Directors’ Report, Strategic Report and Consolidated
Financial Statements for year end 31 March 2016
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SevernsideHousingDirectors’Report,StrategicReportandConsolidatedFinancialStatementsYearended31stMarch2016
Contents
CompanyInformation,Auditors,AdvisersandBankers Page3
BoardDirectors,ExecutiveDirectors Page4-7
ReportoftheBoard Page8
StatementofResponsibilitiesoftheBoard Page17
StrategicReport(incorporatingOperatingandFinancialReview) Page19
IndependentAuditorsreporttotheDirectorsofSevernsideHousing Page34
ConsolidatedStatementofComprehensiveIncome Page36
ConsolidatedStatementofFinancialPosition Page37
Consolidated&AssociationStatementofChangesinEquity Page38
ConsolidatedCashFlowStatement Page39
NotestotheFinancialStatements Page40
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CompanyInformation,Auditors,AdvisersandBankers
Registeredoffice Severnside Housing, Brassey Road, Old PottsWay,Shrewsbury,Shropshire,SY37FA
SevernsideHousing Registrationnumber: 04025816
HomesandCommunitiesAgency(HCA)
Registrationnumber:LH4325
AWaltersElectricalContractorsLimited Registrationnumber: 03141171
AWaltersElectricalLimited Registrationnumber: 08331962
ShrewsburyHomesForAll Registrationnumber:07492338
CharityRegistrationnumber:1141044
SevernsideCommunityAssociationLimited Registrationnumber:031977R
ShropshireCommunityHousingLimited Registrationnumber:06474307
ExternalAuditors KPMGLLP,OneSnowhill,SnowHillQueensway,Birmingham,B46GH
InternalAuditors Service Matters, Garden Court, Harry WestonRoad,Binley,Coventry,CV32SU
Solicitors Anthony Collins, 134 Edmund Street,Birmingham,B32ES
TrowersandHamlins,HeronHouse,AlbertSquare,ManchesterM25HD
Bankers National Westminster Bank Plc,8MardolHead,Shrewsbury,SY11HE
Funders NationwideBuildingSociety,KingsParkRoad,MoultonPark,Northampton,NN36NW
CanadaLifeInvestments,1-6LombardStreet,LondonEC3V9JU
ShropshireCouncil,TheShirehall,AbbeyForegate,ShrewsburySY26ND
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BoardDirectorsandExecutiveDirectors
SevernsideHousing
BoardMembersandExecutiveDirectors
BoardofDirectors Appointed Resigned
PaulSmith(Chair) January2013
SarahBoden(ChiefExecutive) November2010
GarethEvans January2014
ElaineGanderton(Chair,AuditandRiskCommittee) July2008
AlysonLanning November2010
AndrewParkes November2010
PeterPrice January2014
Rory O’Byrne (Vice-Chair & Chair, Nominations andRemunerationCommittee)
January2010
PaulWilliams January2013
MalcolmPrice(HousingPortfolioholder–ShropshireCouncilNominee)
September2010
MichaelRoughan(Co-optee) April2015
ExecutiveDirectors Appointed Resigned
SarahBoden
ChiefExecutive
January2006
PeterDonovan
ResourcesDirector
October2001
SueGroom
NeighbourhoodandCommunityServicesDirector
July2006
IanGardner
AssetManagementDirector
December2009 July2015
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CompanySecretary
IreneMolyneux January2012
AWaltersElectricalContractorsLimited
BoardMembersandExecutiveDirectors
BoardofDirectors Appointed Resigned
MikeRoughan(Chair) December2012
PaulBeaman December2012
SarahBoden(ChiefExecutive) December2012
PeterDonovan(ResourcesDirector) December2012
ElaineGanderton December2012
ManagingDirector
AndyWalters December2012
CompanySecretary
IreneMolyneux December2012
AWaltersElectricalLimited
BoardMembersandExecutiveDirectors
BoardofDirectors Appointed Resigned
RobinPritchard(Chair) December2012
SarahBoden December2013
PeterDonovan December2012
MikeRoughan May2014
PaulWilliams December2012
ManagingDirector
AndyWalters December2012
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CompanySecretary
IreneMolyneux December2012
ShrewsburyHomesforAll
CharityTrusteesat31March2016
BoardofDirectors Appointed Resigned
ChristineAllen(Chair) April2011
HelenClaireCracknell(Treasurer) April2011
DeborahGriffiths March2013
SueGroom March2013
AmeliaHutchins April2011 October2015
AngusMarshall May2012
NeliaMaggs April2011
AnnWalters April2011
SevernsideCommunityAssociationLimitedBoardMembersat31March2016
BoardofDirectors Appointed Resigned
PaulSmith March2014
SarahBoden March2013
AlysonLanning May2014
RoryO’Byrne March2013
CompanySecretary
IreneMolyneux March2013
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SevernsideCommunityHousingLimitedBoardMembersandExecutiveDirectorsat31March2016
BoardofDirectors Appointed Resigned
RobinPritchard February2008
CompanySecretary
PeterDonovan February2008
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ReportoftheBoardTheBoardpresentsitsfinancialreportandtheGroupauditedfinancialstatementsfortheyearending31March2016.NatureofSevernside’sbusinessSevernsideHousing(SH)isaCompanyLimitedbyguaranteeformedthroughatransferofsocialhousingpropertiesfromShrewsburyandAtchamBoroughCouncil(SABC)inOctober2001.Itsprincipalactivitiesarethemanagementanddevelopmentofaffordablehousing.A.WaltersElectricalContractorsLimitedisawhollyownedtradingsubsidiaryofSHandprovideselectricalservicestoSH.AWaltersElectricalLimitedisawhollyownedtradingsubsidiaryofSHandprovideselectricalservicestoprivateandcommercialclientsotherthanSevernside.ShrewsburyHomesforAll(SHFA)isaRegisteredCharitywhichisawhollyownedtradingsubsidiaryofSHandprovideshomelesspreventionandhousingadviceservices.On1April2016theGroupenteredintoaDeedofTerminationtoresignasamemberofSHFA.SevernsideCommunityAssociationLimitedisanIndustrialandProvidentSocietyandexemptcharitywhichisawhollyownedtradingsubsidiaryofSHandmanagesgrants,SHCommunityChestfundinganddonations.SevernsideCommunityHousingLimitedisaprivatelimitedcompanywhichisawhollyownednon-tradingsubsidiaryofSH.CorporateObjectivesSH’sCorporateObjectiveswerereviewedin2014torespondtochangesintheeconomicandpoliticalenvironment,combinedwiththechangestoitsfinancialcapacityandthecreationofthesubsidiaries.TheJuly2015Budget,whichintroducedenforcedrentreductionsforthenextfouryears,hasrequiredSHtostreamlinesomeactivitiestoidentifyequivalentcostsavingstomaintainfinancialstability.Therefore,theBoardhasagainreviewedtheCorporatePlanresultinginsomeamendmentstoSH’sprincipalactivities,aimsandobjectives.SHcurrentCorporateObjectivesfor2015-18are:
• Customers–Providingexcellentcustomerservice• Communities–Contributingtothedevelopmentofsustainable,thrivingcommunities• Business–Financiallystrongwithknowledgeablecommercialandcaringstaff
SHVisionis:“ExcellentHomesinthrivingcommunities.”SHAmbitionis:“Toprovideandmaintainexcellenthomes,createopportunitiesandofferarangeofservicestobuildthrivinglocalcommunities.”
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SHValuesare:Integrity: Wewillbehonest,truthfulandtrustworthywithcustomers,partnersandstaff;Accountable:Wewillbeopen,transparentandresponsibleinandforallouractions;Fair: Wewillactinanethicalmanner,embracingandcelebratingdiversityand
ensuringprobityRespectful: Wewilltreatcustomers,partnersandstaffwithcareandrespect;Effective: WewilldelivercreativeandinnovativesolutionsPartnership:Wewillworkwithcustomersandpartnersinaprofessional,efficientand supportivewaytoachieveourobjectivesSevernside’sPrincipalActivitiesandAimsSHprincipalactivitiesarethemanagementanddevelopmentofaffordablehousing.SHprincipalaimsinclude:
• Todeliverthecoreservicescustomersneed;• Toprovidewellmaintainedhomes;• Toencouragecustomerinvolvementandsatisfaction;• Toprovidecosteffectivesupporttothemostvulnerableinourneighbourhoods;• Tohelpcustomerstomanagetheirfinancesandtounderstandandplanfortheimpactof
welfarereform;• Toensurenewcustomersare“tenancyready”;• Toencouragesupportanddevelopgreaterindividualandcommunityresponsibility;• TodeveloptrainingskillsandemploymentopportunitiesforSHCustomers;• ToensurethatweoperateinamannerthatrespectsourenvironmentandreflectsSH’s
values;• Tomaximiseincome;• Todevelopanddeliverhighquality,commercialbusinessstreams;• Todevelopandacquiremorehomes;• Toensureexcellentgovernance;• Tohaveskilledandmotivatedstaff;• Todemonstrateandcontinuouslyimprovevalueformoney;and• TogrowthebusinessoftheGroup.
Thereforethecurrent2015-18CorporatePlan–
• ExplainsSH’spurposeandethosthroughourvision,ambitionandvalues;• Setsoutwhatwewanttoachievethroughthestrategicobjectives;• EnablesSHtoidentifyandfurtherdevelopthepartnershipsandalliancesneededtodeliver
communityandbusinesspriorities;• Respondstochangesbeingintroducedthroughkeynationalpolicydecisions;• Buildsontheachievementsandlearningtodate;• Enablesustoplanourresourcestodelivercustomerandbusinesspriorities;• Captures the commitment of SH and its subsidiary companies to our customers, their
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homesandourcommunities;and• EnsuresthateverypartofSH,ourpartnersandstakeholdershaveasharedunderstanding
ofwhatwewanttoachieveandhowwewanttodoit.
BusinessReviewDetailsofperformancefortheyearandfutureplansaresetoutintheStrategicReviewfollowingthereportoftheBoard.StatementofRegulatoryComplianceSHisregisteredwithandregulatedbytheRegulationCommitteeoftheHomesandCommunitiesAgency(HCA).InlightofpublicisedchangestotheHCARegulatoryFrameworkwitheffectfrom1April 2015, SHhadmadeadjustments andenhancements to systems, policies andprocesses toensurethatSHcouldmeetthe2015RegulatoryFrameworkstandards.SH’s levelofcomplianceagainst the standards has been tested and the Board is pleased to confirm that SH is fullycompliantwiththerequirementsoftheHCA2015RegulatoryFramework.
TheHCAmonitorsandreportsoncompliancewiththeRegulatoryFrameworkeconomicstandardsnamely:
• GovernanceandFinancialViability• Rent• ValueforMoney
TheHCAregulatoryjudgementforSHinFebruary2016confirmedthatSHhadmaintaineditscompliancewiththeregulatorystandardsandgaveSHgradingsofG1andV1,thehighestgrades,forGovernanceandFinancialViability.InrespectoftheFinancialViabilityassessmentitwasstatedthat:–
• TheprovidermeetstherequirementssetoutinGovernanceandFinancialViabilitystandardoftheRegulatoryFrameworkinrelationtofinancialviability.
CustomersareactivelyinvolvedindecisionmakingthroughtheResidentSenateandCustomerPanelandpartoftheirroleisscrutinisingandassessingperformanceagainsttheHCARegulatoryFrameworkconsumerstandardsnamely:
• TenantInvolvementandEmpowerment• Home• Tenancy• NeighbourhoodandCommunity
DetailsoftheseassessmentsandperformanceareincludedintheAnnualReporttoCustomers.TheResidentSenatehasamaximummembershipofnine,includingtwoBoarddirectors.MembersworkcloselywithotheractivelyinvolvedresidentswhoparticipateinourCustomerPanelandasresidentinspectors.TheSenatehasresponsibilityfordecisionmaking,shaping
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servicedeliveryandrevisingpolicyandprocedures.Itmeetsformallyonaquarterlybasisandinformallymorefrequently.SHprovidesacustomerlearningprogrammedeliveredannuallytoincreasetheskillsofitscustomerstohelpwithemploymentopportunities.During2015-16,thelearningprogrammedeliveredover137coursesto480customersandstakeholders.Werobustlymonitorcomplaints.Duringtheyearwereceived58complaintsofwhichonewasescalatedtostage2andafurtheronetostage3.Atstage3,thecomplaintwaspartiallyupheldand,inaccordancewithSH’scustomarypractice,learningpointswereidentifiedwhichSHhasimplementedtoimproveourservicetocustomers.NHFCodeofGovernanceSHhasadoptedthe2015NationalHousingFederation(NHF)CodeofGovernanceandCodeofConduct.SHreviewscomplianceagainsttheseCodeseachyearandconfirmsthatitiscompliant.SHEmployeesSHiscommittedtoinvestinginemployeestoensureSHisanorganisationpeoplewanttoworkforandwheretheyfeelvalued.ThisisevidencedbyourInvestorsinPeopleGoldStandard.SH’sstrengthliesinthequalityandcommitmentofallitsemployeestomeetcompanyobjectivesandcustomerexpectations.InformationissharedandstaffareconsultedthroughmonthlybriefingswiththeChiefExecutiveandatregularteammeetings.Werecognisethatthesuccessofourbusinessdependsonthequalityofourmanagersandstaff.ItisthepolicyofSHthattraining,careerdevelopmentandpromotionopportunitiesbeavailabletoallemployees.In2015/16SHinvestedover£130,000instafftraining.Nearly200traininganddevelopmenteventsorconferenceswereattended.Thesuiteofe-learningpackageswasfurtherdevelopedandover400e-learningcourses/assessmentswerecompleted.AnumberofprofessionalqualificationswerealsofundedbySH.InJanuary2016SHlaunchedtheAspireProgramme,abespoke developmentprogrammeaimedatseniorteamleadersandmiddlemanagerstoequipmanagerswiththeskillsandconfidencetooperateallofSH’speoplepolicies.Theprogrammewillalsoenhanceinterpersonalskillssomanagerscanmanagetheirteamseffectively.Theprogrammewillbedeliveredwithablendofexternalprofessionaltrainersandin-housesubjectmatterexperts.Aspirewillrunfortheremainderofthe2016calendaryearandwillcoverfourdiscretemodules.SHhasanapprenticeprogrammeandin2015/16theGroupemployedeightapprentices,includingfivewithsubsidiaries.SHiscommittedtosupportingthethreerecognisedTradeUnionsthatarerepresentedwithinSHandregularlymeetandconsultwiththemviatheJointNegotiatingConsultativeCommittee(JNCC).Employeesarealsoencouragedtocontributetotherunningofthebusinessthroughstaffconferences,workinggroups,comprehensiveservicereviews,corporatebriefingsessions,oneto
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onemeetings,andteammeetingsandbydevelopingtheirpersonalcompetenciesthroughtraininganddevelopment.TheChiefExecutive,ResourcesDirectorandNeighbourhood&CommunityServicesDirectorareemployedonseparatetermstootherstaff,theirnoticeperiodsbeingsixmonths.Theyareentitledtootherbenefitssuchastheprovisionofacarallowanceandhealthcareinsurance.TheAssetManagementDirectorleftSHinJuly2015andtheroleiscurrentlybeingfilledbyanInterimDirectoremployedonafixedtermcontract.PensionAllSHstaffaregivenopportunitytoparticipateinaPensionScheme.ThemajorityofSHStaffaremembersoftheShropshireLocalGovernmentPensionScheme,adefinedbenefit(finalsalary)pensionschemewhichwasclosedtonewentrantsinMarch2010.EffectivefromApril2010,allSHstaffareentitledtojointheSevernsideDefinedContributionSchemewhichistheSHvehicleforpensionauto-enrolment.TheChiefExecutiveandpermanentmembersoftheExecutiveTeamareallmembersoftheShropshireLocalGovernmentPensionScheme.Theyparticipateintheschemeonthesametermsasallothereligiblestaff.CorporateGovernanceTheBoardDirectorsandExecutiveDirectorsofSHaresetoutonpages4-5.TheBoardDirectorsaredrawnfromawidebackgroundbringingtogetherprofessional,commercialandlocalknowledgeandexperiencewhichismatchedtothecurrentneedsofthebusinessTheBoardhas11DirectorsincludingtheSHChiefExecutive,oneco-opteeand,until1April2016,anomineefromShropshireCouncil.Witheffectfrom1April2016,SHhasbecomearegisteredcharityand,inamendingitsArticles,ShropshireCouncilnolongerhastherighttoappointanomineetotheBoard.However,givenhisskillsandexpertise,itwasdecidedthatthepreviousCouncilnomineeshouldbecomeanindependentmemberontheBoard.Duringtheyear,theBoardreceivedawiderangeofreportsrelatedtobusinessactivities,includingreportsfromsubsidiaryBoardslinkedtoprovidingeffectiveoversightoftheiractivities.InordertorespondtothefinancialrestrictionsimposedonRegisteredProviders(RPs)bytheJuly2015Budget,therehasbeenaparticularemphasisonbusinessplanning,stresstesting,riskmanagementandacorporateplanreviewtoensureSH’sfuturestability.Inaddition,during2015/16,theBoardconsideredtwomajorstrategicbusinessproposals.ThefirstoftheseinvolvedtheBoardhavingdetaileddiscussionswithregardtothemeritsofSHadoptingcharitablestatus.TheBoardagreedthatitwasinthebestinterestsofthebusinesstobecomeacharityandSHconsultedwidelywithregardtotheproposalthatSHbecomearegisteredcharityeffectivefrom1April2016.MembersingeneralmeetingagreedthenecessarychangestoSHArticlesand,therequiredconsentstothechangeofSHstatushavingbeenobtainedandtherequirementsoftheCharityCommissionhavingbeenmet,SHbecamearegisteredcharityon1April2016.
