttuuurrrnnn 84 5.8 59 4.0
NNNeeettt RRReeevvveeennnuuueee
AAAccccccooouuunnnttt cccooosssttt 200 14.0 354 19.6
Analysis of amount recognised in Statement Total Recognised Gains and Losses (STRGL)
YYeeaarr ttoo 3311 MMaarrcchh 22000088 PPeerriioodd ttoo 3311 MMaarrcchh 22000077
£’000 £’000
Actual return less expected on pension scheme assets
(546) 175
Experience gains and losses arising on the scheme liabilities
(149) 1
Charges in financial assumptions underlying the present value of scheme liabilities
813 521
AAAccctttuuuaaarrriiiaaalll GGGaaaiiinnn///(((LLLooossssss))) iiinnn pppeeennnsssiiiooonnn
ppplllaaannn 118 697
Increase/(Decrease) in irrecoverable surplus from membership fall and other factors
- -
AAAccctttuuuaaarrriiiaaalll GGGaaaiiinnn///(((LLLooossssss))) RRReeecccooogggnnniiissseeeddd
iiinnn ttthhheee SSSTTTRRRGGGLLL 118 697
Movement in surplus/deficit during the period
YYeeaarr ttoo 3311 MMaarrcchh 22000088 ££’’000000
PPeerriioodd ttoo 3311 MMaarrcchh 22000077 ££’’000000
£’000 £’000
SSSuuurrrpppllluuusss///(((DDDeeefff iiiccciiittt ))) aaattt dddaaattteee ooofff jjjoooiiinnniiinnnggg 13 (638)
Current service cost (284) (413) Employer contributions 258 308 Contributions in respect of unfounded benefits
- -
Other income - - Other outgoings (e.g. expenses) - - Past service costs - - Impact of settlements and curtailments
- -
Net return on assets 84 59 Actuarial gains/(losses) 118 697 SSSuuurrrpppllluuusss///(((DDDeeefff iiiccciiittt ))) aaattt yyyeeeaaarrr eeennnddd 189 13
29
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
222666... PPPeeennnsssiiiooonnnsss (((cccooonnntttiiinnnuuueeeddd)))
HHHeeerrrtttfffooorrrdddssshhhiii rrreee CCCooouuunnntttyyy CCCooouuunnnccciii lll PPPeeennnsssiiiooonnn FFFuuunnnddd (((cccooonnnttt iiinnnuuueeeddd)))
History of experience gains and losses
YYeeaarr ttoo 3311 MMaarrcchh 22000088 PPeerriioodd ttoo 3311 MMaarrcchh 22000077
£’000 £’000
Difference between expected and actual return on assets
(546) 175
Value of assets 4,185 4,575 % of assets (13.0%) 3.8% Experience Gains/(Losses) on liabilities
(149) 1
Total present value of liabilities 3,996 4,562 % Total present value of liabilities (3.7%) 0.0% Actuarial Gains/(Losses) recognised in the STRGL
118 697
Total present value of liabilities 3,996 4,562 % Total present value of liabilities 3.0% 15.3%