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ThesecondmajoritemconsideredbytheBoardwasapotentialmergeropportunity.TheSHChiefExecutivewasapproachedbyHousingPlus,anotherRegisteredProvider(RP)toascertainwhetherSHwouldbeinterestedinenteringintomergerdiscussions.TheBoarddiscussedthisopportunityandagreedthatwhilstSHdidnothavetomergegivenitsfinancialstandingandfullyfundedbusinessplan,thiswassomethingthatSHshouldactivelyexploregiventhechallengingexternalenvironmentbut,onlyontheunderstandingthatanymerger,wereittomaterialise,hadtobeinthebestinterestsofexistingandfuturecustomersandenableacombinedorganisationtodelivermoretogetherthanthetwoorganisationsinvolvedcoulddeliverseparately.Duringtheyear,mergerdiscussionshavegonewellandintensiveduediligenceworkwasundertakenwhichindicatedthattherewasapotentialfitbetweenthetwoorganisationsonmanylevels.InMarch2016,whentheoutlinebusinesscasewasconsidered,itwasagreedthatafullbusinesscaseshouldbeprepared.InMay2016,whenthefullbusinesscasewasconsidered,theBoardagreedthatnecessarystepsshouldbetakentoeffectamergerofthetwobusinessesduringthe2016/17financialyear.BoardDirectorsandExecutiveDirectorsattendregularin-housetrainingeventswhichaddressareasofspecificinterestrelatedtocurrentbusinessactivitiesidentifiedbyDirectors,togetherwiththoserelatedtodevelopmentsintheexternalenvironment.Inaddition,allDirectorsareencouragedtoattendoutsideeventsandseminarstoenhancetheirexperienceandknowledgeandtonetworkwithotherstoensureSHproactivelyadaptstothechangingenvironmentanddeliversgoodservicestoallcustomers.Onanannualbasis,BoardDirectorsparticipateinindividualandwholeBoardappraisalexercises.In2015/16,thecollectiveresultsoftheindividualappraisalsandthefindingsfromtheindependentwholeBoardreview,informedtheBoardactionplanwhichhassubsequentlybeenconsolidatedintoarevisedGovernanceImprovementPlan.ThedeliveryoftheGovernanceImprovementPlanisoverseenbytheNominationsandRemunerationCommittee.ServicecontractsAllBoardDirectors,includingthoseonsubsidiaryBoards,areissuedwithacontractforservicesandtheremunerationlevelisreviewednotlessthaneverythreeyearstoensurethatpaymentlevelsareproportionategivenSH’ssize,complexityandresourcesandareinlinewithindustrynorms.TheremunerationofDirectorswasreviewedinSeptember2015andtheBoardissatisfiedthatBoardremunerationremainsappropriate.ThefeespaidtoSHDirectorsaresetoutatpages58-59.CommitteesoftheBoardTheBoardisservedbytwospecialistcommitteesthatscrutiniseandoverseethefollowingareasofactivityforbothSHanditssubsidiarycompanies:
• Audit&Risk:TheCommitteehasfourmembersandmeetsnotlessthanfourtimesayear.
Itisresponsibleforoverseeingtheeffectivenessofthesystemofinternalcontrols,agreeingtheannualinternalauditplan,monitoringitsdeliveryandthatofinternalandexternalauditorsandprovidingrelevantreportstotheSHBoardandsubsidiarycompanyBoards,includingreportsonriskmanagementarrangements.TheCommitteealsoplaysa
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formativeroleinthedevelopmentanddeliveryofSH’svalueformoneyandassurancereportingarrangements.
• RemunerationandNominations:TheCommitteehasthreemembersandmeetsnotless
thantwiceayear.ItisresponsibleforoverseeingandprovidingguidanceonnominationstotheSevernsideBoard,itsCommitteesandtosubsidiarycompanyBoardsandrecommendingappropriateremunerationlevels.TheCommitteealsoagreestheremunerationofseniorstaff,makingrecommendationstotheBoardinrespectoftheremunerationoftheChiefExecutive.
ResidentSenateTheResidentSenatecurrentlyhas6members.Itsroleistoscrutiniseperformance,decisionmaking,shapingservicedeliveryandrevisingpolicyandprocedures.TheResidentSenatepresentstotheBoard‘GreenPapers’withrecommendationsforchangeandimprovement.TheExecutiveTeamprovides‘ManagementComment’withregardtotherecommendationsthataremadeandtodate,theBoardhasacceptedallSenaterecommendationsforimplementation.Togetherwithotherinterestedcustomers,theResidentSenateiscurrentlyundertakingareviewofSH’scustomerinvolvementstructurewithaviewtostrengtheningexistingarrangementsincludingmaximisingtheexperienceofexistinginvolvedcustomers.RecommendationswillbeputforwardtoensurethatSHhasinplaceasustainableandaccessiblemodelofcustomerinvolvement,engagementandconsultation.
CorporatePlanTheBoard’sthreeyearCorporatePlanisdeliveredbytheChiefExecutivewhoissupportedbytheResourcesDirector,NeighbourhoodandCommunityServicesDirectorandtheInterimAssetManagementDirector.IndemnityInsurancepoliciesindemnifyBoardDirectorsandofficersagainstliabilitywhenactingonbehalfofSH.SubsidiaryBoardsTheSHBoardisresponsibleforagreeingappointmentstosubsidiaryBoardsandhastherighttoremoveBoardDirectorsshouldtheneedarise.EachAWalterssubsidiaryBoardhasfiveDirectorscomprisingthreenon-executiveandtwoexecutiveDirectors,namelytheChiefExecutiveandSHResourcesDirector.
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SHFAhas7Trustees,SHhasnominatedtwopeopletoserveontheBoardofTrusteesofSHFA,theNeighbourhoodandCommunityServiceDirectorandtheHeadofFinanceandPerformance,whohavesincebothresignedfollowingthesigningoftheDeedofTerminationbetweenbothparties.SevernsideCommunityAssociationLimitedhasfourDirectors,includingtheSHChiefExecutive.SevernsideCommunityHousingLimitedhasoneDirector.EqualityandDiversitySHiscommittedtoequalopportunities.SHhasadetailedEqualityDiversityandInclusionStrategyandActionPlanwhichisreviewedeverythreeyears.EqualityManagementReviewsorimpactassessmentsarecompletedonallgroupStrategiesandPoliciestoensurethattheycomplywiththeEqualityAct2010anddonotdiscriminateagainstordisadvantageanyoftheprotectedgroups.SHconductsregulartrainingforBoard,StaffandCustomersandwasawardedbyStonewalltheWestMidlands“MostImprovedEmployer”in2014.Sincethisaward,SHhasfurtherimproveditspositionandmoveduptheIndexachievingapositionof13/30withinsector.Alsoduring2015,followinganassessmentprocess,wewereawardedthe“DiversityNetworkAccreditation”fromtheHousingDiversityNetwork.HealthandSafetySHiscommittedtomaintainingthehealthandsafetyofitsemployees,customersandthegeneralpublic.Ourinhouseworkforce(SevernsideHousingPropertyServices)andourelectricalcontractingsubsidiariesareaccreditedbytheContractorsHealthandSafetyAssessmentScheme(CHAS).TheSHSeniorManagementTeamleadsonimprovinghealthandsafety,monitorsprogressregularlyandensuresthatitsmanagersandcontractorsareawareoftheirhealthandsafetyresponsibilitieswhilstundertakingtheirduties.TheBoardandAuditandRiskCommitteereceivereportsinrespectofHealthandSafetyperformanceandcompliancewithstatutoryobligations.RiskManagementTheprocessforidentifying,evaluatingandmanagingthesignificantrisksfacedbySHison-goingandhasbeeninplacethroughouttheperiodcommencing1April2015uptothedateofapprovalofthereportandfinancialstatements.Asanintegratedpartoftheagreedriskmanagementframework,SHmaintainsakeyriskregister.TheChiefExecutivereportstotheBoardonthemanagementofkeyrisksnotlessthanonaquarterlybasisandtheAuditandRiskCommitteehasdelegatedresponsibilitiesinrespectoftheoversightofriskmanagementarrangementsandperformance.FurtherinformationonSH’sriskmanagementarrangementscanbefoundatpages30-32.
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In2015/16,inresponsetochangesintheexternalenvironmentincludingthoserelatingtoenforcedrentreductionsforfouryearsfrom1April2016introducedbytheJuly2015budget,theSHBoard,throughtheAuditandRiskCommittee,revieweditsriskmanagementandassurancearrangements.ThepurposeofthisreviewwastoensurethatthesearrangementsremaincompliantwithbestpracticebothinsideandoutsidethehousingsectorandprovideappropriateinformationtoenableSHtoidentifyandaddresspromptlyanyemergingriskstothebusiness,particularlythoselinkedtoanyadverseimpactfromtheimplementationofrentreductionsandtheimpactofwelfarereformchangesonourcustomers.InternalControlsAssuranceTheBoardacknowledgesitsoverallresponsibilityforestablishingandmaintainingthewholesystemofinternalcontrolandforreviewingitseffectiveness.Thesystemofinternalcontrolisdesignedtomanage,ratherthaneliminate,theriskoffailuretoachievebusinessobjectives,andtoprovidereasonableassuranceagainstmaterialmisstatementorloss.Keyelementsofthecontrolframeworkinclude:
• BoardapprovedtermsofreferenceanddelegatedauthoritiesforCommitteesandtotheChiefExecutive.
• Clearlydefinedmanagementresponsibilitiesfortheidentification,evaluationandcontrolofsignificantrisks.
• Robuststrategicandbusinessplanningprocesses,withdetailedfinancialbudgetsandforecasts.
• Formalrecruitment,retention,traininganddevelopmentpoliciesforallstaff.• Establishedauthorisationandappraisalproceduresforsignificantnewinitiativesand
commitments.• Asophisticatedapproachtotreasurymanagementwhichissubjecttoexternalrevieweach
year.• RegularreportingtotheappropriateCommitteeonkeybusinessobjectives,targetsand
outcomes.• Boardapprovedprobity,whistle-blowingandanti-theftandanti-briberyandcorruption
policies.• Boardapprovedfraudpolicies,coveringprevention,detectionandreporting,togetherwith
recoverabilityofassets.• Regularmonitoringofloancovenantsandrequirementsfornewloanfacilities.• Robustassuranceframeworktomonitorcorporateplanobjectives
AfraudregisterismaintainedandisreviewedbytheAuditandRiskCommitteeonaquarterlybasis.TheBoardcannotdelegateultimateresponsibilityforthesystemofinternalcontrolbuthasdelegatedauthoritytotheAuditandRiskCommitteetoregularlyreviewtheeffectivenessofthesystemofinternalcontrol.TheBoardreceivesAuditandRiskCommitteequarterlyreportsandmeetingminutes.TheAuditandRiskCommitteehasreceivedtheExecutiveteam’sannualreviewoftheeffectivenessofthesystemofinternalcontrolforSH,andtheannualreportoftheinternalauditor,andhasreporteditsfindingstotheBoard.
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BasedontheInternalAuditorsgivingadequateassurancethatSHoperatesaneffectiveinternalcontrolenvironmentbasedontheareastheyhaveauditedintheyearwithinthescopeofthosereviews,theBoardconfirmsthattheinternalcontrolswithintheorganisationmeettherequirements.Statementofdirectors’responsibilitiesinrespectoftheStrategicReport,theReportoftheBoardandthefinancialstatementsTheBoardisresponsibleforpreparingtheStrategicReport,theReportoftheBoardandthefinancialstatementsinaccordancewithapplicablelawandregulations.
Companylawrequiresthedirectorstopreparefinancialstatementsforeachfinancialyear.UnderthatlawtheyhaveelectedtopreparethefinancialstatementsinaccordancewithUKAccountingStandardsandapplicablelaw(UKGenerallyAcceptedAccountingPractice),includingFRS102TheFinancialReportingStandardapplicableintheUKandRepublicofIreland.
UndercompanylawtheBoardmustnotapprovethefinancialstatementsunlesstheyaresatisfiedthattheygiveatrueandfairviewofthestateofaffairsoftheGroupandtheAssociationandoftheGroup’sandtheAssociation’ssurplusordeficitforthatperiod.Inpreparingthesefinancialstatements,theBoardisrequiredto:
• selectsuitableaccountingpoliciesandthenapplythemconsistently;• makejudgementsandestimatesthatarereasonableandprudent;• statewhetherapplicableUKAccountingStandardsandtheStatementofRecommended
Practicehavebeenfollowed,subjecttoanymaterialdeparturesdisclosedandexplainedinthefinancialstatements;and
• PreparethefinancialstatementsonthegoingconcernbasisunlessitisinappropriatetopresumethattheAssociationwillcontinueinbusiness.
TheBoardisresponsibleforkeepingadequateaccountingrecordsthataresufficienttoshowandexplaintheAssociation’stransactionsanddisclosewithreasonableaccuracyatanytimethefinancialpositionoftheAssociationandenablethemtoensurethatthefinancialstatementscomplywiththeCompaniesAct2006,theHousingandRegenerationAct2008andtheAccountingDirectionforPrivateRegisteredProvidersofSocialHousing2015.TheyhavegeneralresponsibilityfortakingsuchstepsasarereasonablyopentothemtosafeguardtheassetsoftheAssociationandtopreventanddetectfraudandotherirregularities.
TheBoardisresponsibleforthemaintenanceandintegrityofthecorporateandfinancialinformationincludedontheAssociation’swebsite.LegislationintheUKgoverningthepreparationanddisseminationoffinancialstatementsmaydifferfromlegislationinotherjurisdictions.
GoingConcernFollowingtheJuly2015BudgetandtheimposedrentreductionSHreviewedtheircoststructureandidentifiedon-goingannualsavingsofapprox.£1.5m.Thesesavings,togetherwiththerevisedincomestreams,wereusedtocreateanew30yearfully-fundedGroupFinancialPlanwhichmetallfunderscovenantsandwasdeliveredtotheHCAinSeptember2015resultingintheconfirmationofaV1FinancialViabilityrating.ThisconfirmsthatSHmeetsalltheviabilityrequirementsassetoutinHCA’sgovernanceandfinancialviabilitystandardandhasthecapacitytomitigateitsexposureseffectively.Asaresultofthis,andthesignificantstresstestingscenarioswhichareincludedintheexercisetheBoardhasareasonableexpectationthatSHanditson-going
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StrategicReport(incorporatingOperatingandFinancialReview)BackgroundSHisbasedontwositesinShrewsbury,andisoneofShropshire’slargestsociallandlords,with5,469(2015:5,389)homesinShrewsbury,Broseley,Wellington,Telford,Wemandthesurroundingruralareas.Itsprincipalactivitiesarethemanagementanddevelopmentofaffordablehousing.SHisactivelydevelopingnewaffordablehomestoaddresshousingneedsinthelocalarea,aswellasinvestinginexistingproperties.SHisasignificantemployerwith242(2015:247)FTEstaff,includinganin-houseworkforceof65(2015:68)tradespeoplewhorepairandmaintainitsproperties;SHoperatesinbothurbanandruralenvironments.Theassociationisnon-charitableandoperatesfivekeybusinessstreams:
• Housingforrent,primarilyforthosewhoareunabletorentorbuyatopenmarketrates;• Supportedhousingandservicesforpeoplewhoneedadditionalhousing-relatedsupport
oradditionalcare;and• Low-costhomeownership,primarilysharedownership.• Marketrent• Outrightmarketsale
Aswellasmanaging5,469properties,SHdevelopsnewaffordablehousingandisafoundingmemberoftheS3PartnershipprovidingaccesstograntfundingundertheHomesandCommunitiesAgency(HCA)AffordableHomesProgramme(AHP).Duringtheyear,SHdeveloped8(2015:64)generalneeds,8(2015:4)sharedownership,28(2015:0)marketrentand21(2015:0)outrightmarketsalepropertiesatatotalschemecostof£8.286m(2015:£7.045m)with£0.154m(2015:£0.624m)grant.InadditionSHpurchasedofftheshelf,34(2015:6)generalneed,17(2015:0)sharedownershipand11(2015:9)marketrentpropertiesatatotalcostof£6.488m(2015:£1.703m)with£0.060m(2015:£0)grant.However,SH’sfocusremainsitssocialhousingactivitiesandtheseareexpectedtocontinuetoconstituteover94%ofSH’sactivitiesbyturnover.ExternalInfluencesTheGovernment’sbenefitreformshavenotyethadamaterialimpactonourfinances;mostofourcustomerscontinuetopaytheirrentpromptly,thisisbackedupbyourarrearsperformance.However,furtherchangeswillcomeintooperationovertheyearandwewillcontinuetomonitorthepositionveryclosely.Stresstestingour40yearFinancialPlanhasdemonstratedthechallengesofthesummer2015budgetforsociallandlordsespeciallythereductionsinrentalincomeoverthenextfouryearsand
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isembeddedwithinSH’sassuranceandriskmanagementframework.AppropriatemitigationsplanshavebeenagreedbytheBoardforimplementationshouldtheneedarise.
InJune2016BritainvotedinareferendumtoleavetheEuropeanUnion. ThereisuncertaintyacrosstheSectorwithregardsthewiderimplicationsofthisdecision,butSHwillcontinuetomonitorthesituationandwillkeepincontactwithitsregulatorsandfunders.Businessandfinancialreview–SevernsideHousingAssociationTheBoardispleasedtoreportfortheyearending31March2016SH’sturnoverwas£30.957m(2015:£26.646m(*))andasurplusfortheyearof£3.223m(2015:£1.344m(*)).Wehavecontinuedtoinvestinbothourexistinghousingstockandundertakeaseriesofnewdevelopments,forbothsocialandaffordablerent,sharedownershipandmarketrent.AsubstantialelementoftheincreaseinbothturnoverandsurplusrelatedtoSH’sfirstdevelopmentofmarketsalesunitsonitsRowlandCourt,Shrewsburydevelopment.Principalaccountingpolicies,approvedbySHBoardaresetoutonpages40to44oftheFinancialStatements.TheonlysignificantchangestoaccountingpoliciesinthecurrentyearareresultingfromFinancialReportingStandard(FRS)102.SH’sthreeyearincomeandexpenditureaccountsandbalancesheetsaresummarisedbelow:-Table1–SH(Associationonly)highlights,threeyearsummary(*)All2014/15figureshavebeenrestatedtoallowfortheimpactofthetransitiontoFRS102.2013/14figuresarethepreviouslystatedfiguresunderoldUKGAAP.
Fortheyearended31March
2016
£000’s
2015
£000’s
2014
£000’s
StatementofComprehensiveIncome
TotalTurnover 30,957 26,646 25,250
OperatingSurplus 9,607 7,683 6,557
Surplusfortheyeartransferredtoreserves 3,223 1,344 1,143
StatementofFinancialPosition
Intangibleassets - 117 233
Housingproperties,netofdepreciation 132,765 129,055 125,163
Socialhousinggrant - - (11,226)
Othertangibleassets 2,981 3,034 4,247
InvestmentProperties 13,472 8,690 -
Netcurrentassets/(liabilities) 3,868 567 (8,207)
Totalassetslesscurrentliabilities 153,086 141,463 110,210
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Creditors(dueoveroneyear) (138,791) (130,548) (100,853)
FRS17Liability (10,579) (11,638) (7,285)
NetAssets/(Liabilities) 3,716 (723) 2,072
RevenueReserves 14,295 10,915 9,357
PensionReserves (10,579) (11,638) (7,285)
Surplus/(Deficit) 3,716 (723) 2,072
Housingpropertiesownedatyearend 2016 2015 2014
SocialHousing 5,366 5,325 5,372
NonSocialHousing 103 64 55
TotalUnits 5,469 5,389 5,427
Noofdevelopmentunitscompleted 127 83 43
Statistics(Associationonly) 2016 2015 2014
OperatingSurplusfortheyearas%
turnover
31.0 28.8 26.0
OperatingSurplusfortheyearas%incomefromSocialHousinglettings
37.55 31.2 27.7
Rentarrearsatyear-end £405k £663k £561k
CurrentRentarrearsas%ofdebit 0.83% 0.80% 0.72%
Rentalincomecollection/rentalincomedue
99.7% 100.7% 101.3%
Assetcoverratio* 1.22 1.28 1.51
EBITDAMRI** 1.56 1.31 n/a
Emergencyrepairswithintarget(24hours) 99.8% 99.9% 99.8%
Urgentrepairswithintarget(7days) 98.9% 98.7% 99.2%
Routinerepairswithintarget(31days) 99.2% 98.2% 98.5%
Decenthomescompliant 100% 100% 100%
SAP(StandardAssessmentProcedure)rating
73.67 73.11 72.27
Procurementefficiencysavingsachieved 6.8% 6.1% 4.8%
%ofdwellingswithgassafetycertificate 100% 100% 100%
Overallsatisfactionwithservices*** 88% 88% 88%
%Customersatisfactionwithneighbourhood
85% 85% 86%
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%Staffsatisfaction 80% 80% n/a
%workingdayslostduetosickness 4.45% 4.85% 5.0%
*Calculatedastotalassetvalue/totalloanvalue**Specificloancovenantstipulatedbyfinanceprovider***ResultsobtainedfromSTARsurvey(SurveyofTenantsandResidents)ValueforMoney(VfM)Statement
Introduction
ThisstatementisasummaryofSH’sannualvalueformoneyself-assessment.Itprovidesanoverviewofourcriticalanalysisofourvalueformoneyobjectives,anassessmentofprogressduring2015-16,andourplansfortheyearahead.Thefullvalueformoneyself-assessmentcanbefoundat:www.severnsidehousing.co.uk/value-for-money
SHconsidersValueforMoneywillbeachievedwhen:
‘weknowwhatoutcomeswewantanduseourresourcesinthemosteffectivewaytoachievethoseoutcomes’
Ouraimistobeahighperformingorganisation,wewillalwaysaskourselveswhetherwecandeliverabetterservicemorecosteffectively.
GovernanceandmonitoringSHhasaCorporatePlanobjectivetodemonstrateandcontinuouslyimprovevalueformoneyacrosstheorganisation.TheBoardandparticularlytheAudit&RiskCommitteehastakenanactiveroleinthedevelopmentofournewVfMStrategyandSelf-Assessmentsoverthepastfouryears.OverthepastyearSHhasfurtherembeddedVfMinallbusinessprocessestoensurethereisagoldenthreadrunningthroughtheorganisationsothatVfMisconstantlybeingmonitoredandreviewed:
• OurBoardisbriefedannuallyonourHousemarkbenchmarkingresultsandreviewquarterlyKPIdataincludinginformationonprocurementandefficiencysavings.
• TheBoardanditsAuditandRiskCommitteehaveassistedinthedevelopmentofanewVfMStrategy,ProcurementStrategyandtheVfMself-assessment.
• Audit&RiskCommitteewiththeChairmeetonanannualbasistoreviewtheBoardKeyPerformanceIndicatorBalancedScorecardtoensurethedeliveryoftheCorporateObjectivesarebeingmonitored.
• TheExecutiveTeamreviewperformanceacrossthebusinessonamonthlybasisviaaBusinessReviewprocess.AVfMDashboardhasbeenintroducedfor2015/16onaquarterlybasisforeachbusinessareatomonitorkeyVfMperformance.
• StaffareencouragedtocontributeVfMideas,over200ideashavebeenreceivedviaannualappraisals,afurther120ideashavebeenreceivedthroughstaffsuggestions
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duringtheyear.Forexample,theresidents’newsletterhasbeenreducedfrombeingpostedquarterlytotwiceperyear,savingover£7,500.
• InvolvedcustomershaveassistedSHinallmajorProcurementexercises,andtheResidentSenatehasbeeninvolvedinthenewVfMandProcurementStrategies.Thisensuresthatwearelisteningtoourcustomers,andprovidingtheproducts,servicesandvaluethattheyrequire.
ANewValueforMoneyStrategyhasbeendraftedincollaborationwithandapprovedbyBoardandSenate.ThekeyprinciplesofthenewStrategyare:
• VfMOutcomeswhichcontributetoCorporatePlanobjectives• Understandcostsandoutcomesofeachactivitytomaximisecapacity• EmbedVfMinallbusinessprocesses• StrategicProcurement
InparalleltothisanewProcurementStrategyhasalsobeenapprovedwhichfocuseson“BuyingBetter”byadoptingbestpracticesuchaselectronicprocesses,developingstaffskills,categoryandcontractmanagementanddataanalysis.Costs&PerformanceSHutilisevarioussourcesofbenchmarkingtomonitorperformanceagainstourpeerssuchastheHCAGlobalAccountsandHousemark.WearealsobeginningtoidentifysourcesoutsideofHousingtoensurebestpracticecomparisonsarenotlimitedtoourownindustry.AtthetimeofwritingthissummaryfortheFinancialStatements,Housemarkdatafor2015/16isnotyetavailable.Analysisof2014/15datahasdemonstratedapositivetrend.WiththeexceptionofResidentInvolvement,alldepartmentsareholdingVfMperformanceinthe“GoodPerformance/LowCost”quadrant,ortrendingtowardsit.Detailedanalysisofthesetrendsduringtheyearhashelpeddirectbusinessdecisions,forexampletheNeighbourhoodsandCommunityDirectoratehavesincerestructured,withareductioninmanagementfrom6to4whichwillsave£100,000perannumfrom1stJanuary2016onwards.
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PerformancecomparedwithHCAGlobalAccounts2013–2015(allLSVT)
KeyRatios(LSVT) HCA2015
Severnside2015 HCA2014 Severnside
2014HCA2013
Severnside2013
Quartile2015
HeadlineSocialHousingCostperunit
£3,550 £3,420 Comparabledatanotavailable,noCapitalisedcostsinGlobalAccounts
ManagementCosts(inc.OtherCosts)perunit
£1,125 £1,529 £1,201 £1,550 £1,168 £1,479
Repairs&Maintenance(incCapitalisedcosts)costsperunit
£2,054 £1,891
Comparabledatanotavailable,noCapitalisedcostsinGlobalAccounts
GrowthinTurnover 5.0% 4.9% 4.3% 6.0% 8.0% 4.6%
OperatingMargin 28.8% 28.1% 27.2% 26.0% 26.7% 26.0%
Currenttenantarrearsattheendoftheyear
4.2% 0.8% 4.1% 0.72% 4.0% 1.5%
%lostthroughvoidproperty 1.6% 0.86% 1.7% N/A 1.5% N/A
Baddebtsfortheyear 0.8% 0.65% 1.0% 0.3% 0.8% 0.26%
UpperQuartile
MiddleUpper
MedianMiddleLower
LowerQuartile
Tosummarisetheresultsinthetable:• OverallheadlinecostsforManagement,RepairsandMaintenancearebelowtheaverageof
allLSVT’sat£3,420perunitwhichis£230perunithigherthantopquartileperformance.• Over22%ofourstockisdedicatedtoHousingforolderpeople,whichtheHCAhave
calculatedcost£1,800moreperunittoservicethangeneralneedsproperties.• Wehavehighmanagementcosts,whichweareactivelyreviewingandtakingstepsto
reducebyundertakingprocessreviews,andenteringintoamergerprocess.• OurtotalcostsofrepairandmaintenancearebelowthemedianforallLSVT’s.• GrowthinTurnoverandOperatingMarginarejustbelowaverage
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• SHperformexcellentlyinthemanagementofarrears,debtcollectionandrentlossthroughvoidproperties.
Inlastyear’sVfMself-assessmentwecommittedtoreviewcostsfurther:
• ReviewedPolicies,ProcessesandProceduresinourNeighbourhoodandCommunity
ServicesDirectorate.Leadingtoarestructureofthedepartment,removingduplicationandensuringthemostappropriatespecialistteamsareengagingwithourcustomerstoproducethebestoutcomesforourcustomersinthemostefficientwayforourteams.
• WehavecreatedanEmploymentandMoneyAdviceteamwhichisfocussedongivingourcustomersthesupporttheyneedtosustaintheirtenancy.
• Eventhoughourcurrentarrearsperformanceisbestin-classwehavebeencollaboratingwithanotherRegisteredProviderwhichisprovidingexpertiseintheautomationandintegrationofincomecollectionusingtextingtoprovideafutureproofsystem,toensurefurtherefficiencies.
• SHhavealsoengagedwithHousingQualityNetwork(HQN)toactasacriticalfriendonaprojecttoprocessmapoldandsundrydebtcollection.
• WehavemergedourFacilitiesandHealthSafetyteamswithasavingof1managementpost.• HeadcountinourHRdepartmenthasdecreasedby2,whichgivesaHRstafftoemployee
ratioof41.5whichistopquartileperformanceaccordingtotheCIPD.• Undertakenareviewofgovernancecostswhichincludedexternalbenchmarkingofsalaries
paidtoBoardMemberswhichwerefoundtobecompetitiveandhavebeenheldfor2015/16.
• Saved£40,000byin-sourcinglegalservicesforHousingManagementissues.
BenchmarkingisalsousedduringProcurementexercises.AbenchmarkingexerciseevidencedthefactthatthecurrentKitchenunitswerebeingboughtatthebestcostpriceversus4othermanufacturersofequivalentproductsontwodifferentprocurementframeworks.Asaresultofthisexercise,theincumbentKitchenmanufacturerproposedachangetoamoremoderndoordesignwhichwouldsave20%onthecostofthekitchen,customerswereconsultedandhaveapprovedthechangeswhichwillsave£40,000perannum.
AlltenderreportsforproposeddevelopmentsincludeaVfMsection,whichcomparestenderedbuildcostspersquaremeteragainstanexternalcomparator-theBuildingCostInformationService(BCIS)operatedbytheRoyalInstitutionofCharteredSurveyors(RICS).Constructioncostsforthemostrecentdevelopmentsare10.5%belowtheBCISindexwhenadjustedfortheShropshirelocationwhichindicatesthatweareprovidinghomesofahighstandardforbelowaveragecost.
Annualspendonresponsiverepairsreducedby4%from£1.56min2014/15to£1.49m.Repairsvolumesandstandardsremainedthesamehowevertheaveragecostofrepairreducedfrom£83tobelow£80.Theaveragetimetocompleteresponsiverepairsalsoreducedduringtheyearwithrepairsbeingcompletedinanaverage3.7daysfromreportingtocompletionagainst4.5daysachievedin2014/15.Thepercentageofappointmentsmadeandkeptalsoincreasedto98.9%.
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Voidrepairunitcostsreducedby15%during2015/16withratesreducingfrom£2,000pervoidto£1,700.Overallspendreducedby8%,saving£67,000,whilstthenumberofvoidsincreasedby7%from408to438.
ActiveAssetManagement
Weknowfromourassetdatathatsomepropertiesaremoreexpensivetorepairandsomearelesspopularthanothers.SHusesanAssetPerformanceModel(APM)toaidourunderstandingofthefinancialperformanceofourpropertiesbycomparingthefuturerentalincomeforeachpropertywithitsprojectedcostsofmaintenance.TheAPMwasupdatedbySavillsin2014/15.Wecurrentlyhave3assetgroupsof143propertieswithanegativeNetPresentValue(NPV–wherecostsexceedincome),investmentdecisionsforthesepropertiesareonholdwhilstanalysisoffuturemaintenancerequirementsisundertakenaspartofthe2016/17stockconditionsurvey.
Inadoptinganactiveassetmanagementapproachwehave:
• Takenstepstoaddresstheproblemoflackofdemandforsomeofourlesspopularshelteredhousingschemes,garagesitesandvacantlandincluding:o HeathsHouses–Redeveloped88lowdemandshelteredflatstoprovide41homes
formarketsale,marketrent,discountedrentandsharedownership.o NewParkClose–PoorlyutilisedShelteredHousingmeetingroomandscheme
managershousereplacedwith3bungalows,securingsocialhousinganda12%localauthoritygrantcontribution.
o BellLane&AllertonRoadGarages–Unpopulargaragesitesconvertedinto8newhomes.
o BrookClose–Underutilisedlandadjacenttoshelteredhousingschemecreating10newhomes.
o Sold2lowperforminghouses,andhave3moreinthepipelinefordisposal,creating£560kforreinvestmentinnewhomes.
• Implementedamobileworkingsolutionforsurveyors:o Stockconditionandothersurveysarecompletedelectronicallyfromsiteeliminating
themanualupdatingofstockconditiondata.Wehavecompleted350surveyselectronicallysofar,whichmeanswiththecurrent10%stockconditionsurveythatwewillhave42%ofourstocksurveyedwithinthepast5years,and99.5%ofallpropertieswithindividualstockconditiondata.
• PublishedanewPropertyStrategyfocusingonusingthisdatainatargetedway,usingindividualpropertyperformanceleadingtobetterinvestmentplanninganddeliveryinordertomaximisepropertyreturn.
• Thechartsbelowdemonstratehowwearediversifyingourassetstoensurethebestoverallratesofreturn.Thismixedtenuremodelhasenabledustore-invest£3.4mfromthereceiptsofmarketsalesbackintoourbusinessplan,andinvestin39propertiesformarketrentwhichprovidea6%returnonassetsviaourSevernHomesteam.
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SocialRentAffordable&Discounted
Rent
SharedOwnership
MarketRent MarketSale Total
13 29 25 39 21 127
CustomerSatisfaction
SHcommissionedacensusstyleSTARtenantsatisfactionsurveyin2014.Atthattimesatisfactionwiththeoveralllandlordservicewas87%forgeneralneedstenantsand91%forshelteredtenants,theHousemarknationwideaverageswere87%and84%respectivelysoSevernsideareslightlyabovethenationalaverage.
Researchundertakenintosurveyshasshownthatcensusstylesurveystendtoproduceacentraltendency,wherebythepersoncompletingthesurveywillgivethesamescoreagainandagain.Thiswasborneoutwhencalling200dissatisfiedrespondentstounderstandthereasonsforpoorscores.
SHareundertakingareviewofhowcustomersatisfactiondataiscollected,reviewingcustomertouchpointswiththeobjectiveofreducingthecostofsurveys,whilstimprovingcustomersatisfactionandusingsurveysasawaytocontinuouslyimproveourservicesbycapturinglivepositiveandnegativefeedback.
Procurement
ProcurementatSHcontinuestoaddvalueformoney,saving£213,760for2015/16,includingthefollowingprojects:
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• ImplementingnewStoresMaterialsContract–Saving£80,000inmaterialcosts,£38,000byclosingthein-housestores.Reducingthenumberofsuppliersfrom230to168,reducingthenumberofpaperinvoices,reducingwaitingandshoppingtimefortradesmenandhavingincreasedManagementInformationleadingtomorecontrolovermaterialcostsandspecifications.
• Boiler&BoilerFiltersavings-£17,000–reviewedandamendedourspecificationforgascentralheatingboilersandre-negotiatedourdirectrebate.Thenewboilersareeasiertoservice,andhavemorefunctionality,plusalargerinternalcondensesyphonwhicheliminatestheissueofcondensepipesfreezing.Average£50savingperboilerequatingtocirca£13.5ksavingperannum,theboilersarealsomoreenergyefficient,savingourcustomersmoneyontheirbills.WehavealsochangedsupplyofMagneticFilterswhicharecheaperandhavea20yearwarranty.
• Kitchens–ChangeddoordesignsonKitchens,samequality,moremoderndesign,approvedbycustomerssaving£40kperannum
• Lifts–NewcontractwithlocalSME’sofferingbetterservice,savingof£20k• MobilePhone&Landlines–Saving£80kperannumforSH,jointlyprocuredwith
ShropshireHousingGroupsavingthemasimilaramount.• Vanservicing–saved£15kinyear1.
AnewProcurementStrategyhasbeenapprovedwhichfocusesonfurtherincreasingvalueforthenext3yearsusingbestpractice,electronictoolsanddata.
HowhaveweusedEfficiencySavings
DetailsofourachievementsinrelationtovalueformoneyareprovidedinthefullversionofourVfMSelf-Assessment.ThisgroupsoursuccessesundertheheadingsinournewCorporatePlanshowinghowourachievementslinktoourcorporateobjectives.In2015/16wemadesavingsofaround£3.2maboveourbudgetwhichexceededthe£2.9mofsavingsin2014/15.Mostofthesesavingswereusedtoreduceoutstandingloanbalanceswhichsupportour40yearfinancialplanandourdevelopmentprogramme.
OurDevelopmentProgrammehasadded573propertiestothehousingstockinShropshiresince2001.Thishashelpedtocountertheimpactofthe457RighttoBuy/RighttoAcquirepropertiessoldtodate.
In2015/16SHhavecompletedthedevelopmentof127newproperties,tohouse465people,investing£12.3m,someofwhichhascomefromadditionalprofitgeneratedfromthesaleofnewproperties.Ourcurrentdevelopmentprogrammeaimstoprovideatleast485furtherhomesovertheperiod2016/17-2019/20assetoutbelow:
Tenure Social Rent
Affordable /Discounted Rent
For Sale
Shared Own
Market Rent
Total Units
No of homes
14 300 69 78 24 485
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ThecurrentDevelopmentProgrammefacilitatesforcirca£57.4m,withsome£16.9mincomefromnewpropertysales,togetherwitharound£3.7mgrantandothersubsidy.Our40yearfinancialplanassessestheviabilityofeachfundingstreamandtestsitsvalueformoney.
FuturePlans
Duringthefinancialyear2015/16,SHcommencedmergerdiscussionswithanotherregisteredprovider,HousingPlus.Extensiveduediligenceworkwasundertakenandnobarrierstomergerwerefound.Thisduediligencework,anddiscussionsatExecutiveTeamandBoardlevel,hasshownthatthereisanexcellentvaluesbasedfitbetweenthetwoorganisationsandthatbusinessefficienciescanbeachievedwerethemergertobeprogressed.
TheBoardsofbothSHandHousingPlusrecognisedthatinanewpartnership,anewmergedbusinesswillbemoreresilient,financiallystrongandbeabletodelivermoretogetherthanthetwoorganisationscoulddoseparately.Theneworganisationwillbeabletorealiseefficiencies,releasecapacity,providemorenewhomesanddelivercareservicestoawiderrangeofcustomers.
Accordingly,inMay2016,whenthefullbusinesscasewaspresentedandseparatelyconsideredbytheBoardsofSHandHousingPlus,bothBoardsagreedthatnecessarystepsshouldbetakentoeffectamergerofthetwobusinessesduringthe2016/17financialyear.Itisanticipatedthatfollowingmerger,recurringefficiencysavingswillboostsurplusesandincreasepotentialborrowingcapacityby£50million.Thenewcombinedbusinesswill:
• Ensurefinancialresilienceandthecapacitytocontinuetogrow• Increasehousingsupplyviaamorediversedevelopmentprogramme• Enhanceproductivityandperformanceinthepropertycarebusiness• OffergrowthopportunitiestoCarePlus• Sustainanddevelopfitforfutureservicestocustomersandinvestmentinhomes• Deliversuccessfultransformationanddriveouttheintendedvalueofthemergerforthe
benefitofexistingandfuturecustomers
FurtherdetailsregardingspecificplansonhowSHplantoimproveValueforMoneycanbefoundinthefullVFMself-assessmentviatheSHwebsite…http://www.severnsidehousing.co.uk/main.cfm?type=VALUEFORMONEYandcopiescanalsobeobtainedfromourmainofficereception.
HighlightsandAchievementsSHhascontinuedtoinvestsignificanttimeandenergyintoensuringthatSHisawell-managedbusinessthatisfitforthefuture.Achievementsduringtheyearinclude:
• FollowingtheJuly2015budgetwhichsawtheimpositionofa4yearrentreductionanewfullyfundedfinancialplanwascreatedwhichnotonlymetallcovenantrestrictionsbutsawthecreationofanewdevelopmentplanfacilitatingafurther485newhomescombinedwiththere-profilingofourAssetManagementbusinessplan
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• AsaresultofthisrevisedfinancialplanourratingwiththeHCAwasmaintainedasV1/G1• Our2015/16developmentprogrammedeliveredatotalof127propertiesduringtheyear
comprising67socialhousingproperties,anadditional39propertiesforourmarketrentportfolioand21propertieswhichweredevelopedforoutrightmarketsale.
• Themarketsalepropertiesareincludedinthetotalof41mixedtenurepropertieswhichweredevelopedonthesiteofoneofourlowdemandbedsitschemesasaresultofouractiveassetregeneration/managementpolicy
• Atotalof£1.4mwasreceivedfordevelopmentpurposesthroughvariousgrantstreamsincluding200%oftheoriginalfigurebidforfromtheHCA.
• OurCurrentTenantrentarrearsremainedattopquartileperformancewiththefigureat31.03.16being0.83%oftotalannualrentdebit
• Anti-SocialBehaviourandcrimecontinuedtoreduceinthoseareaswhereneighbourhoodagreementsareinplace
• InresponsetothechangingeconomicenvironmentanewPropertyStrategywasdevelopedfocusingonmaximisingpropertyreturncombinedwiththeintroductionofanewAssetInvestmentReportandServicePlansincludingthe30yearpropertyinvestmentrequirements;therisksattachedtothis;astrategicactionupdateandanimprovementimpact.
• OurVoidsperformanceremainedattopquartilewithturnaroundforstandardvoidsat18.9daysandvoidrentlossat0.79%
• 100%DecentHomescompliancewasmaintainedwithourSAPratingincreasingto73.67andTargetedimprovementsreducingthenumberofpropertieswithaSAPratinglowerthan50to21
• Afurther1yearextensiontooursupportingpeople"Sustain"contractwasnegotiatedwithShropshireCouncilwhichcombinedwithourTenancySustainmentServicehasallowsustocontinuetoprovidesupportservicestoourmorevulnerabletenants.
• OurSustainableCommunitiesteamcontinuetoprovidesupporttoourtenantsresultingin306tenantsreceiving£223kofincreasedon-goingbenefitsandanadditional£77kinoneoffpayments,10movingintoemploymentafterreceivingsupportand8workplacementsbeingofferedatSevernsidetogainemploymentskills
• Theestablishmentofourin-housecleaningcompanyservicingnotonlyourofficepremisesbutalsothecommunalareasofourschemesandflatshasresultedinannualsavingsof£20k
• OurDesignandMarketingserviceswerealsobroughtin-houseandalsoachieved£20kannualsavings
• Aflexiblebenefitschemewasrolledouttoallstaffcomprisinganumberofavailableservicesandproductsandwastakenupby16%ofstaff
• Ourtwoelectricalcontractorsubsidiariescontinuedtoperformstronglythroughouttheyearresultinginatotalvalueof£56kbeingpaidviagiftaidtoourcharitablesubsidiarySevernsideCommunityAssociation
RisksanduncertaintiesRisksthatmaypreventSHachievingitsobjectivesareconsideredandreviewedmonthlybytheExecutiveTeamandregularlyreviewedbytheBoard.TherisksarerecordedandassessedintermsoftheirimpactandprobabilitythroughtheuseoftheSHriskmatrix.Majorrisks,presentingthegreatestthreatstoSH,arereportedtotheBoardquarterlytogetherwithactiontakentomanagetherisks,includingassessmentofkeycontrolsandtheoutcomeoftheaction.Themajorriskstosuccessfulachievementofbusinessobjectivesgoingforwardareconsideredbelow:-
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Keyrisks Actionbeingtaken
WelfareBenefitReformAct
WelfareBenefitReform–ImpactonarrearsduetotheintroductionofUniversalCredit
WelfareBenefitReform–Impactonarrears,duetotheintroductionofdirectpayments
• Monitoring rental arrears and workingcloselywith tenants to recover theseonatimelybasis
• Monitordirectbenefitenvironment• Deliverfinancialinclusionstrategy• AgreedHBservicelevelagreements• Anti-povertystrategy• Monitoringregulatoryandlegislative
changes• CloserworkingwithCreditUnion• Identifyunderoccupiedproperty
IncreaseinPensionContributions
Increaseinpensioncontributionsasaresultofrevisedvaluationabovebudget
• Full Pension Review in line with theActuarialReviewSCLGPS
Health&Safety
Non-compliancewithfiresafetyregulations
BreachofHealthandSafetylegislationleadingtoenforcementaction
Non-compliancewithworkingatheightlegislation
Non-compliancewithAsbestosRegulations
HealthandSafetyarrangementsforsubsidiaries
• Statementofarrangements• Riskassessments• Training• Policy&Procedures• Informationtotenants• Workinggroups• BSCAudit• Manuals• Inductions• Investigations• H&SCommittee• BSCAudit
Development
FailuretodelivertheDevelopmentBusinessPlanandStrategy
Failuretodeliverdevelopmentschemeswithinbudgetandtimescales
Failuretomeetsharedownershipsalestargets
• CreationofDevelopmentPipeline• StrategicreviewofLocalPlansites• DevelopmentStrategyactionplan• DevelopmentGroupMeetings
Treasury
Funderscovenantsnotmet
Futurerentalincomedoesnotmeetbusinessplanassumptions
Increaseinthenumberofsaleslinkedto
• Regularmeetingswithfunders• Regularexternalandinternalaudits• Regularcashflowandcovenantforecasts• Yearlyfundingvaluations• Quarterlybusinessreviewmeetings• Monitoring of government policy
changes
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RightToBuyandtheimplementationofVoluntaryRighttoBuyproposalsleadtoincreasedlossofincomeduetosaleofstock
CapitalStructureandTreasuryManagementThefollowingparagraphshighlightthekeyfeaturesofSHfinancialpositionasat31March2016.At31March2016SHmanaged5,469(2015:5,389)housingproperties.Thesepropertiesareshowninthebalancesheetatcost(afterdepreciation)at£132,765k(2015:£129,055k).Duringtheyeartherewere106additions(2015:83)tohousingpropertiesof£11.8m(2015:£8.8m)and25sales(2015:22)producinganetsurplusof£389k(2015:£325k)mainlyundertherighttobuyscheme.ForthefirsttimeSHalsodevelopedpropertiesformarketsaleandfromthe21propertiescompleted16soldbefore31stMarch2016producinganetsurplusof£722k.FollowingtheJuly2015budget,thepropertieswerevaluedbyprofessionalvaluerstotakeintoconsiderationanyimpactoftheimposedrentreduction,andasat31stMarch2016thevaluationonanexistinguseforsocialhousingbasisbasedonmortgageeinpossessionstatuswas£180m.Duringtheyear,theborrowingswereincreasedby£7m.Attheyear-endborrowingsamountedto£125,554kwiththefollowingrepaymentprofile:Maturity 2016
£000’s2015
£000’sWithinoneyear 56 53
Betweenoneandtwoyears 57 55
Betweentwoandfiveyears 18,690 182
Afterfiveyears 106,751 118,311
Total 125,554 118,601
AsummaryofSH’sheadroomattheyear-endisasfollows: Facility
£000’sDrawn£000’s
Available£000’s
Nationwide 105,000 88,500 16,500
CanadaLife 35,000 35,000 -
ShropshireCouncil 10,000 2,280 7,720
TotalBorrowings 150,000 125,780 24,220
Cashatbank 7,215
34
Independentauditor’sreporttothemembersofSevernsideHousingWehaveauditedthegroupandcompanyfinancialstatementsofSevernsideHousing(‘theAssociation’)fortheyearended31March2016setoutonpages36-74.ThefinancialreportingframeworkthathasbeenappliedintheirpreparationisapplicablelawandUKAccountingStandards(UKGenerallyAcceptedAccountingPractice),includingFRS102TheFinancialReportingStandardapplicableintheUKandRepublicofIreland.ThisreportismadesolelytotheAssociation’smembers,asabody,inaccordancewithChapter3ofPart16oftheCompaniesAct2006andsection128oftheHousingandRegenerationAct2008.OurauditworkhasbeenundertakensothatwemightstatetotheAssociation’smembersthosematterswearerequiredtostatetotheminanauditor’sreportandfornootherpurpose.Tothefullestextentpermittedbylaw,wedonotacceptorassumeresponsibilitytoanyoneotherthantheAssociationandtheAssociation’smembers,asabody,forourauditwork,forthisreport,orfortheopinionswehaveformed.RespectiveresponsibilitiesofdirectorsandauditorAsexplainedmorefullyintheStatementofDirectors’Responsibilitiessetoutonpage17,theBoardisresponsibleforthepreparationofthefinancialstatementsandforbeingsatisfiedthattheygiveatrueandfairview.Ourresponsibilityistoaudit,andexpressanopinionon,thefinancialstatementsinaccordancewithapplicablelawandInternationalStandardsonAuditing(UKandIreland).ThosestandardsrequireustocomplywiththeAuditingPracticesBoard’sEthicalStandardsforAuditors.ScopeoftheauditofthefinancialstatementsAdescriptionofthescopeofanauditoffinancialstatementsisprovidedontheFinancialReportingCouncil’swebsiteatwww.frc.org.uk/auditscopeukprivate.OpiniononfinancialstatementsInouropinionthefinancialstatements:• giveatrueandfairviewofthestateofaffairsoftheGroupandtheAssociationasat31March
2016andoftheGroup’sandtheAssociation’ssurplusfortheyearthenended;
• havebeenproperlypreparedinaccordancewithUKGenerallyAcceptedAccountingPractice;and
• have been prepared in accordance with the Companies Act 2006, the Housing andRegenerationAct2008andtheAccountingDirectionforPrivateRegisteredProvidersofSocialHousing2015.
OpiniononothermatterprescribedbytheCompaniesAct2006InouropiniontheinformationgivenintheReportoftheBoardandtheStrategicReportandtheDirectors’Reportforthefinancialyearforwhichthefinancialstatementsarepreparedisconsistentwiththefinancialstatements.
36
ConsolidatedStatementofComprehensiveIncome
Fortheyearended31March2016 Notes 2016 2015
£000’sGroup
£000’sAssociation
£000’sGroup
£000’sAssociation
Turnover 2
31,694 30,957 27,291 26,646
Less:Operatingcosts 2 (22,120) (21,350) (19,484)
(18,963)
Operatingsurplus
9,574 9,607 7,807 7,683
Surplusonsaleofhousingproperties 3 389 389 325 325
Deficitondisposalofothertangiblefixedassets
(15) (8) (2) -
Interestreceivableandotherincome 16 12 40 33
Interestpayableandsimilarcharges 4 (6,440) (6,440) (6,445) (6,445)
OtherFinancingCosts 5 (365) (365) (306) (306)
Increaseinvaluationofinvestmentproperty 12 28 28 54 54
(6,387) (6,384) (6,334)
(6,339)
Surplusonordinaryactivitiesbeforetaxation
6 3,187 3,223 1,473 1,344
Taxchargeonsurplusonordinaryactivities 7 - - -
-
Surplusfortheyear 3,187 3,223 1,473 1,344
Othercomprehensiveincome
Netgain/(loss)ondefinedbenefitliability 23 1,059 1,059 (4,353) (4,353)
Pensiontransfer 157 157 198 198
Totalcomprehensiveincomefortheyear 4,403 4,439 (2,682) (2,811)
TheGroup’sturnoverandoperatingsurplusallrelatetocontinuingoperations.
Historical costs, surplus and deficits are identical to that shown in the financial statements unlessnotedotherwise.
38
StatementofChangesinEquityGroup Revenuereserve Pensionreserve TotalEquity £000’s £000’s £000’s
Balanceat1April2014aspreviouslyreported 9,847 (7,285) 2,562EffectsofadoptionofFRS102 7 - 7Balanceat1April2014(restated)
9,854 (7,285) 2,569
Totalcomprehensiveincomefortheperiod
Surplusfortheyear 1,473 - 1,473Pensiontransfer 198 (198) -Gains&losses,net - (4,155) (4,155)Balanceat31March2015
11,525 (11,638) (113)
Balanceat1April2015
11,525 (11,638) (113)
Totalcomprehensiveincomefortheperiod
Surplusfortheyear 3,187 - 3,187Pensiontransfer 157 (157) -Gains&losses,net - 1,216 1,216Balanceat31March2016
14,869 (10,579) 4,290
Association Revenuereserve Pensionreserve TotalEquity £000’s £000’s £000’s
Balanceat1April2014aspreviouslyreported 9,357 (7,285) 2,072EffectsofadoptionofFRS102 15 - 15Balanceat1April2014(restated)
9,372 (7,285) 2,087
Totalcomprehensiveincomefortheperiod
Surplusfortheyear 1,344 - 1,344Pensiontransfer 198 (198) -Gains&losses,net 1 (4,155) (4,154)Balanceat31March2015
10,915 (11,638) (723)
Balanceat1April2015
10,915 (11,638) (723)
Totalcomprehensiveincomefortheperiod
Surplusfortheyear 3,223 - 3,223Pensiontransfer 157 (157) -Gains&losses,net - 1,216 1,216Balanceat31March2016
14,295 (10,579) 3,716
39
ConsolidatedCashflowstatementFortheyearended31March2016 Notes 2016
£000’s2015£000’s
NetCashfromoperatingactivities 18 15,851 12,426
Cashflowsfrominvestingactivities
Purchaseoftangiblefixedassets (16,392) (16,281)
Proceedsfromsaleoftangiblefixedassets 1,530 1,363
Grantsreceived 1,399 684
Interestreceived 16 40
NetCashfrominvestingactivities (13,447) (14,194)
Cashflowfromfinancingactivities
Interestpaid (6,435) (6,596)
Newsecuredloans 7,000 38,780
Repaymentsofborrowing (53) (25,879)
NetCashfromfinancingactivities 512 6,305
Netchangeincashandcashequivalents 2,916 4,537
Cashandcashequivalentsatbeginningoftheyear 5,084 547
Cashandcashequivalentsatendoftheyear 8,000 5,084
40
Notestothefinancialstatements1a Basisofaccounting
ThesefinancialstatementshavebeenpreparedinaccordancewithFinancialReportingStandard102TheFinancialReportingStandardapplicableintheUKandRepublicofIreland(FRS102),andtheStatementofRecommendedPractice:AccountingbyRegisteredSocialHousingProvidersUpdate2014andcomplywiththeAccountingDirectionforPrivateRegisteredProvidersofSocialHousing2015.
AnexplanationofhowthetransitiontoFRS102hasaffectedthefinancialpositionandfinancial
performanceofthegroupisprovidedinnote27. ThefinancialstatementsaregroupstatementsandconsolidatetheresultsofSHandits
subsidiariesA.WaltersElectricalContractorsLtd(AWEC),AWaltersElectricalLtd(AWE),ShrewsburyHomesforAll(SHFA)andSevernsideCommunityAssociation(SCA).
AWEC&AWEareprivatecompanieslimitedbyshares,theirsharecapitaliswholly-ownedbySH.
SHFAisacompanylimitedbyguaranteeandacharityregisteredwiththeCharitiesCommission.SCAisanEnglandandWalesIndustrialandProvidentSocietyregisteredwiththeFinancialConductAuthority.SevernsidehascontrolofbothSHFAandSCAviastepinrightsandpowertoappointandremoveBoardmembersifappropriate.
Thedirectorshavepreparedtradingandcashflowforecastsforthegroup.Theseforecastsshow
thatthegrouphassufficientfinancialresourcestomeetitsobligationsastheyfalldueforaminimumof12monthsfromthedatethatthesefinancialstatementswereapproved.
Accordingly,afterconsideringtheforecast,appropriatesensitivities,currenttradingandavailable
facilities,thedirectorshaveareasonableexpectationthatthegrouphasadequateresourcestocontinueinoperationalexistencefortheforeseeablefutureandhaveconcludedthatthegoingconcernbasisofpreparationisappropriatetoenablethegrouptocontinuetradingforatleastoneyearfromthedateofsigningthesefinancialstatements.
1b Accountingpolicies The followingaccountingpolicieshavebeenappliedconsistently indealingwith itemswhichare
consideredmaterialinrelationtotheGroup’sfinancialstatements. Measurementconvention Thefinancialstatementsarepreparedonthehistoricalcostbasisexceptthatthefollowingassets
and liabilities are stated at their fair value: non-basic financial instruments and investmentproperties.
Basicfinancialinstruments Tenantarrears,tradeandotherdebtors,tradeandothercreditorsandallnon-cancellableinterest-
bearingborrowingshavebeenclassifiedasbasicfinancial instrumentsandarerecognisedinitiallyat transactionprice lessattributable transaction costs. Subsequent to initial recognition theyarerecognisedatamortisedcost.
41
Otherfinancialinstruments Cancellable interest-bearingborrowingsnotmeeting thedefinitionofbasic financial instruments
are recognised initially at fair value. Subsequent to initial recognition they aremeasured at fairvaluewithchangesrecognisedinthestatementofcomprehensiveincome.
Turnover Turnover represents rental and service charge income and amounts invoiced in respect of the
provisionofotherservices. SupportingPeople
SupportingPeopleincomeisrecognisedintheaccountsandmatchedtoexpenditureasservicesareprovided.GoodwillGoodwillarisingfromthepurchaseofAWECrepresentsthedifferencebetweentheconsiderationpaidandthefairvalueofthenetassetsacquired.Goodwillisbeingamortisedover3years.
Housingproperties
Housingpropertiesarestatedatcostlessaccumulateddepreciationandaccumulatedimpairmentlosses.Completedhousingpropertieshavebeensplitbetweentheirlandandstructurecostsandaspecificsetofmajorcomponentsthatrequireperiodicreplacement.
Refurbishmentorreplacementofsuchacomponentiscapitalisedandthendepreciatedovertheestimatedusefullifeofthecomponentatthefollowingrates:Properties(Structure) 50-120yearsKitchens 20yearsBathrooms 30yearsCentralHeating 15yearsDoors 30yearsWindows 30yearsElectricalRewire 30yearsSolarPanels 30yearsLifts 30years
Roofs 70years
Costincludesthecostofacquiringlandandbuildings,developmentcostsandinterestchargesduringthedevelopmentperiod.
Direct costs relating to development activities are capitalised and all other works to existingpropertiesarechargedtoincomeandexpenditure.
Sharedownershippropertiesandassetsheldforsale
Undersharedownershiparrangementstheoccupierhastherighttopurchaseproportionsatthecurrentvaluationupto100%.Proceedsofsaleoffirsttranchesofequityarerecognisedinturnoverwiththeattributablecostsincludedincostofsales.
42
Subsequenttranchessold(‘staircasing’)areaccountedforasdisposalsofhousingproperties,asnotedabove.FirsttranchesawaitingsalearerecognisedwithincurrentassetsontheBalanceSheet. InvestmentpropertiesInvestmentpropertiesarepropertieswhichareheldeithertoearnrentalincomeorforcapitalappreciationorforboth.Investmentpropertiesarerecognisedinitiallyatcost.Subsequenttoinitialrecognitioninvestmentpropertieswhosefairvaluecanbemeasuredreliablywithoutunduecostoreffortareheldatfairvalue.Anygainsorlossesarisingfromchangesinthefairvaluearerecognisedinthestatementofcomprehensiveincomeintheperiodthattheyarise.Nodepreciationisprovidedinrespectofinvestmentpropertiesapplyingthefairvaluemodel.Investments
Investmentsarestatedatcostlessanyprovisionforimpairment.
Impairment Afinancialassetnotcarriedatfairvaluethroughprofitorlossisassessedateachreportingdateto
determinewhether there isobjectiveevidence that it is impaired.A financialasset is impaired ifobjectiveevidenceindicatesthatalosseventhasoccurredaftertheinitialrecognitionoftheasset,andthatthelosseventhadanegativeeffectontheestimatedfuturecashflowsofthatassetthatcanbeestimatedreliably.
Financial assets that are considered to be permanently impaired are written down to their
recoverableamounts. SocialHousingGrant SocialHousingGrant(SHG)isinitiallyrecognisedatfairvalueasalongtermliability,specificallyas
deferredgrantincomeandreleasedthroughthestatementofcomprehensiveincomeasincomeoverthelifeofthestructureofhousingpropertiestowhichthegrantsrelate,inaccordancewiththeaccrualmethodapplicabletosociallandlordsaccountingforhousingpropertiesatcost.
SHGmayberecycledorrepaidundercertaincircumstances,primarilyfollowingsaleofaproperty
butwillnormallyberestrictedtonetproceedsofsale.Grantsforrevenueexpenditurearecreditedtotheincomeandexpenditureaccountastheybecomereceivable.
Taxation
Thechargefortaxationisbasedonthesurplus/deficitfortheyearandtakesintoaccounttaxationdeferredbecauseoftimingdifferencesbetweenthetreatmentofcertainitemsfortaxationandaccountingpurposes.
Deferredtaxisrecognised,withoutdiscounting,inrespectofalltimingdifferencesbetweenthetreatmentofcertainitemsfortaxationandaccountingpurposeswhichhavearisenbutnotreversedbythebalancesheetdate,exceptasotherwiserequiredbyFRS102.
43
ValueAddedTax SHisVATregisteredbutalargeproportionofitsincome,rents,isexemptforVATpurposesand
thereforegivesrisetoapartialexemptioncalculation.ExpenditureisshowninclusiveofVATasVATrecoveredisaminimalamount.Inputtaxrecoveredisdeductedfromoperatingcosts.
Depreciation Depreciationiscalculatedtowriteoffthecostoftangiblefixedassetsonastraightlinebasisover
theirestimatedusefullives.Thefollowingdepreciationrateshavebeenused: Properties 50-120years Propertycomponents 15-70years Fixturesandfittings 33%perannum Fixturesandfittings(solarpanelsonly) 30years Plant&Equipment 33%perannum Computerequipmentandsoftware 33%perannum Motorvehicles 33%perannum Stocks Stocksarestatedatthelowerofcostandtheestimatedsellingpricelesscoststocompleteand
sell.Thisincludesa10%obsolescenceprovisionappliedtomaterialsstocks. Baddebtsandwrite-offs
BaddebtsarechargedtotheStatementofComprehensiveIncomeintheyearinwhichtheyareincurred.AprovisionforbadanddoubtfuldebtsismadeonanestimationofthosedebtsthatwillnotberecoveredattheStatementofFinancialPositiondate.Inrespectofrentaldebtorsinternalpolicydictatesprovisionismadeonthefollowingbasis:Currenttenants0-4weeksarrears noprovision5-13weeksarrears 20%provision14-26weeksarrears 50%provision27-52weeksarrears 75%provision52weeks+arrears 100%provisionFormertenants 100%provisionInrespectofotherdebtorsprovisionismadeatvaryingpercentagesbasedonthesizeorageofthedebt.
44
Operatingleases
Rentalspayableunderoperating leasesarechargedona straight linebasisover the termof thelease.
Interestandfinancecosts Interestandfinancecostsonborrowingsarecapitalisedtotheextentthattheyaredeemedtobe
financingthedevelopmentprogramme.Allotherinterestischargedtotheincomeandexpenditureaccountintheyearinwhichitisincurred.
In accordance with FRS 102, issue costs incurred on the raising of loan finance are netted off
against the loanbalancesandreleasedto the income&expenditureaccountover the lifeof theloan.
Pensioncosts SHparticipatesintheLocalGovernmentPensionScheme(LGPS).Theschemeisadefinedbenefit
pensionschemebasedonfinalpensionablesalary.Theassetsoftheschemeareheldseparatelyfromthoseoftheassociationinanindependentlyadministeredfund.
Pensionschemeassetsaremeasuredusingmarketvalues.Pensionschemeliabilitiesaremeasured
usingaprojectedunitmethodanddiscountedatthecurrentrateofreturnonahighqualitycorporatebondofequivalenttermandcurrencytotheliability.
Thepensionschemesurplus(totheextentthatitisrecoverable)ordeficitisrecognisedinfull.The
movementintheschemesurplus/deficitissplitbetweenoperatingcharges,financeitemsand,inthestatementofrecognisedgainsandlosses,actuarialgainsandlosses.
Thepensionreserverepresentstheimpactofactuarialgainsand/orlosses,lesstax,whichhave
beenaccountedforinthestatementoftotalrecognisedgainsandlosses. ThereisanelementofestimationuncertaintyrelatingtothevaluationoftheschemeandSHplaces
relianceontheworkofactuariesforthisdisclosure. UndertherequirementsofFRS102,theassociationdisclosesfurtherinformationonassetsand
liabilitiesonamarketvaluebasisattheendoftheaccountingperiod. Lessoraccounting Paymentsreceivedfromthelesseearetreatedasrentalrevenueontheincomeandexpenditure
accountandtheassociationisaccountingfortheleasedassetasafixedassetonthebalancesheet. TransactionsbetweenGroupEntities TheAssociationisexemptfromtherequirementofFRS102todisclosetransactionsbetween
Groupundertakingsasallsubsidiarycompaniesarewholly-ownedbySevernside.HowevertheAccountingDirectionforPrivateRegisteredProvidersofSocialHousing2015requiresthatdisclosurebemadeofrelatedpartytransactionswithunregisteredgroupmembers.
45
2 Turnoverandoperatingcosts–2016 Group
Turnover Operating
costsOperatingsurplus
£000’s £000’s £000’s
Incomeandexpenditurefromlettings
GeneralNeedsHousing 19,333 (14,491) 4,842Garages 345 2 347SupportedHousing 5,799 (2,896) 2,903SharedOwnership 109 (90) 19 Socialhousinglettings 25,586 (17,475) 8,111 OtherSocialHousingactivities SupportingPeople 1,151 (1,120) 31Leaseholders 27 (20) 7SaleoffirstTranche-LCHO 518 (368) 150
1,696 (1,508) 188
TotalSocialHousingLettings 27,282 (18,983) 8,299 NonSocialHousingLettings Shops 43 - 43Market&CommercialRentMarketSalesServiceCostsMarketSalesCommercialSalesCharitableActivityDonationsReceived
754-
2,8786268229
(110)(3)
(2,156)(598)(270)
-
644(3)72228
(188)29
TotalNonSocialHousingLettings 4,412 (3,137) 1,275
TotalTurnover&OperatingCosts 31,694 (22,120) 9,574
46
2 Turnoverandoperatingcosts–2016 Association
Turnover Operating
costsOperatingsurplus
£000’s £000’s £000’s
Incomeandexpenditurefromlettings
GeneralNeedsHousing 19,333 (14,587) 4,746Garages 345 2 347SupportedHousing 5,799 (2,897) 2,902SharedOwnership 109 (90) 19 Socialhousinglettings 25,586 (17,572) 8,014 OtherSocialHousingactivities SupportingPeople 1,151 (1,120) 31Leaseholders 27 (20) 7SaleoffirstTranche-LCHO 518 (368) 150
1,696 (1,508) 188
TotalSocialHousingLettings 27,282 (19,080) 8,202 NonSocialHousingLettings Shops 43 - 43Market&CommercialRent 754 (111) 643MarketSalesServiceCosts - (3) (3)MarketSales 2,878 (2,156) 722 TotalNonSocialHousingLettings 3,675 (2,270) 1,405
TotalTurnover&OperatingCosts 30,957 (21,350) 9,607
47
2 Turnoverandoperatingcosts–2015 Group
Turnover Operatingcosts
Operatingsurplus
£000’s £000’s £000’s
Incomeandexpenditurefromlettings
GeneralNeedsHousing 18,527 (15,008) 3,519Garages 335 (1) 334SupportedHousing 5,659 (2,619) 3,040SharedOwnership 105 (34) 71 Socialhousinglettings 24,626 (17,662) 6,964 OtherSocialHousingactivities SupportingPeople 1,069 (840) 229Leaseholders 26 (21) 5SaleoffirstTranche-LCHO 332 (253) 79
1,427 (1,114) 313
TotalSocialHousingLettings 26,053 (18,776) 7,277 NonSocialHousingLettings Shops 44 - 44MarketRentCommercialSalesCharitableActivityDonationsReceived
5495279424
(117)(463)(128)
-
43264
(34)24
TotalNonSocialHousingLettings 1,238 (708) 530
TotalTurnover&OperatingCosts 27,291 (19,484) 7,807
48
2 Turnoverandoperatingcosts–2015 Association
Turnover Operatingcosts
Operatingsurplus
£000’s £000’s £000’s
Incomeandexpenditurefromlettings
GeneralNeedsHousing 18,527 (15,077) 3,450Garages 335 (1) 334SupportedHousing 5,659 (2,618) 3,041SharedOwnership 105 (35) 70 Socialhousinglettings 24,626 (17,731) 6,895 OtherSocialHousingactivities SupportingPeople 1,069 (840) 229Leaseholders 26 (21) 5SaleoffirstTranche-LCHO 332 (253) 79
1,427 (1,114) 313
TotalSocialHousingLettings 26,053 (18,845) 7,208 NonSocialHousingLettings Shops 44 - 44MarketRent 549 (118) 431 TotalNonSocialHousingLettings 593 (118) 475
TotalTurnover&OperatingCosts 26,646 (18,963) 7,683
49
2(a). Operatingsurplusonsocialhousinglettings–2016 Group
GeneralNeedsHousing
Garages SupportedHousing
SharedOwnership
Total2016
£000’s £000’s £000’s £000’s £000’s
Incomefromlettings
Rentsreceivablenetofidentifiableservicecharges
18,935 345 5,639 100 25,019
ServiceChargeIncome 147 - 135 - 282 Netrentalincome 19,082 345 5,774 100 25,301 OtherIncome 169 - 6 - 175GrantAmortisation 82 - 19 9 110
Turnover,net 19,333 345 5,799 109 25,586
Management (7,186) - (145) (49) (7,380)
RoutineMaintenance (2,832) - (455) - (3,287)PlannedMaintenance (1,721) - (1,604) - (3,325)BadDebts (94) 2 (18) - (110)Depreciation-Properties (2,658) - (674) (41) (3,373) Operatingcosts (14,491) 2 (2,896) (90) (17,475)
Operatingsurplus 4,842 347 2,903 19 8,111
Voids 134 20 60 - 214
50
2(a). Operatingsurplusonsocialhousinglettings–2016 Association
GeneralNeedsHousing
Garages SupportedHousing
SharedOwnership
Total2016
£000’s £000’s £000’s £000’s £000’s
Incomefromlettings
Rentsreceivablenetofidentifiableservicecharges
18,935
345 5,639 100 25,109
ServiceChargeIncome 147 - 135 - 282 Netrentalincome 19,082 345 5,774 100 25,301 OtherIncome 169 - 6 - 175GrantAmortisation 82 - 19 9 110
Turnover,net 19,333 345 5,799 109 25,586
Management (7,179) - (146) (49) (7,374)
RoutineMaintenance (2,847) - (455) - (3,302)PlannedMaintenance (1,809) - (1,604) - (3,413)BadDebts (94) 2 (18) - (110)Depreciation-Properties (2,658) - (674) (41) (3,373) Operatingcosts (14,587) 2 (2,897) (90) (17,572)
Operatingsurplus 4,746 347 2,902 19 8,014
Voids 134 20 60 - 214
51
2(a). Operatingsurplusonsocialhousinglettings–2015 Group
GeneralNeedsHousing
Garages SupportedHousing
SharedOwnership
Total2015
£000’s £000’s £000’s £000’s £000’s
Incomefromlettings
Rentsreceivablenetofidentifiableservicecharges
18,212 335 5,468 95 24,110
ServiceChargeIncome 139 - 135 - 274 Netrentalincome 18,351 335 5,603 95 24,384 OtherIncome 94 - 51 - 145AmortisedGrant 82 - 5 10 97
Turnover,net 18,527 335 5,659 105 24,626
Management (7,078) - (127) (5) (7,210)
RoutineMaintenance (2,882) - (527) - (3,409)PlannedMaintenance (2,404) - (1,346) - (3,750)BadDebts (139) (1) (16) - (156)Depreciation-Properties (2,504) - (603) (30) (3,137) Operatingcosts (15,007) (1) (2,619) (35) (17,662)
Operatingsurplus 3,520 334 3,040 70 6,964
Voids 122 38 47 - 207
52
2(a). Operatingsurplusonsocialhousinglettings–2015 Association
GeneralNeedsHousing
Garages SupportedHousing
SharedOwnership
Total2015
£000’s £000’s £000’s £000’s £000’s
Incomefromlettings
Rentsreceivablenetofidentifiableservicecharges
18,212 335 5,468 95 24,110
ServiceChargeIncome 139 - 135 - 274 Netrentalincome 18,351 335 5,603 95 24,384 OtherIncome 94 - 51 - 145AmortisedGrant 82 - 5
10 97
Turnover,net 18,527 335 5,659 105 24,626
Management (7,089) - (127) (5) (7,221)
RoutineMaintenance (2,892) - (527) - (3,419)PlannedMaintenance (2,453) - (1,345) - (3,798)BadDebts (139) (1) (16) - (156)Depreciation-Properties (2,504) - (603) (30) (3,137) Operatingcosts (15,077) (1) (2,618) (35) (17,731)
Operatingsurplus 3,449 334 3,042 70 6,895
Voids 122 38 47 - 207
53
3. SurplusonsaleofHousingPropertiesGroup&Association
Proceeds Costs TransfertoGrant
Surplus2016 Surplus2015
£000’s £000’s £000’s £000’s £000’s
RTBProperties 1,232 336 745 151 140
RTAProperties - - - - 176
OtherProperties 180 53 - 127 9
SharedOwnershipStaircasing
114 3 - 111 -
Total 1,526 392 745 389 325
4 Interestpayableandsimilarcharges Group&Association
2016£000’s
2015£000’s
Bankloans,andotherloansrepayable 6,222 5,943Fairvalueadjustment 1 3OtherFinancingCosts&Interest 217 499
6,440 6,445
5 Otherfinancecosts/(income) Group&Association
2016£000’s
2015£000’s
Expectedreturnonpensionschemeassets (990) (1,192)
Interestonpensionschemeliabilities 1,355 1,498 365 306
6 SurplusonordinaryactivitiesbeforetaxationGroup 2016
£000’s2015£000’s
Surplusonordinaryactivitiesfortheyearisstatedaftercharging:
• Depreciationonproperties 3,373 3,137• Depreciationonothertangiblefixedassets 293 315• Deficitondisposalofotherfixedassets 15 2• Amortisationofgoodwill 117 116• Reversalofimpairmentlosses - (48)
54
• Revaluationgain (28) (6)
Note6(continued)• Auditor’sremuneration:
ExternalAudit–AuditServices(*) 36 35ExternalAudit–Other(*) 48 38InternalAudit–AuditServices 31 25
• Operatingleasecharges
159 211
Association 2016£000’s
2015£000’s
Surplusonordinaryactivitiesfortheyearisstatedaftercharging:
• Depreciationonproperties 3,373 3,137• Depreciationonothertangiblefixedassets 259 294• Deficitondisposalofotherfixedassets 8 -• Amortisationofgoodwill 117 116• Reversalofimpairmentlosses - (48)• Revaluationgain (28) (6)• Auditor’sremuneration:
ExternalAudit–AuditServices(*) 36 35ExternalAudit–Other(*) 48 38InternalAudit–AuditServices 31 25
• Operatingleasecharges
159 211
*UnderSORPrequirementstheservicesprovidedbytheexternalauditorshavebeenstatedexcludingVAT.
Theparentcompanyhasbornetheoverallauditfeeonbehalfofallsubsidiaries.
55
Notes(continued)
7 Taxation Group (a)Analysisofchargefortheyear
2016£000’s
2015£000’s
Currenttaxonincomefortheyear - -Tax(credit)/chargeondeficitonordinaryactivities - -
(b)Factorsaffectingtaxchargeforperiod
ThetaxassessedfortheperiodislowerthanthestandardrateofcorporationtaxintheUK(20%).Thedifferencesareexplainedbelow.
2016£000’s
2015£000’s
Surplusonordinaryactivitiesbeforetax 3,187 1,473 Currenttaxat20%(2015:21%) 637 308Fixedassetdifferences 529 538Expensesnotdeductiblefortaxpurposes 74 55Incomenottaxablefortaxpurposes (120) -Capitalallowancesforperiodinexcessofdepreciation - (19)ReliefobtainedforhistoricFRS102adjustments - (3)Amounts (charged)/credited directly to equity or otherwisetransferred
212 (913)
ChargeableGains 30 31Othershorttermtimingdifferences 2 4
Deficit/(Surplus)attributabletocharitableactivities 20 (2)Adjustclosingdeferredtaxtoaveragerateof20% 248 -Utilisationoftaxlosses 10 1Deferredtaxnotrecognised (1,642) - Corporationtaxchargefortheperiod - -
(c)Factorsthatmayaffectfuturetaxcharges
TheGrouphasadeferredtaxassetof£2,232k(2015:£3,885k)inrespectoftimingdifferencesandtaxlossescarriedforward,whichhasnotbeenrecognisedasnotexpectedtobeutilisedintheforeseeablefuture.FurtherdetailsareshownatNote17.
From1April2016SHacquiredcharitablestatussignificantlyreducingtheimpactoffuturetaxcharges.
56
Notes(continued)
7 Taxation Association (a)Analysisofchargefortheyear
2016£000’s
2015£000’s
Currenttaxonincomefortheyear - -Tax(credit)/chargeondeficitonordinaryactivities - -
(b)Factorsaffectingtaxchargeforperiod
ThetaxassessedfortheperiodislowerthanthestandardrateofcorporationtaxintheUK(20%).Thedifferencesareexplainedbelow.
2016£000’s
2015£000’s
Surplusonordinaryactivitiesbeforetax 3,223 1,338 Currenttaxat20%(2015:21%) 644 282Fixedassetdifferences 528 537Expensesnotdeductiblefortaxpurposes 74 55Incomenottaxablefortaxpurposes (120) -Amounts (charged)/credited directly to equity or otherwisetransferred
211 (912)
ChargeableGains/(losses) 30 31Grouplossrelief 26 7
Adjustclosingdeferredtaxtoaveragerateof20% 250 -Deferredtaxnotrecognised (1,643) - Corporationtaxchargefortheperiod - -
(c)Factorsthatmayaffectfuturetaxcharges
SHhasadeferredtaxassetof£2,252k(2015:£3,907k)inrespectoftimingdifferencesandtaxlossescarriedforward,whichhasnotbeenrecognisedasnotexpectedtobeutilisedintheforeseeablefuture.FurtherdetailsareshownatNote17.
From1April2016SHacquiredcharitablestatussignificantlyreducingtheimpactoffuturetaxcharges.
57
Notes(continued)
8 StaffcostsGroup 2016
£000’s2015£000’s
Staffcostsincludingthedirectors: • Wagesandsalaries 7,328 7,021
• Socialsecuritycosts 614 599
• Otherpensioncosts 799 935 8,741 8,555 F.T.E. F.T.E. 2016 2015Numberofpersons(includingthedirectors)employedduringtheyearexpressedasfulltimeequivalents(37hoursperweek):
• Officestaff–SevernsideHousingnonPropertyServices 159 161• Officestaff–PropertyServices 18 18• PropertyServicesstaff• Otherstaff
6530
6825
Totalemployees 272 272
StaffcostsAssociation 2016
£000’s2015£000’s
Staffcostsincludingthedirectors: • Wagesandsalaries 6,462 6,266• Socialsecuritycosts 544 532
• Otherpensioncosts 763 899 7,769 7,697 F.T.E. F.T.E. 2016 2015Numberofpersons(includingthedirectors)employedduringtheyearexpressedasfulltimeequivalents(37hoursperweek):
• Officestaff–SevernsideHousingnonPropertyServices 159 161• Officestaff–PropertyServices 18 18• PropertyServicesstaff 65 68
Totalemployees 242 247
58
Note8(continued)
DirectorsGroup&Association
ThedirectorsaredefinedastheBoardofDirectorsandExecutiveOfficers.TheremunerationoftheExecutiveOfficerswas: 2016
£000’s2015£000’s
Emoluments(includingBenefitsinKind) 412 446
PensionContributions 84 98
Total 496 544
Theemolumentspaidtothehighestpaiddirectordisclosedabove(excludingpensioncontributions)
139
136
TheChiefExecutiveisanordinarymemberoftheLGPSpensionscheme.Contributionsarepaidinlinewithothermembersofitsschemeandnoenhancedorspecialtermsapply.TheChiefExecutiveisthehighestpaiddirector,andreceivesnoadditionalremunerationforherserviceasanexecutivedirectorontheboardofSevernsideHousing.
Staffwhoreceivedremuneration(includingbenefitsinkind)inexcessof£60karesummarisedinthefollowingbands:
2016 2015£60,000-£69,999 4 3
£70,000-£79,999 3 4
£80,000-£89,999 1 -
£110,000-£119,999 - 1
£120,000-£129,999 2 1
£130,000-£139,999 1 1
£160,000-£169,999 - 1
£170,000-£179,999 1 -
Totalhigherpaidstaff 12 11
59
Note8(continued)
TheremunerationoftheNon-ExecutiveOfficerswas:
2016£000’s
2015£000’s
PaulSmith 8.5 8.5ElaineGanderton 4.5 4.5RoryO’Byrne 4.5 4.5AndrewParkes 4.5 4.5PaulWilliams 4.5 4.5MichaelRoughan 4.5 3GarethEvans 3 3AlysonLanning 3 3MalcolmPrice 3 3PeterPrice 3 3RobinPritchard 3 3PaulBeaman 1.5 1.5
47.5 46
9 Goodwill Group&Association 2016
£000’s2015£000’s
Cost At1stApril 350 350Purchasedintheyear - -At31stMarch 350 350Amortisation
At1stApril (233) (117)Amortisedduringtheyear (117) (116)At31stMarch
(350) (233)
Total31stMarch - 117
60
10 Tangiblefixedassets–Housingproperties Group&Association
AssetsUnder
Construction£000’s
Propertiesheldforletting£000’s
Totalhousingproperties£000’s
Cost At1stApril2015 8,970 143,527 152,497Additions:
Properties 4,526 8,587 13,113Components - 3,160 3,160
UnsoldLCHO(1sttranche)movedtocurrentassets (4) (831) (835)UnsoldMarketSalesmovedtocurrentassets - (819) (819)Disposals/Write-offs - (2,460) (2,460)ComponentsDisposals - (738) (738)CompletedinyeartransferredtoInvestmentProperties - (4,758) (4,758)CompletedinyeartransferredtoPHFL (6,144) 6,144 -At31stMarch2016 7,348 151,812 159,160
Depreciation At1stApril2015 - (23,443) (23,443)Chargeforperiod - (3,228) (3,228)DepreciationonDisposal-Components - 276 276At31stMarch2016 - (26,395) (26,395)
NBVat31stMarch2016 7,348 125,417 132,765
NBVat31stMarch2015 8,970 120,084 129,054
Properties held for rent include 103 Market Rent Properties and 54 New Built Shared OwnershipProperties.Garagesandtheremaining25SharedOwnershipPropertiesweretransferredatnilcost.Assetsunderconstructionincludesurveyordevelopmentfeesforcapitalworks.AfullimpairmentreviewwascarriedoutforallrelevantpropertiesasaresultoftherentreductionimposedintheSummer2015Budget.Themostrelevantcalculationfortherecoverablevalueoftheassetwasdeemedtobedepreciablereplacementcost.Thiswascalculatedbyevaluatingthebuildcostsforallnewlydevelopedunitsovertheprevious2yearswhichwhencombinedwiththoseincludedinthecurrentdevelopmentpipelineprovidedvaluebypropertytype.Whenthiswascomparedtothehistoriccostvaluecarriedintheaccountsitwasconcludedthatnoimpairmentwasrequired.
61
Housingpropertiesunitscomprise: 2016 2015 GeneralNeedsHousing 3,767 3,796AffordableRent 292 241MarketRent 103 64HousingForOlderPeople 1,217 1,220SupportedHousing 10 10Other 1 1Sharedownership 79 57 5,469 5,389
Nointeresthasbeencapitalisedfor2015/16(2014/15:nil).
11 Tangiblefixedassets–other Group
Land&Buildings
Fixtures&fittings
PlantandEquipment
MotorVehicles
IT
Total
£000’s £000’s £000’s £000’s £000’s £000’sCost At1stApril2015 2,834 701 98 232 2,415 6,280AdditionsReclassification
--
8017
21-
69-
165(17)
335-
Disposals - (65) (4) (58) (183) (310) At31stMarch2016 2,834 733 115 243 2,380 6,305
Depreciation At1stApril2015 (273) (631) (49) (93) (2,060) (3,106)Currentcharge (56) (21) (17) (42) (157) (293)Disposals - 66 3 48 173 290 At31stMarch2016 (329) (586) (63) (87) (2,044) (3,109)
NBV31stMar2016 2,505 147 52 156 336 3,196 NBV31stMar2015 2,561 70 49 139 355 3,174
Thevalueofnon-depreciablelandincludedwithintangiblefixedassets–otherland&buildingsis£74k(2015:£74k).Thisisheldonalong-lease.
62
Tangiblefixedassets–otherAssociation
Land&Buildings
Fixtures&fittings
PlantandEquipment
MotorVehicles
IT
Total
£000’s £000’s £000’s £000’s £000’s £000’sCost At1stApril2015 2,834 693 86 42 2,399 6,054Reclassification - 17 - - (17) -Additions - 51 7 - 155 213Disposals - (66) - - (177) (243) At31stMarch2016 2,834 695 93 42 2,360 6,024
Depreciation At1stApril2015 (272) (629) (45) (17) (2,056) (3,019)Currentcharge (56) (21) (14) (14) (154) (259)Disposals - 66 - - 169 235 At31stMarch2016 (328) (584) (59) (31) (2,041) (3,043)
NBV31stMar2016 2,506 111 34 11 319 2,981 NBV31stMar2015 2,562 63 41 25 343 3,035
Thevalueofnon-depreciablelandincludedwithinassetsnotforrentis£74k(2015:£74k).Thisisheldonalong-lease.
12 InvestmentProperties Group&Association
2016£000’s
Balanceat1stApril 8,690
Additions 4,754
Netgainfromfairvalueadjustments 28
Otherchanges -
Balanceat31stMarch 13,472
Historicalcostnetbookvalue 13,437
63
13 Stocks Group
2016 2015 £000’s £000’s
Materialsstocks 75 123Workinprogress
- SharedOwnershipunsold–Completedproperties- SharedOwnershipunsold–Workinprogress- MarketSaleunsold–Completedproperties
832104819
155296
- 1,830 574Association
2016 2015 £000’s £000’s
Materialsstocks - 50Workinprogress
- SharedOwnershipunsold–Completedproperties- SharedOwnershipunsold–Workinprogress- MarketSaleunsold–Completedproperties
832104819
154296
- 1,755 500
14 Debtors Group
2016 2015Amountsfallingduewithinoneyear £000’s £000’sRentaldebtors 405 664Less:provisionforbaddebts (195) (475) 210 189 Otherdebtors 561 397Less:provisionforbaddebts (178) (118)Prepayments 416 328
1,009 796
Association
2016 2015Amountsfallingduewithinoneyear £000’s £000’sRentaldebtors 405 663Less:provisionforbaddebts (195) (475) 210 188 Otherdebtors 458 327Less:provisionforbaddebts (167) (111)Prepayments 416 328
917 732
64
15 Creditors:amountsfallingduewithinoneyear Group
2016 2015 £000’s £000’s
LoanspayablewithinoneyearTradeCreditorsHirePurchase
562,259
31
531,86815
Othertaxationandsocialsecuritycosts 195 213Othercreditors 241 131Accruals 1,666 1,654Deferredincome 2,130 1,459 6,578 5,393
Association
2016 2015 £000’s £000’s
Loanspayablewithinoneyear 56 53TradeCreditors 2,187 1,894Othertaxationandsocialsecuritycosts 166 189Othercreditors 60 78Accruals 1,620 1,607Deferredincome 2,130 1,459 6,219 5,280
16 Creditors:amountsfallingdueafteroneyear Group
2016£000’s
2015£000’s
HousingLoantoberepaid 125,498 118,548DeferredGrant 13,293 12,000HirePurchase 34 23Total 138,825 130,571Association
2016£000’s
2015£000’s
HousingLoantoberepaid 125,498 118,548DeferredGrant 13,293 12,000Total 138,791 130,548
65
Thehousingloanfacilitiesdueaftermorethanoneyearcomprise£17,000k(2015:£10,000k)variableand£108,701k(2015:£108,754k)fixedloans,andaresecuredbyspecificchargesonthefreehold&leaseholdhousingproperties.Interestispayableatratesbetween0.55%(2015:3.09%)and5.45%(2015:5.45%).
17 Deferredtaxation
Thedeferredtaxliabilities/(assets)providedandunprovidedintheaccountsareasfollows:
Group
Provided Provided Unprovided Unprovided 2015 2015 2016 2015
£000’s £000’s £000’s £000’sAcceleratedcapitalallowances - 236 227Othertimingdifferences - (2,011) (2,383)Taxlossescarriedforward - (457) (1,729) - (2,232) (3,885)Association
Provided Provided Unprovided Unprovided 2015 2015 2016 2015
£000’s £000’s £000’s £000’sAcceleratedcapitalallowances - 210 201Othertimingdifferences - (2,005) (2,379)Taxlossescarriedforward - (457) (1,729) - (2,252) (3,907)DeferredtaxassetshavenotbeenprovidedforinrespectoftaxlossesandothertimingdifferencesassetoutatNote7.Inaddition,noprovisionhasbeenmadeindeferredtax(2015:nil)fortaxrelatingtocapitaldisposalsinthecurrentandpriorperiodwherethegainistoberolledoverintoreplacementassets.Itisnotenvisagedthatanytaxwillbecomepayableinrespectofthesegainsintheforeseeablefuture.
66
18 Reconciliationofoperatingprofittonetcashinflow/(outflow)fromoperatingactivities Group
2016£000’s
2015£000’s
OperatingSurplus 9,574 7,807Depreciationcharges 3,666 3,454Amortisationcharges 117 117LGPScharge (208) (108)SharedOwnershipcosts 368 243MarketSalecosts 2,156 Aborteddevelopmentcosts - 29WIPtransferred - 121AmortisedGrant (110) (98)(Increase)/Decreaseinstocks 48 1(Increase)/Decreaseindebtors (178) 432Increaseincreditors 418 428Netcashinflowfromoperatingactivities 15,851 12,426
19 Analysisofthechangesinnetdebt Group&Association
1stApril2015£000’s
Cashflows£000’s
31stMarch2016£000’s
Cashinhand,atbank(includinginvestments)
5,084
2,916 8,000
Totaldebtdue
(118,601) (6,953) (125,554)
Total (113,517) (4,037) (117,554)
20 Reconciliationofthemovementinnetdebt Group&Association
2016£000’s
2015£000’s
Netdebt1stApril (113,517) (105,305)Increaseincash 2,916 4,537Increaseindebt (6,953) (12,749)Changeinnetdebtduetocashflow (4,037) (8,212) Netdebt31stMarch (117,554) (113,517)
67
21 DeferredCapitalGrantGroup&Association
2016 2015 £000’s £000’sAmortisedbalanceat1stApril 12,115 10,593Grantsreceivedduringtheyear 1,399 1,606Releasedtoincomeduringtheyear (110) (83)Amortisedbalanceat31stMarch 13,404 12,116 Originaltotalvalueofgrant 14,231 12,832 AmountrecognisedinStatementofComprehensiveIncome (827) (717) Duewithinoneyear 110 116 Dueafteroneyear 13,294 12,000
22 Analysisofchangesinfinancing Group&Association
2016£000’s
2015£000’s
Balanceat1stApril 118,601 105,852Netcashinflow 6,952 12,746Fairvalueadjustment 1 3Balanceat31stMarch 125,554 118,601
68
23 Pension
Group&Association
InaccordancewithFRS102,Severnsideisrequiredtodisclosecertaininformationregardingassets,liabilities,incomeandexpenditurerelatingtopensionschemesforitsemployees.
SevernsideHousingparticipatesintheLocalGovernmentPensionScheme.TheLocalGovernmentPensionSchemeisadefinedbenefitschemebasedonfinalpensionablesalary.
ThemostrecentvaluationoftheShropshireCountyPensionFund(thefund)wascarriedoutasat31March2013andhasbeenupdatedbyindependentactuariestotakeaccountofFRS102requirementsinordertoassesstheliabilitiesoftheFundasat31March2016.Liabilitiesarevaluedonanactuarialbasisusingtheprojectedunitmethodwhichassessesfutureliabilitiesdiscountedtotheirpresentvalue.
TheprioryearfigurespresentedinrelationtothefundarerevisedfiguresaccordingtoIAS19disclosurerequirements.
2016 2015
£000’s £000’s
PresentValueofFundeddefinedbenefitobligations (40,643) (41,494)
FairValueofplanassets 30,064 29,856
Netliabilityinbalancesheet (10,579) (11,638)
Movementsinpresentvalueofdefinedbenefitobligation 2016 2015
£000’s £000’s
At1stApril (41,494) (33,476)
CurrentServicecost (928) (790)
InterestCost (1,355) (1,498)
Remeasurements 2,465 (6,121)
Contributionsbymembers (251) (271)
BenefitsPaid 1,038 662
Curtailments (118) -
At31stMarch (40,643) (41,494)
69
Movementsinfairvalueofplanassets 20162015
£000’s£000’s
At1stApril 29,856 26,191
Interestonplanassets 990 1,192
Remeasurements (1,062) 1,896
Administrationexpenses (18) (20)
Employercontributions 1,085 988
Membercontributions 251 271
Benefitspaid (1,038) (662)
At31stMarch 30,064 29,856
ExpenserecognisedintheStatementofComprehensiveincome 2016 2015
£000’s £000’s
Currentservicecost 928 790
Administrationexpenses 18 20
Netinterestcost 365 306
Effectofcurtailments 118 -
Total 1,429 1,116
TheexpenseisrecognisedinthefollowinglineitemsintheStatementofComprehensiveIncome:
2016 2015
£000’s £000’s
OperatingCosts 1,064 810
OtherFinancingCosts 365 306
1,429 1,116
TheamountrecognisedintheStatementofComprehensiveIncomeinrespectofremeasurementsis£1,059k(2015:£(4,353k)).
70
Thefairvalueoftheplanassetsandthereturnonthoseassetswereasfollows:-
2016 2015
£000’s £000’s
Equities 15,350 15,528
CorporateBonds 7,736 7,619
Property 1,608 1,224
Cash 517 929
Alternatives 4,853 4,556
Total 30,064 29,856
TheestimatedMacaulaydurationofliabilitiesis20years(2015:20years).
Principalfinancialassumptions(derivedusingamaturedurationprofile)attheyear-endwereasfollows:
2016 2015
RateofCPIinflation 2.00% 2.00%
Rateofincreaseinsalaries3.50% 3.50%
Rateofincreaseinpensions2.00% 2.00%
Discountrate3.60% 3.30%
Invaluingtheliabilitiesofthepensionfundat£40,643k,mortalityassumptionshavebeenmadeasindicatedbelow.
Theassumptionsrelatingtolongevityunderlyingthepensionliabilitiesatthebalancesheetdatearebasedonstandardactuarialmortalitytables.Theassumptionsareequivalenttoexpectinga65-yearoldtoliveforanumberofyearsasfollows:-
• Currentpensioneraged65:23.9years(male),26.4years(female).• Futureretireeuponreaching65in20years’time:26.2years(male),29.2years(female)
Thehistoryoftheplansforthecurrentandpriorperiodsisasfollows:
Balancesheet
2016 2015 2014 2013 2012 2011 2010
PresentValueofSchemeLiabilities
(40,643) (41,494) (33,476) (35,766) (29,878) (26,956) (26,714)
FairValueofSchemeAssets
30,064 29,856 26,191 24,229 20,744 19,655 17,181
Theassociationexpectstocontributeapproximately£961ktoitsdefinedbenefitplansinthenextfinancialyear.
71
PensionBond
SevernsidehasenteredintoaPensionGuaranteeBondAgreementwithShropshireCountyPensionFundandNationwideBuildingSociety,wherebyShropshireCountyPensionFundmay,ifSevernsideHousingfailstomakeappropriatepensionschemepayments,seekrecoveryfromNationwideBuildingSociety.Thepensionbond,nottoexceed£5,240k,(2015:£5,240k)isbasedonactuarialassessmentsofthescheme’sliability.
24Investmentsandsubsidiaryundertakings
Severnsideistheparententityofallofthefollowingsubsidiaryundertakingsasat31March2016.Allhavebeenconsolidatedintothegroupaccounts.
Name CountryofRegistration/Status
BasisofControl
PrincipalActivity
A.WaltersElectricalContractorsLtd
EnglandandWalesPrivateLimitedCompany
Ownershipof2£1sharesbeing100%oftheissuedsharecapital
ElectricalcontractorstodelivermaintenanceservicestoSevernside.
AWaltersElectricalLtd
EnglandandWalesPrivateLimitedCompany
Ownershipof1£1sharesbeing100%oftheissuedsharecapital
Electricalcontractors.
SevernsideCommunityAssociationLtd
EnglandandWalesIndustrialandProvidentSocietyregisteredwiththeFinancialConductAuthority(formerlytheFSA).
StepinrightsandpowertoappointandremoveBoardmembers
Toprovidesupporttocommunitiesinneed,includingtheprovisionofgrantstoassistindividualsandgroupstoimprovetheirenvironmentandeducationaloremploymentopportunities.
ShrewsburyHomesforAll
CompanylimitedbyguaranteeandacharityregisteredwiththeCharitiesCommission.
StepinrightsandpowertoappointandremoveBoardmembers
Torelievethoseinneedofassistance,peoplewhoarehomeless,inhousingneedorwhoneedhelptoavoidhomelessness.
25 CapitalcommitmentsGroup&Association
2016£000’s
2015£000’s
Capitalexpenditureauthorisedbutnotyetcontractedfor 18,333 16,261
Capitalexpenditurecontractedforbutnotprovidedforinthefinancialstatements
8,656 13,504
26,989 29,765
Theabovecommitmentswillbefundedthroughcurrentcashresources(£7,215k)andborrowings(£24,220k),whichareavailablefordraw-downundercurrentloanarrangements.
72
26 Othercapitalcommitments
Group&Association
At31stMarch2016Severnsidewascommittedtomakingthefollowingminimumpaymentsundernon-cancellableoperatingleasesforeachofthefollowingperiods:
2016
£000’s2015£000’s
Notlaterthanoneyear 3 12Laterthanoneyearandnotlaterthan5years 134 134Laterthan5years - - 137 146
27 ExplanationoftransitiontoFRS102fromoldUKGAAP
Group Surplusforthe
yearended31stMarch2015
Revenuereservesasat31stMarch2015
Revenuereservesasat31stMarch2014
£000’s £000’s £000’s
AmountunderoldUKGAAP
1,190 11,235 9,847
AmortisedGrant
97 717 620
RevisedhousingpropertydepreciationonFRS102treatmentofgrants
(1) (458) (457)
Reversalofdepreciationchargeonpropertiesreclassifiedasinvestmentproperties
98 98 -
Revaluationofinvestmentproperty
54 6 (48)
Holidaypayaccrual
38 (71) (109)
FairValueadjustmentonnon-basicloanbalances
(3) (2) 1
AmountunderFRS102 1,473 11,525 9,854
73
Association Surplusforthe
yearended31stMarch2015
Revenuereservesasat31stMarch2015
Revenuereservesasat31stMarch2014
£000’s £000’s £000’s
AmountunderoldUKGAAP 1,060 10,616 9,357AmortisedGrant 98 717 619RevisedhousingpropertydepreciationonFRS102treatmentofgrants
(2) (458) (456)
Reversalofdepreciationchargeonpropertiesreclassifiedasinvestmentproperties
98 98 -
Revaluationofinvestmentproperty 54 6 (48)Holidaypayaccrual 39 (62) (101)FairValueadjustmentonnon-basicloanbalances
(3) (2) 1
AmountunderFRS102 1,344 10,915 9,372
28 FinancialInstruments
Thecarryingamountsofthefinancialassetsandliabilitiesinclude:
2016
£000’s2015£000’s
BasicLoansatamortisedcost 115,551 108,559Non-basicloans–Fairvaluethroughprofitandloss 10,003 10,002
Financialliabilitiesmeasuredatamortisedcostcomprisebankloansandoverdrafts,tradecreditorsandothercreditors.
Financialliabilitiesmeasuredatfairvaluethroughtheprofitandlosscomprisebankloans.Fairvaluerepresentsthenetpresentvalueofthenon-basicloansusingtheweightedaveragecostofcapitalassociatedwiththoseloans.
74
29 Relatedpartytransactions
Therehavebeennotransactionswithanyrelatedpartieswhicharenotincludedwithinthegroupfinancialstatements.
Duringtheyear,SevernsideHousingrechargedcostsof£17,081(2015:£7,687)incurredonbehalfofotherGroupundertakings.Suchcostsincludetherechargingofinformationsystems,officecostsandgeneralmanagementcosts.Theserechargesareagreedbymanagementandarebasedonrelevantcostinformation.
Duringtheyear,SevernsideHousingpurchasedservicesfromA.WaltersElectricalContractorsLtd,asubsidiarycompany,totalling£1,420,495(2015:£1,336,826),andservicesfromAWaltersElectricalLtd,asubsidiarycompany,totalling£66(2015:£4,307).
Atthereportingdate,SevernsideHousinghadthefollowingtradingbalanceswithnon-regulatedGroupundertakings:£103,723(2015:£234,691)wasowedtoA.WaltersElectricalContractorsLtd,£78(2015:nil)wasowedtoAWaltersElectricalLtd.
30 PostBalanceSheetEvents
SHbecamearegisteredcharityon1April2016.Seepage12formoredetails.
On1April2016therewasamutualdecisiontakenforShrewsburyHomesforAlltoleavetheSHGroup.
InMay2016SH’sBoardapprovedthefullbusinesscasetoproceedwithamergerwithanotherRegisteredProviderduring2016/17.Seepage12formoredetails.